Done with playing FOLLOW THE LEADER WITH realtors! (commission, mortgage, sale)
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The current market condition is not created by the rapid price appreciation in bubble markets but rather lack of financing available to buyers that are deemed a high risk in every market.
When we look for houses on the Internet and elsewhere we actually jot down those who are thousands too high for our accepted limit. We do this because you never know at what stage the listing is currently at. For instance, it may be new; on the other hand, it may have just hit the MLS after several price reductions already.
Also, unless we or our buyer agent delve into the history of a property once we have it narrowed down, there is often no way to tell if it is distressed, an estate or divorce sale, REO, etc. A certain percentage of those listed on the MLS site are, but don't initially say so in the description.
I also check as far as I can online sites that list distressed properties. I've found some good ones, but unless they are local government sites every one wants a subscription to find out further info. However, with enough info-thumbnail photo and street-I can usually drive by and find the property.
People say to check the sheriff sale lists but besides all the driving around different counties that must be done (hard for me because I am disabled), gas costs do become a factor, as well as time. So I try my best sitting at the computer and searching as long as it is possible for me to do so.
One last thought--a small horse farm at the end of our road went up for sale over 18 months ago at $459,900. It is still for sale and is now listed at $379,900. And it is still not selling...ditto for the nice home across the road from it which has been on the market almost as long.
I hope real estate agents don't get too discouraged as this must be a really lean time for them. They have families to feed just like us. But that's the way with most sales; it's a roller coaster ride, although with real estate the downward slump has really slowed the ride to a crawl.
With all the news and media coverage you'd think people understand that it's a buyers market right now and even with that, we are going through a financial setback in the US. Well, believe it or not, there are people out there that refuse to believe it.
There are people out there saying that the media is blowing this all out of proporation.
I wonder sometimes what planet these people live on.
An optimistic planet focused on history, facts, and the knowledge that real estate is local. Do not fret! Come election time, the economy will majically turn positive as the media trumpets the election of a liberal............irregardless of the facts. When Clinton was elected during the "wost economy in history" we had already been in recovery for over a year....but the facts did not matter...........media perspective did!
Years ago people got enough from travel agencies charging them for all kinds of stuff and started to search the internet and book their own flights and travel arrangements. Nobody ever expected the people to do that in such a way that almost all travel agencies are history. Airlines give discounts if you book online instead of calling them.
The same is going to happen in real estate IMO. With the gas prices as high as they are today, no realtor or client is going to drive all over town unless they have done a good research online and many have stated that they came up with the home themself and the realtor just had to show the homes they liked. So if realtors keep asking the same commision as when they had to do the search from scratch,... the realtors are IMO in for a bad surprise. People have to save in an economy like it is today, that is for every one the same so you have to be creative and save and IMO people will do more themself and only hire a realtor or lawyer when they need and will pay accordingly or do it FSBO and will cut out the realtor completely. Many will need a realtor but not as much as it was in the past so unless realtors adjust, they will lose more and more like the travel industry did and never expected.
Your situation is different as a seller or would be seller from the vast majority of homeowners. You actually own your house and it sounds like you bought it for very little, so you could afford to sell it if you had to, regardless of economic circumstances. Most people though are mortgaged to the hilt. Few put 20% on a home anymore and mortgages have often been done by doing a 80% first, then taking a 20% second to avoid the PMI, or, people take out ARMs to get the lowest rates they can qualify for and often interest-only loans with prepayment penalties. It's a racket. That worked when prices were skyrocketing, but it causes financial disaster when prices stop rising, interest rates are reset, home prices begin falling, and the "homeowner" has no equity cushion to absorb the fall. You aren't in that situation, but most of America's homeowners are. About 33% of American homeowners actually own their homes free and clear. I'm one of them too. I paid cash for my home in January. No mortgage. I could sell if I had to below what I paid. I wouldn't like it, but I wouldn't be wiped out. I also have avoided taking out equity loans (never have done that), and I own my auto outright and have no credit card or any other debt. I stay debt free. Most people are up to their eyeballs in debt, including mortgage debt, and they are very vulnerable to a stalled or sinking housing market. There's no safety net, and those houses are hitting the market now and depressing prices. Many of the people selling now are selling because they're realizing that their ARMs are about to reset, have reset, or they fear being caught in an underwater mortgage. They can't refinance if there's no equity.
This is why I feel it is important to find out if the seller owns the home outright. For instance, I mentioned that the house we are looking at sold for $45,000 in 1986. It's probably paid off by now as the owner owns another on the same road that is being listed at over $400,000. There are certain sites that can show a mortgage balance, if any, although they often don't even have that information.
I also notice that under "last sale" on information web sites the amount of sale is listed as $1.00. It then says "not a sale". I'm assuming that these houses do not have any mortgages attached to them.
As you so importantly pointed out, if there is not mortgage the seller may be willing to go much lower then the asking price, especially if he/she needs or wants to move out of the area or has purchased another property and is paying a mortgage and/or taxes on both.
So this is something I try to find out. Also if it is an estate or divorce sale, the sellers are often anxious just to get what they can for the property so they can close whatever it is they are doing and distribute the proceeds.
When there is a mortgage, then one has to find out what the balance is. Even so, it doesn't mean the lender will take that amount, but will want what they can normally get that is closer to the full market value.
Years ago people got enough from travel agencies charging them for all kinds of stuff and started to search the internet and book their own flights and travel arrangements. Nobody ever expected the people to do that in such a way that almost all travel agencies are history. Airlines give discounts if you book online instead of calling them.
The same is going to happen in real estate IMO. With the gas prices as high as they are today, no realtor or client is going to drive all over town unless they have done a good research online and many have stated that they came up with the home themself and the realtor just had to show the homes they liked. So if realtors keep asking the same commision as when they had to do the search from scratch,... the realtors are IMO in for a bad surprise. People have to save in an economy like it is today, that is for every one the same so you have to be creative and save and IMO people will do more themself and only hire a realtor or lawyer when they need and will pay accordingly or do it FSBO and will cut out the realtor completely. Many will need a realtor but not as much as it was in the past so unless realtors adjust, they will lose more and more like the travel industry did and never expected.
Comparing travel to real estate is ridiculous at best.
How many times when booking travel do you need to contact a lwayer?
Do you have to go look at the plane first?
Do you have an inspector check out the plane?
Do you have to get a loan for the flight?
I can make travel arrangements in 10 minutes because there are a minimal amount of factors involved.
Home sales takes weeks and sometimes months because of the myriad of factors involved.
There have been many websites that have tried to make money off no service or low service real estate and most of them have gone by the wayside. Some are successful but the majority of the home buying public does need help in purchasing and selling and so the full service realtor is going nowhere.
Years ago people got enough from travel agencies charging them for all kinds of stuff and started to search the internet and book their own flights and travel arrangements. Nobody ever expected the people to do that in such a way that almost all travel agencies are history. Airlines give discounts if you book online instead of calling them.
The same is going to happen in real estate IMO. With the gas prices as high as they are today, no realtor or client is going to drive all over town unless they have done a good research online and many have stated that they came up with the home themself and the realtor just had to show the homes they liked. So if realtors keep asking the same commision as when they had to do the search from scratch,... the realtors are IMO in for a bad surprise. People have to save in an economy like it is today, that is for every one the same so you have to be creative and save and IMO people will do more themself and only hire a realtor or lawyer when they need and will pay accordingly or do it FSBO and will cut out the realtor completely. Many will need a realtor but not as much as it was in the past so unless realtors adjust, they will lose more and more like the travel industry did and never expected.
The internet has changed the face of many businesses, including travel. Although it provides real estate agents with a powerful tool, the same is true for the homebuyer. It just takes some research in order to find all the various sites that can give a lot of information on a property that is usually known only to an agent. The sites are there; it's just finding them that's the hard part. And some want a monthly fee as well, although this fee can save the buyer a lot in the long run.
I posted before about a business known as Buyside which I believe is the wave of the future. They recognize that buyers often end up doing all the work, research etc. and then have to call an agent to come in to negotiate the deal. Businesses like Buyside (there is one other but I can't remember the name) recognize this and their agents work on a flat salary. It does not threaten the listing agent as he/she will still get the same commission as if another agent had brought them a buyer. At the closing, the buyer receives a large part of the commission paid to Buyside minus operating costs.
When I discovered this it was just disappointing that they do not yet operate in all 48 states but as I recall both California and Florida, among others, has given them the go ahead to do business. I think it's a wonderful idea, and it doesn't threaten "regular" agents' commissions in any way.
So what you wrote is very true and I think the real estate industry will be making even more adjustments in the years ahead as people become ever more internet savvy.
Decay and Bentle are right. I have bought and sold many properties on my own and it isn't that complicated. I don't plan to ever use a realtor again as the interenet gives me all the tools I need.
Come on!! All of you realtors agree that there are lousy realtors out there, so lets hear from some!! If you are a realtor and you suck please tell us a little about yourself!!
Decay and Bentle are right. I have bought and sold many properties on my own and it isn't that complicated. I don't plan to ever use a realtor again as the interenet gives me all the tools I need.
Come on!! All of you realtors agree that there are lousy realtors out there, so lets hear from some!! If you are a realtor and you suck please tell us a little about yourself!!
I don't think you will hear from realtors who feel they "suck" , but some input from ex-real estate agents would be interesting. Anybody????
The avaiability of mortgage balances for instance is pretty much a credit report number. Access without permission is a violation of the law. They are not public records. You can access that which is recorded...but that will never provide a full story or present balances.
Iggy House is Buyside Realty. Last report I think was Iggy's House had revenues of 400K and expenses of 5.1 million. Sounds like a bit of a problem actually. These discounters generally have a very hard time in slow markets. If there is a successful one I would think zip realty which provides much more modest rewards. Redfin is another and there are some reasonably competent smaller ones.
Does any of it work? Well the breed in general is lambasted for lousey customer service. That is the drawback of the model. If you are good why would you work for Iggy's at half pay? So you end up with effectively clericals...and that may work fine unless there is a problem. But clever marketing? Sharp negotiators? Good troubleshooters? Don't hold your breath.
If however you are personally competent at all this you don't need an agent at all. Just jump right in negotiate the buyers commission and part of the listing commission from the listing agent and a price 12% below the comps and you are all set...who needs an agent anyway?
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What I Do..
, but some input from ex-real estate agents would be interesting. Anybody????
