I see your point, but it doesn’t seem real world to me. Realtors are always using the catch phrases you toss around like:
“They are more concerned with living the life they have earned and choose to live.”
No one wants to overpay for this right, but thats where prices are right now (and declining). No one earns the right to buy a depreciating asset. 98% of your clients are paying a price which is economically a bad deal for them, although a great deal for the people pocketing the 6%.
Example:
An exec buys a house in Carmel Valley. Pays 1.5M for a 5,000 square foot lot with a 4,000 foot home. Pays approx $6,000.00 mortgage on each 1M so pays $9,000.00 interest only plus taxes which makes it $10,500.00 / month. You say that is 100% mortgage, but i’m just doing it for illustration because the exec is losing the interest on any down payment (it’s buried in the house) so the cost of money is the same. After tax benefits it is roughly $8,000.00/month.
Lets say the house goes down in price to $1M… I don’t know anyone that would be happy in this scenario.
The house should sell for $600,000. At this price it is justified economically.
Using Carmel Valley as an example, everyone I know there works like a dog to afford this “Lifestyle they have earned”. They do have a quality of life but it’s not all good quality!!!
I hate the ‘dream’ that realtors sell. Even the home descriptions on the MLS make you want to vomit. I’m gonna write one right now:
A slice of heaven awaits you in this Tuscan manor. Four bedroom, 3 bath at the end of a cul-de-sac. Kitchen a professional chef would die for. Your dog at your side while the fireplace beckons. Enjoy your gorgeous home in villa like surroundings. Gentle waterfall sounds and jasmine perfume the air and you sleep on a cloud of dream dust while your mortgage rate gently upwardly adjusts!
“The data is all out there and has been for quite some time.”
What the heck does this mean? My house which sold for $2,050,000 in December 2006 still shows as $2,300,000 on the realtors web site, but listed as SOLD. This is the quality data that you refer to. No wonder realtors hate zillow… It actually shows the $2,050,000 price I sold for 6 months ago (Can’t have too much ‘quality’ data out there can we sdrealtor?)
“While you are sitting on the sidelines, those that can afford it and want to buy a home will continue to do so. Nothing you can say or do will make it otherwise.”
Thats true… nothing i say or do will change what most people will do… they will follow the herd and then cry when they realize they are in trouble.
Are they really making informed decisions? or are realtors convincing them that prices will go up, and mortgage brokers that they can afford it? The one consistent fact is that realtors make money selling houses whether or not it is a good deal for their clients. Like many kinds of sales, after the house is sold you walk away and the owner has to deal with the aftermath. This is fine. This is business. But it’s not exactly ethical to sell a product at this magnitude and comment on the economic feasibility of it. Your job is to show houses, not proclaim a rosy future.. This is why Real Estate is such a dirty word to most people. They know that realtors will say anything to sell a house.. Even statements which they are unqualified to utter.
Realtors should open doors and show off features. They are ethically responsible for the statements they say. So in today’s market they should just stay quiet and not say the following:
“and the price you will ultimately have to pay or not pay for that matter.”
This is the ultimate salesperson’s tool – putting the buyer (or potential buyer) in fear. This is a somewhat sly reference to the fact that you feel that I am on the sidelines while prices go up. And I will ultimately pay for it (if I choose to).
If you said this in 2000 I would agree… In today’s market it seems somewhat irresponsible.
