Come on HP'ers - rush down to your local Wells Fargo, who'll make you a real estate loan you can't refuse (so they can then bundle it up, commoditize it, and pawn it off to Freddie, Fannie, the Chinese and hedge funds, earning a fat commission while carrying no risk)
Come on! What do you have to lose? (Besides your home, your possessions, your family and your financial life?)
Check out Myth #3 - this should be criminal.
The Great American Homeowner Challenge with David Bach, and Wells Fargo Home Mortgage as founding sponsor, is designed to inspire 10 million Americans to buy a first, second or investment home — you can be one of them.
Myth #1“I can’t afford a down payment.”
In the past, buying a home required a 20% down payment. But not today. In fact, 7 out of 10 first-time homebuyers make a down payment of 10% or less.
Myth #2“I have less-than-perfect credit, so I can’t get a mortgage.”
A less-than-perfect credit history doesn’t have to stand in your way of reaching your homeownership goals.
Myth #3“It’s less expensive to rent, and now may not be the right time to buy.”
In fact, you may be surprised how much home you can afford for the same rent check you're sending in now, especially when you consider the tax advantages of homeownership. And unlike rental costs, your monthly principal and interest payments will stay the same for the life of a fixed-rate mortgage.
Because home prices almost always go up (and only occasionally decline), buying as soon as you’re able is typically a better strategy than trying to time the real estate market. Moreover, as a homeowner, you’ll be building wealth as your home equity grows.
Myth #4“The whole mortgage process is long and complicated.”
We want to make buying your first home as easy as possible.
Myth #5“I won’t be able to make my monthly payments.”
Our goal is to help you succeed financially, so we’ll carefully review your loan options with you and help you choose the loan that’s right for you.
October 13, 2006
Wells Fargo "Renting is Hazardous to your Wealth" and prospective homedebtor myths
Subscribe to:
Post Comments (Atom)
64 comments:
Number three is rediculous right now. It's exactly why I do rent.
These are the exact five comments that realtors make when I go to open houses. I always tell them that I did own a home, I made a killing, and now is the time to rent. When they start to argue I tell them that I will re-enter the market when, not if, I can get this house for 50% of what you are asking. They always get angry.
but it's gotta be fun! Man, I wish they had open houses here. I'd love to run around and have fun with hungry realtors
Renting is hazardous to your wealth,
buying right now is a pack-a-day habit with a fifth of vodka chaser while rock climbing with a dry-rotted rope.
Saw an empty open house while tooling around on my trusty bike over the weekend. Regret not going in. Will do next time.
Renting is the most proven way to stay poor. Look at the difference between wealth of renters vs home ownership. I'm not saying things are not going to correct, but its the facts.
Keith,
NAR = National Association of Ramen.
Renting is the most proven way to stay poor. Look at the difference between wealth of renters vs home ownership. I'm not saying things are not going to correct, but its the facts.
----------------
How can one say that homeownership is a form of wealth? Someone hands me $50 dollars and I have the cash in my hand, that is an actual financial transaction.
Equity is a number someone makes up in their head put's it on a 8-1/2 x 11 sheet of paper (worthless) makes me sign for it and then tells me this is what you have to spend and this is what it will cost you to payback...where is the wealth there? that is what i call DEBT!
Don't belive the hype, it is only wealth if you withdraw on it(ATM), if you dont withdraw then it is only a home.
"Renting is the most proven way to stay poor. Look at the difference between wealth of renters vs home ownership."
In normal times, renting is 90% cost of owning, so why not buy? Not so now. And houses are depreciating - that means, for a long interim, buying = losing money.
Also, this is an example of the logical fallacy of "questionable cause" (that two things are frequently associated together does not, in itself, prove a causal relationship).
Bubbles owe themselves in part to lapses in reason.
Bubbles owe themselves in part to lapses in reason.
----
Spot on, and this is the reason Keith started this blog, was to inform. The more you feed this bubble the more the goverment Prints, and the more the cost of things (INFLATION). IE $4.50 for a gallon of milk.
No matter what the Fed says, they will have to Hyperinflate us out of this mess in 07, the writing is on the wall.
Borkafatty you are wrong, not often but on this point you are. I have seen studies that people who own homes vs renting have more money all across the board. Not just "wealth" tied up in real estate. You are getting worst then richard when someone else wants to post something you don't agree with.
"I have seen studies that people who own homes vs renting have more money all across the board. "
Have you ever known anyone trying to switch jobs/careers during a depressed housing market? I did, Houston ala '85 (oil bust) and LA ala '91 (aerospace/defense bust), and guess what, they all lost their shirts. If they'd rented, they could have switched cities (i.e. jobs) w/o a drop in their net worth.
Now, we have depressed housing markets in most of our major cities, not just the highlights.
What's the best way to build wealth right now then? I've made more money investing in real estate over the past 5 years than anything else. I currently have mutual funds, a stock account and a high yield savings account. Is there something else I should be looking at?
I don't think the future of real estate is as dire as all you folks do. See why here.
So all renters are better off if they never own real estate? Yeah ok. You just don't want to hear it, but people who own real estate over time have more money. Yes people today who bought in the peak will lose money IF they sell now.
Borkafatty you are wrong, not often but on this point you are. I have seen studies that people who own homes vs renting have more money all across the board. Not just "wealth" tied up in real estate. You are getting worst then richard when someone else wants to post something you don't agree with.
---------------
Please I am not in the mood for attacks or comparisons to Richard, just explain your point, and correct me. I am not saying I am right at anything it is just my point of view.
Yes I do own, and yes I have some liquid, am I wealthy? No! I am at work sick, at least if I was wealthy I could stay home in bed and not have to worry about putting food on the table for my kids..
Homeownership is a False sence of wealth. My Opinion of course.
Please feel free to comment but leave the Richard comparison out please, and post those Studies if you would I would like to read them.
"You just don't want to hear it, but people who own real estate over time have more money."
People have to move with the jobs so yes, if everyone has a semi-perm health care job (doctor, PA, etc) then buying, when the ownership costs are in line with the local renting markets, then it's fine. But nowadays, with the private sector companies expecting people to move every now and then to maintain their careers then where's the value in ownership aside from that 'flip' which comes with each job churn cycle?
Myth #3“It’s less expensive to rent, and now may not be the right time to buy.”
In fact, you may be surprised how much home you can afford for the same rent check you're sending in now, especially when you consider the tax advantages of homeownership. And unlike rental costs, your monthly principal and interest payments will stay the same for the life of a fixed-rate mortgage.
-----------------------
This is an outright lie. I live in Chicago. I rent a 2 bed for $1000/mo. A $1000/mo mortgage would be $150,000. There are no 2 bed condo's going for that amount here.
panicearly said...
Myth #5“I won’t be able to make my monthly payments.”
Once you sign on all Xs we trust that you`ll find a way.
Friday, October 13, 2006 1:35:39 PM
-------------
You'll always find more money!
:I rent a 2 bed for $1000/mo. A $1000/mo mortgage would be $150,000. There are no 2 bed condo's going for that amount here.
Bingo, and most start at $400K which gives you a ~$4K per year tax bill on top of paying the interest on the principle of the mortgage (which BTW is a secured loan for those who think that a mortgage isn't the same thing). So right there, w/o condo fees, you pay $300 per month, almost a third of one's equivalent rent money just to keep city hall from confiscating your unit.
mendoman said...
So all renters are better off if they never own real estate? Yeah ok. You just don't want to hear it, but people who own real estate over time have more money. Yes people today who bought in the peak will lose money IF they sell now.
Friday, October 13, 2006 3:30:44 PM
--------------
Until, the furnace goes, or the hot water heater, or the basment leaks and mold growes and the kids get ill............ there are alot of variables, you can't just throw blanket statments around like if you own you are better off.
Salt Lake Mortgage Guy said...
What's the best way to build wealth right now then? I've made more money investing in real estate over the past 5 years than anything else. I currently have mutual funds, a stock account and a high yield savings account. Is there something else I should be looking at?
A lot of us made money in real estate over the last five years. But, real estate follows a business cycle just like everything else. If you compare real estate today to the dot-com boom / bust you can easily see how it was a great investment and is now a terrible investment. As to what the next big thing will be, that's the million dollar question.
I don't think the future of real estate is as dire as all you folks do. See why here.
Your chart has been used to illustrate exactly why real estate is as dire as this blog suggests. The prices can not sustain their current levels with real wages decreasing and credit tightening. If we go into a hard recession, which a lot of us think will happen, the prices definately can not be sustained.
And besides that if you rent, and times get tuff & the landlord is not a dick, you can hopefully work out an arangement, with him/her.
With the lender (who can also be a dick) it is what it is. Sure they can stall your foreclose, and put you in a payment plan that in the long run will kill you, all it is doing is benefiting them.
I have owned for 14 years if I stop making payments they take my house, where is the wealth and what happens to my 14 years of Equity?
You are a mere Account No. the wealth is delusional.
Like a.creampuff said, the "owners are richer than renters" argument is not quite that simple. Could it be that those who are better off to begin with are simply in a better position to buy? You really start delving into class issues if you look at the whole renter/owner wealth cycle.
Right now, renting and owning are still out of whack, compared to historical norms. Renting and owning are typically about the same, the cost of entry to buying (closing costs and a down payment), was what kept most people out. For some people, living paycheck-to-paycheck, saving up $5k or $10k would literally take years. All the new loan programs got people into homes by removing the cost of entry, and as home prices excelerated, using exotic financing to keep the monthly cost of owning down. Down-side; there is no free lunch and the cheaper money comes with more risk.
Either way, as mentioned, if you have to move during this period, you are just screwed. And if the Dems win Congress, expect military budgets to get slashed. Expect gov contracts to dry up. Expect more people to need to move. It could be disasterous.
Renters do also have closing cost's (IE) First Month's, Last Month's & Security Deposit.
Average 2 bedroom rent $1300+-
$3600 just to move in.
I would suggest intuitively that people who own are better off than people who rent, HISTORICALLY
1) tax reasons
2) paying yourself by paying down your mortgage equals savings
3) home appreciation = wealth
4) people who owned had jobs, a downpayment and verifiable income to qualify for the loan to buy a house
note that all of those factors got thrown out the window during the bubble
that's why what was true before may not be true in the future
especially when homes depreciate - that changes everything
Stop paying your rent and see how long you can stay. Once the landlords know you are a flake, have fun living in a dive.
"And if the Dems win Congress, expect military budgets to get slashed. Expect gov contracts to dry up. Expect more people to need to move. It could be disasterous."
You're joking, right? If the Dems win Congress next month (and I expect they will), federal spending will increase like you've never seen. Oh and BTW, military budgets are already "slashed" because the DoD now has to pay for Iraq out of its budget. Procurement of dozens of high-profile weapons systems is in jeopardy and aerospace/defense suppliers are feeling the crunch right now.
Thanks Keith, for talking some truth out there. Yes, there will be some down turn. All markets? some? and how much?. Its all guess.
Yes, I'd agree that tax laws make owning a no-brainer if you have significant income. The IRS will kill a professional couple filing jointly unless they have the big mortgage deduction.
Renters are too transient in my experience, and that always invites low-lifes who cause trouble for honest people.
Renting is fun. Owner won't fix stuff. Have to move, because the owner sells or moves the rent up. Don't have a say about what goes on around your home. No homeowners take renters seriously living next to them. Oh you get to be a slacker and watch TV all day and fight with your spouse all the time( outside of course)
Everything in life comes with a caveat doesn’t it. Why can’t they say:
Buying makes sense…at the right price.
Buying makes sense…unless you are at the peak of the bubble.
Buying makes sense…unless you live in a metropolitan area that has seen year over year increases of 150 to 200 percent.
Buying makes sense…if the building in equity, tax benefits, and property meet you and your families needs.
I doubt anyone will argue that in certain areas for example Salt Lake City Utah or many parts of Texas, buying is a GREAT time right now. But what about for 35,000,000 California residents where the state is at a median of close to $500,000? Why didn’t we see many of these ads in 2003, 2004, and 2005? Because so many people were buying (flipping as well) that business was good. Now that the market is softening they actually have to market to get customers. Again caveat emptor as always.
People often fail to realize the many other upsides to renting. In the last 10 years, I have lived all over the world while my homeowner friends have been stuck in one static little life. I have rented big when I had friends or girlfriends (some with kids) or dogs to share housing with and rented small when flying solo. I have lived in the mountains, the city, the suburbs, overseas, near the ocean, on the harbor, et al. I have always been closer to my current job than 95% of my colleages. There are other advantages too but they are common knowledge.
"Stop paying your rent and see how long you can stay."
In my state, as soon as a renter complains to the housing authority, it takes minimum 6 mos to start the eviction process. So, that's essentially 9 mos of free rent being a full blown deadbeat.
If you play the "check's in the mail" game with the mortgage company, that trick will fail via the second month and then by month no 3, foreclosure procedures will be exacted.
So, let's see... rent = 50% of mortgage, so essentially what's 9 months of a typical mortgage payment on a $400K condo? $2200 * 9 = $19.8K. So, that's essentially $20K of free money if one plays the screw the landlord game as a renter vs being an owner.
Perfect, because with all that extra cash saved, I can pre-pay for the following year's rent at a place with no landlord reference required. That's the advantage of being a cash rich renter. That why, if I have to move again, in the near term for a better job, I'd already paid for a brand new clean reference.
:The IRS will kill a professional couple filing jointly unless they have the big mortgage deduction.
That's generally because professionals are W-2 employees and therefore have minimal tax deferral strategies outside of the standard interest deduction.
A self-employed couple can actually defer $42K per person into self-directed 401K programs with full service brokerage accounts, precious metal reserves, etc. That's a real way to grow wealth then to hope that one's home equity goes up.
No homeowners take renters seriously living next to them. Oh you get to be a slacker and watch TV all day and fight with your spouse all the time( outside of course
Yeah but I get a lot of laugh at my neighbors ( the owners) when they fight in the driveway over their not having enough money to buy groceries. Also watching the utility guy disco their cable,electric gas. I sit on my fat ass paying 25% of what they pay with all the same benefits that they have. Plus I am the one who sold them their home and enjoy just living in the house next door, only income is interest from those fools. Life is sweet. Finally I will buy their house back at some point when the value drops in half.
"I have seen studies that people who own homes vs renting have more money all across the board. "
Which presumes home ownership is a key step to building wealth. Or conversely, perhaps it is more likely a manifestation of wealth built on other foundations.
Haggis
David Bach is the Worst Person in the World
I couldn't believe he came out with some real estate shilling book last year - but at least he's staying consistent telling people to buy all the way down!
Saltlakecity...
"What's the best way to build wealth right now then? I've made more money investing in real estate over the past 5 years than anything else. I currently have mutual funds, a stock account and a high yield savings account. Is there something else I should be looking at?"
So have I. It's all past tense. Indeed it was a good way to build wealth. But, life's a fairly long game, and if you're looking for the holy grail of brain-dead riches you've got to ask youself why everybody throughout history found money so damnably hard to come by.
We've clearly developed a fail-safe system of guaranteeing wealth without risk. Damn, why the hell didn't our parents and grandparents suss this out? They must be dumber than a sack of hammers. Good thing we're not though.
Haggis
Damn, why the hell didn't our parents and grandparents suss this out? They must be dumber than a sack of hammers. Good thing we're not though.
Haggis
--------------
I have said this many many times Haggis, to my parents:
When you were walking to the boat, the guy standing there was yelling:
"Want to be Rich, boat to the right".
"Want to be Middleclass Boat to the left".
My father who was not much into paying attention and has bad hearing thought the guy at the dock said:
"Want to live with a Bitch boat to the right"
"Want a Peice of ass boat to the Left"
He choose the Piece of ass.
There in lies the 2 job thing:)
I suppose my position would be a bit different if we were facing a decline due to high interest rates and unemployment.
I'm convinced real estate is the best way for an average person to build wealth over the long run. I feel bad for Californians who face these prohibitively high prices just to enter the game, but there are plenty of places around the country which are bargains when you consider the price of renting vs. owning. Unfortunately, these places have other negatives to living there.
I know Utah is two to three years behind the rest of the country, but signs of a slowdown are apparent now. People are simply asking too much for homes. Those that aren't get sold very quickly. My real estate agent just sold a home in a zip code where inventory had doubled. She said it went under contract, for full price in three days. Her strategy, just price it slightly below the rest of the market.
I think bargains exist in every market and as foreclosures and short sales increase, that creates more opportunity.
Just my opinion.
WHY ONLY 40 OR 50% DOWN IN PRICE? AS A NEEDED PLACE TO LIVE, WITH SOME SORT OF CROPS PLANTED, EVEN IN CONTAINERS, AS I MUST EAT, THE LOWER PRICES EQUAL LOWER TAXES, AND MORE TIME OF "GROWTH ECONOMY" HELPING, NOT HURTING NEIGHBORHOODS, WITH HIGHER TAXES, ADMIST DECLINING WAGES, YET RICHER BANKERS, TAKING THE FARMS AGAIN
"Renting is the most proven way to stay poor. Look at the difference between wealth of renters vs home ownership. I'm not saying things are not going to correct, but its the facts"
Driving an economy car is the most proven way to stay poor. Look at the difference between wealth of Hyundai drivers versus Lexus owners. I'm not saying that gas prices aren't going to explode, but its the facts.
You posted an article from a lender, but then the blame goes to the realtor?? Whatever.
I've been doing this business long enough now and over the years many young people came into my office looking to purchase a home. A few years back it was an easy decision for them to make. Often even a low down mortgage payment was equal to or even less than a rental payment. Those clients have equity gains (as long as they didn't refi the heck out of it -- not my responsiblity) and should be alright.
Well that has changed. While I'm no financial advisor I have been known to tell some of these younger folks more recently that at the moment renting is a cheaper cost of living than purchasing a new home. I've calculated mortgage payments for them and also handed them a rental list with monthly rent prices.
Just as an example a young couple really liked a particular home that would have cost them $1700 a month because they had no real down payment. They said they could afford such a payment though. But when I showed them basically the same home for rent for $900 a month they were surprised.
I told them to rent the home and put the $800 more they would have spent in the bank each month. I told them that this would be a good practice run to see if they were really ready to buy a home at today's prices. They would soon know if they could A) afford to be a home owner and B) give them the opportunity to save for a real down payment to lower the cost of home ownership.
If rents start to rise later on (which I haven't seen yet -- only read about) then they'd have money to plunk down on a home by then.
Look, I'm a realtor and don't really want to teach this because I want to sell homes (so yes, I can collect a fee). This lesson needs to be taught though, it's more important than whatever fees I'll make. This is the lesson that I think Keith (and others) can offer (and Keith probably does but there is too much crap stuff to sift through on this site including vulgarity, blaming, and ignorance).
Maybe that couple does not come back to me when they have saved enough for a home. Maybe they move out of the area because of a job or something else, who knows. But if they are around and choose me to represent them in a purchase the transaction is going to be a heck of a lot easier on everyone.
I'm 35 years old, most of my clients are not the younger crowd. Most have 20 or so years on me. Most have bought and sold many homes over the years and have been through ups and downs.
I want to see more emphasis on facts to help teach the younger folks, especially those with young families. There are exceptional younger people that already have a clue and are doing some smart things with their money, I'm concerned about those that don't have a clue.
Salivation Time Again
Line up all you fool folly, go to Wells for your financial raping. I am looking forward to your foreclosure. As this is my business. Remember I have stacks of foreclosures on my desk and many new ones daily. Don't think this can happen to you? Think again!!!
--------------
Hate to bust your balls FORCLOSE YOU! I would turn it to ashes before I would let anyone take my home, opps sorry, Ya I am a smoker I must have fell asleep. Go to jail you say..big deal, what a Federal Pen, Alias Motel 6..again big deal 3 meals a day and my ass is dry.
Not that I have a problem with your profession, I just hate Lawyers.
"I'm convinced real estate is the best way for an average person to build wealth over the long run. "
The average person will never be wealthy. That's the myth of a permanently mobile, middle to upper middle class, society. Since the mid-90s, when only IT/programming tasks produced jobs and LCD displays were no longer even remotely possible to be made in the US, did we shift from that permanently mobile society to that which jumped from one financial asset bubble to another.
The average person, at most, can survive till retirement with some money in the IRA/bank. And if that person happens to have bought his home when 1.1-1.2 * rent = 1 mortgage, like it is in cities like Buffalo or Erie even today, then at least he's got an inflation hedge which is his estate. At the moment, most metro areas aren't priced like the former rust belt.
The people who become wealthy are either partners at big law firms (Wachtell, Cavath), MD surgeons/anethesilogists (Hint: workers who're good at taking exams like the MCAT), big time salesmen/rainmakers, IP holders (Google founders), entertainment divas (Britney, etc), movie stars (Julia Roberts, etc), professional athletes (Shaq), or legendary traders (Nick Darvas, William Gann, etc).
vulgarity, blaming, and ignorance
Church is 3 days away you can repent then.
The bubble came to salt lake with a vengence last year and was present to some extent before that. Websites like marketwatch show an average of $100,000 appreciation LAST YEAR in a stagnant wage market. I have friends at two different biotech companies in town who say they are having trouble recruiting from out of state with the current wage level and housing level. These are biotech jobs. Homeowner friends who have owned for some time have seen there home values DOUBLE in 5-6 years. They are investment savvy and openly recognize a bubble. I would have to double my monthly rent/payment despite a substantial down payment to buy the home I currently rent. Local HOMEBUILDERS have estimated that a minimum of 10% speculation in the demand the past year and this is considered an understatement. A friend of mine knows a lawn care business owner who read "Rich Dad Poor Dad", mortgaged his house and bought two additional investment properties. Utah consitently has one of the highest forclosure rates in the country and had a relatively high usage of option arms as discussed in Business Week. See their Map of Misery. Salt Lake Mortgage Guy, I am a buyer on the fence and there is no way in hell I am buying into this market.
Todd Tarson
Todd what bothers me the most, and I say this with the utmost respect, you act like you care what the buyer actually pay's.
I mean come on You are in the business of selling realestate, your paycheck is whatever percentage you charge from the sale.
So you want the number to be as close or as high as possible.
I just have a hard time with this I care attitude, like I said no offence, but sounds to car salesman for me.
You could careless If I could afford it or not a sale is a sale. I may be wrong as there are some honest people out there and you just might be one of them, and if you are good for you, you sleep well at night.
But I am sorry I dont buy into it. No offence.
Also, when making statements like "homeowners on average have more wealth" beware causality and selection bias. You have to qualify for loans to buy a house which requires a decent job (usually) and some wealth to begin with (historically). So, the structure of the game itself selects for those who are already predisposed for wealth accumulation or have it already. In the scientific community this is refered to as "selection bias" and completely nullifies the validity of statements like the one you made. Sure, bums aren't wealthy and they don't own homes, but I don't think it has anything to do with homeownership (the causality problem).
Mendoman:
You are confusing correlation with "cause and effect."
By using this method, you could say that owning Mercedes Benzes is a way to get wealthy simply because wealthy people have expensive cars.
You may also be confusing cause and effect, which, in laymen's terms, is "putting the cart before the horse."
The cause, money, is correlated with expensive cars, the effect. The cars were not the cause of the wealth but the effect of it. There is a correlation between owning expensive cars and having money, but that does not prove that expensive cars are the cause of wealth.
It is true that most people who make more money do own houses. They also tend to stay in one place a longer time, can predict their earning power for at least a decade or longer and can save enough money for a down-payment. They had the money *before* the house, not money by owning a house.
In normal times, you cannot make a greater return on real estate vs. other investments, so owning real estate to make money will get you no better return than buying stocks unless you both live in your house *and* rent it out.
The idiots in government who promote home ownership as a means to aquire wealth confuse or reverse the causal relationship.
Many people do just fine renting as they are not going to be living in the area longer than five years, or the real estate is simply beyond their reach economically.
Even rich people do not want to buy overpriced real estate as demonstrated by the 27% decline in house prices in Del Mar, California. 1.7 mil to 1.3 mil this past year!
May I suggest
http://tinyurl.com/ygls9l
MEGA-STORM SIGNPOSTS
Bork said
>I mean come on You are in the business of selling realestate, your paycheck is whatever percentage you charge from the sale.
So you want the number to be as close or as high as possible.
and
>You could careless If I could afford it or not a sale is a sale.
I totally understand what you are saying because you are correct... sort of.
I offer a flat fee commission to my buying and selling clients, it's not always a percentage. It's whatever my clients negotiate for. Some are quite better than others. No deal is ever the same, why would my fees be??
As to your other point, yes I dont' get paid unless I represent a client in a transfer of property. You are 100% correct.
I do give buyers an FYI form that has some information on issues to keep in mind when purchasing a home. It includes information on the added expenses that could affect a clients budget and other factors they might not be aware of.
Just because someone is pre-qualed for a $3000 a month mortgage doesn't have to mean they have to spend every dollar of it on the mortgage. I don't think it does at least, and most of the clients I've had don't think so either. Clients are smarter than you are giving them credit for.
I turned away probably 3 million in sales (not commission) in 2005. I wasn't always comfortable working with each and every would be client. I'm talking easy money too.
On the flip side, people hire me to do their bidding. I'm not a financial advisor (part of my FYI is the recommendation to speak to a financial advisor before making an offer), I don't pretend to be one.
If you came to me and wanted to pay way over price for a property with some sort of potentially damaging exotic lending product I have two choices. Do the work you are hiring me for or don't do the work you are hiring me for. I get the feeling with some people (including those that I've chosen not to work for) that they are going to buy anyway. That they are comfortable with the decision they've made.
How much of that am I responsible for??
Lastly, I run a business -- I don't get 'pay checks'. The fees I receive for my services are revenue for the business. I've done my very best to cultivate a healthy business. Because I've only been a realtor since 2001, I probably am a product of the great market that we've just been though. Much of my success is owed to the hot market I don't deny it. I'm certainly not bragadocious enough to say that I'm some sort of guru or anything. I got into this business because I wanted to start a business, not for 'pay checks'. I got pay checks in my old work places that I no longer wanted to work at. I'm calling the shots now and I'm cool with that.
I'm offering the services that I know my clients want. How do I know?? Because it is what I discuss with them before proceeding to work for them. I'm having a great time.
Yes business has slowed down this year, but I'm on track for production from 2003. It was a very good year for me back then so I'm happy.
I realize the MO around here is to blame realtors for everything wrong in the world. Still I wade in here once in awhile because I'm an 'entertained realtor'. I don't always agree with the NAR and in fact there are plenty of changes that I would like to see, but it is a trade organization that is doing their job (no matter how dispicable you and this blog think that job is). It is no different than any other, it is going to spin information to be positive. You know it and I know it.
So whats next?? How about educating those who need it. I talk just as frankly to a group of realtors as I do here. I think the bar needs to be raised (a lot). There are scumbags in my profession and won't ever deny it. Hopefully more would be clients choose a service like the one I (and many other quality realtors) provide rather than those schoochbags. It is going to take time to flush those bad apples out. I need help.
Keith has a lot of potential to help this cause as well, but all the blaming isn't going to do it.
"Renters do also have closing cost's (IE) First Month's, Last Month's & Security Deposit. Average 2 bedroom rent $1300+- $3600 just to move in."
Hmm... I live in a housing bubble region (2 times rent equaling one equivalent mortgage payment) and the landlord's have no pricing power given the condo mania of '04/'05.
So, as soon as a property owner said, 2 months plus security, I responded, "sorry, 1 month and 1 month as the security" and he responded, "so it is, you're the boss".
Rent's been constant in '05 and '06 with no projections of an '07 increase come year's end. Boy, there's a real incentive to be a homeowner (*Hint: no residual income stream renting out) given the fact that a landlord's willing to be a serf to a renter since I have a regular 780-800 FICO score.
here is a thought. what if you're a renter because you were a homeowner who got foreclosed on!
"what if you're a renter because you were a homeowner who got foreclosed on!"
You'd be a low FICO renter which would get you no sympathy from a good apartment complex which provides timely repairs, well-managed facilities, and a hotline for emergencies. In other words, if the unit had a wait list, you're pretty much out of the running and will be chasing delapidated places to live in. A good credit tenant is a landlord's fantasy which is why bubble sisters are MVPs in the rental world.
Very good reply Todd, like i said I respect your Position.
I noticed this ad recently and nearly sent Keith the link myself. The amazing thing is that this thought process is still out there in the masses. I recently graduated as a Ph.D. engineer, and keep in touch with several of my former labmates. One of them, a post-doc who has been offered multiple professorships, just bought a puny place in the Bay Area for over 700k. Another of them, a Ph.D. engineer working in industry, told me this last weekend that he was "tired of throwing away money on rent" in the Philadelphia market. I guess it does not occur to him that people buying houses now are throwing away money much faster than he is, and will be doing so for a long, long time or until they end up in bankruptcy. If these two genuinely smart guys can be acting and thinking this way, I have to think that the masses are just f'ed when it comes to thinking through the incredibly important financial decision of buying a home. Ads like this, from what many consider a trusted source (oops), should be criminal.
Wow. Wells Fargo is getting into some major sleaze territory here.
There has GOT to be a reason why they would pursue FB's with flat out LYING at this juncture.
I'm so glad I no longer bank with them.
Dude, PhD engineers and scientist tend to be the least financially savvy people out there as far as the advanced degree crowd goes. Part of the reason for it is that their education teaches them that entities in the world are concrete, ala designed or determined. The idea of major markets being fundamentally unsound and that tulipmanias aren't simply historical anomalies is not commonsense from their pov.
Todd Tarson-
God bless you for teaching fiscal soundness to your young clients.
This will only help your carreer after the market bottoms.
Here's why:
After the bust, people will look at realtors as, in general,lying scumbags.
Those realtors who were TRUTHFUL will get clients running back to them.
And, as we know, so FEW have been truthful that you should have more than enough sales once it bottoms.
Thankyou.
kilobar,
While I think there are many causes for the recent run up in prices, I definitely agree with you there needs to be more regulation in the mortgage business.
For years, Utah led the nation in mortgage fraud, foreclosures and bankruptcies. About three years ago, the state began to regulate the mortgage industry. Half of those working as loan officers have dropped out of the industry because they were too dumb to pass the exam, or failed background checks due to criminal history.
Consequently, the foreclosure rate, bankruptcy rate and fraud rate have dropped significantly.
Some of the stories coming out of California and Colorado about mortgage brokers doctoring paperwork, slamming borrowers with pre-pays longer than the adjustable period and using bait and switch option arms makes me sick.
By requiring licensing, the states can hold these sorts of people responsible for their actions and deter fly by night operations.
Adjustable rate mortgages have their place in business, but only if the borrower knows up front all the implications of that loan.
Salt Lake Mortgage Loans
WELLS FARGO
I won’t give them my business, they clearly can't be trusted
Sometimes I read a post that really gets it right... and I really agree with the poster who mentioned that there is always a caveat.
Renting is worse than owning... *unless* renting is so much cheaper than owning that it starts to make sense.
Owning is better than renting... *unless* owning gets so expensive that renting starts to make sense.
Everything has its breaking point, and in my personal opinion, housing has reached that breaking point.
I looked in a neighborhood I like in SF, and a simple 2bd/1ba house might rent for about $2400. Buying the same house would probably run you about 740K.
Mortgate payments + taxes are likely to be around 52k a year (a large downpayment would lower this, but because an investment would get at least 5% in a short term CD, it's basically a wash). I'm not even considering insurance. All in all, you're looking at about 4,300/mo - almost 2k more a month than renting. So you're 24k a year in the hole.
If you sell in 5 years, you'll have to pay transaction costs, plus mortgate fees... so lets's say housing flatlines for 5 years.... by buying, you've lost over 100K. If it drops, it could be even worse.
I'm still in favor of owning long term, but owning is clearly no longer the best choice in all, or even most situations. Even without a housing crash, renters will probably greatly outperform owners over the next few years.
Long term, I'd still bet on owners.
but, i could never grow tomatoes on the sidewalk,and at this non inflationary price of 2.99 a lb, up from, if you can beleive 99 cents 2 years back, that is only 4% a year inflation, ditto house prices, and costs to keep?
Watch out for Wells Fargo. They made it as difficult as possible when I paid off my mortgage two years back. They would not accept my payment at their office (convneient to get a few more dollars out of me in interest)and then botched the entire transaction over the phone (had me send the pymt to the wrong city & made my transaction apply as the rest of my pymts instead of one lump payoff. I am going to pay cash for my next house and avoid these monsters.
Post a Comment