“Stubborn Home Sellers Could Worsen Downturn”
A housing report from the Washington Post. “At a recent meeting with her Las Vegas real estate firm’s 200 agents, Joanne Levy told them they needed to deliver a stark message to clients. They would tell them that unsold homes are at a record level and sellers need to lower their prices.”
“In other words: the boom is over. ‘They want the 2004, 2005 market,’ Levy said of today’s clients. ‘We don’t have that.’”
“With stubborn sellers refusing to relent on asking prices, many prospective buyers have kept their hands in their pockets. Some industry observers fear that bull-headed home sellers could worsen a downturn by driving up the inventory of homes for sale and running off would-be buyers.”
“‘Sellers have not caught up with the reality of the marketplace despite the proliferation of ‘For Sale’ signs,’ said Howard Glaser, a mortgage industry analyst in Washington, D.C. ‘There is a lag period between sellers’ expectations and the reality of the marketplace,’ he said, and shaking them out of their high-price fantasy ‘is more psychology than science.’”
“Las Vegas had 20,800 single-family homes on the market in September, a 57 percent jump from a year earlier. It’s the same story in once-booming regions like California, where home prices in eight major markets declined in September compared with a year earlier.”
“Despite these truths, real estate agents say, many sellers continue to overreach on their asking prices. ‘I try not to list those properties,’ California Association of Realtors President Vince Malta said of the overpriced homes. ‘You could do that last year and someone would still come in and make an offer,’ he said. ‘Back then, we were all marketing geniuses.’”
“A homeowner’s blind faith in the price of his or her home could be costly if it flies in the face of reality and prices continue to drop, said Stephanie Madon, a psychology professor at Iowa State University. ‘If the homeowner believes the house is worth a lot and refuses to budge, it could become a self-defeating prophesy,’ she said.”
“In the end, stubborn sellers could lose more home value the longer they delay.”
From CNN Money. “An Austin couple, Richard Morrisett and Regina Maldve, had a lot to learn about selling a home. That education is costing them big money. They had put their three-bedroom, two-bath house on the market in April for $419,000, then dropped it to $399,000. In June, just as they were moving to their new home, they finished negotiating a verbal offer of $393,000.”
“Eight hours later, they had another bid - at $399,000. That’s where the trouble began. They failed to land either buyer and the couple is still trying to move the property.”
“When the couple finally changed brokers, they discovered they had overpriced the house, with comparables in the neighborhood about 25 percent lower. They repriced it for $365,000 but still had no bites. They dropped it to $359,000 with the same results.”
“Meanwhile, they were now over-extended with two mortgages. They had counted on proceeds from the sale of the old house to pay for some upgrades on the new one. They borrowed to make their payments - and worried a lot. ‘We can’t carry two mortgages and other bills and credit cards,’ says Maldve.”
“Their salvation may be at hand. They have accepted an offer of $350,000 and took a down payment. But the new buyers have asked to delay closing until they can sell their own house. ‘But we need to close before Oct. 31,’ says Maldve.”
“They feel they must close before the end of the month. The brinksmanship is nerve wracking. Says Morrisett. ‘Even if the deal goes through, we’ve still lost more than $40,000, because of bad advice. Not to mention the loss of six months sleep and fights over where to get the money to tide us over.’”
A housing report from the Washington Post. “At a recent meeting with her Las Vegas real estate firm’s 200 agents, Joanne Levy told them they needed to deliver a stark message to clients. They would tell them that unsold homes are at a record level and sellers need to lower their prices.”
It’s called conditioning……….now it’s time for sellers to get their education.
“It’s called conditioning”
aversion therapy … Psychology, Psychiatry.
a type of behavior conditioning in which noxious stimuli are associated with undesirable or unwanted behavior that is to be modified or abolished
Realtor (TM) to sellers: “Prozac, anyone?”
Actually GS………..it’s a shame that home buyers can’t see the golden opportunity that is opening up here for them.
All they have to do is put off buying for 12-18 months and this whole pack of cards will implode. The best way to kill this beast is to stop feeding it.
Pen posts “aversion therapy … Psychology, Psychiatry.
a type of behavior conditioning in which noxious stimuli are associated with undesirable or unwanted behavior that is to be modified or abolished ”
In my hood we call it a butt whoppin’
Where the hell is Pavlov when you need him? Wuff..Wuff..
whoa, Austin is a super groovy,young town- can’t be soft
WTF !
Man, I looked at the pic of that house. 350K my ass. It should sell for 225 absolute max.
And I see my buddies “Mr. and Mrs. Trout” in Florida didn’t get their place sold! Wonder if they walked the 28K deposit?
I checked Realtor.com for a coastal area in Florida where I have some interest and usually find a couple hundred homes meeting my parameters. I checked today and 2500 homes out of 7500 available met these same parameters. Unbelievable!
That’s insane fiowa…out of three relatives trying to get out of south fla. one has had one offer, since jan 06…rumor has it would-be sellers are pulling their homes off the market and now trying their hand at renting properties. why pay 3000 for a mortgage when you can pay 1000 to rent the same place!
The problem with the CF neighborhood is that most of the houses are 1200-1867 SF, with the highest dale in there being 291K for 1867 SF with a screened pool.
It looks like maybe 15 houses were built much larger, but none have gone for resale since built.
I’m sorry, but you can’t use as true comps houses from the gated golf course community across the street, where ALL the houses are 1800-4500 SF.
Sad things is that Austin didn’t start to come out of the dot.com bust until 2004 when the Cali equity locusts came to town. As soon as I saw the Austin American Statesman crowing that almost 33% of the homes being purchased were purchased by out of town “investors”, I knew that they were in for another crash so shortly after the last one. That’s why we’ll be moving back in 2008 when we can be on the winning end of the crash unlike what happened to us when we tried to sell in 2003 and got hammered!
Morrisett and Maldve’s old house is only appraised for 333K. They should consider themselves very lucky to pull 350K.
That 584K mortgage in Austin will bleed over 16K in taxes a year.
They are juggling houses for 350 and 584K and couldn’t come up with 40K? If this is representative of any significant number of mortgage payers, it’ll be game, set, match for more than just housing. Who’s money do you think they are using to buy that 584K? I’ll be willing to bet it is an uncovered bank note (from fractional reserve lending) whose 10% basis is your money making X.X%.
This is Texas. All hat and no cattle. A professor in a 600K house. Just great.
This is why Texas will crash and burn.
He is in a medical school related field. Those guys make a lot of money for professors. As a full professor, I would not be surprised if he is making 100-150k. And that is not including consulting on the side.
Then there is the possibility of grant kick-backs. I didn’t think that UT participated in this, but I know A&M does. Essentially, schools are allowed to charge “overhead” on top of any federal grant a researcher applies for. This is to cover admin staff, janitorial supplies, electricity, whatever. The rate is negotiated with the grant agencies on a school by school basis. However, it can be as high as 50% on top of the grant. A few unscrupulous schools (A&M — or at least a few departments in A&M) don’t need all this money, so they give some of this back to the professor under the table.
Then there is her salary. Though she is a research associate, so she is only adding 5 figures to the mix.
Anyone, a 600k house is not unheard of for a full professor of pharmacology at a school of UTs caliber.
Walker (texas ranger??):
Regardless of what their salaries are, they admit that they are screwed if they don’t close by the end of October. That is the only thing that matters here. Credit cards, school loans, children, taxes, it all can easily add up to every cent they make and more. People with large salaries can put themselves in a real financial pickle, and often do. Not to mention, this guy is a medical field professor. This is one field that consistently produces financial morons.
Out here at the Univ. of California, San Diego, hot new professors and upper management are routinely offered UC-subsidized home loans of up to $1 million. This is a taxpayer- supported school, I might add. UT Austin is competitive with UCSD.
http://ucsdnews.ucsd.edu/newsrel/general/kbrant06.asp
” Brant’s compensation package includes a base salary of $230,000, automobile allowance of $8,916 per year, 30 days of temporary housing, reimbursement for moving expenses, eligibility for a University sponsored home loan of up to $1,000,000, and the standard Senior Management Group benefits package which includes medical, disability and life insurance coverage, as well as participation in the UC retirement
> and savings programs
“This is Texas. All hat and no cattle. A professor in a 600K house. Just great.
This is why Texas will crash and burn.”
I’ve heard that expression somewhere…… Help me out..
Molly Ivins says that a lot, especially when discussing our current federal executive, so that might have been your source.
“Meanwhile, they were now over-extended with two mortgages
Something to consider, the last two homes I sold I asked the buyer if I could rent the house back for 2-3 months after closing. They agreed and this was a tremendous help to me. I didn’t have to worry about my house not closing and carrying two mortgages. It’s nice to have that peace of mind.
Jackie
‘ Countrywide Financial Corp., the largest U.S. mortgage lender, on Tuesday said it expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps. The cuts affect about 4 percent of Calabasas, California-based Countrywide’s workforce.’
‘This cleansing that takes place as the markets pull back is always healthy in the long run, for both Countrywide and the industry,’ CEO Angelo Mozilo said.’
I wonder how many shares Mr. Mozillo “cleansed” from his accounts over the last several years.
That said, I still have CFC in my IRA bought back in 1995.
“expects to cut staff by more than 2,500 employees to help save more than $500 million as demand for home loans slumps.”
dont’ worry folks, all is well…we have a Goldilocks economy..
yeah, right, as though they are the only ones that are going to be lightening the load..
Just to be clear,
Its not like this is the only time they will cut staff either. I cannot imagine countrywide was working everyone 20 hours/week overtime last year. Thus, the quantity of the drop in business says… cut more.
Neil
ALL IS WELL……Kevin Bacon, Animal House!
ALL IS WELL……Kevin Bacon, Animal House! Great& very appropriate visual.
I suspect this will hurt a lot of people in my neck of the woods. CFC has a huge office complex in Simi Valley and I doubt they commute from very far to get here. Simi is a nice suburb with good schools, etc, but it’s a pretty expensive place to live. I wonder how many soon-to-be-ex-CFC people live here. Hopefully enough for me to find a sweet deal next year…
Simishag posts “I suspect this will hurt a lot of people in my neck of the woods. CFC has a huge office complex in Simi Valley”
What a hoot! We are homeboys! I have lived and owned, raised a family in Simi Valley…. about 30 years!
Let me tell you my hommie it will blow the butt ot of Simi
it alone will not cripple it…but CountryWide is a very real part of Simi if it suffers or fails Simi Valley will be in deep doo-doo period.
Besides the employed, it was ground zero for peddling thier funny loans…. I think when they re-set that in its own will fry the place….. let a lone the HELOC’s…. re- fi’s. From what I have seen Simi went NUTS with the gift from God money the inflated houses gave them….. we will get a world class butt stomppin’ very soon!
Good luck, I hope you get a good place,
posted “‘This cleansing that takes place as the markets pull back is always healthy in the long run, for both Countrywide and the industry,’ CEO Angelo Mozilo said.’
I hope he gets his share of clean!
He has been cleaning his portfolio. It seems that he’s unloaded close to $100MM in the past year.
“Stubborn home sellers could worsen downturn”
I don’t remember real estate agents complaining about stubborn home sellers worsening the upturn in prices
Good point, and I mean it seriously. Could they not see that prices were going to eventually get so high it killed the market? The NAR could have started talking the market down in 2003/2004 and this situation wouldn’t be near as dangerous.
Talking the market down…? How so?
Not being cheerleaders for toxic loans?
Not colluding with appraisers to hit the numbers?
Not trying to be part-time flippers themselves?
Part-time flippers - LOL.
I pulled up a street in my town that I knew had mass speculation and 60% of the homes were invetors from out of town, in fact, several were realtors.
Those things were happening pre-bubble.
By pointing to how out of whack prices were with incomes/rents, etc. They are supposed to be professionals.
The bar is very low to become a realtor. I would hardly call them professionals unless they can anti up some real credentials.
Ben-
You say that as if other then the people here. Someone actually pays attention to what NAR/CAR or any other speaking hole says… Not the case.
“You say that as if other then the people here. Someone actually pays attention to what NAR/CAR or any other speaking hole says…”
Dude, come on. At least TRY to be comprehensible.
Yeah, at least TRY! LOL!!
By not publising Books on “why the boom will continue FOREVER..”
By being honest with the public on the use of toxic loans
By not looking out for #1 (ie sales commissions) and taking an interest in their client (ie lamb to the slaughter)
We all know plenty of people who think housing can only continue to rise in the future without thinking of fundamentals, why should Realtors with their vast week of “education” be any different ?
“Could they not see that prices were going to eventually get so high it killed the market?”
Something came to mind today…
I think we here on the blog have given them too much credit for thinking that they were willfully and skillfully orchestrating the blowing of the bubble.
I now think that the Realtors, builders, etc. ended up believing their own lies and rhetoric. Sort of like the addict that truly believes that they can stop, “whenever they choose to”….
I worked for someone who called believing your own marketing material - ” breathing your own exhaust!”.
Pen-
Good point
Like George Costanza once said. “Jerry, it’s not a lie, if you believe it.”
From my own experience “in the belly of the beast”, I can attest to this. Every time a new price change came across my desk (an increase of course) I used to wonder, how long can this continue? When I finally asked one of the Sales Managers what the heck was happenning, she told me this was just the way it is; real estate will continue to go up; buy now or be priced out forever, etc. They truly did believe their own hype. But in the case of the sales people, it wasn’t just hype. They were making $$$$$$$
Those were heady days for the Realtors and Realtorettes
(We had only one price reduction in two years: that was on a 2 million dollar house that wouldn’t sell - it was situated on a down slope)
“Stubborn home sellers could worsen downturn”
Sweet music to my ears. Let the greedheads homes rot on the market until it sucks every last penny out of them. Over the last few years, I found it very discouraging when looking at houses and their listing prices. Now, I find it humorous. I liken it to running across a Yugo on a used car lot with a sticker price of $29,999 and a sign reading “Classic”.
Whoa! Time out! Let us not drag Yugo’s into this blog! It’s a total classic. Before they went out of business here in So Cal - a dealer advertised ‘Two for $7000.00.’
Good analogy… except you forgot the other sign with an Xed out $30,000 sign reading, “reduced!”
I’m glad it’s no longer “stubborn buyers”. Not that calling buyers stubborn is untrue, but recognizing that sellers are going to need to adjust before buyers need to budge is a mini-breakthrough in the realtor world.
Hard to believe the country that gave us the Yugo could ever fall apart….
LOL!
Best line in a long time. Thanks.
Ben Jones:
“By pointing to how out of whack prices were with incomes/rents, etc. They are supposed to be professionals.”
Hahahahahaha…….It takes YEARS to become a real professional (& a fair amount of smarts). Last I checked, it takes a few weeks and a dumbass exam to become a realtor TRADEMARK. And what the hell is the TM nonsense all about - oh yeah, its a fabricated word.
posted “I don’t remember real estate agents complaining about stubborn home sellers worsening the upturn in prices ”
You gotta’ love the realtors like Susan J. …. when tings go against you just blame the victum.
Here’s a good example…
http://tinyurl.com/y7g7s5
Note the last sale price and date on the right… welcome to my world
Members only link.
“welcome to my world :-(”
I hear ya. LA is truly offensive.
from 300K to 965k in under 3 years and now they’re asking 1.6 mil less than a year after they bought it. Dallas has nothing on L.A.’s bubble.
Oh really? Would YOU pay 700K for some McMansion in the M Streets?
“Welcome to Mcmansions, can I take your order?”
“Uh , yes…I want the 2004, 2005 market prices please”
“Levy said of today’s clients. ‘We don’t have that.’”
BWAHAHAHAHA
- ‘There is a lag period between sellers’ expectations and the reality of the marketplace,’ he said, and shaking them out of their high-price fantasy ‘is more psychology than science.’”
How do the Realtors reconcile this with the old ” No more land?”
I’ll see your no more land and raise you a “no more buyers”.
LOL. You guys crack me up.
The NAR could have started talking the market down in 2003/2004 and this situation wouldn’t be near as dangerous.
And, in addition, with the MSM not talking it down either, that’s why the bloggers stepped in.
That’s why I started my Bubble Meter blog, to give a dose of much need reality to the bubblicious housing market. Economic Activism as Ben Jones said!
David
Bubble Meter Blog
This bubble is going to take at least another couple of years to clear up. Although the psychology is slowly changing the myths about real estate are still out there. I was at a party this weekend where I heard a group people discussing property prices. I heard “Real Estate never goes down” and “We’re going to finance our retirement with our house” (the last one was from someone in their mid 30’s who bought their house about 8 months ago at the height of the market).
I’ve given up trying to give examples of declining property prices when I hear these comments, but they illustrate that even with some price declines the herd has still not given up on the idea that real estate is a can’t miss investment.
“We’re going to finance our retirement with our house” (the last one was from someone in their mid 30’s who bought their house about 8 months ago at the height of the market).
A retirement was financed. It was not theirs.
Bwahhahaha that is exactly what I was thinking as well. I’ve said it a dozen times already. I’m not going to finance some deluded Clownifornian’s retirement by buying their overpriced stucco crapbox.
“I’ve given up trying to give examples of declining property prices when I hear these comments, but they illustrate that even with some price declines the herd has still not given up on the idea that real estate is a can’t miss investment.”
Seriously–Japan is an ISLAND, and their property values dropped for what, 15 years?
Note that property values in japan kept dropping even after the government offered free money (the zero interest rate policy). Even 1% mortgages were not enough to stimulate demand.
However, it can’t happen here(tm). US consumers love to spend so much that even the slightest drop in interest rates will stimulate demand (and economic activity via the multiplier effect).
Also how many folks here know about how Helicopter Bernanke, earned his nickname?
Hey GetStucco,
What is the shelf-life on SPAM? Also, what area of Montana did you buy your “Armageddon” cabin?
Thanks.
Where did you buy the alcohol you have been chugging today?
Lets call a truce. Can’t we all just get along?!?!?
C&C,
You remind me — we will not be able to say the bubble is completely deflated until we see LA experience another version of the Rodney King riots and maybe an earthquake for good measure…
So if the rioting started tomorrow then the bubble would be deflated? Non sequitur.
P->Q does not imply that Q->P.
http://en.wikipedia.org/wiki/Necessary_and_sufficient_conditions
Along with the above excitement of the early 90s, add something like another Orange County bankruptcy.
We got that…The city pension fund fiasco (entertainment) here in san diego. Just waitn on riots ‘n’ quakes
California Association of Realtors President Vince Malta;
“Back then we were all marketing geniuses”
You were also a pack of liars and scumbags. You’re no longer a genius, but you’re still sucking the bottom of the cesspool.
These people were NEVER geniuses. Right place at the right time, combined with a willingness to peddle crap. Sticking a for sale sign in the lawn and local rag while waiting for offers does not constitute marketing. The coming implosion will separate the pros from the wannabes. Personally I look forward to the day when I don’t have to see some cheesy realtor’s glamour shot on every bench and grocery order divider. I’m not jealous of the money they make, just tired of realtors pretending to be professional businesspeople.
“combined with a willingness to peddle crap”
maybe they can get a license to sell variable annuities
I often listen to financial shows on AM radio, and it’s amazing how many people phone in with annuity questions.
posted “I often listen to financial shows on AM radio”
Shame on you!……
If annuities paid the broker 1% instead of 6-12%, no one would own them.. Annuities are sold, not bought.
‘If the homeowner believes the house is worth a lot and refuses to budge, it could become a self-defeating prophesy,’ she said.
Uhhh… what? Doesn’t she mean self-fulfilling? I guess psych profs these days understand real estate but not the English language.
Well, no, she doesn’t mean self-fulfilling. If the homeowner believes the home is worth (say) 50% over market, and refuses to budge, the homeowner’s “prophesy” that it will fetch that amount is not self-fulfilling. Closer to self-defeating.
Good point.
Well, no. Not self-fulfilling. If the homeowner believes the home is worth (say) 50% over market, and refuses to budge, the homeowner’s prophesy that the home will fetch that amount does not get fulfilled, it gets defeated. Thus the prophesy is indeed closer to self-defeating.
Good point. Again.
Well, no. If the homeowner thinks the home is worth (say) 50% over market, and refuses to budge, the homeowner’s prophesy that the home will fetch that much is not fulfilled. More like defeated.
Still not a bad point.
actually that statement makes no sense because it’s not a prophesy at all, it’s just a delusion or denial of reality. it should read “if a seller believes the house is worth more than it is and refuses to budge, their delusion/denial of reality will worsen the situation as time goes on”. something like that.
Morrisett and Maldve’s agent went back to the first bidders to ask for another $5,000 or so.
“The buyers thought they had a verbal agreement and they were angry,”
Good for the first buyers. I wonder if the first buyers had a contingent sale.
Mr. Realtor (TM) fumbled the deal big time. Got greedy and got burned!
Doubtful… what part of article did you miss that said the offer was verbal. Verbal means nothing.
It did to the folks who made the offer…They went away, and in a huff, too.
You can leave in a taxi.
If you can’t get a taxi, you can leave in a huff.
If that’s too soon, you can leave in a minute and a huff
You know, you haven’t stopped talking since I came here. You must have been vaccinated with a phonograph needle.
‘But we need to close before Oct. 31,’ says Maldve.”
Need to in one hand and crap in the other. Ha,Ha,Ha, Call me mean but I love stories like this one. I, like many here have been watching this show for nearly 4 years, and I can finally see the light at the end of the tunnel. The lessons learned will be many, the smugness will fade in a hurry. It pity stories will be all over and I for one say bring them on.
Waiting for 3 years for bubble to deflate. Yes, the show took too long…the correction has been S—L–O-W over the past one year in So. Cal.
Recently seeing some speed. An openhouse for a town home I visited last was asking for $565k in Thousand oaks,CA.
Fast forward 4 months and last weekend, they had new carpet and other upgrades, asking for 485K (negotiable). Owner is a real estate agent.
Was purchased for 200k in year 2000 end.
Will not sell at the current price, another larger and better located unit came to market last month and sitting…
Meanwhile RENTs in area are up 12% for me, and wait for this, if you lease for 6 month, is CHEAPER than if you sign lease for a year!! First time I came across this. Inflation or deflation, anyone?
But, but, Mish says DEflation is coming!
Given enough time, any prediction comes true.
I suggest you actually read what Mish says about Deflation. Prices are a symptom of it. You need to look up the term:
Credit Destruction.
Slightly OT:
College tuition, fees up more than 6 percent.
With everythng increasing ..how is that it we are going to get Deflation anytime soon.
http://tinyurl.com/yn2btu
Student loans for outrageous tuitions and living expenses will be the new credit bubble. Banks will loan all the FB’s (realtors) money to go back to school to develop the skills necessary to get a decent job in order to pay for their overpriced POS’s.
Tuition increases are a direct function of government-subsidized student loans. When the government stops transferring money to universities via “students”, tuition increases will stop.
Aside: (1) Why do Law schools exist? To provide cushy employment to people with law degrees. (2) Why can anybody get into Law School? Because anybody can get government-subsidized loans to go to Law School. (3) What does “no child left behind” mean? Any American, no matter how lazy or unintelligent, has the right to go to Law School. Don’t worry, we’ll get illegal aliens to do the real work.
Have you applied to law school? Good luck getting accepted with an LSAT below the median. Half of college graduates who want to go to law school cannot get accepted to 95% of law schools. That is in addition to the cost-prohibitive nature of professional education for which there are no grant programs.
Your assertion about tuition increases being caused by subsidized student loans ignores the fact that education subsidies are progressive subsidies and are not equally distributed among income levels. There is certainly some upward pressure on tuition, but it is outweighed by the moral imperative of equality of access among equally qualified students. Additionally, the benefits that accrue to society from having a better educated citizenry outweigh the losses in efficiency due to subsidy.
“Moral imperative of equality of access?” How about the moral imperative of not stealing money from taxpayers to support special interest groups?
Example: Anybody who graduates from college in CA and possesses the technology to fill out the application forms can get into one of the state law schools and get financial aid for same. That’s why tuition is $15K+/semester. They also partially subsidize smarter students, the ones who will eventually pass the bar, who get full or partial scholarships.
Anyone who improves his education by going to Law School hasn’t been trying up until then. Law School is to education as pickles are to literature.
‘ “Moral imperative of equality of access?” How about the moral imperative of not stealing money from taxpayers to support special interest groups?’
Why do use the epithet “special interest groups” to categorize people without financial means to fundamental rights such as education?
“Example: Anybody who graduates from college in CA and possesses the technology to fill out the application forms can get into one of the state law schools and get financial aid for same.”
Spectacularly wrong.
“Anyone who improves his education by going to Law School hasn’t been trying up until then. Law School is to education as pickles are to literature.”
o rly?
We’re going to have stagflation, stagnet income and modest inflation on goods and services. It will be driven by energy and a weaker dollar.
Tuition has out-paced inflation for years. Most state schools get a fraciton of their budget from the state. e.g. U of MT less than 17% comes from the state.
Welcome to the 70’s.
Tuition has outpaced CPI. Which is not the same as inflation. I believe it hasn’t outpaced inflation if the true measure of inflation (which many say is 3% over CPI) where to include a heavier measure of healthcare costs (which many U. traditionally cover for their employees).
The correction is just getting started…we have 3-7 more years in front of us. When you see the Sunday paper fill up with 2 pages of RTC (or whatever govt agency) owned homes in 3-point type font that you need a magnifying glass to read even if you are 25, then we are really going. When you see that shrink to 1/4-1/2 page, then it is time to buy for investment for a 5-10 year hold.
‘But we need to close before Oct. 31,’ says Maldve.”
Remember the good old days, back before 2000? Those were the days when people would sell their primary residence BEFORE buying another. This two mortgage situation is popping up frequently in articles.
A question for Mr. Maldve: Was this new house some historic landmark or one-of-a-kind custom deal designed by a famous architect? Highly doubtful. Here’s some advice Maldve: If the house you wanted is no longer available when you actually close the sale of the first home, do not fret. There is an identical one two doors down. Welcome to the world of the large-scale public builders!
Tell him the good part.
The good part is that no matter whether
our clients make money, or lose money,
Duke & Duke get the commissions.
Well, what do you think, Valentine?
Sounds to me like you guys
are a couple of bookies.
Realtors are really just bookies. Well paid ones too.
I told you he’d understand.
Real estate agents just want sales, they would prefer higher priced sales since they make more money but if they can’t get higher priced sales they will go for lower priced ones. They know they don’t get a commission until there is a sale.
Exactly. The “standoff” is beginning to hurt the realtors, there is no transaction volume…
I suspect a quite healthy moth population in realtors purses and wallets.
Graspeer posts “Real estate agents just want sales, they would prefer higher priced sales since they make more money but if they can’t get higher priced sales they will go for lower priced ones. They know they don’t get a commission until there is a sale.”
Thank you! In one breif paragraph you have stated the entire facys about Realtors. This is the begining, the middle and the end. Nothing eles needs to be said….Brovo!
LOL - love that movie.
But yeah, it is ridiculous how quickly realtors change their tune. Just weeks ago they were talking about a small pause - then prices would start increasing again - now they’re saying that sellers are stubborn…
Looking good! Feeling good!
Reminds me of another line from the movie that will be transferrable to homes from watches.
“Look, it tells time simultaneously in Monte Carlo, Beverly Hills, London, Paris, Rome, and Gstaad.
In Philadelphia, it’s worth *50* bucks.
Just give me the money.”
“With stubborn sellers refusing to relent on asking prices, many prospective buyers have kept their hands in their pockets. Some industry observers fear that bull-headed home sellers could worsen a downturn by driving up the inventory of homes for sale and running off would-be buyers.”
That’s just amazing. Now its the stubborn sellers. I admit they are delusional, but then, wasn’t the NARealtors ™ that told them the BOOM would not BUST. They could expect rising real estate prices for the next 5 to 10 years. So they bought. Now they expect the rising prices for the next 5 to 10 years.
The RE industry put the idea in their heads in the first place!!
You now reap what you have sown !!!
Many out there are still in denial. Have posted several remarks about a friend in Pasadena CA whose daughter is trying to sell something, has reduced from 880 to 790, no offers except someone who wanted her to take a second mortgage covering everything. After a bit of gentle whining, the mother still says, “It’s a good time to buy.” So I said, “If it’s a good time to buy, why sell? Why not hold and rent it out?” Haven’t got their answer to that one yet. I suspect they know perfectly well where this thing is headed but just don’t want to admit it.
I can’t believe that the first buyers would have actually closed the deal on that house with comparables $40,000 less. How would they get a mortgage appraisal?
When we sold our first house in Seaford, LI, in 1990, we went through several rounds of “buyers” not going through with the deal. The Real estate agents were not at all surprised because it happened all the time and the reason had nothing to do with the price of that house, which eventually sold for $5K under the $170K listing price. The reason the buyers dropped out is that they didn’t have the money to buy a house. The last thing I’d want to do is traipse through houses with a real estate agent when I’m not really going to buy but there are a lot of people who do. Go figure.
A lot of people on this blog do just that.
We go to open houses, model homes, grand openings, etc. to get a feel for the market. It’s the only way to truly know what is going on. Best if you’ve been doing it for years, so you can immediately get a sense from agents, brokers, sellers, buyers, etc. what the current mood is.
Anchors at work here. The ‘loss’ of 10%, based on the anchor point of $419,000, is devastating. That same anchor point made the move-up purchase seem reasonable, and suddenly it feels like someone stole a part of the future. This will be the general psychology for home sellers in the future.
Nice application of the anchor theory.
Well said turnoutthelights. My guess is that panic will set in some time during 07 as the number of interested buyers approaches zero.
You know, I’m wondering that same thing. Buyers getting really spooked (and hoping to make a killing at an auction), and sellers hitting financial walls, just flat unable to move lower this side of BK. We may be witnessing the birth of the E-Baying of real estate. All auction, all the time.
“Housing Slump Takes Shine off Star-studded Properties”
“LOS ANGELES — Cher is quietly trying to unload her gothic Pacific Coast Highway mansion in Malibu. Actor Nicolas Cage wants $35 million for his Bel-Air home, complete with screening room and Olympic-size pool.
But even in the land of $2 million “tear downs,” housing prices are dropping faster than Jamie Foxx’s Lamborghini…”
http://tinyurl.com/yabyre
There was a cable show last spring (on Comedy Central, I think) that showed stars’ real estate purchases with “bragging rights” going to Woody Allen for paying the highest price per square foot ever recorded for a place in NYC. Since when is paying more than anybody else ever has supposed to be a GOOD thing?
I sure am hoping we return to valuing fiscal restraint after all of this, but it may be too much to hope for.
“The Oscar-winning Mr. Cage bought his seven-bedroom Bel-Air home — once owned by pop singer Tom Jones — in 1998 for $7 million.”
Yah, no bubble there….
It’s not unusual..
I think he’s trying to sell that same home now for 25 or 35 million I don’t remember which.
I thought Cher was dead. No wait, it’s her career that’s dead.
“With stubborn sellers refusing to relent on asking prices, many prospective buyers have kept their hands in their pockets. Some industry observers fear that bull-headed home sellers could worsen a downturn by driving up the inventory of homes for sale and running off would-be buyers.”
- Keep prices at levels where homes won’t sell and inventory will bury them.
- Lower the prices and screw up the comps while inadvertently flushing out latent supply (flippers and cash-flow negative optioned-ARMs who cannot hang on if prices fall) onto the inventory pile.
Where is the upside in the downturn, no matter where seller wishing prices go?
I wonder what the percent flush is for dropping prices? Is it long-term one-to-one, or lower…like a 10% drop in home values (prices) forces 5% of owners into the dire straights category.
The key to all of this is foreclosures/lender REOs. When they become a significant number of houses for sale on the market, things turn downward quickly. They establish new low prices and there is nothing anyone can do to maintain prices. Inventory will be only those who need to sell and prices will need to be competitive. After a couple of years of dropping prices, demand drops further and number of sales drops to almost none. Then you are near a bottom. Based on what we are seeing, it could be 2 to 3 years or more to a bottom. The big factor next year will be the 1 out of 9 homes resetting rates/payments.
The brinksmanship is nerve wracking. Says Morrisett. ‘Even if the deal goes through, we’ve still lost more than $40,000, because of bad advice. Not to mention the loss of six months sleep and fights over where to get the money to tide us over.’”
BUY PHARMACEUTICALS!!!!!!!
The drug industry will go hog wild ponying up the Valium and Prozac neccessary to keep the thousands of other FB’ers like the Morrisetts acutely sedated as their financial world comes crashin’ in on their idiot heads.
Hey HD,
The drug industry will also do well peddling Motrin and Tylenol to relieve all of the headaches generated by the FBs pounding their heads on their granite counters.
I suspect K-Y and Preparation-H will also be selling well…
“They feel they must close before the end of the month. The brinksmanship is nerve wracking. Says Morrisett. ‘Even if the deal goes through, we’ve still lost more than $40,000, because of bad advice. Not to mention the loss of six months sleep and fights over where to get the money to tide us over.’”
Ah…the American Dream!
all so they can live in a bigger and more expensive house than the joneses. Nice values.
Mo Money: I concur.
‘Even if the deal goes through, we’ve still lost more than $40,000, because of bad advice.
Hey moron! How have you “lost” $40K? I am so tired of hearing people claim their house is worth x number of dollars. The RE appraisal industry has been hijacked by a bunch of high school educated “hit men” that will get the lender whatever number is needed. Those who are familar with the industry have probably seen the MAI designation. Unfortunately this has come to signify “Made As Instructed.”
“In other words: the boom is over. ‘They want the 2004, 2005 market,’ Levy said of today’s clients. ‘We don’t have that.’”
Translation: Drop the price to 2003 levels if you want to sell.
Quite true.
ALL the homes for which I saw the price appreciattion graphs in ZILLOW, suddenly the graphs went straight up around then, mostly around mid 2003.
Waiting for the 2003 price. Do you think that may reach by 2008?
Over $1Trillion in loan resets says…yes. and then some too.
JWM posts “Over $1Trillion in loan resets says…yes. and then some too.”
Man Oh Man! I really hate it when that happens!
The realtor is saying they have to price at 2003 if they want to sell now, late 2006. By 2008, prices will have to be considerably lower than 2003.
I’m already seeing 2003 prices in some areas (San Diego), and they are still not selling. Don’t even think about buying unless you see 2001 prices (preferably less), IMHO.
In the Bay Area you will need 35% at min. but more likely 45-50% to get anyone out there.
Beside there is no more hiring in Silicon Valley. 2005 was up only 4.5% but that was mostly out of the region. Most job openings are musical chairs. Med price is still way to high and needs to get back to 1999-2000 prices… thats nearly 6 years backwards.
“When the couple finally changed brokers, they discovered they had overpriced the house, with comparables in the neighborhood about 25 percent lower. They repriced it for $365,000 but still had no bites. They dropped it to $359,000 with the same results.”
Pricing off recent comps gets really tricky when new homes are selling at stated prices which are maybe $50,000 or more above market value thanks to incentives.
There are still alot of people that have equity that could sell at a lower price that would sell and that is who the real estate agents are looking for . If they get enough of the have equity group to start selling lower the stubborn and lose money group will have to follow and quit waiting for the spring bounce . Maybe everyone will wait until they see that there isn’t a 2 quarter bounce in 2007 before they get serious .
The realtors got alot of people to rent or take their listings off the market while they promised a spring bounce in 2007 . Now that that ploy didn’t work they are getting serious about the need for price reductions now or starve .
posted:There are still a lot of people that have equity that could sell at a lower price that would sell and that is who the real estate agents are looking for
If the Realtors in my area are looking for that type of seller, they will be hard pressed to find one. I’ve been house-hunting since spring. I do a search on each property under consideration. What did current owner pay, what liens against house, etc. Time after time I am seeing sellers holding out for the most profit they can squeeze out of their house. These are folks with plenty of equity. It’s just our good old seventh deadly sin Greed in play.
These sellers are getting offers from buyers; it’s just that these offers do not meet the benchmark of 25% YOY appreciation from time of current owner’s purchase.
So the search continues. I don’t feel like being the vehicle by which some greed-motivated seller finances their new boat, or granite countertops, or boob job, or whatever.
‘Back then, we were all marketing geniuses.’”
Genius Is Rising Prices! — Galbraith in 1929 Crash
“A homeowner’s blind faith in the price of his or her home could be costly…”
Amazing. I rarely see people, other than myself, use the term “blind faith.”
Americans’ brains are overloaded with blind faiths in the areas of economics, investments and political systems. The so-called education is no antidote to propaganda and brainwashing in these areas of high returns on propaganda.
Jas Jain
Are you aware of an actual country where either educated or uneducated people are immune to financial or political propaganda and brainwashing?
No but I’m aware of the fact the the rest of the world will prudently save every dollar (insert currency here) the can as if it is the last one they’ll have in their hands… but noooooooo! We wouldn’t want to do that here in the USA…..
Jas posts “Amazing. I rarely see people, other than myself, use the term “blind faith.”
I guess you never heard of the Band?
Jas post in same brillant remarks ” The so-called education is no antidote to propaganda and brainwashing ”
This from a pHd? odd… Doctor heal thy self!
“We received no advice about keeping it staged,”
This is another parasitic RE business I’d like to see go away. You need to see the house empty , warts and all to give it an honest evaluation. Filling it with designer furniture, high end artwork, impracticle traffic patterns and fresh flowers doesn’t reflect reality and influences the weak minded who dwell on the fancy decor and not the house itself. You want to make an Agent uncomfortable when touring an open house ? Ask them if it was staged.
Just read a new story about a woman who is trying to rescind a sale four months after closing. The slick salesman only showed her the house at night and she didn’t see or smell the neighbor’s back yard. She finds out that they use the back yard to pee in and the urine smell is over powering. That and the trash build up was terrible and stunk. Caveat Emptor. I wonder if she discloses this to a new buyer if she is screwed and can’t unwind the sale. The seller is out of state so good luck G.I.
“Their salvation may be at hand. They have accepted an offer of $350,000 and took a down payment. But the new buyers have asked to delay closing until they can sell their own house. ‘But we need to close before Oct. 31,’ says Maldve.”
This is the part in physics where particles start to collide when time and space is narrow.
my other comment would be…
“Daisy chain of disaster”
I can see the big talker bragging in the coffee shop about owning two homes … yea right Elroy… your a big time RE investor now… so you in BK court soon fool…Crash in Burn !! LOL!!
Guess what, I wouldn’t be surprised if the seller of the home the “need to close” would be more than happy to give them more time if it meant that they get to keep the sale. Especially if it is a public homebuilder.
Countrywide laying off more than 2,500 employees
http://news.yahoo.com/s/nm/20061024/bs_nm/financial_countrywide_jobs_dc
Sorry if this has been posted already. The axe is falling…
Good, more cannon fodder for the bursting.
That’s only a small dent in their US workforce of over 50,000 employees. By the end of 2008, my guess is that they will have laid off over half their workforce and closed about a third of their locations. They’re really overextended/oversaturated in so many markets around the country (but especially in California). They have so much excess capacity.
“This is another parasitic RE business I’d like to see go away. You need to see the house empty , warts and all to give it an honest evaluation.”
yeah, and if see another apt here in San Fran where the “stagers” turned a closet into an “office”, I’m going to puke. Who do they think they’re fooling. I’ve seen more than one place over 500K with one of these clos-offices, where there wasn’t enought room between the chair and wall to clear the desk when standing up
and it’s not like SF apartments are known for their huge closet spaces to begin with. I guess if you buy one of these places, you can’t afford to buy clothes anymore anyway.
I have a friend who once had to turn her closet into an office. She was laid off at a time when the economy was very bad, and all that she could find was a work-from-home job. She lived in a one-BR with a walk-in closet. She started by working from her LR but found that she could not “leave the office.” So she moved her clothes to a rack in her bedroom, hid it with curtains, and turned the closet into her office.
I met her about a decade after she’d left this job, and she was *still* telling stories about how depressing it was to work in a closet. She said she felt like a mole.
A closet/office would definitely not be a selling point for me.
A couple of years ago I had to use a walk-in closet for an office and actually liked it (I’m just weird that way, I guess). My biggest complaint wouldn’t have been the lack of space, but rather lack of ventilation. Suffice to say, saving money on using a closet for an office makes saving money on microwave burritos a really bad idea…
ROFL!
San Franciscans love coming out of the closet so this is a perfect fit.
I prefer to refer to San Francisco as “Frisco”. San Franciscans hate it and it rhymes with “Crisco”.
From CNN Money. “An Austin couple, Richard Morrisett and Regina Maldve, had a lot to learn about selling a home. That education is costing them big money. They had put their three-bedroom, two-bath house on the market in April for $419,000, then dropped it to $399,000. In June, just as they were moving to their new home, they finished negotiating a verbal offer of $393,000.”
“Eight hours later, they had another bid - at $399,000. That’s where the trouble began. They failed to land either buyer and the couple is still trying to move the property.”
Is the above implying that they tried to play the $393 buyer against the $399 buyer and then ended up losing both buyers?
According to the article, the realtor screwed it for them:
“But it was the mishandling of the two bids that really rankles. After receiving the second higher bid, Morrisett and Maldve’s agent went back to the first bidders to ask for another $5,000 or so.
“The buyers thought they had a verbal agreement and they were angry,” says Maldve. They backed out and closed on another home just a week later. “
In logging my time as a seller’s agent, this situation has arisen probably 80 to 100 times. In Wisconsin, where I work, it is my fiduciary responsibility to my sellers to inform them of both offers (if the second one arrives before the first contract is signed) and then I take my marching orders from my sellers. Interestingly, those whose homes or condos are at the low-end of our local market nine times out of then feel obligated to stick with the verbal agreement: a deal is a deal, they reason, and I would do the same in their shoes. It is the higher-end property owners who want to squeeze every last dollar out of their homes and who therefore tell me to go back to the original buyers and tell them to bring back a new “highest and best” offer. I always admire those buyers who were first in the door who say, “thanks but no thanks.”
Susan posts a nice apolgy, but the fact remains the realtor screwed the pooch. Why do you stick up for these dirt-bags?
You never did answer me after I reposted at your request in regard to the numbers of people you have hung?
Remember…. stated income loans, liar loans, ARM loans they had no chance of repaying after adjustment, Neg Am loans…. well you know all too well the entier toxic lot.
To come here and take the high and proper ground about this goofed up deal, is hardly a trade or public service in light of your contbution to the current mess.
The realtor didn’t screw the pooch - the sellers did. Bidding wars are over.
A realtor gets money with a transactions so frankly it is not in the realtor’s interest to have a deal go sour over 5k.
Mr. Newman: You do not know me, nor I you. However, you have no compuntion about judging me merely because I have earned a living for many years working with buyers and sellers of homes. You are entitled to your sweeping generalizations and personal attacks on my character simply because I am a realtor. If others agree with you that my hard-earned insights about the business of real estate are not welcome here, then so be it.
As I wrote in an earlier post, it is easy to see the world in black and white. But over my long life I have come to respect and appreciate those who evolve to understand that life is mostly shades of gray. You, sir, have not demonstated on this board that you are capable of seeing gray. And so it is with a long windup that I address your persistent question of how many clients “I have hung.” The answer is none.
Susan posts ” And so it is with a long windup that I address your persistent question of how many clients “I have hung.” The answer is none.”
My reply…. Liar, liar pants on fire! Susan pull my finger you get a present for finally answering my question. Your prize will neither be black, white nor gray…. but a rolling green death!
AEnewman,
You are completely wrong. The Owner dropped the ball. The agent would have reported both bids and taken direct instruction from the Owner as to whether to ask the first & lowest bidder to up the ante.
Clearly the Owner was gagging for an extra $6K, got greedy and got burned.
The RE industry has a lot to answer for but I don’t think they’re obligated to take the hit for the Owners greed.
Haggis posts “AEnewman,
You are completely wrong. ( Me! AE Newman) ?
Sorry Haggis, us mis-read my post and Sue’s reply. I have been nippin’ at her ankles for over 3-4 days now. Over several diffrent Threads in order to get her to fess’ up about her role in the overall realestate? lending problem we now face.
I did not ask or accuse her of being involved in the stated deal. In fact I know she had nothing to do with it.
My questions were directed in general term and repeatly ask and untill now left unanswered. At the end of her comments she did directly answer all of them. So that is that story. Susan never hung anyone in a realestate deal. I will let it stand there.
Haggis goes on,
The Owner dropped the ball. The agent would have reported both bids and taken direct instruction from the Owner as to whether to ask the first & lowest bidder to up the ante.
Clearly the Owner was gagging for an extra $6K, got greedy and got burned.
I agree with you! That is exctaly how I read the story.
Regards AE
Susan posts “Mr. Newman: You do not know me, nor I you. However, you have no compuntion about judging me merely because I have earned a living for many years working with buyers and sellers of homes.”
Save it for Nuremburg.
So let’s count up the mistakes that couple has made:
1) Initially priced their house too highly (probably didn’t shop around for a selling agent)
2) Got greedy over $6k and wound up alienating their first prospective buyer, and probably didn’t realize that buyer with the second offer for the full $399k was probably planning on nickle-and-diming them on the home inspection (just a hunch)
3) While this was happening, let a slowing market turn into a bear market
4) Just for kicks, decided to buy the new home before closing the deal on the first home
That’s not losing $40k because of “bad advice,” that’s losing $40k (and counting) because of one’s own greed and idiocy.
I really hope that the buyer that they tried to squeeze for an extra $6k is laughing his/her butt off reading these quotes. The only thing that could make this more absurd is if they owed more than $350k on their first home because they took out a HELOC to pay for granite countertops. Or maybe a hot tub.
My guess is that if we were to check back in on them after two years they wind up losing both homes and their marriage probably doesn’t survive the fallout.
Yeah, but justice prevailed. The greedy realtor screwed herself out of a sale and out of the good graces of her “clients.” (Marks, more like.) The first would-be buyers, who no doubt made a more-than-fair offer that was verbally accepted, were fully justified in telling the sellers where to go when the latter came back at them for an extra $5000. And the 2nd would-be buyers, who offered too much, not surprisingly saw the writing on the wall and pulled out. Justice and instant karma all around.
The virtuous circle will be complete if the 1st couple, having discovered Ben’s blog in the interim, make a mega-lowball offer on the house a few months from now, which the desperate, weepy sellers, now FSBOs and paupers, are forced to accept.
Maybe you’re right and it was the realtor who was greedy. But, as I tried to explain above, the realtor doesn’t decide to go backto the first buyers unless the sellers order her/him to. The sellers could simply have said, “We are choosing to honor our verbal agreement” with our initial buyers. But they didn’t, it seems, so I agree with the poster who say it’s likely that the couple is being disingenuous when they say that the realtor misled them. Greed can come from many quarters.
Wait a second Susan ,in most cases its the realtor who runs the show and suggests to the seller or buyer what to do .Nine times out of ten the realtors steer the buyers and sellers in the direction they want them to go .
And Susan , I use to be a realtor and a lender/manager prior to this 2000-2005 run up so you can’t fool me about what goes on in the business. I use to review a thousand real estate contracts a year on average for a number of years also.
You might be a good honest agent for all I know but I think in this last real estate run up we needed the agents to do more to protect buyers from this false run up in prices . It’s not enough to say that the lenders were giving the money so why not .
If you have been in the business for a long time you must know what the real estate business use to be like verses today .If you are not alarmed by the risk factors in real estate today than you should keep reading this site until you understand just what a speculation mania this real estate cycle was for the last 5 years .
Right, Susan — I seem to recall the Realtor (TM) who helped us sell our last home try to talk us into buying on the toxic I/O ARM payment plan. I am reasonable sure that if I had no financial education (like the average US Joe Soccermom home buyer) then I would have just gone right along with the suggestion to financially hang myself. You ought to think long and hard before you continue to defend this industry which has put so many US households on course for a future bankruptcy.
Susan,
I don’t doubt that the greedy sellers were the main problem. If they had a good offer in hand they would have been better off to take it, especially if they’d given verbal acceptance to the first buyers. If their realtor had strongly admonished them to honor their word and accept a very decent offer from the first party, she would be off the hook as far as I’m concerned. But it sounds like she had her eye on that extra 6% of 5K, and told them to go for the 2nd set of buyers instead. From what I know about the overall ethics of realtors, not to mention their business saavy, the 2nd scenario is what actually transpired. Either way, as far as I’m concerned, the sellers and realtor deserve their current predicament.
Good to see you’re still here, by the way. I may feel very adversarial about the RE industry as a whole, but it’s good to have opposing viewpoints presented in here.
GS. This situation happen to me when I was selling my house . I got a offer that went into escrow but I could get out of it if another offer came along . Another offer did come along and I refused to take it in spite of the offer being higher than the first offer . I just could not do it to the first guy . The agent for the second set of buyers got mad at me . Sometimes honoring a deal means more than getting more money .
Again , when I was looking for a house a agent took me to a property that already had a offer on it but the agents were still trying to market it . I told them I was not interested in a kicking another party out of escrow .
Yep, sounds like they chased the $399 buyer in lieu of the $393 buyer and lost both after the $399 dropped out.
I have to admire how mercenary the realtor’s are prepared to be, they led the pump and dump and now they’re prepared to put the boots to the throats of the (screwed) sellers. I thought they’d fight a rearguard action against falling prices all the way down, but this is really really quite a breathtaking display of contempt for their poor fools who’ve bought over the last couple of years. Wonderful…….a Ferengi proverb comes to mind…..The wider the smile the sharper the knife……:)
Many people on this site months ago predicted that once the realtors started to starve they would abandon the price protection stance and start putting the pressure on for the price reductions . Realtors needed to get out of their own investment properties also .
If I was a realtor and I had to face a prior house buyer who needed to sell who couldn’t afford the loan I put them into by my referral to some dog mortgage broker I would be tap dancing like the realtors have been for months now .
The realtors and lender agents had a big gravy train for 6 or 7 years now and anybody that didn’t save money for the down cycle was just plain stupid .
(Any decent lenders or realtors no offense to you people )
Yes. The prediction that realtors will drive down prices to keep sales volume is coming to fruition. Did not expect it to begin this quickly. I guess the gravy train did not give them enough reserves after their own speculative investments
I just think all the players including realtors and lenders thought that the appreciation would continue for at least 3 to 5 more years.
Its not just realtors, but in my experience salespeople in general are very poor at managing risk. Maybe it’s part of what makes them effective in sales, but their optimism usually gets them into trouble when things go south.
At my old job, where I used to help administer the 401k plan, the sales managers often had the lowest contributions even though they were among the top earners. It blew me away one year when I saw that the receptionist (~$32k) was putting more of her own money (in actual dollars, not percentage) into 401k than a sales manager who made over $100k between salary and bonuses. Another anecdote: I’ve never heard of a sales bonus going to prepay a mortgage or into a savings account, but I always heard of dropping most of it on a vacation, an antique, etc.
I wouldn’t generalize all sales people in that manner…
Sales professionals are very good at managing risk. You would be surprised at the level of planning (i.e. risk aversion) that goes into the sale of say an Enterprise Software deal on the part of the sales person/team… Most if not all sales pros use a Sales methodology like Miller Heiman, which requires them to plot risks to the close of a sale and provide a plan for overcoming/averting those risks. Of course, those plans also help sales pros avoid wasting time on deals that can’t be won.
As far “Optimism” as a quality that gets sales people into trouble, it is a requirement of any successful sales pro because they will hear objections many times before they ever get a sale and the only thing keeping a sales pro from unemployment during a cold streak is optimism.
Success in sales is about 30% methodology/30%psychology/30% IQ/10%luck…
I should have clarified… “Successful sales professionals” exhibit those qualities/behaviors above.
A friend of mine who is a (sensible) realtor has seen this coming for a while. Not quite as long as while as people on this blog have, but not bad for a realtor. He knows it’s been a gravy train in recent years, and he knows it runs in cycles and is coming to an end.
His big problem lately is dreamy-eyed sellers who still demand top dollar for his properties. He’s turning down listings left and right because they aren’t priced to sell, and he tells them so. Some sellers storm off to list with other more optimistic realtors, so he “loses” listings, which is actually fine by him because to try and sell at their price means he’d waste time and money for nothing.
That said, he is still moving houses, but what he’s noting is that pricing is not consistent, with a given cookie-cutter comparable house listed for $300k in one instance and another near-identical one listed for $400k. Guess what — only houses that are low-priced are moving. Hence his avoidance of overpriced listings.
He’s been at it for over 20 years, so he’s been in it long enough to see the boom and bust. He also knows which listings to pick, and he’ll let the newbies try and sell the overpriced properties — and starve when they don’t sell.
Not all sellers are holding out for a crazy price…
U.S. Treasury’s Paulson Sells New York Condo for $8 Million
By Sharon L. Crenson
Oct. 20 (Bloomberg) — U.S. Treasury Secretary Henry Paulson, the former chief executive officer of Goldman Sachs Group Inc., sold his 50th floor condominium near Manhattan’s Lincoln Center for almost $8 million, according to public records.
Paulson paid a total of $2.88 million for two apartments he bought and combined on West 67th Street, one in 1996 and the other in 1998. Tax on the re-sale was about $112,000, according to the New York City Register.
The median price for four-bedroom Manhattan apartments like Paulson’s was just under $7 million in the third quarter, according to Miller Samuel Inc., the borough’s largest appraiser. On the Upper West Side, it was about $7.2 million, and prices in that neighborhood may be poised to rise further, said Gregory J. Heym, chief economist for Terra Holdings, the parent company of New York City real estate brokers Brown Harris Stevens and Halstead Property.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aKRoc7vVvtak&refer=us
He sees what’s coming, and acted accordingly.