Can The Real Estate Industry Self Govern?
Readers are interested in discussing the real estate industry and accountability. “Topic: Factual accountability and disclosure by listing services, agents and brokers. It is my opinion that the truth has been something sorely lacking in much of this bubble run up. I suspect that many of the bidding wars have had phantom opposition, that many agent representatives are investors as well and that listing facts are anything but factual.”
“How many cases have there been where a property has been taken off the list and then magically appears as a new listing a few weeks or months later.”
“What about a property described as reduced twice when no one can remember seeing it listed at the first price? And of course we have people who are being paid a hefty percentage of the transaction for their expertise who are investors in the commodity they are advising for.”
“No greater harm has been seen that that of believing that the RE and Mortgage industry can self govern. Self profit yes, self govern no. The foxes have been managing the henhouse for far too long and for some unexplicable reason we have been buying regular eggs from them at Fabrege prices.”
One reader added, “Another topic is the role of crooked appraisers in this run up. They are the ones who validated all these hige price jumps, and I’mwondering where the justification was these past few years for a house to be truly worth $55K more than the one 3 doors down that sold for 6 months prior.”
And how about economists? “Hawaii, it appears, has caught the mainland’s cold. Although the median price of homes in the state continues to rise, sales have been decreasing for several months and market observers believe it won’t be too much longer before prices begin leveling off.”
“It’s no longer a seller’s market where almost any price goes and buyers fall over themselves making offers above the asking price. ‘I think its pretty clear a buyer in the market has more choices and can take their time and make an informed decision whereas last year and the year before the market was so fast they had to jump,’ Harvey Shapiro, research economist for the Honolulu Board of Realtors said.”
“‘If history repeats, it will plateau,’ Shapiro said. ‘The ’90s were atypical where we had price decreases.’ During the mid-’90s, median prices fell about 20 percent over a period of four to five years. But Leroy Laney, a professor of economics and finance at Hawaii Pacific University, doesn’t expect a repeat of that scenario.”
“‘The real estate market typically doesn’t behave like the equity or bond markets,’ he said. ‘They don’t go up or down. They usually go up and then plateau before waiting a decade and then having another rise. But that doesn’t mean it can’t go down some.’”
“Shapiro doesn’t think it’s too late to get into the housing market. ‘I would recommend people buy at this time because prices will be going up,’ he said.”
‘How many cases have there been where a property has been taken off the list and then magically appears as a new listing a few weeks or months later.’
This is true and realtors will admit it. The days on market stat is worthless. In my area, I’ve seen houses sit for over a year, but the days on market is something like 60.
BTW, I think the Hawaii bust was deeper and longer than this article suggests. I remember one housing analyst wrote that his grandmother had bought a home there in 1990, and it didn’t recover that price for 11 years.
Economists in Hawaii tend to have very short memories and focus mostly on the median price. I bought a condo in the early ’80s for mere 65k when they were auctioning brand new condos for 125k. Too bad I could not afford the 125k so I bought the former. But then when the Japanese started speculating the market and bought properties without even looking at them, the price of my condo shot up to 250k. I did not sell but my neighbor did. He bought a home in Vegas with lots of money spare. He was very lucky because the market crashed. I felt sorry for the lady who bought his home. She had to foreclose. At that time you could buy the same home for 125K again. From 250k to 125K , that was a huge drop. But the median price declined to a fraction of the real value of the homes. Median price does not mean much in real terms.
Aloha
Ben-
You nailed a big complaint of mine. Some MLS By-Laws have rules on relisting a property, to get a new MLS # attached to the property and try to hide the DOM. Most associations I know, don’t enforce their Bi-Laws. With mediation clauses in the contracts, they protect themselves and agents, and sellers from lawsuits. I would love to see Agents, LO’s, Sellers… sued when they commit fraud. It would clean up the industry.
I just came back after on Friday a weeks vacation in Hawaii-the papers did talk about a slowdown and there was an increase in listings than the last time we were there (in August)-however, the only price reduction was about 5% off on houses over $5,000,000 (Diamond Head area).
Many articles on the homeless problems and unemployment is high among the locals accroding to people I talked to there-however-not reflected in the unemployment figures because people gave up looking for jobs-they just move back with their familes.
Sorry SoCalBroker,
I’ve alway considered those MLS sheets marketing and am confused why others think they’re some sort of contract.
In all 3 of my home searches I have found so many inaccuracies on those MLS sheets including taxes misrepresented, Lot sizes WAY off, rare but sometimes school systems are inaccurate, characteristics of a house a joke…(If a deck is rotting and needs to be ripped down should it be listed as a characteristic adding to the value of the home?)
We had been advised by a builder friend during our first search that it is our responsibility as buyers to confirm any and all information on those sheets. I usually start with the tax offices. We are also both present at the inspection and consider that a full day activity…not a walkthru experience.
Your right on the money. At the bottom of each sheet it should say information is considered reliable but not guarenteed.
Can The Real Estate Industry Self Govern?
HahaHahaHahaHahaHahaHaha!
That’s really all we need to say on the subject.
“‘The real estate market typically doesn’t behave like the equity or bond markets,’ (Leroy Laney) said. ‘They don’t go up or down. They usually go up and then plateau before waiting a decade and then having another rise.”
http://www.gold-eagle.com/editorials_01/seymour062001.html
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
I rest my case….
I think we had better all rest our cases with this quote…..
All I know is people do what they have to do when they are getting the pressure applied financially. If it means sell at any price they will do that. Watch Out!!!
The RE industry knew the good times couldn’t roll on forever, so while they could grab what they could, they acted with all the dignity and restraint of monkees at a salad bar.
By all means, we need tighter regulation and oversight and vigorous enforcement to help protect stupid people from themselves.
Can The Real Estate Industry Self Govern?
No, but the market will kill it off anyway, so who cares.
I say…Keep the goverment out of it.
Regulations and red tape will create new bigger problems.
Fannie mae, and Freddie Mac, and HUD are examples of goverment intervention gone wrong.
I am not saying the industry dosn’t have its problems (and a lot of them at that), but goverment intervention will only make things worse.
I am reminded of the slap on the hand that Ameriquest got. But I think the reader is correct to point out that so much data comes from entities that have an interest in ever higher prices; the NAR, Mortgage Bankers Association, National Assoc. of Homebuilders, etc. Maybe wrestling this away would help. And there is the MLS monopoly.
MLS fractionalized is not a pretty thing I have seen an attempt at that once before here in Los Angeles it did not go over well. Surely you won’t agree but the current MLS system setup is the best. Unless of course your going to make it a federal setup complete with bureacracy and the monetary losses that goes along with anything federal. What most consumers forget is that they are not the customers for this service. They are not paying for it. The minute you put it in the hands of non-industry consumers it will no longer exist because the funds won’t be there to maintain it. IMO
I disagree with this. Before the Internet end users weren’t the customers for the MLS. But now it is different and most buyers do their own research and search the MLS before ever talking to an agent. So I think the service while it was not intended originally to be used directly by consumers is now a consumer product, and therefore customers have a right to accurate and truthful information- since this information has influence into the ultimate buy decision.
Yea, But your not a repeat customer. Once you do whatever pertains to you your done with it. Your not going to keep coming back month after month for years and years. Sure you’ll scream that you’ll use it and it’s a consumer product but it’s not. And to make up for that lack of repition the price point would be prohibitive. And the last fractionalization attempt was during the time the internet was a viable option. If it was a workable and profitable model for the one’s who actually own the data. especially the people I’m familliar it would have been done. The money is not in Joe Blow consumer the money is in the Agents and as long as that is the reality of it. That’s the way it’s going to be.
And that’s a farce that most people do their research on the net before they buy. Sure some scan the net and look at houses in the neighborhoods they want but as far as real research except for the few that frequent this blog most people have no clue as to what actual research they should be performing let alone doing it. Americans as a whole have turned into a lazy bunch of media driven morons and want to be spoon fed everything. If that wasn’t the case we wouldn’t have been in another bubble. All anyone had to do was a little research and found out we just came out of a serious downturn 5 yrs before this bubble started. Had they even a clue do you think they would have taken out these suicide loans and all the other nonsense probably not.
Most people aren’t repeat customers to Match.com but the price there is under $50/month.
Bwahhhaa. Gimme a break your comparing Match.com with the MLS. Step away from the computer you shouldn’t drink and surf. If you don’t know the differences between the two then I’m not gonna explain it. Rest assured if you want the same level of data provided to you in real time and accurate. It will cost you more than $50.00 a month. Just for enlightenment purposes there is a database service out there for real estate that is freely available to the public It’s for commercial property with all the historical data, market data , you could possibly ask for it costs me just for basic service of Los Angeles 24k a year. Believe me when I say that if you want it with all the data the MLS has plus historical information your going to pay. It takes a lot of people and effort to get something like that running and keep it running.
I guess my real question is given the change in consumer behavior and expectations- what purpose would keeping the MLS in the current state serve? It will only continue to draw negative attention on the part of consumers as the market changes and they CAN view the MLS on all sorts of sites ziprealty, and every agency’s potential customer sites… so the consumer expectations are going to be for accurate information. Period. Once they spend the time looking at it- and as the market further deteriorates, anything that contributes to the public perception of deceptive practices by those in the RE industry and affiliated with it… it seems that the benefit to being honest and appealing to the consumer would outweigh the costs.
The MLS is already made available on uncountable sites right now… regardless of who ultimately is paying for the access… all real estate sites that I have seen have access for the end user. So… then it still becomes an enduser product- in the sense that the pain from consumer perception of deceptiveness on the part of the RE industry will cause them more pain than benefit.
Your query is not really making sense. The percieved deceptiveness in the industry has nothing to do with the MLS from what I can ascertain from this blog but the individual or collective behavior of agents, NAR, or the talking heads claiming representation either real or imagined. My opinion is that a vast majority is imagined.
The MLS is a tool used by licensed agents to conduct business. What you have access too is nothing more than a flyer or a sign for a property and the respective agent(s) representing the property. Quite frankly that’s about as much as any consumer really needs. If there is something else that is needed then the consumer can go and do his respective research or inquire to his agent whether or not that data is readily available via the tools the agent has access too.
Consumer having access to the MLS is not going to change the DOM game if that is what you are referring too and that arguement is all based on interpretation. If a property has been removed from the market for a length of time or the representation of that property has changed then it is in fact a new listing to the current market. If you are seriously inquiring about a property then the agent can use his tool which he pays for the MLS and give you the history on that property because he is paying for the ability to provide that service to his clients. Should the actual consumer have access to that information no not at all if they want that type of access go get a license pay the fee’s and wallah it’s all yours.
Be glad to buy in Hawaii right now, Harv, if you’ll idemnify me against any losses or loss of value I might incur as a result of relying on your economic forecast.
Deal? No, I didn’t think so. So shaddup.
I wouldn’t buy even if he’d indemnify me. The cash I’d lose just from operating it would make it a losing proposistion
Yes, keep the government out of it because they screw things up on a fundamental basis. Just like they say, there are buyers and sellers, and let the market decide what the market is.
But I say, if they’re going to hyperinflate the economy, let’s help them along the way, buy oil, gold and silver, or any other commodity with the exception of housing.
I was told by my realtor when i first met him. There are multiple bids. You will have to bid 1.5% for every offer out there.
This was pretty typical with all realtors i spoke to.
Dumb as I was in 2002 accepted this as fact.
1 month later, I found the place I was ready to bid on.
Asking 330K… Realtor tells me 7 other offers out there. No counteroffers… One time shot!
Dumbo me offered 35K over asking. 1.5% x 7 offers x $335K
That comes to 10% over asking. The offer was accepted and I made a first deposit into escrow.
Then my employer announced we were going to be acqiured by a competitor. OK. I Called the realtor and backed out. Got my money back 100%. Three month later I find the home sold for $5K over asking. There were no 7 other multiple bids.
Man! As far as im concern this bubble is built on consumer freud.
Thomas-
You’re a lucky man, and now wiser for the experience. Read ‘Sell Now’ by John Talbott (Jan 2006) and you’ll see all aspects of this bubble. Really important read. Agents like that ought to be horse whipped.
and even when there were multiple bids, could be that they were all fake … even if you are not new to this game you can be surprised every time again with all the dirty tricks realtors use to quickly fill their pockets, at the expense of their ‘customer’.
you know what tricky business I saw a lot this weekend? Slow open house day, despite superbowl, march madness, easter, all being past…it was raining, so I was one of 4 or 6 sign-ins at the couple OHs I went to, even truly new listings (I know the real new ones versus the ones expired and now listed as “new” after already being on for 6 mos lol!). At three of them the agents were on their cells talking business. I really felt it was a ruse to convince the three people still looking in town that people do actually buy houses here. One was loudly (in the echo-y empty house) telling someone that her people were wondering whether they wanted to do the offer over asking and then do the credit at closing, or the ‘other way’. I’ll be over at 4pm anyway. She got me to actually ask whether it was the overpriced PoS I was standing in that she was talking about or not. Not. I think they all got together and said ‘hey let’s talk on the phone during OHs so people think we’re really busy, eh?”. It was pretty funny. I guess I’ll learn in the coming months whether they were really closing deals.
which reminds me too, that this business of encouraging people to pay asking or over-asking even and then get credits back for repairs or ripping out the heinous wallpaper and shag rugs (less of that happening now…people can’t foottraffic on shag rugs lately..)…thus artificially inflating the means and medians…that’s gotta be increasing I’d guess, along with the reductions in asking price to something way below market so that realtors can point to sales-over-asking that someone claimed was happening in DC..
another lovely honest set of practices.
how is that not equivalent to cooking books? it’s surely manipulating market stats in a deliberate way and such that consumers can’t even really address the source; how many people will have time or inkling to research whether the properties that sold for over asking were underpriced initially, or that the sales included credits at closing etc?
it’s the reulations and subsidies that fck it up
same as ALL gov programs,subsidies etc……..
“Man! As far as im concern this bubble is built on consumer freud.”
That is a brilliant Freudian Slip, my friend!
That would make yet another great bumper sticker…
The housing bubble is built on consumer Freud!
(almost seems like a Yogi Berra-ism, no?)
with no superego to whip the egos and ids into shape and allow for a functioning society!
Don’t allow the no down loans . The buyer has to be serious about buying and willing to save a little . Down payment requirements would at least keep some of the gamblers out of housing . My neighbor got a no down loan . She told me that her attitude was” if the bank gave us the loan than we would go for it because we had nothing to loose “. The interesting part is that this couple has 4 other houses and had just bought another one 3 months before this no down one that I’m talking about .She just put one of them up for sale and claims she is going to put another one up for sale also .Apparently the two other places they have held long term .
While I do believe that these people will make the loan payments , I think they need to sell the 2 houses quick before they run into trouble .
Oh by the way , I did have to talk them out of buying another house after this last one and they actually listened to me .
Is personal responsibility dead? Should the free market be regulated?
People who read this blog regularly tend to be intelligent, well-educated folks (no offense!). They have been prudent in their money management and won’t share the downside probelms that others will have. If everyone took the time to learn about an alleged “investment” before plunging in, we wouldn’t have nearly the degree of problems we have today or are expecting shortly. If lenders hadn’t been short-sighted and fired all of their middle management and given important jobs to minimum-wage workers, we might have had a higher degree of security in the underwriting and loan management processes, too. Prudent, well-educated people might have made much better decisions than other folks who have never seen a recession, let alone a bank run or other serious financial hardship.
Now the proposition under consideration is whether some bureaucratic oversight should be ginned up to try to prevent irresponsibility, negligence and fraud in the future. Let me say this: that idea worked SO well at Freddie and Fannie… and in the S&L’s… and with Enron… and with the South Sea Bubble…
Get the picture? Greed carries its own punishment. It neither can nor should be averted.
Personal responsibility is a good thing, but fraud is still fraud. If someone makes a stupid, greedy decision based on facts, then they have to pay. Caveat emptor, and all that. I know some people think a “free market” means “absolutely no regulations of any kind,” but in practice that doesn’t work too well. It’s not an even playing field.
If there is no avenue of redress for fraud, then the only other way to deal with fraudsters is to gather the villagers with the pitchforks, torches, and heat up the vats of tar.
as far as I know, fraud has always been illegal and, also as far as I know, most western societies have had some form of redress for it
anything else is pointless, costly and, ultimately, will provide protection to the big companies and donors and reduce the effectiveness of the market
Moopheus-
You’re my kind of American. Your last paragraph was well stated. I don’t want the government protecting me from myself, I want the so called free market to have consequences for nefarious actions. The R E Industry is not a ‘Free Market’ (huge lobby in DC), its a Cartel.
Yes,… after this crash the govt. will enact laws to never, ever let this happen again. Like LTCM, Enron, MCI, Global Crossing …blah, blah. The inside money is on the beach in Argentina, and are watching via satellite the upcoming comedy transpire. After the dust settles they will come back ,and pay off the next round of politicians ,and the next generation of suckers….
——-
Not sure if this was posted about Pana City beach/ Panhandle Fl condo crash..
http://www.sunherald.com/mld/sunherald/business/14409077.htm
Excellent article on Panama City. I live here and I can tell you that it seems like half the town is for sale but nothing is selling. There were fewer than 7,000 properties on the MLS for the area in early March, and now we’re well over 8,000. People are starting to cut their prices, but not nearly enough.
The same old rusty worn out idea of deregulation is nothing more than a relic of a failed ideological philosphy embraced by conservative republicans. We’ve seen the end result of unrestrained commerce over and over again yet a vocal minorty ignorantly shout the same stupid lies like “regulation is bad for business”.
When is enough enough? How many people have to be harmed by reckless profiteering?
Amen, brother. Deregulation of the energy grid, for example, gave rise to the energy pirates like enron. Predatory capitalism needs to be kept in check.
Personally, I’d go a step further and mandate that the highest-compensated individual in a company (i.e. the CEO) cannot be paid more than 60 times the lowest paid employee. That might end some of these obscene CEO salaries and golden parachutes, while the company is being looted in the name of “shareholder value.”
“Amen, brother. Deregulation of the energy grid, for example, gave rise to the energy pirates like enron. Predatory capitalism needs to be kept in check.
Personally, I’d go a step further and mandate that the highest-compensated individual in a company (i.e. the CEO) cannot be paid more than 60 times the lowest paid employee. That might end some of these obscene CEO salaries and golden parachutes, while the company is being looted in the name of “shareholder value.” ”
Bingo. We’d see how quick they’d think twice about outsourcing jobs to $5/hr wage slaves. The “greed at any cost to human capital” has revealed itself in crystal clarity just in the past 3 years. Accelerated outsourcing, 400million pay packages while fuel prices explode, the underfunding and bleeding of pension funds of wage earners while the perps walk… and on and on and on. At the same time, I recall some voters saying they want “character and integrity” in the WhiteHouse and Congress. Well, they got what they voted for. Maybe next time they’ll vote with their wallet instead of some nefarious far out issue trumpeted on Fox News.
Sammy & Lingus,
The same old rusty worn out idea of deregulation is nothing more than a relic of a failed ideological philosphy…
…mandate that the highest-compensated individual in a company (i.e. the CEO) cannot be paid more than 60 times the lowest paid employee…
Yes! I’m 100% with you on this!
Finally, some voices of reason. I will give an “amen” to all everything written above. No need for amplification.
The regulation / deregulation question boils down to which you want to defend yourself against. A bad government? Or a bad company?
Personally I’ll take my chances aginst a bad company.
Comment by waaahoo
2006-04-23 17:01:33
The regulation / deregulation question boils down to which you want to defend yourself against. A bad government? Or a bad company?
Personally I’ll take my chances aginst a bad company.
___________________________________________________
Is this StupidSpeak or are you facing charges?
I have lived in Hawaii for 13 years, Mr. Shapiro comments withstanding, I new of several individuals who purchased at auctions 1 bedroom condos for 25K to 35K at the “Then Bottom” in 1998-1999 which previously sold for 195K in 1990.
Currently, unmigitagited nonsense rules the senses of individuals who have more money and credit than brains. I also know of a co-worker who in December 2005 moved into a brand new 3000 sq foot home on an 6500 sq foot yard for 950K and he only earns 80K/year, do the math, not pretty. I have recently observed that he sweats a lot more and has much more nervous laugh, when he laughs.
I am happly renting in Hawaii, driving a paid-for car, no heating or cooling bills, 100$/month electricity and water bills, no credit cards and paying for everything in cash, I sleep well at night and life is good!!!
I am happly renting in Hawaii, driving a paid-for car, no heating or cooling bills, 100$/month electricity and water bills, no credit cards and paying for everything in cash, I sleep well at night and life is good!!!
Hey Chuck, need a roomate, LOL???????
No Thanks, My wife and I are doing fine, We would like to own a house some day, but we do not EVER wanr a house owning us. Aloha from Hawaii.
One answer I was mulling today was not regulating the real estate industry (i agree that’s nearly impossible), but bringing pressure to bear on the media to cover RE industry more responsibly.
Ben maybe this is a topic for another weekend, but I bet we on this blog could come up with some suggestions for an ethics guide, that, at minimum, would at least help readers understand the difference between sound reporting and lazy/biased stuff.
I started thinking about this, BTW, when I saw a post on grim’s blog about a condo project in my boro, Brooklyn, that was touted in this Sunday’s Times, and has been covered in a couple of the RE-friendly blogs in NYC. What wasn’t mentioned in these stories was this building apparently has no c of o yet, and the owners may be in some financial trouble (stuff you can see from public records searches). What about asking reporters to actually do their homework and do a 5 minute check on a building before splashing it all over their pages?
One reader added, “Another topic is the role of crooked appraisers in this run up. They are the ones who validated all these hige price jumps, and I’mwondering where the justification was these past few years for a house to be truly worth $55K more than the one 3 doors down that sold for 6 months prior.”
Buyer’s are culpable in the run-up. They listened to the RE sale shills and mortgage thieves.
With 21 years in the appraisal biz, I’ve seen my lower than contract price values sacked (at the purchaser’s request) and replaced in a report prepared by a 6 month tenured trainee.
OK IDIOT, OVER-PAY BY $100k WTF DO I CARE…Listen to the scammer agent-L/O racketeers! JUST DON”T GO LOOKIN’ FOR A SCAPEGOAT WHEN IT ALL CRASHES DOWN ON YOUR HEAD!!!
Hellava lot FB’s dug their own graves in this debacle.
hd, I’ll give you that the buyers dug their own holes in many cases. What was it then that kept some potential buyers from drinking the kool aid and buying into the lies? I looked at houses several times in the last 3 years and each time I was told that I could afford some unreasonable mortgage if I used the sophistcated loans available at the time. But there was a small voice inside telling me that it was just not right. It was a quiet voice, a voice almost was drowned out by the desire to “get in before I was priced out” and the incessant chanting and vibratory pressure I was subject to in all communications with the RE sector. There was no clear “VOICE OF REASON” available until I found Ben’s Blog. But I fret that there are far too many people out there who have succumbed to the other voices, the lies, the deceptions and trickery that are used to this day unchecked, unexposed, and sadly, unpunished. In fact my perception is that the worst of the lot not only are getting away with robbery, but doing so in the finest rainments. It’s a wee bit frustrating to say the least. Perhaps time will turn the tables on the crooked and greedy in our midst and they will suffer the consequences of their misdeeds. Perhaps. But wouldn’t it be a better place to live and raise kids if we could shine a light on this kind of wrongdoing and punish it in near real time. Where’s my pitchfork?
But I fret that there are far too many people out there who have succumbed to the other voices, the lies, the deceptions and trickery that are used to this day unchecked, unexposed, and sadly, unpunished.
When the President of the US is trumpeting the value of home ownership it’s easy to understand why people would think they were missing the boat and scrambled to clamber on board no matter what the cost.
But what always dumbfounded me, was how people could look at one of my appraisal reports, backed with 21 years of experience with a pair of college degrees; a pair of state licenses; VA & FHA certifications; and with the coaxing of their real estate broker and mortgage thieve, disregard the f*ckin’ value, hire another appraiser and then literally overpay for a property by thousands and thousands of dollars.
It would just blow me away. Still does…
Hey, folks-screw the professional -WTF does he know!!!
He’s only makin’ $300., but that MB and LO are legit-Their only clip you for thousands in commissions when that deal closes.
No bias here-LMAO.
So go ahead and jump of the cliff-listen to them you freakin’ idiots!
Count your blessing and that you heeded the little voice in your head.
Lots of people not getting a good night’s sleep right now, because of the deep shite they’re in.
And there’s no way out for them.
hd man,
I feel your pain…regarding your experience being disregarded and not valued. But sadly it appears that’s been going on for years in all industries.
Our marketing department was never the same when the 30 year industry veteran left and was replaced with a 29 year old MBA that had barely any worktime in. For some reason sheepskins seemed to trump all. (That company who’s founder was once named one of the top 10 most influencial in the computer industry is now out of business after being taken over by more inexperienced MBA youngins, btw.)
i like your phrasings…incesssant chanting, vibratory pressure…
in the reverse of the ‘but suzanne researched this!’ scene, I had additionally the pressure from husband, and it was probably only the simultaneous pressure to stay on budget at all costs (we don’t like creditcard debt) he made clear would continue if we stretched to buy (albeit with conventional financing) an overpriced miserable little thing that stopped us. He decided we couldn’t afford to have a second child if we bought the little PoS house, betting on appreciation to ‘keep us in the market’ and allow us to move up some day. I made the very hard decision to tell him that he could blame it on my utter insanity, but I wasn’t prepared to do that. this is the kind of scenario I guess the century21 people were hoping to defuse with their ad campaign, but happily I know better now than to trust suzanne. I thank you all for this blog, which has been so wonderful for me and another tool in the arsenal when dealing with hubby, who were it not for the obvious lies our realtors have told and the info from here, would still be part of that vibratory pressure. it’s bloody seismic-feeling at times…
Why do we even need appraisers if the value of a house is really only determined by a buyer willing to pay the asking price?
If that is all it takes for values to rise in a frenzied state, then what purpose does an appraiser serve?
I am not saying they aren’t important in the process theoretically, but if there is no punishment for lenders and agents who use appraisers as nothing but a rubber stamp for their greed fix… then at that point, why bother being an appraiser for an industry that has managed to marginalize those with integrity and honesty that was supposed to be a balance check?
A-Excellent points…You apply the term “theoretical” appropriately. Ironically, the true worthlessness of the appraisal function pretty much evolved with the bubble.
Kinda like throwin’ gasoline on the fire.
Why an appraisal if the process is worthless?
To cross the T’s and dot the I’s for FNMA & regulators (it’s an Emperor has no clothes thing-what the FEDS say and what’s happening on the street are totally disparate), and to create a pseudo-scapegoat when everything blows up.
I pretty much left the biz in 2001.
Musta been pre-ordained…Praise the Lord my name isn’t on the rot that passes for a FNMA 1004 these days.
But this is where I think there should be an uproar. Not just a minor ripple, fizz, and honest appraisers just go away quietly because their services are no longer necessary… this is where appraisers need to call BS on the lending and RE industries for phucking price fixing and collusion to price gouge!
Criminy- there SHOULD be some check and balances and an appraiser should be able to call BS in a market where homes are doubling in price in 3-5 years time and say that there IS no reason for it and that that house really didn’t rise in value.
I want to see a big foot stomping fit pitched here…. I mean the lending and RE industry basically have been able to do away with the whole purpose of the appraisal industry- marginalized the integrity of the profession, yet appraisals are still required in order to get anything done… it is like a hired liar.
THAT SUCKS!!!!!! I want to see someone calling BS on those crooked RE agents and Lenders!!!!
yes, good point. What value does an appraisal have if the same home can be valued by the same appraiser at 2x the value a few months or maybe one year later, or 10x the value in 10-15 years (something which is not uncommon in my area of the Netherlands).
These valuations do nothing else than support the web of fraud and lies that is spinned by the brokers, speculators and mortgage mob. Appraisals nowadays have nothing to do with objective ‘value’.
Comment by hd74man
2006-04-23 19:28:30
When the President of the US is trumpeting the value of home ownership it’s easy to understand why people would think they were missing the boat and scrambled to clamber on board no matter what the cost.
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If georges mouth is moving, there will be a lie coming out. You can bet your last dollar on it.
Sunlight is the best disinfectant and the Internet is bringing a lot of sunny days, whether the Realtors (TM) like it or not. Prosecute the people who perpetrated fraud, let the dummies who just were stupid take their medicine. No bailouts, no excessive regulation. Requiring more complete disclosures in some cases might be a good thing. Either require real estate agents to act like stock brokers and other fiduciaries or just do away with the concept altogether. The Internet and the market are going to take care of a lot of this anyway. I hope they enjoy their last chance at this golden goose, because their greed and technology have killed it.
Code of ethic rule #2 for the media: Stop putting 2005 data (lipstick) on 2006 (pig):
http://www.nypost.com/realestate/62642.htm
Doesn’t this “journalist” know we’re almost into May 2006?
Just saw a commercial while watching the basketball play-offs that is a sign of the bubble bursting times: 1-800- DIVORCE
No self-governing agency governs without bias. Unless they have serious penalties for ethical lapses and violations of trust, I think they need more oversight.
Simmsays…
http://www.AmericanInventorSpot.com
simmssays- ‘ethical lapses” hahaha - That sounds like something I learned in an ethics class (CEU requirement). Ethics is something you learn as a child from your parents. If you have an ‘ethical lapse’, you’re morally bankrupt. That ethics class reminded me of my childhood religion classes, and I’m no fan of organized religion either.
Coldwell Bankers online site, Californiamoves.com just hit 199,999 home for sale in California. Started tracking it on 05/30/05 when it was at 152,363. 01/01/06 it was down to 141,604 listings. I would expect to see 300k listings by June 15, 2006.
No. It can’t.
Therefore, caveat emptor.
Freakin’ lemonade stands can’t self-govern but you don’t spend $500K on a cup of sugar-water.
The free market works just fine if RE agents would play by the rules.
Confirm thy soul in self-control, Thy liberty in law!
The lack self-governing ability in the RE-industry, coupled with a lack of regulatory oversight, is a direct causal factor behind the bubble. The short-term interests of realtors, lenders, appraisers, developers, mortgage brokers, and industry spokespersons favor the approach of selling the belief that it is always a good time to buy (because real estate prices always go up), as spreading this myth leads to steadily increasing sales and more pie for the industry to divide. By propagating this lie and using it to find bagholders, the industry shills guarantee that prices will eventually reach a breaking point, and that a prolonged downturn will ensue (whiich brings us to where we are at the current point in the cycle).
one of the troubles with the RE industry is the fact that it is a relatively slow-moving sector where too much money is going around. During one upturn of 5-10 years, many of the shills make enough money to retire so they couldn’t care less what happens after the cycle tops.
Even lawsuits after a crash will not harm them as they have already pocketed their fat paychecks and there is usually no way to touch those. If they ever get convicted for fraud, the company will go bankrupt (there will be no money left there by that time) and they can still retire on the Cayman Islands or some similar place.
markets don’t work without decent information.
American capital markets are the most heavily regulated in the world and yet they are also the most trusted. This is not a coicidence.
our securities law recognize the fact that it is usually close to impossible to prove intentional fraud. this is why we have set up a disclosure system for businesses who want to access our capital markets that only requires proof of a material misstatement in a prospectus or registration statement to win a judgment.
moreover, GAAP ensures that all disclosures remain relatively consistent for ease of comparison.
why can’t we have a similar regime for the real estate market? our securities markets aren’t perfect, but they are a lot more transparent than real estate. we don’t implicitly trust stock brokers to give us unfiltered information, so why should we trust realtors?
ultimately, every investor has to make his own decision as to whether to invest, but what is so wrong about putting safeguards into place to ensure that the average investor can get access to decent information?
A perfect summary of why regulations are good. Capitalist markets only work when they are transparent and the purpose of those regulations mentioned above are to provide that transparency.
I don’t know that this comes down to a regulation issue…can’t realtors just be held to the same standards that any business person is held to? I mean, they are supposed to represent the interests of their clients, so if a buyer enlists the services of a realtor and they mispresent the market by saying it’s a great time to buy,when by any measure of professional competence they should be able to see that the market is declining and by any measure of client’s-interest it would be incumbent upon them to speak of the dangers of declining markets, they should get sued? be held liable? that if there’s an incredible mania going on, but fundamentals don’t support the price levels, that they warn people about that? that if there’s a lot of funny financing going on, and affordability is low, that the you’ll be priced out forever rhetoric might be balanced with an ‘on the other hand’ (who will buy from the people buying now? are you sure you can afford these prices)? that the tax benefit isn’t just 30% off the top of your payments, but related to a number of factors, instead of lying or misleading or being just wrong about it with their clients? what do those little contracts say, the ones some realtors have you sign when you agree that they will be your sole realtor rep for some period of time? I had signed one…don’t recall the details.
Does it become misrepresentation when the mls listings they send with the tag of ‘new listing’ isn’t actually–is an expired listing re-listed, or a prop. withdrawn and re-listed? Or only if you actually *ask* and they lie about it (I know I have seen ‘new listings’ that seemed suspiciously familiar to me and asked for a check to see if it was an expired listing re-listed…I don’t know that I ever got that data)? Is it misrepresentation and violation of their purported relationship with me when I ask for advice on how much to offer and they tell me straight-out, not in a “in my opinion” way, that it doesn’t matter at all how long something’s been on the market, it doesn’t matter for you to look up (they must hate that!) how much the person bought the house for, it’s all a matter of what people get for their houses and nobody takes less than 5% under asking? Is that a violation only if they *know* this to be false?
This little debate came up between hubby and I this weekend, because once again one of the local realtor groups (Reinhart) in Ann arbor published their “calling all buyers: What are you waiting for?” box on their frontpage OH listings. Are you waiting for prices to drop? They say The 20-year history of prices in this area tell us that prices will continue to *rise* despite a slow-down in appreciation during this soft period.
Is this claim carefully crafted to avoid an outright lie, or are they “allowed” to outright lie anyway? There are periods even in OFHEO data charts, showing some actual periods with negative appreciation numbers, albeit short ones, and even if they could argue that there is never a prolonged period of decline, it’s a lie to say this is what the history “tells us”. I suppose if we’re supposed to read the silent ” over the very long -term” at the end of that sentence?! The most recent business column in the AANews said how prices declined y-o-y I believe for March. Even with parsing words I don’t think you can turn ‘decline’ into ’slower appreciation’. And an OH I went this same day they ran the ad again emphasized that the current asking price was less than the seller paid! I didn’t check that one, but either the experts at the office or the listing agent is “wrong”.
They further in the advert asked if buyers were waiting for more listings, and they confidently replied that there were far more properties available now then there will be ‘later in the year’ . This flies in the face of conventional wisdom about spring/summer being the time to add listings, and contradicts the AANews business reporters current column saying the realtors she spoke with (they of course remained unidentified) said they don’t expect the explosion of listings round these parts to decline anytime soon. Hmm. Maybe there is some debate in the local realtor community, but isn’t it wrong/unethical/illegal? for them to pretend that this is incontrovertible? I know we have to treat realtors like they’re car salesmen, but at least when you walk into joe’s jeep/chrysler you know that the salesmen are having meetings with and getting talking points from *joe*…with a realtor, even though you may realize in the end she gets her comission from the seller, she claims to be your independent representative, looking out for you, analyst of the market for you. To study the market well takes time and effort, and it is too easy and reasonable to presume that *this* is what she earns her money from, this and actually considering what is in your best interest, and not from smart-talking and deception and collusion and parsing words where necessary and the ocassional neighborhood tours and tire-kicking.
everything you mention is a justification for holding realtors liable w/o evidence of intentional fraud. if you want to eliminate misleading information from the marketplace, you must provide liability against brokers simply for pushing misleading information. I guarantee that if this was the legal standard, you would not see realtors playing so fast and loose with the numbers any longer
okay, good…then let’s hear from those who believe it would be ‘bad’ to regulate realtors as stockbrokers are regulated. What would change in a bad way if we asked merely what we ask of those selling stocks and bonds–that they not provide misleading information?
Are the people against realtor regs also against broker regs?