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  • September 5, 2010 at 12:46 PM #17914
    drboom
    Participant

    Picking up from another thread. Background: I claimed to have done well when I purchased my house without getting professional guidance on what and where to buy and how much much to pay.

    A couple of our esteemed piggie RE professionals were incredulous and insisted I couldn’t possibly know what I was talking about. It ended up thusly:

    [quote]… as much as you claim to know the comps there is no way you can compare it properly without access to all the comps not just the ones you have seen as well as comps lying just outside the area you bought. there are also remarks explaining concessions made as well as financing differences to consider.[/quote]

    I got this line of thought from almost everyone I dealt with in the RE world: “We are professionals, and we have special insight. Laymen are helpless and ignorant without us.”

    The quote above illustrates this point perfectly: a pedantic explanation of the obvious couched in a way to make me think there’s some magic in a simple market analysis. Can you imagine someone trying that with used cars? They’d be laughed out of the forum.

    To address the specific points raised:

    1) I claim to know all the comps because I have the sales history going back to the 1970s for every single house in the development. I’ve also followed every listing in the area through to closing for two years.
    2) Comps outside the area are pointless since I have a time series of near-identical comps in the area … and I don’t want to live outside the area. Yes, I understand the value of seeing how my subdivision is doing vs. the market at large and have done so.
    3) Almost every single sale in my area over the relevant time period has been a short sale or REO. Bidding was fierce until the gubmint money ran out. Very few concessions, if any, are being made on those sales. Side deals like mine aren’t captured by the MLS anyway, so I wouldn’t rely too heavily on that.
    4) Financing differences matter a lot in the new house market and with e.g. condo conversions. In-house/”preferred lender” financing can result in some misleading “sale” prices for sure. But there aren’t any condo conversions around here and the newest houses were built in the 1960s. Resale financing isn’t as creative and has little or nothing to do with the reported closing price.

    Twenty or thirty years ago my dear fellow Pigg would have had a point: data access was limited to ordained members of the priesthood. But times have changed. The mortgage guys don’t like the situation very much either–efficient price discovery tends to lower profits.

    All that aside, the really annoying and dangerous thing is the “professional’s” readiness to dismiss outside opinions as uninformed or worse. Just one example: I got static for years when I was predicting the housing crash to anyone who would listen. The “professionals”, as a rule, didn’t even try to argue with me; they just said that, in their professional opinion, I was wrong. I found no exceptions to the prevailing RE groupthink. Now all I get is excuses from the same people. These are otherwise fairly bright folks, but all they do is talk to other “insiders” so they fail to get the big picture.

    Do not fall for the fallacy that esoteric technical knowledge–like which form to fill out and when–makes a “professional” smarter than everyone else. Given the industry’s track record, I’d advise the pros to take a more humble approach.

    If any pro wants to argue with me, please tell me one thing first: what proportion of your past buyers from 2003-2007 are now underwater or worse? If you knew a crash was coming, why didn’t you serve their best interests? If you didn’t know or denied it was coming, how do you explain yourself to the clients who trusted your professional judgment?

    September 5, 2010 at 2:03 PM #600673
    njtosd
    Participant

    drboom-
    I completely agree with you. I have to say that the attitude taken by one of the realtors in that other thread was very high handed – for example, his/her (apparently) unilateral decision to refuse to deal with unrepresented buyers. I didn’t see any suggestion that he checked with his clients before turning potential buyers away. . .
    Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent). Interestingly, the article also pointed out that agents selling their own homes left those homes on the market longer without changing the price (as compared to sellers represented by agents), waited longer to accept an offer and ultimately sold for approx. 3% more than the statistics suggested that similar houses were selling for. Because they got the full 3%, the authors suggested, it was worth the extra effort. Had they only been receiving a commission on that 3%, the extra effort wouldn’t have been economically justified.
    Finally, we sold our home in North County San Diego three years ago (2007). We insisted on setting the price $125,000 higher than the agent (very well known in the area) recommended. We received three offers within two weeks and ultimately sold for $10,000 less than asking price ($115,000 more than the agent had recommended). Yes, maybe it was a fluke, but I think people should have more respect for their own instincts. And, as I mentioned in that other thread, a good real estate attorney should be able to give you even more value than an agent.

    September 5, 2010 at 2:03 PM #600764
    njtosd
    Participant

    drboom-
    I completely agree with you. I have to say that the attitude taken by one of the realtors in that other thread was very high handed – for example, his/her (apparently) unilateral decision to refuse to deal with unrepresented buyers. I didn’t see any suggestion that he checked with his clients before turning potential buyers away. . .
    Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent). Interestingly, the article also pointed out that agents selling their own homes left those homes on the market longer without changing the price (as compared to sellers represented by agents), waited longer to accept an offer and ultimately sold for approx. 3% more than the statistics suggested that similar houses were selling for. Because they got the full 3%, the authors suggested, it was worth the extra effort. Had they only been receiving a commission on that 3%, the extra effort wouldn’t have been economically justified.
    Finally, we sold our home in North County San Diego three years ago (2007). We insisted on setting the price $125,000 higher than the agent (very well known in the area) recommended. We received three offers within two weeks and ultimately sold for $10,000 less than asking price ($115,000 more than the agent had recommended). Yes, maybe it was a fluke, but I think people should have more respect for their own instincts. And, as I mentioned in that other thread, a good real estate attorney should be able to give you even more value than an agent.

    September 5, 2010 at 2:03 PM #601311
    njtosd
    Participant

    drboom-
    I completely agree with you. I have to say that the attitude taken by one of the realtors in that other thread was very high handed – for example, his/her (apparently) unilateral decision to refuse to deal with unrepresented buyers. I didn’t see any suggestion that he checked with his clients before turning potential buyers away. . .
    Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent). Interestingly, the article also pointed out that agents selling their own homes left those homes on the market longer without changing the price (as compared to sellers represented by agents), waited longer to accept an offer and ultimately sold for approx. 3% more than the statistics suggested that similar houses were selling for. Because they got the full 3%, the authors suggested, it was worth the extra effort. Had they only been receiving a commission on that 3%, the extra effort wouldn’t have been economically justified.
    Finally, we sold our home in North County San Diego three years ago (2007). We insisted on setting the price $125,000 higher than the agent (very well known in the area) recommended. We received three offers within two weeks and ultimately sold for $10,000 less than asking price ($115,000 more than the agent had recommended). Yes, maybe it was a fluke, but I think people should have more respect for their own instincts. And, as I mentioned in that other thread, a good real estate attorney should be able to give you even more value than an agent.

    September 5, 2010 at 2:03 PM #601417
    njtosd
    Participant

    drboom-
    I completely agree with you. I have to say that the attitude taken by one of the realtors in that other thread was very high handed – for example, his/her (apparently) unilateral decision to refuse to deal with unrepresented buyers. I didn’t see any suggestion that he checked with his clients before turning potential buyers away. . .
    Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent). Interestingly, the article also pointed out that agents selling their own homes left those homes on the market longer without changing the price (as compared to sellers represented by agents), waited longer to accept an offer and ultimately sold for approx. 3% more than the statistics suggested that similar houses were selling for. Because they got the full 3%, the authors suggested, it was worth the extra effort. Had they only been receiving a commission on that 3%, the extra effort wouldn’t have been economically justified.
    Finally, we sold our home in North County San Diego three years ago (2007). We insisted on setting the price $125,000 higher than the agent (very well known in the area) recommended. We received three offers within two weeks and ultimately sold for $10,000 less than asking price ($115,000 more than the agent had recommended). Yes, maybe it was a fluke, but I think people should have more respect for their own instincts. And, as I mentioned in that other thread, a good real estate attorney should be able to give you even more value than an agent.

    September 5, 2010 at 2:03 PM #601735
    njtosd
    Participant

    drboom-
    I completely agree with you. I have to say that the attitude taken by one of the realtors in that other thread was very high handed – for example, his/her (apparently) unilateral decision to refuse to deal with unrepresented buyers. I didn’t see any suggestion that he checked with his clients before turning potential buyers away. . .
    Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent). Interestingly, the article also pointed out that agents selling their own homes left those homes on the market longer without changing the price (as compared to sellers represented by agents), waited longer to accept an offer and ultimately sold for approx. 3% more than the statistics suggested that similar houses were selling for. Because they got the full 3%, the authors suggested, it was worth the extra effort. Had they only been receiving a commission on that 3%, the extra effort wouldn’t have been economically justified.
    Finally, we sold our home in North County San Diego three years ago (2007). We insisted on setting the price $125,000 higher than the agent (very well known in the area) recommended. We received three offers within two weeks and ultimately sold for $10,000 less than asking price ($115,000 more than the agent had recommended). Yes, maybe it was a fluke, but I think people should have more respect for their own instincts. And, as I mentioned in that other thread, a good real estate attorney should be able to give you even more value than an agent.

    September 5, 2010 at 5:17 PM #600703
    bearishgurl
    Participant

    [quote=njtosd]. . . Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent).[/quote](emphasis added)

    Fascinating, njosd, I’ll look up the book.

    I stand by my assertion that buying a FSBO does NOT save the buyer any money. Therefore, I would surmise that eliminating commission would shave little to nothing off the the purchase price for the buyer.

    September 5, 2010 at 5:17 PM #600794
    bearishgurl
    Participant

    [quote=njtosd]. . . Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent).[/quote](emphasis added)

    Fascinating, njosd, I’ll look up the book.

    I stand by my assertion that buying a FSBO does NOT save the buyer any money. Therefore, I would surmise that eliminating commission would shave little to nothing off the the purchase price for the buyer.

    September 5, 2010 at 5:17 PM #601341
    bearishgurl
    Participant

    [quote=njtosd]. . . Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent).[/quote](emphasis added)

    Fascinating, njosd, I’ll look up the book.

    I stand by my assertion that buying a FSBO does NOT save the buyer any money. Therefore, I would surmise that eliminating commission would shave little to nothing off the the purchase price for the buyer.

    September 5, 2010 at 5:17 PM #601447
    bearishgurl
    Participant

    [quote=njtosd]. . . Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent).[/quote](emphasis added)

    Fascinating, njosd, I’ll look up the book.

    I stand by my assertion that buying a FSBO does NOT save the buyer any money. Therefore, I would surmise that eliminating commission would shave little to nothing off the the purchase price for the buyer.

    September 5, 2010 at 5:17 PM #601765
    bearishgurl
    Participant

    [quote=njtosd]. . . Further, I’m not sure if you’ve read the original Freakonomics book (authors are an award winning econ prof from Univ. of Chicago and a reporter for the NYT), but it includes a fascinating large scale statistical study of prices received by sellers that sold through agents versus those who went the FSBO route. Almost no difference in ultimate sale price (but the sellers obviously made the 2-3% or so that would otherwise have gone to the agent).[/quote](emphasis added)

    Fascinating, njosd, I’ll look up the book.

    I stand by my assertion that buying a FSBO does NOT save the buyer any money. Therefore, I would surmise that eliminating commission would shave little to nothing off the the purchase price for the buyer.

    September 5, 2010 at 5:30 PM #600708
    sdrealtor
    Participant

    DR. B
    LOL, I was not incredulous and said you may have done very well. I just dont have the data to know that to be true and dont think you do either. We dont have special insight we just subscribe to databases you dont have access to. Thats all it is. Pay a few grand a year and you can see them also.

    nj
    I did not refuse to deal with any buyers and would deal with anyone who wants to buy any of my lisitngs. I encouraged them to find someone to represent them and I would gladly deal with any of them. There were not turned away from buying the property, just turned away from the opportunity to waste my time trying to bend me over a barrel and take me from behind. There is nothing wrong with asking them to find an agent to show them the property. If they have a sincere interest in the property they should have no problem doing that.

    The proceeds delivered to a seller are unchanged whether the buyer is represented by an agent who gets paid a commission or by a principal who gets that commission for themselves. On the other hand a buyer represented by a good agent is more likely to have gone through some vetting process which is beneficial to my client.

    September 5, 2010 at 5:30 PM #600799
    sdrealtor
    Participant

    DR. B
    LOL, I was not incredulous and said you may have done very well. I just dont have the data to know that to be true and dont think you do either. We dont have special insight we just subscribe to databases you dont have access to. Thats all it is. Pay a few grand a year and you can see them also.

    nj
    I did not refuse to deal with any buyers and would deal with anyone who wants to buy any of my lisitngs. I encouraged them to find someone to represent them and I would gladly deal with any of them. There were not turned away from buying the property, just turned away from the opportunity to waste my time trying to bend me over a barrel and take me from behind. There is nothing wrong with asking them to find an agent to show them the property. If they have a sincere interest in the property they should have no problem doing that.

    The proceeds delivered to a seller are unchanged whether the buyer is represented by an agent who gets paid a commission or by a principal who gets that commission for themselves. On the other hand a buyer represented by a good agent is more likely to have gone through some vetting process which is beneficial to my client.

    September 5, 2010 at 5:30 PM #601346
    sdrealtor
    Participant

    DR. B
    LOL, I was not incredulous and said you may have done very well. I just dont have the data to know that to be true and dont think you do either. We dont have special insight we just subscribe to databases you dont have access to. Thats all it is. Pay a few grand a year and you can see them also.

    nj
    I did not refuse to deal with any buyers and would deal with anyone who wants to buy any of my lisitngs. I encouraged them to find someone to represent them and I would gladly deal with any of them. There were not turned away from buying the property, just turned away from the opportunity to waste my time trying to bend me over a barrel and take me from behind. There is nothing wrong with asking them to find an agent to show them the property. If they have a sincere interest in the property they should have no problem doing that.

    The proceeds delivered to a seller are unchanged whether the buyer is represented by an agent who gets paid a commission or by a principal who gets that commission for themselves. On the other hand a buyer represented by a good agent is more likely to have gone through some vetting process which is beneficial to my client.

    September 5, 2010 at 5:30 PM #601452
    sdrealtor
    Participant

    DR. B
    LOL, I was not incredulous and said you may have done very well. I just dont have the data to know that to be true and dont think you do either. We dont have special insight we just subscribe to databases you dont have access to. Thats all it is. Pay a few grand a year and you can see them also.

    nj
    I did not refuse to deal with any buyers and would deal with anyone who wants to buy any of my lisitngs. I encouraged them to find someone to represent them and I would gladly deal with any of them. There were not turned away from buying the property, just turned away from the opportunity to waste my time trying to bend me over a barrel and take me from behind. There is nothing wrong with asking them to find an agent to show them the property. If they have a sincere interest in the property they should have no problem doing that.

    The proceeds delivered to a seller are unchanged whether the buyer is represented by an agent who gets paid a commission or by a principal who gets that commission for themselves. On the other hand a buyer represented by a good agent is more likely to have gone through some vetting process which is beneficial to my client.

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