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Evil Buyers Display Extreme Cruelty to Distressed Sellers


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2007 Apr 17, 5:43am   34,437 views  547 comments

by HARM   ➕follow (0)   💰tip   ignore  

buyer eyeing seller

Sadistic, Greedy Buyers Toying with Sellers Like Cats with Prey*
Copyright © 2007 UnReality Times®. All Rights Reserved.
by David Lereah, Leslie Appleton-Young and John Karevoll

As the alleged real estate bear market enters its second year of hitting bottom, some buyers out there are clearly enjoying this one-time market aberration --perhaps a little too much. Is deriving sadistic glee from other peoples' suffering a nice thing to do? The Germans have a word for this: schadenfreude (and we all know what cruelty the Germans are capable of!).

According to Donald Parisi, president of the Realtor Association of the Fox Valley (IL), buyer cruelty is reaching grotesque proportions:

"Parisi said he believes ‘doom and gloom’ media coverage has hurt the market. 'We’ve seen some very ridiculous offers,' Parisi said. 'People shouldn’t be desperate … The problem is some buyers are out there just to take advantage of the marketplace.'"

This view is further clarified by Jim Fox, manager of Realty One in Canton, Ohio:

“As unrealistic, said Fox, are some would-be buyers; they expect sellers to practically give their homes away. ‘Some people, … they want us to help them steal a home,’ Fox said.”

Even more to the point than Mr. Parisi, Florida Realtorâ„¢ Becky Troutt gets right to the heart of the matter:

"I think some of the buyers are out for blood! ...There is a difference from 'getting a deal' and 'trying to get something for nothing'! Just because the market is slow right now and homes take longer to sell.....doesn't mean that sellers are going to give their homes away and it doesn't give you the right to go for the jugular vein! How insulted would you be if you were that seller and someone asked you to come down off your price $90,000? Do you think you would say...ok sure no problem. I'm not spinning my heels in mud with an unrealistic buyer who only wants to try and rip a seller off!"

A note to home buyers: If you only want to pay $200,000 for a home......don't look at homes that are $90,000 more than you want to spend or can afford just because it's a slow market, and you think you can get a seller down that much.....because....IT AIN'T GONNA HAPPEN!!!"

Now, that's telling 'em like it is, Becky!

While the unbridled greed and glee exhibited by these sadistic buyers (and the American Dreamâ„¢-hating press) are stomach-turning awful, they are not the primary causes of this upside-down market. The real culprit for this most unnatural and unhealthy market condition, is well understood in the industry:

"What appears to be driving the increase in foreclosures is that home values are not rising, DataQuick analyst Andrew LePage said. 'Take away home-price appreciation, or ratchet it down or even make prices negative, and all of those forms of (economic) distress start to result in increased foreclosure activity,' LePage said."

Clearly what's needed here is massive government intervention to protect homeowners and rekindle the normal 20%/year appreciation. This might take the form of a distressed homeowner mortgage buy-down, or federal underwriting for all the kindhearted subprime lenders who generously enabled low-income Americans participate in the American Dreamâ„¢ (often mischaracterized by Gloom'n'Doomers as a "bailout").

To proactively tackle this looming crisis, the NAR and CAR have teamed up with the MBAA (Mortgage Bankers Association of America) to sponsor the Save the American Dreamâ„¢ Act of 2007. Says NAR Chief Economist, David Lereah, "We are urging people to sign our online petition, and write, call, email and beg their Senators and Congresspersons to support this badly needed piece of mercy legislation. Home ownership is as American as apple pie --only you (and Uncle Sam) have the power to save it! Please do your patriotic duty and support the SADA. God bless."

[*Note: while the offset quotes and links are real, this 'article' is a parody]

#housing

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350   Malcolm   2007 Apr 18, 6:09am  

I don't know, that's just how my mind read his name.

351   Peter P   2007 Apr 18, 6:10am  

Every time I see that, I think of a certain Stone Age reptilian cartoon pet.

Don't laugh, I will not be surprised if dinosaurs reign your virtual neighborhoods soon. They deserve a second life.

352   Malcolm   2007 Apr 18, 6:11am  

I want the existing laws enforced. If MLS illegally prevents listings elsewhere I would have to agree with that point.

353   DinOR   2007 Apr 18, 6:11am  

Isn't that what "Vinnie" says when he pops somebody in the knee caps?

Hey! It's just business, you understand. Nothin' personal.

Malcom, I can't speak for the 298 million in this country that are *not realtors but given their druthers I imagine most would prefer 1% over 6% if actually given a real choice. But hey what do I know I'm just a JBR?

354   Randy H   2007 Apr 18, 6:12am  

Again with emphasis added:

July 13, 2006
FTC Charges Austin Board of Realtors with Illegally Restraining Competition
Board of Realtors Required to Eliminate 2005 Rule Blocking Internet Searches for Non-Traditional, Low-Cost Brokerage Properties

The Federal Trade Commission today charged the Austin Board of Realtors with violating the antitrust laws by effectively preventing consumers with real estate listing agreements for potentially lower-cost unbundled brokerage services from marketing their listings on important public Web sites. In settling the charges, ABOR is prohibited from adopting or enforcing any rule that treats one type of real estate listing agreement more advantageously than any other listing type, and from interfering with the ability of its members to enter into any kind of lawful listing agreement with home sellers.

355   Malcolm   2007 Apr 18, 6:13am  

I have no problem with someone filing a lawsuit against a business practice. I just don't hear agents whining about how unfair MLS is to them. Those would be the people who didn't like MLS if in fact it is what you say it is.

356   HeadSet   2007 Apr 18, 6:15am  

Nice debate, folks. Quite an enjoyable brawl.

The MLS may not be the megalith some think. for example:

I have bought homes with no realtor involved.

I have had a real estate agent show me homes "For Sale By Owner", he just wanted me to pay 2% directly, not from proceeds of sale.

I have sold homes on the MLS with a 4% commission.

I have bought a home from a Realtor that was advertised as an "exclusive listing" - not on the MLS. This particular Real Estate company (a Century 21 Affiliate) charged 3% for exclusive listings, and 6% for MLS.

357   Malcolm   2007 Apr 18, 6:15am  

DIN says
Malcom, I can’t speak for the 298 million in this country that are *not realtors but given their druthers I imagine most would prefer 1% over 6% if actually given a real choice. But hey what do I know I’m just a JBR?

THEN LET THEM NEGOTIATE THE COMMISSION IT IS A FREE COUNTRY!

358   DinOR   2007 Apr 18, 6:17am  

@HARM,

I think it's been misspelled often enough that it's now become the norm? And I want people to know I was outta line when I said I was going to put Malcom's life's work next to the...... That was outta line. I apologize Malcom. That was *not cool. I apologize.

359   Malcolm   2007 Apr 18, 6:18am  

Randy, if your article is true (no reason to question) then what is your problem. The courts said they have to let them list elsewhere so how are they still in your opinion doing what you say they are?

360   Malcolm   2007 Apr 18, 6:19am  

Din, no offense taken. Please don't misunderstand viamently disagreeing with someone as lacking respect on a personal level.

361   DinOR   2007 Apr 18, 6:22am  

Headset,

I don't want to say that "all" military types fit the bill but G.I's are USED to haggling! It's what they do all day. I'm not sure it's reasonable to expect some single mom in Des Moines to get down and negotiate with some shark realtor that does this stuff for a living? Am I wrong here.

Hi_there,

How am I doing? Any pointers that might help me get my point across like bodgering the language or other helpful tips? O.K, I'll try that. Thanks,

DinOR

362   Boston Transplant   2007 Apr 18, 6:23am  

Malcolm,

I get the impression you think people who rail against NAR practices are also railing against our form of capitalism. Am I correct?

363   Malcolm   2007 Apr 18, 6:23am  

I think that is it in a way. I believe the court system should determine if particular business practices violates the law. If they do you will find me right along side of you, but I'm not going to sit back and nitpick businesses I don't care for because I don't see value in their servie. I think most of them are useless and the market cleans them up.

364   HeadSet   2007 Apr 18, 6:23am  

DinOr (aka dino) says:

"And I want people to know I was outta line when I said I was going to put Malcom’s life’s work next to the…"

Gee, I thought you meant it would be in the "Library," as to read when nature calls. You know, next to the Tom Clancy novel and the Playboy.

365   Malcolm   2007 Apr 18, 6:25am  

No Boston, not at all. Some of their logic though does seem to lead down that path. My hackles instantly go up when people for instance imply that the state or society can just waltz in and start tearing down people's IP.

366   Malcolm   2007 Apr 18, 6:25am  

Boston, thanks for actually asking instead of telling me what I believe.

367   Peter P   2007 Apr 18, 6:26am  

You know, next to the Tom Clancy novel and the Playboy.

You know, you can always listen to the Tom Clancy audio book while reading the Playboy and at the same time watching CNBC for the next investment idea.

368   Malcolm   2007 Apr 18, 6:26am  

It's not a long manuscript so you only get a few wipes.

369   DinOR   2007 Apr 18, 6:27am  

Malcom,

No seriously, I apologize. I mean that.

370   Randy H   2007 Apr 18, 6:27am  

Malcolm

Because the MLS is organized as a consortium of local boards, which "collaborate" (or collude depending upon your judgment of the legality) to continually skirt rulings like the one I just posted. Whenever a ruling like this hits it targets a single MLS board, not all of them in aggregate. Any attempt to address the larger organization is politically defeated by lobbies. So case-law is difficult to bring to bear in these cases, which are most often settled (as this one was).

Meanwhile many hundreds of other MLS boards out there continue on business as usual.

And agents do break MLS board covenants all the time. They will do whatever it takes to get their commission. So long as they keep a low profile, they can just violate the MLS board agreement and get away with it. But they also don't mind the anti-competitive MLS because it's a source of high-commission transactions where they are assured their counterparties will "play by the same rules".

371   Malcolm   2007 Apr 18, 6:27am  

Without IP I say we have no free market, and innovation comes to a grinding halt.

372   HeadSet   2007 Apr 18, 6:29am  

"You know, you can always listen to the Tom Clancy audio book while reading the Playboy and at the same time watching CNBC for the next investment idea. "

Would that be on the big screen in your bathroom? No sushi bar in there, too?

373   Peter P   2007 Apr 18, 6:31am  

I only read magazines in the bathroom. No electronics other than laptops.

374   Malcolm   2007 Apr 18, 6:31am  

I can't wait for LCD paint. Your whole bathroom wall can be a photogallery.

375   HeadSet   2007 Apr 18, 6:32am  

And I thought Peter P was the imaginator of dream bathrooms

376   OO   2007 Apr 18, 6:32am  

Headset,

people's circumstances differ, and their strategy of taking advantage of the housing downfall may differ too. I bought a year before you did, and I was just out of grad school. If I didn't get assistance from family on dp, I would not have had time to save enough dp to take advantage of that bottom. If I graduated 3 years earlier, and I understood the bubble as well as I do today, I would have jumped in EVEN knowing that the price might go down further, because I might just want to get into a particular neighborhood at a semi-bargain price while I could still borrow, and I expected my pay to rapidly increase afterwards.

Therefore, I don't think there is an one-size-fits-all strategy for everyone. Someone may buy before it bottoms, and he knows it, someone may just wait for the perceived bottom. There are many reasons why one can't come up with a dp, and I don't want to speculate on it. If someone doesn't think for whatever circumstances he can come up with enough dp, then getting in just before the bank closes its door is not a bad thing.

Another consideration is the weakening of the dollar. I have more than enough to pay off my mortgage balance, but I choose not to, because I can make higher return on my savings than sinking it into a dollar-denominated loan that will only get cheaper to pay off as dollar tanks. Therefore, if you know what you are doing, acquiring a dollar-denominated loan and locking the rates down is the right thing to do, provided that you have that amount of money to begin with, and you can shift your own money to more lucrative uses. Money will one day get much more expensive, if there's some way that you can lock down the cheap rates of today and profit from money getting expensive in the future, why not?

I don't think one can universally determine if debt is bad (tax shield, arbitrage, dumb people pricing risk badly so that you get a good deal). Debt is a good thing if you know how to take advantage of it. Apart from FBs, there are also people who strategically get into debt as a financial tool to profit, and right now the window for getting ridiculously cheap debt is still open, that is all I am saying.

377   skibum   2007 Apr 18, 6:34am  

I only read magazines in the bathroom. No electronics other than laptops.

Probably smart from an electrocution standpoint.

Excellent debate, BTW to all.

378   Boston Transplant   2007 Apr 18, 6:34am  

You're very welcome. My observation is that almost everyone is remarkably considerate on this board.

379   DinOR   2007 Apr 18, 6:35am  

Randy H,

Exactly, b/c MLS can provide a "base level" for some very good commissions they tolerate the rules just enough to keep from getting the boot.

And as much as it pains me to admit it, Malcom is correct that NO industry operates efficiently when the least significant player dictates the terms by which the game will be played.

380   skibum   2007 Apr 18, 6:37am  

After what's been said today, I doubt I can meaningfully contribute to the debate. However, here's an interesting link:

http://www.ftc.gov/opp/workshops/comprealestate/index.shtm

Click on the "Workshop Transcript" link if interested. It's hefty, but seems like (on cursory pass-through) a very interesting and relevant read.

381   Malcolm   2007 Apr 18, 6:38am  

And now in this group hug, I have to say that you guys have solid points about MLS business practices.

382   OO   2007 Apr 18, 6:47am  

Whether MLS is a monopoly doesn't matter, in this world we are moving to more transparent information. Realtors need to show me apart from MLS data what other service they can provide, and what they can provide won't overlap with other alternatives I have (researching on the internet, advertising on craigslist, attorney, etc.).

If realtors cannot come up with a distinctive raison d'etre, they will become extinct fairly soon, or their commission structure will change drastically.

In both Japan and Hong Kong, after the bust, the realtor's commission structure came down significantly. In Hong Kong, for example, when I was growing up, BOTH buyer and seller used to pay realtors 2-2.5% for the transaction amount. Now, the standard has become 1%, and you can easily negotiate it down to .5%, in a buyer's market, the buyer doesn't need to pay, in the seller's market, the seller doesn't need to pay.

383   skibum   2007 Apr 18, 6:48am  

RE: the link I referred to, pages 263-267 of the meeting transcript are useful summaries from the FTC/DOJ representative at this meeting. I have to manually retype the PDF, so here's a brief excerpt (sorry about any typos):

*****

“Coming from and enforcer’s perspective, I believe that the single overarching story line of our program for many years probably has been this: From time to time conventional, full-price brokers have taken collective action to disadvantage innovative, reduced-service, lower-priced brokers. The particular actions that they have taken have changed over time, but the same intent resurfaces…

Dating back to the late 1980s and early 1990s, we brought cases involving local MLSs that were refusing to list houses that were being sold under “exclusive agency” contracts, or were treating such listings on disadvantatgeous terms. The underlying MLS rules were a form of private agreement, and we thought the agreements were anti-competitive on that particular point."

384   HARM   2007 Apr 18, 6:50am  

I have one modest request: when you use an acronym that can be translated multiple ways, please define it at least once.

Ex: is "IP" "internet protocol", "information provider" or "intellectual property"?

385   OO   2007 Apr 18, 6:52am  

When there are no buyers around, all anti-competitive measures will just break down. The only reason why they are able to play the dirty games they play today is because there are too many buyers with too much cash flowing around.

If you leave an organized group of wolves to themselves with absolutely nothing to feed on, they will start chewing each other up.

386   DinOR   2007 Apr 18, 6:58am  

OO,

Good analogy! I think we're already seeing that in markets like LV where buyers have cleared out faster than you can say "free buffet"!

It just seemed so bizarre b/c in an era of increasing transparency and ever better technology, NAR declared "full speed astern!" Thanks for taking a "little" of that frustration out of the equation for me.

387   lunarpark   2007 Apr 18, 6:59am  

Does anyone know the current status of the housing market in Atherton? A friend is going to list her house in Atherton next week. The realtor told her most places are going over asking, $500k or more over asking. I see 28 homes listed, with 2 sale pending. Just curious...it's not a market I track at all.

388   skibum   2007 Apr 18, 7:01am  

OO,

It's not just an over-supply of buyers. Aside from any anti-competitive underpinnings of the NAR, there is the issue of fear factor in the buyer and seller. Of course, it sounds like a great thing for discount brokers, FSBO and the like to gain traction, but when it comes down to brass tacks, most buyers and sellers will go to an agent. They fear being screwed by not using an agent to advocate for them in the RE transaction.

Whether or not this advocacy is needed, this psychology clearly exists. As a result, discount brokers and dissolution of the MLS as we know it will be long in coming, but when it does, it will accelerate and transform very quickly as the mass psychology changes, IMO.

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