patrick.net
An Antidote to Corporate Media
1,194,815 comments by 13,944 users - AmericanKulak, askmeaboutthesaltporkcure, Ceffer, mell, RayAmerica, stereotomy, Tenpoundbass online now
invite responseComments 1 - 4 of 4 Search these comments
Most of the realtors out there aren't that great. They're there because it's an enjoyable job, that isn't too difficult beyond finding clients and when the market is good, they'll do well regardless of their skill levels.
That being said, you'll find most of the deals in a brokerage go through just a few people, because they're doing hundreds of deals a year versus 1-2. When you're doing 1-2 a year, docusigning isn't that easy. It's changing, it's been 5 months since you've done something (and likely their broker just handed it all to them).
There are two aspects to real estate, one is the business side. People who are going to give full commissions to their realtors, who will close without a question, who will pay to get the first crack at the best deals. If you saw an amazing deal at say BestBuy for a 90" tv for $299, regular $10,000 are you going to call up a friend and ask if they want one, or are you going to tell some stranger behind you about this great deal you've just found on the shelves? Same way with a realtor. It's going to the person who is going to close, and close fast, and who understands they are being given first crack and will reciprocate by giving that realtor more business as well.
A home owner doesn't need an amazing deal to make the numbers work for them. If they pay full retail for a house, they're getting a fair deal and it works. If you're looking at flipping or renting it out, you need a good base price. If the home owner is going to buy something, but the flipper will only buy specific, give them the first crack at the best deals, and then pass along anything that doesn't work out to the home owners.
Get a good realtor, be prepared to move fast. If you say you want to come down and have an appraisal and sit on it for a few days, you'll never get another call back unless it's a home owners special....
tri plexes are all for landlords, home owners don't see them very often. It's a business deal, so they go to the best connected people out there. It isn't easy to get those, especially when you're being treated as a home owner.
If you can afford a 1.25M property, then why on earth were you scrounging for a 350K crack shack in Oakland? Heck, as your experience shows, even these were selling for more back in 2011.
As far as most realtors, yes, they mostly suck. That said, business is business. It does not matter if the other guy has opposing interests. In business, most of the time the other guys interest is not the same as yours but it does not mean that you can't negotiate a deal that is good for all.
The tax advantages of buying are no different than they were in 2011 so not sure where your tax advisor is coming from. If you are a high income earner, the tax advantages are awesome.
From reading your post, it simply sounds that you "just are not into real estate". There certainly is no crime in renting. It seems that you need to be certain of ZERO risk. This is life my friend. There is risk everywhere but in the end we all lose anyways so lighten up a bit and just go with your gut with a lot of common sense.
Malkovich
2013 Dec 31, 10:19am
If you can afford a 1.25M property, then why on earth were you scrounging for a 350K crack shack in Oakland? Heck, as your experience shows, even these were selling for more back in 2011.
Point taken. I had my reasons. I am risk-averse but probably more importantly, my income was quite a bit less in 2011. I am fortunate and grateful that I've done so well these last few years. The same economy that buoyed housing has also buoyed everything in general and my services-based business has almost doubled revenues every year for the last three years. For which, again, I am humbly grateful.
I should also mention, the crackshacks, as you so adeptly name them, were selling for far less at that time. I have a friend who swooped in a bought several 4plexes for sub-$200K. But he is a professional landlord and, wow, the things he deals with...
I found a few deals here and there in my range but so so many listings were sketchy short sales back then. But, believe it or not, there were a few duplexes to be had in the sub-$400K range in Adams Point, many in Temescal, even a few in Rockridge. Had I been looking in South Berkeley (around Ashby BART) there were a lot. North Oakland had tons but I wasn't interested and still not interested in North Oakland.
Malkovich
2013 Dec 31, 10:31am
This is what I finally had to do... I had a very hard working "buyers" agent, but she could NEVER seal the deal... We finally changed our attack plan and only worked with the "listing" agent, knowing they were playing both sides of the fence. (and got double the commission)
This was the only way we were able to get finally to a closing!!
Yup.. the last two listings I really wanted I approached the listing agent and in both cases, they referred me to a colleague at the same brokerage. So, I was sleeping with the enemy... sort of...
But, in the market of the last year, being such a sellers market, one could argue that the advantages were/are negligible to using the listing agent or their colleague.
RE is going nuts the Bay Area and there is no fighting that even if you have a leg up in the game.
Been following Patrick.net for a few years and, in the last couple years, been reading the Bay Area Redfin forums also.
As I read the constant arguments of the bulls and bears I've always tried to digest the information with an open mind. Though, to be frank, I am a cynical pessimist by nature and typically found myself leaning towards the bear's opinions.
I think what really caught me off-guard was that the Fed kept the interest rate so low for so long. I also didn't consider the low inventory situation created by the now easily understandable fact (hindsight is 20/20) that many people who bought during the bubble would hold on to their "investments" until prices came back up. Who would have known?
That said, despite being mostly bearish about housing I have, in fact, been looking for a place since 2011. As a single renter with a high income I wanted to take advantage of the tax benefits of being an owner and a landlord - My plan was to buy a du/triplex to owner occupy.
As time went by, I would “move up†and out of the rental into a larger house and eventually enjoy all the benefits of being a CA landlord (appreciation, prop 13, ever-rising rents, etc.) and possibly even move away from CA yet retain the income from the rental.
My ideal scenario was to buy a multi-unit in a semi-urban environment (i.e. close to BART). I read some time ago about how people have started gravitating back to urban areas in order to be closer to their jobs, reduce stressful and expensive commuting, be closer to restaurants and entertainment, etc. and that, due to rising energy costs, this trend is to increase more so in the future. I was looking in nicer areas of Oakland (by the lake/temescal/grand lake/lakeshore) and, later, South Berkeley.
When I started poking around in 2011 there wasn’t much on the market (in the way of du/tri/4plex buildings). I was hoping to find something for around $350-400K. But the listings were completely barren. When and if something came on the market, there were no comps or similar listings to know if something was a deal or over-priced. Add the fact that I am sort of a picky dude and required a garage made it even harder to find any viable prospects.
But, I kept looking. I shamelessly admit, my life is not that exciting and, other than running my business and eating out a few times a week with my GF, I don’t have much going on in my free time. So, I would spend countless hours reading the forums and checking out listings on Redfin (looking at current and historical data).
As time went by prices started rising (with me thinking “wtf?â€) I raised my price range. I believe this is called “chasing the market.†And chasing it I was. The last offer I submitted a couple months ago was $1.25M (the reason I didn’t get it is a long story and yet another quirky, questionable, dishonest RE agent saga). Fortunately my business has done well and my personal income has increased substantially each year since 2011.
But here I sit. I rent a 1200 sq ft apartment in a decent area of SF. I am making good money (though the government – Fed and CA – gets about 45% of it now) and I am starting to question if my “dream†is even a good one. It’s been an interesting 3-4 years and I’ve learned quite a bit about RE:
1. It is a really crooked business. Wow, the things I’ve seen (and am still seeing). Had I known what I know now back then maybe I could have used some of this stuff to my advantage.
2. RE agents are, uh, interesting characters and often of questionable character. And the 4 or 5 I’ve worked with all seemed to be dimwits. For example, I’ve submitted several offers. Each and every agent had trouble with Docusign – checking the right boxes, simply emailing the link, etc. How hard is it to master a freakin’ electronic signature software that you use on a regular basis? And I am using this person to facilitate the most costly transaction if my life?
3. The RE agent profession, if you could call it that, really attracts a lot of lying dingbats. Oh, the stories I could tell. Such as my own agents exaggerating the number of offers. Of my agents clearly having their own interests above mine (“Hey, this place would be great with a little sweat equity – don’t mind that section of the house that is sinking and almost falling over – no big whoopâ€) How naïve I was about the whole thing.
4. The rent-control that is present in SF, Oakland, and Berkeley is absolutely nuts! I can’t believe a government can come to a business owner (especially mom and pop LL) and control the rents they charge and force them to cater to their tenants forever (or provide a huge payout just to leave). In SF, Oak, and Berkeley the tenant owns the rental more than the LL!
Having always been a saver, I’ve been putting away quite a bit of “down payment money†over these last years. It is invested in some conservative funds and have been getting a boring yet steady 10% return (some of which I am, yay, taxed on as it is dividend returns). I’ve also maxed my SEP IRA every year, done the IRA/Roth flip and am still living frugally.
Meanwhile, I’ve been getting a sense of déjà vu. The same buddies of mine who were boasting about the appreciation of their homes back in the first bubble are at it again… Funny how they check Zillow constantly – though maybe I shouldn’t judge - perhaps I would do the same… And, of course, the comments section on many an online rag such as SFgate are bursting with people patting themselves on the back for their investment savvy at having bought 2 years ago as prices are double today.
The latest news is my new accountant/tax advisor is saying it is not a good time to buy a house and that the tax advantages aren’t as good as they are made out to be. He says to wait until the next downtown. But sheesh… I’m sure not getting any younger and, hate to say it, I’m getting sick of San Francisco. Seems I spend half my life driving up and down Geary.
Sometimes I think about chucking the RE “dream†and devoting 100% of my energies into my business to aim for an early retirement and eventually relocate to a cheaper area during one of the future downturns. What to do, what to do…?
If I could turn back time?
1. Would have raised my limit right off the bat to $600K
2. Would have always called the listing agent to take advantage of their easily corruptible and greedy nature to get a deal
3. Would have probably not been so picky
4. Would have searched even more consistently – missed out on some deals because of the holidays and whatnot
I suppose you can call me Captain Hindsight! LOL
#housing