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powayseller
Participantkagster, there is no reason the Help U Sell would be banned, since they pay the 2.5% or 3% fee to the buyer’s agent. My house sold in 6 weeks with Help U Sell, and I am the last sale in my neighborhood in 9 months. The HUS is a discounter only to you as the seller, because they work on volume and they eliminate a couple services, such as sitting at your Open House, they don’t use an independent photographer for your photos, etc. So if you wanted an Open House, you would do it yourself. My photos were very good even though my agent took them with her camera. I did not see any other indication of any discounting.
My positive bias for realtors is based on several things. First, I am always amazed at the disclosures I must give and receive and am nervous about lawsuits. What if I get a house with a cracked foundation or mold or some other problem, just because I didn’t know to ask about it? A FSBO doesn’t have to tell you, right? My cousin spent $60K retrofitting her foundation because she didn’t know it was settling when she bought the house. My realtor told me of several subdivisions built on settling soil in San Diego, where the foundations are settling and cracking. There, even the realtors were not cautious enough. What if someone sues me for not disclosing something that I should have disclosed?
Second, I want MLS information to know everything about the comps, the true days on market, the pendings, and the previous sales prices. How will you get that information? Only the realtor has access to it via the MLS. If I overpay by $50K just to save $20K on commissions, how smart was I? If the $680K house went into pending, but I am making an offer on the $710K house, how smart am I really? So having MLS access is very important when you make your offer.
A good realtor can also advise you on what to look for or avoid. For example, Jim Klinge has some really good posts on his website telling people not to buy near power lines, avoid a house where the neighbor looks down in your yard, look for xyz, …He/she can advise you that this particular home is a very good deal for that neighborhood, etc.
Next, I never know how to fill in those forms. What is the buyers supposed to pay for, vs. the seller. Escrow and title fees, closing costs, etc. What if I put in my contract I will pay for it, but usually the seller pays for it? What about the # of days for contingency,e tc. I never know what to put in for all those numbers. But perhaps an attorney could advise you on that. Probably if you took a realtor course you would know all that.
Last, I have some friends who are realtors.
I hope the realtor commission system changes. I would prefer to pay my realtor in the same way I pay my accountant: by the hour or by the project. Currently, most of a realtor’s fee goes to pay for his sales and marketing efforts toward the clients he does not get. A realtor probably spends 70% of his time trying to get clients. So about 70% of the fees I pay go for that part of his day. I don’t want to pay for that, frankly. So if some looky-loo client wants to take up 3 months of a realtor’s time looking at houses he never plans to buy, or works with a realtor for 2 months and ends up buying a house from a different agent, I think the realtor should charge that looky-loo and that disloyal client, rather than wrapping it into the commission that I have to pay. Let each person pay for the service they use.
So David Lereah, change the realtor pricing model. Don’t charge the person who gives you the sale for all the time you spend with the person who *doesn’t* give you the sale! What a perverse form of pricing punishment that is.
I’d also like to see better training and entrance requirements. Most of the realtor training is in closing the deal and figuring out the paperwork, not in the economy, construction, or business matters. I think the training could be vastly improved.
So while I value realtors, I vote for a complete overhaul of the payment system, and better training and screening.
ParticipantIf you look past his “white trash” writing style, the guy does make some good points. Namely, how many of us will want to buy real estate at the bottom of the cycle, when our jobs are in jeopardy (if we even have one), inventory keeps rising, foreclosures dot the neighborhood, and we have dozens of acquaintances who can’t even get someone to look at their homes; real estate will seem like a super risky purchase. Second, how many of us are mad we missed the runup. (I should have bought investment properties but am not mad.) How many of us would own a house if we had moved here just a few years earlier, or graduated from school just a few years earlier? We would have bought at bubble prices too, but we were too late into the game and didn’t buy because we are truly priced out.
However, the white trash poster missed a couple things too: we expect real estate prices to fall a lot more than 30%, you *can* find the bottom (thanks to jg’s charts for proving that point), some of us *did* enter the markets in 2001, and most of us qualify for a home purchase now but chose *not* to make it. Everyone I met on this forum is a white collar professional, independent thinker with a very good income, so the choices made by our group reflect the independent and contrarian thinking, not any lack of money to buy a house. We’ve got people who *sold* their homes at last year and are renting until prices come down, and others with 6 figure incomes who could easily qualify for a McMansion but choose to rent instead waiting for the bubble to pop.
So the guy completely missed the fact that we are the smart contrarians, like the people who dumped stock in early 2000 and bought it back in 2001.
ParticipantLarry J. at the Senate Hearings, one of the panel members explained that people are qualified on a debt/income ratio of over 50% on ONLY the principal and interest, NOT including the taxes, insurance, HOA, etc.! I find this abhorrent. (spelling- okay, this may find its way into the TRACK house thread)
That’s why I was asking about the language on that advertisement, since we can no longer assume that lenders include all fees in their DTI calculation. I am as surprised as you are.
Participant4plexowner, if the consider that boomers will sell their large homes in favor of smaller homes and condos, couldn’t it take decades to absorb the glut of larger homes? Wouldn’t that have a downward pricing pressure on real estate for decades?
One of the first questions I asked my financial advisor in my 20’s, which she dismissed was, “if the stock market prices go up due to demand, and demand is greater due to boomers putting money into the stock market, what happens in early 2000’s when the boomers take their money out: wouldn’t that make the stock market prices go down? So in my prime working years, as I am putting money into the stock market, boomers are taking it out and lowering the price?” I still think it’s a valid question.
Your dumping-houses statement reminds me of the dumping-stocks question. How much will the boomer retirement affect the real estate and stock markets? Perhaps not much; perhaps they will need to keep working. I wonder how many boomers will truly retire like the previous generation did. According to the Frontline story, the new trend is for boomers to keep working, even part-time, long into retirement, since they lost their pension funds and too much in the 2000 stock market crash
Participantduplicate.
ParticipantI value realtors. The seller pays the fee, so why not use a realtor? I doubt the seller will give the buyer a discount for not having a realtor. From what I’ve been told, transactions involving only one realtor means that agent does double the work. If somebody wants to save the realtor commission, why don’t they just go out and get a realtor license?
ParticipantIf you add on the TI and HOA, you could be at 65 – 70% DTI? After the loan recasts, you could be at 100% or 110% DTI? What a ;bunch of schmucks to give a loan like that!
BTW,the most surprising question of omission at the Senate Hearings was “Who is holding the MBS, and what is the risk to the financial system when these loans recast?”
I am certain that anyone with a 60% – 70% DTI loan will default within a few months. And I refuse to qualify that statement with “in my opinion”.
ParticipantI make friends by inviting people over. Either the family is invited for brunch or dinner, I ask a lady to go running with me, meet me at dog park with her dog, meet me for coffee, meet me for a walk. At the gym, I usually chat with the front desk staff, so I reach out when I can. People appreciate that attention. I started a group of neighborhood gals meeting every week for coffee, just other housewives who are otherwise at home cleaning also, and they were so happy for these get-togethers. My husband meets guys at his soccer games, but otherwise is pretty busy with his kids and doesn’t want to make time for friends. So my suggestion is to be the one to make the invitation. I have rarely had someone say they could not come.
I find that few people invite others over for a meal or for an outing, so I have to make the first move. It is *always* appreciated. I teach piano, and my students’ parents love to stay and talk with me afterward. So once people are in a situation to talk, they will gladly chat. Making the first move is the key.
ParticipantIs the 60% debt to income ratio for the principal and interest only, or is it for the total PITI + HOA + Mello-Roos?
September 23, 2006 at 1:10 PM in reply to: I cant take it anymore! It’s a TRACT house not a TRACK house #36186ParticipantPerry, you must have got that from the senators at the Hearings last week. I swear, at least one of them kept saying “amortirized” or something wacky like that…
ParticipantWhy is it when I wrote about this, I was “Chicken Little”? I believe someone said I simply don’t understand Option ARMs, that many people who take them out are sophisticated individuals using them as cash management tools, and I am too extreme and frustrating in suggesting that they are a problem. Now, the press is full of these stories, and the senators are having special hearings on the matter. The difference between my forecast and these media stories is that none of them made a specific forecast for the country or for any city. I am trying to get my hands for some data so I can make more accurate forecasts, but am not hopeful. NOT even the regulators at the Senate Hearing last week had any numbers on the number of Option ARMs out there! The only number they quoted came from a document we’ve all seen, Christopher Cagan’s report.
September 23, 2006 at 12:53 PM in reply to: Senate Banking Committee Video on Non-traditional Mortgages #36184ParticipantThese hearings pointed out that subprime borrowers are at the greatest risk of foreclosure due to exotic lending. These loans have been targeted at the less educated, lower-income folks, usually minorities. Whereas only 10% of prime loans have a prepayment penalty, over 80% of subprime loans have a prepayment penalty.
The subprime borrowers have to time their refinancing just right: if they do it one month before their 2 year teaser period expires, they incur steep prepayment penalties (often 6 months interest). If they refinance after their 2 year teaser period ends, they get hit with a payment shock, where the new payment can actually exceed their gross income.
Furthermore, as I explained above, subprime borrowers are qualified for principal and interest at a 55% debt ratio on the intial teaser rate! Now add taxes and insurance, and in year 3 add the higher payments due to the end of the teaser rate + add the higher interest rate that is in effect now, and you’ve got a person in foreclosure. One of the regulators said a loan payment like that can TRIPLE.
ParticipantGreat data point, davelj. You have a very good memory. I’m envious…
Here’s the last update from the Tenants Legal Center: “According to a recent MarketPointe Realty Advisors survey, rents in San Diego County increased by 3.81% in the last year (September to September) Our rents are 2.47% higher in September than they were in March 2006. The apartment vacancy rate has dropped to 1.84% from 3% only six months ago. This survey looks at complexes of 25 units or more.” – Tenants Legal Center
An article in the U-T Friday explained that the higher rents are caused by the record low vacancy rate, which is caused by the loss of 9,500 apartment units that were converted to condos in the last 3 years. Although some are now offered as rentals, the new owners are charging more money for the condos than they charged for the apartments.
September 23, 2006 at 6:06 AM in reply to: Senate Banking Committee Video on Non-traditional Mortgages #36162ParticipantNo wonder I can’t get loan data – not even the federal regulators have it! Amazing! None of the top people at the hearing from the OTS, FDIC, Treasury, etc., knew how much of these loans were being held by the banks, vs. how much was sold as MBS.
Although the senators questioned the panel about the impact of the resets, none of the federal regulators would make a prediction on what will happen when these loans reset. They kept bypassing the question, answering with “we don’t have any problems yet with these loans…” Only the state regulator from Arizona said she was very concerned but the “train has already left the station”.
All federal regulators concurred that *the most important* point of the guidance is the requirement that borrowers are qualified based on the fully amortized payment, instead of just the initial teaser rate.
The Chairman of Republic Mortgage Insurance is concerned about another housing debacle. In the 1980/90’s housing bust, they paid $15 billion in claims. What will it be this time?
Subprime hybrid ARMs, mainly marketed to minorities, can end up with payments more than the borrower’s gross income! The spokesman for the Center for Responsible Lending explained the 2/28 ARM goes as high as 12% interest with current interest rates. They’re like 2 year balloon loans, because the borrower cannot afford the higher payment. If you finance before the 2 year period ends, you’re hit with the prepayment penalty. His main concerns with the subprime product is 1) high debt ratio of 50% – 55% of gross income, 2) underwriting to the initial low interest rate, and 3) payment excludes taxes and insurance, so once you add that in, the total payment is over 60% of income, and once the payment adjusts, the payment exceeds gross income!
When asked about the % of loans with prepay penalties, neither of the mortgage banker association spokesmen had any idea, hahahaha. But the CRL guy cited industry studies showing that 80% of subprime loans have them.
Mr. Allard cited a Colorado homeowner who was hit with a $20,000 prepayment penalty if he refinanced with a different broker.
1.8 million homeowners are at risk of default, and 500,000 will end up in foreclosure, according to the Consumer Federation of America. Most borrowers have no clue about the payment shock.
Senator Jim Bunning admitted that he needed a lawyer to review his refinancing documents, which were 36 pages of legalese. He makes a good point. If not even a senator can make sense of loan documents… I have to admit, they are very difficult to understand, and how many people actually read all their loan docs?
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