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Oh the audacity of you to put realtors in the same league as doctors. Get over yourself. Hopefully in a few years, most people will take it upon themselves to educate themselves on the buying / selling process which in turn will make realtors obsolete.
You mean taking a 2 week real estate course is not equal to Law or Med school?
I too think Realtors will eventually go the way of the stock broker and travel agent.
Keep renting. Buying a house in this unstable economy just isn't wise. I was recently laid off from a major corporation and the home owners have it the worst because it is harder to "cast a net" when looking for a new job when you own a house. As a renter, I can find a new job, then look for a new place to live if it is too far from where I live now. Twin Cities traffic can be hell, and I ain't gonna waste my life in it. If one owns, you don't usually have that choice if work is far away.
Also, one of my former co-workers took a new job in New Jersey. She said that she will NEVER buy again. She lost about $60,000 when she sold her townhouse.
If you work for someone else you will always fear for your job. And fear mongering is 50% of the reason why the market is down.
I also know people who said they will NEVER rent again. Rent a home for 3 years and you'll spend 40 to 50k and have ZERO to show for it, no tax advantages, etc. If someone loss 60k, was that cash, or equity? If cash, she needed a different agent. if equity, then hopefully it was a must to sell the home.
Yes you have up keep and maintenance but you have those things when you OWN something. I Own a piece of the greatest country on the planet. I'm an agent, and I used a great agent and brokera to help me with that and the whole process when I bought. And sure there are crap agents everywhere just like doctors, lawyers, car salesmen, chiropractors, any any other profession. But anyone that puts down ALL agents in an attempt to make some kind of point has some issues. What do you do for a living might I ask?
Last edited by GreatGreenvilleGuy; 12-20-2010 at 12:22 PM..
You mean taking a 2 week real estate course is not equal to Law or Med school?
I too think Realtors will eventually go the way of the stock broker and travel agent.
I was wondering the same thing...hmm. Let's see. A 2 week or 1 month real estate course gives one the same social status a being a doctor!! Wow! I am in the wrong line of work
Yeah, stock brokers need to go away too. Sell those loaded funds to some other fool...
I like the idea of renting a house....sounds like the best of both worlds! Better yet, I'd like to purchase a condominium house -- that is, I'd like to have equity in the house itself but not have to take care of the yard, sidewalks, maintenance, etc. and leave that to an expert that our "community" pays for uniformly. If there are "condo houses" please shout out and let me know....I'd like to research that idea more!
I like GreatGreenvilleGuy's take on owning, however: "I Own a piece of the greatest country on the planet"!
I always have to laugh when home owners act like they are just paying for the house and not paying for upkeep. My rent is $600 a month, or basically the cost of the total utilities and a portion of the taxes a person pays each month of the year to own a house. Then there are all of the repairs, appliances to buy, new roof, painting, furnace, windows..........I am getting dizzy, the crap never ends. I know because I rent in a house and no way would I want to own the wallet buster.
Home owners like to gloat about all of their "equity" but then conveniently leave out all of the "extras" to keep the house running. And then when they want to sell they have to pay a thief realtor about 7% in commission. LOL!!
Back to my original point which is that in this mobile economy, who stays in a house for 30 years anymore. If I rent for 30 years, I can always keep easily moving close to that next good paying job.
Who in their right mind has a problem with home owners talking about equity? this guy/gall must have had a bad transaction in the past! Yes if you own things you have to pay to have them kept up. And why pay someone elses mortgage for 10 years when you couldve paid your own. Plus the average person will see thousands more money to offset that pesky ownership maintenance you despise because they will have lowered their taxable income. And no financial adviser worth their salt would tell you with a straight face to rent ANYTHING for 30 years! lol.... But of course you probably think Advisers are worthless too.
Real estate is a local market. If you just buy anything anywhere it could be risky. Who in their right mind says real estate isn't an investment. Wow. This is why you need to talk to a LOCAL agent instead of folks chimin' in on a forum.
A financial advisor WOULD tell you to rent for 30 years if the cost of borrowing to own was too high (like NYC or SF) and you couldn't afford it, or if you could invest the capital into the market and as long as you could yield over 4%-5% annually you would be doing better than owning equity in a home. Also, home equity is one of the least liquid form of assets, a major turnoff for many investors.
As I have said before, it's the land that is the "investment". The structure itself won't ever keep up with inflation but the shell does appreciate if the cost of rebuilding goes up. Rest assured the guys who bought hunting land or farmers that sold to developers have done the best "investing". I'll explain more later.
If the land / neighborhood transforms into something that is undesirable, then that home will be a net loss after you feed it for years because (more often that not) the land does not keep up with the ever changing demand parameters.
I know golfgal said that her old house was basically unchanged for years and it is going for 4X more money. Then I want to know why my 1991 built home already had bad shingles, heating, needed new flooring, changed lighting to keep in style, new landscaping, and tens-of THOUSANDS of dollars of maintenance over the years. I must just be unlucky.
Things that are bad for values:
· Long commutes (think Saint Francis)
· Neighborhoods turning to crime (think Brooklyn Center, Burnsville).
· Property taxes that get out of control (think Minneapolis).
· Permanent economic Downturn / paradigm shift in housing needs (baby boomers selling their McMansions / deleveraging; think Eden Prairie).
· Negative population growth (think Big Stone County, Faribault County, etc).
· Poor job market especially with concentrated industries (think Iron Range).
· Plenty of land to simply buy new (think Rogers / Andover, Dayton, etc ).
· Cost of energy (think huge homes and old inefficient construction (Saint Paul) ).
· Over building (think Phoenix, Fort Myers FL)
· Neighbors that decide to let their home go to sh_t (think Mound MN).
· Poor Quality school districts (Think St. Paul).
We didn't even cover the opportunity costs of having to turn down a job because you didn't want the hassle of selling or the fee to sell your home.
If you are smart enough to know what will be desirable in 30 years then you home was a good "investment". In 1972, someone didn't "know" that the Metro area was going to have such a large population growth and healthy economy when you bought in Plymouth or Wayzata.
What I have learned is to buy property that increase your chances of that land to go up in value. Like golf course communities that are close to the major hubs or lake property that are close to work centers (Lake Minnetonka) or vacation properties close to the cities (think Brained). But those have their risks because the land over appreciated.
So in summary population growth makes everyone who bought a home look smarter because it puts pressure on the land prices. If your land doesn't take off in value well above inflation (as many areas have in the Metro area), there is no question home ownership is an expense and a poor investment. Once the town is filled-up, that means people need to move farther out. But the reality is NO ONE can positively predict those 9 bullets listed above over the long haul.
Just as you only hear about when people win at the casino, you only hear about the times people made great appreciation on their home / land. I live in Andover. My value was affected by long commutes, plenty of land for others to build their own home, people are wanting smaller homes (I have a 4000 sq footer), the job market is focused on business owners relating to the housing trades which is down.
So for me, I am "up" $100K in about 20 years. But I have easily blown $100K in repairs and upgrades. I'm not complaining. My LAND went form $19K to $90K (??) which is the bulk of the appreciation. But in 1991, I could have bought a 1/2 acre culdesac lot in Plymouth by the McDonald's on 55 for $41K ($22K more that Andover). That Plymouth lot went up a whole lot more in value. Lesson learned.
But when I moved to Andover in 1991, the commute wasn't a nightmare as it is today. In 1991, I would have no idea that the home owners would have been business owners in the trades (and several large homes have gone into foreclosure). Additionally deleveraging has taken off over the past couple of years that could not have been predicted in 1991. So to my point, no one is smart enough to predict all of the parameters that far in advance.
I'm not a realtor. But there is a reason that the average wage is $39K. Most of them could not quantify how the market works and why. I'd say maybe 10% of them are worth their commission and I have only used the best of the best. In most cases, I know more than them about there own industry. I've sold homes myself and I have used agents to sell my properties as well.
Last edited by MN-Born-n-Raised; 12-21-2010 at 04:27 AM..
Hello all.. What mild spring-like conditions we are having this Dec!
I rent a condo in Highland Park but will be looking to buy within the next
12 months. Anyone want to predict where they think the market is going
6 months, 12 months, 2 years from now?
I'm not looking for the standard "I'm a Realtor and I tell everyone the market is going up even if its not because I want to earn a commission" type replies.
IMHO. MN isn't done depreciating yet (as an aggregate). I cannot speak specifically to the Highland Park area.
I was wondering the same thing...hmm. Let's see. A 2 week or 1 month real estate course gives one the same social status a being a doctor!! Wow! I am in the wrong line of work
Yeah, stock brokers need to go away too. Sell those loaded funds to some other fool...
I didn't say that Realtors have the same social status as doctors - I was saying that you are paying for their expertise, just like you are paying for the expertise of a Realtor vs. the option of doing it yourself. And obviously the expertise of a doctor is much more valued from a financial standpoint since most Doctors make $200k+ and the average Realtor $35k.
Heck, people can go to WebMD and try and diagnose their own health issues to but that doesn't mean they should.
As long as the current Realtor model provides more benefits (i.e. value) than it costs there will not be a change. Personally, I think there is a likelihood that the business model will change but I don't see it happening in the short term as currently the benefits of hiring a Realtor vastly outweigh the alternative for most people.
I understood BilWallace was saying; real estate agents have expertise and knowledge that the average person doesn't have. Not just about the area -- I certainly don't need a realtor to help me with that, as we knew exactly what our (rather small) purchasing target location was. But when talking about the large expense of buying or selling a home, it absolutely makes sense for most people to pay a small amount to get some expert help. Those who have more experience, have the time, and know the ins and outs of the business may choose differently, but since most people aren't buying and selling lots of houses in their lifetime, it makes sense to get some help from someone who works with the business as a living. (although obviously some Realtors are better than others; that's why almost everyone I know has found their agent through word-of-mouth from former clients who have had positive experiences). I'm paying for their expertise, experience, advice, and contacts. Sure, I could probably figure it out on my own with enough effort and time, but I'd prefer not to risk make a time-consuming and potentially very expensive mistake while I learn.
As to the earlier comment about financial advisors and the advice to rent: yes, financial advisors often DO tell people that renting can make sense. In some cases it makes MORE sense than buying. But again, that all depends on a lot of different factors. Buying is not the best option for everyone.
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I'll explain more later. 
