patrick.net

-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.

John M,
Honestly, if I had a home that was in California and wanted to sell, I'd probably sell it myself as well. The reason is that I was a salesman for over 7 years. Selling homes is no diffrent than selling power tools or cars. It sounds like you were well aware of the prices around you and priced accordingly.
I don't see that happening in my neighborhood. All I see are people that apparently think that money grows on trees and people will magically appear that will pay the price they demand.

John M,

"Most of the FSBO signs down here now are just big lottery tickets..."

LOL! Damn! That's cold man, cold. But totally true! It's been called "throwing you hat in the ring" or a "me too" offering. God, it just makes me ill! John M, you don't know what you've done for me man. Oregonians are the biggest "DIY" crowd on the planet and I've had to look at exponential FSBO sign growth for over a year. There was always something bugging me and now you've put it in total perspective!

willywhopper2 Says:

> Honestly, if I had a home that was in California and
> wanted to sell, I’d probably sell it myself as well.
> The reason is that I was a salesman for over 7
> years. Selling homes is no diffrent than selling
> power tools or cars. It sounds like you were well
> aware of the prices around you and priced accordingly.

This is penny wise and pound foolish thinking...

I'm also a good salesmen (I can overcome objections and close for the sale with the best of them), but since I'm not a full time residential sales person I don't have the contacts to find the agents that work with the buyers that will pay top dollar for my home...

The people that do FSBO home sales are the same kind of people who would post an ad on Craig's List to sell a Picasso (to save the fee art brokers charge)...

Former Apt Broker,
I totally agree. Just a few years ago, the biggest, baddest, most desireable car to have was a 57' Belair. People ate them up, paying as much as 50k for the things- even the 4 door models. Companies went into business just to make replica parts, and magazines were full of new trim, hoods, door shells, and interior parts.
Everyone bought the things and these days if you head to a Goodguys show, there are so many Belairs, people just don't really care because there isn't anything special about 300 of the same car, in the same color configuration and same boring straight 350 V8. That's why I got a Mercury because most of them were scrapped in the 60's because they had more durable engines for racing. So they wound up being fairly rare for a car of that vintage. Finding parts is near impossible for the body. I've seen maybe 3 other Montereys since owning this one for 4 years. Is it worth anything? Nope. Zilch. In fact, if I sold it now, I would probably lose money on what I've sunk into it.
It's interesting to see what the kiddies fix up these days. Hondas and Acuras complete with big exhaust, cam and engine performance kits, and little trinkety alluminum accessories. In some ways, it's no diffrent than what kids did 30 years ago, which was take some old boring car and hop it up with some monsterous engine. I can respect that, but I can't help but know that in 30-40 years, the old farts walking around car shows will be looking at 91' Honda Civics. Sort of depressing.

To add, HEMIs are the most overated mechanical item in history. The gimick was simply a hemispherical combustion chamber. woopty-doo.The additional power was neglible. If you want just a classic HEMI engine, expect to pay a minumum of 15-20k. Insane.

WW2

That Harvard report was interesting. What income level do you think they set to be middle class? I presume that would vary greatly by region.

One item that makes that point is aircraft. In the 60's - 70's, one could buy a Cessna 150 for the same price as a new Buick. Every county had a small airport with lots of planes. Average Joe could afford a Cessna or Piper, Rich Joe could buy a Beechcraft or multi-engine. All these plane were made in the good ol' USA. Poor men could afford used planes or rent them cheap.

Today, a new aircraft costs as much as a house in the suburbs. Rental of a Cessna is typically $100/hr, for an old one.

Of course, legalman had something to do with it. In the 80's, Cessna claimed that $20,000 of each new Cessna 152 was to cover assessed legal fees/payouts.

John M,

"The loan was completely handled by the builder"

See, this is the type of incestuous relationship that just gets me fuming! Oh, so it must be a "good deal" otherwise the builder wouldn't have handled the whole enchilada! O.K, I gotcha! I have friends and clients (and clients that are friends) doing this kind of thing to me all the time. It just feels so defeating. I have a client that is putting down 150K on a 3 mil. home next week! Oh, I'll provide as directed but I wanted to make sure the guy had plenty of ways to walk away from it. His wire (from another bank) didn't come through in time so the builder's realtor said they now have the right to sell the home to another buyer. Well along comes the builder, tells my client "don't listen to her" and offers the guy 7% on his money! I told my client that the going rate is 8% and half of the profit! Maybe this weekend will chill him out!

Headset,

Ever consider a homebuilt? One of my old client's brother puts out an all steel model called the RV 9? They do them right here in Aurora, OR? I think sans powerplant (Lyc. 120) the kit is 20K. Must do alright, his brother tells me he sells a lot of them and they're pop pop popular with enthusiasts. Full aerobatic capability.

Headset,

I worked at NAS Cubi Pt. in the "I" and after launching a "floatilla" of F-4 Phantoms a Lycoming 120 may not excite me as much as it used to.

DinOR,

I have been looking at homebuilts on and off through the years, I just have not made the plunge. I will google that RV9, though.

Why wouldn't the Lyco be exciting? If it powers an aerobatic plane, tell me that isn't fun? Are you saying the F4 has spoiled you?

A motorcycle or MG isn't any less fun just 'cause it ain't a Formula One racer

Headset,

I've done just about everything one can do with an airplane EXCEPT fly. And I'm O.K with it, really. In truth, yeah I'm pretty spoiled. I was just old enough to see most of the warbirds that served in Nam' get decommssioned. The A-3 Whale (huge), of course the F-4, the F-5 which were used by the Philippine Air Force and many other now obsolete airframes. I worked the "Transient Line" so we had to service/repair just about everything including MAC (C-130/C-141). It was fun b/c everyday was totally different. I had friends at VRC-50 and VC-5 (Adversary Squad. that flew the A-4) and they were hating life. I stay in touch with a lot of those guys and we laugh at how "brainwashed" we still are! Before I complete any work (even if it is on a lawnmower) I still "inventory" my tool box and inspect the area for F.O.D. Sad really.

Jon,

"clearly a sign you can't hack it"

That is what's so sad about what we're regrettably conveying to younger people. "Living with enormous amounts of debt dangling over head provides incentive to work and builds character". Really? So I can be a used up character on his 3rd. marriage (and second bankruptcy) just like you dad? What are we doing!