The Housing Bubble

Readers suggested a topic on used house salespeople. “How about how Realtors are Liars? They’re out there advising the public to buy housing while prices are falling, attempting to create a sense of urgency by suggesting sales increasing rapidly when in fact they’re at 14 year lows and flat. These people just lie and lie and lie yet whenever their corrupt behavior is mentioned, the issue is redirected onto ‘banksters’. Why is that?”

A reply, “Because the Realtor® lies only steal 6% at a swipe from the sheeple loanowners while the banksters steal millions. Also the ‘nesting instinct’ which leads sheeple to commit financial suicide just so they can paint the walls any color they want. Sheeple love what they perceive as success/confidence, see also the furry-eyebrowed Realtor® in the movie ‘American Beauty’.”

One said, “We never hear about the realtors and all the non-banker people that are lying about real estate. Whenever you buy or sell a home, there is a long line of people demanding their cut for overpriced or completely unnecessary services. These things are borderline if not outright fraudulent. There’s no movement to go after them so they will still be around long after the bankers are gone.”

Another had this, “This is from my realtor could it be a lie?”

‘ - I’m super happy to say that we have some feedback from the lender on XXXXXXX. Believe it or not, this is lightening speed for a lender in a short sale…’

‘As in every short sale, the lender completed their own value assessment of the property. It appears that their assessment came back at a much higher value than the $399,000 list price. This can be considered great news for any buyer of this property when looking for an opportunity to purchase a property with existing equity.’

‘Fortunately, the lender is not requiring that the list price be increased for approval, but they have countered your $XXXXXX offer price. In a nut shell, we will need to increase your offer a bit in order to secure an approval. This does not mean we need to go over the asking price, but we need to be closer to the $399,000 list price. - ‘

“In all fairness this is a BANK lie being passed on to me by a Realtor like I am so stupid to think I have instant equity in a possibly still falling market and can’t use the internet to find what similair homes sell for which is about 400K except ‘as is’ foreclourses they are about 380K because they are trashed. Have to see the house again and decide if I want to increase offer. Its empty now so I can see it better. I can also use a home inspection report to drive price back down again if there is anything wrong. Don’t know what the bank will say to that but I don’t want to buy a house that’s got problems. NO need to reply too quickly to a bank in any case.”

To which was said, “You do realize that normally what the bank gets on these properties is a BPO—a ‘broker’s price opinion.’ In other words, it is just a number that one particular realtor thought would be a good value to put on the property. It is not the same as a good appraisal showing multiple recent sales as comps.”

“Short-sales are strange beasts, because everyone knows that the listing party (the nominal ‘owner’) is not the party that will have to approve the sale in the end. I mean, the owner COULD sell at a below-mortgage price, assuming they were willing to bring lots-o-cash to closing. But since they don’t have the means, the listing price is kind of a strange fiction.”

“I don’t think it’s ‘fraudish’, but it’s definitely different from a normal sale where a full-price offer would presumably get an acceptance. But since everyone knows that it is different, and they make sure to explicitly list it as a ’short sale’, I think it’s ok…”

And finally, “(This) is a constant and therefore unlikely to be part of the explanation for the RE bubble. It is NOT the case that every salesman is a lying sack of sh!t. But it IS a very useful working assumption. And always has been. Frankly weren’t we supposed to figure that out at the age of 8 after watching Saturday morning commercials?”

The Rock River Times in Illinois. “According to the Illinois Association of Realtors’ (IAR) fourth-quarter 2011 report, Illinois home sales (single family and condominiums) totaled 25,394, up 14.8 percent from 22,114 home sales in the fourth quarter of 2010. The 4Q11 statewide median home sales price was $128,000, down 10.8 percent from $143,500 in 4Q10.”

“‘Chicago continues to show an absorption of properties in the market by aggressive buyers seeking great opportunities to purchase now,’ said Realtor Bob Floss, president of the Chicago Association of Realtors and broker-owner of Bob Floss and Son Realty. ‘The decrease in median price and increase in units sold continues to show the downward pressure distressed sales still have on property values across the city. With interest rates at historic lows, and sellers and buyers looking to make real deals close, 2012 remains an excellent time for first-time, right-size buyers, or investors to get off the fence and make long-term investments in real estate.’”

The Chicago Tribune in Illinois. “‘If you’re selling your place, right now you’re in a beauty contest and a pricing war,’ said Tommy Hicks, an agent at SouthportSotheby’sInternational Realty in Chicago. ‘The really good stuff goes in a week,’ said Hicks, who with his wife has been looking for three months for a $1 million fixer-upper in Chicago’s Lincoln Park neighborhood. ‘People seem to be catching on to the fact that if you bought something in the last seven to eight years, you probably can’t sell it for what you bought it for.’”

“‘Realtors are busy like the old days,’ said Bob Floss, president of the Chicago association. ‘They’re saying, ‘We’re working like dogs but for a third of what we used to make.’”

“At this point, Floss said, it’s a pretty cut-and-dried conversation with homeowners interested in listing their home for sale. ‘If you want to sell, this is what we got now,’ he said. ‘And if you want to wait, wait, but how long is the wait? (Sellers) are saying ‘OK, we don’t like it but this is what it is.’”

The Nashua Telegraph in New Hampshire. “According to RE/MAX of New England, which releases a regional housing report each month, in January 2012, more housing units were sold in the state than in the same month the previous year, but the median sale price dipped almost 3 percent. The median price of units sold in New Hampshire dropped from $185,000 in January 2011 to $180,000 in January 2012. Still, that 2.7 percent decline was one of the smallest in New England. Only Maine saw a smaller decline, of 2.3 percent. Connecticut and Rhode Island saw the biggest median price drops over the period, with declines of 12.2 and 12.3 percent, respectively.”

“‘The slight uptick in sales is encouraging as it means buyers are active in the market, however we are still trying to find a balance between buyer expectations and market realities when it comes to pricing,’ said Jay Hummer, executive vice president of RE/MAX of New England.”