Hacked By GeNErAL

Hacked By GeNErAL

Posted on July 20, 2016 at 9:43 pm
Jennifer Reyer | Posted in Uncategorized |

Zillow could spend more than $60M defending itself in a lawsuit centered around just one employee



Spencer Rascoff of Zillow




Spencer Rascoff of Zillow

The legal tensions are escalating between Zillow and News Corp.-owned Move Inc.

And with good reason. There’s a lot of money at stake.

In its fourth quarter earnings report this week, Zillow’s profits fell short of expectations, after the Seattle online real estate company spent $8.1 million on an ongoing lawsuit with Rupert Murdoch’s News Corp., which in 2014 acquired Move Inc.

In a SEC filing on Friday, Zillow said that legal costs related to the Move Inc. litigation mounted to $27.1 million last year. And those expenses are expected to go up in 2016, reaching an eye-popping $36 million.

That’s a lot of coin for a suit that largely centers around one employee.

A photo of Errol Samuelson.




Errol Samuelson

The dispute is tied to former Move executive, Errol Samuelson, who was hired by Zillow in March 2014.

Samuelson and Zillow were promptly sued by Move for allegedly hijacking trade secrets, with Sameulson sidelined in July 2014 from working at Zillow by a Washington State Superior Court Judge, a ban that was lifted last year.

If the rivalry wasn’t nasty enough in the courts, some verbal barbs flew this week.

In a Friday appearance on CNBC, Rascoff was asked how long the legal bills would hang over Zillow.

“You’d have to ask Rupert Murdoch that question,” said Rascoff, referring to the News Corp. chairman.

Rascoff continued:

“We are focused on innovating, News Corp. is focused on litigating. Unfortunately, you see this all too often in business where companies who lose on the business battlefield resort to the court room out of desperation. We have been sued by News Corp. We are forced to defend ourselves. It is vindictive, it is baseless. But I try to put it out of my mind, and focus on turning Zillow into a $5 billion or $10 billion revenue company and I leave it to the lawyers to handle it.”

In response to the CNBC appearance, Move issued this statement:

“Today on CNBC, Zillow CEO Spencer Rascoff accused Rupert Murdoch and News Corp of acting out of ‘desperation’ in filing a ‘vindictive’ lawsuit. But that litigation was filed by Move long before News Corp even owned the company, and it is based squarely on the merits of the case, not emotions. In Zillow’s own filings with the SEC, it has concluded there is a ‘reasonable possibility’ it will suffer a loss in this lawsuit.

It’s understandable why Mr. Rascoff said today of the litigation, he’s ‘tried to put it out of my mind.’ Just last week, the judge ordered defendants to appear for a two-day evidentiary hearing on April 13 and 14 into Move’s claims that important evidence has been destroyed by some or all of the defendants in this case.”

Rascoff has taken shots at Move Inc. in the past, calling it a “crappy company.” Meanwhile, at a real estate conference last year Murdoch exclaimed: “What the hell does Zillow mean?”



Read the original artical here

Posted on February 23, 2016 at 6:11 pm
Jennifer Reyer | Posted in Uncategorized |

New Mortgage Rules and How to Make the Most of Them

BEGINNING Saturday, applicants for most home mortgages will receive new forms from their lender that are intended to make it easier to review and compare loan offers.

Along with the updated forms, new rules aimed at simplifying the borrowing process for consumers will take effect.

Mortgage applications submitted through Friday are governed by the old rules, while applications submitted on or after Saturday will fall under the new rules.

At least initially, consumers may encounter lengthier waits to close on the purchase of their home. Thirty-day waits are now common in some markets. But 45- or 60-day waits may become more common as lenders familiarize themselves with the new rules, according to Bob Davis, executive vice president of the American Bankers Association.

“I’m sure there are going to be growing pains,” Mr. Davis said.

“This is a new process for everybody,” said Diane Evans, president of the American Land Title Association, an industry group for title insurers and settlement agents. “No one’s had practice at it.”The switch to the new forms has been in the works for more than a year and was originally scheduled to take effect on Aug. 1, but the changes were delayed until Oct. 3. The two-month breather has given mortgage software vendors additional time to make necessary changes, but there still may be problems.

The new forms are supposed to make it easier for borrowers to compare loan offers and to see if the final loan terms differ significantly from the initial estimate. The change was required by the Dodd-Frank financial reform law, which directed the Consumer Financial Protection Bureau to combine and simplify older disclosure documents required by two federal laws.

Under the new rules, borrowers will receive a loan estimate, including information like the interest rate and monthly payment, within three business days of applying for a loan. If they apply to several lenders, the offers will be displayed in a similar format so the borrowers can compare terms like fees and interest rates.

Holden Lewis, a mortgage analyst at Bankrate.com, said borrowers can easily see how much each loan will cost over the first five years by comparing forms. The form was tested with consumer focus groups and went through several revisions to make it as easily comprehensible as possible. “This is very much a net positive for consumers,” he said.

Lenders must also give borrowers a disclosure, which details the final loan terms and summarizes the transaction, three business days before the closing. Borrowers can compare the disclosure with their initial loan estimate to see any changes.

The bureau says that only major changes in a loan — like a switch to an adjustable-rate loan from a fixed-rate loan, a significantly higher interest rate or the addition of prepayment penalties — should require a revised disclosure, which brings another three-day waiting period.

“Some have been spreading misinformation about this point, claiming that last-minute changes based on walk-throughs or similar circumstances will cause frequent three-day delays in the closing process,” Richard Cordray, the bureau’s director, said last month in prepared remarks to the National Association of Realtors. “That is simply wrong.”

But it most likely will not be clear until late October or early November, when closings under the new rules start occurring, if the new approach is causing serious confusion.

Here are some questions and answers about the new mortgage rules:

■ How can I minimize possible delays?

You can get up to speed on the new forms and rules by reading about themon the bureau’s website.

Ms. Evans said borrowers should ask questions, listen carefully to instructions from their lender and be prepared to supply extra information promptly if asked. The quicker borrowers provide what is needed, she said, the faster the process can move.

■ What if I have already submitted a mortgage application?

If you applied before Oct. 3 and your loan is in process, the new rules and forms do not apply, Ms. Evans said.

■ Will the rules affect the availability of any loans?

While standard loan options should be “readily” available, some lenders may temporarily curtail certain specialty loans, Mr. Davis said. For instance, he said, some lenders may limit “construction to permanent” loans, which allow borrowers to finance a construction loan and a long-term mortgage with a single closing, because of confusion over how to disclose the information.

Posted on October 6, 2015 at 11:11 pm
Jennifer Reyer | Posted in Uncategorized |

Have you Heard: Seattle Unveils ‘Grand Bargain’

Faced with a growing housing problem, Seattle leaders have unveiled an ambitious plan to create 6,000 affordable housing units in the next 10 years.

In September, Mayor Ed Murray and Councilmember Mike O’Brien introduced what is being dubbed the “Grand Bargain,” a plan that tries to find common ground for both housing advocates and real estate developers while increasing the production of affordable homes.

It’s a groundbreaking proposal at a time when many cities are looking for new ways to expand affordable housing production.

There are two major components to the Grand Bargain. The first establishes the Affordable Housing Impact Mitigation Program (AHIMP), also known as a commercial linkage fee, that will help fund the construction of new affordable housing by requiring developers to pay a fee on every square foot of new commercial development. The fee will range from $5 to $17 per square foot, based on the size and the location of the development.

The second part calls for Mandatory Inclusionary Housing (MIH) for new multifamily developments, requiring 5% to 8% of units to be affordable for residents earning up to 60% of the area median income (AMI) for 50 years. In 2015, 60% of the AMI is $37,680 for an individual and $53,760 for a family of four. As an alternative to on-site units, developers can pay a fee to construct new affordable housing off site.

The proposals alone would be a tough sell, but there’s another important piece to the plan.

“The Grand Bargain says what if we implement a mandatory inclusionary housing program but we do it in conjunction with a modest ‘up zone’ citywide,” says O’Brien.

In other words, the city will look at increasing development capacity by allowing developers extra space or height in their buildings. This would give landowners some additional value in exchange for providing affordable housing.

“Instead of the affordable housing advocates or the nonprofit housing providers on one side and the private development community on the other side ready to sue each other over the linkage fee, this agreement we believe will give us more affordable housing with the up zone, and the development community is supportive of it,” O’Brien says.

A new model

The sweeping proposal stems from the work laid out by the Housing Affordability and Livability Agenda (HALA) Advisory Committee. Made up of 28 housing experts, activists, and community leaders, the committee recently met for 10 months to hash out specific recommendations.

The HALA plan, which features a total of 65 recommendations, comes at a time when low- and middle-income families are struggling to find affordable housing in Seattle. More than 45,000 households in the city—one in six households—are spending more than half of their incomes on housing.

In the very best of times, Seattle and its development partners have created about 800 affordable housing units in a year, says Faith Li Pettis, co-chair of HALA. A partner at the Pacifica Law Group, Pettis is a bond counsel familiar with affordable housing transactions.

HALA needed to find a way to more than double the prior high-water mark to meet Murray’s call for 20,000 affordable housing units in the next 10 years.

“There was no way we were going to get that out of the nonprofit community using their traditional type of financing,” Pettis says. “The capacity isn’t there.”

The Grand Bargain components—the commercial linkage fee and the mandatory inclusionary zoning— are estimated to add 6,000 affordable housing throughout the city over 10 years. Many jurisdictions that have mandatory inclusionary zoning have been able to produce units at 80% of the AMI, but the committee wanted to go deeper. As a result, the units that HALA expects to come out of the plan will be targeted at 60% of the AMI.

Seattle has a strong track record of supporting affordable housing, including a housing levy that has been repeatedly passed by voters. Even with that, the area needed a new model to capture the number of units needed by residents, Pettis says.

“This has the possibility of being a real game-changer,” Pettis says. “It’s a new way of doing business.”

Despite the strides made by the HALA committee and city leaders, there’s still a long road ahead, admits O’Brien.

In early September, he was hoping to pass a commercial linkage fee bill this fall. Officials will also work on the inclusionary zoning legislation, which is expected to take approximately six months. However, key zoning changes have to happen as part of the Grand Bargain, and to do that citywide would likely take about two years, estimates O’Brien.

All eyes will be on Seattle during this time.


Posted on September 14, 2015 at 8:40 pm
Jennifer Reyer | Posted in Uncategorized |

Jeb Bush Tax Plan Could Disrupt Real Estate And Small Business

Whatever the long-term effect of the Bush 2016 tax plan, there is one provision that may create something of a shock to both real estate and the financing of small business. In the “Backgrounder” for the Reform and Growth Plan, we read –“Generally, businesses would no longer be able to deduct interest payments.” The provision is seen as a corollary to another proposal


Under the proposal, businesses could fully expense all new capital investments, an approach that seeks to remove taxes on marginal investment returns. This would simplify the tax code and significantly increase incentives to invest in new machines, equipment, buildings, and other structures.


Devil In The Details


Now there are a host of devilish details that I would like to clarify about these proposals.  For example there is that word “generally” which can cover a multitude of sins and what exactly does “new” mean?  Is is it something I just bought for my business making it new to me or something that is really brandy new?  Makes a big difference when you are talking about real estate.  Also does the expensing apply to capital investments that would not be depreciable under current law such as land and does it apply to intangibles?


Hopefully more details will be forthcoming.

MIAMI, FL – SEPTEMBER 12: Republican presidential candidate and former Florida Governor Jeb Bush greets people during a Miami field office opening on September 12, 2015 in Miami, Floria. Bush continues to campaign for the Republican nomination. (Photo by Joe Raedle/Getty Images)


Economists Think It Is A Great Idea

If you poke around you will find that many economists approve of changes of this sort.  A recent article in the Economist refers to the deduction for business interest as a “A Senseless Subsidy”.



An Oversimplified Example

I’ve constructed a simple example to illustrate how the current system works and the effect that the change might have. My example sacrifices realism for easy math, but I think it shows the principles that are at work.


Joe inherited a bit of land from his uncle and has decided to build some housing on it.  The equity in the land allows him to take a mortgage to fund the construction cost – $275,000 (You can make it $2.75 million if that sounds too chintzy and scale the rest of the numbers up by a factor of 10).  Joe expects the net operating income (NOI) to be $24,000.  NOI is the rental income offset by the actual expenses of running the property including taxes, insurance and repairs, but not interest or depreciation.  A more hip term in some circle is EBITDA.

Joe has decided that he would really like his taxable income to match his cash flow.  In order to achieve this he will pay $10,000 of principal on his mortgage each year for 27 years and $5,000 in the final year. Under that scenario cash flow after debt service and taxable income will be $250 in Year 1 gradually increasing til it reaches $24,000 after the mortgage is paid off.  Joe will recover the principal payments through depreciation deductions.  In real life, they would not match on a year to year basis, but they will ultimately line up.  Over the 28 years in my simplistic scenario Joe would collect $672,000 in net operating income, pay $196,000 in interest (at 5%), $275,000 in principal and have taxable income and pre-tax cash flow of $201,000.


Under the Bush plan, things are different.  Joe gets to immediately deduct the entire $275,000 which is really cool if he has a lot of other income to shelter, but not so great if he doesn’t.  It would however turn into a net operating loss, which he would probably get to mostly deduct over the next several years.  Conceivably that could shelter Joe’s net operating income for the first twelve years or so.  It gets hard after that though, since neither the interest nor the principal is deductible.  Over the life of the scenario Joe has $672,000 in NOI and an upfront deduction of $275,000 for total taxable income of $397,000 and the same pre-tax cash flow of $201,000.


When Things Don’t Go So Well


A much more disturbing thought, one for which I will not try to construct examples is what happens with firms that borrow to finance receivables, inventories and to deal with irregular cash flow.  During periods in which inventory and receivables are stable there might be a pretty good match between taxable income and after-tax cash flow.  The notion that you could run into a rough patch during which there is barely enough operating income to cover your interest expense, but you are still generating taxable income because the interest is not deductible is frightening.


The Other Changes Affecting Real Estate

Bush’s plan eliminates the deduction for state and local taxes.  With the local taxes goes one of the subsidies to home ownership.  The other, the home mortgage interest deduction is not directly attacked, but there is an indirect assault.  Itemized deductions other than charity are subject to a cap.

The cap would limit the tax value of itemized deductions to two percent of a filer’s adjusted gross income. Since it is dependent on a progressive tax schedule, a filer in a lower bracket will be able to have more deductions as a share of their incomes. Low- and middle- income filers in the 10 percent tax bracket could deduct up to 20 percent of their income, while high-income filers in the top bracket could only deduct about 7 percent.

Someone with the maximum deductible mortgage balance of $1.1 million might be paying between $40,000 and $50,0000.  If their adjusted gross income is $400,000 the cap would limit them to about $28,000 total non-charitable  deductions.  If they have large medical bills or gambling losses, there might be no benefit at all from the mortgage interest.




Posted on September 14, 2015 at 8:20 pm
Jennifer Reyer | Posted in Uncategorized |

Condo prices climbing even faster than houses


From the roof of their apartment building on Seattle’s First Hill, Dominick Pham and his fiance, Sarah Cheung, can see the Luma condos rising. The couple, who have rented for two years, recently made a down payment on a $465,000, one-bedroom unit there.  (Dean Rutz / The Seattle Times)



 From the roof of their apartment building on Seattle’s First  Hill, Dominick Pham and his fiance, Sarah Cheung, can  see the Luma condos rising. The couple, who have rented  for two years, recently made a down payment on a  $465,000, one-bedroom unit there. (Dean Rutz / The  Seattle Times) 



Both homes and condominiums saw prices rise in August at the fastest 12-month pace seen this year, according to data released Thursday.

The path to homeownership for Dominick Pham and Sarah Cheung was short. Two blocks, actually.

The engaged couple, Maryland transplants in their late 20s, had forked out rent for two years at a new, luxury apartment tower on First Hill. This summer, they noticed the Luma condominiums being built nearby and jumped at the chance to buy a one-bedroom unit on the lower floors.


“Why pay rent when that could go toward a mortgage?” thought Pham, a software engineer. “This is the perfect opportunity.”

Across the region, home prices are zooming skyward, driven by new buyers like Pham and Cheung, a record-low inventory and expectations of higher interest rates.

In August, the median price of single-family homes in King County was $499,950, 14 percent higher than a year ago. Condos fetched a median $299,250, a 20 percent gain over last year, according to the Northwest Multiple Listing Service. In both, the gains were the biggest 12-month jump seen so far this year.

The biggest jump occurred in Seattle, where the median single-family-home price was $575,000, a 15 percent annual gain, and median condo price was $395,000, 32 percent more than a year ago. A big factor in the soaring Seattle condo prices is the handful of new downtown projects, where units can cost $600,000 or more.

In Snohomish County, August’s median single-family home price was $366,825, or 11 percent higher over the year; in Pierce, $255,000, up 6 percent; and in Kitsap, $259,975, or 6 percent higher.

In the four-county region, there were 7,792 pending sales — mutually agreed sales contracts that haven’t closed yet — the highest level for August since 2005, the MLS said.

VIA Seattle TImes. 

Continue reading HERE. 

Posted on September 14, 2015 at 8:04 pm
Jennifer Reyer | Posted in Uncategorized |

Savvy homeowners find ways to cut remodeling costs | Design Decor | The Seattle Times

Savvy homeowners find ways to cut remodeling costs | Design Decor | The Seattle Times.

Posted on December 5, 2012 at 6:52 pm
Jennifer Reyer | Posted in Uncategorized |