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  1.    #1  
    I don't know what else to call it (warning, I am house hunting right now so this is VERY prevalent in my mind)

    It occurs to me that there is no market force that seeks to restrain real estate prices. Real Estate agents for the sellers have a vested interest in higher prices. Real Estate agents for the buyers have a vested interest in higher prices.

    What keeps the prices in check? Lenders, right?

    Wrong!

    Lenders are only interested in being able to recoup their investment. So they will loan you as much as you want up to the appraised value.

    So, then, appraisal is the restrictive force right?

    Wrong!

    Appraisals are based in large part on recent sales of other property in the vicinity.

    So, if someone overpays for a property, the other properties in the vicinity get a boost in appraised value.

    So, where is the restriction? In the buyers' collective heads. Only if we refuse to pay so much, will we see the correction.

    Buyers unite! We can do this!

    Step 1: I saw this house first, you go find your own!!!

  2. #2  
    Very wrong on this.

    That is called a Comparable Market Analysis, not an appraisal.

    Market price is market price, it can be roughly checked by others in houses in the area, but real estate agents don't set the price, the market price is what the buyer is willing to pay.

    No matter what, when you sell your house your opinion will change.
  3.    #3  
    Quote Originally Posted by dlbrummels
    No matter what, when you sell your house your opinion will change.
    I know. That's the worst part.
  4. #4  
    I feel your pain. My girlfriend just went through the process. It's a crazy housing market and even crazier in Seattle. I think I'll wait and save my pennies a bit longer.
  5.    #5  
    Quote Originally Posted by dlbrummels
    Market price is market price, it can be roughly checked by others in houses in the area, but real estate agents don't set the price, the market price is what the buyer is willing to pay.
    Seriously though, real estate agents do "influence" what a buyer is willing to pay. My agent encourages us to bid high and write in an "escalation clause" on the contract that says if someone offers more, we will match or beat it up to a limit.

    The argument is, if you want this house this is what you have to do. And, since "all" the agents are offering such advice, the public feels "compelled" to pay more.

    NOTE: I am not blaming an agent for what I agree to pay. If I agree, it is my decision. And, it is in fact the "market value."

    While overall I appreciate the agents assistance (because Maryland real estate law requires a 1" thick stack of papers for a transaction). However, I realize they have no cause to seek a lower price.
  6. #6  
    Quote Originally Posted by shopharim
    I know. That's the worst part.
    Just get one of them thar double wides. Ya need to move, ya just take it with ya.
    Well behaved women rarely make history
  7.    #7  
    Quote Originally Posted by clairegrrl
    Just get one of them thar double wides. Ya need to move, ya just take it with ya.


    For the record, I am not interested in government regulation of this area of public life!!!
  8. #8  
    YOU decide what something is worth -- to YOU.

    Its the whole Gestalt of that thing, that house, that place.

    you are competing against others who also have a passion to possess the thing that you also desire -- and you'll need to pay just enough more than they, to have it.

    And your're also simultaneuosly attempting to extrapolate into the future what someone else will pay you, if you sell several years later.
    755P Sprint SERO (upgraded from unlocked GSM 650 on T-Mobile)
  9. #9  
    Quote Originally Posted by shopharim


    For the record, I am not interested in government regulation of this area of public life!!!
    There's no foundation for that sort of comment
    Well behaved women rarely make history
  10. #10  
    Quote Originally Posted by shopharim
    Seriously though, real estate agents do "influence" what a buyer is willing to pay. My agent encourages us to bid high and write in an "escalation clause" on the contract that says if someone offers more, we will match or beat it up to a limit.

    The argument is, if you want this house this is what you have to do. And, since "all" the agents are offering such advice, the public feels "compelled" to pay more.

    NOTE: I am not blaming an agent for what I agree to pay. If I agree, it is my decision. And, it is in fact the "market value."

    While overall I appreciate the agents assistance (because Maryland real estate law requires a 1" thick stack of papers for a transaction). However, I realize they have no cause to seek a lower price.
    Maybe you need a new agent !
  11. #11  
    Quote Originally Posted by shopharim
    Seriously though, real estate agents do "influence" what a buyer is willing to pay. My agent encourages us to bid high and write in an "escalation clause" on the contract that says if someone offers more, we will match or beat it up to a limit.

    The argument is, if you want this house this is what you have to do. And, since "all" the agents are offering such advice, the public feels "compelled" to pay more.

    NOTE: I am not blaming an agent for what I agree to pay. If I agree, it is my decision. And, it is in fact the "market value."

    While overall I appreciate the agents assistance (because Maryland real estate law requires a 1" thick stack of papers for a transaction). However, I realize they have no cause to seek a lower price.
    You should offer what you want to pay for it, feedback from the agent is optional, greed will do a lot to an agent.
  12. #12  
    Quote Originally Posted by shopharim
    ...While overall I appreciate the agents assistance (because Maryland real estate law ...
    if you're looking in the DC area things are tough right now --

    I was lucky that I bought mine when I did 2 years ago ...
    755P Sprint SERO (upgraded from unlocked GSM 650 on T-Mobile)
  13.    #13  
    Quote Originally Posted by dlbrummels
    You should offer what you want to pay for it, feedback from the agent is optional, greed will do a lot to an agent.
    That's been our approach. Our agent and lender have been coming up with all sorts of approaches. But we are resolved to not spend more than we have budgetted, even if that means waiting (and waiting, and waiting and waiting...).

    I mostly needed to rant.

    Also, regarding,
    Quote Originally Posted by dlbrummels
    Maybe you need a new agent !
    Some of this might be unique to Maryland. But, both the seller agent and the buyer agent are paid by the seller, at a commission based on the sale price. So, the buyer agent can be tempted to advise outside of the buyer's best interest.
  14.    #14  
    Quote Originally Posted by BARYE
    if you're looking in the DC area things are tough right now --

    I was lucky that I bought mine when I did 2 years ago ...
    In one neighborhood in MD, we saw the list price for the same model in the same neighborhood increase 13% over two months.

    The first unit was listed at X. It sold for x+y
    The second unit was listed at x+y, and sold for x+y+z
    The third was listed for x+y+z+aa
  15. #15  
    Quote Originally Posted by shopharim
    That's been our approach. Our agent and lender have been coming up with all sorts of approaches. But we are resolved to not spend more than we have budgetted, even if that means waiting (and waiting, and waiting and waiting...).

    I mostly needed to rant.

    Also, regarding,

    Some of this might be unique to Maryland. But, both the seller agent and the buyer agent are paid by the seller, at a commission based on the sale price. So, the buyer agent can be tempted to advise outside of the buyer's best interest.
    Agents are required to present ALL offers.
  16. #16  
    From the outside, it surely can seem that everyone is conspiring to get the buyer to pay the highest price possible. But that's in a hot market - timing is everything - remember not too many years ago when real estate values plunged in teh Northeast.

    It's purely supply, demand and perception......with interest rates extremely low and the stock market under-whelming, you're seeing a larger that usual number of investors in the market that are driving prices up based on the speculation that they will be able to turn the property quickly and make a big profit. I call it the "regular-joe syndrome".

    A saying in the stock market is when the regular joe starts jumping into the stock market, it's time for the professional investor to get out. It's pretty much the same thing in real estate - were I you, I'd stick to my guns and not let the emotion of purchasing cause you to make a poor decision.
  17.    #17  
    Quote Originally Posted by dlbrummels
    Agents are required to present ALL offers.
    Didn't know that. It explains some things though. I found it wierd that agents set aside a day to present contracts. Back in Ohio (admittedly 9 years ago), where we bought our first house, it was more first come first served (unless it just wasn't as competitive).
  18. #18  
    The fact that both sides get paid more when the price goes up is bad. The fact that the agents get paid on the *entire* value of the house is worse. A monkey could sell a million dollar house for $750,000. Why should a real estate agent get paid for the first, say, 90% of appraised value? And then, call it 25% of everything over that? That would give them huge incentive to drive up the price for the buyer. A buyer's agent could get 25% of everything under 110% of the appraised value. As it is now, the incentives are all out of whack. I don't think the numbers above are the best (I just made them up) but the fact that a cartel conspires to keep such innovative ideas out of the marketplace boils my blood.

    And yes, I stole this argument from Freakonomics (though I haven't read it). :-)
  19. #19  
    In today's market, the escalator clause is a great thing only if the house you are wanting is worth it to you to pay the top price for it. Just make sure you put an "up to" amount limiting how much you'd pay, and then be pretty sure that you're going to pay the top amount. As for saying that a buyer's agent would want you to pay a higher price for a home than necessary, I think that could be true on the most unethical agents, but most agents would rather sell the house to you at a price that's going to make you happy and create future business. A $10,000 increase in sales price will probably only net them $150 (agents usually only get 1/4 of the commission). What I've found is more listing agents trying to sell the house for less than what the seller wants because they make nothing if it doesn't sell. A home is only worth what a buyer will pay. The agent is truly used more for their work after the writing of the contract and up to closing, than just showing you homes or listing your home. They're there to make sure everything goes smoothly for both sides.
  20. #20  
    Quote Originally Posted by RickMG
    What I've found is more listing agents trying to sell the house for less than what the seller wants because they make nothing if it doesn't sell.
    And that agent is just as wrong as a buying agent pushing his client to pay more. The incentive scheme is driven toward quick transactions.
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