Post by: Guest on August 07, 2005, 07:39:46 AM
What do you guys recomend? if the collective knowledge of gun nuts here is any indicator, if figure you guys will be of much help
Post by: Fjolnirsson on August 07, 2005, 08:21:03 AM
Don't take anything your realtor says as gospel. 99% of the ones I've met were lying filth. There are good ones, but hard to find.
Get a home inspection from an impartial company. It's worth the money.
Check the neighborhood at various times, not just when the realtor takes you. Some will take you at a "quiet" time. Go at night, on weekends, etc. Get out and go for a walk while you're there.
Talk to neighbors. Ask about potential problems or planned developments in or near the neighborhood.
Get a good map of the area and check for nuisances in the area. Train tracks, power plants, garbage dumps, etc.
Do your own checking online, and compare it to what your realtor is showing you. Realtor.com is a good site. I found out you can usually find anything the realtor can on your own using the web.
Be agressive with your realtor. If he/she won't show you what you want to see, go see someone else.
If you have kids, check for child molestors in the area. We had realtors try to gloss over this several times.
If I think of more, I'll post again.
Good luck.
Post by: garyk/nm on August 07, 2005, 08:23:08 AM
Post by: The Rabbi on August 07, 2005, 08:50:44 AM
Realtors are one step above child molester. Maybe.
I worked in the mortgage business for 9 years and worked as a realtor as well. They get paid when the house closes. That should give you some idea of incentive. Find out how long your agent has been in the business. If it is more than 3 years full time then they are probably good (read: less bad) because it is a brutal competitive business.
Check out the various web sites. Look especially at IndyMac's web site. You can apply on-line and get pre-qualified. Try to qualify yourself on a 15 year loan if you plan on staying in the house a while. If you plan on moving in 5 years or less rethink buying. You will get less house with a 15 year loan but the savings are astronomical.
When someone tells you your house is your biggest investment reach for your wallet. Your house is your biggest liability. The house eats up utility costs, insurance costs, property taxes, and maintenance and gives you nothing but a roof over your head. So try to minimize what you buy.
They say it over and over: ;ocation location location, but it is true. You can change anything about a house except where it is. Something to think about.
Anything I miss?
Post by: Art Eatman on August 07, 2005, 11:16:42 AM
You as homeowner are liable for all repairs. Renting, it's the landlord. That's another factor.
DO NOT get one of these interest-only loans, nor a floating-rate loan. Those are just fool's paradise deals. The exception is those who are buying into a rising market, expecting that the rate of appreciation in appraised value will grow--and they expect to sell within a relatively short period of time. They're not buying "The Home" where they expect to live over the long haul.
Depending on location, count me among those who look at today's prices as a Bubble, and expect the bubble to burst within a year or three. Not true everywhere, of course, but in some areas it is already taking longer to sell a house than just a year ago--which indicates a market top.
Art
Post by: cfabe on August 07, 2005, 12:02:41 PM
Post by: Matthew Carberry on August 07, 2005, 12:47:59 PM
I'm an Originator with the major credit union up here. Think carefully about your long-term plans for this home. Is it a starter you will be moving out of in just a few years? Are you anticipating a change in income? Worst case, what if one of your incomes goes away? Those kind of questions will help you plan on what sort of loan program to look for.
One of the best reads online about various things to think about, and a site full of great calculators for comparing options, is Jack Guttentag's www.mtgprofessor.com .
I'd recommend doing some poking around his site. He's a former industry guy himself but now just gives lectures and things. He doesn't work for anybody and is not trying to sell anything.
Post by: mtnbkr on August 07, 2005, 12:50:40 PM
Chris
Post by: Standing Wolf on August 07, 2005, 03:59:18 PM
Quote
Check the neighborhood at various times, not just when the realtor takes you. Some will take you at a "quiet" time. Go at night, on weekends, etc. Get out and go for a walk while you're there. Talk to neighbors.
I wouldn't have bought my house if I'd had any idea how many @#$%^&! dogs bark all day long.
Post by: dws1117 on August 07, 2005, 05:47:34 PM
Did I say never?
Post by: Art Eatman on August 08, 2005, 04:29:24 AM
http://www.nytimes.com/2005/08/08/opinion/08krugman.html?th&emc=th
Post by: Jacobus Rex on August 08, 2005, 05:47:42 AM
Pay close attention to the roof and foundation. Water damage is also a real problem. It can come from plumbing or weather. Termite inspection is also important. I bought a house that a "professional" had inspected. I found terminate damage that he missed not long after I bought it.
Sellers and realtors often like to CLAIM that they have another buyer lined up that is about to get it if you don't. Don't fall for it, take your time and always offer less.
Post by: cfabe on August 08, 2005, 06:30:39 AM
Post by: K Frame on August 08, 2005, 08:55:06 AM
ANOTHER story about how the housing bubble is deflating.
I guess, given that roughly the same article has been published every day somewhere in the country for the last several years that eventually someone is going to get the prediction right.
One thing that needs to be said, though...
The housing bubble that bursts in New York, San Francisco, Miami, etc., may have absolutely NO relationship or effect on the housing bubble that you may be experiencing in your area.
That's the thing about real estate. Given that housing is not mobile (unless it's a trailer), each housing market is controlled by many interfactors that can easily trump regional or even national trends.
For example, the housing market in DC is so hot right now (77,000 new government jobs over the past couple of years, with more to come) that the zone of influence, generally delineated by what prudent people would consider a doable daily commute, is now over 100 miles out. The DC housing market is influencing housing prices as far away as Adams and York counties in Pennsylvania.
Post by: Dave Markowitz on August 08, 2005, 09:13:07 AM
1. Signs of water damage. Not just in the basement but in the attic or from plumbing leaks.
2. Note how old the water heater is and how long they typically last in that area.
3. Note how old the roof is and in what condition.
4. If it's an older home, look at the size of the circuit breaker panel. E.g., I had to upgrade mine from 60A to 100A. New homes come with 200A panels.
5. Are the A/C outlets properly grounded?
6. Are there any trees on the property that need to be trimmed, especially trimmed away from the house?
7. Do any trees sit over the sewer line that drains your house to the sewer main? If so, roots may have gotten into it?
8. What is the age and condition of the HVAC system?
9. Are they old windows that leak or are they new?
10. How is the house insulated?
11. If any walls have wallpaper, in what condition is the wall behind it? (Yeah, I got SCREWED with this one.)
12. Check for critters, e.g., carpenter ants/termites.
13. If you have kids or are planning to, how is the school district?
Post by: Pebcac on August 08, 2005, 10:16:59 AM
Post by: K Frame on August 08, 2005, 10:31:15 AM
Would a portal to another, evil, dimension be a fatal flaw?
Post by: mtnbkr on August 08, 2005, 10:41:40 AM
Quote from: Mike Irwin
Would a portal to another, evil, dimension be a fatal flaw?
Depends on your point of view. It would make taking the garbage out easier.Chris
Post by: Pebcac on August 08, 2005, 11:45:11 AM
Post by: Art Eatman on August 08, 2005, 12:07:46 PM
Post by: K Frame on August 08, 2005, 12:29:26 PM
Just like you, Chris. So lazy that you're willing to pollute a parallel dimension with diapers and other unsavory stuff.
Post by: BryanP on August 08, 2005, 02:44:24 PM
My wife is an RN. I'm a LAN SysAdmin. I make a little bit more money than she does. We have no kids. Between the two of us we make enough money to be in a much, much nicer house than we are now. In theory. The last few years my wife has had numerous health problems, some caused and some exagerrated by a particularly nasty car wreck she was in. As a result she hasn't worked much these past 2-3 years. Fortunately we had our bills structured such that we can get by one only one of our incomes if we are careful and nothing else major goes wrong. If we had bought the much nicer house we would have been hurting very badly. She's doing better these days (well, mostly*) but being a bit frugal on our home person saved our bacon.
*She was all better and back to work the past couple of months and *wham* - she was bitten twice on the left leg and foot by a brown recluse. She's due to get out of the hospital tomorrow. *sigh*
Post by: 41 Redhawk on August 09, 2005, 08:45:57 AM
1. Get an inspection AND do it yourself too
2. Put up as much down payment as you can possibly do
3. Finance it for no more than 15 years. If you can not do that, you can not afford the house
4. It is going to cost more than "they" say....allow for that.
5. Do all your planning and calculating based on one income
Best to buy less than you can afford and have breathing room! The person arranging your financing gets paid to sell mortagages. The more he sells, that more he makes. He is not your "friend"
Post by: Nathaniel Firethorn on August 09, 2005, 10:22:55 AM
Check the neighborhood during rush hour as well as the other times given.
I'd recommend reading "The Homeowner's Legal Guide," but it looks like it's out of print.
Talk to the neighbors.
Look for Superfund sites nearby. Generally they're not a plus.
- NF
Post by: Brad Johnson on August 09, 2005, 10:46:46 AM
Quote
Don't take anything your realtor says as gospel. 99% of the ones I've met were lying filth.
...and 99% of the buyers I work with are wishy-washy, uncommitted, and generally need their heads examined for trying to waste my time looking at houses they A) can't afford, or B) don't intend to buy anyway, they just want to "see it for fun" on MY time and gas.There is a term in the industry - "Buyers are liars". I've lost count of how many times buyers will have me haul them all over creation looking for a specific kind of house with specific things in specific areas, only to buy something totally opposite of what they thought they "had to have."
Quote
Be agressive with your realtor.
I can see why you've had trouble with realtors. "Getting aggressive" with a realtor is a good way to have them tell you to hit the road. And I have, literally. One client was so "aggressive" that I left him a the corner store and called the jerk a cab.You want to establish a working, mutually beneficial relationship, not an adversarial one. You can be specific and discerning without being an a$$.
Quote
If you have kids, check for child molestors in the area. We had realtors try to gloss over this several times.
Why are you asking the realtor about a non-real estate issue? The realtor is there to help you buy a house, not to raise your children. That's YOUR job. If you have a concern about sex offenders, check out your state's sex offender database or contact the local police department for crime reports specific to that area.Quote
Do your own checking online, and compare it to what your realtor is showing you. Realtor.com is a good site. I found out you can usually find anything the realtor can on your own using the web.
Yep, you can. And you can get even MORE information if you'll meet with the realtor at their office where you can go through the database TOGETHER and determine which homes best meet your criteria.If you want advice on buying a house, get it from someone who does it for a living and not from someone who bought one house thirty years ago. Uncle Joe or Brother Bob might be a nice guy, but he knows squat about the housing and mortgage market
Now that I got that off my chest...
Quote
Pick a mortgage company to work with, get pre-qualified, and they will give you all of the necessary info on programs available to you. The programs vary widely by location.
AMEN! Your money situation should be priority one! Get that lined out first. A mortgage is simple. Regardless of what the jickylender.com commercials say, lenders will want to know three things. 1) How much do you make, 2) How much do you owe, and 3) What is your credit status. The first condition will be verified with tax returns and paycheck stubbs, the second and third will be verified with your credit report. Sure, there are lenders who will do a loan without pulling credit scores, but be prepared for a 15-20% down payment and interest rates 3-5% higher than a conventional loan.
Quote
Check out the various web sites. .... You can apply on-line and get pre-qualified.
Dear Lord, NO!!!! A prequalification from an internet lender isn't worth the paper it's printed on. In short, they are crap. They say you are "pre-qualified" which is totally different from "pre-approved". I can qualifiy you on a calculator, getting a full blown pre-approval means you have completed the loan process and have been completely and fully approved for the loan with no conditions or contingencies remaining to be verified.
l can't caution you enough against internet lenders. Since the inception of the jickylender.com boom, I haven't had a single transactions (as in "None") involving an internet lender that closed on time or was anywhere remotely close to being like the Good Faith Estimate showed. And that's if they even closed at all. Local lenders have always been a better, and cheaper, source of a mortgage. As an example, the average local mortgage here costs around $650 with no origination fee and no paydown. The same loan via an internet lender will cost roughly three times that. If you can't find a good local lender, go with a nationally known name like Countrywide, Bank of America, or Wells Fargo. At the very least you will have some corporate backing if something happens to go wrong.
Quote
DO NOT get one of these interest-only loans, nor a floating-rate loan. Those are just fool's paradise deals.
Ditto!! Ditto!! Ditto!!Go for an old-fashioned 3-5% down conventional loan. It's straightforward and you know exactly what you're getting from the start.
Quote
Be modest and moderate in your choices.
Couldn't have said it better myself! There is a distinction between buying as much house as you can get approved for, and buying a house you can actually afford. Having a big, fancy house is worthless if you are in debt to your eyeballs and don't have the cash to do anything but sit at home.Quote
If you're married, try to buy the house based on one income's ability to make payments. That way, if one of you loses your job, you won't be completely screwed.
+1, and then some!!In terms of what to do...
First, get your financial situation in order. Don't circumvent this. Do this first, before even setting foot in a house. With this step out of the way you can look at houses you KNOW you can afford, and you can negotiate from a strengthened position bacause your pre-approved offer is, for all intents and purposes, the same as cash. Lenders will give you a Good Faith Estimate based on your loan amount. If you have questions about the accuracy, go to a title company and have them pull a file on a transaction similar to yours so you can see the closing statement, or get your realtor to pull one from their files. Which brings us to....
...Find a good realtor! The hallmark of a good realtor is someone who will tell you what you NEED to hear and not just what you WANT to hear. Also, look for someone fairly low-key. Slick, fast-talking agents are little more than fancy used-car salesmen (remember, I'm an agent and I have to deal with dirtballs like this. I know of what I speak). Hint, an agent that pulls up in a fancy brand-new Hummer or Mercedes is probably NOT the person you want to use. Find someone who drives a nice, clean 3 or 4 year old car (model not important) and dresses professionally, but not overtly fancy. Finally, trust your gut. If you don't feel personally comfortable with the agent after just a few minutes, find someone else.
Also, be truthful with your realtor. If you don't like a house, say so. It's not their personal home, so you're not going to insult them by saying you don't like it. On the contrary, it helps the agent make better use of your time by weeding out houses with features you inherently dislike. Also, be aware that a good realtor will not try to "sell" you on a home. Good realtors know that buyers will purchase a home they like and don't need to be coerced, cajoled, or persuaded to do so.
Once you find a house, look. Then look some more. You know what a water stain looks like. You know what gas smells like. You know what loose, warped, or water damaged wood looks like. So... LOOK! Even good inspectors sometimes miss things. Also, BE THERE when the house is being inspected. That way you can ask about things you notice, and the inspector can give you more in depth information on anything they find.
And don't get hung up on "getting a good deal" if it loses the house you really like. Trying to wrangle an extra $1500 or $2000 out of the deal and losing the house is not worth the $15-18 difference in the monthly payment. That's right. That big number on paper is really a small number in reality.
Above all, be patient and make sure you maintain good communication. Pain-in-the-butt things WILL pop up. Count on it. It makes it a lot easier to overcome if everyone is on the same page. Keep in touch with your agent and mortgage broker regularly, but don't be a pain in the butt. Calling every day only makes the realtor and mortgage broker more likely to ignore your call. And be realistic. Life isn't perfect, which means no house, no realtor, and no mortgage lender is perfect. Some things simply can't be done exactly like you want them, but there is usually a mutually beneficial middle ground. Use a little common sense and maintain your objectivity.
Hope this helps!
Brad
Post by: SteveS on August 11, 2005, 08:37:25 AM
Post by: SalukiFan on August 11, 2005, 10:47:01 AM
We picked our buyer's agent from the realtors on this site and were really happy with her. I didn't know that much about home buying since it was my first home purchase and our agent really worked with us. She told us the upside AND the downside of the home we purchased. That's what you need - someone who has looked at hundreds of houses and can tell you how the home you are looking at stacks up. Good luck!
Post by: DigMe on August 11, 2005, 11:12:26 AM
One thing that some realtors do though (I read about this in Cialdini's book "Influence" and I realized after I read it that my realtor had done this) is show you one or more totally crappy, just assed up houses so that the ones they show you after that seem better (which usually has a very effective psychological result). Not saying that ALL realtors do this but it's documented and ours obviously did this in retrospect. So, perhaps you could politely tell your realtor that you know this is sometimes done and you don't want your time spent doing that.
Also, don't get in a hurry to buy a house. Hopefully you won't have your back against the wall and need to make an offer soon. Take your time and don't feel rushed. Find exactly what you want. We had to pull out of our initial deal after coming to some realizations about the house we'd signed the contract on (realizations that were made when going back and visiting the house on our own time as someone else suggested here) and by the time we did that we had our backs against the wall because my wife was about to go overseas and we needed to have a contract signed before then. Not that we hate our house but it wasn't exactly what we wanted and we might have held out for something else. It wasn't so big of a deal though because we'll probably be in this house for, at the most, 5 years.
brad cook
Post by: Brad Johnson on August 11, 2005, 11:16:00 AM
Brad
Post by: Brad Johnson on August 11, 2005, 11:25:28 AM
Quote
One thing that some realtors do though (I read about this in Cialdini's book "Influence" and I realized after I read it that my realtor had done this) is show you one or more totally crappy, just assed up houses so that the ones they show you after that seem better (which usually has a very effective psychological result). Not saying that ALL realtors do this but it's documented and ours obviously did this in retrospect. So, perhaps you could politely tell your realtor that you know this is sometimes done and you don't want your time spent doing that.
That's why you want to join your agent at their office and go through the database together. And make sure they start from scratch on the software - beginning with price information, number of bedrms/bathrms/garage, etc and work up the search criteria. Then, you can go through the list together and pare it back to the best six or seven that you KNOW are good candidates.Be an active part of the process. If the agent is worth their salt they will welcome your participation because it makes their job soooooo much easier. A good agent welcomes this opportunity because it usually means you will be more satisfied in the end, and you will recommend them to others. It's basic, sound, long-term business strategy - a happy client is the single best advertising in the world. And it's free.
Brad
Post by: The Rabbi on August 11, 2005, 11:27:56 AM
Quote
...and 99% of the buyers I work with are wishy-washy, uncommitted, and generally need their heads examined for trying to waste my time looking at houses they A) can't afford, or B) don't intend to buy anyway, they just want to "see it for fun" on MY time and gas.
If you are getting stuck consistently playing tour guide to buyers then that isnt the buyers' fault. That's your fault. You need to re-examine your business practices. I have met many more poor-terrible realtors than I have poor buyers.As far as interest-only loans or adjustable rate: there is no way anyone can give you a blanket statement to take one or not to take one. Everyone's situation is different and what will work for some people wont work for others. People who get the majority of their income in a few months in the year (like realtors) will tend to do better with interest-only loans because they can pay down the princicple on their own schedule. Airline pilots are in the same situation btw. Historically people do better with floating-rate loans and that has been my personal experience. I dont know I'd recommend one now in general just because rates are low but rising.
Post by: Brad Johnson on August 11, 2005, 12:13:59 PM
Quote
If you are getting stuck consistently playing tour guide to buyers then that isnt the buyers' fault. That's your fault. You need to re-examine your business practices. I have met many more poor-terrible realtors than I have poor buyers.
Get in real estate for several years, average more than 50 transactions a year, and do so with a 98% client satisfaction rating. Then you can advise me on re-examining my business practices.Whether you believe it or not, I see it every day. People think realtors are in some other plane of existence where money appears out of thin air, and that we enjoy listening to an endless string of BS and argumentative disbelief based on popular myth, old wive's tales, and junk information from "Uncle Bob" and "my neighbor Frank who bought a house in 1953". They will take the advice of "Bill down at the sewage treatment plant" before they will listen to someone who does real estate for a living. And then proceed to argue with you about it!
Let's face it, when it comes to money, people get stupid. Even very business-oriented clients have a bad habit of losing their objectivity. And when I say lose it, I mean THEY LOSE THEIR FREAKIN' MINDS! Want to hear the story about the guy who lost the sale of a $500,000 house arguing over a light fixture that cost less than the "power brunch" he had that morning? Or I might tell you about the young couple who cost themselves $3000 in loan costs and an extra point in interest because her parents were absolutely certain that "all realtors are crooks" (sound familiar?) and flatly refused to interview a local lender I suggested. Or I'll give you almost endless examples of sellers who try to fudge facts on their disclosure and then expect me to just "play along because I'm getting a good commission out of it". Screw you, buddy, it's not worth the loss of my livelyhood to help you cover up the fact that you put some JB-Weld on your furnace to keep from having to pay a legitmate $50 repair bill to correct a carbon monoxide leak!
That's what I deal with. Every day.
Quote
As far as interest-only loans or adjustable rate: there is no way anyone can give you a blanket statement to take one or not to take one. Everyone's situation is different and what will work for some people wont work for others. People who get the majority of their income in a few months in the year (like realtors) will tend to do better with interest-only loans because they can pay down the princicple on their own schedule. Airline pilots are in the same situation btw. Historically people do better with floating-rate loans and that has been my personal experience. I dont know I'd recommend one now in general just because rates are low but rising.
You are correct, interest only loads are a way for people to buy a house that could otherwise not afford it. Problem is, purchasing a house with an interest only loan isn't really "purchasing". By definition, interest only means you are buying ZERO equite (ownership) in the home. It's all the negatives of renting combined with all the liabilities of home ownership. Whoopee. Call me old school, but I think if you take out a loan and agree to pay X amount of interest, then your payments should include some incremental amount of additional ownership. I look at interest only loans as an easier way for people to buy more house than they can afford. And floating rate loans are a joke when rates are this low. Floating rate loans are for when the rates are HIGH and you can take advantage of a possible DIP in the lending rate.
One of the few (VERY few) times I would recommend an ARM (adjustable rate mortgage) for the corporate ladder-climber who knows that they will be moving every couple of years, and who's company pays all the relocation benefits. The borrower has the benefit of a lower payment while still maintaining a relatively secure interest rate. They are not buying equity as fast, but the offset is that they are not losing equity in the form of closing and moving costs each time they sell, relocate, and buy.
If you are worried about being able to meet the payment demand, then BUY LESS HOUSE. Put it on a 30 year note, then pay on the extra principle when you can. If you can average an extra 15% in principle per year, it will take your 30 year note and make it an 18 year note. This corresponds to about a 60% overall interest savings and still leaves you the safety net of a smaller payment if you need it.
Even though it sounds like I'm bitter, I do like the job. The scheduling flexibility is great, the income is good, and I really do meet a lot of nice people (with some goobers thrown in to make life interesting).
There are good realtors out there. Most of them, in fact. The problem is that a few very visible dunderheads make the rest of us look bad.
Brad
Post by: SalukiFan on August 11, 2005, 12:52:38 PM
Quote from: Brad Johnson
I'd be careful using the Most Referred site. They require your contact information so they can turn around and sell it.
Brad
This information is not required if you just use the site to look up recommended realtors. I just went there and pulled up the most referred realtors in my town without typing in anything. I never had to submit anything to them to get the information I used - I just contacted the realtors directly.Brad
That said, Brad is right in cautioning people about putting your personal information into websites. Selling information has become a big business and this is something you have to watch out for...
Post by: Declaration Day on August 11, 2005, 03:43:04 PM
Spend a lot of time on the internet, looking at listings and prices so you get a feel for what homes are worth in your target area. Look in surrounding cities, even if they aren't your first choice. Print out some listings you'd be interested in, and go look at them. Do all of this long before you contact a realtor. This is what my wife and I did. Eight months of homework paid off; the house we bought is in far better shape than others we looked at in the same neighborhood for a similar price.
Other than that, I emphasize what others here have said: Buy what you can AFFORD, not necessarily what you QUALIFY for. I know so many people who can either 1) afford their house and nothing else, or 2) fell on hard times and had to sell their big expensive home. The sad part is that most of them bought more than they needed because they felt pressured to "keep up with the Joneses". Don't fall into this trap, buy what you need and can afford.
Post by: Sindawe on August 11, 2005, 04:19:54 PM
When I purchased my home 11 years ago, I went through a " Buyer's Broker", one who worked for ME in finding the home that meet my qualifications, and stood by me through out the process. We meet in his office and went over what I absolutely had to have, what I would would really like, and what was was pretty indifferent to. Based on those criteria, he compiled a listing of about 15 different homes in the area (Boulder CO and surrounding), and we spent a day driving about looking. Most were OK, but nothing great. A few were "EEWWW" with Avacodo appliances and lots of dark wood paneling. My outlook and mood may be on the dark side, but I like my environs full of light and space. One of the first sites we looked at, that I was not initially enthoused about turned out to be ideal when it was facing south, rather than north (I have a townhouse).
I also went through a Mortgage Broker, paying her fees to get a mortgage that I could live with (monthly payments no more than $100 higher then my rent at the time), on a fixed rate loan. I ended up with one that was $150 less than rent, which covered the HOA dues nicely.
1. Make sure the reality is working for YOU, not some seller.
2. Don't buy as much house as you can possibly qualify for, but what you can afford in the lean times.
Post by: The Rabbi on August 11, 2005, 04:28:08 PM
Quote
Get in real estate for several years, average more than 50 transactions a year, and do so with a 98% client satisfaction rating. Then you can advise me on re-examining my business practices.
I'm not the one pissing about bad customers. Part of being succesful is figuring out your buyers on the front end and weeding out the bad ones. It isnt fool proof but it isnt hard to do.Quote
You are correct, interest only loads are a way for people to buy a house that could otherwise not afford it. Problem is, purchasing a house with an interest only loan isn't really "purchasing". By definition, interest only means you are buying ZERO equite (ownership) in the home. It's all the negatives of renting combined with all the liabilities of home ownership. Whoopee.
"Old school" is not exactly the term I would have used.the difference between your loan amount and the property value is the equity in the property, by definition. So an interest-only loan may or may not have a relationship to equity. If home values are rising (like now) then your equity increases even as your loan amount stays the same. If home values are falling then even an amortized loan will still mean a loss of equity. Yes, interest-only loans can be abused by people with champagne tastes on a beer budget. But they can also be an effective money management tool for the right person. As I said, it depends on an individual's situation. Someone with seasonal income will do quite well taking one. You always have the option of paying down the loan. I never saw one that disallowed that.
Post by: The Rabbi on August 12, 2005, 05:09:40 AM
This has been a brewing issue. Realtors are essentially conduits of information, much like stock brokers used to be. Or used car salesmen, to make a more apt comparison. But in almost every other field where the conduit of information model exists, the fees and prices charged have declined precipitously. I used to pay over $100 for a stock trade and today it's 5 bucks.
So why should real estate be any different? It shouldn't. But the Realtors (a copyrighted term that sounds better than salesmen) have a powerful lobby that insists on keeping and passing legislation that mainly benefits them. I would include the mortgage deduction in that mix, btw.
So if anyone can get a copy of the editorial it is well worth it.
Post by: Brad Johnson on August 12, 2005, 08:03:43 AM
Quote
I'm not the one pissing about bad customers. Part of being succesful is figuring out your buyers on the front end and weeding out the bad ones. It isnt fool proof but it isnt hard to do.
That's right, it isn't. But it still doesn't take away from the fact that many people will rely on popular myth and decades-old misinformation instead of taking the advice of someone who makes their living in real estate. As for being successful, reread my quote that you posted. I believe I qualify.Quote
On today's editorial page of the Wall St Journal is their editorial entitled "Realtor Racket." They are specifically referring to some recent state laws that make it hard, if not impossible, for discount realtors to make a living.
This has been a brewing issue. Realtors are essentially conduits of information, much like stock brokers used to be. Or used car salesmen, to make a more apt comparison. But in almost every other field where the conduit of information model exists, the fees and prices charged have declined precipitously. I used to pay over $100 for a stock trade and today it's 5 bucks. So why should real estate be any different? It shouldn't. But the Realtors (a copyrighted term that sounds better than salesmen) have a powerful lobby that insists on keeping and passing legislation that mainly benefits them. I would include the mortgage deduction in that mix, btw.
You've intertwined a great many issues in a small statement. Let me see if I can address them....This has been a brewing issue. Realtors are essentially conduits of information, much like stock brokers used to be. Or used car salesmen, to make a more apt comparison. But in almost every other field where the conduit of information model exists, the fees and prices charged have declined precipitously. I used to pay over $100 for a stock trade and today it's 5 bucks. So why should real estate be any different? It shouldn't. But the Realtors (a copyrighted term that sounds better than salesmen) have a powerful lobby that insists on keeping and passing legislation that mainly benefits them. I would include the mortgage deduction in that mix, btw.
I haven't seen the "Realtor Racket" article, so I can't comment on it. However... your statement implies that the "realtors" in the form of a national lobby, are responsible for state laws that make it hard for discount realtors to make a living. So, if I am reading your statement correctly, the real estate lobby is trying to make it tougher for real estate agents to make a living. Huh? If that is the way the article actually reads, then I would have great doubts about its veracity, as the situation is patently counter-productive.
You also mention previously paying $100 for a stock trade and now paying only $5. Great! Sounds like capitalism works. And this relates to real estate how?
As far as I know, there isn't a single state that requires you to sell your house through a real estate agent. It's a free country, so go "For Sale By Owner". It won't hurt my feelings at all. In fact, I'm relieved. It means is that I won't have to deal with your animosity and underlying disdain, and can concentrate on more productive things.
Do the realtors have a powerful lobby? Yes. Do coffee growers. Yes. Do farmers? Yes. Do gun owners? Yes. Why does it bother you so much that a special interest group has registered a term that relates to their field of interest? People do it all the time. The NRA has several registered terms and trademarks. I don't see you berating them.
You seem to have a problem with realtors in general. That is evident from the "used car salesman" dig you so obviously included. Okay, it's a free country and you are free to believe what you want. The fact is that market forces are the main control of real estate in this country. Buyers and sellers doing what they do best, buying and selling, are the driving force behind home sales and home sale prices. Complaining that we, the real estate agents, have a stranglehold on something that is way out of our general control is just silly.
As far as getting a copy of the editorial, why don't you cut and past the relevant information here for all to see.
Brad
p.s. - The various state real estate lobbies are the reason that most states don't have a sales tax on real estate transactions. If you'ld like, we will stop lobbying against it.
Post by: The Rabbi on August 12, 2005, 08:42:40 AM
Currently only "realtors" are allowed to list and sell houses that arent theirs and collect a commission. Even giving "rebates" to buyers or sellers out of the commission is illegal in some states (and this was one point in the article). LendingTree.com does give such rebates, effectively lowering the price. Traditional realtors dont like this so have lobbied to outlaw the practice. This costs consumers money. Anytime monopoly power is used to cost consumers money I have an issue with it. The NRA does not cost consumers money. On the contrary, they lobby for empowerment of consumers in the ability to buy what suits their needs, not what some bureaucrat says. But the Realtors' association doesnt want people to be able to choose who can sell their house for them. They only want licensed, dues-paying Realtors to be able to do that. That is called "restraint of trade" and it sucks.
As far as stock commissions:let me 'splain this to you. In the '70s commissions were set on a universal schedule. You could not charge less than the schedule and stay in business. But somewhere someone got the idea that competition would benefit the consumer (sound familiar?) and they did away with the schedule. With the internet, people did not need high-priced "professionals" advising them and executing trades, which are done mostly via computer anyway. The actual cost for a transaction is miniscule, not unlike real estate btw. So market forces have driven down stock broker commissions. And you are right,Brad, that's great for everyone except stock brokers. So why shouldnt Realtors be included in the information revolution? Why is it that if I find a buyer for my neighbor's house I cannot get paid a commission for it? Why is it mortgage companies and banks cannot sell real estate without getting a license? Because the mightly realtors' lobby has decreed this.
So dont confuse the issue by saying I can sell my own house or buy my own house. It is true, but irrelevant. I cannot buy or sell my neighbor's house or friend's house and get a commission. That is the issue.
As far as animosity: yes, I have dealt with many many lying sleazebucket former car salesmen masquerading as real estate professionals. I have dealt with even more plain incompetants doing the same. There is a reason your field enjoys a reputation somewhere between lawyer and politican for honesty. I have met maybe 2 or 3 good agents in my time, and that is out of hundreds.
Post by: Guest on August 12, 2005, 08:52:57 AM
Post by: Brad Johnson on August 12, 2005, 10:44:18 AM
Quote
LendingTree.com does give such rebates, effectively lowering the price.
Yep, they give rebates, which come to them in the form of referrals from lenders, who jack up their mortgage products to compensate for the amount. That's why online lenders typically cost 2-3 times as much as a local, non-jickylender.com affiliated lender. So the $1000 you got back as a "rebate" will almost cover the extra $1200-1300 that you paid for the loan in the first place. You haven't saved anything. You've paid more.Quote
Traditional realtors dont like this so have lobbied to outlaw the practice.
That's right, they have. And for good reason. It's call "under the table practices" and it's patently unethical. Call it what you want - rebate, referral, whatever - it's still a bribe to get someone in the door so they can hit them with inflated fees and misc charges buried in an undecipherable sea of numbers.Quote
But the Realtors' association doesnt want people to be able to choose who can sell their house for them. They only want licensed, dues-paying Realtors to be able to do that.
Again, last time I checked, you always have the option of going For Sale By Owner. And the seperation of realtor and lender is a good thing. You think you have a problem with real estate agents being greedy and underhanded, wait until the agent and lender are the same person....Quote
As far as stock commissions:let me 'splain this to you. In the '70s commissions were set on a universal schedule. You could not charge less than the schedule and stay in business. But somewhere someone got the idea that competition would benefit the consumer (sound familiar?) and they did away with the schedule. With the internet, people did not need high-priced "professionals" advising them and executing trades, which are done mostly via computer anyway. The actual cost for a transaction is miniscule, not unlike real estate btw. So market forces have driven down stock broker commissions. And you are right,Brad, that's great for everyone except stock brokers. So why shouldnt Realtors be included in the information revolution?
Realtors have been. You should check around. There is no set commission on real estate. In fact, brokers who talk about commissions among themselves are in direct violation the RICO act. It's called "price-fixing" and it's a federal crime. Are commission structures often similar? Yes. But it's not a "grand conspiracy" of the real estate profession, it's a simple market supply/demand issue. Around here we see commissions from under 4% to in excess of 8%, with listings in all commission brackets. Some brokers have even gone from a percentage commission to a flat fee. Again, market driven. The consumer chooses what they feel is the best option. And you're right, by the way, the transaction costs nothing. Your commission is buying time and marketing. It's the same as buying an ad in the paper, only on a more grand scale and in anticipation of a faster sale and a greater net return.
Quote
Why is it that if I find a buyer for my neighbor's house I cannot get paid a commission for it?
The very reason that agency exists in most states is because there was a time when every Tom, Dick and Harry could call themselves a broker. Because there was no standard of professional behavior, or canons of professional ethics, people were getting screwed left and right. Don't blame the realtors for a situaion the general public created.If you want to get a commission, get licenced. It's not hard. The Tennessee licensing procedures are not far removed from those in Texas. The classes are available on-line, the license costs very little ($100 every two years here) and you can hook up with a sponsoring broker who will let you hang your shingle under his name and still work from home.
Quote
Why is it mortgage companies and banks cannot sell real estate without getting a license?
Like I said above... if you think you have a problem with sleazy agents now, wait until the agent is also your mortgage broker. If you have an issue with the power of the real estate lobby, think what will happen when the real estate lobby and banking lobby combine!Quote
So dont confuse the issue by saying I can sell my own house or buy my own house. It is true, but irrelevant. I cannot buy or sell my neighbor's house or friend's house and get a commission. That is the issue.
Now we see the crux of the issue. Money, and easy access to it. Okay, go sell your neighbor's house. Are you prepared to foot the bill for all the marketing, or take any liability for informational discrepancies? Are you willing to present, in writing, your behavioral guidelines? Are you going to carry E&O insurance that will cover problems that arise from your involvement in the transaction. Or do you just want to dig a couple of bucks out of your friend's pockets just because you happened to overhear a guy at the barbershop say that he wanted to buy a house? (intentional satire).Look, sounds like you've had some bad dealings with real estate agents. Sorry to hear it, and sorry I can't convince you that there are some good eggs out there. Guess we'll just have to agree to disagree on this one...
Brad
Post by: The Rabbi on August 12, 2005, 11:17:28 AM
Quote
The very reason that agency exists in most states is because there was a time when every Tom, Dick and Harry could call themselves a broker. Because there was no standard of professional behavior, or canons of professional ethics, people were getting screwed left and right. Don't blame the realtors for a situaion the general public created.
Ah, government to the rescue to protect the public from the unscrupulous. And where have we heard this before? And how well has it worked? But it is well known that the biggest proponents of licensing are the practitioners themselves. And it is precisely to eliminate competition.
Being a Realtor is not cheap. There are continuing ed requirements, MLS fees, licensing fees, E&O insurance, etc etc. This is why about 80% of the licensees are out of the business after 2 years.
Quote
Like I said above... if you think you have a problem with sleazy agents now, wait until the agent is also your mortgage broker. If you have an issue with the power of the real estate lobby, think what will happen when the real estate lobby and banking lobby combine!
And how often has the Realtor kept the buyer from an unscrupulous mortgage broker versus how often has the mortgage lender, unable to approve the loan, saved the buyer from a bad deal that the Realtor was more than happy to see go through? And there are many cases where agents are also mortgage brokers and I never heard of any issues. I have heard, and seen, plenty of agents getting disciplined for grossly unethical conduct though.As I said, I have met and worked with excellent agents. And she is still active in the field too.
Post by: Brad Johnson on August 12, 2005, 11:56:36 AM
Brad
Post by: The Rabbi on August 12, 2005, 01:13:07 PM
Quote
Well, I tried. Maybe someday you will understand that the world is not out to get you, and that some of us do actually want to help.
We're from the government and here to help you. I feel better already.Sorry to be so tough on your chosen profession but having worked in and around it for 10 years I have a lot of experience. There are good, conscientious, knowledgeable realtors out there. But that isnt the norm, unfortunately. But even more objectionable is the structure of the industry and its unwillingness to change from its monopoly status. So caveat emptor.
Post by: Brad Johnson on August 12, 2005, 02:28:56 PM
Quote
Sorry to be so tough on your chosen profession but having worked in and around it for 10 years I have a lot of experience.
If the industry is so bad, why were you in it so long. Brad