Is a lower asking price really so painful?

From Rismedia:

Home Sale Slowdown Forces Painful Price Reductions

As a real estate broker, Joanne English Rollieson knows how to price houses. But the cooling real estate market forced her to cut $30,000 off the $525,000 asking price for her own home in Teaneck [New Jersey].

“Buyers have a lot to choose from,” explained English Rollieson, president of English Realty in Englewood, who recently sold her four-bedroom colonial. “If sellers are motivated to sell, they need to be more realistic with their prices.”

It’s a lesson home sellers are learning all over North Jersey: After five years of record sales, double-digit price rises and frantic bidding wars, the fizz has gone out of the real estate market, both nationally and in the state.

The signs of a slowdown are everywhere. The Realtors association recently reported that the inventory of houses for sale is at the highest point nationwide since April 1993. In New Jersey, house sales dropped 16% from the second quarter of 2005 to the second quarter of 2006, the Realtors reported.

For sellers, it all adds up to one question: How to sell in a buyers’ market?

The first answer is probably the most painful: Price it realistically. Just because your neighbor got $600,000 a year ago doesn’t mean you’re going to get $650,000 – or even $600,000.

And don’t immediately dismiss low-ball offers; in this market, some agents are bringing back the old saying, “Your first offer is your best offer.”

The Realtors association’s Lereah predicts that prices will continue to drop until the end of the year, and post only modest gains in 2007. Moody’s is less optimistic, predicting that prices will drop in 2007, especially in areas like the Northeast, where prices rose so far so fast.

Economists Richard Shiller and Karl Case, creators of the Standard & Poor’s Case-Shiller Composite Home Price Index, also recently predicted in a Wall Street Journal essay that price moves “might be squarely in negative territory by some time in 2007.”

“There is significant risk of a very bad period, with slow sales, slim commissions, falling prices and rising default and foreclosures,” they wrote.

The only people who will suffer are sellers who bought within the past year or two and paid top dollar.

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175 Responses to Is a lower asking price really so painful?

  1. James Bednar says:

    This piece ran in the Record on Sunday.

    I decided to bring it back to the top today. News seems rather light this morning, and I don’t think it got a fair shake(out) on the weekend.


  2. James Bednar says:

    From the Jersey Journal:

    Project OK’d for Bayonne

    A court has cleared the way for a New York developer to proceed with a big residential project for Bayonne’s downtown, but it’s unclear when work will start.

    In late January, the Bayonne Zoning Board of Adjustment voted to approve plans by Marl Associates, of New York, to tear down the empty Win City Supermarket, formerly Pagano IGA, and put up a 74-unit condominium development at 26 North St., but soon after that a neighbor, Thomas Urciuoli, sued to stop the project.

  3. James Bednar says:

    From the Express Times:

    Developers back for another try

    The developer of a 308-home age-restricted development tweaked year-old plans to meet township needs and regulations.

    Toll Brothers introduced Regency at Pohatcong 16 months ago. Monday night, the developers were back before the land use board for another round of hearings on the site plan.

    The site includes 167 town homes and 141 single-family dwellings for adults age 55 and over. The lots for the homes would be one-seventh of an acre.

    Regency at Pohatcong is the second 300-plus age-restricted development planned off of Interstate 78.

  4. FirstTime BuyerNotBuying says:

    10%-20%-30%-40% or even 50% means shxt with the current prices I see.

    YOU”RE FOOLING NOBODY!! And Most importantly….ME!!

  5. James Bednar says:


    It’s a great housing market! No, wait, it’s not!

    “Alleged” housing bubble? “Ostensibly little additional research?”

    Them’s fightin’ words.

    We’ll overlook for a moment that fact that all possible measures of home-sales activity — from the number of sales to the amount of time it takes to sell a house to the median sales price to the inventory of unsold houses to the number of building permits issued — points to a slowing market. We’ll note that most market procrastinators expect prices in this area to hold firm, even as they fall elsewhere.

    And we’ll give the home builders a pass on the fact that they got a key piece of data they were using to support their point of view — the number of building permits issued in Bucks County in the first six months of 2003 — wrong. Spokesman Scott Elliott graciously corrected the number when it was brought to his attention by this reporter. The final comparison numbers show that the number of permits issued in Bucks and Montgomery counties in the first half of this year is down from 2003, as it is from 2005.

    “You overdid it,” Zandi told builders. “I do think there’s too many homes out there, too many new homes.”

    Price declines next year, Zandi said, are, “almost inevitable now.”

    The NAHB’s Markstein’s view wasn’t much more optimistic.

    “Based on our forecasts, clearly we’re not in a soft landing,” Markstein said. “We’re past that.”

    It will probably take another year to work out a “huge overhang” in housing inventory and get the housing market back on track, he said.

  6. Al says:

    Is a lower asking price really so painful?

    What?? Lower the price?? You mean we will not get rich from living in our house?? We have to work and save money?? What is the fun in that??
    Don’t tell me that thats how you become wealthy!! Work is boring and pay so little. I earned more from my house appreciation in the last 5 years that from my work and it is Tax Free!!! Work Suck!!! Someone buy my home?? Please, you know work suck – please do not make me work, you can work and fund my futue why won’t you!! Be Nice!! Please. Pretty please with sugar on top!!

  7. Al says:

    I earned more from my house appreciation in the last 5 years that from my work and it is Tax Free!!! This is a real quote from one of my colleagues along with Apprecition on my house is how I save for retirement.

  8. skep-tic says:

    “The only people who will suffer are sellers who bought within the past year or two and paid top dollar.”

    the portion of the article is presented w/o quotes. it is clearly an opinion, yet it is presented as fact.

  9. factsrule says:

    skeptic: No the people who will suffer are those who bought in the last 3 years or so, we were most definitely in bubble territory in 2003.

    In addition many more will suffer who purchased before 2003, but have used up all or most of their equity, with all kinds of HELOC and the like, I have seen it first hand over the last few years. The expensive cars, the massive home renovations, the numerous vacations, and all of this in every day towns.

    To think this thing is going to be contained just among those who purchased int he lat year or two is foolish. This thing is huige, and the unraveling has just started. Just wait until next year.

  10. MaxedOutMama says:

    And it’s a stupid opinion as well. It’s pretty obvious that retirees who found their property taxes doubling have already suffered, for example.

    But we won’t know who gets hit worst for several years; this took a while to wind up and it will take a while to wind down.

  11. skep-tic says:

    the thing is, for the uninformed, I can understand why they think things will return to “normal” with modest price cuts.

    if you think to yourself, “well, there were record sales when prices were sky high– so obviously a lot of people can afford this. why wouldn’t people buy when the price is 10% off?”

    these people don’t understand what was driving demand during the past few years. some (like the author of this article) are vaguely starting to understand that recent history was abnormal, but he/she still has no idea how abnormal it was

  12. factsrule says:

    James As I said when you posted this on Sunday, this is not a new feature of the Record. It was done every Sunday, during the last real estate down turn, I remember it well.

    It is ironic that they chose to bring to bacjk now, just as history is starting to repeat itself.

  13. skep-tic says:

    further evidence how out of touch the MSM is with this issue: the NYTimes launch of their “Key” RE magazine two months ago

  14. James Bednar says:

    U.S. Q3 employment cost index biggest gain in 2 years
    U.S. Q3 private-sector employment costs up 0.9%
    U.S. employment costs up 3.3% in past year
    U.S. Q3 wages rise 0.9%, benefits up 1.1%
    U.S. Q3 employment cost index up 1% vs. 0.9% expected

    Wage-price spiral?


  15. BC Bob says:

    Got back yesterday from Bermuda. I was waiting for a taxi there and overheard two couples. They were complaining about the prices in Bermuda. One guy says, “I can’t believe that it cost $14.90 for a beer, soda and a bag of chips”. The other guy says, “For that price you can buy a condo in DC”. The other guy responds, “Are you kidding, I wouldn’t pay that unless they threw in a Mercedes”.

    I talked to them briefly, they had recently attended a Wachovia symposium on H-Builders. Thet said that H-Builders were cutting up to 30-40%, including incentives off 2005 prices. They didn’t specify the regions. When I told them I lived in Jersey, they simply said, Why????

  16. Sapiens says:

    The property revaluations for the tax assessments are going in full swing and in earnest. I think they are trying to get them done before the house of cards collapse. The other thing is, those that have their taxes being taken out with their mortgage payment don’t realize that if they fail to make their higher reassessed payment in full that they will be in default of their mortgage.

  17. skep-tic says:

    gonna be tough to make a rate cut with those wage numbers

  18. Richard says:

    Noticing the GSMLS listings are starting to drift downward. Possibly contributing to this I’ve noticed a number of properties being withdrawn and not relisted. I have to imagine a sizable # of these folks are waiting for after the holidays. If you’re a buyer you’ll continue to have plenty of choices through and into the spring and not all the usual crap left on the market. Reason of course is high prices. I’m waiting very anxiously for the spring as I believe we’re going to see some serious inventory that won’t be able to be absorbed. Question is at what point does the exhaustion set in? This will force prices flat to down depending on where you are. I don’t believe we’re looking at prices 10-15% below today’s realistic listings. More like flat to 5% but that will depend on where you are.

  19. James Bednar says:

    All depends on the Q3 YOY productivity. However, I agree, in fact, I think hike would be more appropriate. I’m solidly in the Lacker camp.


  20. skep-tic says:

    Reserve Bank of India just raised rates to 7.25 today

  21. skep-tic says:

    people think there’s going to be a rebound in the spring. we are returning to “normal.” after all, this is only a “pause.”

    I wouldn’t expect to see any deals next spring. I think it’ll take a few months for the rejuvenated hope to wear off.

  22. You ain't no Debt Slave says:

    “This will force prices flat to down depending on where you are. I don’t believe we’re looking at prices 10-15% below today’s realistic listings. More like flat to 5% but that will depend on where you are.”

    Prices are already down 10-15% so what’s up with your 5%?

    Nothing is mobing at their wish prices. Hello it’s not 2004-2005. Snap out of your greed.

  23. Go ahead buy and be a debt fool says:

    “The only people who will suffer are sellers who bought within the past year or two and paid top dollar.”
    Expect many more pigeons to have been bagged by the NAR into thinking houses are an ATM machine.

    The pinch is hitting them watch these houses hit the market start january.

    Gluts of homes ion the market and this will only surge again in a few months.

    make’em pay…Bleed’em dry..

  24. skep-tic says:

    from today’s Journal News re: Westchester 3d quarter numbers:

    Some brokers said part of the problem is the reluctance of sellers to take less for their houses than they could have gotten in the recent past.

    “That’s hard,” said Carlton Gillman of Houlihan Lawrence. “They don’t want to know theirs is worth less than it was six months ago.”

    Greg Rand, managing partner of Prudential Rand Realty, agreed.

    “The interest is there. What you’ve got is a standoff. I don’t see the buyers buckling,” he said.

    “The good news is you’re not seeing deep discounts. You’re seeing moderate discounts.”


    Still a mystery why realtors aren’t pushing for deep discounts when their sales are off by 20% and inventory is up 20-30%.

  25. BC Bob says:

    “I don’t believe we’re looking at prices 10-15% below today’s realistic listings. More like flat to 5% but that will depend on where you are.”

    In my town prices (closed sales) are off a minimum of 10% from their 2005 highs. This does not include incentives. Current asking prices are around this #. The realtors I know, say currently there is no interest at these prices. Based on this, prices will have to fall more than 5% off these asking prices. Unless of course, everybody receives a 60-100% pay raise.

  26. Homer Simpson says:

    I guess sellers think well why cant people just go get an exotc mortage than they can afford the price I am asking.
    I think of the bubble has a hicup and what goes up must come down

    Everyone put your trays in the upright position and fasten ur atey belts its gonna be a bumpy ride

    prices will come down agleast 50 percent why u ask or you are saying I am coocoo for co co puffs Just watch and see.
    Hence why everywhere in Nj is now an easy commute to Nyc they are thew only ones who can afford these prices
    Sure its a 3 hour bus ride but the bus picks u up in front of this house….wow really 3 hours each way…..I’ll take it lol
    Most jerzians that work in nj that i know cant afford these prices

  27. Sapiens says:

    I wonder how many of those trying to sell owe close to the amount they are asking for their pos.

    How many are deep in debt with HELOCs?

    With no manufacturing industry and only credit creation how long did those running the show expected it to last?


  28. BC Bob says:

    “prices will come down agleast 50 percent”

    I originally said prices would be off 30-40% from their 2005 highs. I am beginning to think, that I may have been too conservative. You are right about the seat belts, a crash helmet should also be included.

  29. James Bednar says:

    Bergen County Sold homes report from Tami Rappaport:

    WEEKLY HOMES SOLD OCT. 17 – 24, 2006


  30. UnRealtor says:

    Richard, the buyers who buy with the intention of camping out for a few years, cashing out and moving up, are now out of the market (no appreciation, no incentive.)

    I believe they made up a significant portion of the market, and were esentially speculators.

    These are the people who paid well above asking two years ago, ‘just to get in.’

    Bottom line: when appreciation left the picture, so did all the mania. Sellers are in for a rough ride, prices have a loooooong way to correct — there will be no ‘permanently high plateau’ for this bust.

  31. Spelunker says:

    The 07 spring will bring with it plenty of inventory and seller disappointment. There may be some price adjustments in an attempt to stand out in the crowd. The crowd is so very big though and the cuts so very small though. 15% cuts during the spring will not make the house sell. In my mind the spring will be the first big battle between buyers and sellers. Everything up to now has been somewhat of a skirmish. The spring battle with soften the resolve of the sellers making for the 30% + cuts starting mid summer.

    Sorry for the battle analogy.

  32. Pat says:
    “Eminent domain and the ballot box

    Arizona, California, Florida, Georgia, Idaho, Michigan, Montana, Nevada, New Hampshire, North Dakota, Oregon, and South Carolina have all scheduled votes on the issue. Louisiana approved a similar measure in September.”

    Not a big issue in NJ. Is this because the property tax is taking up the entire frontal lobe, or are bubblier areas more likely to have worse ED issues.

  33. Spelunker says:

    I want to add that even a 30% off the median is not enough to bring it back to affordability. 40-50% is where it needs to drop. Those drops in the median will take some more time. However, even at the 30% median drop there will be many deals out there. Just drop those low ball offers in there.

  34. waters says:

    The only way I see prices coming down 40-50% is if there’s a major recession or a housing panic, which is somewhat possible. I guess I could see 40% inflation adjusted declines 5 years out.

  35. Jase Rion says:

    my advanced apologies for my inexperienced questions. however, i was thinking that if there are enough sellers who can sustain their HELOC’s and will not lower their prices, this will keep prices at the current high level for months, if not years, to come. am i wrong?

    i’m too waiting to buy my first home, but i havent seen any substantial decrease.

  36. Sg says:

    Some examples. In Bridgewater, NJ SFH development.

    Last year very similar SFH houses transactions are as following,

    14 Murphy Dr, Sep 05, $650,000
    9 Hughes Rd, Nov 05, $640,651
    27 Elmara Dr, Jan 06, $642,500
    8 Bertram Dr Nov 05, $635,000

    At present, in the same community, you have listing MLS# 2302462, 2308259, asking $549,000. Prices have already reduced much further then people realize. This comparison may not be accurate as houses may be slightly different, but I don’t think they are significantly different at all.

  37. Pat says:

    Yes, I’m with you SG.

    Although I live in PA, the majority I work with lives CNJ. Same observations. But unless a person watched the original list prices last year, and is now comparing similar homes and list prices, that person may not realize prices are lower.

  38. Pat says:

    A Realtor Says:
    “The market condition I have explained to everyone is as follows….

    Since 2000 thru mid 2005 the market appreciated approximately 118 % and I started to see a slow down in appreciation between May and October 2005.

    Once October 2005 came, there was a market slowdown and a major decrease in ASKING PRICE VALUES hitting the market.

    From October 2005 through September 2006 there was approximately a 18% decrease in asking prices which was really the adjustment of the markets over adjustment in 2005.

    Now it is October 2006 and we will still 2 to 3% more in adjustments but are still adjusting to a large amount of inventory. This inventory is in part around due to the fact that alot of homeowners did not get or listen to advice similar to mine and their properties just sat. Please understand that 2 of my listings went to another agency after 90 days because they did not take my theory seriously and both are still around and another is off the market.”

  39. skep-tic says:

    buying will start to get attractive when we see 30% discounts. 50% off not out of range of possibility given that this is where prices were 5-6 yrs ago and not much fundamental difference between now and then. however, I don’t think it necessary for this to occur to get a good deal

  40. Pat says:

    [Reposting/Duplicate. First try is “awaiting moderation.]

    A Realtor Says:
    “The market condition I have explained to everyone is as follows….

    Since 2000 thru mid 2005 the market appreciated approximately 118 % and I started to see a slow down in appreciation between May and October 2005.

    Once October 2005 came, there was a market slowdown and a major decrease in ASKING PRICE VALUES hitting the market.

    From October 2005 through September 2006 there was approximately a 18% decrease in asking prices which was really the adjustment of the markets over adjustment in 2005.

    Now it is October 2006 and we will still 2 to 3% more in adjustments but are still adjusting to a large amount of inventory. This inventory is in part around due to the fact that alot of homeowners did not get or listen to advice similar to mine and their properties just sat. Please understand that 2 of my listings went to another agency after 90 days because they did not take my theory seriously and both are still around and another is off the market.”

  41. Spelunker says:


    They can keep their high price as long as they like but prices around them will continue to drop. sellers who can sustain their HELOC’s are not the only ones contributing to the inventory. They are only part of the picture.

    You’re right, substantial price decreases have been somewhat illusive but they are out there. It is sort of the white elephant right now for sellers and agents. Denial.

  42. chicagofinance says:

    Panic starting around April 2007 is starting to look about right.

    Question to everyone:

    Am I crazy, or has rush hour traffic not bounced back to normal after the summer quiet period? I always considered the period from October 1st until mid-November to be the absolute peak of the whole year. No one is on vacation, everyone in school and everyone going to work. Strangely, I have still made great time virtually every day.

    Is this an anecdotal reflection of a slowdown?

    People thoughts/observations?

    [papa] chicago

  43. njresident286 says:

    CF –

    congrats on the baby! have you beeb sleeping at all?

    I actually mentioned to my Fiance the other day that area’s that have always been high in traffic the past 2 years are moving much better now. I am not sure if people are finding new routes, or they have moved from the area.

  44. NJGal says:

    Skep-tic, I would take 30% off in a heartbeat. In some cases, even 20% would do it for me, if the house is priced more reasonably now and has a lot to offer!

  45. SAS says:

    “When I told them I lived in Jersey, they simply said, Why????”

    yup, I have gotten that same response too. Then I have to puff out my chest a little and say I also have a place on the uws of manhattan.

    he he… ;)

    Thank god I had a strong back in my youth.


  46. Richard says:

    folks i said flat to 5% of today’s prices, not peak prices.

  47. Lintel says:

    The S&P/case-Shiller index mentioned above predicts through actual trading that the New York City Area Index (of which 14 New Jersey counties are a part of)area is showing a 7.5% drop From Aug 06 to Aug 07. The Aug 07 contract has been steadily dropping since mid-summer 2006. Most of the directional and risk protection trades in the NYC Area Index have been against further downward price action. In other words, there have been few trades betting on higher prices in 2007.

  48. Rich In NNJ says:

    This information is EXTREMLY preliminary, but I thought I’d share this snap-shot of where October is right now.

    For Bergen County ONLY, here is the average & median price along with the number of homes sold and number under contract in October (10/1-31) for the past 11 years. This is for residential SFH listings; this does NOT include Condos/Co-ops & Twnhs.

    Year Avg$ Med$ Sold UnderContract
    1995 $255,296 $255,000 589 581*
    1996 $261,618 $215,000 619 674
    1997 $271,432 $219,000 642 652
    1998 $277,425 $220,000 651 656
    1999 $340,098 $259,000 596 468
    2000 $373,225 $274,000 559 609
    2001 $417,626 $329,000 648 552
    2002 $478,221 $360,000 558 609
    2003 $503,135 $395,000 701 647
    2004 $562,756 $460,000 626 683
    2005 $676,837 $545,000 573 577
    2006 $633,328 $485,000 434 526 as of 10/31/06 11:20 AM EST

    And here is the same data including Condos/Co-ops, Townhouses as well as SFH.

    Year Avg$ Med$ Sold UnderContract
    1995 $237,887 $192,000 720 706*
    1996 $237,259 $192,000 792 832
    1997 $247,577 $205,000 826 786
    1998 $252,701 $205,000 845 830
    1999 $298,098 $235,000 799 616
    2000 $327,550 $250,000 785 828
    2001 $371,773 $299,500 897 749
    2002 $417,984 $340,000 793 850
    2003 $444,996 $364,000 976 923
    2004 $492,371 $420,000 887 935
    2005 $588,046 $490,000 830 797
    2006 $559,749 $449,000 622 719 as of 10/31/06 11:20 AM EST

    *1995 data may be incomplete as I believe this is the first year this data becomes available.


    PS Congrats Chicago!

  49. Pat says:

    No, Papa, traffic is seeming less down here in CNJ, too.

    Peak is right before Christmas, I’ve thought. Shopping after work. Lines coming out of the Menlo Park Mall are just so festive, ha ha.

  50. skep-tic says:


    I would not be surprised if you could get 20% discount from 2005 prices right now. People who have had their homes for sale for 6 months+ with few or no offers may be willing to bargain.

  51. Homer Simpson says:

    Even still many buyer are setteling for 10 percent off. Come on now.
    MOst of nj has had a 65 percent + apprcation over the past 5 years.
    When lookin back there were areas that had minimal to no appeciation before the bubble. People keep talking about the market has to adjust itself out…Well to me Prices drop 50 prcent thats still a 15 percent appreciation which is very good. And that puts the market back to where people can afford it.
    Nj needs to have 3 areas like it did before the bubble
    Upper class area where all the big ballers can move to
    middle class area where a typical jerzian can go who makes a nj salary
    lower class ara where people with not a lot of money can go

    Once we have brought bacj the 3 basic area than people will be able to sell therewe homes

    And for pete sake buyers stop thinking a 10-15 percent drop in acceptable. it not yes maybe you can afford 500k but wont u feel like a schmuck when you try to sell it an can only get 300k for it

    If they are not wiling to go lower wait all overpaying is doing is getting some people out of trouble and getting new people into trouble

  52. LeeS says:

    I don’t think there’s a question as to whether prices have declined, we know they have. It comes down to the fact that those of us here, in general, tend to believe that we should pay what a house is worth, not what seller’s believe it s worth. If 6 years ago, the prices of housing was 3X median neighborhood income, that’s still what it should be today. I can’t even see spending $400,000 on a house that was originally listed at $600,000 and feeling like I got a good deal. The reality is, majority of neighborhoods in NNJ have a median income of $60-80K, meaning housing should be priced accordingly. Correct me if my theory is wrong that houses should be approximately $240,000 for a decent 3BR. Maybe I am out of whack and need someone to tell me so that I don’t overestimate how much of a decline I need to see.

    Neighborhoods I’ve been looking at include Clifton and Bloomfield. I figure I have a much better shot with Clifton since 50% of the town is currently paying $3,000 or more a month to own their homes…

  53. Al says:

    James Bednar Says:
    October 31st, 2006 at 8:37 am
    U.S. Q3 employment cost index biggest gain in 2 years
    U.S. Q3 private-sector employment costs up 0.9%
    U.S. employment costs up 3.3% in past year
    U.S. Q3 wages rise 0.9%, benefits up 1.1%
    U.S. Q3 employment cost index up 1% vs. 0.9% expected

    Wage-price spiral?


    Don’t you mean Price-wage inflation spiral???

    Price went up first….

  54. Clotpoll says:

    All these stats…zzzzz! There are a zillion metrics applicable to real estate markets, but they all have the smell of six month old cheese. Too bad we can’t turn on CNBC at 5 daily and get a new story. Anyone in RE or mortgages who can look you in the eye and tell you with certainty what the market will be like in two months should be avoided like the plague.

    I’m in the biz and field a zillion inquiries a day from both buyers and sellers. Believe me, there are plenty of sellers out there who DO get it…they will offer concessions, reprice and do what it takes to meet the market. That’s why in most CNJ areas, the inventory build has been pretty much flat since July.

    I don’t look for a lot of the avaricious, unrealistic sellers to re-enter the market come Spring, as the incompetent, poop-for-brains agents who would take their listings (and who maybe took those listings during the course of ’06) will be stacking gerbil food at WalMart. Seasoned pros are walking away from these owners in droves.

    Maybe someone can explain to me how an asset class which offers comfort, shelter, status and ridiculously-advantageous tax treatment can utterly collapse. The only surprise I’ve really had in the whole ’05-’06 decline is seeing how much buying interest STILL exists…even in the face of the steady stream of media bile.

  55. chicagofinance says:


    When Hunter arrived, the first words out of his mouth were:

    “boooyaaa boycott open houses, no nott”ing, bleed ’em dry grubbers.”

    Needless to say the nurse and ob were a little shocked.

    I was thinking – “that’s my boy!” ;-)

    Oh – and I’m definitely the dad – get your mind out of the gutter! :(

  56. InvestorDavid says:

    “MOst of nj has had a 65 percent + apprcation over the past 5 years.
    ….Prices drop 50 prcent thats still a 15 percent appreciation which is very good.”

    If the house was bought at $500K 5 years ago and the price went up 65%, the new price is $825K. If the price drops 50%, the new price is $412.5K.

    I think price went up around 85% between 2000-2005 in NNJ area.

    If 5% appreciation every year should be normal, a house bought at $500K in 2000 should be about $670K at 2006. But in year 2005, the price was 925K. To be at $670K in 2006, the price has to come down $255K. 255/925 = 27%.

    So the price should come down about 27% from the peak price of Summer 2005, if we assume 5% appreciation in real estate.

  57. Pat says:

    “Maybe someone can explain to me how an asset class which offers comfort, shelter, status and ridiculously-advantageous tax treatment can utterly collapse.” It’s called renting.

    “The only surprise I’ve really had in the whole ‘05-’06 decline is seeing how much buying interest STILL exists….”
    It’s called stupidly ignoring the stench of dumped inventory.

    CF..yeah, gotta get’m indoctrinated…just have to resign yourself to your parental duty. My kid told her Pre-K teacher last spring that houses crash. The poor teacher thought she needed some testing. Now, she likes the term “dead-cat bounce” and repeats it while jumping rope.

  58. chicagofinance says:

    Clotpoll Says:
    October 31st, 2006 at 12:11 pm
    Maybe someone can explain to me how an asset class which offers comfort, shelter, status and ridiculously-advantageous tax treatment can utterly collapse.

    I will use an analogy with companies and stocks. You can have a GREAT company, tremendous management, defendable strategic position, large margins, excellent growth prospects…..however, if the price is too high, it can be a terrible investment.

    If you cannot fathom the same relationship in the current real estate market in NNJ, then you simply are refusing to be objective [either consciously or not].


  59. Homer Simpson says:

    Homer Says its time for a little christmas song to break up the nutiness (Just go with it)

    Deck the Halls with Greedy Grubbers
    tra lalala la la lala

    Tis the Season to be greedy
    tra lalala la la lala

    Time to pull my house and relist it
    tra lalala la la lala

    Now I have tricked and scammed you haha

    Please please please help me get rich quuuuuick
    and buy my overpriced hoooooooooooooooooouse


  60. chicagofinance says:

    as if it were not obvious


    October 31, 2006 — A $5 billion New York hedge fund has found itself in hot water with its clients over charges that one of its executives engaged in questionable use of the hefty fees investors paid to it.

    D.B. Zwirn & Co., which makes its home on Fifth Avenue, held a series of conference calls with key investors over the past weekend to address the issue of its internal financial controls, The Post has learned.

    An individual familiar with the calls told The Post that Zwirn “discussed how a former finance executive with the fund inappropriately expensed ‘items’ ” to its investors over a number of years.

    He would not provide examples of what “items” investors were charged for.

    Another source familiar with the calls said there was a lot of discussion of “whether these internal accounting problems extended further to issues that directly affected client capital,” such as valuation of its holdings and allocation of its investors’ money

    Based on the typical 2 percent management fee most hedge funds charge, the Zwirn operations take is roughly $100 million annually in cash from management fees and tens of millions dollars more from its 20 percent cut of profits.

    One source close to Zwirn told The Post that while there were calls made over the weekend about its accounting issues, the problems did not affect the fund’s asset valuations.

    Daniel Zwirn, the fund’s managing partner, did not return repeated calls. A fund spokesman also refused to comment.

    This is the second black eye in recent weeks for the fast-growing five-year old Zwirn fund, a major player in the loan trading market.

    The Post reported two weeks ago that the fund hired David Becker last year, the disgraced former head of commodities trading at Citigroup, who was fired in March 2004 for overstating the value of Citi’s commodities book to boost his bonus.

    Becker, who copped a plea in federal court on Sept. 27 to one count of conspiracy to falsify bank records and to commit wire fraud, was fired from Zwirn on Sept. 25.

    The fund told The Post that the background checks on Becker did not reveal any red flags.

    Daniel Zwirn, a 35-year old Wharton graduate, did stints with $8 billion Highbridge Capital Management and MSD Capital, the private investment fund of computer billionaire Michael Dell, prior to opening his own shop in 2001.

    The deepening mystery at Zwirn comes amid calls in Washington for greater regulation of hedge funds, which are private pools of capital used by the super-rich to invest.

  61. Nothing less than 25% off peak 2005 says:

    what has changed in our economy or job market to justify 80-100% increases in houses the last 5-6 years?

    Think about it.

    Jobs leaving the state, property taxes soaring, energy soaring utility expenses soaring…..
    Wages fairly stagnant, incomes going up due to escalating healthcare cost.

    This move is not justified. Use your friggen noodle.

    Still stupid idiots are buying houses at inflated prices. They deserve the consequences of their lazy drone-like mental behavior.

  62. Nothing less than 25% off peak 2005 says:

    What a bunch of slimeballs!

    MBAers all taught to put me me me first in every transaction.



  63. Al says:

    The Labor Department reported that its Employment Cost Index was up 1 percent in the third quarter, compared to a 0.9 percent rise in the April-June period. It was the biggest quarterly increase since a similar 1 percent rise in the second quarter of 2004.

    The increase, which was above the 0.9 percent rise that economists had been expecting, was led by a big jump in the cost of employee benefits such as health insurance and pensions

    So all that fuzz is over 0.1% extra?????? now think about what 0.1% extra would do for you personally (unless it moves you into the new higher tax bracket than the effect is huge!!!)……

  64. Al says:

    I seen not able to close my tabs

  65. Al says:

    For teh post of the wages grows -yes it seem more and more like inflation spiral, but in htis case it is central Bank/goverment induced spiral.

  66. Nothing less than 25% off peak 2005 says:

    This is great point.

    The increase, which was above the 0.9 percent rise that economists had been expecting, was led by a big jump in the cost of employee benefits such as health insurance and pensions

    So all that fuzz is over 0.1% extra

    Most of the gain in “incomes” was healthcare related NOT wage grwoth..


  67. Glen says:

    I recently moved away from NJ (sold the house for a decent profit) and moved into a realy wild market out west.

    Here in 2002, a brand new 2500 sf, 4 BR home would sell for an average of about $160,000

    In late 2004 and early 2005, a huge boom happened and these same homes were selling (quickly) for over $500,000. Rarely with bidding wars, but they’d only be on the market for a few hours. Inventory was very tight.

    Many of my neighbors caught “equity fever” and started building their custom dream “mcmansions” several miles away, counting on their massive equity to pay for the new luxury digs. This is happening all over the place. About a year ago, these people started to see their house sit and sit and sit on the market. Overpriced. But in my casual curbside conversations with them, ALL of them felt entitled to the prices that had been seen by their peers just months before.

    I have a neighbor who has had a sign in his yeard for 9 months now. Actually, 3 of them. He fires the RE agents that deliver him the truthful news. He wonders why they suck so bad at selling his house. He has never budged his price, not even once. I see open houses at this place not just every weekend, but on both days of the weekend. His asking price? $525,000. I know from tax records that he paid $225,000 for it just 3 years ago.

    What an idiot. He could sell it tomorrow for $425,000. $200k in profit in just 3 years. Insane. Greed kills.

  68. Nothing less than 25% off peak 2005 says:

    what has changed in our economy or job market to justify 80-100% increases in houses the last 5-6 years?


  69. James Bednar says:

    The fuss isn’t about the .1%, but the 3.3% private sector YOY increase.

  70. Jay says:

    bc bob, welcome back, aaaah, bermuda.

  71. BC Bob says:


    Thanks for the great work. We are just in the beginning phases of this bust and already down approx 12% in BC. Who knows what the real # is when you throw in the incentives.


    Just got back in town and saw the news. Congrats and all the best. Now, I would have really been impressed if he added, buy gold!!!

  72. AntiTrump says:

    James Bednar Says:
    October 31st, 2006 at 8:37 am
    U.S. Q3 employment cost index biggest gain in 2 years
    U.S. Q3 private-sector employment costs up 0.9%
    U.S. employment costs up 3.3% in past year
    U.S. Q3 wages rise 0.9%, benefits up 1.1%
    U.S. Q3 employment cost index up 1% vs. 0.9% expected

    I agree with Lacker the rest of the fed is behind the curve on inflation. They will get blindsided if they don’t raise the rates further.

  73. Jay says:

    Canada’s housing market braces for soft landing
    Record inventory puts brakes on sales, prices

    Tuesday, October 31, 2006

    Inman News

    Existing-home sales in Canada fell 6.7 percent below their year-ago level in September, as for-sale inventory rose to a new high, according to seasonally adjusted figures provided by the Canadian Real Estate Association.

    According to the Multiple Listing Service, some 38,890 homes were sold on a seasonally adjusted basis last month, down from 41,699 sales in September 2005. Sales sank 1.9 percent from the previous month, as activity slowed considerably in British Columbia, Ontario and Quebec, despite Saskatchewan posting its best sales month ever, CREA reported.

  74. BC Bob says:


    Thanks!!! I have to say it is distressing leaving the pink beaches and landing in Newark!!!
    I met people from all over the world. It sounds like Australia, Sweden and Ireland is very similar to here, ridiculous prices that are not in tandem with the underlying fundamentals,financed with toxic loans.

    The DC people that I referred to earlier expect at least a 50-60% fall in their market. One thing I found in common, a lot of these people have owned numerous properties over the years and have liquidated most of their portfolio. However, I did not meet any RE brokers nor mortgage brokers.

  75. Sapiens says:

    Steal of a deal
    Houses bought at inflated prices. Millions in loan proceeds allegedly pocketed. All ending in foreclosure. In Colorado, it’s one part of a nation-leading problem.

    This is just the beginning. Let’s see how bad it gets once the shenanigans from Jersey are known.


  76. Al says:

    Dare I say it – if the bubble is worldwide – may be we need to look at the money our stock funds managers/CEO’s/Bankers are making while our stock portfolios getting 5% year????

    Fire all of CEO’s are more that x20 of average salary in the country, fire all stock managers who’s salary is more that x10 for average salary in the country… It is not like they are risking their lifes as solders in Iraq or police officers all over the country, or mining workers working at 30$/hour….

  77. Sapiens says:

    Foreclosures Soar in Region

    As ARMs come due, residential filing rate rises 20 percent

    News from Connecticut..


  78. Al says:

    It seems like grab@run mentality all over the world – I will make millions today and after that I do not care what happens -I am rich!!!

  79. Jay says:

    global economy and global housing crash. makes me uncomfortable for sure, nowhere to hide. Has some serious implications for all.

  80. Pat says:

    Al: IMO, no need to fire anybody, just rewrite some reporting and disclosure requirements. Prospectus must be 8th grade level. Fees must be stated in a simple chart on the cover, or Page 1.

    “For too long, workers approaching retirement — for whom investment decisions are absolutely crucial — have been denied clear information that would allow them to make informed decisions,” said John Bogle, founder of the Vanguard Group.”

  81. Nothing less than 25% off peak 2005 says:

    speculators and flippers are gone? Are they really gone, or are they now just sellers, instead of being buyers? A large proportion of the investors are still waiting to sell their investments, the negative impact of speculation is still to come.

  82. Jay says:

    More on the international theme, from Australia:

    Housing affordability in ‘destructive cycle’
    By Jessica Marszalek
    October 31, 2006
    PEOPLE who cannot afford to buy their own home are unknowingly making the housing affordability problem worse, an industry body said today.

    Urban Development Institute of Australia (UDIA) Queensland president Brent Hailey said housing affordability was now so bad, those who could not afford homes were funding their own social and economic problems in the future.

    Instead of pouring money into home repayments, he said, people who could not afford to buy their own property were spending more in other areas, putting pressure on interest rates.

    And rising interest rates made the housing affordability problem worse, Mr Hailey said.

    The Reserve Bank will consider raising interest rates at its monthly meeting, next week, with some observers tipping another rise.

    Mr Hailey said this was a “destructive cycle” that would lead to job losses in construction and other industries, as people who moved to Queensland could not find affordable housing to buy or rent.

    He said Queensland could end up with a whole generation of renters, as had happened in London and New York, as couples gave up on the dream of owning their own home.,20867,20676884-1248,00.html

  83. Jay says:

    Some Predict That the Worst
    Of Housing Slump Has Past

    By James R. Hagerty
    From The Wall Street Journal Online

    Just when the gloomier pundits were starting to enjoy the housing slump, optimists are piping up to declare it could be almost over.

    Former Federal Reserve Chairman Alan Greenspan, whose interest-rate cuts helped create what he once called “froth” in house prices, said in a speech last week that he detected “early signs of stabilization” in the housing market. Some Wall Street economists also are saying the worst may be behind us.

    Not so fast, replies Ian Shepherdson, chief U.S. economist at High Frequency Economics Ltd., a Valhalla, N.Y., research firm: “It’s going to get worse before it gets better.”

    Some of the optimists’ arguments are dubious. To bolster its position that the housing market is stabilizing, the National Association of Realtors last week trumpeted a 2.4% decline during September in the number of previously occupied homes offered for sale through multiple-listing services. But the Realtors’ news release didn’t mention that listings almost always decline in September, when the back-to-school season means fewer people are moving. Over the past 20 years, listings have declined an average of 3.4% in September, says Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse.

    Ms. Zelman, who last year correctly predicted a plunge in home-builder share prices, thinks investors who now are bidding those prices back up are way too early. Sales of new homes are unlikely to start rising again before early 2008, she says. Meanwhile, “land is going down in value daily,” she says.

  84. Sapiens says:

    Qui bono? Who benefits?

    Guys, so we know this market is unsustainable.

    Basic arithmetic tells us that if you don’t have the income you can’t afford the house.

    If there is no price appreciation, there is no equity to extract, meaning no HELOC.

    If housing crashes like is doing, QUI BONO? WHO BENEFITS??

    What is the big picture??


  85. Spelunker says:

    “Basic arithmetic tells us that if you don’t have the income you can’t afford the house.”

    so very true. for the past few years people side stepped this obstacle by creative financing or by selling a house that was way over valued or a little of both. Those days have come to a close. average middle income new jersey residents cannot afford the average house. not by a long shot.

  86. Clotpoll says:

    Hey Pat (from repsonse #58)–

    It’s called renting? So a bunch of renters (who’ll beat those meany sellers by shooting themselves in the foot) will pull a multitrillion dollar market into collapse? Are they going to organize themselves via the Vulcan Mind-Meld, so they’ll all simultaneously know when things have bottomed?

    And as for “stupidly ignoring the stench of dumped inventory”…let me get this straight: homes for sale are either 1) grossy-overpriced and headed for the junk heap; or 2) “dumped inventory” if they are somehow fortunate enough to sell?

    I guess the slow, steady stream of pretty nice places I see selling every day (granted, at mid-to-late-2004 prices) must be an illusion. This market is nothing, compared to the late 70’s-early 80’s. When I see wrap mortgages all over the place and developers taking back notes at 17.5%, I’ll buy into the “collapse” camp, then retreat to Idaho with a case of grenades and a year’s worth of beef jerky.

    Until then, I’m enjoying reading the collected writings of all you prophets of doom! BTW, as a Realtor, I don’t care where prices go…as long as the amount of available transactions stays good, all is fine. It’s just as easy to lean on sellers as it is to lean on buyers.

  87. Pat says:

    Subsidies determine who feels the pain and who doesn’t.

    Into which section of the housing pancake stack do the subsidies get inserted? My money is on subsidies that support median price. Then bankers win. Roll out the dead foreclosures and get those new buyers in here at the bottom..STAT! There’s a nice new little subsidy described on JB just posted a high-end killer (proposed close of loophole) that will also subsidize median.

    Anybody notice a couple of newsbleeds lately about how poor, highly in-debt soldiers aren’t allowed combat duty? Let’s change usury lending rules, and put the payday loan businesses out. Now, our boys need some help here.

    What do you think is down the pike on that one? I’m not putting my tin-foil hat on here, but come on. Why would that kind of news be feeding out right now?

  88. Pat says:

    Last comment replied to Sapiens 87.

  89. Pat says:

    Clotpoll…for the last couple of years, buyers have been crying the anti-realtor blues. “Who needs re agents? Get rid of the middle-man, use the internet for what it should be used for” etc.

    What do you think will happen after the next few years of “leaning on sellers” takes place? Sellers are going to be chiming in with the anti-realtor slogans.

  90. FH NJ says:

    Too funny! Monmouth County, Fair HAven


  91. Seneca says:


    Please share the MLS #s of the properly priced homes. I am a interested in buying even at the risk of being called a bagholder by the poets on this blog.

    I have a simple calculation to determine the appropriate price: 1997 to 2000 comps prices * (1 + 5%)^n where n = the numbers of years between the comp sale and today. If you have any clients selling their homes within this calculation, let me know, show me the MLS #(s).

    So far, all the homes I have looked at are asking for a 10%-15% year over year growth even if they have held the property for 7 years or more.

  92. Jay says:

    “When I see wrap mortgages all over the place and developers taking back notes at 17.5%, I’ll buy into the “collapse” camp, then retreat to Idaho with a case of grenades and a year’s worth of beef jerky.”

    Beef jerky can be quite unhealthy, I would recommend a more balanced diet.

    Seriously, it doesn’t require high interest rates for the market to tank, as we have seen.

  93. Politely says:

    CF – congrats!

    As for post #55: You only have to look at past bubbles to see how it can collapse. But aside from that, I did want to specifically address the “ridiculously-advantageous tax treatment” statement. It’s not exactly true. If you’re subject to AMT, which, among other things, is more likely to be triggered as your deductions (eg, state, local & property taxes) increase, this “benefit” quickly becomes unbelievably painful. Under AMT, almost all of your deductions (including state, local & property taxes) get added back to your federal taxable income – consequently this is ridiculously dis-advantageous. You get taxed twice, and consequently, the higher your property taxes, the more you pay in federal taxes. With respect to a tax benefit from housing, under AMT, you can still get to deduct mortgage interest (with some caveats, of course) – which I could argue is a benefit I would rather live without.

    Clotpoll, if you’re showing expensive homes with high property taxes or otherwise dealing with high income folks, I would go easy on trying to sell the tax benefits, because you may find your buyer suddenly losing interest or getting quite irate about taxes.

  94. skep-tic says:


    I what market (area, price) are you seeing this steady stream of sales?

  95. BC Bob says:


    This market is imploding on its own. It has nothing to do with int rates/employment etc.. It is built like a deck of cards, the foundation being debt,debt,debt. The financing in place (adj over the last few years) only works with constantly rising prices. Flat prices and they are in deep piles. This market will retrace to where the craziness began, around 2000-2001. Markets always retrace to where fundamentals support it. We have seen increases of 80-100% from 2000-2005. History indicates that RE increases approx 1-1.25x the inflation rate. If we assume 3-4% annually over this time, you are talking about approx 20% gain. We will retrace the additional 60-80% gains, at least 30-40% decline.

  96. Homer Simpson says:

    This site Should be proud if you google for
    “Greedy Grubbers”
    this site comes up number 3
    and Jims old site comes up number one and 2 way to go for being the Greedy Grubber originators :)

  97. Spelunker says:

    maybe time to add it as the slogan for the site?

    “I guess the slow, steady stream of pretty nice places I see selling every day must be an illusion.”

    maybe a hallucination. are we talking about NJ 2006?

  98. James Bednar says:

    Surprising move by the 10Y today.

  99. BC Bob says:

    The only steady stream that I see is the increasing # of problem loans.

  100. BC Bob says:

    “BTW, as a Realtor, I don’t care where prices go…as long as the amount of available transactions stays good, all is fine. It’s just as easy to lean on sellers as it is to lean on buyers. ”

    In the past few years, you had buyers who were bidding up properties 10-15% ,in some cases more than that over asking. You thought it was prudent of them to do this??? Did you also suggest that they finance with an I/O because this was all they can afford/only way for the deal to go through??? Is this how you lean on a buyer??? Now you have no problem leaning on them and suggesting they take a 20-25% haircut???? Sounds like they lose on both ends. Why would you have to lean on a seller??? RE agents always tell me that RE prices never go down.

  101. Sapiens says:

    James Bednar Says:
    October 31st, 2006 at 4:20 pm
    Surprising move by the 10Y today.

    Not at all JB!

    Did you see our trade balance last month?

    Where are they going to place all those petro-dollars?

    T-Bill ofcourse!


  102. Al says:

    Hmm realtors/flippers are getting a lot of responses. I should try one:

    Come one house prices already dropped 10% – if you scale down to 1999 prices it will be 20% in 1999 prices. So what are you waiting for?? you are getting great deal on this small slowdown. Economy is very strong, wages growth 0.1% above predicted!!!!! and if Fed reviewes it later it will be 0.5% more – fed always wrong in it’s calculations.
    If you do not buy now you will miss the other strong period of appreciation!! you wll complain forever while sitting in you 300$ jeans, watching wealthy foreighners buying houses all over NJ!!!!

    Real estate always goes up!!!

    ARM’s are good – they increase affordability and you can always refinance later when FED will lower rates again.

    P.S. Dog Food is better alternative to Beef Jerkey – it has more calories, vitammines and aall minerals. And it is never goes bad(just like real estate never goes down). Ohh yea, Dog Food is cheap (just like houses).

    Peace Out :)

  103. BC Bob says:

    Re: 10 Year

    In addition to what Sapiens has stated,the NAPM had a big drop and the mentality on the floor, at this time, is to buy the dips. Also: China,China,China.

  104. Clotpoll says:

    To Seneca (from #29); what price, what area? I’m in Somerset/Hunterdon, and I don’t know anything outside my home turf. There are a few values here, though.

    This is fun…I’m enjoing the taste of some of the words that have been stuffed into my mouth, like “real estate never goes down” or “buy this home with an i/o mortgage and refi later”. Are you guys past clients of mine? Have you taped me? Because if you did, you’d know I don’t play that (nor do other honest Realtors). Why work with a Realtor? I dunno. Anyone can make a purchase or make a sale; works fine…if you think real estate is just a commodity and the only thing that sells it is price.

    Skep-tic, don’t take my word on the slow, steady stream of sales. will tell you in Somerset/Hunterdon, the inventory stopped growing around July. If I run a cursory search in this area and look for both new active listings and under contract listings- beginning from the same date- the numbers come up roughly even. Granted, the sales pace and pace of new homes coming on market is not lighting up the planet, but it’s ok. I’m not hyping how great things are here…just pointing out it’s not Armageddon. I do this every day, and I’ve seen much, much worse.

    Have we already forgotten the S & L crisis? Many townhome communities in NJ were built on bogus appraisals and financed by chimps. Original owners in those developments took an immediate 50% beatdown and waited years to get back to break-even. Talk about greed, fraud and collapse!

    This market is a piece of cake.

  105. Al says:

    Realtors worry. me happy.

  106. UnRealtor says:

    “This market is a piece of cake.”

    All in due time, the music hasn’t stopped playing yet, hang onto your hat.

    (No 5% commission for the triple cliche.)

  107. Al says:

    I am just wondering – what reaators doing on this blog??? I am salaried worker, so I can’t make more money by working extra hours – in fact my company does not allow overtimes unless with specific permission of the VIP…

    Should not realtors be selling homes if buisness is going with normal speed??? or it is soooo good that you don’t minnd passing on a few 6% (18K comissions??) to post some messages on the blog?

    Or those pesky flat fee brokers getting under your skin?? or even FSBO???

  108. Al says:

    And Yes I am tired and grumpy right now…
    Good night all, waking up at 5am is no fun.

  109. Jay says:

    Clotpoll, it’s way to early in the game to be drawing any conclusions. Come back in a year or two, let’s see what you have to say then…perhaps from Idaho.

  110. Homer Simpson says:

    Just pointing out it’s not Armageddon

    Wow I can’t believe this, what have we been doing here this whole time. We should listen to realtors because they read

    First off “Honest realtor” How can you think that people can afford these prices. Forget these silly loans for a minute, house are not selling becuase yes no one wants to pay these prices but cannot afford them. People are supposed to live with in there means. So please explain I live in NJ make a NJ salary how can I afford a 300K 3 bed 2 bath townhouse? I know Somerset county very well also. I know what prices were 5 years ago. Please explain to the board all knowing and all mighty realtor if that same townhouse went for 130,000.00 a few years ago, what makes you think people can afford that much now? With prices of taxes. There was an article stating most people in NJ have an average of a 1900.00 mortage and they cannot afford it. A 235K house with taxes is 1900.00 plus per month on a 30 year fixed.
    I have seen prices of townhousesdrop 50-60K in towns like Hillsborough. I know most areas in that county and I have seen houses on the markets for months and months.

    If the market is going to adjust itslef out than it needs to drop a termendous amount.
    Hence we will have Armageddon. People and banks will be losing money. I feel bad for I/O mortages. So many people are just paying interest and will not be able to make there money back if they sell it in a few years. This is only the begining. Realtors
    love to act like they no what will happen but anytime you ask them about the last bubble the stutter on there words.

    Realtors are a dime a dozen, unfortuantly they are so much like lawyers they will do anything for a paycheck. (except lawyers to a much better job at selling there case realtors could not sell there way outta a paperbag) Prove me wrong tell me why I should pay all this money for a house, why it has easy access to a bus? I work in NJ try again? It has big shiney windows?? It has nice size rooms?? I can read the listing too. But hey dont forget to mention that the house down the road is the local crack house…I guess thats not a good selling point. I have asked realtors on townhouses what the maintence fee covers..urr umm I don’t know.. Realtor can’t answer simple questions and I am supposed to let you look for houses for me? Screw that, agleast if I look I can find what I am looking for.
    I have been to close to 100 open houses over the passed few years and have yet to find a realtor that has any selling skills. Well I can uhh look around tell me what you want? Why I can see the same things you can at gsmls.
    And why is it that realtors relist there properties lie about it and than when you confront them they have some sorta excuse. I have NEVER met an honest realtor.

    AND DARE I SAY….A realtor is so much worse than a pushy car sales man(but agleast car salesment or women can answer my question and dont give me dumbfound looks and a crack of drool like realtors do)

    So don’t even begin to act like you know. REALTOR=LIAR SCAMMER



  111. Clotpoll says:

    Hey Al,

    Lighten up, man. If Realtors are persona non grata here, I’ll leave. Just tell me. I hope not, though…it’s more fun pestering you ghouls (Happy Halloween!). BTW…this is all a part of selling homes for me. Gotta keep the gray matter stirred up.

    “Pesky flat fee brokers”? Check their market penetration. Was miniscule in the best of times (around 1% of sales in GSMLS)…is non-existent now. They are- and will be- a non-issue. Fleas.

    Politely…point well taken on the AMT and the attendant tax blowback. However, it’s hard to beat the 500K capital gains exemption on the sale of a marital primary residence. What other asset sale do you get that deal on?

  112. chicagofinance says:


    I think you are correct about the Ten.

    Fookun’ unbelievable.

    It’s screamin’ recession.

    I don’t care about all of the variables.


  113. BC Bob says:

    “This market is a piece of cake”

    Gotta love this one!!! I bet Bob Toll doesn’t agree, he said he has never seen a market like this. Go ask Kara, its workers, its suppliers, its lenders, its customers. Go ask Realty Trac. I can go on and on. We are in the initial stages of the biggest bust ever in RE history. We are in the first mile of a 26 mile marathon. This bailout will make the S&L crisis seem like a walk in the park!! The cake is being sliced into smaller and smaller pieces. Pretty soon, there will be only crumbs on the floor!!

  114. chicagofinance says:

    Here you go —- yeah…

    Oct. 31 (Bloomberg) — Treasuries rose, pushing 10-year notes higher for a sixth straight day, as reports showing business activity and consumer confidence declined this month suggested the economy is losing momentum.

    Ten-year notes swung from a monthly loss to a gain after the statistics, as yields fell to the lowest in more than three weeks. Traders increased bets the Federal Reserve’s next move will be to cut borrowing costs before April.

    “Consumers are spending less and growth is down,” said Andy Richman, who oversees $8 billion in fixed-income assets as a strategist for SunTrust Bank’s personal asset management division in West Palm Beach, Florida. “The combination of the two is certainly helping the bond market right now.”


    Cut in 2007

    The combination of data “supports the case for those who think there may be an ease sometime in 2007,” said Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc., one of the 22 primary U.S. government securities dealers, which trade with the Fed.

    Interest-rate futures contracts show traders see a 14 percent chance the Fed will cut its benchmark rate by a quarter- percentage point to 5 percent in January, compared with zero percent odds a week ago. There’s a 79 percent likelihood of a cut to that rate by March, futures show.

    The Fed left its benchmark overnight rate unchanged at 5.25 percent the past three meetings. It said after last week’s gathering that inflation will likely moderate.


    “When you get weak economic data, but you don’t think it’s going to cause the Fed to begin easing in the near-term, you generally get further inversion of the yield curve,” said Joseph Shatz, senior government bond strategist at primary dealer Merrill Lynch in New York.

  115. Pat says:

    Hey, Clotpoll, btw, you got me reading my Shakespeare again this afternoon.

    Don’t hate the messengers, O.K.?

  116. Clotpoll says:

    Yeah…don’t hate the playa, hate the game. Shakespear rocks.

    Homer, what an original piece of vitriol! Realtors are all the same…just like lawyers…all dishonest…all stupid…eat babies…control the world banking system. Very evolved there. I think there was another thought you were trying to convey, but I don’t understand Piltdown.

    Copy that on not being able to find a good agent at an open house. You never will, either. Good agents rarely do them. Right now, NAR says fewer than 2% of homes held open sell as a direct result of the open house. Try going into work and proposing a project that has that potential for success! Agents use open houses as remote personal offices to meet buyers and sell them other homes.

    Maybe we are stupid…

  117. BC Bob says:

    “However, it’s hard to beat the 500K capital gains exemption on the sale of a marital primary residence. What other asset sale do you get that deal on?”

    No argument there. However, this is not the issue. That worked over the last 20 years. You better worry now about the return of your $, not the return on your $. Now,it’s all about prices in direct correlation to incomes. How do you justify 80-100% price increase while incomes rose 15-18% during the same time frame, negative real incomes??? Simple, you don’t. Also, the migration of high income jobs out of the state, being replaced by lower paying govt/servive related jobs is looming like a big dark cloud over this market. It was a great run, one for the history books. Unfortunately, the decline will be just as big if not bigger. Asset appreciation is out, cash is king.

  118. Clotpoll says:

    And as for Bob Toll, don’t feel sorry for him. He may be staring at cancellations galore, but dig this:

    TOL closed on 8/14/06 @ $23.95. Since then, TOL has risen to today’s close of $28.91. No amount of subsequent bad news has been able to drive this- or many other homebuilder stocks- further down.

    Also, Bob Toll currently owns 12.6% of the outstanding float in TOL. He has made no sales in 2006, and none are planned. His brother, Bruce, however, has pretty much cashed out…in order to throw it all away in the newspaper business.

    Bob Toll has seen it all and is crazy like a fox. Take nothing he says at face value.

  119. patient homebuyer says:

    wow a real troll on halloween

    clotpoll you make me laugh

    we will see how smug you are come spring 07

    better get more of those fancy business cards

    with your ugly mug on them

  120. James Bednar says:

    I’ll be at the Otteau Fall Market Seminar in Edison on Friday. Any agents here planning on attending? I was hoping to attend the Secaucus seminar but my schedule didn’t agree with it.


  121. BC Bob says:


    What I said had ZERO to do with Bob Toll’s stock position, only his take on the RE market. However, since you brought up the stock, dig this. In 7/2005 the stock was close to $59. It is now a mere $5 off its low and $30 off its high and this is something to cheer about??? In addition to this, it came down on heavy volume, up on very weak volume. I hope you don’t manage $ on the side. If you do, let me know, I’ll be happy to take the opposite side. By the way has the stock risen or is it the proverbial dead cat bounce. The charts look sick to me. By the way, you never answered how 80-100% price increases can be supported by negative real income over the same period. You also did not address the high paying jobs taking their cake out of state???

  122. politely says:

    Clotpoll, can’t speak for everyone here, but I like when realtors stop in. Either they provide good information about the market or they provide entertainment by making silly claims – although sometimes it’s hard to tell which is which. :) Either way, the interaction is thought provoking and makes the board more interesting. Hopefully the high emotional content doesn’t chase you & the other realtors away.

    As for the $500k exemption, sure it’s nice, assuming you have gains :)

  123. BC Bob says:


    I agree, when they offer something of substance. When somebody is applauding a 50% decrease in the price of a stock,because it is $5 off its low, where is the value??? If the market is down 20% it is a bear market, what is it when a stock is down 50%, a bust??? I have been waiting for somebody to convince me to become a homeowner again, I could be wrong about this market. Funny thing, since I have been on this board, I have not received one valid reason why I shold buy now. But you are right, mainly on the entertainment end.

  124. It's crashing says:

    It is comical listening to the realtors.
    Starter houses at $500,000.
    20% down is $100,000.
    $400,000 Mortgage.

    How mnay starter families have $100,00 to put down and afford a $400,000 30 yr mtg?

    First of all a shack like this would probably rent fr about $1800-$2000 a month.

    So 5% Interest on $100,000 = $5,000 lost intrest on downpayment.

    $400,000 30 yr at 6% or so $24,000 a year in interest only or $2,000 a month = to rent payment.

    Then what about those property taxes of $5500 a year or $458 a month. Insurance $50 a month.

    So far to buy a shack starter house $2000 in interest + $458 a month taxes + $50 a month insurance or $2508 a month for only these 3 items. What about maintenance and other expenses? ight as well add on another $300 a month over time.

    Oh I forgot about the $416 a month in lost intrest at 5% on $100,000 downpayment.


    iT’S FAR FAR CHEAPER TO RENT. When prices drop to about $350,000 on this house does it make sense to buy.

    Run the number with any clown realtor and watch how they squirm.

  125. Clotpoll says:

    BC Bob–

    No response on the 80-100% price increases in the face of the decline in real income because you’re absolutely right. In fact, the NY Fed has attributed every pullback in RE in the Northeast US since WWII to this imbalance occurring to some degree. High-paying jobs leaving NJ exacerbates this situation and it’s a real, ongoing concern. I’ve personally sent scores of families to NC over the past 18 months…and they’re not coming back.

    However, that doesn’t necesarily render NJ a barren wasteland. I think drugs, biotech, telecom, financial services and defense are pretty well-positioned industries for the next 100 years or so. And, even though I’ve been here 14 years, I still can’t figure out the self-loathing that affects so many residents here. The grass is not always greener in the Sun Belt. And, the market power of the households created by immigration and second-generation Americans moving west from NYC has been long underreported and underestimated.

    The charts on TOL do look pretty bad. However, you can’t put a graph with a deposit slip and go to the bank. Show me a well-run company (which you have to admit TOL is) trading at book value, and I’ll show you a buy. So what that it’s up on weak volume…it’s up. I’m also gonna go out on a limb and guess that Bob Toll is averaged in somewhere south of $59/share.

    Thanks, Politely. I field a lot of emotion every day. No big.

  126. Homer Simpson says:

    Well see that just riduclous that “good realtors” don’t do open houses.

    How is the Buyer supposed to get a good realtor than?
    I can’t trust word of mouth either. And I take it you put newbie realtors in open houses. Which makes no sence. Yes it may get them experince, but it gives the impression that the company that realtor works for deals only with Bafoons, so I would never get an agent. I mean at this point with the market in a downward spiral it just seems that realtor would be putting there best sales people into the open houses. Even if people don’t buy at open houses, if I walk into an open house, the realtor can answer my question tell me what the bennifits and dare I say some history about the house??? I guess this is why I have a negative view on realtors. Its like there robots, they all say the same thing and to this day there are realtor who say the market is fine and will may a come back.
    To me realtors ar brainwashed zombies, with all the diffent open houses I have been to I hear the same thing. I understand for the past few years you could say easy access to a bus to NYC or even its got nice size rooms.
    But the thing that get to me is realtors saying I am not making any money, and yet to this day I can go into an open house and there still no selling other than whats on the listing.
    So if its a little differnet than how realtors work, hey realtors especially should know that they need to adjust the way the run busniess to adapt to the market.
    I understand that yes some people were and still are in denial, but suck it up and adjust accordingly.
    Even new homebuilders say they cannot profit from building smaller homes, no they can they are just not going to make as much as they did for the Mega mansions. If homebuilders started building normal sized homes they would not have the problem of worrying. But I guess greed always gets you in the end.
    So to end this on a Happy note
    Lower your prices to where average NJ worker can afford meaning a 300,000 house needs to be reduced to 150,000.00 and Happy Halloween

  127. It's crashing says:

    Hey Clotfool, Please address this affordability issue

    It is comical listening to the realtors.
    Starter houses at $500,000.
    20% down is $100,000.
    $400,000 Mortgage.

    How mnay starter families have $100,00 to put down and afford a $400,000 30 yr mtg?

    First of all a shack like this would probably rent fr about $1800-$2000 a month.

    So 5% Interest on $100,000 = $5,000 lost intrest on downpayment.

    $400,000 30 yr at 6% or so $24,000 a year in interest only or $2,000 a month = to rent payment.

    Then what about those property taxes of $5500 a year or $458 a month. Insurance $50 a month.

    So far to buy a shack starter house $2000 in interest + $458 a month taxes + $50 a month insurance or $2508 a month for only these 3 items. What about maintenance and other expenses? ight as well add on another $300 a month over time.

    Oh I forgot about the $416 a month in lost intrest at 5% on $100,000 downpayment.


    iT’S FAR FAR CHEAPER TO RENT. When prices drop to about $350,000 on this house does it make sense to buy.

    Run the number with any clown realtor and watch how they squirm.

  128. It's crashing says:

    Ohhh my correct my numbers

    $2000 to rent a starter shack, but

    $500,000 to buy.

    $100,000 downpayment at 5% interest or $5000
    $400,000 30 yr mtg = $24,000 a year or $2,400 a month

    Property Taxes $5500 a year or $458 a month

    Insurance $50 a month

    So to rent = $2,000 a month
    To buy = $2,400 + $458 + $50 = $2908 just for intrest taxes and insurance…no principal pay down or upkeep and maintenance.

    + $100,000 intrest at 5% or $416 a month

    or $2908+ $416 = $3324 to buy a POS shack and realtors say it’s a good time to buy.


  129. It's crashing says:

    $15,888 more a year to buy a POS shack overpriced.
    Does not include pricnipal paydown or maitenance.
    vs $2000 a month to rent. And house prices are going down????

    I think class action lawyers should file lawsuits against the NAR and realtors for fraud.

  130. Spelunker says:


    what is your take on the affordability issue?

    Is the answer for a family to buy a yet smaller place for say 350?

  131. BC Bob says:


    Info tech is gone, Ft.Monmouth is going to Md., NJ is no longer the leader in the pharm industry. Ca. has overtaken us. NJ was the leader with 20% in the pharm industry employed here, it’s now down to approx 11%. Biotech is moving to Tobacco Road. However, we are increasing state workers on our payroll, last month to the tune of 30% of jobs added in NJ.

  132. Pat says:

    Homer, you’re not, by any change, planning to attend the Trump Real Estate Expo in NY with Cramer, are you?

    You and Bob. THAT I’d pay to see.


  133. Pat says:

    Change = chance

  134. BC Bob says:

    “Show me a well-run company (which you have to admit TOL is) trading at book value, and I’ll show you a buy.”

    Book is 21.06, now trading about 1.4x book. By the way, market cap lost since 7/05, approx $4.5 billion. Quite a haircut. Don’t buy a stock because it’s cheap, it very well may get cheaper. I’m sure Bob is not smiling, unless you consider his options exercised this past June.

  135. Sapiens says:

    Paulson re-activates secretive support team to prevent markets meltdown


  136. Clotpoll says:

    Whew! This is like seeing a bad car wreck and not being able to look away.

    To Homer and It’s Crashing…Realtors don’t determine selling prices. It’s a market of buyers and sellers, and they determine the prices. Neither I nor anyone else in my industry is blindly advocating a purchase of real estate in the current environment. Everyone’s situation is different, and there are no blanket answers.

    Sue the NAR for fraud? What’s been misrepresented? The US economy was pretty much propped up by this industry from 1996-2005, and now it’s time to run us all to the slaughterhouse? The stock market is running pretty strong again…should all those brokerages get killed when it inevitably pulls back? Be responsible for yourself.

    To Spelunker…the affordability issue is a tough one. A yet smaller place at 350K isn’t a very satisfying alternative. Honest-to-God, there’s just a lot more value in great places outside NJ that are beautiful, affordable and family friendly. Omaha, Houston, Louisville, Iowa City, Raleigh, Burlington, VT and Fayetteville, AR come to mind…

    Maybe NJ is just turning into a giant Manhattan…a colony of the rich to super-rich. Not everybody should be in Manhattan, and maybe not everybody should be here, either.

  137. SAS says:

    “This market is a piece of cake”

    Yeah, it is a piece of cake. Prices are falling, and if you bought in the past 3 years you will be upside down and lose it all.

    yawn, give me something with substance.


  138. Seneca says:

    Clotpoll – ok, show me what you’ve got in Somerset, 4BR 2Bath on a decent size lot (at least .4 acres), commuting distance to NYC. MLS#s will do fine.

  139. Realtors should lick public’s ass to pay for their sins. They cheer the party and put the hanging rope under Average joe’s neck. They manipulate market and coerce buyers to buy at inflated prices. Classic ones, “real estate never goes down, buy now”, “the current price is supported by sound fundamentals”, “there is no bubble”. It sounds like yesterday. Now those liars are telling people, after their get their commision, “you have to be responsible for your own purchase”, “we didn’t do anything wrong”. Come on, scroundrels, you are not qualified to be called humans.

  140. Clotpoll says:

    Hey, I’m proud to be subhuman! It’s sorta cool…like those cavemen in the Geico commercial.

    Deadman, glad to see you’ve unearthed the “coercion” in which we’ve engaged. Funny how all that undue pressure led to the highest homeownership rates in history and created such tremendous wealth. Yeah, we suck. And market manipulation? My clients- buyers and sellers- don’t (and never have) really listened to me that much. Look at the numbers of sellers out there attempting to still get ridiculous prices; are THEY listening to their agents? I wish we could manipulate as well as you allege. It’s almost a standing joke in most RE offices…emotional market players pretty much shut out all voices of reason at “crunch time”.

    Not to make light of the pain of many who purchased late-market via toxic loans and other risky vehicles, but methinks everyone’s estimates of how many people are going to be wiped out in this downturn are a little high. Runs are more apt to occur in highly-liquid assets, not illiquid assets like homes (cash-out refi and HELOCs notwithstanding).

  141. factsrule says:

    clotpoll: Oh grasshopper you have so much to learn, but you will learn, they always do learn.

    The so called professional realtors helped drive the market up, you encouraged the mases. that abnormally high housing prices were the norm, and would continue.

    Now youe expect them to change, you guys sold them this fleeting fantasty as reality. Now that they will not listen to you, you are wounded.

    You guys got them high on real esate, and now you guys are going to have to wean them off the drug, but that takes real work, something you guys are not used to or good at.

    once this is all over, the good thing will be that realtors will become in many cases will become irrevelant. Realtors brinh nothing to the table, buyers and sellers with the help of the internet can negogiate themselves, lawyers will continue to handle the legal aspects of the transaction.

  142. factsrule says:

    clot: again with the silly uninformed posts form a so called professional.

    You say Manhattan is not for everybody, and that perhaps NJ is becoming the same way a haven for the super rich, blah, blah, blah.

    you do realize that the over whelming majority of people who live in NJ, work in NJ, yes even in Bergen Co. even more so I would think in Hunterdon and Sommerset.

    Do you see why many people on this site despise realtors, myself included, the stupid ignorant comments, the misinformation, the rah rah cheer leading.
    The vague attempts to comment on topics that you know nothing about. And all of this from realtors, no education required, not even a High School degree.

  143. Seneca says:

    clot – I am still waiting on my ‘good buying opportunities’. Where are the homes for sale at reasonable prices? I have my money saved up, looking to buy at the right price. Show me something that doesn’t have a 50% markup over 2001 price please.

  144. Homer says:

    You state
    I wish we could manipulate as well as you allege
    and that My clients- buyers and sellers- don’t (and never have) really listened to me that much.

    So you claim they dont listen to you and its not the realtors fault its all on the buyers.
    But I did not hear any realtors saying hey this might not be the best time to buy, no they all claimed that this was a great price. And hey I understand you have to go with the market and you are trying to make a living but please stop acting like realtors had nothing to do with this bubble. You are as much to blame as buyers. Anyone with half a brain would have known the the prices would come down. And I want to know what kind of crack you realtors smoke. Prices never come down, so explain the last housing bubble?? It took people who over paid in the last market until this bubble to make there money back or a small profit.
    And please explain to me if all the realtors understand that the market is extremly overpriced than why when I put an offer for 170K or a property that was listed at 339K and a similar one got 309 at peak of bubble and was only worth 130,000 in 2002, why do the “Understanding” realtors look at me like I have 3 heads?? As much as we amuse you, you amuse us with all your fun filled lies.
    Its funny to see how much you actually think you know about the market.
    And I want to understand why realtor think that everywhere in NJ is an easy commute to NYC? I know as a fact that there are many people who live and work in NJ, I guess you target the commuter becuase they have more money than we do and they can pay these prices. Well sooner or later you will run out of commuters and have to face the Jerzians who live and work here and cannot afford these prices. Please explain if only a few years ago most people could afford anywhere from 120-200K give or take and the salaries have not gone up how can a 350K house be a starter home? Is the realor going to pay my deposit of 20%? I make good money for being 27 but I dont roll with a NYC salary so please explain to the blog all mighty reltor why these prices are justifiable??

  145. factsrule says:

    Homer; Clot will not be ble to answer your questions, realtors are like parrotts, they can only repeat what they are told by theri brokers, and David Lereah,and all the rest.

    I am in a town In bergen county close to NYC, and according to the latest censue stats (2005), the majortity fo residents in my town 90% work in NJ. yet all you heard the last few years was close to NYC, close to NYC transportation, easy NYC Commute, minutes from GWB. minutes from NYC buses and trains.

    It had got to the point where I was waiting. to see walk to NYC.

  146. WannaBuy says:

    May possibly attend an open house in Hawthorne on Sunday in the new K Hovnanian community. Have couple of questions.

    Is Hawthorne a nice place to live? Any drawbacks (i.e. crowded schools, congestion, tough areas)?

    And, has K Hovnanian ever been known to offer discounts? I know other new home builders have discounted recently. There were several listings for this development on public realty sites and ads in NY Times, but all were via various realtors, not the builder directly.

    Thank you.

  147. WannaBuy says:

    Oh, this is funny. Is it a good commute to NYC? Both of us work there.

    Quite probably this became an important selling point not for the people who already lived and worked in NJ, but for those of us NY’ers who were forced to flee NYC because of the even more ridiculous price of housing there. Believe me, I don’t think many of us would choose to commute otherwise.

  148. Clotpoll says:

    To Seneca–

    My idea of value and yours differ greatly. If your parameters are that you will pay no more than 50% over 2001 (even pre-9/11/01) prices, you’ve got some more waiting to do. We’re generally looking at 10-15% off the market highs right now on homes of the type you mentioned. There is every possibility that prices will continue to come down, but nothing has triggered the big capitulation that would be required to bring prices to your desired level in one fell swoop. Again, reasonable sellers are getting sales accomplished at levels well above your target. Not to be too anecdotal, but I’ve recently closed a 570K listing at 555K and a 494K townhome at 480K. At the height of ’05, that 555K would’ve gotten around 610K and the 480K townhome would’ve drawn 515K. In all seriousness, why not start looking for some pre-foreclosures; if they are waiting to explode in the numbers many who are posting here seem to think, somebody in that position may well hit your bid.

    Homer, thanks again for putting words into my mouth. Always a pleasure to know someone’s got us all figured out. Again, and I’ll go very slowly: agents…don’t…determine…selling…prices.
    Agency also does not mean that we are bound to deliver a home at a discount, nor does it mean that we talk either buyers or sellers out of doing what it is they want to do. If you were out there trying to purchase in a hot area in, say, 2003, any quality home would have multiple offers within 3-4 days. Lots of buyers and no inventory. Neither I nor any agent I know had to “talk a buyer up” on his offer in a situation like this…it was either get a higher offer in, or lose the purchase. Very often, clients of mine who lost in situations like this did find themselves paying more just a few weeks later for essentially the same home.

    Now, in perfect hindsight, I could’ve suggested to every single buyer I worked with during that period that they forget buying, go into a rental, save money, work out their angst on blogs like this one and wait for the inevitable correction. But, would that have been serving their need? Homer, not everyone is you. The reason agents are looking at you like you have 3 heads when you offer 170K on a 339K listing is that no matter what we think is going to happen in the future, the seller on that place could reduce to a level far above your offer a still make a sale. And, to be blunt, the market just’s not for you, it’s not against you. It just IS. So don’t hold your breath waiting for someone to justify or explain.

    Factsrule: I wholeheartedly invite you and the entire public to transact RE without agent assistance. Anyone can make a sale; it does not require a Realtor . If you want to treat RE as a commodity and base all your decisions solely on price, be my guest. Investors always need a ready supply of cheaper housing, available via a gray market of exposed, unrepresented sellers.

  149. aj says:


    It’s good to see your rebuttals. At last we have some Realtor who has the guts to state something on this blog and then stand for his words. I’m not saying I agree with you, but I like your attitude and posts.

    You mentioned that in all seriousness people like us should be pursuing pre-foreclosures. Given where the prices are – I am seriously considering this option. Did some research and found that this is possible only in pre-foreclosure. Individual people have no chance at the autions of the pre-foreclosure.

    My question to you is are there RE agents who specialize in getting such pre-foreclosure properties for individual buyers like me? If yes, how can I find such Realtor?

    Also one last question – if pre-foreclosure is a good idea pricewise, why dont ordinary people go for it? I mean what’s the catch?

  150. Clotpoll says:


    Thanks. Was beginning to think a posse was being formed to firebomb my office.

    Pre-foreclosure is the point at which you have the best shot at a one-on-one with a homeowner beginning to “slip under”. The faster you find them, the longer you will be the only person in front of them, too. The stuff that makes it to auction in this environment is pretty dicey, to say the least. And, many of those bidders at auction are very often shills and Wall St types. Between them and the lenders holding firsts, John Q Public gets blown out pretty fast.

    Some RE agents claim to specialize in pre-foreclosures and REO, but the vast majority of them use it as a come-on. There ARE a handful of agents out there who ply this trade on their own account, but you don’t want their help…they’re competing against you.

    Ordinary people don’t go for this for a simple reason: it’s real work, and it takes skill to do it successfully. Besides being up against lenders, RE agents and Wall St, you’ve got to apply sales skill, financial skill and the tact of a minister. The average pre-foreclosure has the demeanor and personality of a rabid wolverine…equal parts bravado, depression, paranoia and resignation. However, there is good literature out there and investor clubs where you can get involved and develop the skills required to succeed. Just be prepared for a lot of rejection. The best thing you may have going right now is that lenders holding a second on a property going under will take as little as a nickel on the dollar to bow out…and, lenders holding firsts are VERY open to short sales in certain situations. I haven’t seen this in a long, long time.

  151. factsrule says:

    Chot re al estate is a commodity, it is realtors who have emotionalized the process for both buyers and sellers. In all seriousness what does a realtor bring to the table.

    market knowledge? based on what sound economic fundamentals, or rhetoric?

    knowledge of the area? Perhaps, but for people who know the area its not necessary, for others a little work on their part and they can do it themselves.

    Contracts? That is the attorney’s job.

    Advertising and hosting open houses? Sure, they do that, but its certainly not worth 4 to 6% commissions.

    You still have people out there buying, good for you, but bad for them, as this downturn is just getting started.

    I remember the ealry 90’s very painful indeed, and there weas no exotic financing, and people actually ahd to qualify for a mortgage in those days.

    The economic fundamentals do not support the housing rpices in this area, it truly is a simple concept to understand.

    What drove the market was lax lending standards, toxic financing, fear and greed, not economic fundamentals.

    Realtors played a big role in this by scaring people into believing that they would eb closed out for ever, same nonsense that was ued last time around. Like I said, when this is all over realtors will be redundant, they bring nothing to the table.

  152. Clotpoll says:


    I’m gonna go out on a limb here and admit that I agree with you on ALMOST everything you say above. The truth is, the bar to entry in RE is so low as to be laughable. The industry, to a degree, is a refuge of scoundrels and lowlifes. It is also, hands down, the most money a person can make in the absence of any shred of education. In NJ, you can obtain a license if you are not walking on all fours and mouth-breathing. I’m the owner of a RE company, and I reject out of hand virtually all applicants, because they cannot sustain a short business conversation or write in complete sentences. The excellent chapter on RE agents in Freakonomics pretty much hits the nail on the head.

    However, as in any industry, there are exceptions to the rule and exceptions that prove the rule. At the top of RE is a group of practitioners that exhibit advanced skills in marketing, negotiation and staging that add tangible, demonstrable value to the transaction. The good news for the public is, as home prices have risen and RE fees have risen to surgeon-like levels, the public demands performance commensurate with that pay grade. And, honestly, the vast majority of RE agents can’t deliver. The first wave of them has already been picked off in this downturn, and more are soon to follow.

    What you’re going to be left with is a pretty good group of survivors who will come out with even better skills and will continue adding value to the RE transaction.

    A zillion entities have tried and failed to commoditize the RE transaction (Microsoft, Yahoo, Foxtons, Zillow and E Loan come to mind). Every single one of them fails, because they refuse to accept that RE is a unique asset class that does not and will not trade like a commodity. The only thing that commodity-based business models have ever done to the selling public is ensure that homes marketed in this fashion sell at the lowest possible price vs. similar competition.

  153. aj says:


    Do you have url/website for your company?

    I am thinking of hiring you as my agent for searching a pre-foreclosure property.

  154. Clotpoll says:


    In all candor, I’m your competitor, as I’m an investor, too. If I root out anything exciting, I’m going to be all over it first. I’d be happy to give a few tips on how you can get started doing this for yourself, though. Drop me a line @

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