Monthly Archives: January 2008

Misleading home buyers: Conflict of Interest? What conflict of interest?

Sameoffice1
Thankfully, a recent NYTimes article, Feeling Misled on Home Price, Buyers Sue Agent and an interview hours ago on Today on MSNBC, are beginning to shed light on deceptive real estate practices.  However, the
article doesn’t expose widespread conflicts of interest that contributed to
the real estate bubble and their growing cost to society. 

1.  For starters, look more closely at this misleading statement:

"As prices spiked, buyer’s agents and
brokers became popular as sounding boards, advisers and negotiators.
The National Association of Realtors estimates they are now involved in
two-thirds of all residential purchases."

That makes this the first housing collapse in which large numbers of
buyers had a real estate professional explicitly looking after their
interests."

My guess is that one in five * transactions or about a
million sales of existing homes during 2006 involved
"designated agents" or some other name that papers over the conflict of interest that occurs when buyer and
seller are represented by the same brokerage firm. (* In some markets, the ratio could be considerably higher.)

2.  The means that home buyers do not
receive proper advice and protection, or as a partner in a real estate agency told the
NYTimes:

"We have seen so much misrepresentation over the last five years," he said. "So I appreciate where these buyers might be coming
from: ‘I’m a lowly consumer, you’re certified by the state of
California, you didn’t do X, you didn’t do Y, and I got hurt.’ "

3.
The NYTimes speculates that consumers, angry that their counterfeit
buyer agents did not provide adequate advice and protection, will
increasingly take legal action. Will their collection actions rise, at
some point in some overvalued market, to a class action lawsuit? 

"The Ummels may be on the leading edge of the law, but they are unlikely to be alone for long. With the market falling, many homeowners owe more on their mortgages than their houses are worth. And
many of those deals involved brokers who are required to carry
professional liability insurance, presenting a tempting target for
angry buyers.

‘If you put someone into a property at the top of the market, you
look really bad if it goes down,’ said K. P. Dean Harper, a real estate
lawyer in Walnut Creek, Calif. ‘There are a lot of letters going out
from lawyers to real estate agents saying, ‘My client would never have
purchased if you had properly evaluated the market conditions and the
value of the property.’ "

 

Represent_3
4.  A series of "Dual Agency Detective" blog posts dating back three years predicted "a new era of heart break for real estate consumers."  Although it’s easy to poked fun at designated agency with political
cartoons, the cost to individual home buyers and society, as this
prophetic case attests, is no laughing matter:

My so-called buyer’s agent (who promptly switched roles at contract
signing without explanation), initially advised me to bid $750,000 for
my house of choice, which was listed at $699,900. When I told her that
such an offer was beyond my price range, she was quite adamant that I
not offer anything under the list price. When I finally backed out the
deal because of her bait and switch scam, I later heard that the house
in question sold shortly afterwards for $682,000–in other words,
nearly $70,000 less than the bid suggested by my so-called buyer agent.

This type of price inflation (caused by seller’s agents masquerading
as buyer’s representatives) must have a very distorting impact on
housing costs.  The economic fallout is enormous
: ordinary citizens are
forced to move out farther in search of decent, affordable places to
live, which  leads to a host of problems connected with traffic
congrestion, suburban sprawl, etc.

As I perceive it, the real estate cartel’s use of dual agency
[a.k.a. "designated agency"], which works to the detriment of the
average consumer while enriching dishonest agents through the practice
of double-dipping, contributes significantly to the manifold problems
we see in the residential housing market and therefore should be fully
exposed.

Yourfanniemaybenext_2
5.  Who will end up paying the cost?  Commenting on the mortgage package included in the tax rebate agreement announced by Congress and the President, a link on BostonBubble reads: "Profits privatized, risks socialized – Economic stimulus a
wealth transfer from the middle class to the rich and the reckless."
See Paper Money’s blog post for call to action.

Conflict of interest, what conflict of interest?

PS.  The NYTimes may not have gone far enough, but the story (once, the most forwarded story in the NYTimes) is echoing around the blogosphere.  Some in the industry are worried this may be "the tip of the iceberg," and the buyers told MSNBC’s Today show they want to change the industry.  Sounds like the Consumer Revolution we’ve sought over the past 15 years.

Posted in Defensive Homebuying, Dual Agency Detective, In the News, Real Estate Bubble, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance

Unlisted properties represent opportunity for proactive home buyers

Mainventorypie_011008v6 This graph of active listings versus unlisted properties during the 4th quarter of 2007 reveals two significant trends behind today’s lead story in The Boston Globe: 

"Thousands in Mass. foreclosed on in ’07:
7,563 homes were seized, nearly 3 times the ’06 rate

TREND 1: The Globe reported that "…lenders initiated foreclosure proceedings against 7,467 Massachusetts homeowners" between July and September.  That means that foreclosure petitions during the 3rd quarter of 2007 were nearly equal to the total number of actual foreclosures year round.  Add that trend to the fact that foreclosure petitions topped 3,000 listings during October 2007, and you can see that the problem is growing.  In fact, the number of foreclosure petitions in October approached the number of MLS sales in December 2007 as graphed in a previous blog post.

TREND 2:  The inventory of unlisted properties or homes for "potentially for sale" across Massachusetts is also growing.  It’s difficult to identify how many expired and canceled listings have been already been relisted in the MLS, and we can only guess at how many homeowners facing foreclosure would be willing to sell.  Still, the inventory of homes "potentially for sale" may be approaching the number of active listings during this slow time of the year, as shown in the graph above. 

Should you wait for more homes to come onto the market or be more proactive?  The Real Estate Cafe is exploring ways to help home buyers search expired and canceled listings, and to approach homeowners with "unlisted" properties – particularly those who have received foreclosure petitions – with unsolicited offers.  If you’re a homeowner willing to consider an unsolicited offer, or rent your unlisted property until you put it back on the market later this year, please contact us.  Our qualified buyers are looking for ways to negotiate sales outside the MLS, and recognize that savings can be shared by doing so.  (PS.  Our menu of hourly and flat fees are modest by industry standards; and depending on negotiations, may be paid by our buyer clients so sellers retain more of their home equity.)

Posted in Commission Reform, Do-it-yourself, Extreme Househunting, Foreclosures, FSBO: Best Practices, Savings & Rebates, Timing the market, Unbundling the Commission

Rebate Wish List: Home buyers, what would you do with a tax rebate PLUS a real estate rebate?

Wishsign Pull quotes from: Bush backs $145 billion economic plan

The president and Congress are scrambling to take action as fears mount that a severe housing slump and painful credit crisis could cause people to close their wallets and businesses to put a lid on hiring, throwing the nation into its first recession since 2001.

Economists said a reasonable range for tax cuts in the new package might be $500 to $1,000. Congressional aides said the White House plan is looking at rebates of up to $800 for individuals and $1,600 for married couples…"

"Americans can spend this money as they see fit: to help meet their monthly bills, cover higher costs at the gas pump, pay for other basic necessities," he said."

General discussion on Boston.com: Would you spend a tax rebate? Specific questions for home buyers:

1. What would you do with the proposed tax rebate? Would the rebate, plus declining interest rates, make any difference in your home buying plans for 2008?

2. If you added a 100% commission rebate from The Real Estate Cafe, typically 2.5% of a home’s sales price, would that influence your home buying plans for 2008? What would be on your Rebate Wish List?

3. If you received a rebate over $10,000, would you be willing to donate part of your rebate to a cause or charity? If so, please add your favorite to The Real Estate Cafe’s "Rebate-It-Forward" list.

RebateWishList.com currently forwards to a twin discussion on The Real Estate Cafe’s experimental new social networking site.  Comments are welcome on either site, and home buyers are invited to introduce themselves via our interactive map.

Posted in In the News, Real Estate Bubble, Savings & Rebates, Timing the market

Move over rebates, here come PREBates

Request to show MLS listing priced 31% below it’s assessed value. Used to focus on rebates, now it’s PREbates or pre-BAIT. 2 good 2 be true?

Posted in Uncategorized

Happy 7th anniversary to Wikipedia

2001Wikipedia, a free Wiki content encyclopedia, goes online.

Posted in Writing tools

NOW, what do you think will happen to housing prices in 2008 & beyond?

Please take a few minutes to update this survey of housing
price expectations
in Massachusetts after a week of negative housing
headlines. This survey is being conducted independently by The Real
Estate Cafe
but we are eager to share the results with the press.

CLICK HERE, not photo below, to start survey:  What do YOU think will happen to housing prices in 2008 & beyond?

Bottomout_20082012_2

Posted in Bubble Hour, Consumer surveys, Housing forecasts, In the News, Market trends, Price trends, Real Estate Bubble

Village Heart / Twitter Heart?

Read / Comment on Twitter is my Village

Posted in Uncategorized

Expired & canceled listings soar in MA as Petitions to Foreclose approach MLS sales

Posted in Foreclosures, Market trends, Real Estate Bubble

Best money-savings tools & trends for home buyers in 2008?

Followthemoney
The Real Estate Cafe’s "Booth Sleuth" is eager to attend the leading real estate technology conference in New York this week so we can identify the latest tools and trends to help clients save money.  To raise funds, we’re repeating the "fare sale" we offered in November 2007.  If you think you’ll be using our services anytime in 2008, we encourage you to prepay for them now so you can enjoy savings of up to 50%.  More details upon request.

If you’re looking to develop a new product or service to help real estate consumers save time and / or money, we’re also willing to conduct sponsored research at the conference.  For examples of our work, see Twitter posts and "Live Notes" from last real estate conference on The Real Estate Cafe’s public wiki.  Confidential inventory of Web 2.0 applications in real estate also available.

Posted in Change Agents, Counterintelligence, FSBO: Best Practices, RECALL: Real Estate Consumer Alliance, Savings & Rebates, Tech Trends

Draft

Oct. 2007: Foreclose petitions
topped 3,000 in Mass., 4,814 MLS listings sold during same period,
8,976 listings expired or were canceled!

Because October listing represent December closing, maybe more appropriate to compare sales in December 2007:  Sales below 4,000 (3,956) or down about 20% from October 2007.  Expired & canceled listings even higher:  10,982 across Massachusetts in December 2007.  Those listings are now available, at approximately 5% below their last asking price in the MLS.  Estimating that another 9,000 home owners have received foreclosure petitions since October 1, that puts further downward pressure on asking prices.  48,321 active listing and 38,000 in shadow inventory 67,585 MLS sales last year.

Defensive homebuying tip:  The falling number of active MLS listings unstate the potential inventory of homes for sale.  For each home sold in December, there were 2.7 expired and canceled listings.  If petitions to foreclose continued at October pace, there are up to another 9,000 distressed homeowners who may consider in an unsolicited offer to purchase their home:

Petitions to foreclose are the first step in the foreclosure process, and do not always end in actual foreclosure. Some homeowners eventually sell their homes or refinance.

“Petitions to foreclose spiked in August, and are back up near that level in October,” Warren said. “Auction announcements and foreclosure deeds are slightly lower than in previous months, which could mean more homeowners are finding solutions before they lose their homes, or that lenders are slowing down the process. It looks like we’ll see more of the same in 2008.”

Posted in Uncategorized
Recent Posts
Recent Comments
    Archives
    Categories
    Meta
    HTML Snippets Powered By : XYZScripts.com