Sorry if this is the wrong place to question this, but why should any buyer or seller use a realtor? I have been having this argument over the last 2 years because in my opinion (base on real facts) Realtors are the true cause of the housing bubble and crash. Realtors who claim they had 5-20 years experience misled sellers into believing their houses were worth 200-300% more then what they had original paid for them, thus lying to buyers telling them their offers were to low or telling buyers there's multiple offers on a property when a lot of times there wasn't just to get a higher commission.
I guess what im asking is if Realtors have all this so-call experience then how can they explain a house worth $100k today can be worth $300k in 18 months? Remember you are supposed to be the expert when a seller ask for your expert opinion on listing price, and when a buyer ask you whats a fair offer price.
And as of today 04-25-2010 you guys are still misleading buyers and sellers, here is a clip from the Las Vegas Review Journal about how Realtors are selling short sales.........
-Listing offices are starting to manipulate prices along the lines of foreclosures in the past year, which is to list properties well below current market value to get multiple offers and submit a viable offer to the lender, Nason said
The question is why? Whose interest are you servicing?You are suppose to be on the seller side or the buyer.side. You guys are creating once again a false market and if you don't realize that or believe that then you are in the wrong business.
On short sales Realtors should be 100% with the buyers! With all the inventory out there now Realtors should be on the buyers side 100% of the time.
This wasn't caused by the Realtors, no one had to buy a home when the prices were inflated. They could have rented a place until the market correction. Something is only worth what someone is willing to pay for it. If you bought when the market was high and now are crying to bad. Some of the people who are bailing on the loans are people who have finances available to cover the loan and are trying to get a free ride. I hope they realize the bank can sue and get a judgment against you for the difference in the price it sold for and the amount owed. The bank can also have the judgment attach to your future wages and bank accounts and renew the judgment multiple times to make it last 10 years or more.
It seems everyone who bought when it was high thought the property was a good deal then. Even if they were qualified for a loan that was outside their means to repay doesn't mean you have to accept it. Do you think most of the investors on this board are extended beyond their means? They use numerous formulas and calculate for unforeseen items to avoid any potential losses due to purchasing property without enough profit margin.
There are a lot of Realtors out there that shovel a lot of BS. You have to weed through those and find the good ones who are out for long term relationships not a one shot deal.
Based on all your comments after this first statement, you should be asking, "Why should any buyer or seller use a BAD realtor?"
And the answer is that they shouldn't.
Now, as for using a good realtor, there are lots of benefits, such as (on the seller's side):
- Determining accurate list price
- Creating great MLS listing
- Advice on staging and improvements before listing
- Taking great pictures
- Great marketing to attract buyers and other agents
- Availability for open houses and showings
- Help with negotiation
- Help with the closing process
- Etc...
I guess there are some generalities in your arguement that I will offer an alternative side to.
1st- I am not about to defend the entire realtor industry. IMO, just like any other business, there are some good agents and agents that don't know crap.
Point 1- "realtors true cause of housing crash". Sorry, don't buy it. There is a lot of blame to go around to all involved parties, realtors included, but to say that realtors are the primary cause is a little too much. I still believe that when it gets down to it, it is the individuals responsibility to do proper research on such a large purchase. I think I have dealt with clients who probably research buying what type of Flat Screen TV they want to buy more than what resort condo they are to buy (and this has always blown my mind).
Yes, there are some agents out there spouting off junk that they pass off as fact and that is reprehensible in an industry where we should be looked at as "experts", but I believe this is not the norm.
Point 2- "lying to buyers to believe their home was 200-300% more than it was."
That just doesn't make sense numbers wise. If a home's true worth is ~$100,000, you are implying that agents are trying to jack the price to $200-$300K. Even if there was a Seller out there that was soooo far out of touch with reality to list it at this price, the "market" would reject this home's price on the basis of no one putting an offer in. And if there was a Buyer out there just as out of touch with reality who did put in an offer of say $275K, they would then need a clueless bank and a mathematically challenged appraisor to get a loan. I grant you that some homes have had their prices somewhat inflated by ethically challenged agents in a listing presentation in order to get the listing, but regardless of the list price, the market still decides at what the house sells for. If I am showing you around 5 homes that were all more or less the same and 4 of them were in ~$200K and 1 was listed at $250K, I would assume that the $250K is automatically out for you. The market will reject it.
Point 3- if you ever have an agent give you a prediction of what the home will be worth in 12-18 months, then guess what...you just found a crap realtor. No one knows. They can give you indicators such as a "BIG contract was just signed will end up bringing 2500 jobs to the area. I think this will be a positive to the real estate market but no guarantees."
Point 4- getting a higher commission.
Again, the numbers of this don't add up.
Let's say you are looking at a home for $100,00 and I as a your ethically challenged Buyers agent try to get you to go higher by saying there were multiple offers. If you did buy at $100,000 I might get ~3% (percentage variesbut let's go with this) as the Buyers agent, or $3,000. And this $3,000 goes to the company of which I might get 70-80% of this. Let's say 75% is my split with my company, so I would get $2250 with a successful sale of a $100,000 property.
If I were to try to make you go higher (with the multiple offers line), realistically, your not going to go too much higher, so let's say $110,000 (as you still need to qaulify and the apprasial needs to come through as well). Of $110,000, the 3% commission is $3300 of which I get 75% from my company, so now I get $2475. A whopping $215 more. Trust me, it is not worth risking losing the deal, having you go through the stress of it all (some Buyers might just walk when they here multiple offers and then I/you are back to square 1), hoping the bank and the appraisal come through, all for $215.
Point 5- "On short sales Realtors should be 100% with the buyers"
Why? A short sale is still an owner who is underwater and trying to sell their home for as much as they can. If I am the listing agent (hired by the Seller), I would go over current inventory on the market, pending sales, recently expired properties (or market rejects), and what has sold in the surrounding area recently, Days on Market.... The Seller should be made aware of the short-sale process, risks...
If the Seller ends up taking a price below their mortgage, they may still be required by the bank to payback the difference over time. If the Realtors should be working for the Buyers in all short-sale scenarios, then who is respresenting the Sellers best interest in their desire to Sell in a timely manner than produces the maximum possible purchase price and thus reduces the Sellers potential financial obligation to the bank?
Let's say you are dealing with a FSBO. It seems to me that you are implying that the agents are marking up inflated listing prices. I would argue that a FSBO owner would want the same thing, max possible price for their home. A listing agent should be trying to get max possible price (within reason and ethical standards) for the Seller as I assume this is exactly what the Seller wants.
Again, not defending the industry as a whole. I agree, there are realtors out there that do a disservice to the industry, but what major industry can claim 100% honesty & integrity by all employees?
I would grant you that more serious education requirements should be in place in order to get a license to weed out less than ideal canidates.
But on a few of the points, I respectfully disagree with you.
Plus, when it comes down to it on why should Buyers/Sellers use a realtor, the simple answer is...they don't have to. It is their choice, no one forces them to use an agent. And just like any service that an individual uses, they should still do some DD to make sure that what they are being told is whithin the bounds of reality.
Interesting question... As a Broker in California I offen ask myself that question... The answer is... To sell property..
Until the agents raise their price then it isn't cost effective for me to sell the house myself...
My job is to buy at 25% equity... If an agent will sell at 6% bless their heart... And there are more of them then "Me"
Now I will never buy via the MLS unless the cost to buy is a number lower then 65% of value.. And not ARV... which is stupid to figure into the mix of values...
Great question
Michael
Edited: 06/26/2010 at 12:36PM
Michael Quarles, Yellow Letter Mail E-Mail: michael@YellowLetterMail.com Telephone: 888-YOUR-MAIL Website:http://www.YellowLetterMail.com 1-800-Sell4Cash Territories are available for 147.00 per month.
@ J Scott, First thanks for your response and everyone else who responded.
I'm not really speaking for me or other investors, we as investors know the game and the risk, well most of us. I'm speaking for all those families who had good jobs, had been saving for years to buy a home, the people who were looking for homes, not ATM's and their only mistake was they didn't know enough about real estate and turned to a realtor.
Again the Realtor is supposed to the expert, and no Realtor I have talked to (and my office is across the hall from a realty firm with at least 100 realtors working there) can justify or explain how these property prices kept raising at that pace other then "well the house across the street was listed at $250k so that's what we based the average list price ", that's when I would expect the expert in the room to say "Mr. home buyer the asking price for this home is way over price for this market" instead of saying "you're getting a great deal and I would advised offering more than the asking price because there are100 offers on it" wink wink
Remember it was Realtors who told sellers that all they had to do was paint the walls. put stainless in the kitchen and cut the grass and the house would be worth $100k more! I'm sorry but yes that's what was being sold to home sellers across the country, and the home owner didn't know better all they knew is this realtor was going to get them a lot of money for a 5-7% fee. Where im from some realtors were charging up to 8% to list and sale your home.
People say well the banks are to blame, somewhat, but the banks relied on the appraisals, and as we all know the appraisals were whatever the listing price on the house was, which brings us right back to the people/ experts who were in charge of listing the house to begin with...the Realtors.
The problem I feel is this, if you are getting paid to sale a house and your pay is 7% of the sale, and you only work on commission, then why list at $100k when you can push for $200k when you know the appraisal is going to back you? Now you are in a position to sale this lie to the average home buyer. And the conflict is you can't say you are a buyers agent while listing properties and sharing commission if you sale someone else listing. There needs to be something in place to separate the 2.
Here's where I blame the banks, the majority of homeowners lost their ass not only on the buy but on the Refi. These same homeowners who had their homes for yrs and paid on time having about 25k-50k in equity now was being told their homes were worth more money basically overnight so instead of the $25k they work for they were being told they had $100k in equity and they could cash out if they refi. Granted bad decision on the homeowner, but how easy is it to turn down that much cash while being told your payments won't go up and many times it would be lower??
Again I'm talking about the people who did it the right way, not the subprime people working at burger king buying $400k homes in gated neighborhoods...which you can still trace back to the realtors, you know first contact , when you go show a $400k house you should know what that person does for a living and advised from there.
I know it seems like im beating on realtors but I'm a investor who got into this to make money and help people, and I can you I have sat in many living rooms with homeowners needing to sale fast and I always ask why did you buy this home and it's always the same answer, "we wanted to live in this neighborhood and our Realtor told us we were getting a good deal and the bank assured us our payments would be x amount and not a penny more.
A lot of what you said is exactly my point, during the bubble realtors ( I know out east where im from) were charging 7-8% fees to list the home, and as a buyer you would go higher if the realtor could show you the home was worth way more then the offer and that was done by giving buyers comps of other over price homes in the area. Expert realtors knew what was going on and should of been advising of the situation. You gave a great example of how people research Tv's more then a major purchase like a house, but at the same time when you go to best buy you don't pay the sales associate $3000.00 for his expert knowledge of what tv to choose and how much you should pay for that tv.
As for jacking up the prices, yes that's exactly what they did and I gave examples in my second post, hell they even made a show called "sale my house" about how to get higher listing prices and offers.
People always wonder why new construction of homes was booming and the answer was at the time it was cheaper or the same price to just build a brand new home.
a bank appraisal is always going to reflect the listing price unless there is major damage to the property, and stand alone appraisals rely on comps, which go back to the listing prices
On the short sales i gave a perfect example from a realtor explaining to the Sunday newspaper how they are trying to sale short sales now. I do a lot of short sale deals and I always advise to the homeowner don't do anything unless the bank agrees to a final sale and forgives whatever remaining balance and most banks especially now will agree to that. And as a buyer or investor buying it's not my job to care about the banks lost, that's the point of a short sale, bank and homeowner lose. and as a realtor I don't see why they would care about the bank lost, when they are getting paid on both sides of the deal and not by the homeowner so again who are they working for?
Short sales are interesting because this was or is a chance to put the market back were it should be and it's not.
I have trouble placing all of the blame for the housing bubble on the real estate industry, lenders, individuals or government policies. All were a factor to some extent.
What bothers me more is that so many are willing to place blame rather than taking charge of their own lives. No matter what happens we all have choices and no one can take them away and less of course we let them.
I lost my job just before this recession hit. Fortunately, I realized that security wasn't going to be found in a 9 to 5 job. Losing my job turned out to be a very positive thing. Now I work for myself and do quite well.
I recently read an article citing a Realtor poll. The poll asked many home sellers why they selected their real estate agent. The majority stated they selected the first Realtor they talked to. For residential home sellers or buyers credentials meant nothing, most have no idea what any of these credentials mean anyway. Very little thought was given to a selection process.
The main problem that I have with Demetrius's arguement is that he keeps saying that comps, appraisals, ect go back directly to listing prices.
This is just not the case!!!! Comps are what a similar house actually sold for, not what it was listed for!
This is the reason for using a buyers realtor to work on your side to counteract the sellers realtor. It is the same thing as having an attorney represent you to counteract the attorney representing the other side.
The better realtor will always win (if there is a deal to be made), so you had better find a GOOD realtor as part of your team.
Sorry, I don't buy this excuse. People need to take responsibility for their decisions and not just listen blindly to "experts". It no different than someone who comes into a lot of money and -- instead of learning about money management -- instead just goes to a financial planner and says, "Take care of this for me."
If you don't know anything about buying a home, don't buy one until you learn! Don't trust a so-called expert just because they have the title of "realtor" or "planner" or whatever.
You do realize that to become a real estate agent, you basically need a high school education, about 100 hours of training, and you have to pass a test where the questions are pre-determined, right?
If you are going to entrust the biggest financial decision of your life to someone with potentially that little knowledge, you get what you deserve. (Btw, I'm not saying all realtors are idiots, just that they *could be*)
explain how these property prices kept raising at that pace other then "well the house across the street was listed at $250k so that's what we based the average list price ", that's when I would expect the expert in the room to say "Mr. home buyer the asking price for this home is way over price for this market" instead of saying "you're getting a great deal and I would advised offering more than the asking price because there are100 offers on it" wink wink
There is no intrinsic way to determine the value of a piece of property. Property is worth nothing if you don't evaluate it relative to something else (like other property or the cost to build something like it).
The best way to determine the value of residential property is to look at what people paid for similar property, in a similar location, in the very recent past. That's what comps and appraisals are about, and that's what drives supply and demand in this industry.
So, for a realtor to say, "Five similar properties in this area just sold at $250K, but they weren't worth that much" is ridiculous.
If a bunch of similar properties in an area sell for a similar price at the same time, that's what they're worth! You may not like that, but it's the way things work from an economics standpoint.
Remember it was Realtors who told sellers that all they had to do was paint the walls. put stainless in the kitchen and cut the grass and the house would be worth $100k more!
Remember, it was the stupid buyers who believed them.
If people would have stopped believing everything they were told, and had done some research, they could have made their own decisions.
the home owner didn't know better
Whose fault is that?
...we all know the appraisals were whatever the listing price on the house was...
If that's the case, the appraisers weren't doing their jobs. That's certainly not the realtor's fault.
Granted bad decision on the homeowner, but how easy is it to turn down that much cash while being told your payments won't go up and many times it would be lower??
Sorry, I don't buy that argument either...
Do we free all the drug dealers using the rationale, "We can't blame the dealer...how easy is it to turn down thousands of dollars selling a product that basically sells itself!"
How can you say that someone is exempt from responsibility for their bad decisions because they were pursuing a get-rich-quick scheme. Sorry, that's no excuse for doing stupid stuff...
...it's always the same answer, "we wanted to live in this neighborhood and our Realtor told us we were getting a good deal and the bank assured us our payments would be x amount and not a penny more.
So, now you're blaming ARM loans. That's certainly different than blaming realtors!
I purchased my house a couple years ago, and it's lost about 20% in value in that time. Am I blaming anyone? No. I made a decision based upon my own knowledge.
In fact, I'm still thrilled with my decision...I'm living in the home I wanted, my payments haven't gone up (and never will), and worst-case I have to stay here for a while before I have enough equity to sell without bringing money to the table.
I knew that was a potential scenario when I purchased my house, and now I'm happy to live with it, without blaming anyone else...
People need to take responsibility for their decisions and not just listen blindly to "experts". It no different than someone who comes into a lot of money and -- instead of learning about money management -- instead just goes to a financial planner and says, "Take care of this for me."
If you don't know anything about buying a home, don't buy one until you learn! Don't trust a so-called expert just because they have the title of "realtor" or "planner" or whatever.
That's pretty much my point, why should anyone use a realtor? If you have to do all the leg work before listing your home with them there's no point in using them. Would you put the time you don't have into researching, studying, and learning about computers, then turn around and pay Geek Squad $1000.00 to come out and install your mouse?
When you don't know about a subject especially one that could have real serious long term financial risk, it's not dumb to seek a professional in that field, its dumb not to. The average Joe does not know about comps, or how appraisals are form, or how much is their home really worth for resale, or that the asking price of the home has the listing realtor fees included in that price, or a offer of 80-90% of a asking price for a home is a good if not great offer, or they can sale their home just as easy as a realtor can if they can spare 10 hrs a week, have a facebook, twiter, youtube or craigslist account and have $100 for newspaper ads.
This is just not the case!!!! Comps are what a similar house actually sold for, not what it was listed for!
When a Realtor is advising a seller on what to list their home for, do they say " the average sale price for similar houses in this area is $85k and that's what you should list for? Or do they say "the average listing price for homes in this area is $101k and that's what you should list for? Come on you know better! Again I base my argument on 100% facts. You can go to any realtor website pull up 3-5 homes for sale and see if the list price reflects the average sale price for homes in that area or average listing price. And 90% of all real estate sales go through a realtor......and they are not to blame? The million of sellers and buyers are to blame for not knowing enough about real estate and trusting professional REAL ESTATE AGENTS for their so call expert advice and skills. (Jawsette) gave an example comparing realtors to attorneys, if the same rules and standards were applied to realtors like attorneys a lot of realtors, like a lot of them would have lost their realtor licence for malpractice! MY POINT IS SIMPLE WHY ARE REALTORS LISTING HOMES THEY KNOW ARE OVER PRICE? WHY ARE THEY SELLING HOMES THEY KNOW ARE OVER PRICE? it doesn't matter what another realtor did to get a buyer to buy a over price home you should not be basing your listings off that and you know it. Then, rather than 50 over price homes in a area you would of only had 2 or 3 and the market would be stable, and people would not be upside down on their mortgages.
How can you say that someone is exempt from responsibility for their bad decisions because they were pursuing a get-rich-quick scheme. Sorry, that's no excuse for doing stupid stuff...
Not saying that at all. I'm saying people were misled and they have to be responsible for making a bad decision. But the people (real estate agents) should also be responsible. Funny how in all this the banks were blamed, homeowners where blamed, and real estate investors were blamed, have you heard any realtors get blame for this or investigated? NO, do you know why , because they blamed the mess on real estate investors. You know the people (im one of the them) who puts up their own cash, buys a run down property, puts 25-$50k into the the house then sales it for maybe if lucky 15-20% profit. and because of this new laws and rules were put in place for us, and banks while business as usual for the realtors. Hell maybe they should do away with all realtors and let the real estate investors sale the homes because we put hours and days into researching a property before we make a decision to buy or pass. We give a whole new meaning to CYA! How many times have you heard of a realtor sitting down with a buyer and giving them a valid exit plan if things don't go as planned? But buyers agents get 3% of the sale? For what? And yes a lot of season investors can predict what the market is going to do 6-24 months from now because we look at everything that has to do with that city, locally and national why, because we have a vested interest...our cash. How much does a realtor lose if a deal they put together bust after the closing?
Because realtors can do things that people who aren't in the industry and don't have the connections can't...
Here are two personal examples...
As a buyer, when I was looking for my last personal residence, I hired a buyer's agent to help me. I had access to the MLS, and knew all the properties I wanted to look at, but my buyer's agent was one of the best in the city, and I knew her experience would come in handy.
And I was right. She knew another agent who had a listing that met all our criteria (and more!) but was about $70K above the price range where we were looking. She also knew that this house was about to undergo a big price drop because the seller's had accepted a job offer out of town and were desperate to sell.
Ultimately, she got us a showing before the price drop, and we loved the house. We put in an offer that would have been full-time after the price drop, hoping they would accept it and wouldn't bother waiting to see if they could drop the price and do better.
We got the house. I never would have looked at it if it weren't for inside info that my agent had...all because of her networking connections as an agent.
As a seller, we used an agent to sell our first investment property. It sold in about 4 hours. This is because our agent had another buyer who had just lost a house due to an appraisal issue.
Our place was outside of the buyer's purchase area, but my agent convinced her to look anyway. She did, and she loved it. And my first investment property sold in 4 hours.
Again, this wouldn't have happened had I been listing it myself, despite the fact that I had all the knowledge I needed to properly price the house, etc.
When a Realtor is advising a seller on what to list their home for, do they say " the average sale price for similar houses in this area is $85k and that's what you should list for? Or do they say "the average listing price for homes in this area is $101k and that's what you should list for?
Perhaps I only know good agents, but most of the agents I work with would definitely say to list a property near the sold comps, not near the active comps, for several reasons:
1. The house will sell faster;
2. The house won't have as many appraisal issues;
3. The realtor will get their commission faster and with less work.
If anything, the agents I know would ask sellers to list properties too low to make a quick(er) sale.
Again I base my argument on 100% facts.
Can you present the data that you used to arrive at those "facts"?
If you've read Freakonomics, you'll know that some very well-respected economics have studied the data and disagree with your "facts".
They've found that agents tend to sell houses faster than FSBO, and for less money. This is because most agents are out to make quick money and they don't really care if they get 3% based on a $300K sale price or a $280K sale price... (but the $280K will sell much more quickly)
This is just another example of bad real estate agents, but the facts are that most agents are bad in the opposite direction you think they are.
You can go to any realtor website pull up 3-5 homes for sale and see if the list price reflects the average sale price for homes in that area or average listing price.
Ummm, I hate to point out the obvious, but the reason you don't see a lot of active listings in the sold comp range is that the houses listed in that range HAVE ALL SOLD!
If that doesn't make sense to you, reread it until it does... :)
And 90% of all real estate sales go through a realtor......and they are not to blame?
100% of drug sales go through drug dealers...are you saying the people taking the drugs share none of the blame?
How many times have you heard of a realtor sitting down with a buyer and giving them a valid exit plan if things don't go as planned?
What do you mean "if things don't go as planned?"
The buyer has chosen the neighborhood. The buyer has inspected the house. The buyer has worked with a mortgage broker to determine how much he can afford to pay each month.
What won't go as planned?
How much does a realtor lose if a deal they put together bust after the closing?
I have no idea what you're even asking here?
How does a deal go bust *AFTER* the close?
Are you saying if the market goes down? Big deal...real estate markets go down all the time. And they go up all the time. Historically, real estate prices tend to be highly correlated with inflation:
Anyone that buys a house should be able to do enough research to determine that little fact. If they then choose to ignore that fact and buy during a real estate bubble, that's certainly not their agent's fault.
It's clear you're looking for someone to blame in all this mess, but you're going to have a really tough time trying to convince anyone who knows anything about real estate that it's the fault of the agents...
Ummm, I hate to point out the obvious, but the reason you don't see a lot of active listings in the sold comp range is that the houses listed in that range HAVE ALL SOLD!
LOL, Come on J Scott, so you are now saying similar homes that have sold has no reflection of a new listing for a similar home in the same area???
What I said earlier was that Realtors base their listing price off of average listing prices for similar homes in that area rather then actual sale prices for the similar homes. But thanks for the laugh and proving my point again. And you are correct they should list a house at the lowest price possible and off actual sales for similar homes if those homes weren't over price. Which a professional realtor should know if a home or houses in a area are being over price right???
It seems like you have a one in a kind Realtor and that's great, I'm not sure where you buy and sale property but if you are working the Vegas, Chicago, Washington DC, Los Angeles, and Cleveland markets it's a little different. I'm active in all five markets and have been for the last 3 years, before that I was a title agent for one the largest title companies in the country, Which by the way when I say I use 100% facts besides just looking at realtor websites, it helps if you are in the room doing the actual closings. I learned real estate investing just by closing deals all day for 5 years and talking with 1000's of sellers buyers banks, attorneys, CPA's, police, attorney general, judges, senators, the mayor, media and realtors. I know every law, rule, trick, loophole and fraud. There isn't one transaction in this business that I have not handle and yes I know who is mostly responsible for this mess. If you only knew how close realtors were to being investigated by the feds back in 04' but the attention turned to the banks especially sub prime banks that were doing some real shady things with straw buyers.
And I never said FSBO sale homes faster then Realtors, I was making a point that if homeowners knew how easy it was to sale a house they could sale as fast as realtors if not faster. And with all the different social media out today you can reach the same amount of people as the MLS can. Hell just last Saturday i sold one of my wholesale investments properties in 6 hours by doing nothing else but having a garage sale at the property (do you know how many people come to garage sales?) A lot more then show up at open houses! and they normally come with the intent of buying something.
I don't have try to convince anyone realtors are to blame for the housing mess when half the realtors in this country would be out of business if it weren't for Reo's being thrown at them and now short sales which most of them have no clue how to execute a short sale.
they're not getting the 7-8% listing commission anymore, and more people who are not in distress who want to sale are opting to to sale without realtors. Which is why so many realtors now advertise themselves as buyers agents. but I guess that's because its a buyers market right lol?
This has been an entertaining thread. J Scott you've done a good job of making the points I would have myself.
Demetrius, you sure seem to think you know so much about Realtors having never been one yourself. The idea that "Realtors base their listing price off of average listing prices for similar homes in that area rather than actual sales prices for similar homes" is ridiculous. What would be the purpose of listing a home and just "wishing on a star" with some random list price that the home would sell?
Every Realtor colleague I know soley bases their list price off of recent sold listings in the immediate area, not some pie in the sky number.
You blaming Realtors for all this trouble is laughable, yet entertaining. There are bad seeds in every industry --dare I say, even investors-- :wowo:
Based on your postings, you've stated that you wholesale and your profile states you are looking for short sales. Do you not make a spread on these?
Wouldn't you say that you speak with unsuspecting/desperate sellers that maybe don't understand the true value of their home, yet you convince them to sell to you at a discount and then you turn around and sell it at a higher price for a *drumroll* PROFIT?!
Do you feel sorry for your buyers that you've just sold to? Because maybe you've just made 20k when they could have gotten it for 20K less had they just gone around you or found the seller themselves.
Also, do you do Short Sales for the warm fuzzies, or do you make, I'm going to say it again, a PROFIT? Do you not find sellers in distress and get the bank to agree to sell to you for less than you sell to your end buyer? Wouldn't you say you are then "jacking up the price" of the home? After all, the bank is willing to sell for less, you could then just pass this wonderful deal on to the end buyer without you making a profit. Could you not? Your profit on the deal is what is "jacking up" the end sales price.
Your only contribution to this community has been to come on here and bad mouth Realtors. Did you start posting to spread negativity, or do you have anything positive to contribute to fellow investors? Hopefully, it is the latter.
No, actually that's what were saying above (that realtors list houses at prices similar to other active listing prices, not other sold comps)...
I'm saying just the opposite...
I was just pointing out that over a long period of time and over all listings, there is more chance that a house priced around the median sold price in an area is a sold listing than an active listing. This is because sold listings contribute to the median sold price whereas active listings do not.
That's not my opinion...that's just basic math.
So, what you are observing is true, but not for the reason you believe. It's true because it's a mathematical certainty, not some phenomena related to the skill of real estate agents.
In other words, it's impossible for you to observe otherwise. So, if you look at FSBO listings, you'll observe the exact same thing. You can't blame it on the agents...
It seems like you have a one in a kind Realtor and that's great, I'm not sure where you buy and sale property but if you are working the Vegas, Chicago, Washington DC, Los Angeles, and Cleveland markets it's a little different.
Without some data (that is more fact-based than just your personal observations), I have a hard time believing that those 5 markets are somehow unique when it comes to the skill (or lack thereof) of real estate agents.
Which by the way when I say I use 100% facts besides just looking at realtor websites, it helps if you are in the room doing the actual closings.
Actually, no, it hurts. You're more likely to get an accurate interpretation of data from an independent third-party who is not biased by empirical evidence than you are from someone who is jaded by personal experience that may or may not be representative of the system as a whole.
You think that all these data points that you've observed somehow contribute to you "understanding what's really going on," but instead it does just the opposite. It skews your perspective and convinces you to ignore any data that you haven't personally observed.
And when your observations account for only a small percentage of reality, that's not a good thing.
I learned real estate investing just by closing deals all day for 5 years and talking with 1000's of sellers buyers banks, attorneys, CPA's, police, attorney general, judges, senators, the mayor, media and realtors.
Again, your observations account for a very small piece of reality...
Let's give you the benefit of the doubt and say you closed 10 deals/day for 5 years -- that's roughly 10,000 closings. Given that there were probably between 5-10 millions home sales that occurred during that time period, your empirical data is hardly representative of the housing market as a whole.
And that still presumes that you could observe unbiasedly, which is a big stretch (nothing to do with you, more to do with human nature).
There isn't one transaction in this business that I have not handle and yes I know who is mostly responsible for this mess.
Clearly you're confident in your beliefs, but without independent data to support what you're saying, your confidence doesn't translate to "fact".
And I never said FSBO sale homes faster then Realtors, I was making a point that if homeowners knew how easy it was to sale a house they could sale as fast as realtors if not faster.
Those two sentences are contradictory.
First, you acknowledge that FSBO homes don't sell as fast as agent represented homes.
Then you say that homeowners can sell just as fast as realtors "if they knew how easy it was."
Clearly, FSBO sellers know how easy it is (they're doing it!), but even you admit that don't do it as quickly.
Why the contradiction?
And with all the different social media out today you can reach the same amount of people as the MLS can.
It's not about quantity of leads, it's about quality of leads. And for better or for worse, the reality is that these days, the majority of serious buyers are represented by agents. The other reality is that agents are much less likely to show your home to their buyers if it is not listed on the MLS than if it is.
Hell just last Saturday i sold one of my wholesale investments properties in 6 hours by doing nothing else but having a garage sale at the property (do you know how many people come to garage sales?)
Let's look at all the problems with this example:
1. It's a sample size of one. You claim to be presenting "facts," but you have yet to mention any data other than your own personal experiences. These aren't "facts".
2. This was a wholesale deal, which is much different than a retail sale. Very few agents that I know ever come close to dealing with wholesale deals, so to compare the experience of selling this one deal to what realtors do everyday is a stretch.
3. We are a week away from the tax credit expiring. A monkey could sell a house in this market. Buyers are more motivated to buy over the past couple weeks than in any time in the past 3 years (other than perhaps last November). So, selling a house last weekend doesn't prove anything.
I don't have try to convince anyone realtors are to blame for the housing mess when half the realtors in this country would be out of business if it weren't for Reo's being thrown at them and now short sales which most of them have no clue how to execute a short sale.
Now you are saying that most agents are clueless?!?!
While I personally agree with that statement, unfortunately if true, it completely undermines your entire original argument that agents are purposefully manipulating the market for their own gains.
So, which is it:
Are agents idiots?
Or are that masterful manipulators who have destroyed the system by orchestrating massive fraud?
You can't have it both ways...
...but I guess that's because its a buyers market right lol?
I love the way you attempt to try to twist words without even considering what the words actually mean.
If you go to a realtors site to get "active listings" you will never get a comp listing. A comp listing is one that has already sold and that sold home can not be on the active listing since it is not for sale.
And the reason that the sales price is always below the listing price is because of the bartering that goes on in the sales process.
You seem to refuse to accept what you claim to know and was properly interpreted by JScott in his analysis above.
There are no tricks to the trade, it is salesmanship. Everyone understands the barter process. You set your price above that which you really want so that in such a barter process you wont be convinced to come down to a price below that which you wanted in the first place.
If the reason for listing prices being higher than sales prices is now not obvious to you then you are acting like one of those realtors that you are disparaging so vehemently.
By the way, JScott never said the comps have no effect on new listings, but just the opposite.
I'm a supportor of realtors - in fact, my wife is a successful one and I'm considering getting licensed myself. However, to me, the above is one of the biggest flaws I see in most realtors. Of course, I don't blame them one bit - I wouldn't want to go through a lot of headaches and possibly lose a sale over $200 commission. Especially on a higher priced home.
I always thought that you should be able to pay a bigger percentage over a certain price (i.e. 3% up to 100,000 and 10% of anything over that), but apparently this is not legal in most states. I don't understand why not, as most salespeople get paid more after they hit a "quota".
I think J Scott's reasons are all good for a normal homeowner selling their primary residence, as they have jobs, kids, etc. and don't have time to learn or do all this stuff. This site is for investors, and any investor with some financial saavy can learn to do comps and negotiations. And you can get a flat fee MLS listing for about $500.
The rapid growth of the money supply via exotic securitizations. The Multiples of M1 to M3 went way beyond sustainable. As they created the new vapor paper, in a sense they create false demand.
Number 2, we were in the grip of a mania. The real estate boom of 2004 thru 2006 was no different than the tulip manias, the Mississippi Trading Companies, NASDAQ in 2001.
Their is plenty of people to blame in the debacle. Including the home owners who borrowed the money.
I am a Real Estate Agent and an Investor. I know plenty of moron investors and moron real estate agents.
The problems are multiplied in Cleveland due to demographic shifts happening there. Blaming it on Realtors is like blaming the restaurant raising its prices on the waiter. Yes they upsell and all that crap but they only play a role in the market. They sure do not define or make a market.
That market reminds me of a herd. Large herds leave only wasteland behind them, while lesser herds often
leave 'extra' stuff for those who follow by default. Greedy large herds destroy even what stuff they cannot consume. Folks
become Farmers in times such as those.
If anyone ran up the prices it was the builders and the bankers.
