Who disagrees that house prices will continue to fall?
Everyone making money off you!
- Buyer's agents disagree, because they get nothing if there is no sale.
Buyer's agents get paid only if their clients buy, no matter how bad the deal is, which
is the exact opposite of the buyer's best interest. Agents
take $100 billion dollars each year in commissions from
buyers. Agents claim the seller pay their
commission, but fail to mention that the seller gets that money from the
buyer. Think about it: who brings the money to the table - the seller or the
buyer? All money comes from buyers. No buyer, no money.
Real estate in America is all about preventing the buyer from getting information. There is no free market because
bids on houses are never published and you have no way of knowing whether bids are faked to get you to
think you have to pay more. There should be a law to make all bids public and
validated by a bank, but the NAR is one of the largest lobbyists in Congress, so
don't expect any changes soon.
Quote from a patrick.net reader: "When I'm told that the seller has
multiple offers, I tell the broker that we've also put offers on several other
houses. Fear of loss works both ways..."
Another reader:
Never trust a word from the realtor. They are constantly lying that
"I heard there's another offer, make your highest offer" or
"The bank has a verbal with someone, but if you come in with a strong offer
they might take it." They don't seem to understand that I want a deal,
there's no reason to get in a bidding war over any particular property in
this market, and if one owner isn't willing to consider a low bid,
there's a house right down the street for sale too. As
soon as I told one agent I didn't want to make an offer if there was a
second bidder, that bidder mysteriously disappeared and he claimed he
mis-heard the information and there wasn't anyone else.
If a house is a really good deal, agents have a big financial motive to buy it first and flip it to you.
Great quote from patrick.net reader Linda:
Realtors ALWAYS GET FIRST DIBS AT EVERY HOUSE even before it is listed.
Realtors always have a shot at the best deals. In fact, IF A LISTED HOUSE WAS
NOT ALREADY PURCHASED BY A REALTOR OR one of their buddies---that means IT IS A
BAD DEAL. If it were a "good" deal---they would have bought it. Under the
REALTOR / MLS monopoly system--- prospective buyers only get to look at the junk
left over that Realtors and their "friends" do NOT want.
This means that your best chance of finding a good deal is by looking at the
listings the MLS is not showing you: FSBO sites, Craigslist, foreclosures,
builder inventory. It's also productive to talk to people you know who might
want to sell, or send out postcards in a certain area. Avoid the agents
to avoid commissions and to get a more complete view of the market.
Why should you give up nearly two years of your life working to pay an agent
who is not even really helping you? That 6% commission means 6% of the 30 years
of work it takes to pay off a house. That's 1.8 years donating your labor to
a real estate agent! Just find a house on your own, hopefully a house for sale by owner,
and get a real estate lawyer by the hour to draw up the offer and complete the
sale.
There are agents who really believe they are helping the buyer, but
they're in denial about their conflict of interest. Author Upton Sinclair had a
great explanation for this: "It is difficult to get a man to understand
something when his salary depends on his not understanding it."
Seller's agents are not necessarily much better. A famous study by economist
Stephen Dubner pointed out that agents get higher prices when selling their
own houses than when selling clients' houses.
- Mortgage brokers disagree, because they take a percentage of the loan. They
want buyers to take out the biggest loan possible to maximize their commission.
Even worse - mortgage brokers get paid according to how bad the deal is
for the buyer. The worse the deal is (higher interest rate, points, fees, etc)
the more the mortgage broker gets!
- Government agencies like Fannie, Freddie, and the FHA disagree, because
their own existence (read "executive salaries") depends on guaranteeing private
loans with public money. These agencies are perhaps the largest scam ever
devised. Most people will borrow as much as they possibly can to buy a house.
The existence of Fannie and Freddie just make it possible to borrow yet more
money by pushing lending risk onto taxpayers, benefiting bankers with larger
interest payments, and harming buyers with higher housing prices. Ironically,
Fannie and Freddie drive up the price of housing in the name of "affordability".
The public is unlikely to ever understand this. The perfect crime.
- Banks disagree, at least when they can get origination fees and then sell
the mortgage, because in that case they do not care about the bankruptcy of
borrowers. Banks sold most loans to the government agencies Fannie Mae or
Freddie Mac, and now use the FHA the same way. The conversion of low-quality
housing debt into "high" quality government debt was the main support for the
housing bubble. Fannie and Freddie already imploded, and the FHA is now on the
edge.
The other way for banks to dump the risk of loan default has been the Wall
Street market for private mortgage-backed securities. When mass foreclosures
eliminated the loan-resale market, the Federal Reserve bought private
mortgage-backed bonds in huge quantities, using newly printed cash. The Federal
Reserve is nothing short of a criminal conspiracy to protect the banker class at
the expense of the rest of us.
- Appraisers disagree, because they are paid by mortgage brokers and banks,
so they are going to give the appraisals that mortgage brokers and banks want to
see, not the truth. Appraisers that kill a deal by telling the truth do not get
called back to do other appraisals.
- Newspapers disagree, because they earn money from advertising placed by
real estate agents, lenders, and mortgage brokers. Papers are pressured by that money
to publish the real estate industry's unrealistic forecasts. Worse, agents
have a near-monopoly on actual ask and bid information, and newspaper reporters
never ask agents hard questions like "how do we know you're not lying
about those prices?" The result is an endless stream of stories reporting that
the real estate agents say it's a good time to buy. Asking
real estate agents about housing is like walking into a used car dealership and asking the
salesman if today would be a good day to buy a car.
- The Federal Government disagrees, because everyone in Congress gets
bribes (oops -- I meant campaign donations) from the NAR and from the
banks. So every Federal law will be aimed squarely at increasing commissions for
the NAR and increasing interest payments to banks. Buyers lose, because they
have no lobbyists in DC. The very laws of our country have been corrupted to
squeeze more profits out of you.
- Current owners disagree, because they do not want to believe they are going
to lose huge amounts of money. Anyone who owns is likely to encourage you to buy
too, to prop up their own house value via comps, and so that they can feel that
they are not alone in their sinking boat.
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