Real Estate Information

After months of financial reports that should scare anybody without a sizable nest egg into holding on to their money this holiday season, Black Friday entered like a lion.

Crowds were lined up in front of every major chain in America at earlier hours than every before. Many malls opened at 12:01 a.m. Black Friday morning.

Unlike last year when sales disappointed, American consumers were ready to buy.

The nation s retailers had a robust start to the holiday shopping season, according to results announced Saturday by a national research group that tracks sales at retail outlets across the country.

According to ShopperTrak RCT Corp., which tracks sales at more than 50,000 retail outlets, total sales rose 8.3 percent to about $10.3 billion on Friday,

the day after Thanksgiving, compared with $9.5 billion on the same day a year ago. ShopperTrak had expected an increase of no more than 4 percent to 5 percent.

“This is a really strong number. You can t have a good season unless it starts well,” said Bill Martin, co-founder of ShopperTrak, citing strength across all regions. “It s very encouraging. When you look at September and October, shoppers weren t in the stores.”

One of the arguments being made against housing is that consumers are not only unwilling to buy, but due to increased lending restrictions they are unable to buy. The bottom line is consumers will hold off buying if they don t have confidence and they don t perceive a “good deal.”

The opening holiday weekend showed to me that “good deals” were available and consumers acted on them. In some cases, products were completely sold out.

It was only half an hour into Black Friday, and a customer at the Toys R Us flagship store in Manhattan s Times Square was already yelling, “The Zunes are done!”

Heaven help you if you have a Wii on your shopping list.

“Wii!” yelled a woman into her cell phone, as she walked past a wall of Xbox remotes. Nearly half an hour after the doors opened, the Wii supply was still holding out.

“We got three walls of Wiis,” reported store employee Jose Vargas. He said the consoles had sold out a few days ago but were re-supplied in time for Black Friday.

Meanwhile, a six-foot stack of Extra Special Elmos had dwindled to a height of two or three boxes, despite the fact that this year s edition is only slightly different from the 2006 model.

The lack of innovative new products was not lost on consumers.

“The Wii was last year!” yelled a consumer with a plush Spiderman in her hand. She stood in a line that snaked, anaconda-like, through the video game section.

Retailers are willing to discount this year despite profit erosion. Wal-Mart made a campaign last year solely on attracting a higher class of customer and offered upscale lines that floundered. They ve gone back to their roots this year and are finding enormous success.

A whiff of this already showed up when the nation s largest retailer posted third-quarter earnings Tuesday of $2.86 billion, an 8 percent rise that beat Wall Street expectations.

Retail experts say Wal-Mart s flagship U.S. stores may be in the midst of a turnaround after two years of a zigzag course between upscale and discount goods that has slowed sales growth.

Tomorrow ushers in another shopping barometer known as Cyber Monday where workers returning to their jobs after a long weekend shop online for further deals. We ll know soon how this holiday shopping season will turn out, but the effects of the housing downturn have yet to be seen.

With interest rates continuing to drop and strong employment, I personally see a lot of opportunity in the housing market. As builders are following the same pattern of discounting retailers are, “good deals” are out there.

Let me conclude with a quote from Ian Plenderleith speaking to the Fort Williams Chamber of Commerce in Scotland ten days after 9/11. He said,

We may be unsure how long the process will take, but my own view is that no one should underestimate the resilience of the American people and the underlying strengths of the US economy. There remains every reason to be confident that those strengths will come through.

Another real estate scam hit the news today. This time mortgage fraud wasn t involved, but real estate was still the center of the scam.

Promising yearly returns of 18%, Kenneth K.C. Tebbs involved dozens of people for millions of dollars in a scheme he claimed was tied to legitimate real estate investments. The “investment” was backed by title to real estate, but when investors checked up, they found nothing.

KSL reported -

They thought their money would be used to purchase residential lots in booming communities in Salt Lake and Utah counties, and company notes indicate their money was secured by deeds of trust.

We asked Gomez if he has his name on a lot.

“No,” he answered. “It was never secured.” He doesn t know where the

money went.

This investment opportunity, presented by companies MNK Investments and/or Twin Peaks Financial Services, is a typical Utah based scam, based on the principles of a Ponzi scheme. The investors involved are out hundreds of thousands of dollars. The total amount lost amounts to millions of dollars.The allegations are sweeping through the south end of the Salt Lake Valley. They involve dozens of investors, millions of dollars, and a deal that sounded so good even law enforcement signed up.

Many of those duped used borrowed money, mainly from equity lines, to finance their investment. Now that money s gone. I wrote extensively about this exact same scam concerning failed real estate investor Casey Serin some months ago. He too came to Salt Lake to investigate one of the dozens of companies that engage in this illegal activity.

This type of scam is nothing new. It was made famous in the 1920 s by a crook named Charles Ponzi who ultimately had this version of malfeasance named after him. Whether it s wrapped up as real estate investing, stock investing, currency investing or tulip investing the end result is the same, the investor loses their money. The brilliance in the scheme is the fact that early on, the promised returns are actually delivered. The operator of the scheme pays earlier investors with money from newer investors and gets those people to commit even more money to the scheme.

In the end, no new investors are recruited and the scam collapses with only the operator left with any money. In this instance, as with every instance, the operator says they did nothing wrong. Mr. Tebbs is so bold as to ask the judge to let him go -

But in the response to the civil lawsuit, he says he s unable to repay or refund the investors at this time and asks the judge to dismiss the claims against him.

I suggest the judge throw the book at Mr. Tebbs because he s had the money to buy nice cars, a nice home, a boat and other luxury items.

In the civil lawsuit filed recently investors did ask a judge to make sure the owner of the company can t sell his cars, his boat, his motorcycle and other items until they get a shot at getting their money back.

So how does one protect themselves from such a situation? First of all quit believing everything you hear. If it s too good to be true, it is! Ask questions. My cursory investigation of Mr. Tebbs shows he had an insurance license that lapsed in 2005. Why? I suspect it was because he was raking in “investment” dollars. He also had a mortgage license. It too lapsed. Again I ask why? And why was he conducting a real estate investing business without a license? These are the questions you ask when you invest hundreds of thousands of dollars. If you don t know to ask them, you shouldn t be investing, especially not borrowed funds.

The sad thing is there are dozens of these schemes floating around in Utah. If you currently have money in such a scheme, pull it out as fast as you can. Even if you re making money right now, you need to get it out. Eventually, the pyramid will come crashing down and you ll have nothing left.