This is a blog that tells the story of the impact on our family  of the west corridor leg of the public RTD (Denver Rapid Transit System) light rail project for the Denver Metro area, in Lakewood Colorado. For those who may not know, Lakewood is a  suburb west of Denver. Money for the project came from local, state and federal taxpayers. We aren’t sure where this light rail leg “begins” in Denver but we do know it will end near the monstrous courthouse building in Golden, CO, affectionately known in the area as the “Taj Mahal”. Another spur of light rail is currently being built  to the Federal Center, which  is about 5 minutes drive from our house.

In early February, 2010, we heard chainsaws cutting down the trees from Carr St, slowly heading west each day on 13th Ave. Within a few days, our own big beautiful Cottonwood trees were being cut down, one by one. We had 5 large trees, each one was about 90 feet tall. The diameter of my favorite tree was measured and was 5’4″ tall, the  same height I am! These mature trees stood for 100 years and were all at least 85 feet high. Unlike most Cottonwoods, these trees were sturdy, strong and not filled with rotten branches or trunks, which is unusual for cottonwood trees. They provided shelter for our house during hail storms, lots of shade  …and homes for squirrels and birds.

Here are some pictures showing the workman taking them down. There were tears in my 94 year old grandfather’s eyes as he helplessly watched his trees being taken down. RTD, Rapid Transit System, had not even paid him for the taking of his land or paid him for the trees they were cutting down. The tree cutters parked their equipment in our driveway for several days while they took down the trees one by one. The large limbs and trunks were taken down in sections. Each section made the house shake when it hit the ground or driveway. To their credit, the tree cutters were polite and very careful with our home and property and their crew exercised safe procedures. Still, it was impossible for our family not to feel violated by the loss of these great trees and the taking our land which has been in the family for 50 years.

I can’t be the only one who is confused by real estate data. Every few days, there’s another news story about with data that purports to prove how the real estate scene is getting better, getting worse, or staying the same.

Denver, where I operate, is usually said to be faring better than most of the rest of the country. As of November 2009, this city was one of only four cities with a positive gain since November 2008 on the in the S&P/Case-Shiller Home Price Index. The worst among the 20 cities covered were showing declines in the 15 to 25 percent range.

Today, however, a story in Forbes lists Denver among the “new capitals of the housing crisis.” It cites data from Altos Research, a Mountain View, Calif.-based real-estate research firm, suggesting that “the Mile High city is taking a turn for the worse.” That firm provides “real-time” data to Forbes.

In July 2009, it says, list prices in Denver fell 0.5% from the year before—the first decline since 2008. The slump has since worsened, it says. In January, year-over-year asking prices were down 3%, to $368,870. Fair enough. But that July data today is eight months old. And it comes from a firm whose claim to fame is “real time” reporting? Huh?

Furthermore, we all know that average list prices are pushed around by all kinds of factors. Maybe the owners of lower-priced are suddenly more interested in selling.

I don’t recommend ignoring the news. But at the same time, I refuse to take it too seriously. In all the crosswinds of good and bad trends, it’s impossible to know which way things are going.

For investors, the strategy is to continue to look for deals with a margin of safety. For homeowners, the advice is similar. Do your best to read the macro picture, but then do what makes most sense for your situation today.

A homeowner called in response to one of my “We Buy Houses” advertisements. She was interested in selling but not “highly motivated,” to use the industry term. Her condo was worth maybe $37,000 in fully fixed-up condition. She and her husband had more than $75,000 in debt on the place, in a first and a second mortgage, secured at times when credit was much easier.

I regretted breaking the news to her that a short sale was the only way out. I outlined the process. Both lenders would have to agree to accept less than what they were owed. The owner of the second lien would have to agree to take “much less” than the $18,000 due. She and her husband didn’t like the idea of walking away from an obligation, nor the prospecting of becoming renters, not homeowners.

“You are already renters.” I didn’t say that exactly. But that was the essence of what I told her. If you’re paying to live in a place in which you’ll never build equity, aren’t you in fact renting? I say certainly. Holding the deed is a mere formality. “I admire your integrity.” I did say that. She’d actually been overpaying on the second, hoping to eventually retire the debt. Should she continue doing so?

“I wouldn’t,” I replied. Should she devote the extra funds toward paying down her first mortgage? My answer was the same: “I wouldn’t.”

This report by a University of Arizona law professor, Brent T. White, identifies two reasons people keep paying on underwater mortgages. One reason is to avoid shame and guilt. Another is exaggerated anxiety over foreclosure’s perceived consequences.

This point from the report is most poignant: Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility.

In other words, the banks didn’t worry about honoring their moral obligations. His point is, “Why should you?”

The Federal Housing Administration has long banned FHA borrowers from buying homes previously owned for less than 90 days. To potential homebuyers, that may not have seemed like much of problem. After all, there are plenty of homes available in the MLS.But to the investors who buy distressed properties and fix them for a quick sale, the restriction has been a big roadblock. Now the blockage has been lifted.

The FHA just announced the waiver of 24 CFR 203.37a(b)(2). The temporary halt will take effect on February 1, 2010, and will be effective for one year unless otherwise extended or withdrawn by the FHA Commissioner.Investors are elated, but homebuyers should be happy too.

A new supply of cheaply bought, well repaired homes will come on the market. Many such bargains wouldn’t happen without removal of the 90-day capital-carrying burden imposed by the FHA.Homebuyers should seek out bargains rather than let Realtors restrict the “inventory” to listed homes. Search for terms like “wholesale homes” in your area. Many such properties are unlisted—in effect For Sale By Owner. If a broker won’t approach FSBO sellers, search for “real estate lawyers” to make such purchases possible.

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Most homes are sold by a broker, who often ask a standard 6% or more in commissions. Brokers aren’t as motivated as a homeowner to sell the house, since they don’t pay the expenses of the home. A listing agreement binds you, the homeowner, to sell through only one broker for a long period of time, like 6-12 months, regardless of the performance of the broker. You also have to keep the house ready to show at a moment’s notice and have to leave during the showings, which can really interrupt your life. You put up with strangers walking through your home. Sometimes, they leave doors open and lights on when they leave! You may have to make costly repairs to the home to satisfy the buyer and pay for closing costs, and other seller’s concessions.

We are not real estate brokers, we do not want to list or sell your home. We are a team of experts who buys homes from people who choose to sell their homes or MUST sell their homes and move. Many things can happen in life that create changes that require a home be sold, such as financial problems, medical problems, a growing family, job loss, job transfer, divorce, retiring, a death in the family, etc. We specialize in assisting homeowners who have a financially unstable property.

Contact the experts at Colorado New Beginnings today at 303-350-8237

A short sale is a win-win solution for the homeowner and the bank. The homeowner avoids a foreclosure, which is like “death” to their credit. The bank is often willing to discount the loan amount and sell the home, taking a loss, to avoid having to keep a “non-preforming asset” on their books. The bank accepts a discounted payoff, meaning the bank gets paid less than the full loan amount owed. So, the home is sold, the mortgage or deed of trust is satisfied (paid off) and you avoid a foreclosure or bankruptcy.

For more information about how Colorado New Beginnings Program can help you call us at 303-350-8237.