May. 24, 2007 - More Has Been Revealed

As I was working on an offer for a couple of my investers the phone rang.  Imagine my suprise when the caller turned out to be Deborah Arends from Re/Max Northwest.  You remember Deborah, she's that alomost famous REALTOR® from Seattle who I wrote about last week in You Knew This Was Coming.  I called her in hope of getting her side of the story before I ranted on the CBS hit piece on REALTORS® and the six percent commision, but she was understandably busy after having just been on national television and all.  I e-mailed her a link to my piece after I posted it because I wanted to be sure she knew she was in my blog.

As it turns out, Deborah told me that she was interviewed for about ten hours over a two day period.  Let's see now, ten hours, minus the sixty seconds of footage they used on the show, wow!  That means that she had nine hours and fifty nine minutes of stuff to talk about that never made it to the air.  I knew that CBS was editing everything to weight the story in favor of the flat fee listing Redfin, but I am sure that in nine hours and fifty nine minutes of film that sits on the cutting room floor there must be a lot of positive stuff about Deborah's way of doing business.  As I said in my previous post, she was truely a sacrificial lamb that took one for the team.

She thanked me for my defense and indicated that the notoriety that comes with being nationaly televised hasn't really hurt her.  In fact she is as busy as ever and doing well.  It was really nice talking with her, I'm glad she called.  One of the benefits of being almost famous and on the way up is that other almost famous people return your calls.

That's the way it is in the real world folks.  A good REALTOR® is going to thrive just because they are good.  The rest will fall by the wayside.  When that happens, unlike CBS, those of us that are thriving will try not to step on them.  

As always, if you have found yourself receiving my blog postings via e-mail, it is because I have either blogged about you personally, blogged about something I know is of interest to you, or I consider you to be a person of deep thinking and intellect and I would love to have you occasionally commenting on my blog. If you would like to be removed from the list simply send me an e-mail saying so.

May. 19, 2007 - Let Me Introduce You To The Dude

I would like to introduce my readers to another blogger that has gotten my attention.  As far as I can tell he is not, nor has he ever been a real estate agent, however, he does have oppinions on real estate.  In fact, he has a real estate categroy on his blog.  The fact is, I have even been moved to comment on a post or two.

And so. with no further ado, allow me to introduce you to THE DUDE.  If you happen to comment on anything you see there, tell him Gene Molloy sent you.

As always, if you have found yourself receiving my blog postings via e-mail, it is because I have either blogged about you personally, blogged about something I know is of interest to you, or I consider you to be a person of deep thinking and intellect and I would love to have you occasionally commenting on my blog. If you would like to be removed from the list simply send me an e-mail saying so.

May. 16, 2007 - You Knew This Was Coming

Ok, everybody that watched 60 Minutes last Sunday raise your hands.  That many of you, huh?  I'm astonished.

Personally, if it wasn't for the fact that I knew they were going to do a hit piece on the established real estate industry I would never have watched it.  Ever since the demise of Dan Rather which was brought about by the provably unfair and innaccurate story on The President's National Guard service, I have given up on 60 Minutes and CBS in general but this was going to hit pretty close to home and I wouldn't have missed it for the world.  The only reason it took so long for me to get around to this "rebutal" is that I was so damn angry that I could not have kept a civil tongue.  It's one thing to have a sharp, scathing tongue when one is pitching a good rant, but I couldn't get out of Southside, street fighting, trash talking, gutter mode and I did not want to offend anyone with profanity and name calling.

Right out of the starting gate Leslie Stahl, who by the way, really needs to comb her hair if she is going to continue misleading people on national television, makes a blanket statement that "traditional" real estate agents charge 6% commission and hold that number sacrosanct.  Since I personally never use the word sacrosanct I did not really know what it meant.  Don't get me wrong, I kind of knew what the "essence" of the word was, but I couldn't actually define it.  To make sure I was not misunderstanding things I looked it up.  It means "1. extremely sacred or inviolable. 2. regarded or treated as being above or beyond interference, criticism, etc".

Once I had an understanding of the true definition of the word I was outraged.  The folks at 60 Minutes are telling bold face lies on national television.  The Sherman Antitrust Act is a federal law that prohibits price fixing.  Since REALTORS® are not above the law they must adhere to the law and that is why commissions are negotiable.  Let me say it again, there is no such thing as a fixed or a standard commission rate.  There may be agents who will not work for less than 6% and there may be real estate brokers who will not allow the agents in his or her office to take a listing at anything less than 6% but that is their personal decision and they have a right to make personal desicions like that.  Here in my neck of the woods you mostly find people taking 5% commissions.  The truth is that commission rates are set by whatever the market is willing to bare.

Then the piece went on to give Redfin, a kind of an on line brokerage, some pretty good exposure.  I decided to look them up.  The headline on there website says "Find, Buy and Sell Homes Online".  Gee that sounds like fun.  Just like Amazom.com or something only for houses.  You know what, why don't I just give you a link to Redfin so you can see for yourselves.  When you get to their site look for the following cool stuff.  In their own words they are a flat fee lister, meaning that you are going to pay them $3000 up front to list your home in the MLS.  They will give you some good advise on how to get your house ready to sell, you know, the same kind of information you can get off of my website for free.  Right there on the front of their "sell" page they tout a "$3000 flat fee, 100% satisfaction guarantee: a typical customer saves over $12,000".

I sure am glad that they are not in Chicago yet, because they give you a 100% satisfaction guarantee on your $3000 which you pay up front.  Or do they?  Ah ha, no they really do not.  If you hadn't clicked this far you would have never seen the words " Please note that we do not offer refunds just because your listing hasn't sold, which may be due to market forces, but only if you are unhappy with our representation of your listing".  On second thought, maybe I should welcome them to Chicago.  What would you like better, especially in a sluggish market like we are in now, their 100% satisfaction guarantee that you have to gamble $3,000 on, or my 100% satisfaction guarantee that says if I don't sell your house you simple don't pay me a dime.  If you look around their site a little bit more you will see that I am actually going to do a lot more work for you as well, taking the burden off of your shoulders for marketing and showing and such, things which I probably have more experience at than you do anyway.

How about those buyers though.  Redfin will actually rebate 2/3 of the commission they make back to them.  That sounds like a dandy deal alright except for the fact that when the sellers begin to realize that the buyers of their homes are actually paying them 2% less than the purchase agreement states, thereby not really getting the price that they negotiated for, well I guess those sellers are not going to want to negotiate with Redfin buyers any more.  Not only that, but since this 2% rebate is going to have to show on the HUD-1 (RESPA), aren't the lenders going to look at this as an unreasonable inducement to do business?  That's against the law in some states.  I don't want to hear anybody trying to tell me that it's no different than a seller contributing the buyers closing costs either, because it certainly is.  The seller knows from the terms of the purchase agreement that they are contributing 2 or 3%, or whatever is agreed upon, back to the deal and it is coming from the sellers funds up front, not through the brokers back door.

Back to the 60 Minutes segment.  Good old Leslie Stahl, who is looking kind of long in the tooth by the way, goes on to interview a "traditional" agent Deborah Arends.  Now I have no way of knowing how much editing took place or how much Deborah knew about what was going to be asked, but I am going to send her a link to this post, and maybe if we are lucky she will post a comment on her side of the story.  I did try to call her and I did leave her a message but I am sure she has better things to do than to talk to an almost famous real estate broker like me (especially since she is now almost famous herself), so I will just have to tell you what I saw.  When asked what she tells people when they want here to work for less than 6% she replyes that maybe she is not the agent for them.  You go girl, a very honest answer.  I have been know to say the same thing and walk out of listing presentations for less.  When asked about the rebate that Redfin boasts about giving back to the buyer (they clain to have rebated over $3,000,000 back) she looked kind of stunned and said she didn't know how to answer that.  It looked to me like she didn't even know that that question was coming.  It would have stunned me as well, because of the reasons I have previously stated.  Most of us "traditional" (You know, I'm kind of beginning to wonder what exactly that means) REALTORS® would feel like we were betraying our sellers and confusing the lenders if we were giving kick backs.  Isn't a rebate just a prettier name for a kick back?  It's kind of like a dandolion being a prettier name for a weed.  Anyhow, Deborah did a splendid job, considering she was being set up as a sacraficial lamb.

Then they had a funeral of sorts, a mourning session if you will, for a flat fee lister who claimed to be the first of the internet flat fee listers.  Poor guy claims he was driven out of business by "traditional" real estate, who actually colludes to put nontraditionalists out of business.  I would rather believe, and I am sure you would too, that he was put out of business the same way Rambler, DeSoto, Plymouth, Hugo, etc. was put out of business, by not being able to lift their legs high enough to produce with the big dogs.  It's not even a David and Goliath story, look at me, I don't work for ERA, Century 21, Coldwell Banker, Re/Max or any of the other corporate franchise giants and I do ok.  The fact is, if this guy had a listing somewhere that myself or my client could find, I would be glad to show it to a buyer client, even if he was only offering a 1% cooperative compensation.  My duty to the client is to show them what they want to see, not what I am going to make the most money on.  So as bad as I feel about this guy going belly up, I have to realistically think that it's because he had an inferior business plan and not because he was shunned by the real estate community.  The truth be told, if I thought that there was a business model that was better than the one I am working, I would probably be working it.  There just is no easier, softer way to do this job correctly.  The consumer needs to realize that you get what you pay.

If nothing else it looked as if 60 MInutes was trying to actually hurt the real estate industry as it exists today by presenting a biased, one sided piece, which was designed to make anything other than a flat fee lister look like a member of the evil empire.  If you saw the piece and you agree with my assessment, or if you have had a full service REALTOR® do a good job for you, please follow this link to CBS and give then a piece of your mind.

As always, if you have found yourself receiving my blog postings via e-mail, it is because I have either blogged about you personally, blogged about something I know is of interest to you, or I consider you to be a person of deep thinking and intellect and I would love to have you occasionally commenting on my blog. If you would like to be removed from the list simply send me an e-mail saying so.

May. 3, 2007 - You Want What??????

So we had us some real excitement didn't we?  We looked at some really nice houses and we found you a place that felt like home.  I know your head was spinning when we wrote up the offer.  You thought that it was only a matter of telling the seller how much you were willing to pay for the house, you didn't expect 11 pages of mumbo jumbo, did you?  I know you were nervous during the negotiations, but didn't I tell you we could get that place for a lot less than they were asking?

I'm really glad you hired Michael Pignotti the Home Inspector too.  I have worked with him on many occassions and I know he is a straight shooter.  That was a pretty comprehensive inspection, wasn't it?  I was really impressed by the little tips and tidbits he was giving you during the inspection.  You know, I learn a few things myself, practically ever time I work with him.  I'm glad we didn't find anything that would be a safety hazard or life threatening this time around.  I remember the time he saved another buyer of mine from buying a house that was going to cause the new owner some real problems, but hey, that's another story.

Your Attorney has a copy of the home inspection report as well, so let's look it over and see if we need to ask for any repairs or repair credits.  Let's not get carried away though, remember what the contract said, "A major component shall be deemed to be in operating condition if it performs the function for which it is intended, regardless of age, and does not constitute a threat to health or safety.  The fact that a functioning component may be at the end of it's useful life shall not render such component defective for the purpose of this paragraph.  Buyer agrees minor repairs and routine maintenance items are not a part of this contingency".

With that in mind, yes, I think we should ask the to have the roof leak repaired.  If you feel more comfortable contracting to have it done yourself then we should ask for a credit so you can have it done after you take possession.  I do not, however, think you should ask to have the washer and dryer replaced.  They are old, but they work.  No, not even a credit to buy new ones.  The home inspection is meant to insure that you are buying a safe and sound home.  The home inspection is not an instrument to be used to try and renegotiate a better deal after the fact.  

As always, if you have found yourself receiving my blog postings via e-mail, it is because I have either blogged about you personally, blogged about something I know is of interest to you, or I consider you to be a person of deep thinking and intellect and I would love to have you occasionally commenting on my blog. If you would like to be removed from the list simply send me an e-mail saying so.

May. 1, 2007 - Short Sale, It's Never A Good Idea

Just because something exists does not mean it is a good thing.  Take the short sale for instance.  The short sale in real estate is something that happens when you have to sell your house but you owe more on it than you can actually sell it for.  Believe it or not that is happening a lot right now.

It's happening because of all of those tricky mortgages that were out there a few years ago.  You know, the boom times, back when it was a sellers market and houses were flying off the market as fast as you could list them.  Those were the good old days for some people, but for others it turned out to be the worst time of their lives.  For the "well qualified buyer" (as the auto industry refers to those who can get the good deal) things turned out not so bad.  For those that needed to get into the market with gimmic loans and took on mortgages with teaser rates or interest only payments in order to buy more house than they could normally afford they might just as well have been the end times.

Any way, for some people things are getting mighty tight.  ARMs (adjustable rate mortgages) have been adjusting up, the interest only period on the interest only loans are over and market values are not sky rocketing any more.  They are having a hard time making ends meet and some are even finding themselves having to make late payments, which is only making their situations worse.  They come to the realization that selling the house might just be their best option.  They even decide to go FSBO because if they can save the commission they will probably be better off.

Enter Swifty.  Swifty may or may not possess a license to practice real estate but one thing he definitely does not possess is a heart.  He probably has taken a Carlton Sheets course, or the equivelant, and he is going to come at you like he is your friend.  "I can help you out of this mess" he says.  "I have money.  I don't have enough to actually pay off your whole debt, but let me talk to the people at the bank and see if I can't get them to accept a short sale, I've done this before and I know how it works.  No more worries for you friend, you'll be out from under your mortgage payments and I might even be able to rent you the house at a price you can afford, you won't even have to move".

Old Swifty is not your friend.  Swifty is not telling you that even though the bank will be willing to give him your house at his price they still might want you to pay them the balance you owe them.  He also hasn't mentioned that even if the bank does forgive you the balance of your debt, the Internal Revenue Service is going to look at that as income and you are going to owe them their pound of flesh and believe me, if you come late with them you will not believe the interest and penalties that they are allowed to tack on.  And that's not to mention that they can just take your pay check one fine day if they get tired of waiting for you to pay them.

The moral of this story is that you should try and avoid the short sale, and people who tell it that it's a good solution, at all costs.  If the burden is getting heavy, talk to somebody who has more to talk about than a short sale.  In fact, don't wait until the you can no longer carry the load, when you can see the writing is on the wall, look for a solution right away.  Don't wait until you have to desperately try to FSBO and bump into Swifty.

As always, if you have found yourself receiving my blog postings via e-mail, it is because I have either blogged about you personally, blogged about something I know is of interest to you, or I consider you to be a person of deep thinking and intellect and I would love to have you occasionally commenting on my blog. If you would like to be removed from the list simply send me an e-mail saying so.