From CNN/Money:
Consumer group goes after real estate industry
By Les ChristieA leading consumer rights group, the Consumer Federation of America (CFA), on Monday issued a report charging that real estate industry members act as a cartel to stifle competition, resulting in higher prices and poorer service for homebuyers.
It’s the latest episode in the long-running soap opera that pits consumer groups and the government against the real estate industry. The dispute has become increasingly heated in recent years as soaring home prices have resulted in huge commissions for the industry. At the same time, the technology advances that have dramatically lowered costs in investment, travel and other industries have not had a great impact on real estate.
“Many traditional real estate brokerage firms, and their organizations, function as a cartel that tries to set prices and restrict service options,” said Stephen Brobeck, CFA’s executive director at a press conference in Washington D.C.
…
Traditional brokers charge high, uniform prices regardless of the quality of the broker involved. Even a newly licensed, inexperienced agent receives the same commission no matter what the level of service offered.
…
Traditional brokers who work with both seller and buyer in a home sale almost always function as facilitators. Brokers try to make sure a sale is completed (and they get paid), rather than as fiduciary agents acting in the best interests of their clients, as the brokers claim to do.
…
Brokers “double-dip,” promoting their own listings or the listings of their firm over properties better suited for their clients.
…
Many real estate brokers also sit on state real estate commissions; they make up the majority of all state boards, according to the CFA. They regulate themselves and make rules that disadvantage competing business models.
…
“Prices should be left up to the marketplace,” says Brobeck, “but the cartel still sets the prices.”
Builder Confidence Declines In June
June 19, 2006 – Rising mortgage rates, deepening affordability issues and the retreat of investors/speculators from the marketplace have prompted single-family home builders to further adjust their perspectives on the new-home market, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for June, released today. The HMI declined four points from an upwardly revised reading in the previous month to hit 42 for the latest report, its lowest mark since April 1995.
“Based on historical experience, particularly the 1994-95 episode, the pronounced pattern of movement in the HMI is not inconsistent with the reasonably orderly cooling-down process we’re projecting for home sales and single-family housing starts in 2006,” said NAHB Chief Economist David Seiders
HAHAHAHAHHA!!!!!
Nice to watch this group squirm!
BAbababababa
Bob
What a bunch of unethical group of schemers!
When you buy a house you are on your own. Look after YOUR own best interest…Noone else involved will!
So why is the internet not doing away with this cartel? What is the big god-awful barrier here?
What is going wrong?
Delusions of a free market economy dance in my head.
Pat
I wish Google, Yahoo & MSN form an association to start free MLS service and market it to general public to go FSBO. The only trouble at this time is not many reputed names are offering FSBO service. In stock trading, you had many reputed names, and that caused folks to switch to internet based trading. If some reputed companies get in this field, many folks will try FSBO first, than paying the commissions.
I don’t think it would need to be a free MLS service. $100 a listing would work just fine and generate healthy profits for the owner. Throw in real estate agents working on a different model (fixed price for specific services) and competition could thrive. Trouble is they have the potential to make so much money on commisions they get greedy and noone tries a different way of working. Perhaps a serious slowdown will change that.
That’s right–it’s all the fault of the real estate cartel. They’re like OPEC–the bubble and collapse have nothing to do with the idiocy of the Am. consumer. Blame the cartel!
WM
Aw come on anon, it’s very true that the buyer has acted like a total fool during the whole run up.
But it’s also true that the NAR has been lying- straight out lying- to try to keep this puppy breathing air for quite some time now.
There’s enough blame to go around, several times.
Fair enough, Seattle; let’s just remember that when the scapgoating begins, and it looks as if it is beginning quite predictably, the NAR needed banks, loan and credit agencies, the media, assessors, and all of their ilk to pull this one off. Further, as much as any kind of conspiracy going on here, a vast cross-section of the population chose willful amnesia and took home the suffocating puppy all on their own. The consumer chose to be a participant in this death, just like the FED did. Yes, blame will go around–ashes, ashes, we all fall down!
WM
If guilty they should be prosecuted … 10-20 year jail term sounds good to me.
Falling home values are also affecting homeowners’ ability to refinance into a traditional 30-year fixed rate loan to avoid foreclosure.
In 2002, Christopher Jones, 32, refinanced into a hybrid ARM with plans to refinance again when the rate started to readjust. At the time, his downtown Atlanta house appraised for $108,000.
Now, his monthly payments have shot up, but Jones can’t sell his house for more than $84,000 and he can’t get an appraisal for more than $85,000.
The appraisal firm told Jones that the value of houses in his neighborhood have fallen victim to a cooling market. With no other options left, Jones has decided to pack it in and foreclose on the house.
“I’m just going to take the loss,” he said. “That’s all I can do.”
Some homebuyers, especially first-time buyers, may not have fully understood the risk of ARMs. In the rush to close on a house sale, especially in the frenzied market of the past few years, many first-time buyers often failed to get the full details of their loan from their mortgage broker.
Great to see this, hope something comes from it, but not holding my breath.
31,173 gsmls …wow!!
Unfortunately, even the cartel of NAR et al., cannot take that # to the bank!!
“31,173 gsmls …wow!!”
Should be at 35,000 by the first week of July.
From weekend open discussion:
Anon 12:20am “if they were faced with selling for anything less then a market could bring.”
This statement by you, proves my point that you are either a small fish who really has no clue about money and markets or a recreational drug user.
Inventory grinding higher!!!
Welcome to the new home of Garden State MLS’ public search engine. Currently, there are 31,173 properties advertised for sale in NJ on our site. For Residential Properties that are Multiple Listed with Garden State
Greedy money grubbing sellers and starving realtors are feuding now.
Hehehehe
Bababababa
BOOOOOOOOYcott Houses!
No Bids No buying NO NOTT”””ING!
Bob
Deliquencies, Foreclosures
Fell In First Quarter.
This is according to the
Mortgage Bankers Association.
The question of the Day:
Are we Normalizing?
“Should be at 35,000 by the first week of July.”
Sorry, lack of sleep. Probably closer to mid-July, at the current pace.
Bubbles don’t “normalize”, they collapse.
grim
Saw another two houses which were “Under Contract” for over a month just get relisted (under new MLS #s, natch).
Both are over $1M, so the last Greater Fool buyers must finally be catching on.
Unrealtor, I’m seeing it too, different zip than you.
I saw four houses (empty) go off last week, but were never tagged “under contract/pending.”
Now,I’m waiting to see.
Pat
Interesting post on the Bergen County board re: high taxes:
“People voted Corzine and the Democrats in. Taxes are rising and will continue to rise as long as “they” think we are all rich in Bergen County and we need to fund programs for housing, social programs, etc.. in the other counties.
I live in Northern Bergen County, purchased a home 6 years ago. In 6 years my property taxes went up 990 dollars every single year. Yes, almost $6000 in 6 years.
I work two jobs, my wife works two jobs and we can not afford to continue in this state.
Seems NJ should focus on having at least ONE decent city with which to collect tax revenue, rather than spend tax revenue on several decaying crime-ridden cities (Camden, Newark, Paterson, etc).
As Camden is near Philly, that might be a good place to start (re-start). It’s pathetic that NJ politicians have simply accepted that every NJ city should remain a dump.
Atlanta, Raleigh, Dallas, etc — all great cities that could have an equivalent in NJ.
Corzine needs to wake up and smell the coffee on those public employee benefits, and stop dreaming that a sales tax will benefit fix the state.
I heard a report today, and one state employee said, basically, to stop attacking public employees’ pension and health benefits, because it’s all they have because they make less than the private sector employees.
If she only knew the net present value differential on those benefits, she would understand the problem.
How I wish an oversight board could limit total compensation (at least until the budget was balanced) to a system of equity with private total packages.
For example, every public employee gets rated into a comparative scale to “like” private employees.
The public employee total package can then not exeed 1.45% the total package of the equivalent private sector employee factor until the budget is balanced.
The additional .45 is to compensate them for their services to humanity as public employees (I suppose.)
Pat
Many of the public sector
has developed a sense of
entitlement.
Many don’t have any idea
what goes on in the private
area.
It goes on and on. Corzine ,
he was like a cheap suit.
Gee I remember when they were selling in 4 hours or 4 days, now its 4 months
Pat and Unrealtor-
How do you guys keep track of the properties? We live near the Shore but read this blog religously. Do you just use Realtor…but then how do you know when they come back on the market? Also do you know where to check what a particular property sold for? Thanks for any tips…
DK
I’ve posted this before a few months ago that I believe that eventually the real estate agent will go the way of the travel agent, due to the internet in no small part. I believe that quality properties sell themselves, e.g., they have a sufficient number of pluses that they will appeal to a large potential buyer pool. They don’t require a salesperson to tout all the features.
I remember how easy it was to sell my car over the internet. Placed an ad on Autobytel and within two weeks, my car was sold. And we’re talking about a 9 year old Geo Prizm sedan with over 100K miles. But I took care of my car, kept all my maintenance records and stated this in the add. I had multiple inquiries and the first person who test drove my old car bought it.
I’m not saying that buying a car is the same as buying a house. A home purchase is more complicated for both parties and the decision itself is more complicated. But there’s no reason why people can’t sell their own properties as long as they’re willing to put forth a little effort. Of course, poorly maintained properties, poorly constructed properties, or properties in poor locations or on odd-shaped lots might require some marketing expertise. But this could be sought out on an individual basis.
Furthermore, these qualities of the property should be reflected in the asking price (at least in a sane market). All other things being equal a poorly maintained property shouldn’t fetch the same price as a properly maintained one, period. It has been a bit crazy that people have been asking 800K for a “starter” cape. What is even crazier is that there have been way too many “greater fools” willing to pay these prices. As Grim frequently says, Caveat Emptor.
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