You know I say a picture is worth a thousand real estate clerks, but in this case, major kudos to Naples real estate clerk Tom Doyle for just telling it (and showing it) like it is.
Why do real estate clerks spin, lie, distort and deceive, when honesty is of course the best policy? Why trust a snake with your money and financial future, when the truth is so obvious for all to see? Better yet, why use a real estate clerk at all?
Ignorance is not bliss for anyone doing business with deceptive real estate clerks. But I think we'll start seeing more of Tom Doyle's type of business model - just tell the damn truth.
Naples Real Estate Background Recap
Investor buying fever in 2004 and early 2005 drove home prices up 50% or more in the Naples FL area during that time, mostly in the lower price ranges, but higher priced properties also had healthy appreciation. Real estate prices peaked in the fall of 2005 for many property types when investors pretty much dropped out of the market.
Generally the price of homes in the Naples area that have sold, are 20% or more off of peak pricing. The more unique, rare or specialized a house or condo is, the lower the drop. The more the community or property was investor driven, the greater the drop.
January 14, 2007
Here's what the Naples Florida housing crash looks like - thanks to an honest real estate clerk
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24 comments:
I work for a large lender, and I know sales employee turnover is higher in Naples than any other sales center in the country. People must be getting frustrated.
Sadly, a good friend of mine allowed his wife to pressure him into signing off on a condo in Naples in 2003 because she was afraid that if they didn't buy then, they would be "priced out forever" when they wanted to retire there in ten years or so.
At the time, I stated that I HATED to make any financial decisions under such duress, and that I thought it was a mistake for him to do so.
In an event, of course, they signed off on a $185k loan, (all done over the fax/phone!), and in the ensuing four years, firs watched the price of the condo triple, and now fall to about $250k.
However, I am concerned that in the next few years the condo price will fall to below $150k, and they will then be making payments on a 30-year loan of $185k.
Let us hope they don't ever have to sell in the next ten years or so...
Keith, you always say "why use a real estate clerk at all?"
I would like to know how do you purchase a house without one? What is the step by step procedure? I'm interested in saving that 7% when I buy my next house. Thanks.
WHAT CRAP!!! WHY DOES THE CHART show a 12% compound return as a reference. That is CRAP TOO! That chart is very misleading in that many might assume the 12% compound is the mean, when in fact that is bubble returns also. A new mean line should be drawn in based on 25% of median household income. That is where property will go back to based on a 30 year fixed mortgage with 20% down.
Shoot, how about the one-woman housing bubble Naples had? She ran around buying up everything a year ago...
She was the star client of the auction in November in Naples, taking 40% hits in the face of foreclosure.
I think she panicked...
But her realtor made out good. He sold her some of her homes from his personal stash, then bought them back at the auction. Now he's set for life and ready for the next run up in Florida real estate. That was a con most flim-flam practitioners would worship at the altar of...
If your blog needs permanent photos, why not put one up of her and her 'realtor' for the 'Housing Panic Hall of Fame', right next to David Learah and Casey Serin and Taiwan Lee?
striker said...
I would like to know how do you purchase a house without one? What is the step by step procedure? I'm interested in saving that 7% when I buy my next house. Thanks.
Striker. I bought my first (and only) home without a real estate clerk and sold it with one. I learned a lot through both processes and will never use a RE clerk to buy or sell a home again.
When I bought my home I started out with a RE clerk. I quickly realized that all the person was doing for me was pulling houses off of the MLS and trying to convince me to buy one ASAP. Since the seller pays the commission here, the clerk was going to get a 3% commission for meeting me at a few houses each weekend. I stopped using them and started looking on my own (this is even easier now since many sellers agents give access to the MLS on their web sites). All of the comperable sales, price/sf, etc. data was available on-line at the tax appraisers web site so I did my homework and started working through the process. I quickly found out that the sellers agents would negotiate with me more since I didn't have an agent. Since the sellers agent would get the entire commission, they would be willing to drop the price even more to move the house. From what I saw, they didn't care about their clients, but only cared about selling quick and getting a commission. After negotiating on the house I wanted, I realized that the title company actually did all the work in the transaction. The entire process worked just fine and worked out better without the help of an agent. I got the house that I wanted in the neighborhood that I wanted for less than asking price and comperables in the area. The seller paid for all of the closing costs except for the inspection which cost me $300.00.
> WHY DOES THE CHART show a 12% compound return as a reference.
For the same reason that the stock charts during the dotcom bubble only went back a few years. If people really understood the performance of stocks (and houses) over the long term, adjusted for inflation, it would be really clear that buying when everybody else is saying "you can't lose" and "it's different this time" can be financially devastating.
Hell, go try to look at NASDAQ values before 2001 on finance.google.com- they won't show them. It's a New Paradigm, the old rules (like the rules in 2000-2002) don't affect us!
I agree that you don't necessarily need a realtor to buy or sell a home.
I do suggest, however, that if you are selling your home, you pay a flat fee to get it listed on the MLS. One tip I would suggest is to fax a nice flyer of your home to real estate agencies in the area and write "broker protected" on the flyer. This means that if an agent brings a buyer for you, you are saying that even though you are selling it yourself, the buyers agent will get their commission for bringing a buyer to you. Since they typically screen the buyer for decent credit and make sure they are pre-approved by a lender, it's only fair that you compensate that agent for bringing you a qualified buyer.
Ok so instead of a 200% proft, I will have only made 100%.
Boo hoo for me.
Are you retarded 3:27?
There are only about 100,000 web sites that give you financial info. Just cuz google doesn't hve it, doesn't mean there's yet another conspiracy out there.
Off the topof my mind the sites that give you your precious pre-2000 NASDAQ: yahoo finance, money.cnn.com, bloomberg.com amd ph yeah NASDAQ.COM!!
Interesting discussions on a variety of subjects, but I am still trying to decide weather this bubble is going to be like the crater in the 1926 florida realestate bust, as it's seemingly that these two bust did offer the easiest credit with no down payments moreso than at any other time that I have found.
Actually, I bought a pile of puts in this sector, at differeent time cycles, that are mostly upsidedown, due to bad timing on my part, and the constant bullish spin in most areas of the media.
And it is refreshing to access reality to what's really going on the ground, not what larry kudlow keeps telling me about his 'goldylocks' scenarios daily.
I do wish you were a little less hawkish about the ME, but what the hey, if we were all alike in our opinions, the world would be one big bore. Just remember, the dawgs of war are extremely tough to separate once they inniate contact, and it is a fact that just one of our NUK subs can contain over 200 missle driven nuks. As per the discovery channel.
Chris G.
?Why should we be fair / real state deal washers who made so much so unfairly on the back of their clients who'se lives many are ruined. Strawman troll alert.
Coconutz!
"Striker said...
I would like to know how do you purchase a house without one? What is the step-by-step procedure? I'm interested in saving that 7% when I buy my next house. Thanks."
Do your own homework. Educate yourself on the real estate sales process, and be prepared to spend some TIME doing it.
I have bought and sold, with AND without realtors. It almost pains me to admit it, but the positives (going through a RE agent)
have outweighed the negatives. Of course, that’s just been my personal experience.
The RE person isn't smarter than you; he/she just does real estate sales a lot more often than you ever will! When the going gets rough, a GOOD RE agent really shines. They know the ropes, the ins and outs, to get across that big nasty snag in the sales/contract process!
On the other hand, the bad one's fold very quickly, leaving you hanging on to the stern of the Titanic. And I think the bad outnumber the good right now!
I've lived through both experiences.
At this stage of my live (semi-retired, wife retiring in 1-2 yrs, no kids at home, planning to downsize, etc.) my next house purchase will be handled by ME.
Having the experience (survived real estate sale heaven and hell,) and also now having the time, without any pressure, to do it right, I see no reason to include Mr.6% in my next home buy!
AGAIN ,DO YOUR HOMEWORK!
I try as much as possible to be unbiased and fantasy free. The stock market teaches hard lessons, especially those who engage in wishful thinking.
I am a homeowner in Southern California whose house "value" has tripled from when I bought it at the low point in the market.
Still, I know a crash is coming that will trim a lot of value off my house, inflated value luckily as I bought this house at the lowest point of the lowest point in housing. However, I am stuck here in Southern California because I want to lock in retirement benefits where I work which requires staying here for a few years longer. Just long enough probably to be "selling low" at a time when house values will be in free fall.
There is no way I see this ending with anything less than 60% price reductions in houses. And as a person who has feet in both worlds, both as a recent renter and a home owner, I'm not biased in either direction.
I have several January puts on mortgage lenders and those stock prices are getting close to paying off but just ever so close.
I did make a mistake shorting Fannie Mae. Those bastards apparently have a Get Out Of Jail free card. They haven't been delisted from the exchange after years of failing to report.
@ Striker who said
"I would like to know how do you purchase a house without one? What is the step by step procedure? I'm interested in saving that 7% when I buy my next house. Thanks."
Typically the buyers agent fee is paid completely through the co-broke. The co-broke is the split of the commission paid by the seller, that goes to the agency that brings in a buyer. So on a 6% commission usually 3% ends up with the listing agency, and 3% with the buying agency. Then those 3% are split between the actual agents and their brokerages.
In terms of actual money in the pocket for the average realtor on a 6% listing, about 1% gets to your pocket after all the cuts and taxes. It's good money to be sure, but infrequent. At least half people you work with for dozens of hours decide not to buy or fail to sell.
I can imagine a web site where all the paperwork necessary for each state (and county and city if necessary) is online.
They can have staff realtors who only take 1% for just helping out online. These guys wouldn't have to waste time with open houses and other crap. The deals would come to them ready to roll.
The reason for any commission at all is because you want to provide the incentive to help the homeowner/homebuyer do it right.
If the author of this were truly honest (or maybe just more competent), the x-axis would extend back decades, in which case the red regression line of 12% per year increase would look more like 3%, and we would see that the bubble took off earlier than this graph suggests - and that the current expected value according to historical norms is quite a bit lower than this graph suggests.
@ moto maz re: foreclosures
Foreclosures are farmed pretty hard by investors around here. The ones hitting the newspapers are pretty unlivable, as anything decent is picked up in the early stages of defaulting.
Any time you miss a mortgage payment you get flagged and posted on quite a few places on the Internet. Then investors signed up for the various services get emailed that you're missing payments.
Go post on Larry Kudlow's blog that the jump ($15?) in gold on Friday was a vote of confidence in Bush.
[Larry cited a day earlier the drop in gold by a buck was a vote of confidence for the prez's new way forward on Iraq...]
" and ready for the next run up in Florida real estate."
I hate to bust your bubble, but there WONT be another run up (except for a sucker rally).
Another sucker gonna bite the dust! har har har
Anon 4:39: you completely missed the point. We all know there are other sites with that info.
My "precious pre-2000 NASDAQ", like my "precious pre-2002 housing prices", tend to show a historical mean that we're going to regress towards.
Stiker... really just keep it simple. Find a house you like and offer 6% less than you think it is worth.
It is really that easy.
Have you guys seen this, it's my favorite valuation chart.
http://www.nationalcity.com/corporate/EconomicInsight/HousingValuation/default.asp
Just click on Naples (over 90% over valued)
I have friends in Naples who jumped on the spec bandwagon just as everything dried up. It has been heartbreaking to watch.
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