The Thin Line Between Boosterism And Propaganda
One reader wants to hear the current sales pitch. “I would like to know what sale pitches the realtors are using right now to even get buyers to buy in a down turning market. Buyers have more inventory to look at, but so what, homes are still over priced. I suspect the agents are selling based on get in now before the interest rates go up more.’”
One called this tactic ’sick.’ “I think realtors are playing up the emotional factor–that buying a home is an emotional decision, not an investment, and let’s face it we all want to have a home of our own.”
A reader is Florida saw this, “There was an article this week in SW FL about how the population has increased in FL a significant amount between July ‘04 & July ‘05. Not a day later, I see articles with Realtors proclaiming how the housing market will pick right back up after this ‘pause’ because of ‘all the people still moving to FL despite the hurricanes.’”
Another asks, “I am curious about the possible climate for Realtor resentment and backlash as the bubbles’ mighty hiss starts to blow down strapped homebuyers that had listened to advice and analysis from realtors.”
“For better or worse, the majority of homebuyers get their ‘take’ on the RE market from Realtors or RE affiliated economist from these main sources: Stories in the local/national newspapers and on the nightly news with ‘RE expert’ quotes. RE related Internet sites with the ‘local market conditions/forecast’. And self education aside, it’s difficult to lay all the blame on them for believing these realtors because the complicit and/or lazy media give these spokespeople credibility by quoting them in NEWS ARTICLES as ‘real estate experts’ which they may be, but biased ones to be sure.”
“The vast preponderance of comments by Realtors in the past few years have been decidedly declarative and never stated as ‘This is my opinion’ or ‘This is how I see the market headed.’ There’s nothing even close to a disclaimer amongst the babble. Realtors, both nationally and locally all steer us in the same optimistic, almost utopic direction. They play to our aspirations with guaranteed home price appreciation and to our fears with being priced out forever.”
“There are without a doubt, professional, competent Realtors out there working hard in all kinds of markets that will not deserve the scorn and retribution that may come their way. However, when the leadership of the NAR is responsible for the quotes nationally and so many of the rank and file falls into step with their rhetoric, how will they be able to convince the pitch-forked angry mob that they’re one of the good ones.”
“So I ask you fellow bloggers: How do you think the Realtor profession will be viewed in the post bubble era? And what, if any changes will come about in the aftermath, such as regulation similar to stockbrokers under the oversight of the NASD? Will the NAR choose to voluntarily change their culture of propaganda to remain credible or will it be done for them by public sentiment or legislation as the duped masses catch on that the guarantees that were promised are not the ‘money back’ variety.”
I think they are an endangered species. The Feds are looking at the MLS and questioning whether there is a cartel. The internet is making looking houses up a breeze and after the shennanigans that have been pulled through this runup with unethical behavior from all the players in the RE Biz you will see more oversight. Wait for the ARM resets the bankruptcies and the congressional committee hearing that will ensue. It will be ugly and in a perverse way like a car accident I will be morbidly fascinated watching it unfold.
I think the realtor crowd is waiting and hoping for a “spring bounce”, and they are doing everthing possible to encourage kickbacks instead of price reductions . They are going to have a little more than just egg on their faces when the writing on the wall unfolds.
In addition I think the realtors will blame it on the interest rate increases rather than the gold fever they encouraged .
They’re QUESTIONING whether there’s a cartel?
That’s like QUESTIONING whether there are twelve in a dozen.
For Home Loan Broker, Troubles Come With Creative Refinancing
OT but Interesting article from the LAT
http://tinyurl.com/msybq
did deals in the 80’s w/o realtors- the net will crush them when the courts knock down their MLS cartel
Realitors participating in kick backs should be against the law. It is not allowed in the stock brokerage business and should not be allowed in the RE business. Any manipulation on the part of the RE broker should be deamed unethical. When we get to that point maybe realitors can gain some respect. Until that time they are nothing more than used car salesmen.
What I mean by kickbacks are giving ,upgrades, helping with points , paying all the buyers closing costs , throwing in a car or a pool with the deal , paying the first two years payments for the buyer etc. etc. .
What about regular old kickbacks? Every Zip realty listing I get tells me how much cash they will give back to me if I buy the listed property.
Really ….. now that’s interesting .
a “buyer’s agent” realtor (who has his own agency maybe? He only represents buyers) says of the local market that many of the agencies in town give big bonuses to realtors who bring in buyers…don’t know exactly what that means, but it sounds like they’ve gotten to the point where they want to know, as in the salesfloor of old, “did anybody help you decide to buy a house today?” kind of ‘kickback’.
These are interesting times. The old media are nowhere near nimble enough to compete with bloggers and global competition allowed by the web. Their circulation is declining and we’re about to see the same trend hit realtors. The old media blinked first because there was never a mechanical printing press asset bubble to keep it going.
People don’t care about commissions when they’re making money hand over fist in RE but when the inevitable correction arrives they’ll be doubly concerned and the consequence for realtors is going to be brutal and swift. I know plenty of realtors here in San Diego and it’s tough to watch friends struggle. That said, we can now fly to Aruba cheaper because of the automation and efficiency created by Orbitz, now the same guys are doing their thing with Zillow.
Low prices are good for consumers, bad for Fortune 500 pension plans and middlemen.
If a Series 7 registered rep lied as much in 1 year as the average Re person lies in 1 week he would be in handcuffs.
But nobody cares. When this shakes out I think a lot more blame will go to the mortgage lenders than the RE agents, and probably rightfully so. But honestly, the overfed brain dead people of this country care more about “Dancing with the Stars” and “American Idol” than the house of cards teetering right under their noses. Sad but true.
It’s an interesting question. Pete’s comments are counterbalanced by the powerful RE lobby. They’ve done an excellent job at making the entire population look up to them as experts on the economy and the RE market, although you barely need a high school diploma intelligence level to join the club, and they are just salespeople, not economists. We can’t discount the power of the RE lobby, and their money has grown as more realtors have jumped onboard. They are more powerful than ever.
Despite the internet, people still want a 3rd party professional to handle their RE matters.
When Office Depot started selling forms for wills and trusts, how many people though estate planning lawyers had some competition? And now you can hire these services over the internet, i.e. legalzoom.com. But still, don’t most people want to see a lawyer and pay $900 for a trust rather than doing it for $50 over computer?
The fact remains that most homes are sold my realtors, despite all the internet information. You can get info over the internet, but that doesn’t help you with negotiations. People will call a realtor to show them the house they found on the internet, to help them with filling out the sales contract, deal with inspections.
The low-cost realtor is a competitive force, but you don’t save too much. Theyl’ll reduce their own commission to 1%, but you must still offer 2.5% to the buyers’ agent to get them to show your house. And with so much choice now, what buyer wants to deal with an owner? I used Help-U-Sell, and closed escrow in January 2006. We paid 2.5% to the buyers’ agent, and 1% to our realtor. If we had offered only 1% to buyers’ agent (and the commission paid is listed in the MLS Full Buyer Page), I’m certain the realtor would not have brought her clients to us.
I have not seen more than 1 FSBO sign in my area of town in the last 6 months. Lots of little mom-and-pop realty signs, though. From what I see, the realtor is still going strong.
The experiences Ive had with individual realtors have been free of the excesses commented on in this blog. However, in general New England people are more understated than in the Sunbelt. Looking back, the realtors I dealt with dealt with me honestly. They didnt tell me (in 1989) that housing prices would continue to fall, but they did tell me that prices were falling. We bought anyway, for 15% off the asking price. In 2005, a different realtor told me that prices were rising and that prices were “crazy.” She didnt suggest that they would keep rising, to either us or to the people who bought from us. Its not clear what more one could expect from a person in the realtors’ position. Realtors cant be expected to grill a buyer on whether a house purchase is a good idea. People can look to “RE experts” for information and maybe advice, but in the USA people want experts to do their thinking for them as well. Caveat Emptor!
Many posters to this blog will add nightmare realtor stories, as Im sure there are a lot of them. However, there are a lot of snarky comments about people who are motivated by their professional interest to present the upside of a house sale, but who do so in an ethical manner. As the bubble bursts, many of these people will look ridiculous, but lets save the snarks for those who truly deserve it.
Paying 5% for their services IS a nightmare story and greatly excessive.
5-6% is a crazy fee when homes are 100% overvalued. One might expect buyer’s agents to offer a discount in order to represent a motivated buyer. Prospective buyers should ask for it. The market for realty services is changing with the RE market.
I remember reading on a link from a post on this blog that in the UK commissions are only 1 to 1.5%. Is that total commission? If it’s 1.5% each to the listing agent, listing broker, selling agent, and selling broker (approximately - the spreads vary), that’s no different than it is here.
However, the article or post did seem to imply it was the total. Anyone know the truth and the details?
Thanks
Buyer’s agents are rarely used in the UK (and Australia, where I live) except for executive relocations.
The total commission you get charged as a seller in Oz is around 3%. I would guess that the 1%-1.5% UK numbers you are quoting would be the total selling commission.
The biggest problem I have with the NAR is in relation to some of the readers topics posts. Can they not see the danger to individuals finances when prices go too far, too fast? For example; the NAR’s chief economist openly ‘expected’ prices to ‘level off’ in 2004. Yet when prices zoomed upward, he found a way to justify it. Then he called for a leveling off in 2005. Prices went even higher. At one point last spring, when median numbers came out he said, ‘15% is too much, even for me.’ But regrouped and found yet more ‘fundamental’ justification for the boom.
IMO, if these guys were the responsible professionals they believe themselves to be, the NAR would have started warning it’s members about over-valuation long ago.
How about the lender/appraiser check and balance system that
went down the tubes with this 6 year rise in the housing market .
This is good if you all haven’t already seen it
http://www.itulip.com/housingbubblecorrection.htm
I think we’re going to be doing everything from the web, from finding the home, making an appt to view the home, and getting the financing.
Realtors will be phased out, like travel agents were.
Wrong….The numbers will be reduced though…
In bubble markets, the price movements are far more important than interest rate movements. Over the past few years, prices rose so quickly that a mortgage on a median home doubled, even including reductions in the mortgage interest rate. Take a 10% drop in median house price versus a 1% point increase in the interest rate. Overall, the price drop is more important.
Principal 400000 400000 360000 360000
Rate 0.06 0.07 0.06 0.07
Mortgage $2,398 $2,661 $2,158 $2,395
So even if interest rates go up a bit, a mild (10%) drop in prices will more than make up for it.
Any potential buyer who “buys” the RE agents’ arguments that “better buy now before rates increase” is just a fool.
I am a Realtor and I cannot recall the last time I put a gun to some ones head and say buy this house or else.People need to grow up and take responsibility for what decisions thay make.Everyone these days looks for a scape goat to blame a decision on.When are we going to grow up as mature adults and take responsibility for our own decisions.All I see here is blame the Realtor’s, blame the Realtor’s all I say is grow up. All I give is the facts I cannot tell if a market will go up or down.I do not have a crystal ball if you ask me what will happen to the market in 6 months my answer is I have no idea.I can tell you what it did in times past, which is now wrong, I can tell you what’s it’s doing now but that’s it.I can take a guess but it’s just a guess.
The internet is my best friend as a Realtor.
I guess we should all go and dig up Henry Ford and roast him over the coals for getting us all into the oil mess we are in.He forced me to buy a car, I have to pay too much in gas now, bad,bad very rich Mr Ford.
So, your telling me you showed your clients the bust cycles in Real Estate and they still wanted to buy at these prices ?
He sounds like the stockbrokers my friend sues.
Why is it that Realtors use such atrocious grammar?
Because it accurately reflects the caliber of their cognitive abilities.
Why Realtor instead of just plain realtor? A realtor is a noun, not a proper noun nor an honorific.
I’m not kidding, the NAR had the trademark filed as REALTOR, and lately they have backed off and allowed Realtor to be acceptable.
Could you be any more arrogant? They also have insisted in the past that only the broker could be called a REALTOR, and that any agent who worked for the broker was a REALTOR-associate.
After 5 years of exploding housing prices with no fundamentals behind them, you have the fukking audacity to come on here and run your mouth about your integrity?
Yes. You are a Realt-Whore..
All we need is a nation-wide public MLS. I hope it happens soon. Here’s what it would cause:
1. Everybody has all data - listings, solds for comps, tax rolls, etc. Let’s put all the tools out for everybody to use.
2. Agents would be advisors. Whoops, there goes 60-80% of the agents, but the agents that can offer valuable advice, will last. It would probably change how we get paid too, but if that meant I didn’t have to work nights and weekends, I could get used to it.
3. It would give the public a better understanding of the market.
4. NAR would go back to administrating an industry (read: just send out a monthly magazine and shut up)
bubbleinfo.com
I second that Carlsbad !!!
I have been arguing for my entire career with one of my best friends who has been a director of both NAR & CAR that the standards need to be much more stringent…
We as realtors are advising people on what is most likely the largest financial decision of their life and we have a bunch of monkeys running around with there newly minted license acting like experts…
Its sad, and the public has a dammed good right to be angry…
Agree 100%. Although many Realtors have been less-than-ethical these past few years, there are many others who are honest and provide a valuable service.
I think we need to move away from “real-estate expert” to “salesperson” in the description of realtors/brokers, though.
If one doesn’t have a lot of time to show a house (on demand), deal with advertising, and worry about the paperwork, etc.; it is very helpful to have a Realtor list your home.
Likewise, if you want to know about a house before it hits the market, it’s a good idea to have a buyer’s agent. There are many Realtors who really will do their best to negotiate a good deal for you. We just need the bubble to shake out all the losers from the industry.
IMHO.
I’m wondering if a city in FL or if PHX will be ground ZERO in the bubble pop race. What amazes me is buiders are building new homes for sale in PHX against the staggaring pace of the inventory build… INSANE! Gonna hit 50K soon… THEN WHAT????
Bunch of ghost towns , people will become afraid to buy. I always liked Arizona myself Maybe the inventory will slowly be absorbed , builders will stop building for awhile .and the Baby Boomers will resume their interest in that area .
The fact is, barring a all out recession their is a certain amount of building that they must complete because they are committed…Its like being 5 months pregnant..you still have 4 months to go….
What I would watch for in the new tracts in your area is the “Dirt Turners”…If you see the big grading contractors stop cutting in roads and the huge excavators are not putting in infrastructure (Storm, Sewer etc.) then you will know we are at the tipping point….
dave , I like you analogy!
any one here KOGO- george chamberlin show. some one complained about the promotion of option arms, negative amort loans on the show. while broker and george put in clause” no one forced to borrow option or otherwise” they claimed they analyze them for infoming the clients. What was egregious was the broker’s claim that these loans are good for one who is desperate to get into a home and dont have income or payment to qualify!. on top it he claims that it has been validated by the equity build in the past two/three years??!!!. my ft. I dont know they either ignorant of the drawbacks of option arms or just slick sales man.
sorry , it is your
Adrian,
The problem is that the industry is loaded with people that are not necessary for the process anymore. I note you say you are a Realtor and not just a real estate agent. That used to mean something, I am not sure it does anymore. Travel agents are not gone but there are a lot less of them now.
But hey come on, if you read the bubble blogs, you are no doubt aware that your industry has been less than truthful and somewhat sleazy in fact. You may be a nice person and beyond reproach but you must admit that the lines that we have all heard from agents goading people into spending more than they can afford to get into a house is just wrong.
Pete.I have never done that and never will, I let the mortgage broker decide what they can afford.I never push a customer to buy out of the ranges they give me. I let them decide for themselves. I have even talked them out of buying as I felt they were in over their heads.
One couple ended up in divorce the husband left and I saved the wife a lot of headaches. Buyers are more educated than they used to be in particular the internet buyer.I do not worry about what other agents do all I am concerned is with the service I give them and the agents that work for me.I think we have too many agents and most do not have any idea how things work, some do lie. Buyers are not as stupid as we make them to be on here, and I have yet to put a gun to a buyers head.My buyers make informed decisions ultimately they make the decisions not me.I just give them the facts good or bad.
One easy and quickest way to improve integrity in the RE industry is to place it under the SEC’s jurisdiction. The SEC is far from perfect, but at least there are repercussions for fraudulent acts.
I second that tommy_trojan! If for no other reason than because real estate is now treated as an investment. And as an investment all related data on volume, sales, earnings, etc. should be regulated, publicly available free of charge, and any fraud prosecuted.
folks can ‘caveat emptor’ til the cows come home and eat their lawns, but how is it *not* pressure of a wholesale sort when the local realtors run ads like they do in ann arbor?
For weeks one group–Charles Rheinhart–had been showing graphs of how the mean (mean, not median) house price may have been a little flatter here or there, but bounced back up after ’slow periods’ like these times. Don’t be afraid, they yelled in big boxes on their listing pages. Don’t let a “challenging time” stop you from buying!
There are lots of homes to choose from, there’s never been a better time to buy, they say. They ran that for a couple weeks. Then they tried a chart showing how renters never attain wealth after 20 years or whatever, while homeowners have all this wealth…I didn’t pay attention to the data because it didn’t feel worth my time to analyse such crap. Get in they said, if you want to have any chance of not being poor forever. (they didn’t use those words in that case…I think they said something instead like “there’s no comparison in your chances for creating wealth” or some such).
Today there on their listings page was this big big box showing a picture of a guy in a big empty house with good sunlight streaming in and he’s peering down at a dead-looking little tree in a flower pot. He’s got a watering can behind his back, and he’s staring down at this pathetic little thing, refusing to water it obviously, frowning at it, seeming concerned and, well, somewhat psychotic. He needs to give up the water, get out the shovel, and plant that poor tree before it dies dammit!
The big caption text reads: Calling All Buyers! What are you waiting for?
underneath in big red background bulleted text is:
. A drop in price?
The 20-year history of prices in our market tells us that prices
will continue to rise (in italics!), but at a slower pace during this soft period.
. Better Interest Rates?
Economists predict that rates will increase slowly, but steadily, over the next 2 years. 30-year loans at 6.25% are available today through our sister company Ann Arbor Mortgage. WIth the Fed planning two more rate hikes before the end of May, this rate may not be around for long!
.Greater Selection?
The selection of homes is much greater now than it will be later in the year. Terrific homes are available today, in every price range and style.
They end with the bottom box line of:
It’s a marvelous time to buy your next home, and we’re just the people to make it a great experience for you
Now, I ask you, WTF is this but attempted groupmindfuck about the market and what those buyers they can’t find should be doing?!
And it works on people like my husband…it’s so much work to convince him it’s a shitty time to buy. He’s their target…what is he waiting for?! Prices won’t ever go down, inventory is high…go go go buy buy buy right NOW!
I can’t see how these realtors could say it any clearer. I’m sort of waiting for their next little ad campaign. this one is more….personal…than their last graphs and charts. I think next week they might start getting abusive.
“Calling all Buyers! Why the hell are you so stupid?! Don’t you get it that if you don’t buy now we’ll laugh at you?! Are you too ugly to show your face at an open house? What are you waiting for, your session on nip and tuck? Get your asses out here or we’re coming in after you suckers…”
yeah, the fallout for me is that I can’t trust them. why should I?
the obvious answer for me is that this is propaganda, and pretty shitty stuff, but effective because they hold all the cards. Someone I spoke with last week said when he bid under asking ( I can’t imagine it was a lowball offer…he ended up bidding high enough on a house down the street to get it for himself) in 2003 the realtor told him to go away and not come back, that he/she didn’t want to hear from him again. The house sold to someone polite who didn’t try to violate the laws and who had to turn around and sell it 2 years later at a loss (maybe not a big one, but an actual lower-price-than-before loss).
The Realtors are straightout telling us they won’t accept lower prices because they say so, no point in waiting around for it, it ain’t gonna happen. How is this not a cartel, this is really beyond propaganda. Calling all realtors…the buyers will stay away as long as this continues to be a strange combination freakshow/carnival/ pyramid scheme/snakeoil sales-tent instead of a * housing market*.
This area as a whole has no pop growth to speak of, no new industries, job creation is the worst in the country for our state…
They just want the guy in the ad to bend down a little further over that tree, take that watering can he’s got covering his rear end, and….
oh, yes, I’m sure it’ll be the most pleasant possible experience working with you, rheinhart agency
cheers all!
Aren’t Realtors not suppose to take or make frivolous offers??? Does that mean that the sheeple can only make full priced offers with no contingencies. Write those 25% less offers and get those sellers into shape. A frivolous offer is only in the minds of sellers in denial.
As a sellers broker, you are requied to present “any” and “all” offers to the seller…As a buyers broker you do not…However, it could get complicated if you actualy have a written/signed buyers/broker agreement,,,A broker then (may) have a duty to write and present what he/she would think was a frivolous offer….LALAW may know for sure…Got any comment LA ??
With market analysis like this, any wonder why REALTORS get a bad rap?
http://realtytimes.com/rtmcrcond/Nevada~Las_Vegas~clintyvonnestewart
What I hear in my area are constant radio ads touting how Realtors have a STRICT code of ethics that they live and work by…
Interesting that they never detail exactly what those codes of ethics actually contain.
Carlsbad Jim said:
MLSs are privately maintained by the real estate industry through fees charged to every realtor with an active license. Each realtor inputs and maintains the data for their listings; system administrators audit the listings to maintain the integrity of the systems (which, I think, are regional in most areas). If realtors are eliminated from a transaction, there is no record in the MLS.
How would a public MLS be funded and administered—by the government at the county level, or by a group of NAR advisors? Would sellers be charged an additional property transfer tax by county governments, or be charged a flat fee by NAR, to pay for a public system? Who would enter data for new listings, and update data once listings are sold (or withdrawn from the market)—the sellers, NAR advisors, or government employees? Would sellers have unrestricted access to add new records? If so, how would the integrity of the system be maintained? How long would listings be allowed to stay active in the system, how long would sellers have to update listings once they are sold, how would we ensure that the data entered is accurate, etc.?
In most counties, real property records are computerized. Would all counties throughout the nation be required to computerize records so that they could be linked to a public MLS? Would standards be established so that vital data, such as property description, list price, sales price, and seller concessions for each sale, is included in every record?
I just don’t see how a public MLS would work without involving the government. It just seems more logical for sellers who want to avoid paying commissions to sell their properties themselves (maybe try using multiple FSBO databases in addition to yard signs and newspaper advertisements).
I don’t think realtors will lose their role as thusly ‘played’ out–have people seen the Century 21 realtor ad?! I just saw it for the first time…it’s the realtor on the speakerphone and hubby and wife are in bathrobes and hubby is all “but wait a minute…” and wifey is all “no, there’s no what about’s; I love the house” and hubby is like sweating and saying “but the kids; they’re only 1 and 3″ and wifey says “they’re gonna grow up!” in a frustrated and insistent tone and lit like she’s uttering a deep profundity, and then the realtor comes on the speakerphone again (they pan to the speakerphone, it was a little dastardly effectwise, but then I don’t tend to find the disembodied presence of a realtor in my living room very comforting in the first place!) and says “this is a very special listing…” and hubby closes his eyes holds his breath and says “okay” and wifey says “really?” and they hug, and then realtor on phone says something about getting it all set for them and it ends with hubby saying “did you see the size of that garage?”.
Ah, another person worried that he’s getting in over his head, but hell that garage and the kids trump it all…with the help of his friendly Century 21 realtor who stands by, ready to tell them they must act quickly because it’s a “special listing”…musta been a garage with granite countertops and a loft for the kids when they grow up and want to never actually see their parents while at home.
Their slogan was “century 21…agents of change”, so MLS-monopoly or no, you’d just never have these kinds of great housing markets without the psychological and guidance services so responsibly and heartwarmingly provided by those gentle genius Realtors. People would have to think these things through without the knowledge that it’s a special listing, that they must act fast, and minus the speakerphone presence of a ‘professional’. This couple were clearly very joe and jill average, probably don’t know what mls stands for, the dears.
As real estate “investing” becomes clearly a stupid idea, realtors will still have the important role of “helping” in this way…Thanks Century21
cheers!