I knew it wouldn't be long before Realtors® started getting hungry. Locally we have these wonderful people who will sell your house for "just" 1.5%.
This is where it starts getting fun to believe in karma. The wolves are starting to turn on each other.
19 comments:
Am I actually first AND murst? wow!
Ho Ho Ho - It's Santa Flipper Clause
They eat their young.
Santa F. Clause
Rob, my aunt has been talking about selling her house that she bought 5 years ago for a couple of months now and what a big profit she is going to make from it. I tried to explain the housing situation to her and how I had also discussed it with our realtor last April when we bought our house (at an awesome discount I might add). She kept saying that I couldn't know what I was talking about because I read a few blogs and do a little internet research.
Well, I never claimed to know even a third of what's going on and what I do know I don't understand half of it but what I do know is that now isn't the time to sell if you want a profit.
She started talking to realtors and had her house appraised. LOL the appraisal was MUCH less than she thought it would be and has now decided that maybe she will wait awhile to sell.
Rob,
Discounters are nothing new. They just don't tend to stick around, especially in tough markets.
Kerriella,
A lot of "life plans" are being modified to reflect the new reality. Your aunt is a perfect example. She also is anecdotal evidence as to why the inventory is starting to level off a bit. With a purchase basis from 2002 she's probably better off owning versus renting at this point. Depending on area Sept '05 - Jun '06 was the peak to sell. After that it got tougher. As of now very tough and probably for 2-3 years still tough.
Still if she bought in Phoenix in 2002 then she might as well sell now anyway. The 2/5 tax exemptiion may not last, the price is going to go down and there's still a ton of dead equity to redeploy.
Nothing wrong with a 'reduced' commission Rob. Still a good living if you can do it.
Osman,
I brought up the subject because I wanted to hear other opinions before giving my opinions. You are correct, low cost real estate has always been around and always failing. I think this time IS different. THere are just so many tools in the public domain and the industry didn't adjust to the higher prices with lower fees (as a percentage).
Following on from recent posts plus my thought when I saw that picture of protests against CFC, "Hmm, not too many WASPs in those T shirts". Anyone care to look into some figures and demographics?
Take the long term historic house price trend. At present we are well above trend. Take out the Caseys, Jeffs and similar flip-floppers. The difference (the above trend bit) should be the extra housing built recently plus trade ups which have been purchased by the extra funds which have become available through the expansion of the sub-prime market. Demographically, who are these buyers? People who previously were unable to buy? i.e. the lower end of the income spectrum. Has the sub-prime market enabled the "minimum wage" poor into the housing market, tempting them in with products which can not be viable in the long run? It must have already happened, but someone will have made a race related point out of this, given the demographics of the "minimum wage" poor.
I think what I'm trying to say is, has this housing bubble been built on the back of extending credit, through an unsustainable mechanism, to a group of consumers who shouldn't have been buying in the first place?
Arthur,
Exactly. I was grilled on this very point yesterday over on CalculatedRisk. Minorities have made great gains in the last 20 years in homeownership. No one complained. On the way back down however the cries of racism will be heard and addressed.
@Rob Dawg
I would like it to be different, but I don't think it is. The current marketing is the RE agent/expert will help a person find a house for free and will do all that negotiating and paperwork at no charge. That is a pretty tough market to go against. Most sales agents do guide their customers toward houses with good commission and they do prefer to work with other agents because fsbo's can be so obstinate about getting what they want. The result is houses with an agent are more likely to sell in a slow market than houses with out one.
I don't think the general public buys the "for free" line anymore. I also think the ostentation as exemplified by Crisp & Cole has basically burned the bridges. I don't remember exactly but I think it was something like 40% of all transactions were initiated by buyers approaching agents with a house they were already interested in.
Following on from recent posts plus my thought when I saw that picture of protests against CFC, "Hmm, not too many WASPs in those T shirts". Anyone care to look into some figures and demographics?
These are organized "protests" put on by fine, upstanding organizations such as ACORN and Jesse Jackson, Inc. They want cash. Once CFC makes a "donation" of, say, $1.5 million, the protestors will go away.
IOW, a shakedown.
I do hope you are right, because there are few RE agents worth the money. I think those agents will do fine regardless, but the current RE agent model is broken.
Man, this is a blog to whine about minorities, brown people and people whose names end in 'z' and dog's fart smelling food isn't it - and coming from SoCal, USA at that, both of which have a mixing of self-identifying ethnic populations unrivalled in the world - compared to the homogeneity of so much of the rest of the world, across all continents( being THERE might be exciting to me from HERE but if I lived there all the time, the sameness would get tiresome and how freakin' boring would that be )-
I suppose I ought to keep in touch and track the progression of these sentiments - It might as well be this blog for the milder variants of these sentiments - yeah I know where to go for the more extreme versions.
But is it contained, I wonder ? The subprime bust sure as hell wasn't; so I don't rate the likelihood of containment of this contagion too highly.
I still wonder - in the words of that great philosopher, Rodney King - "Why can't we all get along?"
-K
Oh yeah, on topic - when I sold the house in Pasadena in 2001, as the housing boom was taking off, I used a cut-price agent called Mike Glickman (yeah Jewish name alert ) - charged 0.5%, told us what he'd do compared to a full service agent - told us to offer the full 3% to the buyer's agent. He didn't hold our hand - if an offer came in he passed it on - if we didn't like it and wanted to wait - he just said OK, no cajoling, persuading just OK.
Since it was a boom time we sold in 30 days - The buyers agent complained about how much work THEY had to do ( well what do you expect for 3% huh?) - but Mike was always available albeit terse and precise in his advice - so when the buyers late in the day wanted all these post inspection changes he just, in 2 minutes said - yes do that, that that and that, FORGET THAT..
It all worked out ok. Of course that was the start of a boom - I'm not sure I'd use him, or any discount agent in a collapsing market, because selling a house would have to require a lot of time, effort marketing etc I'd have though, more than what a 1/2 % commission would buy one.
-K
While I do see a need for Realtors since I'd rather have them do the paperwork than for me to make a mistake. Plus, they should carry E&O insurance anyway. But nothing, I repeat nothing, a Realtor does warrants the 5-6% commission. Sure, there's marketing, but that's what, $2500? ($500 for 1000 6x8 full-color glossy postcards mailed + $500 for the sign + $1500 for other misc marketing via newspapers?) Sure the time spent in open houses is worth something, but somehow that should account for the remaining $27.5K the Realtor (and broker) collects on a $500K house? It's a good deal for the RE industry if you can get it, but come on.
The model blew up when housing prices exploded and got squished by the internet.
There's 70 houses for sale in Wrightwood for less than $300k. Pictures in seconds, hot links to schools performance, census demographics, etc. Just asked for 3br/1.5ba and got 11. Spent 3 minutes and nothing, not even one to remember when it goes back to the bank. A Realtor would do what again? Heck, I'm gonna wait for half the agents to let their liciense lapse and spend the 80hr and $1200 and be my own agent and save another 4%.
This just in...
Realtors are feeling the pressure to scrape by on "crumbs" until the market picks up again, said David DeLoach, broker-owner of DeLoach Real Estate in St. Cloud.
"I've still got my lights on -- I just paid the light bill," DeLoach said Thursday. "We're just trying to make it through this. We're not expecting it to last, because there is pent-up demand from buyers. I know that."
---
I wonder what he's going to say when he's working at Walmart?
I love how the Realtors (tm) point to the "pent-up demand" but never point to the surplus of bedrooms in the nation. Jobs are going to migrate. And no one expects Amgen to begin hiring in mass soon.
Dollar volume of RE transactions is dropping. Fast. That ought to sick the sharks on each other.
Very, very interesting.
Got popcorn?
Neil
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