Today’s pick - Conway’s Red Top - burgers and shakes

A lot of new burger joints have opened in Colorado Springs over the past several years - Five Guys, Smashburger, Red Robin, and Carl’s Jr, not to mention the old standards of Burger King and McDonalds.  But one local burger joint keeps going even with all the new competition.  That restaurant is Conway’s Red Top.  They have huge burgers, so I order a half size because I could never eat a whole one.  There are many other choices on the menu, but a burger and shake is what I order when I go to Conway’s Red Top.  There are 3 locations in Colorado Springs.  My go-to location is on North Carefree just east of Academy.  Fun place to take your out of town visitors for a local tradition.

As a featured blogger for HomesColorado.com, I post about once a month.  Here is the link to my latest offering, a follow-up to my March blog post about reducing principal as a way to increase wealth.  Enjoy.

I first read a Seth Godin book when I bought The Dip.  It helped me understand personal energy and business and how they work together.  Occasionally I see references to his blog, but you know life is busy and I forget to check in and see what new things he has to share.  I now follow him on Twitter so I don’t forget to check in.  Seth likes to share.  He’s very smart about giving and that creates an interest in his books.  I hope he continues to be wildly successful.  Today I ran across a link to his blog again and it was linked to an article on buying a home.  Or as he puts How to Buy a HOUSE.  There is a difference.  We create homes and we live in houses.  Check out Seth’s blog to see what he thinks about it.  What do you think?

I thought I’d take a different approach with the restaurant review this week and tell you about some great places to eat if you head south this year.  I spent a long weekend in Santa Fe and Albuquerque in March and went to a few of our favorite haunts plus a restaurant that was new to us in Albuquerque.

SANTA FE RESTAURANT FAVORITES

First, Santa Fe.  There is no shortage of good restaurants in Santa Fe.  If you like chilis, you will be in heaven.  I always hit overload and then need to eat something without chilis.  The two favorites we ate at on this trip were Cafe Pasqual’s where the Huevos Rancheros makes you lick the bowl and Tomasita’s, situated in an old depot where the Margaritas are top notch and the food is varied and delicious.  The red sauce is spicy and the green sauce is pure chilis.  For a yummy lunch when we are walking around the square, Tia Sophia’s is fun and good.  It gets busy at lunch, so go early.

ALBUQUERQUE RESTAURANT FAVORITES

Now on to Albuquerque.  Our usual favorite is Sadie’s, where the red and green temperatures start at “Not So Hot”.  If you want spicy sauce and to enjoy local atmosphere, this is the place.  We can now buy their salsa in Colorado and it’s what we eat at home.  But the place we tried this time was El Pinto.  We love going through Chimayo, NM on our way back to Colorado and eating at Rancho de Chimayo, but El Pinto is a close second without having to leave Albuquerque.  It is a sprawling hacienda in a lovely setting and the food is great.  Our pitcher of Margarita’s was a great compliment to the meal.  And if you like guacamole, El Pinto’s was very fresh and flavorful.  It didn’t last long with the 4 of us digging in.

So the next time you are traveling through central New Mexico, stop and smell the chilis.  Just telling you about them makes my mouth water and I’m ready for another road trip!

I’ve read articles by The Mortgage Professor, George Mantor, over the past several years, but his articles have taken a very different direction recently.  I believe his research is probably right, that banks pushed products to keep money flowing which benefitted financial intermediaries and the financial intermediaries found a way to skim off a lot of money from credit default swaps as things went very wrong.  The result is that retirement plans have changed for almost everyone, especially those in retirement or getting close to retiring.  Here’s a link to a recent article on George’s blog.  To be honest, his posts depress me and I prefer to be an eternal optimist, but perhaps this is information that someone can use to improve their situation, so here it is for you to read.  Actually, George’s posts segue right into one of my top pet peeves.  Why is it that we don’t provide financial education in US schools?  This is something that I’ve always felt is missing and plan to be involved in during my retirement years.

Financial Education

We make sure kids can read and write and do minimal math, but we don’t train them to understand finance.  They leave high school and fall into the trap of easy credit and not saving and lack an understanding that they are the ones ultimately responsible for their financial well being.  They become buried in debt at too early an age and don’t know how to dig themselves out.  If we had been educating our children on how our markets work and on how to manage money wisely, do you think more mortgage borrowers would have made a different decision about the loan they signed for?  Maybe they would have had a better understanding of what was really going to happen with their loan.

Affordability

When I first became aware of the increasing use of interest only loans being used for home purchases after I became a Realtor in 2003 , it made my skin crawl, because I knew these products were intended to be used for cash flow management by wealthy investors, not mom and pop homeowner.  Builders in states where prices were unaffordable by the masses worked with banks to provide loans that made their homes “affordable”, at least in the short term.  With the dream of homeownership twinkling in their eyes, many people signed up.  We’ve seen the result in places such as California, Florida, Arizona, and Las Vegas.  Is it any coincidence that these are all areas where new construction was a huge part of the economy?  These were communities where warm temperatures and vibrant lifestyles drew new residents.  They are all areas where home values shot up 30-40% a year and where foreclosure rates now top the list year over year.  The high appreciation rates were unsustainable because they were eventually going to run out of buyers who could afford the homes, even with tricky loan products.  But without a basic understanding of how the financial markets work, the average home buyer didn’t have a clue.

The Solution - Supply and Demand

Since I hate to discuss a problem without trying to find a solution, what is the solution?  It’s not going to be easy.  One in four mortgages is underwater in the country.  The good news is that 3 of every 4 is not.  But without jobs and people having a sense of stability, more home value decreases will come.  Hopefully many of the go-go markets have hit bottom or near it so that they can recover.  Supply and demand is real and it is the solution.  With low real estate prices now in places where homes were unaffordable until 2008, people who want to buy, can.  The tax credits that end April 30, 2010 have provided an extra incentive for those sitting on the fence to buy, and they are.  What happened in the housing market had to happen for anything to change.  Over time those who lost their homes to foreclosure will recover as well and be able to buy again, hopefully with a better understanding of what happened so they can avoid it a second time.  We are already seeing people who qualified for a short sale being able to buy again.  We can all hope that this next wave of home appreciation will be more tempered so that we don’t hit a wall again anytime soon.  With 40% of baby boomers selling and moving somewhere else (somewhere warm, like CA, AZ, FL, and Las Vegas?), there will be a lot of big homes available to the next wave of move-up buyers.  Lots of supply, probably not as much demand, so that prices stay steady.  In Colorado Springs, we usually have steady growth with a few hiccups along the way.  We saw prices decrease in 2008-2009, but most homeowners are okay.  Foreclosure and short sale properties are selling and many other sellers are sitting on the fence waiting for things to improve.

The Future

When I look back in 5 years I expect to see that things settled out, prices started to go up slowly once again, and sellers who really want to sell and move will put their homes on the market increasing supply and keeping prices from becoming overheated.  In areas where supply is limited, prices will go up faster, but without loan products that trip them up, buyers will have to save before buying a home and that will keep demand in check.  During the height of the market, 25% of sales nationwide were for second homes and investment properties.  I wouldn’t expect to see that same ratio going forward because investors will have to bring larger down payments to the table.  But investors are part of the solution too.  While they are saving up a down payment, buyers need to live somewhere and if they aren’t living in mom and dad’s house, they’ll be renting and investors who bought real estate during this perfect storm of low prices and low interest rates, will be able to make a profit renting them out.  Rental income may become a cornerstone for some retirees so that they have enough income to retire.  Property managers will manage those properties, make money, hire people to help manage them, hire people to make repairs and improvements, and a new cycle will start.  Whew, what do you know, I get to be an optimist afterall!  Right now things feel dire to many people and we still have a lot of issues with government debt and the elitist, arrogant thinking in Washington, but this is America and when we know what needs to be done, we do it.  If you are financially able to, go out, buy a house or some land, and get the economy moving.  You’ll be the one who benefits down the road.

I just couldn’t wait until next week to tell you about another great Colorado Springs restaurant - The Margarita at Pine Creek.  I love this place!  It is so unique and the food is wonderful.  Visit in the summer months and eat on the lovely outdoor patio.  But the inside has a great ambience as well.  It feels like you are eating at an old hacienda.  One of my clients said it made her feel like she was back in the German countryside.  Margarita at Pine Creek offers a nice multi-course soup and salad lunch along with specials of the day.  The evening menu always changes.  They are closed on Mondays, but have a nice brunch on Sundays.  This is a great place to take out of town guests or to try if you ARE an out of town visitor.  You will want to come back often.  Patti is the owner.  If she is there, tell her I said hi.  Do not confuse this restaurant with Three Margaritas.  We’ll review them at a later date.

I recently included Paravicini’s Italian Bistro located in Old Colorado City in my restaurant posts.  I found out by receiving their enewsletter that they are included in a progressive dinner being sponsored by several very nice restaurants in Old Colorado City on March 23, 2010.  That’s tonight!  If you want to see if there’s still room and get more details, call Paravicini’s at 719 471-8200.  The other restaurants participating are Gertrude’s, Pizzeria Rustica, and Jake and Telly’s.  The only one of the 4 restaurants I haven’t tried yet is Jake and Telly’s, but it is a local favorite.  The food at all 3 of the other restaurants is delicious.  Gertrude’s menu includes some very nice vegetarian dishes for those of you looking for a vegetarian restaurant in the Pikes Peak Region.  What a lovely way to spend an evening!  Attending offers an opportunity to do a little walking around the area.  In case you are not familiar with Old Colorado City, it is one of my favorite haunts in the Pikes Peak Region.  Lots of fun shops, good restaurants, and an amazing view of Pikes Peak.  Territory Days is coming up Memorial weekend and there are always other events throughout the year.  The lights at Christmastime are really beautiful.

I don’t want to repeat blog posts I write on other sites, but I want you to have access to the content.  I am now one of the featured bloggers for our company site, HomesColorado.com.  RE/MAX Properties just launched a new site this winter and the blog is now up and running.  Enjoy the article I’ve written on the effects on equity by accelerating your mortgage!  And watch for my posts on HomesColorado.com about once a month.  You’ll always find a link here.

Should I sell my home now?  Why not wait until things improve?  When are they going to improve?  I don’t want to sell unless I can get a buyer to pay what I put into the house.  Will they do that?  What can I expect to get for my house?  Do I have to pay closing costs for the buyer?

These are all questions Realtors hear daily.  The answer to most of these questions is - It depends.  It depends on when you bought your home.  It depends on whether you have been paying down your mortgage since you purchased your home.  It depends on how much money you have invested in your home on improvements.  It depends on whether you are willing to bring money to closing if you owe more than you can sell for.  It depends on whether you have a hardship that is forcing you to leave your home, in which case you may qualify for a short sale.  It depends on what your goals are when you leave your current home.  Are you leaving town?  Do you want to be a landlord long distance or would rather not?  Have you outgrown your current home and need more space or want a different type of home or a different location?

The fact is that as a buyer of another home, this is a golden opportunity - right now!  Interest rates are staying low for now.  Home prices are staying low for now.  There are plenty of resale homes available for sale.  Builders are anxious to keep their employees and sub-contractors busy during this lull so they are prepared when the market improves and they’d love to build a home for you.  And no one has a crystal ball that tells us exactly what will happen in the future.  The only real information you have to work with is what we know now.

Here are some other things to consider.  If you are thinking of buying a more expensive home, did you know that this is the perfect market for saving money?  Here’s a sample scenario:  Your current home can sell for $200,000, but was worth $220,000 2 years ago, which is a $20,000 difference (10%).  The home you would like to buy sells for $300,000.  Two years ago it would have sold for $330,000, a 10% difference.  By selling (or keeping your current home as a rental) and buying a more expensive home now, you save $10,000 over buying in a “normal” market!  With 5% down payment and a 5% interest rate on a fixed 30 year mortgage, that saves you about $153 a month for principal and interest.  Other savings include lower taxes, possibly lower insurance premiums, and $1500 less down payment required for a 5% down payment.  Currently FHA loans require 3.5% down payment, but that may change to 5% this year.  Down payment requirements can vary.  In this example we’re assuming 5% is required.

If your sights are set on a new house, go to your favorite web calculator and run the numbers yourself.  If you like what you see, give it a shot!  Talk to a Realtor.  We’d love it if you talked to us.

Why am I posting so many times on the same issue - financially distressed homeowners?  Unfortunately, that’s where the market still is and will be for some time to come.  The number of contacts I have had recently pertaining to this issue has put this topic at the top of my mind.  It is important for people who are in fear of losing their homes to know that there are people in the real estate industry they can trust to discuss their situation.

I’ve mentioned in a previous post that many homeowners who are behind in their payments do not talk to anyone before being foreclosed on.  It is embarassing.  They didn’t expect to be in this situation.  They don’t know where to turn.  They don’t want their friends and family to know they are in trouble.  They think they can find a way out on their own.  But homes are being foreclosed on without any attempt to stop the process.  What they need to know is that there are options available.  If they wait until the last minute, it’s almost impossible to save their home from the public trustee’s sale.  One place to start is CDPE.com to find trained Realtors in the homeowner’s city.  Other training is becoming available to Realtors.  NAR now has the SFR (Short Sales and Foreclosure Resource certification).  If you don’t find a CDPE trained Realtor in your city, look for a Realtor with the SFR certification.  These Realtors have taken the time to educate themselves on the short sale process.

But the real reason for my post today is to warn you about scammers that take advantage of homeowners who are in default and who also take advantage of Realtors who don’t know what they are doing when it comes to short sales.  Everytime there is a crisis, creative criminals find ways to take money from well-intended individuals.  In this economy there are short sale scams, loan negotiation scams, you name it.  Here are some questions to ask before starting to work with any self-described short sale company.  I want to thank Brandon Brittingham of Maryland for his post of these tips on BrokerAgentSocial.

1.  Ask if the type of short sale practice they use is legal in your state.  Different states have different requirements.  Check your state laws and local laws or common practices and thoroughly research any company you are considering.  If they say they are short sale experts, what experience do they have to support that?  How many short sales have they closed?  Are they willing to give you legitimate references?  Do they work with reputable real estate brokers, lenders, and title companies who can provide those references?

2.  Are they asking for money upfront?  Some legitimate companies do charge upfront, but it isn’t the norm.  Realtors who are short sale specialists only get paid at closing and their payment is outlined on the HUD1 Settlement Statement.  How is the short sale company you are considering getting paid?  Are they accountable to the seller’s bank, who will be approving a short sale, or to anyone else?  What recourse do you have for getting your money back if they don’t do what they say they will?

3.  Be wary of companies that have no affiliation with a real estate company.  Companies Brandon says he has run across that are running scams or offer no real service are not affiliated with a real estate broker for a reason.  Real estate brokers and agents that are members of NAR are required to abide by the Code of Ethics of the National Association of Realtors.  Any licensed Realtor is required to abide by the laws of the state in which they are licensed.  If you aren’t a licensed real estate broker or agent you don’t have to follow these laws or codes.  So be cautious of companies who are not affiliated with legitimate brokers.  Do your homework to see if they are legitimate companies and provide the services they claim to offer.

Let me add one last caution.  In a short sale, the seller’s bank is agreeing to take less than is owed to allow the homeowner to sell their home.  Therefore, they have to approve the sale.  Some short sale or real estate investment companies do what is referred to as a double close.  An investor buys the property at the first closing and then shortly after (the same day) the investor sells the house to another buyer the seller has never met at a second closing and takes a profit from the transaction.  Do you think there is room for fraud in this type of activity?  Very much so.  If the seller could have gotten a higher price to begin with, don’t you think their bank would like to know that? 

There are people in the marketplace who want to take money out of the deal without putting down any money of their own or getting their own loan for the first closing.  Oftentimes the company you are talking to is the investor.  Please know there are legitimate investors who close and then sell to someone else.  And legitimate real estate investors are a group that will help get us out of the real estate mire we are currently in, but they do things according to the rules.  If the buyer won’t have their own hard money on the table at the first closing, be suspicious and cautious.  This same caution goes to buyers who know there is an intermediary between them and the seller.  Work with a reputable Realtor who can spot suspicious activity and help you avoid it.

As always, if we can help, we are here to do that.