This is my attempt at blogging. I'm still learning about the blogging world, and this is my own personal study hall.

Wednesday, March 22, 2006

Buying a Home, part 2

OK, first, in response to my good friend Koppie:

You're talking about San Francisco. I'm talking about "Kemp Mill" in Silver Spring, Maryland. Come visit us and you'll see what I'm talking about. There's really no comparing the ridiculousness (if that's a word) of the over-pricing in our neighborhoods.

Second, back to what I was saying in my previous post:

I want to start a revolt. I want to rebel against the real estate industry, which has a strangle-hold on our society, and is destroying the American Dream of land/home ownership. Now, the real estate industry is certainly not the only party at fault in this. The lending institutions keep on finding new ways of destroying people's lives, in addition to making it difficult for most and impossible for many to own their own homes, particularly in even the most mildly desirable of areas. In fact, if we didn't absolutely need to live in a neighborhood where we could walk to a Shul, we would never even talk about buying a house here. They are ugly (have I mentioned that yet?) But we want to live near DC, and that basically means we have to live here. There are other neighborhoods near DC that have nicer homes, but they aren't any cheaper. Some are astronomically more expensive. So here we are.

My rebellion will be along these lines:

First - we (that is anyone discussing buying a home) have to agree to significantly undercut the asking price of any house or plot of land. And I mean SIGNIFICANTLY. If we all bid at least $200k below the asking price, eventually the sellers and their agents will get the idea - the bubble has burst. Another way to accomplish this is to agree to initially bid no more than 40% of the asking price, and not to outbid one another by more than 5% at a time, with a cap at 60% of the asking price. We need to recognize that there are other homes available. There are always old people looking to retire in Florida, always middle-aged people looking to move to a smaller place after their kids have moved out, always people who need to relocate for work. The only reason the prices are so ridiculous now, is that the agents have us convinced that we will lose the house if we don't bid higher. And the reason they're right is because they've convinced the other bidders of the same thing. (Did you know that the law, as currently written, states that a real estate agent can tell a bidder that another bid has been made, but can't tell the bidder what that other bid is? This means the second bid can be $150k less than the first bid, but the idea of another bid existing will drive the first bidder to raise his bid even higher. This is supposed to prevent corruption and hyper-inflation of the price!)

Second (particularly if the first step doesn't work) - anyone who has bought a home at an exorbitant price should file and join a class-action lawsuit against the agents who inflated the prices of the homes they bought. This would get complicated. Someone would have to come up with an estimated amount of money that was unfairly and unethically pressured out of the buyers' hands at the time of purchase. They could work out some average amount that everyone would share, or some system to divide the money based on how much each buyer lost.

Third (particularly if the first and second steps don't work) - we should start up a group representing home buyers. There is already a Home Builders Association and a Realtors Association, why not a Home Buyers Association? Here and now, I am declaring the establishment of the National Home Buyers Alliance. Our goal is to represent home buyers and prospective home buyers, and anyone who hopes to become a home buyer in the future, to demand tighter restrictions on the tricks that real estate agents can pull to unfairly and artificially inflate the prices of homes, and to try to get laws passed that require one of the following, or some combination thereof:

a) Lawyers, not real estate agents, one representing each side, negotiate and haggle over the price of the home, and earn a flat fee - NOT A COMMISSION.
b) Real estate agents haggle over the price of the home, and earn a flat fee - NOT A COMMISSION.
c) Real estate agents cannot represent both sides of real estate transactions, not the same transaction and not other transactions - this means they represent either buyers or sellers, not both. Ever. They are no longer "real estate agents". They will be "real estate buyers agents" or "real estate sellers agents".

Look, I have good friends whose families have long histories in the real estate industry. I don't want to harm anybody. I also do not mean to suggest that real estate agents are to blame for the way things work, or that real estate agents are criminals or crooks. They are not. They work completely within the law. But the law breeds corruption and unfairness. It's gotten out of hand and the system needs to change dramatically.

2 Comments:

Blogger Düdie said...

Hey Seth, you raise points and while not an expert I have some real estate experience you might find useful. First, consider that with housing prices where they are, the same amount of money (or less) that you would spend on a mortgage can be spend on renting a house. There are people who rent homes for 20 years all because you don't have the large down payment and you have lower monthly costs (and often somebody else paying for repairs) which frees you up to have your money working for you. Too many people are stuck on the dream that they must own property but it's really a thing of the past. If you can take that $20000 down payment and put it somewhere else, with little intelligence you could be earning 10% monthly on it and I'm talking in a simple, low risk investment.
Secondly, there are buyer associations, dependant on communities. That's why it's important to speak with the city hall and see what properties are valued at as well as having any property thoroughly inspected by an accredited individual. Also, you said you have friends whose families are in the real estate business; speak to them to see what's reasonable, they know. One of the first rule in generating wealth and savings that work for you is to surround yourself with people who know more about specific fields than you do.
I can recommend some books too :-)
Good luck.

1:24 AM

 
Anonymous MB said...

Check out the house for sale by ReMax on the corner of Kenbrook and Hoyt - it says "Gorgeous on the inside" which essentially acknowledges the hideousness of the house's exterior.

Great series, keep it going!

7:42 PM

 

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