From MarketWatch:
Foreclosures could top 8 million: Credit Suisse
More than 8 million mortgages could go into foreclosure in coming years in the wake of the credit meltdown as the economy worsens and the U.S. suffers more job losses, according to a recent report.
Credit Suisse’s fixed-income research team forecast that 8.1 million mortgages will be in foreclosure over the next four years, representing 16% of all mortgages. In a recent research note, Credit Suisse lifted its earlier forecast from April when it predicted 6.5 million foreclosures, or 13% of all mortgages.
…
“Despite some initial signs that subprime foreclosures were near a plateau, the combination of severe weakening in the economy, continued decline in home prices, steady increase in delinquencies, particularly in the prime mortgage space, ensure that foreclosure numbers, absent more dramatic intervention, will march steadily higher,” Credit Suisse wrote.
…
Earlier this week, Office of the Comptroller of the Currency director John Dugan released statistics showing a high re-default rate on mortgages that have been modified in the first two quarters of 2008.“The results were surprising, and not in a good way,” Dugan told a gathering in Washington at the Office of Thrift Supervision’s annual conference.
According to the OCC statistics, which looked at loans modified in the first quarter and second quarter of 2008, 36% of borrowers had re-defaulted by being more than 30 days past due and after six months the rate was roughly 56%.
After eight months, 58% of borrowers had re-defaulted. The OCC tracked the number of borrowers that re-defaulted on their mortgages after the modification was completed.
…
Meanwhile, Credit Suisse said that if home prices continue to spiral down, more and more mainstream borrowers could end up walking away from their homes, especially if the mortgage is worth more than the value of the house.“Thus far, the population of subprime borrowers in the U.S. is relatively small,” the analysts wrote.
“However, the severe recession that appears more and more likely, coupled with the collapse of confidence in housing and resultant foreclosures and the impact on credit scores, risks transforming the U.S. into a subprime society.”
Adding to the headwinds, a deteriorating labor market will put more pressure on foreclosures, they said.
Jingle mail…coming to a neighborhood near you.
From the Herald News:
Budget crunch forcing layoffs
Spending restrictions dictated by the state tax cap law, municipal officials said, have left the city with no other fiscal options, which prompted the City Council to approve a plan to lay off 81 employees.
“It’s something that none of us want to do,” said Councilman Steven Hatala Jr. as he left the Monday night meeting, which was attended by dozens of public employees. The state “is putting shackles on us.”
The layoffs, which would save the city about $4 million annually and become effective early next year, will affect all city departments including police, fire and public works. The plan also reduces the hours in several full-time positions, officials said.
But city officials said if the five unions that represent the majority of full-time municipal employees agreed to keep wages at 2008 levels, forgoing any pay raises, many of the layoffs could be avoided.
Under state law, municipalities cannot increase tax-supported spending by more than 4 percent each year. Under that tax levy cap law, Clifton would be able to raise spending by about $3.7 million in the 2009 municipal budget.
Mayor James Anzaldi said the city budget is currently $7 million more than last year, and with an already tight spending plan, the last reductions that could be made were in manpower.
Would you bet against Goldman?
From Bloomberg:
Goldman Draws Ire for Advising Default Swaps Against New Jersey
Goldman Sachs Group Inc., one of the top five U.S. municipal bond underwriters, is angering politicians and public-finance officials in New Jersey, Wisconsin, California and Florida by recommending that investors purchase credit-default swaps to bet against 11 states’ debt.
In the three months since the New York-based securities firm recommended “shorting municipal credit,” the value of the Markit MCDX index of the derivatives’ price more than tripled, to as high as 278.33 basis points from 87.75. A basis point on a credit-default swap protecting $10 million of debt for five years is equivalent to $1,000 annually.
Bets against public debt, once unheard of on bonds considered safe enough for retirees, have soared as the National Conference of State Legislatures projects recession-fueled budget crises will cause $97 billion of shortfalls nationwide over the next 18 to 24 months.
It’s “disturbing” to advise investors to bet against the financial health of a state whose bonds Goldman helps sell, Assemblyman Gary S. Schaer, a Democrat who chairs the Financial Institutions and Insurance Committee, said last week in a letter to Chief Executive Officer Lloyd C. Blankfein.
“New Jersey needs to maximize its presence in the credit markets, not to see its presence undermined.” Schaer wrote.
Grim #4
Surpised?
from Nov 29
By the way, my colleague Yvette Essen showed me the CDS data on some of the US states. These are quite revealing too: Michigan -192; California -165; Nevada – 164; New Jersey – 150; Ohio -104. So, California is now priced as a greater bankruptcy risk than Slovakia, 150.
http://blogs.telegraph.co.uk/ambrose_evans-pritchard/
This could get ugly:
Unemployment cash shortage
Five states may have to raise taxes, cut benefits or borrow cash to cover unemployment insurance benefits at a time when job cuts are accelerating.
NEW YORK (AP) — Five states, including Ohio, are in danger of running out of funds they use to pay unemployment benefits, meaning they may have no choice but to increase taxes on employers, cut benefits for laid-off workers or borrow the cash.
This comes at a time when job cuts are accelerating and states are facing huge deficits going into next year.
States with unemployment funds that are running low are mostly larger ones that are tied closely with manufacturing.
http://money.cnn.com/2008/12/09/news/economy/state_funding.ap/index.htm?postversion=2008120908
Michigan, Indiana, Ohio, New York and South Carolina all have reserves of less than three months to cover benefits.
From MarketWatch:
Week-over-week mortgage filings down 7.1%
Interest rates charged on fixed-rate mortgages dropped further last week, helping keep the volume of applicants seeking to refinance their mortgages near highs reported for Thanksgiving week, the Mortgage Bankers Association said Wednesday.
Overall, mortgage applications a decreased a seasonally adjusted 7.1% for the week ended Dec. 5 compared with the final week of November, according to the MBA’s weekly survey.
…
Also for the first week of December, the MBA’s survey showed, applications for mortgages to make home purchases fell a seasonally adjusted 17.4% compared with the previous week.
From Bloomberg:
Worst Spending Slump Since 1942 Extends ‘Scary’ U.S. Recession
The biggest slump in U.S. consumer spending since 1942 will extend the recession and push the jobless rate to the highest level in a quarter century, according to economists surveyed by Bloomberg News.
Household spending will drop 1 percent in 2009, the biggest decline since after the attack on Pearl Harbor, according to the median estimate of 51 economists surveyed Dec. 4 through Dec. 9. By the middle of next year, the economy will have shrunk for a record four consecutive quarters, the survey showed.
“That sounds scary enough to me,” said Jeffrey Frankel, an economics professor at Harvard University and a member of the group that determined the start of the recession. “Consumers have carried the weight of expanding demand for a long time at the expense of a serious deterioration of their balance sheets.”
…
“It’s a serious recession, and there’s a good chance it will break the 16-month record since the Depression,” said James O’Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. “We’re at the stage where the weakness is feeding on itself. The next few months look pretty rough.”
This was posted the other day
NJ’s unemployment fund running out of money
The Associated Press • December 8, 2008
The Star-Ledger of Newark reports a spike in jobless claims has exhausted a $260 million infusion pumped into the fund five months ago.
The National Conference of State Legislators says New Jersey is not alone: A dozen other states have reserves of six months or less to cover benefits.
The fund had a balance of $750 million at the end of November.
The fund paid out $169 million last month compared to $138 million in November 2007.
———————————–
How much is the federal government going to float as the states income dries up and as unemployment increases?
I call bottom!!
Q Ratio Signals ‘Horrific’ Market Bottom, CLSA Says (Update1)
Email | Print | A A A
By Patrick Rial
Dec. 10 (Bloomberg) — A global stock slump may have further to go, according to Tobin’s Q ratio, which compares the market value of companies to the cost of their constituent parts, CLSA Ltd. strategist Russell Napier said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKNSK0gYlqB0&refer=home
The current recession has been ongoing for over a year before they finally called it a recession. The depression was not called a depression until the DJIA was about 1/4 of its peak (at 100 form a peak of 400)
You may have seen this before:
http://tinyurl.com/wfxu
Curious to see if the unions will take concessions instead of layoffs.
HEHE,
Buy now while stocks are cheap!!!!! And its a GREAT opportunity for 1st time home buyers. Historically low interest rates!!!!!
Stocks sure are cheap. Look at their PE ratios compared to last year.
d2b
I have generally had negative opinions of unions due to my personal experience having to work with them (not for them). However i think there is some legitimacy to their calls of cuts to execute pay and benefits first.
Top Execs make can easily make 100’s of times what most of the union workers do. heck a 10% cut of all executive benefits across the board would probably save substantially more money and is probably more effective then cutting loose the union guy
HEHE 15
Perhaps compared to last year before the credit bubble burst. But not compared to long term valuation
question for the guru’s
everyone is rushing to T-bills and rates are now negative as no-one trusts our insolvent banks.
While it does look like a treasury bubble, are there really many other options besides holding physical commodities/metals (which really arent that liquid for most people)if the goal is simply return of capital as opposed to return ON capital?
From The Economist Dec 8th.
House prices Mortally wounded (Tell me something I don’t know)
House prices continue to fall in most countries
HOUSING markets look grim all over the world. In the third quarter of 2008, house prices fell in 11 of 16 countries measured by The Economist’s house-price indicators. The worst fall was in Britain, where prices tumbled a whopping 5.5% in the three months to September, following a 2.7% drop in the previous quarter. America’s housing bubble was the first to burst in 2006, and it has been deflating rapidly since. Many places that recorded gains in the first quarter, such as Hong Kong and China, are now seeing declines. Only in Sweden and Switzerland did house prices grow by more than 1% in the third quarter. Germany, France and South Africa saw tiny rises. Global house prices are expected to fall by 15% in the next two years.
Pretty graph in the article…
http://www.economist.com/daily/chartgallery/displaystory.cfm?story_id=12748853&fsrc=rss
Maybe Corzine should announce that the state will suspend all business with Goldman Sachs until it reverses its call.
Oh.. wait..
From the WSJ:
AIG Faces $10 Billion in Losses on Bad Bets
American International Group Inc. owes Wall Street’s biggest firms about $10 billion for speculative trades that have soured, according to people familiar with the matter, underscoring the challenges the insurer faces as it seeks to recover under a U.S. government rescue plan.
Kettle,
I was being facetious.
Off topic, but Gator would like to extend a public apology to Sarah Palin, who is apparently not the dumbest Governor in America. I was wrong. Damn you, Rod Blagojevich!
From CNBC:
Whitney: Banks On Life Support Next 18 Months
Influential bank analyst Meredith Whitney remains bearish about the economy, and her outlook for the banks that “lubricate the economy” is grim.
“The big banks are going to be on life support for at least 18 months, if not 36 months,” Oppenheimer’s executive director of equity research told CNBC Wednesday morning. “The big banks will not fail, but the big banks will not grow, in my opinion, for at least another two years.”
…
She echoed other analysts who see the funds from the TARP program being used to fill holes, and do nothing to stimulate the economy.
“You’ve had massive asset deflation,” she said. “There’s more of this to come.”
A must read for most on the board.
http://seekingalpha.com/article/110008-is-america-on-a-downward-slope
This article is preaching to the choir, but sums up a lot of info posted.
Interesting topic for discussion:
The systemic risk created by a high percentage of homeownership.
I’ll start it off by positing that the higher the ownership ratio moves towards “full ownership”, the greater the risk that an unemployment spike can cause a corresponding foreclosure spike. This relationship causes a dangerous negative feedback loop where economic weakness will feed on itself. Therefore, a high homeownership level isn’t a goal, but something to be avoided.
From article: post 25
One helicopter won’t do when there is $8.5 trillion to drop. Colonel Kilgore explained why he was taking that particular beach with, “Charlie don’t surf”. Colonel Paulson could explain his latest bailout with, “Citi don’t lend”. If these efforts to revive our economy follow the plot of Apocalypse Now, it will end with Timothy Geithner gasping, “the horror, the horror”, when the hyperinflationary bust eventually brings our existing financial system down.
Pictures are great.
I’ll add that increasing ownership levels to “full ownership”, can only be done by adding less qualified, marginal owners to the mix. As ownership levels increase, the quality of new owners falls, adding higher levels of risk to the economy.
These marginal owners are less likely to have the necessary cushion to withstand the layoffs or economic shocks I mentioned in my first point, and are more likely to be the first laid off. Therefore the higher the ownership rate, the more likely that a shock would cause a significant foreclosure spike, feeding back into the system, etc.
(28) Grim – When I was researching the census infor on the subject – that seemed to be true. Spain had the highest home ownership…75% I think…
I believe you are on to the issue…
Compounded by the fact that the builders stopped doing the smaller, affordable homes because they could not make as much off of them. The appropriate housing for me was 1150 sq. feet but I had a tough time finding that…
this walking away chit is really getting me. Understandable ONLY if you lost your job and are truly in a dire situation, inexcusable if your house is just a house now and no longer an ATM machine.
This isn’t the first generation to eat some equity in a down market. Stick it out.
I’ll also add that high ownership rates result in reduced worker mobility. As mobility decreases, it is more difficult for workers to take advantage of economic opportunities in other geographic areas. As ownership rates move towards “full ownership”, labor mobility falls towards some lower level (not necessarily zero).
This is fun, how about high ownership levels resulting in less consumer spending as a higher percentage of income is diverted from discretionary spending to debt service.
Given that our economy is largely supported by consumer spending, pushing the ownership rate to higher and higher levels acts to slow, or even reduce, economic growth.
According to the article prime mtg holders may walk away from their houses if values continue to decline. Why? You signed a contract youa greed to pay, if you are still employed, than you continue to pay your mtg.
I got caught up int he last housing bubble, and prices declined. We did not walk away.
More layoffs, more store closures. Consumer gets hit, commercial real estate gets hit.
From MarketWatch:
Office Depot to close 112 underperforming retail stores
Office Depot to close six of its 33 distribution facilities
re #3 and #4 – re: NJ Debt CDS rating. What does Assemblyman Gary S. Schaer think we just mark it up triple AAA?
We all know Politicans are usually in the dark about complex financial matters but this guy is a real moron. Does he not know that California is now paying bills with IOUs?
Insteead of writing letters to CEOs what Schaer should be doing is cutting spending so the CDS spreads narrow.
What is this where is all the money?
http://www.youtube.com/watch?v=7GSXbgfKFWg
Office Depot to close 112 stores, 6 distribution facilities
taking care of business ha?
http://online.wsj.com/article/SB122888021757894023.html
article referred to at Market Ticker…
Fed Weighs Debt Sales of its Own – WSJ
“I had always worked under the assumption that the Federal Reserve couldn’t issue debt,” said Vincent Reinhart, a former Fed staffer who is now an economist at the American Enterprise Institute. He says it is an action better suited to Treasury Department, which has clear congressional authority to borrow on behalf of the government.
Fed doesn’t issue debt?
What are these green papers in my wallet with the words “Federal Reserve Note”?
Isn’t a Note a short-term obligation or a promise to repay?
These things used to carry the promise to repay, in silver or gold, at the bearers request. Not so much anymore.
(32) Grim
“Given that our economy is largely supported by consumer spending, pushing the ownership rate to higher and higher levels acts to slow, or even reduce, economic growth.”
There ya go Grim – Your doctorate thesis… you are good to go..
Another thing to keep in mind that increasing homeownership levels by increasing housing stock tends to have a ratcheting effect. We increase housing stock so that ownership rates can rise, but it is very difficult to reduce housing stock in times when ownership levels need to fall (unemployment/economic spike). Easy to add houses, but difficult to remove. Inventory clicks upward, but rarely moves downward.
Higher level of housing stock creates its own negative feedback loop causing home values to fall during times of economic weakness (oversupply, underdemand).
re: #37 This new Fed Debt is going to be called BernakeBux
Here is a pic.
http://2.bp.blogspot.com/_H2DePAZe2gA/ST95v4XVEhI/AAAAAAAAGwI/CSz9UQTmm2I/s320/Bernankebux.JPG
http://www.doctorhousingbubble.com/
“The Rise and Fall of Southern California’s Housing Empire”
(40) You go Grim….
We can always trade cans of tuna and cigarettes like they do in prison when the dollar collapses.
Grim @ 42 he argues that one of the reason CA is hurting so badly is that our entire ecomomy shifted to supporting the housing boom.
These riots are not happening just because of the shooting.
Greece is nearly at a standstill anger over government scandals, unemployment and high poverty levels, worsened by the global economic slump.
http://news.yahoo.com/s/nm/20081210/ts_nm/us_greece_unrest
Grim @ 42 he argues that one of the reason CA is hurting so badly is that our entire ecomomy shifted to supporting the housing boom.
The sale of existing homes between parties generates very little real economic growth. Nothing is made here, no value is added, dollars are simply shuffled around. The building a new home creates something (yea, the value is questionable right now). Materials are manufactured, jobs are created, wages are paid, value is added. But the trading of used homes? Little value is actually created here. The only economic impact is the vig taken by the Realtor to facilitate the transaction. But even that is simply a transfer, no value is added there.
Greece is a bellwether for the US, the riots could spread very quickly.
http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2008/12/10/greek_fighting_the_eurozones_weakest_link_starts_to_crack
Sean 41 I really like the “Thingy” on the bill classic.
Grim 31,32,40 you are on a roll. Good stuff.
(4) Grim
http://www.latimes.com/business/la-fi-goldman11-2008nov11,0,1943014.story
uh…”Goldman Sachs Urged Bets Against CA Bonds it Helped Sell”
“Budget crunch forcing layoffs”
How about cutting those fat benefits instead?
How about medical co-pay for union workers? How about working past the age of 45?
(47) Grim – JOBS…..
Cindy,
How’s CA housing market? Are people buying at these prices?
Curious to see if the unions will take concessions instead of layoffs
C…none of the above
They will bitterly complain. Accuse the town of wasting money in stupid areas. Plead to the state for a bailout and will probably ultimately get their way
Another thing that has been eating at me.
The New Jersey Realtors (NJAR) have been campaigning against the NJ Realty Transfer Tax on the grounds that this increased tax is a burden on buyers and sellers of real estate.
What about the 5-6% New Jersey Realtors Tax on the sale of a home? You know, that commission? Are you telling me that the Realty Transfer tax is onerous to sellers, but that god damn commission somehow isn’t?
Dopes.
Houses are selling here, Frank. But we have a very high unemployment rate – last I heard 9.4%. Things may even get worse before they get better…
Our state is “hurtin'”
#40,
No it’s not, we have 15 millions illegal Mexicans that are willing to buy a home and more of them are waiting at the border. Just let them in, they will settle in Detroit or Newark with no problems.
#56,
If you have high unemployment rate then who’s buying the homes? Mexicans?
#55,
Forget NJ Realty Transfer Tax, how about the 6% rip-off commission that the agents are charging to sell homes that people can’t afford. Send all RE agents to jail.
re: Selling bonds and recommending against buying them.
Most large banks have many difference divisions and departments and all of them have chinese firewalls. Banking Laws obligate a bank to completely segregate its securities underwriting business from its deposit taking and loan making activities.
Let’s not let that get in the way of a good story however.
#59 – Isn’t that what I said?
Grim or anyone have you seen any lowering of
commission rate? I would think that in this environment competition should be fierce.
Greece is certainly not a bellwether for the US.
The difference between the two populaces is extreme.
They also have my favorite law ever, the one barring police or military from entering university campuses. It has to be one of the funniest things I have ever seen. My Brother in law is from Greece and he explained this to me six months or so ago and I just couldnt visualize it. Now I can.
The ‘anarchists’ throw molotov cocktails, step over a line in the sand, put their hands on their ears and stick out there toungue’s and can’t get arrested. Its like Tag and having a home base as a kid
Grim or anyone have you seen any lowering of commission rate?
You’ll see the NJEA disband before commission rates are cut.
#61,
Sorry I read it quickly. But you defended it before.
Once again, someone has entered the Twilight Zone. A time-space continuum of a logic circle (cue music) in which only…
CAT increases in value. Destruction to
generate Value.
It obviously brings up the argument of why war follows low economic points.
We can make the assumption that a bubble so large that it encompasses an entire country’s GDP may only be corrected by destruction. Destruction may be the best (least negative) solution in certain circumstances.
Home-sale deals plunge in Phila. area
October’s financial turmoil hit the Philadelphia area’s existing-home market hard, as the agreements of sale signed in the eight counties fell 19.9 percent from September and 32 percent from October 2007.
“September and October’s poor economic news combined with the normally slower fall real estate season create a logjam in pending sales activity,” Steve Storti, senior vice president of Prudential Fox Roach Inc., said yesterday. “Until the credit market unfreezes, regional real estate will be slow.”
FAIL! How about dropping prices. The new Realtor catch phrase: “It’s the credit markets fault. Prices are reasonable at these levels because well you know, Philly is different”.
No TARP for you GMAC!
http://www.bloomberg.com/apps/news?pid=20601087&sid=anoKYq4DGB.Q&refer=home
But, but, but I thought that Philly areas never really participated in the bubble, so that’s why it won’t nosedive?
Who’d a thunk it.
Sorry I read it quickly. But you defended it before.
I defended a wage commensurate with the work performed.
If all I’m doing is presenting an offer, why should I charge any more than a few bps to cover the few hours of legwork it will take? In addition, isn’t it fair that I be compensated to offset the risk I’ll need to bear as an agent of your transaction?
Then again, if I’m asked to babysit you, every weekend for 5 months, showing you 6 dozen houses in 14 towns, being on call 24 hours a day, answering 400 emails, and driving hundreds of miles in the process, I expect to be compensated for it.
Fair? No?
http://www.fresnobee.com/170/story/1065413.html
“Housing might lead Valley back”
some of the article…
“The unemployment rate in the Fresno area could reach 2003 levels as the economic free fall that started with the bust in housing prices spreads into other sectors, a university economist said Tuesday.
The jobless rate in Fresno County could reach 13% when the economy troughs in late 2009, said Jeff Michael, director of University of Pacific Eberhardt School of Business in Stockton.
He called that a “stunning” return of double-digit unemployment rates, but noted they still would be below the rates of the early 1990’s (it reached nearly 16% in Fresno County in October 1995) – and well above the rates of about 7% in 2006. The jobless rate in October climbed to 11.4% from 9.6% in September.
The nine months between October through June will be the most severe part of the downturn, Michael said.
Michael said he was encouraged by increasing home sales, which are fueled by falling home prices and could help the region and state out of the recession earlier.
Sales of existing homes have been climbing over the past several months as falling home prices entice buyers off the sidelines . The 632 houses sold in Fresno and Clovis in October continued a stretch of monthly increases that started in February.
The streak may end in November, Fresno Assoc. of Realtors President Don Scordino said. Tougher credit standards; the widespread use by banks of out-of-town escrow companies, which lengthens the home-buying process and leads to more cancellations; reducing loan limits for FHA mortgage from $362,700 to $276,000; and the early closure of the Fresno County Recorder’s Office last month likely could bring November’s final numbers down.
The final tally could be lower than October even though the number of houses that entered contrac totaled 755. That compares with 274 in October 2007 and 419 in October 2006, Scordino said.
Grim
ON 100% home owner ship,
Home owner ship for low income segments of the population is a break even financial proposition at best and only offers the potential of wealth accumulation during housing booms. The average home price appreciation over time is nearly break even with inflation. So instead of using the increased expenditure associated with owning to fund education of other personal improvement goals the money is going to go an “asset” That is just as likely to lose them money as it is make money.
More generally, as state budgets become strained during an economic crisis, the cost of home ownership is likely to increase more then renting would due to property taxes and other fees.
A healthy rental market is also important to maintain some level of “liquidity” for intermittent home owners. Those who have sold a home but are not prepared to repurchase right away.
Lack of a health rental market (very high home ownership rates) has the potential to greatly reduce overall efficiency of the housing market. In order to reach very high levels you would have to use artificial market forces. A significant number of the people who like n places like Manhattan could never realistically afford to own their residence and it is unlikely to make financial sense for them to do so due to the mobility issue you have already pointed out. The costs of buying and selling a home could/would be a substantial added expense for such a population
One last thought, perhaps already mentioned; abnormally high levels of home ownership would require that some people take on more housing based financial risk then they would otherwise. This is not significantly different from other artificial market influences that tend to fail or be ineffective
I’m always the first agent to suggest cutting commissions (on both sides) to bridge a gap between the buyer and seller.
In every case, without exception, the agent representing the seller turns into an aqua-net combustion fueled, hot pink lipsticked banshee. I’d rather wrestle a banana out of a hungry gorillas hands.
I’ve even had agents suggest that they wouldn’t present my offer if it was based on a reduced commission structure. Sounds a bit like collusion, price fixing and anti-competitive behavior, no?
#71,
Not 6% or 1.5% (agent take), I would say more like 0.25%. Especially since you are paying for professional advice and for most people it has been disastrous. Also RE agents in NJ are the richest people I know of.
meredith whitney on squawk box this morning: “House prices are going back to 2000, at least another 20% down.” Talking heads, “Isn’t that kind of apocalyptic?” Take a look out the window; the apocalypse is nigh.
Maybe the commission part kind of evens out. When we bought a house in Hawaii in 2002, our agent picked me up and drove me around looking at places. For the house we just bought in NJ there were complications with encroachment on the property. Our agent stayed on top of the issues and made the sale go through. Yes, they earn a lot of money but you are getting a service. With a very simple purchase they probably aren’t all that involved.
suspecious package outside goldman at beaver and broad, bomb squad is on way. Only ten and a fun day on the street already
I didn’t realize how prescient my post title was. Good Lord, we are all subprime now.
Hot off the presses (no link).
Moody’s downgrades Jumbo Prime Securitizations
Moody’s Investors Service has downgraded 323 tranches and confirmed 22 tranches from 12 Jumbo transactions issued by Banc of America in 2006 and 2007.
The collateral backing these transactions consists primarily of first-lien, fixed and adjustable-rate, prime Jumbo mortgage loans. The actions are triggered by higher than anticipated rates of delinquency, foreclosure, and REO in the underlying collateral relative to currently available credit enhancement levels. The actions listed below reflect Moody’s revised expected losses on the Jumbo sector announced in a press release on September 18th, and are part of Moody’s on-going review process.
So much for fixed-rate prime.
Isn’t this the kind of junk that fueled purchases in Upper Haughtyville? Weren’t we told that these borrowers were immune?
(69)
Does this mean we’ll see a run on GMAC Bank now?
And even though GMAC is FDIC insured, is it best for one to pull their funds out anyway (assuming they are less than the insurance limit)
I’m not expecting FDIC to run out of money in the short term, but has anyone had accounts in a bank the FDIC has taken over? What is the procedure for getting your money after the bank has entered conservatorship?
nothing in package bomb threat over
GMAC the bank that issues CDs has nothing to do with GMAC that is 51% owned by Cerbus and 49% by GM. The GMAC in trouble is the one trying to be a bank not the part that is already a bank.
[RE agent turns]into an aqua-net combustion fueled, hot pink lipsticked banshee.
Spppppeeeeeeewwwwwwwww.
…sigh. More coffee to clean off the monitor… thanks for the visual, grim!
sl
Joey
http://www.fdic.gov/consumers/banking/facts/index.html
grim, 80 Weren’t we told that these borrowers were immune?
They were. When they still had jobs.
Unemployment. The new black of the season.
sl
HEHEHE Says:
December 10th, 2008 at 7:51 am
Stocks sure are cheap. Look at their PE ratios compared to last year.
Who knows what earnings are in this environment. P/E is not very meaningful, most companies are having problems rolling over debt so even survival is not a given.
I was wondering if we could get a specific link to that face on realtor dot com.
You could sneak it in some other time to avoid lawsuits.
The broker I used to sell my NYC place got $30,000 for essentially a week and a half of part-time work and the cost of one NY Times listing—and that represented cutting his 6% commission to about 4.5% so that I’d take a lower offer from buyers without their own broker. I know I wouldn’t have done nearly as well without a broker, but still….
If lawyers can manage to bill in 10-minute segments, so can real estate brokers.
Unemployment. The new black of the season.
Thought that pink was the new black.
Who knows what earnings are in this environment. P/E is not very meaningful, most companies are having problems rolling over debt so even survival is not a given.
I was always under the impression that a company needed to have an E for the P/E to be meaningful. Not sure though, but my calculator keep crashing with this odd “Divide by zero failure” error when I try to calculate a few.
Answer : Never
Question: What the number of times before yesterday the US government was able to issue bills at zero yield
If this doesn’t indicate the markets are a mess I’m not sure what will
I’ve noticed in my parents McMansion neighborhood, about a new house for sale each week. I seriously doubt they are trying to cash out. When one of the houses sold for 1 million in early 2007, that was the time I would figure they would all jump at the gun to sell if they were going to. I have a big feeling that a lot of these people are in severe danger of defaulting. What I find funny is that I have a feeling I would get a nice graph that traces the case schiller index just by tracking the number of German Automobiles in the neighborhood.
re: #87 Bingo give that man a prize. The Banksters have been advising their clients to follow CDS spreads, and ignore the fundementals.
Average joe trader, cannot buy a ticket that that game since there is a $100 million capitalization requirement to play in CDS sandbox.
Ignore the fundementals, so far the spreads are only widening and everyone is getting out of the pool.
Last one out of the market shut off the lights.
Pat and John,
Thanks for the info
Sean #48
Americans are too lazy to riot… rioting will be outsourced to China and India.
(DealBreaker is starting to feel alot like F*cked Company for those who took part in the dot com bust).
From DealBreaker:
Layoffs Watch ’08: CS
Previously announced cuts at Credit Suisse began yesterday and are expected to continue today, with the investment bank being hit hardest. Apparently the mood is “like a funeral” this morning
Seneca,
Americans will probably even better at rioting. Most countries riot because they are starving. We have riots over Ipods and Xboxes.
funny:
http://img369.imageshack.us/img369/6012/bailoutyk2.jpg
Interactive listing of TARP recipients:
http://online.wsj.com/public/resources/documents/st_BANKMONEY_20081027.html
Gator-
On the NFL from Philly.com-
NFL commissioner Roger Goodell yesterday took time out from suspending druggies and gun nuts to announce that the richest sport in world history will lay off more than 10 percent of its staff in response to the still-developing economic downturn.
The NFL is eliminating about 150 of its staff of 1,100, including some of the nice folks employed at NFL Films in Mount Laurel, N.J.
Pat,
In Re Philly. I called this issue a couple of months back when yoy sales were down close to 30%.
“The city has collected $88.6 million in real estate transfer taxes so far this fiscal year, more than $28 million less than last year. The numbers are so anemic that Dubow and Nutter fear the city will not even meet its revised austerity budget figures.”
Sean Says:
December 10th, 2008 at 9:11 am
Greece is a bellwether for the US, the riots could spread very quickly.
They were a bellwether for democracy. Maybe it seems far fetched but wait until millions of Joe 6 packs here realize that the US is broke and the boom years were fueled by credit. How many years of a declining standard of living will it take for something like that to occur here?
I feel like the movie Groundhog Day.
Layoffs and bad news every day with nobody offering any real solutions. Bloomberg.com’s headline is always ‘Stocks Up” followed by six links to bad news.
Peace #89
… how much should the agent earn for putting this listing together?
http://newmls.gsmls.com/public/show_public_report_rpt.do?method=getData&sysid=%203900977&ptype=RES&report=res_media&pubid=256043&pubid=256043&fromPublic=PUBLIC&app=public
Take special note of the photo at the top right listed as “bath” and described as “all new”. Yes, I think most modern bathrooms are done in pink ceramic with rust stains and coordinated rotting formica countertops.
I am not saying this is criminal but is there NO policing at all of agent listings by brokers or the NJAR?
The Philly story about home sales is similar to one of the problems that the new government-owned GM is going to face.
Nobody is buying anything these days that requires a loan.
I can’t see how the big three can survive without forced BK to shed waste.
There needs to be more of a tiered structure on agent commissions. Also, they should legalize commission rebates in NJ.
I found our place myself online, contacted a realtor I once used, he put in an offer, we got it, he did some paperwork and we were done. A 5 digit commission for a few hours work. As a buyer, there wasn’t much to negotiate. Why am I paying just as much as someone who needs their hand held and shows 10 placed a weekend for 6 months?
D2B(101):
“Bloomberg.com’s headline is always ‘Stocks Up’ followed by six links to bad news.”
Best indicator of a shorting opportunity that I know of. This and the fact that world governments think that borrowing against the future (leverage) to pay for stimulus will somehow re-inflate the pseudo growth through credit bubble. The more I’m reading, the more I feel economic stimulus will be value negative to an economic turnaround. You don’t solve a credit problem by issuing more of it!
As a buyer, there wasn’t much to negotiate.
Sure there is, you could have attempted to negotiate a lower buy-side commission resulting in a lower net price paid by you based on that offset. Seller would have taken a lower price, but would also be paying less commission. Or, you could have asked to compensate your agent directly, and have him waive his seller-paid commission. Reduce the offer price by the buy-side commission amount and pay the agent directly after the sale closes.
Since most listings expire unsold, prices continue to fall and since most sellers don’t become realistic about their price until after the listing expires and no one has bought the house unless it is a distress sale why even bother with the realtor. If you see a house you like but it is priced a bit high just go to propertyshark get the owners address and number and call him or write him a letter and wish him and the realtor good luck and best wishes on the sale of the home, but if it exprires you would greatly appreciate it if the owner can contact you directly so you can see if you can buy it. By that time if it is still available the owner will have cut his price 10-20% and you have the 6% commission off the table. In a falling marker realtors are great for estate sales, short sales, transfers, bankruptcies, but the dream house you want where the seller has an unrealistic price you are better off not wasting anyone’s time by even contacting the realtor. Just let it expire and when the seller has his “found Jesus” moment buy it from him directly.
Seneca (102):
I like the look of the newly unplanted bush placed in the front yard with the burlap bag still wrapped around the roots. The chipped laminate on the bathroom vanity is a nice touch as well.
Who the hell doesn’t make cosmetic improvements when trying to sell their home in this economy? Are people smoking crack?
#107 – Fantastic advice
Grim is the Anti-Realtor!
Trader 100
How many years of a declining standard of living will it take for something like that to occur here?
Depends on how DHS uses the 20,000 Northcom troops planned for 2011.
It should be interesting. Iraq and Afghanistan have shown that modern armies can be very vulnerable to guerrilla tactics by civilian populations.
Who wants to be an enemy combatant?
clot and realtors, can you help me decipher this?
quick backstory: Went to open house sunday. liked the place. an agent we’ve been working with met us there and told us the sellers were moving because they found a short sale they liked, and were going to be moving by month’s end, but they didn’t mind carrying for a few months until they got their price.
i asked the seller’s agent about the washer/dryer and she actually said, “everything is negotiable.”
today, i get this email from the agent we’ve been working with:
is it possible that maybe the whole short sale thing was bogus, and these people are in over their head and need to sell ASAP? what’s the best strategy on finding out what their current mortgage situation is?
as a point of ref, the house next door sold for 600k in oct 2006, and it had 1 more bathroom but was the exact same size. these sellers are asking 600k, but we want to offer 525k.
ps – this is in bucks county
Cindy (50)-
Classic GS. Classic bucket shop.
Trader 100
Then again Greece doesnt have the ADS system…
Clusterstock:
Black Hole AIG Needs Another $10 Billion
http://finance.yahoo.com/tech-ticker/article/142790/Black-Hole-AIG-Needs-Another-10-Billion?tickers=aig,gs
“but it’s also stuck $10 billion on what were just bad bets, not necessarily designed to help clients manage risk. “
112 yikes
cant you go to the local municipality and pull the public records? that should show what sort of debt level they face and give you a ballpark idea
yikes-
Interesting that they are buying a short sale presumably at a discount and want to hold out for their price.
You sent a link to that house and it is in a great area, but I was unsure if that was a busy street.
75k is a huge haircut and it probably will not work. It would be a great shot across the bow.
kettle-
HELOC’s show up as liens for the full amount so debt level is deceiving. However most HELOC’s are in even numbers. It’s hard to tell if the HELOC has a balance.
Mike (62)-
On short sales (which is pretty much all I do), I long ago raised my fee way beyond 6%.
I’ll negotiate down to 6% with a bank that doesn’t make my life miserable, but these lenders frankly have two choices:
1. Foreclose, and take the maximum possible loss.
2. Accept a short sale, and mitigate potential losses by paying me to execute a non-judicial solution.
Banks can suck it. Deadbeat homedebtors can suck it. And Frank, you can suck it, too.
I just took a look at the new MRIS numbers for Bowie MD (20715).
Sales
November05 61
November06 28
November07 18
November08 7
Sales have absolutely plummetted. Average and Median house prices have risen slightly (only high end homes are selling). Two homes sold for under 300,000$ even though there were 45 listings.
Number of months of inventory skyrocketed to 24.5 from 9.5.
I have said before, this winter will be brutal for sellers.
Sales volume ($$) for Bowie MD is down 68% over last year.
Bowie MD is a suburb that sits right outside of Washington DC and Baltimore MD.
STu
The US Gov is like a circus plate juggler. How many plates can it hold up at once? AIG has way to much counter party exposure for them to go under with our potentially disastrous consequences of forcing a large # of parties to settle up CDS contracts when they dont have the cash to do so.
AIG
Big 3 (Only a matter of time)
JPMorgan
Citi
BOA
Capital 1
wells fargo
GS
PNC
US Bank
Debt monitizarion
…….
thats a lot of plates
oh and now a negative rate on treasuries?
problem with assessing what is “full” homeownership is that homeownership levels vary across countries and have changed within the U.S. as tax, regulatory and financial conditions have changed. Best you can do, I think it to posit a range within which full homeownership might lie. But range might be big enough that it wouldn’t be too helpful in determining whether there was excess homeownership (e.g., homeownership only went up by 5% during the bubble).
kettle1 Says:
December 10th, 2008 at 11:00 am
112 yikes
cant you go to the local municipality and pull the public records? that should show what sort of debt level they face and give you a ballpark idea
thanks for this.
My realtor did get the price down $95,000 from the asking price on the place we just bought. That was worth something and I was happy about it. That being said they do earn a pretty hefty sum for the actual amount of work put in.
yikes (112)-
My gut tells me that they are telling you the truth. Banks are much more open to short sales these days, and when written short sale approvals are generated, the parties are given a very narrow window of time in which to close. If the sale isn’t closed in that window, it will not be accepted by the bank.
“Americans are too lazy to riot… rioting will be outsourced to China and India.”
LMAO
yikes (112)-
OTOH…I wouldn’t let any of that influence your offer, should you choose to make one.
“but it’s also stuck $10 billion on what were just bad bets, not necessarily designed to help clients manage risk.”
As Grim said, it all depends on how much work the realtor is forced to put into the sale. During the housing bubble, realtors were making quite the pretty penny. Today, they are luck to even make a penny. There is nothing keeping you from selling or buying without the assistance of a professional. It’s their knowledge and experience that should help both parties mitigate their risk. When you go it alone, the risk is all yours. And from a personal standpoint, I don’t see all that many wealthy realtors around anymore.
Wow, how did that quote get in there. Sorry ’bout that! :-(
Are zero-yield treasuries the indirect result of Joe Sixpack moving money out of stocks (or any other risky asset/security) and into money market funds (or lesser risk security)?
Directly, its hard to understand why the heck an investor would settle for essentially zero yield. Convincing arguments can be made for a “flight to safety” situation, or perhaps significantly low inflation expectations.
But maybe this isn’t a direct phenomenon. Joe Sixpack cashes out of his investments, and deposits his cash into a money market. Money market doesn’t want to hold cash, so it goes out and purchases additional positions in already held positions. Some of that is short-term treasuries, so it buys, despite the high price/low yield. I suppose the same would apply for other “safe” mutual funds with large short-term treasury positions.
I’ve got to say, this phenomenon seems much more palatable when looked at from the indirect perspective. I wouldn’t buy short-term Treasuries at this level, but I did add some additional funds to a money markets and CDs lately.
Quote of the day
“Americans are too lazy to riot… rioting will be outsourced to China and India.”
what about mexicans? would they riot for a cut rate?
mexicans are busy in palisades park
Report from hinterlands: (stolen from WWFB :)
Haven’t got a contract (yet), working out the language of various clauses, paragraphs and subparagraphs…the lawyers must eat, you know!
The bank is working me over. I’m living on xanax (see Gary’s posts) and red bulls. This cannot be good for long term health.
I’ve just had my life insurance physical. I have to have life insurance for at LEAST the amount of the mortgage. (See posts about recourse; just ‘cuz yer dead don’t mean you off da’ hook)
Funding is toast. No banks call you back. no Credit Unions, not the SBD, the state, no one…
And I got a seller who wants to close “quick” because he wants to leave for Florida.
Must be nice to be living with ones head up ones arsehole.
what about mexicans? would they riot for a cut rate?
Mexico rioted over tortilla prices.
#112
Yikes– I would say you should bid what you think the place is worth and ignore the sellers’ circumstances. I doubt you could get the whole truth regarding them no matter how hard you try. Above all, I would not allow anybody to try to create a sense of urgency with respect to this house. You have time on your side and there will be many other nice houses within the next 3-4 months.
grim,
Serious question: How is that not a flight to safety by proxy?
———————————–
non-farm payroll for the last 10 yrs
http://www.icharts.net/portal/app?service=external&sp=Y3nbzS4=&page=Chartdetail
REAL ESTATE INVESTORS want our real estate value back! We want our equity lines and credit cards back! We want our car leases back!
These are not WANTS BUT DEMANDS and if we don’t get this stuff, WE WILL RIOT. If you think the riots in Greece are bad, just wait until you’re dealing with angry real estate investors. YOU DON’T TAKE AWAY MY PUNCH BOWL AND THINK I’M OKAY WITH IT!!!
I interviewed brokers for about a month before I picked the one I used. One of the things that amazed me was that none of them suggested making any cosmetic improvements, and I knew the place badly needed them. For instance, there was wallpaper in the bedroom and the kitchen was crying out for an island. When I told them I intended to take care of these things before putting the place on the market, they looked at me like I was crazy. Granted, ’05 in Tribeca was a very hot market, but I would’ve thought they’d realize I was planning to make their job a lot easier. I was also amazed at the disparity in suggested listing prices, which differed by $200,000.
The photos in that listing Seneca posted made me dizzy. Clearly part of broker training should include photography lessons from any random 12-year-old.
#122
also, 525k does not seem like an outlandish lowball on a 600k asking price. You need some cushion if you are going to buy now as I think it seems pretty obvious that house prices will be down another 10-15% by the end of 2009. Not saying you will necessarily get the house with a serious lowball, but I feel like the downside risk is greater than losing any particular house right now.
tard (138)-
It’s going to be very hard to start a riot with no one to help you.
And it really sounds as though what you want to start is not so much a riot, but a tantrum.
Good luck on that.
“Then again, if I’m asked to babysit you, every weekend for 5 months, showing you 6 dozen houses in 14 towns, being on call 24 hours a day, answering 400 emails, and driving hundreds of miles in the process, I expect to be compensated for it. ”
Fair? No?
—> Nice analogy, lets look at the numbers:
6% on $400K = $24,000K Commission
72 Houses Shown = $334 per house
1K miles = $24 per mile
400 emails = $60 per email
I feel your pain.
You claim you “baby sit” & “expect to be compensated” for it. Your in sales & provide a service, learn how to be professional, ask the right questions, shut up, be nice & learn to smile. Its a numbers game & always will be.
How many of your sales were through referrals? My guess is less than 3% based on your comments.
Think about it ~ I DON’T NEED YOU TO BUY A HOUSE at the end of the day.
However, you need a buyer to even have a slight chance of making any kind of money. Your selling a commodity. You have lot to learn… Maybe you should try selling auto, retail or ice to an eskimo.
“Are zero-yield treasuries the indirect result of Joe Sixpack moving money out of stocks (or any other risky asset/security) and into money market funds (or lesser risk security)?”
From what I’ve been hearing, the banks are buying the zero yield short-term treasuries as it was a secret part of the deal when they became involuntarily involved in the TARP.
“The White House confirmed that it has reached an agreement with congressional Democrats on an $15 billion aid package for U.S. automakers. The White House called the aid either a bridge to viability or a bridge to bankruptcy.
The deal depends on the automakers having a plan in place that shows long-term viability by March 31. If the companies are unable to prove their long-term viability, the government will ask for its money back and the automakers will likely have to enter bankruptcy protection.”
Ask for its money back? WE ARE DOOMED!!!
And don’t forget to pick up your free slice of bread as you head to the exits.
unmoderate me pls, grim…
and WTF is whith that math in 143?
24K? Seriously?
Dude, an agent gets 1/2 of 3%, or 6K…
Each side splits the 6K (each gets 3%) then each agent splits it with their broker, so it gets halved again…(AFAIK…)
if you are a viable buyer right now you are calling the shots in any real estate transaction whether the seller or agents want to admit it or not. They can chose to work with you on your terms or wait around for the next bidder who may or may not come. And every month that a seller waits is more money out of their pocket in terms of price depreciation, property taxes and maintenance. Not to mention all of the lost time and effort involved in showing your house. For agents it is even worse if you walk– when is the next time they are likely to get paid? It is going to be a very rough few months for these people until we get to next spring at which point I think things will get better for the agents but not for the sellers. If you are seriously looking right now bid very low and always be willing to walk. The risk is almost totally on the other side.
oh, then the 6K is taxed as self employed (1099’d if IIRC) so you pay ABOUT 50% in taxes, so you walk away with $3000.00
You need 2 a month to hold a decent job.
Or you can spend 80 hours for one buyer…
146: correction:
Each side splits the 6K (each gets 3%)
s/b: Each side splits the 24K (each gets 3%)
—> Nice analogy, lets look at the numbers:
6% on $400K = $24,000K Commission
72 Houses Shown = $334 per house
1K miles = $24 per mile
400 emails = $60 per email
Play Fair
2.5% on $400k (I don’t control what the other side makes) = $10,000 of which some portion goes to my broker. Lets say 50%, that leaves me with $5,000 commission on $400k.
72 houses shown @ $24 per showing = $1728
1k miles @ $1.65 per mile = $1650
400 emails @ $4.10 per email = $1640
Total that up, $5,000 commission.
And I’m not even factoring in the time associated with setting up appointments, negotiations, failed offers, successful offers, arranging inspections, etc.
Now factor in my overhead, and Uncle Sam.
How about covering the losses I take from buyers who flake after I put in the time?
PotentialBuyer probably uses corncobs.
Bailing out CDS contracts is the equivalent of bailing out Casino gambling losses.
#149,
How about the rest of us that don’t get paid for miles, emails, appointments etc… just a salary? Welcome to planet earth.
China’s Exports Fall for First Time in 7 Years as Demand Slumps
China’s exports fell for the first time in seven years as a world recession slashed demand, adding pressure for more measures to sustain growth in the world’s fourth-biggest economy. Exports declined 2.2 percent in November from a year earlier after gaining 19.2 percent in October, the customs bureau said in a statement on its Web site today. The median forecast of 14 economists in a Bloomberg News survey was for a 14.8 percent gain.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2v.AWwaVpj8
who’s the genius who came up with the decoupling concept?
confused,
and what has the government been doing with the trillions it has spent so far?
black or red?
More from Fuc… err… Dealbreaker:
Layoffs Watch ’08: Goldman Sachs
Cuts at Goldman, on top of the previously announced ten percent, which were rumored to be planned for January, have supposedly been moved up to right this second. Stay tuned.
“black or red?”
Those are 95% odds. I like them a lot better than the odds of us ever getting paid back on the TARP.
Grim,
Some thoughts on homeownership rates.
1. Lack of liquidity in home sales is a result of an inefficient market. Some of this inefficiency may be on purpose.
2. If there were no additional cost to buying and selling a home then liquidity of homeownership should be equivalent or better then rental units.
With these two additional thoughts we can see that by increasing the efficiency of our matching sites, MLS, and reducing the barriers to liquidity, RE agent fees, then it is possible to increase homeownership rates without impacting the issues that you raised.
StillLooking,
I may be wrong about the property on Paramus Rd. In rereading the article they talk about a property on the EAST side of Rt. 17 called the Schedler property. I’m trying to find out more info.
Sorry for the misinformation.
Rich
“who’s the genius who came up with the decoupling concept?”
– Peter Schiff
question – all that news about 4.5% rates last week … what happened to it?
i just went to bankrate and i dont see 4.5 anywhere. i just searched the philly area and i see only ONE rate under 5.5
http://www.bankrate.com/brm/rate/mtg_ratehome.asp?params=165000,PA,10&product=1&points=1&pType=f&refi=0&pct=0
skep – very good points above. thanks. our 75k lowball we feel gives us a cushion for when things go sour in 2009 and 2010.
Frank-
Why don’t you become a Realtor if you think that it is so lucrative?
“Why don’t you become a Realtor if you think that it is so lucrative?”
And leave his janitorial position?
grim @ 9:16am, 9:43am:
Sounds like a simple solution would resolve things: pay realtors by the hour.
$30/per hour sounds about right given the level of education and experience required.
There appears to be some confusion over a real estate agents appearance and their financial position.
Realize that few buyers would use an agent who doesn’t, at some level, demonstrate the wealth that would be expected from someone successful in that position. Nothing new here, the same exists in many fields.
There is a bit of a catch 22 here, you need to be successful to be successful. So how do agents get around this? They drive expensive leased cars, dress well, and wear flashy jewelry and watches, etc. Its a show, its the way the game is played. Same reason why successful offices are in flashy buildings and well decorated. Just part of the cost of doing business. Hasn’t Zig been saying this since the 70s?
Above a certain level in the market, this is expected. Nobody is going to trust an agent in a rusty Sable with their $1m transaction, period.
So what do you end up with? A group of people desperately trying to appear much wealthier than they really are. Stop confusing the two.
GS Cuts were moved awhile ago. Normally as a BD GS has a 11/30 YE so layoffs usually stop by then, however they are moving to a 12/31 YE to have a standard bank calender YE. Good News even though they are running dual YEs in their GL, right now and 11/30 is the cut off for now they can still jam some bodies out the door right now and when they switch over to 12/31 next year they can get those bodies off the book in an 2008 period and not an 2009 period.
Joey at 10:11am wrote:
“I’m not expecting FDIC to run out of money in the short term, but has anyone had accounts in a bank the FDIC has taken over? What is the procedure for getting your money after the bank has entered conservatorship?”
FDIC takes bank over on Friday, you can withdraw your money (up to FDIC limit, normally $100K, but $250K through 2009) on Monday.
142-Potential Buyer, definitely stupid…
Let’s work off a %5 commission as it’s closer to the average:
%5 on 400k= $20000
1st split- %2.5 $10000
in house split – %1.25 $5000
agent gross 5k
from that take %30 for taxes and your at 3k.
Still sounds like a lot? don’t forget health insurance, errors and omissions, MLS fees, national association fee’s, state association fee’s, car insurance & that’s just for starters. Point being- get the fax before you post or risk being labeled as a re re… is it too late?
sorry last post was to #146
Vic,
makes sense,
he is a big fan of asia in this mess.
ahhhh. the 4.5% mortgage rates plan is not yet in effect.
doesnt look like the fed has a date yet in mind. bummer.
Now its a party! Who invited the neighbors?
Biotechnology Companies Get Their Turn in Line for Federal Aid
U.S. biotechnology executives are lobbying Congress to change a tax law and provide millions of dollars in government money to small, cash-starved drugmakers that comprise most of the industry.
potential (146)-
Who let you out of the idiot house?
Please go back.
Good RE agents do not render “service”. “Service” has no value.
A good RE agent is paid to deliver a result. If an RE agent delivers no result, the client is the fool for engaging him.
#148 Stu: the government will ask for its money back and the automakers will likely have to enter bankruptcy protection.”
Won’t they have spent most of the money by March 31?
I think the thing that gets people bent out of shape about RE commissions is that they are done on a percentage basis. So in 2001, the agent was doing the same job for roughly half the pay as now. But I agree it is still not very lucrative for all but the most successful agents
3b:
That money was spent yesterday!
spam (149)-
Mr. Potential @ #146 also seems to believe that there are no costs of sales or expenses involved in RE brokerage.
6% of every transaction- as 100% pure profit- into the hands of listing agents. Like a license to print money.
Potential, if I ever made that kind of jack, you’d have never seen me make a single post here…ever. I’d have been in Tiera del Fuego long ago.
People like this are TSTL.
#164 Yikes:question – all that news about 4.5% rates last week … what happened to it?
It is a proposal at this point;nothing has been done yet.
Frank (156)-
Whatever it is you’re paid, you’re overpaid.
Lackey.
TSTL? im laughing and I don’t know what it means
basically everyone in america is overpaid except for the illegal aliens
kettle1 Says:
December 10th, 2008 at 12:37 pm
Now its a party! Who invited the neighbors?
Biotechnology Companies Get Their Turn in Line for Federal Aid
U.S. biotechnology executives are lobbying Congress to change a tax law and provide millions of dollars in government money to small, cash-starved drugmakers that comprise most of the industry.
Finally us, Chemists/biologists get some of the bail-out money!!!!
Grim – do you remember our conversation the other day when you said that chemists need stronger lobby???
Funny how this blog works!!!!
yikes (164)-
“question – all that news about 4.5% rates last week … what happened to it?”
Yikes, I honestly hope somebody at Phony, Fraudy or DOT figured out that the purchase of MBS required to drag rates down into this range are not only not feasible, but would be unsustainable even if it were feasible.
Just more happy talk and trial balloons from your friends at FEDCO…wishing you and yours the merriest of holiday seasons!
It is a proposal at this point;nothing has been done yet.
The NY Fed purchased outright $5b of agency coupon last Friday.
Vic (166)-
From some of Frank’s earliest posts, I can assure you that he couldn’t pass the math portion of the NJ salesperson exam.
And question #1 is: do your knuckles scrape the ground when you walk?
“Still sounds like a lot? don’t forget health insurance, errors and omissions, MLS fees, national association fee’s, state association fee’s, car insurance & that’s just for starters.”
I laugh a little inside when RE agents try to justify how hard their lives are citing MLS Fees, NAR Fees, State Assocciation Fees.
First, I took 5 classes a symester (twice yearly) for four years where each class required 200$ worth of books and materials. Yes, 2000$ per year in books alone. Lets count up the cost of not getting paid for 4 years while you shell out the bucks for classes.
I cry no tears and cut RE agents on profession costs.
Cost of taxes, healthcare, childcare or other generic cost which everyone pays regardless of their line of work is almost certainly irrelevant.
grim (169)-
Stop making sense.
Perhaps Qwerty, Potential and some others here would refer to buy a house and use a bank teller to do the deal.
That’s what the banks would like.
#188 grim: I stand corrected. However, at this point I have not seen any advertised 4.50 mtg rates.
Median net income (after taxes and expenses) for NJ Agents/Brokers in 2007 was $25,500.
http://njar.com/research_statistics/pdf/2008NJMemberProfileSummary.pdf
Only 12% were making more than $100k per year, the majority of those having more than 6 years experience. Over $200k was almost exclusively made up of 16 years+ experience.
Median income for those 3-5 years was $28,800. You need to go all the way up to 16+ years experience before you see a $70k median net income.
Those guys are rolling in dough.
#75 Grim, Clotpoll and anyone else qualified to speak about real estate law –
Is a realtor legally obligated to present all offers to the seller?
However, at this point I have not seen any advertised 4.50 mtg rates.
Didn’t work, rates went up.
I named a first without declaring a second.
“I cry no tears and cut RE agents on profession costs.”
I cry no tears and cut RE agents no slack on profession costs.
Man my grammar is going down the toilet.
coop (184)-
TSTL= too stupid to live
Grim:
That was an excellent analysis of the effects of homeownership on the general economy. You should probably develop those ideas further and make it a separate post by itself.
wallies (195)-
Yes. No exceptions.
The thing I don’t like about realtors is I don’t mind if a buyers broker is some crusty old guy or gal as long as they get me a great deal, I am more than happy to pay. But for the type that is just taking me in the car to look at houses, that is almost like the limo at scores, it is a professional service, there should be hot looking girls and guys serving drinks and flirting with the customers. That would be worth it, plus if they wanted to make the bigger bucks they need to earn their commission in the champaign room.
Grim,
Lets do a comparison to another profession. Lets say, a doctor.
When do doctors reach the break even point when the amount of money they spent on education equals the amount that they made?
Nick (190)-
Not looking for slack to be cut…or the public’s tears.
Not looking for your understanding, even.
Your profession- and its output- have been commoditized. Mine hasn’t.
John (201)-
Would the champaign [sic] rooms have to have crush valor seats?
Those things are damn hard to clean.
Lots of REITS rising from the dead.
Lets do a comparison to another profession. Lets say, a doctor.
Flawed comparison, pick a sales-based profession with a commission-based compensation structure.
vic (205)-
See “Bernie’s, Weekend At”.
I smell a few too many folks here right now who have a bias against anyone who is well-compensated for selling things.
Off to swindle a few little old ladies. Back later.
“Off to swindle a few little old ladies. Back later.”
Stay away from my grandmother, unless you are willing to spend some time with her in the champagne room.
I’m not comparing type of work I’m using that profession to make a point.
The point is that barriers to becomming a RE agent are very low. This is the main reason why you have such low pay early on.
The reality is that someone who is in the first 4 years of their profession when they didn’t go to a lengthy professional school is really in an intern position. Intern’s get paid typically a fraction of their counterparts in order to get OJT.
The same applies in any discipline regardless of whether they are sales based or not. I may be looking at the issue wrong, perhaps you could help me to understand why this type of comparison is flawed?
“Grim,
Lets do a comparison to another profession. Lets say, a doctor.
When do doctors reach the break even point when the amount of money they spent on education equals the amount that they made?”
I’ll tell you this. About 5 years ago, I was going to go to medical school. After seeing the sky high tuition they were charging, I decided to not go. I have a few friends who started their residency that expect to make no real money because of the debt they took on to go school.
there are obviously realtors who provide huge value relative to what they get paid. Someone who has a lot of experience doing short sales, for example. But a large percentage of agents seem to be nothing more than tour guides.
I do not understand why the competant agents accept this– I would think there would be a push to get higher accreditation standards, esp in a time like now where a lot of people are chasing few commissions, or at least have diff’t level of accreditation, like for example you could have a master-level accreditation that requires more training/ tougher exam.
On a practical level, a lot of times it doesn’t really matter what you think as a buyer or seller in terms of the agent’s worth since in a lot of towns one agency basically has the market locked up and you essentially have to go through them if you want access to the best listings / buyers
Regarding median net income of RE Agents. Take the part-timers out of the equation and how does that change the median? Half the agents I know have other jobs.
If half the people at my current place of employment had other jobs, I doubt they would be very successful at either one.
Clot,
If I mis-represented myself as a realtor hater, I apologize.
I have used RE agents in the past and will continue to use them in the future. They provide a necessary service and bring order to a generally chaotic market.
I do not mind paying someone for services, but the trend that I have noticed lately is that there are too many wolves and not enough grandmothers in the RE agent buisness. There are entirely too many RE agents with little or no real experience.
It probably has a lot to do with declining sales. But no matter what brought on the change in RE agent behavoir it has become dangerous to walk blindly into a RE agents office unprepared.
This was posted on a blog from http://www.trulia.com:
“In addition to everything else, a For Sale By Owner has to be concerned with safety. Now, there are some who will say that is just a Realtor’s scare tactic. Well, I can assure you that a person’s over all safety is definitely not a scare tactic. A For Sale By Owner basically gets a for sale sign and then places an ad in the local newspaper and then opens their door to every stranger in the area and beyond. We are taught as children NOT to talk to strangers but then when we get older and own a home, that very important piece of advice goes right out the window. Opening your door to someone you know nothing about is not safe for anyone not just For Sale By Owners. So, to the nay sayers, I say no amount of money is worth risking you or your family’s safety.”
This RE agent is trying to convince readers that there are “strangers” hiding in the shadows preying upon people who list their house as FSBO. If an adult is afraid of “strangers” then they need to seek competent medial help.
I agree with skep-tic that higher accreditation standards might help bar entry to sub-par people.
grim Says:
December 10th, 2008 at 9:43 am
Sorry I read it quickly. But you defended it before.
I defended a wage commensurate with the work performed.
If all I’m doing is presenting an offer, why should I charge any more than a few bps to cover the few hours of legwork it will take? In addition, isn’t it fair that I be compensated to offset the risk I’ll need to bear as an agent of your transaction?
Then again, if I’m asked to babysit you, every weekend for 5 months, showing you 6 dozen houses in 14 towns, being on call 24 hours a day, answering 400 emails, and driving hundreds of miles in the process, I expect to be compensated for it.
Fair? No?
grim: You also need to embed the cost of the time you spend on all the people that you provide the same support and do not transact. Further the time you spend to build and maintain expertise.
What about mortgage broker commissions?
Those run as high as real estate agent commissions.
How about title insurance? Nobody up in arms over the biggest scam going in RE today?
There are lots of hands in this pot.
Hell, even the State has its hand out.
SOV being picked up buy Banco Santander subsidized by FED. We are picking up the tab for a Spanish bank to buy out our own.
What’s wrong with this picture?
Chicagofinance,
In most beginner sales courses they will teach you how to guage the level of interest or necessity that a client shows. A good salesman will be able to tell within the first meeting whether or not you are going to purchase something. There are generally a set of questions that you can ask your client in order to determine if a sale is going to happen. One may be “how soon do you plan on buying a house?”, “what has changed for you in the last few months that makes you want to buy a house now, perhaps a little one is on the way?”
Depending on how these questions are answered you can put a “sale thermometer” on your client. Failing to do this right results in countless hours spent on driving uncommitting buyers around to houses, a waste of your time and money. Perhaps this is the OJT that I was referring to earlier?
I spend countless hours reading books to remain relevant in my job. I cannot think of an industry that doesn’t have this need. The time spent in personal development goes unpaid.
What the heck are you talkling about, Banco Santandar bought Sov straight up at the request of the Fed to help them avoid going under. Banco Standar did not get any cash in the deal.
make money Says:
December 10th, 2008 at 1:52 pm
SOV being picked up buy Banco Santander subsidized by FED. We are picking up the tab for a Spanish bank to buy out our own.
What’s wrong with this picture?
Latex and squeegees in case the amatuers leak
Clotpoll Says:
December 10th, 2008 at 1:09 pm
John (201)-
Would the champaign [sic] rooms have to have crush valor seats?
Those things are damn hard to clean.
has this been posted?
People falling behind on their mortgage on purpose. i’d NEVER tell someone to do that
lol
http://www.usatoday.com/money/perfi/housing/2008-12-09-homeowners-late-mortgage_N.htm
Can’t make this stuff up folks seems blogs are becoming more and more influential, as the regular print media is going bankrupt.
Our Lawmakers down in DC must have staff that read blogs.
Mel Watt Democrat from North Carolina to Kneel Kashkari today
“IS GOLDMAN SACHS RUNNING THIS COUNTRY?”
Nicholas Says:
December 10th, 2008 at 1:53 pm
Chicagofinance,
I spend countless hours reading books to remain relevant in my job. I cannot think of an industry that doesn’t have this need. The time spent in personal development goes unpaid.
N: If you are salaried…fine. If you are commission-based, then such “development” costs need to be ammortized across you revenue stream……..agreed?
The market has cratered
any of you SRS/SKF guys messed around with
SSO
or
SDS
?
#216 grim: Why do you consider title insurance to be a scam?
What the heck are you talkling about, Banco Santandar bought Sov straight up at the request of the Fed to help them avoid going under. Banco Standar did not get any cash in the deal.
John,
Do you really think that Santander folks are stupid? Do you really believe that they didn’t squeze money or backstops on this.
From what you’re saying above, fed asked them nicely to buy a bankrupt business and they showed up with cash!!!
Also to Kash n Carry.
Rep. Spencer Bachus (R., Ala.)
I wonder what [Treasury] Secretary [Henry] Paulson and Mr. Kashkari, back when they were still working for Goldman Sachs, would ever agree to a deal where billions of dollars changed hands based on a two-page application, without asking what the money was going to be used for or whether it was going to be paid back.
#216
“What about mortgage broker commissions?
Those run as high as real estate agent commissions.
How about title insurance? Nobody up in arms over the biggest scam going in RE today?
There are lots of hands in this pot.
Hell, even the State has its hand out.”
*********
Grim, you are totally right and these transaction costs up and down the line are a big reason why real estate is so non-liquid right now.
For example, FHA loans which are now a huge share of the market require 3.5% down (starting Jan. 1). In reality, with transaction costs included (not including realtor’s commission), the amount up front needed to buy is closer to 6%. Huge difference between 0% up front which existed up until 18 months ago and 6%.
I can understand the bankers’ origination fee since they are risking capital. Title insurance is way overpriced relative to the risk. RE transfer taxes are ridiculous and I think realtors are right to fight these. There are always going to be transaction costs but the amount attached to a relatively simple residential real estate transaction in most cases is simply out of control. Gets close to 10% of property value in many cases when you add everything up
chicagofinance,
Excuse my ignorance in this area. How is it fine if you are salaried?
Amoritization across your revenue stream when looking at year end numbers is equivalent to doing the same if your salaried?
You make 50k per year commission, I make 50k per year salaried. I spend 100 hours reading development books outside of work hours, you spend 100 hours reading development books. I’m not sure how amoritizing across revenue stream would be relevant.
Make Money, yep they did. I worked at Independence Savings banks as a management Trainee and bought into the IPO at 10 that later got bought by SOV at 40 a share bankrolled by Standandar who became SOVs largest shareholder, Standardar wanted to buy a US bank but there were some regulatory restrictions, when SOV was quickly going down the drain and FDIC was on hook as Wamu just went down and SOV was then the largest savings bank they said they would approve a merger if Standandar bought them without any US Govt help, the FDIC then strong armed SOV to take 2 dollars a shar for the firm, which they did. I bought SOV bonds during this time as I figured the Spanish would want to save face and would bail them out so as not to lose their whole investment. However, I did not anticipate it going down to the wire. I am a prior employee, prior common shareholder and current SOV Pref sharehold and a Curreent SOV bondholder. If you are interested so much I suggest you go to Brooklyn where the old Independence Bank Headquarters is now the largest Trader Joes in the world!!
make money Says:
December 10th, 2008 at 2:04 pm
What the heck are you talkling about, Banco Santandar bought Sov straight up at the request of the Fed to help them avoid going under. Banco Standar did not get any cash in the deal.
John,
Do you really think that Santander folks are stupid? Do you really believe that they didn’t squeze money or backstops on this.
From what you’re saying above, fed asked them nicely to buy a bankrupt business and they showed up with cash!!!
I called up title insurance companies last spring and they were very soft. I think I posted this a while back but every one I called kept discounting their rate by another 100$.
First one I called quoted 1100$
Second quoted 1000$
Third quoted 900$
I called the first one back and they said that they had made a mistake and those were last years prices.
First one quoted 800$.
Agreed Grim, something isn’t right in the title insurance industry.
Reducing the financial barriers to selling a house will increase liquidity and ultimately increase homeownership rates.
Isn’t the real estate transfer tax fairly new?
When we sold my parents’ house, we paid about $4500 – a percentage of the sale value.
My brother said that there used to be a fee – something like $25 – and then they changed it to a percentage of the value of the sale.
He said it was one of the things McGreevey did when he was governor to raise revenues.
???
A realtor is in a sales position. If he/she sells a lot they make money, if not they don’t. Just like any other sales position. What’s the problem/animosity towards them.
If you can do it yourself do it and make a killing. I have found that most successful entrenepeurs and sole prprietors have the toughest bosses…..
Nic,
Where and at what purchase price, if you don’t mind me asking?
I don’t have a problem with realtors earning what they earn. I do wonder however why so many potential buyers come to the table with their own agent? Why in this age of easy internet access would local buyers want somebody who has a vested interest hovering over the deal that is likely the biggest and most important one of their lives? I’ve got to believe the reason most buyers who retain their own agent do so because they’re needy pains in the rear end. The more I think about it, the more I think in many cases the poor buyers’ agents are underpaid.
Even if I had a buyer’s agent, I’d still have the contract reviewed by a competent real estate attorney. So what am I missing? Why should a local buyer (who knows the area) retain their own agent?
grim: How much ($ amount) is the average closing cost (buy side) today, assuming no points?
Fun Chart for the day
First year of major corrections in the DOW since 1900
http://3.bp.blogspot.com/_9ZzZquaXrR8/ST_f0BwN6UI/AAAAAAAACkk/4iFp22B83l4/s1600-h/LoosePic.jpg
I don’t think it’s fair to single out real estate agents on the transaction costs issue, so here is an example for lawyers.
I recently decided I needed a will. I thought about going to a trusts & estates lawyer, but realized that it would probably cost me several thousand dollars. I don’t have a lot of assets nor am I wealthy so the cost/benefit didn’t make sense. I used willmaker pro software and just did it myself, knowing full well as a lawyer who practices a diff’t kind of law that there were likely issues that I was missing using this type of generic software.
Someday if I have more to lose I will get a better will and actually hire someone, but right now it just wasn’t worth the cost. I think the same thing is true for most real estate transactions– it would be nice to have the expert, but most deals are not that complicated and a service fee of $25,000 or more is not really warranted (ignoring the fact that the 6% doesn’t even guarantee that you will get any kind of an expert).
#236 Ed:So what am I missing? Why should a local buyer (who knows the area) retain their own agent?
To present the offer to the seller I would presume.
Although the buyer could present the offer directly to the seller, or the sellers agent.
Isn’t the real estate transfer tax fairly new?
Old, started in the 60s but was a relatively low amount. The fee was ratcheted upwards somewhere around 2003/2004 along with the real estate boom.
It wasn’t just property taxes that jumped, the Realty Transfer Fee did too.
What would be interesting would be if you created a model that showed how financial barriers to selling a house, such as RE fees, RE Broker fees, Title Fees, and RE Transfer Tax directly affected homeownership rates.
Possibly you could find a comparable system and make studied changes so that you could predict future homeownership rates based on the percentage cost for liquidating a housing asset.
You could make a statement such as “with barrier fees at 10% homeownership rate will eventually settle at 64.5% +/- 2% and total transaction rate should sit at 100,000 units”
This could possibly be a boon for the RE agent industry because they are very similar to OPEC in they have individual incentive to try and get as much commission as possible from a share of sales. You could prove that there is a “sweet spot” for total commission. Above or below that line would result in less overall generated revenue for RE agents.
Apply game theory and somehow lobby to get barriers reduced or increased to reach the sweet spot.
Just a thought.
speaking of hands in the pot
http://www.nj.com/news/index.ssf/2008/12/_patti_saponethe_starledgerrob.html
“During a three-year period the foundation will reimburse the Banbury Fund, a Robertson family foundation, for $40 million of legal fees that were paid by that fund during the course of the litigation”
It must be great to be a lawyer in this case. Regardless of the outcome, I’m sure both legal teams were victors when they sent their bills out.
chi, #215
You said:
grim: You also need to embed the cost of the time you spend on all the people that you provide the same support and do not transact.
My family dealt with the same local RE brokerage three times in a short period. The score: They sold one house and got a commission; showed another aunt and uncle some houses but didn’t make a sale; and lost out on the third when their bidder got outbid.
One out of three. And I would guess that’s actually a pretty good ratio.
They stop by my brother’s house at Christmas time with little gifts – box of chocolates, a pen, a calendar.
My brother said something in passing that when he retires, he wants to move to DE or PA in ten years – down seven.
I said to my brother – no doubt when this guy makes the rounds at Christmas, he’s hoping to get a few leads out of it – someone will mention a neighbor who’s retiring, who will be looking to sell in a couple of months, or a kid who’s getting married and will be looking to buy.
Way to keep the relationships warm and generate referrals without being a nuisance.
This guy does well, too.
Fed Weighs Selling Its Own Debt
http://online.wsj.com/article/SB122888021757894023.html?mod=googlenews_wsj
The Federal Reserve is considering issuing its own debt for the first time, a move that would give the central bank additional flexibility as it tries to stabilize rocky financial markets…
One hurdle: The Federal Reserve Act doesn’t explicitly permit the Fed to issue notes beyond currency….
Some economists worry about the consequences of this approach. Fed officials could find it challenging to remove the cash from the system once markets stabilize and the economy improves. It’s not a problem now, but if they’re too slow to act later it can cause inflation….
now down to seven, I meant.
When we sold my parents’ house, we paid about $4500 – a percentage of the sale value.
Based on the current fee structure, a seller at $350k would be required to pay the state $2,100. A fee of $4,500 would probably correspond to a sales price around $550k right now.
Grim,
Crofton MD, 300,000$. Sale fell through due to the seller accepting a sale price and then she tried to renegotiate.
Interesting analysis (cant vouch for the blog just found it)
Is the Fed Taking the First Steps to Selective Default and Devaluation?
http://jessescrossroadscafe.blogspot.com/2008/12/is-fed-taking-first-steps-to-default-or.html
They [the FED] are asking Congress about permission to issue their own debt directly, not tied to Treasuries.
This is known in central banking circles as ‘cutting out the middleman.’ Not only does the Treasury no longer issue the currency, but they also no longer have any control over how much debt backed currency the Fed can now issue directly. If the Fed were able to issue its own debt, which is currently limited to Federal Reserve Notes backed by Treasuries under the Federal Reserve Act, it would provide Bernanke the ability to present a different class of debt to the investing public and foreign central banks. The question is whether it would be backed with the same force as Treasuries, or is subordinated, or superior.
There will not be any lack of new Treasury debt issuance upon which to base new Fed balance sheet expansion. The notion that there might be a debt generation lag out of Washington in comparison with what the Fed issues as currency is almost frightening in its hyperinflationary implications. This makes little sense unless the Fed wishes to be able to set different rates for their debt, and make it a different class, and whore out our currency, the Federal Reserve notes, without impacting the sovereign Treasury debt itself, leaving the door open for the issuance of a New Dollar.
What an image. The NY Fed as a GSE, the new and improved Fannie and Freddie. Zimbabwe Ben can simply print a new class of Federal Reserve Notes with no backing from Treasuries. BenBucks. Federal Reserve Thingies. Perhaps we’re missing something, but this looks like a step in anticipation of an eventual partial default or devaluation of US debt and the dollar.
———————————
Stu,
The frame work for a revaluation of US debt and the US dollar is being put into place
grim,
If my brother is right – that it used to be a relatively small transfer fee – that’s an outrageous new tax that was slipped in sideways.
If the realtors want to fight it – I’m glad someone is.
Make Money, yep they did. I worked at Independence Savings banks as a management Trainee and bought into the IPO at 10 that later got bought by SOV at 40 a share bankrolled by Standandar who became SOVs largest shareholder, Standardar wanted to buy a US bank but there were some regulatory restrictions, when SOV was quickly going down the drain and FDIC was on hook as Wamu just went down and SOV was then the largest savings bank they said they would approve a merger if Standandar bought them without any US Govt help, the FDIC then strong armed SOV to take 2 dollars a shar for the firm, which they did. I bought SOV bonds during this time as I figured the Spanish would want to save face and would bail them out so as not to lose their whole investment. However, I did not anticipate it going down to the wire. I am a prior employee, prior common shareholder and current SOV Pref sharehold and a Curreent SOV bondholder. If you are interested so much I suggest you go to Brooklyn where the old Independence Bank Headquarters is now the largest Trader Joes in the world!!
Classic John!!!
we decided to use a buyer’s agent for a few reasons.
1. if the seller has an agent, the 6% is already baked in to the price. whether or not you bring an agent to the table just determines how this money is divided.
2. all of this discussion as to whether the agents’ fees are really worth it are interesting in theory, but in practice buying and selling in many towns seems pretty much controlled by an agency, like it is the local mafia or something. Chosing to deal outside of that agency can be very difficult, if not impossible if they have all of the listings.
3. working with one of these dominant agencies can give a good source of inside info on sellers. these people are nosy and know everything about everyone in their town and seem to have few scruples about giving away this knowledge.
4. using an agent is often a useful buffer in negotiations. it makes things less personal between the principals and allows the economics of the deal to carry more weight.
Realtors do have it tough, they have to pay their own medical and workers comp, their medical rates are rising as in going the extra mile to close the deal they are ending up with many cases of claims as a result of bruised tonsils.
If my brother is right – that it used to be a relatively small transfer fee – that’s an outrageous new tax that was slipped in sideways.
Slipped in easy because it was lubricated by sky high appreciation. Sellers didn’t seem to mind sharing a little bit of their new found fortunes with the state.
In a flat to declining market, it hurts.
Yikes,
Why do you ask?
Although the buyer could present the offer directly to the seller, or the sellers agent.
When we bought our house about a dozen years ago, the agent holding the open house was only too happy to present us with the papers to make an offer. We showed them to a RE attorney who made a few changes and then we dropped them back off at the RE’s office. The attorney came with us to closing.
We were first time buyers with 5% down. We lowballed our offer and it was accepted. Don’t know if there’s a direct correlation between getting a great price and not having our own agent there who took a cut, though I suspect there was. The bank appraised our home high enough that we amazingly didn’t have to pay PMI.
I imagine that requests for sellers to pay the transfer tax are common these days. NY state has an additional stupid “mansion” tax of $10,000 on top of the normal transfer tax for sales of $1M or more
skep,
In NJ, the seller pays the tax.
The money from the sale sat in escrow until the lawyer on the estate got paperwork back from the state showing that the tax had been paid. Otherwise, the state could put a lien on the property.
Took about 3 months to get the acknowledgement from the state.
Russians trudge ahead as economy tanks once again
As financial turmoil spreads and storm clouds gather over the entire world, many middle-aged Russians are feeling a familiar chill. Unlike most Americans, any Russian over 40 has vivid memories of two previous national economic crashes that brought personal ruin to millions of people. Recent conversations with Russians offer glimpses of a middle class that’s worried, but not yet afraid. They say their past brushes with disaster put iron into their souls and changed their values. “I think I can overcome anything; I’ve already been through every stage of hell,” says Mikhail Sadskykh, a successful Moscow massage therapist who, like many of his compatriots, has been through three different professions in as many decades. “I’m not going to be stressed anymore over anything. I’ve changed. The most important thing for me now is my family, who stood by me through the hardest times. We’ll get through whatever may be coming.”
hey john,
got a story about russian male massage therapist you would like to share?
Ed-
I don’t consider myself needy because I use a buyers agent. I’m in sales and negotiating a deal is not a problem. One nice thing about a buyer’s agent is that they do the legwork to show listings. That way I can bounce from listing to listing on a given day without waiting for keys. You can speak freely about a house without a cheerleader trying to change your mind.
We worked with a buyers agent when we bought our house in 2000. This lady listened to us and showed us a bunch of houses. The house we have now was under contract but when the deal fell through that listing agent called ours because they had worked together on previous deals.
If they would give me the 3% instead on the buyer’s agent I might change my mind. However if I choose to represent myself I save no money.
I have the tools to pull out my own teeth and cut my own hair. But sometimes it’s better to use someone who has some experience. I’ve purchased one home in my lifetime. I see no advantage in going up against a listing agent that has sold many.
What about the 1% mansion tax on buyers once the purchase price exceeds $1m? I don’t hear anyone complaining about that one.
We’re talking about $10k paid for by the buyer on a ~$1m purchase, along with an additional $10k transfer tax paid for by the seller.
$20k in “state taxes” paid on a ~$1m sale.
skep,
Mansion tax exists in NJ as well.
I plan to use a buyers agent. I was under the impression that for a novice like me, first time buyer, it would be useful to have someone on my side who would help with negotiations, suggest what the other side might be willing to accept, and allow us to tap into their experience to steer us through what could potentially be a complicated transaction. It might be easy but you never know. I thought of it as a type of insurance. The commission is another matter. I suppose a percentage of the sale price as a standard is the only way it is possible to make a living in a crowded field. If agents charged a flat rate and tried to live off volume sellers/buyers would think it unfair that the more expensive houses were commissioned at the same rate as the less expensive ones.
scribe: thx…good anecdote…
“Why don’t you become a Realtor”
You need to be a good BS artist/liar, I am too honest. I would never let a person buy a home for 4 times their income. I would not be able to sleep at night.
Nicholas Says:
December 10th, 2008 at 2:09 pm
chicagofinance, Excuse my ignorance in this area. How is it fine if you are salaried?
Amoritization across your revenue stream when looking at year end numbers is equivalent to doing the same if your salaried? You make 50k per year commission, I make 50k per year salaried. I spend 100 hours reading development books outside of work hours, you spend 100 hours reading development books. I’m not sure how amoritizing across revenue stream would be relevant.
N: SIMPLIFYING – If I make a $50,000 commission based on 20 hours work associated with one transaction in August. However, I focus full time all year on my craft, and keep myself educated and current. Further, at all times I keep my clients interests at heart and walk away from deals that are for the sole purpose of transacting. Am I ripping off the ONE client that paid me?
Black or Red, more like Invisible. The FED is covering credit protection for bets by people who don’t own the CDO. That is Invisible Casino Gambling. The entire government has become corrupt at all level.
NEW YORK (Reuters) – American International Group Inc (AIG – News), the giant insurer bailed out by the U.S. government, is trying to figure out how to unwind derivatives contracts that cover nearly $10 billion in trades, without asking taxpayers for more money.
The problem underscores the minefield AIG is navigating in trying to stop the heavy losses sustained from bets it made on mortgage debt before the U.S. housing market collapsed.
The company’s shares were down 22 cents to $1.71 in Wednesday afternoon trade on the New York Stock Exchange.
AIG spokesman Nicholas Ashooh said on Wednesday unwinding the $9.8 billion in derivatives trades is not as straightforward as unwinding others.
With credit default swaps, AIG agreed to protect debt for banks and other parties in deals that forced the insurer to post large amounts of collateral and ultimately seek government help.
Under the government rescue package that swelled to more than $150 billion last month, many of those derivatives transactions can be canceled because a government fund is buying the debt that AIG had guaranteed for banks and other parties.
But with the portfolio in question, the parties that bought the credit protection do not own the actual collateralized debt obligations (CDOs), making the deals harder to unwind than other transactions.
“It does need a different approach, but we are still addressing all of our financial issues with the package from the Federal Reserve, and we still have capacity under the federal loan,” said Ashooh.
As of last month, the U.S. fund had contracted to buy $53.5 billion in toxic mortgage debt from parties that traded with AIG.
There are options for unwinding the contracts, said Donn Vickrey, an analyst at research firm Gradient Analytics. “If there is no specific asset to buy, there is no reason why you could not set up something analogous,” he said, suggesting that AIG and the federal government could instead purchase an instrument written on an index rather than buy an individual CDO.
“It seems to me for the government it could be better as it would be more diversified than holding an individual security that you know to have underperformed,” added Vickrey.
AIG, once the world’s biggest insurer by market value, has posted losses of $42.5 billion over the past four quarters, largely because of collateral it had to post for its CDS portfolio.
Ashooh said the $9.7 billion worth of contracts may be addressed through a government-backed fund called Maiden Lane III. The contracts are not expected to be a cash drain for AIG in the same way that others linked to mortgage debt have been, he said. Two-thirds of the contracts do not carry collateral requirements.
He added that the contracts are a slice of AIG’s multisector $71.6 billion CDS portfolio, and that no new losses have been incurred. Details were disclosed in a quarterly filing with the U.S. Securities and Exchange Commission last month
“They have always been part of the portfolio,” he said.
Through Tuesday’s close, AIG shares had fallen 97 percent this year. The government rescue left taxpayers holding about 80 percent of the company’s shares.
New Jersey Realty Transfer and Mansion Tax Revenue
2007 – $615,274,934
2006 – $655,488,165
2005 – $531,377,732 (RTF hike/Mansion Tax enacted)
2004 – $297,534,743 (RTF hike)
2003 – $109,278,544
2002 – $90,003,903
2001 – $79,061,773
2000 – $77,687,046
1999 – $71,298,890
1998 – $63,259,822
1997 – $51,882,018
We’re talking about more than half a billion in state revenues last year, up from $79 million in 2001.
This is a significant source of revenue for the state, its not going away.
my advice to first time buyers.
Use the buyers agent and lowball the seller and watch how hard the agent works on your behalf.
grim (268)
that is a rediculous jump.. i mean, 8-9x in 5 years???
80MM -> 655MM?!!!??
And since 2006, legislators have been pushing for a law to allow individual municipalities to collect a local realty transfer fee.
that is a rediculous jump.. i mean, 8-9x in 5 years???
12x in 10 years:
2007 – $615,274,934
…
1997 – $51,882,018
Frank [265],
4 times income? Try 6 times median income for a POS cape in North Jersey if you’re lucky. You think 99% of realtors give a f*ck if someones broke? Just look at the state of our economy if you need an answer to that one.
grim –
don’t you think that is completely unsustainable?
#273,
That’s why it should be a crime, the same way it’s for stock brokers. If you advise 80 year old lady to invest in .com stocks, you go to jail. Why the double standard?
chicagofinance,
I’m still not seeing the relevance.
If I make a $50,000 commission based on 20 hours work associated with one transaction in August. However, I focus full time all year on my craft, and keep myself educated and current. Further, at all times I keep my clients interests at heart and walk away from deals that are for the sole purpose of transacting. Am I ripping off the ONE client that paid me?
It depends on what value you are amassing and storing by working on your craft not related to the sale.
Some examples of when your question proves true:
I make and sell swords. I only sold only one sword this year for 50,000$ and it was magnificent. I spent the rest of my time honing my skills and studying other craftsman to better myself in order to create that sword. I earned that money.
Im a RE agent, I research and make sales. I only made one sale this year for 50,000$ and it was very prosperous for my client. I spent most of the year researching properties and deals until I found this gem that came along. I earned that money.
When your answer proves false:
If you spent the year reading books on how to fake it rich then you didn’t earn that money.
gary (273) –
agreed about the income to house ratio –
i mean, last i checked, the majority of NJ does not make 100k .. the median income in NJ is 67-68k.. multiply that by 4, and you barely get 260-270k.. last i checked, you can BARELY get entry level housing at that price point.
frank (275)
since when is it that advisors goto jail for advice on buying .com stock?
unless you know a law that isn’t in public perview (sp?) i’d like to know what statute in the either the USC or the NJSC (or any other state code for that matter)?
crazy,
I don’t know if prices rose in NJ like they did in Maryland but we saw a 280% increase in RE prices since 2002-2003.
If you were to factor in a rise in property values x3 when calculating tax they only increased taxes by about 100% (x2) since 2003.
This is still a huge increase in taxes but not as astonishing as you first claimed.
No, this is not sustainable as you are seeing now.
nicholas (279) –
yes, im not saying that 8-9x is astronomical, but i was saying that the jump does not correlate to the rise in property values..
my point is:
was there that much of an exchange of property that the tax levied from transactions far exceeded the actual value increase?
d2b 101 – Thanks. I would have worked at NFL Properties doing licensing information administration. I am sure heads are rolling there too.
Dec. 10 (Bloomberg) — Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, are considering waiving a requirement for new appraisals on refinanced loans, their regulator said
This morning I posted some sales volume for the last few Novembers going back to 2005. I don’t have any numbers earlier then that but I would guess that there was a substantial increase in transaction volume.
That would also have boosted revenue in $$ for the last few years.
clot, as i told you 2 days ago, you have plenty of opportunities to average down your losing position if you choose to do so.
http://finance.yahoo.com/echarts?s=SRS#chart1:symbol=srs;range=5d;indicator=volume;charttype=candlestick;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
# John Says:
December 10th, 2008 at 1:55 pm
Latex and squeegees in case the amatuers leak
Clotpoll Says:
December 10th, 2008 at 1:09 pm
John (201)-
Would the champaign [sic] rooms have to have crush valor seats?
Those things are damn hard to clean.
Please, just stick to onions….
sl
Ket, 238
Fun Chart for the day
First year of major corrections in the DOW since 1900
http://3.bp.blogspot.com/_9ZzZquaXrR8/ST_f0BwN6UI/AAAAAAAACkk/4iFp22B83l4/s1600-h/LoosePic.jpg
Gosh, golly, gee… does that mean were at the bottom??
/sarcasm-off
sl
Nick (214)-
”
But no matter what brought on the change in RE agent behavoir it has become dangerous to walk blindly into a RE agents office unprepared.”
Agreed. I am amazed at how little research buyers and sellers are willing to conduct before blindly putting their financial lives in the hands of a Realtor.
I’m the first to admit that 9 out of 10 of us are complete hacks, too.
In a bit of positive news apparently NASCAR is hurting.
Frank (265)-
“I would never let a person buy a home for 4 times their income. I would not be able to sleep at night.”
Yet you have no problem ripping us off through the public treasury.
In a bit of positive news apparently NASCAR is hurting.
Now that’ll cause a riot.
From the AP:
AC casino revenues fall 7.8 percent in November
Atlantic City’s casinos won 7.8 percent less from gamblers in November than they did a year ago.
Half a month with a smoking ban, coupled with a severe economic downturn that has left people with little money to spend or risk in the casinos caused yet another dismal month for the gambling halls.
Only two of the 11 casinos reported an increase, while six reported double-digit decreases.
“We have some level of optimism from our hotel occupancy numbers,” said Dan Nita, senior vice president and general manager of Caesars Atlantic City, whose revenue was up 8.5 percent for the month.
But he added Atlantic City’s “drive-in business” continues to fall off. A decline in gasoline prices could help that situation in coming months, he said.
The November report was another ominous sign for two of the most endangered casinos in Atlantic City.
…
For the first 11 months of the year, casinos won $4.2 billion, down 6.7 percent from the same period in 2007.
This will be the second straight year that casino revenues declined in Atlantic City after 28 years of consecutive increases.
#290 – Now that’ll cause a riot.
I’d wager they could be easily distracted by free tacos and cheap beer. Perhaps even a Toby Keith “performance”.
RichinNNJ,
…my hopes….hopelessly dashed.
I can’t see Ridgewood letting him build condos there- then again, “hmmmm taxes… lotsa taxes”….they might salivate over that.
sl
From Reuters:
More negative structured finance actions in ’09-Fitch
Ongoing turbulence in the financial markets and a dramatic slowdown in the U.S. economy will result in significant negative rating effects across structured finance markets in 2009, Fitch said in a report.
“The U.S. is entering a severe recession driven by a contraction in credit. The rapidly unfolding financial crisis that has taken hold over the past six months has few historical parallels from which to gauge the possible depth and length of this downturn,” said Fitch.
…
It expects that ‘AAA’ through ‘A’ ratings on prime credit cards, prime autos, Federal Family Education Loan Program student loans, large loan, and multiborrower CMBS transactions, as well as investment-grade corporate collateralized debt obligations, will remain well insulated from the tumultuous conditions and experience limited risk of downgrades.
In contrast, the ‘AAA’ through ‘A’ rated tranches for the remaining seven sectors, including all areas of residential mortgages, are more susceptible to downgrades due to substantial deterioration in collateral performance, it said.
…
Slowing economic fundamentals and mounting job losses, along with turmoil in the financial markets and increasing foreclosures, will further depress house prices and put additional pressure on residential mortgage-backed securities in subprime, prime, and Alt-A segments.
been out for a few hours, but DAMN
i love this
http://www.breitbart.com/article.php?id=D9503SIO0&show_article=1
no bailout for the big 3 …
#282 John Fannie Mae and Freddie Mac, the mortgage-finance companies seized by the U.S. government, are considering waiving a requirement for new appraisals on refinanced loans, their regulator said
Makes perfect sense, throw everything out the window. Welcome to the brave new world.
269.
Make Money,
Bingo. The rest of this discussion is meaningless. This is the reality.
From ML-Implode:
Jumbo Prime: ‘Walk Away’ Loans – More Downgrades Coming
This story was originally released a couple of weeks ago but somehow did not make it to the blog. It goes hand in hand with the Moody’s downgrade of many Bank of America Jumbo Prime deals citing a 13% delinquency rate. This represents a total meltdown in the sector happening right now that nobody is reporting.
Through my proprietary default and foreclosure data and research we have been watching this happen in real-time for months…I have warned you many times about this coming. It is amazing it took this long for somebody to say something. Now that the raters are reporting such massive default rates, I am going to officially say that the ‘Jumbo Implosion’ is upon us.
…
AAA Prime, full doc, bank portfolio Jumbo 30-year fixed rate loan rates over the Fannie/Freddie $625k limit for higher value areas have recently surged again. Actually, they never really came back but rates are between 7.75% and 9% for perfect borrowers. And you have to put down 25 to 40% in many cases. Agency Jumbo from $417 to $625k and FHA Jumbos to $730k in some areas are both about 7.5%. Either way, Jumbo rates are at multi-year highs no doubt.
…
nalysts are not taking into consideration how much trouble the American economy will be in across the nation when those middle to upper class home owners all over the nation see their prices fall as much as the lower end has. This will happen – it has to. Unless folks start paying cash and see extra value in million dollar homes, home prices will gravitate to the most readily available financing, which is still $417k.
…
I am hearing that more ratings agency downgrades are on the way in the Jumbo Prime arena – rightfully so. Believe it or not, as with Pay Option ARMs, much of Jumbo Prime are also ‘walk away’ loans.
not sure if this has made the rounds-
New Element discovered:
Lawrence Livermore Laboratories has discovered the heaviest element yet known to science. The new element, Governmentium (symbol=Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons, and 198 assistant deputy neutrons, giving it an atomic mass of 312. These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons. Since Governmentium has no electrons, it is inert. However, it can be detected, because it impedes every reaction with which it comes into contact. A tiny amount of Governmentium can cause a reaction that would normally take less than a second, to take from 4 days to 4 years to complete. Governmentium has a normal half-life of 2 to 6 years. It does not decay, but instead undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places. In fact, Governmentium’s mass will actually increase over time, since each reorganization will cause more morons to become neutrons, forming isodopes. This characteristic of moron promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as critical morass. When catalyzed with money, Governmentium becomes Administratium (symbol=Ad), an element that radiates just as much energy as Governmentium, since it has half as many peons but twice as many morons.
Jebuz F’n Christmas
Look at this listing and please read the blurb/description.
http://www.realtor.com/search/listingdetail.aspx?pg=7&srcnt=134&sid=8e4d194eaaca45bfa87f7ca34cdb15bb&fhcnt=8&loc=Haddonfield%2cNJ&usrloc=Haddonfield%2cNJ&typ=5&ml=8&fhpg=1&lid=1097740067&lsn=64
ok….
BWAHAHAHA!
(300)-
“They will consider offers between 429,000 and 479,876 for this property! ”
– Is this George Constanza’s house?
List price of $469k, but they’ll consider an offer of $429k?
Should have just said, “Will accept lowball offers.”
I almost want to see the Big 3 bailout pass because if it goes back to commitee it will come out as a $25B bail out bill with giveaways to law firms, chicken farms, meth clinics and churches.
I would take that to mean bid between 429k and 365k
chicken farm, meth and church lawyers will get double payments
From the AP:
Pay raise for judges tucked into bailout plan
If the $14 billion bailout plan for U.S. automakers passes, it will help more than just Ford, Chrysler and General Motors. Federal judges would get a pay raise, as well.
Who will bail out California?
From the WSJ:
California Budget Deficit Grows Another $3.6 Billion
Gov. Arnold Schwarzenegger said California’s budget deficit has widened by another $3.6 billion in just the past few weeks amid a worsening economy, and that the total shortfall of an estimated $14.8 billion will keep climbing until the state legislature acts.
The governor chided the legislature for failing to heed his call last month to come up with a plan to rein in spending and increase revenues to deal with the tide of red ink. He said in a press conference Wednesday in Sacramento that the deficit keeps increasing at the rate of $40 million a day, and that if nothing is done the state will run out of cash by the end of February. “We’re heading towards a financial Armageddon,” the governor said.
Growing the deficit by $40 million a day? Apparently Sacramento is burning dollars to heat the statehouse.
What happens to the US economy if California goes bankrupt?
From Reuters:
California November revenue $1.3 billion below estimate
California’s general fund revenues in November were $1.3 billion, or 18.5 percent, below expectations, suggesting the government of the most populous U.S. state could run out of money as early as February, State Controller John Chiang said on Tuesday.
The government of California, the world’s eighth-largest economy, must contend with a $28 billion combined shortfall for the remainder of its current fiscal year and its next fiscal year, which runs from July.
The massive deficit reflects the strain on California’s finances from a housing slump, rising unemployment and weak consumer spending as a punishing downturn grips both the state and national economies.
“November blew away even the most pessimistic estimates, with general fund revenue down $1.3 billion,” Chiang said in a statement. “These receipts could expand our immediate cash problem by another half a billion dollars, with no recovery in sight.”
“According to projections from last month, all general and special funds will be exhausted by March 2009 when the state runs more than $1.9 billion in the red,” he added. “November actuals suggest the state could run out of money as early as February — and face an even larger cash shortfall in March.”
Even if I was still living—and buying—in NYC, which does not have an MLS system, I wouldn’t use a buyer’s agent. As others have pointed out, I can get all the listings I want online, and the seller’s agent isn’t going to want to split that commission.
#288 Toshiro
I heard on the FAN last night that the NFL had laid off 150 employees.
#308 grim,
Maybe Arnold won’t be back.
How long before California starts printing it’s own notes?
My landlord just listed my rental home on Zillow, http://www.zillow.com/homedetails/Address-undisclosed/2140689352_zpid. I’m only 5 months into a one year lease. I’m a little concerned with people cruising by my place unannounced since I’ve got a couple of kids at home. Funny thing is the house was for sale before I rented it for $369,000 and now they are looking for $440,000. I know my landlord paid over $410,000 for the place a couple of years ago. Should I be concerned? What rights do I have if they start coming by to show the house?
302. Victorian
rofl its like, “hey, I wonder if they would do 450K? They will???” *high fives self*
#312 – bairen – The NFL and NASCAR both going away would be a dream come true for some of us. So much so that should it come to pass I’d be back in church as that would be evidence for the existence of a god.
Imagine no NFL or NASCAR, replaced by Gus van Sant films and Basquiat documentaries… /sniff/ it’d be beautiful….
Also, the kitchen is newly remodeled, and by newly we mean circa 1977 by designer Edith Bunker.
http://www.realtor.com/search/listingdetail.aspx?pg=7&srcnt=134&sid=8e4d194eaaca45bfa87f7ca34cdb15bb&fhcnt=8&loc=Haddonfield%2cNJ&usrloc=Haddonfield%2cNJ&typ=5&ml=8&fhpg=1&lid=1097740067&lsn=64
#316 toshiro,
Can ESPN and Hockey go away too?
you guy didn’t read, or am I just being stupid here?
The “Sellers are participating in Prudential’s Value Range Marketing System. They will consider offers between 429,000 and 479,876 for this property! ”
It’s a method of pricing “in a range” to attract more buyers. (So they say…)
Anyway, it’s ON PURPOSE. It’s not to get lowballed.
IMHO, it’s more akin to a closed auction where the sellre states “minimum bid $1.00” but intends to get buyers bidding up against (themselves, it’s likely) and actually getting a higher sale price than what they might have got with straight up pricing.
Ask Max Spann how that’s working out…
WSJ
EDUCATION DECEMBER 11, 2008 Painful Choices as College Bills Wallop Families Article
Comments
By PHILIP SHISHKIN
The day after Thanksgiving, Glen O’Brien had bad news for his two children, who were visiting from college. With his electronics business pummeled by weak demand, he told them he couldn’t afford to keep paying their bills at New York University.
“We were both completely in shock,” recalls his daughter Caitlin, a junior majoring in Spanish. She was looking forward to spending her spring semester abroad in Chile. Instead, she is planning to move back to California, get a job and take cheaper courses at a state college. She hopes to return to NYU next fall. The school costs about $50,000 a year for tuition, room and board, and fees.
As the economy shrinks, joblessness expands and small-business owners lose income, many students and their parents are struggling to make payments for the second half of the academic year, which are typically due this month or in January. Midyear applications for financial aid, typically rare, are up at a number of colleges, as families who believed they wouldn’t need help earlier in the year are now feeling squeezed. Michigan State University, where students have been hit hard by the woes of the auto industry, last month set up a $500,000 fund for families hurt by the economy’s slide.
Experts say it’s too early to tell what effect the recession may have on overall college enrollment, which typically rises in downturns as the unemployed who can afford it flock to schools for retraining. Yet next fall is shaping up to be a nerve-racking time for many colleges, who are also coping with shrinking state subsidies and endowments.
Many students are already making painful adjustments, including dropping out, borrowing more to stay in school, transferring to cheaper schools or taking on part-time jobs. A third of parents expect the economic downturn to affect their ability to pay for college this year, according to a survey of 7,000 parents of newly enrolled freshmen by Eduventures, a Boston-based research firm.
“I’m packing to move out of my apartment as we speak,” says Jose Kerch, who was laid off four months ago from a call-center job in a bank and is now attending Glendale Community College in California.
Mr. Kerch, 37 years old, says he has already received some financial aid. He applied for more after burning through most of the money in his 401(k) retirement plan and having his 2004 Ford Ranger repossessed. Pat Hurley, Glendale’s financial-aid director, says Mr. Kerch’s application is being assessed in what she calls a “crunch semester” for her office. Glendale says financial-aid applications are already up 15% from the last academic year.
At Colorado College, which costs about $47,000 a year and has 2,000 students, financial-aid director Jim Swanson says he’s dealing with at least five cases of laid-off parents. “For our institution, that is significant,” he says. The Colorado Springs school has established an emergency fund for hardship cases and is also helping struggling parents set up payment plans. In at least one case, he says, a student is taking a leave of absence because her father’s small business is hurting.
Angela Cobián, a sophomore majoring in political science at the school, is planning to apply for more scholarships and student loans when she goes home for the Christmas break. Her father works for a contractor laying cable and operating heavy machinery — a business that’s been hit as construction has slowed. Ms. Cobián says she was expecting to graduate with about $30,000 in student-loan debt, but now “it’s gonna be higher.” She plans to cut her Christmas break short to take a paid internship at a law firm.
Debbie O’Donahue, who says she is carrying more than $100,000 in college debt for her three sons, is borrowing again to put her fourth son through Lock Haven University, a state school in Pennsylvania. “I don’t have a choice,” she says. “If I don’t do it, he’s going to leave college.” The family’s financial predicament became even more dire this year, after her husband, a parts manager at a General Motors dealership, saw his income shrink, Ms. O’Donahue says.
A Mountain of Debt
Jane Sawyer, a real-estate agent in San Juan Islands off the coast of Washington, is struggling to keep her son, Michael Guard, enrolled at the University of Chicago, where he’s now a sophomore. “I’m trying really hard so he doesn’t graduate with a mountain of debt,” she says.
As house sales fell this year, Ms. Sawyer says, her income tumbled to a third of what she’d made in previous years, while her expenses rose. Her husband, Michael’s stepfather, recently had a stem-cell transplant for lymphoma. All of that has left Michael, 19, scrambling for money to stay at Chicago for the quarter that begins after Christmas. He already has some grants and student loans, covering about $20,000 of Chicago’s $50,000-a-year bill. But he’s been relying on his mother and savings from summer jobs to cover the remainder.
Michael, who studies philosophy and Spanish, is now considering asking his step-grandfather for a loan. He says he may skip the winter quarter and transfer to a cheaper school next year. “I hate the idea of having to borrow money,” he says. Susan Art, dean of undergraduate students at the University of Chicago, says the school hasn’t yet seen a huge impact from the recession.
Juggling Jobs and Classes
For working students, the recession is making it harder to juggle jobs and classes. Nicholas Lima, a sophomore at Rhode Island College in Providence, already has student loans and three part-time jobs on campus. Budget problems have prompted the state to impose a midyear tuition increase that will cost Mr. Lima about $200 per semester, so the 23-year-old Army veteran is looking for another job, possibly bartending on weekends.
Families who were counting on investment funds to pay for school are struggling, too. Jory Card, a student at the University of Oregon, says his great-grandmother left a trust fund, invested mostly in stocks, for his and his brother’s education, but it’s lost much of its value. His parents are now paying his tuition out of pocket while he looks for jobs and scholarships.
Community colleges, where tuition is a fraction of what private universities charge, say more students are looking to transfer from more-expensive schools. At Brookdale Community College in Lincroft, N.J., where tuition is about $1,700 a semester, “we are getting heavy phone volume from people looking to transfer midyear,” says Michael Bennett, director of financial aid. Brookdale has also seen “a dramatic increase” in financial-aid applications for spring, he says.
For Mr. O’Brien, the business owner with two children at NYU, the reversal of fortune has been stark. His San Rafael, Calif., company, Electronic Stockroom, supplies flat-screen television sets, projectors, speakers and other gear to companies installing home movie theaters. The business has enabled Mr. O’Brien, 54, to buy a second home, and to send Caitlin, 21, and his son Conor, 18, to NYU, the school their grandfather attended.
Earlier this year, as Conor was entering NYU to study music recording, a slowdown forced Mr. O’Brien to ask Caitlin to borrow $12,500 for the fall semester. Orders continued to plummet, eventually dropping by 30%, Mr. O’Brien says. He cut 13 of his 38 employees and closed some warehouses, and is now selling one of his two homes.
Moving in With Friends
Caitlin, who’s been working as a nanny in New York, says she’s planning to move in with friends in Los Angeles and look for a job while taking classes at a state college. She has written to NYU to explain her family’s financial situation and to ask the school to ease its restrictions on the amount of outside credits a student can use toward an NYU degree.
The school just offered her a $4,000 scholarship, Caitlin says. But while she appreciates the offer, she plans on taking a leave of absence for the spring semester.
NYU spokesman John Beckman says the financial crisis hasn’t had a big impact on the school. “Things look little bit different than last year, but not a lot different,” he says.
Conor, meanwhile, is still looking for a way to stay in NYU. He’s hunting for jobs, and to save on Manhattan’s high housing costs, he’s thinking of moving in either with an aunt who lives in New Jersey, or with friends in Brooklyn. His father’s business “was doing so well,” he says. “I didn’t think it could cave in so quickly.”
I know my landlord paid over $410,000 for the place a couple of years ago. Should I be concerned? What rights do I have if they start coming by to show the house?
In NJ your LEASE is protected. yo can not be kicked out until the end of your lease. Unless you are living in Owner-occupied multi-unit rental with 2-4 units.
In addition I believe you and your landlord have to come to an agreement with you about reasonable showing schedule, which does not put hardship or serious inconvenience on you. I do not know if you can disallow prospective buyers to come and look at the property completely.. But they certainly can not come at any time and expect you to go out of your way to show the house.
if you want to stop people from coming inside I guess – consult a RE lawyer.
general link:
http://www.lsnjlaw.org/english/placeilive/irentmyhome/tenantsrights/index.cfm
319.
why would anyone bid a penny over the 429k? If anything it encourages me to make an even lower bid. If the approach is assuming there will be a bidding war……on a mediocre and overpriced SOUTH JERSEY property well…..stupid is as stupid does.
320,
time for colleges and universities to come clean and correct the insane run up of tuition over the last 15 years. 50K for NYU? Give me a break. Everyone I know who graduated from that school have spent their adult lives seriously underemployed.
There’s one thing I’ve always found comforting about actuaries. They can look at data that’s over a year old, and analyze it without ho-hum boredom. Sprinkle in some interest assumptions and factors that are handed to them on a silver platter, and then ..crunch. They’re all excited.
Now if we could only get them to make predictions without the factors and without the hindsight.
http://www.insurancejournal.com/news/national/2008/12/10/96204.htm
Although, I am suddenly craving mango chutney.
Barb?
Any reason that you don’t like Haddonfield?
50k for NYU? Jesus. I have issues with my sister going to Rutgers for 25k. How does anyone graduating from NYU plan to ever pay that debt off?
Ben:
Students don’t go into debt over college anymore. Parents pay for it….
Barb: ref 300; 317; et al. The house on Crystal Lake Ave isn’t really in Haddonfield either. I went to HS two blocks from there and the location is Haddon Heights. The street is a high volume traffic through-way between Kings Highway and Cuthbert Road. I suspect they are trying to leverage the cachet of Haddonfield. Haddon Heights BTW recently had a re-assessment that jacked up proprty taxes in many cases over 50% so their taxes are probably close to Haddonfield’s as well.
317…..that looks like a nice house.
#318 – bairen – Can ESPN and Hockey go away too?
Of course! All 18 ESPNs and the never ending hockey season have to go.
No more arena football. I’ll take what I can get.
You have to think that professional bass fishing may be the next to go…
Since 1962 house prices followed wages and increased in value around 4% every year. Some years it didnt go up at all and builders took a loss. When the interest rates came down people could afford more and not just houses but this caused inflation in things that don’t count as inflation such as food,( resturant dinning) gas and housing. and caused money to be where it was not counted as inflation. when it really should have been counted as inflation. when you have inflation it should be reined in with interest rate increases . If they would have never lowered the interest rates they would have come down naturally to a more susstainable level. Istead they keep lowering and lowering to fix whats already been broken. Now if i had any money like in the bank why would i leave it in there if there not going to pay me anything for using it. Well that median house in 1962 cost $12,000 that same house today should be worth 125000 but in 2007 they were asking 225000. now that everyones credit is ruined and your insurance payments are up becuase your credit rating went down. And your gutts are gone cause of the rude ride and job losses all because of lowering interest rates instead of letting them alone. If you get what iam saying your in touch, if you don’t your making to much money to care but i think your money situation is going to change.
If you really want to sell your house you dont need a real estate agent put your own ads in the paper have your own open houses . Put the price right on the window . it should sell its self unless there is somthing your trying to hide thats why alot of people use a real estate agent. Hiding face. agents just never seem to have all there facts right. Whats really scary is i had a well meaning succesfull agent tell me if my house were his he would nock out that wall and extend the room out on the portch i said oh you would would you. He had no clue that it was a tri bearing ceiling wall he was talking about knocking down. Agent Dope. No you can’t knock down any wall.. So keep your commission and use a reputable title company.
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Joyce
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