From CNN/Money:
Real estate: Babes in bear land
A financial planner who had never seen stock prices lose value probably isn’t the best place to turn for investment advice. But many Americans are taking just that kind of a flyer when it comes to their most valuable investment – their home.
Just more than half of members of the National Association of Realtors (NAR) had four years or less of experience in a 2005 survey – which means they came into this year’s real estate downturn knowing nothing but boom times.
…
That’s the first time there has been a decline in that key price measure in 11 years – not even one in three Realtors today was around back then.Buyers and sellers are negotiating this rapidly changing market with the advice and guidance of agents who may not be terribly familiar with the current landscape.
…
“We’ve picked up 400,000 to 500,000 new agents, and having people in the field not used to cycles is not going to help smooth out this down cycle,” said Nicolas Retsinas, director of Harvard’s Joint Center for Housing Studies. “Is it the top of my worries about what’s going on? No. But the point (about inexperience) is well taken.”
…
But Dean Baker, co-director of the Center for Economic and Policy Research and an economist who has long argued that current prices are overvalued and due for a severe correction, says that inexperienced agents could give bad advice to buyers, encouraging them to pay more than a property is worth in a market undergoing a correction or slump.“From a seller side, you want a Realtor to get the best possible price, but most buyers also had a Realtor who helped to convince them it was a good deal,” said Baker. “If you’re led to believe housing prices are only going to be higher, you might be convinced to overpay.”
Baker said there’s an inherent conflict of interest that comes into play even more in a down real estate market between the buyer’s agent and the buyer.
“And in the end, the (buyer’s agent) wants a sale,” he said. “Since they’re paid on commission, they want you buy a place and pay as much as possible for it, not walk away because of a weakening market.”
realtors are vampires. They are hungry for blood!
“Just more than half of members of the National Association of Realtors (NAR) had four years or less of experience in a 2005 survey -”
Reminds me of all the day traders in the late 90’s that said WB’s time had passed, since he was not invested in tech. Nothing like on the job experience. I wonder how many hours of their 75 hour licensure was dedicated to dealing with this???
BC Bob, a former RE agent I know told me last year something that makes sense now.
RE Agents – the better they smell, the worse they sell. The looser the dentures, the tighter the ventures.
I have to agree with the article, but in my case, while I did not sell real estate thru the last downturn, I experienced it first hand. I was a F@kd buyer, a GF, a bagholder, etc.
I have told all my recent buyers my opinion on the state of real estate ( my opinion has been formed mostly based on what I have learned here) and my sellers also. My buyers believe me, my sellers do not.
With that said people are still buying real estate for different reasons, I am lowballing, with little sucess ( none actually), I was rejected again yesterday, but at least they had another offer, at the same time. The others have pretty much told me where to go.
I started in sept of 2002 and have been waiting for a buyers market. I did not like working with seller’s then and I don’t like it now.
Back in 2003 when I said I would like to open a buyer’s agency – no listings – everyone thought I was nuts. They still do.
KL
I am lowballing, with little sucess ( none actually), I was rejected again yesterday, but at least they had another offer, at the same time. The others have pretty much told me where to go.
KL
Thank you for sharing your lowball experiences with us…
Pat,
Hilarious.
KL,
Just keep plugging, it will happen.
Just a clarification KL,
Are you lowballing for yourself, or lowballing on behalf of your clients?
jb
From the Star Tribune:
Too many agents, too few buyers
Chris Galler, senior vice president of the Minnesota Association of Realtors, has some advice for real estate agents who handle only a few transactions a year: Consider getting out of the business.
The stark reality in the real estate market is that there are too many agents chasing too few buyers. Even as home sales have slid, the number of licensed agents and brokers has jumped 8.8 percent statewide between January 2005 and September 2006 to 40,930, according to the Minnesota Department of Commerce.
That conundrum may prompt some to quit the business voluntarily or involuntarily, a reduction in commissions as agents compete for a smaller share of business, or both.
It’s getting so crowded that hints to less-productive members are no longer subtle. In his association’s fall member resource update, Galler asks: “Is it time for a career adjustment?”
Are you lowballing for yourself, or lowballing on behalf of your clients?
Clients
KL
Several states have taken licensure measures over the past few years to try and up the quality of agents on the streets.
Basically, they’ve gone to a “single-license” model. This eliminates the Salesperson license and requires all agents to possess a Broker’s license, which is much more difficult to earn.
In Colorado, single-licensing became law in ’01. Over 2/3 of the agents in that state surrendered their licenses or became referral agents upon enactment.
Don’t hold your breath waiting for that here.
I’d love to see the tighter licensure requirements in NJ…
Salesperson
150 hrs+ Prelicensure Education
75 hrs+ Yearly Continuing Education
Broker
250 hrs+ Prelicensure
A BA/BS requirement instead of the HS/GED
All just a pipe dream.
jb
“In Colorado, single-licensing became law in ‘01. Over 2/3 of the agents in that state surrendered their licenses or became referral agents upon enactment.”
and yet Colorado has the highest foreclosure rate in the nation right now. doesn’t seem to have stopped the problem of agents facilitating bad deals.
just look at the incentive structure: you cannot expect to get objective advice as a buyer when your agent’s pay always depends on you buying
from Realty Times [I though “duty of care” was part of realtors fiduciary duties..]
Question: What do I do if I am EXTREMELY unsatisfied with my real estate agent — but he refuses to let me out of my contract? He does not return my calls; the broker in his agency does not return my calls; there are no responses to my emails; my house is almost never being shown and I am extremely frustrated.
I am trying to sell my home, and am considering moving to another state and the stress of this problem is becoming great. Any assistance you can give would be move appreciated.
Answer: It happens that brokers and sellers sometimes do not get along. However, you have a listing contract with the broker and that contract must be honored — that means the broker is not obligated to end it early unless there is contract language to the contrary.
I’m beginning to think the transaction broker model has the most merit..
The transaction broker does not represent the interests of either party, only serves to facilitate the transaction.
The question is whether or not this model can be leveraged effectively.
In order to do so, you would basically need to contract with both buyers and sellers.
Seller: I have a house I want to sell for $x in town y.
Buyer: I am looking to buy a house for $x in town y.
Introduce both parties, and facilitate the transaction should they decide on a sale.
If real estate ever makes the jump to the web, it’s going to be via this model.
jb
JB,
A Match.com for RE.
Exactly
jb
I agree to an extent Jim. I think there should be sellers agencies who work only for sellers, and buyers agencies who work for only buyers.
Dual agency is for the birds.
KL
Are we in a market that should be modeled after Saturn – no haggle pricing?
KL what about using the divorce attorney model? Agencies can do both, but represent only one party at a time.
Since both parties are in a negotiation, both parties stand to gain from the transaction, therefore, both should incur mediation fees in the transaction.
Buyers may think they would now be paying for something they didn’t pay for in the past, but in reality, the cost is built into the price. Everyone says sellers pay for RE services, but truly, the parties DO share the cost currently, but with no trust felt on the buyer’s part.
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