TS, Thanks for that. It was an informative insiders view. I don't have a license, but I have acted as my own agent and done FSBO stuff without an agent here in Florida when buying "no frill" investment properties. But I can definitely see the value in using a realtor if I was going to sell, or buy property with more features. I can't tell you how many of my friends are realtors, as I have lost count. Wonder what they'll be doing in a year or so. SM
Trendsailor, thanks for your points. It is quite refreshing to see counterpoints made with cogent arguments unlike the usual and customary counterpoints that starts or ends with expletives. I agree with your points about buyer's brokers earning whatever they make, they really work for it and provide a valuable service. I don't doubt that their service will be needed in the future. They are not unlike lawyers, accountants and others in the service industry. What I am questioning is the validity of the 3% paid to the listing broker. There are about 20 properties here in my area for sale. The houses are from 600-900K. Let think about this for a minute. The listing agent fee for a median listing in this area is $22,000. If the house sits for 6 months do you honestly think a broker will spend 5% of this $22k to advertise the listing? Let's see,- a yard sign with her/his face on the sign, a bubble container, maybe 400 brochures, maybe a 4-hour sunday open house held 4 times in this 6 months, a listing at realtor.com for what..$75/6 months? In your paragraph about cherry picking listings, you mentioned that you would laugh discretely at sellers who want you to advertise their property. If listing brokers are not willing to do that, what are they paying them for? I don't think anyone should pay somebody 22k to keypunch room dimensions to the MLS. While the buyer's broker is fielding calls from their "psycho" buyer at 10 PM and driving them to 20 houses the next day, the listing agent just has to sit tight, do a little ego massaging to the seller who in now anxious that his 700k house is getting no looks. (We all know the reason why...the listing agent gave the owner the price he "hopes" to hear and will "convince" him to lower price 50-80k over 5 months). As much as I respect your opinion, I stand by my estimate that the marketplace will, 1 day, sort out this inequality and perhaps reward the buyer's agent with a biggger pie piece. Changes in the marketplace has always moved at a glacial pace, specially when bumping up against "pseudo cartels" like exchanges, NAR . Just look at trading floors. They were essentially unchanged for 100 years but look at the velocity of change in their form in the last 1.5 years! My lawyer who has handled closing in my area for 25 years has not heard of flat fee MLS where a seller can pay $400 and have their property exposed to hundreds of buyers agents. These firms are in my opinion what ISLD, ARCA, Schwab , Walmart were to their respective niches. I love your idea of serial deposits to wake up my buyers. Gotta bring that up to my lawyer. Thanks again.
Hey Jem - I think you are hitting on an important factor here that may help our national economy still somehow manage to muddle through the real estate problem. That concept is "relative value". Money (and people) should migrate to the best lifestyle "value" relative to other competing parts of the country. With FL having no state income tax and in general a very laid back lifestyle with mostly low crime (except s fl) I think the demographics still support FL. The one killer we have though is that insurance costs that have gone 2x -3x in the condos. But parts of FL like the west central and east central areas are remarkable values still for amazing waterfront lifestyle and recreation (golf etc). The other negative we have is the humidity that northerners seem to whine about. In truth its not worse than what they get in the inner cities up north and we have coastal breezes. But between Nov and May this is quite nice here and very temperate. I think this will trump most other considerations for retirees. But at some point there is going to be a large price to pay for the rapid growth on infrastructure and I see no way around communities having to bump up tax millage rates significantly. Just thoughts, TS
Bubbles typically last a lot longer than people anticipate. I dont think this is anywhere near over. How can anyone say this is over *before* the majority of the interest only arms from hell have reset? The local san diego paper,recently, had a list of declines for areas from their peak prices. These are median home prices for resale of single family homes. Coronado: -64% Carlsbad southeast: -32% Point Loma: -31% Poway: -28% Escondido West: -25% At the peak, the median price of a Corondao home was 3 MILLION DOLLARS. Imagine being the bag holder who bought at the top and is down 64% right now. Try telling him he wasnt caught in a real estate bubble. With all time record high inventories, and 10X interest only arm resets coming next year, there is no way you can say this is over. At least not in southern california.
Agreed. Not in California. Those people ignore earthquakes, floods, fires, mudslides, traffic and the entertainment industry for the priviledge of living there, and I'm sure that after they pay $300 a square foot for housing, once in the while they have second thoughts. But...there are a hell of a lot of places to live that aren't in southern california or a condo in south florida. I speak about the whole market in general. Otherwise, it would be like trying to take the pulse of the stock market by looking only at Enron. Those people who put their life savings into Enron stock are walking cautionary tales, and almost all of them are still suffering for it, but they are not the typical investors... SM
With great sympathy toward the folks that lost it all with Enron, they didn't diversify, didn't protect themselves against the downside, and they were buying something that was over-inflated with a "it can't fail" mentality. And they were doing it because their coworkers were doing it, and they were blinded by paper profits. I think the analogy works pretty well.
I've said it hundreds of time: To quote national housing as either in a bubble or not is plain crazy. Housing is a regional issue and not national. Nobody living in CA or FL cares what's happening in Salina, KS. No offense to Salina. Just as those in Salina don't generally care about other areas. CA will get MUCH worse than it is now. I expect at least a 50% retracement from the highs. When IO/ARM resets occur and blast people out of houses they had no business buying in the first place, it'll get real ugly. Some areas had up to 80% IO/ARM loans on purchases since 2004. That means LOTS of loans up for reset. Can you say BOOM!
Yup, that pretty much sounds like socal. Everyone thinks their home is going to double in the next 5 years. Heh. Not anymore. That euphoria is gone and starting to be replaced with a lot of worry and dread. It could get ugly here. Not sure about 50% decline from here, but there is plenty of room to go down. I dont this this bubble is going to pop as much as deflate. We'll know in the next 3 years. I have too many friends here in extreme pain making their mortgage payments and they havent hit their first ARM reset yet. Their interest only loans will reset too. double whammy. Have no idea how they will make their payments if they are just clawing by already.