Did we go too far?

While the following article isn’t about New Jersey, the same question should be asked. Did we go too far?

From IndyStar.com:

Time to wake up from dream houses

In a sense, though a very qualified sense, Central Indiana has been a victim of its own success when it comes to home mortgage foreclosures.

Historically a leader both in the rate of homeownership and the frequency of reliance upon federally insured loans for buyers of modest income, the region also finds itself among the front-runners on the downside.

As the market-watching firm RealtyTrac reported Thursday, Metropolitan Indianapolis dropped from first place to third place nationally in foreclosure rates last year but had nothing to celebrate. Lenders took back 48,000 homes, up nearly 36 percent over 2005.

Who’s at fault? Who isn’t? Illegal loan scams that have made the headlines in recent months and led to multiple arrests certainly have cut a swath of blight as phantom financing led to abandonment and foreclosure.

However, far greater loss results from widespread activity that defies no law but too often defies good sense.

The decline in well-paying blue-collar jobs has been identified as a key culprit, and anyone can experience an unexpected drop in earning power. However, evidence shows that too many eager consumers are taking the plunge without sufficient earnings and reserves.

Lenders, sellers and builders are encouraging the gamblers by demanding too little in the way of resources and credit-worthiness and by offering a mish-mash of poorly-understood inducements such as adjustable rate mortgages whose eventual cost will outpace incomes. When layoffs or medical bills hit, families lose homes, neighborhoods lose value and taxpayers who back the government loans lose as well.

Joel Epstein, president of the Greater Indianapolis Mortgage Bankers Association, cites a nationwide push “to create a culture of homeownership” which has led to excess as well as success. “Did we as a lending industry and a real estate industry, in trying to get people into houses, maybe go too far in some cases? I would say yes. Were some people given the wrong kinds of loans? Yes. Were some people not ready to be in homes? Yes. Was the economy at fault? Yes.”

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203 Responses to Did we go too far?

  1. skep-tic says:

    don’t buy stuff you can’t afford

  2. BC Bob says:

    “Did we as a lending industry and a real estate industry, in trying to get people into houses, maybe go too far in some cases?”

    Too far??? They shot for the stars and hit the moon. Unfortunately, for this market, every action has a corresponding counter action. After manias like this, usually the precipitous decline will also over shoot on the downside. The same fuel that led to this absurdity will be the cause of its ultimate decline.

  3. ck986 says:

    Im not sure where to post this but ill put it here,

    This was probably my 6th consecutive week visiting open houses and the notable quote of the day was “prices will increase in March and that I should buy before that” Its good that they have it pinned down so well. They (The Realtors) suggested that its a buyers market now, but after March it may not. Looking for houses is taking a toll on us, we just want a nice affordable place. Another thing I have noticed is that people are not really likely to negotiate unless their house has been sitting for a very very long time. We looked at one house that has been on since June and the realtor said “please provide any offer”. We looked at some nicer homes that have sat for 2-3 months and well they were less motivated to sell. They may have heard that the market is going to change in March.

  4. curiousd says:

    i do know buyers who are expecting to buy before may because they have seen ‘noticeable decreases’. i have tried telling them just look at the tax records on comparable bought in the area from 2000-2002 and tell me you really think you are getting a good deal. they are not listening.

    it reminds me of my strategy classes in school.. in any negotiation beware of the ANCHOR (price mentally projected to be accurate and not necessarily connected to a fundamental economic reality).

  5. 2008 Buyer says:

    As these originators tighten guidelines, some of the people who NEED to refinance as well as some of the marginal buyers wouldn’t be able to get a loan.

    Many of Orange County’s boldest lenders are struggling to stay in the black – and in some cases to stay in business – as their customers miss mortgage payments in record numbers. These lenders, experts say, exercised poor judgment in a bid to maintain loan volume last year. What’s become clear is a whole bunch of people signed up for loans or were sold a loan they really couldn’t afford,”

    http://www.ocregister.com/ocregister/homepage/abox/article_1556536.php

  6. Clotpoll says:

    ck896 (3)-

    Unless you are losing your nerve and your search is becoming prohibitively tiresome, I’d counsel waiting just a few more weeks. I think that wait will reward you with even more selection…and accordingly, a better price.

    I would be shocked if the traditional Spring jump in inventory is not augmented by withdrawns/expired from ’06 jumping back in and some degree of pre-foreclosure-inspired selling.

    BTW, here’s a good “quickie” test for determining the quality of agent you run across at open houses: if the agent mentions the words “buyer’s market”, assume he is a nincompoop. How can it be a “buyer’s market” when possibly 70% of all buyers cannot buy, because they are unable to sell their current homes? I can show you a gazillion listings in my area that I know for a fact have serious buying interest…the only problem is, those buyers can’t get a contract on their current homes!

    A non-contingent buyer is going to be a very powerful person in about six weeks. Hang on!

  7. bergenbubbleburst says:

    cvk986: and when prices do not rise in March, they will blame the weather, or something else, and they they will move teh date up to April, May etc.

  8. Clotpoll says:

    I think BC Bob and ChiFi can back me up with the details on this, but one very often sees the best potential for big gains in securities markets when a phenomenon called “order imbalance” occurs. Basically, when the buy side or the sell side gets super-heavy vs the other side of the trade, the avalanche of subsequent orders causes securities to gap up (or down) in a much more volatile, rapid and disorderly fashion than in normal markets.

    My call for the Spring is that we are going to see an order imbalance on the sell side, as owners realize that there are loads of competing listings vying for the attention of too few ready, qualified buyers. Those sellers who must meet the market are going to “gap down” in order to sell.

    If you’re looking for the best buy in this year’s market, it may well be at hand.

  9. Clotpoll says:

    Burst (7)-

    Like mini-versions of Lereah. We’re all well-advised to keep an eye on the facts and the numbers.

    If NAR would just address the truth of the current situation, everyone involved would be better served. Some truthful talk would also stabilize the market; instead, I think this Spring is going to be a rush to the exits for many sellers.

  10. BC Bob says:

    Clot,

    You are right.It’s the damn chain. Too many weak links in the chain. It is mutilated. The chain represents “old” buyers [not in age but current homeowners]. This industry needs a ton of new buyers until the chain is resuscitated. How does this happen??? Lower prices. I don’t think the public knows how far this chain can stretch for a single transaction.

  11. James Bednar says:

    From the Morning Call Online:

    Home to slowing market

    Kevin and Jen Graney liked the spacious house on a half-acre in Bethlehem Township, but not the $500,000 asking price.

    So they offered $30,000 less than the list price, and last month, the seller accepted.

    The Graneys’ experience reflects a shift in the housing market in 2006. Home buyers regained a flexibility to negotiate that had been lost in the boom years of 2004 and 2005.

    Those years were characterized by homes selling in a matter of weeks and properties receiving multiple offers. Last year, by contrast, was a period of growing inventory and fewer sales.

    Two years ago, the Graneys would probably have had to offer the full asking price or more to buy the 3,200-square-foot home. In 2006, the seller gladly accepted the offer of $470,000 because the home had been on the market for more than a year. Other offers — including one for $525,000 — had fallen through.

    ”People are thinking twice about how much more properties can appreciate in value,” said Stephen Thode, who runs the Goodman Center for Real Estate Studies at Lehigh University. ”Rather than committing to that jumbo mortgage on the bigger home, they are saying, ‘I think I will stay put for a while.’ ”

    Real estate agents in the Valley spent much of 2006 trying to convince sellers that the market had shifted in favor of buyers. Many say sellers still wanted to set asking prices that were too high for the market.

    ”I worked with quite a few sellers who did not really care that people were saying the market was sliding,” said Ellen Shaughnessy, an agent with Prudential Paul Ford Realtors in Easton. ”They still wanted to price their homes at a premium despite what was starting to happen. Some of those [homes] are still there.”

    At the same time, real estate agents say many buyers have falsely assumed the market is in free fall, and have submitted offers that grossly undercut asking prices.

    Real estate agent Loren Keim said his Allentown firm, Century 21 Keim Realty, put five properties priced at $500,000 on the market at the end of the year. All the properties received offers between $350,000 and $360,000, or 30 percent less than listing prices. Virtually no seller is going to accept an offer so low.

    The stalemate between buyers and sellers, he said, contributed to falling sales and a decline in future contracts in the last quarter of the year.

  12. BC Bob says:

    Clot,

    My #10 was in response to your #6, regarding buyers wanting to buy but can’t sell.

  13. James Bednar says:

    From the NY Post:

    FORECLOSURES SOARING

    The number of New Yorkers forced into foreclosure is skyrocketing, especially in Nassau County, where foreclosures have jumped a stunning 82 percent in the past year.

    According to foreclosure tracking firm RealtyTrac, the number of city foreclosures went up 15 percent in 2006 from the year before, while Long Island jumped 55 percent. The national rate surged by 42 percent.

    “People in general are living outside of their means,” said wealth manager J.J. Burns. “This generation wants everything now. People are not saving for the rainy day.”

  14. lisoosh says:

    This is hysterical:

    “Real estate agent Loren Keim said his Allentown firm, Century 21 Keim Realty, put five properties priced at $500,000 on the market at the end of the year. All the properties received offers between $350,000 and $360,000, or 30 percent less than listing prices. Virtually no seller is going to accept an offer so low.”

    It doesn’t seem to have crossed his mind that he is doing a pi$$ poor job of setting attractive prices. ALL prospective buyers (and their agents) have come to the same conclusion regarding the value of his offerings and yet he feels that THEY are being unrealistic.

  15. njrebear says:

    I agree that Clot is an MVP but i stand by RentLord in his/her assertion that even an above average realtor isn’t worth the 6% commission.

    Realtors in my opinion use unfair trade practices by monopolizing listings. The whole realtor problem will not be solved until the mls access is made public. I don’t mind paying $200 a year to gain access to the listings but to have to go through a 6% realtor to access mls is unfair.

  16. James Bednar says:

    Two comments regard commissions. First, keep in mind at least 4 people have their hands in the commission pie. No single person gets anything remotely approaching a 6% cut. Also, commissions are starting to move towards the 5% mark. So, assuming a 5% commission and a 50/50 broker/agent split, these four folks each get a maximum of 1.25% for their involvement.

    Buyers Agent
    Buyers Broker
    Sellers Agent
    Sellers Broker

    Not to mention any fees or referral charges that might come off the commission to reimburse the office or referral company/agent.

    jb

  17. James Bednar says:

    Times have changed and everyone needs a more efficient RE transaction process.

    Do some digging into title insurance.

    jb

  18. RentLord says:

    True jb. I paid my share of title insurance fees ;-) twice… a rip-off indeed!

  19. njrebear says:

    JB,
    I do understand that commissions get spilt but the total is still 5-6% commission. I don’t care if my commission is funneled to a single person or a group of people. In my opinion all the 4 entities listed above are non-essential.

    It’s like saying, everybody who wants to invest in the stock market have to go through a certified financial planner or a broker who calculates commission as a percent of capital.

  20. James Bednar says:

    Just an aside, I noticed a number of Foxtons signs up on Foxtons listed properties that had yellow tape over the “3%”.

    Also, noticed that they seem to have stripped any reference to “3%” from their website.

    Full Service, for less commission? Here’s how we can do it:
    With house prices doubling in many areas over the past few years, many Realtors® are, in reality, earning double commission. Therefore, you the home seller, can end up paying twice the amount of commission for exactly the same service.

    That’s why we charge you less commission, not the traditional 6%. We never compromise on service; we’re simply keeping things fair.

    Also:

    The realtor’s covert means of business

    Foxtons, the discount broker, broke with tradition in a prepared statement it issued days after laying off its mid-Hudson staff:

    “Foxtons knows that it is not only attractive pricing, but also an attractive commission offering to other brokers that can help sell a home, particularly in a tight market.”

    This, the company said, was its rationale for encouraging sellers to offer a 4 percent commission instead of the firm’s customary 3 percent. Foxtons hopes the extra percentage point — which translates to roughly $3,150 on the typical Orange County home sale — might make its listings more attractive to other Realtors, who in turn might bring their clients by to take a look.

    jb

  21. RentLord says:

    Foxtons – another example how the Realtor/NAR cartel has forced a discount broker to charge more fees.

    Realtors just do not show any Foxtons properties with the old commissions – inspite of that being illegal. It’s easy to explain away why realtors don’t show foxtons properties. Especially with highly-eloquent, i-know-more-than-you type guys like Cloth.

    (sorry i have to take a dig at clot all the time.. can’t help it today)

  22. Al says:

    ck986 Says:
    January 29th, 2007 at 8:12 am
    Im not sure where to post this but I’ll put it here:

    This was probably my 6th consecutive week visiting open houses and the notable quote of the day was “prices will increase in March and that I should buy before that” Its good that they have it pinned down so well. They (The Realtors) suggested that its a buyers market now, but after March it may not. Looking for houses is taking a toll on us, we just want a nice affordable place. Another thing I have noticed is that people are not really likely to negotiate unless their house has been sitting for a very very long time. We looked at one house that has been on since June and the realtor said “please provide any offer”. We looked at some nicer homes that have sat for 2-3 months and well they were less motivated to sell. They may have heard that the market is going to change in March.

    We have been looking at the starter homes for about a month.. Realtor quote: every price should be negotiable in htis market.

    HOwever – what we have seen is starter homes are not getting any cheaper. It seem like for us to buy a bigger colonial style home (they are actually coming down in price quite a bit) is almost the same in price as buy starter-upper cape-cod.

    We have seen a lot of families with 2-3 kids in small 2bedroom cape-cod (which are called 3-4 bedrooms in NJ, since owners are counting finished attick and sometines even unfinished!! as a bedroom, and sometines even 2 bedrooms!!!) who are trying to sell their cape-cods for double of what they paid 5 years ago.

    I believe the reason for this: they need to buy bigger house. They have no/very little equity if they would have to sell their house at let’s say 20% from what they have bought their house for (6% realtor’s fee, moving expences, paying minimum payment of their mortgage, refinancing).

    Even if they paid regular 30 years fixed payments, did not take out any home-equity loans they would still hardly break evena after realtor’s fee in normal market. But they need a bigger home now!!!

    What else had happened in the last 5 years: incomes did not grow as fast as costs of food/gasoline/medicare and those people now have 2-3kids!!!

    So they actually have less income available for housing than when they have bought their first home, and can not afford bigger home without getting HALF of bigger home price from selling their homes…

    (their fisrt home is still very affordable for them, since their loan is back dated to 1999 prices with 2007 interest (after refinancing).

    But they just can not get into bigger house.
    So why should I, as new home buyer provide an old owner with thouse extra 100K of my money??

    Anyways, Check the listings for Middlesex/Sommercet counties by yourself – starer cape cod’s homes in decent neighbourhoods are listed in low 300K+ (and believe me they are crappy, I have seen quite a bit of them) and nicer bigger colonial’s in the same areas are in high 300K right now.
    So for us (me and my wife) it is almost does not make sense to even look at starter homes….

    We can stretch our finances, and get into a long-term home which will be our family home for a long time.

  23. suziehomemaker says:

    Hello Everyone, I visited 3 open houses yesterday in Berkeley Heights,got there close to the end, one sheet I noticed about 8 sign ins. Realtor tells me she had a busy day , lots of people stopping by, if I am interested make an offer, they are neg.ON THE POSSESION, home has been sitting for 5 mts. Other one I saw was new construction,had been reduced, realtor, a very nice lady, told me if I am interested to call builder, and make an offer as he really wants to unload the house. I have been looking for the longest time, I think I will go back and sit on the fence for a while.

  24. Anxious but waiting says:

    I have to say I kind of Agree with Al #23.
    Looking for starter homes is starting to not make much sense.. Just keep saving and when the larger more attractive house is basically the same price … Buy That house and know you won’t outgrow it any time soon.

  25. SG says:

    (Baltimore Business Journal, Jan. 26th): “Wachovia Corp. has closed its subprime mortgage lending division, EquiBanc Mortgage… Wachovia decided to close the business after “an intensive strategic review of its mortgage business, which has altered the company’s approach to the origination of nonconforming loans… EquiBanc was Wachovia’s sole business dedicated to subprime lending.” Wachovia (WB) has retail and commercial banking operations in 21 states and is the second-largest bank in Greater Baltimore when ranked by commercial lending and fourth-largest when ranked by deposits…As of Sept. 30, Wachovia had assets of $559.9 billion and market capitalization of $88.2 billion.”

    http://phoenix.bizjournals.com/baltimore/stories/2007/01/22/daily37.html

  26. RentLord says:

    looks like the builders have priced out the crappy capes and splits a long time ago with cheap McMansions.

    I went to an open house in Somerset this weekend – a 4br,2.5 bath sitting for 90 days (DOM of 60 days cuz they say they took it off the market in the holidays – big deal).

    Priced at about $550k, it’s a shame to see such poor workmanship, staged with fresh paint all over. The problem is most first time buyers are naive about quality of construction ( Atleast, I didn’t know a thing about houses when I was buying the first time). A few handy-man jobs and you know what it means to have a well constructed house.

    That baby is going to go for atleast 100k lower soon.

  27. Rich In NNJ says:

    RentLord Says:
    January 29th, 2007 at 10:28 am

    “Realtors just do not show any Foxtons properties…”

    Actually, in my experience it was the Foxton agent who wouldn’t put together a showing with my agent on a house we were interested in seeing. And this has happened on more than one occasion.
    I’m guessing the Foxton’s agent wanted us to call them directly. Using JB’s inofrmation the Foxton agent would receive 3/4% compared to 1 1/2% if the commission had to be split.

    Rich

  28. Al says:

    About Foxtons – they are never returning your calls and when they finally call you – they are very rude and never working with you on time – they would say – “I can only show you the house on monday at 12:00pm”…

    I think seller is a lot better off with FSBO than with the realtor like this.

  29. RentLord says:

    Al #29 – I am willing to put up with their times and drive in my car, etc if I get a break in commission.

    Beware you are giving fodder for a guy like Clot to give us the holier-than-thou attitude.

  30. Clotpoll says:

    Yo Lard-

    Check Rich’s post above (28). Foxton’s has not been boycotted out of the game. They are dying because their business model doesn’t work. It is based upon the non-existent skills of their agents, who for whatever reason, are willing to work for far less than their counterparts in other companies. My experience tells me they accept less compensation, because they are either brand-new to the business or have failed to develop the skills needed to survive in the legitimate biz. Every day- and in a multitude of ways (just look at #28 above for one example)- Foxtons’ face to the public fails to execute in even the most basic of duties required to sustain a legitimate RE company.

    The public likes a discount. I like a discount. However, when the discount comes at the price of a complete disadvantage to the customer, it ceases to be a discount and becomes a liability.

    If the Foxtons model were even partially successful, the public would be flocking to it. Instead, they are left- once again- jiggering their business model to address simple marketplace realities and to try and recover from lost opportunities.

  31. RentLord says:

    There’s a difference between having rules and executing the rules. Foxtons doesn’t execute well. Nothing wrong with their discount model.

    What I am saying – I know, it sounds un-realistic, is that the whole commission business in RE needs to be over hauled.

  32. Al says:

    RentLord Says:
    January 29th, 2007 at 11:52 am
    There’s a difference between having rules and executing the rules. Foxtons doesn’t execute well. Nothing wrong with their discount model.

    Foxtons – many of people I have talked to expressed the same opinion: their model is great, their web-site is great, but they take on too many listings and do not provide appropriate services.


    What I am saying – I know, it sounds un-realistic, is that the whole commission business in RE needs to be over hauled.

    I believe many people would sign their name here… However how to do it – not very clear.

  33. Clotpoll says:

    Lard-

    Since you and your ilk see “no value” in RE agency, am I right in assuming that you see no value in any number of other brokerage-type financial services agencies (ie, securities, financial planning, insurance)?

    If I’m not correct, what’s the difference?

    If I am corrrect, then it’s logical to conclude that you hold a similar view of the value of economic output to that of an economist in, say, 1934. At that time, the prevailing view was that legitimate economic activity resulted in the manufacture of tangible material goods or the cultivation/transportation of cash crops. The US struggled mightily with getting out of the Depression, because the government insisted upon re-purposing tremendous intellectual talent toward the production of tangible product (witness the various infrastructure, parks and arts programs that made people feel good but contributed little of real worth to the economy). It was not until the demand for war materiel created by WWII spiked that the underlying causes of the Depression were quelled.

    You continue to decry the “inefficiencies” of our business. What, exactly, are these inefficiencies? Listing and sales info is readily available to the public (except from a handul of dinosaur companies that still attempt to hoard it); there is also ample opportunity for the public to choose from a variety of brokerage models…or, to simply go it alone in transacting RE.

    Do you feel you deserve even more than unfettered access to information? Do you want the right to free- or discounted- access to confidential work product and proprietary marketing systems? Or, would you like to see such things abolished, so that buyers and sellers can come together in a separate and equal state of ignorance?

    In the absence of an organized marketplace, there is disorganization…even if information is ubiquitous. Disorganized, informal marketplaces are traditionally much more prone to inefficiencies and abuses…so much so that the product being traded loses intrinsic value; why would RE be any different?

    If RE agency went away tomorrow, what’s your vision of how things would work?

  34. MBaldwin says:

    My realtor, while not outright refusing to show me a Foxton’s house, certainly tried to talk us out of even looking at it.

    Even after I told him directly that a certain Foxton’s house was on the top of our list, he said that he called several times and didn’t get a call back to see the house. To his credit, he did take us to the house and knocked on the door. Noone home.

    He told us point-blank that he had never closed a sale on a Foxton’s house, despite going into contract a number of times. He said that because of the commission structure that if we placed a contract on the house that we could only expect “limited” service from him.

    When I called Foxton’s directly to see the house, they called back with an appt. at my convenience within 15 minutes.

    For what it’s worth.

  35. Al says:

    When I called Foxton’s directly to see the house, they called back with an appt. at my convenience within 15 minutes.

    Could it be that Foxtons Agent does not return calls from your realtor, since it would be splitting 3% to 1 1/2% – not worth even bothering – so they prefer working with buyer’s directly??

  36. MBaldwin says:

    You got me. My realtors says Foxton’s keeps 2 percent, he gets 1 percent.

  37. Clotpoll says:

    Al (33)-

    The reason the compensation structure is the way it is in RE is because the public has consented to it. The public continues in its consent, because no better overall idea has been presented.

    Over the past 10 years, the alternative concepts presented to buyers and sellers have changed traditional RE for the better. As in lots of other businesses, though, traditional RE has been able to “pick and choose” the best elements of competitors’ models, incorporate them into our business model and discard the elements that don’t work. Then, the alternative practitioners are left with nothing but the parts of their businesses that don’t work to point to as a difference between them and us.

    The biggest “win” for consumers as a result of all this creative destruction is the fact that they are totally empowered and are NOT dependent on us anymore for basic information. We can no longer hoard that information and dispense it with an eyedropper in order to force loyalty anymore.

    The control and leverage the permabears clamor to obtain is already in their hands…and they don’t even know it.

  38. Rich In NNJ says:

    MBaldwin,

    “When I called Foxton’s directly to see the house, they called back with an appt. at my convenience within 15 minutes.”

    So I guess, my guess was correct:
    “I’m guessing the Foxton’s agent wanted us to call them directly.”
    In order to keep the commission. So it’s not the Realtor but the Fox(ton) that’s being “unethical”.

    Hmmm, if I run into a Foxton’s listing again I’ll call them myself and when they call back I’ll make the arrangements (or hand the phone to) my agent.

    Rich

  39. RentLord says:

    Cloth, How much does a brokerage firm offering sophisticated service take? 6%???

    Let’s start with a cap of 1.5% commission (I believe thats about right in UK).

    But then putting a cap on illegal immigration and RE commissions fall in the same category – politics and bureaucracy rule

  40. 2008 Buyer says:

    Not looking good for the homeowners with ARMs about to reset
    There isn’t much that moves the market like a shift in interest rates by Federal Reserve policy makers. This year, it is beginning to look like the Fed won’t move much…Some Wall Street forecasters say the Fed could go all year without changing its rate targets, a prospect that contributed to the market’s sluggishness last week….Ethan Harris, chief U.S. economist at Lehman Brothers, has been telling reporters since mid-December that he expects no rate move from the Fed in 2007. If anything, he now says, there is some risk the Fed may raise rates this year, if the current supply of relatively cheap money throughout the global financial system begins to translate into more inflation in the U.S.
    http://online.wsj.com/article/SB117002369139690514.html

  41. Al says:

    Hmmm, if I run into a Foxton’s listing again I’ll call them myself and when they call back I’ll make the arrangements (or hand the phone to) my agent

    Lol I like this one :)

  42. njrebear says:

    “Since you and your ilk see “no value” in RE agency, am I right in assuming that you see no value in any number of other brokerage-type financial services agencies (ie, securities, financial planning, insurance)? ”

    Are you saying the above entities charge 6% commission on capital?? Commission yes. 6% no.

    “Do you feel you deserve even more than unfettered access to information? Do you want the right to free- or discounted- access to confidential work product and proprietary marketing systems?”

    I’m ready to pay for this service but not at 6%! As I said before I’m ready to pay $200 for a yearly subscription. I feel NAR will make more money if they charged every home buyer and seller $200 towards subscription rather than selling the service to realtors for $600 [?].

    “Disorganized, informal marketplaces are traditionally much more prone to inefficiencies and abuses…so much so that the product being traded loses intrinsic value; why would RE be any different? ”
    It would be very difficult to categorize NAR as ‘disorganized’.

  43. James Bednar says:

    A few months back there was a bill that attempted to allow for rebates of sales commissions (to either party). The full text can be found here:

    http://www.njleg.state.nj.us/2006/Bills/A4000/3567_I1.PDF

    (2) a real estate licensee may provide a seller or purchaser a
    16 rebate of a portion of the commission paid to the licensee in a
    17 transaction, so long as: the licensee and the seller or purchaser
    18 contract for such a rebate in advance; and the licensee complies
    19 with any State or federal requirements with respect to the disclosure
    20 of the payment of the rebate. The rebate paid to the seller or
    21 purchaser may be in the form of cash or other thing of value,
    22 including, but not limited to, a gift certificate, and may be made at
    23 or after the closing;

    jb

  44. Richard says:

    FSBO is the only way to fly, then get yourself a RE attorney to close the transaction. the fees paid to a RE agent are completely unjustified unless you are looking for something very specialized and requires a healthy network to tap into.

    a family member on LI who lives in a great neighborhood in nassau county has his property listed for 5 months with prudential. the agent couldn’t bring any offers to the table within 20% of their asking price. they put it on FSBO and 2 weeks later had 3 offers, 1 with no agent so they saved a good chunk of change and were able to offer a more competitive price. they got 7% off list and the list price was competitive with surrounding properties.

  45. SG says:

    I have a question from Home Maintenance angle.

    The next house that I buy, I am presuming will be our long term home for at least 15 years (barring anything unusal in the mean time).

    Which home built year would be better from perspective of home maintenance expenses? I am not sure after how many years a Roof need replacement or other major structural works need to be done etc…

    At present I was looking something built in 80’s, but my decision was very arbitrary, without any proper research. What happens if I buy a house built in 60’s or 90’s !!!

  46. chicagofinance says:

    Rent: what do you do for a living, and let us take a whack at it as useless and superfluous.

    Clot just gave the thread a piece of advice about when to enter the market. He gave you the reason for his opinion. He gave this information without any contingencies.

    Please offer the thread an equivalent beneficial piece of information other than FSBO, which in my opinion can be used effectively, however, in only very specific circumstances.

  47. thatbigwindow says:

    SG: It all depends, usually roofs are good for 30 years (although sometimes 15 years if it is a cheaper roof)

    Year built is irrevelant, it depends on how well the house was kept. If you neglect a house, it will detiorate. The house we have was built in the early 1900’s, but has a new roof, furnace, water heater. True, the electric and copper plumbing is old, but overall the house is well built and was cared for before we bought it.

  48. njrebear says:

    JB,
    What was the total cost in getting a RE license in terms of both money and time?

  49. Al says:

    I’m ready to pay for this service but not at 6%! As I said before I’m ready to pay $200 for a yearly subscription. I feel NAR will make more money if they charged every home buyer and seller $200 towards subscription rather than selling the service to realtors for $600 [?].

    I like the idea of offering everybody access to the MLS data for a fee…… I do not see any problem with it. Also allow FSBO to be put into the system for a fee as well??? and after that we will see true value which realtor brings to the table.

    Right now – two people doing the same leg work – the realtor and the buyer – two people going to open houses and seeing the homes. I do not realy need a realtor to drive to the home, open the door, go inside and look.

    SO if I would have a choice of paying let’s say 500$/year for access to realtor’s data – I am as a buyer would be in exactle the same position.

    This would be an efficient way to weed out realtors who do not provide any valuable services to their cutomers.

    The final decision will be mine, I will get the loan myself, pay my own closing costs and so on?? so what excactly does realtor brings besides an access ot the MLS computerized database??? For people who would like someone holding their hand all the way realtor is more needed. However I still do not see why this particular service costs north of 18,000$. For people who went to colledge – thats how much 1 year!!!! of tuituion in private colledge could cost – does amount of time colledge professors/TA/janitors/stuff spend on you compares to realtor’s time frame.

    For thouse who would argue that only few showings by a realtor result in sale – that is the MAJOR inefficiency of current system – If I could go nd see myself I would be only contacting realtor about the listings I am realy interested in AFTER I checked them out couple of times !!!!

    SO a simple change like allowing everyone to see MLS listings/list their houses for a fee would make market a lot more efficient and free up ton’s of people to do something producing more valuable services/goods.
    Right now it is artificially monopolizing the market and I believe we will see a lot more Lawsuits against NAR in the future years requiring impletmenting such a scheme – and actually reauiring them not to charge some random fee but actual costs of listing service + let’s say 20% return on employed capital.

    After that we will see what will happened – I say realtors will mostly disappear who would want to pay extra 18K??? Monopoly is never productive/efficient.

  50. James Bednar says:

    Class – $400 (I believe it was 11 Saturdays, 8hrs)
    Book – $30
    Exam – $60
    Fingerprinting – $80
    License Fee – $160
    Total (to date) – $730

    jb

  51. Al says:

    Time wasted??? Priceless???

  52. James Bednar says:

    Time in total would be roughly 150 hours.

    jb

  53. James Bednar says:

    U.S. vacant housing at all-time high..

    From the U.S. Department of Commerce:

    CENSUS BUREAU REPORTS ON RESIDENTIAL VACANCIES AND
    HOMEOWNERSHIP

    National vacancy rates in the fourth quarter 2006 were 9.8 (+ 0.4) percent for rental housing and
    2.7 (+ 0.1) percent for homeowner housing, the Department of Commerce’s Census Bureau announced today.
    The Census Bureau said the rental vacancy rate was not statistically different from the fourth quarter rate last
    year (9.6 percent) or the rate last quarter (9.9 percent). For homeowner vacancies, the current rate was higher
    than a year ago (2.0 percent), and also higher than last quarter (2.5 percent). The homeownership rate at 68.9
    (+ 0.5) percent for the current quarter was not statistically different from the fourth quarter 2005 rate or the
    rate last quarter (69.0 percent each).

    Mike Larson has a graph of the vacancy data here:

    http://interestrateroundup.blogspot.com/

    jb

  54. bergenbuyer says:

    my realtor told my foxton’s gives 2% to foxtons’ agent and 1% to buyers agent therefore buyers agent are less inclined to show foxtons houses. He also said foxton’s agents are half assed and the transactions he’s had with foxton’s he’s done 99% of the work vs. the typical 50/50. Basically 0.5% vs. 1.25% and more work? Can’t blame realtors for staying away from foxtons listings.

  55. njrebear says:

    jb,
    thanks

  56. James Bednar says:

    From the AP:

    Counties vow to help tackle property taxes

    Declaring New Jersey’s 21 counties vital to combatting the nation’s highest property taxes, county officials Monday vowed to spend the next several years trying to find ways to promote more shared services among local governments.

    Next several… years.

    Oh bother.

    jb

  57. RentLord says:

    Considering that the average American moves once in 5 years (including renters of course), isn’t it more prudent to first tackle the RE commissions and then deal with RE Taxes?

  58. James Bednar says:

    From MarketWatch:

    http://www.marketwatch.com/news/story/broaddus-says-fed-policy-likely/story.aspx?guid=%7BC641CB5F%2DA4F3%2D48D9%2D9D5F%2D8194D41CF288%7D

    The Federal Reserve’s likely to hold the line on monetary policy for the next six months or more as the economy seems to be in balance, with less risk of a slowdown or an inflationary outbreak, J. Alfred Broaddus, the former president of the Federal Reserve Bank of Richmond, Va., says.

    “I’m not sure the Fed is going to need to move rates in either direction for a while. I don’t see a particularly strong rationale to move one way or the other,” Broaddus said in a Monday interview with MarketWatch.

    The policysetting Federal Open Market Committee, which meets holds its next two-day meeting starting Tuesday, has held the federal funds target rate steady at 5.25% at each of its last four meetings
    Broaddus said that inflation, as measured by the moving 12-month change in the core personal consumption expenditure index, or PCE, has been moving steadily lower and that this will “properly” keep the Fed from hiking interest rates.

    “The recent performance [in the core PCE] makes me feel good about the inflation outlook,” Broaddus said.

    As long as there isn’t a major downward surprise in data on U.S. employment for January, due for release on Friday, “I don’t see any reason why the Fed will feel compelled to lower rates in the near-term future,” he said.

    Broaddus said he wasn’t sure which direction the next Fed move would take because he didn’t expect any change over the near-term forecast horizon.

    “Because you are pushing the [next rate move] out way into the future, it makes it all the harder to decide whether the next move will be up or down. I think it’s about 50-50 at this stage; it could go either way.

    “But I don’t think it is going to go either way probably for another six months or so,” Broaddus said.

  59. Rich In NNJ says:

    RE Taxes.

    YOu HAVE to pay taxes, you don’t HAVE to pay commissions.

  60. RentLord says:

    Exactly Rich. We shouldn’t HAVE to pay commissions. If only Corzine could pass a law capping RE commissions – that would reduce the burden on us while they figure out how to reduce taxes over the years(years!)

    I wonder if a state can pass such a law (cap on commissions that is) without getting into some legal wrangling with NAR

  61. James Bednar says:

    Why not just get a license and do it yourself (and friends/family)?

    jb

  62. MJ says:

    NE rental vacancy rate down 5.6 from 5.8 YOY inspite of significant rent increases.

  63. nwbergen says:

    Corizine won’t and hasn’t helped to pass a single law that helps the middle class. (Capping) is not part of his vocabulary. Sure he talks a good game but not much to show.

  64. gary says:

    I sold my first house without a realtor and will sell my current one the same way. It was easy as pie for us. The lawyers handled everthing between the parties… no sweat. No offense, but I don’t really see the need to have a realtor to sell. Same thing with our investments, went directly to the mutual fund companies and also with the few individual stocks we have. Diddo with insurance policies.

    Why do you need a middle person for any of this? Do your homework and take care of your own business.

    I wish I could buy a house w/o a realtor, I hate having to put a fake smile on while they go through their selling points. My wife and I could punch huge holes through their diatribe but we’re polite nonetheless.

  65. James Bednar says:

    NE rental vacancy rate down 5.6 from 5.8 YOY inspite of significant rent increases.

    MJ,

    Are those numbers from the link I posted?

    jb

  66. MJ says:

    the rent increase part is not in your link..

  67. James Bednar says:

    Which table? I see 6.5 in Q4 ’06 down from 6.7 in Q4 ’05.

    It might be more helpful to see the historical data:

    http://www.census.gov/hhes/www/housing/hvs/historic/histtab1.html

    Keep in mind rental vacancies are higher in the Northeast now than they were in the 2000-2002 timeframes.

    jb

  68. RentLord says:

    jb regarding #61:

    Why not just get a license and do it yourself (and friends/family)?

    Are you saying anyone who wants to buy a house should throw away their bill of rights (fingerprinting) and get a RE license?

    Not that I am against fingerprinting myself, but have friends who have quit jobs because they won’t!

  69. thatbigwindow says:

    RentLord – I didn’t have to get finger printed to get my license.

  70. lisoosh says:

    “Clotpoll Says:
    January 29th, 2007 at 12:18 pm
    Al (33)-

    The reason the compensation structure is the way it is in RE is because the public has consented to it. The public continues in its consent, because no better overall idea has been presented.”

    Not really true. The public has never been offered any alternatives. It would be interesting to see what would happen if there was a choice to either pay a realtor a commission or to pay a fee for specific services a la carte.
    I would love to see which option became more popular.

  71. James Bednar says:

    From NorthJersey.com.. Keep in mind this is an advertising piece masquerading as a story.

    ‘Unbundler’ helps sell-it-yourselfers

    Ultimately, they found a flat-fee real estate broker who — for under $500 — offers the all-important exposure in the Multiple Listing Services maintained by the real estate industry. Derek Eisenberg’s Hackensack-based firm, Multiple Listing System (multiplelistingsystem.com and a variety of other URLs) is part of the Continental Real Estate Group.

    Eisenberg says he’s not a discounter, but an “unbundler” of real estate services. He can list your home on the nationwide MLS service, Realtor.com, as well as on local sites and his own site, for a flat fee. He can sell you signs or rent you an electronic lockbox. For a half of a percentage point, his company will help you negotiate your sale.

    Of course, if a real estate agent brings a buyer to the seller, the seller has to pay the usual 3 percent commission of the buyer’s agent.

    “Our service is not for everyone,” Eisenberg said. “We target the educated consumer. We get a lot of very savvy people, a lot of attorneys, a lot of builders, a lot of business people who know what they’re doing.”

  72. SG says:

    Was just at Zillow site after long delay. To my surprise, they have added, Free Posting for homes for sale.

    http://www.zillow.com/postings/Postings.htm

    If houses really don’t sell much, folks may be more open to put it on Zillow and hopefully price it minus commission.

  73. MJ says:

    Which table? I see 6.5 in Q4 ‘06 down from 6.7 in Q4 ‘05.

    You are right.. it was a typo on my part.

  74. Rich In NNJ says:

    RentLord Says:

    “We shouldn’t HAVE to pay commissions. If only Corzine could pass a law…”

    You don’t HAVE too. You can FSBO when it comes time for you to sell.
    I don’t like the idea of government getting involved (NJ can’t even keep its own financial house in order). I feel it should be left to what the market will bear and if change is needed the market will change. Foxton’s is one example, even though they seem to be failing. Other brokerages are willing to negotiate commissions as well.

    Rich

  75. James Bednar says:

    If houses really don’t sell much, folks may be more open to put it on Zillow and hopefully price it minus commission.

    SG,

    Sorry, they will price it to market with hopes that they will pocket the commission as additional profit (or preserved equity).

    jb

  76. njrebear says:

    jb,
    link on #71 doesn’t work.

  77. Seneca says:

    Posted this in another topic but conversation has carried over here…

    Clot,

    I think you are an asset to this blog and I have learned from your posts, even if I don’t always agree with you.

    With regard to the zero-sum result when buyers/sellers transact outside market channels, I am sure there are lots of “match-ups” that could take place at a negotiating table that would have the results you mentioned (excess of emotion, lack of credible info, etc.) However, what if a buyer negotiates for a living, albeit not in the capacity of a local residential real estate agent?

    Someone who negotiates multi-billion dollar M&A transactions, or multi-million dollar outsourcing contracts, or $500k+ per annum distribution agreements, or $1 mil.+ procurement budgets, etc., if they are good at their job, should also be able to negotiate on their own behalf quite well when it comes to the purchase of a home. Yes, there are all kinds of caveats (they need to put in the time/effort to learn about the market in which they want to buy which for many, is already the place they live) but I really do think that a smart, sharp person can negotiate on their own behalf just as well as, if not better than, a real estate agent. One of the most effective negotiating techniques is the ability to simply walk away from the table and I think many realtors do everything possible to make a deal happen. I don’t blame them for that but I do think that Levitt’s assertions in Freakonomics that your real estate agent’s incentives and your incentives as a home seller/buyer are not well aligned, is true.

    To be sure, there are many folks who need to have an agent holding their hand, guiding them through the process. However, there is a healthy slice of the market who could work this process on their own if only they had access to the data. I believe opening up the data to the public (I can’t get addresses on the GSMLS, thats sort of key isn’t it?) is something you advocate. At the end of the day,you are left with buyers/sellers who aren’t using your services because they have no choice, but because they genuinely don’t feel capable of doing it on their own. It would help the industry vet out the choice clients from the “too pragmatic” ones like me who only need you for your detailed listing info.

  78. RentLord says:

    Rich, #74 >> Foxton’s is one example, even though they seem to be failing

    One of the main reason why FSBO and dicount brokers are failing is because of the steering tactics used/promoted by NAR.

    If Racial steering is illegal why not this type of RE steering?

  79. UnRealtor says:

    “I don’t care if my commission is funneled to a single person or a group of people. In my opinion all the 4 entities listed above are non-essential.”
     

    Boom — hit right out of the park.

  80. James Bednar says:

    From Marketwatch:

    Number of vacant homes for sale surges 34%

    The number of vacant homes waiting to be sold surged 34% to 2.1 million at the end of 2006 compared with the end of 2005, by far the fastest increase ever recorded, the Census Bureau reported Monday.

    A year ago, 1.57 million homes were vacant and awaiting a sale.

    The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%.
    “We have more than a million housing units of excess supply,” said James O’Sullivan, an economist for UBS. “If you are looking for evidence that the worst is over for housing, you’re not going to find it in this report. This argues that housing starts need to go down more.”

    In the past 12 months, housing starts have slumped 18% to a seasonally adjusted annual rate of 1.64 million.

    In 2006, the number of housing units in the United States rose by 2.14 million, or 1.7%, to 126.7 million. The number of units occupied, however, rose by less than half as much — 1.04 million.

    Meanwhile, the homeownership rate (the percentage of homes occupied by their owners) was essentially steady at 68.9%, the government said, close to the all-time high of 69.3%.

    With so many vacant homes for sale, owners will begin to offer them for rent, said Asha Bangalore, an economist for Northern Trust. If the supply of rentals rises, rental prices should begin to come down, helping to bring down core inflation.

  81. lurkerA says:

    #72 – I’ve seen houses listed on zillow by the RE agent, same price as MLS. I think some see it as just another marketing tool to use in addition, not instead of.

  82. Rich In NNJ says:

    One of the main reason why FSBO and dicount brokers are failing is because of the steering tactics used/promoted by NAR.

    Okay, new topic.
    I agree and would consider that unethical. But the NAR is not doing that and you would be hard pressed to find any evidence that they are. Any advertising they use promoting their service and comparing it to others is not steering.
    But I believe you’re referring to brokers or agents that may do this. As in any business there are those that will do anything to “get the sale” or keep the full commission. That is why (as with any major purchase) you would want to interview (shop around) for your agent if you choose to go with one. And one of the questions I would ask is if they would be willing to deal with discount brokers and FSBO that are willing to pay commission.

    But you’re a buyer at this stage, correct?

    Rich

  83. njrebear says:

    jb,
    back to #71

    Since you are now a licensed realtor, can’t you offer similar service for buyers ( for a fee of course )?

  84. Commercial RE Consultant says:

    Did we as a lending industry and a real estate industry, in trying to get people into houses, maybe go too far in some cases? I would say yes. Were some people given the wrong kinds of loans? Yes. Were some people not ready to be in homes? Yes. Was the economy at fault? Yes.

    Is your high school education at fault…yes.

    I got an idea…how about making business classes mandatory in our high schools. The teachers can instruct the young adults about car insurance, banking, investing, health insurance, credit cards, buying a home, their wonderful pension plans, etc. etc.

    Sorry gym, music & art teachers, this just may be a bit more important.

    The worst part is that most college grads in this country do not know or understand anything about the above topics!

    I’ll even go one further….the high school teachers probably donot have a clue on some of these topics.

  85. SM says:

    Clot,

    Can you explain, what extra work, does realtor has to do, to deserve 60k commission on 1 Million house vs. 30K for half Million. Climbing more stairs?

    Wouldn’t realtor be always motivated to sell properties for higher price(whenever possible) in order to pocket that extra commission.

  86. chicagofinance says:

    Looks like my diatribe from yesterday has served more as chum for the sharks than anything else. Wonderful, I genuflect in front of all of you savvy people.

    So tell me, what do you do for a living?

  87. Rich In NNJ says:

    Clot,

    I didn’t realize your job was SO easy. Just ignore the small sales and get all the big ones.
    Now, do you just sit in your office waiting for the million dollar spenders to come in or do you troll Wall Street?

    JB,

    Just think, if you make just 6 sales in the coming year you’ll clear $360,000! And all you had to put out was $730.

    Oh bother

    Rich

  88. njrebear says:

    cf,
    Would you cough out 6% commission without thinking twice?

  89. SG says:

    If Sanofi-Aventis buys/merges with BMS, I would definitely predict significant impact on NJ Job scene.

  90. AntiTrump says:

    #24 suziehomemaker:

    I have been watching the Berkeley Heights Market too. If the new construction you are referring to is on Mcmane avenue, just of diamond hill road. That’s been there for over a year. Nice house, but not in the best part of town. The funny thing is that at one point they increased the price by about 20K and offered about the same in buyers discount. Then they lowered the price again and removed the discount.

    Most of the other homes have been on the market since last winter. I don’t think they are “Serious Sellers” just “Wannabe Sellers”.

  91. AntiTrump says:

    #29 Al:

    I complettely agree with you. Foxtons is a peice of crap. I knew someone who listed a house with them in 2005. He wanted to list lower than what the foxton’s agent suggested but she said that it was too low and they should aim higher. Anyway he went with her advice and the home gathered dust for almost a year before she asked him to lower the price even lower that what he orignally proposed. He finally got rid of them after the listing expired and went with one of the more established realtors who cut him a 4% deal.

    Sellers please save yourself the trouble of listing with Foxtons. You are better off fsbo or negotiating a commission with a good realtor.

  92. Seneca says:

    chifi,

    I have no doubt that your services are quite valuable to many investors. Do I have the option of utilizing your services? Yes I do. I have a background and education that support my ability to make my own financial decisions. For reasons I would rather not explain here, I have some money invested with professional FAs and some invested on my own. I routinely outperform the professionals. Yes, I will move all of my investments to a self-investing platform when the circumstances make that an option for me.

    That being said, while my educational background includes accounting, I have no desire to keep up with the ever-changing rules and frankly, filling out my yearly filings is like pulling teeth. Therefore, I use an accountant and pay him a fair price.

    Bottom line is I have a choice. The RE market doesn’t leave me much choice as a buyer other than to go FSBO or use a realtor and since most listings are with licensed agents, I have to use a broker. Otherwise I have no access to address info, DOM, and no easy access to sales prices for comps.

    Financial related service professionals have a place in our society, but not when their services are forced down the throats of the consumer.

  93. skep-tic says:

    #6

    “A non-contingent buyer is going to be a very powerful person in about six weeks. Hang on!”

    just don’t see what’s so special about 6 weeks from now.

    Even if we see a big new wave of inventory post-Superbowl, it is going to take months for these sellers to shake off their fantasy prices.

    The listings that have been around for a year plus already (most of them) are clearly the product of sellers who are not “motivated.”

    As has been said on this blog repeatedly, most sellers have already spent their fantasy sale price in their heads.

    If they are older, they are probably banking on a major windfall to fund their otherwise non-existant retirement.

    If they are younger, they need that fantasy price to pay off their HELOCs / IO loans, etc, or they cannot trade up.

    At the end of the day, I still think it is going to take somekind of recession to break this logjam.

  94. chicagofinance says:

    njrebear Says:
    January 29th, 2007 at 3:34 pm
    cf,
    Would you cough out 6% commission without thinking twice?

    Absolutely not, but I WOULD pay 6% [and have] in instances where I thought it would result in the most net proceeds. I’ve even worked with clowns who were effectively useless until I stuck a shoe up their bums. I still was able to get my money’s worth though.

    I’m glad that some of you have DIY’ed/FSBO and had good experiences. I am in Clots camp for the most part. There are just way too many overconfident, underprepared, and visceral chuckleheads skating across the landscape. Even the most benign person can be reduced to jerkweed status when they put on the old Monty Hall routine.

    Overpriced at 6%? If you do your research, bargain, and keep the branding iron hot, I say NO. However, it wouldn’t surprise me if, having done that, you aren’t paying 5%.

    By the same token, you have FSBO’ed in a strong market only? Have you tried to FSBO now? What is you experience? I glad to hear differing views.

  95. AntiTrump says:

    Housing slump affects GM too..

    From today’s wsj:

    GMAC’s Mortgage Ills May Be Costly for GM

    The decision General Motors Corp. made late last week to delay its fourth-quarter earnings report reflects in part the toll a volatile U.S. mortgage market has taken on its recently divested GMAC Financial Services lending unit. And that volatility could prove costly for the world’s largest auto maker, some industry watchers said.

    GM, which announced Thursday that it wouldn’t report its results as scheduled tomorrow because of accounting problems and the need to finalize GMAC numbers, sold 51% of GMAC for $14 billion to Cerberus Capital Management. The deal closed Nov. 30, and accountants for GM and Cerberus have since been poring over the books to make sure the $14.4 billion tangible net book value ascribed to GMAC at the time is reliable. If the value is higher or lower, GM or Cerberus may need to pay out certain settlements.

    In GMAC’s case, potential provisions for loan losses from subprime mortgages may need strengthening, and residual interest in trading securities may need mark-to-market adjustments, Mr. Johnson said.

  96. Seneca says:

    … can’t wait to see what in my last comment requires moderation.

  97. BC Bob says:

    JB [81],

    “From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%.”

    There that’s word [never] again.

  98. RentLord says:

    chi >>
    Absolutely not, but I WOULD pay 6% [and have] in instances where I thought it would result in the most net proceeds. I’ve even worked with clowns who were effectively useless until I stuck a shoe up their bums. I still was able to get my money’s worth though.

    I have paid full 6% in the past, and don’t doubt you rich financial guy would pay as well.

    BUT THAT DOESN’T MAKE IT RIGHT

    6% is absurd. period.

  99. dreamtheaterr says:

    chicagofinance Says:
    January 29th, 2007 at 3:29 pm
    Looks like my diatribe from yesterday has served more as chum for the sharks than anything else. Wonderful, I genuflect in front of all of you savvy people.

    So tell me, what do you do for a living?

    Chifi, what’s being debated here is the value-add being brought to the table by a realtor.

    Until a few years back, salespeople at Circuit City/Best Buy were on commission. It changed to hourly-rate floorpeople, since they were not adding value to customers. Customers can research products and buy them online, eliminating a layer of expenses. The same is happening with the auto industry; savvy consumers don’t go and haggle with salesmen. Instead, they do their research online, pick the model and go through the Internet department where the guy is not on commission.

    My point is that if people are smart/curious enough, they can be a do-it-yourself. This does not apply to all situations obviously and to all people. For example, you provide an invaluable service to your clients by putting together a asset allocation plan, umbrella insurance, estate plan, etc. But in the eyes of someone who has some idea of asset allocation and only wants to invest in basic asset class through ETFs, and does not need any hand-holding through a bear market, you are not adding value. But you are adding value to a client who needs hand-holding and needs access to certain funds/private equity through you. My feeling is that certain ‘systems’ are marketed such that it makes people think that they HAVE to go through a broker to get a product/service.

    An insurance broker wants to sell me universal insurance (even though it did not serve my purpose) because it’s a high commission for him. Not only is he not bringing value to the table, he was taking advantage of my supposed gullibility. Too many people are being misled, and this is because basic classes are not taught in US school/college on financial prudence. A fool and his money are always parted. At the same time, don’t be penny-wise, pound foolish. (In the above example, I can get a low-cost term life policy directly from a company like TIAA-CREF).

    Real estate is not rocket-science and the industry knows that. So the only way they protect their turf is through their current practices of keeping information restricted. But as the Internet as shown time and time again, all basic services are being commoditized due to the real-time flow of information. Most realtors will eventually go to dodo-land.

  100. Richard says:

    i just purchased shares of an IPO at underwriting price on a closed end fund (ADO). it has a whopping 5% annual expenses. the reason i’m willing to accept that is due to their stellar track record and expected returns. point is its not the amount you pay it’s what you get in return.

  101. Richard says:

    >>Even if we see a big new wave of inventory post-Superbowl, it is going to take months for these sellers to shake off their fantasy prices.

    well said. sellers seem awfully stubborn this go around letting houses sit empty for months on end. in the end the one bringing cash to the table (the buyer) will have the upper hand. when that is is anyone’s guess but you have to imagine after some amount of time the sellers have to start hurting from the double carrying costs. if inventory continues to stay high through spring and summer the expectation will have to shift further downward.

  102. make money says:

    http://hud1.towerauction.net/cgi-bin/e10_select_property.cgi?id=352448767&office=e10&state=NJ

    What do you guys think about this flipping opportunity. Lot size is 90×120, two family( get’s a thousand dollars a month for a two bedroom apt.)

    I don’t know much about Maplewood. Good enough town? Taxes? Schools?

    Any feedback would be appreciated.

  103. Seneca says:

    “One pound of learning requires ten pounds of common sense to apply it.” – Proverb

    Unfortunately, you can’t teach common sense in high school, or anywhere it seems. Those of us who have it will do fine transacting in RE outside the established norms. Those of us who don’t have it will put food on Clot’s table and clothes on his back. Its fine with me.

    Plenty of buyers dished out 3-6% to RE agents (its baked into the price, right?) who told them RE values only go up, NEVER down. Plenty of Deal or No Deal players will forgo a guaranteed $300k because they have a one in ten chance of earning $500k, despite a 9 in 10 chance of earning $250k or less. A fool and his money are soon parted, yada yada yada.

    chifi – at some point, my post back around #93 might come out of moderation and is directed to you especially.

  104. Richard says:

    GMAC’s woes are more than just the state of the market. after they got sold off management changed a couple of things treating their longstanding partners with more contempt than collusion. they’ve lost a couple of deals that i know of personally from a friend who runs a relocation dept for a fortune 500. he’s dealing with other lenders that are more hungry for his business. just goes to show even the big boys can still cut off their nose to spite their face.

  105. lowball says:

    #6 Clotpoll Says:

    “I can show you a gazillion listings in my area that I know for a fact have serious buying interest…the only problem is, those buyers can’t get a contract on their current homes!
    A non-contingent buyer is going to be a very powerful person in about six weeks. Hang on!”

    ========================================

    Well, what happens if that very powerful non-contingent buyer (which I am) decides to go (#64, Gary style) directly to the Front Of The Line (which I’m about to do) thus bypassing the chain of bagholders?

    Builders need to build, they can help themselves, builders need to make their annual numbers, GOOD THINGS HAPPEN TO THOSE WHO WAIT.
    (I know, just being unpatriotic again! )

  106. Richard says:

    make money, that house is in a nasty part of maplewood. not quite the ghetto but close enough. you’d have to remediate the mold and termites so that could set you back. i’ll take a stab and say you’re unlikely to get/keep model tenants.

  107. ab says:

    Nice posts from Richard again – must have taken his happy pills today.

  108. skep-tic says:

    #105

    it does seem that builders are the only sellers who are meeting the market right now.

    problem is that around me, only multi-million dollar SFHs are getting built. Nice to see $500k discounts on $3M homes, but doesn’t help me much

  109. AntiTrump says:

    Dr Richard and Mr Hyde.

  110. BC Bob says:

    “but you have to imagine after some amount of time the sellers have to start hurting from the double carrying costs. if inventory continues to stay high through spring and summer the expectation will have to shift further downward.”

    Same Richard???

  111. Clotpoll says:

    Seneca (78)-

    Yes, negotiation skills carry over well from other businesses. And, when you apply those superior skills in dealing with a counterpart that doesn’t have equal skill, you’ll beat that guy to a pulp. Good for you, but not necessarily a “win-win”.

    I know a couple a non-agents who are great negotiators, and they do a bang-up job at blindsiding FSBOs and getting them at way under market value.

  112. Michelle says:

    I am really encouraged by the price drops I have been seeing in Mountain Lakes. I was told by many many a realtor that ML would not be affected as other towns would be because of the schools, income levels etc. Well I am seeing house after house like MLS #2259865 that was listed for $1,225,000 on 3/26/06 and is still sitting there now listed for $1,049,000. A year and a half ago this would have been snapped up in seconds. Now I think they will be very lucky to get over 900k for it.

  113. Clotpoll says:

    Rich in NNJ (88)-

    Who said anything about my trolling Wall Street and only going after big money deals?

    Anyone who knows me knows that’s not my style. You don’t build a lifetime business based on people who are making the last RE transaction of their lives.

    I do, however, constantly troll for young “first-timers” (so much so, my nickname used to be Son of Sam). Over the course of their lives, they’ll make 3-4 more purchases/sales, plus I get the bonus of years of recommendations and referrals…as long as I treat them right.

  114. Clotpoll says:

    NJ Rebar (89)-

    6% of what? And in return for what?

    You can’t write “6%” on a deposit slip and put it in the bank. Could you further define what 6% is being taken from…and, BTW, could you also define what’s being done in return for the 6% payment?

    If you can’t, you’re just another sucker who fixates more on what he pays than what he gets in return.

  115. AntiTrump says:

    #112 Michelle:

    Another common theme of every real-estate bubble is. “This neighborhood will hold it’s value”.

    All neighborhoods will be affected by the price correction, though the degree of correction may vary.

  116. chicagofinance says:

    .dreamtheaterr Says:
    January 29th, 2007 at 4:30 pm
    So tell me, what do you do for a living?

    Chifi, what’s being debated here is the value-add being brought to the table by a realtor.

    But in the eyes of someone who has some idea of asset allocation and only wants to invest in basic asset class through ETFs, and does not need any hand-holding through a bear market, you are not adding value.

    dream/index:
    #1 you didn’t answer my question
    #2 you may not have meant it in such a vein, but I find your comment incredibly insulting
    #3 I didn’t claim that all realtors are worth their fee – however – it appears to me that the argument here stresses that NO realtor [regardless of skill] provides a value proposition at any price – or any reasonable compensation that someone should be able to make a living. Am I talking about the bulk of professional force in these industries? – NO. However, to deny that there is not a good plurality of competent, ethical, and value added professionals in an entire established industry strains credulity.
    #4 You fundamentally misunderstand a basic premise about using agents for your business/financial dealings – at least half of my clients [and I’m sure Clot’s] are fully capable of making independent decisions about their personal transactions. However, while intellectually capable, they do not have the time, inclination, or disposition to effectively project manage.

    Think about what people are hired to do? Personal trainer at a gym? Think about it. Stay at home mom or dad hires a nanny. Think about it.

    Look at the fixed income capital markets, and how long they have remained an opaque and inefficient mess. Real estate is a far more complex animal, and is nowhere near what you are suggesting. It has nothing to do with being monopoly. Bottom line, it works as well as the bulk of the users expectations need it to work, and to suggest that such a cottage industry can be repaired by a few lines of code is naive.

    In Hoboken, local government is a disgusting morass of corruption. However, does anyone “….while intellectually capable…..have the time, inclination, or disposition to effectively [run and serve]…”? No, they do not, because, in the grand scheme of things, it just does not rate as a priority to people. That is not to say it isn’t important, but in the priority of their lives – NO.

    You can argue until you are blue in the face, but ultimately, it is a matter of frugality, and in my experience, it also ends up being an obsession with the ninth letter of the alphabet, and ultimately that results in a limited and unproductive perspective.

  117. Clotpoll says:

    RentLard (98)-

    And, exactly why is 6% “absurd”? Because you say so?

    All the RE info in the world is out there for you for FREE, right now. You don’t need to pay NAR $200/year for it. ANYONE can make a sale…go for it.

    And, as for price controls and government intervention (especially NJ’s government):
    now there are two concepts that have always worked to everyone’s benefit! Excellent idea! LOL!!!

    RentLard, please tell us what you do for a living. Please also explain to all why you think- with no training or experience- you can step into my shoes and immediately do my job as well as me.

    Please also offer your thoughts on how well I’d do at your job on my first day.

  118. waitingwatching says:

    Hi, this is my first time posting, although like many others I’m a regular lurker. In the debate about re agents and commission, one issue I haven’t seen addressed, and would like to hear more on, is what latitude a buyer has in negotiating terms with a buyers agent vis a vis services to be offered. Not sure if this would have to be by contract or not, but it seems to me that if I’m going to fork over 3% of the purchase price to a buyers agent (and I view at least half the overall commission coming out of my pocket as the buyer) I might as well get some service out of it. And since that commission is going to go somewhere, regardless of whether or not I have my own agent, I might as well have a buyers agent and insist on getting something from the arrangement. Any advice on what a buyer should look for, insist from, a buyers agent?
    thanks

  119. Clotpoll says:

    Lisoosh (70)-

    The public has- for years- been offered numerous alternatives, only one of which is the “unbundling” concept, promulgated by Assist-2-Sell and Help-u-Sell.

    There are also many discount, no skill, limited skill and internet brokerage alternatives available.

    Perhaps you haven’t noticed them, because the one thing they all have in common is that virtually no one chooses to buy or sell a home that way.

  120. d2b says:

    As far as commissions go… I believe that it’s only a matter of time before an alternative solution is tried. It will be Web based, and have the backing of a major financial or tech company.

    A Realtor does a few things other than climb the stairs and print paperwork. I’ve been in my house for 6 years. If I sold, I wouldn’t know where to start. The right RE agent would take an objective view at my home and tell me how to prepare it.

    In the end, I’m going to go with the solution that puts the most money in my pocket. If I sell my home for $400k, I’m more concerned with the 375k that I get to keep. If I were a buyer, I may chose to negotiate directly with the seller’s agent. Especially if I were only going to offer lowballs. I see more value in the seller’s agent than the buyer’s agent. I may be wrong.

    I sell large capital equipment. It’s the type of business where 1% or 2% can kill a deal. Deals have not been done because the reduced price would have made it impossible for us to provide the level of service needed to insure success. But deals have been done, because my willingness to walk away tells the customer that they are getting the best possible deal.

  121. AFE says:

    dream-

    nice post..the whole one size fits all service industry has had to accomodate the “value” of the internet and thus some industries have accomodated.

    btw, thanks for the tiaa-cref heads up. Had an insurance agent give me a “financial competence” talk when I asked about term life insurance..ugghh..still recovering from it.

    afe

  122. d2b says:

    JB:
    Why did you get your RE license, anyway?

  123. lostinny says:

    Commercial RE Consultant #85

    I do agree that most HS teachers wouldn’t know how to do this on their own. They would need a curriculum written for them as that’s the way all classes are taught. I’m not going to bash teachers or the education system except to say that my brain has turned to mush since I’ve been working in it. I don’t know how districts in NJ work but in NY, they are all teaching to the test- the test being the Regents exams. There’s nothing on there that tests for common sense in every day living so it doesn’t get taught. You can offer the education to anyone. It doesn’t mean they’ll take advantage of what you’ve taught them. And unfortunately, teenagers couldn’t care less about these things. They are all “adult issues.” But since you are so interested in seeing this taught, perhaps calling your local legislators and suggesting it may be a good start.

  124. Rich In NNJ says:

    Clotpoll (113),

    I wasn’t talking directly to you as much as I was being facetious in my response to SM in post #86.

    Click on the link above and then re-read my post.
    All will be crystal clear.

    Rich

  125. Clotpoll says:

    Ah, the shadow of suspicion has now fallen on our young Mr. Grim. That didn’t take too long.

    “…and just why DID you get that RE license?”

    “…and who among your friends attended Communist Party meetings?”

    Welcome to the starving bunch/Death Star, JB!

  126. Rich In NNJ says:

    Clotpoll (113),

    I responded to your post but it’s in moderation (two links!) Here is is without the links,

    I wasn’t talking directly to you as much as I was being facetious in my response to SM in post #86.

    Click on the link above and then re-read my post.
    All will be crystal clear.

    Rich

  127. d2b says:

    waitingwatching:

    Right now, I believe that you can not negotiate a commission structure with a buyer’s agent. That would amount to a kickback. It’s legal other places but not in NJ.

    You can negotiate commission with the listing agent. But I would rather pay the best agent in town 6%, than some rookie 4% or 5%. The best agent has the network in place to make things happen and get more traffic.

    If I was new to an area I would work with a buyer’s agent. Ask around to find out who is the best agent in the area. Cream rises to the top.

    The only time I would bypass a buyer’s agent is if I wanted to lowball. I would want to eliminate the extra layer to get a better sense of the situation. Plus, I wouldn’t want to waste an agent’s time with low-percentage, low-reward stuff. They would end up firing me.

  128. Zac says:

    funny how I just can’t seem to think of another profession that needs to defend itself.
    Oh wait….car salesmen.

  129. Clotpoll says:

    Besides, everybody knows Grim got that license to gouge 6% fees out of all his friends & family. He’s gonna be one pimpin’ mack daddy!

    He’s also gonna be a big hit at the next NAR convention, what with all those tropical fish stories…and a bubble blog, to boot!

  130. Clotpoll says:

    Rich in NNJ (128)-

    LOL! That one flew over my head.

  131. d2b says:

    Clot:
    I wanted to know because I may want to get one myself. I’d like to buy a business and if fundamentals improve I would consider multi-unit properties.

  132. Clotpoll says:

    Zac,

    What I do needs no defense at all. I’m calling out Mr. Lard to defend his dimwitted assessments of a business that he has no clue about.

  133. Al says:

    # Zac Says:
    January 29th, 2007 at 6:26 pm

    funny how I just can’t seem to think of another profession that needs to defend itself.
    Oh wait….car salesmen

    Lawyer – not all but a lot, polititian, governer, president of USA to name a few….

  134. UnRealtor says:

    Clot, if realtors provide critical value-add, as you persistently suggest, then stop hiding address information from property listings.

    Put your theory to the test.

  135. Zac says:

    how about accurate property tax figures on the MLS listings, some of them are off by THOUSANDS of dollars.

  136. rhymingrealtor says:

    I have to add to the Foxtons comments. They are horrible to work with, I have never said I would’nt show a Foxtons, but they do not give you the listing agents cell phone in the listing you must call the office number press 1 press 2 bullsh@t. They have to call you back, I got a call back yesterday on a phone call I made to show a listing at 4pm I called at 10AM got a phone call back to confirm at 515 pm yeah I made that 4pm showing… that is the most recent example. I have wanted to go to owners homes, because although I don’t believe it is standard anymore it used to be exclusive to them for the first 14-30 days and I don’t think the owners knew this.

    Second on all the ideas kicked around here about how to sell homes without agents, Open MLS who updates it? who upkeeps it? is it like linux an open source?? When you are selling your home, do you let anybody who found your home on the “open MLS” in? Do you require some sort of Idenification at the door. Like someone said earlier, they would just go in a couple times and then call a realtor, so the home owner is supposed to let just anyone in? And what about empty homes, do they just leave the keys under the mat?? Explain to me why I should just let anyone in my home occupied or not? Someone here mentioned not too long ago they can do all the research on products on line and then look at them in the store without the whole salesperson issue, but most stores have security at the door, and buzzers, most homeowners do not.

    I, as clot said would like you to tell us the better way. Maybe it would be better for me because working for commission can really suck sometimes.
    KL

  137. rhymingrealtor says:

    Clot,

    I’ve been around just a little longer than you ( on this board ) I think you do a great job explaining in detail what we do, but as you should already know from running into all types of people in person, you cannot explain/tell people something if they already know it all.

    KL

  138. UnRealtor says:

    KL, in many other states realtors provide the address with every listing.

    Have a look:

    http://www.har.com/cs_singlefamily.htm

    The realtors update it.

    (They provide dimensions for every room as well, along with the total square feet. Try finding that in any GSMLS listing!)

  139. skep-tic says:

    I get what Clot is saying– there are some great RE agents, even though there are a lot of bad ones. I am sure Clot adds value to the deals he does, and is ethical as well.

    However, the fact that there is a minority of valuable, ethical agents (and even Clot admits he is in the minority) does mean that we should simply accept the status quo as consumers

    To say otherwise is a bit like saying, “Totalitarian dictatorships aren’t that bad because there are a couple of benevolent totalitarian dictators.”

    I will follow Clot’s advice and interview agents, seek recommendations, and monitor if I hire one.

    But it should be obvious that the high volume of bad, unethical agents drives up the cost of doing business for the consumer substantially, and this is really unacceptable

  140. James Bednar says:

    “…and just why DID you get that RE license?”

    I hope to address this in more depth in it’s own post, but I’ll throw out a few points here.

    I’ve learned over the years that it’s easier to facilitate change from the inside, quietly, than from the outside, yelling loudly at the door.

    Access to data. While I currently have access to GSMLS data, I won’t say exactly how I have it. However, I want visibility into the other MLS systems to gain insight into the markets in other counties, including South Jersey. Monmouth and Ocean counties come up often here, and I’m not able to address either of them directly.

    Unfortunately, data isn’t free, nor is my time, so I have to find some way to make some money back. MLS subscriptions, Realtor Fees, etc are going to end up running me a few thousand a year. Add in hosting charges, domain name registration, and my own time and this site costs me near $20,000 a year (3hrs daily, 365days a year, $20 an hour). That $20 an hour amount is incredibly conservative since I bill considerably more for my consulting time.

    Data isn’t free, and I can’t afford to pay for it out of my own pocket to share. Until I can facilitate some kind of change, the only alternative is to play by the rules, that means coming up with enough revenue to pay for it. Which brings me to my next point. How do I pay for all of this without joining the dark side?

    Attempt to establish an NJ Open MLS system that is based on the transaction broker model (flat fee, both sides) as defined in NJ license law. My legal counsel advised me not to attempt it unless I held a brokers license or did business under another brokers license. So, I get my license and “practice” for 3 years until I can get a brokers license. I can spend hours on this topic, I spend months coming up with a model that I thought would be viable.

    Second would be to develop my own referral network. I would take the time to find the “best and brightest” statewide, as well as take the time to ensure they stayed that way. I would act as a referral agent in this case, and be paid a portion of the commission for a referral.

    Another alternative would be act as a buyers agent providing minimal service for those interested. I have no interest in babysitting, describing the cozy home and fine neighborhood, or pointing out the wonderful tilework in the 45 year old bath.

    Also possible is to establish a subscription service where customers would receive detailed market statistics, etc. The question is, how many would pay? I could attempt the same on the broker/agent side, providing detailed market statistics to businesses, etc..

    While I enjoy blogging incredibly, I don’t know if everyone here realizes how much of my time this site takes. I said 3 above, but in reality it’s closer to 4 or 5 a day. My blogging day starts at 5am, I’ve found I have to wake up at least 2 hours earlier and go to sleep at least 2 hours later to be able to fit everything in.

    jb

  141. skep-tic says:

    “I, as clot said would like you to tell us the better way.”

    I think an easy place to start would be to enforce the ethical code.

    Suspend or revoke licenses for realtors who relist to hide DOM; who refuse to submit or communicate bids; etc

  142. Rich In NNJ says:

    Slacker,

    Where’s that link to buy “stuff”?

    Rich

  143. Richard says:

    >>Dr Richard and Mr Hyde.

    you beat me to it.

  144. Richard says:

    >>Same Richard???

    contrary to popular belief i’m neither a housing bull nor bear. i look at each situation individually like we should all look at our own lives. persistently high inventory will eventually break down even the most stubborn sellers. this is a hypothetical. what i am seeing (which is typical of this time of year) is a lot of crap on the market. when something good comes on at today’s prices it sells pretty quickly. question is what happens to the B-level inventory?

  145. Zac says:

    Clot, as an insider, would you explain why there are many listings sitting there for the better part of a year without or with minor price adjustments. Are there that many sellers “just fishing?”

  146. Richard says:

    you can do on the job interviews of RE agents. pick one and have them take you to a couple of listings. you’ll know pretty quickly if they have a clue (assuming you have one already). if they’re no good toss them aside and try another one. it’s good to get recommendations as a way to weed out a pin the tail on the donkey approach. if you happen to like a property but the agent that showed it is a dunce you can get another more competent agent and have them figure out how to split the fees if you buy.

  147. d2b says:

    I have a friend that is a lawyer and has a RE license. He goes from broker to broker looking for the best deal. At one time he was with a broker that charged 35% instead of half, so he kept more of his commission. He also doesn’t have to do desk time (which I believe is working in the office handling ‘walk-in’ type work). He is really an agent because he is in RE development.

    Another friend became an agent, but he had to work in the office and pay for his desk, internal office phone, and business cards. He gave it up because he can make more money in his remodel business, than sitting in the office.

    Could one of the Realtors give us a behind the scenes idea of the costs associated with being an agent?

    Are brokers flexible if someone becomes an agent to handle their family and friends, plus personal business?

  148. sas says:

    chew on this:

    **The criteria for Section 8 are set by the federal government and vary depending on the number of people in the household. For example, one person who earns less than $24,800 a year could qualify, but a family of four with income lower than $35,000 could also meet the requirements.

    **The minimum wage of New York State is $7.15 per hour as of January 1, 2007.

    7.15*40= approx 300/week.
    thats $1,200/month * 12months = $14,400.

    So, it pays better to stay at minimum wage.

    SAS

  149. njrebear says:

    hot clot,

    “could you also define what’s being done in return for the 6% payment?”

    http://njrereport.com/index.php/2007/01/29/did-we-go-too-far/#comment-75072

    Here are few things on the top of my head. I’m sure i can come up with more.

    1] Rig up MLS so that expired properties show up as new.
    2] Spend millions on ‘Suzanne the researcher’.
    3] Publicise imminent market turnaround.
    4] Access to MLS system.

    Who the sucker?

  150. njrebear says:

    JB (#142),
    Thanks for sharing your future plans.

    hmm … should i wait three years for JB to open up his agency :)

  151. scribe says:

    All this talk about putting street addresses in the public MLS …

    It seems pretty obvious to me that it’s a really good idea to have a third party screen people before you let them into your home.

    Other side of the coin, if you saw a house you liked online, and you did have the ability to go and look at it yourself, by yourself, wouldn’t that be an awkward situation, to go poking around in someone’s home? It seems to me that the broker acts as a buffer, to make the situation more graceful.

    What about vacant houses that could be stripped of their copper pipes? That’s happening a lot out in Colorado, with all the developments that aren’t occupied.

    If street addresses were out there on the Web, wouldn’t vacant houses be more vulnerable to being vandalized and set on fire? That’s happening a lot out in Colorado, too. And the insurer won’t pay if
    the house is unoccupied.

    These all seem like common sense points to me for why street addresses shouldn’t be too readily available over the Web, to anyone and everyone.

  152. njrebear says:

    The Fed: A Tilt Toward the Tighter Side?
    As Bernanke begins his second full year as Fed chief, a steady policy stance is expected, though a hike is possible by September

    http://www.businessweek.com/investor/content/jan2007/pi20070129_312783.htm?chan=top+news_top+news+index_investing

  153. seneca says:

    scribe,

    How do you make the leap from MLS listings with addresses = anyone off the street having free access to a home? No one is suggesting that. As a buyer, I just want to know if the home is in the part of town I want to live in. Why should I have to call an agent for that? (Assuming I already know the neighborhood).

    Why should I have to ask an agent how long a listing has been on the market? The answer is fabricated anyway with all the relistings, but why would an agent even want to be bothered forwarding me the full details on a listing?

    Finally, I don’t know how many open houses you have been to, but having a realtor host an open house in no way guarantees I won’t be casing your house for future robbery or lifting your valuables as I poke around while the realtor shows the finished basement to another person touring the home.

    Copper thieves don’t need the MLS to figure out which homes haven’t been occupied in months.

  154. syncmaster says:

    Assembly approves tax credits for homeowners

    State Assembly members today approved a sweeping property tax relief bill that would give most homeowners a 10-percent to 20-percent cut in local tax bills this year and attempts to impose a 4 percent cap on future tax growth.

    “This is the double-dose of property tax relief and reform our residents have asked for and so desperately need,” said Assembly Speaker Joseph Roberts (D-Camden), sponsor of the measure (A1).

    The bill was approved 71-8, and now moves to the Senate, where it is scheduled to be considered on next Monday.

    The bill will use more than $2 billion in state funds this year to offset a portion of the local property tax bills faced by 1.9 million of the state’s 2 million homeowners.

    To help stem the annual rise in tax bills, which have grown by an average of 6 percent to 7 percent for each of the past five years, the bill imposes a 4 percent limit on future tax collection growth — but allows exemptions for a variety of expenses, including bond payments, exceptional increases in health care costs, scheduled growth in pension contributions and cuts in state aid.

  155. RentLord says:

    Clot, chifi, KL and every other lurking agent out there –

    It does not matter how much we beat this thing. It’s obvious that you guys are trying to protect your easy money. It’s like asking a convicted criminal to be his own judge.

    I may buy a house this year or may not. I have paid commissions before when I bought and sold and I have much less at stake than you guys.

    Go ahead, ignorance (of the common folks) is your bliss. Fleece every young married couple, anyone getting a divorce and anyone else in the unfortunate situation of a move.
    Feed them fear, talk about the value, talk about their ‘dreams’, give them your fake smiles, suck up kick down.. it’s all a game. After all this is business there are no scruples here.

    With Americans moving once every 5 years there’s a lot of easy money to be made.

    What I do for a living is none of your business and doesn’t come into the equation.

  156. njrebear says:

    Old National 4Q Earnings Down

    http://biz.yahoo.com/pz/070129/112538.html

    “We also continue to watch very closely the commercial real estate sector, where we are continuing to see weakening fundamentals,” continued Moore. “Given these factors and our commitment to high credit standards, we may be challenged to grow the commercial real estate portfolio during 2007.”

  157. Rachel says:

    James Bednar Says:
    January 29th, 2007 at 7:12 pm

    “Access to data. While I currently have access to GSMLS data, I won’t say exactly how I have it.”

    I tell people I slept with a realtor to get my GSMLS login and password. Of course I am totally joking.

    Rachel

  158. scribe says:

    Seneca,

    You said:

    How do you make the leap from MLS listings with addresses = anyone off the street having free access to a home?

    I didn’t. The point I was trying to make: If you were selling, and someone got your street address off the MLS on the Web and wanted to see your house, what would you do to screen them before letting them in to look around? Meet them in a coffee shop? What ID would you ask for, and how would you vet that ID?

    I think most people are more comfortable with having a third party screen people, face-to-face, off-site. And I think they’re also more comfortable if a third party goes with them to look at a house.

    My guess is that that’s one of the reasons why so many FSBOs fail.

    Last night, I asked Clot how many prospective buyers he screened out, and he said it was a lot.

    When you deal with the public, you’re going to get all sorts of people, including some you’d rather not be exposed to, especially when it comes to your home.

    You also said:

    Copper thieves don’t need the MLS to figure out which homes haven’t been occupied in months.

    No, but street addresses online would certainly make it easier to spot them.

    We had a house that was vacant for three months, and we were worried about that. And this was a house that was sold via private bidding without ever going into the MLS at all. A public listing with a street address on the Web would have been completely unnerving.

  159. waitingwatching says:

    No 129:

    d2b, thanks.

    on the issue of an alternative to the current broker commission structure: why can’t both the selling agent and the buyers agent work on a fee, rather than commission basis. i think from both sides of the transactin this would be more efficient, although i can see how brokers would potentially oppose this as they would have to track the time they are actually working on a property and sellers/buyers would have a clear view of what services they actually provide and are paying for. Like lawyers, different agents of differing experience levels could charge different hourly rates. While this might not be the easiest way to riches that many brokers now think is their path, it sure seems like a much more sustainable model going forward as buyers/sellers will know what they are paying for and actualy assess a value to a broker.

  160. njrebear says:

    Midwest Banc Holdings Q4 earnings fall

    http://biz.yahoo.com/iw/070129/0208139.html

    “On December 31, 2006, total nonaccrual loans related to this relationship were $25.8 million, representing 60% of total nonaccrual loans.”

    >>
    Non-accrual loans are those 90 days or more past due

  161. RentLord says:

    James Bedner – you are a visionary and one of a kind. The world needs more people like you!

  162. njrebear says:

    For those of you interested in graphs, take a look at this one ….

    http://interestrateroundup.blogspot.com/2007/01/empty-homes-everywhere.html

    Graph shows percent of vacant homes since 1956.

  163. scribe says:

    Rentlord, you said:

    With Americans moving once every 5 years there’s a lot of easy money to be made.

    Here’s a good example of “easy money”:

    My relatives who sold in a day, the broker worked with them for at least a year.

    This is an elderly couple. One was eager to move to a seniors’ apartment – couldn’t take the stairs anymore. That was their motivation for selling. But the other was hemming and hawing, kept going back-and-forth with this broker – to list or not to list. When you’re pushing 80, and you’ve been in a house for 40 years, it’s hard to pack up and go.

    The family was concerned that for every day they were still in that house with its huge flight of stairs, one was at risk of a serious fall. And the more this dragged on, there was also a concern that the bubble would pop, and they’d lose their best chance at selling and be stuck there.

    Good thing they finally pulled the trigger in July ’05.

    So they have this open house with spectacular results – people lined up down the block, multiple offers, more than they ever imagined.

    And the family’s concern at that point and through the closing – that the party who was reluctant would cancel the deal, and that almost happened.

    The broker could have ended up with nothing after all that time and effort.

    It’s a people business, too – people with all of their quirks.

    The broker certainly earned her money on that one.

  164. dreamtheaterr says:

    But in the eyes of someone who has some idea of asset allocation and only wants to invest in basic asset class through ETFs, and does not need any hand-holding through a bear market, you are not adding value.

    dream/index:
    #1 you didn’t answer my question
    #2 you may not have meant it in such a vein, but I find your comment incredibly insulting

    Chifi, at the outset, my apologies to you if you are upset. But I did not mean it that way at all toward you. Perhaps I should have used the word ‘a financial advisor’ instead of ‘you’. No doubt you add value in your area of expertise. My apologies once again.

    For the record, I do IT consulting at asset management companies in the NYC area. Been doing it just 3 years (been in the US 5 yrs), but enough to see how the odds are stacked against the regular guy.

    For example, I see too many financial advisors pushing people into horrendously expensive load funds screwing them on breakpoints, pushing variable annuities, universal life insurance…I could go on and on. In the midst of this Wall Street marketing propaganda, I think 90% of Main St. investors can do well by following some common sense, some of which is below:

    Buy the market through index funds/ETFs, dollar cost average or value average monthly/quarterly. Actively trading just lines the pockets of the taxman and the brokers. If you buy mutual funds, avoid companies with high expense ratios and high turnover. Think of it…if the folks at Merrill and Goldman are that smart, why are their mutual funds stinkers? Let them milk the corporations for M&A fees, etc. John Doe should stay out of their way.

    Buy term life insurance to protect a family. Don’t buy it for newborns for heavens sake. Buy umbrella insurance if you’re wealthy.

    Avoid variable annuities unless you are in the highest tax bracket and have already maxed out all retirement accounts for the year. Withdrawals are dunned at ordinary income.

    As much as possible, keep tax inefficient bonds in tax-deferred accounts. You’re converting long-term capital gains to ordinary income if you’re keeping equities in your Traditional IRA, etc.

    Diversify globally, based on market cap. Cover US (remember, US is only 50% of the world market cap), Europe, Far East and emerging markets. Tilt towards value and small cap a bit. Have a bit of REITs and commodities for the rebalancing kicker. Rebalance when asset allocation is +/- 5% from initial targets.

    Read Bill Gross’s commentary (of PIMCO fame) but buy Vanguard Total Bond Index or the AGG ETF instead. Keep a bit in junk bonds and TIPs for diversification within FI.

    Keep around 5% of portfolio to actively trade so that you don’t feel you’re missing out the excitement of trading stocks. Or go to Vegas….

    Buying cars – know holdback and factory to dealer cash offered by manufacturers. Invoice is not the cost to the dealership. If possible, buy a 3-4 yr used car.

    Pay off credit card balance monthly and be proud to be a deadbeat. I have a card that deposits 1.5% cashback to my Roth IRA directly.

    There you have it….. it’s simple information above effective if we want it, to be for the vast (95+%) majority of Americans. Now, how many financial advisors would recommened what was outlined above? Not many, because they have inherent conflicts of interest.

    Usual Disclaimer – This is not advice to buy and sell any securities mentioned above.

  165. chicagofinance says:

    RentLord Says:
    January 29th, 2007 at 9:21 pm
    James Bedner – you are a visionary and one of a kind. The world needs more people like you!

    grim: I would take this compliment lightly, because:
    #1 you are a slacker
    #2 he just referred to me as a “lurking real estate agent”

  166. Seneca says:

    Scribe,

    You said:

    The point I was trying to make: If you were selling, and someone got your street address off the MLS on the Web and wanted to see your house, what would you do to screen them before letting them in to look around?

    My point about opening the MLS is not that we open it and cease to use realtors. The seller doesn’t have to let me in their house without their realtor present. That’s fine. I just want to be able to do a drive-by so I can tell the realtor whether or not they should even waste their time.

    Last year when open house hunting, I would frequently pull up to a house and not bother getting out of the car. If I have to set up an appointment to see the house, even if its a no-go from the moment I pull up, I have to waste 20 minutes of my time and the realtors time taking a tour and making nice. No thanks. (Maybe I am too nice and should just drive away and phone to cancel?)

    As far as people being more comfortable with a third party screening people, I have no doubt many people feel this way but what can I say? I am an excellent judge of character and would have no issue doing this myself.

    The bigger threat to me or a Realtor is the possibility of having a nut case show up to look at a house. Check out Realtor forums online and you will see countless postings by Realtors who were accosted and felt threatened by people attending a showing. They bring mace, buff husbands, and karate class skills with them when they are having an open house. I would urge anyone doing FSBO do to the same and the best bet would be to have two people at the home at all times. (FYI, those same online agent forums will also reveal other fun tidbits like realtors who show a house with a lockbox and then don’t bother to lock up on their way out. Nice. Do you pay extra commission for that?)

    With regard to copper thieves:
    …street addresses online would certainly make it easier to spot them.

    I can’t argue with that. If you are moving far from your previous home then I think you are left with little choice but to hire a Realtor to not only try to sell your home, but check in on it at some minimum interval to make sure everything is on the up and up. The NAR commercials lead me to believe most agents would be glad to do this as part of their friendly helpful service.

  167. RentLord says:

    chifi #168, obviously my comments irked you. If the message doesn’t suit your goals attack the messenger! very common place.. I thought you may be above this silly stuff.

  168. Clotpoll says:

    RentLard (158)-

    Sorry to see you’ve demurred from answering some of my questions from earlier in the thread. Were they too difficult? Spewing invective may be your idea of an answer; to me, it’s a cry for Thorazine. If you’re able to channel your train of thought long enough to answer simple questions, please check back; I’m waiting with bated breath for your final solution to us POS Realtors.

    I also apologize for asking what you do for a living. Obviously, this is a sensitive issue. I should’ve realized you’re the head of CTU in New Jersey. Don’t worry…I won’t blow your cover. Neither will anyone else here (right, everybody?).

    BTW, say hi to Jack Bauer for me.

  169. Clotpoll says:

    RentLard (170)-

    Just a wild thought for you to consider…you may not be winning friends and influencing people here by attacking ChiFi, one of the more reasonable and level-headed regulars.

    Again, just a thought.

  170. chicagofinance says:

    dreamtheaterr Says:
    January 29th, 2007 at 10:09 pm

    Only buy index funds for large cap U.S. equities.

    “If you buy mutual funds, avoid companies with high expense ratios and high turnover.”
    Yes

    “Buy term life insurance to protect a family. Don’t buy it for newborns for heavens sake. Buy umbrella insurance if you’re wealthy.”
    Yes

    “Avoid variable annuities unless you are in the highest tax bracket and have already maxed out all retirement accounts for the year. Withdrawals are dunned at ordinary income.”
    Yes

    “As much as possible, keep tax inefficient bonds in tax-deferred accounts. You’re converting long-term capital gains to ordinary income if you’re keeping equities in your Traditional IRA, etc.”
    Yes

    “Diversify globally, based on market cap. Cover US (remember, US is only 50% of the world market cap), Europe, Far East and emerging markets.”
    Yes – with caveats, must be situation appropriate – also recent market trends may suggest otherwise

    “Tilt towards value and small cap a bit.”
    Disagree – further if you are using index funds, I would avoid this strategy.

    “Have a bit of REITs and commodities for the rebalancing kicker.”
    Probably unnecessary, but may be situation appropriate.

    “Rebalance when asset allocation is +/- 5% from initial targets.”
    Acceptable – but targets must be periodically reviewed

    “Read Bill Gross’s commentary (of PIMCO fame) but buy Vanguard Total Bond Index or the AGG ETF instead. Keep a bit in junk bonds and TIPs for diversification within FI.”
    If you have sufficient assets, a bond ladder may work much more efficiently and can be the most straightforward way to provide appropriate duration target.

    “Keep around 5% of portfolio to actively trade so that you don’t feel you’re missing out the excitement of trading stocks. Or go to Vegas….” Flies in the face of indexing, mostly likely create a return drag based on your philosophy.

    “There you have it….. it’s simple information above effective if we want it, to be for the vast (95+%) majority of Americans.” Really. It my experience, the vast majority of Americans [or any country really] are wholly incapable of doing what you suggest due to lack of:
    intellect
    persistence
    interest
    control

    The most embarrassing recent example is a CFO of a major subsidiary of a public traded corporation. You would recognize the parent and subsidiary. This guy makes $350,000 a year. Has no savings. Is on his second wife. We discovered he had $300,000 in a no-interest checking account….etcetera, etcetera. Is he unique? Somewhat, but there are plenty of other examples.

    “Now, how many financial advisors would recommend what was outlined above? Not many, because they have inherent conflicts of interest.”

    I guess that I, and many of my colleagues in the FPA, manage to overcome our conflicts. Every client I offer a flat fee or charge by time, and most come back and ASK for commissioned product. I think it is because most of them understand it and are most comfortable with it.

    I will make two comments:
    #1 our worst potential client base tends to be engineers, because they are fully convinced of their superior intellect. They generally sit in meetings with a mocking smile on their face as they defend investing in savings bonds etc., or pursue arguing for argument’s sake [as if the meeting is the high school debate team].

    #2 the other groups that are problematic tend be foreign nationals, who do not recognize cultural norms in the United States, and tend to treat professional service provided as servants, have tremendous expectations for service to be rendered, and have little interest in being billed or paying bills – I generalize [but not stereotype].

  171. RentLord says:

    Clot,

    First, your name’s so close to profanity I won’t go there inspite of you mutliating the lord in my name ;-)

    I admire ChiFi’s financial prowess and the eloquent way you put together stuff.

    That said, What we are discussing is not personalities but rather the system.

  172. Clotpoll says:

    Seems like a lot of frustration around here with MLSs that don’t post street addresses in the public interfaces.

    Virtually all agents I know will provide addresses if you just drop them an e-mail with the ML numbers of the properties. No arm-twisting, no haggling. My agents and I do it all the time. It’s easier to initiate a conversation with a prospect once we’ve proven we’re willing to provide info with no strings attached.

    If an agent tries to withhold info to force a meeting or some other unearned loyalty, just move on to another one.

  173. AntiTrump says:

    Knock if of guys !!

    Realtors like every other profession have bad apples and good apples.

    One thing that is different from other professions is that realtors have so far been successful in holding on to the 6% commission.
    i.e more successful than stock brokers and travel agents in the internet age. Part of the reason is the mls cartel that restricts access to information.

    I am not saying the commission should be 4% or 8% or what ever, I am just saying that the commission doesn’t reflect the value of the goods or the talent of the agent,i.e doesn’t follow free-market principles.

    Chifi, if hourly payments to the a financial advisor was fixed at X dollars, it wouldn’t make sense as there will be fa who deserve more than x and some who don’t even deserve X

  174. Home Seller says:

    I’ve been following this thread and its pretty sad to see what Clot is dealing with here.

    I just don’t understand why people like Rentlord and Njrebear can’t discuss topics with Clot in a mature, respectful manner?

    Guys, one thing you are forgetting (or don’t realize) is that not everyone is like YOU. Some people (actually alot) DO want the services of a realtor (or a financial advisor) for that matter, and would pay a large sum, IF THE SERVICE IS WORTH IT. I used to be like you guys (stuck in my ways), however over time I came to realize that you cannot put a price tag on someone who is trustworthy and puts your interest first.

    There are certain things I CHOOSE to do on my own (IE: manage part of my taxable/non-taxable investmensts, do my own taxes, etc), however there are other things that I either don’t have the time OR don’t understand like a professional would (IE: wealth management, SELL MY HOUSE). I choose to pay these people because I know I will be better off in the long run. I’m NOT saying my way is right or wrong, ALL IM SAYING IS THAT THERE IS NO ONE RIGHT ANSWER! Different strokes for different folks and you should respect that. If you continue to bash people who you don’t agree with, I can tell you your doing a great disservice to yourself and this website.

  175. njrebear says:

    cf # 96
    “I’ve even worked with clowns who were effectively useless until I stuck a shoe up their bums. I still was able to get my money’s worth though.”

    I can never get myself to do that … I wish i could :(

  176. UnRealtor says:

    Some NJ realtors must be frustrated by the inability to post a street address, because some of the realtor.com listing headings say “123 Main Street” instead of “Gleaming hardwood floors!”

    Plug in a search in this MLS system, and see how superior it is to what we have in NJ:

    http://www.har.com/cs_singlefamily.htm

    They provide:

    1. The address.
    2. Numerous, large, clear photos.
    3. Detailed listing of every room in the house, and its dimensions.
    4. Total square feet of the home.

    Making a phone call to get an address for every listing of passing interest is a waste of time.

  177. Clotpoll says:

    Seneca (169)-

    Toward the end of your post, you mentioned checking in on vacant homes as something good agents will do. That’s true. And, with the percentage of listings that are vacant growing fast, it’s something we’ll be doing even more.

    Even more important, if there’s anyone posting/lurking here who’s currently trying to sell a vacant home: BUY VACANT HOME INSURANCE!!!

    A homowner’s insurance policy is only in force when a home is occupied. If a home has not been inhabited in 30 days, the homeowner’s policy IS NO LONGER IN EFFECT. That’s right: fire, vandalism, burst pipes…NOTHING will be covered if the home’s been vacated and a vacant home insurance policy is not in place.

    That could really mess up your day.

  178. UnRealtor says:

    “I just don’t understand why people like Rentlord and Njrebear can’t discuss topics with Clot in a mature, respectful manner?”
     

    Note that Clot resorts to ad hominem with clockwork regularity (in an effort to showcase how realtors are professional?).

  179. Clotpoll says:

    UnCola (181)-

    Nay…I resort to ad hominem when the hominus in question deserves to get capped.

    Moron.

  180. Home Seller says:

    Guys- He gives great advice, all the time. Why do you have to lump him in with the ENTIRE RE business? I work in sales and there are bad apples in mine along with EVERY industry. Can some of you guys (not BC Bob..he is more levelheaded) show some humility?

    disclaimer; I have no idea who Clotpoll is (or any of you guys for that matter. I am just a lowly lurker who has benefitted greatly before and after the sale of my home)

  181. Seneca says:

    Excellent tip Clot on the vacant home ins.

    On the subject of MLS details, you are correct. I have found a realtor who sends me requested MLS #s with a one hour turnaround. He is fairly easy to deal with and has also taken to asking me to do drive-bys before he sets up appointments to show a home. Some might regard this as him being lazy but it is actually what I prefer. Why waste each others time?

    He still doesn’t know the details of a home as well as I do (e.g. current taxes) and changes his pricing policy every time formulas he gave me in the past don’t match current asking prices but he feeds me data so I guess he is ok. Should he earn 3% for it? I don’t know. Only time will tell.

  182. scribe says:

    Seneca, you said:

    I just want to be able to do a drive-by so I can tell the realtor whether or not they should even waste their time.

    OK, I can see that.

    The other thing – the realtors packing mace, a buff husband, etc. – geez, dealing with the public is even scarier than I thought! :)

  183. Clotpoll says:

    scribe (185)-

    Sad, but true. One of my agents is very attractive and is pretty well known in the area, as her photo tends to draw attention (funny, she always seems to have at least one single, male, professional condo/townhome buying client).

    She gave me a lift one day after work & proudly displayed her aresenal: mace in the purse, Taser in the map compartment and a very cute little snub-nosed Derringer (with permit) for those “special occasions”. I have no doubt at all she’d unload all that-and more- on any fool dumb enough to jump ugly.

    Like Uma Thurman in “Kill Bill”.

  184. Clotpoll says:

    Seneca (184)-

    With you on that. I don’t think drive-bys and neighborhood cruising are a waste of time at all. In fact, they save client and agent lots of time. Why bother to walk in the door if the surrounding area is nowhere you’d care to live?

    If an agent and client can quickly eliminate whole towns & neighborhoods, finding a home gets a lot easier.

  185. njrebear says:

    Homeseller 177,

    ” Njrebear can’t discuss topics with Clot in a mature, respectful manner?”

    What did i say? All i said was 5-6% commission is being forcefully imposed because of a monopoly. Does respectful and mature conversation involve agreeing to not disagree?

    I’m trying to bash the system, not Clot. Why do you try to equate NAR bashing with Clot bashing?

    Point me to a single post from today where i bashed Clot? I might have previously been rude to Clot but today i made it a point to correct myself.

    Get your facts right before attempting to randomly accuse people of wrong doing.

    Clot is smart, knowledgeable and probably deserves some commission but to say every realtor out there is at par with Clot and deserves a commission is absolutely wrong. I believe the realtor i met over the weekend owes me money for helping her understand current market dynamics.

  186. Steve says:

    Hi all,

    Still a huge fan of this site, unfortunately not much time as of late to post… but on the topic of realtors, I can say I dealt with a number who definitely tried to play me when buying (and I almost learned the hard way!) – but honestly when I went to sell, I had initally tried doing FSBO for a bit and then signed on with two realtors (partners) who were really excellent.

    Negotiated to 4%, and they were there, week in week out, with open houses and showings until I got a couple offers which I was quite happy with. I knew my neighborhood and price points very well, but they and their colleagues provided access to a large pool of local buyers that I just wasn’t able to tap myself.

    Honestly, having tried it myself it was a major hassle- a huge amount of “merely curious” neighbors and few serious buyers streaming in and out, despite my long conversations with each no bites. I also learned I could make a lot of friends, but I wasn’t gonna close anything.

    In addition, I think that having the owner show vs. a third party makes a difference, sometimes people are just too self conscious to really look at the place with you hovering over them.

    Being able to head out to the beach on the weekends, instead of sit home wondering if someone was going to show for an appt, was really nice. If you work a lot and value your free time, it’s something to consider.

    They provided a lot of MLS info to confirm my gut feel on pricing, access to a large pool of solid buyers, and plenty of labor over a number of months showing- when I was at work, on vacation, or doing my regular day-to-day stuff. No question, for me, the 4% was worth it.

    Steve

  187. chicagofinance says:

    dreamtheaterr Says:
    January 29th, 2007 at 10:09 pm
    For the record, I do IT consulting at asset management companies in the NYC area. Been doing it just 3 years (been in the US 5 yrs), but enough to see how the odds are stacked against the regular guy.

    For example, I see too many financial advisors pushing people into horrendously expensive load funds screwing them on breakpoints, pushing variable annuities, universal life insurance…I could go on and on. In the midst of this Wall Street marketing propaganda, I think 90% of Main St. investors can do well by following some common sense, some of which is below:

    dream: Allow me to point out that it is exactly the practices with which you take issue that allow these Wall Street firms to offer you the best paying IT consulting gigs. I guess your principles are more of an intellectual exercise, rather than something to live your life by, or have you found a way to reconcile you conscience and your paycheck? People in glass houses……

  188. Pat says:

    General comments –
    Over here across the border in PA, we have public access to addresses on the “independent channel” [non-realtor].

    I use one Realtor(TM) site to quickly scan and track daily modifications, since they appear non-highlighted (Clotpoll, you know what I mean), then the other to look up addresses and many other details like room size. Saves time, eliminates phone calls to the agent and narrows my driveby list. If an address is not listed, I bag it. Ten others that have addresses will then take my weekly gas allotment. But in the end, I’ll still use an agent, because I value not being involved in the bid process.

    Why can’t the seller be given the option to list address? This is America, right?

    The crux of what people seem to be begging for is better customer service, derived from a shift from a paternalistic philosophy to one of teamwork and open sharing. What if Realtors were guaranteed the same fees but the information were given freely? Everybody gets what they want. You might ask, “How could this be?”

    Realtors truly believe that they value-add. Customers feel information-deprived. Therefore, making the change will have no net impact in the long-term. Customers will continue to use their services. This infrequent and time-consuming transaction will continue to flow to the agent in all but a minor number of sales. In the short-term, some abberations will be seen until consumers understand the value. Tag-u-ass opinion.

    ——

    C.F. I find your characterizations of engineers extremely insulting (hahhhahahha…kidding!)
    I love the best parts of engineers, though- their fierce loyalty to a project and abject depression when you pull the development plug and force a go-live.

  189. New In Town says:

    It seems odd to me that those willing to have a big sign in their yard advertising that their property is for sale, to that anyone who just happens by ( or is casing the neighborhood), but blanche at the thought of spreading this information to those who are most likely to be buyers.

    Fear of the customer is not a very good business model.

  190. mkfinancial says:

    For those looking for a good economic discussion on real estate try Chapter 2 of Freakonomics by Steven Levitt and Stephen Dubner. It’s all about the secretive system – MLS!

  191. lisoosh says:

    “On the subject of MLS details, you are correct. I have found a realtor who sends me requested MLS #s with a one hour turnaround. He is fairly easy to deal with and has also taken to asking me to do drive-bys before he sets up appointments to show a home. Some might regard this as him being lazy but it is actually what I prefer. Why waste each others time?”

    I like to do exactly the same thing, I am pretty picky and hate dragging someone all over the place for nothing. Plus I like to take the time to make my own impression. When a realtor assists me in that way, I tend to be very loyal, even calling them when I find something of interest on my own. I worked in sales for many years and am allergic to hard sell but will make sure that if someone is truly willing to work for me, they benefit in the end.

  192. lisoosh says:

    Unrealtor –
    That Houston system really is nice. I found an absolute stunner for $210k in a nice established neighbourhood in a matter of minutes, which I would jump on if it weren’t for the fact that I would rather have all my teeth pulled than live in that city,

  193. still_looking says:

    wow….

    I’ve been working a lot this past week….and finally got to reading and this thread really got me.

    re #86: it’s amazing how little many people know about personal finance.

    a partner in my group of ER docs is buried in debt, funds his 401-k at 3%, carries large credit card debt and was thinking of a HEL to pay down some of it.

    then, our group’s shareholder meeting…I mentioned “stepped up cost basis” and was met with about 15 pole-axed stares and a few “huh??”s in response.

    I am all for mandatory personal financial classes. Even if just the basics in HS and then more in depth levels in college.

    …let’s see the house in maplewood. Drive by it — and then the surrounding 3 miles. You’ll end up on Chancellor Ave in Newark. I went to UMDNJ for 4 yrs — you wouldn’t want to live there (or near there.)

    …thanks for all of your time JB. I know this forum has educated me tremendously on so many topics with data and information (and many extraordinary people.) May your coral grow and grow.

    Back to lurking…

    sl

  194. James Bednar says:

    Clot, chifi, KL and every other lurking agent out there –

    It does not matter how much we beat this thing. It’s obvious that you guys are trying to protect your easy money. It’s like asking a convicted criminal to be his own judge.

    I may buy a house this year or may not. I have paid commissions before when I bought and sold and I have much less at stake than you guys.

    RL,

    While I haven’t yet met Clot or KL, yet, I don’t think they’ve misrepresented themselves in any way. They’ve clearly identified themselves as agents, so the “lurking” title might be a big undeserved. This is very different from agents that post as if they were lay-persons.

    I’ve met Chi on more than one occasion and he too is who he says he is. He is not a “lurking agent” by any means. I assume you haven’t seen the “bubble sitter” video?

    jb

  195. UnRealtor says:

    Realtor™ Clot #182 writes:

    “I resort to ad hominem when the hominus in question deserves to get capped. Moron.”
     

    QED.

  196. dreamtheaterr says:

    “have you found a way to reconcile you conscience and your paycheck? People in glass houses……”

    Sorry Chifi, nothing for me to reconcile. My gripe is that a fee-only financial advisor offers much more value than commissioned salesmen since there are no inherent conflicts of interest. And a fee-based structure in real estate will be a superior to the commission structure currently prevalent.

  197. chicagofinance says:

    dreamtheaterr Says:
    January 30th, 2007 at 10:20 am
    “My gripe is that a fee-only financial advisor offers much more value than commissioned salesmen since there are no inherent conflicts of interest.”

    dream: your comment is patently false – the whole “holier-than-thou” halo of fee-only is a ruse:

    #1 it tends to be the most expensive way to conduct business – strategy is designed, but other than asset management, all costs are borne by the clients in the implementation phase.

    #2 it focuses strategy on maximizing assets under management – ask a fee-only advisor whether you should make a bigger down payment on a house by removing assets from a managed account.

    #3 shows a fundamental lack of interest in serving the public with less than roughly $500,000 in investable assets – often though the number is $1M in practice.

    Your arguments make sense in theory, but in practice it falls down.

    In many instances, the fee-only people are established businesses, and then shift to fee-only because they already have assets, and promptly drop their smaller clients, because they can’t be bothered.

    Bottom line, don’t get hung up on the WAY people are compensated. Focus on competence, client service, integrity [a.k.a. fiduciary responsibility], and overall costs.

    A compensation model does not make an advisor or real estate agent ethical.

    The model that I find is ideal is “fee-offset”. My firm has 4 methods of compensation: hourly, flat fee, commission, fee-offset. We don’t turn anyone away, although we do focus on “fit”, and someone who is particularly troublesome is not going to be pursued very rigorously.

  198. dreamtheaterr says:

    Chifi, in case you feel I am picking a bone with you, I am not. Not in any way. I know your credentials and ethics. I have read a fair amount on DFA (Dimensional Fund Advisors) folks (Fama and the other professors at UChicago). I presume you had the privilege of sitting in their classes too.

    I just feel there is too much free/bad advice floating out there, and people know no better.

  199. Tick says:

    Generally people from richer areas move into an area that is less expensive providing the commute is not horrendous. The problem is all the New Yorkers arent able to get a deal in the areas around New York in the Jersey areas because the taxes, insurance, and homes no longer provided a decrease from where they were living. Jersey did the same to PA with its urban sprawl so moving just across the border of NJ is not an option either. So NY doesnt move into NJ, NJ Doesnt move further south or into PA. Because the pricing of the 3 areas are equal. There is no incentive to move to a cheaper area because one doesnt exist.

    NJ also priced itself out of the First time home buyer. First time home buyers are simply renting or moving out of state.

    Its essentially over until prices decline and there is incentive to move.

    I work in Information Technology and can tell you that a good 80% of the people in this field I wouldnt trust touching a toaster but they are in the same field as me and competing for the same jobs. I would expect thier are the same if not more than 80% of poor realtors because it was an easy field to get into to make a lot of money when the housing market was booming. Same thing with all the idiots who ran to Devry thinking they will make a ton of money in computers which is a dying field. Back to the subject that leaves about 1 in 5 that actually knows what is going on and 80% that are being mis guided.

    The realtor I had in NJ sold her $800k house to live in a rental condo the same time we sold our home. She knew what was going to happen. I suspect she could buy her old house back at a lower price if she wanted to but will probably wait another year or two for the market to settle before deciding what to do.

    The problem is you had 350K homes sell for 500K in a very short amount of time with no improvements done on the homes. Everyone ran to real estate because hey everyone can get rich quick this way. Some did. Just like there was a time you could have bought any stock and if they had a website oh my goodness they must be a great company they are on the web. Now those 350K homes are now 4-5 years older and now require additional repairs in a declining market. No changes have been made to any of them because people over extended themselves. Yet people still think its worth 500K or more. Now the sad part is its worth less than 350K because its still the same 350K house with an additional 5 years of use on it. It was hard enough to think that house was worth 350K much less 500K and now needs a roof, fence, pool liner, kitchen remodel, bathroom upgrades with a poor commute on pot ridden roads, and ever increasing property taxes.

    NJ is not California with its sunny weather and beaches. There is no reason a lot of it was priced like it was.

    I would expect to see prices of 5-6 year ago because of property taxes, increased insurance rates, declining job pay rates, rising health insurance, and finally increased interest rates. Companies in NJ arent simply going to give thier employees more money. Dont be surprised when Pharma companies start moving out of NJ.

  200. Commercial RE Consultant says:

    lostinny 125:
    Good point…Regents exams…It has been awhile since I’ve been in school. What do they test? As for the “adult issues”….Most teenagers hate History Math, English, but they still need to learn it. Maybe they should have a Regent Exam for dealing with life issues. I know way too many poor decision makers.

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