perils of real estate 2010

Bad enough that prices are unstable

Well, unless you are on an island with no access to the outside world, the news about real estate for the last few years has been rather disconcerting. If you have been on that island, stick around…you ain’t heard nothing yet!

The public perception is that housing prices have fallen a great deal and they will continue to fall. Some people think that when the dust clears, the owner will pay you just to take the damn house off their hands. People in supermarkets avoid eye contact with one another. You can never be sure if your neighbor has just stopped paying their mortgage and their actions will reduce your equity to pennies. The fear of a possible break-in has been replaced by the fear that you will end up homeless on the street.

The public clamor is only the tip of the iceberg

The things that are going on behind the scenes, the way things are being done now and the new world of real estate transactions make the public information tame by comparison. While the focus has been on what happens to a nation when good loans go bad, the entire industry has stepped behind the curtain and changed in ways that adversely impact the consumer.

Don’t look to just any real estate agent still in business to sort this out for you.

Darwin did not consider real estate agents in his thesis

There are so many things going on that it should be noted from the outset that the skill level of real estate agents has little to do with their survival in recent markets. This is a fact. Regardless of the number of post cards they send out and regardless of how many times they crow that they are in the top 1% or 5% of real estate agents in the world, agents are at the mercy of the public. Real estate agents live and die on the basic truth that they will be chosen if they are available when a need arises.

The disdain that most agents have for doing things such as floor duty or cold calling leaves the public in the hands of agents that have no desire to do anything but sit at a front desk and play free cell on the office computer. The person that answers the phone when you call a real estate office is probably not the best and the brightest…but they are available. The person that calls and gives you a song and dance about having a buyer interested in your neighborhood is not necessarily the best person to list your house (in many states, they can not list your house if they represent the buyer that wants to buy your house).

No, many of the agents that are still in business only have one skill. They have managed to be in the right place at the right time, one transaction at a time. So much for survival of the fittest.


Banks above the law

Not picking on Bank of America (although their name is a true oxymoron), just grabbed their picture. I could have stuck any federally chartered bank in that slot. You see, real estate is governed pretty much by local laws. Each state has laws that govern the practice of real estate . These laws impact consumers. Most people expect local laws to be followed. Well, the federally charted banks don’t see it that way and there is not one Governor or State legislative body that has the chutzpah to stand up to them. Once they own a property, caveat emptor becomes the law. It goes beyond “let the buyer beware”. Banks have a practice in place that clearly states … let the buyer be damned.

You are on your own buying this property!

Little things like lead paint disclosure and property condition disclosure/ disclaimer are totally ignored by banks. If you think you have a ratified contract with a bank, check the small print. They reserve the right to keep on accepting offers up until the moment you sign on the dotted line at closing. If a better offer comes in the night before, your offer can be rejected.

You probably have heard the term short sale. Most people think the term refers to the price being short of the amount owed on the property. NOT TRUE. The word short refers to the amount of common sense used by the people that have to review the offer and assist in completing the transaction. Firms like Wells Fargo have so many departments, it is a wonder they ever accomplish anything. The policies in place in these large lenders do nothing more that feed the frustration of home owners in trouble and paralyze the attempts of all those attempting to accomplish the sale.

The world wide web gives and takes away

No one is minding the store

The spiraling out of control housing market is spinning next to the tremendous growth of the internet and use of the internet to facilitate real estate transactions. It is scarier than the wild west. Rules are created and abandoned as the use of the web increases. The NAR is more concerned with Joe Smith using the term Realtor in his url than they are with the fact that agents are stepping outside accepted practices with no regard for the buying public. These internet savvy hot shot agents have no concern for the everyday practice of real estate. They are focused on volume and squeezing every dollar possible out of every transaction. They are not members of the profession because they want to work in a field of service, they are here to milk money out of any cash cow that might wander onto their website or in their door.

Pretty harsh? Not really. There was a time that a buyer could have their agent prepare an offer on a home and the agent could register and deliver that offer. Then the listing agent would be required to present that offer within a reasonable period of time to the seller. Now agents feel comfortable requiring that offers be entered into their internet system. There is no agency governing this practice. There are no provisions for how offers falling through the internet cracks will be recovered. There is no way of knowing whether or not the offer is actually received. And should an offer get lost….well too bad. There is no penalty. Governing bodies have not even addressed the issue.

Ask the agents why are you doing things this way….oh, it is the banks. We have so many listings, we just can’t keep up.

The one thing that is true about the market … there are a lot of houses for sale. Good luck if you are thinking of trying to buy one. Remember …. caveat emptor.


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