Dumpster - Day 1

No demolition of the basement yet.

First we have to declutter the accumulated junk from my wife's family (50 year span!).

That pic doesn't do service to how much crap I pulled out already. Many of the larger things aren't in the dumpster yet because I need lifting assistance.

There were tons of old tools. Large wrenches, 50 chisels, 25 hammers, innumerable coffee cans full of rusty nails, etc. Two massive desks that had to be disassembled to fit out the narrow doorways. Steel shelves bound by stripped rusty screws that also had to be taken apart.

I was so filthy yesterday....by boogers were black!

We will fill this thing up in no time. Junk is still all over our attic, the garage, the shed, and the yard.

Still haven't decided what to do about the demolition. The contractor's $4,500 seems steep.

It looks like there are few neanderthals on Craigslist who claim they will, "beat any estimate."

I'm thinking more like $2,500 for a demo. I will call the cavemen either tonight or tomorrow after I finish emptying the basement.

Verizon wants $135 to move our internet connection upstairs. On the phone I told them to, "go eff themselves." Not really.

It's bull$hit. We pay them nearly $300 a month for cell phones, color TV, a house phone that doesn't work, and internet.

And when we had it installed originally - 3 years ago - they had the stones to charge me like $450 or something. I'm pretty sure I blogged it.

I was in shock. Cable installation was FREE every other place I lived. After all, they are going to get over $1,000 per year back from a new customer.

But I think this is one of those typical NYC-are jam-jobs. Verizon figures you live in NY....so they can charge you more. This crap really pisses me off.

Everytime I call a service or contractor for a price the first thing they want to know is, "What town do you live in?"

They pulled the same crap up in Cohasset, MA when we lived there. Some maid service wanted $1,000 to clean the entire house!

How much does FiOs installation cost where y'all live?

Do My Own Basement?

Our basement is in desperate need of being "re-done".

It's already finished....but there's mold and nastiness throughout.

But the problem here on Long Island is that these contractors sodomize you, in terms of price.

They are rude-a$$ mofos to boot!

I mean how much do you think it should cost to demo, reframe, rewire, put up sheetrock, hang a drop ceiling, and paint a basement?

I'm curious what some of you in flyover country would pay for this.

Personally, I don't think it should cost more than $10,000.

But you watch, they'll try to charge me 50k!

That's why I'm sort of thinking about trying to do it myself. Well I checked out some book on how to do it at the library anyway.

I can demo it, right?

I just bought a reciprocating saw for $60 on Amazon. A dumpster here costs $350-$500.

I'm a little nervous about cutting into a pipe or wire - but I think I can handle that.

One guy, a contractor who told me he could get me a dumpster for "only $800" (!) said that the problem with demo'ing your own place is "controlling the dust."

I'll bet I can figure that out.

I'm seriously thinking about trying to find someone who lives 100 miles away to do it. They can sleep here. I'll help.

Doing any of this work myself would, of course, amount to a complete waste of my time in the long run.

But I don't think I can stomach a bunch of criminals coming into my house and robbing me for a few months or however long they drag it out.

Chainsaw Bought....Still Have Ten Fingers!

In late July, I was awoken by a booming cracking sound right outside my window. It very well scared the scat out of me.

Curiously, there wasn't even any wind or rain at the time. And thankfully it fell in the middle of the yard rather than on the house or on those wires right behind it.

So what was I going to do with this tree.

I called a couple tree places (after emailing them a picture) and they wanted around $500 to remove it.

Recall that last summer I had another down tree (branch) and I circumvented this jam-job by hiring a guy off Craigslist to cut it up for $100. I had to help him and dispose of it myself.

One of the tree guys I called told me he'd come down himself to check it out because he was on his way to the *club* near my house anyway. Which club, I asked. Oh, the VERY EXPENSIVE one. Great, his estimate wasn't going to be cheap...

After talking to him about golf for 20 minutes and definitely having charmed him....he came in at $400 for the job. There's no doubt in my mind that if I was someone else, perhaps some 'old bag' dowager or yuppie type the price would have been $700 or even $1,000.

I hired him but the next day thought better of it.

I went to Home Depot and bought a $330 18 inch chainsaw. I figured this way I would no longer be held hostage by these tree predators. Here on wealthy Long Island with all these huge old trees and frequent thunderstorms....these guys are millionaires. Seriously.

Make no mistake I was scared to death of using a chainsaw. Google told me there were *40,000 chainsaw related injuries in America each year*!

In fact at the store I called my first wife, informed her of my DIY plans, and she screamed at me, "If you cut your arm off....there's no (deleted) way I'm coming to the hospital!"

Of course I saw another local *mom* at Home Depot and after chatting a bit she remarked about my chainsaw purchase, "Your wife is SO LUCKY to have a husband...that can do things around the house like that." Take that Mrs. C-Nut?!

I read the instructions and safety manual 6 times, cover to cover. I read chainsaw forums and watched YouTube chainsaw videos. All told it took me several hours of preparation - maybe even more than 10. And that was before even cutting it up. Tim Ferriss would clamor that this most certainly was not a good ROI of my time. Whatever. I hate to get ripped off and be at the mercy of sodomizing contractors, et al.

I tried to get a couple guys I know to come over and just help me get started but everyone was busy.

So eventually I mustered the courage to fire the saw up by myself. It started smoking and the chain started moving even though I had the brake on. The manual said this should NEVER happen. WTHeck! I turned white.

Customer service guy on the phone told me I had to pull the trigger/throttle right away - that was my problem. Then I had trouble restarting it. Damn. Did I break this thing right off the bat. What was my *supportive* wife going to say (if I ever told her)?

But it wasn't broken and I soon got to work on the tree (had to pull the cord 12 times even though the manual said to NEVER do more than 4-5). Well I got to work on the smaller limbs anyway. The manual, with all its breathless warnings, really does scare the $hit out paranoid noobs like me. It talks about *kickback* constantly. That's when the tip of the saw hits something and the whole thing bounces back right toward your face. Yeah, really. Although my saw had a kickback guard on it - assuming I installed it correctly.

It was a bigger job than that pic might suggest - being pretty thick at the base. Also, the tree limb was still attached high up on the trunk. And the manual warned to NEVER cut anything like that, over your head.

Actually I was able to break the branch down using only my brute strength. Yeah I'm indeed strong as $hit. (or the limb was dangling...)

Now it did take me a long time to delimb the tree. I wasn't exactly confident in what I was doing on this first job of mine. And again, I was scared of severing something and ending my golf career before I hit my peak.

Then once I was done with the smaller stuff I had to figure out how to cut the trunk. I didn't want my saw to touch the ground, having heard that dirt will destroy the saw in an instant. Eventually I figured out that I needed to keep propping up the end of the log in order to prevent *binding* - when the wood pinches the saw. The log was freakin' heavy and not exactly easy to prop up for the first several cuts.

Many Hours later here's the burnable wood anyway:

I put it on Craigslist as *free firewood*. Some guy in a $60,000 Land Rover came by and loaded it into his car. Saving $20-$30 on firewood ought to help him pay for the luxury vehicle, no?

I'm sure some of my more handy readers are laughing at my real world, incompetence. Yeah, I can't spackle or change a flat tire either without a cordless cellphone. Whatever.

Many of y'all can't buy stock options mid-market or prove Stewart's Theorem!

Of course Category Zero Hurricane Irene landed here last week and not a single tree fell in my yard now that I'm armed with my own chainsaw...

Check out this *chainsaw accident* video:

Looked real to me!

See also - Chainsaw ROI.

A Light Turned On

Have y'all seen these new(?) *touch* lamps?

There's no light switch, one simply touches the pole to turn it on. In fact it's a three-way so a few successive touches/taps will deliver increasing light wattage.

I bought one at Lowe's recently ($54) for our basement/office and mistakenly thought the *touch* switch nothing more than a gimmick.

But then I realized yesterday that the new switch mechanism was a terrific ergonomic improvement. No longer do we have to bend our wrists under a lampshade, often in the dark(!), fumbling around looking for that traditional turn switch which always seems to be 180 degrees opposite of our initial reach!

Delighted to see them down to $40 today, I bought two more for our house - another for our homeschooling/work basement and one for my son's room. His sister, Princess C-Nut, was begging for one of her own too, "Dada....but I can't reach my light."

So I guess it's also especially good for kids.

But I am thinking that if someone has a pet....that the animal rubbing against the bottom of the pole will most annoyingly activate the touch-switch. In that case, we have now discovered reason #267 to either barbecue the false-idolized critter OR fatten it up and peddle to the local Chinese restaurateur!

How To Unclog A Garbage Disposal

As a consequence of my deadbeat landlord's *deferred maintenance*....I'm learning a lot about fixing stuff around the house: infestations, flooded basements, re-lighting hot water tanks, etc.

I've had two clogged sinks for some time now that the scumbag has refused to fix. I could always call a plumber, pay them to take care of the problems, and then deduct the bill from my rent. The only problem is, now I probably won't be paying any more rent. So everything I pay comes directly out of my pocket.

Today I unclogged my kitchen sink's garbage disposal - a Badger 7.

All that I had to do was insert a 1/4 inch allen wrench underneath it and turn it 90 degrees. That freed up whatever it was that had jammed it. Instantly, I could hear the water gushing down the drain.

I wrote this post because significant Googling did not reveal this very simple solution. Perhaps others will find this post and save themselves some time, effort, and a plumber's bill. Although the solution ended up being easy, that doesn't mean I didn't bend over backwards trying to figure it out!

Be sure to unplug the disposal before jamming any metal tools into it.

Next up - I'm going to have to kill three hornets' nests that have appeared in my storage shed. At least in that deparment, I have some experience.

Rent What?

Check out the tiny rental market in my hood above.

Note the gap between $2,000 and $3,700.

People all the time who hear about my lunatic landlord and all the BS I have to put up with from him, they are always telling me *move out* or *move somewhere else* as if it's so easy to pull off.

Even when we moved to this region 3 years ago, there was almost nothing for rent in the *middle end* of the market - around what we pay now $2,500 per month. I've been watching this part of the rental market all these years and it's always been slim pickings. When anything in this range hits the market, it's gone within a day or a week. There just isn't much of a rental market out here. Sadly, many people get discouraged by that and buy mortgage more home than they can afford. It's hard enough to go against the grain, against the relentless *homeownership* - *don't waste money on rent* sophistry....but it's even harder to rent when there is NOTHING AT ALL TO RENT.

We have 2,200 square feet, a perfect location, and an awesome backyard. Other renters in town that I know pay MORE for LESS. One I know is paying $2,800 for a mere 1,300 square feet. And this wealthy couple is just parking there short-term, or so they hope, while they renovate their house. Pretty much that is the rental demand out here - people looking for an in-town abode while they renovated their kitchens and whatnot.

I've put up with my landlord's shenanigans because, all told, we still had a very good deal here at this price. After overpaying for all his properties, it's kind of funny that he *undercharged* us for rent by a few hundred bucks a month. But dumbness is pervasive, no?

While the gratuitous suggestions to simply *move out* (as if moving wasn't a major pain in the butt!) do chafe me, to be fair, it is pretty darn hard to believe that an area such as this would have so few rental options. I've never seen anything like it either, in all the places I've lived.

Water Levels, Boiling Over

It'a almost non-story that local water bills are rising.

"It’s going to be a big increase," Water Commission chair Glenn Pratt said in a phone interview. "It’s going to increase our revenue about 30 percent."

And they've got their pathetic excuses:

The 200-unit Avalon apartment complex has not broken ground. The Water Commission was expecting to receive a one-time windfall from their settlement with the company, as well as revenue once the project came on line.

The water department’s one and only wholesale customer, Linden Ponds, a retirement community in South Hingham, halted construction and is only buying about one-third of the initial water sale projections.

The result, Pratt said, is roughly a $500,000 change in budget revenue projections for fiscal 2010.

At the same time, the department’s debt service, where roughly $36 million is still owed, is rising each year until 2017, Pratt said.

This last line had me scratching my head:

And, due to lots of rain this past summer, water consumption is at a five-year low, therefore revenue projections are not being realized on that end either.

Okay. So we get some decent rain in the summer and embattled consumers get to save some money by not watering their lawn as much. Good, right?

Except that in this case water company *revenues* come up light and they can just raise the metered rates to cover their shortfall.

So, between the debt service that is rising until 2017, and the ability of the utility to claw back lost revenue...

They are basically declaring not only that WATER BILLS CAN NEVER FALL, but that they WILL DEFINITELY RISE!

With higher prices coming, basic economics and recent empiricism should condition the water company to expect a *six year low* in demand this coming year.

Marginalizing Affordable Housing

Massachusetts has a law on its books called 40B. Formerly called the *snob law*, it allows developers in towns with less then 10% *affordable housing* to bypass local zoning laws if they are going to include some so-called affordable units in their plans.

In the larger scheme of our thoroughly statist government, that doesn't sound so bad, now does it?

But there's more.

Not only does 40B permit a zoning override, IT PROVIDES FUNDING to the developers through direct private market extortion.

There's some state 40B *bank* that's been forcibly funded by local banks. This bank then doles out the loot with scant oversight. In fact, developers can utilize their OWN APPRAISERS, their OWN CONTRACTORS (with their wives mysteriously on the payrolls), and engage in sundry other shenanigans. Without getting too far into the details, let's just say that 40B has got to be one of the biggest scams I've ever heard about. It's not just un-Constitutional, it's been a total broad daylight boondoggle. One accusation puts the pillage minimally at $100 million!

Yesterday, I received a mailing from www.40Bfacts.com. Apparently, that is some organization devoted to fighting this codified theft. Though, I had to reread it twice to figure out what the flyer was saying.

It was horribly written - so much so that halfway through it I wasn't sure whether it was FOR or AGAINST the law. This garbage had spelling mistakes; and was incoherent and poorly articulated.

The fact is, and I see this time and again from well-intentioned Morons, it's hard enough to *argue* with outright thugs - but it's nearly impossible when using weak-a$$ argumentation!

There another site www.repeal40B.com out there devoted to the same cause. Branded at the top of its web page is *Preserve the Environment*. [Eyes rolling.]

See what I mean about putting forth the wrong counter-arguments?

Alright, don't want to linger on this subject - I just wanted to put it out there. Here's one line from that first website worth highlighting:

Whatever the problems are, one thing is clear: Massachusetts is the only state to use 40B and after 40 years, we rank 49th in the nation in housing affordability.

What's truly disgusting, and depressing, is that despite abject failure and gross malfeasance, that none of our invertebrate pols here in Mass have the stones to stand up and speak out against the disaster of *affordable housing*.

Marginalizing Garages

Is a garage a necessity for a home?

And, how much *market value* does it add?

My answers are "no" and "not as much as most think".

Just look down your street and count how many people actually use their garages for cars.

Our last move was from a garaged house to our current driveway-only abode. My wife whines incessantly how in New England, we NEED a garage because of the weather.

What do you know, almost two years here and we've managed to survive.

It only snows, at most, 10 days per year. And, in those rare occurrences, either the wipers can sweep away the snow or there's a husband out there anyway clearing a whole lot more of the white stuff with a shovel.

Mrs. C-Nut counters, "But it rains ALL OF THE TIME."

Whatever. Shrinkage isn't fatal.

Again, realize that if no one parks cars in their garages, empiricism has declared them far from necessary.

People would rather use them for *storage* than anything else. So, if garages add value to a home it's not in the manner for which they were intended.

Now, down south I think a garage may be more necessary, and more valuable on account of the heat. That's why they have those *carport* things I guess.

The Cost Of Credit

Recently, someone I know got me on the phone and was picking my brain about their housing situation.

They want to move, far away, but they own mortgaged a house that has fallen to just below their debt load. I believe they owe around 200k and the house is worth that, if not a bit lower.

Of course, a real estate commission and other transaction costs quickly add up on an *exit*. So the dude will in all likelihood have to go in his pocket to leave the house with his credit intact.

So, say the total figure is $10,000. Would you tap your savings and ante it up?

What if it was $20,000?

In other words, at what point do you just keep your savings, walk away from the house, and imperil your precious *credit score*?

First of all, this is a multivariate imbroglio. How much savings does the potential walker have? Are they planning or hoping to tap the public mortgage market very soon, or not? What is their house really worth? Etc.

I thought about this question long and hard. I've concluded that about 10k is all that I'd put up, ever, to maintain my credit score.

Bad credit should be erased in 7 years time. Furthermore, I think that in the future banks won't be too harsh on borrowers with small black marks on their resumes from this recent period because....there'll simply be too many of them!

Plus, damaged credit has the positive side effect of returning people to reality, and renting.

As I wrote in Homeownership Sucks:

I know a guy who, unfortunately is amidst a divorce and has left his 3,700 square foot, 100 year-old Victorian house and moved into a 3 bedroom rental apartment. He insists that aside from all the other issues implicit in a divorce, he is loving renting now. He has nothing to worry about fixing or renovating. He no longer comes home to annoyances like leaky faucets; he no longer frets about peeling paint or creaky steps. Now he just comes home from work and can finally relax.

Getting back to the slightly underwater house....

I say, after negotiating a 4% real esate commission, put the house up for sale, keep dropping it till it sells. Then bring the sale to your lender - and when they decline, immediately stop making payments; and linger until law enforcement throws you out.

I do not think it immoral to walk away from a house even if you have the money to make the lender whole.

Check that. I don't think it's any more immoral than banks LENDING to people on terms that put them into abject, 30-year debt slavery.

The Boat Eyesore

The plus side of living near the ocean is obvious - even if it's only for a 3-4 months a year.

The downside is all these darn front-yard boats.

We have to look at them, everywhere, for 7-8 months of the year up in frigid New England.

Why can't we pass a *snob ordinance* against parking them in yards and driveways?

Down the street from me is a McMansion development - overpriced and barely half-filled. Homes are listed from $1.3 million to over $2 million. Unbelievably, some dipsh*t there has parked a tarp-covered nasty boat on his lawn. They have an HOA there for crying out loud.

That guy must be on or THE board of the Home Owners Association.

I can't even believe that the boaters themselves want to look at their toys on a trailer or on stilts for two-thirds of the year, every single year.

Sometimes the fascists really do have to pass paternalistic laws for Morons.



Expecting a flood or just an inconsiderate Moronic neighbor?

Against The Grain

Within my immediate circle of friends and family, my wife and I know only but one, perhaps two other couples that rent instead of own their abode. And this one couple only rents because they live in NY and the market ran away from their budget. (Remember, when you mortgage a house you are still renting - renting money from the bank.)

I am quite sure that none of these people cook or eats-in as much as we do.

And I just realized that within this same group, Mrs. C-Nut and I are absolutely the only ones that drive *clunkers*.

The blue book value of my 1997 Suburban has got to be less than $1,000. That's what? Three monthly car payments for most people?

I am having a hard time finding things to cut back on in this financial Armageddon. I am open to suggestions.

What I really need is a new revenue stream...

Real Estate Autopsy

Eleven months ago, in May of 2007, my wife and I bid on our first house in Hingham, Massachusetts. Here's the old post.

The house was listed at $750,000 and we BID (not "offered"!) $700,000. As far as I am concerned, that is a sh*tload of money to commit to for one's first home - unless of course you have a trust fund. I was pretty unsettled by the whole process. In fact, only when the seller refused to hit my bid (he came down to $720k) and it expired did I fully realize how nervous I was. I had such a sweeping sense of relief that losing the kick-*ss house was probably for the best - partly because of the geographical instability of Mrs. C-Nut's job and also because we really didn't know anything at all about the South Shore region. The thought that we would buy a house, move in, and discover we hated the area was nightmarish, to say the least. My wife was very disappointed and a wee emotional upon our bid's expiration - but that's what the women do, they fall irrationally in love with stuff, and occasionally undeserving men.

This post will catalog my interaction with the SOB seller and in doing so will illuminate some of the larger forces at work in this housing debacle.

Alias will be used.

Leroy - SOB owner and seller of the house

Lindsey - listing broker

BuyingBroker - didn't use one, you clowns. Only a Moron would.

C-Nut - himself

First, about the house. It was put on the market at near the very peak of the Massachusetts real estate cycle - December 2005. I don't know the precise offering price but I believe it was just north of $1 million.

Ten months later, in October 2006, with the house not moving, Leroy rejected/ignored his first bid of $725,000.

The house sat, and sat there on the market. By April of 2007, when my wife and I found it, it had been listed for 17 months now, and had just been lowered to $750,000. We absolutely loved the house. It had high ceilings, plenty of light, an open, flowing floor plan, and it was almost 4,000 square feet. There was a ginormous oak paneled room replete with a bar and fireplace in addition to the four bedrooms, study, dining room, formal living room, and a sunroom. There was something wrong here because even in this teetering market, homes much smaller in Hingham were selling for substantially more. It took some thinking and research but we came up with three possible explanations:





1) Folks in family-centric Hingham highly value a backyard. Though this house was huge, and sported privacy, it really didn't have much of a yard.

2) Folks in Hingham, in that price range, for a family-sized house like that, highly value a "neighborhood". This house was sort of off a main road and wasn't exactly on a quiet tree-lined street; they're just weren't tons of kids nearby who could entertain your own.

3) Folks in Hingham don't value contemporary homes; they like center-hall colonials - which I detest. So great, the market undervalues what I really like!

Given the house's attributes, we talked ourselves into decertifying the "no neighborhood" and "no backyard" drawbacks. After all, just about every house has its tradeoffs.

Now, Lindsey, the broker, couldn't have been more direct. She had just gotten the stubborn bastard to lower his price from $800,000 to $750,000. He insisted, and she relayed, the caveat the he wouldn't take anything less than $750,000. This guy will epitomize the reality-blind, market chasing seller of the past few years.

So my wife and I dug in and crunched the numbers. One thing that did concern me was the apparent un-salability of the house. If it wasn't moving then, in a slow market it should also expect to languish at least as much and trade at a steep discount to its theoretical value. Since we follow around my wife's career - from Philly to NY to Charlotte to Boston, to...??? - we had to assign a significant probability to the chance that we might not be there that long and thus forced to sell the house in the near future. Remember that selling a house costs $$$$: 5%-7% of the list price, plus closing costs, inspections, attorney fees, and boxes and moving trucks - so we are talking close to $50,000 of post-tax dollars, not even counting whatever loss you might take. The last thing in the world we wanted to do was buy a house, settle in, and then find out we have to move a few months later. This is what happened to us in Charlotte. We were not there six months before my wife's job got removed to Beantown. Thankfully, we had decided to rent down there.

The number we came up with for our bid was $700,000. It certainly wasn't based on "the most we COULD pay" but rather on more intelligible factors like where the real estate market was headed, what I expected the economy to do (i.e. tank), transactional costs, etc.

My wife wanted to bid around 675k and then end, via "negotiation", around 700k. As a professional bidder-and-offerer I refuse to play those amateurish games. I decided that we'd start almost at our limit, articulate that to the broker, and not budge. So we took a deep breath and made the bid official. It might have been live for a two or three days - my memory fails.

Now Leroy was beside himself. He spoke with the broker seemingly every day and was well aware that a bid was, finally, materializing. When it came in 50k below his recently reduced offer, he was devastated, literally. He was rendered so speechless that he couldn't even muster a counter offer, maybe he said 745k, I can't recall. One thing I do remember him saying was, "Well, they can't afford my house!" Can you believe that? But otherwise, Mr. Big Shot was so wracked with emotion that he turned over the entire process to his father! Now Leroy had relocated to Florida and his father was local, but c'mon - a middle-aged man who couldn't handle selling his own house? Bear in mind, from Lindsey, I had been informed that Leroy "owned a few businesses" including "a trading or investing type of firm". Keep this last detail in mind.

So the clock was ticking and new cast member Daddy, at the last minute, countered at $720,000. My wife half-heartedly implored me to go to 710k or 715k but I vetoed her. The fact is, we were exhausted from months of house hunting; we really didn't have much in the way of other options. The rental market is tough in Boston. Anything with 3-4 bedrooms gets pretty expensive due to college student demand (let me tell ya, my toddlers don't contribute sh*t yet for rent!). And in suburban Hingham, there was almost nothing for rent. Still, I saw little reason to capitulate - especially at this point. As I told my wife, that house has been sitting and will continue to sit there on this foundering market. Let him call us back in a few weeks.

My wife and I soldiered on. With 2-3 months left on our lease there wasn't really time to find, vet, and bid on another house so we focused on finding yet another rental. Lindsey kept badgering me over email because well, Leroy was pestering her. There was another "young couple" taking multiple, hard looks at the house. They were "probably going to make a bid"....

Imagine me yawning off these provocations.

The "young couple" did in fact make a bid. Six weeks after we were out of the picture, this couple matched our bid 700k for Leroy's house. And guess what, the SOB countered at $725,000, five grand higher than his counter to us! Into the teeth of this plummeting market, he had the nerve to fade his offer. I don't know, maybe he was working off a 2005 calendar or something.

The fact is, Leroy's ego was running the show. He had just gotten two $700,000 bids within a couple of months and figured he had found the price floor - as if the housing market was a static animal that could deteriorate no further. So after "losing" about 300k from his original personal value of the home (remember it started over $1 million), he was now going to get real serious about the last $5,000, $10,000, or $25,000. Above all rational considerations, clearly his ego feared "selling the bottom".

So it turned out that the "young couple" likewise didn't raise their bid; they walked away, and quickly bought another house in nearby Hanover. So Leroy had been jilted twice in succession now and the most recent potential buyer was completely out of the picture.

It's now the end of June and after much scouring we did find our current, glorious abode for rent.

Of course, as I predicted, Leroy's house was still sitting there a month plus after our failed bid. After losing the "young couple", Leroy (via Lindsey) reached out to us to see if we were still interested. Having mentally moved onward, here is the email I sent the broker:

6/20/2007

Linsdey,

Haha. If I emailed you what my wife said about Leroy after I told her that your other couple bid 700k, and he countered at 725k (5k higher than he offered us – while rates were higher!), the Coldwell Banker profanity filter would explode. We could have been all done (and happy) at 710k, six weeks ago. Instead we’ve been scrambling all over for a place to live, he’s still paying taxes and upkeep, and you didn’t get a commission. We’ve been dragging our two babies in the car, every single weekend, and wasting all sorts of time.

Leroy is a pig. On Wall Street the expression is "bulls and bears make money, but pigs get slaughtered". He deserves every penny of his "loss".

There're 200+ homes for sale in Hingham – many of them are beautiful and the buying season is nearing its end. Mortgage rates today are 6.61% versus 6.21% when we bid. Leroy’s house (and every other one in America) is worth 4% less than when we bid. My bid, if we were still interested, would be 675k. But of course, that would "insult" his highness.

Leroy has to understand that even if he sells his house for a lower price than he wants, that he’ll get more interest on his cash in this higher-rate environment. So it’s a wash for all involved except of course for his ego.

This guy thinks he’s so smart but what exactly about the last 19 months has signaled to him that he’s got the SLIGHTEST CLUE about real estate prices in Hingham?

I told you the first time I met you that mortgage rates would rise. Guess what, rates are going higher still and the economy is about to take a dive.

I feel your pain Lindsey. You should drop his listing.

Signed,
C-Nut

Now Lindsey, who as a typical broker only wants a sale, at any price, asked my permission to forward that email to her obstinate client. Sick of trying to convince the SOB to get realistic herself, she leaned on me. Do y'all think I have ever turned away an opportunity to agitate? She titled it - "A Buyers Opinion" and sent away.

The next day I receive this steaming pile of condescension from Leroy (via the broker)

(Leroy's response)

SUBJECT - Fwd: Now i understand/ probably too much house for him anyway"

LOL- God am I smart, I guess I know it all. Why would C-Nut ever buy any piece of real estate given his prognosis of the economy, interest rates and housing market, not to mention weather forecasts? Give me a break. Doesn't sound like a good investment if he's right. I do think the housing market is a problem, but saying every house in America is worth 4% less given a 50 bp move in interest rates is so absurd and shows his ignorance. In fact I believe the house is priced to reflect much of what C-Nut is saying at this point. With that said, a house is only worth what some one will pay for it. C-Nut also fails to realize that the market is a leading indicator, not a lagging indicator. Much of what he is predicting is already priced into the housing market. Sure could get a bit worse but every market is a bit different. Also I believe, if you look at it on a bellcurve looking out 5+ years, prices now will look attractive. A house is a long term investment, and there should be many factors that go into decision- sometimes its easy to be dollar wise and pound foolish. I am not insulted by C-Nut's thoughts or offer. He is entitled to his opinion. We are both big boys here. I am not sure I agree with C-Nut's prognosis, and long term predictions. Despite what C-Nut says, the economy is in relatively good shape, and longer term America will be just fine. In fact, I expect some of the money to shift from various asset classes to real estate over time given the correction. I also don't think interest rates are going to move much from these levels, and if there's many who also think the next move could be down. Regardless still relatively low historically speaking. . With that said, I am not going to sell the house below $700,000 and that has nothing to do with ego. If C-Nut's willing to step up a bit perhaps we can get something done here, but sensing its a long shot as the house is worth less and less every day according to C-Nut. The best time to buy is when there's blood in the street? C-Nut must have loved the Lennar preannouncement and all the weakness in the home builders today. My house probably worth $625K now in C-Nut's mind. I appreciate you following up w/ C-Nut and passing along his email. I will keep it to myself, as I can see why my dad did not want me to see it. No worries here, as I am pretty thick skinned. Speak with you soon and thanks again for your efforts on my behalf.

All the Best,

Leroy

PS- Can tell C-Nut that I am not a pig despite what he thinks. Far from it. I remember that saying from my rookie days on wall street. Remind him Best time to buy is when there's blood in the street's.



So now, a dispassionate business transaction has turned into a pissing contest - at least for Leroy. Just as I has supposed, selling his home at market prices was proving an ego management crisis for Leroy. Apparently, my *sound economic reasons for the magnitude of my bid* really chafed the guy. "Too much house" for me? Hah, how about "not enough money" for him. He can't have it both ways. If he's such a big shot, so wealthy, then why niggle over $20,000???

Despite his no doubt, self-acclaimed rejoinder, he was still up all night thinking about C-Nut. He's hardly the first bonehead I have ever caused to lose sleep. As proof, he had to send ANOTHER, even more condescending email first thing in the morning - the fruit of his lucubration. Here it is in all its glory. Try to remember that this is a middle-aged adult who is supposedly a very successful entrepreneur:



The funny part of C-Nut's analysis is he's the one shlepping around Hingham w/ a couple of infants, wasting all sorts of time, and can't seem to find a house to buy despite being a buyers market. So now he's going to rent, and have to relocate the family again. Tell C-Nut I will be thinking of him when I am offshore fishing in my sportfish next week as he tried to find his temporary home. ### ***** street is a great home, and don't mind holding for time being until we find someone who appreciates it as much as I do. Tell him can [he] get a great deal on a house on the railroad tracks, probably can save a few sheckles, Mr Wallstreet- lol. Give me a break- He's talking one trade as the difference between owning a house or not, kind of short sighted in my view, but not surprised. My wife also laughed and said tell C-Nut and his wife that we hope C-Nut has fun moving into his rental when are [sic] family will be out boating and enjoying life- Enjoy the weekend Lindsey and don't worry about C-Nut.

First of all, I submit that anyone over the age of 40 who uses "LOL" is an unmitigated tool - he's used it twice now.

Yeah, Leroy, I am a "Wall Street rookie". If being a pig, trying to squeeze water from a rock is a rookie mistake, he needs to remember that I am not the one who started at $1,000,000 and chased the housing market down 30% - and counting.

Now I could go on splice and dice his email at length. For example, he claims that the idea that housing prices drop with rising mortgage rates is "absurd" and "shows C-Nut's ignorance". But then he says that "much of what C-Nut is saying is priced in".

Hmmm.

If it's so "absurd" then why address the notion of it being "priced in"?????

So big deal, the guy doesn't understand real estate. On that he's co-ignorant with 99% of the country. Heck, there are guys that write for the Wall Street Journal and Forbes that don't get it either.

But the interesting part of this exchange is Leroy's gross immaturity and transparent, if not pathetic, chest-thumping.

C-Nut can't afford his house?

Boy am I smart?

LOL...you're renting?

I'll be thinking about C-Nut while I am out sportfishing and enjoying life?

That's about as grown-up as this sand sculpture:



Remember this is the guy, this big shot, who was so distraught over my *lowball* bid that he couldn't even continue with the negotiation. Daddy had to step in. And apparently Daddy temporarily shielded his middle-aged son from my unpleasant email as well.

Leroy is clearly what men, young enough to use "LOL", would deem a "poseur".

Throughout this exchange, there was also the angle that Leroy was challenging my financial manhood. He was trying to goad me into paying up and proving that I had the cash for his house.

Cripes, he even said:

"...and don't mind holding for time being until we find someone who appreciates it as much as I do."

Appreciates?

In other words, my bid didn't show enough appreciation for his beloved house?

Now, we loved the house. I'd have never bid on it in the first place otherwise. I am just not the type to settle - for anything, ever. Unfortunately for Leroy, I also highly value cash in the bank and my precious four hours of sleep at night.

I am sure there are some people Moronic enough to pay-up for a house when their financial manhood is questioned but it certainly wasn't the case for the only bidder for Leroy's house within sight.

Now whenever I mix it up with clowns, Mrs. C-Nut is invariably the first one to scold me. "Why are you getting into it with Leroy?", "Why are you picking on Perry Eidelbus?", etc.

My wife said to me.

"These people are idiots. Don't piss him off because then he'll do something irrational like NOT SELL to us simply because he doesn't like us."

"Take it easy," I told her. Almost everyone, even my wife, forgets that I am a professional bidder/offerer - an extremely experienced financial negotiator. I am well aware of all the angles, all the politics, and all the realities of a transaction. I told her, listen, Leroy is probably atremble thinking, "Hey, maybe I shouldn't have patronized C-Nut??? Perhaps he'll be less likely to ever bid again because of my email...????"

The mistake almost everyone makes when analyzing interactions is focusing too much on their own perspective. A month later I was proven 100% correct. Read this rather rich email Leroy, with his house still sitting there, sent me:

7/20/2007 11:37am

Hi C-Nut-

I figured I would touch base directly with you. Perhaps we got off on the wrong foot, as I did not mean to run you around with the little ones and waste your time as I have 3 little ones myself, so familiar with that drill. With that said, not sure where you head is at. Please keep in mind that the whole process is a bit emotional for me, as I truly love the house and enjoyed living there. I have relocated to Florida as I am sure you are aware. Despite what you think, I don't have much of an ego, quite the contrary. Feel free to contact me directly if you still have a sincere interest in the house. It's a great home, I know firsthand.

All the Best,

Leroy

We "got off on the wrong foot"?

That sure is a curious way to describe his childish, baseless condescension.

Clearly, he was, ham-handedly, trying to placate any hypothetical animosity he provoked in me - just as I had predicted to my wife. After all, he's the one carrying a house that needs to be sold in a downtrending market.

Mind you that he now only wants to know if I have a "sincere interest" in his house - as if a dollar-denominated bid demands an emotional rider.

My wife wanted me to respond kindly (Ha!) and to explain to him that we had just signed a 12 month rental lease (that Leroy mocked) - a $30,000 contractual obligation.

I RERAINED from any such conciliatory action - Puuhleez Mrs. C-Nut! There're countless things she's more competent than me at - but we're talking about my métier here. Did Muhammad Ali take boxing advice from his wife?

I said let the SOB squirm. Let him continue to wonder if I am still a possible buyer. Don't tell him anything about my lease - which could always be broken or sublet. We still liked the house and I didn't want to tell him we were out of the picture in which case he might wise up and fire-sale it. Why help injure a possible $650,000 purchase in December?

(For those of you reading this in the distant future...the stock market tanked shortly after Leroy's "conciliatory" email in August of 2007 and then bounced to new highs in November. Meanwhile, house prices continued to crater everywhere but NYC and a few other places like Portland, Seattle, and Charlotte. In January of 2008, the stock market tanked again; this time taking out August's lows, credit markets froze up, a large investment bank went under, and housing continued it's downward spiral.)

In November of 2007, seeking to extend his two year run of precise 50k overpricing, Leroy dropped his nominal list price from $750,000 to $729,000. In January of 2008, he dropped the list price to $699,000.

And this month, April 2008, I saw on the web that his house finally sold, 28 months after listing it for over $1,000,000.

Mr. Big Shot, Mr. Wall Street Veteran eventually reaped $670,000.

By rejecting not one, but TWO 700k bids ten months earlier, Slick cost himself at least $60,000 - as I estimated the carrying costs for his unsold home at 3k per month added to the bid differential. And let's not forget the headaches and anxiety inherent in such a prolonged ordeal - for such an obvious emotional basketcase.

The other day I licked my chops and sent Leroy a "congratulatory" email:



Greetings Leroy,

I see on the web that you sold your magnificent house for 670k - it's definitely the nicest house to sell in the 600s in Hingham in many, many years. So well done! According to my email files, you did vow to me that you would never sell it for less than 700k; so I applaud your grown-up flexibility. By my calculations, "fair value" for that house is 640k today so it's like you MADE 30 grand!!! I am so glad you found another family that "appreciates" the house more than we did - even if said appreciation expressed itself in the form of a lower cash flow to you, plus another 10 months of carrying costs.

I do want to thank you for not budging on your 720k offering to us last year; in fact we were definitely prepared to settle at 710k or even 715k. But it was the wrong house for us and I am a firm believer that things always work out for the best. We are renting in [another town] now and have determined that we like it a bit more than Hingham; it's less "diverse" if you know what I mean. The fact that we are renting a house NICER than yours for $2,500 a month (a full 40% cheaper than the total cost of owning a 700k home at 6% rates) allows me to sleep soundly at night. I just renewed the lease through July'09 and I will continue to laugh at all these sheep who got sucked into the real estate trap at bad prices. The fact is, mortgage rates are headed inexorably higher and your large oil-heated house is headed to the 500s. I think you and I both learned over the past year that Hingham-ites don't value square footage; they want and pay up for backyards and neighborhoods. It's got to be a cruel joke for you that even today, zillow.com has your house worth $968,500.

I got to thinking the other day that, depending on when you bought your Florida house (2005?), between that and the Hingham house selling debacle, you might very well have hemorrhaged $1 million bucks or so on real estate in the past few years. Now I have no idea whether or not that is pocket change for you. Some Googling research has revealed to me that you are a successful businessman and you may indeed be one flush dude.

BUT, that would just make your obstinacy and niggling over $5,000, $10,000, and $25,000 pittances - not to mention all the "deferred maintenance" on the Hingham house - all the more bewildering. I mean really Leroy, wall-to-wall carpeting in this day and age? And as for your kitchen - or as I dubbed it the "shitchen" - did anyone ever cook in it? Or was your cookbook a stereotypical "collection of take-out menus"???

All the Best!

C-Nut



He did send a weird response that I may broach at another time.

My wife is gonna LOVE this blog post!

Patience - The Downpayment On Your Dream Home

I want to extend my deepest empathies to anyone waiting to buy a home. They are simply priced WAY too high still. Unfortunately, the majority of Americans are willing to spend the super-majority of their income (and then some) on shelter. Those of us prudent with our cash and realistic with our career forecasts simply can't buy into the desirable neighborhoods. The fact remains, unless you are willing to "pay up" and join the maxed out debt slaves, your dream home is unavailable.

The answer is, of course, to lower your expectations. As much as I'd love to live in my dream home, I love my MONEY in the bank a whole lot more. I also love to sleep at night worry-free.

Here's some evidence, that even in this ravaged housing market, prices have a LONG way to drop.





About 2,000 people attended the auction. Registration was free, although each bidder was required to bring a cashier's check for $5,000. (link)

Are you kidding me? Two thousand people at a Boston-area foreclosure auction? I guess those Morons who aren't already banged up from real estate investing are just itching for this fashionable dent in their net worth. Sort of like Bank of America!



It won't be the optimal time to buy real estate until foreclosure auctions are as empty as Cindy Sheehan book signings.

Hang in there. If you've waited this long, you can hold out some more. The steepest drops are not behind us.

Only Buy A Foreclosure

This past week I arrived at the conclusion that the first house I buy will in all likelihood be a foreclosure.

I have been frustrated these past 6-8 months or so watching NOTHING happen with the homes I am interested in buying. Sellers are stubbornly hanging tight and if they do drop the list prices, it's been in laughingly small increments like $10,000-$15,000.

I actually took some time off (2 months) from scanning the homes I have on my radar and got very upset yesterday when I re-checked them and saw them all still available, languishing at the same ridiculously high prices. I mean, I am seeing homes listed for sale for $1,000,000 that are barely worth 800k - and that's today with full employment and mortgage rates still in the low-mid 6% range. It's a joke.

Then it hit me that due to the types of affluent towns (with good schools!) that I am targeting, most, if not all, of the sellers are empty-nesters. They are people whose kids have moved out and are close to, if not retired themselves. Conceivably they already have a house on Cape Cod or in Florida in which they want to spend their dotage in. The problem is, these people ARE NOT distressed sellers. They likely have a negligible mortgage, if any at all.

Let me ask y'all a question - If you owned a stock for many years, made a lot of money in it, and you decided to sell it, how aggressive would you be?

They are all half-assed sellers who've made money by holding onto their homes. The concept of hitting a bid and getting out is simply incomprehensible. Sadly for the lot of them, they are just going to hemorrhage money for years by clinging to the 2005-level (psychological) values of their homes.

As I have told people in describing my failed attempts at buying a house this summer - I was always bidding 2008 housing prices while the sellers wanted 2005 prices.

Now I do have a connection that is apprising me of nearby foreclosure transactions. They are SUBSTANTIALLY lower than the normal sales through Coldwell Banker and they're of course way lower than the list prices of stubborn empty-nesters. Theoretically foreclosures, because of their urgency, sell below "fair value". I will concede that, but who the heck wants to pay fair value? And let's not forget that fair value is a dynamic variable. Those clowns who thought they got a "deal" in 2005, no matter who they are, are likely now very aware with how fleeting fair value can be. A savvy buyer understands that unforeseen risks abound ($150 oil, 10% mortgage rates, etc.) and therefore will only pay less than value for stuff. Remember, as a trader I used to buy on the bid - if not lower. Only amateurs (retail customers) paid the offer (asking price). Fair value is what someone is willing to pay TODAY; it's hardly a penny more.

Now for the good news. My distressed landlord confessed to me that he is thinking about foreclosing on the house I rent from him. The house has its flaws, shoddy construction chief among them, but in a foreclosure I bet I could buy it for 475k - a number that is very close to the 416k that I am effectively paying via $2,500 in monthly rent. If I bought the house I would gain the un-attached garage which is a fully furnished office (for me!) that also has plenty of space for a guest bedroom. I got extremely excited thinking about scoring this house for a pittance.

Of course it is still a pipe dream several big steps from actualization. Nonetheless, with over 2 million estimated foreclosures on the horizon, these are the types of opportunities that will soon be available to me - a first time buyer, sitting on a small pile of cash.



Actually I just saw an updated estimate of foreclosures at the 3 million house number.

I am partial to the highest estimates. As the housing market continues to deteriorate, and outstanding debt becomes so much larger than current market value, homeowners are increasingly just going to hand the keys over to the bank and walk away. Many will laugh (as my landlord is); some will hurl all the blame outward, likely at the mortgage lender/bank; and some will probably blame President Bush. Regardless, once the foreclosure ball gets rolling, it will become socially acceptable to quit on one's debt.

For a sub-population that has no homeowner equity and no cash, foreclosure isn't really a big deal.

One can't lose anything when they have nothing to begin with.

Real Estate - Fixer Upper Arbitrage

How many times have you heard someone exclaim, "You know if I buy that house, put fifty grand into it, I can sell it for a hundred grand more..."?

I have heard it more times than I could count - which is no small number!

The fact is, after you pay all the transaction fees: closing costs, title insurance, real estate commissions, etc., the theoretical profit of such a flip gets whittled down to nothing.

For example, if the house costs 600k and your "updating" yields a sale price of 700k, the 5%-6% real estate commission alone will erode $35,000-$42,000 of your massive 50k profit.

Sure, arbitrage as I have outlined is more doable with lower priced homes as the transaction costs are smaller in dollar magnitude but I submit that these opportunities, generally speaking, do not exist.

They don't exist because they have been arbitraged away by contractors. In this housing bull market run, all these obvious buy, fix-up, and flip-for-a-profit properties have been scooped up by professional contractors - men who know a little be more than everyone else about updating costs. Also, bear in mind that they can do the work cheaper than you as well.

So, the next time you contemplate buying a speculative fixer upper that's been languishing on the market for months, remember that all sorts of professional contractors have scouted and rejected its prospects already.

Oh yeah, and don't forget that housing prices, broadly speaking, are going to drop at least another 20% from today's levels.

Homeownership Sucks!

I know a guy who, unfortunately is amidst a divorce and has left his 3,700 square foot, 100 year-old Victorian house and moved into a 3 bedroom rental apartment. He insists that aside from all the other issues implicit in a divorce, he is loving renting now. He has nothing to worry about fixing or renovating. He no longer comes home to annoyances like leaky faucets; he no longer frets about peeling paint or creaky steps. Now he just comes home from work and can finally relax.

My wife and I considered buying a decrepit Victorian house in Waltham and he, coming from the unimpeachable perch of experience, essentially said not to do it. Asked if he went back in time, would he still buy his old Victorian, this guy said he would only buy the house if he were "young and dumb."

This was one of the points I argued with my wife when we were jawboning buying a few places earlier this year. Every little repair job in a house is a burden on the MAN. He's the one that has to diagnose and research every little issue. He's the one who has to manage plumbers and contractors as they try to ravage his wallet. I told my wife that renting allows me to sleep at night - a luxury of almost unquantifiable value.

So I am here in my new place four weeks now. The rails on the staircase are falling off, the window sills outside need paint, the glass door on the shower is hanging by a thread, both the seal and the lock on the back door are in disrepair, the pump in the air conditioner has been broken and fixed twice recently, and there's probably some more stuff I can't remember at this instant. Again, this is only over the past four weeks!

Then this week my landlord got hit with two more little disasters. The blower on the septic tank went - cost $770. And, in the course of trying to convert the heating system from oil to gas he not only obviously needed to buy a new boiler - costing a few grand, it turns out the chimney that houses the exhaust also has all sorts of problems. It has a crumbling interior of asbestos, terra cotta, or some other junk; it had to be swept/vacuumed out and now needs a new steel liner. This will run around $1,800 - so they say. It might even make sense to completely rebuild the chimney, given the total cost.



So yes, I truly believe that Homeownership Sucks. It is completely overrated AND it makes no economic sense given that rental costs are roughly 70% of purchase costs nationwide. In Florida, they are down to 60%.

How many times have you recently heard Morons say they bought a condo because they didn't want to deal with yard work and upkeep?

Notwithstanding the premium of buying over renting a place, it makes perfect sense that an abode with outsourced upkeep should cost more than a place where dwellers are responsible for every little maintenance problem.

Devil's Advocate - No, those condos pool their upkeep costs, spread them over more people, so they'd be cheaper to maintain than individual units.

Now that's a great little theory, but have you ever seen low condo fees out in the real world? I haven't.

Added to that is the bickering amongst condo owners over management decisions. How often should the grass be watered? How much to spend on flowers for the common roadway? I know a new tony condo development in Port Washington, NY that is already awash in management strife. There was a big brouhaha about how long the parking lot lights would be left on at night. The cheap old folk wanted to save money on electricity. Remember, that's what fossils do whether they are rich or not - they run around turning lights off.

As I sit here typing this, my landlord is outside trying to remove a sliding glass door and re-glue the insulation. It's a little complicated to extricate such a door but he's hoping to avoid calling a carpenter.

I gave my wife last night the litany of things that have gone wrong in our first month. I chuckled that I love having a landlord because it's like having a handyman, on call, for free!

What could possibly be more ideal?

In this hectic age where consumers highly value their free time, don't y'all think that free maintenance and outsourced upkeep should demand a premium?

In other words, it should be cheaper to buy than to rent a given house that's replete with the on-call handyman.

Sometimes the market prices of our world really are upside down.

UPDATE - Door couldn't be fixed by owner. Carpenter has been called.