patrick.net

BuffPilot,

Great technique, and it sounds like you were lucky to be in an up market. Did you sell to an incoming AF member at a small base? Did your network include Housing Referal? As an AF member, do you have experience from several PCS moves in home buying.?

Back in the mid 90's, when we were in a slow market, I bought from a guy going PCS (transfered to a new base, for you non-military types). I caught him before he listed with a Realtor and offered to assume his VA Loan and cover all closing costs. He accepted, and the closing went well. He got to stay in the house until the movers came.

I had made this offer to another fellow, but he turned it down. He listed and his house sat unsold for months after he moved. When it finally sold, it was for slightly less than he paid for it originally. He was also out the commission along with the mortgage payments on his empty home.

I do not understand the "greedy" tag used in several posts. I've often noticed that "greed" is when the other guy wants to keep his money.

newsfreak,

Glad you like it! I've seen it work well in other arenas and thought it might apply here too. Many are already aware that "Di-Tech" belongs to GMAC Finance. So they work both extremes of the market. Anybody ever notice at the end of their infotainments (commercials) they put the "fine print" up on your TV screen for about .7 seconds? Anybody ever able to read it?

On the other hand realtors have GOT to step up their game! If they expect to survive let alone thrive they are going to have to bring so much more to the table it just isn't funny. I don't know. It's not really my problem to figure out how they can bring value to the table. For one thing they should stop aligning themselves w/ all of the traditional foes of the client. The lenders, the title companies etc. Help these homedebtors figure out a way to pay off their home in 10-12 years vice 30 or 40 for a start!

newsfreak,

Sorry for not giving a quick reply to your quiry.

We're hitting the Utah and Arizona portions of the Colorado Plateau, and yes, we'll hit Blanding at some point. The plan now is to spend about 2 weeks in the area and see Zion, Capital Reef, Cedar Break, GSEscalante, Canyon de Chelly, Bryce Canyon, Havasupai falls, Glen Canyon NRA, Antelope Canyon, and Petrified Forest NP.

DinOR,

If I see RE craziness, I'll snap some pictures and send them to you.

I don't want to imply anything lewd by together-together time. My boyfriend and I just live so far away from each other that most of our together time is talking on the phone and surfing the internet together.

SQT,

Good point, athough I would think overpricing is more from ignorance and short-sightedness.

I wonder if the FSBO you have seen are overpricing because they assume Realtors are underpricing. That is, they think a Realtor is more interested in a quick sale and commission than max seller profit.

Headset,

I don't think FSBOs are all stupid, just the vast majority of the ones I've seen. There are a couple people here who FSBO in hot market, priced correctly, and got offers pretty quickly.

Nothing wrong with greedy. Most people are greedy, they want the best life for themselves and their family, that's totally fine. The problem are people who are penny wise and pound foolish. They're not willing to put in the initial investment of time and money to market their house, or hire an experienced agent handle the job. As a consequence, they end up spending much more time carrying a house they no longer want.

DinOR says:

Help these homedebtors figure out a way to pay off their home in 10-12 years vice 30 or 40 for a start!

Excellent! That would be a real value-added service. But, it would lower their percentage if people got the mindset that a house should be a place to live and not a long term sentence.

newsfreak,

Thanks for the tip! And I'll be on the watchout for crazy RE. I know Northern AZ and Southern UT is getting some NV and CA money, and it'll be interesting to see just how much.

Our primary focus is north of the Colorado River. If time gets short, we'll probably cut out the AZ stuff for another time. A lot just depends on the amount of hiking involved. We've done a Oakland to both rim of Grand Canyon (with a total of about 10 hours of hiking) and back within 4 days, so 2 weeks seems like utter luxury to us.

I know for a fact that one of these FSBO's on my block is an idiot, greedy, or both. The reason I know this is that the house has MASSIVE curtains with the virgin mary on the front. Instant turn-off if you happen to be non-catholic. This is the most insanely priced FSBO home I've seen. single story, sort of shoddy, for a supposevly reduced price of 1.2 million. He had a yard sale a few weeks back. I stopped by and he has a cheap-o plastic Sears drill. I used to sell power tools, and a plug in drill like this one goes for 30 bucks new. He wanted $40 bucks for his used version. When I told him that they didn't cost that much new, he shrugs, goes back to his stool. The guy is just ignorant.
On the other hand, while I sit here and use the word: greedy it's only because I think the whole California housing scheme in itself is fueled by greed and that longterm, it'll bite everyone in the ass in the form of a lagging economy, crappy schools, a brain drain, and a lower quality of life that's already well pronounced. At the same time, If I had never had any money and my old house was worth 1 mil, you bet I'd try to sell it. At the same time I would know that what I was selling, at the price I was asking was asanine.

I would not be surprised if sociopathic scumbags target FSBOs looking for contracts with gaping holes in them.

I hadn’t even thought about this aspect. Boy, now I’d be too scared to list without a realtor(tm)!

SQT -

come on, isn't that what the smart FSBO hires a lawyer for? If there are gaping holes in the contract, isn't the lawyer liable?

Somehow, I doubt the average real estate agent knows more about drawing up contracts than the average lawyer.

Of course, if the owner wants to write the contract on a sheet of loose-leaf paper, well then.........:(

tsusiat,

I think DinOR nailed it earlier. Most FSBO are the sort of people who are too cheap and too ignorant to regularly visit doctors, consult a lawyer, or use an accountant. Sure there are some smart and informed FSBO who can do it right, but they're definitely the minority.

"I would not be surprised if sociopathic scumbags target FSBOs looking for contracts with gaping holes in them."

"I hadn’t even thought about this aspect. Boy, now I’d be too scared to list without a realtor(tm)! "

The above sounds like a NAR ad! Not using a Realtor does not mean you don't use and attorney or title company. The main job of a Reator is to find a buyer, closings are handled by said lawyers or title companies (the cost of which is not included in the Realtor commission). In some states, Realtors can provide a preprinted sales contract, but that is written to protect the Realtor. How does a scumbag criuse for bad contracts? A contract is only signed after a buyer is found.

If the FSBO uses a contact he got from OfficeMax, I would have to say he fits into Astrid's "pennywise and pound foolish" comment.

SFWoman,

I think there's a lot of good reasons to be an agent-less buyer, even though the buyer pays the commissions. Most FSBO seems to be run of the mill ordinary or downright awful. In the DC area, I don't think I've ever seen a FSBO on a house that's worth north of $1.5M.

-buyer
+seller

:oops:

buffpilot,

Huh?

A bad agent is next to worthless, but a good agent can really push a deal through in a way that FSBO cannot. Also, I bet most of California no longer have the standard 6%.

Headset,

I didn't know you were active duty? I was Navy 1979-89 and AF Reserve 89-93? Anyway, if realtors would put down the commission "bong" long enough to clear their heads they'd realize that as this boom goes bust all of their traditional allies and relationships are going to be looked at under a microscope. They keep going back to the same distribution channels! Like a moth to light. IF: they were to work with financial planners and the like they could find an extra $50 a month to apply to the buyer's credit cards and get those knocked out. Then go after the car loan/s. With all of the $'s Americans pump into those black holes now FULLY applied to their clients mortgage they can whittle that down in short order! This way the would have sold you a house and didn't just drop you off at the corner and tell you Good Luck! And in the end everyone "get's more client". With your mortgage "Paid in Full" I can set up your kids college accounts, the insurance guy can sell you a long term disability policy and in the end the realtor can sell you a 2nd/vacation home. We all just need to change the way we think.

Not listing does not mean you do not get the services of a Realtor.

Since many buyers only know to go to a Realtor, you have quite a few buyers agents out there. I know several folks who have sold FSBO recently, with the buyer bringing in the Realtor. The seller just added the 3% commission to the original asking price.

In my case, when I sold a home last year, it wasn't even that. I was approached by several buyers agents who bid up the price. (I did not sell to the highest bid since he was a flipper, the next highest guy couldn't bid higher because he was maxed out on savings plus loan appraisal, so I sold it to the second guy for that). The extra price more than made up for the 3% commission.

Of course, I could just have been a dumbass who underpriced the home.

DinOR,

Like I said before, I think you guys could totally be the future, especially as buyer agents. All hourly fee based. You could do the initial consult on affordability and financial planning. Then have hire some 19 year old to drive the buyers around. Once the buyers find something nice, have a "senior associate" do a walk through and make traditional buyer agent type stuff. Everybody gets good service and everybody makes good money.

@Headset & Buffpilot,

Unless I'm completely mis-reading everyone's comments here, what most people are saying is that MOST FSBOs they know of TEND to be ignorant, cheap and greedy. They are not saying that ALL FSOBs are ALWAYS ignorant, cheap and greedy.

You two would fall into the rare, exception-to-the-rule "smart" FSBO camp.

Going back to the original question of this thread:

In a HOT market, one probably can do away with agents. But then again, as people have pointed out, lapses in legal documents may come back and bite you. So only the very naive and greedy or the pros will take the FSBO route.

But, we are not in a HOT market. We are in a stagnant market. Many FSBO probably because the profit margin is too small. If you are sitting on a 50% (or 100%, or 200%) appreciation, you probably don't mind giving away a healthy percentage to someone who can do the job of selling for you and realize sale ASAP before the market drops further.

But if you are sitting on a 10% appreciation (because you only bought last September), the realtor fees and the mortgage interests you've been paying will drop you into the negative territory. Well, if on top of that your wallet is also very, very tight and you need some money from the sale to help you avoid bankcrupcy, you'll have to sweat yourself this time.

So bottom line: I suspect the majority of FSBO owners have experienced rather dismal appreciation.

DinOR,

I knew you were a Squid but I did not know about the AF Reserve!

I'm a 1980 USAFA grad, I took the early retirement in 1995 after a Flight Surgeon grounded me for hearing. I got to do lots of time flying over Iraq and Bosnia, and got to live in England and Portugal. Also got extended stays in France, Italy, Turkey, Guam, and Phillipines.

That seems like a lifetime ago!

After I got out, I bought up houses, fixed them up and rented them out. I never "flipped,' I always added value. I sold the houses during the recent insanity since the prices were so inflated, and it seemed anybody with a good credit rating was buying and not renting.

Jon,

I hear you, relative to local Boards offering stuff via WAP/WML, what I meant is, if a site was to arrive that offered the ability to type in something like:

1234 Smith Ave, then could return just lines of addresses, phone numbers, links, maybe maplinks for the same area in realtime, well that could take off.

Replicating stuff meant for larger screens just seems cumbersome.

People realize their houses value has dropped quite a bit so they figure by selling on their own, they will be able to lower their price that much (realthore's commision) lower than comparables and they may be able to get someone to even look at it!

....but what do I know? The NAR says that RE will appreciate $5.7 percent this year.....duh, my house has been on the market for six months now, duh, nobody is even remotely interested in it, duh, I guess it's time to increase the price 5.7%.

SFWoman,

Like your ex-neighbor, I'm more than happy to pay more if I can get more. I've seen my share of totally unethical and incompetent agents and they're not just completely worthless, but their presence can actually cost a seller/buyer time by presenting worthless ideas/listings.

Well, everyone. I'm signing off for a couple weeks with the boyfriend. I promise to keep an eye out for middle of nowhere developments and door to door sale signs. Y'all take care and have fun.

I have positive proof that the "boom" is over, I went sailing this weekend with a dope smoking $anta Cruz hippy that just "passed" the RE exam. He is slated for millions now. This guy is a waky/bakey dude.

Is the deadline for getting into contract, closing escrow, and registering for school fast approaching? I am seeing a spike of activity for family-sized housing units. However, 2bd homes are just sitting there.

Or another theory is that family-sized units are move-up buyers and priced out first time buyers can’t/aren’t willing to buy the 2 BR units.

Why the spike then?

Sage,

It is for those reasons that I always use a RE attorney to review all documents, regardless of what agents tell me. I have justified the cost in the past by negotiating the commission down by enough "extra" to cover lawyer's fees. I don't have the time or tolerance to do all the legwork myself, as I'd have to do in a FSBO. RE attorneys do represent the person paying them, and not any other interests.

Is the US$ being devalued so fast that housing prices are actually falling without the numbers changing much?

Unalloyed

Is the US$ being devalued so fast that housing prices are actually falling without the numbers changing much?

Only if you are a buyer with foreign denominated currency. The value of the USD has nothing to do directly with the value of domestic real estate. In fact, domestic RE represents an asset class for which relative values are not correlated well with things like currencies or stock/bond markets.

All the talk about USD weakness here as it relates to the RE market is of a macroeconomic "side effect" nature. For RE to fall in real terms without nominal prices changes requires domestic inflation. In fact, weakening USD exchange rates work against this because as the USD falls nominal interest rates must rise (because we have a current account deficit), meaning that inflation cannot rise unchecked.*

*Note, this assumes the neocon ZIRP crowd won't get their wet-dream of US inflation operating as a tool of foreign policy. Six years ago I'd have said "never". But at this point just about anything is possible given the lack of leadership on all sides and at all levels.++

++Non partisan statement: I am an equal opportunity cynic.

OT- How many sales to buyers, who actually intended to live in those homes, have been pushed forward in 04 and 05, for fear of being priced out of the market, and for fear of missing out on low interest rates? This must have taken a huge number of potential buyers out of the current market. I think this answers the question of the relator who said, "Where are all the stinking buyers?"

This is a major reason why the bust is hapening sooner rather than later.

Mike/a.k.a Sage,

Well exactly. Several of the articles linked over the last few months clearly stated over HALF of the mortgages in America are under TWO years old! TWO years old! So what, half of America has 28 years (at a minimum) left on their mortgage? That'll sober ya' up in a big hurry.

Not to beat this to death, but had some sort of personal planner been involved, people in their 50's wouldn't be signing up for 30 MORTGAGES! Uh dude, I know, I've heard your 50's are the "new" 30's and I'm down with that and all but when you finally pay this sucka off you'll be in your 80's!

Peter P,

83,000 people took the CFA Exam this cycle. Stop keeping us in suspense and tell us how you did!

Sage,

The horror,

the horror.

Surfer X,

I'll take "waky/bakey" to mean that your sailing "buddy" gets "higher than a Georgia Pine" the very minute he wakes up? Sounds like the kind of guy I want negotiating my "biggest investment"! Oh well, when all else fails there's always real estate.

Sage,
That's god-awful! I've never heard of such a thing. What the hell was the matter with these people? They'll probably have to spend the rest of their lives paying for that house, so what was the rush? How do crazy people get a loan in the first place?

WW2,

Others have commented on the Barret Jackson Auto Auction which is a materialistic tribute to boomers w/money run amok. The bigger question is what could have 300K done for the community?

DinOR,

A comprehensive personal planner for people who do not understand money and investment. A new industry?

Typical advice may be to tell a young couple to limit thier house to one they can pay off in 10 years, invest X in bonds, X in small caps, etc. And of course, no credit card debt that can't be paid off that month.

Got to find a way to stop this planner from recommending investments that pay him bribes, though.

Also, so many Americans are not interested in building real wealth, but in having it now and creating the illusion of prosperity. Witness all the easy credit stores, luxury car leases, and overhocked mini-mansions. They would rather have 6 year car loan on a new BMW rather than own a 2 year old Impala with no loan.

However, I have heard that half the homes in the US have no mortgage, so there is hope!

Headset,

You bring up some genuine concerns, and fresh perspectives. My wake up call came as my daughters (18 and 21) began facing the realities of today. We've created a system (Peter P likes to call debt = wealth) that is basically financial suicide. Put in simple terms there are TONS of professionals out there ready willing and able to help you with your investments, taxes and liabilities (insurance) but virtually NO ONE to help young people (or folks in general ) manage their DEBT! It's such a huge hole in the financial services industry you could drive a Mack truck through it! What little we do have is in the form of bankruptcy attorneys, "debt consolidation" services and payday loans for crissakes! We're failing an entire generation (if not two) and somehow managing to live with ourselves. We need to re-examine the whole way we address this issue of debt. Last night I watched the Spelling Bee and have never felt dumber in my life! The words I need to "spell check" would have failed me in round ONE! We have a lot of sharp young people out there and they deserve better.

Headset,
I was reading an interesting article a few days ago.It is a Harvard report about the mysterious disappearing middle class. It made comparisons between the 1970's and today. One would think that middle class families of today are spending more on stuff, even if inflation is considered, but the stark reality is that compared to the 70's, families are spending LESS. A few reasons are that for one, incomes haven't kept up with inflation. A family in 1975 making the median income level would have as much as 50% of their take home pay leftover for luxury purchases. This was also at a time period when a large number of mothers still stayed home. Small things like clothes, shoes, and other manufactored good were more expensive then than today. Most of those items were still made in the U.S, thus they cost more. The fact is that given inflation, families now make LESS than they did 30 years ago.
A family shopping at Wal-Mart spends way less on consumer goods such as TV's, radios, bicycles, and lawn mowers then people did in the 70's because most of those aforementioned items were considered luxury goods Vs today where except for the extreme euro-chic items, just about all consumer goods are cheap and disposable. Even some of those european brands are all made in Chinese factories right along with the Mr Coffee makers.
The real problem is that until very recently, most metropolitan areas were like the rest of the country and in the middle class bracket. Now that most of these areas are now more favorable to upper income level folks, the economics are not working for the middle class.
This pattern is nothing new. It has been going on for a few decades now. The new " middle class" are those that got their degrees in law, medical, or some other higher learning trade. What's baffling to most middle income folks is that it seems unfathomable that people that make 3-4 times as much as they are at best just barely able to afford what 15 years ago was a plain-jane house.
So in essence, young families are in some ways more responsible with their finances, not because they choose to be, but because the changing economic times has forced them to go into defensive mode. I would probably fit under that category.