Comerica Bank … Social Security Administrations Sweetheart Thieves

COMERICA BANK LOGO

Ok, so this is just a logo

danger

It should actually look like this

Now maybe I should start at the beginning. You see, when you make the decision to begin receiving your social security benefits, you are given the option of direct deposit, a check or they will deposit you money in a bank and send you a handy debit card. My first mistake was believing that any bank chosen to work with the Social Security Administration must be suspect and potentially rife with under the table payoffs, etc. Kick backs are an essential part of large government contracts. It is not how well you do your job, it is how much largess can you spread around to the people making the decisions.

ralph babb

Ralph Babb

Chairman and Chief Executive Officer

Comerica Bank

(He does look tired, but then, I doubt he sleeps at night)

Every month, the Social Security Administration would deposit my monthly benefit (you know, the money I paid in every year before I was 62). I would use the card for personal expenses and business expenses. It was easy to keep track of where the money was going. I could check the account on-line anytime.

For awhile, these bums had me fooled.

Let’s fast forward to July 4th weekend in 2014.  My wife has a friend that invited us to join them for a camping trip in Assateague, Maryland. I had never been camping and thought it would be a fun thing to do. It was. Had such a relaxing time that when she suggested we do it again the following weekend to celebrate my birthday, I immediately agreed.

Stay with me. On July 10th, I stopped at Rodman’s Discount Gourmet and purchased some Brie for the upcoming weekend. I then went to Ranger Surplus on Hungerford Drive in Rockville, MD and bought a shovel for the camping trip (I had learned that one needs a shovel when camping at the beach). I used my Direct Express (Comerica) card to pay for the purchase. At the Ranger Surplus store, the machine jammed and I was not given a receipt. I then went across the street to the Great Wall Supermarket and bought can of Cafe Dumond coffee for the trip.

So far, so good. I left the Great Wall store and drove home at 1:52.

The next morning, I played a round of golf with friends at Gunpowder Golf Course. My wife came home and we left for the ocean at around 5pm. We got to the Food Lion in Ocean City at around 7:30 pm. I used the card to purchase wood for the campfire at that time.

It was a great weekend.  On Tuesday, around lunch time, I attempted to purchase an app for my iphone. The purchase was denied. I went to the computer and signed into my account. You can not imagine my surprise to learn I had no money left in the account.

It seems that the card (well not the actual card since it was in my wallet throughout this ordeal), had been used at the Walmart in Martinsburg, WV at 4:28 for a purchase of $52.75. I did not drive to Martinsburg, WV. I am not sure I have ever been to Martinsburg, WV. I know I have never been in the Walmart in Martinsburg, WV. According to Google maps, it is about a two hour drive from Rockville. Oh, it gets better. The card was used again at 4:29:46 in the same Walmart for a cash purchase of $50.00. At 4:30:19 it was used again for a purchase of $50.00 in the same Walmart.  At 4:56:15 it was used at Wendy’s #0451 Q2 in Martinsburg, WV for a purchase of $4.84.

I was working during this time in Washington DC. I finished work and stopped at Hungry Howies in Derwood, Md and bought a pizza for $5.30 at 10:30:23 pm.

While I was sleeping, at 00:23:04 (just past midnight) the card was used at a Pilot in Hagerstown, Md for a $20.00 purchase. It was used again at the Pilot at 00:23.25 for another $20.00 purchase ( I think that is 21 seconds later), then it was used again at the Pilot at 00:25:01 for a purchase of $11.63. At 00:27:29 it was used one more time at the Pilot fora cash purchase of $21.19.

My round of golf shows up at 7:51:24 on the 11th in Laurel, Md. We teed off at 9:00 am and finished around 1:00 pm or so. At 10:25:02 the card was used at the Walmart in Martinsburg, WV for a cash purchase of $34.83. At 10:33:43 it was used in the same Walmart for a cash purchase of $50.00. At 5:06:46 (while I was driving to Ocean City) the card was used at a McDonalds #32086 in Martinsburg, WV for a cash purchase of $15.44. At 5:45:02 the card was used in the Walmart in Hagerstown, Md for a cash purchase of $60.72.

Here is the thing that baffles my mind. How could I possibly go from the Walmart in Hagerstown to the Food Lion in Ocean City in less than 2 hours? It is at least a three and one half hour drive according to Google maps.

I called the credit card company and was walked through the process. They sent me a form to fill out to the best of my ability. I filed a police report with the Montgomery County Police Department ( I live in Montgomery County). I was told it was a level one fraud investigation and it would take a bit of time to check out my story.

So today, I receive a letter from Christine B in the Fraud Services Department sharing that “During our investigation we found a conflict in the information provided by you and information resulting from our research. Based on this information, we cannot confirm that fraud occurred. They go on to suggest I report the incident to my local law enforcement (interesting, the police report was with my initial documentation) or contact the merchant directly.

OK………..I call BULL SHIT.

bank buildingTHIS IS A BUILDING THAT HOUSES THIEVES. 

It will not change the world. Those that have read this far may say, damn that’s rough.  No, it is not rough. It has only provided me with a mission. I will harangue congress to kill the deal. I will share the story often. I will delight at every misfortune that falls on any of the the people running this corrupt bank. I will ask friends to keep it mind.

And to paraphrase another that was screwed over by our government.

From where the sun now shines in the sky, I will stay pissed forever.

The “R” logo … a badge of shame?

So I peruse Inman News this morning.  For the uninitiated, Inman News is one of the trade publications covering the real estate industry.  One of their top writers, Matt Carter shared that the NAR has been “cooking the books” to create the illusion that the market is better than it really is.  The NAR (the National Association of Realtors) has always offered information with a overly positive spin.  Real Estate agents have had to overcome questionable advertising done the by the NAR for years.  A case in point, as homes across the country were falling into foreclosure and the facts were revealed regarding bundling and re-selling mortgages, the NAR decided it was a good time to promote home ownership was a good investment. Mr.Carter’s story is just another black eye.

It is important to share, membership in the NAR is not required for an agent to practice real estate. Of course, if you are not a member of the NAR and your local state association, your access to the Multiple Listing Service is restricted and you can not function as a real estate agent.  It is like saying you don’t need a driver’s license to be a cab driver but you can not operate a motor vehicle on public thoroughfares without a driver’s license.

Now we find out that those of us working as real estate agents that have been convinced something about the data provided by the NAR does not jibe with out local markets have been correct.  The market is as bad as we have imagined.  The data provided by the NAR has been a lie.  They are now scrambling to restate (?) the data.

In the interim, that famous “R” logo is losing it’s luster and fast becoming a badge of shame.  Mr. Carter’s article states:

Statistics published by the National Association of Realtors appear to overstate sales of existing home by 15 to 20 percent, mortgage and property data aggregator CoreLogic says in a new report that concludes home sales fell more sharply last year than previously thought.

A NAR spokesman said the Corelogic claim “is premature at best,” and NAR will be making some benchmark revisions to its historic sales data later this year.

NAR’s figures — based on data collected from multiple listing services and large brokerages — show sales of existing homes fell 5 percent in 2010, to 4.9 million. But CoreLogic, which collects public sales records from county recorders and courts, estimates that home sales actually fell 12 percent, to 3.6 million.

The implications are not trivial: a slower rate of sales means that it will take longer to burn through unsold inventory, and a glut of homes for sale in a given market can undermine prices. CoreLogic says the unsold inventory on the market in November represented 16 months of supply, compared to NAR’s estimate of 9.5 months.

Weak sales following the expiration of the federal homebuyer tax credits, an excess supply of unsold homes, and the impact of sales of distressed homes is driving home prices down, CoreLogic said. A national, repeat-sales home price index compiled by the company was down 5.1 percent in November from a year ago.

If that trend continues, national home prices will probably be down 10 percent year-over-year by spring, CoreLogic said.

In its latest forecast, NAR projects that the median existing home price will be down 0.6 percent from a year ago during the first quarter of 2011, but post year-over year gains for the next five consecutive quarters.

CoreLogic says one reason NAR’s existing home sales data may be inflated is because the benchmark multiplier NAR analysts use to adjust for MLSs which they aren’t getting data from hasn’t been calibrated since 2004.

But there’s been consolidation among MLSs since then, CoreLogic noted, and a decline in the number of for-sale-by-owner sales outside the MLS and brokerage process. That means NAR is now capturing a greater percentage of existing home sales and doesn’t need to make so large an adjustment when extrapolating its results.

CoreLogic said that historically it’s only been able to account for 85 to 90 percent of the existing home sales tallied by NAR.

Beginning in 2006, NAR’s sales numbers began to look even more inflated relative to data collected by CoreLogic, the Mortgage Bankers Association, and the U.S. Census Bureau, a trend that has “continued and become more pronounced through 2010,” CoreLogic said in the February edition of its monthly report, “U.S. Housing and Mortgage Trends.”

While NAR numbers show home sales bottomed in 2008 and then rebounded in 2009, CoreLogic data shows no such rebound in 2009.

CoreLogic Senior Economist Sam Khater said the analysis “is less about NAR’s data than a critique of data in general.”

“Anytime you’ve got fundamental changes in the market like that, it’s going to cause market data to go haywire,” Khater said. It’s important to have data from a wide range of sources, Khater said, in order to “see where the truth lies in between them.”

NAR spokesman Walt Molony said that while NAR will be making benchmark revisions later this year to its historic sales data,  “data drift” issues are expected to be “relatively minor.”

“Under the circumstances, the Corelogic claim is premature at best, especially given the process that is currently under way,” Molony said in an e-mail.

The last benchmark revisions of the existing-home sales series was based on 2000 Census data, Molony said, and NAR will soon be rebenchmarking using independent sources. NAR will be consulting with outside housing economists on the methodology to determine if there is any drift in the data, and by how much, he said.

“There’s been a notable increase in nontraditional sales outside MLSs, so a major function in consulting with outside housing economists and government agencies is to determine methodology and obtain consensus on the benchmarking,” Molony said.

He said NAR will also be looking for a new way to rebenchmark existing home sales on a more frequent basis instead of waiting for  Census data to be updated every 10 years. NAR already updates sales rates and months’ supply benchmarks on an annual basis, Molony said.

Molony said the rebenchmarking of existing home sales will result in “no notable changes” to NAR’s previous characterizations of monthly sales changes, and no impact on price data.

Khater said CoreLogic’s public records data captures all sales, whether they involve a mortgage or are all-cash purchases, and regardless of whether a home was listed in an MLS or not.

One drawback with public records data is the lag time before sales are reported and data are collected. Khater said CoreLogic estimated December 2010 existing-home sales in the February report using preliminary data.

There you have it.  Core Logic uses actual data and the NAR uses data from the systems they control…the MLS. If you are interested, have a conversation with any agent about the accuracy of the MLS. All of the data in the MLS is entered by the agents and there is no methodology in place to match it with any facts.

It just could be what was perceived as pessimism on the part of some agents was actually a taste of reality. The market is a long way from recovery.  We know. We work here everyday. We don’t need statistics. We see the results of diminishing returns on our personal income.

So, NAR, forgive me if I don’t endorse you. I pay my dues. I really don’t have a choice in the matter. I only ask that you do not use any of my dues to support your continued skewering the truth.

The convenience truth…

This is all we’ve got … one planet

The other morning I came across an article in the Washington Post regarding the melting glaciers in Peru. It is safe to say that for the majority of my life, I never would have bothered to read the article.  Peru is so far away and the fact that they have glaciers melting would not have triggered any interest on my part.

Fortunately, for me and everyone connected to me, Peru is much closer to home now.  I have spent the last three years of my life in a relationship with a woman that was born and raised in Lima, Peru.  She did not just bring herself into the relationship.  She brought along a culture that is deeply rooted within her.  She brought along her essence, and I became so much richer for the experience.

I was born in Washington, DC and have been a resident of the DC area all of my life.  I went through life believing that I was an American.  Today, I understand that America includes North, South and Central America.  My vision of myself and my country has been altered somewhat.  Today, I understand that those that live in the land of plenty have taken so much for granted that they fail to see the convenience truth.

The first shock to my sensibilities occurred when my woman shared her history with me.  I learned as we shared with each other.  My story regarding the horror of Kent State and the National Guard patrolling the streets of DC at various times were countered with her memories of living under military rule with tanks in the streets and bombs going off on a regular basis.  She shared things that are incomprehensible to most people born and raised here.

People in the United States of America blindly have faith that when they turn on a spigot, water will emerge. It is a given.  It is always there.  We have spigots in the kitchen, the bathrooms, the powder rooms, the laundry rooms and outside of our homes.  Turn the spigot and voila, water flows.  One morning, I was shaving.  I left the hot water running while I shaved.  When finished,  I was confronted ( in a gentle manner ) by my lady and she asked why did I leave the spigot running?  Wouldn’t it make more sense to turn it on and off as needed?  I didn’t bother, it was more convenient to leave the water running. This is a convenience truth … it is easier to waste water than conserve resources. In the aforementioned article, people shared that a 3 hours walk to get water has become a 6 hour journey now that the glaciers are melting at such a rapid pace.

One night, I came upstairs to my office to handle some emails.  I left the television set and lights on in the family room.  I had full intentions of going back down when I finished my work.  My dear lady came in the office and asked if it would be possible for me to turn the t.v. and lights off if I was not using them. I thought about it. Electricity is always there ( barring a storm ).  Flip a switch or press a button and voila … you have power.  Then I realized that leaving electricity on when I was not using it was kind of stupid.  I had left everything on because it was more convenient.  This is a convenience truth … it is easier to use up available energy than it is to conserve natural resources.


We spent one of our early afternoons together going through all the things I brought to the home.  Boxes and boxes of stuff.  Stuff I wanted. Stuff I bought. Stuff I forgot I had. Stuff I had bought twice or more. Stuff.  Together, we decluttered so there would be room for my stuff and her stuff.  When the sorting was done, we hauled what we did not want to the landfill.  She was stunned. For as far as the eye could see there was stuff. There was old stuff, broken stuff, discarded stuff and some almost new stuff.  There was so much discarded stuff it made it impossible to believe that there could be an imbalance of trade or the economy could be bad. Somebody paid for the stuff. Now it was in a landfill. It seemed pretty apparent that consumerism was rampant.  This is a convenience truth …. it is easier to buy new than look around and see if you really need what you are buying.


Left overs are a regular part of our dining experience.  There was a time when I would not think of saving left overs.  I certainly didn’t take “doggy bags” home from eating out.  It seemed to be much easier to just cook something fresh than it was to re-heat last nights dinner left overs.  Left overs were not “fresh”.  I never stopped to think about how much money was being scraped into the garbage. Here is a convenience truth … it is easier to buy a prepared meal than it is to heat up leftovers.


I am a full time Realtor.  She teaches Spanish at a private school and works with me in real estate as time permits.  Her mom and daughter live with us and we expect her college daughter to join us in the spring.  When working, I am used to seeing abandoned homes, trashed homes, empty houses.  Our throw away culture has grown to the point where we actually throw away homes.  To some, these homes are just blights on the landscape.  I look at them and see the incredible architecture, the craftsmanship that went into building the homes.  Where others see rot and decay, I see a framework for a home.  It is more convenient to leave them empty and falling down.  Here is an convenience truth … we would rather allow neighborhoods to decay than take the time and effort to take care of existing buildings.

The Amazon is the lungs of the world.

So where is this going.  The inconvenience truth is rather ugly.  Glaciers are melting.  Greenhouse gases are continuing.  Politicians spend a great deal of time in meetings and committees and blowing hot air.  Rather than do what we can to preserve the earth, we point fingers and attempt to assess blame. It is easier to discuss a problem than it is to take corrective action.  Here is a convenience truth … it is easier to enjoy convenience and be wasteful than it is to conserve our natural resources.

I spent the majority of my life, ignorant to the impact that my lifestyle was having on the world around me. I grew up in the land of plenty.  It took life lessons from someone that grew up in a different place, in a different culture to open my eyes to the convenience truth.  There is only one planet.  The oxygen created by the rain forest in the Amazon is the very air that you breathe.  One of the sources of life for that rain forest are the melting glaciers in Peru.

If we fail to begin to conserve our resources, one day you will turn the spigot and nothing will appear.  If we do not change that rate in which we use our energy resources, one day you will flip the switch and nothing will happen.  If we do not begin to live within our means ( very old saying … buy it new and wear it out, pay with cash or do with out), one day we will find our currency is worthless.  If we do not change our wasteful eating habits, one day there we may go to the cupboard and the cupboard will be bare.  If we fail to maintain the buildings that exist, we may never find a way to provide shelter for everyone.  If we continue on the wasteful path we are following, we may wake up to discover that there is nothing left to waste.

This is for my children, and their children and all the following generations.  I may be a much better person today because Lourdes Tudela welcomed me into her world, but her legacy will be that she opened the eyes of many to a better world.  I only hope that those that read this will look beyond jingoistic rhetoric and understand that for us to truly be a world leader… we have to lead. And that my friends is the convenient truth.

If you swim away from shore, you will never reach dry land.

There is another thought that comes to mind. It is “”Those who cannot remember the past are condemned to repeat it.” – George Santayana .

Somewhere between the two there is hope for tomorrow.  It must be human nature that causes us to react to tragedy by seeking someone to blame and as a group pointing our collective finger at them.  This reaction was brought to light by the tragedy in Arizona.  It certainly was a made for media event. A judge, a congresswoman and a child and others fell victim to a senseless shooting.  Forensic evidence was still being processed when the finger of blame began making it’s way across the political spectrum.  There may be some validity to the charges that our once civil discourse has moved to a rather base area.  It is no secret that de-sensitizing an entire society has repercussions. I am neither judge nor jury, scholar nor academic.

I do believe that there is a connection between “Roe v. Wade” and the reduced value on life that is exhibited in the violent deaths that occur in our inner cities on a regular basis. Of course, that would be the subject of an entirely different discussion.

It is the start of a new year.  Somehow, lots of people think that January 1st is some sort of bench mark.  Society does not pause, nor does it change course at the stroke of midnight on December 31st.  We are fluid. We can change. We do not have to remain shackled by the mistakes of yesterday. We can move on and make tomorrow better.

As famous as the “Moon dance” by Michael Jackson was, most people did not stop to realize he was looking one way and moving in the other.  The brilliance was in his movement, not his choice of direction.  Focus. His focus was on performing and ours was on the performance.  No one stopped him and said “legs are for moving forward”.  People have walked backwards since man stood erect. He just added style.

The same can be said for mortgage lenders, appraisers, real estate agents, investors, buyers and sellers,etc. that were involved in a real estate transaction during the last five years.  People have been doing exactly what they did since the first real estate transaction was recorded.  No one stopped them. No one stepped forward and asked the all important question – what will be the consequences of your behavior.

We have remained frozen in time.  We have continued to, pardon the expression, “beat a dead horse”.  We spend days, weeks, months and now years attempting to analyze what went wrong.  We are not just remembering the past, we refuse to let it go and move on.  We spend so much energy trying to fix blame, we have little energy left for moving past the mistakes.  It would behoove those in the industry to stop dwelling on yesterday, look at where we are today and take action so that tomorrow is better.

Today interest rates are low but qualifications for loans are more stringent.  Rather than bemoan the tightening that has occurred, we should be marketing to those that still qualify. They do exist. Houses are still being sold every day.  The requirements for acceptable “flipping” have changed. Rather than just walk away from the market, investors should be retooling how they buy and sell.  It is a much harder market.  Agents for years have bemoaned the plethora of agents that are licensed.  Today, you have to know what you are doing to survive. Darwinism has reached into our profession. Rather than complain, it might make more sense to be proud that even in the toughest of times, you are still working.

You have every opportunity to become a leader.  You have every chance to reach out to those that need your services.  You have success before you.  Stop dwelling on the past, stop swimming in the wrong direction.  Turn to the light.  Accept today for what if offers and focus on how to make it better.  Historians will handle the past.

7 come 11 …. a roll of the dice, gambling on our weakness

Historically, people have rolled dice betting on the outcome.

I was educated in a parochial school (Saint John the Evangelist in Silver Spring, MD).  That was a long time ago but I still remember some of the lessons I learned at the feet of the good Sisters of the Immaculate Heart of Mary.  I also recall lessons learned daily at recess.  It was a simpler time when television was broadcast over 3 channels in black and white.  I had to pass Heitmueller’s farm each day as I walked to and from school.  The land that would be filled with Wheaton Plaza was still a forest.  The ICC had just been added to the future plans for Montgomery County.  This was almost ten years after WWII had ended and America was involved in the Cold War.

Casting lots

Back to the lesson’s learned.  In our religion class, our teacher covered all of the major events in Christianity.  In the Spring,  my dreams of Mickey Mantle were interrupted by the focus on Passion Week and Easter.  In one of the lessons, it was explained to us that while Christ hung on the cross,  the soldiers in charge of the crucifixion decided the new owner of Christ’s robe by casting lots (a roll of the dice).  Now, in those days, the Romans that carried out the crucifixion were not considered “the good guys”.  Their act of gambling to decide on the new owner of Christ’s last possession was used as an example of why gambling was bad. (I didn’t stop to consider that this flew in the face of the parish weekly bingos or the game of “hooligan” offered at the annual carnival.)  The numbers 7 and 11 were forever burned into my brain.

The attack on Pearl Harbor  1271941

I don’t remember exactly when, but at some point the date December 7, 1941 was burned into my brain.  There wasn’t much shared about the politics of the time.  It is sad to say that the Holocaust wasn’t focused on very much. My memories of the lessons are vague, but the feeling of being attacked by those horrible “Japs” was the emotion that lingered.  If you were to ask any elementary school child about the attack on Pearl Harbor, you would hear the tale of innocent sailors being murdered on quiet Sunday morning.  You would here about “kamikaze” pilots and the ritual of “Hari kari”.  We did learn that the attack had a religious fervor to it. The response, from Roosevelt’s speech to the bombs dropped on Hiroshima and Nagasaki were the main focus of history lessons.  The message was clear.  We were attacked and we responded.  The nation, regardless of political affiliation, came together as one force.

The attack on New York  9112001

Sixty years and a couple of months later,  America was attacked again.  As confusing as world politics are today,  I think I have a good idea why we were targeted.  Oh, there have been claims that we brought the attack on ourselves because of our lifestyle. Some have suggested our involvement in the middle East is to blame.  The turmoil over what may have caused the attack has come later.  I remember best the response, from Bush’s speech to flags waving across the nation.  I remember the anger.  I remember the silence echoing gently from plane-less blue sky’s. Of course, then I remember the “religious” cloak the cowards attempt to use to obfuscate their questionable justification for murder.

Two days, one a seven and one an eleven.

Despots, zealots, terrorists and self-proclaimed mis-guided “saviors” are forever taking chances on destroying our country and changing our way of life.  We are far from a perfect union.  Individually and nationally we do make mistakes.  Those that are intent on our destruction will seize on any apparent error and attempt to paint us in a corner of “evil doers” while they hide in caves or behind closed doors espousing “self righteous’ indignation.  Their constant threat is the price we pay for the right to live as we do.  Their totalitarian myopic view can not tolerate our steadfast support of the ideals in which our nation was founded.  The freedoms we have as stated in the Bill of Rights are an anathema to our enemies.  We visibly agree to disagree on many issues.  Our congress of elected representatives may feature a majority from the right or the left, but they always represent us.

Snake eyes…also know as craps…you lose

I suppose that the future will continue to give birth to those that wish to destroy us.  We may collectively grumble about intrusive searches while boarding planes.  We may challenge the wisdom of our military actions.  We may decry the direction taken by our leaders.  And yes, while we grumble they will continue to gamble.  They will continue to perceive our discourse as weakness without understanding it is the basis of our strength.  The future will hold times when they will “roll the dice” again and again.  I have complete faith that they will continue to watch those proverbial dice tumble to a stop, snake eyes, at the end of each roll.  They will leave the table broke and broken.

After all, this is the United States of America.  This is a country where a boy can learn the hard lessons of losing cherished “flip cards”, wander through life and become a rather thoughtful grown man.  Sure, we have always had dice games and people have always gambled.  When all is said and done, those that gamble lose and any person, group or nation that thinks they are gambling on our weakness will learn they are challenging our greatest strength.  And that my friends is a losing bet, every time it has been made.

Thank you to all those that have served and allowed me the freedom to speak.

Rent to Own? Before you ask …

I get a lot of emails and phone calls from folks that want to know if I can find them a home to rent with an option to purchase.  They have been on the internet, surfing, dreaming and hoping against hope that they can find a home to rent that will also be available for purchase at the end of their lease.

Now, some of them may have tried to purchase a home and found that they did not have the resources.  Maybe they discovered that lenders have a higher bar than the FHA requires.  It can be quite confusing out there for your average consumer.  The FHA says they will guarantee loans for people with a credit score as low as 580, but the lenders say they will not lend money to anyone with a score lower than 620.  I do this for a living and don’t understand how lenders get away with this, but they do.  It is the 21st century’s form of “redlining”.  The folks that are turned away begin seeking other alternatives.

In there search, the come across ads that offer them the opportunity to rent/lease a home and eventually be able to purchase the home.  There are firms that advertise “rent to own” homes using phrases that appeal to those that have been denied a mortgage. They offer their services to buyers who want to:

  • Secure a home
  • Own a home with less than perfect credit
  • Live in it now
  • Want to explore all options in how, when and what type of financing.

It sounds too good to be true.  In my opinion, it is just that, too good to be true.  Rent to own purchases have all the upside and downside of borrowing money from a loan shark. Yes, you may get into a home, but when the terms are realized, you may not be in line for the experience you expected.  If you step back and analyze the potential outcomes, you may rethink your decision.  Most consumers just don’t know or understand.

Rent to Own?  Before you ask, consider these factors.  The owner surely wants to sell.  The owner has not found a buyer willing to pay what the owner wants to receive for the home.  The owner will probably have a price in mind that is a bit higher than market value.  The potential rent to own buyer will most likely accept a higher price because it is the only way they feel they can own a home. A deal will be negotiated that allows for the sales price and the earnest money that will be accumulated in addition to the monthly rent.  By the way, the base monthly rent will probably be higher as well.  The rent to own buyer will accept this fact because, after all, it is a home they are going to own.

The amount of money needed each month will begin to add up.  Let’s just say the home is listed for sale at a price of $300,000.  Homes similar in age, condition and location are selling for $280,000.  The seller points out that as time goes by, the value of the home will increase.  The seller also points out that the sale will be consummated next year and the value of home will probably be greater then. The poor consumer can not buy one of the $280,000 homes, so they accept the sales price.  The seller explains that the rent is only $700 per month higher than comparable rentals, but remember, you aren’t buying one of those and $500 of the rent is going into an escrow account that is your earnest money deposit.  The $6,000 that accumulates over the year will be applied to your down payment or closing costs.

Stop and think.  Do you think the fine print is going to protect you?  What do you think will happen, if at the end of the year the value of the home has plummeted even more?  What do you think will happen if your circumstances change and you can not proceed?  What sort of interest rate do you think you will be charged?  Oh, and what do you think will happen to your $6,000 if you do not actually buy the home?

The ads that indicate you own the home a little bit of the time as you rent are not true.  You do not own one brick until the title is transferred into your name.  Sure, on an emotional level it all sounds to good to be true.  In reality, it is too good to be true.  Anyone that suggests that renting to own will solve any of the following is a buffoon.

  • Your needing time to arrange a shortage of a down payment
  • Your needing time to solve credit issues that are temporarily preventing you from owning a home
  • Your desire to “try-out” the house, schools or neighborhood first without a 30 year commitment.

If you can not qualify to buy now… rent.  Save your money for a down payment.  You should control your options and one of them should never be “option to buy”.  Do not let their tail wag your dog.  Home ownership can be accomplished.  There is no fast track. There are no short cuts.  The past five years should have revealed the fact that those that can not afford will lose what they attempt to buy.  Don’t become yet another casualty left by the side of the road by those that continue to take advantage of the uninformed and under educated consumer.

Rent to own?  Before you ask, make sure you are asking someone that will tell you the truth.


We are John MacArthur and Lourdes Tudela-MacArthur.  We are Realtors working with Frankly Real Estate.   We can be reached at 301-509-5111. You are welcome to visit our website Hot DC Homes

Real Estate is not now and never has been your greatest investment

What ever are they thinking ?

I posted a blog today.  It focused on John Paulson’s message that “now is the time to buy”.  My good friend Lenza poked fun at the industry in a recent blog about catch phrases.  One that is often bandied about is “Real Estate is the best investment you can make”.  People produce charts, graphs and statistics to back up their claim.  They pit real estate against the stock market.  It is all poppy cock.

The people that are urging you to accept the notion that real estate is your greatest investment have a vested interest in your buying into that thought.  They want to finance your purchase, they want to represent you in the purchase, they want you to buy their listing, they want to appraise your purchase, they want to settle your purchase and some of them are looking for your business after your purchase.  For these people, nothing happens until you decide to make a purchase.

They are patiently waiting for you to shake that money tree.

I am a real estate agent.  I don’t make a dime until I represent someone that either makes a purchase or sells a listing.  I do make nominal income with rentals, but I need someone to buy or sell to make a living.  I do not believe for one minute that real estate is your greatest investment. It never has been and it never will be.

The basic value in real estate is shelter.


Shelter is at the bottom rung of Maslow’s Hierarchy

If you look at the chart, the goal is self actualization.  Making money certainly may enable you to take care of the items on the bottom rung.  The government seems to be in charge of the the fourth level.  The third level is a challenge. It requires that you reel in your ego and self interests and learn to get along.  This lesson begins when sharing the sandbox with other children and is constantly being re-learned as you grow old.  The second level involves the ego.  Often, every accomplishment here requires that you return to the prior level and rework your people skills. Once you are able to achieve level two without rocking the boat on level three, you reach level one.

I am here to tell you that level three is the area of your greatest investment.  There is no immediate monetary reward for this level.  This level requires that you put the interest of others before your own. In doing so, you actually are putting yourself in position to grow.

This is not a bible thumping message.

I have lived a full life.  I have bounced back and forth between levels two and three more times than I can remember.  For every person that remembers me fondly, there must be three or four that remember me as a jerk.  I have learned through life experience.  I too chased the American Dream and made several attempts to put the right pieces in place for the picture to be complete.  I have made stupid mistakes and mistakes out of selfishness. I have failed in jobs and relationships.  I spent a lot of my adult life thinking self actualization was a state in which you had it all. I now know, that is not true.  When you have acceptance of your short comings and belief in your strengths, you are in position to be the best you can be.

Your greatest investment is in yourself.  Never accept less than you deserve and never offer more than you can give. Be the person you are. You can strengthen your weaknesses, but never do so at the expense of your strengths.

This is the United States of America.  It is not perfect.  The country has faults.  All countries have faults. The advantage you have in this country is that you have the first two rungs by default!  This is not a “pollyanish” belief. Yes, there are those that choose not to live in the same accommodations that others demand.  Yes, there are those in our society who suffer from one dementia or another.  I stand by my belief that in this country, you have the first two rungs.  You may get style points from your neighbors as you move up in status, but at the core, you have the first two rungs and nothing more.

The third rung is where you become an active part of the equation.  This is when you have to reel in your desire to be the most important person in your world and accept you can only be important if you fulfill the needs of others. As I have moved through personal challenges and work challenges, I have been thwarted by my personal demons.  I had to recognize them and conquer them, one at a time.  It is a work in progress.

The work would never have begun and my journey would have ended fruitless had I not recognized the importance of investing in myself.  There is no dollar figure on progress.  There is no monetary return on the investment.  There is no honor in the mis-steps.  When I have clung to the Waylon Jennings line ” I can’t say I’m proud of all of the things that I’ve done, but I can say I’ve never intentionally hurt anyone”,  I have overlooked that there is a reason that the proverbial road to hell is paved with good intentions.  At the core of such professed innocence is a lazy, self absorbed ego that can not see the needs of others and gently plows through where angels fear to tread.

There are a lot of lessons learned

What in the world does this have to do with real estate?  As I enjoy the twilight of my life, I become a bit frustrated with those that continue to hawk dirt.  I do not enjoy the subtle guilt trips included in messages from the NAR.  I disagree with the agents that continue to extol the virtues of buying a home.  As news of all the things that have gone on in this industry over the last 4 years becomes public, I am ashamed.  I am as guilty as the next one.

Things change

In late 2007, I had just completed another very successful year in real estate.  To quote Casey at the bat, “there was no joy in Mudville”.  My partner at the time cared very little about anything other than the bottom line.  The needs of clients were being set aside in favor of my partner’s thoughts, etc.  Homes were eliminated from review based on the amount of commission being offered.  Money was coming in and being spent quickly.  I quit.  I severed the relationship. I had to face friends and acquaintances admitting that yes, I had chosen that person and I had made a big mistake.

As soon as I began working with my current partner, my life changed. Our focus has always been on what our clients asked us to do for them.  We have enjoyed success personally and professionally. I found the balance between level three and level two.  It is no longer scary to walk that tightrope.  I have allowed myself to trust those holding the safety nets.  I learned that real estate is not now and never has been your greatest investment.

I am humbly as possible reaping the rewards of investing in myself.

I strongly encourage you to do the same.