Rocky Mountain Real Estate Grok
Scams Plague Hot Markets
By Emily Esterson , 1-09-07
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Investment scams plague any hot market. And not just scams, but high-interest pay-day lenders and others who thrive on the citizenry's wish to get rich quick. Now Colorado Attorney General John Suthers is hoping to put an end to appraisal fraud and to crack down on mortgage brokers who partake in deceptive trade practices. For the first time, mortgage brokers trading in Colorado must register with the state. The Rocky Mountain News writes that new legislation to address the growing wave of appraisal fraud also prohibits a mortgage broker from "compensating, coercing or intimidating a real estate appraiser in order to obtain an artificially inflated appraisal."The legislation prohibits anyone, including Realtors, other brokers, lenders, or investors from "improperly influencing, or attempting to influence an appraiser and the value of a residence, and prohibits an appraiser from knowingly submitting a false appraisal.
The state of Utah, too, has been battling real estate scams. As one of the remaining places with an inflating real estate market (as opposed to a deflating bubble), director of the Utah Securities Division Wayne Klein warning residents to beware of real estate-based scams. The Deseret News reports three common real estate scams currently active in Utah: Promoters who use credit scores of investors to buy and sell homes; so-called "hard money" lending that is used to finance high-interest home loans; and investment scams in which promoters solicit an investor's home equity to make an investment. Klein says if the offer sounds too good to be true, it probably is.
Speaking of potential scams, residents of the communities of Three Forks, Montana are skeptical about a developer with a long legal paper trail and grand ideas for their quiet piece of the state. A huge development planned for the neighboring community leaves lots of questions While developers all over the Rockies are experimenting with planned, mixed-use projects that combine walkable neighborhoods, amenities, apartments, homes and lots of different sizes, this one is likely the largest in the state according to the Helena Independent Record. The 2,599-lot community of Rolling Glen Ranch, a "Planned Unit Development," or PUD, is spread over 1,724 acres. When completed the project, a town, really, will sport 6,500 residents, roughly the population of White Fish. “We’re creating an old Montana downtown area,” Steve Cavanaugh told the newspaper. Cavanaugh is the mastermind, along with his wife Susan, of the Rolling Glen Ranch. He says there will be a mixture of commercial, such as an old Grand Hotel and bank area, but also sites for a private school, a fire and police station, a library and a post office. There are also plans for a medical facility, an Alzheimer’s care unit, an assisted-living facility and a community designed for those 50 and older. The neighboring community of Three Forks has some concerns about the project, such as who will oversee the build out and maintainence of the community in, say, 30 years. The Cavanaugh's investment so far is only $1.3 million, which for a proposal of this size isn't much.
As for the weekly bubble report, the Denver area housing market continues to slump, according to the Rocky Mountain News. Home sales dropped by $424 million in 2006 from 2005, probably the first time the Denver-area market has ever seen a year-over-year drop in total dollar volume, reports the newspaper. The decrease was caused by two factors: The price of homes rose only modestly, and the number of homes that sold dropped. A total of $14.5 billion in homes were sold by Realtors in the Denver area last year, compared with $14.9 billion in 2005.
On the upside though, the Bitterroot Valley in Montana seems to be keeping the housing slump at bay, according to the Billings Gazette. Of course that depends on who's buying and their price range. The newspaper sites a recently sold ranch listed for $14 million, and notes that "Transactions at the highest end of residential real estate aren't necessarily trend indicators." The median price for a residence under one acre is about $169,500, up from $93,000 in 2000. The article notes that real estate trends tend to take their time getting to Montana, and a slump may yet wait on the horizon for the robust valley market.
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Comments
Lots were sold throughout the Midwest to auto industry workers who were just a few years shy of retirement and were heartedly tired of harsh winters. Unfortunately, the same lots were sold over and over, leading to interesting confrontations as people arrived in town to discover someone else's trailer on their spot in the sun.
Prescott Valley was an interesting town when I got there in the mid-80s -- the mayor was a survivalist who looked like Santa Claus, the high school was so crowded with newcomer kids that was open year-round with staggered "summer" vacations, few streets were paved, most everyone was on well water and septic tanks and the attitude of the electorate was 'I came here to die warm, so don't tax me for anything, especially schools.'
Today, Prescott Valley is a suburb of Prescott, with paved streets, utilities and (gulp) even a WalMart. Probably more liveable, but much less interesting.
The billings paper printed a story that was in the Missoulian that was corrected the next day. Sales according to the Bitterroot Valley MLS are down 25% according to their records.
Thanks, Bill Zader, Broker/ owner Western Montana Realt Group
Thanks for that information on the Bitterroot Valley.
I'm not able to find that correction you wrote about. We'd like to amend the story with the correct information and link to the corrected version, but I've searched and searched. Was the correction in the Missoulian or the Gazette?
And, where could we find the MLS numbers you write about?
Best,
Courtney Lowery
Managing Editor