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Require a publicly advertised price for a house to be a legally binding offer to sell at that price


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2017 Feb 27, 6:57pm   19,504 views  59 comments

by Patrick   ➕follow (55)   💰tip   ignore  

Unethical real estate agents (but I repeat myself, lol) in California normally ask prices for properties lower than the seller would ever accept.

Why would they do this?

The answer is that lying about the acceptable price is a well-established fraud which has proven effective in cheating buyers out of their money. The fraudulent advertisement of an unacceptably low price as if it were acceptable consistently provokes naive buyers to bid more than they otherwise would bid.

The idea is to make the market look super-hot to encourage the highest bidders to bid even more. Once the house is sold, the realtor can breathlessly claim that there were many bids and the house sold over asking when in reality, the asking price was a cruel and fraudulent lie, and the house would never have sold at all if the only bids were actually at the asking price.

We have laws against bait and switch when selling toasters. Why don't we then have laws against bait and switch when buyers are making the biggest purchase of their entire lives? The answer is simple: corruption of our lawmakers via bribes (aka "campaign contributions") from the real estate industry.

The solution here is to demand honesty from real estate agents, something that will never happen without the force of law behind it, because real estate agents are almost uniformly unethical. Every publicly advertised price for a house must be a legally binding offer to sell at that price within the next 30 days.

Without this, we will continue to get the sleaziest occupation manipulating the public for profit. Even whores provide value. Real estate agents provide no value at all.

#housing

patrick.net's 40 proposals

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1   Dan8267   2017 Feb 28, 12:44am  

The solution is a 100% capital gains tax on all real estate. You don't get to profit from land becoming scarcer. You only get to get your purchase money back.

That and a georgist tax on land that increases the more land you own.

2   RealEstateIsBetterThanStocks   2017 Feb 28, 2:28am  

the only good realtor is a dead one

3   joeyjojojunior   2017 Feb 28, 6:43am  

I don't see the problem here. When you bid for a house, bid what you think its worth and nothing more. If you don't get the house, move to the next one. If you keep losing, probably you are out of touch with market prices.

Do you want to ban all auctions then?

4   anonymous   2017 Feb 28, 7:15am  

Easy work around

Sellers ditch the Buy it Now model for Auction pricing

5   indigenous   2017 Feb 28, 7:25am  

This is the market at work. A new law is not going change this.

6   Dan8267   2017 Feb 28, 7:50am  

errc says

Sellers ditch the Buy it Now model for Auction pricing

Auctions can and are often fraudulent. Hidden reserve prices, shill bidders, hidden fees are just a few ways to run deceptive auctions.

My solution solves all of these problems by completely removing the perverse incentives.

7   indigenous   2017 Feb 28, 7:52am  

How are you going to do that?

8   mmmarvel   2017 Feb 28, 7:52am  

Let's start with I want less government not more, so no, I don't want to see more laws. Second, I don't like the premise because the property should go to the highest bidder. If you are asking $500K but people/the market bids it up to $800K, why should I be forced to sell it for $500K. Third, there is an easy work around the people would figure out quickly. My property is worth $500K but due to Patrick's law (give credit where it's due) I'll list it for $900K. I can and will take a lower offer but the law forces me to set a ceiling price so I'll set that ceiling REALLY REALLY high.

9   indigenous   2017 Feb 28, 8:18am  

There are always shills at an auction, it is expected, so what?

10   MisdemeanorRebel   2017 Feb 28, 8:24am  

What happens if a dealer advertises he's got a particular car model on sale, and then when people show up he tells them he's had so many offers the car is now $5000 more expensive?

If you advertise a price, that's the price. Otherwise you can take it to auction.

11   NuttBoxer   2017 Feb 28, 9:11am  

Rather than writing new laws, buyers should ask themselves "Does it ever make sense to take on an enormous amount of debt when all information concerning the transactions is guarded by a third party who has a conflict of interest to always gouge me?" If that premise makes sense to you, you don't need a price disclosure law, you need an anti-ass-raping law.

12   joeyjojojunior   2017 Feb 28, 10:47am  

Buyers should always go into the transaction assuming NOBODY is really looking out for their interests but themselves. Don't trust anyone else's idea of how much you can afford. Or how much you should bid. Or whether you should increase your offer. Everyone has different incentives that don't perfectly match up with yours.

The only person looking out for your interests is you. That's pretty much true in life

13   Patrick   2017 Feb 28, 10:48am  

NuttBoxer says

all information concerning the transactions is guarded by a third party who has a conflict of interest to always gouge me?" If that premise makes sense to you, you don't need a price disclosure law, you need an anti-ass-raping law.

The breaking up of the monopoly on the information is the anti-ass-raping law.

joeyjojojunior says

The only person looking out for your interests is you. That's pretty much true in life

How do you look out for your interests when the information about all transactions is hidden and/or manipulated?

14   joeyjojojunior   2017 Feb 28, 10:50am  

"How do you look out for your interests when the information about all transactions is hidden and/or manipulated?"

Oh, but it's not. House sales prices are readily available. It's simple to look at recent sales prices in your neighborhood, pictures from that listing, time on market, price/sqft, etc.

All the info is out there.

15   Patrick   2017 Feb 28, 10:53am  

joeyjojojunior says

All the info is out there.

Absolutely not out there.

Even the house sale prices are routinely manipulated. Realtors eliminate low sales from their comps, with a variety of excuses ("not representative", etc). An alternative mechanism is to overpay the transfer tax. An extra $100 can make the house sale price appear $100K higher, etc. (Sale price is not recorded in San Mateo County, only transfer tax from which sale price is "estimated")

They have the means, motive, and opportunity to fake bids to get you to pay more, so why wouldn't they do it? Because of "realtor ethics"?

16   Shaman   2017 Feb 28, 10:55am  

This just seems to be the way the game is played these days. A high priced home will sit while a lower priced one is bid up. Weird? Sure. But in the last exchange I participated in, we sold and bought after our (above asking) offer was accepted over other lower offers. We listed our place at about five k below what we actually wanted to get for it, and had several bids right away, which we countered for "last best offers." One came back five k higher, right where we wanted to be anyway, so we went with them.
Anecdotal sure, but that's how it looks from the inside.

17   Dan8267   2017 Feb 28, 10:55am  

APOCALYPSEFUCK_is_ADORABLE says

There is no way to tell if most or all of the bidders at an auction are straws in the employ of Realtors.

In online auctions, they are all bots.

18   joeyjojojunior   2017 Feb 28, 10:57am  

"Absolutely not out there."

It's publicly available. Hell, go to Redfin or Zillow and look at recent sales. It's a bit delayed there, but still gives you a pretty good idea of the market. Plenty of information for you do decide what you think a house is worth.

19   Patrick   2017 Feb 28, 11:05am  

You're not seeing all the recent sales.

20   Patrick   2017 Feb 28, 11:06am  

indigenous says

How are you going to do that?

Notarize all bids and post them on a publicly available web site.

21   joeyjojojunior   2017 Feb 28, 11:13am  

"You're not seeing all the recent sales."

I guess it depends on where you live. In many(most?) places, property taxes are determined by sales price so those prices are diligently recorded and accurate. They definitely wouldn't be overstated else the new owner gets a shock when his property tax bill arrives.

22   FortWayne   2017 Feb 28, 11:54am  

That should be the law

23   CDon   2017 Feb 28, 12:16pm  

@Patrick, what is going to prevent each listing to just be something like: "One Billion or best offer", knowing fully well that the purchase price will be far less?

24   NuttBoxer   2017 Feb 28, 1:18pm  

rando says

The breaking up of the monopoly on the information is the anti-ass-raping law.

Ahh, vis-a-vis Ron Paul's Audit the Fed bill(for the purpose of ending the Fed). You are much more patient than I. Any system that obviously corrupt will only gain my participation when its time to burn it down.

25   indigenous   2017 Feb 28, 1:22pm  

The better way to attack this is with state nullification as in the 10 amendment center.

And the much under appreciated Jury nullification.

The much bigger problem is the 4th branch of government, I think Tom Woods is doing a show on this today or tomorrow.

26   Patrick   2017 Feb 28, 2:38pm  

CDon says

Patrick, what is going to prevent each listing to just be something like: "One Billion or best offer", knowing fully well that the purchase price will be far less?

That's fine, because it's not fraud.

Asking $100 or best offer *is* fraud.

The lie is that they might possibly accept the asking price. Which they will not.

27   SFace   2017 Mar 3, 12:22pm  

I have to agree with Patrick here. The game is rigged to favor sellers which relies on real estate agents. The only losers are buyers. (especially if homes are competed for)

If buyers don't like it, buy a new home (firm price) and the buyer ends up even worst off.

28   Patrick   2017 Mar 3, 12:36pm  

Actually, sellers also lose with realtors!

Realtors routinely "lose" or "forget" about offers which do not give their own agency both sides of the commission.

This is why I also have this proposal: "Require notarization and publication of all bids on real estate."

Have not written it up as a post yet, but I will.

29   LarryPatrickMaloney   2017 Mar 5, 12:40am  

You are correct.

In Ohio, it's that way... in fact if you offer asked ng, the selller must accept the offer.

Patrick says

Unethical real estate agents (but I repeat myself, lol) in California normally ask prices for properties lower than the buyer would refuse to ever accept.

Why would they do this?

The answer is that lying about the acceptable price is a well-established fraud which has proven effective in cheating buyers out of their money. The fraudulent advertisement of an unacceptably low price as if it were acceptable consistently provokes naive buyers to bid more than they otherwise would bid.

The idea is to make the market look super-hot to encourage the highest bidders to bid even more. Once the house is sold, the realtor can breathlessly claim that there were many bids and the house sold over asking when in reality, those bids were cruel and fraudulent lies, and the house would never have sold at all if the only bids were actually at the asking price.

We have laws against

30   Patrick   2017 Mar 5, 2:10am  

LarryPatrickMaloney says

In Ohio, it's that way... in fact if you offer asked ng, the selller must accept the offer.

Thanks @LarryPatrickMaloney what an excellent law or ruling, lol!

Can you point me me to link about that if you have time?

31   bob2356   2017 Mar 5, 4:56am  

Patrick says

Require a publicly advertised price for a house to be a legally binding offer to sell at that price

So do something other than bitching on patnet if it bothers you so much. Put together a referendum, get it on the ballot, and let people vote on it.

Why would someone who is a renter even care? No one makes anyone bid anything. The way it works for real buyers is you make your offer and if it doesn't get accepted move on. A contract is only binding once both parties accept it.

Patrick says

Unethical real estate agents (but I repeat myself, lol) in California normally ask prices for properties lower than the buyer would refuse to ever accept.

I have no idea what "prices for properties lower than the buyer would refuse to ever accept" would possibly mean. The buyer makes an offer, the seller accepts it. What low price would the buyer refuse to ever accept?

The seller signs a listing agreement with the realtor which stipulates the price. The realtor is bound by it. They can't advertise some lowball price without making a new listing agreement. Anyone with an above room temperature iq can come up with comps in less than a minute.

LarryPatrickMaloney says

In Ohio, it's that way... in fact if you offer asked ng, the selller must accept the offer.

Simply not true. The seller is never forced to accept an offer. The seller would be liable to the realtor for the commission if a full price offer was refused. http://ohiorealtors.org/2014/02/03/legally-speaking-the-case-of-the-reluctant-seller/

32   BayArea   2017 Mar 5, 7:52am  

bob2356 says

The seller is never forced to accept an offer. The seller would be liable to the realtor for the commission if a full price offer was refused.

This is the vehicle for what Patrick is asking.

But then Realtors win more, which is disconcerting.

33   Patrick   2017 Mar 5, 9:44am  

If a store advertises a toaster for sale for $20, and then when you get to the store refuses to take less then $30, that's called "bait and switch" and it's illegal.

Just saying that we should enforce the same thing for houses.

No one should ever be liable to a realtor for anything.

34   joeyjojojunior   2017 Mar 5, 10:02am  

rando says

If a store advertises a toaster for sale for $20, and then when you get to the store refuses to take less then $30, that's called "bait and switch" and it's illegal.

Just saying that we should enforce the same thing for houses.

No one should ever be liable to a realtor for anything.

I don't see how it will make any difference. Houses are always going to sell for the highest bid, regardless.

It may change the way the game it played, but won't really make much real difference.

35   Patrick   2017 Mar 5, 10:10am  

bob2356 says

I have no idea what "prices for properties lower than the buyer would refuse to ever accept" would possibly mean.

Oops, meant "seller". Corrected now. Thanks.

36   Patrick   2017 Mar 5, 10:15am  

joeyjojojunior says

I don't see how it will make any difference. Houses are always going to sell for the highest bid, regardless.

First, no, they frequently do not sell for the highest bid. Some bids are "weaker" than other because of financing, and other bids maybe never get seen by the seller at all because the agent is trying to get both sides of the commission for their own agency.

But you know, you're right. If we just had public and notarized bids, that would eliminate a lot of the games realtors play which harm both buyers and sellers. Maybe I should drop this one and concentrate on public notarized bidding.

37   joeyjojojunior   2017 Mar 5, 10:29am  

rando says

First, no, they frequently do not sell for the highest bid. Some bids are "weaker" than other because of financing, and other bids maybe never get seen by the seller at all because the agent is trying to get both sides of the commission for their own agency.

OK--"highest" is the present value of offer which includes risk of the deal not going through. And if the agent is not showing all bids, that is fraud and illegal. Making the listing price a binding offer will not change that in the slightest.

rando says

But you know, you're right. If we just had public and notarized bids, that would eliminate a lot of the games realtors play which harm both buyers and sellers. Maybe I should drop this one and concentrate on public notarized bidding.

Granted--I'm not a realtor, but I find this conspiracy theory, like most on here, to be greatly overstated. The cost/benefit of not showing all bids to a house seller seems very low. Like someone lying on their expense reports--I'm sure it happens now and again because some people are idiots--but why risk a good job over a hundred bucks? But, I find it very hard to believe that it is prevalent.

38   SFace   2017 Mar 7, 8:11pm  

"First, no, they frequently do not sell for the highest bid. Some bids are "weaker" than other because of financing, and other bids maybe never get seen by the seller at all because the agent is trying to get both sides of the commission for their own agency."

You got to be a retard to hire that kind of agent or cant see through that stuff.

There are hundreds of agents, its not that hard to pick the right one.

39   orthofrancis   2017 Apr 17, 9:15pm  

While not being a fan of tactics of realtors like this, I think they can get away with it because buying a house is like an auction - maybe with a reserve.

Not a perfect analogy, but you get the idea.

40   marcus   2017 Apr 18, 6:30am  

This obviously wouldn't work, becasue it would be even more subject to abuse by corrupt realtors than the current system. IT would mean that it's the first buyer at that price gets it.

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