If you think that the TARP Funds are not going to affect you, think again!

And while you’re at it start measuring the distance from your driveway to I-15 or State Street or Highway 89. So far Utah ranks second in the nation for earmarked TARP funds and you will see the symptoms of UDOT spending if you haven’t noticed already. Road projects are going to be erupting in Provo, Orem, American Fork, Highland, Lehi, Springville, Spanish Fork, Cedar Hills, Saratoga Springs, and many of the unincorporated areas of Utah County this year and next. So, “I don’t live next to a state road,” you say. So you won’t be affected any more than a little inconvenience in your usual driving or shopping routine. Well, your immunity from the effects of road projects is over now in case you hadn’t noticed before.

Federal money for road and infrastructure projects is funneled through the state and then to local communities. Those governments have the power exercise “eminent domain” in order to obtain property needed for projects that change the use of land for the benefit of the public. We are not questioning the public needs or the integrity of the various levels of government in this blog. Also the “taking” of property is not always the most troublesome aspect of road projects. The point is to know what questions to ask yourself about the real estate that you own or use (lease, share, etc.).

The TARP funds will be used for road and other projects, but we will only address roads because they are all above ground and visible. You can see the distance from your driveway to the nearest government controlled road (city street, county road, state highway, interstate freeway, etc.). The one nearest to your home may not be under construction, nor the one intersecting it, but is there a planned repair or upgrade to the road a half mile away or farther that will:

• Add one or more lanes?
• Add curb, gutter and/or sidewalk?
• Increase the traffic speed?
• Create a thoroughfare?
• Include a storm water detention basin?
• Remove part or all of the property next to yours?
• Encourage use by commercial vehicles
• Change a railroad crossing gate?
• Prompt a zone change or master plan amendment?
• Require a detour or closure for extended time?
• Expand or move utility easements?
• Change the size, depth or route of underground utility lines?
• Necessitate a semi four?
• Involve a median?
• Realign or close an intersection?
• Become a bridge?
• Vacate control from state to city?
• Result in a dead end near you?

The value of your real estate could go up or down over night as a result of any of the above factors or others. The use you enjoy now may be improved or terminated. Your retirement plans may be altered – dashed for loss of value or accelerated with a windfall settlement. Your lifestyle may take a drastic turn. It is not a question of who or what may do this to you, but how will you plan to react or take advantage of it.

In Orem, for example, the I-15 Core project includes a new Single Point Urban Interchange (SPUI) to replace the current arrangement of exits and entrances to the freeway. The engineering for this isn’t confined to the right of way boundaries to I-15. A few other related concerns will require the acquisition and demolition of several homes and commercial properties on the east side of I-15 at Center Street (Exit 271). For safety sake, the current intersection and light at 1200 West (the frontage road, in effect) on that east side of the freeway will be moved eastward – uphill and will be realigned at a higher elevation. That will get north bound on ramp traffic approaching the ramp at a greater speed and create the need for a more gradual slope and a longer acceleration lane to approach the on ramp which, in turn, will require a greater radius (not such a sharp turn) to get onto the ramp.

All of these changes trigger others. The change in grade and radius of the acceleration lane takes out the front part of a convenience store and gas station plus it leaves the remaining store (without the gas pumps) in a low spot below the shoulder of the road – not a preferable position for any retailer looking for exposure. Worst of all, the access to the store – if it can survive as some sort of a store – will be only from the rear or side, diminishing the convenience of the “convenience store”. As this major intersection on Center Street in Orem becomes busier, as this project is designed to facilitate, traffic on the uphill (east) side and in the north bound and south bound lanes will back up farther from the light as they wait for the green signal. That back up will extend away from the intersection so far that other private driveways will be blocked form any exit or entrance until a break in traffic occurs. This back up of vehicles will end up in front of residential owners, commercial owners, commercial renters, commercial customers, two large office buildings, a freight terminal and several professional offices. As if people could hope to make left turns across that kind of traffic build up, the engineers are contemplating the installation of a median strip to prevent any left turns even when the traffic does have a lull.

Now we ask ourselves, “what is the fair market value on the day before the announcement is made that this is going to happen?” “What is the fair market value on the day after?” Yes, there is obviously a difference, but there is no such “announcement” per se because these projects, whether in Orem, Salt Lake City, Heber or Timbuktu, are leaked, rumored, promoted, squelched and debated for months or years before anything is made official. How is the fair market value doing in the interim? Consider these questions with a professional real estate advisor, attorney, and or tax consultant. It is exciting to anticipate such changes if you understand the opportunities and not just the threats of change.

There will be new road projects in American Fork, Pleasant Grove, Highland, Alpine, Vineyard, Saratoga Springs, Lehi, Bluffdale, Provo, Springville, Spanish Fork and most other cities along the Wasatch Front. The “Front Runner” or commuter rail Project will have varied impacts on communities and individual residents and property owners all along its path from Brigham City to Payson. The effects will only be bad if you are not planning for it with understanding of how to take advantage of such progressing waves of development. There are also maneuvers that you can take to defend yourself against undesirable consequences of Utah’s far reaching transportation plans. I hope that I or some other professional can calmly help you plan for the ripples of the TARP Fund Tsunami. They will be closer than you think.

You may be looking for an agent to help you with your quest to find a home or investment. You may wish you had one to help with the sale of your property or merely to answer some questions about the market in general. You may pick an agent from your town or neighborhood, be it Provo, Orem, Alpine or Salt Lake City and be frustrated if they are busy or skeptical of they are not. This dilemma raises some serious questions that may seem unrelated to your particular need.

Is the agent too busy for me and my needs? Is the agent not busy because of too little experience to stay busy? In this current real estate market and in the wake of bad news and sweeping reform proposals it is easy to hear the words, “the market is slow” or, “real estate is down” and assume that if an agent is not busy, the market is to blame. Do you prefer that agent who has plenty of time for your needs?

If you see where I am going with this, let your questions simmer as we consider these statistics as of a few minutes ago. They are derived from the Wasatch Front Regional Multiple Listing Service. It is the largest data base of local properties that are represented by REALTORS who are members of local boards of realtors who participate in the MLS service. This MLS includes all property types: residential, du/tri/fourplex, apartment buildings, land, commercial and farm/ranch properties. It includes properties from Nephi to Provo, Orem to Sandy, Tooele to Heber, Bountiful to Logan and beyond. There are 31,619 active property listings in that Wasatch Front Regional data base and 11,211 member agents representing those properties. The average of 2.82 properties listed per agent as of a few minutes ago is a fluctuating number, but it does give a good basis for what you might call “busy”. The MLS also indicates that since May 1, this year 3,653 of those properties have sold bringing the average of effective agents down to .65 transactions per agent (assuming that each transaction involved two agents). I use the recent month and a half to bring the number within reasonable measurability. Before that the numbers were even lower and now the news headlines (if you believe them)say we are within view of the end of the dismal tunnel. The market should be good or relatively better giving the “not so busy” agents the benefit of the doubt.

There are a few agents like myself who are very busy with listings numbering 10 times the average or more and transactions also at 10 or more times the average. We must be busier than the average in order to stay abreast of the market, the trends, the reforms and the needs of people like you. We are not too busy, just busy. We like to be busy. We are not the part-time or spare-time agents. We are the full time agents – the agents that are getting things done for their clients. Do we want to be busier? Of course! Especially with your business. And, in my case, I even want to be busy with your questions. I owe it to you to offer whatever expertise I have available.

The answer without any dilemma is, “Get the busy agent to help you.” What is the question?

There are as many formulas (perhaps formulae if your town is too big) for answering that question as there are citizens in your town. It is that question’s implications that prompt change and resistance to change, urge moving out and moving in, and elect new political candidates along with their attendant appointees and staff. I will take the liberty to suggest Orem City, Utah as a model for discussion and I will recommend as the criteria the front counter of the Community Development Department.

This department in many cities can include Planning, Zoning, Building, Engineering, Ordinance Enforcement, Public Works and other phases of government that deal with the physical aspects and growth of the municipality. Question: Does the number of hats that the Community Development Director wears indicate the relative size of a town? Orem City has many specialized departments that operate under or with Community Development, each having a department head and appropriate staff who understand their special facet of administration. Does the number of specialized departments reflect the size of a town and does that number translate into your determination of the town being too big or too small? If the specialization and departmentalization goes so far that people at the front counter of each department can’t speak about the jurisdiction or issues of any of the others does that indicate that the town is getting too large?

If you like specialization for the sake of encouraging extraordinary expertise in each person at their respective front counter you may think that no town is too large…until the department reaches that point of saturation when staffing also includes those notorious ones who leap to the front counter with great zeal to be helpful in exercising their authority that is limited to the answer, “No” for all development questions. The town may be too large also if the front counter personnel become so specialized that their expertise can only be applied to a narrow field of citizenry. This can squeeze their career down to routine and squelch personality along with politeness, sincerity and helpfulness. Orem City isn’t that big.

What can make a town seem too small? If the front counter person represents several departments and has the authority (or hats) of each, enabling them to make determinations affecting multiple facets of the city’s development, their expertise may only include qualifications in one field of application. Front counter decisions may be dubious or insufficient for your particular need or issue. While their authority may allow them to say, “Yes,” to your request, their lack of knowledge may be as good as a “No.” Orem City is not that small.

While you are thinking about these ideas, think about your town or towns where your experience at the front counter of the Planning Department or Zoning, Building, Engineering or whatever aggregate of departments they may have. Is your town too small or too large or just right? Send me a response with your opinion and the name of your town. This will be a fascinating survey.

Maybe that’s the motto of the yard sale aficionado, but when it comes to home buying it doesn’t apply in the same way. Often the converse is true, that one man’s treasure is just trash to the next person. Sometimes a man’s treasures are a woman’s nightmare and visa versa. Let’s take a brief look at treasures then we can wade through the trash for a moment.

Most of us are proud of the extras that we have installed on our car, our boat, bicycle or computer and that pride really gets puffed up when it comes to the extras and customizations on our home. Has it ever occurred to you that most people don’t have the same favorites in color, architectural style, or décor? You can probably admit that, but can you admit also that a buyer for your home in Orem is not in the same psychological or emotional condition today that you were in on the day when you decided to build in that lavish desk in the third bedroom? When describing the sophisticated wiring that you installed yourself, the state-of-the-art heating and cooling system that your NASA engineer friend helped you set up, or the hand made glass chandelier glass that you got from France. Do you find your agent’s eyes wandering around the room or the buyer’s face contort as she restrains a yawn? Not only can items like these non-plus the majority of buyers, they can become liabilities without your being aware of it.

Removal of the solid teakwood desk built in with matching shelving may be just the thing that takes the price down in the mind of buyers who need that as a bedroom. Your enthusiasm about it could also represent to a buyer or agent that a large part of your perception of value in your home is wrapped up in the beautiful desk and that the rest of the house is of common value. That is interpreted as an opportunity for a buyer to make a lower offer and specifically exclude the desk as a gift back to you.

Touting technical systems as amenities or value added items will usually be lost on half of the audience, the half who are more right brain oriented. Will they simply discount the feature as unnecessary or over built or will they deem it as very complicated, not user friendly and prone to break down? (More on left brain v right brain communications in future blogs.) Suffice it to say that without knowing the mind of that person on the opposite side of the table, you are not merely guessing, but undermining your own asset.

If you are limping with bullet holes in your feet contact me for a discussion on negotiation, marketing, value perception, etc. or just stay tuned into this blog of The Masters Group. Coming up we will wade through the trash. Whose trash? Yours and your neighbor’s.

If you hear the news and only manage to remember the totals and averages, the harm to your investment and asset management may be devastating. This statement of mine is about as helpful as the news that grabs your attention. Big numbers and sensational headlines always get audience attention and sell ad space, but if you are alert for the purpose of buying real estate at a good deal (like taking advantage of a short sale, auction, or some other form of distressed property transaction) you must at least define your objective and the length of time of your anticipated ownership (your holding period). Many will simply conclude that, “the short sale price is fantastic and I’m just going to live there until I…” graduate, get transferred, get married, need to expand, retire?

If all things are equal in comparing two short sale “deals”, i.e. the size, age, quality, floor plan, builder, colors, etc. and they both have the same “location, location, location” factor, they are still not equal. There are other inconspicuous factors that will undermine the value of one more than the other and it could easily happen before your “I’ll live there until I …” date.

For example, in the community of Eagle Mountain, Utah there are a number of notices of default that forecast the impending short sales that may likely come onto the market in addition to the ones that are already being offered for sale. Those notices are for homes in nearby neighborhoods of homes in similar plats (subdivisions) built by comparable builders if not the same builder, of the same quality and even the same or very similar floor plan. They are available for the same price range and may even have been financed by the same institution. The difference is that one neighborhood has more of these distressed properties that the other or will have when the newly noticed properties come onto the market. If The Chatterfield Downs neighborhood has a higher concentration of the distressed properties than The Sheffield Meadows which neighborhood will have a greater erosion of market value now?

After the market settles down and all the distressed properties have been purchased and new occupants have settled in are all the problems over? Who are those new occupants if they were those who could afford the discounted price? They are either investors or buyers who could not afford a higher price probably. The investors will have since rented the property and the buyers who got in because the property was available at maybe a 1/3 less than the homes were originally marketed for will generally be living like people who can only afford homes that would normally be found in a neighborhood of less expensive homes. So you see more unpainted fences, poorly manicured yards, disabled cars or unfinished do-it- yourself projects in a neighborhood of $240,000 homes or one of $160,000 homes? There is a principal of conformity that is applied in appraisals that considers the general condition of the homes in a neighborhood.

Will you be flocking with the rest of the birds upon news of “good pickins” in towns like Eagle Mountain or Lehi, Utah or do you think you may reconsider quiet markets like Orem or Provo, Utah where the short sale properties are less concentrated. In Eagle Mountain (the Notices of Default in 2008 represented approximately 5.3% of the total homes, as calculated by Newreach, but the concentration in the neighborhoods around Clubhouse Lane, Jefferson Dr, Pinehurst Dr, Franklin Dr, Appaloosa and Mt Airey Dr was 33 notices of default since January of this year (Utah County records) while the nearby and similar area around Lewis, Ute Dr, Clark, Rose St, Golden Eagle Rd, Chilton, Dillons Dr, and Smith Ranch Rd saw 19 new notices. Could you draw any hunches about the future values between these two areas? Let’s look at Orem. The notices of default as shown by the same source was approximately 1.5 % of the total homes and the greatest concentration since January 2009 was in the northeast area of 500 North to 1600 North and 500 East to 1600 East: only 11 homes.

Statistics like these will not be broadcast like the other numbers that are so sensational, but now you know another perspective to consider. I invite your comments and arguments. Those too will have some effect on real estate in your area if not others. Please respond to this blog.