[HN Gopher] In January, there were more real-estate agents than ...
___________________________________________________________________
In January, there were more real-estate agents than homes for sale
in the U.S.
Author : undefined1
Score : 205 points
Date : 2021-03-22 16:52 UTC (6 hours ago)
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(TXT) w3m dump (www.wsj.com)
| taurath wrote:
| Why don't we just simply tell people straight up "If you don't
| have capital at this moment, you most likely never will" because
| that is the way things seem to be going.
| jb775 wrote:
| Wouldn't the natural solution to this be real-estate agents
| accepting lower commissions? Or transition to a non-commissioned
| pay rate?
|
| RE agents historically provided massive value because _they_ were
| the market-makers. Nowadays, they are glorified paper pushers and
| it 's baffling they're still demanding a percentage of a massive
| purchase.
| chrisco255 wrote:
| I used to sell real estate during the last bull cycle of
| '03-'07. People got the same attitude towards agents then, when
| the supply is so low and buyers are high, it's relatively easy
| to sell on your own.
|
| But during a bull market being a buyer's agent is more work.
| People have full time jobs and can't spend all their time
| researching or managing multiple offers. Buyer's agents put in
| dozens to hundreds of hours of work per client and get no
| guarantee of a return (if your client goes to another agent,
| you have no recourse and you get no income from that
| transaction).
|
| If you're getting 20 offers on your house, then 19 of those
| buyers are gonna be disappointed and gonna have to regroup and
| find something else.
|
| During a bear market, the opposite is true. Being a listing
| agent now takes better marketing, networking, presentation and
| sales skills and it is easier to be a buyer's agent.
|
| At any rate, there are countless numbers of obstacles that can
| cause a deal to fall through, from financing, inspections, FHA
| approvals, title issues, personal issues, etc that skilled
| agents can much more easily navigate and close a deal much more
| reliably. For me, no two deals were the same, and it was always
| interesting to try to thread the needle when it at first seemed
| hopeless.
| osrec wrote:
| I find it strange that for one of the largest transactions most
| people will ever make, they choose to use an advisor with little
| or no real education in the subject, with whom they have a
| relationship that's steeped in moral hazard.
| jandrese wrote:
| With good realtors you sign a document that states that they
| work for only you.
|
| Of course there can be other issues, like the realtor
| "helpfully" setting up the appraisal with their own company,
| the one that just happens not to notice any major issues with
| the sale.
|
| I also think that the convention of the the realtor taking a
| percentage of the sale as their commission is problematic as it
| incentivizes them to show you the most expensive houses instead
| of the ones that are best for you. I'd be happier if they
| charged a flat fee or a flat hourly rate.
| datavirtue wrote:
| I have found that they want the sale as quick as possible. No
| matter what side of the table they are on they will never
| tell you to offer lower nor will they bring up anything that
| will slow the sale. It is a perverse relationship indeed.
| They only do the things they need to do to be in compliance
| with all the regulation that was enacted after people were
| swindled by realtors enmass.
|
| It is an outdated monopoly that preserves itself by laws they
| have lobbied for and by bullying people with lawyers. They
| used to offer an advantageous network effect that we needed
| before we had stuff like zillow.
| frongpik wrote:
| There's a rare exception when a real estate attorney with a
| reputation is also a part time agent. Finding one is a
| challenge. They give a lot of valuable advice, but it's
| only actionable when you have choice and the money, i.e.
| the buyers market of the expensive houses.
| professoretc wrote:
| Our realtor was great... because he wasn't really a realtor.
| His fulltime job was as a DA, he just did the realty stuff on
| the side, so he didn't really _need_ the commission. It
| seemed like he was showing us houses just because that 's
| what realtors are supposed to do, but he was great when we
| found our house looking on our own.
| Gibbon1 wrote:
| When I was looking I picked out the houses I wanted to look
| at. Then got my friend the real estate agent to get
| disclosures and and show me the house during the week day.
|
| I don't think that the incentive to show you more expensive
| homes is that strong. Impression from a friend of mine is a
| real estate agent wants to close as many deals a year as
| possible. Closing houses a year, more money. Being known as
| someone that closes fast and often means hopefully being
| poached by more upscale agencies.
|
| Buyers agent though has an incentive to soft bully the buyer
| into over bidding.
| ssully wrote:
| I did the same approach. We used someone a family member
| used and recommended. We would send her houses we liked,
| and she would setup the appointments. She would offer her
| advice when asked, and did a great job handling the various
| offers we put in. I honestly never felt pressured at any
| point during the home buying process.
| wehadfun wrote:
| >commission is problematic as it incentivizes them to show
| you the most expensive houses
|
| Don't know everyone's experience but Realtors show whatever
| house the client wants to visit and clients can and do find
| houses for them selves.
|
| >flat fee or a flat hourly rate
|
| Does the client still pay this flat fee/hourly rate if they
| don't buy or sell the home? I'm sure a realtor would have no
| problem showing you up to X homes for $Y,000 paid upfront.
| analog31 wrote:
| My rule of thumb is, nobody works for the buyer or the
| seller. They work for the sale, because the sale is what pays
| their commission.
| brianwawok wrote:
| If your hire your own inspector, they get paid either way.
| analog31 wrote:
| True, they always say to hire your own inspector. But
| finding one who isn't a charalatan is a coin toss. You
| might be able to hire them independently, but
| recommendations from agents who are "working for you" is
| still a large part of their business. And they're not
| liable for anything they fail to notice. That entire
| industry favors people who are deal makers, not deal
| breakers.
|
| The inspector is working for the sale, but indirectly.
|
| One house that my family sold, the inspector showed up at
| the appointed time, and mentioned that he was the buyer
| broker's brother. He didn't find any problems with the
| house.
| tehwebguy wrote:
| Yep, got to bring your own checklist for the inspector.
| ipaddr wrote:
| If you find and pay. Once they inspect and approve a
| place they are out of work. So they are more likely to
| make a bigger deal out of the smllest things.
|
| If the realtor pays the opposite happens.
| hsitz wrote:
| Not following. The inspector is generally out of the
| picture after the inspection, however it goes. If they
| identify problems, specialized contractors (e.g.,
| plumber, electrician, carpenter) will be contacted to get
| more detail on the problem. Besides which, inspectors
| rely on word-of-mouth referrals from real estate agents
| even if they're always employed directly by buyers. If an
| inspector frequently blows up deals with overly critical
| inspections, their referrals will dry up.
| _huayra_ wrote:
| Even within the confines of that contract, any realtor will
| have their limits due to the commission-based structure. If
| they spend 50 hours working to get you 90% of your
| theoretical maximum selling price and it would take 50 more
| to get the last 10%, they may end up pushing you to accept
| the 90% offer because the next 50 hours is best used selling
| another property.
| lotsofpulp wrote:
| > I'd be happier if they charged a flat fee or a flat hourly
| rate.
|
| You can always try to negotiate the agent's price. I know a
| few sellers that had agents agree to 3% commission recently.
| It's all about supply and demand, and if agents get
| desperate, they'll agree to lower prices.
| toomuchtodo wrote:
| I just (this weekend) negotiated a 4% commission with a
| realtor for a property I'm selling. The deal is that
| they'll keep it in the brokerage and not have to split the
| fee with another brokerage (which is the usual arrangement;
| 6% split half and half between brokerages, with the
| realtors on both sides getting half of that split). Market
| is hot enough I'm satisfied I'll get top dollar even with a
| smaller pool of potential buyers (cash deals over list
| market).
|
| With that said, my realtor in this market has been doing RE
| for decades and has a proven record of delivering.
| RHSeeger wrote:
| How does that work? Doesn't that mean they're filling the
| role of both buyer's and seller's agents? Ignoring the
| moral complexities there (hint: don't), it means they're
| doing more work to get the money; presumably up to twice
| as much work. It doesn't see like they're getting a good
| deal.
| lupire wrote:
| > keep it in the brokerage
|
| You'll miss the wealthy out of towner with a different
| brokerage, more likely to be the top bidder.
|
| Most listing brokers will accept a 1% discount, and many
| buyers will use a discount (refund) broker on their side,
| so 4% "in house" isn't a substantial discount to miss the
| one buyer who might go higher.
| toomuchtodo wrote:
| This is a condo on the lower end of the price spectrum in
| a large complex, so not a property a wealthy out of
| towner would be shopping for. If fair market value was
| >$300k, I wouldn't consider such an arrangement as I
| might miss the whale.
| ianai wrote:
| If you're only going to do something once in your life then
| it's probably not going to be something you execute with the
| same calculation and expertise that you'd something more common
| like tying your shoe laces up. So people who live in the market
| get to do all sorts of middleman things.
| commandlinefan wrote:
| what choice do they have, though?
| qeternity wrote:
| Ah, the hallmark of a functional marketplace.
| lotsofpulp wrote:
| In the US, no one is forcing anyone to use a real estate
| agent.
| twiddling wrote:
| don't get me started on title insurance
| Domenic_S wrote:
| Before the zillow/redfin days the only way to see houses
| for sale was to physically observe the for sale sign or
| look in the newspaper. The NAR keeps a tight fist around
| the MLS where for-sale homes appear. Even with all the
| online information there's plenty of "secret" info in the
| Realtors-Only MLS notes. The information asymmetry is
| absolutely bonkers in real estate.
| mattnewton wrote:
| This, I hired a buyer's agent simply because even sites
| like Zillow had huge gaps when trying to put together
| comparable houses on an offer. The information alone was
| nearly worth the entire commission for me.
| twiddling wrote:
| Some neighborhoods have houses listed in the "informal
| markets" ( community of like minded brokers who wish to
| maintain the "feel of the place")
| lotsofpulp wrote:
| I fully support more transparency and accessibility of
| information. I think governments should make the details
| of real estate transactions easily searchable, and most
| do in the US!
|
| But if a group of people want to organize and maintain
| that info in a certain way, and have their notes, and get
| paid for doing that, is that not their right?
| datavirtue wrote:
| That is anti-free market activity. Unethical by US
| standards.
| [deleted]
| Robotbeat wrote:
| Is it their right to restrict info by leveraging IP law
| on other people? They use that IP law to grant themselves
| information asymmetry to gain 6% commissions whereas many
| countries have commissions half that. IP law is not a
| natural right but is instead granted by the government to
| try to enhance the common good. So therefore whether it
| is their "right" is somewhat contingent on their use of
| IP law actually benefitting the nation. If it's not
| beneficial and is just increasing fees, then it should be
| curtailed.
| lotsofpulp wrote:
| > Is it their right to restrict info by leveraging IP law
| on other people?
|
| Did they create/curate the info? If so, then yes, just
| like anyone else is able to use IP laws.
|
| > They use that IP law to grant themselves information
| asymmetry to gain 6% commissions whereas many countries
| have commissions half that.
|
| No, they use supply and demand for their services to
| collect 6% commission. And it's very negotiable, also
| showing that the amount a real estate agent charges is
| due to supply and demand.
|
| I'm only familiar with the way real estate agents work in
| the US, so I can't comment on how it works in other
| countries. But all I can say is, in my experience, the
| sales history data is all available on the government
| website, and otherwise, you're paying for the marketing
| and whatnot. If you don't like the price, then negotiate
| lower, and if that fails, don't pay it and do the work
| yourself.
| whimsicalism wrote:
| > No, they use supply and demand for their services to
| collect 6% commission. And it's very negotiable, also
| showing that the amount a real estate agent charges is
| due to supply and demand.
|
| Actually, no. There is extensive evidence that real
| estate commissions are _not_ tied to supply & demand due
| to collusion in the marketplace.
|
| https://papers.ssrn.com/sol3/papers.cfm?abstract_id=34507
| 67
| lupire wrote:
| They use a cartel/trust to collect 6%, which is only
| legal because it is possible to negotiate a discount and
| it's hard to prove that the cartel is freezing out
| discount agents.
| Domenic_S wrote:
| I think it probably is their right, yes. I was responding
| to "nobody's forcing you to use an agent" which is
| technically true, but functionally you're operating at a
| substantial disadvantage if you do (don't).
| bena wrote:
| I think this is often the case where the only real
| product is information.
|
| If you and I have the same information as the agents,
| then their use goes down a lot.
| datavirtue wrote:
| There is all kinds of bullying and strong arming and
| threatening going on. I have gotten it from many
| different realtors. They are worse than dentists and
| lawyers.
| whimsicalism wrote:
| This is not true - if the other party is using a real
| estate agent, they might refuse to work with you if you
| are operating independently.
|
| This is how collusion in the real-estate market
| functions.
|
| https://papers.ssrn.com/sol3/papers.cfm?abstract_id=34507
| 67
| lotsofpulp wrote:
| If you're a buyer, no agent is going to refuse you since
| they're getting paid by the seller.
|
| If you're a seller, you might very well get fewer agents
| bringing their clients to you. You're free to advertise
| that you will pay a commission to entice agents though.
| And the buyer is also free to side step the real estate
| agent or tell their agent they will make up for
| commissions from non agent represented sellers.
|
| It's 2021, using
| Redfin/Zillow/Trulia/Craigslist/Realtor.com is trivial.
|
| I foresee less and less opportunity for collusion as
| information becomes more and more accessible to everyone.
| lotsofpulp wrote:
| It's very easy to sell or purchase a home without an agent.
| You can contact the owner, and get all the paperwork done
| with a lawyer who deals in real estate transactions. There
| are usually signs that say "For Sale By Owner".
| jandrese wrote:
| Very easy might be overstating it. Arranging tours with the
| homeowner individually is a hassle. The reason you hire a
| realtor is because they have access to the key boxes. A
| home is a huge purchase, I don't know how many houses a
| typical person looks at before deciding, but for me it was
| over a dozen.
| dionidium wrote:
| It's also easy to forget that first-time buyers won't
| have any sense for what's normal, expected, or required
| during the process. Obviously, you can research this
| yourself, but 1) there's no substitute for experience;
| and 2) you're paying a professional because they already
| know this stuff and you presumably have other things to
| do.
| datavirtue wrote:
| You can become an expert in the time it takes to research
| and plan a vacation.
| lotsofpulp wrote:
| I meant easy as in there's no artificial hurdle. The
| example of arranging tours displays that agents do
| provide some value. People like to complain about agents,
| but they're free to stick a sign on their yard, purchase
| online ads, and otherwise do the leg work.
| datavirtue wrote:
| Just use a title agency. Professional, quick and they
| handle all the nitty gritty and make sure your ass is
| covered...on both sides of the table.
| throwaway0a5e wrote:
| It's very hard to find a home you want to purchase without
| access to the MLS system
|
| It's very hard for potential buyers to become aware of the
| house you have for sale without it being in the MLS system
|
| Realtors control access to the MLS system.
|
| See where I'm going with this?
| lupire wrote:
| Redfin and others give free access to the MLS system.
|
| The next two sentences are simply false.
| olyjohn wrote:
| Redfin will let me list my house on the MLS without a
| fee?
| wayneftw wrote:
| Zillow lists homes for sale by owner. Last time we bought
| a house, we almost exclusively used Zillow to search for
| them because all the Realtor-branded MLS access systems
| sucked. In the end, the house we bought was found on
| Zillow.
|
| Our real estate agent worked pretty hard for us buying
| and selling and we were glad to have him. When we found
| our new house, it was on Zillow for only 8 minutes and he
| got us in first during a peak market. It was his tip that
| "sellers will often stick with the first buyer who offers
| selling price instead of waiting for better offers" that
| allowed us to beat everyone else, even though our sellers
| had actually gotten a higher offer because it made us
| give them an offer immediately after our first tour. This
| was after we had basically lost out on three other sales
| for houses that we wanted (not his fault - we weren't
| first or highest on those).
| lotsofpulp wrote:
| No, I don't see where you're going with this. Sounds like
| a group of people created a product that helps facilitate
| real estate transactions, and they want to get paid for
| it:
|
| https://www.nar.realtor/nar-doj-settlement/multiple-
| listing-...
|
| If you don't want to pay the real estate agent
| organizations, you can put your real estate listing on
| Craigslist, buy online ads, stick a sign on your yard, go
| door to door to various real estate agent offices, etc.
| reducesuffering wrote:
| They're alluding to a cartel or mafia.
| Lammy wrote:
| That's because realtors' actual job description is rather
| unmentionable these days:
| https://depts.washington.edu/civilr/covenants_report.htm
| dcolkitt wrote:
| I second this. Recently purchased a property, and skipped a
| buyers agent. That usually lets gets you a 1-3% discount on the
| price. You can find standard contracts and offer letters for
| free online.
|
| Or, in today's market helps get you to the front of the line in
| a multi-offer situation. Since the sellers agent automatically
| becomes the buying agent, the listing realtor is highly
| incentived to push your offer to the seller. In a standard 3/3%
| commission, even if you negotiate a 2% discount, the listing
| agent nets 33% higher commission if your offer wins.
| icedchai wrote:
| When I purchased my place, I used the seller's agent. My
| offer was about 1% lower than someone else and I still got
| the place. I only assume he made up the difference.
| jp57 wrote:
| But generally (in the US) the seller's commission of 6% (or
| whatever) is a contractual agreement between the seller and
| _their_ agent, and then the seller 's agent pays out the
| commission to the buyer's agent (as specified in the purchase
| contract, which is a different contract than the one between
| the seller and their agent).
|
| If you go in without an agent, you must write into the sale
| contract that you want part of the seller's commission taken
| off the price, otherwise the seller's agent gets the whole 6%
| for herself. But in my experience, most buyers are clueless
| about how all this works and would never know to do that, and
| would not get a discount, regardless what the seller's agent
| might say.
|
| (Of course actually it's a bit more complicated, the 6%
| actually goes to the seller's _broker_ , who pays out both
| the seller's agent and also the buyer's broker, who then pays
| out the buyer's agent.)
| bob33212 wrote:
| I did the same thing. The relator told us that she stopped
| taking calls after our offer. If this isn't a sign that you
| shouldn't trust realtors I don't know what is.
| tehwebguy wrote:
| It's absolutely built into the business model unfortunately
| -- a done deal is worth 1-3% of the current deal price.
|
| But getting 1-3% of the delta on a higher offer that
| doesn't exist yet is not only a meaningless money
| difference, if it slows the deal down it costs them money.
| hnrodey wrote:
| I'm currently running a FSBO in a Denver suburb. Listed this
| past Thursday and with high likelihood I'll be under contract
| this evening. I can offer a couple interesting stories on how I
| continue to see the perverse incentives for real estate agents.
| mkoubaa wrote:
| I seriously thought about getting a license to save money when I
| was buying my first house
| ncmncm wrote:
| If they were for sale, they weren't homes. They were houses.
|
| Seriously. It creeps me out that RE people call things nobody has
| even lived in "homes". Places somebody else lived in are even
| worse. How do they know it was a home? It might have been crack
| house. "Crack home"? Anyway what you can buy is just the house
| part. It becomes home after you make it that, if you succeed.
|
| The idea that you can _buy_ a _home_ emphasizes the worst of
| American capitalism.
| chrisseaton wrote:
| I think for many people 'house' and 'home' and interchangeable
| and the connotations you see in the language aren't what's
| intended.
| gullywhumper wrote:
| The housing market is bonkers in Minneapolis. This Saturday we
| put an offer in on home that went on the market Thursday. There
| were 31 other offers. We offered 20% over asking, but didn't get
| it. That was our fourth unsuccessful offer so far. Three of the
| winners for the other offers supposedly had both appraisal gaps
| and waived inspections.
| McRask wrote:
| It's almost that bad in suburban New Jersey. Not so bad as
| waiving inspections necessarily but covering appraisal gaps is
| pretty much required because of how hot it is. Same for 10-20%
| over ask on the offers.
| ryandrake wrote:
| When we were buying about 8 years ago in the Bay area, we
| probably wrote 50 offers, all above asking, and finally got
| one home. It was a total nightmare as a buyer. One home got
| 40 written offers, according to the listing agent, and sold
| for 2X its asking price--all cash, no contingencies.
| jb775 wrote:
| That's insane they got 2X. I'm sure if some of their
| neighbors knew that, they'd consider selling themselves.
| asdff wrote:
| Sell, then what? Another mortgage if they want to live in
| the area, or uprooting entirely. That 2 million dollar
| bay area house might have been a 20k house among 10-40k
| houses in the 1970s; today it's a 2 million dollar house
| among 2-10 million dollar houses, so at best you'd be
| doing a lateral move or downsizing into something grossly
| overpriced, or line up to become one of the 40 people
| trying to throw a cash offer somewhere in the
| stratosphere above list on some midwestern home.
|
| It's a zero sum game unless you upzone and build more
| housing to meet the demand, because the population of
| this country has only gone up.
| drunner wrote:
| Same in Fort Collins. Last house we lost on was listed for 425,
| sold for 500 with waived inspection and appraisal gap.
| jb775 wrote:
| I think the seemingly high prices are simply where inflation is
| showing up first. Or at least partially. Pent up demand and
| Covid throwing a wrench in everyone's lifestyles also likely
| messed with supply/demand.
| twiddling wrote:
| low rates
| lurquer wrote:
| Can't read without subscription.
|
| But, I was wondering...
|
| Is this one of those click-bait article titles that should read:
|
| "In January [, similarly to the last 120 months,] there were more
| real-estate agents than homes for sale in the U.S."
|
| Note: I'm referring to the sub-heading of the actual article...
| not implying OP put the wrong title.
| hellbannedguy wrote:
| We need more Brokers in California.
|
| For years, a Broker's license could be obtained by 8 courses, An
| easy test, and a four year degree.
|
| The Realator's Lobby decided their were too many Brokers.
|
| They introduced a bill (A bill requiring years of training under
| a broker in order to get the license) to Arnold Schwarzenegger.
| Arnold said he didn't see the need, and didn't want to stifle
| competition.
|
| Governor Brown signed the bill though. (I stopped judging a
| politician by there party that day. Both sides take a lot of
| money.)
|
| I would love to see the entire real estate industry decimated. We
| have given a very few of these people so much money for what? In
| the mean time, I would like to see more Brokers. More competition
| for the popular cheerleaders, handholding, and Omission and error
| insurance?
|
| Sorry about the tone. Realator's have always irritated me, and
| most people pick them out by a personality contest?
| simonebrunozzi wrote:
| The title seems misleading to me. Let me explain.
|
| 1) Average homes sold per real estate agent, per year: 2.8 [0]
|
| It means that on average, on a given month, only 1/2.8 = 35.7% of
| active real estate agents will be listing a home for sale.
|
| 2) Homes for sale per year: 6,220,000 [1], however it seems that
| January 2021 saw that number go to an annualized of 6.69M. [2]
|
| 3) To say that in January there were "more real estate agents
| than homes for sale", would mean that there are at least 6.69M /
| 2.8 = 2,389,000 active real estate agents in the US.
|
| I don't have a WSJ membership, and therefore can't read in the
| article what this number is. I can only try to guess that it's
| either the total number of real estate agents (2M in 2019), or
| realtors (1.3M in 2019) [3].
|
| The title seems clickbaity. The essence, I guess, should be that
| realtors are competing against each other more than before?
|
| [0]: https://www.rtrsells.com/can-you-tell-how-many-homes-a-
| realt...
|
| [1]:
| https://cdn.nar.realtor/sites/default/files/documents/ehs-02...
|
| [2]: https://www.wsj.com/articles/u-s-home-sales-edged-higher-
| in-...
|
| [3]: https://www.homelight.com/blog/how-many-realtors-in-the-us/
| allcentury wrote:
| Averages are not a good metric for this field. NAR itself uses
| median to make it look more balanced than it is [1], but in
| reality - 80% of the transactions goes to 20% of the agents.
|
| [1]: https://www.nar.realtor/research-and-statistics/quick-
| real-e...
| neartheplain wrote:
| This matches my anecdotal experience. Last week my parents, who
| live outside a big US city, got a letter out of the blue from a
| buyer's agent asking if they'd want to sell their home. They
| don't; it wasn't and isn't listed for sale. They've lived in the
| home for decades, and never before received this type of
| solicitation. I see it as a marker of a tapped-out housing
| market.
| BeetleB wrote:
| I get a few of those every month for years. It's not a sign of
| much. I hang out in real estate investing circles and this is
| purely marketing. The majority of times, they're looking for
| people who have a lot of equity in the house and are in trouble
| financially - so they'll sell at a discount. Maybe only 1% of
| people who get such mailings fall in this category, but they
| are the ones who will pick up the phone and call, so the money
| to mail was well spent (if the mailer did some market
| analysis).
| triceratops wrote:
| I get calls from telemarketers asking me. I don't even own a
| house.
| jccalhoun wrote:
| My parents live in rural Indiana and get people asking if they
| want to sell or if they want to sell part of their land once
| every couple of years.
|
| Two years ago my cousin sold his house even though it wasn't up
| for sale(in a small town in Indiana) because someone liked it
| so much that they kept offering them more and more money.
| SoylentYellow wrote:
| A lot of these letters are also from real estate "investors".
| Their tactic is to go after properties before they are on the
| market and use the seller's lack of pricing information to
| score a substantial discount.
| matwood wrote:
| I get those letters all the time, and have lived in my house
| for quite awhile. Thing is though, I consider my house always
| for sale for the right price. One RE agent I know came close to
| my price, but her buyers were a bit crazy and ended up moving
| to a completely different state.
| supercanuck wrote:
| This has been relatively common for me in Southern California
| during the 8 years I've owned a home.
| lotsofpulp wrote:
| I love the various attached stories about people's personal
| lives and tribulations, almost all of which I assume are
| fake.
| nickthegreek wrote:
| I live in an upcoming area in Columbus, Ohio and get calls for
| cash offers of my home every week for a year now. It is
| infuriating.
| Scoundreller wrote:
| But this $149 super-selective top-secrets road-to-wealth
| program told me I need to cold-call and ask, no, demand! what
| I need to acquire wealth.
| nostromo wrote:
| This is the wrong conclusion. This is a very common scam.
| People will reach out to people not selling their house and
| offer them below-market prices.
|
| A small number of people (often elderly) have no idea how much
| their home is actually worth and will sell it for a lowball
| offer because the price seems so high to them.
| rwmj wrote:
| When I lived in London this happened regularly. Even now we
| live out in the countryside we get these unsolicited letters
| from time to time.
| atwebb wrote:
| That's been fairly common for decades, some are genuinely
| looking for a specific neighborhood/house for a client. Some
| are looking for a deal, some are looking to find sellers to
| represent. You'll also see realtors blanket mail recent sales
| in the area, implying that it is a good market and what you
| might be able to get. Some of the tactics get very
| greedy/nasty, especially when someone, who was an owner of
| desirable property, passes.
| JeremyNT wrote:
| This is essentially a scam and you'll find it anywhere that
| housing prices are on the rise. These people are looking for
| older / less clued in owners who are easily confused and in
| need of cash. They can trick these people into selling well
| below market rate by going directly to them.
|
| Sadly it works. If you have an older relative who may be in
| cognitive decline try to make them aware of this trick!
| jandrese wrote:
| I get those letters every other day now. It's pure spray and
| pray from agents.
| Scoundreller wrote:
| I think this metric is irrelevant without looking at time-on-
| market.
|
| Each agent may still sell a dozen a year.
|
| There are also more stock brokers than stocks, but we slice them
| up and shuffle them around a lot.
| paxys wrote:
| Makes sense when a large chunk of the country is unemployed and
| you can get a real estate license online relatively painlessly.
| Filter down to agents who actually have a client and/or have
| bought or sold a single home and the number will be very
| different.
| irrational wrote:
| Where we live the market is especially tight. We ended up selling
| our home by saying we would not sell if you have a realtor and
| this is the price you will pay and you will not have an appraisal
| contingency. The very first people to come and look at it bought
| it. The market is very much a seller's market right now.
|
| We also purchased a new home without having a realtor involved.
| These days, the Internet makes things so easy that there isn't a
| need for a realtor like there used to be.
| chrisco255 wrote:
| People always say this in a bull market. Then a downturn
| happens and it takes 6 months of active work and marketing to
| sell.
| ghaff wrote:
| I don't have the data but I'd guess a few things:
|
| - It's probably very uneven across housing types and locations
|
| - If people are moving from apartments to houses, they're net
| taking homes for purchase off the market
|
| - Anecdotally, I see people moving into larger homes to have
| more room
|
| - I expect you end up with some overlap when people are in the
| process of moving
| sschueller wrote:
| Is that wording correct? It sounds like actual real estate agents
| are for sale.
| klmadfejno wrote:
| I can't read the full article, but I did just buy a house in the
| greater boston area. The housing market is very tight now. Very
| small number of houses available relative to the historical
| seasonal norm. Part of that was driven by a very hot market in
| the previous months which are normally empty. The number of
| buyers is very very high. Most properties are going as soon as
| they hit the market, for a fair chunk over list.
| Robotbeat wrote:
| It makes sense because houses don't stay on the market very long.
|
| What matters for average real estate agent wages is average price
| of real estate time number of houses that sell per month. If the
| number of houses on the market is small because they sell
| immediately, that's it necessarily a problem for them.
| Ericson2314 wrote:
| The land industry is total scum. They make us all poorer with
| sprawl, they are the industry with the worst history of systemic
| racism, they're more deeply invested in the status quo than the
| car industry which could retool a few factories to crank out
| traincars and e bikes.
| kevin42 wrote:
| I wonder how much of this is related to the eviction moratorium.
| Anecdotally, my wife has a house that had a tenant in it. She was
| planning on selling it last year, but she had a hard time getting
| the tenant out. His lease had expired, and he also hadn't paid
| rent. He thought that the moratorium should cover him even though
| his lease had expired for several months. She only recently got
| him to move out, and she put the house up for sale right away. I
| bet there are more sellers than her in this situation.
|
| I suspect that once the moratorium is up, there will be a lot of
| landlords looking to sell. They've been not getting rent for a
| long time, and they may have to sell in order to get out of the
| hole they're in. Many still have mortgages, but they will have a
| hard time collecting a year worth of rent. But the bank won't
| have the same problem foreclosing.
| ianai wrote:
| Pretty sure she can still sue civically for back rent. Wish the
| renter had at least tried to pay some rent during that time out
| of good faith.
|
| I am almost certain this will be a trend.
| commandlinefan wrote:
| Winning a suit is one thing - collecting damages is something
| else.
| mywittyname wrote:
| There's going to be predatory companies popping up who buy
| up rights to collect on these lawsuits for pennies on the
| dollar and proceed to <vulgar transitive verb> the tenants.
|
| This situation is going to play out over the next decade at
| least and it will be terrible for (almost) everyone
| involved.
|
| If you're renting and can afford to: pay your damn rent! In
| five years, you don't want to be staring down a judgement
| for a year of rent, plus interest, plus "collection" fees.
| cletus wrote:
| This depends on your outlook.
|
| You can stress about this and spend a lot of your time
| chasing down someone for repayment. This is the wrong
| approach IMHO.
|
| Instead just sure in small claims court (limited to
| $5,000). This is done without lawyers. You simply present
| your lease agreement, bank statement and any relevant
| communications.
|
| Once you get that judgment give it to a collections agency
| and forget about it. The agency will take a percentage of
| anything they collect.
|
| Then just look at anything you get back as a bonus.
| Taylor_OD wrote:
| Wouldnt that be like only 2-3 months of rent for most
| people?
| cletus wrote:
| In coastal cities, sure. But in a lot of parts of the
| country it's not.
|
| Also, as others have noted, different jurisdictions may
| have higher limits.
|
| But to go to civil court to recover $20,000 just isn't
| worth it. Your legal expenses will be significant and you
| face the prospect of losing or being unable to collect.
|
| So by limiting your potential damages you don't incur
| litigation expenses, spend less time and stress on it and
| your net return may be similar.
|
| What's better? $5,000 it costs you nothing to get a
| judgement for (other than a nominal filing fee) minus
| 10-20% for the collection agency or $20,000 you may need
| to spend $10-20K to litigate?
| ceejayoz wrote:
| It's really not that simple.
|
| https://en.wikipedia.org/wiki/Judgment_proof
| cletus wrote:
| That's why you assume the sun is a total loss and you
| spend no time chasing it. Let the debtor dodge
| collections agents and field those phone calls.
| deberon wrote:
| I tried suing a landlord in small claims court. Their
| lawyer just had the court move the case to civil court so
| they could bring representation. It's a broken system
| imo.
| RHSeeger wrote:
| Unless you need that money to pay the mortgage on the
| property. If so, then "oh well, I get what I get get and
| I don't get upset" isn't really where most people are
| going to land.
| RKearney wrote:
| > Instead just sure in small claims court (limited to
| $5,000)
|
| Depends on your state. Here, small claims is limited to
| $25,000 with no limit for eviction suits.
| lotsofpulp wrote:
| The civil courts are pretty useless if your adversary has
| no funds and nothing to lose.
| setgree wrote:
| Everyone has a credit score that can go down. (Is there a
| floor?) A record of a rent lawsuit is no good for anyone.
| I often wonder how people on the verge of eviction think
| about this kind of thing -- whether it is salient or even
| understandable.
| [deleted]
| datavirtue wrote:
| They will just pass a law that allows it to be removed or
| excluded from credit reports. Or the banks+credit
| agencies will collude to do it when it starts dipping too
| hard into credit card applications. #medicalbills
| klyrs wrote:
| I've lived most of my life without a credit card, never
| leased a car, never gave owning property much thought.
| Got some student loans when I was young, but that's about
| it for my credit history. This is all a result of me
| living responsibly within my means. Rental referrals are
| just about the only leverage that an ex-landlord would
| really have over me. You can duck collections pretty much
| forever if you don't need credit
| thephyber wrote:
| Weird flex.
|
| People who aren't paying rent after the pandemic started
| likely aren't doing it for fun. Most likely they are
| underemployed, hence collections will stack up. "Living
| within your means" assumes it is even possible to find
| employment and a handful of life/medical/mental/family
| stability that not everyone has.
|
| You seem to underestimate how much of modern life in the
| USA depends on credit. Electric, water, telephone,
| internet service require credit or suffer the costs and
| inconveniences of prepayment. Rental housing almost
| always requires credit checks in any desirable market.
|
| You also seem to assume that collections can never be
| converted into a lean on your assets or garnishment of
| your wages. And that doesn't even begin to crack the
| strange and painful tactics debt collectors use on your
| family, employment, friends, and other social pressures.
| kevin42 wrote:
| Exactly. The renters are in a really bad situation as well.
| There's no way most of the people who couldn't or didn't
| pay rent for a year are going to have $20,000 to pay back
| rent, even if there's a judgement against them.
| zip1234 wrote:
| The eviction moratorium is for people that make up to 99k
| or 198k married.
| ianai wrote:
| Right and I'd be for society helping them with that sort
| of debt. But having a judgement against someone does open
| avenues for future, slow recovery.
| klmadfejno wrote:
| Probably a lot easier to let poor people go and help home
| owners directly.
| sky_rw wrote:
| Nothing is stopping you, a member of society, giving
| somebody $20,000 to help them with back rent.
| anoonmoose wrote:
| yeah, there is- I don't have $20K
| mattnewton wrote:
| I don't get your point?
| ianai wrote:
| In this context, the argument that my position is invalid
| unless I'm willing to pay out of pocket to enact it in
| whole (20k$) acts like the barrier to file a lawsuit
| under a minimal amount of damage. Like flipping that
| argument around to be used against one another. Not what
| I'd call a worthwhile contribution to discussion.
| DamnYuppie wrote:
| I believe the point is that the OP is asking for everyone
| else to pay money for a cause they think is worthy, the
| comment you are responding to is that if they are that
| commit to the idea they can always pony up their own
| money.
| munk-a wrote:
| I think that's a slight misreading, if we as a society,
| through our government, offer blanket loan forgiveness
| then the benefit and cost of that action can be
| appropriately distributed. The comment is asking for
| people to take the burden onto themselves and pay out to
| solve the crisis unilaterally which is an unproductive
| action at best.
|
| Maybe Bill Gates and Bezos could execute a one time rent
| forgiveness program from their personal values - that
| might even work out pretty well in the short term, but
| it'd be placing too high of a burden on those two in
| particular.
| bananabreakfast wrote:
| no one on earth has that much cash. 20K * 1M people is
| $20B.
|
| All the billionaires in America do not just have that
| much money just laying around. This would be a budgetary
| concern of the federal government. No citizens could
| individually pay everyone's rents.
| whimsicalism wrote:
| Bezos has 10 billion in cash and could easily get another
| 10 in loans without having to sell his shares.
| ianai wrote:
| We can be charitable to their point. The most recent
| stimulus was 1.9T. No one outside of governments has that
| sort of cash.
| mattnewton wrote:
| ah, thanks.
|
| Well, to that I'd say, if my money had anywhere near the
| impact of everyone's money pooled together I'd do it.
| Until then I'll keep advocating for public funds to be
| spent this way, and I assume OP would as well.
|
| If you lend each completely broke person $100 they are
| still about to be completely broke and your investment
| will be wiped out after a brief respite. But if you hand
| each bankrupt person $X,000 then many might be able to
| dig themselves out of the hole and remain productive
| members of society.
| munk-a wrote:
| Relying on charity to make up for a lack of proper tax
| collection is a terrible thing for society in the long
| term. It's unsustainable and will just further wealth
| inequality.
|
| Also, most people, even most people on here, don't have
| 20k to throw around willy-nilly even if they have assets
| exceeding that amount.
| nostromo wrote:
| I've been migrating my vacant rentals to Airbnbs during the
| moratorium for this very reason. I may not rent them out again
| to long-term tenants for quite some time.
|
| Local governments should consider all of the perverse
| incentives they create when making these sorts of changes.
|
| (If you do this, note that if you let someone stay in your
| Airbnb for a month, they also cannot be evicted in some
| jurisdictions.)
| asdff wrote:
| Also note that in some areas what you are describing is
| illegal.
| majormajor wrote:
| If you as a government make it hard enough to seek rent as a
| landlord, can you increase ownership proportions?
| whiddershins wrote:
| Many buildings where I live are explicitly rental buildings
| ... so I guess you would be meaning co ops and condos but
| they are surprisingly expensive conversions.
| fshbbdssbbgdd wrote:
| In a supply-limited housing market, landlords are competing
| with owner-occupiers for the same units, so you end up
| housing the same number of people either way. More investor
| money just means that purchase prices are higher, and
| rental supply is greater vs. owner-occupied. In that case,
| the government making it hard to be a landlord will be good
| for marginal home buyers, but bad for marginal renters.
|
| In a market where housing development is less restricted
| and construction occurs to meet demand, the addition of
| more investor capital means that more houses will get
| built. This is a good thing! It means that renters who
| don't have enough wealth to build a house still get a place
| to live. In that case, you want to make it easy to be a
| landlord to encourage more capital to be in the landlord
| business and building homes.
| waterheater wrote:
| General rule of thumb: rent if strongly believe you'll be
| in a place for less than three years, and consider buying
| if staying longer.
|
| Say a potential buyer has a mountain of cash. They can
| scoop up a property with no issue. Financially, owning
| makes sense to them (no interest payments due to a
| mortgage), especially if they pick location correctly and
| see a property value increase.
|
| Next, say a potential buyer has a small pile of cash. A
| mortgage will almost certainly be needed to finance
| property, though this buyer should be able to cover the
| down payment. If location is right, it should work out well
| for this person, but it will take decades to see a positive
| return.
|
| Finally, say a potential buyer has little-to-no cash,
| living month-to-month on rent. They simply cannot afford to
| purchase a property and/or get approved for a mortgage.
|
| Let's consider each of these three categories of buyer in
| your scenario, where a local government makes it more
| difficult to seek rent. The wealthy buyer doesn't care,
| unless they own many rental properties, in which case
| they'll possibly have a harder time filling their units.
| The second buyer will benefit the most, potentially
| allowing more of this class to purchase properties
| (theoretically, more properties will be on the market).
| However, the third buyer is out-of-luck because they simply
| don't have the financial resources to outright purchase a
| property. Decrease the number of rental properties, and
| rents will increase, unless the number of new buyers
| balances existing renters.
|
| In summary, in your scenario, I would bet the wealthy will
| sell some properties and cash out, while the middle class
| will scoop up more properties and be able to pay for higher
| rents. The poorest, however, will likely need to settle for
| a lower overall standard of living.
| whimsicalism wrote:
| So, in the context of the bay, rather than paying my
| $3k/mo rent, I should buy a $1 million dollar home?
| microtherion wrote:
| If you can afford a 20% or so downpayment (big if, I
| know), the two options might work out to fairly
| comparable (after-tax) monthly payments right now. In the
| longer run, buying will leave you potentially with equity
| and with a fixed rate mortgage will assure fixed
| payments.
|
| Even in a mildly inflationary economy, making fixed
| nominal payments on a salary rising more in line with
| inflation for an asset valued more in line line with
| inflation can be a fairly attractive deal.
|
| But none of the above is meant to be investment advice.
| Homeownership has its risks and certainly loses
| flexibility.
| pedrosorio wrote:
| Just checked Redfin, a condo in SF for $1M with a 30 year
| mortgage at a nice 3% interest rate and 20% downpayment
| would be:
|
| - $3300 in principal + interest
|
| - $1000 property tax
|
| - $500+ HOA
|
| - $200 homeowners insurance
|
| That is $5000+ monthly and requires $200k upfront (and
| significant upfront cost as the brokers are paid off).
| How is that comparable in after-tax payments to renting a
| $3000 apartment?
| munk-a wrote:
| You should only ever rent if you intend to live in a
| property an amount of time so small that the rent you're
| paying out doesn't cover the exchange cost. And that
| assumes that property prices aren't increasing which they
| almost always are and generally at a pretty firm pace.
|
| Basically - you're trying to avoid the scenario where you
| live in a place so short that the exchange cost you pay
| to flip it on the far side exceeds the amount of rent
| you'd pay to reside in it.
|
| Determining the exchange cost isn't always straight
| forward - the 6% given above may or may not be realistic
| for you, there are some brokers that will take a 1% cut
| and those folks are more common in hot markets, and there
| may also be taxes you need to take into consideration.
|
| Also, there is a risk of getting stuck with a lemon - if
| you purchase a house which seems fine but actually has
| extensive water damage and mold you could lose a portion
| of the value, this is a really significant consideration
| in quiet housing markets (like the midwest) and less
| important in areas like SF where most of the property's
| value is likely the land itself - in either case you're
| taking a big chunk of the value of the structure out of
| the equation when reselling the property but in the later
| case the value of the structure is rather minimal while
| in the former case the land is essentially free.
|
| Basically you almost always want to buy if you are able
| to. The money you're spending on housing when you own a
| property is accruing as equity instead of being siphoned
| off by a landlord.
| frongpik wrote:
| If it was just about the money, it would be better to
| invest the downpayment into a margin trading account with
| 1 to 5 leverage.
| nostromo wrote:
| Maybe if there were margin calls on real estate loans
| (there aren't) of if there were no margin calls or forced
| selling on brokerage accounts (there are) this would be
| good advice.
| vkou wrote:
| No, because if you're investing on a 1-5 margin, the
| market dropping by 20% in two weeks, and then going up by
| 80% over the next five will leave you flat out broke.
|
| Meanwhile, someone not investing on margin will be up
| 60%.
| munk-a wrote:
| If it's just about money then you should diversify - but
| owning your own home is a self-securing investment, it
| means you can't go broke no matter how bad fate treats
| you - with the exception of going underwater on your
| property value which is only ever actually a problem
| since banks can effectively margin-call their mortgaged
| properties.
| exclusiv wrote:
| Home ownership, with a mortgage and down-payment less
| than 20% is higher leverage than that with more
| stability.
|
| Put 10% down on 1M. Goes up in value to 1.5M in a few
| years. Boom. 500K gain on 100k. Not that uncommon.
|
| Also, if it's your primary, then tax free income up to
| that 500k if filing jointly when you sell if you lived in
| it for 2 years. Hard to beat.
| hsitz wrote:
| > "General rule of thumb: rent if strongly believe you'll
| be in a place for less than three years, and consider
| buying if staying longer."
|
| This is a valid rule of thumb only because transaction
| costs are generally much higher when buying a home than
| when renting. Typically 6% of the cost is siphoned off by
| brokers (3% to each side) and the fees people pay to take
| out a mortgage loan are significant. Fees you pay to
| start a lease generally amount to only a small fraction
| of these.
| Johnny555 wrote:
| A good rule of thumb for selling costs is around 10% of
| the selling price. And when buying, factor it around 3%
| just for closing costs (or more if you're paying points),
| but then add-in more for funding reserves.
| nazgulnarsil wrote:
| breakeven is more like 10 years.
| munk-a wrote:
| Just to note - that last class of buyer has no financial
| motivation to remain a renter. They are stuck in a
| situation they can't get out of easily where a larger
| portion of their paycheck goes to housing and decreases
| the rate at which they accrue value.
|
| This is why home buying assistance exists and is a very
| _very_ good program for the government to subsidize,
| renting should, ideally, be a tool for those just
| starting life and those with the means to indulge in
| luxury - most people should own their homes since most
| people are living in the same place for extended periods
| of time. The exceptions to that are rare and need
| consideration, but the majority of renters today are
| people who are stuck in the rent cycle or don 't know any
| better.
| techsupporter wrote:
| > most people should own their homes since most people
| are living in the same place for extended periods of
| time. The exceptions to that are rare and need
| consideration
|
| I'd be very curious to know what kind of exceptions you
| mean.
|
| I've owned where I live a few times, each time it ended
| poorly. Now, I rent. The problem is, I can't buy what I
| want to live in even if I wanted to buy. Here's what I
| want to buy:
|
| - Inside the city limits of Seattle; location is not
| fungible, I can't substitute a property in Spokane or
| Atlanta for one in Seattle.
|
| - Within a 10-minute walk to a train station or rapid bus
| route.
|
| - An outdoor space of my own, not a shared garden but a
| balcony or private garden of some sort.
|
| That's it. That's the Tweet.
|
| You'd think that would be trivially easy, but the exactly
| two places I've seen where property can be owned (one is
| a townhouse development in Rainier Valley with an
| _astoundingly_ expensive HOA, yet still sold out and the
| other is a condominium development near the stadiums but
| the handful of units with a balcony sold out immediately)
| are unavailable.
|
| There's nowhere else. No condos, no townhouses, no
| rowhouses, not even any detached houses. It's all rented
| apartments. No one is building ownable properties,
| because of a combination of striving for rental returns,
| zoning, and Washington's condo liability law.
| munk-a wrote:
| Well yea - that's a poor market for ownership and Seattle
| has one due to the recent (in terms of housing price
| response) appearance of two insanely large tech giants in
| the area - that causes a lot of market distortion that
| you're sadly on the receiving end of today.
|
| It is financially advantageous to own a property, it is
| _usually_ financially advantageous to own a property if
| you just want to rent it out - renting is a profitable
| business that 's why there are a lot of really large
| companies holding insane amounts of property in the US.
| If the city/region has some guaranteed demand for rental
| numbers (like uni stundents and young people working
| their first job) then the math changes to make it even
| more advantageous to rent - what you're essentially
| seeing is that owning property is the correct decision,
| it's so correct that the market for property is being
| soaked up by landlords that can make a tidy profit on the
| margin and are more reliable load recipients than
| individuals.
|
| I'm sorry you're in the housing situation you're in
| because it sucks but, if you did see two identical places
| you lived and one was available for sale and the other
| for rent then it'd be the correct financial decision
| (really correct in fact) to buy the property.
| munk-a wrote:
| You could indeed, which would generally be a positive for
| society.
| datavirtue wrote:
| You have to flip that around. It has to be easier and
| dearer to own than rent. Seeking rents is already hard. If
| you follow all the rules and regulations it takes decades
| to profit when renting out homes. We need tax relief and
| incentives to build affordable housing...bad.
| whimsicalism wrote:
| > If you follow all the rules and regulations it takes
| decades to profit when renting out homes
|
| What do you mean by this? You still have the property
| which presumably hasn't depreciated in price.
| datavirtue wrote:
| Let's say you do eek out some amount that could be called
| profit. You get taxed on it according to your highest
| rate bracket. Then you have maintenance costs. These can
| be substantial and come as a surprise. If you get good
| renters and they pay for ten years you might get to a
| point where the whole deal was worth your time. You can
| always skim a little but it's really a long term
| prospect. Maybe you get lucky and are building
| significant equity each month as well. I don't really
| count that. Maybe a tennant implodes and you are stuck
| with a huge repair bill for some fucked up reason. It is
| perilous and fraught with inconvenience...not easy money.
| Forgot to mention insurance.
|
| Oh yeah, one of the towns where I have property just
| pulled a new rental regulation out of thin air requiring
| a notification filing and fee for each rental property
| per year or on each new tennant lease. This country is
| turning into regulation hell.
| ineptech wrote:
| It sounds like you've never been a landlord. For small-
| timers at any rate, the main attraction is asset
| appreciation, and the second is tax subsidies. Excess
| rent is usually the least important factor, and is often
| around zero, and can even be negative.
| whimsicalism wrote:
| I don't think the typical landlord is paying more on
| maintenance per month than they are gaining from rent.
| Taxes are paid net of maintenance costs.
| testesttest wrote:
| > You get taxed on it according to your highest rate
| bracket.
|
| Why would you personally own the property as opposed to
| putting it under an LLC or Corp? You would still have to
| pay taxes on personal income but it offers a lot more
| options on how to recieve the income and handle expenses.
| monocasa wrote:
| > it takes decades to profit when renting out homes
|
| Only if you don't count the equity built from the rent
| that you can cash in by selling at pretty much any time.
| csomar wrote:
| That's just messing up with the market. You need to make
| both easy, so that people who want to settle and buy can do
| that; and people who want to be mobile and rent can do
| that.
| scruple wrote:
| > I suspect that once the moratorium is up, there will be a lot
| of landlords looking to sell. They've been not getting rent for
| a long time, and they may have to sell in order to get out of
| the hole they're in. Many still have mortgages, but they will
| have a hard time collecting a year worth of rent. But the bank
| won't have the same problem foreclosing.
|
| My mother-in-law has 2 properties in SoCal and is dealing with
| this exact situation. She is speaking with a lawyer this week,
| in fact. I won't get into all of the details but will say that
| she owns these properties outright but has not collected rent
| on either since April and May of last year...
| whimsicalism wrote:
| > she owns these properties outright but has not collected
| rent on either since April and May of last year...
|
| Is this not just due to the eviction moratorium?
| undefined1 wrote:
| similar recent case here, where the tenants stopped paying and
| wouldn't move out. the landlord ended up selling at a loss with
| the tenants still in:
|
| https://www.youtube.com/watch?v=wv7AKN09vhM
| 11thEarlOfMar wrote:
| I'm not sure this is news?
|
| In December 2019, there were about 1.4 million existing homes for
| sale. [0]
|
| That same month, there were about 2,000,000 active real estate
| agents [1]
|
| [0] https://www.nar.realtor/blogs/economists-outlook/existing-
| ho...
|
| [1] https://www.nar.realtor/research-and-statistics/quick-
| real-e...
| theferalrobot wrote:
| Slightly off topic but... as someone that is moving out of the
| city and even a few states over does anyone have any advice on
| home buying? Would it be better to buy now or rent for a bit and
| then buy? Is that like asking what stocks to invest in or is it
| more predictable than that? I have zero experience with this sort
| of thing.
| jccalhoun wrote:
| I would say if you can afford a good down payment then buy now.
| Otherwise, rent and save more for a down payment.
| k3oni wrote:
| With the market prices being as high as they are now and low
| inventory I would recommend you rent for now and get to know
| the new area/city first. It's a seller's market right now and
| there's a higher chance of you over-paying for a property right
| now. I keep telling friends that i would rather buy a home with
| a lower price but higher rate/apr than vice-versa. You can
| always refinance, but you'll never be able to change the price
| you've paid.
|
| Edit: Also worth noting that real estate markets are more
| local, so there exists the chance that you might still be able
| to find some affordable houses but depends on the area.
| majormajor wrote:
| > I keep telling friends that i would rather buy a home with
| a lower price but higher rate/apr than vice-versa. You can
| always refinance, but you'll never be able to change the
| price you've paid.
|
| This is true, but assumes that prices drop significantly
| rather than merely stop rising like crazy and also doesn't
| include that if you're renting, you never get that rent back
| from the period of time you were waiting.
| k3oni wrote:
| That specific point was more related to the market i'm in
| right now, so it's pretty much market/area depended and yes
| as you point out your mileage might vary as i've never
| taken rent into consideration for this use case.
| Bhilai wrote:
| Depends a lot on the city where you want to buy but more
| generally I think the current frenzy will ease out a bit once
| covid restrictions are done with, interest rates go slightly
| higher and there is more inventory in the market. I dont have
| any data suggesting this but I feel a lot of home owners are
| not selling at the moment because they would too need to pay a
| much higher price for their next home. But there is some
| contrary evidence too where some owners who want to downsize or
| move away from an urban area are looking to cash out big.
| datavirtue wrote:
| First time home buyers are completely boxed out right now.
| There are people sitting on down payments waiting this out.
| topkai22 wrote:
| So we just bought a house in the same zip code we currently own
| in. You are right, it is a bit like picking stocks, but there
| are some general rules you can follow that might help.
|
| House prices are ballooning for two reasons right now- COVID
| and interest rates. COVID means you are going to pay premium
| regardless rightn now, interest rates are more interesting.
| Interest rates are up a bit from their bottom at the beginning
| of 2021, but are still historically low. Because so much of a
| house price is financed, if your time frame is long enough
| paying a premium on a house right now might be worth it now if
| you expect interest rates to rise. Using some VERY bad
| financial math, a $500,000 house financed at 3% for 30 years is
| "cheaper" than a $400,000 house financed at 5% on a cash flow
| basis.
|
| Transaction costs for houses are high- expect to pay 8-10% of
| the price of the house to get is sold (this goes to real estate
| agents fees, taxes, prep work, etc.) If you aren't sure you are
| going to stay in the area for a long time than definitely don't
| buy- think of it as your house immediately depreciating by 10%
| when you buy it.
|
| Traditionally, housing prices has also been considered a good
| inflation hedge, if you want to factor that into your
| calculations. However, that has been way less true post 2000
| (where there hasn't been much inflation and housing prices have
| been way over the map.)
|
| Finally though, housing isn't just a investment, it is also a
| consumption good. In my case that was probably the deciding
| factor for us- we choose to increase the amount of money we are
| spending on housing because that is what we wanted to buy.
|
| Some more insight into our thought process: 1) We knew we
| wanted to buy a house in one of three neighborhoods and had
| always planned to move within within the 2022-2024 timeframe.
| We moved up our time frame by the year, but this was always
| happening for us. 3) We are already bought into the area, so we
| had already benefited from the overheated market. 4) We timed
| our interest rate lock just about perfectly- interest rates are
| now 0.5% higher. 5) The house that came on the market is across
| the street from friends of ours, we were willing to pay a
| premium to be near our social circle.
|
| In the end, we bought a house I fully believe will be worth
| less next year than today, but will be OK (althought not great)
| as an investment in 20 years (which is our time horizon.) In
| your case, if you aren't super familiar with the area or aren't
| sure you have a 10+ year time horizon you might want to rent
| just to give you time to understand the new city your are
| moving to- the type of mistakes you can make in buying a
| primary residence aren't just that you lose money on the asset,
| but that you don't like where you live for years.
| AnimalMuppet wrote:
| Could you explain a bit about why COVID is making housing
| prices balloon right now?
| ghaff wrote:
| People are moving out of cities (where they were often
| renting) and into suburban/rural houses. People are moving
| into bigger houses. On the wealthy end of the spectrum
| people have even bought second homes outside the city.
| topkai22 wrote:
| Pretty much. Some additional insight I've heard is that
| COVID has restricted peoples ability to consume things
| other than housing, so people have the ability to consume
| more housing. If a family normally spent $7k on housing
| every year but didn't because of COVID, that is $7k more
| they have for a down payment, which means they can buy
| $35k more house.
| ghaff wrote:
| One interesting question is how much of this is pulling
| in activity that would have played out in a similar way
| over the next few years. For example, it's not uncommon
| for young people who get married, maybe have kids, to
| move out of a city to the suburbs for more space and
| better schools.
|
| To the degree it's actions that would have happened
| anyway, it probably implies there will be something of a
| dip after the current spike.
| asdff wrote:
| I'm not so sure we'd see a dip in housing, although we
| see the dip in luxury rental prices. The reasons for this
| is due to supply, or a lack thereof. There are new
| generations looking to settle down and do the above every
| single year. Every year more than the last are doing
| this, this is an expanding world. Yet, these areas where
| these people are moving to are not building the
| corresponding amount of housing required to meet demand.
| With not enough new housing built, prices rise, and
| people 'drive to where they qualify,' stretch out their
| car based commute, and we all deal with those
| externalities from the increased congestion and pollution
| no matter where we live in the city. It's a lose lose
| unless the US finally bends and start building housing,
| but they haven't done this in earnest since the boom
| after WWII (where we are still bidding on that hastily
| constructed housing stock today, because that's legally
| all there is in some neighborhoods).
| joshuaheard wrote:
| The Orange County, California, rental market has seen a
| huge surge in demand. I listed a rental property, and after
| two days, I had to cut off listings and applications. I had
| over 40 inquiries. I have never seen anything like this. I
| have talked to other realtors and the consensus is that
| people are moving from LA because the density of LA is
| causing a Covid fear, people can work remotely now and
| choose to live better in Orange County, and last year's
| riots caused people to be fed up with urban areas.
| asdff wrote:
| What sort of rental property are we talking about? Single
| family home rentals I can see as getting more popular,
| but I wouldn't think a 200 unit apartment in OC to be
| much different than one in LA in terms of demand these
| days. IMO it's in OC, ventura, and san bernardino county
| that I see way more lax mask usage than in LA county, as
| well as more crowded restaurants due to a less strict
| health department.
| datavirtue wrote:
| Don't do it unless you have to.
| ghaff wrote:
| A few questions I would ask:
|
| - Do you have confidence that you'll be able to continue
| working from wherever you move to?
|
| - Are you looking at a house or a condo? (It's generally easier
| to rent an apartment than a house.)
|
| - What are your motivations to buy? There's plenty out there on
| the financial side. Some of it is even reasonably accurate.
| However, IMO you should probably be thinking more about whether
| you want stability and the ability to customize a home or are
| you wanting to maintain a degree of flexibility if you decide
| to move somewhere else in a few years?
|
| - Do you know the area(s) you're thinking of moving to? If not,
| it may make sense to rent for a while while you decide if
| that's where you really want to be.
| jpm_sd wrote:
| It's enough of a seller's market that OP will almost
| certainly have to rent at/near their destination while house
| hunting. Last time I moved, it was 6 months of rental while
| going to open houses every weekend.
| freeone3000 wrote:
| Even with regards to maintaining a degree of flexibility, it
| might be worth considering if you actually do lose money on
| closing costs + taxes + value loss than you will on rent,
| even for a short term. Half or more of every mortgage payment
| is invested in an asset, 0% of every rent payment is.
| ghaff wrote:
| On the other hand you're foregoing any further returns on
| the money you take out of savings to pay the down payment
| and closing costs. It's definitely not as simple as rent is
| throwing money away compared to buying.
| freeone3000 wrote:
| For a $200,000 down payment on a $2500 a month mortgage
| (with 50% going to principal) versus $2000 a month rent,
| you'd need ten months to get past the $10,000 closing
| costs even assuming 10% return on next-best option and
| that the value of your home remains flat. Owning the
| place you live is probably the best investment you can
| make.
| FireBeyond wrote:
| The median household income was $68K in 2019, the highest
| it's ever been. That's $55K a year after tax. Now you're
| paying $2,000 in rent. Even if you don't spend a single
| cent of income on anything else besides a house, you'd
| still be looking at seven years to come up with that
| downpayment. Realistically, more like 15 years with
| expenses, at a minimum. i.e. "Don't buy a house until
| you're about 40 years old".
|
| > The usual rule of thumb is that you can afford a
| mortgage two to 2.5 times your annual income.
|
| So for the median family, $140K-$170K.
|
| I'm not sure where the median family lives that they're
| buying $170K homes that they were previously renting for
| $2K/month, but it sure ain't anywhere near here.
|
| Not to mention appraisal discrepancies, which require you
| to have the funds for the downpayment, for the closing,
| and to cover the appraisal discrepancy dollar for dollar.
|
| But generally, I'm just trying to figure out how we come
| to the conclusion that the average family is putting
| anything close to a fraction of $200K to a downpayment.
| freeone3000 wrote:
| Usually inheritance and gifts from wealthy relatives. If
| you don't have that, you won't be buying a house and will
| forever be renting save the rare outliers with $200k/year
| jobs. It still doesn't make renting a good idea.
| jpm_sd wrote:
| > Is that like asking what stocks to invest in
|
| Yes, pretty much. We are definitely in an asset price bubble
| but "the [housing] market can remain irrational longer than you
| can remain solvent" (with apologies to Keynes).
|
| The strategy I have successfully pursued in two cross-USA
| moves: find a not-too-expensive house in a neighborhood that
| has some kind of long term value, whatever that means (good
| schools? close to nature? cultural opportunities?). Remote work
| is great, but try to be within commutable distance of non
| remote opportunities in your field as a hedge against future
| change.
|
| That way, even if the market plunges in absolute terms by the
| time you need to move again, relative value should hold up?
| Hopefully?
| starclerk wrote:
| Time in the market > timing the market.
|
| As long as you don't put more than ~30% of your money into a
| single asset (e.g. a house), then you're pretty certain to
| always make money in the long-term.
| boring_twenties wrote:
| How many people are buying a house with anything less than
| 100% of their money?
|
| Everyone I know who "owns" a home first had to save up for a
| 3-20% down payment, which translates to having 500-3,300% of
| their money in the asset.
|
| Biggest outlier I know personally put 50% down, so 200%.
|
| Obviously I know that cash buyers exist too but that's not
| most people, unless I'm woefully wrong.
| bsurmanski wrote:
| heh, good luck finding a house worth less than 30% of your
| net worth.
| brianwawok wrote:
| Very very easy in much of the midwest, with a tech job.
| xbmcuser wrote:
| In the next few years inflation is expected to be high ie
| dollar value is going to go down so house prices could go up as
| well as interest rates are also expected to go up. So if you
| are interested in buying in the current situation I would
| advise buying as soon as you can and if going to mortgage lock
| down a lower interest rate.
| dcolkitt wrote:
| One thing, I'd at least consider, is buying vacant land and
| building. Normally you pay a premium for a new build relative
| to an existing house. But in this market houses are regularly
| getting bid 20% over list. To be fair, materials costs and
| certain subcontractor labor costs are also up, but the overall
| price tag, nowhere near as much.
|
| This is probably one of the few times when building new is
| cheaper than buying old. New builds with modern finishes are
| more likely to hold value if/when there's a downturn.
| lotsofpulp wrote:
| Unless you know people in the construction industry, and/or
| are familiar with construction yourself and evaluating
| whether or not the job is being done right, I would not
| recommend building yourself, especially in hot markets.
|
| If you're small fry, you're not going to be able to secure
| the best workers, and you can easily get taken advantage of
| because you have no idea what shortcuts people are taking if
| you're not checking up on things.
|
| Also, materials costs are insane right now, if you can even
| get them in a timely fashion. I know someone who took out a
| construction loan early 2020 based on estimates pre pandemic.
| They started building recently, and blew threw their budget
| on lumber alone and had to draw from retirement accounts to
| keep going.
|
| It is a great learning exercise, but not one many can afford
| on their primary residence.
| datavirtue wrote:
| This. Don't build unless you you already know what you are
| doing. I know what I'm doing and it is an absolute bitch
| and I am finding I have to do most of my own work.
| matwood wrote:
| > if you can even get them in a timely fashion
|
| This. Not just materials but parts because of supply chain
| backups. Oh, and general worker rates. I just had to
| replace a hot water heater. Big box stores had prices
| listed (~$1300 but no stock). Plumber wanted to charge $4k
| for the equipment and installation. Luckily I knew someone
| who had wholesale accounts, called all over the state, and
| found one. Then I did the install in ~2 hours. Dealing with
| that for an entire house, sounds like a terrible
| experience.
| yardie wrote:
| We moved countries, France -> US. Rented for a year and used
| that time to search for something we liked. Avoided a lot of
| pigs with lipstick as home flippers in a hot market tend to
| slap on new paint and do shoddy, minimal repairs. I personally
| wouldn't buy until I'm absolutely ready to. And yes, we did
| miss a few opportunities since we weren't ready.
|
| Unlike my experience buying in France, the US does not do
| bridge loans. You are a) lucky and close as a seller and buyer,
| b) take on 2 mortgages hoping the old house sells, c) are
| temporarily homeless, d) or temporarily renting.
|
| Housing is super emotional and I hate having to make emotional
| decisions. You have to make a lifelong decision based on a 30
| minute tour. And buying in a hot market just makes everything
| more stressful. I'm not surprised people are making lightning
| quick decisions because hesitating is not an option.
| hirundo wrote:
| > Is that like asking what stocks to invest
|
| Yes it is. Watch "The Big Short" if you think the housing
| market might be less crazy. So take my advice with the
| appropriate skepticism:
|
| With the lock downs and rise in remote work there has been
| upward pressure on rural and low density housing prices, same
| as toilet paper and weightlifting equipment. That makes it a
| seller's market. I have rural neighbors moving forward their
| plans to sell for that reason. As a buyer I might be inclined
| to wait for the pandemic to pass and for prices to revert
| somewhat to the mean.
|
| This advice is brought to you by someone who managed to buy at
| the very top of the real estate market. I think the crash
| happened when I signed my purchase agreement.
| mjh2539 wrote:
| > As a buyer I might be inclined to wait for the pandemic to
| pass and for prices to revert somewhat to the mean.
|
| The opposite force (motivating you to buy now) is that
| interest rates are very low, and that will probably change in
| the future.
| gruez wrote:
| >The opposite force (motivating you to buy now) is that
| interest rates are very low, and that will probably change
| in the future.
|
| It's low for you, but also low for everyone else. Low
| interest rates push purchase prices higher because people
| care about monthly payments, not the final price. Overall
| it's a wash and you don't gain/lose for buying in a
| low/high interest rate environment.
| dcolkitt wrote:
| Nearly half of home sales are to cash buyers, who at
| least theoretically aren't sensitive to mortgage rates.
|
| https://www.appraisalinstitute.org/Nearly50PercentofHomeS
| ale...
| hirundo wrote:
| The half that _are_ sensitive to mortgage rates bid up
| prices for both halves when rates are low.
| asdff wrote:
| I feel like its the cash buyer who is dictating these
| sale prices, no?
| rsj_hn wrote:
| This is the correct take.
|
| Low interest rates means house prices are high now, and
| they will fall when interest rates climb, giving you
| capital losses. Much better to buy when interest rates
| are high, as rates will fall in the future and house
| prices will increase, giving you capital gains.
|
| In both cases, you will pay the same amount for the same
| house in terms of monthly payments, as households are
| payment constrained, and they don't particularly care
| what percentage of their monthly payment goes to pay for
| principle and what percentage pays for interest. They max
| out what they can afford in terms of the total monthly
| payment, and thus houses prices go up and down in the
| opposite direction of interest rates.
|
| But be careful, even though it is much better to buy when
| rates are high, that doesn't mean that waiting for rates
| to go up is a good strategy, as rates may not go up for
| twenty years, or even a hundred years - you don't know.
| But certainly a low interest rate environment is a
| terrible time to buy a house, even if you have to suck it
| up and buy anyway.
| ryandrake wrote:
| But when will rates be high? Rates have been consistently
| falling since 1981...for the last 40 years! They have
| been under 5% for the last 10 years. No sign of any
| upward pressure at all.
| [deleted]
| sangnoir wrote:
| > Overall it's a wash and you don't gain/lose for buying
| in a low/high interest rate environment.
|
| You can't paint with such a broad stroke without
| crunching numbers - I think the better, but less
| satisfying answer is "it depends". It depends on the
| specific market and pricing dynamics (past and future),
| as well as on the length of the mortgage term and how
| high interest will go in the future - which is hard to
| know beforehand. Further complicating this are objective
| factors such as flexibility (of renting), and how much
| you're willing to pay for it. Buying a house is huge
| time-sink: expect to screen hundreds of houses and
| actually viewing dozens of them. Then you have to put
| together an offer quickly. If you're unlucky, your offer
| may be tied to some other buyer and the seller may ask
| you to write a motivating essay on why they should sell
| you their house - which I find insulting _and_ time-
| wasting.
|
| To GP: you need to write down actual figures and work it
| all out for best & worst cases - estimates are fine. When
| you are done, pick a path you are comfortable with.
| matwood wrote:
| I would rent for a bit just to get your bearings in the new
| place. It's hard to know what part of town you really want to
| live in, until you experience it for a bit.
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