How to Buy w/out a Realtor?

[sdrealtor]

Dr B
The cold medicien is getting the better of you again. At the time a deal is made it can be judged to be a “good deal”, an average deal or “getting screwed”. Only over time does one know if it was a postive or negative financial move.

Someone could have overpaid in late 2003 and gotten screwed but then resold 4 months later and made a 6 figure profit thus having gotten lucky on timing.

Someone could have gotten a “good deal” in early 2007 but then gotten crushed because they had to sell later that year when teh financial market seized up.

There is a difference.

When you get down to the real responsibility of any agent it is to represent the client interests at that point in time for that transaction. Of course some agents are better at anticipating the markets movements but that is really the work of economists and analysts not RE agents. If someone wants to buy something, a good agent should help them get a “good deal” in the current market.

The agent didnt make the decision to buy a home, the buyer does. The agents job is to help them do what they want and getting them a better deal in the current market is doing a good job for their client. Some of us look out for our clients long term financial well being but by definition that is not our role.

[njtosd]

[quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.

[njtosd]

[quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.

[njtosd]

[quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.

[njtosd]

[quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.

[njtosd]

[quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.

[urbanrealtor]

[quote=njtosd][quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.[/quote]
Given a large enough sample size, a good estimator could give estimates that average within 1-2% of closing (good being the operative word). However, a single property has far more potential to be arbitrary. As far as an ongoing transaction, the seller does not have the right to switch buyers unless a buyer has violated the contract (and even then the mechanisms are structured). The buyer, however, can back out prior to close if he changes his mind (gets cold feet, sobers up, dies…whatever). So if I had shown up (like I got hired to consult) while a DIY was happening and I told the buyer the price was too high, he could say “lower the price or I am walking”. The terms of the contract would determine whether he got his deposit back or not.

[urbanrealtor]

[quote=njtosd][quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.[/quote]
Given a large enough sample size, a good estimator could give estimates that average within 1-2% of closing (good being the operative word). However, a single property has far more potential to be arbitrary. As far as an ongoing transaction, the seller does not have the right to switch buyers unless a buyer has violated the contract (and even then the mechanisms are structured). The buyer, however, can back out prior to close if he changes his mind (gets cold feet, sobers up, dies…whatever). So if I had shown up (like I got hired to consult) while a DIY was happening and I told the buyer the price was too high, he could say “lower the price or I am walking”. The terms of the contract would determine whether he got his deposit back or not.

[urbanrealtor]

[quote=njtosd][quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.[/quote]
Given a large enough sample size, a good estimator could give estimates that average within 1-2% of closing (good being the operative word). However, a single property has far more potential to be arbitrary. As far as an ongoing transaction, the seller does not have the right to switch buyers unless a buyer has violated the contract (and even then the mechanisms are structured). The buyer, however, can back out prior to close if he changes his mind (gets cold feet, sobers up, dies…whatever). So if I had shown up (like I got hired to consult) while a DIY was happening and I told the buyer the price was too high, he could say “lower the price or I am walking”. The terms of the contract would determine whether he got his deposit back or not.

[urbanrealtor]

[quote=njtosd][quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.[/quote]
Given a large enough sample size, a good estimator could give estimates that average within 1-2% of closing (good being the operative word). However, a single property has far more potential to be arbitrary. As far as an ongoing transaction, the seller does not have the right to switch buyers unless a buyer has violated the contract (and even then the mechanisms are structured). The buyer, however, can back out prior to close if he changes his mind (gets cold feet, sobers up, dies…whatever). So if I had shown up (like I got hired to consult) while a DIY was happening and I told the buyer the price was too high, he could say “lower the price or I am walking”. The terms of the contract would determine whether he got his deposit back or not.

[urbanrealtor]

[quote=njtosd][quote=urbanrealtor]

I am not sure what would be unethical. No sale price is “ultimate” (this property resold for far more years later). It is our job to consult and give our opinion of market value for a given property in a given area at a given time. Perhaps I don’t understand what you are asking.

[/quote]

I was just wondering whether a realtor making a public estimate (in other words, posted on a website or otherwise made available to the public) about what s/he thinks a property would sell for might have the tendency to (a) influence a buyer or seller; or (b) rile a buyer’s or sellers agent. It just seems like it might interfere with an ongoing business transaction. I wasn’t referring to consultation with clients. Now that I think about it, I guess Zillow does provide their “Zestimates” – but I don’t think they’re terribly reliable.
The point I was trying to get at is this – I wonder how close, on average, the best “estimator” could predict the ultimate sale price of a given house.[/quote]
Given a large enough sample size, a good estimator could give estimates that average within 1-2% of closing (good being the operative word). However, a single property has far more potential to be arbitrary. As far as an ongoing transaction, the seller does not have the right to switch buyers unless a buyer has violated the contract (and even then the mechanisms are structured). The buyer, however, can back out prior to close if he changes his mind (gets cold feet, sobers up, dies…whatever). So if I had shown up (like I got hired to consult) while a DIY was happening and I told the buyer the price was too high, he could say “lower the price or I am walking”. The terms of the contract would determine whether he got his deposit back or not.

[drboom]

UR and sdr laid out nicely why I think interests aren’t aligned.

[quote=urbanrealtor]Generally, home prices are 7-10 times per capita income depending on demand.
Mid 2003 the price coefficient was 8.5 or 9 in San Diego (pretty middle of the road).
It was not until a year later that home prices started to become broadly decoupled from income fundamentals.
In short, 2003 was not a crazy year except in hindsight.[/quote]

UR, unless Rich Toscano’s graphs are off, the multiplier was over 10X in mid-2003 and climbing. That was the highest it had been for two generations. I for one had been ranting about absurd house prices for at least a year by then, but I don’t have a blog to point to so you’ll have to take my word for it.

[quote=urbanrealtor]The same house would go for the same nominal price now.
Still about $400k.[/quote]

Factoring in inflation, the time value of money in the down payment (if any, admittedly) and selling costs, that’s at least a $80k loss if not more. Better than the stock market, maybe, but stuffing money in a mattress would have worked better.

[quote=urbanrealtor]The DIY in question sold it in mid-late 2005 for more than 500 btw.[/quote]

If we are to judge the wisdom of an investment by flippers’ standards, then this forum is a funny place to do it. Arguing that a greater fool came along in time to avert disaster is not persuasive. Most people lose their shirts trying to time markets unless they have inside information.

[quote=urbanrealtor]I can only show you the past info and give you my analysis of it and tell you if this deal looks good at a relative level right now.[/quote]

As long as everyone understands what’s going on, I have absolutely no problem with a skilled technician rendering a spot price opinion. But everyone knows that’s not how it generally works. “It’s a good deal!” is about as far as it goes, which is why I think comps aren’t as useful as you seem to think.

If you want to do a real analysis of the RB deal, compute the rent multiple. Otherwise we’re just comparing bulbs in a tulip craze.

[quote=sdrealtor]The agent didnt make the decision to buy a home, the buyer does. The agents job is to help them do what they want and getting them a better deal in the current market is doing a good job for their client. Some of us look out for our clients long term financial well being but by definition that is not our role.[/quote]

In an ideal world with inhumanly well-behaved operators, yes. But the incentive for agents on both sides of the transaction is to close a deal, so corners get cut.

The chant of “it’s a great time to buy” never stopped from the beginning of the boom right through the crash. I heard it everywhere in ’08 and ’09, even from my own agent–whom I consider a fairly bright guy. He didn’t know how to respond when I said “No, it’s not really a great time at all”. Looking at the graphs on the front page of this site, I’d say I was right: 2009 was at best an “acceptable” time to buy, but not “great”.

Houses have well-understood values in relation to other things, namely incomes and prevailing rents. To call a specific house a “good deal” without reference to those two things is simply drinking the speculative Kool-Aid. A competent analysis would take those factors and more into consideration. It’s not hard to do, even for a rube like me.

If you think that kind of analysis is beyond the scope of any real estate professional, how about posting a disclaimer to that effect in your office?

Cheers!

[drboom]

UR and sdr laid out nicely why I think interests aren’t aligned.

[quote=urbanrealtor]Generally, home prices are 7-10 times per capita income depending on demand.
Mid 2003 the price coefficient was 8.5 or 9 in San Diego (pretty middle of the road).
It was not until a year later that home prices started to become broadly decoupled from income fundamentals.
In short, 2003 was not a crazy year except in hindsight.[/quote]

UR, unless Rich Toscano’s graphs are off, the multiplier was over 10X in mid-2003 and climbing. That was the highest it had been for two generations. I for one had been ranting about absurd house prices for at least a year by then, but I don’t have a blog to point to so you’ll have to take my word for it.

[quote=urbanrealtor]The same house would go for the same nominal price now.
Still about $400k.[/quote]

Factoring in inflation, the time value of money in the down payment (if any, admittedly) and selling costs, that’s at least a $80k loss if not more. Better than the stock market, maybe, but stuffing money in a mattress would have worked better.

[quote=urbanrealtor]The DIY in question sold it in mid-late 2005 for more than 500 btw.[/quote]

If we are to judge the wisdom of an investment by flippers’ standards, then this forum is a funny place to do it. Arguing that a greater fool came along in time to avert disaster is not persuasive. Most people lose their shirts trying to time markets unless they have inside information.

[quote=urbanrealtor]I can only show you the past info and give you my analysis of it and tell you if this deal looks good at a relative level right now.[/quote]

As long as everyone understands what’s going on, I have absolutely no problem with a skilled technician rendering a spot price opinion. But everyone knows that’s not how it generally works. “It’s a good deal!” is about as far as it goes, which is why I think comps aren’t as useful as you seem to think.

If you want to do a real analysis of the RB deal, compute the rent multiple. Otherwise we’re just comparing bulbs in a tulip craze.

[quote=sdrealtor]The agent didnt make the decision to buy a home, the buyer does. The agents job is to help them do what they want and getting them a better deal in the current market is doing a good job for their client. Some of us look out for our clients long term financial well being but by definition that is not our role.[/quote]

In an ideal world with inhumanly well-behaved operators, yes. But the incentive for agents on both sides of the transaction is to close a deal, so corners get cut.

The chant of “it’s a great time to buy” never stopped from the beginning of the boom right through the crash. I heard it everywhere in ’08 and ’09, even from my own agent–whom I consider a fairly bright guy. He didn’t know how to respond when I said “No, it’s not really a great time at all”. Looking at the graphs on the front page of this site, I’d say I was right: 2009 was at best an “acceptable” time to buy, but not “great”.

Houses have well-understood values in relation to other things, namely incomes and prevailing rents. To call a specific house a “good deal” without reference to those two things is simply drinking the speculative Kool-Aid. A competent analysis would take those factors and more into consideration. It’s not hard to do, even for a rube like me.

If you think that kind of analysis is beyond the scope of any real estate professional, how about posting a disclaimer to that effect in your office?

Cheers!

[drboom]

UR and sdr laid out nicely why I think interests aren’t aligned.

[quote=urbanrealtor]Generally, home prices are 7-10 times per capita income depending on demand.
Mid 2003 the price coefficient was 8.5 or 9 in San Diego (pretty middle of the road).
It was not until a year later that home prices started to become broadly decoupled from income fundamentals.
In short, 2003 was not a crazy year except in hindsight.[/quote]

UR, unless Rich Toscano’s graphs are off, the multiplier was over 10X in mid-2003 and climbing. That was the highest it had been for two generations. I for one had been ranting about absurd house prices for at least a year by then, but I don’t have a blog to point to so you’ll have to take my word for it.

[quote=urbanrealtor]The same house would go for the same nominal price now.
Still about $400k.[/quote]

Factoring in inflation, the time value of money in the down payment (if any, admittedly) and selling costs, that’s at least a $80k loss if not more. Better than the stock market, maybe, but stuffing money in a mattress would have worked better.

[quote=urbanrealtor]The DIY in question sold it in mid-late 2005 for more than 500 btw.[/quote]

If we are to judge the wisdom of an investment by flippers’ standards, then this forum is a funny place to do it. Arguing that a greater fool came along in time to avert disaster is not persuasive. Most people lose their shirts trying to time markets unless they have inside information.

[quote=urbanrealtor]I can only show you the past info and give you my analysis of it and tell you if this deal looks good at a relative level right now.[/quote]

As long as everyone understands what’s going on, I have absolutely no problem with a skilled technician rendering a spot price opinion. But everyone knows that’s not how it generally works. “It’s a good deal!” is about as far as it goes, which is why I think comps aren’t as useful as you seem to think.

If you want to do a real analysis of the RB deal, compute the rent multiple. Otherwise we’re just comparing bulbs in a tulip craze.

[quote=sdrealtor]The agent didnt make the decision to buy a home, the buyer does. The agents job is to help them do what they want and getting them a better deal in the current market is doing a good job for their client. Some of us look out for our clients long term financial well being but by definition that is not our role.[/quote]

In an ideal world with inhumanly well-behaved operators, yes. But the incentive for agents on both sides of the transaction is to close a deal, so corners get cut.

The chant of “it’s a great time to buy” never stopped from the beginning of the boom right through the crash. I heard it everywhere in ’08 and ’09, even from my own agent–whom I consider a fairly bright guy. He didn’t know how to respond when I said “No, it’s not really a great time at all”. Looking at the graphs on the front page of this site, I’d say I was right: 2009 was at best an “acceptable” time to buy, but not “great”.

Houses have well-understood values in relation to other things, namely incomes and prevailing rents. To call a specific house a “good deal” without reference to those two things is simply drinking the speculative Kool-Aid. A competent analysis would take those factors and more into consideration. It’s not hard to do, even for a rube like me.

If you think that kind of analysis is beyond the scope of any real estate professional, how about posting a disclaimer to that effect in your office?

Cheers!

[drboom]

UR and sdr laid out nicely why I think interests aren’t aligned.

[quote=urbanrealtor]Generally, home prices are 7-10 times per capita income depending on demand.
Mid 2003 the price coefficient was 8.5 or 9 in San Diego (pretty middle of the road).
It was not until a year later that home prices started to become broadly decoupled from income fundamentals.
In short, 2003 was not a crazy year except in hindsight.[/quote]

UR, unless Rich Toscano’s graphs are off, the multiplier was over 10X in mid-2003 and climbing. That was the highest it had been for two generations. I for one had been ranting about absurd house prices for at least a year by then, but I don’t have a blog to point to so you’ll have to take my word for it.

[quote=urbanrealtor]The same house would go for the same nominal price now.
Still about $400k.[/quote]

Factoring in inflation, the time value of money in the down payment (if any, admittedly) and selling costs, that’s at least a $80k loss if not more. Better than the stock market, maybe, but stuffing money in a mattress would have worked better.

[quote=urbanrealtor]The DIY in question sold it in mid-late 2005 for more than 500 btw.[/quote]

If we are to judge the wisdom of an investment by flippers’ standards, then this forum is a funny place to do it. Arguing that a greater fool came along in time to avert disaster is not persuasive. Most people lose their shirts trying to time markets unless they have inside information.

[quote=urbanrealtor]I can only show you the past info and give you my analysis of it and tell you if this deal looks good at a relative level right now.[/quote]

As long as everyone understands what’s going on, I have absolutely no problem with a skilled technician rendering a spot price opinion. But everyone knows that’s not how it generally works. “It’s a good deal!” is about as far as it goes, which is why I think comps aren’t as useful as you seem to think.

If you want to do a real analysis of the RB deal, compute the rent multiple. Otherwise we’re just comparing bulbs in a tulip craze.

[quote=sdrealtor]The agent didnt make the decision to buy a home, the buyer does. The agents job is to help them do what they want and getting them a better deal in the current market is doing a good job for their client. Some of us look out for our clients long term financial well being but by definition that is not our role.[/quote]

In an ideal world with inhumanly well-behaved operators, yes. But the incentive for agents on both sides of the transaction is to close a deal, so corners get cut.

The chant of “it’s a great time to buy” never stopped from the beginning of the boom right through the crash. I heard it everywhere in ’08 and ’09, even from my own agent–whom I consider a fairly bright guy. He didn’t know how to respond when I said “No, it’s not really a great time at all”. Looking at the graphs on the front page of this site, I’d say I was right: 2009 was at best an “acceptable” time to buy, but not “great”.

Houses have well-understood values in relation to other things, namely incomes and prevailing rents. To call a specific house a “good deal” without reference to those two things is simply drinking the speculative Kool-Aid. A competent analysis would take those factors and more into consideration. It’s not hard to do, even for a rube like me.

If you think that kind of analysis is beyond the scope of any real estate professional, how about posting a disclaimer to that effect in your office?

Cheers!

[Author]

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