***Official Real Estate Thread***

[grapedrink]

Those are all good points. These guys are buying up all 3/2 and 4/2 in working class neighborhoods. That's where the housing shortage is. Generally they are not subject to rent controls so that is huge. They are also not stuck with inclusionary housing requirements that new developments are- which often makes it hard to pencil out with attractive numbers. I think they are probably going to make out ok.

They are mostly going after those areas because they cash flow from the jump. Whereas if you buy in coastal California, you have to wait years for rents to get high enough to cover (unless you put A LOT down) and you are basically hoping for appreciation. Which I would argue is the better long term play but you have to stomach several years if not a decade+ of negative cash flow. Hedge funds usually don't want that.

I keeping hearing what a pain real estate is though. Just heard it again last week from a lawyer touting the virtues of equities etc. There are none of carrying costs like, prop management, maintenance, or liability risk, etc.. She swears the returns are always greater in the market and usually faster but I have seen plenty of grand slams in real estate too.

Where real estate has the advantage is being able to gain equity on the leverage. You can buy a $1M home with 15-20% down and make gains on the $800-850K you borrow. If the market appreciates 5% per year you make $50K on a $200K investment for a 25% return. Whereas $1M in an index fund at average returns would net you $80K on $1M cash. This of course assumes that you have somebody else paying the mortgage for you.

 

[drunjk]

 

[Muscles]

A good seller will provide an inspection up front and identify what he has or hasnt fixed.

The definitely will not do that in Hawaii.

You bring an inspector and hope he catches everything.

 

[ReForest]

Yes, I know a buyer would not use a mass market firm for the buy side. The seller's agent often needs to be onsite before and after the inspection and for other visits. Doesn't work well when they are a hundred miles away and not motivated by their low commission.... This has happened more than once with my wife on transactions. In the end, the sellers felt bad for my wife because she shouldered most of the load to get the deal closed.

This is another issue that I think should change. Agents that represent sellers should be from that particular area. Out of state agents or out of county agents or even out of city agents don’t really have an understanding of the area and sometimes complicate the transaction. There should be some 30 miles rule on agents repressing sellers in a particular area. The local agent would benefit and the seller would benefit from an agent that lives in that area and is intimately familiar with that area - versus and out of tower that is just trying to make a commission Or double end the deal.

 

[StuAzole]

This is another issue that I think should change. Agents that represent sellers should be from that particular area. Out of state agents or out of county agents or even out of city agents don’t really have an understanding of the area and sometimes complicate the transaction. There should be some 30 miles rule on agents repressing sellers in a particular area. The local agent would benefit and the seller would benefit from an agent that lives in that area and is intimately familiar with that area - versus and out of tower that is just trying to make a commission Or double end the deal.

Silly. A seller should be able to hire whoever they want. If they think a guy from LA is the best person to sell a home in Solana Beach, why stop them?

 

[Pico]

I can get a 4.3% Amex high yield account or I can buy a home or air bnb. Oh what to do?

 

[sdsrfr]

Better than crawling under the house yourself, but yes they are a waste. Especially when each section obsolves them of liability with a clause that says "to get a professional opinion you should always consult a licensed plumber, electrician, engineer, etc."

I figured the point of the inspection was to give you outs from the deal without losing your deposit.

any buyer beware comes from the disclosures and read on who previously owned the place, liens on the title and how well did they upkeep, or lack there of, and budget accordingly.

we had a hard rule of no flips bc the disclosure wash that also happens.

 

[npsp]

lol, your high net worth transactions are a tiny percentage of total volume. They’re irrelevant to the larger discussion.

But really? CAR forms have like 15 lines to fill in and the rest is almost never negotiated. Address, price, 17 day inspection, FATCO for title and escrow, loan contingency or no, closing date. Done.

Im most curious about your theory on cut rate agents. With this change, EVERY agent will need to compete on fees. It happens in land brokerage, and in commercial brokerage, so why not residential? Your wife may elect to keep her fee at 3% and maybe people will still pay it. It may signal she’s a star, worthy of a higher fee. But if everyone else cuts to 1%, she’s going to lose a lot of clients.

I know of a very successful agent out of RSF who just took a beach-front listing in Carlsbad for 1.5%. It got her the deal. Thats how it’s going to go on the buy side now too. Really, it’s the buyer agents who are going to see the biggest cut if buyers end up paying the fee.

It’s no longer about Redfin and Zillow. The whole structure is about to change and it’s going to spell trouble for anyone who can’t produce volume or establish themselves as an agent worth the extra scratch.

All that talk about what agents do is nice, but we both know the hardest part of being a broker is landing the listing/buyer in the first place, not the transaction itself. I’m not saying they don’t deserve compensation, but I am saying 3% is way too much. But we’ll see - maybe I’m wrong and agents will be able to negotiate even higher fees now, but I doubt it.

If residential real estate brokerage required any sort of intelligence it wouldn’t be filled with high-school educated surfers. No offense.

I am looking at this from a very narrow slice, I understand that. I am also maybe jaded by watching how my wife and some of her fellow brokers handle their business.
That noted, regarding forms, etc... they are fairly simple, but you would be amazed at the level of ignorance of many highly educated people.
You are also correct that commissions are negotiable. I noted above that my wife is taking on a listing for 1% because that is what it took to make the deal. She is negotiating today for a listing that will be in the 1 -1.5%.
Is 3% too high? In some instances yes, and in others no. Take the two listings above, these are vetted properties that have been well maintained and will require very little work to prep for sale. This saves my wife's time so the lower commission is fair compensation for the amount of work she has to put into it.
On the other hand, she had a recent listing @ 2.75%, that took a lot of work and sat for a long time then fell out of escrow because the seller didn't heed my wife's advice to fix some major issues. She even invested >$20K of her own money to do necessary upgrades that the seller didn't want to do. It took the house falling out of escrow for the seller to finally heed my wife's advice and make those repairs. As soon as it went back live, it went right into escrow for more $$ than the previous offer and closed in 3 weeks. That 2.75 % was hard earned.

 

[npsp]

Too bad they don't do this.

The good ones do.

 

[npsp]

Better than crawling under the house yourself, but yes they are a waste. Especially when each section obsolves them of liability with a clause that says "to get a professional opinion you should always consult a licensed plumber, electrician, engineer, etc."

That's why a good agent brings in a licensed plumber, electrician, etc... to confirm the inspection findings and estimate the cost of a repair if needed. If your agent (or you) doesn't (don't) do this, they (you) are negotiating from a disadvantaged position. This can be costly as Muscles had noted above.

 

[Pico]

I figured the point of the inspection was to give you outs from the deal without losing your deposit.

any buyer beware comes from the disclosures and read on who previously owned the place, liens on the title and how well did they upkeep, or lack there of, and budget accordingly.

we had a hard rule of no flips bc the disclosure wash that also happens.

I think the point of the inspection is to assure your lenders that the place is in decent shape.

 

[npsp]

I figured the point of the inspection was to give you outs from the deal without losing your deposit.

any buyer beware comes from the disclosures and read on who previously owned the place, liens on the title and how well did they upkeep, or lack there of, and budget accordingly.

we had a hard rule of no flips bc the disclosure wash that also happens.

That is one of the points of having an inspection. Seller's disclosures are always to be taken with a grain of salt. It's odd how some people tend to forget to list critical things...
The other point is that it exposes issues that open the door to negotiate for repairs and/or repair credits. This is where the good buyer's agents earn their 2-3%.

 

[SlicedFeet]

I like how real estate agents don’t age, there’s something they’re not telling us.

Every mug shot is flawlessly, especially the one’s on Bus Stop benches…what would those benches be without RE agents…a blight I tell you.

I do like when they drop off a pad of paper with their mug shot and phone number. I gotten alot of uses out of that over the years.

One local agent puts mini flags on the corner of your lot for flag day…she’s quite Patriotic, she hasn’t aged a bit in her picture over the years either.

I wonder how they come up with their catchy jingles…or is there a service for that just like the mugs shots?

One thing that I despise about Re Agents though…when they buy plants at Home Depot to stage for a house, they sell it, then they return the plants back to HD for a refund. Cheap asses. I get so pissed when I’m in the return line and there is a hussy in jewelry in front of me returning a botanical garden.

You can blame realtors all you want on the insane cost of housing but the real problem was the Fed and the unfathonable suppression of Interest rates for such a long period. Of course which led into the Airbnb phenom.

in 2020 I was bored and decided to work for the census that year. I was dumbfounded on how many houses were Airbnb’s and not primary residences. Also how many were owned by large corporations. That housing stock is not coming back to the market anytime soon.

 

[npsp]

Silly. A seller should be able to hire whoever they want. If they think a guy from LA is the best person to sell a home in Solana Beach, why stop them?

Agree, my wife listed a house in LA for a client of hers because said client felt she was the best person for the job. But as I noted above, having a listing agent far away, can have it's issues too. It's all about the level of customer service that agent provides.
On the buy side, I do believe it is critical to go with a local agent that knows the area well.

 

[npsp]

I think the point of the inspection is to assure your lenders that the place is in decent shape.

Again, that is only one point.
Take the example above of my wife's listing that took falling out of escrow to knock some sense into her client's head. The reason it fell out of escrow was that the inspection revealed the issues that my wife was lobbying to have repaired from the the get go. These issues were first discovered during the pre-listing inspection and had been disclosed but the wording of the inspectors report gave the buyers enough pause to pull the plug and walk.
Maintaining your home is not underrated.

 

[ReForest]

Silly. A seller should be able to hire whoever they want. If they think a guy from LA is the best person to sell a home in Solana Beach, why stop them?

Ask a realtor from Solana Beach what he thinks? lol. I just think that local realtors should be benefiting from the sales in their area. But making a law rule to that effect would be pretty silly.

 

[ghost_of_lewis_samuels]

Ask a realtor from Solana Beach what he thinks? lol. I just think that local realtors should be benefiting from the sales in their area. But making a law rule to that effect would be pretty silly.

there's probably just as many bad agents in solana beach, if not more than good.

 

[StuAzole]

Ask a realtor from Solana Beach what he thinks? lol. I just think that local realtors should be benefiting from the sales in their area. But making a law rule to that effect would be pretty silly.

If a local can’t get the listing that’s on him/her.

 

[Muscles]

Let's just do some simple math.

3% of 1M is 30K. A mid level analyst at my work makes $120K for 2000 hours worked per year or roughly $58 per hour. $30K is roughly 500 hours and 3 months of full time work for a very well educated mid level analyst.

Does anyone believe a RE agent is doing 500 hours of work per transaction? Of course not. It's a scam and 100% not worth it when you do the math.

I'll be happy to pay an agent for hours worked. They better be ready to see how hard hours billed is when they have to account for all of it.

 

[npsp]

A good real estate broker/agent is going to cost you well north of $58.00/hr. They are apples and oranges. One sits in a cube all day while the other performs a wide range of tasks in an effort to close multiple transactions. Are some agents worth <$58.00/hr.? You bet. However, the good ones will be north of 100.00/hr. I doubt my wife would work for less than $125.00/hr. + commission at close of sale. She'd probably charge for her trades people to come in and really inspect the house.
Like life in general, there are really good performers and really poor performers. It's always the really poor performers that give any industry and bad name. And from the comments on this thread, is seems like a lot of you have had to deal with bad agents.