Deep Creek Distressed Properties (2010 edition) ..

Updated as of December 31, 2010

List created in response to real estate agent claims that distressed properties were "few and far between." Some properties have sold below 2004 prices, despite claims in 2007 and 2008 that the local market was "well and improving daily" and that property values were still rising and in 2009 that properties were holding "value." See some of these statements at the bottom of this posting.

ACTIVE

2221 DRY RUN Rd: foreclosure.

268 LEHMAN Ln #41: current list price: $559,000, 2007 sold price; $565,000. Based on other sales, this is probably even an optimistic price point.

84 WHISPERING Way: current list price: $575,900, price reduced more than $250,000 since this new construction property was first listed in July 2010.

64 POND Ct: current list price: $549,000, reduced by $109,100 on September 21, 2010. More signs of distress in Lakefront Links/Waterfront Greens.

24 HOOPPOLE Ct Unit B-6: current list price: $314,900, 2005 sold price: $380,000. A lot of searches on this one.

257 MARSH HILL Rd #13: current list price: $314,000, 2005 sold price: $355,000.

93 RIDGE VIEW Ct: current list price: $499,000, original list price: $775,000, days on market: 1258 (nearly 3 1/2 years).

950 GLENDALE Rd: current list price: $825,000. Listed or relisted 4 times since 2007, priced more than $150,000 less than fall 2009.

105 HAILEE'S Ln: current list price: $850,000, original list price: $1,200,000.

360 PRITTS Rd: current list price: $479,000, 2007 sold price: $500,000. Lakefront and listed or relisted five times since 2008. Reduced by $20,000 on September 21, 2010.

486 HAZELHURST Ln: current list price: $649,000, 2006 sold price: $799,000. Bank owned lakefront. Delisted September 3, 2010. Relisted September 9, 2010. Reduced another $50,000 on September 29, 2010.

257 MARSH HILL Rd #2: short sale, current list price: $275,000, 2006 sold price: $319,000. "VERY MOTIVATED SELLER, WILL CONSIDER ALL REASONABLE OFFERS!" Reduced by $24,900 on September 17, 2010.

321 TREE TOP Way #76: short sale.

1758 PIGS EAR Rd: current list price: $99,900, 2007 sold price: $119,900.

40 SUNSET Rdg: short sale, land. Reduced September 8, 2010, October 14, 2010, December 1, 2010.

850 NATIONAL Pike: foreclosure. Reduced September 7, 2010.

46 LAKEFRONT LINKS Dr: Current list price: $399,900, June 2010 list price: $499,900, just reduced $100,000. Agent-owned, Waterfront Greens.

47 LAKEFRONT LINKS Dr: Current list price: $319,900, June 2010 list price: $409,900, just reduced $90,000. Agent-owned, Waterfront Greens.

48 LAKEFRONT LINKS Dr: Current list price: $309,900, June 2010 list price: $409,900, just reduced $100,000. Agent-owned, Waterfront Greens.

50 WATERFRONT GREENS Dr: Current list price: $299,000, June 2010 list price: $399,000, just reduced $100,000. Agent-owned, Waterfront Greens.

1529 PARADISE POINT Rd: current list price: $399,900, 2007 sold price: $395,000. With price cut September 3, 2010, the current owners appear to be slowly accepting reality (think current prices versus 2007 prices).

198 PARADISE ACRES Rd: current list price: $295,000, 2006 sold price: $310,000. Another $5,000 price reduction on top of the $10,000 price reduction on July 9, 2010 which moved this property from on the verge to actively distressed.

264 SANDY BEACH Ln: current list price: $1,289,000, 2008 sold price: $1,400,000 (2008 list price: $1,775,000). This one apparently turned out to be an expensive two year rental for a Pittsburgh area surgeon (add up all the transaction costs, negative equity, mortgage payments, association fees and divide by the number of months owned to see what they really paid per month to "rent" this property). Reduced by another $100,000 on August 30, 2010.

116 TEABERRY RIDGE Rd: short sale.

752 WISP MOUNTAIN Rd Unit 6B: current list price: $479,000, 2005 sold price: $499,000. Previously listed in 2008 and in 2009. Five price cuts since being relisted in March 2010. Another former DC Development LLC property. Built on a clear-cut mountaintop, used as tax writeoff, currently owned by downstate LLC - sound familiar?

247 HERRINGTON MANOR Rd: short sale.

4897 ROCK LODGE Rd: current list price: $60,000, 2004 sold price: $68,500.

218 MIDDLETON Rd: current list price: $599,000, 2005 sold price: $600,000. Current listing agent was buyer and seller's agent in 2005 transaction. He's practically making a career out of selling and re-selling this property.

256 JEFFREY Ln #28: current list price: $299,000, 2004 sold price: $295,470. Just reduced from $330,000. This one looks like another certain investment loss for some downstate folks when you factor in association fees ($185/monthly), transaction costs, etc.

78 CLUBHOUSE Dr: current list price: $499,000, 2005 sold price: $589,000. Another in Waterfront Greens. Listed three times since 2008.

929 DEEP CREEK Dr: current list price: $725,000, 2006 sold price: $750,000. 2008 list price: $1,329,000. Agent is partial owner.

72 WATERFRONT GREENS Dr: current list price: $109,000, 2008 list price: $139,000. Agent-owner offering to pay first year of buyer's mortgage interest. Listing describes Waterfront Greens as ever-popular (the community has certainly gained popularity on this list as 3 others are listed below). Use Ctrl-f to search 'Waterfront Greens' to quickly find the others.

73 KENDALL CAMP CIR Rd: current list price: $825,000, 2007 sold price: $939,900. Another distressed property in Kendall Camp and former DC Development LLC property. The current owners (from Potomac, MD) had initial mortgage balances of approximately $840,000 and a down payment of approximately $100,000. By the time this sale is completed, they will almost certainly have lost the entire down payment and more (including agent fees and transfer costs), so much for those great returns on investment some local agents were touting in 2007 and 2008. By my math that would be a negative return on investment of greater than 100%.

75 BOULDER RIDGE Dr: current list price: $989,900, 2007 sold price: $1,075,000 (2007 list price: $1,295,000), 2004 sold price: $851,700. In this case, apparently the 2007 cash buyer is having second thoughts about this "investment." Another interesting point on this property is that the previous owner is also the co-owner of a local real estate firm. You probably noticed that he was willing to sell for significantly less than list price back in 2007 when agents were telling the rest of us how prices were rising and Deep Creek real estate was the best investment around. Could he see what the future held?? Certainly makes you wonder.

199 UPPER HIGHLINE Dr: short sale, another former DC Development LLC property gone bad. Same current "owner" as 335 Waterfront Greens and 342 Lakefront Links - Morgantown-based LLC.

342 LAKEFRONT LINKS Dr: short sale. Same current "owner" as 199 Upper Highline and 335 Waterfront Greens - Morgantown-based LLC.

109 NORTHGLADE HILL Dr: short sale, current list price: $329,000, 2007 sold price: $375,000. Current listing agent was buyer and seller's agent in 2007 transaction. One might guess that he's been thrilled by his own return on this investment.

257 MARSH HILL Rd #17: current list price: $299,900, 2004 sold price: $320,000.

60 BRIGHT Psge #60: current list price: $379,000, 2007 sold price: $417,000.

50 FASTING Ct: current list price: $549,900, 2006 sold price: $602,880.

200 KENDALL CAMP Cir: current list price: $599,900, 2008 sold price: $610,900, former DC Development LLC property.

2544 STATE PARK Rd: current list price: $798,000, 2007 sold price: $799,900.

1 LITTLE DIPPER Ln: short sale, land, former DC Development LLC property.

565 GLENDALE Rd #312: short sale.

65 BROBST Rd: short sale.

SOLD

129 WALNUT St: December 16, 2010 sold price: $19,000; foreclosure.

213 11TH St: December 16, 2010 sold price: $150,000, 2006 sold price: $169,000.

1250 PERGIN FARM Rd: December 3, 2010 sold price: $500,000; recent list price: $539,000; 2005 sold price: $570,000. Listed or relisted three times since 2009.

2576 FINGERBOARD Rd: November 24, 2010 sold price: $13,000; foreclosure.

119 7TH St SOUTH: October 14, 2010 sold price: $85,000; foreclosure.

1104 ALEXANDER Ln: September 30, 2010 sold price: $275,000, 2008 sold price: $309,000.

914 STOCKSLAGER Rd: September 24, 2010 sold price: $1,024,500, 2006 sold price: $1,220,000. Listed or relisted four times since 2008.

1692 DEEP CREEK Dr #29: September 1, 2010 sold price: $290,000, 2006 sold price: $295,000 + renovation cost, formerly agent-owned. Owner previously told me that he was confident this property would sell for $380,000+ and indicated that it was a good investment. Delisted July 27, 2010 (952 days after it was originally listed in 2007). Agent-owner sold at a loss relative to 2006 cost basis and ate renovation costs as well.

5 NORTH RIDGE Ct: October 18, 2010 sold price: $370,000; prior list price: $399,000, 2004 sold price: $438,900.

234 BEN DEWITT Rd: November 5, 2010 sold price: $122,000; foreclosure.

93 BRENNEMAN Ln: October 12, 2010 sold price: $550,000; foreclosure, former DC Development LLC property. Price reduced June 15, 2010, July 10, 2010, and again on August 6, 2010. We have followed the history of this property going back several years now to when things were reportedly "well and improving daily" in the Deep Creek real estate market.

3195 TURKEY NECK Rd: December 17, 2010 sold price: $1,175,000; prior list price: $1,199,000, 2005 sold price: $1,200,000.

603 OAK St: August 23, 2010 sold price: $69,000; foreclosure.

2491 SHADY DELL Rd: October 6, 2010 sold price: $24,000; foreclosure.

543 PYSELL CROSSCUT Rd: September 29, 2010 sold price: $142,000; short sale.

254 WINDING TRAIL Ln Unit 7B: August 31, 2010 sold price: $415,000, 2008 sold price: $435,000.

273 CIRCLE FOUR Ln: bank owned, foreclosure. Delisted July 31, 2010, sold September 7, 2010 for $220,000.

734 SOUTH BLAKESLEE Rd: November 10, 2010 sold price: $510,000; prior list price: $569,900; October 2009 list price: $695,000.

13 WINDING Way: July 2010 list price: $249,999, 2004 sold price: $285,000, over 500 days on market. Pending sale as of July 23, 2010. August 23, 2010 sold price: $240,000 or $45,000 less than the 2004 sold price. Listing indicates new deck, so the total loss on this one could be significantly more than $45,000.

12 SKI HARBOR Dr #12: August 6, 2010 sold price: $360,000, 2007 sold price: $400,000.

164 HAZELHURST Rd: July 16, 2010 sold price: $600,000, 2002 sold price: $570,000 (2009 list price: $889,000). After paying transaction costs, 8 years of property taxes, and finally a real estate agent to market the property this former owner sells this exclusive lakefront lot for less than his 2002 cost basis (i.e. negative return on investment since 2002). Nearly a decade after the lot was purchased, no investment gain. Obviously this is only one property, but it certainly stands in stark contrast to all those promises of great investment returns we were hearing just a few years ago.

668 WALNUT Dr: short sale.

632 BROBST Rd: foreclosure.

662 WATERFRONT GREENS: June 25, 2010 sold price: $835,000; 2008 list price: $1,389,000. Formerly agent-owned, previous history profiled here.

1342 STOCKSLAGER Rd: 2010 sold price: $1,150,000, 2007 sold price: $1,525,000.

91 BOULDER RIDGE Dr: foreclosure. Sold at about 85% of 2004 selling price.

44 JRS Dr: $12,390 seller subsidy, 2010 sold price: $413,030, 2005 sold price: $420,000.

1692 DEEP CREEK Dr #3: short sale, 2010 sold price: $309,000, 2005 sold price: $380,000.

768 FISH HATCHERY Rd: foreclosure.

4456 NATIONAL Pike: foreclosure.

1448 PYSELL Rd: short sale.

4488 GORMAN Rd: foreclosure, sold price: $90,000, 2009 list price: $185,000.

219 DINKY TRACK Rd: foreclosure.

IN LIMBO

38 SHINGLE CAMP Ter: short sale, most recent list price: $999,000, 2006 sold price: $1,307,000. Reduced by $300,000 on September 17, 2010. Short sale pending.

2087 STOCKSLAGER Rd: most recent list price: $575,000, original list price: $698,750. Listing says "reduced from $599K to $575K thru 12/31/10. Must close by the end of 2010 for this price," as if the price is mysteriously going to rise if it has not sold by the end of the year. I hope no one falls for this joke. Delisted December 31, 2010.

915 DEEP CREEK Dr: recent list price: $650,000, 2005 sold price: $700,000. Delisted December 28, 2010.

2 STILWATER Dr: seller offering to hold first mortgage, recent list price: $799,000, 2005 sold price: $865,000. Reduced another $25,000 on August 30, 2010 - now $130,000 less than August 2009 list price. Delisted December 13, 2010.

8 PHEASANT RUN Rd: short sale, land. Delisted December 12, 2010.

209 HIDDEN VALLEY Ln: most recent list price: $220,000, original list price: $315,000, 2003 sold price: $195,000. After 1000 days on the market, list price is approaching 2003 sold price. Delisted November 30, 2010.

611 MARSH HILL Rd #1: most recent list price: $1,185,000, 2008 sold price: $1,325,000. Delisted November 30, 2010.

20899 GARRETT Hwy: recent list price: $465,000, 2006 sold price: $475,000, list indicates motivated seller, bring all offers. Price reduced August 21, 2010 moving this listing from the "on the verge" list to the actively distressed list. Delisted November 25, 2010.

188 MEDALLION DRIVE Rd: short sale. Delisted November 24, 2010.

19868 GARRETT Hwy: most recent list price: $598,800, 2002 sold price: $600,000. Recently priced below 2002 sold price. Delisted November 22, 2010.

115 WOODLAND Way: most recent list price: $279,000, 2005 sold price: $295,000. Delisted November 19, 2010.

335 MOUNTAIN VIEW Dr: most recent list price: $588,900, 2006 sold price: $675,000. Delisted November 18, 2010.

584 OLD WILSON: short sale, land. Delisted November 2, 2010.

788 FOXTOWN Rd: recent list price: $297,000, 2005 sold price: $329,900. Delisted October 28, 2010.

209 2ND St: short sale. Price reduced August 10, 2010. Delisted October 5, 2010.

1 MISTY MEADOWS Dr: foreclosure, Waterfront Greens. Price cut August 10, 2010. Price cut again August 30, 2010. Delisted September 26, 2010.

POLAND VISTA NORTH Ln: short sale, Thousand Acres. Delisted September 2, 2010.

3285 SHINGLE CAMP Rd: short sale, May 26 list price: $1,795,000, June 25 list price: $1,399,000, July 1 list price: $999,500. At this rate they'll be giving it away to the Farm Queen at the Garrett County Fair. Recently delisted.

335 WATERFRONT GREENS Dr: short sale, previously pitched by local real estate agent/blogger as property that had rental income (when others apparently did not - wow, can you imagine the distress those owners falling into the don't have rental income category must be in). Same current "owner" as 199 Upper Highline and 342 Lakefront Links - Morgantown-based LLC. Delisted September 10, 2010.

735 BIRCHWOOD Dr: short sale, current list price: $145,000, 2007 sold price: $182,000. Delisted July 20, 2010.

2491 SHADY DELL Rd: foreclosure. Delisted July 15, 2010.

126 HIGH ROCK Ln: short sale, former DC Development LLC property. "SELLER VERY MOTIVATED." Delisted July 7, 2010.

ON THE VERGE

65 POND Ct: Current list price: $139,000, 2008 list price: $179,000. Waterfront Greens. Agent-owned. Just reduced by $40,000 after nearly 800 days on market.

84 POND Ct: Current list price: $139,000, 2008 list price: $179,000. Waterfront Greens. Agent-owned. Just reduced by $40,000 after nearly 800 days on market.

91 KENDALL CAMP Cir Unit 7A: this one makes the list following a recent price reduction, something we have seen plenty of in Kendall Camp.

156 MISTY MEADOWS Dr: current list price: $459,000, 2008 list price: $599,900. This one makes the list due to the recent negative price action in Waterfront Greens. Agent-owned.

79 MARSH HILL Rd #5: current list price: $275,000, 2004 sold price: $249,900. Listed for the third time since 2007. We have previously covered the weakness in the Deep Creek townhouse/condo market.

219 MOUNTAINTOP Rd: current list price: $745,000, May 2009 list price: $949,000. Out-of-state owner is real estate agent. Another former DC Development LLC property.

388 BRANT Rd: current list price: $845,000, 2007 sold price: $840,000, recently reduced $54,000. Already underwater if you include transaction costs.

402 BRANT Rd: current list price: $849,900, 2007 sold price: $840,000. Already underwater if you include transaction costs. Recently delisted.

726 PINE TREE POINT Rd: current list price: $979,500, 2006 sold price: $960,000. Already underwater if you include transaction costs.

1511 MARSH HILL Rd: current list price: $749,000, 2005 sold price: $700,000. April 2010 list price was $835,000.

573 BECKMAN PENINSULA Rd: current list price: $525,000, 2005 sold price: $500,000. Price reduced $100,000 on July 15, 2010.

Many more ..

All of that and just 17 properties sold in May 2010 as Deep Creek inventory continues to build.

Judging by some of these price declines coupled with the level of overhanging inventory, there are many more for sale properties out there with unrealistic list prices which will likely be forced lower before a willing buyer steps forward and a sale is completed; thus, adding to the potential distress. As such, I'll try to update this list weekly. Stay tuned, more to come.

After reviewing the carnage, now review a few statements from local real estate agents over the past few years.

January 21, 2008: "Local developers realize that Deep Creek has always been in high demand and that prices will go back up this summer." Not exactly!

March 10, 2008: "I do not know if we are at the bottom of the real estate market yet, but we are close. Even if home prices continue to decline they will not go low enough to compensate for the increase in interest rates to come." Wrong on two accounts!

March 10, 2008: "Send me a thank you card in 5 years when you use the equity in your vacation home to help send your kids to college!" This one is laughable to the extent that it is stated as only a true used home seller and real estate daytrader/speculator could manage!

April 17, 2008: "Deep Creek Lake Vacation Rentals Still Going Strong." Oblivious.

May 16, 2008: "Why wait?" Because prices will be lower in the future!!

May 19, 2008: "Cyril Moulle-Berteaux of Traxis Partners LP recently reported in a May 2008 issue of the Wall Street Journal that that the real estate market has bottomed out and “The Housing Crisis is Over.”" I guess this one proves that you can find anything you want to find on the internet and that some of it is very wrong!

May 27, 2008: "Vacation Home Market Has It’s Own Set of Rules." “The continued demand by this segment (vacation home buyers) has driven up prices and values in our market even though other areas have seen price declines.” If only every would-be vacation home buyer got $3 million in stock options from Dick's each year.

January 15, 2009: "2008 Deep Creek Lake Area Real Estate Market Statistics." “The Deep Creek Lake area real estate market continued to show steady performance in 2008." Oblivious.

May 1, 2009: "Are We Turning the Corner?" Clearly, the correct answer was No!

September 3, 2009: "How is the Lakefront Real Estate Market at Deep Creek?" "Deep Creek lakefront properties have still continued to hold their value. " "The number of homes sold has decreased this year, but we are holding value. Now I know we are all talking about and hearing about all these price adjustments and decreases. Yes, we are seeing sellers drop prices, BUT, we are holding value. Home owners are not making as much on the re-sale of their property but they still have not dipped below the value they paid originally." Don't worry, prices aren't rising like we said they would, but, we are holding value. I know of quite a few sellers who would vigorously disagree!!

Buyer Beware!!

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.

Update on misleading statements from Deep Creek real estate agents ..

this time in reference to 163 Kendall Camp Circle, McHenry, MD.

March 07, 2008: "very competitively priced" at $899,900.

Final selling price: $725,000. Maybe the new owners read about this property on this blog and learned something that helped them in the negotiations. One only wonders.

At least he didn't say prices were going up in 6 months or that it was a good time to buy but when "competitively priced" is nearly $175,000 above selling price you really have to wonder what criteria were used in determining this price or that it was "competitive". What I'm really getting at here is how do these agents determine "value" or the right price so that they can say one price is competitive and another is not? In the one post I linked yesterday the agent said there were properties selling below "value" in January 2008 (so presumably there should be a lot more of them now)? How does he know though? Is it all based on previous selling prices or are there real valuation metrics they use? Or are they confusing "price" and "value" like I previously confused "perspective" and "prospective"?

Of note for prospective buyers, there are at least three other properties for sale in this same development ranging in price from $839,900 to $969,900 which have been on the market for an average of 480 days with essentially no price reductions. As noted by one of my readers there is an additional Kendall Camp property on the market for $777,000. Maybe he's the listing agent and wants to call more attention to his listing since it is listed by a broker that doesn't show up on Redfin and I can't tell how long it's been on the market or how many price changes it has gone through since it was built in 2006. The same reader also pointed out that another Kendall Camp property (123 Kendall Camp) recently closed at $940,000 (or about $20,000 below what the agent-owner had purchased the property for in 2006). So each sold Kendall Camp property referenced here was sold by DC Development LLC at WISP Resort to an individual who later resold the property at a loss. It turns out the 93 Brenneman Lane property which is headed for a huge loss was also a DC Development LLC property. My reader was right, I really should dig into this some more.

I'll reiterate one of my previous comments on this as well, if it's a great time to buy why are agent-owners selling at a loss right now? Shouldn't they be holding on to these investments that they are saying are going to rebound in price instead of making cut-rate sales where they are guaranteed to lose money? Why not wait it out for the rebound and sell for a big gain? No one has really given a good answer to that one yet, but I am waiting. I should also point out that this most recently sold property was originally listed for $999,000, so clearly there continues to be a precedent of properties selling well below list in Kendall Camp.

In fact, price reductions of these magnitudes can save buyers more than those slight changes in interest rates some people like to talk about when citing the reasons to "buy now". An example:

$800,000 30-yr mortgage at 7.0% = $5,322.42/month
$800,000 30-yr mortgage at 6.0% = $4,796.40/month

$700,000 30-yr mortgage at 7.0% = $4,657.12/month

All according to this simple mortgage calculator. Now which one would you prefer: paying $100,000 more or 1% more on the interest rate? Turns out paying the higher rate is cheaper per month but more importantly you have LESS debt so if in 5 or 10 years you sell the property you have $100,000 more in equity than if you would have paid more at the lower rate. A famous investor once said that he makes his money when he buys not when he sells, so as I have said before the real opportunities come from lower purchase prices not lower interest rates.

And finally, just for the record and to follow up on the first comment to this posting, I too have hinted to potential buyers that there may be good deals to be had in the Deep Creek market going back to early and middle part of last year and subsequently updating my thoughts periodically with comments on short sales, inventories, etc. However, you will notice that I simply offered my thoughts without adding the obligatory "buy now" or "prices will go back this summer" or "the equity gain from buying now will pay for your child's education in 5 years" or "the market is well and improving daily" when it really wasn't, etc. In my mind that is the difference between (1) presenting your argument and (2) being misleading or just simply giving really bad advice.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

2011 Short Sales

Updated June 8, 2011

Sold (4)

LOT #81 MOUNTAINTOP Rd: 2011 sold price: $70,000, listing suggested it was priced $100,000 below true market value. Somehow I'm skeptical. If that were the case why weren't buyers lining up to pay even $50,000 less than market value.

1835 MARSH HILL Rd: 2011 sold price: $675,000; 2005 sold price: $875,000.

321 TREE TOP Way #76: 2011 sold price: $420,000; previous sale was $95,000 for the lot.

199 UPPER HIGHLINE Dr: 2011 sold price: $650,000, another former DC Development LLC property gone bad. Seller (was it the bank or previous owner?) also contributed a $19,500 seller subsidy. Original 2007 list price was $1,099,900. Previous "owner" same as another active short sale listings at 342 Lakefront Links and an inactive, previously-listed, short sale at 335 Waterfront Greens - Morgantown-based LLC.

Active (9+)

200 KENDALL CAMP Cir: listed in 2009 at $689,900 as the owners of less than two years were looking to flip the property to make a quick profit, less than two years later the list price has been reduced to $534,900 - well below their 2008 purchase price of $610,900 - and the listing reclassified as a short sale. Read more in this Deep Creek property profile.

438 MALACHI Way: listed in 2009, relisted in 2010, now listed as a short sale in 2011.

105 HAILEE'S Ln: listed in 2008 for $1,200,000; several price changes and nearly three years later, now listed as a short sale with a list price of $722,500. If someone had bought this house on the advice of local real estate agents in 2008 and wanted or had to sell the property today, they would be looking at an investment loss of approximately $1/2 million. Big commissions for agents, big investment losses for those who took their advice. Consider that next time you consider taking their advice.

164 SUSANS Way, price reduced April 10th.

19 BRIDGEVIEW Ln: previously a pending short sale, now back on the market, current list price: $435,000; 2009 list price: $549,900.

634 NORTH RIDGE Rd.

135 JEFFREY Ln Unit 19-A.

70 PARKSIDE SOUTH Ct: current list price: $975,000; prior list price: $1,295,000; 2006 sold price: $1,275,000 (sold by DC Development LLC to couple from Potomac, MD).

342 LAKEFRONT LINKS Dr: current list price: $825,000; original 2008 list price: $1,199,900. Now listed as a foreclosure.

Pending (3)

252 PARADISE HEIGHTS Dr: pending short sale, current list price: $995,000; prior list price: $1,195,000; 2005 sold price: $1,259,000. Listing mentions that property is turn key with rental income. So here's my question, if the current owner is collecting rental income why is this a short sale where someone other than the current "owner" is taking the investment loss (potentially even you and me)?

38 SHINGLE CAMP Ter: pending short sale, current list price: $999,000, 2006 sold price: $1,307,000. Reduced by $300,000 on September 17, 2010.

111 ROCK RIDGE Ln #10: pending short sale, current list price: $289,900, 2005 sold price: $358,900.

And there are more active short sales that I will track down as time permits. Another question to ask is how many of these sellers are hiding or diverting assets in order to get their short sales approved?? Otherwise, we'd have to assume all of these sellers are essentially insolvent and have no liquid assets that the banks/GSEs could recoup to offset their losses.

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.

File this one under the one ridiculous argument deserves another category ..

Back in December 2007 after reading countless letters to the editor in the Republican, one example where I suppose the author would also be in favor of dismantling the environmentally destructive Deep Creek Dam, and numerous editorialized comments on Deep Creek real estate blogs about wind turbine development being nothing more than a massive tax avoidance scheme I composed the following (now edited to remove names) and submitted it to a local real estate blog. My comments and the editorialized comments speaking out against wind turbines were subsequently removed from that blog. For the purposes of updating how this blog came to be I thought I would share this for all to see. There will be more to come on why I started this blog as well as some comments on the valuable services that real estate agents provide in the coming days and weeks.



Real estate development is a tax avoidance scheme of magnificent proportions!!! Maybe it's time to start http://www.stopillrealestatedevelopment.org/.

** Under federal tax law, interest paid on a home acquisition debt of up to $1,000,000 for your primary home and second home are tax deductible (i.e. by paying interest to a bank you avoid taxes on other income, see IRS Publication 936).

** Under federal tax law, interest, depreciation, insurance costs, travel costs, repairs costs and utilities for rental properties are tax deductible (i.e. by owning rental property, as several local real estate companies do, you avoid taxes on other income and can depreciate the value of that property even as the market property value increases, see IRS Publications 463, 534, 535, 547, 551, 925 and 946).

** Under federal tax law, taxpayers can exclude up to a $500,000 gain on their primary residence (so by selling a house at a huge profit, you avoid taxes unless you have gained over $500,000, see RaileyRealty website).

So thanks to these tax laws, big real estate companies skim off millions of dollars in transaction fees and out of state banks like Countrywide rake in millions more for pedaling risky no money down, interest only loans to the financially naive (all helping to push consumer debt to record highs while housing affordability is at record lows relative to personal income). At the same time representatives from the mortgage bankers association, the national association of mortgage brokers and the national association of realtors head to Capital Hill day after day to insure that these tax laws remain in their favor. I've been there and seen them with my own eyes, right along side the guys in cowboy boots from big oil and big coal. Then when things get bad and foreclosures rise and property values decline guess who shows up in Washington to ask for even more help, you guessed it. So now you hear talk of "bailouts" and of course the Federal Reserve cuts interest rates to help bailout these people who have been talked into reckless decisions by their realtor and/or mortgage broker. Of course cutting interest rates penalizes those who were not reckless and have saved and/or rely on interest income to pay their bills in retirement, so while the government bails out Countrywide and the realtors and tries to prop up inflated real estate prices the little guys get hurt and the next generation looks at a future where the American dream of owning a home is unattainable (of course these things have a way of correcting themselves over time, no matter how much money the government throws at the problem).

** "Today, the NATIONAL ASSOCIATION OF REALTORS® is widely recognized as one of America's strongest, most effective lobbying organizations." (See National Association of Realtors, http://www.realtor.org/)

Meanwhile, real estate development goes on and homes are continuing to be built using undocumented labor and even documented workers who are paid "under the table" in order for the employer to avoid payroll taxes and allow the employee to avoid taxes all together. A massive tax avoidance scheme!!

And all this development, especially near Deep Creek Lake, takes over acre after acre of farm land that is permanently ruined for farming all so rich folks from "down state" can have their tax deductible second homes. Small farms that have been in families for generations are developed with energy hog homes that are reached by energy hog SUVs and the small family farms that have kept Garrett County rural and are its heritage slowly disappear. Mountain slopes are cleared of thousands of trees to make room for more and more second homes for rich folks looking for tax avoiding second homes. These are the facts and they are undeniable, every time a family from DC heads west to Garrett County, the local real estate companies ring the register as more and more visitors stroll through their own tax avoidance personal amusement park. And this all happens while other folks move to Garrett County and tell everyone else what they should think of wind power and the county they have lived in all their lives.

Like I said, one ridiculous argument deserves another.

Just as the government gives tax breaks to promote investments in infrastructure (transportation, energy, telecommunications, etc), it also gives tax breaks to encourage investment and home ownership so please stop using this massive tax avoidance scheme argument relative to others when you are benefiting from a similar one yourself.

And speaking of investment, if your employer has a 401(k) plan you most likely are invested in General Electric in one way or another. They are one of America's largest, most respected companies and largest supporters of clean energy technologies, so stand to benefit greatly from what you have called "tax avoidance" schemes. Are you prepared to divest your holdings of such companies which would be transferring profits to you as a share holder as well?

Don't forget to check back to Dan's Deep Creek Blog for future updates.

Deep Creek Market Update ..

I've read a lot about the state of the Deep Creek market and have even seen some infer that property values are up despite what is going on in the rest of the country. So I wanted to know if buying in 2006 would have still been a good investment (since people are reporting values are up since then) and recently did some research to uncover just how good of an "investment" a property pulled from the listings was for its "investors".

The rundown goes like this. The current owners purchased the property from DC Development, LLC in June 2006 for $749,900 and the property is currently listed for sale at $799,900 after initially being listed for $899,900. At first glance, it still looks like the owners stand to make a quick $50,000 on their "investment" or a modest 6.5% gain over the purchase price of two years ago. This is, of course, what the real estate agents promoting these properties as good investments would have you believe. A more critical examination, however, would include closing costs, transfer taxes, real estate commissions, etc.

Using publicly available information from the MD Land Records Database, one can see that the current out-of-state owners used a combination of first ($599,900 ARM, at 7.5% with 5-year interest only period) and second ($149,500 fixed, presumably at a higher rate) mortgages to enter into a $500 down purchase of this property where they also paid approximately $16,000 in taxes and fees and I would guesstimate about $10,000 more for the privilege of taking out a loan from their out-of-state bank. Adding all of that up and assuming they invested no more money in the property for improvements or upgrades you have about $776,000 as the true cost to purchase this property. Now consider they are using a real estate agent to sell the property and he and his broker may command a 6% commission on the selling price.

This means even if they do sell the property at the current list price the sellers will likely only receive about $751,000 from the sale which is likely about $24,000 less than they have invested in the property meaning that they will almost certainly take a loss on the sale of this property (unless my assumptions are dramatically off). Of course, it is also all together possible that the final selling price could be well below current list price, stay tuned.

Now what was that I was reading about property values being up and the DCL market being "well and improving daily". Obviously this is only one property but this observer is unconvinced that the market for existing houses has improved at all since 2006. Furthermore, I hope that this analysis shows my readers the hidden "costs" of real estate investment that the real estate agents don't mention when they talk about "rising values" and gains you can make on short-term investments.

Don't forget to check back to Dan's Deep Creek Blog for future updates.

After 1516 days on the market is it really still "new" construction?

Here we have 255 FANTASY Ln MC HENRY, MD 21541 built in 2007 and still listed as new construction after 1516 days on the market. And, oh by the way, the price was recently reduced again (from $849,900 to $629,900 to $599,900). Property was originally listed for at least $899,900.

According to p. 205 of this link, apparently the current owner (RIGALCO LLC, which appears to be a shell company for an Annapolis-based general contractor and his business partner) is well behind on the property taxes and the property may be sold by the county to collect the debt.

Property #: 257
RIGALCO LLC ELECTION DISTRICT NO. 18 ACCOUNT NO. 18085135
All that parcel of land assessed to the above in Tax District No. 18, known and designated as Lot 12 on the plat of Phase IX-A Fantasy Valley recorded in Plat Book DKM 3, page 265, containing 0.47 acre, more or less, and described in deed from D. C. Development, LLC to Rigalco, LLC dated November 10, 2006, and recorded November 14, 2006, in Liber No. 1266, folio 89, one of the Land Records of Garrett County, Maryland.
State and County Real Estate Taxes Due for 2009-10 and 2010-11
Total Amount of Taxes $15,023.36
DOI Penalty $ 0.00
Cost of Sale $ 146.00
Sanitary $ 0.00
Total as of the Day of Sale $15,169.36
Assessment $597,930.00

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.

More Deep Creek Short Sales ..

I guess those luxury foreclosures I've been reading about in the Washington Post and on CNBC have spread to Deep Creek Lake as well (as expected). Click here for more details on 199 UPPER HIGHLINE Dr. This property has been more or less listed for sale for three years now and is yet another DC Development LLC property gone bad.

And two more in Waterfront Greens at Deep Creek Lake (another area with a checkered sales history that I've previously blogged about) at 335 WATERFRONT GREENS Dr and 342 LAKEFRONT LINKS Dr. Apparently, all that supposed rental income wasn't enough to keep the current owners afloat, so potential buyers dodged a bullet by not falling for the "analysis" of a real estate agent on this one.

Another still two more on Shingle Camp at 3285 SHINGLE CAMP Rd and 38 SHINGLE CAMP Ter. I guess "few and far between" was in the context of the massive Deep Creek inventory, not the modest number of monthly sales.

At this point, I really have to question whether the author of the real estate blog which has made claims about the market being well and improving daily (in 2008) and recently stating that distressed sales are few and far between is being forthright in his disclosure. If you are in the market you should be asking these questions as well! Buyer beware!

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.