Real Estate - what should we do?

[kcowan]

Quote:

Originally Posted by tryan There will always be more people "riding out" a volitile RE market .... people have to live SOMEWHERE. Also explains why stocks are much more risky (RE poor liquidity).

Plus the 'trading costs" for RE is 6% commission plus the cost and aggravation of a physical move, whereas a srock trade is the cllick of a mouse and $10. NO wonder stock prices are more volatile.

But some people are just in denial about property values returning to their baseline trend and keep clinging to the notion that "this time it's different". Yeah right just like with dotcoms...

My biggest concern is that the subprime fiasco might cause the long term appreciation trend to become a thing of the past.

[lazygood4nothinbum]

doesn't seem to be hurting the clampett estate. 30-day change: up $507,502. check out the ceeement pond.

Zillow - 750 Bel Air Rd, Los Angeles, CA 90077

[starter82]

Quote:

Originally Posted by kcowan But some people are just in denial about property values returning to their baseline trend and keep clinging to the notion that "this time it's different". Yeah right just like with dotcoms... My biggest concern is that the subprime fiasco might cause the long term appreciation trend to become a thing of the past.

Aren't you sort of subscribing to the notion of "this time it's different" by saying that long-term appreciation may end with this "crisis".

[cj]

We've been on the real estate roller coaster before. This is the 4th house we've tried to sell. Two were sold in a great market (1988, 2002) but we bought a house in 1988 in the Washington DC area that we sold 8 years later for LESS than we paid for it. Bought September 1988 for $202K, sold in February 1997 for $200K. Of course now that same house is on Zillow today for $458K...

The market goes up, and people forget that it sometimes goes down. That's the way it is.

CJ

[BunsGettingFirm]

Is it advisable for the buyer (me) to offer the buyer's agent an incentive to for every 10k that he can knock down on the price? I think the agent gets 1.5% of the sale price. The broker and office gets the other 1.5%.

I'm looking for 1-BR or 2-BR condos in Boston. I looked at one broker's web site, and it clearly lists some decent-looking condos in the $200k to $250k range, but when I called, the agent was so eager to steer me to the $300k+ condos in the Harvard Square area. Since I will turn this condo into a rental in a few years, I don't want it to be too fancy. I also don't want to spend an extra $100k just so that the agent and his office can make an extra $3000.

I'm going to strike off this particular agent from my list because he's obviously not working in the buyer's best interest. However, I'm thinking that the other agents I call will do the same thing because the incent for the buyer's agent is not structured for him to find the best deal for the buyer because the pay off comes from having a high sale price.

[cute fuzzy bunny]

Unless you get someone who really cares about their job, the buyers agent is working for two thing. One is their commission, and the higher the sales price the higher the commission; the other is the seller who is actually paying them. Unless you get a "true" buyers agent that you are paying a fee and is not receiving payment from the seller. Some states have those.

A lot of agents also will not mention a purchase price or help you negotiate beyond showing you comparable sales. Most of them are afraid of the associated liability should you decide later that you could have gotten the home cheaper but the agents "bad advice" led you to pay more.

There are pretty good agents out there. Mine gives me any commission over 2.5% back in gift cards, lists for 2% and gives me her feelings on what the desperation level of the seller is and what price range I should be offering in.

[lazygood4nothinbum]

why would it benefit the realtor to steer a customer to a higher price? wouldn't it behoove the realtor to steer the customer to a lower price which would accelerate the sale? isn't the lesser percent of something greater than a higher percent of nothing? perhaps not understanding this is why i never went into sales.

[BunsGettingFirm]

Quote:

Originally Posted by boont "Now that the buying fervor is over, it will mean regression to the mean" kcowan I hear a lot about this regression to the mean when people talk about real estate. However, if you mention that the stock market is way too high and must inevitably suffer a "regression to the mean" a whole forest of people will come forward and say they ride out all drops and buy more stocks at every opportunity. That is not only inconsistent it doesn't make any sense either. boont

The statement isn't inconsistent if these same people had sold on the way up and are diligently following a constant-mix portfolio strategy. However, unless most people are running their portfolios using a computer program, my bet is that they did exactly the opposite.

Even if they aren't using leverage, doing so would still require balls of steel. Hm...I'm going to use that as my new screen name.

[BunsGettingFirm]

Quote:

Originally Posted by lazygood4nothinbum why would it benefit the realtor to steer a customer to a higher price? wouldn't it behoove the realtor to steer the customer to a lower price which would accelerate the sale? isn't the lesser percent of something greater than a higher percent of nothing? perhaps not understanding this is why i never went into sales.

True, but CFB and I pointed out the same thing. If the buyer's agent gets paid a percentage of the the sale price, he's really getting paid by the seller, so follow the money, and you'll find the agent's true loyalty. The point is that I wasn't dreaming when I felt from my initial conversation that the buyer's agent wasn't working in my interest. I'd have go to realtor.com to find me a real buyer's agent.

[cute fuzzy bunny]

Easy. 3% of 350,000 is better than 3% of 300,000. And someone who quals for 300 will probably qual for 350.

Further, the average 350,000 house looks better than the average 300,000 house. Once you've showed a customer something larger, nicer and/or in a better part of town, everything else looks like crap. Its an easier sale to make because the buyer likes and wants it more, even though its a little more expensive.

[Nords]

Quote:

Originally Posted by BunsGettingFirm so follow the money, and you'll find the agent's true loyalty. The point is that I wasn't dreaming when I felt from my initial conversation that the buyer's agent wasn't working in my interest. I'd have go to realtor.com to find me a real buyer's agent.

That point was made for me in Malcolm Gladwell's "Freakonomics" where research showed that realtors tended to take more time to get more money for selling their own homes, yet tended to go for lower prices and quicker sales when selling customer's homes.

Apparently they're willing to take a little less on each transaction if they can make it up on volume.