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From Hi-Fi to Wi-Fi to Re-Fi


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2006 Sep 18, 2:43pm   11,955 views  196 comments

by Peter P   ➕follow (2)   💰tip   ignore  

What have we achieved in the past 25 years? What have we learned?

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36   astrid   2006 Sep 19, 5:53am  

Claire,

I guess you're looking for buyer agent to get a fee from FSBO and get a kickback from the agent. I don't think that'll be necessary. I think you can personally extract just as a good deal without an agent. You need to know the market cold and maybe even do some oppo research on the seller. You and the FSBO seller both know that you going in without an agent saves them 3%, so you should feel confident about wrangling for a lower price without fear of being rejected.

Furthermore, even an agent that you pay personally still have an incentive to get a deal done with minimal time expenditure. They're more likely to grab for the quick deal that you and the seller would both accept, than to drive the hardest possible bargain for you the buyer. You're just a unit they got in stock and now they want to sell you out ASAP so they can jot down another transaction on their ledger.

It's possible that an exceptional agent will know stuff about the neighborhood or about the seller that you do not know, and end up doing you a real service by finding just the right home. However, those agents seem to be extremely rare and you're unlikely to find one that'll work with your terms.

37   skibum   2006 Sep 19, 5:53am  

Claire Says:

I was thinking along the lines of paying the buyer agent a set fee and having a clause that 1) they can’t tell the other side that we are paying them and 2) the comission handed over by the seller and/or seller’s agent would then be given to us. Obviously, you would probably have to pay them a bit more than if it was just the comission, but it would certainly be an incentive for them to get the price down as low as possible as it will not be cutting into their comission - if you see what I mean?

A couple more things to add to your scenario. First, most "exclusive right to sell" contracts spell out that if a buyer is brought to the table without a buyer's agent - say, if the seller mentions to coworkers he's selling, or decides on his own to put up a CL ad, the seller's agent pockets the ENTIRE commission. We negotiated to eliminate this clause (seller's agent agreed), but it didn't matter, as it didn't come to this scenario.

Second, I'm not sure the above tactic is considered "legal" from the Realtor (tm) code of ethics, the joke that it is, anyway. Maybe George can comment, although I understand these rules may vary from state-to-state.

38   DinOR   2006 Sep 19, 6:03am  

"FSBO in 2008 means dealing with the bank"

Robert, absolutely. I don't want to get on a negative here but I fear you're quite right. I'll do anything to help kick the chair out from under the "sacred 6% comm. cow" but most FSBO's are NOT coming from a position of strength. It's being done out of fear and desperation.

We've said here before that most people won't change (until they're forced to). Can you imagine just how much disgust/desperation it takes for the avg. guy who's life consists of the people in the adjacent cubes to take this kind of plunge!

39   Claire   2006 Sep 19, 6:07am  

There's a difference between legal and ethical though - which one is it?

40   astrid   2006 Sep 19, 6:09am  

M. Cote,

Wow! I'm totally in awe.

Claire,

My parents knew a people who were trying to sell houses (SFH, middle class to upper middle class area, comparable to other houses in the neighborhood) between 1990 and 1996. Those people describe the experience as humiliating and an endless effort to woo buyers and dealing with buyer demands. When the market slows down enough, a seller will entertain any contract, as long as they can afford to do so. Home ownership become millstones when you're trying to sell into a hostile market.

41   Claire   2006 Sep 19, 6:13am  

I believe that the term is a buyer's broker rather than a buyer's agent. In point of fact I do know a realtor that is a pretty nice guy (our kids used to go to pre-school together) and when we asked (two years ago now) about the market he said then, that he thought that if there was a market correction it would be in the order of 15-20%, which we decided we didn't want to risk. He briefly mentioned that we had two options, a buyer's agent who gets the comission from the seller, or we pay for them to find us a house and we get the comission (which he said could work out to be much more expensive) - but it was long ago and we didn't get into details as we felt we weren't ready to commit yet.

42   skibum   2006 Sep 19, 6:14am  

Claire,

I don't know. It is certainly not ethical according to the "code":

http://www.realtor.org/realtororg.nsf/pages/narcode#DutiesRealtors

However, I don't know if it is strictly legal. On the other hand, much, much worse has transpired between realtors and clients before, and it will certainly continue.

43   astrid   2006 Sep 19, 6:15am  

Claire,

The relationship you describe works like a buyer kickback in practice. 1-2% kickbacks are pretty common in hot markets. I don't think you're violating any established legal or ethical standards.

I know some realtors will say it's more ethical to maintain the 6% norm and not undercut other realtors.

I'd say nonsense. You shouldn't be paying a 6% transaction cost just so an agent can snag ridiculous amounts of money for minimal work.

44   skibum   2006 Sep 19, 6:17am  

Claire,
Who knows, by the time you decide to buy, RE agents as we know them today may be truly obselete. One can hope, anyway.

45   astrid   2006 Sep 19, 6:21am  

skibum,

I don't think there's any technological reason why we can't keep total RE transactional costs under 2%. Mortgage brokers and most realtors do zelch except fill out a couple standard forms. Most of this stuff could be outsourced to India or Mexico or North Dakota and no one would know the difference. It's not as if these RE "professionals" had more training than the average Indian telemarketer.

46   DinOR   2006 Sep 19, 6:24am  

"when you're trying to sell in a hostile market"

It may be a little early to call this market "hostile" just yet but I don't think it's far off. Once buyers realize that they are dealing with an FB ill-equipped to do anything other than spend bubble bucks it will get hostile!

What's amazes me is in spite of a 255% increase in LV foreclosures that banks are still dealing with people (that as George describes) are"no longer are available at that number"? Why? I mean, I understand having foreclosure laws in place to protect "home owners" but this is getting ridiculous! These "homes" have never had anyone spend the night there, the "owners" can't point to it on a map but they're getting the same protection under the law? This is the kind of BS that will breed hostility. From a lot of quarters!

47   Claire   2006 Sep 19, 6:25am  

We'll just have to wait and see what happens. The reason I wanted to use an agent is that I've no experience in the US market and don't want to fall into a "trap" which an agent would have know about. I agree that their commission is outrageous here - especially when the house prices in my area are currently $1m + for ordinary houses

48   Claire   2006 Sep 19, 6:27am  

know=known

49   skibum   2006 Sep 19, 6:35am  

Claire,

We fell into the same boat - as first time buyers, we didn't want to get "suckered" or merely not realize something we should have done. I can tell you with certainty, those fears were ill-founded. What to do?

Continue to go to open houses in your neighborhood of interest to get a very good idea of what's available and what prices are doing. Talk to the realtors at the open houses to pick their (small) brains about what they know about the market. Honestly, business is so dead right now, they are usually sitting on their asses at these open houses and would probably enjoy talking to a human for a change. Read a book or two about RE transactions (no, not the ones about flipping!)

For the BA, check out movoto.com - it's one of those sites that links into google maps with new and old listings, DOM, etc. (BA only). Use zillow.com (although their zestimate is way off). They are atthe very least good for giving you prior sales histories for most homes. There are probably several other useful websites (redfin?) Read up on the art of negotiation (see DinOR's old thread on this). The rest of the equation, as astrid mentioned, can be taken care of by a good RE attorney.

50   speedingpullet   2006 Sep 19, 6:43am  

Speaking of Zillow.....I know the Zestimates are a bit wonky, but they do help in knowing which way the local market is going.

I've noticed that Zillow has not updated its numbers since sept 1st, despite the fact it is supposed to be a weekly update.
Does anyone have the skinny on why?
Or news on when they intend to update...?

51   astrid   2006 Sep 19, 6:46am  

Claire,

If you want to avoid "traps" then you must get a real estate attorney and maybe even a specialized tax attorney (if you're a foreign national). To avoid simple mistakes, read homebuyer websites or borrow a couple of library books. If you need more hand holding, run through the house with a shrewd friend who's been through the process. I concur with skibum's sentiment that a buyer's agent does virtually nothing for an intelligent buyer and may work to your detriment.

The biggest selling points for most buyer agents are convenience, MLS access and the erroneous belief that buyer's agents don't cost you anything. Convenience is not a major issue for you (since you already live in the area and know it pretty well), MLS listings are now pretty open and easy to research, and buyer's agents can cost you a lot of in terms of the seller's final price point. If a seller knows they must pay your agent, they're going to tag that onto their selling price.

There are few things worse than an unscrupulous buyer's agent. My parents worked for years with someone they thought was their friend. They got shown high priced dumps in sucky locations. They later found out that this "friend" was only showing them the runts in her own listings or her own property (!). Fortunately, my parents didn't buy anything with her and when they got serious about buying, they found a decent place on their own that gave much better value.

52   DinOR   2006 Sep 19, 6:50am  

LILLL,

Good for you! Losing the "obsession" to BUY NOW is a major step toward a "full recovery"! And no, a 20K "discount" after a 200% run-up is not a reduction, it's an insult. Not the least of which to one's intelligence.

Yet there's more to it than just saying renting has made the "world my oyster". (That's true and I've certainly not been remiss to exploit exactly that). It's much easier to "fantasize about your next place" (than to be saddled with debt and maint. on our old place) but beyond that is the chance to "re-invent" yourself. I realize in L.A giving one's self a "life-style make-over" can become a weekly event but I've yet to have mine.

Everyone here has this remarkable opportunity to create a more balanced and healthy environment for ourselves. Like most of us I don't get handed this opportunity every day so it's nothing to be taken lightly. I don't want to speak for others but it's not uncommon for us to be in a rut that goes a lot deeper than any housing bubble. I tried the suburban lifestyle and knew almost instantly it wasn't for me but when you have family you have to do what's right for the majority.

This implosion will provide a window for ALL of us to "shop" for a home and lifestyle like we probably haven't had since the 70's in this country. I for one am not about to screw that up. IMHO.

53   astrid   2006 Sep 19, 6:50am  

PS - and my parents did this before the days of online MLS listings and Zillow. They were going by newspaper and realtor booklets. Research nowadays is much easier and more targeted.

54   Claire   2006 Sep 19, 6:58am  

Where do you get information about foreclosure properties though? As I imagine they might be the better buy next year/in a couple of years?

55   DinOR   2006 Sep 19, 7:06am  

Claire,

Hello btw, I'm by no means an expert in this area but I think there's a pretty clear consensus that foreclosures are best handled by the vultures, bottom feeders etc. that walk, talk, eat and sleep this stuff. Now I'm not saying there aren't deals out there to be had but with as much inventory piling up none of us should have to "chase" this!

Besides there will be plenty of N.O.D/pre-foreclosures and short sales to pick through. Please talk with LILLL regarding here sudden loss of a sense of urgency to BUY NOW. It wasn't easy for me either. I grew up in the same house from 2 years old until I joined the service. I lived in one house for 10 years. No one has a stronger sense of "place" than I do but y o u m u s t f i g h t t h e u r g e!

56   Claire   2006 Sep 19, 7:11am  

I've been fighting the urge for 3 and a half nearly 4 years now....and nagging at the back of my mind is our school is okay but it's not half a mile away from several much higher scoring (API) schools (different school district).

57   DinOR   2006 Sep 19, 7:12am  

LILLL,

Share with us your........ "revelation". I don't want to ruin this wonderful experience for others b/c it's different for all of us. All I can say is I woke up one day and I didn't give a rat's @$$ about "not owning" any more. It just happened all of a sudden one day.

Was it like a fever that finally broke? Or was it like finally accepting an old friends passing? The final scene from the "Exorcist"?

58   HARM   2006 Sep 19, 7:17am  

I'm late to the party here (am insanely busy with a move right now --no I'm still jealously renting, I have NOT become a falling-knife FB ;-) ), but I wanted to welcome Tucson Man, and I hope he will continue to contribute more valuable stories "from the trenches" on a regular basis.

59   DinOR   2006 Sep 19, 7:26am  

Claire,

I sure don't want to come off as being parental by any stretch but if you've waited the better part of 4 years a few more months won't make (although it might break a FB's) any of "us". I firmly believe that in the next few months the debate will shift from soft/hard landing to "how hard".

One other option you may want to consider is (and know this hasn't been exactly popular here) "Lease w/Option 2 Buy". They seem to be popping up every where and "I" believe if properly structured and implemented it may give you the "sense of place" you are seeking along with a parachute that may not cost much if any more than a standard rental agreement.*

Seek appropriate legal advice before entering into any contract.

61   DinOR   2006 Sep 19, 7:49am  

"I had worries that I didn't even know I had"

"Money in the bank is like NOT having a toothache"

Oh I hear you loud and clear! Neighbors have always been a big issue for me. Some years back my neighbor told me he was going to put one of those huge "pole barns" with the corrugated sheet metal siding? Yeah, sky blue color right in the middle where we'd all have to look at it all day everyday? At least he asked me what I thought and I said "Please don't do this". They wound up getting divorced so it never got built but it would've been a nightmare. I'm making myself queasy just thinking about it.

62   DinOR   2006 Sep 19, 7:50am  

FRIFY,

What can I say? The Onion is da' bomb and they always have da' goods!

63   Claire   2006 Sep 19, 7:58am  

Is it just me, or is everyone else having trouble getting on Ben's blog today?

64   speedingpullet   2006 Sep 19, 8:01am  

Yes.
And despite Piggingtons getting a new server makeover at the weekend, the site is running slower than 'mollasses in the wintertime', as my old grandma used to say.

Although, to be fair, the next door neighbours are having a new roof installed/cable guys fiddling around, so that may be affecting my Wi-fi.

65   Claire   2006 Sep 19, 8:01am  

Oh drat! What is wrong with my system now?

66   DinOR   2006 Sep 19, 8:14am  

LILLL,

In order for me to have the motivational level I once had to rennovate a home it would have to be basically GIVEN to me! Seriously. The sheer notion of having nose bleed payments AND giving up pretty much all your free time couldn't appeal less.

If I were tetering any direction it would be, Please take this "turn-key" up scale home off our hands for 200K below CMV and accept the in ground pool, SUV and all expense paid vacation as our gifts to you free of charge!

No more "projects". No more HELOC's to go further in debt to fund "street appeal" crack habit!

67   Claire   2006 Sep 19, 8:48am  

So I'll stop trying to get on Ben's site now I know it's not me - I thought my computer was mucking around again.....McAfee have a lot to answer for! Meanwhile I have been forced to visit some other bubble blogs which has proved interesting!

68   SLO_renter   2006 Sep 19, 8:53am  

Charlie:

Thanks for the info re: Ben's blog. I have been checking it all day to no avail. I do miss the daily fix! But then, I get that here, too.

Thanks all!

69   HARM   2006 Sep 19, 9:09am  

OT, but what is it with Peter P and no thread graphics? Does he have something against them or what?

70   HARM   2006 Sep 19, 9:40am  

Welcome to the blog collective, Housing Wizard! (_sound of cheers & whistles in background_)

71   astrid   2006 Sep 19, 10:05am  

ajh,

Connecticut and Maine have disowned Dubya. And I'm sure Yale and HBS would like to do likewise. So Texas is all Bush fils has left.

I don't think of Bush pere as a Texan. There's nothing Texan about that guy.

LBJ was a pretty good politician, though an unfortunate choice for president. US in 1964 needed another Eisenhower or a Nixon.

72   DinOR   2006 Sep 19, 10:13am  

Tucson Man,

I'm not exactly holding my breath waiting for the "sheeple" to join the cause. For the most part they have a vested interest in keeping the bubble inflated to the maximum pressure it can take without actually exploding! However;

It seems to me that for more and more people there will be a tipping point where cheerleading no longer makes sense. (Namely if they are lucky enough to have been able to sell) or if they are actually foreclosed on.

I've spoke with a number of folks that are listing and eager to sell but don't seem to have a clue as to what they are going to do next! Well I don't know about you guys that runs contra to just about everything the American Consumer stands for! We get excited about our new house FIRST! We get excited about the new model car FIRST (then we worry about how we're going to deal with our "trade-in"). It strikes me in today's residential RE market selling, IS the objective!

73   Claire   2006 Sep 19, 11:08am  

I posted this elsewhere, but this is my site of choice to chat - so I was wondering what your take is on this question - you may have covered it already.

What is going to happen to local goverment/cities that rely on revenue from property taxes - if house prices crash, then their revenue will crash too, and I bet they never factored in the chance that this income stream would diminish. Will they try to raise taxes? What about CA and it's Prop 13? Will a lot of people with equity, but lower house values (after the crash) try to change their tax basis?

74   astrid   2006 Sep 19, 11:14am  

"Bush is Skull and Bones all the way."

Yeah, Dubya is hard to write off. But the Yale Corporation set up an it's somebody else's problem field set up Dubya and hope we won't notice.

75   skibum   2006 Sep 19, 11:18am  

Connecticut and Maine have disowned Dubya. And I’m sure Yale and HBS would like to do likewise. So Texas is all Bush fils has left.

I doubt it re: Yale and HBS. Universities are whores. If some alum gives them added name recognition, not to mention money, they're happy to embrace him/her in the alumni family. Hell, if bin Laden's family were to give a ton of money to a place like Harvard, they'd gladly take it! Oh, wait, that actually happened, didn't it?

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