patrick.net

tatupu70,

I'm pretty sure you know the difference between a $50 gift card from Best Buy and a government bailout.
When you get a $50 discount on a TV, that is just Best Buy lowering the price.

A government bailout is funded by taxpayers, not house sellers.

The real reason the real estate market isn't a free one is that real-estate agents seriously restrict the flow of information about real estate transactions. Truly free markets require availability of information.

Wow, impressive negative sentiment regarding the real estate industry in general which given the times isn't necessarily surprising. Like all prior bubbles before, a lot of people burned and disillusioned. Nothing new under the sun.

With regards to laying much blame at the feet of the evil "builders", like many industries there is a very wide range of residential general contractors that fall into the category of "builders". Large national & regional corporate builders to much, much smaller local builders. They all have their pros & cons. And like most, they're all trying to make a living. Did many of them make lots of money back in the building boom. I would imagine. The smaller guys, probaly not so much. Are there some "bad apples" in the group? Yes, just like every other facet of society.

In the end, people need to take responsibility for their own financial decisions. Educating yourself as to currrent real estate values, future trends and the value offered for sale in both the new and existing real estate markets is the buyers responsibility. When it comes to what is ultimately most peoples' single most expensive purchase in their life, it never ceases to amaze me as to the finger pointing that occurs when a deal goes south and doesn't workout the way a buyer thought it should.

@LeanneHassett - dismayed at the non-acceptance of an offer $15k under the asking price? Big factor is the asking price. Was it 10% less on a $150k home which would consume all of the builder's profit (7-10% being the norm; less in this current environment) ? Or 3% or less on a $500k+ home? Big difference. The latter is much more negotiable. If you happened to be a relentless "tire kicker" viewing the property multiple times, they may have also just wanted you to go away. Nothing personal, just common sense.

@investor90 - so the fact that your realtor friend (or anyone else for that matter) saved 20% building their own home vs. buying one retail makes "builders" greedy? Somehwere in the new home building process the value/cost of supervision, overhead, marketing, closing costs, RE commission and a builders profit need to be accounted for - they are legitimate costs of doing business which collectively consititute upwards of 30%+ markup on new construction. This does not mean the builder made 30% profit on the deal. According to this line of thinking, there could not possibly be any value brought to the table by a builder and his/her contracting experience, purchasing power, established relationships with quality subcontractors, etc., etc. No, they must all be greedy SOBs.

Why is it that I get the feeling that those who appear to be the most disillusioned with the real estate industry as expressed by some the comments on this blog are probably the same people constantly trying to get a "deal"? Like most things in life, you get what you pay for - nothing more, nothing less.

iceweasel says

tatupu70,
I’m pretty sure you know the difference between a $50 gift card from Best Buy and a government bailout.
When you get a $50 discount on a TV, that is just Best Buy lowering the price.
A government bailout is funded by taxpayers, not house sellers.
The real reason the real estate market isn’t a free one is that real-estate agents seriously restrict the flow of information about real estate transactions. Truly free markets require availability of information.

You're right, they aren't the same thing. But my point stands--neither of them deny a free market...

And I also agree about the free availability of information being necessary to be a truly free market in the textbook sense. But, if that's your definition, then I challenge you to find a free market anywhere. Real Estate is just like any other market in that sense--you can look at comparable items and decide how much you think a good is worth. People pay different amounts for the exact same item depending on when/where they buy it. If you want to get a good deal, you have to do your research just like in real estate.

You don't go to a car dealer and assume he will give you a good deal. You don't go to Best Buy expecting them to get you a good deal. Why do you think buying a house is any different?

"Roger Pollock"

Mention that name in Oregon and you are bound to get some one's blood boiling. He has since moved on to building in Baja, Mexico. At least there he can buy off the inspectors/law enforcers if there are any.

"The Lake Oswego homebuilder fell victim to plummeting demand for new homes, which in turn spawned a series of lawsuits and foreclosures, including a $10.7 million judgment in Happy Valley against Buena Vista and its owner, Roger M. Pollock.

The company has been sued for defaulting on loans and for shoddy construction at a condominium it built in Southeast Portland. It also lost a series of semi-developed lots in Southwest Portland to foreclosure."

http://portland.bizjournals.com/portland/stories/2009/08/03/story1.html

Leigh:

are there any nursing jobs in your area for a kick-ass RN who recently moved - husband starting PA school? She's awesome and I'm pissed she quit working with us... but apparently her husband and future are more important... She's very good - has ltc experience and a little acute, I do believe...

Yes, I remember reading about Pollock. There are lots of similar stories all over the country. Jeffrey Miller in KS to name another though he's in jail now. You never see the big building co's owners go to jail; they pay fines which don't affect their bottom line, and which are still just a fraction of the money they made by cheating. The same day that publicly traded builders are in the news for fines, fraud, etc, the investment gurus are still talking about homebuilder stocks as if none of that happened. Fraud has become a way of life. Some good places to read about just how involved the real estate industry is in fraud:

www.mortgagefraudblog.com
www.hadd.com/news
www.fbi.gov particularly this one, saying 80 percent of mortgage fraud is done by the industry: http://www.fbi.gov/publications/financial/fcs_report052005/fcs_report052005.htm

It might not be so obscene if tax payers weren't being forced to continue to subisidize housing and give corporate welfare to these co's. Gee I WONDER why so many people put anyone in real estate right up there w/used car salesmen? Of course there are some good people in real estate, but if they really had any backbone they'd be standing up against this and would've ratted out the cheaters long ago. Instead, like many trade org's they protect their own no matter what, then wonder why their reputation is mud. Talk about taking personal responsibility, corporate America needs to look in the mirror.

Leigh says

“Roger Pollock”
Mention that name in Oregon and you are bound to get some one’s blood boiling. He has since moved on to building in Baja, Mexico. At least there he can buy off the inspectors/law enforcers if there are any.
“The Lake Oswego homebuilder fell victim to plummeting demand for new homes, which in turn spawned a series of lawsuits and foreclosures, including a $10.7 million judgment in Happy Valley against Buena Vista and its owner, Roger M. Pollock.
The company has been sued for defaulting on loans and for shoddy construction at a condominium it built in Southeast Portland. It also lost a series of semi-developed lots in Southwest Portland to foreclosure.”
http://portland.bizjournals.com/portland/stories/2009/08/03/story1.html

CSC says

Talk about taking personal responsibility, corporate America needs to look in the mirror.

That we can definitely agree on...

CSC, and look what just got posted on Calculated Risk.....grrrrrrrrrrrr

H.R. 5409, the Residential Construction Lending Act, would create a new residential construction loan guarantee program within the Department of Treasury to provide loans to builders with viable construction projects. Designed to unfreeze credit for small home building firms, the measure would expand the flow of credit to residential builders on competitive terms.

http://www.calculatedriskblog.com/2010/05/housing-production-credit-crisis.html

And Ellie, not sure what the market looks like. I know the new grads are struggling to find work. We have an opening at my company, they train inexperienced RNs to due dialysis: have her look up Fresenius Medical Care online. I think we have an opening in the acute setting. Is spouse going to school at Pacific U or OHSU? Great that he got in:O)

Leigh says

CSC, and look what just got posted on Calculated Risk…..grrrrrrrrrrrr
H.R. 5409, the Residential Construction Lending Act, would create a new residential construction loan guarantee program within the Department of Treasury to provide loans to builders with viable construction projects. Designed to unfreeze credit for small home building firms, the measure would expand the flow of credit to residential builders on competitive terms.
http://www.calculatedriskblog.com/2010/05/housing-production-credit-crisis.html
And Ellie, not sure what the market looks like. I know the new grads are struggling to find work. We have an opening at my company, they train inexperienced RNs to due dialysis: have her look up Fresenius Medical Care online. I think we have an opening in the acute setting. Is spouse going to school at Pacific U or OHSU? Great that he got in:O)

I'm pretty sure it's OHSU. They're both pups - when she started working with us I was doubtful because she was timid for the first ten minutes... then she became a really great Charge Nurse. I'll tell her. Sorry to hijack the thread. Her name's Michelle - if one is hired & she's from Utah, tell her howdy for me...

CSC says

particularly this one, saying 80 percent of mortgage fraud is done by the industry:

Sorry to hear Congress keeps overlooking that fact time and time again, but they are preoccupied with their mortal enemy again, evil banks.

Yep, agree completely...ultimately, it is the individual buyers responsibility to KNOW how much house they can afford, and also to educate themselves about typical builder gimmicks and shell games, because they WILL try to upsell you on every little thing they can.

That 400K base price will turn into $500 at the closing table in the blink of an eye, so be careful! Also, most of the tme, if you sink a lot of money into upgrades and options--you will NEVER get that money back out of the house if you need to sell anytime soon--

Beware the builder base-prices, even if they include options, and be prepared to end up a whole lot higher than you thought you would--happens every time.

What about the RE agents who spent lots of time driving their clients to see houses and got no where and not getting paid? They have to make a living too.

Yes, an article about that from another site greeted me this a.m. before I had my coffee, now my day's all in a wad. I'll be writing to my state congressmen again. These crooks want the gubbamint to stay out of things except when they want a handout. From what I can tell, any industry you look into lobbies for the same thing-- 'keep big brother out of our business except when we run our co's into the ground and need corporate welfare.' Any individual on actual welfare would probably be found guilty of welfare fraud if they behaved the same as the American co's that have taken handouts then given CEO's huge salaries and perks, thrown half-million dollar parties, etc. Welcome to the Corporate States of America.

Leigh says

CSC, and look what just got posted on Calculated Risk…..grrrrrrrrrrrr
H.R. 5409, the Residential Construction Lending Act, would create a new residential construction loan guarantee program within the Department of Treasury to provide loans to builders with viable construction projects. Designed to unfreeze credit for small home building firms, the measure would expand the flow of credit to residential builders on competitive terms.
http://www.calculatedriskblog.com/2010/05/housing-production-credit-crisis.html
And Ellie, not sure what the market looks like. I know the new grads are struggling to find work. We have an opening at my company, they train inexperienced RNs to due dialysis: have her look up Fresenius Medical Care online. I think we have an opening in the acute setting. Is spouse going to school at Pacific U or OHSU? Great that he got in:O)

When someone has knowingly engages in risky and/or illegal behavior that resulted in damages, it IS someone's fault. Shoddy construction, mortgage fraud, are not acts of God. It's a foundation of law in virtually any society that one pays for one's damages. Corporate lobbying has turned the finger of blame onto their customers, ironically calling them too stupid to avoid scams, while implying they were clever enough to commit massive frauds on the entire country. NOT.

When a business is called on the carpet (civil or criminal) then the real finger pointing begins. It was the customer's fault, the subcontractor's fault, the supplier's fault, the economy's fault...anyone but themselves. Too many people have accepted what appears to be sociopathic behavior as good business practice: http://www.mayoclinic.com/health/antisocial-personality-disorder/DS00829/DSECTION=symptoms

E-man says

Wow,
Here we go again. It’s always someone else’s fault.

CSC says

When someone has knowingly engages in risky and/or illegal behavior that resulted in damages, it IS someone’s fault. Shoddy construction, mortgage fraud, are not acts of God. It’s a foundation of law in virtually any society that one pays for one’s damages. Corporate lobbying has turned the finger of blame onto their customers, ironically calling them too stupid to avoid scams, while implying they were clever enough to commit massive frauds on the entire country. NOT.
When a business is called on the carpet (civil or criminal) then the real finger pointing begins. It was the customer’s fault, the subcontractor’s fault, the supplier’s fault, the economy’s fault…anyone but themselves. Too many people have accepted what appears to be sociopathic behavior as good business practice:

I didn't think this thread was about mortgage fraud or shoddy construction. Those are valid complaints. This thread started by blaming a bad purchase decision on the builder or realtor because they "hyped" it. That is not a valid complaint.

Hype has certainly been where most of these sales start. Unfortunately for many buyers it progressed into after-closing complaints of mortgage fraud and shoddy construction. It's all bundled into the same problem--unethical business practices that the rest of us get stuck w/the bill for.

tatupu70 says

I didn’t think this thread was about mortgage fraud or shoddy construction. Those are valid complaints. This thread started by blaming a bad purchase decision on the builder or realtor because they “hyped” it. That is not a valid complaint.

CSC says

Hype has certainly been where most of these sales start. Unfortunately for many buyers it progressed into after-closing complaints of mortgage fraud and shoddy construction. It’s all bundled into the same problem–unethical business practices that the rest of us get stuck w/the bill for.

I couldn't disagree more. Mortgage fraud is against the law. Hype is a marketing technique. There is a huge difference there.

Yeah! Now is the best time to buy. I heard one of my co worker(who owns) telling the other(who rents), " If you don't buy now you will never be able to buy". This after the fact the guy who owns bought in 2005 and is lucky to have the value remain same as his house is in a very good neighbourhood in LA county.

There's no great chasm between the two, it's a matter of degree, what can be proven, what kind of money/connections the company accused has, whether it's in state or federal court as state laws vary, etc. Only the worst, most provable frauds, of high dollar amounts, are likely to catch the attention of law enforcement. And usually even that doesn't happen unless a bank suffered losses too. Consumers are usually told they're on their own to hire an attorney and fight it in CIVIL court, or cut their losses. When someone's sold a house based on X and at closing the seller/builder delivers Y and it's to the buyer's detriment, sometimes it is fraud, sometimes it's just sleazy. Either way, same point--the industry deserves the 'used car salesman' reputation and has only itself to blame.

tatupu70 says

I couldn’t disagree more. Mortgage fraud is against the law. Hype is a marketing technique. There is a huge difference there.

CSC says

There’s no great chasm between the two, it’s a matter of degree, what can be proven, what kind of money/connections the company accused has, whether it’s in state or federal court as state laws vary, etc

One is against the law, one isn't. I consider that to be a pretty large chasm.

davidcheung says

What about the RE agents who spent lots of time driving their clients to see houses and got no where and not getting paid? They have to make a living too.

Like any other salesperson in any other industry in our economy. You win some you lose some! Thats the cost of doing business!

Why do you guys hate realtors so much? They are salespeople.

Perhaps one noteworthy distinction is that a real estate agent's profits have been effectively nationalized, thanks to the FHA, Fannie/Freddie, Ginnie Mae, FDA, etc. etc. Also, not all salespeople (such as the electronics store clerk referred to above) are backed by one of the largest lobbyist groups on the Hill.

One is against the law, one isn’t. I consider that to be a pretty large chasm.

Right: One deserves three hots & a cot, and the other, a swift kick in the dick.

Why do you guys hate realtors so much? They are salespeople.

LOL! You will find salespeople in many other smallest to largest employers/industries, like in SV, have the most strictest guidelines over behavior and pricing when dealing with customers. Any deviation from the policies is severly delt with. So I would not call them your typical "salesperson". REA certainly go well beyond norms and behavior from what I have seen.

Sorry, but criminal defense lawyers and govt prosecutors make their living arguing what is and isn't violation of a law, and to what degree. That has everything to do with whether they get off or not, or whether they have a short sentence or a longer one. Even if something's not a crime, there are still civil (as opposed to criminal) laws where ordinarly people bring suit for damages.

There are many unethical, risky business practices that are not criminal but that done in mass amounts cause damage to not just customers but the country. The economic crash is just one example. Many instances of both criminal and civil law violations go entirely unpunished, but they are damaging nonetheless.

tatupu70 says

One is against the law, one isn’t. I consider that to be a pretty large chasm.

CSC says

Sorry, but criminal defense lawyers and govt prosecutors make their living arguing what is and isn’t violation of a law, and to what degree. That has everything to do with whether they get off or not, or whether they have a short sentence or a longer one. Even if something’s not a crime, there are still civil (as opposed to criminal) laws where ordinarly people bring suit for damages.
There are many unethical, risky business practices that are not criminal but that done in mass amounts cause damage to not just customers but the country. The economic crash is just one example. Many instances of both criminal and civil law violations go entirely unpunished, but they are damaging nonetheless.

Huh? Most of what you wrote there is not relevant to the discussion.. Are you trying to argue that promoting real estate is unethical? Pointing out the positives is a crime?

thomas.wong1986 says

LOL! You will find salespeople in many other smallest to largest employers/industries, like in SV, have the most strictest guidelines over behavior and pricing when dealing with customers. Any deviation from the policies is severly delt with. So I would not call them your typical “salesperson”. REA certainly go well beyond norms and behavior from what I have seen

And there are salespeople in all industries that disregard those guidelines. Which is why most people realize that they need to look out for themselves first and foremost. Real estate agents are like any other salespeople.

tatupu70 says

And there are salespeople in all industries that disregard those guidelines. Which is why most people realize that they need to look out for themselves first and foremost. Real estate agents are like any other salespeople.

Nope, REA are not like other salespeople. Deals in other industries like the ones in SV are reviewed and any side deals will get you fired. Do you want a crash course in Revenue Recognition? Most sales orginzations have several layers of quote-to-contracts reviews and approvals. But you will find RE offices have no such controls so they have no accountability. Who audits sales contracts in the RE offices and reviews their books? No one! They would fail SOX 404 right off. Go ahead and talk to your employers Controller. May well explain it to you!

thomas.wong1986 says

Nope, REA are not like other salespeople. Deals in other industries like the ones in SV are reviewed and any side deals will get you fired. Do you want a crash course in Revenue Recognition? Most sales orginzations have several layers of quote-to-contracts reviews and approvals. But you will find RE offices have no such controls so they have no accountability. Who audits sales contracts in the RE offices and reviews their books? No one! They would fail SOX 404 right off. Go ahead and talk to your employers Controller. May well explain it to you!

When did we get into SOX? And what does it have to do with anything?? We're talking about whether Realtors are like salespeople.. Side deals will get you fired in real estate as well. Those are not allowed. What do you think realtors do?

I responded to your comment about crime. Sorry if you don't like the answer. As for real estate hype "pointing out the positives," all I can say is ROTFLMAO!

tatupu70 says

CSC says

Sorry, but criminal defense lawyers and govt prosecutors make their living arguing what is and isn’t violation of a law, and to what degree. That has everything to do with whether they get off or not, or whether they have a short sentence or a longer one. Even if something’s not a crime, there are still civil (as opposed to criminal) laws where ordinarly people bring suit for damages.
There are many unethical, risky business practices that are not criminal but that done in mass amounts cause damage to not just customers but the country. The economic crash is just one example. Many instances of both criminal and civil law violations go entirely unpunished, but they are damaging nonetheless.

Huh? Most of what you wrote there is not relevant to the discussion.. Are you trying to argue that promoting real estate is unethical? Pointing out the positives is a crime?

CSC says

I responded to your comment about crime. Sorry if you don’t like the answer. As for real estate hype “pointing out the positives,” all I can say is ROTFLMAO!

OK--thanks for the 80s AOL reference there. You responded all right... It was completely off topic and mostly rambling, but it was a response I guess. If you want to continue to feel victimized, you have my permission. I realize it's too much to ask you to do your own research and determine on your own what a house is worth before putting a bid on it. I mean--if someone else tells you it's time to buy, how can you not follow their advice???!!?? That would require you to think for yourself...

Still ROFLMAO. I'm not buying, so I'm not putting a bid in on anything. The research I've done over the past 10 years was not with the goal of homebuying in mind. It was more along the lines of gathering evidence. With what I found that LAST thing I'd have done was buy into the sham.

tatupu70 says

CSC says

I responded to your comment about crime. Sorry if you don’t like the answer. As for real estate hype “pointing out the positives,” all I can say is ROTFLMAO!

OK–thanks for the 80s AOL reference there. You responded all right… It was completely off topic and mostly rambling, but it was a response I guess. If you want to continue to feel victimized, you have my permission. I realize it’s too much to ask you to do your own research and determine on your own what a house is worth before putting a bid on it. I mean–if someone else tells you it’s time to buy, how can you not follow their advice???!!?? That would require you to think for yourself…

Contrary to "experts" its not a good time to buy.

sorry for the offtopic - but I am hoping O.O. or one of the old regulars (if they're still around) can help me with some information.

I am looking for reliable gold dealers in the Palo Alto/Menlo Park area. Want to buy physical, and don't want to go via kitco or tulving online. Thanks in advance.

I sold a bit of gold to Mish metals in Menlo Park (not related to Mish the blogger). They seemed relatively honest, though there's a big buy/sell spread as usual.

http://www.mishinternational.com/index.html

tatupu70 says

When did we get into SOX? And what does it have to do with anything?? We’re talking about whether Realtors are like salespeople.. Side deals will get you fired in real estate as well. Those are not allowed. What do you think realtors do?

Tatupu, you said "REA are like other salespeople"... that is wrong. Other sales people in other industries are under complex internal control guidelines. Side deals and verbal promises in RE firms are simply ignored because they are not accountable or enforceable by no one. They couldnt care less. Compare that to any other local corporate entity small and large where deals are translated to revenue and revenue is scrutinized by third party audits. And the third party auditors who is not an employee of the company is accountable, not to the managers of that entity, but the owners, which may be VCs or shareholders. Very often the auditors do contact customers independently to verify every aspect of deals. If the deals had other verbal promises or 'tactics' like we often hear with REA, "you can always refinance, great schools, prices will always go up" then that deal is tainted and revenue for that entity will be compromised. The heads of that corporation will be held responsible for those tainted deals. That is SOX in a nut shell.

The middle aged women who dominate the REA ranks would never cut it in real industries.

thomas.wong1986 says

If the deals had other verbal promises or ‘tactics’ like we often hear with REA, “you can always refinance, great schools, prices will always go up” then that deal is tainted and revenue for that entity will be compromised

Do you realize how ridiculous that sounds? Great schools is a verbal promise? Prices will always go up--salespeople in other industries don't say that? Come on. Your comparison is really more for salespeople at small companies vs. large companies. Yes, larger companies have checks and balances and keep their salespeople on a tighter leash. But there are many, many private companies where salespeople have a very long rein to do what they need to do to get business. Don't tell me you've never heard of guys taking purchasing manager to strip clubs--at a company I used to work at they sent out an intern to the bank to get $200 in ones for the night's entertainment. That shit happens all the time. You need to get out more.

tatupu70 says

Do you realize how ridiculous that sounds

You will get the same response from your corporate controller of your company.

tatupu70 says

Yes, larger companies have checks and balances and keep their salespeople on a tighter leash. But there are many, many private companies where salespeople have a very long rein to do what they need to do to get business.

Nope private or public, they are accountable to their shareholders and very often they use auditors to verify ALL deals. My company is private and we have PWC as our auditors and they review our deals equally as it was a public clients. There is no difference.

tatupu70 says

Don’t tell me you’ve never heard of guys taking purchasing manager to strip clubs–at a company I used to work at they sent out an intern to the bank to get $200 in ones for the night’s entertainment. That shit happens all the time. You need to get out more.

No it doesnt happen at all around here. That is why we have policies prohibiting such behavorior. Its not considered a business expense. If anything that would be a warning sign. Yes, I have seen people get fired for similar indiscretions.

thomas.wong1986 says

No it doesnt happen at all around here. That is why we have policies prohibiting such behavorior. Its not considered a business expense. If anything that would be a warning sign. Yes, I have seen people get fired for similar indiscretions.

Like I said--you need to get out more...

I sold a bit of gold to Mish metals in Menlo Park (not related to Mish the blogger). They seemed relatively honest, though there’s a big buy/sell spread as usual.
http://www.mishinternational.com/index.html

thank you patrick