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Jim Brubaker
ParticipantLooks like Rich has a new Monikier if I’m not mistaken
ParticipantI imagine that there will be at least 3 or 4 realtors that will make over a million in commissions this year in San Diego County. They’re not waving a flag over it, and they don’t have time to respond to this column. The info you want is a matter of public record. I take issue with your qualifier of “any.” I wouldn’t argue over a statement like “Most people in the industry are starving to death.” Its rather obvious.
I would imagine that there are realtors out there that only sold one house last year. This year they might get lucky. It took me 9 months to sell my first house, and then it got better.
Plus remember rich people don’t care about real estate cycles or prices. They buy what they want when they want. Thats why the median house price is still going up.
ParticipantChris I think there is more to it than that. A commodity producer has two items to look at. Cost to produce the product and the price he can get on the market. A lot of gold mines are barely profitable at $300 per oz. So right now if the accounting department can sell a forward contract 3 months out for 1,000 ozs at $600/oz, they have a $300 per oz profit without any speculation on their part.
From there, you have puts and calls on the commodity. An airline will normally buy staggered calls covering the whole year for jet fuel. This guarantees them a known cost for fuel for the year. One of the reasons the last airline went into bankruptcy it because they thought that the price of fuel would go down and they figured buying the options was a waste of money.
If you were a corporation or bank that had $10,000,000 for example in another country (you sold your corporation or sold a lot of hamburgers) and wanted to guarantee that if they devalued the dollar you would still get your full amount, you would buy puts against the dollar.
The options are mostly for removing risk from a transaction. From there, you have the underwriter (pronounced speculator)of the option, that person is willing to take the risk for a price for a certain lenght of time. If you bought 100 shares of Google and sold calls at $40 above todays price, and the stock rose $40, the stock would be called away from you at todays price +$40. You made money, go do it again. If the stock drops $40, the option won’t be called, but you broke even for the day.
The real trick is timing. Warren Buffet had a bet that the US dollar would fall, and everyone knows that its an absolute certainty. He lost 2 billion.
Then there stupidity. Take the California legislature that noticed that the contract price for natural gas was 3 times the spot price on the commodities market. They decided not to renew the long term contracts and buy on the cheaper spot market. The reason that market was so dull, was because everything was on long term contracts. What happens when a 90% market consumer, switches from contract to spot–lets just say it was a pretty dumb move.
Speculators do make money now and then– Its kind of like horse race betting, you either do it for two years and quit or move closer to the track and live in a trailer.
ParticipantPowwayseller, I think that we are pretty much in agreement as to the direction of the market, I was just trying to point out that a Listing Realtor with a sucessful farm can rake in the coin.
There is two sides to the commission. The listing agent and the buyers agent. If the house sells on the MLS, the listing agent get 50% of the commission. If the listing agent also finds the buyer he gets both sides of the commission. What I was saying, if you want to buy a house in my area, John Lundin is going to get 50% of the commission. Almost every listing in this area is his. He’s got 5 times as many signs out this year. Even if business is down 50%, hes trolling with 5 hooks instead of one.
What SDR was saying, if he can get his sellers to list at a realistic price, his listings will sell. And if you have a “resonable priced listing” (talk about an oxymoran), some other real estate agent will do all the foot work and the listing agent still gets 50% of the commission.
ParticipantI’m not trying to defend SDR but there is a realtor in San Marcos here named John Lundin that has a house on every street with his “For Sale Sign” on it. I’ve seen sold signs on about 6 of his so far this year.
Three $600,000 houses have sold close to me in the last week (sounds crazy doesn’t it). Anyone have a link to a site that will show me the selling price?
I get the feeling that the listing price and the selling price have a lot a space between them.ParticipantI think that what a lot of people don’t realize is that 30% of the realtors are producing 80% of the business. Its an 80 hour work week and your always on call. You can still go a couple of months without a sale–that can put you in a very depressing state, but sell two houses in one week and you are on top of the world.
There must be a large attrition rate of agents right now, I get two postcards a week asking me to come work for another realtor. When I entered the field in 1998, I only found one broker that would take me in in all of North County.
If your wondering, I still have my license,and working in a different field. I’m just waiting for the drop so I can get back in and sell VA repos.
ParticipantExcellent post 4plex–it kind of scares me that I could be RAS’s myself on the bubble and crash (one or two seconds maybe).
Another point I have noticed; that if enough people believe a fact as being true, like the earth being flat, then it IS flat. “Group Think” offers a peace of mind somewhat like a religious experience. To argue against the group makes you “one of them,” (everyone knows who the “them” is except me).
I can remember hearing in the ’60’s “Your home will be the worst investment you’ll ever make, but a necessary one.”
ParticipantI guess I’m looking at Northern inland San Diego county. Poway has somethe best schools. The innerstate highway sysem in this area is new, not 60 years old and falling apart like the rest of the state.
Most of your shopping centers and most buildings are under 40 years old.Maybe we could ask Mexico to annex the city of San Diego–they might be able to do a better job of running it into the ground.
I really think that the real estate market could go parabolic just as prices have. Nobody is going to sell for less. Right now we have 20,000 houses in inventory and prices haven’t even begun to drop. The last time we had that many we were at a low in the market
ParticipantI don’t want to start a flame war, but I think that highpacific is playing in a different league.
I tend to agree with Powayseller’s view. But there is an issue here that needs to be considered. Its as if the US economy is on the blade of a knife, fall to the left recession, fall to the right, hyperinflation.
Hyperinflation sounds impossible doesn’t it. Well in the 1930’s Germany took that road and ruined everyone with a savings account. I’ve got a German postage stamp with 1,000 marks struck accross it in black ink. Real estate prices went into the zillions of marks.
Adolf Hitler rose to power only because he offered hope to all of those that had been ruined. Democracy had not worked, throw the bums out.
We are at a cross roads here, I don’t believe that our government would let it happen, but at least from reading this, you will not be blindsided.
Participantlendingbubbleco
I think you need to be more patient. San Diego has some of the best weather, schools and infrastructure in the country. Rents are very reasonable. If you can wait 18 months and have at least $40,000 in the bank, you should be able to pick up something in the future at the price you want. I figure that there should be 100,000 houses on the market by then. Right now, we have close to 20,000 and it should go parabolic in about 6 months.
As for SDrealtor, he has some good info–he’s in a combat area, his perspective gives you more of a feel to the real estate market. It gives you a fuller picture.
ParticipantPowayseller can you supply a link to that article? It sounds very interesting, I would like to read more
ParticipantI remember a Monopoly game we played a long time ago, The bank ran out of money, so we printed some money using a pencil and paper–these were $1000 notes. Then we ran out of houses and hotels, we improvised. We used chess pieces.
Now take two steps backward into today. Derivatives are a parachute that will save the world when everything hits the fan. If you believe that, then contrary to my beliefs, the tooth fairy must still be alive.
ParticipantI agree with you but I wish it was that simple.
The real estate agent is starving and the $15,000 commission he needs bad, the loan writer wants his $10,000 for writing the loan. At this point its like two high school kids dating, the girl wants to go see the movie, the guy has other plans.
Also a lot of people look to see what their friends have done and use that for reference. If “they” could do it, we can do it too. There we go with a new definition of the word “sheeple.”
The real issue here, is not “can we dig a hole here,” but rather “how were we able to dig it so deep as so we couldn’t get out of it.”
ParticipantYou bring up an interesting point here. My generalizations and lack of accounting skill shows how easy it is to over simplify a situation and distort it.
I guess, its the amount of money generated from this bookkeeping procedure, that irritates me. It implies that the institution is healthier that it actually is.
I see your difference between profit and revenue, but I think that when you mention such large numbers, it just simply eludes the reader as it did me. I apologize for steering anyone astray
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