Owners dislike terms of repayment from David Holland Resort Lodging

Some say money should be promised without resigning

by Andrew Kirk, OF THE RECORD STAFF

Posted: 06/23/2009 04:15:31 PM MDT

There's a lot of grumbling going on about the most recent proposal from David Holland Resort Lodging to pay back condominium owners owed nightly rental income since February.

David Zatz, owner of the company, sent a letter to condominium owners Friday morning announcing a partnership with Phoenix Realty who will take equity ownership in the company.

As part of the new arrangement, Zatz is requesting owners agree to sign a three-year contract. Under the terms of that contract, owners will receive 75 percent of all rental revenue after fees and commissions. The company will hold at least 50 percent of advanced deposits in trust. Owners will be paid back for owed money in four installments of 25 percent, plus interest, with the first payment coming one month after signing. The three following payments will be made on March of each year through 2012.

But while owners willing to speak on the record are hard to find, they do want it said that they don't like being told the conditions upon which they'll receive money owed them.

Jim Jenkins, an owner in All Seasons who has only done rentals for one year, wants the company to acknowledge that.

"It doesn't matter to me that he's promised if I sign up with him for a new contract he will pay me for the old one. He still owes me the money whether I sign up with a new contract or not," he said Monday. "I think generally speaking, people in the rental program feel the same way. That's our money and he owes it whether or not we sign."  Although people on homeowner association boards have expressed patience and loyalty to Zatz in the past, none of those same people wanted to be quoted or could be reached for this story.

They're not the only ones. Zatz himself has not returned three requests for interviews in the past two weeks. Because of the silence, it is unclear if Zatz has a proposal for paying back owners who choose not to sign another contract.

Two owners filed in small claims court against the company on June 1, one for $2,000, the other for $5,650.

Detective Robert DeBotelho with the Park City Police Department said their investigation of a fraud and theft complaint against the company on May 8 for unpaid rental income is ongoing.

DeBotelho said he's mostly waiting to see what Zatz does to resolve the issue himself.

County attorney David Brickey said that's wise because like other disputes over failure to pay for a product or service, the best cure for everyone is a civil resolution. It's sound advice to wait and see what happens, Brickey said.

"As far as we're concerned, we're looking at it on an individual level," DeBotelho said.

In addition to the letter sent Friday, Zatz included the new contract to read and presumably sign as well as a "contract comparison matrix" comparing the services and promises offered by his company to those offered by ResortQuest, Lespri and Park City Lodging to argue that his company is worth sticking with.

In the letter, Zatz promotes his proposal as a good resolution.

"This is good news for all," Zatz wrote in the letter. "The contract we have provided is a big departure from our previous contract based largely on the feedback we have received from unit owners and the changing rental management playing field in Park City."

Mountain Town Music concerts begin for summer.

Silver Star will begin hosting bands in July

Greg Marshall, Of the Record staff

Posted: 06/19/2009 04:37:02 PM MDT

Click photo to enlarge

John Boy's Mule.

The summer of love starts Saturday for Parkites who love free concerts.

Joy & Eric, a favorite duo in town, plays Miners Park Plaza June 20 at 1:30 p.m. The kickoff is one of about 100 shows that will play free of charge at stages across Summit County through August thanks to Mountain Town Music, the nonprofit organization formerly known as Mountain Town Stages.

Mountain Town announced its new moniker Tuesday to represent a broadened mission of education, outreach and support for musical talent and audiences. "We wanted to get the word out about who were are and what we do," said Jack Walzer, president of the board of trustees. "We are more than just a platform for musicians. He listed sing/songwriter workshops and jam sessions at the top of his wishlist.

Mountain Town programs summer concerts with local acts at Woodenshoe Park in Peoa, The Village Stage on lower Main Street and Miners Park in Park City as well as a popular home concert series. A new music series at Zoom restaurant comes to town this year.

Mountain Town's crown jewels, though, are weekly shows at Deer Valley's Snow Park Amphitheater and The Forum at The Canyons. The Frontier Bank Free Concert Series at Deer Valley begins Wednesday at 6 p.m. with Rich Wyman.

The Forum at The Canyons returns with Disco Drippers July 3, a new-fangled tradition on the eve of Independence Day. The show starts at 7 p.m.

Student bands from will open for Wyman and other Wednesday acts at Deer Valley. The groups will be selected from Paul Green's School of Rock, the Kimball's recent Battle of the Bands competition and other sources, according to Brian Richards, executive director of Mountain Town Music.

Sound checks, staging and the chance to play with professional musicians are some of the perks of the program. "We've never done this before," Richards said. "It's been an organic process. I wanted to get younger kids out there so they can feel the power of being on stage and making music. If we make one kid want to become a rock star, we've done our job."

Richards wants to reach out to the old as well as the young. He plans to dispatch bands to care facilities and serenade new arrivals to Summit County. "We're still doing all the things we've always done. We're just adding different elements," Richards said.

"We want to be a central resource for everyone who does live music in town." Mountain Town manages parkcitylivemusic.com, a website with weekly live music listings, and a profile site for bands called gigsdirect.com.

With the Peoa stage scheduled for construction for much of the summer, Mountain Town plans to offer free concerts at a new stage in the Silver Star development, adjacent to the Park City Municipal Golf Course, beginning in July. "Having a new venue is kind of exciting," Walzer said.

Richards said he is perhaps most proud of Miners Park and the Village stages on Main Street, which will boast largely fresh lineups compared to previous years.

"We want to be really inclusive," Richards said. Inclusiveness has meant partnering with other nonprofits to weather lean economic times. "We have so many great musicians and artists, we just want to provide venues for them," Richards concluded.

Accompanying the name change is a new logo. The silhouette of an old-fashioned microphone sits in the middle of a yellow crest. "Visually, it's going to give people an idea of who we are and what we do," Walzer said. For now, although the name has changed, the website remains the same. Check out mountaintownstages.org for a complete list of shows, home concerts and upcoming events.

Calendar

The Canyons

Except for Disco Drippers, shows start at 6 p.m.

July 3, Disco Drippers 7 p.m.

July 18, Grace Potter & The Nocturnals

July 25, Band Of Heathens

Aug. 1, Georgia Satellites

Aug. 8, Shannon Curfman

Aug. 15, Panjea With Michael Kang

August 22, The Wilders

Aug. 29, The Mother Hips

Deer Valley

June 24 Aug. 26

June 24, Rich Wyman, 6 p.m.

July 8, Fat Paw, 6 p.m.

July 22, Swagger, 6 p.m.

July 29, Mary Beth Maziarz (with Wild Honey), 6 p.m.

Aug. 12, Sin City Soul, 6 p.m.

Aug. 19, Coverdogs, 6 p.m.

Aug. 26, The Detonators, 6 p.m.

Canyons golf course still in sand trap

Delays could mean some developers are in default

Patrick Parkinson, Of the Record staff

Posted: 06/19/2009 04:37:09 PM MDT

Development of a golf course at The Canyons is stalled.

Lack of financing and major disputes between stakeholders mire the embattled deal as Summit County officials work toward determining who is at fault. Property owners have been at each other's throats for years.

Some blame Wolf Mountain Resorts Managing Partner Kenny Griswold, who owns much of the land at the resort, which he leased to the defunct American Skiing Co., for The Canyons more than a decade ago. Critics say Griswold has stymied growth at the resort by not conveying land and easements he agreed to provide for the golf course.

Griswold refutes those claims.

Others blame the resort. The development agreement required the publicly traded American Skiing Company, former parent company to The Canyons, to complete the golf course at The Canyons in 2002.

With the county cracking down at the resort, within the next few weeks some landowners could be in default of their development agreements for not providing the golf course.

Property owners came together in the late 1990s to form The Canyons Specially Planned Area, which included an 18-hole course and millions of square feet of commercial and residential space.

"It was anticipated that golf would go in first," deputy Summit County attorney Jami Brackin said. "Golf completion was required but did not occur."

All construction at the resort was expected to be complete within 15 years, Brackin said, adding that 10 years later less than a third of The Canyons is built.

Government officials are investigating to determine if any parties have defaulted on their contracts with the county. But at an enforcement hearing Thursday it was unclear whether The Canyons Resort Village Management Association, which oversees course construction, has enough money to even build nine holes.

A crowd filled the Sheldon Richins Building auditorium as the county grilled stakeholders at The Canyons for nearly six hours.

Because he is currently litigating against Summit County, Wolf Mountain Resorts attorney Paul Peters said he refused to answer many questions in a testy exchange with deputy Summit County attorney David Thomas and interim Summit County Manager Brian Bellamy.

What may be preventing the start of golf course construction is conveyance of a land easement by Wolf Mountain in the West Willow Draw area of The Canyons.

"What's holding that up?" Bellamy asked Peters.

Peters replied: "I believe a mediation between the county and Wolf Mountain would be a good start."

The Canyons had hopes of becoming a world-class four-season resort in the Park City area.

But the current plan for four par-3 holes on the back nine makes the golf course shoddy, Peters contended.

"A standard golf course typically only has 2 par 3s in any given nine," Peters explained. "Wolf Mountain believes this is a substandard design."

The design has changed since Griswold agreed to it a decade ago. The Toronto-based Talisker Corp. development firm is now overseeing course construction since buying The Canyons from American Skiing Co.

The agreement at The Canyons doesn't require Talisker to build a "world-class" golf course at the resort, said Mark Thorne, a Talisker senior vice president.

"Where possible we would keep the arid natural vegetation," Thorne said about the par 71 design. "This golf course gives some nice generous landing areas off the tees and it doesn't play overly long."

The golf course is essential to making The Canyons a summer destination spot, Thorne said in a prepared statement Friday.

"Talisker and The Canyons have worked diligently and at great expense to meet all of their obligations with respect to the golf course, but [Wolf Mountain] has not lived up to its obligations to grant land or easements for road access to adjacent landowners," Thorne said.

Meanwhile, Summit County has stopped Talisker from developing at The Canyons until golf-course construction occurs.

Despite not controlling all the land necessary for the course, the Resort Village Management Association hopes to break ground by grading some holes this summer, said Jen Guetschow, the executive director of the RVMA.

But finding financing to complete an 18-hole course will be difficult without all the land, Guetschow said, adding that Wolf Mountain Resorts is the only entity that has not met its contractual obligations.

But Griswold countered that even 10 years ago American Skiing Co. did not have enough money to build the golf course.

"A golf course was the last thing on their mind," Griswold said, adding that ASC borrowed money 10 years ago to stay afloat. "When you're losing your home, you're not planning on building a brand new swimming pool."

David Holland Resort Lodging close to making new deal with owners

Some complain proposal is too restrictive, not good enough

by Andrew Kirk, of The Record staff

Posted: 06/19/2009 04:39:17 PM MDT

David Zatz appears to be close to working out a resolution with his unpaid owners through their contracts with his David Holland Resort Lodging company. He sent a letter to condominium owners on Friday announcing a partnership with Phoenix Realty who will take equity ownership in the company.

As part of the new arrangement, Zatz is requesting owners agree to sign a three-year contract. Under the terms of that contract, owners will receive 75 percent of all rental revenue after fees and commissions. The company will hold at least 50 percent of advanced deposits in trust. Owners will be paid back for owed money in four installments of 25 percent, plus interest, with the first payment coming one month after signing. The three following payments will be made on March of each year through 2012.

"This is good news for all," Zatz wrote in the letter. "The contract we have provided is a big departure from our previous contract based largely on the feedback we have received from unit owners and the changing rental management playing field in Park City."

Not all owners are excited about being locked into the company through June 30, 2012, or being told the circumstances of payment for money owed.

In addition to the letter and a new contract to sign, Zatz also sent owners a "contract comparison matrix" comparing the services and promises offered by his company to those offered by ResortQuest, Lespri and Park City Lodging to argue that his company is worth sticking with.

The Canyons is back in the spotlight

Landowners asked to explain why golf course is still not built

Patrick Parkinson, Of the Record staff

Posted: 06/16/2009 04:55:46 PM MDT

A highly anticipated golf course at The Canyons remains in a holding pattern.

Despite efforts at cooling tensions between landowners at The Canyons, Summit County, which enforces the resort's complex development agreement, has been unable to help jumpstart construction of the golf course.

"Everyone is suing everybody else," interim Summit County Manager Brian Bellamy said about the stalled project.

A patchwork of roughly 25 Snyderville Basin property owners came together in the late 1990s to form The Canyons Specially Planned Area, which required the golf course be constructed in 2002.

"There isn't one down there yet," Bellamy said in a telephone interview.

At a hearing Thursday he will ask stakeholders why. The meeting is scheduled June 18 at 9 a.m. at the Sheldon Richins Building, 6505 N. Landmark Drive.

Penalties could be discussed for anyone who hasn't fulfilled their development obligations for roads and the golf course at The Canyons, according to Bellamy.

"We want to find out why it isn't there and what it's going to take to get it done," Bellamy said about the course. "They all signed an agreement back in 1999 and we're just trying to gather information on where they are and what they're doing and what they need to do to move forward."

When The Canyons formed, Summit County approved millions of square-feet of commercial and residential development at the resort. Talisker Corp., which purchased The Canyons from the defunct American Skiing Company, could violate the development agreement if the golf course is not built.

Property owners agreed to build the course through a series of complex land transactions.

"I would imagine there are some who have done everything they said they were going to do, and there are others who have not quite gotten there," Bellamy said. "If not, we want to find out why not."

Bickering among the landowners has usually scuttled past announcements that resort officials were close to breaking ground on the golf course.

"Maybe not everybody has ponied up their land. Maybe not everybody has ponied up their money," Bellamy said. "I don't know who is in default, if anybody is."

Tim Vetter, who is The Canyons vice president for community affairs, said he plans to attend the hearing Thursday. The Canyons is entwined in litigation with Wolf Mountain Resorts, which leases ski terrain to the company.

Meanwhile, creating more summer amenities like golf at The Canyons could help the resort function lucratively all year, said Lee Hindin, who developed Dakota Mountain Lodge at The Canyons.

"I'm hopeful that it just takes getting the people together. I know all the people, they all have good intentions," Hindin said in a telephone interview.

Hindin did not comment about landowner disputes at The Canyons.

"I don't know that anybody is trying to hold this up," Hindin said. "A golf course at The Canyons makes so much sense to me."

Wolf Mountain Resorts attorney Victoria Fitlow insists her client, which is one of the major stakeholders at the resort, has fulfilled its obligations by already conveying land for the golf course.

"[Summit County] sued us for the land and we gave them the land and the suit was dismissed," Fitlow said. "I know Wolf Mountain has given up all the land we're supposed to give up."

A Talisker official was not immediately available for comment.

Savor the Summit returns to Main Street

Greg Marshall, Of the Record staff

Posted: 06/16/2009 04:54:27 PM MDT

The table that will run down the middle of Main Street June 19 for Savor the Summit is longer and will seat hundreds more than it did last year.

The so-called "Grand Table" stretches from the top of street, near Wasatch Brew Pub, to the north end of the street near the Mustang restaurant. It will seat 400 more people than it did last year. Diners will eat food from 23 different restaurants, according to Christie Dilloway, one of the organizers of the event.

"Everyone who did it last year signed up again this year," Dilloway said. "Last year was really exciting. It pulled everyone out."

A seat at the Grand Table costs anywhere from about $30 to more than $100, but the price tag shouldn't deter people from Main Street. Patrons can stroll Main Street and listen to music for free. Dilloway even recommends bringing folding chairs.

Officials plan to close Main Street to cars Friday at 2 p.m. Parking at the Main Street post office will be closed at 10 a.m.

As many as 1,000 people are expected to eat, drink and celebrate the season with jazz concerts and dinner deals. The Jazz Foundation and the Restaurant Association decided to bring back the Savor the Summit tradition last summer. The inaugural dinner was a success, Dilloway said, and she hopes early enthusiasm bodes well for one of the biggest meal in town.

The row of tables set down Main Street is just one of the attractions to the two-day food, wine and jazz festival that features seven bands performing on balconies, rather than stages, on the street.

Among the groups schedule to perform 45-minutes sets are Pat Carnahan, Voodoo Orchestra, Little Big Band and Crescent Super Band, which has toured at jazz festivals in Europe and the U.S. The unofficial main stage will be near No Name Saloon, across the street from a beer and wine garden.

Saturday's main attraction is a concert from New Orleans jazz musician Andres Osborne in the parking lot near Wasatch Brew Pub. Tickets for the show are $20 and the music starts at 8 p.m. The concert marks Osborne's first visit to Park City. Dilloway describes Osborne as "swamp boogie" and says his music is fun and "danceable." "If people trust us and come, they're going to discover a new favorite," Dilloway said. "I saw him in New Orleans and I knew then I would love to see him here."

Organizers expect as many as 500 to attend, and Dilloway noted that bleachers will be set up for seating.

Last year, Savor the Summit was scheduled to coincide with a big bike race in town and a jam camp for students. This year, the event doesn't have the advantage of large spillover crowds. But that didn't stop restaurants on lower Main Street from wanting to get involved.

"The restaurants have really embraced it," said event producer Ginger Ries. "It's a great kickoff to the summer and a great local event."

Emerson Olizeira, who owns The Bridge Café and Grill, opened his restaurant in December and signed up to be a part of Savor the Summit in part because he was impressed with last year's event. He's a little nervous now, though, because no diners have reserved their spots with him. "We're a new restaurant, and we're trying to get our name out there," said Olizeira, who also manages Zona Rosa.

The Bridge offers a mix of Brazilian and American cuisine. Patrons with a taste for South American food can choose Moqueca Baiana, a seafood platter with shrimp, mussels and white fish simmered in coconut milk.

Those who enjoy more traditional fare can order steak. Both meals cost $38.

Travis Axtell of Purple Sage plans to serve about 30 diners at the Grand Table, many of them returning customers. He will offer a four-course meal with a smorgasbord featuring Purple Sage's most loved dishes. "It's a really festive event," Axtell said. "I wish we could do it twice a year."

Savor The Summit is June 19 and 20. For a full list of participating restaurants, visit www.savorthesummit.com.

Deer Valley, Canyons to kick off summer

Mountain biking, hiking and some new features at resorts

Kristina Eastham, Record Contributing Writer

Posted: 06/16/2009 04:54:24 PM MDT

Click photo to enlarge

Samantha Hersch, Miranda Alessi and Kailer Spangenberg learn what happens when you mix vinegar...

The Canyons Resort and Deer Valley Resort will start turning lifts and serving in the sunshine as they open for the summer season. Barring lightning and wind, both resorts are scheduled to open Friday, June 19.

The Canyons and Deer Valley have packed summer schedules, and are sure to have plenty to do for everyone, from the aggressive mountain biker to someone who just wants to drink wine and relax while listening to live music.

"The best part about The Canyons in the summer is the ability to ride the gondola to 8,000 feet and see how gorgeous everything looks in the summer compared to the winter," Hannah Bowling, public relations assistant at The Canyons, said. "Even for the person who's not so active as some of the Park City locals might be, it's an opportunity to get into the mountains and feel the elevation difference."

This year The Canyons has a few new features to offer summer guests. The resort has expanded its disc golf course to 18 holes with a new front nine. And, in addition to the gondola, they will be running the High Meadow lift which services "a couple of the hiking and biking trails that are harder for beginners to start from the Red Pine area," Bowling said. The Flight of the Canyons gondola is scheduled to open Friday, but

"I don't think we'll be opening the High Meadow lift right away. It's still really wet up top there," Bowling said.

Deer Valley will be operating two lifts as well; the Silver Lake Express, which services the Silver Lake base area, and the Sterling Express, which services the top of Bald Mountain Deer Valley Summer Adventures Camp started Monday, June 15, and runs through Aug. 21. New this year is a "Sunflower" division, which hosts children from 2 months to 11 months of age. Before this summer, children had to be at least one year old to attend.

With miles of trails to explore, newcomers to mountain biking can take a class at Deer Valley's mountain-biking school.

"It's a great way to kind of start out and get a little bit more comfortable and, if you're not familiar with the mountain, it's another great way to get you used to the trails," Erin Grady, communications manager at Deer Valley Resort, said.

Deer Valley also offers hiking tours of the resort.

After working up an appetite at either of these resorts, you can dine outside at Royal Street Café at Deer Valley or Red Pine Café at The Canyons. Red Pine Café is open for lunch daily and offers an appetizer menu for "après hike" in the afternoon.

At Deer Valley, the Frontier Bank Community Concert Series kicks off at 6 p.m. Wednesday, June 24, with Rich Wyman at the Snowpark Outdoor Amphitheatre, continuing every Wednesday through the end of August. The Utah Symphony will also be at Snowpark Amphitheatre every Friday and Saturday starting in mid-July. For a full schedule of concerts and other events, visit deervalley.com.

The Canyons free summer concert series will kick off on Friday, July 3, with the Disco Drippers. Concerts will continue every Saturday from July 18 through Aug. 29 at 6 p.m. in The Canyons Resort Village. For a full lineup, visit thecanyons.com.

Both resorts honor winter season passes for access to lifts in the summer. New trail maps are available at the base and Silver Lake area for Deer Valley and in Canyon Mountain Sports in The Canyons base area.

Recession seems to be helping some sectors of outdoor recreation industry in Utah

More Utah residents expected to get outdoors in spite of and because of the economy

by Andrew Kirk, OF THE RECORD STAFF

Posted: 06/09/2009 04:31:32 PM MDT

Click photo to enlarge

Inexpensive outdoor activities like fishing are expected to be popular this summer. Park Record...

Outdoor enthusiasts are expecting more people to get outside to play this summer. The down economy is forcing some people to find ways to vacation close to home and inexpensively this summer. Stress over money is also pushing people outdoors to relax and forget about budgets and pink slips.

Perhaps the best evidence of this trend is the fact that the state has sold 50,000 more big-game hunting permits this year, explained Dean Mitchell with the Utah Division of Wildlife Resources.

Mitchell was at the Utah Outdoor Adventure Expo last Friday and Saturday at the Utah State Fairpark in Salt Lake City talking to people about the role of wildlife in the state's tourism industry.

Mitchell pointed to a Southwick Associates report that said in 2006 and 2007 hunting, fishing and wildlife watching had a $2.3 billion impact on the state's economy. During that time period, consumers spent twice as much in retail sales on wildlife-related recreation than on skiing and snowboarding.

"People still want to have fun, and it's cheap to buy a fishing license for $26 and fish 365 days," he said.

According to his associate Robin Thomas, fishing as a hobby is in decline across much of the country. In Utah, the sales of fishing licenses keep growing.

"Buying a fishing license is buying a license to relax," she said.

Mitchell joked it gives him an opportunity to forget about his 401k for awhile. Buying licenses for the whole family is usually cheaper than attending the movies together once, he said.

He also predicted that the increased interest in big-game hunting is probably part of the same trend as the increased interest in gardening this year. People are looking to save money in their food budget and also eat better. Hunting is a fun way of putting high-quality protein on the table, he said.

Hubert Cook is often more of a wildlife watcher than a hunter because he's hunting for a prize of a different sort: gold.

Cook was at the outdoor expo on Saturday promoting the Northern Utah Prospector's Association. With the price of gold at $980 an ounce and the increased need for extra cash in the household budget, he said the sale of dredging equipment is up.

"It's a good weekend hobby getting you out into the elements," he said. "I see lizards, foxes and cacti blooming. No one in metro areas is going to have that opportunity."

Shaun Graves was at the outdoor expo promoting Bowhunters of Utah. As president of the group, he knows a lot of the retailers in the state and said some have done well and others haven't in this economy. The difference is the kind of experience they offer in their stores.

"I think people are just getting wiser about where they put their money. People are less into things, but more into how they spend their time," he said.

Retailers who offer a place to come and practice are doing OK and the better quality the practice experience, the better they're doing, in his opinion.

As evidence of his perspective, he pointed to how membership in his organization has doubled every year since they started and he doesn't expect this year to be any different. People are passionate about bow hunting and believe it's a way to spend quality time with family, he said.

Another aspect of the outdoor recreation industry that is doing well in this economy is emergency preparedness equipment, said outdoor expo organizer Brian Brinkerhoff.

Camping gear retailers tell him items like tents and stoves are selling well to use in case of an emergency, and people are taking them out to local canyons to give them a try, he said. The added feeling of security makes those items easier for people to purchase.

The Utah Outdoor Adventure Expo was held June 5 and 6 to coincide with National Trails Day, Brinkerhoff explained. The day is an opportunity to get people thinking about hiking as a sport, he said.

Brinkerhoff is the host of the Backcountry Radio Network. He said the purpose of the expo was to give outdoor experts, enthusiasts and equipment retailers the opportunity to come together, celebrate the beginning of summer and teach outdoor skills.

Brinkerhoff said people tell him all the time that they heard about an activity on his radio show and decided to give it a try. The expo was an opportunity to show people how to do different sports instead of just talking about them and introduce people to the proper gear to use, organizations to join and the passion people share.

"There's a synergy that happens by bringing them together and getting people to play," he said.

Short sales: an alternative to foreclosure

Buyers beware they're not the easiest way to get a great deal

by Andrew Kirk, OF THE RECORD STAFF

Posted: 06/09/2009 04:32:02 PM MDT

Park City Board of Realtors president Lincoln Calder is concerned about misunderstandings regarding short sales. The term is often coupled with foreclosure in reference to housing crises, but a short sale is a process very different from a foreclosure.

Better understanding of the term could help home owners realize their full options when considering foreclosure and help buyers be educated consumers when looking for deals in the current market, he said.

Adding to the confusion, the concept of a short sale is fairly new and the process is different for every mortgage lender.

Basically, a short sale is getting the mortgage holder to agree to accept less money than is owed through the sale of the home to an outside buyer. This differs from a foreclosure in that the home owner is the one selling the home instead of a bank taking possession from the owner and selling it themselves.

The name comes from the owner being "short" in paying off the bank and the closing costs, explained Mark Seltenrich, president-elect of the Board of Realtors.

Typically, banks lose big in a foreclosure. They lose less in a short sale. An owner's credit is destroyed in a foreclosure, less so in a short sale. Seltenrich said it "nicks" their credit.

There's no standard way for banks to report short sales to credit agencies, so there's no way to predict what the impact will be, but it will always be better than a foreclosure, he said.

It's a better alternative all around, but it's a complicated process, Calder explained.

"It's kind of the Wild West out there," he said.

Short-sale transactions are the most difficult. Foreclosures are actually easier for Realtors, he said.

Sellers

Who should consider a short sale? The answer is a home owner whose mortgage is more than the value of the home and who is having trouble making the payments.

"It's important for owners to understand how to qualify," Calder said.

Because banks must approve of the short sale, they require home owners to prove they are incapable of paying the difference on the loan.

Before considering this process, an owner should first seek a loan modification, Seltenrich said. If an owner is incapable of making their payments, the problem is often temporary like the loss of a job or a salary cut. A modification can lower monthly payments. The federal government's "Making Home Affordable" program can help owners lock in those lower rates permanently.

But if the inability to make payments cannot be solved, short sales are a good option, he said.

Because there are no standard requirements or rules, sometimes banks make the home owner repay the difference on the loan at a later date. They let people out from underneath the mortgage payment, but they don't let them off the hook.

Because the process is complicated, Calder recommends hiring a qualified real estate attorney to give good advice.

Buyers

Buyers need to be fully aware of what a short sale means because the purchasing process takes much longer and is much harder than a normal real estate transaction.

Short sale has become a bit of a buzzword in the industry, Calder said. Some buyers are thinking they're a place to look for a good deal. Yes, they will be priced less than market value, but they will not be half that value or some other major reduction. Banks want to get as much of their money back as possible and will not want to negotiate much lower than market value.

Seltenrich said he has a buyer who is being patient because he loves the home, but the bank has taken more than 12 months in considering the offer. The seller is in no hurry because they haven't made a house payment in 18 months but are still allowed to live there until the bank makes its decision.

"There's no light at the end of the tunnel," he said.

Other Realtors are reporting similar problems and the National Association of Realtors is trying to lobby the government to standardize the process and require decisions from banks in a more reasonable amount of time.

But if a buyer has the time to be very patient (8 weeks is not unrealistic just to get a response to an offer, not necessarily an acceptance or rejection) and is working with experienced Realtors and attorneys, a short sale could save them money in the long-run, Calder said.

Because banks are accepting the offers to lower their own risk, they prefer cash payment or large down payments, according to Realtor magazine.

Another problem to be aware of, Calder pointed out, is that willing sellers will often agree to perform improvements or concede to less for work that needs to be done. Banks will sell properties "as is" in short sales.

The return of the homebuilders

Two bellwethers are pointing toward a recovery. That's good news for some undervalued stocks.

By Shawn Tully, senior editor at large

Last Updated: May 8, 2009: 11:24 AM ET

NEW YORK (Fortune) -- Is it finally time to buy homebuilder stocks? The basic math of the real estate market is now working in favor of an industry that, believe it or not, has done a remarkable job paring costs and harboring its financial strength for the recovery that's now dawning.

The two main bellwethers for housing's future - the supply/demand equation and affordability - are both pointing towards a recovery. The timing is impossible to predict, though the best guess is that home sales will stage a resurgence beginning late this year or in early 2010.

Fundamental demand is driven by household formation, which in turn depends on two factors: the rate of immigration and the number of Americans entering the labor market. Distilling all the data, the Congressional Budget Office reckons that new households can absorb around 1.5 million new houses, condos and rental units a year.

But from 2003 to 2006, housing starts averaged over 1.9 million units, peaking at an astronomical 2.3 million in early 2006. Hence, the flood of new homes far exceeded the number of families joining the labor force each year who could actually live in them. By mid-2008, the CBO reckoned that the U.S. suffered from an oversupply of 1.7 million units, dwarfing all previous records.

Fortunately, the market is working with ruthless efficiency to shrink the oversupply. In the second half of 2008, housing starts fell to an average annual rate of 770,000 units; so far this year, the figure is around 500,000.

Since the number of new homes and apartments now isn't nearly big enough to accommodate the immigrants and young workers crowding the labor force, residents are buying and renting the existing units (albeit at a slow pace). That's driven the excess inventory down to less than 900,000 units. At the present slow pace of homebuilding, the glut will disappear by the end of 2009.

The other force behind the housing rebound: Call it the "New Affordability." According to the most recent Case/Shiller data, prices in many of the bubble markets have fallen at least 40% from their peaks. The declines are drawing people out of rental and into the home-buying market.

That's good news for homebuilders, and all the major homebuilder stocks have rallied off the multi-year lows they hit in March: Toll Brothers is up 50%, and D.R. Horton 100%, for example. Fortunately, they and some others are still bargains. Here are three that cover a range of products and geography and are especially attractive.

D.R. Horton (DHI, Fortune 500) America's biggest homebuilder specializes in the market's sweet spot: starter homes for first time homebuyers. Those customers don't need to sell their existing home to buy one of Horton's - they typically move straight from a rental.

Horton is also a hawk on costs, and it recently reduced interest expenses by retiring over $500 million in debt.

Toll Brothers (TOL) At first glance, Toll would seem an unlikely pick since it secializes in mass-produced, luxury market of homes at $600,000 and up. But the stock is selling at a substantial discount to its peers (based on price-to-book-value).

The company also boasts a strong balance sheet, and CEO Bob Toll is expert at buying distressed properties at bargain prices, a skill he displayed in the early 1990s. Toll may rebound later than Horton, but when the credit markets finally loosen up and lenders aren't so shy about handing out mortgages, it is bound to benefit as first and second-time buyers move up to more expensive homes.

Meritage Homes (MTH) Meritage derives half its sales from Texas, one of the fastest growing states in the country. It's shrewdly changing its specialty from almost $300,000 send-and-third move up homes to starter houses priced at around $200,000.

It's also expert at shrinking the size of its houses to keep them affordable. Result: Meritage is one of the most successful homebuilders at competing with foreclosures. 

First Published: May 8, 2009: 10:51 AM ET