Future of the Real Estate Market

[IIC]

I called my cousin last night and was talking to him about real estate. I asked him about the market and how he was dealing with the slow down. He told me it is not a problem for him because he is not greedy. He said it is always a buyers market. I told him that this does not make sense and his response was again I do not get greedy. Then he went on to explain the greed factor in real estate. I was blown away with what he was saying. In fact the same principle applies to the stock market.

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

Runner...I hope I never meet your cousin...I eat guys like him for breakfast.

[skiracer]

Runner...I hope I never meet your cousin...I eat guys like him for breakfast.

First of all it is never always anybody's market. It cycles between the two forces of buyers and sellers as the real estate market itself cycles thru strong and weak periods. Lowering a home $10,000 might increase and generate some interest but in a weak or weakening marketplace it sometimes takes more incentive than 10,000. But lowering the price is a start in the right direction.

Doug,
Isn't that kind of an inflammatory statement. You don't even know the guy or how he conducts his business.

[Runner]

Runner...I hope I never meet your cousin...I eat guys like him for breakfast.

Smart ass.... let me guess you work for a real estate COMPANY!!!

[skiracer]

Smart ass.... let me guess you work for a real estate COMPANY!!!

Runner,
Whenever a parcel, whether residental or commercial, isn't selling at the price you are trying to market it at the first and foremost item that a realtor can and will do is to lower the price whatever they think it enough to stimulate interest. Alot depends on the owner/seller as to what they have to get out of the property as to what you as the realtor can do in lowering the price. Whenever I do a CMA, comparable market analysis, on a prospective listing I always have a plan that takes in what the seller's needs are in netting out on the deal, what the comparable homes or properties in that area are being priced at in that days market, what comparable homes have sold for in the past 3/6 months in that area, and what the seller's bottom line is as far as consideration in regard to dropping the price if the parcel doesn't sell at the initial pricing. It's like everything else in business or trading. You have to have a well thought out plan that tries to cover everything that may come up in marketing the home or the trade.
The first line of defense is to lower the price. Secondly we try to include some of the appliances to generate lagging interest. Sometimes we will ask the seller to help with the points if the mortgage application involves points. Sometimes I even give back some of my end of the commission but I try to avoid that and it only happens under extreme circumstances.
Commercial properties are similiar to residential properties but the commission structure is quite different and the pricing and bargaining is much more complex. Your cousin is right on the money in his logic about lowering the price. Money talks especially when you can specifically show that by lowering the price accordingly you are presenting the prospective buyer with a good deal comparatively speaking. And I have found in life that you always catch more flies with honey even if you don't necessarily mean to be nice to them.

[dmk112]

Check out patrick.net

Pretty interesting, this guy spends his time writing about how the real estate market will crash, is a bubble, etc..

[skiracer]

Check out patrick.net

Pretty interesting, this guy spends his time writing about how the real estate market will crash, is a bubble, etc..

Do you agree with anything he has to say about it being a bubble?

[IIC]

Doug,
Isn't that kind of an inflammatory statement. You don't even know the guy or how he conducts his business.

Read it again Ski...

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

This is a classic...although legal... con for agents to pull. The house is worth $250,000...right???...But his cousin, being Mr. Nice Guy, drops his commission a little...By how much???...My guess is about $300 off the $7,500 he would've made...And of course the buyer is happy...He just got a house for less than it's worth...BUT WHAT ABOUT THE SELLER???...he just got over $9,000 less than his house was worth because Mr. Nice Guy was not greedy.

Everybody is happy...WHAT ABOUT THE SELLER that Runner's cousin screwed over???...Runner's cousin can twist words around any way he wants...But saying he is not greedy is something I don't buy...He wanted to take what he could get and get on to the next deal IMO. Heck, if he could convince enough suckers to lower their price $50,000 below what it's worth he'd be a friggin' billionaire next year.

PS...Runner, no offense personally...there are plenty of guys like your cousin running around.

[Runner]

Read it again Ski...

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

This is a classic...although legal... con for agents to pull. The house is worth $250,000...right???...But his cousin, being Mr. Nice Guy, drops his commission a little...By how much???...My guess is about $300 off the $7,500 he would've made...And of course the buyer is happy...He just got a house for less than it's worth...BUT WHAT ABOUT THE SELLER???...he just got over $9,000 less than his house was worth because Mr. Nice Guy was not greedy.

Everybody is happy...WHAT ABOUT THE SELLER that Runner's cousin screwed over???...Runner's cousin can twist words around any way he wants...But saying he is not greedy is something I don't buy...He wanted to take what he could get and get on to the next deal IMO. Heck, if he could convince enough suckers to lower their price $50,000 below what it's worth he'd be a friggin' billionaire next year.

PS...Runner, no offense personally...there are plenty of guys like your cousin running around.

Doug, he owns the houses he sells..

[Runner]

If you own your house and bot it under market value I would think you can be a lot more flexible with the sale.. many people are in distress situations and are not looking to sell for a profit.. Does this makes any sense?

[skiracer]

Runner...I hope I never meet your cousin...I eat guys like him for breakfast.

Doug,
Believe me I did read your post. Did I miss something here or are you trying to wiggle out of what you said. You should read your quote. You're the one that said what you said! I just thought it was somewhat inflammatory on your part to make a statement like that. I read the post several times and still it rings the same way to me. I don't see how you can see it or try to explain it away any differently. I thought it was a foolish statement and still do. This is how people do real estate sales. It is the most used strategy in the business. If after a period of time it doesn't sell it's overpriced for whatever reasons and the price has to be readjusted. But that doesn't have a thing to do with your statement being off the wall. You don't even know the guy. What would your reaction be if someone said the same thing about your cousin? Or was it supposed to be a joke? And you should spend a moment reading my other post. It will provide some insight as to how it works. Your last post just doesn't hold any water at all. It is just the way real estate transactions get done.

[Runner]

Here is something I’ve been thinking and would love to hear some thoughts from MM members…

Say I find a house in foreclosure and I do my title search and find no liens are on the property. I talk with the owners and find they are 6 months behind in payments. Can I help this person get out of a jam?

I have them sign the appropriate paper work, I catch the payments up and take over the loan. Now say the house is worth 250 and they owe 150. I spent say 6 on back payments and make the payment each month on time.

I get the house prepped and sell it for 220. Would one possibly walk from the table with a little under 94? Then deduct the 15% tax or 14 or clear around 80..

I don’t know if this is how things work, as I do not have a clue about real estate. Was wondering if something like this is possible..

[Lyehopper]

Read it again Ski...

Example:

A realtor is selling a house for 250K down the street from where my cousin is selling one.

My cousin drops his profit a little and lists the house that is worth 250K to 240K. He sells the house because it is a buyers market. He makes a nice profit and the realtor makes 6% commission if it sells. The buyer is now happy because he got a great deal. My cousin is happy because he made a nice profit…. In a nutshell this is how he is dealing with the slow down and has 3 houses closing this week. Everyone loves a deal…. Of course it is not this simple and he did say you must do the DD before entering into any deal.

This is a classic...although legal... con for agents to pull. The house is worth $250,000...right???...But his cousin, being Mr. Nice Guy, drops his commission a little...By how much???...My guess is about $300 off the $7,500 he would've made...And of course the buyer is happy...He just got a house for less than it's worth...BUT WHAT ABOUT THE SELLER???...he just got over $9,000 less than his house was worth because Mr. Nice Guy was not greedy.

Everybody is happy...WHAT ABOUT THE SELLER that Runner's cousin screwed over???...Runner's cousin can twist words around any way he wants...But saying he is not greedy is something I don't buy...He wanted to take what he could get and get on to the next deal IMO. Heck, if he could convince enough suckers to lower their price $50,000 below what it's worth he'd be a friggin' billionaire next year.

PS...Runner, no offense personally...there are plenty of guys like your cousin running around.

Doug-E-FRESH! DUDE! Runner's cousin owns the freakin' house.LOL!.... His point is this; Why be greedy? Sell that house for a lesser profit, beat out the competition and move on to the next deal, much like a stock trade.... Read his post again.

Hey Doug.... I don't understand your argument here if Runner's cousin was just a listing agent.... An agent can't lower the price without the owners OK anyway. AND what's wrong with an agent taking a hit on his commission if he needs to. I've made "deals" with my RE broker a few times for him to cut his commission for the "sake of the deal". And he does it.... Because he wants to continue to be my agent.

[Runner]

Runner,
Whenever a parcel, whether residental or commercial, isn't selling at the price you are trying to market it at the first and foremost item that a realtor can and will do is to lower the price whatever they think it enough to stimulate interest. Alot depends on the owner/seller as to what they have to get out of the property as to what you as the realtor can do in lowering the price. Whenever I do a CMA, comparable market analysis, on a prospective listing I always have a plan that takes in what the seller's needs are in netting out on the deal, what the comparable homes or properties in that area are being priced at in that days market, what comparable homes have sold for in the past 3/6 months in that area, and what the seller's bottom line is as far as consideration in regard to dropping the price if the parcel doesn't sell at the initial pricing. It's like everything else in business or trading. You have to have a well thought out plan that tries to cover everything that may come up in marketing the home or the trade.
The first line of defense is to lower the price. Secondly we try to include some of the appliances to generate lagging interest. Sometimes we will ask the seller to help with the points if the mortgage application involves points. Sometimes I even give back some of my end of the commission but I try to avoid that and it only happens under extreme circumstances.
Commercial properties are similiar to residential properties but the commission structure is quite different and the pricing and bargaining is much more complex. Your cousin is right on the money in his logic about lowering the price. Money talks especially when you can specifically show that by lowering the price accordingly you are presenting the prospective buyer with a good deal comparatively speaking. And I have found in life that you always catch more flies with honey even if you don't necessarily mean to be nice to them.

Ski, once again you raise some awesome points. I was always under the assumption that the realtor does not have the sellers best interest at heart..

[skiracer]

Here is something I’ve been thinking and would love to hear some thoughts from MM members…

Say I find a house in foreclosure and I do my title search and find no liens are on the property. I talk with the owners and find they are 6 months behind in payments. Can I help this person get out of a jam?

I have them sign the appropriate paper work, I catch the payments up and take over the loan. Now say the house is worth 250 and they owe 150. I spent say 6 on back payments and make the payment each month on time.

I get the house prepped and sell it for 220. Would one possibly walk from the table with a little under 94? Then deduct the 15% tax or 14 or clear around 80..

I don’t know if this is how things work, as I do not have a clue about real estate. Was wondering if something like this is possible..

It the balance on their mortgage is 150,000 then they have about 90,000/100,000 in equity less the 6 months in arrears give or take a few thousand. Would you expect them to walk away without taking anything with them for that just because they are behind 6 months on their mortgage payments and in the foreclosure process. If they knew the house was worth 250,000 do you think they could find a buyer somewhere that would give them 40,000/50,000 for the house as is and sell the house to them before the bank actually foreclosed and took the house away from them. Then the new owner owns the balance of the mortgage (the house) for 150,000 plus the 40/50,000 they gave the old owners which puts them in the home for around 200,000 and the new owner now owns the equity of 50,000 themselves which is the worth of the home less the 50,000 they gave to the original owners and the mortgage balance. The mortgage lenders don't want to be in the "owning homes business" as much as they want to lend the money out for 20/30 years and make the interest off the loan or sell the loan to Fannie Mae and take their profit and go. It would be a great deal for you if you could find someone that would do that but I don't see many people walking away from 90,000/100,000 equity in a home for just someone catching them up and taking everything just for doing that. Unless I'm not understanding what you are saying Runner. Please correct me if I'm misunderstanding something about what you are talking about.

[Runner]

It the balance on their mortgage is 150,000 then they have about 90,000/100,000 in equity less the 6 months in arrears give or take a few thousand. Would you expect them to walk away without taking anything with them for that just because they are behind 6 months on their mortgage payments and in the foreclosure process. If they knew the house was worth 250,000 do you think they could find a buyer somewhere that would give them 40,000/50,000 for the house as is and sell the house to them before the bank actually foreclosed and took the house away from them. Then the new owner owns the balance of the mortgage (the house) for 150,000 plus the 40/50,000 they gave the old owners which puts them in the home for around 200,000 and the new owner now owns the equity of 50,000 themselves which is the worth of the home less the 50,000 they gave to the original owners and the mortgage balance. The mortgage lenders don't want to be in the "owning homes business" as much as they want to lend the money out for 20/30 years and make the interest off the loan or sell the loan to Fannie Mae and take their profit and go. It would be a great deal for you if you could find someone that would do that but I don't see many people walking away from 90,000/100,000 equity in a home for just someone catching them up and taking everything just for doing that. Unless I'm not understanding what you are saying Runner. Please correct me if I'm misunderstanding something about what you are talking about.

Ski, you understood my post correctly. I see your point as to why would they walk with out getting something for the deal… I made this up and was curious as to if this might work. I can see your point crystal clear…. Thanks for posting