From the Wall Street Journal:
Do Real-Estate Agents Have a Secret Agenda?
Home buyers have a new reason to be wary in this weakening housing market: Real-estate agents increasingly have lucrative incentives to push one home over another.
Slow sales have prompted builders and some individual sellers to offer unusually generous incentives to agents whose clients buy a home. Sellers normally pay the buyer’s agent 2% to 3% of the home’s price. Now many are offering thousands of dollars or other rewards, such as travel vouchers, on top of the normal commission.
Such incentives have long been used to sell some homes. But they have proliferated and become more generous recently as a glut of properties on the market makes it harder to sell homes. “These guys are desperate,” Ivy Zelman, a Cleveland-based housing analyst at Credit Suisse Group, says of home builders.
Although there are no national data on the practice, real-estate agents and builders agree that incentives have become much more widespread in recent months, especially in areas such as Florida, Nevada, Arizona and Washington, D.C., where inventories of unsold homes have soared. Builders and sellers also are offering lots of incentives to buyers, including free kitchen upgrades, help with closing costs and even new cars.
The problem with agent incentives is that consumers may not know their agents have a potential conflict of interest when they show and discuss certain properties. Of course, agents can’t make buyers want to buy an unsuitable home, and most buyers have strong ideas of their own. But agents can have a big influence on which homes consumers see. And agents’ influence can be particularly strong with newcomers to an area who don’t know which builders are considered most reliable and which neighborhoods most appealing.
…
The best defense for buyers may be to insist that agents disclose the compensation being offered on any property under serious consideration. That way, consumers could negotiate ways to share anything that goes beyond a normal pay day for the agent — or at least take the incentives into account in assessing the agent’s advice. But few consumers raise such questions. Daniel Ruben Odio-Paez, a broker in the Washington, D.C., area who operates a real-estate search site, www.tbhse.com, says he believes “most buyers have no clue how their agent is being compensated.”The National Association of Realtors, the dominant trade group for real-estate agents, doesn’t require its members to tell buyers in advance of a purchase how much the agents will be compensated. Federal rules require bonuses and sales commissions to be disclosed on the HUD-1 settlement statement, but buyers don’t see that document until the closing or shortly before. At that point, it would be awkward to start negotiating with an agent about the compensation. The federal rules, enforced by the Department of Housing and Urban Development, or HUD, don’t require agents to disclose trips or other noncash awards.
By contrast, federal securities regulations say brokers must disclose any bonuses or special payments they might receive for recommending a particular security. The National Association of Securities Dealers bars the offering and acceptance of noncash awards that are used to promote the sale of specific products.
Incentives for buyers agents are increasingly common on the GSMLS. They range anywhere from gift cards worth hundreds, to tens of thousands of dollars. The incentive notice is typically displayed in the agent remarks section.
That section is not displayed on most reports, as a buyer you might never know.
Conflict of interest? Absolutely.
jb
I agree – If I am showing a home with a bonus I disclose it. & we don’t offer them.
KL
because cutting the price is too painful
From Marketwatch:
Bank of England hikes key rate by quarter point
The Bank of England on Thursday lifted its key interest rate to the highest level in more than five years, as the central bank acts against possible wage hikes that may appear in a few months.
The Bank of England raised its key interest rate to 5% from 4.75%. The move was widely anticipated by economists, unlike the quarter-point hike the central bank made in August.
Cutting the price is for rookies, executing a sophisticated marketing plan based on creative incentives is the mark of a seasoned professional.
Anything to keep the comps high.
I wonder how many appraisers net out incentives when they check comps. I’ll wager a guess and say… None.
jb
From The Record:
Measure aimed at benefiting home buyers, sellers
Gifting could soon be a common part of selling a property.
Assemblyman Patrick J. Diegnan has introduced legislation (A-3567) that would permit a broker to give a portion of the commission earned on the sale of property to either the buyer or seller.
State law currently bans such gifts, though the size of the commission paid by the seller — generally between 4 percent and 6 percent of the sale price — is negotiable.
Rich
I dont know if I agree with WSJ this time. If we accept the fact that homes are products, and I am going to a salesman to buy this product, what more can we expect that an incentified salesman based on whatever is being pushed (in this case by builders)?
If I go to a department store, the guy is certainly getting a better commission on certain promotional units. If I go to a car dealer, there’s going to be a special on the models that aren’t moving on the lot.
Although it may be a harsh reality…it is a reality none the less. Why should real estate be different? Why should a realitor be held to a different standard in the market than, say, refrigerators or cars? I don’t like it…but I know what they’re up to in advance and make sure I dont get screwed. As grim says, caveat emptor.
“These guys are desperate,” Ivy Zelman, a Cleveland-based housing analyst at Credit Suisse Group, says of home builders.
Where did the soft landing camp go????
Very interesting Rich. That bill has the ability to really shake up the local industry.
Can you imagine? A buyers-only agency that will refund 50% of their commission to the buyer?
jb
I hear Chicago has a thing for Ivy… :)
jb
Why should a realitor be held to a different standard in the market than, say, refrigerators or cars?
Becuase a home is a place to live it not a way to make money although thats how people have been treating it for the passed few years. Theres a saying too much of anything is not good.
To many investors, to many flippers, to many useless realtors hence is not wonder we are in this situation.
Although its kinda funny all these insentives, if you sell my house at my asking price I will give you a car. I understand people want to sell there homes, but offering incetives is a Bribe and last I checked bribes were not legal. I do not think incentives should be allowed, if a realtors is selling 6 homes a 3 are offering a new car, a 10k gift certificate and the 3rd a vactation, and the other 3 are offering nothing whose homes do you think that realtor will focus on? And the people selling there homes offering no incentives could have lowered there price a decent amount but the realtor won’t focus to much on it becuase they are not offering any bribes with selling there homes. I understand some people are desperate to sell, just lower the price of your home. And if you say well I need the money for my new home I just bought well hey we aren’t the Jidiot that didnt bargin and offered full price.
Or the classic it for my retirement, well hey sorry you did not manage your money well over the passed 25 years, but what if the buble did not exist and you paid 60 for your home years ago and in 1999 was worth 100,000.00 and it is worth 130k today (because the bubble never happened) Than what would these people do? So people stop saying they need all the money becuase they got lucky in this bubble. But it may not have happened. I’d rather take 50-100k loss now than take a larger loss later. Cuase we all know the bubble crash will only get worse.
“Can you imagine? A buyers-only agency that will refund 50% of their commission to the buyer?”
Didn’t KL want to open a buyers-only agency?
If this passes this could be KL’s “hook”… :-)
Rich
Travel vouchers, mercedes, flat screens, closing costs, mortgage payments for a year, free beer for a year????? Don’t be swayed, don’t let this mask the big picture. This market is headed to the crapper. Grim is right, desperate attempt to keep comps up. What’s next after this fails??
Throw out location,location,location. The new RE motto; price,price,price
I’m going to try to get Assemblyman Diegnan on the phone later this afternoon. I want to pick his brain on this.
The proposed changes are as follows:
(2) a real estate licensee may provide a seller or purchaser a rebate of a portion of the commission paid to the licensee in a transaction, so long as: the licensee and the seller or purchaser contract for such a rebate in advance; and the licensee complies with any State or federal requirements with respect to the disclosure of the payment of the rebate. The rebate paid to the seller or purchaser may be in the form of cash or other thing of value, including, but not limited to, a gift certificate, and may be made at or after the closing;
jb
Also I don’t understand the Star Realtor status being awarded to few Realtors in each town. I live in Bridgewater, and you see few names much more as Sellers agent. In fact in one community, I see houses next to each other listed by same Realtor. Everyone says he is really good.
I don’t buy that argument in Internet era. Essentially the Sellers realtor is doing is just puting a listing on MLS. Also when you have same realtor listing houses around you, you have to wonder, who the Realtor is really working for? Is it not possible, that once he comes across buyer or agent, he/she proposes the competing house.
WASHINGTON (MarketWatch) — The U.S. trade deficit narrowed by 6.8% in September to $64.3 billion, the Commerce Department said Thursday. This is the largest narrowing of the trade deficit since December 2004. The trade gap is at its lowest level since April. The trade deficit was below the consensus forecast of Wall Street economists of a deficit of $66.3 billion. Exports rose to a new record high while imports declined for the first time in seven months. Despite the improvemebnt, the U.S. trade deficit with China widened to a record $23.0 billion in compared with $20.1 billion in the same month last year.”
Imports declined for the first time in 7 months??? Is the US consumer retrenching???
BC bob, could this not be (mostly) oil price related?
Don’t like it.
The term “other thing of value” is way out there. Define value..as in no more than 6% of the sales price of the home? Does this thing end up looking like an options backdating scandal in about 8 years?
Buy Side realty gives the % of commission back as rebate. Currently they are in 28 states, but not in New Jersey.
http://www.buysiderealty.com/
Anybody on this board with Realtor license who does not want to work with traditional realtor, should contact them and start NJ service as well. I will wait for them to start in NJ before starting to look for house. I hate working with agents, and like to do my own research.
curiuosd,
Good point. I have not seen the breakdown yet.
Re Rich in Post 6:
I think the IRS would have something to say about this. The accounting for “gifts” is something they take quite seriously and there is a precedent, though not a complete parallel.
Last year the IRS dropped the hammer on phony non-profit “gifting” agencies that essentially rolled the value of the “gift” into the price of the home. The home sellers were providing the “gift” to the buyers, but the sale price of the home did not reflect that the buyer had actually lowered the price by the amount of the gift.
The “non-profits” were (and I think some still are) taking a fee for brokering what was a transparently fraudulent transaction (some actually had a graphic that spelled out the fraud on their websites).
If the RE agents and realtors accept “gifts” and then in turn provide some or all of that gift to the buyer, they still have to pay the taxes on the gift. I doubt many would and the IRS will come calling.
“James Bednar Says:
November 9th, 2006 at 7:26 am
From Marketwatch:
Bank of England hikes key rate by quarter point”
UK market is even worse than here. Mortgage options and common schemes:
– 40 year I/O
– 50 year mortgage
– Intergenerational mortgage (what a gift for your kids! Why not just sell one for the downpayment!)
– Shared housing, group of friends get together to buy a house. Have no idea what happens when there is a falling out, or one gets married.
In their efforts to make housing more “affordable” they are just making the eventual crash more painful and potentially devastating.
NJ licensure law clearly states that commissions can only be paid to those who hold licenses.
Companies like Buy Side would not be allowed to offer rebates unless this legislation passes.
jb
“The best defense for buyers may be to insist that agents disclose the compensation being offered on any property under serious consideration..”
I always ask a listing agent –
“I like full disclosure in the transaction; What is the commission that the seller is offering.”
The answer always is “Oh. You don’t have to worry about the commissions. The seller is going to pay for it!”
When I insist, they mention the total commission (not the split). The conversation becomes very un-friendly, and they avoid the topic.
It’s frustrating for a buyer like me? After all, it comes in the way of negotiation. How am I to make an offer if I dont know how much the seller is making?!
The real-estate commissions need an overhaul!
Throw out location,location,location. The new RE motto; price,price,price
But everywhere is a good location in NJ. There are obly a few towns that have good locations IE parippany, right by all the highways so that is a good location. Thats the magic word of a realtor, they put location location loaction, so it must be a great place to live, even though there are no major highways as far as the eye can see, and there is not to much in that town but its such a great location beucase theres a bus that takes you places.
Wow so if we stick a bus in a town that goes to NYC thats now a great location to live even though it will take you 3 hours to get into NYC and 3 hours to get home…Yup thats a great location. I have also seen them do this in NJ in towns like Fleminton and that general area. Location location location really close to Othro or Aventis. Now again that goes to show you realtors know most Jerzians cannot afford these prices. I want to move to North NJ, why they heck do I care about transportation into NYC? I dont, but its a way for them to justify homes being overpriced. Even in Flemington wow just becuase your close to pharma companies its such a great location to live. Well not everyone works there.
Thats why I get sick when I see those types of ads. They are only care about people with money who make 150k or more. Do you ever see them targeting people who make under 100k? Last I checked I never saw a listing that didnt try and target rich people. So now that most rich people have there homes, its the people who make under 100k left to buy the homes now and we are not going to be spending 500K on homes. SO remember you heard it from me 50-65% off home prices. If they can go up 65%+ than the can damn sure fall that much too. People think I am crazy for thinking that, but I think all the peole who paid 65% over 2000’s price are crazy. And people who lowball 30% are crazy. I dont get how people can sit here and say that the market wont drop 65%. Why? Why can it go up 65-80% in 5 years, but why can’t it fall that much? Japan home prices came down 80%. And the way this economy is headed with all the layoff and more outsorucing of jobs and companies being cheap, and rising healthcare cost, etc. How can people say that the housing market will not drop 60-70%?
And for all the people who make 150-200 even 300K just wait till your job starts getting outsourced and you are just treated like a number and the only thing availble to you is low paying contract jobs.
Homer,
We all know it.
It’s always a good location.
It’s always a good deal.
It’s always different here.
It’s always a good time to buy.
It’s always a good time to sell.
It’s always in your best interest to use a Realtor ™.
jb
ah yes, the culture of the kickback. There’s a reason to worry about it, because it is a corrupting influence to everyone involved but the poor buyer who never knew this sideshow was being played out. If we can hold our politicians (and their agents) accountable for their conflicts of interest, why not everone else. The slimy operators are everywhere, raping uninformed consumers while hiding behind the veil of their profession. Whether it is real estate agents, builders, contractors, architects, designers, the so called “professions” are rife with this kind of kickback play for doing business a certain way. We should be insisting on transparency. Can we get Lou Dobbs or Ralph Nader over here? They could rant this one to death.
prouscious said:
“..Can we get Lou Dobbs or Ralph Nader over here? They could rant this one to death..”
I think we should start with Jim Grim :)
Jim, I think you are the Clark Howard/Lou Dobbs of real-estate.
Let’s start cheap – start a weekly pod and put it on youtube.
Maybe some station will give this air time :)
ks2nj said:
“Jim, I think you are the Clark Howard/Lou Dobbs of real-estate.
Let’s start cheap – start a weekly pod and put it on youtube.”
Alternative to Youtube, my brother Mark’s service (transparent enough?):
http://alpha.vodpod.com/beta_home
“If they can go up 65%+ than the can damn sure fall that much too. People think I am crazy for thinking that, but I think all the people who paid 65% over 2000’s price are crazy.”
I don’t think you’re crazy at all.
Anyone w/ MLS access can tell me when this sold and how much it sold for? Thanks.
MLS 2059864
6/30/2005 – $855k
Grim, you are like Ralph Nader, Mark Green, John Stossel and Arnold Diaz all rolled into one, and I mean that in the most complimentary way possible. Really. You just need your own theme song.
I disagree with anyone who says real estate is not an investment. An investment can be property or another possession acquired for future financial return or benefit, it can be a commitment, as of time or support… we make emotional investments, as in time volunteering to a political candidates campaign.
Real estate fits all of these definitions as most people invest finances, emotion and time to their homes.
Spitzer had a field day with unethical and illegal behavior by brokers, traders and the like (Canary Capital Partners, Liberty Mutual, etc.) who were induced by various illegal incentives to engage in business activities that were not in the best interest of their clients.
There are NASD rules legally requiring brokers to recommend the investments most suited to each investor’s needs. There are a number of “material facts” that a registered representative must disclose to a customer when recomending mutual funds, for example. (The Fund’s objective, portfolio holdings, historical capital appreciation, expense ratios, sales charges, risk of investing in the Fund relative to other investments, and the Funds hedging strategies.)
The more unsophisticated your customer, the more the NASD holds you to these regulations.
WHY shouldn’t real estate brokers be held to similar if not MORE stringent legal requirements? You might invest 10k in a mutual fund but you are investing 100’s of thousands of dollars and 15 to 30 years of debt into a home! Imagine looking at a home and the realtor having to disclose that in addition to a 5k bonus and a trip to Tahiti should they sell this house to you, you should also know that (1)their objective is to make the sale so they can make a commission, (2)the house they are showing has appreciated 60% in value over the past 5 years, an unprecedented amount which will most likely mean you it will lose value over the next 5 years, (3)historically, when adjusted for inflation, home values have only gone up 3-5% year over year, (4)if you buy this house now instead of taking a wait and see attitude you have a greater than 50% chance of losing money on your investment, (5)a convicted sex offender lives three doors down and (6) there is another house two blocks over that is more in your price range and has the crown moldings you like but the seller isn’t offering me any incentives to sell it to you.
I want to point this passge out from the article. Note, in my role as a financial planner, I am held to the standard of “fiduciary”, which is obviously laughed off pretty soundly by the professional real estate workforce. I am required to disclose all this information, and most of my work involves figures substantially small than the money people drop to buy a house [possibly the consistently biggest purchases of the bulk of people’s financial lives].
“The National Association of Realtors, the dominant trade group for real-estate agents, doesn’t require its members to tell buyers in advance of a purchase how much the agents will be compensated. Federal rules require bonuses and sales commissions to be disclosed on the HUD-1 settlement statement, but buyers don’t see that document until the closing or shortly before. At that point, it would be awkward to start negotiating with an agent about the compensation. The federal rules, enforced by the Department of Housing and Urban Development, or HUD, don’t require agents to disclose trips or other noncash awards.
By contrast, federal securities regulations say brokers must disclose any bonuses or special payments they might receive for recommending a particular security. The National Association of Securities Dealers bars the offering and acceptance of noncash awards that are used to promote the sale of specific products.”
Hypocrisy, no? or maybe more likely, the NAR does not “walk the talk” in any formal way.
Ok back to the topic: If realtor getting insentive besides his usual fee – The house is Overpriced by the amount of insentive and buyers pays for it.
As simple is that. Everybody should their real estate agents if they are getting extra insentive and just do not buy homes which do offer an insentive to realtor.
SG,
Would you mind if I email you directly?
Thanks,
007
A little off topic but worthy of mentioning;
Is China starting to see its engine of growth sputter???
“There was further support in comments from Peoples Bank of China Governor Zhou Xiaochuan who said at a Frankfurt conference that China has very clear plans to diversify its currency reserves, which now stand at more than $1 trillion. A wide range of instruments are under consideration, including gold and oil.”
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B41C034A4%2D9EF0%2D4A34%2DAB9F%2D3576C36B9F58%7D&siteid=bigcharts&dist=news
Can anyone tell me date/price MLS 2319619???
Please??
Thanx in adv…
BTW SG- totally agree. (post 19) hope the law changes, JB. Looking to buy in Somerset but my skin crawls when I get near a realtor.
Also: SG do you know of Gateway Church?
O.T.
In regional news (Bucks County, PA), some (not all) new listings in good school districts are now at 18% to 20% off ’05 peak sales prices.
Two months ago, the discount was 12-15%.
But I still see the occasional ’05/06 flipper trying to make $100k on new carpeting, bathrooms and a Home Depot kitchen. Not so many, anymore. A lot of those are ending up on realtytrac.
Keep on Boooyaaaing, everybody, we might be able to buy a house, pay our bills, feed our kids and figure out a way to get our country out of hock if we try hard.
“new listings in good school districts are now at 18% to 20% off ‘05 peak sales prices.”
Pat,
That’s incredible, still overpriced, but a start. Do you also have data on closed sales???
I long for the days when you were lucky to recoup 80% of a remodel project when you sold a home.
jb
waiting… Yes, I do know Gateway church.
JB: Any idea on Sales Price for 2319907.
http://mitpress.mit.edu/catalog/item/
default.asp?ttype=2&tid=10055
http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=10055
http://www.gao.gov/cghome/d061138cg.pdf
Re: Diegnan’s bill
It makes great sense to me, and it brings something to NJ that’s allowed in other places, or at least in California. Let’s let the agents give some of their “hard earned” commission dollars back to the seller, or use them to entice the buyer to buy. It will show up on the closing statement and is above board.
This would also be great for dual agency situations. In CA when we were dual agent she “kicked back” some of her commission to the sellers when we missed a deadline as buyers. Clearly she wanted the sellers to keep liking us as she was making double commission. It worked.
In NJ we were dual agent and we negotiated hard on price. We wanted the agent to reduce her commission in the form of a rebate to us. She said she couldn’s as it was against the law but that she would cut us a check afterwards for the $5K difference. Needless to say, we never saw it.
The important point here is – let the darn realtors give money back for a change. Lord know they ain’t really earning it in the first place in many cases.
“We will not have any more crashes in our time.”
– John Maynard Keynes in 1927
“I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.”
– E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
“There will be no interruption of our permanent prosperity.”
– Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928
“There may be a recession in stock prices, but not anything in the nature of a crash.”
– Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929
“We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.”
– Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929
“… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.”
– Harvard Economic Society, November 10, 1929
“For the immediate future, at least, the outlook (stocks) is bright.”
– Irving Fisher, Ph.D. in Economics, in early 1930
“The housing market is now transitioning from an ‘unsustainable boom’ to a ‘permanently high plateau’.”
– David Lereah, Nat’l Association of Realtors, Oct 25, 2006
Check out 1927-1933 Chart of Pompous Prognosticators
http://bigpicture.typepad.com/comments/2006/11/19271933_chart_.html
http://www.nypost.com/seven/11072006/business/u_s__treasury_is_quietly_doing_the_feds_work_business_john_crudele.htm
“The housing market is now transitioning from an ‘unsustainable boom’ to a ‘permanently high plateau’.”
– David Lereah, Nat’l Association of Realtors, Oct 25, 2006
Ring ring ring!!!!!!
DO NOT BUY A OVER BLOATED OVER PRICED HOUSE/CONDO
IT’S BAD FOR YOUR FINANCIAL FUTURE.
BOOOOOOOOOOYAAAAAAAAAA
Bob
To go to an eairlier comment a house is an investment to an extent but not what many people are treating it as.
I ean nix the whole bubble for a minute, before this happened how many people an say they knew people who purchased there home to retire on? Probably none. Since people have been treating housing like the stock market it can have the severity of a crashing stock market. I mean everyone has been throwing around the word Recession like it going for a walk in the park.
Lets see how bad it will be
a person loses 200k on what he paid on his home. Goes to forclosure and bank can only get 300k for the 500k home
Even if just on its own the market drops 40 percent and than a recession People think Sales are slow now just wait to see how much more they slow
Plus think of all the money invested and all the money that will be lost
Buckle up it will be like no ride anyone has ever expewrienced
I hope people do not really believe a realtor, who has a contract with a seller, is actually going to show favor to a buyer. When I was lowballing this year I used my own broker who showed all of my low offers. She was also very good at finding out information about the properties that I would never have found out from the seller. She was very happy with the 2.5% she made even though the other broker was not. I am not so sure how I feel about this WSJ article. In any business dealing, I would assume that there would be incentives that are not always disclosed. If a seller is trying to get a leg up on the competition(other sellers) then I do not see the real problem. I do not see this as a material breach. If the broker is hired by the seller, what makes you think they are going to tell you everything. They are not! People have to start protecting their own interests. Hire your own broker to represent you as the buyer. This getting 2 sides of the commission is a joke. Just because the market is going the other way now does not mean buyers should not enlist help…….It just makes sense to have someone representing your needs in the biggest purchase of your life. As this market gets worse, there will be many more brokers willing to work for the buyer….2.5% is better than nothing.
Pat, I have lots of family in Bucks Co – one of my aunts wanted to move but couldn’t sell her townhouse so she is staying put for a bit.
it is simple. every other profession which wears the fiduciary mantle is subject to serious barriers to entry, professional discipline, and disclosure requirements. realtors are subject to none of these things. the “fiduciary” to them is nothing but a marketing ploy. either the regulatory bar should be raised for RE, or realtors should be forced to admit that they are nothing but salesmen whose advice should not be relied upon under any circumstance
Look HAHAHAHA!
Jim Cramer’s “Winners of the New World”
Below, is Cramer’s keynote address at the 6th Annual Internet and Electronic Commerce Conference and Exposition, delivered in New York City, February of 2000. Cramer’s “Winners of the New World” consisted of 10 stocks: 724 Solutions (SVNX), Ariba (ARBA), Digital Island (ISLD), Exodus (EXDS), InfoSpace.com (INSP), Inktomi (INKT), Mercury Interactive (MERQ), Sonera (SNRA), VeriSign (VRSN) and Veritas Software (VRTS). Many of the stocks he picked as surefire winners fell from three figures per share to under ten bucks. Some went bankrupt.
Cramer’s keynote address:
“You want winners? You want me to put my Cramer Berkowitz hedge fund hat on and just discuss what my fund is buying today to try to make money tomorrow and the next day and the next? You want my top 10 stocks for who is going to make it in the New World? You know what? I am going to give them to you. Right here. Right now.
OK. Here goes. Write them down — no handouts here!: 724 Solutions, Ariba, Digital Island, Exodus, InfoSpace.com, Inktomi , Mercury Interactive, Sonera, VeriSign and Veritas Software.
We are buying some of every one of these this morning as I give this speech. We buy them every day, particularly if they are down, which, no surprise given what they do, is very rare. And we will keep doing so until this period is over — and it is very far from ending. Heck, people are just learning these stories on Wall Street, and the more they come to learn, the more they love and own! Most of these companies don’t even have earnings per share, so we won’t have to be constrained by that methodology for quarters to come.
There, now that that’s done with, can we talk about the methodology that produced those top 10 so that you can understand how, in a universe of a gazillion stocks, we arrived at those, so you too can figure it out? I hope we can because I have another 10 and still another 10 and another. They all do the same thing: They make the Web faster, cheaper, better and easier to access anywhere, anytime. They allow you to get on the Web securely anywhere in the world. They make the Web economy the only economy that matters. That’s all they do.
We try to own every one of them. Every single one. And if I had my druthers, I wouldn’t own any other stocks in the year 2000. Because these are the only ones worth owning right now in this extremely difficult, extremely narrow stock market. They are the only ones that are going higher consistently in good days and bad. I love every one of them, just as I loathe the rest of the stock universe.
How did this stock market get like this, to where the only people who can make a dime in it are the people who are interested in the most arcane subject, the moving of data from one space to another, via strange new machines and software? How did it get to the point where nothing else matters, most particularly the 90% of the stock market I have studied for the last 20 years? How did all of that knowledge become totally irrelevant and the only stocks that work are the stocks of companies that didn’t exist five years ago and came public in the last two or three years?
Let’s start with the world in the early 21st century, a world where capital is abundant for a chosen few and nonexistent for just about everybody else. It is a world where the whole of Wall Street and Silicon Valley is at your fingertips if you are creating the infrastructure for the New Economy, and a world where neither Wall Street nor Silicon Valley could give a darn about you if you are using that infrastructure.
Or in other words, we don’t care if General Motors (GM:NYSE – news) and Ford (F:NYSE – news) are going with Oracle (ORCL:Nasdaq – news) or with i2 (ITWO:Nasdaq – news) for their new parts procurement process. We don’t want to own GM or Ford on any occasion. In fact, we would rather own the loser in that tech bake-off than the winner in nontech, because in this new world, there is so much business to be done for the i2s and the Oracles that the capital will remain plentiful for them, win or lose a particular piece of business.
Just yesterday I found myself wishing I had bought i2 when it lost out to Oracle for the giant business-to-business contract for the Big Three automakers. Others had the same idea because i2, the loser Friday, was up much more Monday than GM and Ford could be this year. i2 can own the world because the company with the access to cheap capital always wins. And the companies with no access have to lose.
Or, closer to home. We in the stock market don’t care that The Street.com Inc. (TSCM:Nasdaq – news), a company I helped create, has built a compelling new brand, has more than 100,000 paid subscribers and has $100 million in the bank. We just want to know which companies TheStreet.com employs to publish each day. We want to know who the host is, which publishing tool works best, which wireless strategy TheStreet.com is adopting and how does it automate its email? (By the way, the answers are Exodus, Vignette (VIGN:Nasdaq – news), Motorola (MOT:NYSE – news) and Kana (KANA:Nasdaq – news) — all at or near their 52-week highs as TheStreet.com languishes at its 52-week low, a triumph of the arms merchants over the combatants if there ever were one.)
How did this bizarro world where nine-tenths of the companies I have followed as a stock picker for the last 20 years are losers and one-tenth are winners? To answer that question, you have to throw out all of the matrices and formulas and texts that existed before the Web. You have to throw them away because they can’t make money for you anymore, and that is all that matters. We don’t use price-to-earnings multiples anymore at Cramer Berkowitz. If we talk about price-to-book, we have already gone astray. If we use any of what Graham and Dodd teach us, we wouldn’t have a dime under management.
So how do we sort through which stocks get bought and which stocks get assigned to the waste bin?
We have a phrase on Wall Street. It’s called raising the bar. If you can raise the bar, or brighten the outlook for your company, if you can see your growth accelerating, your stock will go higher and you will be given the currency to expand, acquire and do whatever you want. That’s the secret of the quintessential New Economy stock: Cisco (CSCO:Nasdaq – news). This giant networker has the ability to control its own destiny. It can, as my colleague Adam Lashinsky says at TSC, buy any company it wants to. It can pay any price. Because it has a currency that it better than U.S. dollars: It has Cisco stock. It can do that because it raises the bar every quarter!
But what about the Old Economy stocks? Can Merck (MRK:NYSE – news) raise the bar? Can Pfizer (PFE:NYSE – news)? Can U.S. Steel (X:NYSE – news)? Or Phelps Dodge (PD:NYSE – news)? Union Pacific (UNP:NYSE – news)? No, no, no, no, no and no. So what happens to them? Despite the billions in buybacks and the plethora of strong buys that the Street has put out about these companies, their stocks have no traction. They just stumble along, rising and falling haphazardly with every whim and quizzical speech of the Federal Reserve chairman that still controls their destiny. If Greenspan indicates that there is more tightening ahead, these traditional companies, the ones that you measure with traditional matrices, get pole-axed as we worry about where the capital will ultimately come from if credit gets choked off, while the arms merchants in the Web war, with capital to burn, just go higher.
It is no secret that the Dow, made up principally of companies that can’t raise the bar, is down 12% while the Nasdaq, which is made up of companies that can raise the bar, is up 12%. And in the self-fulfilling jungle that is Wall Street, only growth can maintain growth!
So how do we find what are the great growth companies, knowing that growth and not cheapness of stock to company is what matters? We have to look for the fastest-growing industries and then select the companies that can make the infrastructure happen the fastest and the cheapest in those industries. The growth must be positively organic, if not viral. There must be heavy technological barriers to entry. And there must be an ability to scale without any thought to human cost. These companies must be able to dominate their businesses or be willing to become part of a larger institution that dominates.
So, whom does that eliminate? First, any company that is a commodity producer simply can’t be owned, no matter what. The New Economy makes those be simply a function of low-cost producer with no ability ever to raise price. This, of course, is the crying shame of the way the Fed is trying to break the economy because the only place that could stand for a little inflation is in the deflationary commodity industries. But their inflation revolves around the ability to build inventory to anticipate future price hikes and the Fed is taking short rates to a height that makes it uneconomic to stockpile.
Second, it eliminates any bricks-and-mortar company that doesn’t embrace the Net. To not embrace the Net is to give a cost edge to a competitor who does. It does so because the Net removes the middleman that was a product of the regional economy. There is $4 trillion worth of wholesaling that gets instantly eliminated by the Net. Before only the largest orders could be processed by the biggest companies because it was too expensive otherwise. Now all orders can be processed by the biggest companies through the Web. There is no need for the jobber or the wholesaler. Obviously, if you are still using that old distribution network, you can’t compete against those who do.
Third, it eliminates any industry that does not have a proprietary brand. This is one of those weird features of the Web that people haven’t woken up to yet, but it will seem obvious a few months from now. In the New World’s economy, the desire to “name your own price” is too great to squelch. An outfit like priceline (PCLN:Nasdaq – news) will change the very nature of brands in this country. It won’t destroy the premium brand, but it will force everyone else out of the market. Why? Because the way priceline works is that we are trying to buy the premium brand for the price of the off-price brand. That means the off-price brands, whether they be Colgate (CL:NYSE – news) or Dial (DL:NYSE – news) or Hunt’s or Ralston (RAL:NYSE – news), are simply doomed by the Web. Why would you ever buy the second- or third-best when you can get the best via priceline for the same price as the lower tier? Ahh, that’s a real killer. It leaves only the top brands to vie for supermarket space. The others won’t be worth carrying. They won’t move! Oh yeah, same goes for the airlines and the hotels and just about everybody else.
Fourth, it just destroys retail as we know it. Why? Because the companies that embrace the Web more vigorously will eventually be pitted against other companies that embrace the Web more vigorously, creating a virtual constant price war, the kind of war that Marx, of all, actually predicted would happen to capitalism. It will happen to retail once everyone realizes that Amazon (AMZN:Nasdaq – news) recreated Wal-Mart (WMT:NYSE – news) online because it will forever have access to cheap capital. Why do I say forever? Because at a certain point, it will be done with its buildout and will effectively be able to cherry-pick whomever it wants to destroy while having it be subsidized by other areas. It will be Home Depot (HD:NYSE – news) vs. Wal-Mart vs. Amazon in the end. Nobody else. And that’s only if Home Depot figures out it better get on the Web and fast.
Fifth, it wipes out everybody who straddles the Old and New Worlds. Let’s take the brokerage industry. If you are trying to preserve a price point, because you need those margins, you can’t and you become roadkill. Same with journalism. If you are free online and cost offline, you will eventually not be able to charge offline. Why not? Because the Hewlett-Packards (HWP:NYSE – news) and Intels (INTC:Nasdaq – news) and Ciscos are bent on making the online version far superior to the offline version. And they will do it. They, too, have the access to capital to make it happen.
I can tell you from TheStreet.com that we have substantial cost advantages over our printed cousins. We can come out around the clock. We don’t require paper, ink, delivery people or trucks. In that sense, we are much more like television, personal television, which is why we were wrong initially to think we could charge for basic news, and right to think we can charge a huge amount for proprietary analysis that can make you money.
The struggle between the offliners and the onliners in banking will also pan out just like these other industries, with huge wins for those with a fresh online culture and hideous losses for those who don’t see it coming or are slow to adjust. If you have to preserve your giant branch network and the costs that come with it while someone else perfects secure wireless Internet transactions, you can forget about it. You can’t afford to compete. How can Bank of America (BAC:NYSE – news) compete with Nokia (NOK:NYSE ADR – news) as a way to bank? How can Goldman Sachs (GS:NYSE – news) compete with Yahoo! (YHOO:Nasdaq – news) as a way to invest? Isn’t Nokia, with its wireless machine that goes everywhere a better bank than one that needs branches? Isn’t Yahoo!, with its access to all of the information and quotes in the financial world a better place to buy stocks than Goldman?
Of course they are.
So, if you can’t own the retailers, and you can’t own transports, and you can’t own banks and brokers and financials and you can’t own commodity makers and you can’t own the newspapers, and you can’t own the machinery stocks, what can you own?
A-ha, that just leaves us with tech. That’s why we keep coming back to it. That’s why, despite the 80% increase in the Nasdaq last year, we are looking at another record year now. It is by that process of elimination that I have picked my top 10. And my next 10 and my next 10 after. Only those companies are worth owning. The rest?
You can have them.
Thank you.
Jim Cramer”
Question: Really curious what happened to the guy on this blog who said last week he was going to make a low-ball offer on a $320k house.
Supposedly, the owner paid about $80 for it. The poster on here was ready to offer $120k or something along those lines.
If anyone knows what I’m talking about great. If not, darn.
Why I hate Realtors, Below is a peice from a Realtor discussing market conditions in a so called premier Bergen Co. town, I have the town nam out, but everthing else is word for word (including poor grammar) from this “knowledgeable” expert. And she says….
” (Fill in your favorite premier Bergen Co. Town) homes stay on the market on the average of one month to 3 months if priced right.
Many homes available ranging in prices from 439K to higher priced homes of new construction $1,600,000.
The current market in Bergen Co remains to be a good market compared to most of the country. This county is one of the richest in all of NJ. The interest rates are still low.
It is still a good Market, becasue the interest are now at 6.33% for a 30 yr fixed and lower in for a 15 yr.
CALL Today For Up TO DATE RATES!
The media is talking about the bubble. I don’t buy it. Will there be a burst in the bubble? I think not. Most of the population still wants to live here. The bubble may refer to other states nationwide, but not here in NJ.
Winter is approaching and even though houses seem to stay on the market a bit longer,there are buyers making offers and buying homes. As long as our schools stay at the top, The population will continue to grow and the demand for homes will remain.”
Like I said, why I hate realtors.
Supposedly, the owner paid about $80 for it. The poster on here was ready to offer $120k or something along those lines.
I think that was me your reffering to. The house is listed right now at 385K and they paid 40k for it been on the mrket almost 300 days.
So I am going to offer 120k as long as I like the place. I was supposed to go see it last weekend, but the owner had to take her son somewhere so we had to reschedule till tonight. It sounds kinda silly but the realtor said they have a dog, which really doesnt bother me as I have 2 of my own but who knows. So I am going to check out the place with the Wife tonight.
ITs a Bi-Level and there is no reason why it should be listed at the price. Apparantly there have been no offers. So I have a 50-50 shot. We Shall see if I can consider myself THE KING of lowballing or just a practicing Lowballer :)
I will let everyone know tommarrow if we make an offer and I will keep everyone updated on if its a yeah or nay. But if I get it, I want to be known as the King of Lowballers since the house was originally listed at 400 something.
So yes I am getting dangerously close to 70% off OLP and dang nabbit its a rush of excitement cuase there is hope that they need to sell it and get outta there. :)
Buying in Late 07 (maybe) –
I offered 400 on a 799 this weekend. No word. Yet.
The seller purchased it last year for 500. He has been on the market for about 9 months now. His OLP started @ 845. He put in a new roof, painted, new kitchen and floors.
My God Homer good luck! If you get it i vote that your image is used under the Lowball! section of this site.
bergenbubbleburst,
I don’t know why you left the town out, the information you posted is available to anyone with access to the internet.
Realty Times Market Conditions
Rich
BLEED’EM DRY!!!!!!!!!!
I love you lowballers. 400k on a 799? Wow. Maybe we aren’t aiming low enough. Initially, the plan was to spend 400k MAX on a house, so we were looking in the 400-500k range. But now we decided why the hell not max out at 350 … and have an extra 50k to invest in our own business or whatever … and not change our range?
Newbie lowballer here, obviously.
“The Media is talking about this bubble. I don’t buy it. Will there be a burst in the bubble? I think not. Most of the population still wants to live here. The bubble may refer to other states nationwide, but not here in New Jersey.”
Paula, put that pipe down girl. Yikes. This is like listening to a mental patient.
FOR SEVERAL YEARS BUYERS WERE TRASHED BY STARVING REALTORS AND GREEDY GRUBBING DREAMERS.
NOT ANYMORE.
MAKE’EM PAY!
BE INSULTED BY THESE RIPOFF PRICES!
HELLO !
WAKEUP!
bleed’em dry!
BOOOOOOOOOOYAAAAAAAAA
Bob
BLEED’EM DRY!
EVERY OUNCE!
EVERY DROP!
Report back on the grubbers reactions. Then lets have a laugh. Tool on a few starving desperate realtors.
IT’S PAYBACK BABY!
BOOOOOOYAAAAAAA
Bob
“400k on a 799?”
yes indeed. looks about right to me.
NJGal, the townhomes in “sought after” locations are sitting like pigeons on the MLS.
Some are listing themselves as Other, just to get a click-through, I think. Many in expensive developments are shown on realtytrac in preforeclosure. Three years ago, I would not have guessed how high and bad this thing would go.
I wish your Aunt well, and hope she can weather this.
BLEED’EM DRY!
Anyone that’s gets 50% off peak 2005 prices gets a huge
BOOOOOOOOOOOOYAAAAAAAAAAAAA
Bob
Anyone that’s gets 50% off peak 2005 prices gets a huge
BOOOOOOOOOOOOYAAAAAAAAAAAAA
Thats it just a Boooooooooya from Bob
Well what if I want a cookie Bob you gonna hook me up?
To Message #38
Listed 09/13/06
UC 09/15/06
List Price 1,050,000
45 Milito Way, Bernards Twp.
Bought for 975K in 2003
From Marketwatch:
Ryland home sales down 40% first 9 months of 2006: CEO
From Marketwatch:
Beazer tried to close homes to avoid future cancellations
Ian McCarthy, chief executive of Beazer Homes USA Inc., said at an investment conference Thursday sponsored by UBS that the company tried to close as many homes as possible for its latest quarter ended Sept. 30 to avoid future cancellations. He said the home builder “forced people to come to the closing table, and took the cancellation” if needed. “We don’t want to build up inventories of homes that could end up canceling in the future, which weakens our backlog and influences our 2007 forecasts,” McCarthy noted. He said the company’s 44% profit decrease in its fiscal fourth quarter from a year earlier was caused in part by a shift to lower-margin markets like Texas and real-estate charges.
From Marketwatch:
Meritage CEO estimates fourth-quarter land charges
Meritage Homes Corp. Chief Executive Steven Hilton speaking at a UBS-sponsored investor conference Thursday said the company could see between $15 million and $30 million of charges in its fiscal fourth quarter related to land options and real-estate write-downs, based on recent analysis. The CEO said the home builder has taken about $16 million in charges the last two quarters. “Clearly it’s a much different [housing] market than a year ago,” Hilton said. He said demand has softened, home inventories are rising and taking longer to sell, incentives are up and profit margins are down.
Ian McCarthy, chief executive of Beazer Homes USA Inc., said:
“forced people to come to the closing table, and took the cancellation”
how do they do that?
“I wish your Aunt well, and hope she can weather this.”
You know what’s funny? She doesn’t need to move – I think they just liked the different place and thought all would be right with the world. And I love her, but the best is that just months ago she was telling me that there was nothing wrong with the market there. Oh well.
Paula the Realtor’s Bergen county market conditions says Westwood has a GAP store!!! Sign me up BAY-BEE!!! Prices NEVER go down where there is a Gap.
To new lowballers out there. I lowballed on an asking price of 593 several months ago, offered 470. Was told they already had offers of 520. In the meantime, the house is still for sale. So stick to your guns. My family thought I was nuts for insulting the sellers with such a low offer. I cringed when making the offer but now I am just sitting back and waiting for them to come back to me.
“insulting the sellers”
those days are over.
as if 2-3% isn’t enough of an incentive to open a door for a showing, this doesn’t change the fact that a buyer needs to be educated on what they’re doing regardless of what a realtor does or says. sure you can learn a thing or two from realtors but please don’t use them as your teacher in this regard. come to places like this, do other research, etc. there’s absolutely no excuse with the availability of the internet to not be fully educated on this process.
I would be insulted if the seller did not offer me a Mercedes!! Your family thought you were nuts??? Do you know how many people thought that I should be committed, last year, for selling??? Does your family pay your monthly mortgage??? If yes, don’t insult the seller.
pat i see no empirical evidence of your musings. please provide some if you have. throwing about 18-20% off peak prices needs some validation. while we’re in unconfirmed mode, my own ‘personal’ observations of the more sought after towns shows today’s listing prices are off about 8% from peak selling prices.
Here’s an interesting article from the ‘Washington Post’ (I don’t know if this link’s been shared already) about the psychological side of selling (or buying) and how ego and not greed is the impetus behind pricing.
For Sale, By the Owner’s Ego
Feelings Often Play as Big A Role as Logic in Setting Prices, Research Finds
I think this is a good read for those who view most, if not all sellers as “Greedy Grubbers” or better yet, those that speak of sellers as if they were an entity or group like bakers, candlestick makers or realtors.
I think we need to remember, they were once buyers (like many here), then owners (which I’m sure many aspire to) and now they are sellers (like you may be someday).
Off to rake before it gets too dark,
Rich
PS If you’re curious, I’ve happened to have been all three and now I’m back to being a “buyer”. I rent a house now. Hence the DAMN leaves…
Richard,
If you look at the prices that Rich,NNJ, provides, you will see BC median prices off approx 12% as compared to 2005. These are sale prices, not asking prices. Who cares about asking prices?? What do the sell for,and close???? By the way, has BC been moved off the “sought after” list???
Hi, Richard: Completely understandable. I’ll e-mail JB the list of sales, if you want, in the a.m.
Here is an example, and if you search the zip on a local mls feeding site, you’ll be able to extrapolate others, as well, once you have the list I send. Note that the county is 6 months behind in publishing, so listing price is a better indicator right now. Changes appear to be happening quickly.
Same schools, same neighborhood, middle of the road starters:
A: little more SQFT, no basement
Listed $305k, 9/2005; relisted; currently $269 ML S 472 3918
Comps 8/06-9/06 $305+
B. little less SQFT, full basement
Listed 11/06 ML S 404 0752 $245
Also refer to the report JB linked to last week regarding SE PA. Bucks was down the most, according to the “official” approved numbers, although not as much as I see using new listing prices (as I said, on some, not all).
Hope this helps.
Hello to all my bubble friends. Just saw the house. Its nice but needs super TLC and than some. I decided to up my asking price
from 120k to 125k dont wanna seem cheap. I am gonna email the realtor my ofer and we will see what happens
Go for it Homer. Dont let the Realtor make you feel like you’re crazy for putting in that offer.
Good Luck!
Homer,
120k to 125k?? Do you think you are getting a little too aggressive???
Homer,
If you want your offer presented, and you are serious then you must sign the proper paperwork, its usually 4 copies, 8 pages each, and also you must give a deposit. Offers thrown around verbally mean nothing.
KL
Realtor turned flipper…taking a bath. Tax records indicate $370k purchase last fall. Was listed for $479k during spring.
http://www.realtor.com/FindHome/HomeListing.asp?snum=3&locallnk=yes&frm=bymap&mnbed=4&mnbath=2&mnprice=0&mxprice=400000&js=off&pgnum=1&fid=so&stype=&mnsqft=&mls=xmls&areaid=16296&poe=realtor&ct=Manalapan&st=NJ&sbint=&vtsort=&sorttype=&typ=1&x=57&y=12&sid=078DCBD76B4DC&snumxlid=1063042890&lnksrc=00004
nice place. maybe 300K.
But why the std HD kitchens in all these places? Is there no place else to shop?
Sometimes, I wish they’d just leave some of the stuff they toss.
[I’m an oldy but goody.]
Another free car….center ad for Staten Island 2 family courtesy of the NY Post.
javascript:OpenWindow(‘p62_a1.htm’,’help’,’toolbar=yes,resizable=yes,scrollbars=yes,dependent=yes,status=0,alwaysRaised=yes,width=800,height=600′);
Let’s try this again!
http://specialsections.nypost.com/news/nypost/nyphome/20061109/p62.asp
Spelunker,
Photo’s well but its near a racetrack so for your cool $400k you get to listen to engines backfire all day.
anxious but waiting… thanks for the info…
Means it sold at its list price then?
Ooooh, a Saturn Ion. Not the kind of car someone with granite countertops would drive
Mike Says: “People have to start protecting their own interests”
I agree completely. The data on the homes available for sale is in realtor.com. Why would you buy a house on your brokers recomendation cause she has some hidden incentive on the house? Would you do that for car?
BC BOB I am not being aggresive I am being realistic.
The house is at typical Bi-level.
Kitchen needs to be gutted its filty. The cooktop is completely covered in aluminum foil.
The wonderful main pink bathroom looks like it has not been cleaned since the 80’s. The floors need to be refinished. The walls need some good patch work and paint. All windows, sliding glass doors and reg door need to be replaced.
The downstairs, well lets just say it looks like an unfinished basment that was started and never finsihed. The outside needs some help. Lucklily there is a bathroom downstiars that is almost finished. So that can be used for the time being. Just from by rough guestamate looking at the place it probably needs close to 150-200k of work done. And thats not going over board with anything, thats just keeping it simple.
So 385-20% (price decline)
385k
– 77k
————-
308k
– 175k for work needing to be done
————
133k
So my offer is not that bad.
And I know people say well you cant take off the entire amount for comps, why not? If someone can put a 15K kitchen in and make 10k than why is it not ok for me to ask for the full amount? If you can over charge me 10k for a kitchen than I should be able to ask for full comp without getting looked at funny.
Homer,
I’m in your camp, was just playing using the word “aggressive”. Be careful when you say it needs 150-200k, make sure you have reliable contractor’s. Check them out with the state, make sure they are licensed. Don’t pay anybody up front. Work out a payment schedule, 1/4, 1/4, etc.. Get it in writing and agree upfront that you will release your 1/4 once XYZ is done, time frame and to “YOUR” satisfication. Make sure you know exactly what you are getting, all the details, down to size of screws. If you are not an expert in this area, have a friend/relative, who knows construction, involved in this. Good Luck!!!
BC Bob, don’t you hate it when your sarcasm doesn’t translate in email or posts? I laughed out loud at your comment. Your facetiousness was not lost on everyone.
Seneca,
Glad you didn’t take it the wrong way. I thought it was hilaroius that he really thoughtI meant aggressive,(120 to 125k). Oh well, better spell it all out.
One funny thing not mentioned in all the talk about agent incentives:
All agent compensations in NJ MUST, by law, flow through the agent’s broker…AND, only brokers can compensate salespersons. Agents may not- under any circumstances- accept compensation directly from the public. I know- for a fact- that many sellers are in collusion with agents in order to bypass brokers and pay the entirety of all incentives offered directly to selling agents. Not only are incentives not being disclosed to the public, they are being hidden from brokers, too!
Of course, the enforcement of RE regs in this state is a complete joke, and many violations are- and will be- missed.
If you ever visit the RE Commission in Trenton, it’s like a ghost town. An entire floor of office building with 100 empty cubicles, lights off, and 4-5 guys sitting around a desk in one corner of the floor. Many enforcement actions they DO undertake revolve around things like agents’ using nicknames in their ads (what a threat to the public that is!).
Gotta go. Time to shave with the cheese grater again.
“Awaiting moderation”? Nothing in my last post even approaching a dirty word.
Or am I now on probation?
Clotpoll, you can’t put more than one link, although I’ve been moderated often with no links.
The moderation keyword filter contains more than 200 words and phrases at this point.
It’s pretty easy to fall into the moderation trap.
jb