Perrysburg Blog

“I am an out of town owner, and I want to rent my 4000 sq. foot, river front mansion in Perrysburg.  I will sign a 12 month lease for $299 per month.   I need a deposit of $2000.  Email me back on Craigslist or call 419-260-XXXX!”

Hmm.

Too good to be true?

Yes.  It is.

People are actually out there purporting to rent houses THEY DON’T REALLY OWN.

There have NEVER been more vacant houses in Perrysburg than there are today.

This weekend I had to check on 2 new assigned assets for a bank.  Both in Perrysburg.  Both long vacant.

It is neither hard to find them or to pretend to own/control/rent them.

Here is how they do it – and what it costs.

1.  Get a prepaid cell phone.  Use a false ID.  $120

2.  Find an empty house.  $0

3.  Jimmy the lock – put your own on.  $25

4.  Place a bogus Craigslist ad – $0

5.  Make the “deal” so good . . . that you have multiple takers.

6. Spend one day collecting the rental deposits.

7.  Vanish.

This is happening in many other markets – here is a report from San Diego.

I have experienced versions of this scam in Toledo with foreclosed houses.   But . . . it’s just a matter of time in Perrysburg.

Do not “leave the money on the table”.

Don’t rent from a person who is offering something too good to be true.

Don’t trust anyone who does not have a legitimate business presence in the area.

Verify the actual ownership of the property you want to rent – the Wood County Auditor is free!

Who sells the most homes?

In and around Toledo?

In 2009? Who wins the gold?  The silver?  The bronze?

These guys do!

Congratulations to all of them!

Top 50 Agents 2009:

Includes MLS sales in Lucas and Wood Counties from 1/1/2009 to 12/31/2010 and excludes non-commission HUD home sales, commercial sales, mobile home sales, and cemetery lot sales. So . . . it’s my take on the top agents.

Which is now a very valid and pertinent question . . . since the town’s biggest builder just recently closed up shop.

And the current level of new construction activity is, oh, about 10% of what it was a few years ago.

Suddenly, getting a nice, neat, clean, modern new(er) house is actually harder . . . but still, if you are transferring into Perrysburg/Northwest Ohio, just as important and vital.

IMO, Perrysburg continues to be the number 1 choice for incoming corporate moves – but whereas in the past I could show such a transferee 10 or 20 new homes from a diverse number of builders – that is simply not possible today.

But – do not despair Mr. and Mrs. Transferee.

We have houses like 780 Little Creek.

Subdivision still open – Forester/Wherle still building and active but only with contract in hand, no more specs/models . . .

Modern, 2 story, center hall design.

Clean.  Livable.  Not beat up.

No glaring design flaws.

Owners have upgraded with a professional build quality finished basement.  They have updated/upgraded the F/W flooring with tile/ceramic/new berber as needed.

They have upgraded the standard level F/W appliances with some new, bright stainless ones.

And, they have even fenced the yard, built a deck, and added a hot tub.

No need to write a building contract and live in a hotel for 5 months . . . this house is ready.

And it is not unique.  There are several similar like it on the market at any given time.

So the move into town from Chicago or Pittsburgh or Dayton, etc. need not be filled with disquiet at the current lack of new builds.

$189,900 as of this date – it is SHARP!

One of my favorite real estate writers posed a similar query in the Wall Street Journal’s excellent real estate blog – Developments.

James Hagerty posed the question: “Will the bank take my iPhone?”

Which is sobering – I have an iPhone.  You can’t have it.  You can’t take it.  It’s addictive and it’s mine . . . and I have a hard time imagining it being surrendered to a creditor.

Which made me do some thinking.

And then some investigation.

Since I deal with many homeowners today who owe the bank MORE than the market value – what can happen to their iPhones?

And their cars?

And their retirement savings?

And their other assets and possessions?

5 or so years ago this was a pointless, absurd question.

It just did not happen in Perrysburg.

Today – it’s a vital, important, timely question.

According to the Fed (specifically the Federal Reserve Bank of Richmond VA) in their monolithic report “Recourse and Residential Mortgage Default:  Theory and Evidence form U.S. States) Ohio is considered a “recourse” state.

That means that lenders may have MORE remedies against a defaulting homeowner than just taking the house back in a foreclosure.

(N.B. – for this entire post, please remember that I am not an attorney and you should and are highly recommended to hire your own attorney to answer your questions!  You need a good, honest attorney . . . call me, and I will recommend one to you)

If I am a defaulting homeowner, I do not like “recourse”.

What is interesting about the lenders right of recourse in our state is that only in Ohio and Iowa does the lender have a very short period to seek recourse – and in Ohio, and thus Perrysburg, it is only for 2 years after the foreclosure.

Y0u can download their 50+ page paper yourself and read the gory details.  The financial equations on page 10 caused me to have a regression attack and revisit my finance classes at Duke University.   I was so shook up by this I had to go out and sell 5 houses today – but that’s another story . . .

2 years.

That is the time frame for recourse that your bank has to get more coins from you.

Lose your house to the bank . . . and they get an automatic deficiency judgment against you.

But they only have 2 years to collect it.

And many banks are taking 12 months to return phone calls right now – so what are the odds they will get your iPhone?

This recourse is usually obviated when a short sale is negotiated – which reinforces my belief that 2010 and 2011 will be the year of the Short Sale in and around Perrysburg.

Because then you will get to keep your iPhone.

A empty shell.

Crabs like them.

But they are terrible for helping homeowners to pay their mortgage.

And if you drive along Alt20 – aka Illinois Ave. in Maumee, you will see a lot of empty shells.

And “FOR LEASE” signs.

And vacant factories, offices, and businesses.

It’s a vivid reminder of what has happened and what has helped residential real estate to collapse in value.

The collateral damage from this one street’s empty and shuttered businesses and factories is felt in every subdivision in Perrysburg.  I know clients that have lost jobs in Crandenbrook and other Perrysburg neighborhoods who used to work on this street.

But now their jobs are gone.

You want reports of the economy getting better?  You want to know when the residential market is better?  You better go for a drive . . .

Especially with regards to “winterizing” your house.

I was showing a house this weekend on Saturday.  A nice house.  A big house.  An expensive house.

And as I was showing it . . . droning on with my comments for the benefit of my client . . . I know that my brain was telling me something:

“There is a noise that does not belong here.”

“There is a strange noise.”

“Heh – Look at your breathe – it is COLD in this house!”

It was, of course, the sound of running water.

Which is not a good thing to hear in what should be an empty, freezing house.

It in fact constitutes an emergancy as far as the value of the property is concerned.

Here is the actual progression of this and other incidents that I have observed:  Cold.  Expanding water in pipes.  Broken pipes.  Water shooting out of pipes.  Water filling every nook and cranny as gravity, absorption, and other physical forces work in a weird combination.  Mold spores liking the new moist environment.  Mold spores reproducing.  Huge areas of porous surfaces destroyed.  Large water and remediation bill arrives.

It’s a terrible thing to see.

It’s a tragedy if it is your house and bank account.

So – when I tell a client “you really should winterize the plumbing” (which involves a licensed professional with a bond and liability insurance draining and blowing out and filling the pipes with antifreeze . . . and then standing behind his work) —– when I tell a client that, you should listen.

Because if you have been in the houses that have not done that, gambled on our winter weather, and lost – if you have seen it go bad – I would not have to tell you even once.

Still . . . you can do it yourself if you are so inclined.   But one way or another – winterize those pipes!

One thing to add is a clear, shoveled driveway and sidewalk.

But that will become less and less important as we hit March and April . . .

AVID Ratings does a big survey every year (LINK).  Here is what the survey said!

1. Large kitchen with an island
2. Energy efficient appliances, insulation, and windows
3. Home office / study
4. Main-floor master suite
5. Outdoor living room
6. Ceiling fans
7. Master suite soaker tubs
8. Stone and brick exteriors
9. Community landscaping, including walking paths & playgrounds
10. Two-car garages

Now – these all sound reasonable.

I would add a few Perrysburg-focused items that will BOOST your homes value:

1. A three car garage (you can’t “add” this, but you can plan it for your next house . . . )
2. Kitchens and Baths – update them!  There is nothing wrong with changing out a 20 year old microwave . . .
3. Do something to bring light into the house – glass front door, Solatubes, skylights.
4. Landscape lighting.
5. A “moderate” finished basement (carpet, black painted ceiling, painted walls, lights).

These features add “zing” and “POW!” to the buyers memory banks when they compare your home to another when it is time to sell it.

They have both a high “return” in that you can enjoy the improvements while you live there and then get some resale value out of them when it’s time to move.

1. The Shadow of Strategic Default

This one I hope does not come true.   It will be bad for everyone in Perrysburg.

But there CAN come a point in a market where the asset is not worth the debt.  When that happens a smart and savvy investor will simply walk away.

Oh – the moral dimension?  The ethics?  It’s wrong?

Well, the biggest foreclosure in America happened this week – a $5 BILLION collection of apartments in New York City.  And the sophisticated, intelligent, MBA-laden owners including Tishman Speyer and Blackrock Capitol – just walked away and turned the keys in.

Think about the possibilties of dozens and then hundreds of normal home owners with underwater mortgages doing the same – especially if the “little guy” in Toledo gets a loan modification (and he doesn’t really “need” it).

This could happen – and the blood will be messy.

2. The Rise of the Rental House.

Every day I am getting calls from people who need help finding rental property.

Or from owners who want to leaser their homes.

Many home owners are considering leasing because they just can’t stomach the price today’s market will pay them.  So leasing becomes a way to ride out this market.

The tax consequences of leasing can be AMAZING (more on this soon!).

3. The Rationalization of Value.

Sellers are now coming to terms with the new values in Perrysburg.

Like the proverbial “Five Stages of Cancer” or grief . . . many are now in the last stage -acceptance.  They will soon come to the point that I have – I can now rationalize the new values and price points.  I accept that the “old market” is not coming back, but that the new, current market is wonderful.  For new owners.  For buyers.  For investors.  Even for many renters.

4. The Reaction of Corporations for their Transferees.

What is a company to do?  You want to move Joe and Sally Manager to XYZ City.  B

But their home is upside down, underwater, and not worth what they paid for it.

Should they leave it behind?

Should they turn it into a rental?

Should they lose all their savings just for a promotion?

No!  Hey!  They can ask the big giant corporation to make them whole, grossing them up after taxes 4 or more times, and reimbursing them for their loss on sale.

This will be more and more common in Perrysburg.

5. The Restrictions of the Reams of Paper.

The new loan and HUD and lending regulations have taken effect.

No changes  – or you start from square one.

A typo?  10 or 20 days in the hopper again.

Lenders will most likely find new ways to “beat” the regulators . . . but that will take time.  So in 2010 get ready for delays.

6. The Fallout of the Bailouts on Property Taxes.

This is something that I hope does NOT happen in Perrysburg.

The bloom is off the rose with bailouts and budgets and Federal help to Ohio.

No more help is coming.

Our leaders at ALL levels should have used the past three years to cut spending.

They didn’t.

Now with huge revenue hits coming they may look to the homeowner for help.

By running a stream of new levies by the homeowners in the 43551 for every little program and big program will have the effect of increasing your tax bill and decreasing your home’s value as fewer and fewer can afford the tab every 6 months.

I really could go on and on about the market stats in Perrysburg.

I love this subject.

True story:  I gave a guy some stats recently.  Real estate business stats.   He HATED them.  Didn’t like what they either said or revealed or the story that they told.   So he got mad at me.  Because of the numbers that exist.

Lesson:  The numbers are the numbers.

Especially with real estate.   They are what they are.

Let the numbers, at least some of them, thus speak:

1. Seasonality is back.  The big upward trend every month – gone.   The big downward trend every month – gone.  So looking at one month vs. another, if not adjusted for the season is not accurate, IMHO.

In December of 2008 there were 413 houses on the market with a median price of $195,000.  29 went pending that month.  27 closed.  And the median price of the pendings was only $175,000.

In December of 2009, 12months later, there were 304 houses on the market with a median price of $201,000.  21 went pending that month.  30 closed.  The median price of the pendings was $239,900.

Conclusions:

#1.  The number of houses on the market substantially declined.   Sellers either got smart (didn’t really need to sell . . . ), rented out, or took off the market.  The median price of the inventory actually INCREASED by 3% to $201,000.

#2.  The median price of homes getting an accepted offer (”HI, we are buyers and we really like you!”)  that number increased from $175k to $239k.  Hmmm.  Many possible reasons – my experience tells me that many sellers who are selling are in fact selling the best houses in the best condition.   The banks?  They are taking back some nice, large listings – which moves this number up too.

#3.  The median price of the houses that sold?  Up 8%.   Amazing.  Values are up!

Well – that’s half the story.   The median price a couple of years ago was over $200k.   Go back 4 years and it was close to $220k.   With the normal dynamics of a small sample size (and that is what the 43551 marketplace really is . . .) and the return of seasonality, and the market deforming effects of the housing bubble and the bank inventory . . . let’s just say that prices are not in free fall anymore.   But let’s be honest and not say that prices went up 8%.

There are fewer houses on the market in Perrysburg, with more serious sellers, in better condition, with fewer buyers competing for them.

The market is back in balance.

(N.B. footnote:  for this report I am using the data from the Toledo MLS, which does not have all real estate activity, for the period 12/1/2008 to 12/31/2009.)

Which is very bittersweet.

It’s the best meeting I go to every year.  I will not miss it.

I will miss NAR.  I will miss RE/MAX’s convention.  I will miss, rarely, StarPower.  I will miss Inman.  But I will not ever miss Cyberstars.

And today the leader and founder and my friend, Alan Hainge, just announced that he has terminal cancer and is retiring – literally walking off the stage at the end of the last day.   Bittersweet.  (He is a positive, always positive guy – and a great leader too . . . )

On the way here, I was able to “check off” the State of New Mexico.

You see, I have a list – a shrinking list – of states that I have NOT been to.

Now it’s 4.  Thanks to a computer.

Because while flying here on an Airbus A320 the great flight crew of the USAir flight I was on had to make an emergency landing in Albuquerque New Mexico as the flight instruments failed.  “Safety First” is their charge I was told – and with the computers failing they had to land.  Rather ironic since I was on my way to a computer meeting.

We waited at the airport for about 3 hours as they fetched a new jet for us – but there was one store open – and some good reading material.

We made it safe.

But this meeting is a reminder that everyone is heading towards a final landing.  It is just a matter of time.  I hope my friend is prepared.