Another proposal to inflate housing prices & reward counterfeit buyer agents?

Real Estate Cafe comment on proposal to stop the downward slide in home prices by “insuring” homebuyers losses up to $100,000 with tax dollars:

Listing agents used blind bidding wars to manipulate competing home buyers into overpaying before the end of the previous two home buyer tax credits.  Imagine what those same agents, or their peers who have not had a closing all year, will do with asking prices if the government is willing to transfer the cost of overpaying to tax payers?  Can’t you just hear dual agents (aka counterfeit buyer agents) telling buyers that it won’t matter if they overpay, as long as they are within $100K of the future value, because Uncle Sam will pick-up the tab?

We’d like to hear your thoughts about how this proposal would serve / hurt a new generation of homebuyers.  Email or send a direct message to http://Twitter.com/RealEstateCafe if you’d like us to host another Bubble Hour (see post two years ago when sales were at their lowest point since 1991) or TweetUp anytime to discuss this proposal, the double dip housing market, timing the Fall (no pun intended) housing market, proactive house hunting, or recent lead stories and blog posts.  Got any to add to this list?

Double dip in housing already here?  (Boston.com real estate blog)

Drop in home prices could spur new recession, Greenspan warns (Boston Globe)

Homeownership rate continues to slide (USA Today)


Related Articles

Buyer agents’ chatter revealing what’s really going on behind housing stats?

The Massachusetts Association of Realtors releases housing statistics for
the second quarter of 2005 today.   Since that’s the strongest season
of the year, it will mostly likely give home buyers the wrong impression about
what really going on in the local housing market.  For that, you need to listen to the
chatter between real estate professionals, particularly buyer agents on their
own password protected mail lists (something you can’t do ;-).  There, buyer agents in different areas
have already begun asking their peers if they are also
seeing a new phenomena in the market:  houses selling for below their appraised value.  That’s right, not below their asking price, but below their appraised value.  That either means that those lucky homebuyers just made money on their purchase
(the difference between their purchase price and the appraised value of the property) because they were smart enough to use a REAL buyer agent,
or that prices are already falling but that emerging trend has yet to appear in statistics.  Time will tell if these are isolated incidents or not.  In the meantime, put MAR’s upcoming stats into seasonal context or a longer timeframe.  Some argue the 2nd quarter statistics may reflect the top of the market, and years from now will be regarded as a turning point before the housing industry slid into a multi-year recession.

Double Bubble: How counterfeit buyer agents inflated the housing bubble

Doublebubble1_2
Yesterday we blogged about the "Mortgage Meltdown" and record number of foreclosures, challenging the media and regulators to investigate how counterfeit buyer agents (a.k.a. double agents) helped inflate the housing bubble.  If they do, here’s the kind of "glaring" case study they may find:

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.

The homebuyer above concluded, "Isn’t there any investigative team or media personage with the courage and tenacity to shed light on this problem?"  We’d like to ask how homebuyer and sellers who have been victims of dual agency, designated agency, or faulty agency disclosure can use social networking tools, like blogs, wikis, and interactive mapping, to expose the problem and prevent other consumers from being harmed?  Does anyone know if such an organizing effort is already underway, or have ideas about how to get one started?

From double-digit expectations to double-digit disappointments

About this time last year, CNN/Money Magazine reported that a survey by economists Karl Case of Wellesley College and Robert Shiller of Yale revealed that home owners in Boston, Milwaukee, San Francisco and California’s Orange County were "counting on double-digit growth [in real estate appreciation for] EACH YEAR for the next ten years.  Just twelve months later, some of those double-digit expectations are turning into double-digit disappointments, at least in Boston.  Beneath the median and average prices that Realtors report going up, up, up every month; price changes on individual properties are crushing seller expectations and falling faster than consumer confidence

We’d be glad to send you an example of a listing that has been canceled
once, expired twice, and been listed by two different real estate
agencies.  Originally listed for $750,000, the property could sell now
for under $600,000 — a savings of $150,000 or over 20%.  This trend will become more wide spread as interest rates, still near a forty year low, return to traditional levels.   

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