How to Buy w/out a Realtor?

[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!

[njtosd]

[quote=urbanrealtor] 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.[/quote]

Again, as I mentioned in my earlier post, I’m not talking about a situation where a realtor was speaking with a client or taking part in a transaction. I was referring to someone trying to make a reputation for themselves (through a website or newspaper column, etc.) based on the accuracy of their predictions about the ultimate sale price of homes. I guess I answered my own question as it seems that Zillow continues to publish their “Zestimates” – which is pretty much what I was talking about.

[njtosd]

[quote=urbanrealtor] 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.[/quote]

Again, as I mentioned in my earlier post, I’m not talking about a situation where a realtor was speaking with a client or taking part in a transaction. I was referring to someone trying to make a reputation for themselves (through a website or newspaper column, etc.) based on the accuracy of their predictions about the ultimate sale price of homes. I guess I answered my own question as it seems that Zillow continues to publish their “Zestimates” – which is pretty much what I was talking about.

[njtosd]

[quote=urbanrealtor] 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.[/quote]

Again, as I mentioned in my earlier post, I’m not talking about a situation where a realtor was speaking with a client or taking part in a transaction. I was referring to someone trying to make a reputation for themselves (through a website or newspaper column, etc.) based on the accuracy of their predictions about the ultimate sale price of homes. I guess I answered my own question as it seems that Zillow continues to publish their “Zestimates” – which is pretty much what I was talking about.

[njtosd]

[quote=urbanrealtor] 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.[/quote]

Again, as I mentioned in my earlier post, I’m not talking about a situation where a realtor was speaking with a client or taking part in a transaction. I was referring to someone trying to make a reputation for themselves (through a website or newspaper column, etc.) based on the accuracy of their predictions about the ultimate sale price of homes. I guess I answered my own question as it seems that Zillow continues to publish their “Zestimates” – which is pretty much what I was talking about.

[njtosd]

[quote=urbanrealtor] 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.[/quote]

Again, as I mentioned in my earlier post, I’m not talking about a situation where a realtor was speaking with a client or taking part in a transaction. I was referring to someone trying to make a reputation for themselves (through a website or newspaper column, etc.) based on the accuracy of their predictions about the ultimate sale price of homes. I guess I answered my own question as it seems that Zillow continues to publish their “Zestimates” – which is pretty much what I was talking about.

[sdrealtor]

Dr B
Again you are stretching a RE agents role beyond what they are charged to do.

Additionally houses dont always have easy to identify well-understood values in relation to things like incomes and prevailing rents. For example, prices in SF and NYC have never in recent history been anywhere close to being in line with either. Here’s another more local example. In 2001, the house next door sold for $550K and it was way out of whack with rents and incomes in the area. Obviously that house was worth considerably more a couple years ago but it has never been worth less and is still worth about $250K more than that. By any long term quantitative measure one could have looked at back in 2001 it was not a good deal. History of course tells a very different story and it will never approach that $550K price again.

PS you didnt hear any of us on this board saying it was a great time to buy in 2008 or 2009.

[sdrealtor]

Dr B
Again you are stretching a RE agents role beyond what they are charged to do.

Additionally houses dont always have easy to identify well-understood values in relation to things like incomes and prevailing rents. For example, prices in SF and NYC have never in recent history been anywhere close to being in line with either. Here’s another more local example. In 2001, the house next door sold for $550K and it was way out of whack with rents and incomes in the area. Obviously that house was worth considerably more a couple years ago but it has never been worth less and is still worth about $250K more than that. By any long term quantitative measure one could have looked at back in 2001 it was not a good deal. History of course tells a very different story and it will never approach that $550K price again.

PS you didnt hear any of us on this board saying it was a great time to buy in 2008 or 2009.

[sdrealtor]

Dr B
Again you are stretching a RE agents role beyond what they are charged to do.

Additionally houses dont always have easy to identify well-understood values in relation to things like incomes and prevailing rents. For example, prices in SF and NYC have never in recent history been anywhere close to being in line with either. Here’s another more local example. In 2001, the house next door sold for $550K and it was way out of whack with rents and incomes in the area. Obviously that house was worth considerably more a couple years ago but it has never been worth less and is still worth about $250K more than that. By any long term quantitative measure one could have looked at back in 2001 it was not a good deal. History of course tells a very different story and it will never approach that $550K price again.

PS you didnt hear any of us on this board saying it was a great time to buy in 2008 or 2009.

[sdrealtor]

Dr B
Again you are stretching a RE agents role beyond what they are charged to do.

Additionally houses dont always have easy to identify well-understood values in relation to things like incomes and prevailing rents. For example, prices in SF and NYC have never in recent history been anywhere close to being in line with either. Here’s another more local example. In 2001, the house next door sold for $550K and it was way out of whack with rents and incomes in the area. Obviously that house was worth considerably more a couple years ago but it has never been worth less and is still worth about $250K more than that. By any long term quantitative measure one could have looked at back in 2001 it was not a good deal. History of course tells a very different story and it will never approach that $550K price again.

PS you didnt hear any of us on this board saying it was a great time to buy in 2008 or 2009.

[sdrealtor]

Dr B
Again you are stretching a RE agents role beyond what they are charged to do.

Additionally houses dont always have easy to identify well-understood values in relation to things like incomes and prevailing rents. For example, prices in SF and NYC have never in recent history been anywhere close to being in line with either. Here’s another more local example. In 2001, the house next door sold for $550K and it was way out of whack with rents and incomes in the area. Obviously that house was worth considerably more a couple years ago but it has never been worth less and is still worth about $250K more than that. By any long term quantitative measure one could have looked at back in 2001 it was not a good deal. History of course tells a very different story and it will never approach that $550K price again.

PS you didnt hear any of us on this board saying it was a great time to buy in 2008 or 2009.

[sdrealtor]

nj
Its very tough to do. I am very good a predicting what houses sell for around me with a high degree of accuracy. I can tell you what i think it should sell for but there is always the chance some dope can roll into town and overpay. There is also the chance the seller is under some distress that is not readily apparent and they take a low offer and run. Its just to unpredictable.

[sdrealtor]

nj
Its very tough to do. I am very good a predicting what houses sell for around me with a high degree of accuracy. I can tell you what i think it should sell for but there is always the chance some dope can roll into town and overpay. There is also the chance the seller is under some distress that is not readily apparent and they take a low offer and run. Its just to unpredictable.

[sdrealtor]

nj
Its very tough to do. I am very good a predicting what houses sell for around me with a high degree of accuracy. I can tell you what i think it should sell for but there is always the chance some dope can roll into town and overpay. There is also the chance the seller is under some distress that is not readily apparent and they take a low offer and run. Its just to unpredictable.

[sdrealtor]

nj
Its very tough to do. I am very good a predicting what houses sell for around me with a high degree of accuracy. I can tell you what i think it should sell for but there is always the chance some dope can roll into town and overpay. There is also the chance the seller is under some distress that is not readily apparent and they take a low offer and run. Its just to unpredictable.

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