This last round produced the greediest bunch of sellers I’ve seen in my 21 years of real estate. But buyers were jumping on the band wagon because the greed bug bit them as well. HOW CAN YOUR HOME MAKE MORE MONEY EVERY YEAR THAN YOU DO? Fear gripped some of the buyers because they were afraid that they would never own a home.

It did not take a rocket science degree to see that we were on a collision course in real estate. Every time the market would start to become sane, the banks would come up with another loan program that continued to fuel the frenzy. THEN…ALONG CAME THE REAL CULPRITS WHO COMMITTED LENDER FRAUD…falsifying documents, cheating their friends & even relatives, lying to people within their own ethnic communities to misuse their trust to make a buck!

Unfortunately, it IS difficult to determine when things will iron out for America. Some people are all out afraid that we will go into a serious recession. I am a very positive person, but my clients need me to be realistic as well. Real estate is LOCAL. Just like the weather, there are always pockets that are warmer/colder than other pockets right next door.

I was disappointed with California Association of Realtors in 2006 when they projected soft landing in 2007. I kept thinking about all the loans from 2005 that were to reset in 2007. However, I don’t think that we should cast a lot of criticism stones at people who were wrong. I also think that we should not sensationalize the errors as well. I grew up in a time when my mother said that you could be honest and still be polite.

Unfortunately, much like the Savings & Loan debacle, the American people will probably pull the banks out of the mess that they themselves have made with the Sub Prime loan products. Buyers need to take some responsibility for their own lack of knowledge. They need to verify information and not blindly trust lenders. They need to seek Realtors who will take the time to educate themselves first and then educate their clients in turn.

This mess too will pass. Much of America is in a REO/Short Sale market. When prices come down enough for an investor to get break even cashflow with at least 20% down, we will see true value. Local economies can drive prices higher where they make sense. Someone in another comment said that there are many hourly workers who will never be able to buy. That will always be true.

Many would be “Investors” came into the marketplaces with little money down, driving prices unrealistically high. They bought to “flip” houses at the wrong time. Sensational “Investors Classes” were being given to pull people into the feeding frenzy who will never be true investors. They, just like the course presenters, were looking for the quick buck at the expense of others.

We can see from where we are, I hope, that the greed bug can bring about events like stopping the entire economy of France (who invested in sub primes) for an entire day in 2007. It may take the U.S. economy into the greatest recession since the Great Depression. Hopefully people will learn this time. They obviously did not learn from what happened in the 90’s because they helped to create our current potential disaster.

Let’s all begin the clean up and remember not to fall prey to hype, trying to make a quick buck. My mother told me when I was a child…”Your chickens always come home to roost.” WE CAN CLEAN UP AND MAKE IT A BETTER WORLD BY PRACTICING THE TRUE GOLDEN RULE: “Do unto others as you would have them do unto you.” Make a difference in 2008!

From here it’s no longer a rescue mission, it is solely a recovery mission. Those who will survive will need to seek shelter in the form of change, while the others will be zipped up in body bags and taken away to work at Walmart.

Check out today’s post for support.

In any event, thank you all for your continued commentary.

I agree with Rick in saying REALTORS will not become irrelavent. The simple truth is consumers WANT help. They take a risk with every product or service they buy. They want a good deal, they want information and they want guarantee.
Those consumers that are loyal to us REALTORs, like us for who we are and/or what we do for them, like in any industry. My clients use me because I’m likeable, hard-working, go over and above what other REALTORs might do – certainly am not lazy and maybe even do too much at times according to some, and always let them know they’re my #1 priority. There are some people who want this, and some people who don’t. Remember, there are those out there floundering, not sure what to do first or next, those without the time to find the resources or drive around neighborhoods. “Find them” has been my mantra.

Our industry is a CONSULTING industry and it is our duty to remind our clients and prospects of this service and that all the statistics and market updates we can get our hands on are only estimates. Remind them we can give them consulting on every step of the process to help them find that great deal and analyze on a small scale (per house they find, per neighborhood/subarea). Keep it simple… home values are down, so what? So, we need put more emphasis on Comparative Market Analysis for the neighborhoods you like (do the extra work, let them know what you did for them and your clients will love you for it). Unfortunately, another persons loss is anothers gain. Letting them know how and where they can buy *more home for the money*, always perks my clients interest. This is a goldmine of a time right now for buyers. They are our key to regaining the markets in decline. Stimulating and guiding their interest in buying property in these markets is a great business focus.

Our industry will always experience ups and downs and so will our individual businesses. Cameron is right, this is not an easy business. Thank goodness for the people leaving the industry now, less competition and possibly less of those who make REALTORs look bad… the worst representative of our industry is the one who is desparate for business and with no heart left in it.

90% of my business is buyers and referral based after only 2.5 years in the industry. It’s been a great time to buy in beautiful Colorado!

P.S. Not yelling with the caps just trying to emphasize certain words.

That said, those people are the ones going out of business. Those will be the people packing it up and, perhaps, putting their licenses with holding companies until the next boom market.

No offense, but I don’t see the auction market taking the place of Realtors any time soon. Because of the default rate, banks are turning to Realtors for BPO’s on properties, not auction houses. In fact, auctioned properties carry a much higher commission (to the auction house) than brokered properties do, sometimes upwards of 7-10% of the sold price. And to participate in the auction suggests you have the money to do so. The average American, outside of e-Bay is not an auction person. They certainly might take issue with buying a home, without an inspection, taking it “as is” with no idea of what they are getting into, simply because they got a “deal” on it at auction. It’s all relative.

To maintain the market, the banks want Realtors to sell the properties as the first line, NOT auction houses. Say you have a neighborhood where the average home is valued at 500k. Now say there’s been even a 20% price recession. Wouldn’t it benefit everyone in the neighborhood and the bank to do a short sale, (of say 25-30% off that 500k value), and maintain the relative stability of values in the area rather than radically skew everything by selling something at auction for say, 50% of the last appraised value? If a home in a 500k area suddenly gets auctioned off for 250k, guess what? Everyone else’s values are adversely affected and, depending on the situations of the individuals in the surrounding homes, we could be talking about an entire neighborhood that is upside down on their loans. If all those people walk away and a trend starts we’ll see the beginning of a greater economic collapse.

Auctions, in my opinion, work well in super depressed markets, (ie blighted areas where investment opportunities exist), or super hot markets where, quite often, the bidders will foolishly outbid each other for the sake of ego and “winning.”

And what about that 10% commission? On a house that’s 250k the commission could be 25k, about the same a Realtor would charge to sell a home priced at 500k.

How does that make sense?

By the way, I read back through a comment of yours. You said you had that the home you built in Florida had lost $100,000? Since when? You also said that you built it 30 years ago. How much has it appreciated in 30 years, compared to the $100,000 you lost? Was your home really ever WORTH $100,000 more than it currently is? What establishes a home’s value?

This business is supply and demand, just like everything else. The demand for Florida has shrunk, causing property values to decline. Guess you should have sold when demand was at its peak, isn’t that the goal anyway?

I had a client move from Orange County, CA about 3 years ago. He purchased his home 8 years prior for $270,000. In 8 years time, he put it on the market, and 48 hours later, sold it for $625,000. He took his money, and got the heck out of California. He purchased a larger, better quality home here, and still had $225,000 left in the bank.

What made his home in California appreciate $355,000 in 8 years time? Was it demand, wildfires, earthquakes, power outages, or mudslides?

Is it any surprise that foreclosures have gone through the roof in this country, and will it be any surprise when another real estate bubble happens in the future? No.

School information:
National Education Association (www.nea.org)
http://www.greenville.k12.sc.us

Crime:
South Carolina Law Enforcement Division (www.sled.sc.gov)

Company/Business Environment Information:
Expansion Management Magazine (www.expansionmanagement.com)
Greenville Economic Development Center (www.greenvilleeconomicdevelopment.com)
I-CAR (www.clemson.edu/autoresearch/)