Have you ever heard of Palm Island. This development has been so massive and exciting that it has been featured on the History Channel’s Modern Marvels TV show. I first got a glimpse of the the project in 2002 when I was working as an Art Director at a large real estate advertising firm. I was sent an e-mail advertising the new development and I thought it was a hoax.

A developer (Nakheel is the worlds largest privately held property developer) has built an island off of the coast of Dubai in the shape of a palm tree. They literally raised the island out of the ocean. They used huge ships that draw sand up from the bottom of the ocean and then spit it out of a high pressure nozzle that sprays the sand into the air and deposit it in lumps that they build up to form islands. The development was so big that if all the fill materials used to build one Palm island were placed end to end, a wall two meters high and half a meter thick could circle the world three times. The development of this real estate project was so large that it is one of the only man made objects that can be viewed from space.

I just did an internet search on the project and it looks like it has blossomed since 2002 when I first noticed it. On Nakheel’s web site there is an interesting interactive map and time line of events for all of Nakheel’s development projects. It looks like even Donald Trump has gotten into the game with a futuristic looking hotel that will be built and marked as The Palm Trump Dubai.

If all this was not enough the success of this project has spun off another development that is called The World. Private islands are being raised out of the ocean off of the coast of Dubai. They are arranged in the shape of the continents, and encircled by a breakwater that makes the project look like a map of the globe from space. This is the only place on our planet, where You can buy a 5-20 acre man made island.

Talk about development on a grand scale!

I am always saying how interesting our clients are. One of the perks in my business is to see what interesting businesses and projects people are working on in the Bay Area. Our high property prices dictate that many of our clients are working on interesting high profile projects.

I recently sold a second property to a client who I have known and advised for several years. He is an engineer in Silicon Valley who recently took a new job at one of the most interesting electric car companies I have seen. Being that my office is in Berkeley, California, I often see electric and hybrid vehicles traveling around the city. None of them look all that appealing, and I have also test driven them and they are not what I would call fun to drive.

I recently checked out the web site of my client’s new company Tesla Motors and it made me want to go out and buy one. So, although this is not finance or real estate related I thought I would post a bit about their new Electric Roadster.

The vehicle’s performance and engineering looks impressive. It is 100% electric, goes 0 to 60 in 4 seconds, and travels over 200 miles without recharging. Not to mention it is a beautiful looking sports car. The initial production run of the vehicle sold out in just 4 months. All I can say is, “Wow, I want one!”

Rachel and I gave a talk at Stanford University last year where we discussed some basic but not obvious financial thinking. One of our claims was that people who share our spending philosophy will be more satisfied and more wealthy. Our philosophy is basically this: each time you buy something, consider whether you want to trade up or trade down. If you trade up every time, you will likely find yourself with very little savings. If you trade up part of the time and trade down part of the time, you will see your financial situation improve. We think that trading down every time would be better financially but is not practical since all of us want to splurge on ourselves now and then.

We gave specific examples of trading up and trading down and what impact this would have on one’s IRA in 30 years. The numbers can be huge, especially on large ticket items.

So when you go to make that next purchase, consider whether you want to take this opportunity to trade down and save money or if trading up is worth the cost. If you want help figuring out how to make the calculations or if you want to explore how this thinking will dramatically help your bottom line, just contact me and I’ll walk through the numbers with you. cvanemon@opesadvisors.com

MONEY; Cutting Costs While

Appearing Savvy

By FRED BROCK

Published: April 10, 2007

If you have been whipsawed by the stock market and have seen the value of your house plunge, you might be looking askance at your retirement plans. If you are already retired, you may be worried about staying that way without looking for a soup kitchen.

Well, try to relax and remember something important: you can increase your income by cutting expenses, which could save your retirement.

We live in such an affluent society that you can eliminate plenty of expenses without becoming a cheapskate. (more…)

 
Thank you bfurnace for the photo.

Arizona regulators have taken a shot across Zillow’s bow. You can read more about the story on Fox11az.com.

The regulators in Phoenix Arizona are saying that Zillow is providing what they consider an appraisal with out an appropriate license. The Arizona Board of Appraisals has issued two cease-and-desist letters to Zillow. Zillow has often been accused of having a faulty evaluation algorithm that is misleading real estate consumers.

I’m attaching a link to an article that is not written for the target audience of this blog.  (Our audience is top 5% or higher household income) However, I am including it here for you to notice that the press does and I believe will continue to put a happy face on the return of retirees to the workforce.  The claim is that they are returning out of boredom yet the truth is that they are returning because they need the money.  This is borne out in the retirement statistics that are published by the government.  Most retirees have saved too little to continue their lifestyle into retirement and so they have to return to work.  The lesson here is to do retirement planning, save, invest, learn and update your plan at least annually or as your situation changes.

Prepare to Un-Retire

This is a cool app taking you on a roller coast ride of US house appreciation over the last 117 years. 

Real Estate Roller Coaster

Enjoy the ride!

Most people assume the offer with the highest price wins. In Bay Area real estate nothing could be further from the truth. Why you ask? This is because there are two basic parts to a real estate contract, price and terms. If you win an offer based on terms then you may not have offered the highest price.

Let’s take a quick and simplified look at why the terms of a contract are often more important then the price. Hypothetically let’s say that two contracts are submitted on a single property. Offer #1 is submitted at $1,025,000 with a 3 day inspection contingency and a 3% deposit. Offer #2 is submitted at $1,000,000 with no inspection contingency and a 3% deposit.

An inspection contingency protects a buyer’s deposit and makes the California Association of Realtors Residential Purchase Agreement an option to buy. The seller now has a dilemma. Offer #1 allows for the buyer to drop out of the contract or negotiate price and terms for 3 days with no risk to the buyer’s deposit. Offer #2 is $25,000 less, but if accepted immediately puts the buyer’s deposit at risk. In this situation the seller is confronted with assessing what an inspection contingency is worth.

At this point in the negotiation a Seller has only 3 options. The seller can decline all offers, counter 1 or both of the offers, or accept one of the offers. First, if a seller really does want to sell, then they probably will not decline all offers. Second, all good real estate agents know that you should not counter a buyer’s inspection contingency. It is legally too dangerous to deny a buyer their right to investigate a property (this is one of the reasons why an offer that is submitted with no inspection contingency is powerful). The seller could counter offer #2 up to the $1,025,000 price, but they could also risk alienating this buyer and losing them all together. I have witnessed sellers that have lost great offers by making aggressive counter offers. So we are left with 2 options… Take offer #1 or take offer #2. Ultimately many sellers are willing to take a lesser offer that is more likely to close. For if offer #1 backs out of the contract then offer #2 may be gone and the seller may be faced with no alternatives.

The reality of our hypothetical example above is that the situation is rarely this simple. In the Bay Area there are often many more then just 2 contracts (I just witnessed a property in El Cerrito, California that had 31 offers) on a single home. The example above also simplified the contract to 3 terms. In reality there are many more terms to consider when writing an offer.

Ultimately, finding an exceptional real estate agent and consulting with them on how to approach writing a powerful offer, can save you money. It is always important to make sure your agent is adequately protecting your interests when writing an offer. Please note that this article does not advocate writing offers with out inspection contingencies. It is always important for buyers to have adequate time to perform any and all inspections deemed necessary before purchasing a home. This hypothetical example is solely used to demonstrate that terms are an extremely important part of an offer.

Major subprime mortgage

lender files for bankruptcy, fires

 3,200 workers

Story Published: Apr 3, 2007 at 8:14 AM PDT

By Associated Press

LOS ANGELES (AP) - New Century Financial Corp., once the nation’s second-largest provider of home loans to high-risk borrowers, filed for bankruptcy protection on Monday, the victim of its own financial missteps as well as pressures felt by its rival lenders.  

New Century immediately fired 3,200 workers - more than half its work force - and said it intends to sell off its major assets.
(more…)