In all this anger at "the financial industry", where's the outrage against the Realty industry?

I haven't heard word one about them in all of this and I'm of the mind that the Realty and the National Association of Realtors have had a large role in how screwy the housing market has been for the past two decades.

First off, 7% commissions are absolutely insane, even though they are the industry standard in the communities I've bought and sold houses in. That hugely artificially inflates the cost of selling and buying homes.

Secondly, there are certain markets where the Realtors play a strong hand, right along side the banks and the loan servicers, in amplifying home prices. I once almost moved to Eureka/Arcata California and was shown houses by the realtor. At the time, you couldn't get anything decent for less than $400K and nice stuff was $600K+. Now, I'm a doctor but getting into a market like that is pricey if you don't have another overpriced house to sell. As I almost signed a contract up there, I asked the realtor how realistic was it to get a house even if the payments might have been out of my comfortable bracket. Frankly I said, I can't afford these kind of houses but I'm not willing giving up a decent situation back in Michigan for something that is less quality. The realtor said look, we'll get you into whatever you want. I said, but what if my financials don't qualify. He just reassured me that banks would lend and that I shouldn't worry about it. Needless to say, I just didn't feel comfortable buying on thin air so I backed out.

I feel as much as banks lent out money when they shouldn't have, it was the Realtors who not only helped inflate home prices institutionally by way of crazy commission fees but also by the practice of encouraging and convincing people to buy homes they really couldn't afford.

If I were in a position to do so, I'd take a strong look at reforming the Realty industry to help control artificial home price inflation.

Or do anything to screw over regular Americans.

And heard any of the following:

"It may seem more house than you can afford, but with interest rates ...."

"You really need to get in now while you still can ..."

"(Our City) isn't going to face anything like what's happening in Florida, we're far more stable and don't have the same factors ..."

"Don't worry, we can put you in this ..."

and the escrow company are supposed to make sure 1) the buyer can afford the deal and 2) the deal is legal.

Jesus.

Once *that* fire was burning nice and hot, the lenders came along with the "Liar Loans", Sub-Prime mortgages and variable rate refinancing to take further advantage of the insanity. Sure, the buyers were stupid, but the people who promoted and sold loans they KNEW were not affordable are criminally culpable.

The whole industry was in cahoots.

Any honest appraiser who is now forced to honestly appraise, will tell you that. Talk to them, you'd be amazed.

if they didn't play the realtor's game.

I swear they all give kickbacks to each other for recommending each other.

The loan is secured by the person buying the house, sometimes the appraisal comes up short. This benefits the realtor how?

Seems like your personal experience has bled into your broad brush opinion.

Realtors are reactionary to market conditions.

so I'm not sure how your analogy remotely applies.

Last a checked, the on the floor car salesmen/women had no invested cash in the scheme.

has no bearing on the original point being made in the thread.

You know what a realtor does? A realtor sells a property for the value given to it. Much like a...oh, I don't know...a car salesman.

Common economics of supply v demand determined the price at the time.

You are in quite the combative mood tonight.

I'm sure there's a point buried under that.

think you see things clearly. In short, you don't seem to know what you are talking about, at all.

Now, it's possible you are right and I just don't recognize your wisdom. I'm sorry if that's the case.

Your opinions, as stated, just don't make any sense to me nor do they seem relevant but thank you for taking to time to respond to my thread.

/Cheers.

My mother and father were realtors. Many of my professional clients are realtors. I've been in the real estate business myself for, hell, 20 years.

So yeah, I have no idea.

Cheers to you too.

And no, Realtors don't actually buy or sell things. They broker deals.

But if you want to say realtors are like car salesmen, go ahead. I think it kind of proves my point how bad they are.

YOU on the other hand, still seem prejudiced. Nice try, though.

Two of biggest groups of scam artists in business in America. :puke:

I have never had much respect for the vast majority of realtors. Most had failed careers in something else before they became realtors. Anyway, most of the homes around here in the last decade could have sold themselves and the realtors were just able to skim the cream of the 6% off the sale price and call it a day with little effort.

my dad was a realtor for years. He charged commission only on the equity in the sale, not on the total sale, because he felt that adding 6% to the outstanding loan balance was a scam. It was his duty to get the highest sale price reasonably possible, and on that only was he willing to be paid a commission.

He was very successful and had a waiting list of clients. Imagine that, integrity as a business strategy.

Msongs

Last year, while working for a CPA who does tax returns, we received a request for a "CPA letter."

That is a letter in which the CPA states, I've reviewed this person's (or persons') tax returns and they make the amount of money they say they make. It's usually used for the self-employed or an occasional "trust fund baby." In other words, someone without a W-2.

The people in question had a combined income of 35K and were applying to buy a house valued at 250K, with little or no down payment.

Now, having no other financial obligations that might, if they were extremely careful, have been do-able. They had a child.

I don't see 35K qualifying for a quarter of a million home. But, I am financially, dare I say it, conservative.

I saw a few others very similar. The people processing those loans were: the buyers and the sellers, real estate brokers, real estate agents, banks, and others in the financial ponzi scheme.

I also watched a real estate agent work with a "home inspector" to qualify a house for a loan in which the house's basement, had a leaky foundation and roof. The conversation paraphrased, appraiser guy: "There's a bit of a problem with the foundation." Real estate agent, "Not to worry, the mortgage company only needs to know xyz." The buyer, "Good. So we can get the loan."

What a tangled web we weave...

A term coined by the National Association of Realtors in 2007 to describe the oncoming burst housing bubble.

and driving up prices. They never should have been selling to people who couldn't afford the houses when ARMs readjusted or when people could only buy with sub prime loans. Of course, there were Freddie and Fannie problems too underwriting loans that were going to be foreclosed. A total house of cards fore the last five years.

When the toxicity gets out of the market, there will be loan underwriting again and something called down payments.
Realtor commissions have been out of whack for decades. It struck me strangely years ago that a realtor could show five homes in one day, sign a deal and make 30,000.

anyone a loan, an appraiser who can come up with the "right" price, and a home inspector who can make the inspection report say exactly what it needs to say.

who probably aren't doing too much business.

real estate agencies they were going to try to increase commissions and sales --

higher prices increase sales.

The real estate agencies --- read LARGE REAL ESTATE CORPORATIONS -- gave huge amounts

of money to Democrats/Clinton, as I recall.

If a house turns over every 5-6 years -- and that can happen in towns with good schools

because parents will come in for a few years to have their kids go thru the Junion High

and graduate from the High School -- that adds a lot to the costs of the home over time.

You can't prove it, but I'd guess that housing prices wouldn't have taken off as they did

over the last 10-15 years without leniency by lending institutions and lower interest rates.

I would suggest "leniency" at the level of corruption by banks and I would suggest that

Real Estate Agents understood that and worked with it -- to complete a listing and to "help"

their seller, for one -- and at other times their buyer.

but the biggest problem with realtors is many of them are sociopaths. They lie and lie and lie. They won't tell you they know the city council intends to rezone the area behind the house in five months, they won't tell you the area you're buying tends to flood, they won't tell you the area has a drug or gang problem, they won't tell you the house doesn't meet code or that the schools are a mess,etc. They told you "that banks would lend and that I shouldn't worry about it."


They'll say anything to get a sale and their commission.

I could never do what they do or deal with the @sses they have to deal with every day. 6% isn't enough to live that way.

And, btw, their commission is based on the selling price, not the other way around. Realtors don't price out homes. Appraisers do that based on comparable properties, aka, the market. And realtors can't approve you for any loan, a lender does that.

They'd rather sell 8 houses in a month @ $200,000 than 5 at $300,000.

As both a buyer and seller I've had much more pressure to lower my selling price than I've been given to increase how much house I should buy.

A good friend is a realtor. He knew it was nuts a FEW years ago, but everyone was doing it. He didn't push such deals because he believed the rug could be pulled out at any minute. It lasted longer than he thought. Maybe others were more ambitious, however...

Mortgage brokers were more at fault, IMO. THEY knew the house of cards they were building, but they didn't care once they got it out of their hands and into the market.

We bought and sold houses twice between 1999 and 2005 because of job moves.

When we sold our original house in Minnesota, I believe (unless I'm dreaming this in retrospect) that we could legally only consider one bid at a time ... which wasn't an issue because we didn't get multiple bids at once. But I think the rule was that we had to accept or reject one bid before being presented with another.

That all seemed to change when we moved. The market in the Boston area was scary more expensive, so we were getting in over our heads no matter what. After losing two houses because we were outbid, our realtor finally showed us one that we liked very much and that gave us a bit of wiggle room to play the bidding war game. I saw the house on the first day it was put on the market, and I said I wanted to make an offer immediately. We were told that bids would not be accepted until the following Monday. I was furious at not even being able to put in an offer. By the time Monday rolled around we were told the usual: "there are four people interested in this house, so you'd better make the bid a good one." Were there really four people bidding? We had no way of knowing. But we had to bid over asking price for an already overpriced house.

When we moved to yet another state (another job move), the same thing happened, after months of looking for the right condo. The realtor told us there were several people putting in offers .... and the game was played again. We will never know if there were other bidders, and if we overpaid ten or twenty K ... but you are more or less helpless in these situations.

The real-estate world needs to be more tightly regulated and more transparent.

After we regulate the realty industry, we'll regulate the banks...oh.

that these predatory lenders were there.

what these jokers did with the mortgages??????

taking out multiple insurance policies on their investments, sometimes hedging both up and down simultaneously on a single investment????

just unbelievable....

all off the radar..unregulated.....etc......

It's the bankers who are looting the treasury.

There is no law forcing you to, you are certainly free to do the transaction yourself.

Find a willing seller, negotiate a price, make an offer, examine the title or abstract, arrange for the mortgage and so on and so forth.

There are plenty of resources at the library or even online to walk you through it.

...that function like the financiers we are hearing about at present. But I'm going to go out on limb here and say that there are people in every field that take short cuts, are greedy and take advantage of their clients best interests.

I've met some realtors that ONLY work in the buying and selling of high end homes. They have tons of free time and make high commissions because they only work with multi-million dollar properties. This was their goal--to work with and for the wealthy.

I've also met some realtors that earn a solid middle class living, that work their butts off for their clients (damn near round the clock). These realtors were passionate about helping their clients to buy their first home, and realize their dream of home ownership.

I don't think it's appropriate (or fair) to slur all realtors because some in the financial sector made questionable deals. Every commission sales person isn't a dishonest, money hungry charlatan.

Perhaps it was a Freudian slip on your part.

I don't really single out individual realtors as sleazy, but rather the industry as a whole is set up to inflate home values and shoehorn people into homes they can't always afford. The industry as it is currently governed is a big part of the problem, that is all.

You're entitled to your interpretation of my words, but that was certainly not my intent. In my opinion, you seem to be taking some liberties w/what I said...but so be it. It happens on-line. :shrug:

The "industry" is made up of the individuals that work in it. It is not entirely based in "realtors" (as some have said in this thread). Perhaps I'm wrong, but the realtors don't set up the rules for lending. Financial institutions are responsible for that.

I won't fault an entire industry (realtors) because there are some issues with the individual lenders (financial institutions). If you do, that's your choice (and again, you're entitled).

As stated in my post, I don't want to make sweeping generalizations of an entire industry, based on the mistakes of some.

Realtors do not set the price - the person selling the home does -

...I appreciate the compliment. :hi:

I have told a similar story here on DU several times -a nd it backs up what you say in spades.

My husband forgot to show up for a meeting we had scheduled with realtors. The house in question was appraised at $ 175K. Not my dream house and then add in the factor that it sat about a mile or less from the Russian River.

M. was still in grad school, and we had about 37K as our yearly income at that point. When he didn't show, I thought the realtors would show me to the door. Instead, they asked how much I made, and even though it was a scant 15K, they got out the loan papers on that house and assured me that I would qualify -even without M.'s name on the deed.

They started saying things like, "Don't forget, you have an aunt who gives you at least a thousand for your birthday, and for Christmas" <nudge nudge> Wink Wink!

I got out of there as fast as I could. It really made me wonder what was going on with house loans and mortgages. Back when my dad talked to me about buying a house, he always said that you should have at least 10% down. And that the house shouldn't be more than four times the amount of income you had. I was hardly surprised when the whole house of cards came crumbling down in early fall of 2007. I am just surprised that it went along that far for so many years before the crash.

Realtors have to make a living too, they provide a valuable service, and of course there are bad apples.

They compete against each other too much to engage in this conspiracy.

It is a 24/7 gig that has its up periods and down periods.

We have no way of inflating home prices. We are already regulated by state laws, state Association of Realtors, the National Association of Realtors, and our code of ethics.

Hopefully, bad REALTORS and few and far between.

By the way, I teach ethics.

Same twisted locic. GMAFB

So, yeah Doctors are partly to blame.

Commissions have been in free fall the last few years. Also, the fees are split between the selling and listing brokers. Also, the market, not the commission, determines the price. Also, we have ZERO to do with homeloans. What a load.

The shady lenders made buying easy which led to less negotiation of home prices, bidding wars and an elevation in prices. A real estate broker usually represents the seller and it would be negligent if they advised selling a house for less than comparable houses were selling for. Blame the dishonest lenders. (By the way, commissions are negotiable. If you're dealing with an agent who refuses to budge on the commission, find another agent.)

They steer you to people who will encourage you to lie on your application, in worst-case scenarios.

They steer you to homes that are way over double your annual income - homes that are beyond your means - and tell you they can find a way to make them affordable.

Realtors worked hand in hand with developers who worked hand in hard with the mortgage industry.

they should be filing complaints with the state licensing agency. I'm afraid the blame lies primarily in one place . . . with the buyer. A village idiot knows a $40,000 income isn't going to foot the bill for a $400,000 house. Some personal responsibility has to be taken here.

It's their fault for making you want it so much!!!!1!1!11!!

"as long as I've got mine ..."

to keep the pyramid stable for a couple more years.

And you're going to point the finger at mom and pop realtors and their powerful friends in basic cable advertising? Really?

I'm pointing the finger at the guy who tries to sell a $190k condo to someone making $50k. If you've got a problem with that, it's your problem.

blaming someone who may be culpable (to some extent) while deflecting attention away from those who have done the most damage.

You accuse me of deflecting blame, after having tried to steer discussion away from the thread's topic discussion of realtors' roles, first with a comparison to restaurant staff and then to the tranchers?

Project much?

Realtors who made any effort into persuading people into buying homes that were more than 2x their income, or where mortgage payments would be more than 25-30% of their monthly income had just as much of a role in this as anyone. FACT.

It is against our rules and code of ethics. We are allowed to give buyers two or three names of lenders. Then the buyer can make their own choice. Sometimes buyers already have a lender. The lenders I recommend are local ones that I have worked with for a long time who are ethical and follow the rules. I send buyers to get pre-approved and if they don't qualify, they don't buy until they are qualified.

Any realtor who pushes a buyer to buy a more expensive home than they should buy are harming their career. They will not get repeat business or referrals from an unhappy client.

And among ethical realtors and agents, I'm sure it's practiced.

I've had some very nice people, in Tennessee, Gal, try to put me in homes that were 4x, 5x, 6x my salary.

Arguing "but that's not ethical and it should be reported," I wouldn't disagree with you. But it happens, it has happened, and will continue to happen until people within in the industry put their foot down.

That is why I teach ethics.

FYI, I don't think commission rates are too high, or that RE agents are making "too much" money. I just think they're under as much pressure as anyone else was to keep housing prices going up up up and propped up, artificially.

Even here on DU, between 2002-2007 when far-sighted people knew we were in a bubble and called it as such, there was the occasional "dude, stop it, I gots investments" post.

in real estate would be out of business if they behaved in that manner. Their business depends on good will, repeat customers and referrals. You can't make deals like that for very long.

Personally. Hard to get mad at your friends.

There's another factor: realtors advertise up the ying yang in your local newspaper and radio station. Better believe there's heavy pressure for writers and on-air people to keep quiet and not start anything.

But don't stop there. Florida has completely fallen into chaos because the realty industry has taken over government. What you're talking about just applies to their industry. In Florida, they want TOTAL control. You would be surprised how they've managed to work their way in, WITH the help of regular citizens who don't think things through when they lend their support to these people.

are all realtors.

Also, in Washington state, we have the BIAW (Building Industry Association of Washington), who are of the build anywhere and everywhere, environmentalists are terrorists, all the answers lie in uncontrolled growth type of organization. They have some contract with the state to administer workers comp for contractors (I have never really understood this part), and if expenses go down, they keep the difference and with that money they fund political races that further their agenda, ie get the democrats and environmentalists. They were instrumental in defeating several good Democrats and judges in the past few years.


I don't understand why they are not required to return excess premiums to the businesses that fund them as they are of the same right wing ideology that screams about unions.

So true.

it. Yes the "Mom & Pop" realtors are great people.. I am sure. In a community where we have people transfered in and out all the time, the "artificial" inflation of property is very apparent. Looking at an average home in a subdivision in my community..
House for Sale = $185,000
Real Estate Comm = 7% $12,950

So if the new homeowner needs to sell within a year or two.. they have to add another 7% to that price. It is an endless loop.

We have about 7 real estate companies in my SMALL community. These all have offices, etc. There was another company that moved to town and offered a "Flat Fee" to sell the house or it was free. I think it was a $1500 flat rate. The Real Estate Lobbying groups actually tried to get a law passed to BAN this practice. It failed, so now when you talk to a real estate office they give you a little flier telling you why you should pay them $12,000 instead of $1,500.. Here is the funny part.. they both offer the SAME services publish on the same sites.. go figure.

A market analysis is done on the property to determine its value from sales of comparable properties that have sold the previous six months (that determines the sales price). That is done so that a lender will lend money on the property (which is determined by appraisal). If it doesn't appraise according to the determined price THERE WON'T BE A LOAN made on the property. REALTORS have to abide by a code of ethics. The Real Estate Commission of a state determines RULES to protect the PUBLIC. New players came in doing listings in the MLS for fees, but DON'T protect the homeowner for that fee. Also, the homeowner still has to pay the buyer's agent's commission (usually around 2.4 - 3 %) for use of the listing service. That also means the buyer has someone to protect them legally and represent them, but the home seller does not have representation. They also do not show or arrange showings for the property. That is why some have ethical problems with these new players in the market. The law of agency is supposed to create a responsibility from the agent to the principal which is a legally binding responsibility. The commissions are being driven down which makes it too costly for some to remain agents.

Also read this:

http://www.realestatewebmasters.com/blogs/malok/2119/show/

It's not a good feeling knowing your relative realtor/broker is a predator whose favorite condiments on their mealticket are despair and desperation.

But a good realtor who takes their fiduciary responsibility seriously understands mortgages and does NOT push a client to do something they can't afford.

I watched friends get pushed into buying a house while their two other properties were SITTING on the market in this market! That's a realtor who is not looking out for their client.

You can get referrals to a realtor and you can make sure they are working for you as a buyer's agent if you are buying.

There are GOOD realtors who know their job, have seen market fluctuations, and understand the long term obligations of a mortgage. This realtor tells people things they don't want to hear, and hence, does not make as much money as the fast talking dealer who can "get you into" a no interest loan with their buddy.

Really, it's like any job. There are good realtors and bad realtors. Ask around for a referral, and remember that the person who sells the most may not necessarily be the most ethical:-)

As someone who has moved across country several times, I like agents who do relocation work for major companies, because they have to take classes and are regulated more than the average agent. Also, go with reputable companies who hire ethical agents -- not the ones who hire anyone and are advertising for agents.

And an enabler.

7% commissions are wise when the seller can afford to pay it because it draws attention from agents when they see it on the MLS. It can result in more showings for a property and a quicker sale.

by thousands of the slickest snake oil salesmen in the world. For 30 years.

Leahy said it would take 10-15 years to prosecute these people.

Get ready for a long wait.

a boom time in the late 90's and early 2000's, the going commission was 6% split between both the selling and buying side. But many times I saw contracts with less. Also, in our office the broker would not even take the listing if the property was not priced right. In other word if the homeowner wanted to overprice their property, he wouldn't let the realtor take the listing. All realtors should not be painted with the same brush.

Our realtors never discussed financials with prospective buyers. Of course they had to know if the buyer was qualified (able to get a mortgage, had ample down payment). But they left it to the buyer to find their own financing.

Ultimately though, it is the buyers responsibility to know what they could afford. Were some of them talked into bad loans? They certainly were and shame on those financial institutions that allowed, and yes encouraged such practices. You were sensible and asked the right questions. Unfortunately many individuals did not think beyond their immediate wants. Many of these bad loans are also speculators (the flippers) and developers. The many new developments that sprung up over the last 10 years wouldn't allow prospective buyers to be represented by realtors. Why....because they didn't want to pay then a commission. A ton of the foreclosures are in new developments. Thats about all our office handles now are short sales...in developments built within the last 5 years.

Home prices inflated way too high during the boom years, and they are re-correcting themselves downward now closer to their actual values. It's shitty we needed a recession to fix the housing sector, but the recession is taking care of it by itself (of course, new lending regulations are certainly needed).

In the 80s we allowed them to destroy the unions and chop up and sell off the muscle of our nation, the manufacturing sector and steal all that pension money.

They took this cash and poured into the Thrift industry, bought a bunch of legislators and had the regulations removed so they could multiply the money in destroying that industry.

Next, they put the two piles into the stock market and created the so-called tech bubble and stock market boom, making three piles of cash.

When that crashed, as was inevitable, all that money had to go somewhere and real estate is always a solid investment, the problem is that real estate appreciates comparatively slowly and is such a widely spread and heavily regulated sector that control is difficult, what to do?

Buy some more legislators and call up our old friends from the 80 to get more deregulation of the financial industry so we can create a nearly limitless supply of loans and in turn create more demand than the market can supply, this artificially inflates the value of the property which we sell at an enormous profit and put it out of the reach of the government in the unregulated and supra-national hedge funds.

It is the same storm that Raygun's masters created through theft back then. This is what financial people do, leverage and multiply money. They make nothing (usually they destroy it), they contribute nothing, but they take their slice for each transaction. If the profits are not big enough they have the means to manipulate or create the market until they are.

Meantime, companies have been selling off assets, off-shoring and outsourcing, and preparing to leave these shores for the next feeding ground.

Republicans, with the acquiescent help of Democrats, have been hell bent on undoing the New Deal. This meant that Unions and pro-labor agreements needed to be dissolved, regulations that required mom n' pop thrift banks to be simple and easily sustainable needed to be stricken, a national recognition that the stock market is fickle and not the best option for long-term growth needed to be erased from our minds, the wall between financial and investment banking needed to be eradicated, and the belief that one had to earn their way into their own home needed to become a 'right'. Looks like the Republicans have been pretty successful, too. I sometimes wonder how different the world would be if Carter won in '80.

Seems these are the "interesting times" that the Chinese warn of.

so we have to make sure to fuck things up as much as possible before then. :P

future's I see now.

Time for bed.

while we're at it.

I've watched damned near every single hearing on the "economic crisis" and the Congresspeople and Senators don't seem to know anything at all about banking or money. And there are a lot of people here at DU, it saddens me to say, who pop off at length about related issues they know not a single damned thing about.

No matter how much I love Maxime Waters, she simply does not belong on a committee that has anything to do with banking or the economy. And that goes for about ninety percent of everyone else too on that committee. I'm only mentioning her because she's my personal favorite.

.. for me to view *some* realtors as suspect. I've had plenty of experience with dishonest ones, who would tell you anything to close the deal.

They are not ALL like that, in every profession you will find good and bad.