RealTown's RealTalk

Snip: The current problems are a result of irresponsible, unethical (sometimes criminal)
mortgage brokers and banks; And uneducated, irresponsible, dishonest (and
sometimes criminal) borrowers. There are many factors that have contributed
to the current mortgage situation, but the human behavior issue is what
concerns me the most.

I find it interesting that while we find all of those at fault for the current market we don't include ourselves in that group. This was only one of many posts that place the blame everywhere while excluding us.  My post is not meant to pick on whomever wrote that snip.

 I believe that we have a responsibility to teach our buyers how to buy.  Just because the mortgage person says you can afford X dollars on paper doesn't mean you can truly afford it. Lifestyles play a major role in how much one can afford.   I have talked to many Realtors/agents that say that "isn't their problem"  their job is "to sell homes and if the mortgage person says X dollars then that is what they will sell them".  I disagree.  If  we want the market to change then we have to be willing to educate our clients so they can make an informed decision on what they can truly afford.  That also means we need to help educate them on the various mortgages out there so they can choose the one that is best for their situation.  Sometimes what is best for their situation is to wait another year.

This dose not mean we are representing ourselves as an expert in mortgages, [ and from what I have been reading lately I am beginning to wonder if anyone thinks there is such a thing :)], but that we take responsibility in the transaction and do everything possible to educate our buyers so that the home owning experience is a positive one.  I believe thinking with a Home Owning mentality instead of a Home Buying mentality is a great start.

Mary Cunningham
ABR - CRS - e-PRO - PRS
Phone: (810) 577-9604
Toll Free: (866) 735-MARY
Fax: (810) 629-9445
HYPERLINK www.JustCallMaryC.com www.JustCallMaryC.com
HYPERLINK MailTo:JustCallMaryC@charter.net MailTo:JustCallMaryC@charter.net
Serving Genesee & surrounding counties in the Great Lakes State of Michigan.
HYPERLINK www.Crest-Care.com www.Crest-Care.com

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Phyllis Borchardt, REALTOR, e-PRO
Award Realty
Maricopa County, Phoenix
www.WestMarco-re.com
(623) 521-0790

I guess the overpriced properties got into the system (inventory) only because the seller wanted the highest price. It definetly was not because the "listing companies" were not advising the sellers to sell at the overly inflated high price was it.

Now that the overpriced listings were in the inventory, it was the industry that created the urgency within the market place to HURRY UP and buy, prices are going up next week. The real estate industry, especially transaction brokering, and all those associated with overvalued transactions are the ones that are purpetuating the legalized insider scheme.

It also helps the scheme to proliferate when the industry has a substantial increase of new licensees entering the market place. The effect this phenomenon had on prices was extreme and very measureable.

Having appraisers out there that are along for the ride that are simply making the appraisals "FIT" the deal for the licensees involved are also culpable.

 Jim Bourgoin, CEBA, ABR, ABRM

I don't think you can blame any one party.  I do agree with you Mary that some people should just not buy.  During the run up I was stunned at what lenders would approve some of my clients for.  I encouraged a good chuck of my buyers to stay well below the max approved by the lender.

I see the ramifications of that now, in that there are a multitude of people in $350-$400,000 homes (which is a lot out here) that are "downsizing" after one year because they got into too much house.  To me that is a situation where the agent representing them did not help them think through payments and maintenance and all of the assorted things that go along with home ownership.

Jim said: I guess the overpriced properties got into the system (inventory) only because the seller wanted the highest price. It definetly was not because the "listing companies" were not advising the sellers to sell at the overly inflated high price was it.

Of course many listing companies overinflated prices,but if the buyer agent doesn't help the buyer to see that they are overpaying for a property, that is not the listing agent's fault.  I have seen several listings that were grossly overpriced and someone got suckered into paying it, and is upside down now.  I encouraged my buyers to not even consider those ones.  A listing agent's job is to get the seller the best price, and if the market is seeing a run-up then they should be pushing the price for their seller.  A buyer agent should be doing their best by providing a CMA to their buyers so they can see the comps. 

I saw appraisers stick to their guns and not appraise the property at the purchase price, and lenders shop around until the found someone "who would give them some love (as one lender called it)." 

This is an industry issue, and many different components have come into play.  Hopefully lenders, appraisers, and real estate agents will learn from this and make necessary corrections to be better advisors to the consumers.  I have not had any client to date go into foreclosure and my buyers are happy with their home purchases.  I agree with Mary that our job is to educate and help people be better home owners, not just home buyers. 

Melina Tomson, MS
ABR, e-PRO
melina@tomsonburnham.com
www.TomsonBurnham.com
ph: 503-371-6515
fax: 503-588-1628

"Snip: The current problems are a result of irresponsible, unethical (sometimes criminal)
mortgage brokers and banks; And uneducated, irresponsible, dishonest (and
sometimes criminal) borrowers. There are many factors that have contributed
to the current mortgage situation, but the human behavior issue is what
concerns me the most."

Wow. You missed one of the biggest members of this issue. Realtors. They are as responsible for the "Boom" & now "Bust" as the Lenders, Mortgage Brokers & Borrowers. Have you read the news recently? There are Realtors getting charged with Fraud left and right for starting schemes/scams to sell houses to people who could not afford those. In some cases, these were Ghost buyers.

Money does funny things to people's values and ethics. Realtors are no exception and are equally responsible for the mess we are in today.

Just a reminder, there are good people and there are bad people. Same is true for our industry.

Melina says in parts: "Of course many listing companies overinflated prices.....,I have seen several listings that were grossly overpriced and someone got suckered into paying it, and is upside down now...... A listing agent's job is to get the seller the best price, and if the market is seeing a run-up then they should be pushing the price for their seller."

Jim Bourgoin ponders: Florida is a transaction broker state unless the licensee and the consumer enter into a bonified agency relationship in writing. A licensee can not call themselves a buyer agent without first having a written agency agreement. The listing company can not call themselves a seller's agent unless there is a written seller's agency (single agent) agreement. There are no exclusive seller agency companies in the area. They are all transaction brokers. The only way the high prices can be sustained is when they (the listing companies) collectively keep them high. When another licensee from another company is acting as the buyers transaction broker ( http://tinyurl.com/yrmg5n ) They now have to create urgency on the buyer's part in order to support the overly inflated prices that were placed in the 2003-2005 year's inventory. Even the NAR says Realtors are the 16% solution. ( http://tinyurl.com/2ggr8p )

My arguement is this. While working as a transaction broker the listing companies position is truely to get the seller the highest price possible. How then can a transaction broker not work to the detriment of the buyer while they condition the buyer to believe the highest price is the true market value. It would be like the fox guarding the hen house. Each and every listing company (transaction broker) has to support their desire to get the seller the highest price which then supports every other listing companies position for getting the seller the highest price.

The buyers are never afforded the opportunity to have an expert tell them otherwise. The buyer is never able to use the transaction brokers ability to get the lowest price.

Jim Bourgoin, CEBA, ABR, ABRM

OKay Jim,

I guess I'm a little dense on this whole transaction brokerage thing...So out here we have 3 agency relationships which are Seller's Agent, Buyer's Agent, and Disclosed limited agent (which I interpret to be like a transaction broker).  They have limited fiduciary duties and both buyer and seller have to agree that they are losing some of the agents fiduciary duties.

Out here at the time of a listing, an agent would have to get the sellers approval to be a disclosed limited agent, otherwise they are legally representing the seller only.  So in FL it is legally the opposite?  That you are representing both parties, unless you agree not to? 

So a transaction brokerage is a real estate company that can represent both buyers and sellers, but may or may not represent them both during the same transaction?  So if a buyer agent from ABC company writes an offer for a house listed by an agent at XYZ company, that is not considered exclusive representation? (Not to be confused with EBA's who never take a listing).

So, I represent  both buyers and sellers, but never in the same transaction.  In FL, I would be considered a transaction broker?

Melina Tomson, MS
ABR, e-PRO
melina@tomsonburnham.com
www.TomsonBurnham.com
ph: 503-371-6515
fax: 503-588-1628