Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
This assumes that someone, anyone will pay $400K. This assumes that this same property will not still be for sale in 6-12 months and the seller wishes he negotiated the $350 offer back when...... Sometimes, yesterday's lowball, becomes tomorrow's wishful best case scenario.
It's beyond bizzare that in the midst of the bubble, homes were trading at an incredible pace when holding out would have meant more net proceeds for the seller. Conversely, in the midst of the post bubble, so many sellers persist in the belief that by waiting, they will somehow get more for their house. Sellers have a tendency to respond contrary to the market.
If a stockbroker had a crystal ball and could predict what the market was going to do tomorrow, most of us would be delighted to pay any sort of fee he commanded.
Those agents who know, really know, their local market and inventory have a crystal ball. They know their local trend and the competition and can advise a seller how to make certain he obtains the maxium in net proceeds. Perhaps it's even as simple as doing what seems counter-intuitive to most sellers. When markets are appreciating, time is the seller's friend. When markets are depreciating, time is the seller's enemy.
Some sellers believe they are saving money by using a disounter or flat fee guy or doing the FSBO thing. Some sellers do not know the difference between a competent and incompetent agent. A heck of a lot of sellers hire the agent that gives them the best price. And a few obtain their own license and represent themselves, not realizing that 99% of what they learned on the way to licensing has nothing to do with understanding how markets work and what it takes to get sold for the maximum net proceeds.
While trying to save/shave the incremental 2.5-3% listing fee, so many sellers have lost 5-10-15-20% of their home's value waiting for a ready, willing and able buyer.
And apparently you're assuming that no one will pay their price. There are a lot of assumptions going on all around. I'll agree to that. I just don't subscribe to the buyer determines everything. If a seller isn't willing to sell for what a buyer wants to pay, then the buyer determines nothing. And now I'm done with that aspect of the argument. It does no good to say the same thing 10 times.
The rest of your post really has nothing to do with what I was talking about but you make some interesting points.
First of all, I know a lot of real estate agents and NONE of them were predicting this crash until it was upon us. If there were such great agents, then we wouldn't have so many people in houses they CLEARLY cannot afford. If the agents had ANY scruples, they wouldn't have represented clients in deals that were borderline illegal (lying on mortgage apps, telling clients they could refi in a few years, or sell and make a bundle). So yeah, if there were an agent with a crystal ball, and one that had ANY modicum of ethics, I'd pay their fee too. Just like the stockbroker. I haven't met too many of them, though. Most of them are the ones who got their license in the boom because they thought anyone could make a fortune in this business and they've diluted the quality of the industry to a point that I equate most of them with used car salesmen.
You like to point the finger at unrealistic sellers while at the same time saying a good agent can convince her sellers of X, Y, and Z. Well, since there are so many unrealistic sellers (and her we go round and round again) out there who are sitting on their property waiting for their price, then I'd say that equates to a whole bunch of bad agents who can't do their jobs appropriately.
And apparently you're assuming that no one will pay their price. There are a lot of assumptions going on all around. I'll agree to that. I just don't subscribe to the buyer determines everything. If a seller isn't willing to sell for what a buyer wants to pay, then the buyer determines nothing. And now I'm done with that aspect of the argument. It does no good to say the same thing 10 times.
The rest of your post really has nothing to do with what I was talking about but you make some interesting points.
First of all, I know a lot of real estate agents and NONE of them were predicting this crash until it was upon us. If there were such great agents, then we wouldn't have so many people in houses they CLEARLY cannot afford. If the agents had ANY scruples, they wouldn't have represented clients in deals that were borderline illegal (lying on mortgage apps, telling clients they could refi in a few years, or sell and make a bundle). So yeah, if there were an agent with a crystal ball, and one that had ANY modicum of ethics, I'd pay their fee too. Just like the stockbroker. I haven't met too many of them, though. Most of them are the ones who got their license in the boom because they thought anyone could make a fortune in this business and they've diluted the quality of the industry to a point that I equate most of them with used car salesmen.
You like to point the finger at unrealistic sellers while at the same time saying a good agent can convince her sellers of X, Y, and Z. Well, since there are so many unrealistic sellers (and her we go round and round again) out there who are sitting on their property waiting for their price, then I'd say that equates to a whole bunch of bad agents who can't do their jobs appropriately.
Oh, c'mon now. I was have such warm and fuzzy feelings for agreeing with you in that other post.
Sigh.
So now real estate agents are to pay the price for mortgage brokers as well as buyers who knew very well that they couldn't afford what the broker was telling them they could?
"Those agents who know, really know, their local market and inventory have a crystal ball. They know their local trend..."
This is what I was responding to.
I have always said there is plenty of blame to go around in this mess. But for anyone to say that the real estate agents didn't contribute in large part is fooling themselves. And if there were so many great agents, that "really, really knew" their local markets and trends and the like, then we wouldn't have this mess. Their crystal balls would've prevented it, no?
The truth of the matter is, no matter how the agents on this board try to deny it, there are a whole helluva lot of bad agents out there. And to say that people who are FSBO or using a limited service agency are somehow contributing to the delusional seller scenario b/c they think they can save money, yada, yada, yada, is passing the buck big time.
Whoa - first off what buyers put on their mortgage app is NOT the purview of real estate agents. A buyer get "pre-qualified" and off we go shopping. Similarly I do not know of any agents that hawked refi as a smart thing -- from purely a self-interested standpoint it would make more sense to suggest "down the road you could MOVE UP", which is NOT REALLY SAME as suggesting that one could 'sell and make a bundle'.
Not saying none of those things happened, but really HAVE NOT seen that behavior personally AT ALL!
I think pretty much all the folks on this board involved in real estate are VERY honest when it comes to both buyers that do not understand what is happening in the marketplace AND sellers that are not following the market movement. The folks that read / post a lot here will learn much FOR FREE...
I have visited some forums that are frequented by car buyers / sellers (like at Edmunds.com) and there are car dealers that expose the dirty tricks of the dishonest practitioners of that trade as well.
In general online forums can be EXCELLENT places to learn about subjects that are NOT well understood.
Even the LARGEST online forum is only a TINY fraction of "non internent users" and believe me there are PLENTY of real estate agents (and car salespeople) that NEVER go online.
I usually agree with you and this is no exception for A LOT of your post. But not the whole thing. "Pretty much all" is where I have a problem, though. I would say SOME where you say that. I have read posts by agents on this board who can't even spell correctly and are full of misinformation. I have read posts where agents bicker among themselves and can't agree on what's right and wrong.
As to your not seeing those things that agents did wrong and contributed HEAVILY to this mess, all I can say is that you've had your eyes shut. You have admitted that you do this as a hobby, though, so you may not be privy to or interested in what real estate "professionals" tell their clients. I have seen many television documentaries on this meltdown, seen many buyers interviewed and seen many professionals interviewed. I feel VERY confident in saying that there were/are a lot of real estate "professionals" (especially during the boom) that were very careless in their advice, turned the other cheek when they KNEW their clients couldn't afford what they were looking at, and offered mortgage broker "friends" to get loans, turned them on to appraisers who would bring in numbers their sellers needed, etc. If you are seriously trying to say your industry was above that, I'm laughing. Hard.
I usually agree with you and this is no exception for A LOT of your post. But not the whole thing. "Pretty much all" is where I have a problem, though. I would say SOME where you say that. I have read posts by agents on this board who can't even spell correctly and are full of misinformation. I have read posts where agents bicker among themselves and can't agree on what's right and wrong.
As to your not seeing those things that agents did wrong and contributed HEAVILY to this mess, all I can say is that you've had your eyes shut. You have admitted that you do this as a hobby, though, so you may not be privy to or interested in what real estate "professionals" tell their clients. I have seen many television documentaries on this meltdown, seen many buyers interviewed and seen many professionals interviewed. I feel VERY confident in saying that there were/are a lot of real estate "professionals" (especially during the boom) that were very careless in their advice, turned the other cheek when they KNEW their clients couldn't afford what they were looking at, and offered mortgage broker "friends" to get loans, turned them on to appraisers who would bring in numbers their sellers needed, etc. If you are seriously trying to say your industry was above that, I'm laughing. Hard.
And how are you privy to what "professionals" tell their clients? Because you watched a few documentaries? If I believed everything I see day to day in MSM I'd assume Bush had horns and cloven hoofs and Obama spends most of his days turning water in wine. Sheesh.
As for turning the other cheek on what clients can and can't afford, how the hell am I supposed to know the details of their financial history? That's between the loan officer & the buyer ... not me.
And the bank sends out appraisers - not me.
Not that I'm passing the buck - but that buck wasn't even mine to begin with.
Certainly it was yours to begin with. You have a duty to your client. You have an ethical duty to all parties, provided you're a Realtor.
I'm privy to what I've been told, what I've read, what I've seen, what has been discussed ad nauseum everywhere, including here, about how this country got into this mess. How the hell are you supposed to know? You don't have discussions with your clients at the outset where you ask them their financial information and determine what price ranges to look at?
Are you saying that real estate agents and the industry has no fault in this? Really? With a straight face?
Certainly it was yours to begin with. You have a duty to your client. You have an ethical duty to all parties, provided you're a Realtor.
I'm privy to what I've been told, what I've read, what I've seen, what has been discussed ad nauseum everywhere, including here, about how this country got into this mess. How the hell are you supposed to know? You don't have discussions with your clients at the outset where you ask them their financial information and determine what price ranges to look at?
Are you saying that real estate agents and the industry has no fault in this? Really? With a straight face?
My ethical duties do not include financial counseling or information on household budgeting. Before I was an agent I NEVER shared detailed personal financial info with any Realtor - EVER. Have you?
Did they know what I was pre-approved for? Yes. Did they know how much our household income was, our two years of tax return info, other re holding information, bank account balances - no. C'mon - I'm quite sure you haven't been free with that information with agents who've represented you either.
And before we even look at price points, my buyer's are all pre-approved. I'm not wasting my time with someone who doesn't know what - or if - they can afford. So the answer is no - I don't have discussions about their personal financial information.
To say that agents contributed HEAVILY to this housing mess is wrong. There are others who shoulder far more of the blame.
Lots of folks come here to get advice, some not realizing that some agents are simply promoting their industry. I understand that pricing as low as absolutely possible might be conducive to the fastest commission celebration, but not everyone is trying to promote that.
Austin... assuming you are an attorney (since you have not answered), I am sure you will agree that some attorneys are less then honorable.... is every settled based on the merits of the case or case a way for the attorney to get his fee faster? More money in less time.... hmmm.
If a seller is interviewing several Realtors who recommend $300-350 as an asking, and the last one suggests $175, you might want to show this guy the door... but if a Realtor does what to try slightly under market, with examples of how it has worked in the past, perhaps he may have an idea that might just work... and he is not looking for a quick commission. Like attorneys, some Realtors are not honorable, but it is WRONG to paint with a broad brush and assume that we are ALL out for the quick buck.
Like attorneys, we have bums in our profession who make us all look bad, but labeling all attorneys as crooks is like labeling all Realtors are dishonest money grabbers.
If you have several comps sitting with NO OFFERS for 30... 40... 100 days do you join that group or figure that they're all too high? Appraisers and Realtors don't determine the market... buyers and sellers do. If I see comps between $300-400 that are NOT selling then I recommend a price that is less then $300K... with adjustments for condition... maybe $280 or so
Going slightly under market to pique interest does work... Assuming the earlier poster is correct that you deal in commercial real estate, look at it this way. If you represent a shopping center with $30/SF rent that is empty, and the one next door is $25/SF and is close in condition, etc... would you lower the rent? If you want to rent it THIS WEEKEND, would you maybe lower it to $22/SF so the store owner will come to you instead of your neighbor? It might just work...
In a declining market you can't chase the price as it goes down or else you'll never catch it. Price the house at $350 when it should be $325... then you realize that the $325 was right... but in today's market it should be $315. So you lower it to $325 and nobody shows up. If you listed it for $315-320K (slightly under the $325K comps) you would go against the homes that are $340-360 and get all the attention. This does work, but as you know if you are an attorney... never say never and never say always.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
