Tuesday, January 25, 2005

Steel Specs

9/11, earthquakes, and various and sundry other natural and unnatural disasters have compelled us to realize that our building strength calculations need improved. This year the American Institute for Steel Construction intends to do that with its new Specification for Structural Steel Buildings. I won't go into the mathematical details, but believe me that the new direct analysis method is a quantum leap improvement of the old K-factor calculations. Easier to work with and more representative of reality. Check out www.aisc.org for details.

...And Death to Real Estate Agents?

It used to be that FSBO meant hanging a sign in front of your place and waiting. Your alternative was paying an agent full commission. Not anymore. The Internet is a whole, new world, and lots of companies are out there to help sellers and buyers make use of it. And they're growing. Rapidly.

Real estate sales professionals need to closely examine the value they are adding to a transaction if they want to stay in the game.

Death to Letters of Credit

Ever used letters of credit? Ever wonder why it took so long to get one only to finally receive it and have the misfortune of learing firsthand why it took so long? Ever gag on the cost? Ever have to rely on one and find it didn't really amount to much? Ever think there had to be a better way?

Well, there is. International trade is leading the way with trade credit insurance, and such policies are already quite common in Europe. The idea is spreading here in the US, so we may finally be able to start insuring or bonding around the last, few pockets that have used LCs (some of them in real estate and construction).

What does that do? An LC is basically self-insurance with a fully funded, blocked reserve fund. Those assets can now be released by purchasing insurance instead.

The Next, Great Law Suit

Let's see, what new thing in real estate can we find to sue over today? How about "inadequate disclosure of environmental liabilities"? "Huh?" I hear you say. Simple. There are plenty of activities out there creating present or potential environmental liabilities. There are plenty of folks also sitting on land where such activities once occurred. Businesses need to disclose such potential liabilities for all sorts of reasons, major ones being securities regulations, insurance, and real estate transactions.

Problem: There is NO standard for such disclosures, so neither disclosers nor disclosees know if the disclosure was adequate. Coming soon to a courthouse near you.

Enterprise Organizations

That sounds impressive, doesn't it? No, I'm not talking about the TO&E chart on Star Trek. Every business has to have a form, and real estate businesses are no different. Go get one!

But which one? It used to be that incorporating was the smart choice, but it could create some paperwork hassles (including taxes). Now, though, you have the limited liability company, which is treated like a corporation for liability purposes (It shields you from liability.) but has the simple tax treatment of a partnership. So if you're in business, get your LLC on. Whatever you do, don't go as a sole proprietorship (which leaves you individually liable for anything that goes wrong) or a partnership (which leaves you liable for your partners' screwups as well).

Deutschland ueber alles

So much catching up to do.

On 12 January, Metzler N.A. (on behalf of Deutsche Immobilien Fonds) purchased two-thirds of the old Nordstrom building in Seattle for $55.1 million, with Pine Street Group retaining the remainder. This building was the Nordstrom's flagship until they moved across the street to where Frederick & Nelson used to be.