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You complain about a percent when its your commission, but if its the bank's money, I'd bet you'd tell a buyer to snap up the house before rates go back up.....
Would you like to guess what word I'm thinking of right now?
Your industry created the problem it is facing today. When RE was good, your industry passed up the stable returns of a fixed rate pricing structure and instead chose commissions to maximize gains. You made the big money during the boom, and now its falling on its face because it got greedy and used an unsustainable business model.
Consumers don't feel sorry for the auto industry that focused on the high profits of SUVs, and we don't feel sorry for the real estate industry either.
You are kidding right? Our little team had its best year ever. The herd has thinned and volume is very high. The discounters have mostly gone out of business. The average commission is up. Discounting is relatively rare.
The gross revenue is up 60% from 2007 in Vegas. I don't think we will get to the gross revenues of 2004 this year but we will move up a lot. And with the thinned herd the revenue per agent may well exceed 2004.
So as of now it looks like a very nice RE year in at least some cities.
Sorry about that...but hunt around...you can find some cities hurting...Detroit?
You complain about a percent when its your commission, but if its the bank's money, I'd bet you'd tell a buyer to snap up the house before rates go back up.....
Would you like to guess what word I'm thinking of right now?
Your industry created the problem it is facing today. When RE was good, your industry passed up the stable returns of a fixed rate pricing structure and instead chose commissions to maximize gains. You made the big money during the boom, and now its falling on its face because it got greedy and used an unsustainable business model.
Consumers don't feel sorry for the auto industry that focused on the high profits of SUVs, and we don't feel sorry for the real estate industry either.
First, real estate commissions have been based on a percentage of selling price for years. I am not asking for sympathy... but keep in mind that as prices fall so do our fees since they are based on the price of the house.
The industry is not falling on its face... you don't see Coldwell, Remax, Pru or any other the other filing for protection the way the financial and auto industry is.
As far as recommending a purchase and "grabbing" a lower interest rate, isn't this our responsibility as Realtors? Aren't I supposed to tell buyers what the rates are and suggest strategic moves to save money... if I am doing an excellent job (I can't speak for all Realtors), why shouldn't I get top dollar?
You are correct... we all take the good with the bad. GM was thrilled to make huge profits on Suburbans, now they have to deal with reduced sales since they never looked at life beyond the next financial quarter.
And... like it or not, as I illustrated the other day, a drop from 6 to 5% is actually a 16% reduction in fees.
Also... a commission is split between a listing and selling office, then between the office and the salesperson. Whether the fee is 3% or 10%, the salesperson you work with is not taking home all the money.
Just wondering, SterlingGirl... what do you do for a living?
Last edited by AndrewMensch; 01-09-2009 at 09:17 AM..
The difference between your industry and lawyers is that your industry is greedier. I know that's hard to imagine, but take this into consideration:
Nearly every profession on earth does pro bono work, and that includes attorneys who went so far as to put it into their code of ethics. I've never, however, heard the phrases "pro bono" and "real estate agent" mentioned in the same breath.
I deeply respect any industry or person who gives their services back to their community for people in need. When the realtors start giving their services to people in need, they may earn a little of that respect.
Our local board has spent time with Habitat for Humanity, and I personally consult with sellers who want to know how to avoid foreclosure and want more info on terms like "short sale" and "under water."
We don't charge hourly rates like attorneys or accountants do... so sometimes we give a listing presentation, tell the seller what to fix and give them a market analysis, only to find the home listed privately the next week.
Sometimes I think that an hourly rate would be more fair to all sides.
October in Las Vegas was the best October for single family home sales in history. November and December were less good but still close to the best ever. Are you trying to tell me this is not happening?
LOL... Las Vegas is not an indicator for a global market.. and if I am reading it right, Las Vegas is one of the top 3 hardest hit places.... meaning their decline has been bigger than any other place in the US... If you had the best home sales in the last several months, it ONLY shows you that greedy people jumped in too fast (happens in ANY market)... why? Because house prices are projected to be REALLY bad in Las Vegas this year.. if sales are doing so great, house prices should go up, but it isn't and there is a reason... because once you get rid of the greedy people (who will lose money on the deal), there is nobody else to buy the still oversupply of homes in vegas and those that want to buy STILL don't qualify...
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Price continues to go down at at very steady pace. As I have said elsewhere I believe this is almost entirely driven by lenders and the pricing they set on REPOs. When they run out or stop setting below market we get an instant price increase.
No, no, no, no, no, NO! Prices are NOT driven by lenders, they are driven by INCOME of residents there... if their median income doesn't qualify for a median mortgage, a bank SHOULD reject it.. unfortunately that wasn't how it was done during the housing boom.. you are suggesting that this will continue? It will certainly NOT... prices will drop to affordable levels (28% DTI) of the median incomes for people in that area.. and its not there yet... with the recession, you can expect housing prices to actually be priced below affordable levels (and we still aren't there yet)... Repos are only "confounders", meaning they worsen the situtation but they are NOT the "situation"... the NAR and realtors try to confuse the two so buyers will buy...
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Somebody is buying these houses. They are close to 40% FHA...which says a lot of the buyers are first time. There are lots of investors and a few regular home buyers. But there are apparently enough.
That is exactly what the government WANTS to happen... why? Because we are a debt economy... meaning, wealth is created through other people's debts... We ran afoul when people had too much debt but instead of fixing that problem, the government is trying to get people who don't have that much debt into the debt economy which is what you are seeing by the lax rules with the FHA... they are further compounding the problem because what happens when 100% of the society is overburdened with debt? It ain't pretty... The short term "fix" (because it really is NOT a fix) means you better be prepared for one of the worst disasters yet to come and home prices are going to drop even worse... everything they are doing is making the situation worse... they tried to stabilize the market but succeeding only in destabilizing it... don't fall for the short term, look at what happens in the long term...
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So price continues down until the lenders blink. Then we see.
The lenders have been blinking for a long time... its time for consumers to try to correct the situation unfortunately the people who broke the system are the same ones in charge of repairing it... and all they have in mind is saving their paychecks in the short term and damnit in the long term... they are thinking the more money I get now, I can cushion myself in the long term... unfortunately for them, they are going to lose most of it in the long term... pitchforks anyone?
LOL... Las Vegas is not an indicator for a global market.. and if I am reading it right, Las Vegas is one of the top 3 hardest hit places.... meaning their decline has been bigger than any other place in the US... If you had the best home sales in the last several months, it ONLY shows you that greedy people jumped in too fast (happens in ANY market)... why? Because house prices are projected to be REALLY bad in Las Vegas this year.. if sales are doing so great, house prices should go up, but it isn't and there is a reason... because once you get rid of the greedy people (who will lose money on the deal), there is nobody else to buy the still oversupply of homes in vegas and those that want to buy STILL don't qualify...
Of course Las Vegas is not representative of the global market. It is however likely the leader of the high activity markets. It is already clear the Phoenix and So. CA are on a similar path.
Volumes are very high. Prices continue on a steady path down. This leads to the obvious conclusion that the market is not working normally does it not?
There is no shortage of buyers. Sorry about that. The problem is getting the homes for the ones who want them.
The inventory in Las Vegas has remained the same in the face of volume doubling. That has a message too.
I see virtually no possible of buyers at this point in the cycle losing money. May well need to hold three or four years to get out profitably but that is probably healthy. When you buy below replacement cost it is unlikely you will lose money.
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No, no, no, no, no, NO! Prices are NOT driven by lenders, they are driven by INCOME of residents there... if their median income doesn't qualify for a median mortgage, a bank SHOULD reject it.. unfortunately that wasn't how it was done during the housing boom.. you are suggesting that this will continue? It will certainly NOT... prices will drop to affordable levels (28% DTI) of the median incomes for people in that area.. and its not there yet... with the recession, you can expect housing prices to actually be priced below affordable levels (and we still aren't there yet)... Repos are only "confounders", meaning they worsen the situtation but they are NOT the "situation"... the NAR and realtors try to confuse the two so buyers will buy...
Yes, yes, yes, yes, YES! Prices are driven by lenders. It is why price continues down in the face of record level volumes. Some day we may see what is the price level that can be sustained by local incomes. But that happens only after the lenders stop controlling the price line. They are 75% of sales for goodness sake. Seventy five percent of a market IS the market...not a confounder.
Doomer try to warp the obvious out of all rationality when it does not conform to their distorted views.
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That is exactly what the government WANTS to happen... why? Because we are a debt economy... meaning, wealth is created through other people's debts... We ran afoul when people had too much debt but instead of fixing that problem, the government is trying to get people who don't have that much debt into the debt economy which is what you are seeing by the lax rules with the FHA... they are further compounding the problem because what happens when 100% of the society is overburdened with debt? It ain't pretty... The short term "fix" (because it really is NOT a fix) means you better be prepared for one of the worst disasters yet to come and home prices are going to drop even worse... everything they are doing is making the situation worse... they tried to stabilize the market but succeeding only in destabilizing it... don't fall for the short term, look at what happens in the long term...
The Libertarians remained committed to a dooms day theory. That will not make it happen. I would think the real message is the evils that occur when the capitalist model is allowed to run unregulated. It is obvious. The capitalist optimizes short turn return at the cost of sinking the system. So much for libertarian economics.
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The lenders have been blinking for a long time... its time for consumers to try to correct the situation unfortunately the people who broke the system are the same ones in charge of repairing it... and all they have in mind is saving their paychecks in the short term and damnit in the long term... they are thinking the more money I get now, I can cushion myself in the long term... unfortunately for them, they are going to lose most of it in the long term... pitchforks anyone?
There is one agreement. We need new and capable regulation and don't yet have it. Have to gain control of the out of control capitalists.
And the lenders have not blinked. They are running a fast and effective system to get the REOs off their plate as quickly as possible. That they may damage the market is not a criteria. I expect a further decrease in prices even though we are now below rational longer range levels. That is why this is likely the best time to buy in some years.
I don't know how long it lasts. It certainly appears it will continue at least until spring. But these very inexpensive prices and low interest rates are not sustainable and will vanish in the not too distant future.
No Recovery for Real Estate as Speculators Dominate Sales
As the U.S. housing recession enters its fourth year, there’s no sign of a recovery because speculators account for most of the rise in sales.
While the purchases are trimming the inventory of unsold properties, most of those bought by speculators will likely return to the market when prices rise again, hampering any recovery..
There is no shortage of buyers. Sorry about that. The problem is getting the homes for the ones who want them.
That's right... we must find homes for the McDonald's worker, the Home Depot janitor, the soon-to-be out a job whatever, the newly illegal immigrant that just came here yesterday, the 18-year old who just moved out of his parent's place, or the man who lost all his savings in the Madoff scandal... yes, it would be challenging to find them a home... Home ownership accounted for a majority of people out there... a majority of people who have good credit and can afford a home ALREADY own a home... that leaves you with the tiniest of the population to prey upon, I mean convince to buy a home... the rest, well they can go back to flipping burgers or whatever they do, cause they can't afford and nobody (unless they are FHA) is going to lend to them PERIOD... No shortage of "good" buyers... not in this year or the next.. let's not confuse the issue.. Vegas, like any other place is a dead duck... and no matter how much you WISH it wasn't true.. it still is...
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Yes, yes, yes, yes, YES! Prices are driven by lenders. It is why price continues down in the face of record level volumes. Some day we may see what is the price level that can be sustained by local incomes. But that happens only after the lenders stop controlling the price line. They are 75% of sales for goodness sake. Seventy five percent of a market IS the market...not a confounder.
They are a confounder because they are NOT the problem.. the problem has ALWAYS been leveraged debt and no matter how hard you try to spin it, nobody is going to fall for it... Repos are a confounder because they are 75% of the sales... but the problem has ALWAYS been there... unless you unaffordable homes creating unrepayable debt is not the problem we been facing the last couple of years...
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The Libertarians remained committed to a dooms day theory. That will not make it happen. I would think the real message is the evils that occur when the capitalist model is allowed to run unregulated. It is obvious. The capitalist optimizes short turn return at the cost of sinking the system. So much for libertarian economics.
I do happen to be a Libertarian and I am not committed to any doomsday scenario because I think there ARE solutions. I think what the government has been doing is making the situation worse and if that is doomsday to you, well... have fun in la-la land... I am surprise that you think it was unregulated markets that allow this to happen.. You of all people KNOW the government was pushing for home ownership for the poor and for people who lack credit.. they PUSHED for it BIG and you KNOW it... that, my friend is REGULATION... unfortunately that regulation doomed the whole system... so much for warped views... no libertarian would EVER tell a person to make a loan to someone that can't afford to pay it back, no matter how false ideology you want to spout out...
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There is one agreement. We need new and capable regulation and don't yet have it. Have to gain control of the out of control capitalists.
What agreement is this? To not make loans to people who can't afford it? Hmm... that's what we been doing for some time... that is until the government TOLD them to do otherwise under new regulations... out of control capitalists? How about out of control government? Best time to buy? Don't make me laugh and I am sorry if I am killing your income... not like you have ulterior motives or something... The last four months worth of foreclosures are NOT even on the books yet, the fifth month is coming soon and it will expire soon (why do you think citibank and others are approving of loan modifications that redo the prinipal owed? You can stop hiding from the facts)... House prices are going to sink next February.. GUARANTEED...
"Guessing where the bottom is can be dangerous business."
Why is it a dangerous business? Because house prices will shoot up all of a sudden in the biggest (or second biggest) economic contraction in a century? Do you really think that people are going to believe that?
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"Even if we are not at the bottom, we are pretty close."
So, are you then engaging in the "dangerous business" of guessing the timeframe for a bottom in house prices?
Why is it a dangerous business? Because house prices will shoot up all of a sudden in the biggest (or second biggest) economic contraction in a century? Do you really think that people are going to believe that?
So, are you then engaging in the "dangerous business" of guessing the timeframe for a bottom in house prices?
its not the values that might shoot up if you time this wrong, its interest rates... with 1.7 trillion to be financed with new bonds any perception of pick up in the economy can send rates higher in a heartbeat.... notice i said perception...markets react way before the signs of change are there.
the 30 year mortgage rates are linked to long term bonds which are controlled by investors not the fed. in one week since the beginning of trading this year the long bond fell 5% in value indicating quite a large rise in long term rates already... it dosnt take long to translate into mortgage rates
Last edited by mathjak107; 01-09-2009 at 04:04 PM..
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