“What Tactics Will Create A Sense Of Urgency This Spring?”
Several readers suggested a topic about spring sales tactics. “How about some dicussion on what tactics the agents and builders will use this spring to create a ’sense of urgency’ among buyers. The last few years its been very effective to tell people that they would be ‘priced out forever,’ or to ‘hurry up before interest rates rise.’”
“Creating a ’sense of urgency’ is a very effective sales technique. It causes people to make rash decissions without much thought.”
A reply, “Easy: ‘It’s a BUYER’S MARKET now! Hurry up before you miss it!’”
Another, “NAR: ‘Hurry up before prices start going up again later this year.’”
One on rates, “Buy before interest rates go up.”
Another said, “Buy now for the best selection and location! Quantities are limited. Take advantage of your best and last chance in a lifetime to qualify for the home you’ve always dreamed of.”
“Get in now before it’s too late! Don’t let the market take off again without you.”
One had specifics. “I just got a mailer from Standard Pacific (San Diego area), and they are offering $15,000 to buy down interest rates, along with some free upgrades (depends on the development) and cash back for closing. They mentioned four different communities.”
From a blogger. “This topic is particularly interesting in light of the likely inventory explosion we’ll experience post-Super Bowl. One of my posts yesterday linked to an agent in Baltimore who has started tracked withdrawn listings, and in some places there continue to be more new listings than withdrawals, going into November!!!”
“This report contains some really great lines, like this one…’This month I started tracking withhdrawn listings and you can see that there are as many coming off as going on. I think we’ll see sales numbers stabilizing until late January/February 2007 and then as hordes of new sellers try to hit the ‘resurging spring market’ the proverbial stuff will hit the fan. Only those with a strong stomach should apply for this job.’”
Another quotes from the link. “‘When I was younger, very few people bought a home for investment purposes, but when the last stock decline hit, many did just that. The glut of rental properties and proliferation of speculators has a whole lot to do with today’s slowdown. Greed is another big factor. I think sellers should be happy with a decent return versus an obscene return.’”
“Wow, Dominick may be sleeping with the fishes before long if he doesn’t clam up.”
One poster is shopping for an agent. “In a year or two, when purchasing a house possibly becomes affordable again, I’ll be looking to hire a realtor with some honests posts like that. Any D.C./VA realtors want to come forward?”
Builders: “We’ve cancelled all of our land/construction contracts and won’t be building any more new condos/custom homes/subdivisions for the foreseeable future. Buy right now!”
There are two distinct groups of sellers; existing homeowners (include flippers) and builders. They are already following two seperate paths. Builders, I suspect are walking away from/renegotiating their more expensive parcels and will compete on price. No division president wants to lose his job, and as the CEO said last week, to think that builders will just stop building for a few months to hold up prices is a ‘pipedream.’ They have to keep going or fold.
But will the NAR try the same line that failed in spring 2006? I tend to think not, and recent remarks from this group suggest a new push aimed at sellers, not so much buyers. Will the ’sense of urgency’ become, ‘you do want to sell this house, don’t you? Lower the price.’
I can’t see any of the old tactics working at this point. Every report seems to touch on buyers waiting for prices to fall.
Good point. Perhaps the realtors should aim some of that sense of urgency at the existing home sellers. “Lower the price now, or it may be even lower next year”. Of course it can’t be anything official from NAR, more like wispering in the ears of clients.
Check out the ‘rock bottom pricing’ from DR Horton.
‘Buy now before prices go up.’
Ben. The Horton ad also shows 6% co-op for agents. The listings agents are doubly screwed. They can’t compete with their overpriced listings, and their fellow agents make more commission selling Horton’s new homes. That is going to be the problem for all sellers come spring time, the buyer’s agents will show their clients the homes with the most commission. The normal 6% is cut in 1/2 with most agents with a normal listing. At 6% from the builder they get to make twice as much. Spring time sellers better be prepared to lower their price and pay more commission.
The only possible tactic I can see working is the one the car dealers are using: Buy a new home from us, and we’ll pay off yours no matter how much you owe!
Of course, that option’s not available to individual home sellers.
Sell now before you are locked in forever!
I know at least two people who have told me they are waiting for the “spring selling season” to list their homes… Both of them were horrified when I mentioned that they were clearly not the only ones with this idea, that the coming wave of sales on top of existing oversupply was even being mentioned repeatedly in the press, and that many, many properties have been pulled from the market or held for listing come springtime after a disastrous summer and fall (for sellers still hoping for top of bubble prices).
Here’s holding our breath for the Silent Spring!
I personally know of three people in Bozeman, MT taking this approach. And I don’t have a huge circle of friends.
I’m starting to think that the real panic will begin next spring when all these homes are dumped on the market at the same time. I’ve counseled everyone I know to cut the price and move it because things will be much worse a year from now, but no takers.
Deep down, the vast majority of people have completely internalized a belief that since this is a “nice place to live” real estate will appreciate at a double digit annual rate indefinitely.
I bit the bullet, slashed the price & got a buyer now to avoid the huge inventory in the spring that will just create more price pressure competition. When I do buy again, I will demand to get all the equity lost back and then some!!
The old standby: “Their not making any more land”. To which only requires a one word reply, “Japan”.
Inflation is heating up, interest rates will never be lower, qualifying for a loan will never be easier.
I do see the ‘great time to finance’ in most RE reports these days. Perhaps if the Fed gets ansy about the dollar and warns of rate hikes, the cry will become ‘buy before rates go up!’
I talked to a mortgage broker and that was the line he gave me.
The day the NAR came out with the ‘good time to buy, good time to sell’ campaign, I told a broker I know about it. He laughed at first, thought a bit and said, ‘they are wasting my money.
BTW, when I took marketing in college, the professor pointed out that most big ad programs don’t make money for the company, but rather are intended to influence the media.
Inflation is heating up, interest rates will never be lower, qualifying for a loan will never be easier.
All of which mean prices will be going down, because they all reduce ability to buy.
ALL spring sales tactics will failed.
ALL fools already bought.
You severely underestimate how many fools are out there.
There’s 100 million Mexicans waiting to cross the border and the REIC is salivating at the thought of ripping them off
Buy an investment you can touch. Stocks and bonds are intangible, an imaginary investment.
Should have read,’Buy an investment you can TORCH.’ hehehehehehehe
Real Estate over the last 100 years appreciates less than 1% over inflation. Stocks over the same time? try something like 10000%.
“Get your piece of the American Dream now, because when they’ve gone to foreclosure, they’re gone for good”.
The smart springtime buyers will recognize sellers in trouble. This will be a golden but brief “window of opportunity” for you to get the deal of a lifetime. Most buyers who can’t afford their new ARM reset, have a LOT of equity in the home, and it can be yours for the taking! Owners will negotiate, banks will not.
Do you know of anyone who ever bought a ‘bank owned’ home and got a deal? Of course you don’t, because they aren’t sold directly to the public. Large real estate investment companies purchase them, and then resell the homes to you, pocketing all that sweet equity for themselves.
Don’t let this happen to you. Call your NAR agent today, and capture one of these “Owners in Trouble” before their all gone, because: “When they’re all gone, they’re gone for good”!
Deal of a lifetime, that’s a good point:
‘ More and more New Yorkers missed paying their mortgage, according to an article in the New York Times Saturday. The NYT reports that more than 1,400 city homeowners missed their mortgage payments from July to September, compared with just a little more than 1,200 last year. The neighborhoods with the highest number of pre-foreclosures are in the Canarsie, Flatbush and Bedford-Stuyvesant section of Brooklyn, and in East New York and Jamaica, Queens.’
(The neighborhoods with the highest number of pre-foreclosures are in the Canarsie, Flatbush and Bedford-Stuyvesant section of Brooklyn, and in East New York and Jamaica, Queens.’)
These are Black neighborhoods that are not gentrifying. East New York is poor and dangerous, Canarsie and Flatbush are middle class, Bed Stuy is mixed. All have had price run ups that make no sense.
I was told that house in East New York on a street that had four murders on it one week in the early 1990s went for $500K.
These are the cab drivers, the restaurant workers, bus boys, bus drivers, MTA workers. And they definitely cannot afford the $750,000 homes they bought.
Your question about bank-owned property surprises me, lefantome, because a condo I bought in 1994 was bank-owned. Maybe too many of them were repossessed and did not spark the interest of the bank’s friends. The price was indeed below comps at the time, and it’s true the bank’s price was firm.
I meant for the whole post to be a parody advertisement.
I thought we were just supposed to write an NAR campaign for the spring? Not that any portion of it had to be true, but simply work on the emotions and fears of our target audience: the last of the remaining ignorant buyers! Half truths and outright lies have worked pretty well up till now (like most sellers in trouble actually have any equity)….. we just have to keep those buyers worried!!
“Do you know of anyone who ever bought a ‘bank owned’ home and got a deal? Of course you don’t, because they aren’t sold directly to the public.”
I’d agree with you on sweet, nicely maintained properties that got reposessed. Banks just clean the carpets and resell them close to retail value.
But you can definately get deals on properties that need updating. A house that needs $5000 in siding work may sell for a $30K discount. Banks do not like the liability of having properties repaired … they just discount and get them off the books.
That’s interesting about bank owned property. Back in the 80’s, a friend took one of those TV “Get-Rich-In Real-Estate-Foreclosures”, scam programs. The program touted properties that were foreclosed on by the Veterans Administration and how to find them. Anyway, my friend found a couple of houses in Studio City, Ca. which were foreclosed by the VA and tried to get more info. Needless to say, he was stone walled at every turn until I said to him, “Don’t you think if these properties were such a great deal that people INSIDE the VA would be getting them or, at least, passing on the info to friends or relatives.” He didn’t bother with VA properties anymore.
I think that NAR will start to only list houses they deem to be reasonably priced and therefore saleable. I believe that NAR wants home owners to list their properties as low as possible because a percentage of correctly priced home that sells is more than the same percentage of an over priced home that just sits and costs advertising revenue. By refusing to list over priced homes NAR can bring house prices back to a level where they can start to make money again.
On another point, the US dollar is fairing very badly against other currencies like the Euro and Pound Sterling. The feds have a choice. They can either raise rates to strengthen the ailing dollar or hold/reduce them to prevent the acceleration of the inevitable housing bubble bust and resulting recession. The only reason that I can think of for the fed to hold or slash rates is to purposely devalue the dollar. There are two main benefits (to the US) of a weak dollar. These being; more competitive exports and it would be cheaper for the fed to repay its colossal national dept in gold.
Question – If the US dollar halves in value would it take half as much gold to repay the national dept?
Which way do you think the dollar and interest rates are going to go?
Question – If the US dollar halves in value would it take half as much gold to repay the national dept?
You’re joking, right? It would take twice as much gold.
Twice as much if people believe the dollar is through falling. However, if they think the dollar will be even weaker in the future, they’ll demand even a premium over twice as much gold to discharge future debt.
On your first point, I fully agree that realtors may be potential allies down the road, in that the lean and hungry survivors of the Great Realtor Washout of 2007 aren’t going to waste their time with greedy, delusional sellers. They’ll want to close deals as expeditiously as possible. With the coming dearth of credit-worthy, qualified buyers, that means closing the deal on terms favorable to us, the patient and choice-saturated buyers.
Sammy, I am one of those credit worthy, qualified buyers who was spooked out of the market four years ago. So now comes by big question: what is a reasonable price? I have been following a small house in Los Angeles. It sold for 487K in 1998 (if I remember correctly). It went on the market in Sept. for 1.19 million (nicely remodelled and slightly bigger, but it’s a small lot and the garage has been turned into a studio with no permit ). Today I saw it in the paper for 50K less. Still delusional, right? So what do people like me do? When do we know that we are paying a fair price?
Cassiopeia,
I don’t pretend to know the “correct” answer for your question. Personally, I would be happy if prices returned to 1999 levels (adjusted for inflation). Historically, the median house price hovered at roughly three times the median income, which is currently around $60,000 a year, because people balked at paying any more than that (and bankers typically wouldn’t let them borrow any more than that). Of course, houses used to be a lot more modest than today’s McMansions.
I think “fair prices” will only come when the speculative excesses (read: flippers) have been flushed out of the market, and median home prices start reflecting median incomes (a 3:1 or 4:1 ratio, no more).
So Cal tends to bottom out around 4.5 times annual median household income.
One of the quick and dirty metrics is to look at NAHB/Wells Fargo affordability measures and if affordability is 40%+ housing is a good deal.
Obviously with affordability at 3%, to borrow a phrase from Marcellus Wallace, we are pretty F-ing far from OK.
Sammy and Sunsetbeachguy,
Thanks, that’s a good rule of thumb, I guess I should then try to find out the median income in the zip codes I’m looking at and compare with the median home prices in said zip codes.
Sam, it doesn’t hurt to dream a little. If that house I’m looking at sold for 487K in 1998 and prices went back to 99 or 2000 prices, it couldn’t cost more than 650K to 700K (since it has been remodelled). That much we could afford…but I don’t think we will get there. If you look at the charts, it seems that prices began to shoot up ridiculously in 2003. Maybe we’ll get down to 2002…
Question – If the US dollar halves in value would it take half as much gold to repay the national dept?
There isn’t enough physical gold on the planet, much less in US government hands, to repay the national debt, even if one assumes gold going to ten thousand dollars an ounce or more. In addition, if the (deluded) buyers of paper gold, in the form of derivatives, actually demand delivery of the physical metal, as in theory they’re entitled, they’re going to get a very rude awakening, as only a fraction of the gold “sold” in those transactions, actually exists in physical stocks.
“These being; more competitive exports and it would be cheaper for the fed to repay its colossal national dept in gold.”
Thats an intriquing idea. However, the National debt is somewhere over 8 trillion dollars, The estimated value of gold in the US is less than 1 trillion dollars. Gold would have to rise almost 20 fold in order to pay off the debt.
“Which way will rates go” I would think that the fed will have to raise them at some point. Foreign investment will pull out, if our rates dont attract them to our currency. Other foreign currencies such as the swiss frank are far more risk friendly.
I vote for higher rates, the people who could afford to refinance have already done so, especially with the latest pullback in the 10 year not. The media has been talking about the resets, so at this point most people know about them and if they could do something about it, they did. I read somewhere that country wide has already refinanced most of their ARMs loans. I doubt it was at fixed rates, but the point being interest rates tend to go up in the spring, the people that didnt refinance were beyond help anyway. I think the fed gave them a big window to refinance, now they’ll have to close it, IMO.
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“Visit a Hovnanian sales office today and my sister will sleep with you. Buy a home and she is all yours.”
“Buy now for the best selection and location! Quantities are limited.”
….Um, yea–limited to 25,000 houses!!! (in my city)
Yeah, I’d better buy right now. There’s only 21K left in my city too.
They just won’t say how high that limit is.
Just forget about the NAR and what advice they may or may not give to sellers. I can’t say this strongly enough: in 2007, the market will be dominated by lenders dumping REOs. This will obliterate comps and utterly transform the psychology of the marketplace. No lender of consequence is going to attempt to “time” the market. No lender CEO is going to be prepared to tell his board: “Last quarter we were a bank, but this quarter we’re a REIT.” This would be institutional suicide, and they all know it.
What they will do is “hit the bid” until they’ve cleared their inventory. This always happens — there are no exceptions. That’s why in RE, a synonym for smart money is “second buyer” — i.e., the guy who bought it from the bank.
http://www.smirkingchimp.com/thread/3204
[After a nuclear winter, a silent spring.]
Happy Days in the Weimar Republic
So, what was the “Grand Plan” the Fed had in mind when they decided to anesthetize the American public with low interest rates and flood the planet with worthless green scrip?
Did they think that Bush would corner the oil market and, thus, force the rest of the world to take our anemic greenbacks? Or were they just planning to steal every last farthing from the American people before they loaded the boats and fled to more promising markets in Asia?
Or perhaps they were delusional enough to believe that really wonderful things would happen if they just kept tossing banknotes into the Jet-stream like New Year’s confetti?
Whatever the madcap rationale might have been, the country is now facing an agonizing wake-up call as the full-effects of Greenspan’s tenure materialize and the stronghold of global consumerism deteriorates into Weimar USA.
In the long run, Greenspan’s treachery will loom larger then that of his “would-be” understudy, Bin Laden. He put the country on the fast-track to disaster.
Just watch as the “For Sale” signs go up on lawns across America in Dear Alan’s honor.
That is kinda crazy, a fiscal conservative article on smirking chimp.com.
That is a first from my recollection.
The last time I saw that was the CATO institute article on why real conservatives cannot vote for GWB.
A realtor called me whispering conspiratorily, “A house just fell out of escrow that meets your criteria, if we move quickly we just might be able to get! But we have to hurry.”
I asked what would happen if I didnt in fact make a bid on said house, wouldnt it just go on the MLS again like it was before (when I was interested in it then either). The realtor could tell I saw through the his “time pressure” tactic (which was damn stupid to begin with).
Next time, ask how many times said house has already fallen out of escrow, previous to this one.
The NAR blew $40m on an add campaign to tell us that there has never been a better time to buy, and that after 2007, prices will start going up again. But what good will this do them? Haven’t they lost all credibility at this point based on the failure of their previous mantra — “Real estate always goes up”?
It remains to be seen how much good the campaign will do them. It was a national campaign, so it might keep things going a while longer in some areas, even as the worst areas crash and burn.
Their ad agency was quote in the OCR as saying “of course prices are going down.”
AS I’ve said before, there are very few buyers left of any quality. Anyone who could have done so, would have bought for fear that prices were going higher. People like ourselves are the minority. Now all the people that bought are going to be sellers, its called exhaustion, and thats what occured. Thats how market peaks are created, when there is nobody left to buy your merchandise it can be worthless goods, aka beenie babies and tulips.
Do any of you have any words of wisdom on finding a consultant to scope out the physical integrity of prospective houses? Eg, quality of construction and materials, condition of the foundation, geographical risks, etc. Given that my understanding of these things is pretty much zero, it’d probably be a good idea to pay somebody to do this for me.
WB, that’s what I do for a living. What kind of an inspection are you thinking of? For the average homebuyer, a private home inspector is usually all that’s needed. A single family inspection will run you anywhere from $300 -$600 depending where you are and what kind of house it is. It’s important to hire someone with national certification like ASHI, NAHI, or NACHI, but like anything else in life, the quality of the work depends on the person, so ask around for references. I’m a registered engineer, but most home inspectors are not. The purpose of a home inspection is to make sure there are no serious problems or defects that you are not aware of. Lately however, the game is to find as many little things wrong that can be brought into the price negotiation. My inspections are a little different because they always involve litigation, so I have to do a lot of legal research and documentation that most home inspectors don’t do, some involving destructive and non-destructive testing, so ask ahead what the inspection will consist of. After the work is done you should get a standard report. Don’t pay anybody until you actually get the written report. Usually the inspection is just visual-in other words what can be seen, so there’s no guarantee that your sewer or water line won’t fail right after you buy the house, but it’s better than nothing. Hope this helps.
Thanks crash1. Someday, somewhere, we’d like to buy a house. It would suck if we waited this long to buy one and then find out we bought a turd because we were so overcome with the stainless steel appliances and granite countertops.
I just want someone who will give me an unbiased and thorough look at the house construction quality. I don’t want someone to beat up the buyer over every minor imperfection. I just don’t want to step on a landmine.
To the poster who will be shopping for a realtor in DC/VA and was impressed by that “honest” approach of the realtor in Baltimore. If you do find a realtor who you think has the qualifications you seek, I should check back 5 years to see what that realtor was saying then. 99.9% of realtors were probably saying stuff like, “Property prices can only go up and you cannot lose money,” or “If you don’t buy now you will have missed the boat.” Good luck finding that 0.01%.
One more time, with feeling: In my years in real estate in Wisconsin, I have never once heard a fellow realtor tell a customer that “you cannot lose money.” The NAR’s public relations department regularly spins out such pronouncements, but they do not speak for most realtors on the ground. They simply take our dues and do whatever the hell they want to.
I understand that it would make things so much simpler for many posters here if one could safely assume that all realtors (except maybe that .01 percent) are corrupt charlatans who would cheat their children out of their last dollar, but that would be too simple. Just as their are good used-car salesment, good lawyers and good investment bankers, there are competent and clear-headed, honest, hardworking realtors. Anyone who thinks otherwise is un-or under-informed. This blog would be much more helpful to the consumer if those who love to body-blow realtors at every turn would stop acting like school-yard bullies all the time and encourage the occasional realtor to share their insights–and, no, I not talking about my own pearls of realtor wisdom. If what that realtor writes doesn’t ring true, then by all means say so in your response, but the information on this important blog would rise to the next level if there was room for realtors’ insights and observations.
I doubt that very many realtors are brazen enough to say, “you cannot lose money.” But it wasn’t just the NAR truth-makers peddling the spin about “buy now or be priced out” — I heard variations on this theme from many realtors in the 2004-2005 time frame. And how many realtors told their future FB clients that “I really don’t think you guys can afford this house on your income.” Very, very few, I’m guessing, even if some had the thought privately.
I personally got the buy now or be priced out pitch from several downtown L.A. sellers who now can’t move their skid-row-at-$500/sq.ft. units to save their lives, and I have a buddy who is still getting told by his six-months-late condo builder that his unit is worth more than he paid at the end of last year, and that if he stays in his contract he can’t lose.
People who make a commission on sales have a pretty strong incentive not to be entirely straight with buyers in a falling market, and they rarely surprise us with forthrightness…
Yes, salespeople aren’t known for their forthrightness. I’ve welcomed Susan Jacobson’s point of view as a realtor on this board, though am sometimes tempted to note “The Lady doth protest too much.”
Susan
Sorry, but your “profession” has sunk to the level of street hookers in my opinion. The greed of realtors has been close to a feeding frenzy for several years and it appears real estate brokers hired anyone who could talk fast and keep on dancing. I am sure there are some realtors who have a conscience and do have principals but life is too short trying to find the diamond in the moutain of dirt. Much better, much easier and financially safer not to trust any of them and look upon them as hustlers trying to make a fast buck.
I sold a condo in West Hollywood and the first realtor I “interviewed” told me the property was worth $300,000 but prices looked as if they had peaked. However, I was raised in the east end of London and I can smell a scam a mile off. Strangely, my wife (american) thought the realtor was very nice and thought we should use her. No way, sweetheart. I “interviewed” another realtor who told me the condo was worth $420,000 but suggested listing at $435,000. I gave him the deal. He sold the condo in two weeks for $430,000. I then discovered by a fluke that the first realtor was also a lawyer and was part of a real estate investment group (all lawyers) who had her go out and try to find suckers, low ball them and get them to sell. Of course, the “buyer” would be one of the group’s lawyers. Sadly, it seems she and the investment group did very well scamming unwary sellers.
Yes, you are part of a very noble profession (lol) AND please don’t post that I should have reported the first realtor to the California Association of Realtors.
Thank You Susan!
I agree that in every profession there are folks that should not be doing what they are doing. Trust me as a retired social worker I saw folks give their money every week to have someone just to listen to them talk about how their parents are responsible for their shortcomings. Our creed was “do no more harm” just listen and mirror back. Interview Realtors, ask them if they sell their own listings? Do they believe that all buyers deserve a buyers agent. If they do, then they will not sell their own listings, since they have to represent the interest of the seller. In every profession there are folks that do not belong there. This is a great tool to educate everyone. Why not use this opportunity to gain insight, knowledge from the “good” Realtors. I have learned a lot from all of you about the economy, current trends, and of course where the best bargins are.
For the record many bearish realtors have posted here over time.
Mr. IncomeStream had to take a few flamefests.
Deb is a very long time non-practicing realtor.
Realtors are welcome here.
Pollyannaish realtors will have a hard time and Susan fits the bill with her occasional lectures on the virtues of realtors and the vices of housing bears who dislike them.
Post something interesting or insightful to a bearish housing audience (like Deb or Mr. Incomesteam) and you won’t experience negative postings.
BTW, we have had extensive discussions or flame wars over the morality of schadenfreude, housing bearishness and everything else, if you want that type of content go read the archives.
Sunsetbeachguy: Nothing I have ever posted is Pollyanna-ish. The only things I have ever written are TRUE to my experience. I wrote one post about how location is even more important in a tumbling market and I was flamed for that and that helped me understand that the bullies here are so narrow-visioned that they lump all realtors into one basket. That saddens me greatly because it just isn’t intellectually honest. I have been reading this blog for a long time and hestitated to start posting but it finally reached a level of such absurd sweeping generalizations about realtors that I was compelled to post what I have observed about realtors–the good, the bad and the ugly. And guess what? Despite all the certainty here that realtors are a dying breed, in a down market sellers (and to a lesser degree) buyers are going to need realtors’ services much more than in the housing run-up.
LIFE IN bUBBLELONIA
With all the fraud I expect to see a large number of people getting in ‘under the wire’ to take advantage. Could be a lot of fake ’sales’ that amount to filpper to flipper exchange to raise the transaction numbers.
James, You are correct and they are pumping up the price and getting each other 100% financing at the lenders expense. Five such deals closed in one subdivision in Lincoln (Sacramento), CA in the last few weeks. It is called mortgage fraud and all these “owners” will soon be tenants…in the crossbar hotel. This includes the homebuilder who participated in the fraud.
“Buy now. We’ll give you $100,000 back at the closing.” There is a house in my ‘hood in Boston that was priced around $840,000 at its first open house. Three to four weeks later it was $730,000! It did eventually sell but I don’t know for how much.
In addition to discouraging friends and family members from buying now, I’m also advising them to demand that their realtors fully disclose, in writing and prior to closing, any additional compensation being offered by sellers (i.e. fatter commissions so the realtors will try to steer you to the best deals for them, not the best deals for their clients).
Sammy S.
I’m not a realtor, but don’t get this idea that the a realtor steering you to a house with a higher commission is wrong. You know what the total price is. Whether it includes 6% or 10% commssion does n’t change that the commission comes from seller’s proceeds. Also Reators work for the seller. REALTORS DO NOT WORK FOR THE BUYERS.
You obviously do not know how it works. The buyer’s agent splits the commission with the seller’s agent. Sometimes a deistressed homedebtor will pay a bonus to the buyer’s agent. The higher the prices of the transaction, the higher the commission and bonus.
No he does know. REALTORS DO NOT WORK FOR THE BUYERS. That includes “buyers’ agents”.
If you want a real buyer’s agent, hire a professional negotiator and agree on a fee based on how much he can bring down the asking price.
Has everyone on this site been hurt by a Realtor…Gee, Has anyone ever had a good experience? this is sooo sad.
Hi Glenda,
The answer is yes, we have all been hurt by realtors. Your group played a part in this huge price runup that has logically ‘priced us out’ of the market. We’re not interested in buying at these insane prices.
Most (all?) here realize that you are paid on a % of the sale price. Your best interests are in direct conflict with ours (as potential buyers.) There is undeniable proof that your organization will lie, cheat and manipulate to achieve their goal of fleecing us. Until that changes, we will always look at you as a enemy combatant.
Sad it is..
I had an excellent realtor in Terre Haute Indiana. She steered me away from a house that would have given her a bonus $5,000 commission into a house that was much better for me. Very honest and a good friend while I was living there. On a lark I called her a couple months ago (I am bad about keeping in touch) and she felt the real estate market was insane and was very worried about the loans people were getting into.
On a side note, she asked for my address and sent me drapes from the sale of my house that I had asked her for if the buyers did not mind giving them up. She stored these for me for 5 years until she knew where to find me.
Yes, there are a few good realtors out there. Unfortunately, in San Diego all I’ve met are industry parrots who have no background in finance but proclaim “real estate is the best investment ever” and “there is no bubble” (this in the Spring of 2006!) So the vast majority of the “profession” sickens me even as I know there are some very ethical ones out there.
I work in New York State, We have Buyers Agency. When a client chooses to have me as a buyers agent, I work for the buyer not the seller…We have our clients acknowledge what they want at our first meeting. I am not sure what other states do?
Right, but your commission is a percentage of the sale price of the home.
I got a newsletter from Samson Realty today - here in VA. The front page said stuff like “can’t time the bottom, better to rent your old house out at 1000-2000 negative cash flow than to not move up right now”.
Here’s a link to last month’s newsletter for a taste of the fear they’re trying to instill in buyers about missing an opportunity:
http://tinyurl.com/yl4fgf
New ad campaign from the NAR, ” If you don’t buy now, I will hold my breath until I pass out!!”
One on rates, “Buy before interest rates go up.”
Or buy before interest rates go down and prices go up. You can spin it any way you want to and I’m sure you can make a case for buying whatever interest rates are doing. May not be a good case but you don’t have to fool that many people.
My proposed NAR slogans:
10. Don’t trust the “experts”.
9. Buy now or forever be priced out.
8. You’ll never get a deal this good again.
7. Interest rates make it even cheaper.
6. We’re telling sellers to lower their prices, but we’re not officially admitting it.
5. Beat all those other buyers to the punch.
4. We’re listening…
3. …but you have to say something first.
2. …sorry, but we didn’t catch that. Come again?
1. Free tulip bulbs with every purchase!
“1. Free tulip bulbs with every purchase! ”
Too funny. Can we add it to the bumper sticker list?
My step-father’s 92-year-old mother told me that she wasn’t worried about housing prices going down because “they’re not making any more land”. She’s been a landlord for like, sixty years, has seen several boom and bust cycles, and yet…
Kate
She is in fact partly correct. Like everything else one has to weed out the extreme opinions and use common sense.
Ignore the comments like, “Eventually you will be able to buy property for 10 cents on the dollar.” In good locations, it ain’t gonna happen. Not ever.
If someone bought a house in the past 2 years for $400,000, there is a strong possibility they will soon be (or are already) upside down. That’s the bad news.
The good news, if you can call it that, is if that buyer can maintain a $400,000 property WITHOUT being stretched financially, the property will eventually appreciate and PASS it’s original purchase price but after a boom has gone bust, that “eventually” could take a long, long time. Meanwhile that buyer is paying the mortgage on a house which cost $400,000 which he could have bought (after the bust) for $250,000.
The BIGGER problem at the moment, and the big elephant in the room, is that thousands (literally) of people have bought property they cannot afford by using mortgages that will eat them alive long before the prices (after the bust) reverse and eventually reach the original purchase price. In other words, they will be unable to weather the coming financial storm. We are already seeing the early signs. However, once the inventories are cleared out by builders discounts and sellers capitulating on prices (which they will because they have no choice) the buyers will move in. They will not be the greater fools who are still buying at this moment because they have “A gut feeling the bottom is in”, but those buyers that sense the mass psychology (as Professor Schiller calls it) of the market has changed from negative to positive.
As for the “not making any land anymore,” remark. Again, partly true. Location is the name of the game and that phrase might better be adjusted to read: “They are not making any good locations anymore.” Prices are still cheap in Armpit, Nebraska and Skidmark, Arkansas….but who the hell wants to live there!
Tell the you can’t buy property for 10 cents on the dollar to Robert Cote who did just that on his primary residence.
Also, tell it to John Templeton who is a 90% discount bear as well.
Sounds like senile dementia. Lock the poor old dear in the basement and feed her with a slingshot.
Maybe it’s just a visibility issue?
They’ll float hot-air balloons over all houses for sale. On one side of the balloon will be a picture of the sad kids and/or puppy. The other side will list how wide their granite countertops are, how deep the koi pond is, and how many squirrels live in the backyard. The best part is, as the FB lowers his price, he gets to float his balloon higher and higher. So, to find the house with the most discounts, just look for the highest balloon! And if it doesn’t sell, he now has a high platform to jump from…
In other news, aviation stocks slumpped as safety officials grounded flights in many cities, due to tens of thousands of hot-air balloons rising higher by the day…
It will be interesting to see what happens this Spring. There seem to be a lot of sellers waiting to relist, but I’ve also heard buyers saying they are going to jump in in the Spring while the market is “steady” and before things start appreciating again. I tried to talk a coworker out of buying a condo in D.C. in the Spring, but my coworkers informed me that, “we’re just on a plateau and in the Spring prices will start going back up”, “it’s different here”, “builders are offering incentives so it’s a good time to buy”, “it’s a buyer’s market”, etc. I also got the “I’m sorry you wear a tinfoil hat” looks of pity.