The Bleeding Heart Capitalist

Equity Skimming

I did some snooping around about those "We Buy Houses" signs that are all over the place these days. My intrigue is not with people who buy a house, fix it up, and re-sell it for a profit. I have done that in less expensive markets, as do my associates. My curiosity has more to do with someone who ostensibly has the means to shell out the money to do this in this expensive area, yet is relegated to tacking nasty looking signs to telephone poles to ply their trade. It just seems incongruous that someone with half a million or a million dollars in a cash fund (which is what it takes around here, at minimum) would run around town nailing signs to roadsides.

I have spoken with some of these people, and the ones I have contacted do not appear to have that kind of money. They say they have mortgage contacts. Well, I am a mortgage contact. That makes me skeptical. The term "equity skimming" has come up, which many bring up and say they never do. For people that never do it, they sure know how it works. Here is what they tell me:

• Find a homeowner in dire straights and behind on their mortgage. It could be due to loss of a job, divorce, or age/infirmity.
• Have them deed the house house over in exchange for bringing their mortgage current. This could be a matter of a few payments or a year's arrears. The existing mortgage is not paid off, but the buyer may represent that either it is or that the seller is no longer obligated to it once the house is "sold."
• Rent the house out without paying the mortgage to get the upfront money back.
• Sell the house at a quick dump price and keep the equity the owner would have gotten if they had sold the house legitimately.

These investors do distance themselves from equity skimming, yet I never heard of it, so the consumer probably never heard of it either. So why even bring it up?

Another peculiar thing these people do is crow that they aren't real estate licensees, and the context would have you think that is a good thing. Law in this state presumes that licensees know more than the consumer, and are therefore held to a higher standard of conduct than two private parties engaging in a transaction. Simply put, a licensee has a license to lose; an unlicensed investor doesn't. What's the advantage? Would you rather deal with a licensed plumber or an unlicensed one? What about legal counsel from someone without a license to practice law?

Now, before I give the impression that I am Mother Theresa and that I look down on people who are trying to make a buck, let me assure you that buying an undervalued property is the wet dream of anyone in real estate, including me. I actively look for bargains. There are some established and legitimate firms out there that do this all day. These investors with the roadside signs may well have scruples and may not be the types to swindle little old ladies out of their home of 40 years for a song. However, from what I have seen from many of them, they do a poor job of proving it. Here's what is probably going on: the guy making all the money in this is the the book and tape course guru with the the street corner sign idea. Oh, and the sign makers. They're doing OK too. Caveat vendor.

Typepad Glitches

I have been informed that people are unable to comment and/or track back to my posts. I have attempted to fix this on my preferences to no avail; there is still no comment link on my posts. I have informed Typepad of this, as well as my ever growing frustration with their service, so hopefully it will be resolved shortly.

Update: Fixed!

TTLB Ups and Downs

Note: If the inner workings of blog rankings do not interest you, skip this post. I address this subject because I am a competitive guy by nature and cannot pretend that progressing in something that is essentially meaningless is, well, meaningless.

I have blogged before about the shortcomings of the TTLB ecosystem ranking system that is on my sidebar. It is something that the guy does for free, so I think it is poor form to whine too loudly about how he goes about the thing. That said, it does frustrate me a bit when the rules keep changing. I never knew what the formula was for ranking exactly, but the most recent change seemed to shift the emphasis to incoming links, or other blogs that link to you. That makes sense; if others recommend you, it means something. In theory at least, over time, that would even out any discrepancies in traffic and readership.

Naturally, people over time figure out how to "play the system" with low ranked blogs artificially raising their status by conspiring with others to exchange a ton of links. Consequently, you have people with lower readership than mine with absurdly high ranks via all types of link whoring and alliance joining. That is inevitable; there is no way to prevent it, because if you did, the same people would figure out how to exploit the new rules. It is that simple. You just learn to separate the pretenders from the contenders, as it were. The only real way to prevent people from exploiting the rules of the game is to eliminate the rules. But then you'd have no game.

Still, it is NZ Bear's prerogative to tweak the thing. It's his and he owns it. He revised the system this month, blog rankings got reshuffled, some people got annoyed, and others liked it. Earlier this month, I went from something like a 1700 ranking all the way to number 882 yesterday. I didn't see it as a fluke. On December 7th, I got an email from a really popular blog  (REALLY popular. Top 20.) telling me he liked my material and asking if we could exchange links. I was happy to. I like acknowledgment. Strangely, this blog never appeared on my referring information on my TTLB information page. Today, my ranking and link score both plummeted. I am now back to 1648. I found this curious, and read this on the TTLB site:

Excessive links from a single blog in general: Should a link from a blog with 2,000 links to other blogs be worth exactly the same as a link from a blog with only 200 outbound links? A link is a recommendation; it says, "Go look over here, and you'll find something interesting." So should a recommendation from someone who says everything is interesting be considered as valuable as one from someone who seems to choose their recommendations with more care? I say "no". And so there is now a cutoff point for total number of outbound links a blog can have, after which, each additional link causes the "weighting" of a link from that blog to decrease slightly. As I know this is a controversial measure, I've made the limit very conservative: by my estimates, less than 5% of all blogs will be affected by this limit. So unless you link to more blogs than 95% of the blogosphere, you don't have to worry about this change.

Consequently, all of the bigger blogs that link to my site have disappeared from my detail page today. Again, I appreciate NZ Bear's sincere attempts to make his metric an accurate measurement. But I think he's wrong here, and here's why. If I get linked to by a top 20 or 30 blog that happens to exceed the rather arbitrary number NZ has chosen, that should count a hell of a lot more than a link from a small blog with a modest blogroll that ran into me googling the blue guys. It's just logical. So I think that NZ has thrown out the baby with the bathwater to a degree. If you do a good job and get noticed and linked to by a bigger site, that is a coup, not something that should be discounted. Are there tiny blogs with big blogrolls? Sure, but no system will be perfect, ever. Moreover, a counterproductive outcome is that some of my very favorite sites, A Stitch in Haste, Dave Friedman's Soul of Wit, and the Blue State Conservatives, have withdrawn from the ecosystem entirely.

Frankly I could give a rat's rear if I am ranked 880 or 1650. It really doesn't matter, and is certainly not my reason for writing. I have no ambition to be "discovered" so I can quit my day job. It's just cheaper than calling 1-900-TOPURGE. This is my mental recreation. It's more like a friendly poker game. Last week, my 4 of a kind beat your full house. This week, your full house beat my 4 of a kind. I just don't know what to expect. Believe me, it is just as gratifying to be on KipEsquire's Elite 11 as it is to improve from 1650 to 1575, or 950 to 880 for that matter. I say let's just decide what the rules are once and for all so it can be fun again. Isn't that the point?

Strange But True

Perhaps your town has some signs up on telephone poles and street corners that say "I Buy Houses. 1-800-555-XXXX." We have them all over the place in the counties above NYC. Given that I am a real estate broker who likes to work with investors, I call them. Most are full of bologna; they bought an infomercial real estate investment scam course and have been indoctrinated that brokers are to be avoided. Also, if you have the cash to actually buy a house, what are you doing running all over town defacing the scenery with these stupid signs when you could just take out an ad in the paper? Anyway, some might be for real, so I call. Occasionally, they are receptive. My interest is simple- I sell houses, they want to buy houses.

A week ago, I got a call back from a guy who has been posting these signs. He was eager to find a house he could buy, fix up, and re-sell. I knew of a fixer -upper that was available, so we set up an appointment to see the place, have a cup off coffee and see if we might do business down the road. We looked at the house, went for a slice of pizza, and then chatted out in the parking lot. He was in his 20's, earthy, very big, and personable. He liked the house and we wrote an offer the next day. It was low, so we were taking a gamble that the seller might not be willing to bargain. In the end, I found out today that we were unable to strike a deal. That's baseball. So I called him to let him know we'd have to get back to the drawing board. A woman answered his phone, and the conversation went something like this:

Hello, I was calling for Nick.

Who is this?

This is Phil, I was getting back to him about the house we made the offer on.

<silence>

Hello?

Nick isn't here.

OK, can I leave a message?

<silence>

Um, with whom am I speaking?

This is Nick's mother

Well Hello. Can you tell Nick that the seller won't go below $300,000?

Look, I don't know who you are, but Nick is mentally ill and is going away for a long time. I'd appreciate it if you'd stop bothering him.

Now that was news to me. I apologized to the lady, but assured her that I was a legit person and that her son was looking for property. Frankly, if anyone sounded mentally ill, it wasn't Nick. There was nothing more to do, so we said goodbye. I neglected to tell her that her son has put up signs on the street corners saying he buys houses. If this lady truly was going through the ordeal of a mentally ill son it wouldn't have helped to get debating points on the veracity of my not "bothering" her son. Now, it could be that she's just pissed that her son is doing something she doesn't approve. But maybe he is a nut.

Here's what is a little freaky: I was in my car with this guy in an empty parking lot after dark chatting about real estate. I wouldn't have known if he had a small bottle of ether or something equally lethal. My mind was not on self defense. As we chatted, an old man meandered up to my car and told me the lot entrance was about the be chained and we'd have to go. So my acquaintance got out of my car and got into his. Did that guy save my life or my wallet? It just goes to show that you never really know who it is you are talking to.

I'm Sure Arnold Isn't Losing Any Sleep Over It

The city fathers of Graz, Austria, have expunged former favored son Arnold Schwarzenegger's name from the stadium once named in his honor to protest the execution of Tookie Williams.

The new name is now simply Stadion Graz-Liebenau (a district of Graz), though there were other proposals. One was to name the stadium after the Crips, the gang that Mr. Williams founded, but that idea did not get widespread support.

I should think not. What morons.

On Moving Entire Louisiana Towns Inland

Jere Longman of the NY Times has penned a fascinating article that you should check out. In the wake of the recent natural disasters, the idea has come up to move entire towns in Louisiana to safer and higher ground. Having lived in New Orleans in 1993-94 and having an attachment to the area, I must admit that the thought occurred to me that New Orleans herself would be safer if moved from the the south side of Lake Pontchartrain to its north side. Officials aren't that ambitious, bit they are floating the idea with remote rural settlements.

Cameron Parish, where generations of Cajuns have hunted ducks and pulled up redfish, lost about 400 people to Hurricane Audrey in 1957. Last fall, when Hurricane Rita destroyed thousands of structures and flattened the coastline, some state officials began to question whether life there was still worth the risk.

Now Louisiana planners are proposing an idea that would have been unimaginable here a few months ago: moving an entire string of seaside towns and villages - and the 4,000 longtime residents who live in them - 15 or 20 miles inland to higher and presumably safer ground.

"If we could get 100 percent participation, which admittedly is extraordinarily difficult, if possible at all, we could conceivably take the entire population of Cameron Parish largely out of harm's way for future events," said Drew Sachs, a consultant to the Louisiana Recovery Authority. He has been asked to develop bold suggestions for rebuilding the state's coastal region in the wake of Hurricanes Katrina and Rita.

The idea, of course, is already encountering resistance, particularly among younger residents. The tightly knit group of Cajuns who have lived here in unincorporated villages like Cameron, Johnson Bayou, Holly Beach, Creole and Grand Chenier are fiercely independent and self-sufficient. They have resided for generations on inherited family property in the state's southwest corner, 160 miles to the west of New Orleans, living off the land and giving resonance to Louisiana's nickname as the Sportsman's Paradise.

"My grandfather would roll over in his grave if I sold our land," said Clifton Hebert, 44, operations chief of the parish emergency operations center. "He'd haunt me the rest of my life."

But others admit there may be some wisdom in a move, as painful as it would be. Wanita Harrison, a retired biology and chemistry teacher from Grand Chenier, loves the way the marsh fills with pelicans when a cold front pushes through. Her husband, Lee, relishes the splendid rural isolation and the ability to run off to Houston for a week without bothering to lock the house.

With their ruined belongings now piled along Highway 82, however - the piano is somewhere back in the woods - the Harrisons are actually considering the idea. Mrs. Harrison, in fact, says that if she goes north, it will be beyond Cameron Parish.

"It's a good idea to consider moving inland," said Mrs. Harrison, 70. "I love my area, but we have to face reality."

Given modern technology, human beings no longer need to live on the banks of a river. I'm glad that some have embraced the idea, but 100% participation is a lost cause. An ounce of prevention is worth a pound of cure; if you rebuild the area, you are guaranteeing that you'll have to incur a massive cost again down the road. If you relocate the towns, the odds are that you incur that cost only once. It's a free country, and they cannot compel the stragglers to move if this idea takes hold. To those who remain, I would wish them luck, but also make it clear that the rest of the country will not pay for future disaster relief.

NY Times: Pollution Slows Global Warming

Don't tell Al Gore, but pollution may actually inhibit global warming, according to a new study.

Pollution may be slowing global warming, researchers are reporting today, and a cleaner environment may soon speed it up.

Writing in the journal Nature, an international scientific team provides evidence suggesting that a reduction in haze from human causes may accelerate warming of the earth's atmosphere. The researchers said pollutants had held down the rate of global warming by absorbing and scattering sunlight.

"If people clean up the air, more warming will come blazing through," Jim Coakley, a professor of atmospheric sciences at Oregon State University in Corvallis, said yesterday in a telephone interview. Nature selected Dr. Coakley to write a commentary on the study.

It isn't that cut and dried, but that may say more about the convoluted science around the issue than anything else. Draw your own conclusions.

More thoughts at Life, Liberty & the Pursuit of...

'Twas a Good Christmas

How could it not be? We had personal appearances from two reindeer.

Two Funny Items

From KipEsquire's A Stitch in Haste:

The simple truth is that the reason there are so many "starving artists" is because most artists suck.

Kip has a bigger point, but the line struck the soft tissue in my sense of humor.

Also, Wizbang had a name the caption contest for the picture below that was particularly good this week. Check it out.

My favorite: When asked, Santa said the trial separation with Mrs. Claus was going swimmingly.

Wake Me Up From This Nightmare

French Guard I'm French! Why do think I have this outrageous
accent, you silly king-a?!

What Monty Python Character are you?
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