When you hear a Realtor telling you that the market will go up, don’t believe him/her. He makes money if he sell you on buying, and he will be long gone if you lose your shirt. Meanwhile since 2004 I was giving out shirts that said it was probably a bubble:
Sure Realtors might be able to see a 1-3 month window and mini-trends like what happened in Arlington when there were 10x the number of units on the market versus the year before. A high school Supply and Demand class could see that coming. But besides that, we don’t really know.
Why don’t we know? Well it isn’t just us, it happens with all investments. Stocks, Oil, Gold etc. Sure some people are quoted for being dead on, but how many were overlooked and were way off? Most.
I came to this approach when I was reviewing my mother’s finances. She had a ton of individual stocks. Some skyrocketed, some tanked, etc etc. And then she had these mutual funds. I looked into them and read fool.com, they like to expose investment myths.
I found that 75% of the time, these funds didn’t even beat the index! , the average of the stock market (S&P 500). So a fund manager gets paid $500,000 a year to pick stocks and charges a 1-2% per year management fee and only 25% of the time they beat the average? Um, I’ll just take the .01% no cost index fund and if I want to invest in stocks, I’ll be fine with the average. Far lower risk, lower fees and an average return (or far above average if you compare it to beating 75% of mutual funds) Disclaimer: I’m not a financial adviser, have him tell you this stuff.
So if money managers can’t predict stock values, how can we be expected to predict the short terms direction of the housing market? We can’t just look at data since I can find you 5 reports saying things will go down, and another 5 reports saying it will go up. Both make great arguments.
So what do you do?
You stop making your home purchase all about being an investment!
Instead, if you decide to buy, buy what you like and plan to live in for many years, and if you make money after a while, great, more power to you.
New thought:
When a stock brokerage company shows charts on what the fund has done, why are they required to put a disclaimer that “Past performance is not indicative of future results.”? Yet NAR and Realtors never once during the bubble thought to use this type of disclaimer.
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Videos at YouTube.FranklyRealty.com
Keywords: Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor
Posted in
Buying Risks. |
4 Comments »
Being “Upside-Down” in a loan is a phrase most commonly used with car loans. It means that you owe more than the car can be sold for. With cars, if you are in this situation, you have to actually bring cash to the table to sell your car.
So if you have an outstanding loan of $20,000 on the car that you bought for $25,000, and you can only sell it for $15,000, you have to come up with $5k to sell the car. You take the $5k hit now, but save on years of monthly car loans that will far exceed $5k.
Regrettably this starting to happen on a somewhat frequent basis with homes. This did occur in the mid 90’s but was unheard of again up until a year ago.
So a home owner buys a place a year ago for $300,000. Lets say he puts 5% down or $15,000 and the loan is for the remaining $285,000. He buys it as a long term investment, but something went wrong: job relocation, divorce, scary neighbors, whatever. He wants to get rid of it and he is faced with a house that can only clear $275,000 due in part because of the market drop and after darn Realtor fees.
That home owner is now “Upside-Down.”
His options are:
1. Sell the house and literally bring a check for $10,000 to the closing and saying goodbye to the $15,000 initial investment. Total loss is $25,000
2. Hold onto it, rent it out, in hopes of a bounce back. (And then really make a killing, right!)
Most people will go with option #2.
There is something about human nature that makes us feel more pain losing $1,000 than the joy of making say $10,000, which we rationalize as deserving. People would rather fight the smallest loss today, even if that means running it all the way down to bankruptcy.
I’ll focus on Option 2 because that is what most people do, but most haven’t evaluated all the pros and cons of that decision. First of all, you have to realize that you are now in Vegas, and you are essentially doubling down your bet. You aren’t evaluating the current situation (“cutting your losses and running”) and instead you are gambling that the future will be better… eventually.
If you are betting on Red in Vegas, just double down! Eventually you will break even right? Even if you are in for $50,000, Red has to hit soon right? Come on Red!!!
While your Red might hit eventually with real estate, you have to be prepared for the worst.
What is your plan?
1. Holding out for the “Spring.”
Hopefully the market will bounce back and you can then take a lower loss or seek the holy grail… breaking even.
Great, yes the Spring is usually better, but usually during an up market. Last year the winter was horrible and the spring just extended that downward. All the houses that sat in the winter were still there, and for a lower price once spring came. The newly listed houses then had to start with a lower benchmark. So waiting might cause your house to go down another $10k-15k.
2. I’ll just rent it! Easy as that!
Ok, but have you run the numbers? Oftentimes you will have as much as a $400 per month discrepancy between your mortgage and your rent. That makes for about $5,000 a year. After 3 years you are $15,000 behind. If the market rebounds great, but if it stays flat, you are now $15k deeper in debt. What if it takes 10 years to recover? It happened in 1990. Also you can’t just count the sales price, you have to consider all the expenses along the way. Oh and ask your accountant, but the tax advantages that you had while owning the place you lived in are gone.
Also I almost forgot, what about that 5 year ARM that is coming due and you haven’t sold it yet and your mortgage goes up 30%?
3. I’ll live in it.
Ok, but I thought you wanted to get out of the place? Your time horizon better be long enough to ride out the storm. If this is just a 1 year bandaid, you might be even worse off in a year (nobody knows, except the National Assoc of Realtors, NAR, of course!). Also if you have a mortgage of $2,000 and you have the option of renting out a smaller place for $1,000, you have to calculate the $12,000 savings a year (but don’t forget your calculate back in your tax advantages).
For some of you, the numbers might leave you no real choice. If you can’t come up with $15,000 to sell it now, you just can’t do it. But for the rest of you, that are electing not to do it because you feel the pain of a $5k loss (or even $50k) is just too much, just be prepared for a worst case scenario in 1 year or 3 or 10 when you wish that you were only $5k behind.
In my blog on Leverage, The Untold Risks With Buying. There is an example of a lady that lost $150,000 over 250 days, I bet she wishes she cut her losses earlier. She couldn’t believe it could go down that much. This is DC!!
My intention is not to scare or depress anybody. I just want to make sure that you have fully thought out what your options are. I can’t tell you where the market is going (see blog on Realtor’s aren’t stock brokers), but you have to be prepared for all scenarios. I know you will hit yourself if you take a loss and the market recovers, but what would you feel if it didn’t and you had to file bankruptcy?
Most Realtors won’t go over the doomsday scenario of above, but it is real. Our job is to make sure you look at all your options and only you can decide what to ultimately do. If you sense a bit of bias in here, that was fake. I just put that in there to counter balance your preexisting biases.
Also read about a DC condo owner that was Upside-Down in the New York Times: Buyers Scarce, Many Condos Are for Rent “Could he rent the condo? Yes, but that option is not appealing, either. Mr. Murphy estimates that the unit could rent for $4,000 a month, far short of the $6,800 a month the condo costs in mortgage interest, maintenance fees, insurance and taxes…”
What would you like to do now?
– Written by Frank Borges LL0SA- Broker/Owner
Posted in
Listing Advice. |
36 Comments »
More specifically the question was:
BUYER: I was looking to buy a condo in DC this month for around $300k. I just found out that I’m going overseas for 2 or 3 years. Should I buy a place today as an investment property?
FRANK: Do you hope to move INTO that property when you come back or are you investing with hopes that it will go up and you can use the new funds to buy a bigger place?
BUYER: Can you go over both?
FRANK: Sure, the quick answer is No to both. While it is far less risky if you plan to move into it.
BUYER: But Frank, your Blog repeatedly says you didn’t like to give opinions, and instead prefer to give the data and work together.
FRANK: I know, but sometimes I just can’t help myself in such clear cases. Oh, ok. Let me rephrase my opinion and break your question into two. It isn’t a no-brainer, but if after reading the below information you still want to do it, great, go for it!
BUYING NOW AND FLIPPING IN 3 YEARS
Question 1) Is it a good idea to buy a place today as I’m going overseas for 2-3 years. I will sell it when I get back and use that profit to buy a bigger house.
Typical Realtor answer: Hell yeah! (Internal monologue: No risk to me, I make 3 transactions out of it: 1) Help her buy, 2) help her sell and 3) help her buy a bigger place). Do it!
Frankly answer. If flipping and rehabbing aren’t your main line of work, you’d be risking a ton, but there is a chance you’d get rich. Think of it like Vegas.
You know how with mutual funds they have disclaimers that say “Past performance is not indicative of future results”, why isn’t that used in Real Estate when showing huge historic gains?
Yes in the past people have made a killing in such a short period and heck I can show you 5 reports that will say the market will go up and another 5 saying it will go down. So nobody knows for certain. But what I do know is that with a timeframe that is that short, you are gambling, Vegas style.
The CONS data:
- If you were to rent it, you probably wouldn’t cover your mortgage every month. So you would be losing $400 a month or taking a $5,000 loss each year that you rent. After 3 years you are $15,000 in the hole. (please allow for rounding)
- The headache of being a landlord, especially if you are new to it, and from overseas. Ok pay somebody to do it, but there goes another $5,000 at least! Subtotal is $20,000.
- Then when you sell it you will have Realtor fees and closing costs. Lets just say $20,000. Now you are $40,000 in the hole.
- The tax savings are minimal (ask your accountant) and aren’t the same as living in the home since you get rental income (which isn’t enough to cover the mortgage).
- Opportunity costs. Your money could be making 5% in the bank. Assuming 10% down, that $30k in 3 years in the bank at 5% or roughly $5,000 or $45k total.
So from day 1 you are $45,000 in the negative. Over three years the market would have to go up almost 5% a year to nearly $345,000 just to break even! Will it do that? Maybe, nobody really knows. It did in the past!! But if the market stays flat, you have lost $45,000. If the market slides another 10% (3% per year), you would be under $75,000 ($45k+30k) or over 2 times your investment!
Only the buyer can ultimately weigh their risk tolerance, but that seems pretty risky to me, but again, you aren’t me, and it worked in the past, so it is your call. Heck, I’d love it if you bought a place, got rich and shoved this blog in my face in 3 years. I just want to make sure you see that the downside risks are real and could happen.
A buyer should do their analysis under 3 scenarios regardless of everyone’s predictions:
- 34% chance of the market staying flat
- 33% chance of the market dropping 5-10%
- 33% chance of the market going up 5-10
Other buying now factors to consider:
- CON: A loan for an investment will be higher than for a residential property.
- PRO BUYING NOW: Interest rates might go up in 3 years, thus making it more expensive per month to buy (but many will say that higher rates will further drop prices so it is a wash).
- PRO BUYING NOW: Yes, you could miss out on another historic run up and become rich. Just blame your Realtor!
BUYER?: 2) Ok, I’ll think about it. Well what if I want to move into the house after I come back?
FRANK: Much of the analysis above would still apply, minus those stinking Realtor fees. So remove that $20,000 and it isn’t AS risky, and MAYBE even a good idea, but I wouldn’t say a “no brainer.” But it isn’t my brain, it is yours. It all depends on where the market goes and how SURE you are that you will a) come back here and b) want to live in that one place. It seems like a lot of variables would have to line up perfectly for you to come out ahead, but that is your call.
Remember NAR has said “this is the bottom” several times. If it is, you could become rich! If it is goes down, you still might be ok if you hold it long enough. And that could be an additional 3 years or as much as 10 years.
Good luck, let me know if you have any further questions
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Posted in
Buying Risks. |
2 Comments »
I thought it was bad enough when NAR launched their print ad telling people to “Buy or Sell”. Talk about it here: Can you trust your Realtor? New NAR ad reviewed. Now they just launch a TV campaign to “Buy Now/Sell Now”.
Dear Ms. Combs (NAR Pres), can I suggest a new focus for NAR? It will help everyone in the long run and help the deteriorating Realtor image.
Have a campaign around: “Is Buying Right for You, Right Now?”
Here is the email sent to Realtors today:
| Dear REALTOR®,
I am pleased to announce the launch of the 2007 Public Awareness Campaign. This will be an exciting year, highlighted by the integration of the “Buy Now/Sell Now” messaging into the already successful Public Awareness Campaign, and an expansion of the campaign, keeping REALTORS® top-of-mind with consumers through radio and television placements from January through November. I hope you’ll be pleased with the results.
I wanted to give all of our members a special preview of the 2007 campaign materials. This e-mail includes links to the recently redesigned Public Awareness Campaign Web site, where you can view and download the new campaign materials, see the 2007 media buy schedule, and learn about the 2006 research results.
This year the campaign aims to drive business directly to REALTORS® with a new call-to-action, “Every market’s different, call a REALTOR® today.” The campaign speaks directly to today’s home buyers and sellers to convince them that REALTORS®‘ expertise and experience are invaluable in the current real estate environment of increased inventories, stabilizing prices, and historically low interest rates.
The campaign will begin airing nationally January 15 on network television. Radio will follow three weeks later.
To view this year’s new materials click here.
To view the 2007 media schedule click here.
To view the 2006 research results click here.
The campaign includes Web banners, presentation materials, and other resources that you can use to enhance your business activities, so please visit the Web site, and share the campaign with your clients and colleagues.
Thank you for your continued support.
Sincerely,
Pat Vredevoogd Combs, ABR®, CRS®, GRI, PMN
2007 NAR President
|
The link goes to a page showing a family and reasons for it being a “Good Time to Buy” and another ad saying “Know How to Sell”.
First note that the email says “Buy Now, Sell Now” but the ad does not say it is a good time to sell. Instead they focus on what you need to know to sell. It would have been just absolutely nuts if they really had a TV spot on why you should buy, while another spot says you should sell now.
I think NAR needs to change their mission statement. Instead of selling the “American dream” and convincing people to buy without disclosing all the bankruptcies, potential net worth liquidation, they instead should have a campaign of:
“Is Buying Right for You, Right Now?”
And continue to go over the PROS and CONS of buying. Not just perpetuating the PROS and ignoring the risks, or mumbling them under your breathe. I take a different approach with my clients. I play devil’s advocate. I try and talk/scare them OUT of buying or at least fully digest the risks. If they survive that and still want to buy, great, I’ll help them.
Will this new ad finally convince those on the fence to buy? Discuss…
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Posted in
Trust NAR? |
3 Comments »
You all have seen them. You have rolled your eyes at them. Why are Realtor slogans so darn cheesy. And those photos on business cards? How did that trend start? Why don’t accountants or carpet salespersons have photos on their business cards? Oh and that photo that was taken 15 years ago, or taken at a GlamourShots… priceless.
So I’d like to salute the creative and ask for submissions for the cheesiest Realtor slogan
out there and in use (no made up ones please). Once we hit 25 people posting submissions or May 1st, we will issue a $50 Gift Card to Home Depot for the best posting. Either I’ll pick the best or pick a run off that will be voted on.
To start you off, I have found the following slogans:
- “Doing Things For You Only #1 Can Do!”
What the heck does this mean??
- “We know where you live.”
Wow, this one is gonna be hard to beat. This would creep me out!
Or maybe a Cheesy business card? Maybe I should give out cards like the one at the top of this post?
SUBMIT YOUR FAVORITE CHEESY SLOGAN!
Please forward this to your friends if you think they would agree. But don’t spam them. Post the slogan here under “comments” or email me if you have a photo of the slogan in action. I don’t want to make direct fun of particular people so I will edit out their names.
Posted in
Humor |
25 Comments »
This post was more relevant during the bubble of 04-06, but still kind of applies today. I’m not saying not to buy. I’m saying that you need to fully understand the risks involved. Sure people have gotten VERY rich on Real Estate, but you rarely hear about those that go bankrupt. They tend to be less vocal.
People think that “buying bricks” (a house) is far less risky t
han the stock market. Heck look at the Nasdaq that dropped 70% after the .com bubble! That can’t happen with a home, how can it lose 70%?
Well if you put only 10% down, it pretty much happens on day 1!
How? Why? One major difference (stocks vs houses) is being ignored…
LEVERAGE!! LEVERAGE!! LEVERAGE!!
Example:
Lets take a $500,000 home as an example. If a buyer puts 10% down, or $50,000, that leaves them with a $450,000 loan. Because of leverage (using 90% of the banks money to buy your home) all you have to do is close on your house, and on day 1 you have recreated the Nasdaq 70% drop! Since that same day you have lost about 7% (closing costs plus those rascally Realtor fees) in value. That 7% drop in your house value is the same as a 70% drop in your investment (you put 10% down and 7% is gone, that is a 70% drop)!
Just like they say about used cars, the moment you drive it off the lot, the car drops $5k to $25k in value immediately.
Scared yet?
I’m not trying to scare you. If you are asking “then why does anybody buy,” the flaw in the scenerio above is that people usually don’t sell their house after holding it one day. And unlike cars that depreciate, houses tend to go up in value… But not always.
And with appreciation and leverage you can make a killing! One client was saying how she put down 10% and bought a $150k condo. And 4 years later sold it for $300k. She was saying how she had doubled her money! Actually since she only put down $15,000 (10%) she turned that into $150,000 and actually made ten times her investment, a 1,000% return!!!! Party time!
So LEVERAGE significantly increases your profit if things go up, but it can wipe you out if things go down. That is why it is recommended to buy only if your time horizon is long enough. The longer you hold a place, the LOWER your risk (usually). I do however know somebody that had to hold a condo for 10 years just to break even.
There are a ton of statistics out there showing that Real Estate is the #1 fastest way to riches.
So I gave an example of a buyer that made 1,000% (and actually over the last 4 years that was fairly common), but what you never hear about is the down side. Here is one example:
Now an example of a bankruptcy and $150k loss:
“Evelyn” was encouraged by her brother to buy a condo conversion (apartment complex that was upgraded and sold off as new condos). The pitch was “This is DC, DC can never go down! Jobs, government, etc. Everyone is making $100,000 in 1 year and it is a sure thing. The sister said she was very conservative and worried, but still decided to buy a $600k condo in Ballston. She put down “only” $10k-$20k.
She put it under contract a year earlier, closed on it and 9 days later went to flip it! Starting at $665k! She would pocket $30k after fees and double her money! Champagne all around. But it didn’t sell.
This is where I came in. I got a call from a friend that referred her to me. Why? Supposedly the Realtor “stunk.” I didn’t take the listing, it seemed way overpriced.
This is an actual email exchange we had:
“Frank, it was good speaking to you. Your resourcefulness and dedication is what we need to sell [condo name]. We look forward to hearing from you.”
This is my actual reply after looking into it in 10/2005:
“While I’d love to bash your old Realtor, I can’t. Nothing has gone under contract in this building so there is no precedence. He didn’t know what it would go for, since nobody knows, so he worked backwards to try and make you some profit (which is fine).”
Thank God I didn’t take the listing!
It continued to drop. Here is the timeline:
- Paid $600k, tried to flip it 9 days later.
- $665k to $645k over 51 days
- $575k to $540k over 104 days (new Realtor, gotta be the Realtor’s fault right?)
- $520k to $485k over 126 days
- Taken over by the bank at $580,000
- Sold for $465,000
With about $35k in mortgage payments.
That makes for a loss of $165,000!
Conclusion:
Real Estate is NOT a sure thing.
People can make millions quickly in Real Estate.
People can quickly go bankrupt in Real Estate.
I suggest running the 1/3rd Buyer Scenerio analysis.
- 1/3rd chance of the property going down
- 1/3rd chance of it staying flat
- 1/3rd chance of it going up.
If you have run the numbers and understand what COULD happen, then consider proceeding.
Shameless not so subliminal ad coming… Keep in mind that one way to lower your risk is by getting an agent that will help fight for that extra $5k or $50k when helping you buy a place.
Love to hear your comments.
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4006
Videos at YouTube.FranklyRealty.com
22314, Fairfax Va, DC Realty, Realtor
Posted in
Buying Risks. |
10 Comments »
I learned my approach to Real Estate from my mother growing up buying homes (insert “awe” here).
A Realtor’s job shouldn’t be to talk people into buying. However too frequently you’ll hear Realtors saying “Now is the time to buy” or “We have reached bottom.” Maybe they believe it, maybe they are brainwashed, or maybe they are lying. Irregardlessly* in reality Realtors don’t know where the market will be in 1 month, 1 year, 5 years or 10, and don’t believe somebody whose pitch is always the same… UP! (*yes that is a made up word to see if you were paying attention)
What many Realtor know is if they can convince you to buy, they might make another sale! More Sales = More $ for the Realtor
One lesson stood out most from my mother…
On a sunny spring day in 1995, my mother was working with her Buyer Agent Realtor, about to put in an offer. The Realtor kept looking over my mother’s shoulder as she was deciding on a price to offer on a house. The Realtor was not the Listing Agent, but her Buyer Agent (supposedly looking after her best interest). The Buyer Agent Realtor kept saying in a “salesy” fashion: “$XYZ would be a great price!”, or “You will make a ton in 2-3 years!” and “You should put $XYZ!”
My mother stopped her and said, “Let me ask you some questions,
- “You will make money if I buy this house right?”
The agent replied “Yes”
- “Will you be sharing in my risk if this property goes down?”
The agent replied “Sorry, No”
- “Will you be making more money, the higher this offer is?”
The agent replied “Yes”
- “Is the % likelihood of this deal being accepted go up with every $5,000 higher that you recommend we put in here? And thus the more likelihood of you getting paid?” The agent replied “Yes”
“Then please be quiet and let me think.”
(she probably wasn’t as nice as that).
Warning, blatant subliminal sales pitch approaching: When it comes to price, a Realtor’s job should be to delivery information, not suggestions.
The Realtor might use their experience and compare the bidding process to a trip to Vegas and say “at this price you might have a 25% chance of getting it, at this price an 80%”, but when asked “What should I pay?” a Realtor shouldn’t answer that since they have a bias and it isn’t their money. Only the buyer knows their risk levels, how the monthly payments will feel, and how much they love the place.
Don’t get me wrong, a good Realtor can help you get a lower price (ask for some testimonials) and come up with a strategy to do such, but they should not say “If I were you I would bid $XYZ.” Trust me (never trust anybody that says “Trust me”), the higher the price, the easier the job. Fighting to get that last $5k or $10k is the toughest part*, but important especially if the market goes down more, you’ll be glad you fought for that last $10k.
(*Note that some people would rather just buy at full price and have an easy transaction, we can do those too, whatever is important to the buyer.)
I can’t really list all the insider buyer agent techniques on a public Blog being read by my competition, but one example would be to not stop at finding one great home, but finding 2 or 3 houses and taking a “round robin” approach. Offering a price on one, and if that doesn’t work, bid on the next one, then the next and then back to the first with a slightly higher price and repeat as necessary (are you really supposed to “shampoo and repeat?”) until somebody bites.
And lastly, don’t trust any data from NAR, The National Association of Realtors. Just don’t do it. Ignore it. As Peter Coy wrote in Jan 8th’s BusinessWeek, NAR said on 12-12-05 Prediction: “The national median home price will rise about 6.1% in 2006. Over a full year, it has never declined since good record keeping began in 1968”- NAR. This was followed up by “The Reality: Through October (06), the median price of residential properties was down 3.5% from a year earlier.” (Actually probably more like 5% when you include seller subsidies, see earlier Blog on MRIS data.)
Yes they can make one mistake, but the NAR president repeatedly says we are at or near the bottom.” My earlier Blog exposes a NAR advertisement that says now is the time to “Buy Or Sell”, while only listing reasons to buy. How can one time happen to be perfect for both sides? I’ll tell you, when money is involved and it flows to the recommending party, that is how. Also the data is manipulated (see MRIS data report Blog).
JUST ADDED
Here was the T-Shirt that I was giving my clients at their closing. Even when buying a $3M house. This proves that I warned them about a potential bubble:
The 2004 version was featured in a 
Article (near end).
– – – – –
Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4006
Posted in
Buying Risks.,
Shady Agent Tricks |
16 Comments »
If you are putting in an offer to buy a house, and you aren’t using a FranklyRealty.com agent (God knows why you wouldn’t but lets just say you are stuck with your agent), make sure you have your agent look out for MLS fudging.
There are 2 levels of MLS fudging. One is a NVAR (Local Realtor association) violation and the other is borderline ethical. And there are 2 reasons agents fudge the MLS.
- BORDERLINE MLS FUDGING (like sugar-free fudge, is it really fudge?):
This is what happens when a listing agent wants to re-list a property they are already listing for sale. Maybe the house has sat for a few months or there is a big price change. Instead of a 2 minute change, they will withdraw one listing and spend 30-45 minutes reentering all the data.
This low-fat fudge will:
- a) Restart the Days On the Market “M” ticker, DOMM (The other ticker is DOMP which is ALL days for this Property regardless of normal relisting)
- b) Reset the “Original List Price”.
So if a house drops from $600k to $550k after 100 days, and the plan is to drop again, but to $500k, the “borderline fudger” will do a normal delist (expire or withdraw) and relist.
-
a) The new DOMM will be 1 (but the DOMP will be remain “101”)
- b) “Current List Price” will become $500k
- c) “Original List Price” will be $500k (the $600k is hidden and stays with the old listing)
80% of Realtors will see the DOMP at 101 and look back at the old listing to get more information before making an offer. I found one agent did this 17 times!
- ILLEGAL MLS FUDGING (very fattening fudge):
This fudge is harder to do. After delisting the property, the agent goes back to relist. The system by default will recognize the property by the address and ask you if you wish to pre-fill the Tax-ID and some other data from the tax records. And agent doing illegal fudging has to go out of their way to press NO and override the system by entering gibberish into a tax ID of 000000 and then another 40 minutes reentering data. (The MRIS claim that they have a system to protect against this, however I have seen it over a few dozen times.)
- This fattening fudge will:
- a) Restart BOTH the DOMM AND the DOMP
- b) Reset the “Original List Price”.
- c) Leave NO indication that this property ever was listed.
- It looks like a 100% brand new listing. This is a NVAR violation.
Maybe only 25% of Realtors will find this fudging. They know that when submitting an offer they should search for expires and withdrawn listings for that address (and variations like St vs Street and N vs North).
What a shame that we can’t trust our fellow Realtors to be honest.
In the graph above, that is not the default of what a Realtor sees after a search. I had to create a special search to put it in that form. It is much harder to find. Also note that in this case the first 4 light fudgings were from one agent and then a new agent took it on and did the Tax ID=0000 to reset everything. This is NOT as bad (still illegal) as one agent relisting multiple times using the 0000 trick.
NEW: Part 2:
Illegal MLS Fudging. 20% Chance You’ll See One
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, DC Realty, Realtor
Posted in
data manipulation,
Shady Agent Tricks |
19 Comments »
This blog is an extension on the blog “MLS Data Fudged By Realtors. Watch out!” This new post might not make sense without reading it first.
One blog reader asked me, “How frequently does MLS fudging really occurred. Are we talking once in a blue moon, is it commonplace or even the default?”
Great question!
They wanted a breakdown of the frequency of both the Fat-Free MLS Fudge (technically allowed which is the same agent relisting a property to reset some data like the DOMM not DOMP and Starting Price), and the Full-o-Fat MLS Fudging that is a MRIS violation, which resets the DOMM and DOMP and makes the listing look brand new, with no trace of the old listing.
Quick DOMM vs DOMP recap.
- DOMM= Days on the Market- MLS (days for that MLS listing only)
- DOMP= Days on the Market for the property (regardless of relistings, unless fudged)
Quick Full-o-Fudge MLS recap.
An agent can pull their listing and when given a 1 click option to restart it, bypass the default and put “00000” in the tax id box. This is an MRIS violation but done so that buyers and many agents won’t see how long it has been on the market, in hopes of getting a higher price.
My estimations:
I can’t get exact figures. There are probably over 10,000 active listings right now in this area. The system only allows us to pull up 500 at a time. While I was able to search for Tax ID 00* (* meaning anything after two zeros), and 999*, XX* and 123* I then had to manually look up EACH result to make sure it wasn’t a new construction or condo conversion (which don’t have Tax ID’s yet and putting in “000” is and acceptable and legit practice). Some of you might think I have too much time on my hand (maybe since I sometimes talk people OUT of buying), but I don’t have THAT much time.
So I pulled up one county and price range and did a sample analysis. 2400 active homes analyzed.
My search criteria:
Homes and condos in Fairfax County priced from $300,000 to $600,000 built before 2004.
The result was 2400. (Since the max search is 500 I had to do smaller $50k range searches and add them.)
Then I searched for tax ID of 00*,XX*, 999* and came up with about 40 results. Again, sometimes not having the Tax ID (which attaches a property to prior MLS listings) can be legit in cases of new construction, condo conversion and a couple other reasons.
So I took those 40 and opened another browser. I searched for that street address and included all Withdrawns, Temp off, and Expired to see if that property was previously listed and whether the Tax ID of 000 was used to reset the data.
I found 21 Full-o-Fat MLS Fudgings and 17 of those were from the same agent (vs a new agent taking on a listing and wanting to reset everything, which is also not allowed but not AS bad in my opinion).
So out of the sample of 2400 homes, I found 21. Which is just under 1%. This doesn’t seem like a lot and I do remember seeing it fairly frequently, so I started looking at that 1% another way.
Lets say an average buyer might go into about 7-10 homes, they probably have the agent look into about 20 homes online. That means there is a 20% (20, 1% chances) chance that you will come across a listing that has been fudged by the Realtor to deceive the public in order to get their listing sold faster.
Fat-Free MLS Fudge frequency?
So then I wanted to see how frequently a listing undergoes Fat-Free MLS Fudging, the act of relisting the property but not removing the Tax ID. This practice is allowed. Heck, one agent did it 17 times.
I couldn’t look at all 2400 homes, so I focused on 90. , the results from a price range search of $499,900 to $500,000 in Fairfax built before 2004.
25 of the 90 were relisted and had a different DOMM vs DOMP (defined above). This 25 is legit, and tells you that there is a ton of turnover of listings to a different agent. Sucks to be those that lose the listing agents losing those deals.
Of the 25 active listings with a DOMM and DOMP discrepancy
- 15 were new listings from one agent taking over for another agent. This is 100% legit.
- 10 were the same agent (Fat-Free Fudge, allowed but questionable)
- 3 (of the 10) were relisted and withdrawn 3 times for a total of 4 MLS #s each
- 1 (of the 10) was Full-o-Fat Fudged
Conclusion:
About 12% of listings get relisted by the same agent
About 3% of the time they relist it multiple times, sometimes 4 times.
About 1% of the listings (in the example of 90 and 2400) are fudged.
So if you look at 20 properties, there is a almost certain chance that a few were using the Fat-Free Fudge technique and probably a 20% chance that you will encounter the illegal fudging technique.
Why does this matter?
When bidding on a property, you should have ALL the available information. If a place appears to have just hit the market 5 days ago, there might be a little rush to winsecure it. If you bought it to then find out that it was really on the market for 300 days, you wouldn’t be happy that you were duped. Also the amount you offer might be lower if it sat for the same price for 200 days.
Recommendations:
- MRIS (our local MLS system), do a better job at catching these manipulations. A simple review of all 00* would be a start. Secondly impose fines and get serious about cracking down on this. (Email me if you want an address to complain to MRIS)
- Buyer Agent Realtors, report these violations to compliance, they can reset the listings.
- Listing Agent Realtors, stop fudging the MLS or risk losing your l
icense!
- Buyers, don’t be scared, just be aware and make sure your agent double checks into this before putting in an offer. Also ask your agent if their emailed reports use the DOMM or the DOMP (most use the DOMM).
Disclaimer: The data that I collected might not be statistically perfect, but it was the best that I could do. I would be happy to work with a research person to get more exact figures. Also the Fat-Free Fudge, which is allowed, is my opinion not kosher, many agents might debate this or say it is company policy. To each his own. I just wanted to bring up the debate.
Now talk amongst yourselves…
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6
Posted in
data manipulation,
Shady Agent Tricks |
25 Comments »
(This is a Virginia specific posting, disregard for other states)
Update: An Atlanta Realtor did research and found that the number of cases of Total Loss in Georgia was less likely than getting struck by lightening! I’m looking into Virginia’s frequency of Title Insurance claims. You can’t comfortably buy something if you don’t know the statistics behind it, but you also can’t opt out, so what do you do?
Owner’s Title Insurance is OPTIONAL! That doesn’t mean “don’t get it”, it means, “know what you are buying before/if you buy it.”
There are two types of Title Insurance when buying a house in Virginia.
- Lender’s Title Insurance. REQUIRED
This is a fixed price by the state and is required by your lender, so stop thinking about it. It is paid once at closing, it is NOT monthly.
For a $400k loan, this comes to about $1,000.
This is to protect the bank’s investments (loan to you) from a problem with the title.
- Owner’s Title Insurance. OPTIONAL
This covers what the Lender’s policy does not cover. Also a one time payment.
You have 3 options:
a) No coverage (rarely do people know this is an option!!)
b) “Standard” policy. $700 (reissue rates are less, more below about that)
c) “Premium” or “Alta” Policy. $1,000 ($500k house, $400k loan)
The OWNER’S TITLE policy will be the focus of this blog. This policy is 100% OPTIONAL.
90% to 95% of buyers buy the Owner’s policy. I have no problem with this, however I would guess that 80% of people buying this have no idea what it is or that they even have an option. That I have a problem with.
Why do people buy Owner’s coverage?
- It is snuck into the the closing documents (HUD1) by default with NO mention of it being Optional. Sometimes the “premium” policy is put in by default. That really bugs me.
- It is sold as being a blanket coverage that protects you from everything and the fear of losing your house, and going bankrupt. I have yet to get any stats on how often this happens. 1 out of 100? 1 out of 10,000? Once in the USA every year? Or does the insurance cover the costs to cover the $500-$5,000 in legal fees to clear up the issue?
- It isn’t disclosed that the title company selling you this insurance is making a 80% commission on selling you this policy.
- Realtors do not get a bonus for pushing this (thank God), but if a Realtor doesn’t say “you must get it” they will be exposed to potential future liability. For example, if they sell 100 homes and they tell their client NOT to get it, and 1 has an issue, guess who they will sue? So it is easier for Realtors just to say “buy it.” It doesn’t cost them a dime. We like to say “Learn about it, and then decide.”
I don’t mind Title companies making money. What I don’t like is the lack of disclosure. It is not clear to the buyer that this is optional and that most of the profits of the closing come from this. Not the token $200 “fee” they charge. They make their money from Title insurance.
Again, I am not saying NOT to buy Owner’s Title Insurance. I’m just saying:
- Know what it is.
- Who makes money if you buy it?
- Are you getting the basic or premium?
- Ask your Realtor or Title company for some statistics on how often these policies are engaged. (I’ve yet to get an answer for this one)
Examples to ponder:
- The closing company pitches Owner’s insurance as a nearly 100% coverage if something goes wrong with your title. However I spoke to a woman that had to sue her title company to get them to perform on her insurance. She put it this way… “I paid $1,000 for a policy, $800 goes to the closing company as a commission, $200 goes to the policy writer. For $200, how likely are you going to be protected from a $500,000 loss?”
- I was once at a closing in Falls Church. The buyer was a President of the Closing company. THE PRESIDENT OF A CLOSING COMPANY DID NOT BUY TITLE INSURANCE FOR HIS HOME. Keep in mind that he would effectively get a 80% discount and he STILL didn’t find it necessary for his personal home. I asked him why he wasn’t buying it and he said “I do the title search personally and I double checked and made sure there was nothing wrong with the Title history.” Then he had the nerve to say “But you should bring your buyer clients here and make sure they do buy the Owner’s policy.” This made no sense to me. Was he not going to double check my client’s Title history as well as his own personal search?
- Remember that you are buying the Lender’s policy too. If something was hugely wrong with the title, wouldn’t the Lender’s policy kick in to clean things up (as in legal fees)? This part isn’t clear to me. If the house is $500k and you put down $25k 5%), are you really paying to insure against $500k, or is it more of an insurance to protect the $25k you have put down?
On the other hand…
- I have spoken to a Realtor that has been in business for 20 years and she says you would be nuts to not get the policy. She has seen first hand one person that would have had major trouble if they didn’t buy the policy. Now does major trouble mean the loss of the house? All $500k or does it mean they would have had to pay $1,000 or $2,000 in legal fees. I would never pay $500 to insure against a 1 in XYZ chance of having to pay out $1,000. But I might pay $500 to cover $500,000 (if it really even covers you.)
- One of my favorite closing companies in Alexandria says that they use the Owner’s title insurance all the time to clear up title problems that come up. So A buyer buys a house in 2002, and buys a policy. IN 2007 they sell th house but something pops up on the title. This company says that since the seller bought the policy, they were able to close. If they hadn’t bought it… (it isn’t clear if the alternative was a) losing the home (probably not), cover legal fees to clear it up c) ability to close immediately vs delaying closing weeks or maybe months (most likely)
Basic vs Premium
The Premium main feature is that it is supposed to protect you beyond your purchase price. So if your $500k house appreciates to $600k, the basic policy will protect your $500k while the premium protects $600k.
My wish list:
1) That Owner’s Title Insurance would be renamed to “Owner’s Title Insurance (Optional)”, so that consumers would know they have a choice.
2) That I could find actual data on how often these policies are engaged. Are we talking 10% of the time? Once in 100,000? And of those what did it actually protect against. Consumers deserve to have this data.
Dear Closing Companies, can somebody post a comment answering these few questions:
- Out of your last 1,000 deals, how many times did an owner’s policy get engaged.
- Take the last 5, what would have happened to them if they didn’t have a policy?
- What actual real life “worst case” (because that is how policies are sold) examples do you have of somebody NOT having the policy and being adversely affected by this? What did they lose? $500 in legal bills or a $500k house?
Again, I’m not saying to get the Owner’s coverage or no
t. I don’t care if you do. If it makes you sleep better at night, great, I won’t be disappointed. I will be disappointed if you buy it blindly without understanding it.
Other little known tips:
1) Try and get a Reissue rate. If the former owner bought the property within the last 10 years, they probably have a policy. Track that down and save 20-30% on the Owner’s portion of the Title insurance. If lost, the former closing company can send a fax for $25 to prove the insurance was purchased. Take that $300 in savings and use $10 and donate it to StBernardProject.org.
Conclusion
I am in NO WAY saying not to buy Owner’s Title Insurance. I am not even implying it. I am just saying to make sure you know what you are getting. I prefer to give information instead of giving recommendations, but I can say that if you are at all uncomfortable waiving Owner’s Title insurance, then you SHOULD get it so you can sleep well at night. This is not one of those, “when in doubt, don’t get it” issues.
Here is a link comparing the standard policy versus the premium policy. I still don’t think this is enough information to make an informed decision. Click for link to Owner’s Title Policy Comparison chart. This sales sheet is obviously designed to make the premium policy look like it covers 5 times that of a standard policy.
75% of my clients end up getting the standard. Maybe a couple have bought the premium. I don’t personally buy any Owner’s title insurance, but that is just me, and NOT a recommendation.
Comments? Anybody use one of these policies?
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4006
Videos at YouTube.FranklyRealty.com
Housing bubble? Arlington, Alexandria, mls, homes, Real 22201, 22314, Fairfax Va, DC Realty, Realtor
Posted in
Title Insurance? Optional? |
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A reporter finally questions Title Insurance! 95% profit vs 30% for most other types of insurance?
I don’t want this blog to be about reposting articles but
news articles, but this is the first that I have read that showed some actual stats and questioned Title Insurance. Too bad it was a nationwide article so it wasn’t able to address Virginia specific matters like the required Lenders Title vs the Optional Owner’s Title policy (Va specific).
First you have to have read my
Owner’s Title Insurance.95% Buy It, 10% Know Why!
Then you can read Washington Post’s article Title Insurance Premiums Rose With Housing Boom
Here are some highlights:
- “The American Land Title Association defends the $17 billion industry…” and it goes on to give ONE completely random example of ONE family that benefited from the insurance.
- “Industry experts say only about 4 to 6 percent of title insurance premiums are paid out to satisfy claims. That’s much lower than the 70 percent-plus rate typical of other lines of property and casualty insurance.” Translation: Most insurance is only 30% profit. This insurance is 95% profit. With so little going out to pay claims, is the risk/reward worth it?
Again, this isn’t a recommendation, just food for thought.
NEW: This is a website from somebody that found my blog on title insurance. He got so ticked that there wasn’t proper disclosure that he made the closing company refund him some of his payment and he made a website to make people more aware. I think his facts might be off a little, (also rules change by state) but the point is to get another perspective: http://www.title-ins.com/
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4OO6 Please report all typos, I don’t like looking stupid. If you like this post, sign up for new blogs daily, use the form on the right of the page.
Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor
Posted in
Title Insurance? Optional? |
20 Comments »
Make sure if you are going to buy, that you buy for the right reasons.
Don’t be tricked or manipulated with the common myths that you might hear from Realtors on buying.
Here are some MYTHS covered in the video below:
- “You have to buy for the tax savings”, or the
- “What, you want to make your Landlord rich”
- “Buying in DC is a no-brainer, things can never go down”
- “I’ll just rent it if I can’t sell it”
Also read this article that I helped gather information for from the New York Times: Is It Better to Buy or Rent?
– Written by Frank More at YouTube.FranklyRealty.com
Posted in
Buying Risks. |
16 Comments »
For those that didn’t see Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan, that was a “NOT joke.”
Forbes came out with an article reviewing America’s Most Admired Professions and Real Estate Agents were… amongst the bottom 3 in the Harris poll.
Watch this:
As a Real Estate Agent and Realtor, this is embarrassing. As you will see throughout this blog, we will try to give you an insider perspective. Also we pledge to never talk you into buying. But if you are ready to buy, we’ll help and make sure you are protected (as much as possible) from a further downturn with an aggressive price drop.
This is where my fully disclosed shameless plug will end, welcome to FranklyRealty.com. 
– Written by Frank Borges LL0SA– Broker/Owner FranklyRealty.com
703-827-4006
Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria, MLS, Homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC
Posted in
Shady Agent Tricks |
No Comments »
CNBC STREET SIGNS: Homebuyer Beware
Do you know what your Realtor is making? You should.
Now that the market is slowing down, the incentives offered Buyer agents has
increased. Not across the board, but occasionally. I have recently seen incentives as high as 10% in Miami! And I saw one ad where they are offering a vacation to the Realtor. But the WORST I have seen is “$5,000 bonus for a full price offer.” This should be banned (it might be). The Buyer agent (even though paid by the seller) is supposed to be working for the buyer, not the seller. An agent that takes a $5,000 bribe instead of working to get their client, $5k or $10k is an embarrassment.
Buyers should know exactly what their Realtor is making?
How do you do this? You can start with an “Exclusive Buyer Agency Agreement.” I know what some of you are thinking “Oh, I don’t sign those, I would rather work 4 agents to help me find a home.” Ok, I can see how that initially would sound reasonable. But put yourself in the shoes of the agents. How likely is that agent going to be to help you try and fight for an extra $5,000 or $10,000 off? Human nature would kick in and say “why should I be aggressive on this offer if they might just go elsewhere if this deal doesn’t happen.”
Watch CNBC interview Frank Borges LLosa from FranklyRealty.com on the issue of extra bonuses. This interview pulled from the article “Do Real-Estate Agents Have a Secret Agenda?” in the And in 
article: “Home Buyer, Beware”.
At FranklyRealty.com we don’t believe in bribes and kickbacks. We agree up front for what we will be paid and anything extra is given back to you at closing. That way you know we aren’t showing you something just because of a bonus.
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4006
Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria,
Homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor
Posted in
Press,
Shady Agent Tricks |
3 Comments »
Update: a Part 2 link is at the bottom.
MRIS stands for Metropolitan Regional Information Systems. They are the company that provides the Washington DC area MLS system for all Realtors. They also provide data to consumers and the press to reveal how the market is doing. The only problem is that the data is limited and can easily be misinterpreted without giving proper clarification.
When I first saw these numbers, I was shocked that the zip code 22204 was able to get 98.6% of the list price. Only a drop of 1.4%? How is that possible in such a slow market?
So I set out to recreate the numbers and I finally think that I understand how they came up with their data. I don’t question whether the data is correct, I just question how it is presented.
I believe now that the “% of Asking Price” means the “% of the last and lowest asking list price to the sold price, excluding seller subsidies.” So if a house was initially listed at:
Hypothetical example:
$600,000 Starting Price
$500,000 Lowered List Price
$495,000 Contract price
$10,000 Seller subsidy (about average for 22204)
________
$485,000 Net (counting the $10,000)
= a 1% drop using MRIS’s data
= a 20% drop from the top number.
So if you were to include the subsidy and the starting price, the price drop would be almost 20% lower, yet this hypothetical numbers would be reported by the MRIS as a 1% drop ($500k to $495k).
So back to recreating the actual numbers from MRIS. (My Excel document is available upon request.)
I took all homes for the period of 7/01/06 to 9/30/06. I found 72. This number is off from their their 128, I’m not sure why.
From this data I was able to come very close to recreating their numbers (option 1 below).
1) % of Final list price was 98.4% (vs their 98.6%, no big deal).
2) % of Final list price MINUS seller subsidy= 96.8%
3) % of Original list price MINUS seller subsidy= 94.25%
4) % of Highest price (prior Realtor or listing#) MINUS seller subsidy= 92.2%
Using the $600k example from earlier, #3 takes the starting price of $600k and counts the $10,000 seller to make a final closed price of $485,000. However #4 above takes into account if the listing had a prior agent with an even higher price. So with #4 I took the starting price of a house regardless of how many Realtors had tried to sell it, or how many times one Realtor relisted it to reset the Days on the Market.
So while the MRIS data is not necessarily incorrect, the public should know that it does NOT mean that the average house in that zip code only dropped 1.4% from what the seller started with. That number is probably closer to an 8% drop once you count the seller subsidy (which was near 0 a couple years ago) and the initial starting price.
Recalculated drop for 22204: 8% (92.2% of the starting list price, including subsidies)
Conclusion: Don’t assume information that is given to you is correct, question how the numbers are compiled.
Update: I have a Part 2 on this posting: Part 2: Illegal MLS Fudging. 20% Chance You’ll See 1.
And make sure you see the 22 other blogs on shady agent tricks and things that buyers should be aware of. Blog.FranklyRealty.com
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4006
Videos at YouTube.FranklyRealty.com
Keywords: DOM DOMM DOMP CDOM Days on the Market, Housing bubble? Arlington, Alexandria, MLS MRIS, search, Homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor
Posted in
Buying Advice,
data manipulation,
Shady Agent Tricks |
3 Comments »
Recently NAR (National Association of Realtors) came out with this ad:
Click for PDF of ad and read: NAR’s site supporting the ad
The ad talks about the benefits of buying today, yet it says “or sell”!
Here are the benefit of “buying or selling” as explained
in the ad:
1) INTEREST RATES NEAR RECORD LOWS
Frankly comment: While rates are low compared to the last 40 years, rates are higher than just a year or two ago. As a percentage as much as 50% higher with ARMs! So the buying power for a $600k house is now about $400k for a buyer using a 5 year ARM (note that the 5 year ARM is about the same price as a 30 year fix, so far fewer people are buying ARMs). On the flip side, will rates go up more? If they go from 6 to 7%, it isn’t a 1% increase, it is a 16% DECREASE in buying power. So this point DOES have some merit for a reason to buy and should be considered.
2) LARGE INVENTORY WON’T LAST
Frankly comment: Ok, so there are a ton of homes on the market. And since it is taking longer to sell, there are MORE homes every month (excluding seasonality). They aren’t going anywhere (except delisting if sellers don’t get their price and decide to rent). I disagree with the notion that you should, “hurry up the market is flooded with inventory that will go away soon.” Actually I think that is kind of silly.
3) PRICES OVERALL HAVE STABILIZED
Frankly comment: I don’t believe these numbers. In part because they don’t include the seller subsidy, which is now near 2%! (up from nearly zero 2 years ago)
I continue to see prices drop. Buyers need to make sure they are aggressive and getting a great price to help shelter any possible further decline.
4) POSITIVE OUTLOOK
Frankly comment: Uncertain. There are 5 reports that show houses will decline for the 5 reports that show they will increase. I don’t see any immediate and significant bounce upward. Overall, the economic outlook is strong.
5) REAL ESTATE IS A GREAT INVESTMENT
Frankly comment: True, as long as you
a) buy aggressively getting a great price and
b) your horizon is long enough.
If you have a horizon of over 10 years, if history repeats itself, there has never been a decline. But 10 years is a long time. You MUST be prepared for the “what if” you need to sell early and “what if” prices go down. Can you absorb that? And watch out for the “I’ll just rent it” excuse.
6) DON’T DELAY
Frankly comment: Don’t try and time the market. If you buy for the right reasons and with a long enough of a horizon, you should be fine. As for the “Don’t Delay”, I would agree with that……….. NOT.
How can you have an ad that says it is a good time to buy and a good time to sell at the same time?
No wonder T-Mobile made fun of us with this TV ad:
(note that they talk about “Real Estate Agents” and not “Realtors”, I’ll let you figure out the difference)
I have sent an official complaint to NVAR (local) for embracing this ad.
- Their reply was: “Thank you for your feedback and suggestions.”
I have sent an official complaint to NAR (national) for creating this ad:
- Their reply was: “Actually, the word I have is that the ad is tremendously effective and highly popular. Sorry that we dont agree that more buyers will make it a great time to sell as well as buy.”
So in case you didn’t read the NAR response carefully, they are claiming that there are more buyers now and thus a great time to sell. Does that clarify things for everyone? Is this ad more clear?
Please post your thoughts on this ad. Does it make sense to you to advertise that it is a good time to buy and sell? Meanwhile only listing benefits for buying?
– Written by Frank Borges LL0SA- Broker/Owner FranklyRealty.com
703-827-4006
Videos at YouTube.FranklyRealty.com
Keywords: Housing bubble? Arlington, Alexandria, MLS, MRIS, homesdatabase,
Homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor
Posted in
Trust NAR? |
10 Comments »
