November 2009 Archives

Anyone who’s been through some sort of big deal in their life is familiar with the annoyance that comes from dozens of family, friends, and other people asking for the latest on whatever it is you’re going through. I’m sure anyone who’s been divorced, had a loved one in the hospital, going through divorce, had a family member or close friend be involved in a big court battle, etc. knows what I’m talking about.

Our family has been going through a frustrating situation, but I haven’t really talked about it much, but those who do know about it have been calling me, e-mailing me, etc. to get frequent updates on the status, so I’m blogging about it so I can just say, “Go look at the blog.”

For the last year or so, Christine and I have been thinking about buying a larger house. We bought our most recent house in 2003 when the housing market was experiencing a low period. The house was a HUD repossession and had been trashed — or never taken care of — by the previous owner. We recarpeted, repainted, and repaired damage throughout. Over the years we finished a couple of bedrooms and an office in the basement and put in a yard with a watering system.

That house has served us well, but Christine and I had been looking at some of the houses in the newer developments near our house and wondering if we should upgrade. In fact, we made an offer on a home last year which was accepted. After the offer was accepted, we got cold feet and withdrew the offer because we realized we just were not prepared to commit to short sale moving into a newer, larger house yet. We hadn’t done anything to sell our house so we’d have to pay two house payments until our prior home was sold and who knew how long that would take.

After backing out of that, we finished our family room in the basement and made other minor improvements to the house. We still weren’t complete sure we wanted to sell the house because the family room was a nice addition and gave us a lot more breathing room.

Come Summer, we started seeing a larger home as a wise investment decision. Many of the larger homes near us were being listed at steep discounts by owners that simply could not afford them anymore. We began looking around at what was available and walked through many homes. Christine saw a nice house that caught her eye listed, but when we talked to our agent about it, it had been pulled off the market. Our agent said it hadn’t been sold so it might be relisted. Christine kept an eye out.

Finally, a couple of weeks later, Christine found the house again. It had been relisted a couple of days before. We talked to our agent, got a showing, and decided to make an offer on the house. Our offer was accepted. That was in August.

During the time we were looking at homes and making the offer on the nice house, we put our house up for sale. We had an offer in about three weeks and a closing scheduled for late September.

The closing for the house we were buying was scheduled for mid-October. Christine and I had a vacation scheduled at that time and had it moved to the 22nd of October. As the date approached, the messages we were getting from the selling agent was that they weren’t ready to close.

A little background: As we dealt with the selling agent, the house really started sounding like a short sale because there was talk about them having to get banks to sign off on the sale. But, they never represented the sale as being a short sale. If it was, there would have been additional paperwork, specifically a short sale addendum, involved in the contract.

Well, as 22 October approached, the selling agent indicated they would not be able to close. He blamed it on the bank (or banks). We had arranged to rent our older home from the new owners for the month of October so that we would have a place to live until we closed on the new house. If we didn’t close on the newer home, we’d have to make new living arrangements because we had to be out of our previous home by the end of October.

Nothing happened on 22 October. We gave them a few more days to surprise us with a closing and then proceeded to move everything into storage units. One of Christine’s coworkers said his in-laws would let us live in their basement while we waited for things to come together. We were hoping it wouldn’t come to that, but in the end it did.

We’ve been living in a basement, out of suitcases, since 31 October. We extended the closing until 13 November, but as of today, the selling agent has said they will not be able to close then.

The good news, if there is any, is that the selling agent said today they have written approval on at least one of the banks involved in the selling (apparently there’s stuff between a first and second mortgage that has to be resolved).

So, we’re extending one more time, to 25 November. The selling agent expressed confidence to our agent we’ll be able to close before Thanksgiving.

Our theory is this: The sellers we’re dealing with is a third party to a short sale. They’re working directly with the bank to buy the house in a short sale at a price lower than what we’re offering. As a result, when the sale is completed, they’ll make a few thousand (or a few tens of thousands) in profit. So, technically, we’re not involved in a short sale, but the people we’re buying the house from are.

Should this be legal? Maybe, but I think they should be required to provide full disclosure. It’s a little unethical to paint the sale as not being a short sale when in fact it is. Short sales are historically difficult because the banks involved generally take a long time to move.

We’re very grateful to the Hancocks (the older couple whose basement we’re living in) for their benevolence and hospitality. We’d be in a much worse mess if we didn’t have their basement to call a temporary home.

We’ve been looking at other houses on the market, but nothing really compares to the house we’re set to buy.

We’ve considering renting an apartment in the interim so that we’re not taking too much advantage of the generosity of our hosts upstairs. If this looks like it will go beyond November, we may do exactly that.

In the meantime, we’re crossing our fingers (once again) for a closing sometime before 25 November.

Superfreakonomics is the new sequel to the best-selling book Freakonomics by Steven D. Leavitt and Stephen J. Dubner.

This book roughly follows the same formula its predescessor established, although the original book seems rough and a bit disorganized compared to Superfreakonomics, which flows smooth and is even easier to read.

The pattern, of course, is to start each chapter with a shocking or strange statement that, at first glance, appears to make no sense. The rest of the chapter leads up to a point where that statement makes perfect sense once you’ve been exposed to the underlying statistical data the authors enthusiastically present. Each chapter contains an assortment of short stories about related events or historical analysis for perspective on each of the studies discussed.

The most memorable parts of the original Freakonomics, for me, were the chapters on Chicago drug dealers and the chapter that suggested that the falling urban crime rates in urban areas like New York City, Philadelphia, and Chicago during the 1990s was due less to bureaucrat policies and more to do with the fact that the landmark Roe v. Wade case had occurred roughly 20 years earlier, thereby allowing legalized abortion. This allegedly decreased the number of children born into poor, single-parent homes that would have basically been bred into a life of crime. The conclusion was that crime rates fell in these urban areas because the would-be criminals were never born.

If you read the first book, you’ll remember the stories and conclusions about inner city gangs and drug dealers. The researchers had to employ some unorthodox methods of data collection because of the closed nature of gang society. THat is, members of inner citty gangs are not going to welcome some college professor into their inner circle with open arms. Even if they did speak to a stereotypical economics researcher, it’s unlikely they would provide entirely truthful or reliable data to the researchers. As a result, these studies required much more effort on the part of the researchers to blend in and become a trusted individual. It was, essentially, an undercover operation that revealed some surprising facts about how gangs and drug dealing worked (and didn’t work).

So, what about this new book? This time they’ve brought us economic analyses of current and past practices of prostitution. How is “the worlds’ oldest profession” enduring? Well, it depends. It apparently depends on who the prostitute’s target customer base is. Prostitutes who “work the street” pretty much all make the same hourly rates and have to deal with some pretty serious side effects of their work including violence, disease, and the (relatively low) possibility of being caught and arrested by the police.

Prostitutes that work as high-class escorts, are well educated, and can carry on conversations with wealthy customers can earn hundreds of dollars per hour. In fact, it seems the more they can charge, the longer their engagements are. Their patrons are less interested in engaging in a single act and more interested in living out a fantasy of living with an “ideal” mate.

What else is in this new book? An interesting study on infant and child carseats. My state just made it a law that children under the age of eight must use car seats or booster seats in a car. The studies done by the authors of this book suggest car seats and booster seats may offer no real added protection to children over the age of two compared to plain old seat belts.

In this new book, the authors take on global warming. I found this interesting because I’m what you might call a “skeptic” or a “denier.” I don’t believe man has much at all to do with what some call “global warming” (or, more recently, “climate change,” because there hasn’t been any warming for a while.)

I was a bit disappointed that Dubner and Leavitt didn’t take on the plethora of data that suggest historic warming has actually been caused more by solar cycles rather than emissions of greenhouse gases. While acknowledging there is no real concensus (sorry Al Gore), they went with the assumption that global warming/climate change is a real problem we must solve and concentrated their investigation on the proposed strategies to solve it.

Most governments want to “solve” our climate woes by capping emissions, taxing production, and thereby stiffling economic growth across the board. This will, of course, impact humanity globally, probably much more than any changes in the climate will. The costs for these measures are estimated in the trillions of dollars, most of which will come from developed nations. Dubner and Leavitt suggest that in many, if not most, cases, the best solutions to problems are often the simple and least expensive solutions.

They outline some solutions proposed by a small group in the northwestern US called Intellectual Ventures. One of their global warming proposals, for example, involves putting supposedly harmfull emissions into a higher layer of the atmosphere. Doing this would be uber-cheap and would effectively stop warming (assuming there is warming). They know it will work because volcanoes do it when they erupt and it cools the planet for a short period of time by blocking the amount of solar radiation that reaches the surface.

I applaud the authors for taking on so many issues and showing that the way we typically approach problems is often the wrong way.

Freakonomics is available now in hardcover for a suggested price of $29.99. I give it 4 out of 5 stars.