Milkshake Ending

Our 18 year-old grandson (the handsome one in the middle) and two pals biked through Scott Valley into Trinity Center over the holiday and I had hoped to buy them a burger and shake to celebrate but, like a few other things in this project, it didn't turn out quite as planned.

As noted in an earlier post they had brought most of their personal belongings to carry, thinking I suppose they were moving into a college dorm. There was so much packed onto each bike that we had several near-fatal tip-overs on top of Forest Mountain at launch time. This proved significant for the plan because they made several stops to re-tie their loose loads and were not able to reach Callahan until 8pm the first day.

Truman and I had carefully planned this route and the hope was to get going early and reach the crest of Scott Mountain well before dark because we could not find any campsites in Scott Valley. There was a sort of wide spot in the road at the summit however, that hikers and horsemen apparently use as a jumping-off point for treks. The late start (almost noon) and repeated stops prevented that however and the boys ended up "hoboeing it" across from the USFS station a couple miles east of Callahan.

But they reached the summit shortly after noon the next day and were in the jump-off area where my son Pete caught up with them. He was on a resupply mission with bannanas, cookies, & water because of another unforseen wrinkle; cell phones don't work well in that area. Tru was supposed to check in and we all got a little anxious when he didn't, especially Uncle Pete who takes Truman under his wing.

They were repairing a flat tire and after Pete left they cruised ___ that is too generous, they finagled down the south side of Scott ___ a hair-raising series of U- turning steep grades. I know, we drove back this way, but I'm getting ahead of myself.

At the bottom, where the Trinity River enters the lake, the tire let go completely so they hid the bike in some brush and Isaac who was riding it hitched into Trinity Center behind the other two who rode the 5 miles into town. They spent the day and night there before calling on a pay phone for the pick-up which originally was to be in Weaverville, another 25 miles or so down the lake.

When we arrived they were mucho tired and very tanned. They led us back to the abandoned bike and we parted ways . . . they headed to Weaverville and then to Redding where they turned south for home. We retraced our route and thereby got to appreciate their Scott Mountain experience. Trinity Center by the way was almost shut down. The lake was so low that no boats could launch and the lake is the lifeblood of the community so I couldn't find a burger/milkshake to save my life.

I think it was one of those out-on-your-own experiences that all of us can remember from our pre-adult lives and probably a good thing to do before the seriousness of college. I won't know for probably ten more years, though.

Supply & Demand vs Gas Prices

A very interesting article in the Sunday Chronicle tried to explain why the uptick in oil prices is defying the golden economic rule of supply and demand. The gist of it is that it's all because of people who speculate on oil "futures". According to the story, these investors on Wall Street and other global mercantile exchanges are gambling that the recession is at or near its end and that demand for oil will once again rise.

What confuses me is how these guys affect prices at the pump. So what if they bet on what oil will cost six months from now, what has that got to do with what Chevron charges me today? Do these speculators (think pork bellies) somehow influence what the oil companies do in the day-to-day world? What are "futures" but gambles that something is going to cost more (or less) later down the road. What has that to do with what it really does cost?

But back to supply and demand. A barrel of crude is $61.67 now, up 26% in just the last month alone. Yet the world is awash in oil. Surplus oil stocks in the US alone is at the highest level in 19 years. Worldwide an estimated 100 million barrels are sitting in anchored tanker ships because onshore storage tanks are full to capacity.

When the economy melted down last summer demand for oil plummeted. We continue to drive less and buy less gas yet China's thirst for it seems to be heating up again, which could fuel the price rise. This, and the looming end to the recession is apparently what is fueling the future speculators.

I'm going to write the author David Baker (dbaker@sfchronicle.com) to try and better understand futures. Are these guys buying up supplies ahead of time, making less oil available at a future date, thus driving up the price?

Comments / explanations welcome.

Purchase Offers

Please note, all of this is strictly my opinion. Do not take any of it for legal or tax advice as I am completely unqualified to give that. Nor do I pretend that this is all up-to-date, things have been changing much too fast in this business for any of us to claim to be 100% current.

That said, I have written several purchase offers for property here in Lake Shastina and there is some misunderstanding out there among both buyers and sellers, about the effective and the less-than-effective way that purchase offers are made.

For example it's not always smart to make a verbal offer. Anybody can walk in off the street and say "I'll give him 10,000 bucks for it". Verbal offers, especially without a good faith deposit, are only as good as the paper they are written on, which is to say, not good at all. For one thing, why wouldn't a buyer take the time to write it down? Not that interested? Too ridiculous an offer to take seriously? We were taught to encourage buyers to demonstrate their intent in such a way as to grab the seller's attention __ ie. take the trouble to write down what you want to offer.

All the buyer expends to do this is time. He or she also should accompany the written offer with a deposit check ($500 for a lot, or $1,000 for a home are customary amounts for our area although it could be more for example if the buyer wants to really impress the seller). This deposit is called "good faith" money, meant to demonstrate to all parties that this is not just hot air but serious intent.

The deposit should not be more than 3% of the price however, because if the buyer and seller choose to NOT initial a special section called the liquidated damages clause, the seller is not limited in how much he can sue for in damages if the buyer bails out (if both parties do sign this clause the seller is limited to 3% of the accepted price or the good faith deposit, whichever is LESS. That's why if we represent a buyer we advise to not exceed that percentage no matter how much they want to impress a seller.)

The check is not cashed until the offer is accepted at which point the title company deposits the money into the escrow account for the pending transaction. This deposit applies toward the agreed purchase price and on the purchase agreement the buyer must spell out how much he is putting down and how much they are borrowing. If it will be all cash there is also a box lower down the page that should be checked so that it's clear the offer is not contingent on a loan.

So coming full circle, good offers are written ones. It's fine to ask the seller's agent if he or she thinks their seller would consider such-and-such amount. If they say yes, then you submit it in written form. The default period for acceptance is 3 days by the way but that can be overridden if you think the seller and/or buyer will be hard to reach, don't have a fax or internet, etc.

Next time I'll tackle the buyer's 17 day inspection period unless I hear from a reader wanting to know some other aspect of the buying process___or the selling side, we can cover that, too.

Ten Dollar Lettuce

I've done this before and should know better. We used to live on some acreage outside Mt. Shasta city. We had horses, the predictable lineup of farm animals, and garden areas. During our 33 years of "farming" there I learned why people buy food at stores. We had laying hens for example that produced eggs for something just shy of $5 a dozen. I can't remember the exact dollar figure but it proved to be similar for all the rest of our agricultural production . . . rabbits, pigs, beef, and yes. Lettuce.

We are at it again however, hoping against the odds that reality has somehow changed in the intervening years. Perhaps some things that were actual then weren't really, really true. There may have been some fundamental changes to Einstein's laws that will make garden produce actually affordable now.

We built our garden on the cheap, using scrap lumber and old hardware wherever possible. The only hard expenses were 25 metal stakes at $6.75 each and two rolls of deer netting at $69.95 each. Not counting gas, our time, the water, and various bags of manure & fertilizers I need to reap around $300 worth of radishes, lettuce, and zuchinni to break even.

It is obvious right here that we're never going to make that. But as purist gardeners would counsel at this point, building the garden was the costly part. It will last decades with annual and inexpensive additions of fertilizer, water, and seed.

Not only that of course but the produce will be fresh and infinitely better that what you get in the store. Not to mention the contribution, albeit tiny, that this makes toward improving the environment (less fertilizer to grow the lettuce in Texas, less diesel to haul it here, etc. etc.).

And then there is the emotional payback out little plot gives to us. The weeding. The watering. The thinning. Just knowing it's there is comfort to the soul and the sore back. Maybe my back would ache MORE if I didn't exercise it this way. How's that for a good spin?

Oh, and we get to give away the surplus lettuce et al that is all but certain. Of course we first have to buy more netting to stop the so far invisible creatures who are nibbling away the leaves of our ten dollar heads of lettuce.

Wasted Homes and Brown Lawns

As a real estate broker it makes me uncomfortable to watch homes wasting away when a lender takes it back. When an owner can no longer make the payments and fails to get the lender to modify the loan terms (a common story lately) he gets the move-out notice and the bank takes over. But they don't do anything but shuffle paper . . . no painting, no mowing, no watering. The house begins a slow slide into disrepair.

Now the already-eroded value begins to sink even further because the brown lawn and the peeling paint take away from its curb appeal. Lenders evidently don't seem to understand this. They already have stopped receiving the monthly payment and tossed the owner out so now, with zero coming in you would think they would at least try to maintain what value is left.

But no, the banks continue down this imbicilic road of snatching property and letting it rot. It makes me furious that, for example, a lender would kick out a paying tenant when the owner quits making mortgage payment. Why, for heaven's sake would you kick out somebody who was paying rent to an owner? Wouldn't you, duh, maybe ask the tenant to start sending payments to the bank instead? Like, can't a bank be a landlord now and keep the place alive and breathing?

Remember, these lenders are the same ones we "lent" billions to because they were in trouble. I don't know where that money went but it never landed where it was needed and now it looks like we just bailed out some really, really dumb business people. And I don't think we'll get paid back, either.

Here's what the banks could do instead: can't make your payment this month? No problem, let's refigure your loan. We'd rather add months to the end and reduce the interest rate (longer term even at a lower rate could yield the same return for the bank so they wouldn't lose money on the deal) than take a loss on the house.

But oh no. Seeing at least to the ends of their noses these giants of industry want the quick fix. Get out of this deal at any cost. After all it's taxpayer money, not our's, right?

I'm hoping some reader was in this line of work and will set me straight but I wonder if I will hear from anyone.

CC&R Corner, June 2009

For Rent
by Will Bullington, CC&R Compliance Officer, LSPOA
With a bad housing market and our country in financial chaos, we are seeing a large influx in rentals in our community. Many of these rentals have been “below the surface” but with the price dropping, many people that don’t normally live in an area like Lake Shastina can afford to live here. Since last summer I have been dealing with complaints about rental properties: loud music, parties, garbage blowing all over the neighborhood, too many cars parked all over the lot, and the coup d’ grace was two assaults with deadly weapons.

Home owners that live here want to know, “what are you doing about it?” Most of the problems we and the local police are dealing with are young people that have roommates, sharing the cost of the housing. We are required by the CC&Rs to know that you are renting your property, to whom, and you are required to give the renters a copy of the CC&Rs (even on a disk). The Association has authority to discipline tenants and to evict them. The legal costs of doing this are the responsibility of the owner.

Our sub-division is zoned and designated by the CC&Rs as “single family residential.” This means you are not supposed to rent out a home to two, three, four tenants. That’s what brings us two, three, and then four vehicles and double that when they have friends over. That’s what brings us loud parties like a bad “girls gone wild meets animal house” movie. How bad can it get? How about renters going after golfers with a baseball bat, renters attacking a citizen with a sword, renters bashing a citizen’s face in with a rock, renters coming out after public works employees with a bat, and renters having so many parties, over so long a time, that the entire street came in and signed complaints.

This situation is a nationwide issue. So many homeowners associations are dealing with it that the Supreme Court has ruled in favor of a homeowners association that passed rental restriction rules. They ruled that a homeowners association can restrict how many rentals are allowed, what type, etc. Our current rules need to be enforced and that is just what our Board wants done. The situations described in this article occurred quickly over a very brief period of time. For a long time there was only an occasional problem with a renter, but this was almost always handled informally and quickly. The question of vacation rentals has come up also. This is where someone rents their home out for less than 30 days, usually for a weekend. Sometimes it is just a family and other times it is three or four golfing buddies. Very rare that there is any complaints and it makes a tidy sum of tax dollars for the County though a transient tax. It is interesting that the transient tax purpose is to offset the impact on road repair and emergency services to the community providing it. I guess we’ll have to ask the Board of Supervisors if they want to send some transient tax dollars to Lake Shastina.

The problem is being addressed. The bad guys are in jail, problem tenants are moving out, public works is repairing the roads, and we are enforcing our rules. We let our guard down and learned our lessons.

Bragging Rights

This is our grandson Truman Braslaw, at his senior prom last Saturday. His date is Rachael, his "steady" (do they say that still?), a sophomore at the same high school Truman will graduate from next month in Piedmont, right next to Berkeley in the East Bay.

He is as intelligent as he is handsome and has been accepted by several universities including Cal Poly and UC San Diego. But he has chosen instead to spend a year teaching English in Senegal, Africa. Not the with the Peace Corps but some private organization that sends young people into villages to educate children. Some kid, eh?

Oh, and did I forget to mention that Truman is also charming. He is very family-oriented and was brought up to be polite and thoughtful. Very refreshing these days. When he visits (he drives all the way himself now) he invariably offers to help cook, wash dishes, and of course, drive. He is bringing his sister Quincy now for holidays and she now has her driving permit so of course Grampy has to give her driving lessons (see "Driving Miss Quincy" in the archive).

Here's the best part though; how many 18 year-old kids actually CHOOSE to visit their grandparents on their own?

Truman and two friends are driving up after school this Friday for a Memorial Day bike tour of Highway 3. We're going to drop them at Walmart and pick them up in Weaverville next Tuesday. They will use our bikes and camp out three nights along the way, two of them along the west shore of Trinity Lake.

Sally and I of course are nervous wrecks. That's a distance of at least 1,000 miles and all we have to connect with them is Tru's vague promise to call on his cell phone "every now and then". I wanted to follow in a chase car with spare parts and emergency supplies but that idea did not get very far.

We're going shopping tomorrow after we pick up the bikes from Fifth Season where they are getting the first real tune-up since we bought them. I'm not sure but three 18 year-olds should be able to put away a sizeable breakfast Saturday before we head out so we're thinking three dozen eggs, 5 lbs. bacon, a couple gallons of OJ, and a couple dozen bagels. I don't see how they can possibly carry enough food for three days on the road. Seems like a refrigerated 18 wheeler might be appropriate chase vehicle for this crew.

Truman is by the way a killer at ping pong. He beats me every now and then but I have to be sure he doesn't get too cocky so I'll train with the table folded half up for a couple of weeks before he gets here so's to be able to "whip" him maybe 21-18 after which I'm laid up for days in recovery.

But the point is he's sure to want a go Friday night and with my luck his pals will be good, too. That translates to a midnight bedtime which won't even put a dent into an 18 year-old's energy level at 8 the next morning. It would take several paragraphs to describe what it does to us, however.

So there you have it....bragging rights. I wish our other two children were planning families so we'd have more grandkids like ths one but that's a topic for another article.

Working at Home

Notice how relaxed and suave this home worker appears___fresh cup of coffee, stylish sweater, sleek laptop. The lure of making $200 per hour stuffing envelopes (they always add "up to") has been around forever but the internet has made working at home not only possible but in some cases smarter than commuting to an office.

Take our industry for example. Some agents are beginning to center their work time at home rather than doing "floor time" as we call it at the broker's retail office downtown. There at home, uninterrupted by jangling phones and waves of conversation the home worker can really focus on tasks and handle clients in the ideal one-on-one manner that customers uniformly prefer.

But there is another business advantage to having agents working at home covering a specific geographical area; people usually know their 'hoods and have the connections to get things done. Years living in a certain area provides the knowledge that buyers and sellers need in this confusing world.

So in many markets real estate offices are becoming a central hub staffed by people trained specifically to meet and greet walk-in clients or callers and direct them to either an agent on call who can come in to the office and work with them, or increasingly to the home office of an agent in the neighborhood the client is shopping.

Here the internet comes in again because many buyers have already done the shopping on sites like Realtor.com so when they walk in the door they usually have a list of homes that they would like to see already printed out. In other words they don't just walk in as in "walk in off the street"; they've been in touch with the agent for some time and a meeting has been pre-arranged well in advance.

Sally and I are fortunate to have a broker who appreciates this trend and I feel the quality of our lifestyle has improved because we work at home. Contrary to what you might think (and very unlike the model in the picture) it is NOT kicked back, though. We find ourselves putting in more hours and more odd hours than expected.

You see, we're on call 24/7/365 by choice. Customers call on holidays and in the middle of dinner. People will knock on our door too, without calling ahead. So it's very different than going to an office; you aren't taking work home after work, you're living with it. I always felt like I was duplicating my job, having a desk at the office and a homework place at home. In fact I had two computers mostly for that reason and was always struggling to stay coordinated with the two work places.

But working at home is not for everyone. A 9 to 5 job has its advantages if it's the type of work you can LEAVE at work. Real estate isn't and moreover bringing it home means the home itself is now on display so we find ourselves cleaning up more often than (especially me) one normally would. It's like having to be ready for company all the time.

Tele-commuting I guess is coming. Plenty of industries are looking at it and it certainly deserves a look from our perspective.

The Blank Space on my Desk

What an interesting thing. We live on our PC's not for entertainment, but the internet is our connection with our real estate business world. Without email and the MLS we are out of action.

So the other day my monitor died. After fruitless attempts to revive it I called the local repair stores and narrowed the problem down to the AC converter, that little black device on the power cord between the wall outlet and the monitor which converts 110 volt AC power to 12 volt DC which the monitor runs on. The tech put a volt meter to it an it was delivering about 9-1/2 volts DC, not enough to do the job.

So we ordered a new one which will be here anytime now but the point of this story is how odd it feels to sit at my desk and stare at . . . nothing. It is a reality check to realize how useless computers are without a monitor. And how helpless we are without them. Seems obvious but turn yours off and try to "function".

Of course it's different if you depend on them for a paycheck as we do. We don't do movies, music, or Facebook. It's all nuts and bolts business software and it feels really bizarre to not be able to see it, that is.

But help is due any day. The converter should be in tomorrow. If I don't get the call though I think the withdrawal symptoms will get worse . . .

Some Real Estate Stats for Lake Shastina

As I reported in an earlier post business seems to be picking up for all of us in the real estate business. We are getting calls from other offices to show our listings, we are showing listings from other offices, and yes, we're even writing offers. I am not going to say anything about trends here because I am simply not qualified to speak on that, but the phone is ringing a lot more than it has over the past year.

Here are some numbers to illustrate: our office (Coldwell Banker, Scott Valley Real Estate) sold $2,260,000 worth of homes since January. There are 30 real estate offices in Siskiyou County and that makes us # 2 in dollar volume which totaled $18,944,775 just so far this year.

2004 was the peak, when 558 homes sold county-wide. It has slid downward steadily since then to about half___267 in 2008. Average sold prices though topped out in 2005at $278,171 and are down to an average of $231,764 in 2008.

So, volume is down nearly half but prices not nearly as much. However, this is for the whole county and does not line up 100% with what we are seeing here in Lake Shastina. Here we are watching the inventory of unsold homes slowly sink back to a manageable level. This morning it stands at 81, down from a high last fall of 105. Of course in the 2004-2005 peak years it was around 50 on any given day and that's when buyers were making full-price offers.

So there are still too many homes on the market. This is evident to us through our property managment practice, too. Many sellers get frustrated and move their homes into rental to generate some cash so the 80 figure is not entirely trustworthy. Add to that mistrust the fact that some homes are in default or outright foreclosure.

The point is we get buyers asking for these and unless the bank or the owner also put them on our local multiple listing service, we don't see them. We have noticed an uptick in bargain hunters though, compared with prior years. People who might not otherwise be able to afford a home are making aggressive offers that sometimes fly but it is interesting to note that the effort takes much longer than when the market was more balanced.

The secret seems to be homework___if you are planning to invest, do as much upfront as you can. Get your funding in hand. Research the area you hope to buy in. Explore what is for sale with a licensed Realtor. Ask for sale comps, not just what is for sale because what actually sells is the reality check. All too many sellers fail to realize that little step.

Movie Recommendation

The movie was called "Enron; The Smartest Guys in the Room" and we got it from Netflix. It is a documentary and unravels in sad detail how corporate greed led to (at the time) the largest bankruptcy in history.

It was rated "R" by the way and I thought gee, that's odd for a documentary. And it didn't say why either, like graphic violence, strong language, etc. as I've seen on other films. There was some colorful language in the taped phone calls to be sure but nothing like "Goodfellas". By the end though I think I figured out why Hollywood felt it should be restricted from children without their parents present: the "R" is because it's about corrupt business practices and dirty politics.

You see Enron, like any smart company, had or bought friends in Washington and in all localities where its operations would benefit from governmental help. This extended right into the Bush White House and the film had embarrassing photos and audio clips of a grinning President patting the CEO on the back.

Jeffery Skilling was Bernie Madhoff 18 years ago and built an empire based on the same evil principles. He lied, he cheated, he manipulated his way into the Fortune 500 and most of all he and Kenneth Lay promoted this package as the company's corporate policy.

By the time they were exposed by a whistle-blower the floor traders who essentially ran the company were bragging to each other on recorded phone calls about how they engineered the energy crisis in California. One call urged a power plant supplying the state to find an excuse to shut down for a time to drive up the price of electricity while another cried "burn, baby burn!" when a wildfire forced a power company to reduce the power load on its high voltage lines.

The well-respected accounting firm of Arthur Anderson it turns out had "cooked" Enron's books and successfully fooled Wall Street, the government, and Enron's stockholders that things were better than they really were.

Of course we are jaded now and this tale would not shock anyone. The economic downturn has suggested that greed has become the corporate culture of our world. Hedging, lying, stealing, concealing, bribing____all and more of these practices were exposed in the behavior of the big banks and investment companies. And we still gave them money. "We" being an interesting term now.

As one wag said in so many words, but why should we be surprised? Empires rose and fell because of all of these behaviors. Perhaps, he went on to say, perhaps people are just like that. Maybe it's just a matter of scale and publicity . . . bigger scandals and more press coverage make todays expose's seem more shocking when in fact they may be the routine way of doing business now.

I guess if he's right that we just need to get used to it. Survival of the fittest so to speak. Everybody on their own and may the best win. Darwin in the 21st century. But I'm not ready to go there yet. Surely honest, hard-working politicians and corporate heads outnumber these crooked few.

Don't they?

The Grabber

I have a weak back that gets sore if I'm bent over for any length of time. Which is what is required if you have to double over and pick things up repeatedly. We have lots of pine cones on the lawn and falling in our newly-planted garden and you can twist an ankle or fall if you step on one.

So I plan to carry a pail in one hand and use a grabber with the other so as to minimize the wear and tear. Like the guy in the picture, although I don't plan to wear a badge or funny-looking shorts.

Enter age denial, stage right in wifely form. "It makes you look old" she says.
I am old my darling, I just turned 69 I reply. Besides, it's for my back. Surely you don't want me to hurt my back again, do you?

"Oh don't be silly, how can picking up things hurt your back?" I mumble the last incident which I think put me in traction and she says "But it didn't require surgery, did it?"

Getting back on my feet I said, Look at all that dirt I'm wheelbarrowing into YOUR garden, my little butterfly. That takes a toll on my back too, you know.

"But using THAT THING makes you look like those people in jumpsuits you see along the highway for heaven's sake. Besides, exercise is good for you.

I'm certain that phrase will eventually be on my tombstone. I can't count the number of times when cardiac arrest was just around the corner because I'm being urged forward with those charming words. Sally used to say them to Andrew our aging sheltie too, until the vet told us he had heart disease. Boy, did she feel bad about having dragged him around after that.

So I tried logic, probably not one of my better decisions. I said, Precious, I can gather MORE pine cones in LESS time thereby giving me more time to do chores for you. "Chores?!?" she says. "You. Doing. Chores. For. Me?" She has this way with words.

The only way I "won" this round (ed. note: "winning" is relative in the context of spousal disagreements) is because I was returning about 40 bucks' worth of stuff to the store at the time. Since the grabber was $19.95 I cried See? We just MADE 20 bucks by getting this!