Thu 27 Sep 2007
From the Asbury Park Press:
Foxtons done in by housing slump
Foxtons, a West Long Branch-based real estate company that made a splash with its discounted commissions, said Wednesday night it is closing because of a downturn in the housing market.
The company said it is contemplating bankruptcy for an orderly shutdown, and it will continue only with a skeleton crew; it is laying off 350 of its 380 employees.
“The plain fact is that we have been battling against a real estate market that recently has turned into a sharp decline, and the company no longer has the liquidity to operate as a going concern,” said John D. Blomquist, Foxtons’ senior vice president and general counsel.
The decision marks the latest casualty in the softening real estate industry, and it brings a stunning end to a company that was a lightning rod among real estate agencies.
…
Foxtons in a statement Wednesday night said it has 4,400 current listings, and “the intention will be to preserve the value of these listings, to minimize customer disruption and to dedicate the anticipated revenues to pay creditors.”
New Home Sales due out at 10am est.
The bubble gave us Foxtons, the bibble will now take Foxtons
bubble
Has the market spoken? Is the discount model flawed?
Below is an Email reply sent out to a blog reader (9/24) regarding her dissatisfaction with Foxtons:
Dear XXXXXXX,
Many had hopes that Foxtons would be able to break into the market and set the precedent for being the low-cost leader. Unfortunately, their business model wasn’t about cutting costs and providing a lower cost option, it was about cutting the commissions they paid out and maximizing their own margins. I don’t even go into the cult-like marketing techniques they used to get agents to join their firm.
Actually, Foxtons aside, your complaints would ring true for many agencies in the state. Some of the problem lies in the fact that we’re coming off the biggest boom market we’ve ever seen. Realize, that in a booming market, agents become order takers. They don’t *need* to do anything to sell, both buyers and sellers come to them. If a listing was overpriced, and stagnant, a few months of appreciation would bring the market up to the level of the listing, and the home would sell.
Marketing wasn’t important, all these folks needed to do was get the property on the MLS. The same goes for buyers agents, they had so much demand from buyers that they were able to pick and choose who they wanted to work with.
For many of these folks, getting the listing is all they ever needed to do to sell. It’s all they know. Get the listing, by any means possible, even if that means promising a price that would never be met. The next part is to list it, and wait for they buyers to rush in.
We’re in a very different market. We’re back to the old rules of real estate. Veteran agents know how to market in these conditions, but the new agents, they’ll realize they are the chaff soon enough. Foxtons is going to have a difficult time in this new market. The fact that they pay a reduced commission on the buy-side is negative. As a seller, I’m sure you like the option of paying a lower commission. However, realize that buyer’s agents are not thrilled about being paid a lower commission. Not to mention having to do much more legwork with a Foxtons listing.
(snip)
From MarketWatch:
Fixed mortgage rates on the rise: Bankrate
The average rate on fixed-rate 30-year mortgages rose to 6.49% this week from 6.32% last week, reported Bankrate Inc., which operates personal-finance Web site Bankrate.com, on Thursday. The average 15-year fixed mortgage rose to 6.16% from 6.00%. The average rate on 30-year jumbo loans — above $417,000 — also rose to 7.31%. Bankrate cited increasing inflation concerns after the recent rate cut, but noted that any disappointing data could send mortgage rates lower.
Foxtons has gone out of business. However, there are still plenty of financially illiterate fools who own homes. And, as long as that situation exists, scam RE sales models will keep popping up. They have been around since the 1950s, and there’s no reason to believe the parade won’t stop.
I fully expect another well-publicized and capitalized outfit to come along…probably within the next 12 months. My best guess is that the “hook” will be flat-fee MLS access, with some sort of adjunct menu of “services”.
grim (4)-
It’s not the discount- in and of itself- that’s the killer. People like a discount. I like a discount.
The problem is the performance that’s delivered; and, it’s a function of the discount (and, secondarily, the agent compensation structure that flows from it).
The only salesperson that would accept a salary in lieu of commission and incentives…isn’t a salesperson. True salespeople sell because the potential exists to make unlimited amounts of money. The minute you take away the “unlimited opportunity” aspect of the job, you cease to attract the best and brightest. When a RE company gets filled with salaried order-takers instead of incentivized salespeople, their sellers get stuck with agents who lack the skills and motivation required to sell homes and sell them for more.
#8: Very good point. Same reason why accountants aren’t good sales people.
This is very similar to the dot com bubble bust. Many firms who never should have been in business are now gone and the true businesses survived. The outflow of venture capital is eerily similar to the outflow of mortgages to people who never should have gotten them.
This market will steadily decline until the buy side says…OK, I am ready to jump in at theses prices. Real Estate is not liquid like many of the dot bomb stocks traded on the Nasdaq. But make no mistake, there is plenty of blood left to be spilled.
Jack Kemp and Henry Cisneros on Squawk Box, talking about why everyone should own a house.
Kernan started the conversation by stating that it’s obvious too many people own houses…
Article from December 2001 during the dot com bubble burst.
December 27, 2001: 12:57 p.m. ET
Shutdowns more than doubled in 2001, but the pace is slowing, report says.
NEW YORK (CNN/Money) - The bad news is that more than twice as many dot.coms closed up shop in 2001 than in 2000. The good news is the worst seems to be over.
Webmergers.com, which provides research and services for buyers and sellers of Internet and technology properties, released a report Thursday showing roughly 537 Internet companies went belly up this year. That’s up more than 138 percent from 225 in 2000, the report said.
The percentage of electronic commerce and Internet content providers shutting down declined from 2000, with more companies that provide infrastructure, Internet access and consulting services to business customers falling victim to the ongoing industry shakeout, according to the report.
By Webmergers.com’s count, e-commerce companies accounted for roughly 35 percent of the failures in 2001, down from 54 percent in 2000, while news, entertainment and other content sites made up 24 percent of the shutdowns in 2001, down slightly from 27 percent in 2000.
Meanwhile, 21 percent of the dot.coms that shut down in 2001 provided network infrastructure, up from 8 percent in 2000. Web consulting services companies accounted for 7 percent of 2001’s shutdowns, up from 3 percent in 2000, the report said.
Even so, Webmergers.com said the pace of shutdowns appears to have eased over the past two months, with only 42 shutdowns reported in November and December, the slowest rate since the summer of 2000.
“Despite the carnage this year, the worst is clearly over for Internet closures,” the report said.
While it may appear that dot.com shutdowns have declined because there are none left to close, Webmergers.com contends that is not the case.
“We conservatively estimate, based on several data sources, that between 7,000 and 10,000 Internet companies have received some sort of ‘formal’ funding, which suggests that at most, 10 percent of significant Internet companies have shut down or declared bankruptcy,” the report said.
Instead, the report argues that it is more likely that the “Darwinian process” has weeded out the weak Internet companies and left only the strongest ones standing.
Kemp and Cisneros shoud be addressing why we are getting hosed with energy and import prices.
“Weak dollar central to oil price boom”
http://www.reuters.com/article/reutersEdge/idUSL2576484820070926
potter [10],
Same greater fool theory.
Clot: Though I agree to some extent, I feel Foxton is not able to make it due to other reasons. I feel the main culprit has been lack of selling skills on part of home owners, virtual monopoly of MLS system and slowness of sellers to embrace technology.
Most home owners work in jobs that do not require them to sell. In fact most people loathe at some one selling things to them. So in Foxton’s model when they have open house, the homeowner has to do the talking, which he/she is not really good at. They can’t talk smoothly about comp sales and at the same time ask more for their own house comfortably.
Second aspect is due to MLS. Foxton’s majority listing did not come to MLS, which is first stop for buyers. When Foxton started puting on MLS they were charging 4%, and hence were not cheaper to other folks.
Third aspect is embracing technology. Most sellers if you do profiling are folks over 40 to 50 years. These folks still are not used to technology as much, especially for largest transaction in their life. This is different for things like travel and stocks as the transactions are of smaller value and there are no emotions attached.
Whatever everyone says, I think Foxton was largely responsible in bringing RE commissions down from traditional 6% to 4% level.
10:00 - New Home Sales
New single-family homes sales are expected to fall in August, after a surprising improvement in July. Sales increased 2.8%, to an annual pace of 870,000. That gain pushed the yearly rate of decline to 10.2%, from 21.2% in June. Tougher lending standards could restrict the number of potential home buyers in the short term and hurt demand.
Further declines in sales and high level of inventories will put more pressure on builders to cut prices and rein in construction even further. As the pace of sales have slowed, the level of unsold homes remained very high. The July number of unsold homes was 533,000, or 7.5 months worth of sales. That’s a little better than the 7.7 months in June, but still quite elevated.
July home prices were up 0.6% from a year ago, but similar to existing home sales, the mix of homes sold affects the monthly median price. In July, the share of homes sold for more than $500,000 rose in July, while the share of those sold for less than $200,000 declined.
The bubble gave us Foxtons, the bibble will now take Foxtons
TBW,
Until you made that correction in the next post I thought you had said bibble on purpose, its a great new appropriate word.
Bibble: the end of a bubble whens sales slow so much its like they dribble. -
It should be added to a list that includes condoshack, friskyeaters,etc.
KL
Flubble?
Agree with clot that it’s not the discount model but shoddy service that did in Foxton’s . I would love to see the real estate cartel broker up and commissions paid for performance , but I ain’t gonna shed no tears for Foxton’s.
When a friend of mine was trying to sell a house a few years back, I couldn’t find his listing on Foxton’s and eventually we found that it has been listed in the WRONG TOWN !!
Anyway he learned his lesson the hard way by having to have his house sit on the market for the 6 month contract before he could find a good realtor !
Q2 GDP revised down to 3.8% from 4%, core PCE revised upwards to 1.4% from 1.3%.
Missed the Kemp & Cisnero discussion on CNBC. I have had pleasure of meeting and working with both of them in past. I have utmost respect. I have found them most practical in balancing both conservative and liberal opinions. After my first meeting with Jack Kemp, I really felt, he should not have run with Dole in 96, but should have run in 2000 against Gore. He would have made really better president then Dubya.
3b (from #157 yesterday)-
“If I bought a house 2 years ago @450,and the same house is now being offered at 399k, has not the person who purchased 2 years ago over paid?”
I think you’re sorta reinforcing my point: that it cannot be determined whether one has overpaid for a house until he attempts to sell it. If that 399K seller paid 450K for his house, then obviously, he overpaid. He’ll be selling at a loss.
However, his neighbor around the corner could’ve paid 450K for the same model home, and closed on the same day. That 399K sale still doesn’t mean he overpaid…unless he decides to put his home on the market. In short, losing equity due to market fluctuations is not the same as “overpaying” for a home.
Plenty of argument here has been devoted to the (correct) argument that “equity” is an intangible, theoretical concept. We’ve all certainly seen that borrowing against this theoretical wealth- then watching the collateral go “poof”- has helped fuel many current problems in the market.
So, if “equity” is an overvalued concept when the market is rising, why all the concern over it when the market is declining? Bottom line, your neighbor might be selling at a loss right now. You, as a consequence, may well be taking a hit to equity in the current market. However, if you’re not selling, none of that matters.
If taking hits to equity during the course of your ownership bothers you, you should never buy a house. Or…you should try to time the market, buy and sell in two-year cycles and either carry forward profit, or diversify by putting profits to work in other asset classes. The chartists among us here could probably pull up some interesting facts on average equity fluctuation in a 10-15 year ownership window.
True salespeople do not sell because of the commission they sell because of the “high”. When I worked in the big four, the concept of a bonus directly tied to sales was not a big thing. But when I sold a bank a million dollar project and got the high fives back at the office and dinner for myself and my wife at Peter Lugars and four front row hockey tickets as a reward that was all I needed.
People who lease cars or only buy new cars such as a saturn with their no haggle price and then trade them in usually are lousy home sellers in a FSBO or Foxtons arragnement.
If putting a used toyota in the paper and having a few people come to your house and test drive it and then haggle a bit to come to a selling price makes you queesy then how can you sell a million dollar house in a six month process?
I actually feel why trade in and loose one to two thousand when I can sell the car myself and get that “high” when I sell it for the right price. That is why I did a FSBO on on the last two homes I sold because I like to sell naturally and I was trained to sell duing my eight years in the big four. A lot of home sellers just dont have it in them.
Well, I am a card-carrying LOD member, you know.
Washington, Sep 26 (PTI) India is “concerned” over the rapid appreciation of the rupee against the US dollar and the central bank may have to intervene if there is “disorderly movement” in the exchange rate, Union Finance Minister P Chidambaram has said.
The rupee’s real and nominal effective exchange levels are “way beyond comfort levels” at the moment, but “that is something we have to learn to live with”, he said.
“Unless the US government does something about the dollar, there is nothing much I can do about the rupee, as far as the rupee-dollar parity is concerned,” Chidambaram said.
__________________________________________
Do I see a trend here with many countries deciding to live with a weak US dollar rather than try to intervene in a costly and futile exercise in trying to prop up the dollar to protect their exports.
On Foxton’s topic, I think one other issue I think they had was brand recognition. They were unknown brand coming from UK, makes it very difficult for someone trying to sell their life’s most important asset.
They might have had better success, tied up with some known brand name in US. They could have tied up with some 4th or 5th RE company, which did not have much presense in Northeast. At least they would have had some brand recognition and things to claim from other area.
Okay, take away a sales persons commission and see what happens…I can tell you right now, money is the motivation. I compensate the sales force for the company I work for. It all boils down to how much money they can make and that they want a new company car
Here is some more fuel for the schaudenfraud bonfire going on over here.
My friend, who is a managing partner at a major i-bank (which I will not mention) here in NYC, told me, after a couple of drinks last night, that he anticipates that 20% of his department will be cut in next 6 months. Enjoy…
SG (15)-
“I feel the main culprit has been lack of selling skills on part of home owners, virtual monopoly of MLS system and slowness of sellers to embrace technology.”
“Whatever everyone says, I think Foxton was largely responsible in bringing RE commissions down from traditional 6% to 4% level.”
I’ll try to go in order:
1. If the majority of sellers out there lack selling skills, why would they engage companies that require them to do their own selling? I’m not a great swimmer; hence, you don’t see me signing up to swim the English Channel.
2. Foxtons- in its first business model- CHOSE to avoid the MLS. They felt they could deliver the better exposure- via their website- for exclusive listings taken on the cheap. Foxtons came to the MLS, unopposed, after that business model detonated in their face. BTW…average commissions are going up these days. They always do in markets like this.
3. Slowness to embrace technology? 80% of all buyers and sellers spend 75% of their RE research time at Realtor.com. The net is the primary place people meet lenders, RE agents, title insurers and others necessary to the RE transaction. The use of technology in RE has become ubiquitous, and it’s been well-documented by outfits like MediaMetrix. The problem isn’t technology; it’s that people still won’t buy a home that they haven’t personally visited and inspected.
I did not know Enron was still in business? I hope you have a solid code of ethics, a good corporate govenance committee and strong anti-fraud controls in place and an even stronger internal and external auditors. If money is their main and only motivating factor you won’t be in business much longer. An environment where “hitting the numbers” is all that matters is a bad environment and is ripe for fraud. When I was a Director in the Big Four the Lead Partner would like to say if you want to make Partner just to make the money you might as well quit right now. You have to love it and want it real bad to be a Partner long term and money is just a temporary fix.
If you read HR guides you will find that the number one reason people quit jobs is not related to money, people desire things such as training and a need to feel appreciated and part of a team. When we give them that they stay long term. When we give them a big raise they are still doing the same crappy job the next week except now they have a bigger salary which makes it even easier for them to leave as a lot of companies like to pay 10-20% more than your last salary so a raise makes it even more attractive to quit.
thatbigwindow Says:
September 27th, 2007 at 8:55 am
Okay, take away a sales persons commission and see what happens…I can tell you right now, money is the motivation. I compensate the sales force for the company I work for. It all boils down to how much money they can make and that they want a new company car
Do I see a trend here with many countries deciding to live with a weak US dollar rather than try to intervene in a costly and futile exercise in trying to prop up the dollar to protect their exports.
Do they have any choice - how do you see tehm propping up dollar??
I Just do not see a mechanism on how other coutries can fight US dollar inflation, other than start loosing money on every transaction involving currencies exchange. And thats not how the capitalist economy operates. Just look at the oil prices - they are rasing in US dollars because Oil producing countries realizing tat they are not getting as much of goods from US for the same amount of dollars and they used to.
#28 “My friend, who is a managing partner at a major i-bank (which I will not mention) here in NYC, told me, after a couple of drinks last night, that he anticipates that 20% of his department will be cut in next 6 months. Enjoy…”
Imus, can you mention what department? Or more generally, can you say whether he is dealing with mortgages/CDOs/CLOs? If he isn’t in any of those departments and cuts are still 20%, then that would be big news.
Chuck Norris doesn’t buy gold to hedge against inflation. Gold buys Chuck Norris to hedge against inflation.
SG (26)-
“On Foxton’s topic, I think one other issue I think they had was brand recognition. They were unknown brand coming from UK, makes it very difficult for someone trying to sell their life’s most important asset.”
SG, I’ll assume you were living under a rock when Foxtons showed up here. They had instant brand recognition, as they immediately inhabited the shell/corpse of the company they subsumed, YHD. One day, all their ads and signs- in the same vomitocious colors- had “Foxtons” on them instead of “YHD”.
Of course, Foxtons didn’t correctly anticipate the unlimited “blue sky” that came from taking over a company that was notorious for burning through over 40M in venture capital and a CEO facing multiple harrassment suits.
Sarcasm off.
From MarketWatch:
KB Home swings to quarterly loss
KB Home swung to a third-quarter loss as the builder took a big land-related charge and sees housing market conditions continuing to deteriorate into 2008, financial results showed Thursday.
The Los Angeles-based company reported a loss from continuing operations, net of an income-tax benefit, of $478.6 million, or $6.19 a share, for the three months ended Aug. 31, compared with income of $129.3 million, or $1.60 a share, registered during the third quarter of fiscal 2006.
…
The results “reflect the seriously challenging market conditions that prevail for home builders across most of the nation,” said Chief Executive Jeffrey Mezger in a statement.
“The oversupply of unsold new and resale homes and downward pressure on new home values have worsened in many of our markets as tighter lending standards, low affordability and greater buyer caution suppress demand,” he said.
Meanwhile, rising foreclosures and more homes for sale have added to the inventory glut, the CEO said. “At this time, we see no signs that the housing market is stabilizing and believe it will be some time before a recovery begins,” Mezger added.
…
“We expect housing industry conditions to continue to worsen through the end of the year and into 2008,” said CEO Mezger.
From post #247
http://njrereport.com/index.php/2007/09/26/pessimistic-or-realistic/#comments
was looking Says:
September 26th, 2007 at 10:10 pm
receiving listings from my realtor who rented me my apt about a year ago - came looking for me to discuss my buying plans etc and now receiving mls listings in union county.
Just my impression but it seems the prices for town homes/condos are priced higher than that of SFH’s. Any reality to this?
I have noticed this as well - Condos and Townhomes for sale at the same price level as houses - granted generally thay are newer but still.
It does nto make any sense to buy a condo for the same price as home. Condos are glorified apartments!!!
Condo fair market price must be determined by rental prices in the area - fair price for condo - If you buy it with 0% down fixed mortgage - you should break even after ALL - taxes, HOA fees, mortgage, insurances, and do not forget - maintenance expences by renting it out at market rent.
(even in this case you will be loosing money between tenants)
Remember with condo/townhome you are really only own a rotting body structure while home owner accociation owns the land!!!
And one of the HUGE advantages of SFH is not having neighbours!!! - Imagine having bad neighbour in the apartment complex - you just move out at the end of lease term - now imagine having bad neighbour in the condo - you can “move out” but it will cost you at least 6% of costs of the condo.
recent years NAR funded Media campain focuced too much on Owning American Dream and thats made people loose their mind - that and greed.
Condo’s will fall hardest and fastest.
Clot: Good points, I guess we are disecting Foxton issues pretty well. Well there is reason for everything. So, to add to your point,
1. Home owners think they can sell on their own and pocket the part of commission. Due to that greed they under estimate skill required and think selling is piece of cake. But when they are put in front to do open house (may be first in their life), they do it but suck at it. Also they don’t get benefit like RE agents have like if someone walks in the door, he is prospect, if not for current house, some other house.
2. I am sure Foxton’s going away would have some impact on comissions. I am sure you will always have home owners getting scared that their house won’t sell unless they hire the best branded RE agency and most visible name around the corner. These are definitely good times for well branded companies and RE agents with most network and advertising. Good thing is bad ones will be out soon.
3. Technology use for RE is significantly up, but as you mentioned it is on Realtor.com, the front for MLS system. They are able to mold buyers into their way of thinking. You still have lot of lack of information for buyers. The only savvy buyers are able to research things like Relisting, Comp Sales etc… Of course no one is going to buy house like airline tickets, i.e. without seeing it.
I don’t disagree with opinion mentioned here about Sales people having unlimited potential and leading to drive to make sales. But to some extent that is overblown for RE. I am in Sales, and you normally don’t get leads just by doing open houses, doing some local ads, and being on MLS listing. Not to trivialize RE agents work, but I would not call it 100% sales. Normally IMO getting leads is 50% of the work.
John (23)-
You are very right. However, only the really top salespeople live for that “high”. The hacks are in it for the quick buck.
Sorry John, we have been in business for well over 100 years.
So what happens to those 4,400 listings?
Does Foxtons really believe it can service more than four thousand listings with 30 employees?
I really don’t expect them to enforce listing agreements that this point. The right thing to do would be to allow clients to leave and relist with other firms.
SG (37)-
“I don’t disagree with opinion mentioned here about Sales people having unlimited potential and leading to drive to make sales. But to some extent that is overblown for RE. I am in Sales, and you normally don’t get leads just by doing open houses, doing some local ads, and being on MLS listing. Not to trivialize RE agents work, but I would not call it 100% sales. Normally IMO getting leads is 50% of the work.”
Is your point that generating leads is not actually sales work? And, why would you cite lead generation techniques that top RE agents don’t even employ?
Foxton problem for me was: - I called two different agents few times, left messages saying I am interested in looking at some of the houses they were reporesenting, and never got ANY response - how are they suppose to sell houses like this?
grim (40)-
“The right thing to do would be to allow clients to leave and relist with other firms.”
Since when was Foxtons about doing the right thing? I’ve fielded calls for years from sellers wanting out of their listing agreements with them. Not once did Foxtons waver an inch…even when threatened with litigation.
I bet they hold those listings until the very end. No withdrawals, no releases.
Well my company has been in business over 600 years so call me in 500 years when your company’s risk control framework has become a mature model of corporate governance.
thatbigwindow Says:
September 27th, 2007 at 9:20 am
Sorry John, we have been in business for well over 100 years.
No doubt that the NJDOBI/NJREC will see complaints start to funnel in today.
I preferred Foxton’s website to Realtor.com, they had better ads with more info, photos, location and usually a blueprint. I wonder how it is going for redfin.com?
“Is your point that generating leads is not actually sales work? And, why would you cite lead generation techniques that top RE agents don’t even employ?”
No. My point is generating qualified lead is most difficult part in most other sales jobs. This is my personal feeling, that in RE, it does not seem that way. You have most qualified leads generally walking to you either at Open house or from Realtor.com. RE Agent does have to work toward making a successful transaction, so there is work involved.
I agree with John’s points earlier. In sales, Commission is one aspect, but at the end of the day, if one does not love it, he/she will fail no matter what.
Foxtons - a few random thoughts
It is what FSBO should be.
I used them in 2003 to sell a place. For an extra 1% on the commision, the “twinkie with the big marraccas” would come round and do the open houses. Other than that it was pretty much so everything yourself.
In those days they brought pre screened buyers to you. I think this gave them problems as they couldn’t get Alt-A buyers through their screening so they scraped it.
No MLS at the start hurt them, but they still managed to carve their own niche.
If you had no bids in 30 days they turned the heat on you to lower the price.
They killed the 6% and should be thanked for that.
Other realtors avoided them as the 1-1.5% on the buy side was not worth their while if they could put their client in another property with a 3% commission.
My own personal thought is that the buy side commision should be scrapped and that any finders fee should be between the buyer and realtor and paid by the buyer. The work to get the sale through should be on the sellers agent.
John -
You have spent months berating people for not chasing more money, for not entering fields that focus on high salaries and for putting job satisfaction/quality of life/stability before buying power.
Now all of a sudden it is all about company loyalty and steak dinners?
You can’t have been a quality long term sales rep ’cause I ain’t buying it.
I preferred Foxton’s website to Realtor.com, they had better ads with more info, photos, location and usually a blueprint.
I agree, local MLS systems have a long way to go to match the usability and features of their system.
Floorplans and larger photos would go a long way.
My company has been around 6 years, I feel emasculated.
#32: I am fairly sure he does not work with mortgages/CDOs/CLOs — I will confirm his exact department. Cheers…
SG (47)-
“You have most qualified leads generally walking to you either at Open house or from Realtor.com.”
I guess that’s why our ranks are thinning daily.
I never cease to be amazed at how easy the public thinks our work is.
PGC (48)-
“For an extra 1% on the commision, the “twinkie with the big marraccas” would come round and do the open houses.”
PGC, you grossly overpaid for that “service”.
My own personal thought is that the buy side commision should be scrapped and that any finders fee should be between the buyer and realtor and paid by the buyer. The work to get the sale through should be on the sellers agent.
This would be a complete step backward. The reason MLS systems are so popular is because they foster broker cooperation (both a buy and sell side). Eliminating the buy side would make MLS and broker cooperation irrelevant. Second issue is conflict of interest and the rules of agency. Brokers and agents have fiduciary responsibility to their clients. They can’t simultaneously represent both sides of the transaction unless both sides agree. Someone here will be getting “the short end”, if you know what I mean.
If you want to look towards a model that is new, or different, look towards the transaction broker model. The brokerage doesn’t represent either side of the transaction, instead it exists only to facilitate the transaction.
Cutting the buy-side is one of the reasons that Foxtons is dead.
PGC (48)-
“They killed the 6% and should be thanked for that.”
Where’s the grave? I won’t do a short sale for less than 8%…4% in, 4% out.
John, are you one of those people who always has to have the last word? Boosts your self-esteem perhaps?
New Home Sales
Down 8.3 Inventory Up
Letting the puking begin
U.S. Aug. new-home sales worse than 825,000 expected
Drop in median new-home sales price biggest in 37 years
U.S. Aug. median sales price down 7.5% in past year
U.S. Aug. new-home sales worse than 825,000 expected
U.S. Aug. new-home inventory 8.2 months supply
From Bloomberg:
U.S. New-Home Sales in August Slump 8.3% to 795,000 Pace
Sales of new homes in the U.S. dropped more than forecast in August and prices plunged by the most in almost four decades, pointing to a worsening housing recession that spells more cutbacks in construction.
Purchases declined 8.3 percent to an annual pace of 795,000, the lowest level in more than seven years, from a revised 867,000 rate in July, the Commerce Department said today in Washington. The median price dropped 7.5 percent from August 2006, the most since 1970.
The outlook for residential real estate has dimmed since borrowing costs jumped and credit restrictions increased last month on concern over subprime mortgage defaults. The drop in sales underlines Federal Reserve concerns that the housing contraction would deepen and slow growth.
“The housing market is getting worse,” Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York, said before the report. “Inventories are weighing like an anchor around the neck of the housing market.”
Economists forecast sales would fall to a 825,000 pace from a previously reported 870,000 in July, based on the median estimate of 72 forecasts in a Bloomberg News survey. Predictions ranged from 730,000 to 870,000. Compared with a year earlier, purchases were down 21 percent.
Cramer and NAR at war now. Cramer comparing NAR to Pravda on CNBC.
From Bloomberg:
U.S. Housing-Slump Bottom Not Yet Near, Fannie Mae’s Mudd Says
Fannie Mae Chief Executive Officer Daniel Mudd, whose government-chartered company is the largest provider of money for U.S. home loans, said the housing slump will last for years.
The housing market won’t hit a bottom “until the end of ‘08 and then we have some period of time to work our way back up again,” Mudd said today in an interview.
U.S. home prices will fall 2 percent to 4 percent this year, and “more next year,” he said. Prices in 20 metropolitan areas fell 3.9 percent in the 12 months through July, the most on record, based on the S&P/Case-Shiller home-price index.
Any comments on whether or not the Foxtons shutdown will be the “trigger” for this area?
4,400 sellers are waking up with morning with an entirely new outlook on area real estate.
#54 Coltpoll
I didn’t use the option but it was there. My point is that the service selection model and the sliding commission scale was inventive and gave them an edge to the industry.
The only other time I saw the “twinkie with the big marraccas” was at closing when she came to collect the check.
I echo the sentiments re the Foxton’s website. They had WAY better property photos and many more of them than most realtors.
OT:
Our coverage guy from the American Funds called today. You may not know these funds because they work almost exclusively with brokers, advisors, and institutional clients. However, they are the largest asset manager in the United States. They have increased the published allowed limits on non-U.S. investments across a number of funds.
Speaks volumes.
61#, the inventory in summit was up while it went down in neighboring towns. i guess some guys don’t want to be his neighbors anymore.
Yesterday my mother told me that a realtor had left a message on her answering machine saying that he had a buyer for her house, which is not up for sale, btw. She was kind of excited by this, as she’s gone back and forth about selling for a couple of years. She was tempted to call the guy back, until I expressed my suspicion that this was just a heightened pitch—beyond those letters from realtors saying they have a buyer—for listings.
John—your company’s been in business for 600 years? Are you in some way involved in “the oldest profession”? Or work for a monastery? Those are the only business entities that I can think of that have been around for 600 years….
#63–Foxton on seller psychology.
Foxton going down may convince sellers that market changed.
Or it may enable those ellers to blame their trouble on Foxton and not the market. They may get the impression that once they relist with another outfit their house will sell.
I caught Cramer on CNBC on his latest tiff badmouthing RE on the Today Show. What’s funny is that I believe I heard that perky female announcer say that it was a realtor’s group from New Jersey that immediately hit back.
So, at least New Jersey realtors are on the ball and won’t take this blatant media posturing lying down. Gotta give ‘em credit for that.
From the AP:
New-Home Sales Tumble
New-homes sales tumbled in August to the lowest level in seven years, a stark sign that the credit crunch is aggravating an already painful housing slump.
Twice shy,
I cant believe that I agree with Cramer but you can not take these Realtor groups seriously. They ignore the facts and have become a propoganda machine lately.
Ara ‘we are at the bottom(but I am selling my Rumson Estate” Hovnanian is no better.
“I preferred Foxton’s website to Realtor.com, they had better ads with more info, photos, location and usually a blueprint.”
I think the lack of good information on realtor.com is by design. It always aggrevates me that they dont’ include the street address or the property taxes with their listings.
Up 42.3% in NE..
#55 Grim, that was the intention of MLS but realtor.com and the like are changing the rules and continuing the trend that Foxtons started. Add in Zillow and Trulia and the business is changing even further.
Dual Disclosure (IMO All disclaimers, I don’t know what I’m talking about) to me is a joke. The seller has to sign, or turn away a valid offer. If the seller gets a lower commission from DD, at least they get something. The buyer has to sign or walk way from the property until the listing and the 180 day contingency expires.
#56 Clot - Short sales, Auctions have different rules. 5% with 4% for Dual Disclosure (IMO All disclaimers, I don’t know what I’m talking about) seems to be the new norm for regular listings.
MJ, what is up 42.3 %
They ignore the facts and have become a propoganda machine lately.
Perhaps Cramer doesn’t realize that the NAR is an industry trade group whose constituency is neither the public, nor investors. It’s not that the NAR is doing something it hasn’t before, it’s always been a propaganda (promotion) machine of sorts, it’s that public perception of who they are has changed. Joe Sixpack think they are his “buddy”, but he doesn’t realize he’s just a prospect/target market.
It’s like trying to accuse the National Cattlemans Association (beef.org) of being biased because they aren’t talking about chicken or pork.
Grim, my point is that they have crossed the line with comments like ‘prices will recover in 2008′, ‘its a great time to buy’ and ‘we are at the bottom’.
This is beyond promotion of a trade and bordering on fraud.
Cramer video..
“Don’t you dare buy now”
Hah!
http://www.cnbc.com/id/15840232?video=533257614&play=1#
What’s up with the increase in sales for the North East?
I looked at http://www.census.gov/const/www/newressalesindex.html
but could not find a breakdown of prices by region. Would be interesting to see if a jump in sales corresponded with an increase or decrease in price.
What’s up with the increase in sales for the North East?
Volatility.
New Home Sales were down 30% the month prior, up 40% this month. The margin of error is so high (+-66%) that we can’t even be sure sales increased at all. If you look at the yearly trend, it appears that the low July number may be an anomaly, and that July sales weren’t really that slow.
Even YOY comparisons tend to be incredibly volatile. YOY NHS are down 14%, however, with such low confidence and high volatility, we don’t know if the real number of sales is up or down.
I don’t believe in commission when it comes to pushing stocks or mortgages should be the main form of compensation. EF Hutton, Drexel, Kidder, Bache and a whole host of dead wall street companies went under as employees “broke” the rules with managment consent chasing commissions at all costs. Companies like GE and Pepsico of course value sales, but the bonus is also tied to mentoring, training, improving customer satisfaction, developing new products, improving efficiencies etc. and that is how you stay in business long term. If Pepsi worked just on commission and the salespeople pushed it into hospitals and elementary schools, cut prices and ruined brand value in search of quick commissions and pulled phoney accounting moves and inventory schemes to push sales forward they would be one shady company. Actually that would be computer associates model, they actually changed names to CA in an attempt to loose their reputation as push crooked salesmen, maybe they just need to change their internal model of rewarding employees.
Yes my company was founded 600 years ago and we are right on Wall Street and our bonds are triple AAA rated, that I had nothing to do with, I just find it cool to work at a place that is that old. My last company was 105 years old and I thought that was old.
#40 Sure 30 employees can hadle 4,400 listings only a handful are reasonably priced. Maybe one house per employee, maybe two.
I can’t imagine it’s the real estate marking that caused Foxton’s Demise. Doesn’t real estate always go up? What is going on here? Isn’t it the best investment you can ever make?
Nice knowing you Foxtons….
Foxton’s recently started a huge direct mail campaign with those false, someone is interested in your home and is willing to pay top dollar for it letters. They even made it look like the letter was hand signed and used real stamps. I figured this was the end of them.
I love Cramer, 10005 and Seattle baby are sellers markets!!!!!!!! I want to dollar cost average downward into real estate. SELL SELL SELL SELL - Home owners are idiots, like my friend who did not want to sell his tech stocks at 4K, 3K, 2K etc and by the time it hit bottom he was so broke he could not afford a single share in Oct. 2002. Housing is like stocks, the smart money got out summer of 2000 and took their 10% off like a man and got back in in mid 2003 and missed the bottom by a few months and enjoyed the ride, guessing bottoms is a fools errand, wait til it stablizes and starts to rise before you buy. The fools who are selling should get out now and take the little lump before they get a big lumps. But people aren’t rational.
“That 399K sale still doesn’t mean he overpaid…unless he decides to put his home on the market”
Of course it means he overpaid. He could have waited for a year and paid $51 K less.
#30 John
In my line of work, the people who are there for the money are the ones with souls - they’re doing the job to feed the family; the ones who are there because they love the work are some sick and twisted people. Maybe my line of work is a great deal different from yours, though.
Employers pay sales commissions because they find that it helps motivate salespeople. If it didn’t do so, then those employers would all be idiots who are lighting money on fire for no reason. It’s also a retention tool - if you’ve got good salespeople, you don’t want to lose them to a competitor just because your competitor pays a commission and you don’t.
How long before the real estate industry realizes that cheerleading higher prices is not in its best interest? (Yes, you read that right.)
The market is stagnant, locked up. Sales volumes are down significantly from peaks. If the market isn’t moving, commission checks aren’t coming in. Buyers want lower prices, sellers want higher prices. The longer this impass lasts, the more stress that agencies will be under.
They’ll be cheerleading themselves all the way to unemployment.
#86 Agreed, it’s like saying, I bought a stock for 100 dollars last year and now it’s trading for 60 dollars but as long as I don’t sell the stock I didn’t overpay or lose any money.
This is why I created the Free site http://www.InteriorLiving.com to try an break the MLS. The MLS is too exclusive and other more popular sites are expensive for next to nothing in bandwidth. I dont know about you but when I buy a house I shop for it online and then approach a realtor if needed.
Its a work in progress and I have a lot of ideas just not much time lately to implement them but as time goes on and listings increase I will be adding to them. Right now I go for stability and add a little then verify stability again. If needed I try to improve upon the original idea. In a few years will see if I can make a dent in the MLS monopoly.
Always open to new ideas. I have told a few on ideas I want to add to the site and so far its been met with positive feedback. Cant say what they are at this time but I will add them when the time is right.
Everyone asks me what do I get out of this and I have to say when I go to sell my house if the popularity of my site is great enough that I can sell it myself without giving somone the commision then its paid for itself. Its worth a try. If not then its an addition to my resume showing that I can program something which I believe helps more than just having the line on my resume.
Feedback area or reply on NJreport.
http://www.interiorliving.com/contactus.php
Even if you want to tell me off at least I know its working. Enjoy.
#83 Yea I dont get why Foxtons had so much overhead (Staff) with thier number of listings? Sounds more like it was poorly managed over anything else. Maybe they had people like Pencil Sharpener and Pen Restocking manager who had several people who reported to him.
#40 the realtor who tells the clients what they want to hear wins a portion of the commision while the realtor who does thier job loses that commision split. Someone posted it here their job was to just get people to sign on with them and hope the market increases until it meets what the client is expecting to get for the home. That just doesnt work when the market is declining so Foxton homes wont sell because now they are overpriced and overpriced by the people who told them they were worth much more.
Everyone wants to hear thier house is worth millions and most people sign with the realtor who tells them thier house is worth the most isntead of knowing what it should really be worth. It all comes back to consumer education but we all know that already.
The Ten Oldest Companies in the U.S. by Rank
Rank/ Company/ Year Founded
1 J.E. Rhoads & Sons (conveyor belts) 1702
2 Covenant Life Insurance 1717
3 Philadelphia Contributionship (insurance) 1752
4 Dexter (adhesives and coatings) 1767
5 D. Landreth Seed 1784
6 Bank of New York 1784
7 Mutual Assurance 1784
8 Bank of Boston 1784
9 George R. Ruhl & Sons (bakery supplies) 1789
10 Burns & Russell (building materials) 1790
http://www.cftech.com/BrainBank/CORPORATEADMINISTRATION/OldestCos.html
None 600 years old. Maybe its something from Highlander. Or one of those Vampire fronts?
PGC (75)-
If you don’t know what you’re talking about…why are you talking?
patient (86)-
Gun to your head, could you have guaranteed that outcome?
Just wanted to quickly point out something about Apple stock (which for some reason is often-discussed here):
bought at 137 exactly two months ago. It’s up to 153. Obviously this pace cannot continue … but as a stock neophyte, I’m starting to see how easily stocks can outproduce real estate gains in a normal year.
I’ll re-hitch my wagon to real estate in 2008 after the dust settles.
DE (89)-
Nice try. But, the stock/RE correlation is erroneous. Two different asset classes that trade & behave differently.
The tax treatment on gains/losses is different enough, in itself, to make them impossible to compare.
#81
Freak Months like July. Well I would bet its those people who are looking to buy something cheaper before school starts so they dont have to do it mid school year.
Now here is the data that no one shows you and Im not sure its possible to get.
HOUSE SOLD PRICE compared to HOUSE BOUGHT PRICE - Im betting a lot of people are downscaling its always suggested when you are at your limits or facing your limits because it lessens the mortgage issue without ruining your credit. It also helps when house values are on the decline. I would be betting most are localized moves that arent out of state or less than 10 miles are selling thier high priced houses for something smaller and more finacially managable.
HOUSE SOLD DATE to MOVE IN TIME. - I would love to see those stats in the summer so you can see that ok a lot of homes in July sold with move in dates that reflect the school year because they want to be in the home by August.
If anyone knows where to get this data I would love to see it.
#96 In Additon to the July Freak month. Im would like to see the HOUSE SOLD DATE to MOVE IN TIME added with the HOUSE ORIGINALLY PURCHASED DATE and LOCATION. Im betting a lot of people with 5+ years home ownership are also looking to move to areas that are significantly cheaper. This is mainly the out of state. Hearing the house market is at a peak they sell and relocate to an area that hasnt gone through this boom. Like North Carolina which is still increasing because the home to home ratio of that in NJ is still around double. If they do it quickly enough the equity gained in the last 5 years might clear a new home in the charlotte area and still be on the increase in home value.
Wow, only now seeing the mortgage rates rising … this is TERRIBLE NEWS
Jumbos at 7.31? If you are trying to move a house in the 600k and up range, you’re F*CKED.
Not only will buyers need 10-20% down, but they will also have to deal with MASSIVE loans.
Let the bloodbath officially begin! Mark it down folks, Sept. 27 …
Cramer’s call on the Today Show that if you “buy now you’ll lose money” is a buy signal just handed to us on a MSM silver platter.
Anyone looking to get off the fence and table a decent bid? C’mon all you bears, this is what risk-taking is all about. Buy a home to live in with a smart bid, stay put and watch the mess unfold.
Hey #90
How about a foreign company operating in the U.S.?
Now fascinated by these old companies.
Oldest company in the world:
Kongo Gumi
Construction/Osaka, Japan
Founded: 578
40th generation
Oldest bank:
Banca Monte dei Paschi di Siena SPA (MPS) is the oldest surviving bank in the world. Founded in 1472 by the Magistrate of the city state of Siena, Italy, it has been operating ever since.
List of oldest companies:
en.wikipedia.org/wiki/List_of_oldest_companies
Lots of European vinyards, restaurants and hotels. Nothing 600 years old and involved in finance on Wall Street though.
I work at a subsidiary of a Germany Company. I know someone who works for the catholic church and they are 2000 years old so they have us beat!
“DebtVulture Says:
September 27th, 2007 at 12:18 pm
Hey #90
How about a foreign company operating in the U.S.?”
See above.
Plus looked at the big English and Dutch East Indian trading companies which formed the early multinationals. Both formed in the early 1600’s (which would preclude them) and neither has existed for well over 100 years.
Foreign banks, insurance, shipping and trading companies would be the main suspects but they are not old enough.
Actually, 600 is not that long a time, the Frankfurt Stock Exchange is in business 1,100 years.
The origins of the Frankfurt Stock Exchange go back to the 9th century and a free letter by Emperor Louis the German to hold free trade fairs. By the 16th century Frankfurt developed into a wealthy and busy city with an economy based on trade and financial services.
today’s new home sales number together with existing home sale number two days ago will make the case of rate cut stronger. net in net, new jersey home owners and buyers are big winers.
103# what is the oldest industry?
My Foxton’s experience. In the summer of 2005, my wife and I sold our Springfield house, without a real estate agent. (We have been renting since, waiting things out). Agents materialized out of the woodwork, begging to represent us. The Foxton’s guy who came to meet us was so insane that even after I told him — a week later and in no uncertain terms, over the telephone — that we wouldn’t use him, he asked me what time my wife would be home so he could call her. Amazing.
#91 Clotpoll
Without talk, there is no debate and it is better to debate a question without settling it than to settle it without debate.
today’s new home sales number together with existing home sale number two days ago will make the case of rate cut stronger… new jersey home owners and buyers are big winers
…unless you drive to work in a vehicle that requires a petroleum based fuel or eat food or like to keep your home warm in the winter.
The 50 bps cut has already stoked inflation concerns. Any further cuts would likely send interest rates even higher.
http://www.longislandindex.org/fileadmin/pdf/pollreport/Long_Island_Index_Case_Study_Executive_Summary.pdf
This is a really good report that compares LI and Bergen county to NC. Give it a look
Today’s RE numbers show why investors should be diversified. Here’s my diversification:
10% up in smoke
10% down the drain
10% out of the window
Foxtons side story: I purchased my home from a seller that used Foxtons and while I am happy that I paid about $100K less than what it was worth (then) I still can’t believe that this guy used these dolts. When I called Foxtons to see the property it took them forever to get back to me. By the time they called me back I had already viewed the property with my realtor (wasted opportunity to keep buyers broker fee for themselves). My house would have easily sold for much closer to the original asking price if they had only used a normal realtor. When I visited the property there were THREE cards on the table (after 5+ months on the market) and this was an estate sale so no one cleaned up the cards. The property sat and sat for 6 months as the sellers (original owner’s son) lowered the price time and time again. Houses all around me have gone for 10-15% more over the last year (same type house, sqft, etc). The realtors in my town literally just would not show the house. The house showed up in MLS when I searched but when my realtor sent me MLS lists to view the house it was never in there. Hmmmm, I wonder if some creative filtering was going on? Finally I asked my realtors to see the house and they agreed. I don’t blame my realtors as they literally got shit at closing. Because of Foxtons I was able to get my place on the cheap for what I consider to be a steal in my town. But for the life of me I can’t imagine why any seller would try to sell this way. It makes no sense at all. Dealing with Foxtons was pure hassle for all involved. They just sucked on all levels.
This is a really good report that compares LI and Bergen county to NC. Give it a look
You mean Northern VA, not NC, don’t you?
#81 grim
sorry if i’m being dense, but why such a high margin of error and volatility with new home sales? what makes it so hard to calculate?
John,
Thanks for posting that great report. I agree that governance in northern Virginia is superior to governance in the New York metro.
Still very little chance meaningful consolidation happens on a broad scale here. People are happy to pay an extra $1,000 in property taxes in order to maintain the status quo and reduce the chances of kids from lower income backgrounds mingling with their kids.
John (103)
I recently went to Frankfurt.** Driving in from Pflughaven Frankfurt am Main, there was a sign demarking the city limits that read, “Frankfurt: Ein Stadt in einer Brotschen,” which literally translates to, “Frankfurt: A city on a roll!”
Which wasn’t as disturbing as the sign outside the German city of Hamburg: “Hot dog! You’re in Hamburg!”
** No I didn’t None of this is true. But it’d be really cool if it were.
Bi - Are you now seeing the effect of the LAST rate cut? All of the home loan rates HAVE GONE UP.
A jumbo loan is 7.31 … crunch the #’s my friend and then tell me who can buy … the answer is NOBODY
If you need a 450k loan on a 500k house (you put 10% down), then 3500-4500 a month as your mortgage.
Do you know what a 500k house gets you in Bergen County? Nothing fancy. MAYBE a 3/2 if you’re lucky. And do you know what a family must bring in, salary-wise, to cover a mortgage like that, afford cars, gas, put food on the table, etc? 200,000 a year.
This could get uglier quicker than I thought. Guess: October could be a month in which very, very few houses are sold in this area.
Bloodbath (116)
Are you suggesting that it’s ironic for BI, who appears to advocate for further rate cuts, to have asked (in post #105), “what’s the oldest industry”?
Can we call “the oldest profession” an industry?
#104 “today’s new home sales number together with existing home sale number two days ago will make the case of rate cut stronger. net in net, new jersey home owners and buyers are big winers.”
Why do people keep thinking that lowering fed fund rates will lower mortgage rates???
real flippers start to look …
http://money.cnn.com/2007/09/24/real_estate/vultures_circling/index.htm?postversion=2007092711
Would love to see walmart get into the realty business:
http://biz.yahoo.com/ap/070927/wal_mart_stores_drugs.html?.v=2
I usually try to ignore the guy … but for some reason, he hasn’t connected the lowering of rates to the rising interest rates
real flippers start to look
They aren’t flipping (i.e. speculating on increasing prices). They are looking to buy in markets where they can demand hefty discounts and turn condos back into apartments, generating positive cash flow.
I wouldn’t be surprised to see some “reapartmentation” here, with garden apartments turned condo get converted back to apartments.
#104 Bi-moron says
“today’s new home sales number together with existing home sale number two days ago will make the case of rate cut stronger. net in net, new jersey home owners and buyers are big winers.”
_________________________________________
I think you really underestimate the intelligence of the people who read this forum thinking stupid comments like this will stop this real-estate train wreck. I am just trying to figure out if you are really stupid or just truly naive.
http://flippersintrouble.blogspot.com/
Here’s Johnny!
Anyone looking to get off the fence and table a decent bid? C’mon all you bears, this is what risk-taking is all about. Buy a home to live in with a smart bid, stay put and watch the mess unfold.
ts,
There are opportunities in every market: up, down, or sideways. It’s up to the savvy buyer to use all the tools at her disposal to identify these opportunities. We’re not talking about speculating about the future movement of the broad market here, we’re talking about identifying properties that are priced at a discount to the market, ideally due to a correctable defect.
We really can’t know for certain whether the market will be up or down tomorrow. But what we can know is whether a property represents an opportunity in the given market.
Bi said something about vultures starting to circle. Starting? The fat and happy vultures are constantly circling, in all markets.
(sales hat off)
http://www.imdb.com/gallery/mptv/1006/Mptv/1006/2754-1.jpg?path=gallery&path_key=0081505
hehehhehe
JB,
Where and what are the best opportunities? I’m looking at suburban townhouses and class B condos on the Hudson waterfront.
bi (104)-
“…net in net, new jersey home owners and buyers are big winers.”
bi, is that:
1. winners
2. whiners
3. weiners
http://www.youtube.com/watch?v=QlVYDFczOfk
How do you like it?
ttp://www.youtube.com/watch?v=2TVooUHN7j4&mode=related&search=
Flipper household come 2008
BOOOOOOOOYAAAAAAHAHAHHAHAHA
Bob
re 104
I think you missed the ‘h’ in whiners.
Interesting excerpt from WSJ
Sales of Pricier Homes Plummet With Credit Crunch
The market for higher-end homes took an especially strong blow in August as a result of the credit crunch: Sales of new homes priced above $500,000 dropped by more than a third in the latest government figures.
…Sales of new homes priced at $500,000 or more plummeted: 6,000 were sold in August, after 9,000 for each of the previous three months (and 11,000 a year earlier).
The credit market turmoil, spurred by the subprime-market meltdown, has sent rates higher for “jumbo” loans — those $417,000 or more — and blocked many consumers out of mortgages. Lower demand is expected to push prices down even further for higher-end homes, whether new or previously owned. That means larger spenders “will pay a price as the housing market continues to unwind” and could hit consumption growth especially hard, says Joseph Brusuelas, chief U.S. economist at IDEAglobal.
On the other end of the spectrum, the data showed that sales of homes priced between $150,000 to $199,999 actually increased to 16,000 in August from 14,000 in July.
…Inventories continue to rise and 266,000 homes are under construction, down only slightly from the pace throughout the first half of this year, suggesting prices will have to fall much further to balance out the new-home market.
Says Paul Ashworth of Capital Economics: “We’re running out of adjectives to describe how bad conditions in the housing market are getting. The news over the past couple of months suggests that the rate of deterioration [has] become much more severe, something we hardly thought was possible.” –Sudeep Reddy
Mike (111)-
I’m sorry to see them go, for the same reasons.
Their listings were easy pickings for investments/flips back in the day. A Foxtons listing agent’s idea of negotiating was to tell the seller to take the first offer that came in.
http://www.youtube.com/watch?v=N42pK5PBkH0
“3. weiners”
Clot,
Luis Tiant; “I’m happy to pitch for a weiner”
Where and what are the best opportunities? I’m looking at suburban townhouses and class B condos on the Hudson waterfront.
Let me know where I can fax the exclusive broker buyer agreement. ;)
#118
Why do people keep thinking that lowering fed fund rates will lower mortgage rates???
If the fed lowers rates enough, people will be able to refinance with new ARMS.
(66) “Speaks volumes.”
I don’t know. I could make the argument that American Funds feels the need to go international purely on account of their huge size. They are somewhat victims of their own success when it comes to generating returns.
JB,
I don’t get it.
Anyway I have only hired a broker once - to sell a condo. She did a great job. I was happy to pay the commission.
I would not use a broker to buy a place. I can do at better job on the research and negotiation side, and I know how to coordinate all the closing process.
Plus, a seller’s broker will sometimes convince their client to accept a low ball offer by reducing their commission and saving their client a few thousand $, but this only happens when they do not have to share the commission with a buyer’s broker.
Aaron (138)-
“If the fed lowers rates enough, people will be able to refinance with new ARMS.”
Perhaps at that point, lenders will also accept Monopoly money to cover the equity shortfall at the refi closing.
A friend of mine used yhd/foxtons back in 2002 or so and didn’t use the MLS option and his condo didn’t sell. The Foxtons rep then said he should consider lowering the price, he did this and it still didn’t sell, then he added the MLS option and increased the commish (but still at the lower price) and it sold day 1.
In his case being on MLS was the main component to selling the condo, unfortunately for him using foxtons and the path he took to get to MLS was misguided.
My experience is that MLS is the key, just like Clot said earlier everyone uses Realtor.com, if you’re not on there, you’re not getting hte exposure, which leads to selling your house.
I think a flat rate MLS provider will be more succesful than foxtons, but that traditional realtors will always exist.
#133 Wall St Journal
This is very interesting. Homes over 500k month th month were down 33% (9000 to 6000) and Home Sales year over year were down roughly 45% (11,0000 to 6,000). My statement earlier still stands. Let the puking begin.
Pre,
Good reading for you:
Heebner, Top Fund Manager, Sells New York Real Estate (Update1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=atWb41ceOJCk&refer=home
bergen (142)-
For sure, the flat-fee guys will be rushing into the Foxtons’ void. It started months ago.
However, here’s the chinks in their armor:
1. Once the company has collected their fee (upfront, before listing), their work is done. At that point, do they care whether their listings sell? Here’s a hint: no.
2. Flowing from that, let’s say you want to ask 500K for your home…but it’s only worth 400K in the best of all possible worlds. Will the flat fee agent say one word about this, in advance of collecting the fee? Will the agent say anything, other than “press hard when you sign this”?
3. Since the flat fee is the max a company can collect in this scheme, what are the chances that the they will do the things needed to increase visibility and buyer flow for their listings? What are the chances that any company- in any business- will expand their costs in an environment of fixed revenues?
4. Flowing from #3, the flat-fee business requires increased volume to generate growth for the company. Where is the growth in residential RE now?
American Funds = Asset bloat.
Where else to put money to work than overseas?
dream (146)-
Bet against the Mets.
Clot, I hear you and agree. If all they’re going to do is give you an MLS listing and a sign to put in your front yard, it may not be much diff than Foxtons. There will never be a “pay $100 and this will be the most optimal place to sell your home.” But that doesn’t mean variations on this base level service won’t pop up with improvements.
clot -
If what you’re saying is they make money from listings and not sales then there should be growth from their standpoint especially now. Sellers who got themselves into this mess are probably not the kind of people who would consider the “chinks” you described. Sounds like we found the next bubble.
http://www.dealbreaker.com/2007/09/ken_heebner_hates_your_office.php
bi (149)-
Your ability to consistently reach erroneous conclusions is uncanny.
#110
Something to ponder.
If I lost my job tommorow in NC I would still be able to pay my mortgage, feed my family, pay my utilities all on unemployment.
How would the average person in Long Island do on $475 a week? How would that picture look in a couple of months?
I also have to add while I received a pay cut living here I actually take home more money in the end because I pay less for a Mortgage, taxes, insurance (Car, house, health), etc etc etc. Most people are too concerned with how much money they make an hour or year vs what they actually will take home when all is said and done. Thats what the long island report is not telling you.
Last time I cheked a full time position here in NC compared to what I was offered in NY was 15K difference before taxes which is really about 9K. But the taxes and expenses of living in long island are quick to erase all and then some of that 9k difference.
Did they compare air and water quality and lifespan in that report? Or just overall quality of life and crime rates?
Heebner is betting on “lots of layoffs” in New York office jobs, a thesis which I believe is too pessimistic.
A couple of New York-based banks have fired a couple of hundred people, but nobody seems notice that a lot of the people being fired work in California, not New York.
If the situation was so bad, then Wall Street firms would be firing thousands of people, not hundreds.
“patient (86)-
Gun to your head, could you have guaranteed that outcome?”
Of course not, but that doesn’t change the outcome - you still overpaid. Now, if you knew in advance what was going to happen, then not only did you overpay but you’re an idiot to boot.
I can’t guarantee the outcome, but I’m not buying a house at this instant because I think the odds of overpaying are substantially higher now than they will be later.
Mitch,
Don’t know what your business you’re in but in my business people in New York earn double or triple what they would make if they moved to the South.
On day one, you buy a condo on the 33rd floor for $400K.
On day two, you find the exact same condo on the 31st, 32nd, 34th and 35th floors, same view, same everything, all listed at $300K.
But unless you sell your condo on the 33rd floor, you didn’t overpay.
patient (154)-
“…I can’t guarantee the outcome, but I’m not buying a house at this instant because I think the odds of overpaying are substantially higher now than they will be later.”
Which is an entirely different statement than the first one you made. Also, it appears that what you are now truly saying is that your odds of not catching a bottom are greater now than if you wait. Again, you have no certain way of knowing you overpaid for a home until you attempt to sell it. And, we have discussed the subjects of the dangers of market-timing and bottom-catching ad nauseum here.
I’m not picking on you…I keep harping on this, because I get the feeling that many here cannot- and will not- feel comfortable with buying a home until a bottom has been reached in this market. Concurrent with that is the feeling I get that many here will have an aneurysm if they purchase a home, only to find the market decrease- ever so slightly- after the date of purchase.
If so, don’t ever buy a house. The odds are pretty good that the longer you own, the greater the chance you will experience loss of equity (on paper) at various times, due to markets doing what markets do. To think you can avoid this is to believe that from certain historical data points, real estate can only go up.
No one around here still buys that one…do we?
patient (156)-
Correct.
pretorius, NYC is notorious for Christmas layoffs. The time is coming.
Aaron,
Are you expecting that investment banks will each fire thousands of employees in a few months?
patient (156)-
And seven years down the road, you sell the 33rd floor condo- which you occupied as an owner- at $470,000.
Did you overpay? Did you lose money? Depends.
If the condo was an investment, rented at a net loss over that term…now, that’s another story. The cash burn, plus inflation and opportunity cost, may totally negate the profit, thus creating loss.
But, that’s simply another example of how difficult it is to assess the ultimate quality of a purchase of RE, until and unless a sale is made. And, don’t even get me started on 1031 exchanges and primary residences that transition into investment vehicles.
yep
July-Sept S&P 500 - is that an M shape being formed?
I work in Information Technology. I am an Exchange Engineer if you need the exact title.
The pay difference for me on a perm basis was 15K. I know exchange admins here making 108K-123K on a perm basis. Only a handfull of places that can afford that not like the north where you have many more places to choose.
Microsoft pays about 45-55hr here.
On a consulting basis the pay rates are about $10.00 an hour difference from the north if your good. The average joe is not.
I will go so far as to say that NJ pays better than NY.
I know exchange admins back in NJ on a perm level being offered 85-95K as of late. That same rate can be found here with no problem so we have possibly caught the north in some areas of work. The more specialized the are you work in the better but if your a painter you wont make much here.
Basic Admin Perm rough figures I would say.
NJ: 80-95K
NY: 85-90K
NC: 75-85K
In some instances the pay scale is higher here in a perm level than in NJ. All depends on your field. For some reason Lotus Notes is still popular here but expect a ton of Migration projects to exchange at some point as everyone talks about migrating.
Programming jobs go to Raleigh/Durham/Cary/Apex instead of Charlotte. Programming is highly outsourced in Charlotte.
The difference I would say is that the lower admin positons like desktop pay much less throwing the scales off still.
But pay rates are on the rise here because of the growth. They need to increase rates to get people here. So you have for years the pay rate was very low to moving upwards quickly still some companies are trying to keep rates low like it was years ago but are finding that they are getting what they pay for.
I give it 3 years and Charlotte and Raleigh pay rates will be nearly in line with the declining pay rates of NY/NJ.
The problem you hear on average pay scale is the boom here and most companies are slow to move up the pay scale offsetting the companies that realize to get the talent they need from a tech in NY/NJ/CA etc they have to pay near the rates of the north to do so. On paper charts it looks like we trail the north but if your in certain high demand fields the pay rates rival the north. Housing hasnt moved at the crazy rates but they are still showing growth here. Our slowdown is mainly because other areas cant sell to get here so we see a lot of house sales and they rent them out until the owners can sell up north to get here.
Keep in Mind Microsoft has a facility here and if your average you will have to compete with people from Microsoft for jobs.
Second anyone with a bad record and I mean if you ever bounced a check or have been pulled over for any reason go to Raleigh instead of Charlotte. The banking industry which is popular in Charlotte is extremly strict in your background check.
Thats the quick breakdown. So when anyone says we make much less than the north well if your a house painter yes but if your in a specialty area then No.
“Which is an entirely different statement than the first one you made.”
Both apply. I don’t really think it’s debatable that if you buy something on day 1 for X and on day 2 you could buy it for X - 25%, then you have overpaid. Therefore, I’ll stop wasting everyone’s time by debating it with you.
“what you are now truly saying is that your odds of not catching a bottom are greater now than if you wait.”
That is one of the things I said, yes.
“Again, you have no certain way of knowing you overpaid for a home until you attempt to sell it.”
Do you tell your clients that comps are meaningless? You can be pretty certain if that home is exactly the same in every way as the one next door, and the one next door sells for 25% less than what you paid. See the condo example.
“we have discussed the subjects of the dangers of market-timing and bottom-catching ad nauseum here.”
It’s better to make an reasonable decision regarding when to buy any asset than to buy it at random, however, and a reasonable decision would certainly include reaching a conclusion as to whether the market is rising or falling for the asset in question. I don’t need to time the bottom - I’d rather buy on the upswing than the downswing, so I don’t mind being a little late.
“I’m not picking on you…I keep harping on this”
No worries - I’m a lawyer, so I can handle a little harping and picking on.
“I get the feeling that many here cannot- and will not- feel comfortable with buying a home until a bottom has been reached in this market.”
There are a lot of factors for any individual buyer that go into determining when is, for them, a good time to buy, and I agree the economics shouldn’t always trump (and sometimes don’t come into it at all). All other things being equal, however, it’s worth taking into account whether the market is falling. Right now, IMH (but strongly felt) O, it is falling, and will continue to do so for some time. That this is my opinion is not dispositive of my personal decision not to buy until the end of 2009. That comes mostly for (multiple) other reasons, and it’s merely a happy accident that I believe that, market-wise, that’ll be a pretty decent time to buy.
what Hehehe said.
what the heck is an exchange engineer?
“Aaron,
Are you expecting that investment banks will each fire thousands of employees in a few months?”
I can’t speak for Aaron, but I’ll be shocked if that doesn’t happen.
I get the feeling that many here cannot- and will not- feel comfortable with buying a home until a bottom has been reached in this market
I don’t think most people here are looking for the absolute bottom. However, I think many believe something to the effect that “I don’t know where the absolute bottom is, but I do know we are nowhere near it yet. I believe the risk of buying now outweighs the risk of waiting a bit longer ”
I think a lot of us here (at least me) will be comfortable buying a home when a decent home can be purchased at a reasonable price (which I know is subjective). I’m willing to put in another year or so. If I don’t like what I see, I’m out of here
I will go so far as to say that NJ pays better than NY.
In my last job hunt late last year (I am also in IT), I got three job offers. 2 of them were in Manhattan, 1 in central Jersey.
The highest amount was from the Jersey employer.
At the time, I dismissed it as a fluke since we all know that everyone (else) in Manhattan makes over 200K.
Mitchell,
Thanks for the details. The comp spread between New York metro and the South (Charlotte, Atlanta) is much wider in investment jobs compared to IT jobs.
Do you notice many bankers and lawyers moving from NY metro to North Carolina? Or is it mostly IT folks and others?
clot #158
That was a reductio ad absurdam to make my original point.
Oh, well.
John #167,
An exchange engineer works with Microsoft Exchange.
http://en.wikipedia.org/wiki/Microsoft_Exchange_Server
pret #171,
Why would someone in banking leave NYC area? God made this area just for them :)
“Do you notice many bankers and lawyers moving from NY metro to North Carolina? Or is it mostly IT folks and others?”
Lawyers, yes. The pay scale in a place like Atlanta, for example, isn’t that far off from New York. NC a bit more so, but if you’re coming from a top firm in NY they’re so happy to have you that it’s pretty easy to leverage a good deal on pay.
Layoffs? Across the board; quants, mbs, fixed income trading, structured finance, pe, operations,risk, etc.. It’s very simple on WS, earnings take a hit, jobs are cut. Wait until the end of October, cuts before bonus calculations.
Syncmaster,
I don’t know why bankers and investment guys would leave this area. People make $200k+ in this business which is what you need to do if you want to enjoy life around here.
Maybe Mitch can provide some insight if he knows any of them who relocated to North Carolina.
OMG I bet Chicks don’t dig exchange servers.
I thought an exchange server were the people who handed out drinks on the floor of the NYSE on IPO days.
First of all in NY/NJ we are all good looking, healthy make 250K plus a year and drive Mercedes. Hell I saw dirty sexy money last night and I think they made the show after people on this site, why would we leave?
“what the heck is an exchange engineer?”
A customer service rep at a dept store that handles returns. j/k
#168 See #174
#174 got it. Yes I am the guy in the backgroud who reads your e-mail. ;) Go ahead delete it even from your PST file I can recover it. The fact is dont ever say anything in e-mail you didnt want anyone else to know. Yes we see your resumes and everything else you say.
#176 Wachovia has the second largest company campus here. Here instead of a big building its like a college campus. Very park like areas unless your downtown which is funny because I say we have a bum starter set which includes one guy preaching about the end of days are coming but he only works on days between 72-75 degrees when he has free time.
When you drive through North Carolina you think nothing is here but in certain areas they have high restrictions on buildings taller than the tree lines. So you drive down the highway thinking its barren but there is tons of stuff just beyond the trees.
BC Bob Says:
September 27th, 2007 at 1:53 pm
“3. weiners” Clot,Luis Tiant; “I’m happy to pitch for a weiner”
“…Luis Tiant. Aren’t you going to share some of that Colonial Yankee Bacon With Your Family?”
Luis Tiant: NO
People make $200k+ in this business which is what you need to do if you want to enjoy life around here.
I don’t know, dude. I don’t make 200K. My wife and I combined don’t make 200K. But I don’t feel like I’m not enjoying life. But that’s just me. Maybe I’m just another complacent pleb.
… in certain areas they have high restrictions on buildings taller than the tree lines. So you drive down the highway thinking its barren but there is tons of stuff just beyond the trees.
I don’t doubt the truthiness of that statement, but I do think it’s silly.
What are the advantages of living in North Carolina instead of New Jersey, besides lower housing costs?
dreamtheaterr Says:
September 27th, 2007 at 2:15 pm
American Funds = Asset bloat.
Yan: I will stop short of saying you are wrong, because if one provides a laundry list of characteristics of asset bloat, these funds fit the bill. HOWEVER. I have done a significant amount of work studying cross-holdings and correlation (i.e. are you paying active management fees for an index fund?). These guys do certain things…
#1 ten to fifteen PMs per fund that work independently
#2 consistently high marks for stewardship
#3 consistency in PMs as well as long tenure
#4 pattern of reducing asset management fees as the size of funds continue to balloon
#5 tone deaf (i.e. arrogant) regarding marketing trends - STRONGEST TRAIT POSSIBLE
pretorius Says:
September 27th, 2007 at 3:47 pm
What are the advantages of living in North Carolina instead of New Jersey, besides lower housing costs?
pret: dramatic increase in personal relative IQ
Do you notice many bankers and lawyers moving from NY metro to North Carolina?
I’ve heard of some bankers going to Charlotte. In most cases, it’s a quality of life issue. You do take a big pay cut, but you don’t have to work 80 hours a week.
In fact the Wall Street Journal ran a story about a this a few months ago. Couple working on Wall Street…fed up with the long hours and rat race…had a kid…moved to Charlotte…she stays home…he works…bought a beautiful house with a yard…she is going to open a bagel store now…they are very happy…couldn’t do that here.
pret- It’s less crowded (for now).
Chicagofinance,
Good point. Seems like each year half the graduating class of Penn and Harvard moves to New York metro. Few of these people want to live in Charlotte and Atlanta.
“What are the advantages of living in North Carolina instead of New Jersey, besides lower housing costs?”
My choices would be:
Climate (if you like warmer weather)
Golf (access, quality, price, and season length)
Competent state and local government
Cleaner air & water, more natural enviornment
Towns,cities and roads aren’t littered with trash
You basic quality of life issues.
NJpatient,
At the big law firms, the pay difference is pretty substantial between NYC and the south; although the cost of living probably makes up for it. I’m a 7th year associate and I’m pretty sure I’d take a huge pay cut if I moved south.
Actually I have a couple friends who’ve moved to Charlotte from my firm. The pay relative to standard of living is astronomical. Also the pay in places such as Atlanta is coming more into scale.
I dont know much about Atlanta but hear the traffic is horrendous;
isnt that one of the reasons people give for leaving the NYC metro?
What are the advantages of living in North Carolina instead of New Jersey, besides lower housing costs?
Housing, of course, is number one. This would really be the reason for moving there.
But also…
- Property taxes (yea I know Chi, they’re going up…but might as well take advantage while it lasts)
- Everything is newer, not run down (downside, loss of some character)
- Open space
- No more shoveling snow
- No more socialist/nanny/France-wanna-be state government
Friends I have who moved to Atlanta from this area say it is worse there.
I’ve heard the same about Albuquerque too.
I am just commenting on the pay, would consider NC, no way on Atlanta, it’s like Dallas-East.
#172 Banking is huge in Charlotte. Bank of America is based in Charlotte. They own the football stadium. Wachovia is also based here.
Merial tried to get me to move to Atlanta and I used to travel a lot with Lucent to Atlanta. Dont live in Atlanta if you live on the wrong side of the highway it will take forever for you to get to work.
My suggestions is simply check Wachovia, BOA, TIAA-CREF, SunTrust websites and also all the other job sites and talk to them. They will tell you what you can make.
As a breakdown here is my NJ/NC comparison.
NJ:
House Worth 500K (27 years old - 2,000 sq ft)
Needed Roof, Pool Liner, Fence Replaced, Kitchen Remodeled.
Taxes 6500 a year
Commute 1.25 hours each way
NC:
House Cost: 257K 2.25 years ago now worth 315K its 2.5 years old. 3,067 sq ft, all new appliances, lake access, community pool. Taxes 2400 a year. 45 minute commute. Needed a fence which cost us 2500 I think?
Car insurance is half the cost of NJ thats a no brainer.
Living in North Carolina:
Skiing 2 hours away. Not Vermont but ok you can always go to west Virginia which has some vermont quality to it. On par with small NY and PA ski areas. Remember we have the Rocky Mountains here.
Scuba Diving in Lake and 2.5-3 hours to the shore. But there is rock quarry also.
Disney is 8 hours, Florida is 5 hours away. We drove it.
Six Flags - No Gang wars that I know of.
Water training park for white water rafting.
Parks like you cannot believe like grizzly adams.
Mountains galore with plenty of things for the kids to do. They love gem mining.
Cruises out of Charleston, SC about 2 hours away we havent been there yet.
No locals but when you meet one they are the nicest people most people you meet are from NY.
NO SNOW although I saw flakes it didnt stick - We do get ice.
NC is the new Florida without the old people.
Only complaint is for a Nascar area they cant drive worth squat but you can cut them off and they dont follow you home or even beep the horn.
Little traffic and its because of the growth but road widening and new bridges are going in.
I love the 4th of July it rocks everyone is blowing something off and were not talking itty bitty bottle rockets were talking boom stick baby. Seriously every direction you look there is fireworks.
Everyone here is someone like you that just wanted to get out of the rat race and working to live instead of living to work.
#184 look at Cary and Apex and call a realtor in the area and they will tell you about the strict sign policies and building above the tree lines.
#184 pretorius Says: “What are the advantages of living in North Carolina instead of New Jersey, besides lower housing costs?”
Super Target! Besides the regular stuff to buy they also sell groceries, wine, and beer. It was almost a religious experience this past Sunday afternoon.
Chifi, American Funds is a fantastic, low-key shop. I am aware of their independent PMs per fund. No doubt it has worked till date. My question was - how about going forward as money continues to pile in?
How much can you continue having independent PM’s per fund seeking new stocks to buy within the US domestic stock universe before you eventually start seeing some overlap? It’s not a matter of if, but when before you start seeing overlap of holdings, especially as you go down the market cap spectrum. Relaxing the mandate to go overseas is the only way out to give them the flexibility to continue seeking investment opportunities.
Am curious - how many of their funds are closed to new investors?
Lots of people seem to equate standard of living with the amount of house $x buys, then conclude that New Jersey has a low standard of living because you can’t buy a McMansion for $400,000 here.
I suppose I am different because I am happy to live in a smaller home when I can get everywhere by walking and have convenient access to New York’s job, education, and social opportunities.
We here at Exit Realty sympathize with hearing the news that Foxtons, Inc is closing their doors to the real estate industry.
Here at Exit Realty we are opening our doors and hearts to any agents looking to continue in with their real estate practice. 70% Commission will be offered to all agents at start. Any location!!
Contact: 914-433-7878 or 914-912-6401
Mitchell -
how’s the growth for .net p/a’s? can consultants jump from one job to the next there or do you risk bench time for a number of months?
thanks for all the info
“Six Flags - No Gang wars that I know of.”
Mitchell,
LOL!
I notice none of the bears on the board have bothered to touch on the fact that MORTGAGE RATES HAVE GONE up.
The WSJ blurb is very telling. This winter is the perfect storm: foreclosures galore and hit rates on Jumbo loans.
Who could even thinking of buying a house this winter? And if you’re sitting back waiting for the spring, think again - rates will probably be even higher.
What happens when a jumbo hits 8%? Plan for it all, people - save, save, save.
Spending money = not a smart move
Advantages of NJ over NC
More people with teeth
Don’t have to hear the word y’all 1000 times a day
Don’t have to worry which side of the church to sit on when cousins marry
Can go out to dinner after 7pm
Real Italian and Seafood versus Olive Garden/Red Lobster
Houses don’t have wheels
When you get divorced you are still not related to your ex-wife
Don’t have to count the toes on your babies cause of inbreeding
Everyone is not a bible thumping white bread red neck
No listening to dumb Jeff Foxworthy jokes at the water cooler
NASCAR is not on all three channels on your tv
Don’t have to milk a cow to get milk
This is fun!
Foxtons may file for bankruptcy
BY JAMES BERNSTEIN | james.bernstein@newsday.com
3:35 PM EDT, September 27, 2007
Article tools
Foxtons, the one-time 800-pound gorilla of the 2 percent marketplace in the New York metropolitan area, said it may file for bankruptcy and close its business, explaining it “can’t stand in the way of a hurricane” that has come about as a result of the decline in the home mortgage industry.
The New Jersey-based company, which once rocked the real-estate industry by selling homes for as little as 2 percent commission — compared to commissions of up to 6 percent at other brokers — said in an announcement that it is “releasing” 350 of its 380 employees “and may be filing for bankruptcy protection in order to close the business in an orderly fashion.”
No one answered the phone at the company’s headquarters Thursday morning.
In a statement, John D. Blomquist, Foxton’s senior vice president and general counsel, said the company had been “well run, very efficient” and had “a great team that has pioneered a new model in the real estate business — a model which has proven itself and, we believe, will have lasting influence on our sector.”
But, he added, “The plain fact is that we have been battling against a real estate market that recently has turned into a sharp decline, and the company no longer has the liquidity to operate as a going concern.”
“We understand the impact of the action we are taking, but there comes a point where you can’t stand in the way of a hurricane, and it is a property hurricane we are facing.”
The company’s announcement said that it has some 4,400 current listings and that it plans to “preserve the value of these listings to minimize customer disruption and to dedicate the anticipated revenues to pay creditors.”
Foxtons created a huge advertising splash, spending close to $12 million a year on television, radio and billboard ads. It even used buses, bus shelters and subway platform ads to attract customers.
Beth Marten, who heads Home Buyer’s Resource Center, a real estate agency in Baldwin that represents home buyers, said she was not surprised to learn that Foxtons announced it is filing for bankruptcy and may go out of business altogether.
“I predicted this would happen a year and change ago,” Marten said.
Marten said the fees Foxtons paid brokers — which she said at times was as low as 1 percent to 1 1/2 percent — did not entice independent brokers or brokers who worked for other agencies to show homes listed by Foxtons.
“I saw them finally go up to 2 percent, but their listings were languishing,” Marten said. “The broker was only going to get 1 or 2 percent. There wasn’t a lot of interest in showing their houses.”
She said also that she did not believe Foxtons hired the best-quality brokers. “They were questionable,” Marten said, explaining that they priced the homes they were selling at levels that were higher than the market would allow.
“They just didn’t have a clue,” Marten said. “I don’t think other brokers are going to miss them (Foxtons) at all.”
Foxtons Web site said the agency opened for business in march 2000 in North America, and in the early years, had more than 1,000 employees and more than 10,000 homes for sale.
After B school I interviewed for an i-bank job in mortgages down in Charlotte at BofA. The guy I spoke with basically told me that the pay scale is a bit lower down there but it is not much. First year associates could expect $125-175K and then from there you can easily approach $500K within a 5 to 8 years provided you move up the ladder and do well. The travel is still there though since it is banking so there is still a lot of time away from home. In the end I decided it was not for me (both the move and the banking job) but there is not a doubt in my mind these guys were taking care of business. The guy I interviewed with was a friend of a friend so my friend told me where he lived and gave me an idea into his lifestyle. At the higher income brackets ($250K+) your money just goes so much further down there. That fat 7,000 sqft house with the stone pool and such is just not that much more than a regular house down there. Maybe you have to spend $500-$800K for it but at that salary level that is perfectly affordable. The taxes are so low I can’t even write it here it makes me so sick. You are just not bidding against as many people with $$ down there and so you are not paying much more than the cost of the upgrades to get them. In my town in NJ that crappy 4th bedroom instantly adds $200K to the price of your home even though the cost to build it was minimal (good luck getting a permit to add onto your home). Being a banker down there means you literally can live like a king. I hate to say it but it takes a hell of a lot more than $250K to live like a king here.
#203
For .Net developers I would suggest Cary/Apex. A lot of the programming positions here were recently outsourced oversees. I dont think programming is a high paying postion here but again I suggest you contact a few recruiters and talk to them. Keep your numbers high and let them talk you down in pay rates. If you let them set the numbers they will low ball you to see if you will take 50 cents an hour as they are always looking for your bottom. NJ Contracting agencies do the same so always ask for more money and let them talk you down. Have you ever heard of a consulting company talking you up? Come up with a good number for yourself and tell them you cant work for anything less and see if they will work with you. You will be surprised.
I have programming skills on my resume and do get calls for it but I cant say its hot here.
However consider that 2 neighbors across the street from me are developers and doing well but I never see them to get the full scoop. They never come outside one is playing WOW and the other is playing Warhammer. Both recently bought new cars and one bought his wife a new harley so they cant be doing bad. They dont seem to play poker which is popular in our neighborhood.
You cant jump from one company to another like the north. Nothing compares to the abundance of jobs you will be used to in NY/NJ area as there are not a lot of surrounding areas you can go to.
Everyone hires from Microsoft so if you can get into there everyone after them will hire you virtally without an interview depending on how long you were there.
Hot IT jobs here:
Active Directory, Exchange Messaging (Growing), Lotus Notes, Microsoft SQL, Sharepoint, and Small Buisness Server.
Project Management is huge here I get calls all the time for this.
I have heard of companies in need of good XML people but not sure if its hot or not or what the pay rates are.
Low Paying:
Desktop Support, Helpdesk but I would suspect its on the rise.
Lots of people seem to equate standard of living with the amount of house $x buys, then conclude that New Jersey has a low standard of living because you can’t buy a McMansion for $400,000 here.
NJ (at least to me as a first time buyer) has a low standard of living because you have to spend a fortune to buy even the most basic home (which comes with a huge tax bill). Many in NJ are spending huge chunks of income on housing. This leaves little left over to enjoy everything else the area has to offer.
I wouldn’t buy a McMansion in NC. I would buy a modest home and have enough left over for a very comfortable life.
Mitchell -
How about SAP?
There is nothing better than an organically created downtown centered on public transportation. NC gets an automatic zero.
If your goal in life is to fill 2000+ sq.ft with a collection of “stuff”….go ahead…zip down I-95 and don’t come back.
Example:
http://homes.realtor.com/prop/1088936853
Typical but you can find new for this.
$259,900
4 Bed, 2.5 Bath
2,800 Sq. Ft.
0.43 Acres
In Fort mill south carolins your taxes would probably be $1500.00 on a house like this and they recently stated the new lottery is allowing them to cut the property taxes to possibly half!!! Anyone ever remember a property tax cut? I remember having my taxes jacked up then got a measly thankyou check called a homestead rebate. Take $700 more a year and give me back $300.00.
If you seriously consider the Charlotte area:
Mooresville, NC > $100 sq ft
Fort Mill, SC $100 sq ft
Why those 3 areas? Excellent Schools.
If you consider Raleigh/Durham then look at
Apex (Right next to Cary getting Cary overflow)
Cary (Pricey but its pretty)
Again Excellent Schools in both Cary/Apex.
As for the southern jokes I call my buddies in NJ and say stuff like
“You do know where all those VHS tapes from blockbuster went right?”
“I love that new band Journey”
“Wrestling isnt real until you cross the border into south carolina”
“PA is passing the tradition of the Mullet to us in NC”
“Yup just got my AOL diskette today cant wait to dial up”
Reality is NC is southern NY so your teasing NY when you make fun of NC now. Really ask any realtor or ask the guy at the gas station when in NC.
209 - You missed the point - you CAN buy a nice home with all the trappings and STILL have a comfy lifestyle.
I had an internship in NC back in 2000 right out of college and Raleigh was a great, great party town. Only went to Charlotte once, thought it was cool. Yes, the lifestyle out there is a bit slower, but really, when you’re married with kids, does it matter?
I don’t know if RE will ‘explode’ in the coming years, but the market is certainly there.
It’s easy to bash NC folks as toothless, uncultured rubes, but between Charlotte, Raleigh and Nags Head, there’s plenty to do. (Just avoid Nascar :)
#211 I think everyone who needs a SAP developer pays out the nose. I heard of one position but dont recall the company looking for it but the recruiter kept saying if you know someone they will pay a lot for them.
All I can say is post your resume for the area and keep your rates up high (Let them talk you down like they do) and see if its for you.
We all need to make a living and Charlotte is still one of the fastest growing cities. We steal people from Atlanta/NYC/NJ/PA.
Ohio is going to be a hot spot even in the downturn of the real estate market if NC isnt for you. Not everywhere of course.
South Carolina is still very barren. I think its a couple years off from a real growth spurt.
Atlanta forget it its a mess.
Kentucky is slowing. Not sure why but maybe its not as desireable being that for inland or its just a bit to far away for someone moving from NY/NJ.
Im flapping about NC and NC will continue to grow but I would bet that OH is also going to see some growing.
dreamtheaterr Says:
September 27th, 2007 at 4:11 pm
Am curious - how many of their funds are closed to new investors?
Yan: NONE
Check this out from Morningstar….I mean..the beat goes on….
NOTE: THIS INFORMATION IS FROM MORNINGSTAR. YOU SHOULD NOT CONSTURE THIS INFORMATION AS AN ENDORSEMENT OR A SOLICITATION TO SELL ANY OF THE MENTIONED INVESTMENTS. TO USE THIS INFORMATION FOR ANYTHING OTHER THAN DISCUSSION PURPOSES WOULD VIOLATE ITS PURPOSE FOR DISCLOSURE. PLEASE USE A FINANCIAL ADVISOR OR YOUR OWN RESEARCH.
http://advisor.morningstar.com/articles/doc.asp?s=1&docId=13436&pgNo=1
Down South is not the best, my friend went down there with his wife and they both got 120K jobs and went nuts with the money until she ran off and left him and stuck him with the two year old twins to take care of and tons of trouble. If he stayed in NY she would not of had the money to go nuts and her parents would have been nearby to control her. I hear lots of stories about divorces from ex-nyers when one wants to come back and the other does not. His wife got sick of being the only jewish person in Georgia!!!
“If he stayed in NY she would not of had the money to go nuts and her parents would have been nearby to control her.”
John,
You are confusing me. If you are not making over 200k, you are a loser. Yet, if you make over 200k, with low overhead, you tend to be f*cked up? So now your solution is to stay in NY and be a hamster, spinning your wheels to pay overhead, to stay ouf of trouble? How about wake up and get a life.
Comforting, parents to control her?
“I’m a 7th year associate and I’m pretty sure I’d take a huge pay cut if I moved south.”
I wasn’t speculating, Aaron - it’s what I do. “The south” is a pretty big place, kind of like “the north” (the latter including, as it does, West Virginia).
If you go to King & Spalding in Atlanta, you won’t take that much of a pay cut.
Regarding all of the observations about rising mortgage rates, it looks like Bernanke solved the Greenspan conundrum. If you want long term rates to increase, just cause inflation of the dollar by lowering short term rates. In retrospect it seems so simple, given how much of these mortgages were funded by foreign investors….
On another topic, so where do you think the Foxtons market segment will get absorbed in the coming months? My guess is FSBO, since they can’t afford the 6% comissions.
HEY—THIS IS NOT A BLOG ABOUT MOVING TO NORTH CAROLINA.
just sayin’.
Foxtons CEO,
Paraphrasing; “It was a hurricane that we could not withstand”
Clot,
Is this the Sept hurricane that you were forecasting?
On this all NC talk subject,
I think on Los Angeles, San Diego or San Fransisco bubble blog they are probably saying the same for NJ/NYC area.
#216…..LMFAO….she screwed around on her husband cause she was ‘Jewish’. That’s a new one….Gotta love that. No, she was bored, probably self-indulgent, and deluded. Making six figures makes you crave sex with strangers? Bahahaa sorry. Couldn’t resist.
Essex, I think you missed the point about the Jewish bit :)
I couldn’t resist…..I love a good story of a bad marraige. She missed the New York region so much — she #@%$ed her way back?
Clot,
Are you monitoring additional storm activity?
“Foxtons, the one-time 800-pound gorilla of the 2 percent marketplace in the New York metropolitan area, said it may file for bankruptcy and close its business, explaining it “can’t stand in the way of a hurricane”
http://www.newsday.com/business/ny-bzfoxt0928,0,3121370.story?coll=ny-homegarden-utility
“She missed the New York region so much — she #@%$ed her way back?”
Essex,
I just fell of my chair. LMAO.
That pretty much sums up Weichert, Century 21, Burgorff, RE/Max, Keller Williams, and the rest.
“Selling” a house requires only slightly more “skill” than is required by amazon.com to sell a book.
Good price? Good location? I like it? Sold.
People don’t need the “This is the kitchen, and this is the bathroom” tour guide spiel.
“Clotpoll Says:
May 19th, 2007 at 8:52 pm
ChiFi (204)-
I’ve been waiting years for this. 10 runs today, and another tomato can takes the hill tomorrow night…with a blown-out bullpen behind him.
I don’t think they can ditch Torre until after the Angels series, no matter how bad it gets. However, if der Fuhrer gets angry enough, we all know he can pull dumb moves with the best of ‘em.
Who cares about Clemens? By the time he’s ready, they’ll be 12 games out of first place, and A-Clod will be on a 1-for-30 tear.”
Today, From Fox Sports…
No major league team has failed to finish first after having at least a seven-game advantage with 17 remaining. But with three games remaining in the regular season - a weekend series at home against Florida - the Mets might fail to win the division or the wild card.
LET’S GO YANKEES!
Donnie: you honestly think the Yankees have a shot? If so, you have been listening to too much Michael Kay.
“You know Ken, I would take the Yankees top 3 starters over any other.”
Mitchell:
I want to know more about IT reading my email.
WSJ
The Three-Martini Renovation
To cut costs, some homeowners are throwing remodeling parties. Jennifer Saranow on the often sobering results.
By JENNIFER SARANOW
September 28, 2007
Cocktails and power tools don’t mix. But they sure do mingle.
As the housing market cools, homeowners looking to save money on renovations are hosting parties where they invite friends over for an evening of ripping out walls and laying floors. But when novices who’ve had a few drinks get a hold of crowbars, drills and Sawzalls, the results are sometimes less than satisfactory.
One reveler near Chicago hung a sheet of drywall backwards, while a partygoer in Seattle messed up the host’s bathroom floor by installing the tiles crooked. During her recent “Martini Bash” renovation event in Toronto, Debora Beam wandered upstairs to find one of her friends halfway through sledgehammering out the wrong wall. “I was kind of like ‘oh my God,’ ” she says.
Sometimes the problem is inexperience, not alcohol. Although she missed her friends’ official “Demolition Party” in Columbus, Ohio, Suzanne Cohan, a 38-year-old massage therapist, dropped by later to pitch in. She was trying to yank a piece of lath from an exposed wall with a crowbar when the wood snapped and popped her between the eyes. Ms. Cohan, who’d taken off her safety goggles, had to go home and put a bandage on her face. “I violated the safety code, so it was pretty much my fault,” she says.
[edit]
what do i do now i’ve had my house for sale thru foxton for a month now , what do i do in order to get another realtor to sell my house i want to cancel the contract do i take the signs off my self what can i do ?
GEEK ALERT - GEEK ALERT
GET OUT SPANDEX TIGHTY WHITEYS!
WSJ
Custom Bikes for the Masses
Makers Push Limited-Edition Models to ‘Aging Enthusiasts’
By NANCY KEATES
September 28, 2007
It’s no longer enough to have the best bicycle on the block. Now you have to have the best fleet.
Facing a declining number of riders and increasing competition from boutique makers offering $10,000 custom-built rides, bicycle-industry heavyweights are now pushing individuality. Most major manufacturers — including Taiwan-based Giant, the world’s largest bike maker, and Specialized Bicycles — are offering some form of “limited edition” or personalized model this year, bikes that are produced in limited quantities, have frames signed by famous designers or come with custom paint jobs.
[edit]
WSJ
In Sequel, Fears Of Stagflation Haunt Economy
By MICHAEL HUDSON
September 28, 2007; Page C1
Like the movie fiend who can’t be killed off, talk of stagflation re-emerges just about any time the economy slows or inflation perks up.
Such fears are making another appearance. Mark Hulbert, of Hulbert Financial Digest, says the financial newsletters he tracks are buzzing about stagflation.
“I utter the word in my darker, more depressed moments,” jokes T.J. Marta, an RBC Capital Markets strategist. In sunnier moments, he says there’s little chance the U.S. economy could be visited by the scary tandem of weak growth and soaring inflation.
For good reason.
There hasn’t been serious stagflation since the 1970s and early 1980s, when inflation and unemployment hit double digits. With inflation, expectations make all the difference, and inflation expectations are much lower and more anchored now than then.
In the 1970s, an oil-price shock helped to convince people that all prices would keep soaring. Businesses passed higher costs to customers and workers demanded huge wage boosts. Inflation became a fact of life.
By 1980, the Philadelphia Federal Reserve’s inflation expectation survey found professional forecasters anticipated consumer-price inflation of nearly 9% annually over 10 years.
In the first half of this year, the survey projected long-term inflation at less than 2.5%. Consumers and businesses are now used to low inflation. Having learned from history, central bankers are more vigilant.
Still, those who lose sleep over stagflation aren’t completely unhinged.
Rising commodity prices, an ailing dollar, a housing downturn, slowing productivity growth — these trends could conspire to produce slow growth and modestly elevated inflation.
Forecasters surveyed by WSJ.com expect the consumer-price index to finish the year up 3% from December 2006. That would be the fourth straight year above the 2% level that economists generally find tolerable.
Maybe nagflation would be a better term, something that’s hardly good for businesses, consumers or markets, but not a 1970s horror show.
#230 ChiFi - I’m confident about the Yankees facing the Indians in the first round versus the Angels. Then again, I was thrilled when the Yanks faced the Tigers first last year and we know how that turned out. But unlike the past few years, the Yankees now have a good mix of veterans and young, raw talent. Hopefully A-Rod will come through. If he doesn’t, his MVP season will be forgotten and Yankee fans (not me, however) will go back to booing his ass next year (if he’s still on the team).
Never count this team out!!! Even if they lose in the playoffs, I’ll look back fondly on their incredible comeback from being 21-29 in May and 14.5 games back. Unless they lose heart like they did last season… then I’ll really be disgusted. Last year’s loss was worse than 2004.
Oh, and another note, ChiFi… I didn’t hear that Michael Kay quote. If he did say that, well, then that is one of the dumbest things I ever heard.
I get a kick out of John Sterling only because I am a Yankee fan. If I wasn’t I’d think he was the biggest idiot out there. Keith Hernandez and Ron Darling blow the Yankee announcers away.
Wow…23 - a level headed Yankee fan…OK…”crap off”.
I think the Mets are basically unwatchable at this point. I actually hope they tank this weekend, because I don’t have the time to waste on a team that is going to be garbage. If anything, the best result of this situation is that Randolph SHOULD be gone.
I think the Yankees have a good shot. Ultimately, I think the Angels are the most balanced team, although the lack a little power. This maybe be the year when Rivera and Jeter look human. Ultimately, it all comes down to ARod….if he is HGHRod, then you measure up against everyone. If he is destined to be CubRod, then you may as well clean house.
I think Cleveland has no shot unless Sabathia and Carmona carry them.
The Yankees
In 2000 the Yankees only won 87 games and went something like 16-19 towards the end of the season, yet went on to win it all. And who would have guessed that the Cards would have won last year? Once the playoffs start, all bets are off!
To respond to “UNREALTOR” - I quess you never worked with a Burgdorff agent before - they are quite different than the others - they acutally care about their customers. They hire maybe 1 out of 10 of qualified agents. Kind of like the Goldman Sachs of the real estate business.
d2b,
Not only can messaging groups read your emails (ie. have access to them so they can read them if they want to), they can also read your IMs.
Foxtons could probably have saved itself by converting all agents to a commission-based pay.
Foxtons was making big money, but it all went toward providing all employees with base salaries + commisison, cars, laptops, health insurance, company trips, and booze in addition to RIDICULOUS salaries for the big dogs. They truly relied on volume, not quality in service, and for a long time it “worked” at the expense of agents who were REQUIRED to show 100+ properties per month. There were a few good people at Foxtons, but mostly greedy folks lacking good moral judgement. I wish all the kind people there the best, and the rest of the scumbags got what they deserved.
To say you’re surprised that Foxton’s has screwed the pooch..is like saying you were surprised when Hillary annouced she wants to be President: both situations were inevitable. In Foxton’s case, you can fool the consumer for a only a short time (a short time here = 7 years) before word gets around. For CEO Blomquist to state that “We are a very efficient operation” is laughable..as well as his assertion that the current down market is insurmountable. There are MANY good companies which are still operating at a profit–and not just the Prudentials, Weicherts and ReMaxes…plenty of smaller, un-affiliated brokerages are continuing to provide ACTUAL full service real estate brokerage–offering consumers accurate market information and reliable, PROFESSIONAL service–something which clowns such as Mr. Blomquist have no knowledge of. So…adios Foxton’s…you won’t be missed. Your ridculous little cars and even more ridculous little agents (PLEASE..please don’t refer to them as Realtors…they were licensees at best) will ultimately be merely a footnote in the history of commerce. Now…you need to sell your house?
Make a call to your local PruCentReColdERAWeichM3ElekZastkoAllTowneGMFord agency…these guys WILL sell your home.
PS: I’m glad to see people still using the word “scumbag”..the perfect adjective, eh?
In response to 245, the funny thing is Foxtons was planning the the first of october to pay listing agents more on the selling end rather then listing end,originaly they paid $50 for first 10 then $100 then $200 after 20 listings per month…It was going to be $50 flat..with agent required to get 20+ a month…Yes we were paid salaries of 25k + incentives.But LA’s And BA’s put more hours in a week then any traditional realtor will ever in 4 weeks …They wasted millions many people were over paid etc… but what is funny right till the end our last monthly meeting they gave away a bmw to top buyer agent..and offered $1000 to anyone who referred a BA or Loan officer!!Why?? supposedly Hunt was hit with lawsuits and other problems all at once…I dont think he planned to close up shop till a week or two ago…And we were having some of our best monthes ever our commission was 4% and rising hunt planned to be the most expensive realtor in the US just like he is in UK..But when you spend most of your time on blue prints to an underground Vintage Ferrari and sports arena in your back yard, how can you expect to grow to it?
Discount brokerage was never a good idea for the brokers. After the dust settles, the agents will just find a new office to work under. The broker will continue to pay the consequences for years to come.
What happenes to all the people who are currently listed with Foxtons and what can they do to get out of the contract and find another broker.I just signed with foxtons two weeks ago and yet to see my apt on their website.I am losing precious time and cant wait for them to sort out the mess.
Someone,Anyone who has any idea pls let me know.
Good riddens Foxtons.
Service was terrible. As a Realtor, you’d call to try and make an appt NEVER To get a phone call back.. ANd I’d ONLY show those homes as a last resort.
#65.. your comment about photos and floor plans could be true.. however, taht depends on what Realtors you use. In this market more and more are utilizing better photograpny and so on and so forth becasue you realy need to make hte home stand out in this tough market. In hte hot market you cuold just throw it up there with the lousiest pictures and it would sell. Now, there are more homes with virtual tours, professional phots. As for floor plans, that’s not really easy to do as they are not very accesable for residential homes in our areas (but are available for apts in NYC)
Realtor.com is NOT neccesarily the national MLS. It gets feeds from SEVERAL local MLS (we still do not have ONE national.. Realtor.com is the closet to it). Some areas MLS systems do not have or utilize the same technology as others. Our local MLS is http://www.mlssli.com . Realtor.com takes feeds from each individual MLS and then plugs it into their website.
Commissions are up because more time, money and real hard work is needed to market, sell and keep a deal together. Makes sense that they were cut in a market that didn’t require as much effor to sell..
Even in a HOT market. Foxtons was just the pits!!
#249 - You can get out of your contract with FOXTONS.. BUT .. you’lll need to contact your local MLS Board and have them intervene on yoru behalf.
Our board allows those with grievences with their current agent to bring them up. IN essence, the Realtor works for you and ify ou show that there service has not met with the promises they made you you can fire them.
AGain.. call your local MLS Board. They will tell you what steps you’ll need to take to get out of your contract with them
Good luck
#73 - not showing the street address on Realtor.com is for the protection of the homeowners. First, you do not want any nut job just knocking on their door. One of the advantages of hiring a REaltor is to pre-screen any interested party to make sure that they are serious buyers that are qualified. Also…that they are not just some nutjob that wants to case your home. You will not find the street adress on any MLS website.
They shoud include property taxes though.
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