US Housing Crash Continues
Who disagrees that house prices will continue to fall?
Everyone making money off you!
- Buyer's agents disagree, because they get nothing if there is no sale.
Agents want their clients to buy no matter how bad the deal is, which is the
exact opposite of the buyer's best interest. Agents take $100 billion each year
in commissions from buyers. Agents claim the seller pays the commission,
but always fail to mention that the seller gets that money from the buyer. Think
about it: who brings the money to the table - the seller or the buyer? All money
comes from buyers. No buyer, no money.
Real estate in America is all about deception. There is no free market because bids on houses are never published and bids are often faked to get you to think you have to pay more. There should be a law to make all bids public and validated by a bank, but the NAR is one of the largest lobbyists in Congress, so don't expect any changes soon.
If a house is a really good deal, you'll never hear about it from any realtor. Great quote from patrick.net reader Linda:
Realtors ALWAYS GET FIRST DIBS AT EVERY HOUSE even before it is listed. Realtors always have a shot at the best deals. In fact, IF A LISTED HOUSE WAS NOT ALREADY PURCHASED BY A REALTOR OR one of their buddies---that means IT IS A BAD DEAL. If it were a "good" deal---they would have bought it. Under the REALTOR / MLS monopoly system--- prospective buyers only get to look at the junk left over that Realtors and their "friends" do NOT want.
This means that your best chance of finding a good deal is by looking at the listings the MLS is hiding from you: FSBO sites, Craigslist, foreclosures, builder inventory. It's also productive to talk to people you know who might want to sell, or send out postcards in a certain area. Avoid the realtors and you'll come out way ahead.
Why should you give up nearly two years of your life working to pay a realtor who is not even really helping you? 6% of the 30 years it takes to pay off a house is 1.8 years of donating your working time to realtors. Just find a house on your own, hopefully a house for sale by owner, and get a real estate lawyer by the hour to draw up the offer and complete the sale.
There are buyer's agents who really believe they are helping the buyer, but they're in denial about their conflict of interests. Author Upton Sinclair had a great explanation for this: "It is difficult to get a man to understand something when his salary depends on his not understanding it." The NAR (National Association of Realtors) has harmed America far more than terrorism did. At some level, people know this, and that's why realtors are consistently rated the lowest "profession".
- Mortgage brokers disagree, because they take a percentage of the loan. They want buyers to take out the biggest loan possible to maximize their commission. Even worse - mortgage brokers get paid according to how bad the deal is for the buyer. The worse the deal is (higher interest rate, points, fees, etc) the more the mortgage broker gets!
- Banks disagree, at least when they can get origination fees and then sell
the mortgage, because in that case they do not care about the bankruptcy of
borrowers. Banks sold most loans to the government agencies Fannie Mae or
Freddie Mac, and now use the FHA the same way. The conversion of low-quality
housing debt into "high" quality government debt was the main support for the
housing bubble. Fannie and Freddie already imploded, and the FHA is now on the
edge.
The other way for banks to dump the risk of loan default has been the Wall Street market for mortgage-backed securities. Now that mass foreclosures have eliminated the loan-resale market, banks are under pressure to increase loan quality.
- Appraisers disagree, because they are paid by mortgage brokers and banks, so they are going to give the appraisals that mortgage brokers and banks want to see, not the truth. Appraisers that kill a deal by telling the truth do not get called back to do other appraisals.
- Newspapers disagree, because they earn money from advertising placed by realtors, lenders, and mortgage brokers. Papers are pressured by that money to publish the real estate industry's unrealistic forecasts. Worse, realtors have a near-monopoly on sale price information, and newspaper reporters never ask realtors hard questions like "how do we know you're not lying about those prices?" The result is an endless stream of stories reporting that the National Association of Realtors (NAR) says it's a good time to buy. Asking the NAR about housing is like walking into a used car dealership and asking the salesman if today would be a good day to buy a car.
- The Federal Government disagrees, because everyone in Congress gets campaign bribes (oops -- I meant campaign donations) from the NAR and from the banks. So every Federal law will be aimed squarely at increasing commissions for the NAR and increasing interest payments to banks. Buyers lose, because they have no lobbyists in DC. The very laws of our country have been corrupted to squeeze more profits out of you.
- Current owners disagree, because they do not want to believe they are going to lose huge amounts of money. Anyone who owns is likely to encourage you to buy too, to prop up their own house value via comps, and so that they can feel that they are not alone in their sinking boat.
