Wednesday, June 15, 2005

The Duke Cunningham real estate deal

Josh Marshall @ TPM is on his game pursuing the IOKBHAR (It's OK Because He's A Rebublican) deal by which a California congressman piucked up perhaps a half-million dollar windfall from a defense contractor. (Go here to read the basic plot.)

His latest posting points out that the fig leaf that made the whole deal pass the principal's obviously too-lenient sniff test was the "appraisal" of Cunningham's home performed by the selling broker. (To be fair, Cunningham didn't call it an appraisal -- he called it "comparables from an independent source establishing the value of the home.")

Personally, I wouldn't lay out that much long green for a house without a formal appraisal. In fact, like most mere mortals, I couldn't, because my mortgage lender would insist on a formal appraisal, by a licensed appraiser. They would laugh in my face if I aske them to trust the selling broker's opinion.

Brokers give comps all the time. But there is a fundamental conflict between the professional obligations of an appraiser and a broker. Brokers are almost always compensated as a percentage of the sales price; "(a)n ethical appraiser never works "on commission" and never charges according to the value of the property."

So Cunningham and Elizabeth Todd, his broker, would seem to be caught in what chess players call a fork: if the valuation was an "appraisal," it was improperly obtained and delivered; if it wasn't an appraisal, it provides little or no justification for the price.

And as an interesting aside, Googling "Elizabeth Todd," San Diego and "real estate" yields this story, but no other references to Ms. Todd's real estate business. It does, however, reveal an "Elizabeth Todd Designs" on the Carlsbad Chamber of Commerce site, for "Clothing - Women's & Accessories." Is Ms. Todd a full-time real estate person? It would be intresting to know more about Ms. Todd's business and qualifications.


Anonymous Anonymous said...

Elizabeth Todd and her husband Whitney live in a home on his parent's property and have for years and years. Whitney Todd is your classic underemployed rich ne'er do well who sponges off mom and dad--both well-to-do Repuglican donors. I don't believe he's ever had a "real" job in his life. Elizabeth essentially married him for his parent's money and the real estate venture is a good way to seem "busy" for both of them. Too bad they got caught in Duke's lair.

9:37 PM  

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