Lake Mary - Central Florida Real Estate

Debbie

Thats the way of the world "its not your fault it is _____________ fault.   I told someone yesterday that we agents should have buyers fill out a disclosure saying that we can not guarantee a increase in their home value.

There was more regulation and then class action suits against investment firms for stocks.

There is going to be more regulation in lending (class action lawsuits to follow)

Guess who will be next? 

Let's say you are working with people who really want to buy a house. The mortgage broker says "No Problem". The Realtor says "Maybe this is not a good idea". Who do you think they are going to listen to? I have been in exactly this position and been ignored every time.

Debbie,

Everybody is blaming everybody else for this mess. When you look at the big picture, it shows that everyone involved in real estate and mortgages just got a bit too excited about making money. That includes the home buyer, too.

We take the information provided to us from the buyer and their lender to determine what they can afford. Then, we find the home that fits their price. 

We don't go the the lender and say, "Oh they can afford this make it happen."  That is the lender's job.  They tell us the amount the buyer can borrow. 

Even if the lender says the buyer can afford this, the buyer needs to know what they can afford.  We don't go the buyer and say, "Sure you can do that."  That is the buyers job and it is called a budget.  I am sorry to say, but buyers need to take the responsibility. 

Of course there are some exceptions, but the exceptions are not the norm.

Debbie,

Whaaaat? Oh I see Rick is now the expert. I've been using the free verson of his service, now I'll need to be sure I don't sign up for a paid subscription. Thanks for the heads up on this one.

Debbie, throughout this "crisis" there seems to be a misinformed armada of anonymous opinions, at least Rick remains identifiable.  

Thanks for a good post - the media manages to highlight all the negativity.

Larry - You have a very good point, that might be the next disclosure that is added to our buyer's packet. 

Wayne - Not only won't they listen, they will go and get a REALTOR that tells them what they want to hear.  I always council first time buyers that their mortgage payment is the most important bill that HAS TO BE PAID ON TIME. 

Esko - I agree that buyers aren't without blame, everyone thought that they could buy a house in Florida and make a $100,000 in a year... well it was over so quickly that some people are upside down and want to blame everyone else for their own greed.

Richard - AMEN...  You are exactly right!

Lynda- I would love to know how much REALTYTRAC has profited from the "housing crisis"!

Kevin - Love the comment and my sentiments exactly!

Somebody is making money in this foreclosure crisis. I guess realtytrac is making a lot of money now.

Its a blame game out there. Everybody and Nobody is to blame...

SOME Realtors sold people into houses they shouldn't have.

SOME Loan Officers did bad loans.

SOME banks had very lax underwriting guidelines

and now 

SOME have to pay.

It was fun while it lasted... Laugh now cry later....

Unless I am totally wrong, wasn't it the media that added helium to the "housing boom" which may have  encouraged people to buy as well?  OR was that just the other 4 news channels?

Everyone in the industry has to take some blame in the mess that has occurred, but in reality, the "real estate bubble" as some call it was bound to burst at some point.  It was just expedited by the fact that people got greedy, buyers especially, and some timed it right, and other wrong.  Real estate is a cyclical market, and some win, and some lose.

I totally agree about the Blame game.... NO ONE WANTS TO BE ACCOUNTABLE!!

 

Debbie,

You are absolutely right. This is way out of hand.  I think the argument that any of us try to throw people under the bus simply so we can make an extra minuscule percentage (at complete detriment to our long-term reputation, mind you) falls flat on its face.  The difference between what one could finance and what one could actually afford was never so great as to make it worth your while to sabotage your business in that way.

I think a more realistic explanation is that people get excited by fancier/bigger houses, and tend to throw caution to the wind when the time comes to actually decide.  By the time I see a buyer, they usually have looked up "what they can afford" with some online tool sponsored by a mortgage broker and they tend not to lend too much credence to the cost-of-a-home vs. cost-of-homeownerSHIP lecture.  C'est la vie, I guess.  Where there are problems, there's blame to go around. 

It's ironic that this guy Rick built a business exploiting people's hardships being a "foreclosure expert" 

Like you say everyone thought they could make $100,000 in a year. Many made that and more - they're not blaming their REALTORS®

Debbie, I can see both sides of this argument only because I know some agents that would try to convince a buyer they need more house to make a larger commission. I say shame on those agents because it is those few that make it rough on the rest of us that TRY to educate our buyers about the difference between needs and wants. Some buyers don't want to hear that just because they qualified for a $300k loan doesn't mean they need to buy a $300k home. The ones that listened to our advice are still living in their homes and enjoying a better life than the ones in foreclosure.

 

Debbie.... Good points you make, and a lot of good comments you've gotten.  I would add though that, from my perspective, the problem started developing many years ago when the Federal Government, pumped by the liberal media, began to instill the idea in the American public that everyone in the U.S. should be able to buy and own a home.  "It's the American Dream!"  Maybe so, but "Dream" is the operative word.  Not everyone should own a home, especially one above their means.  It's another example of the government and media trying to "fool all the people all the time."

Eric - The foreclosure business is a "Money Maker" for many people. I was recently at a presentation for a company that negotiates short-sales.  Not only do they collect $750 in advance from the sellers they want 1% of the listing side of the transaction.  For making phone calls?  Foreclosures are big business.

Wow Debbie,

Great post... of course Realtors arent to blame, everybody else is.

 

Ken - REALTORS don't sell people into homes.  It isn't a used Pontiac.  I'm having a problem with the belief that REALTORS sell houses to buyers based on getting a commission.  I don't look at someone buying a $100,000 home differently than a $750,000 home, it isn't how I think and I can say that about most REALTORS that I know.  When a home buyer finds the home that they want, they buy it... they aren't going to "pushed" into buying something they don't want, like I said... we aren't talking used Pontiacs here. 

My problem with the television show was that we are being accused of caring more about commissions than our customers and that is simply not true.  I would rather walk away from a buyer "knowingly" see them put there financial life at risk. 

Allison - It was also sellers who took multiple bids selecting the one that waived appraisal and sold troubled homes as-is and the buyers who had to buy them.  I feel caught in the middle and am constantly amazed out how the media hypes the current trend to seller newspaper and get viewers, like they did me last night.

Ben - I think over the past couple of years people quit thinking of their homes as "shelter" and starting thinking of them as cash machines.  When I work with customers, and we are looking for homes I talk about their lifestyle and their needs and could they see themselves living in this home and if it would meet their needs for the next 5 years.  Because I knew that the massive rate of appreciation was never going to continue, buyers had been priced out of the market so rapidly that they were having to buy smaller and smaller homes.  It is unfortunate to think that everyone involved in the process didn't think that way, including the buyers.

Celeste - One of the segments on the news report was a man who took out a home equity line to put an addition on his home.  The work isn't completed, his wife lost her job and they are facing foreclosure.  Life happens and sometimes there is no one to blame. 

Aaron - I agree with you 100%.  Most people think bigger is better and when they are told that they can purchase up to a certain amount, once they see those homes... they can't help themselves.

Mitchell, I was just turned off by the interview with him... I felt like it was a sales pitch for their website and used REALTORS, Mortgage Brokers and Lenders as usual to shelter the blame.  Very little was said about buyers knowingly buying more than they could afford.  

Something that doesn't make sense in the argument presented by "Rick"..

Consumers are fond of telling us they don't need our help, that they can sell on their own, buy on their own and get their resources off the Web.  "I don't need a Realtor" is the mantra of so many of these folks, because they "read a book" or "read it on the Web".  So if they won't listen to us, what makes Rickie think they would have listened to any counseling from us then? 

To the agent who didn't log in but knows agents who knowingly try sell people more expensive homes so that they can get a bigger commissions - I'm sorry to hear that there are agents out there like this.  I know that most REALTORS take their responsibilities very seriously and would never knowingly contribute to someone's financial demise.  It is a few "bad apples" that make the overwhelmingly majority of professional REALTORS, who care about their customers, look bad.

Jeremy- I'm showing a home today that is 3,000 square feet, was purchased in August of 2006 from a builder, using the builder's mortgage company and no REALTOR was involved.  There are a lot of homes out there like that, I guess I can't be blamed for everything.

Eric - Thank you for the insightful comment.  You couldn't be more on target. 

Debbie - Slime really does rise to the top.  Realty Trac is slime.  I agree there is more than enough blame to go around  but the housing market was fueled by speculation.  In California investors were buying 5 and 6 properties at a time and flipping them before the escrow closed.  Owning a home is the American Dream and yes some people went out on a limb because they wanted a home.  And yes some were qualified on the "teaser rate" offered by the lender (Wall Street investor who could only see ROI - no risk).  There were bad loans made and people lost their dream.  But the fact remains it's only 1.5 - 2% of ALL the mortgages.  I am a Certified Mortgage Specialist and I would not put someone in a loan they could not afford. 

A lot of Realtor's and Loan Officers got into the market because of the money that was being made, these guys are out now.  Realty Trac and Rick are opportunists, they are bottom feeders make no mistake about that.

For the most part Realtors and Loan Officers do their job correctly. Property values were over appreciated by the tremendous volume that was sold during that short period of time.  Many Realtors couldn't get the sign in the ground fast enough before the property was sold.  Unfortunately when you have a few bad apples the tree is condemned and cut down. Those of us who survive have the integrity to serve our clients well.  I wish you well, rise above it.  Patti - Certified Mortgage Planner - California

 

Debbie,

While you would never advise your clients to buy a more expensive home than they could afford, do you really think that Realtors bear no responsibility for the mess we are now in.  Greed runs rampant in this industry.  I have personally been witness to more unethical behavior than I can shake a stick at.  Sure, buyers need to take responsibility, but what about the professionals "advising" them?

Maybe mortgage companies made it to easy to get loans, fine, who makes the final decision: Buyer. 

Im sure the next thing we will hear is that Realtors are responsible for Global Warming.

I actually do partially blame the real estate community for our crisis, but not 'cause we sold buyers houses they couldn't afford... I blame us because now that we're in this pickle, we aren't doing anything about it. We need to be pricing our listings properly, telling our sellers upfront what they need to do to help us sell (keep the house clean, scram for showings, etc.) and learning how to respectfully help our sellers understand the realities of today's market.

The 3P's just won't cut it anymore... In my neighborhood, there's very little decent inventory available and good stuff gets snatched right up. The rest of it sits because it's overpriced and under-marketed... which gives the impression that there's a "crisis" when there really isn't.

I'm sure there is enough blame to spread around and the Monday night quarterbacks out there are suddenly experts. If they are so smart how do we get out of the mess. They are experts in this area and if you don't have a solution I can't think they need to be listen to. Thanks for your post.

I don't want to play the blame game.  However, I can say that most of the Realtors in my neck of the woods (So. New Hampshire) were not trying to get their buyers into homes that exceeded their  budget or their needs.  I think there were a lot of factors, including, regulations either being loosened or not enforced - The "reputable" lenders my clients worked with were much stricter in granting loans to those with iffy credit -- it would seem since lenders see the credit and other financial information, they are in a better position than a real estate agent to determine if the person should be given a loan. 

In a single rant post, one bubble blogger blamed real estate agents for raising and depressing prices.  We jack up prices to make more money, and drop them to sell more properties... and make more money.  At the same time. 

It is never the consumer's fault.  They never signed on the dotted line without thinking through their decision.  I told someone that they really were looking out of their range... they found another agent and bought the house.  Luckily, the majority of my clients (buyers) aren't looking to go to the edge of their price range... they have expensive hobbies that they don't want to give up.   

Wow!  I thought a Realtors job was to find property that meets the buyers requests and price range and to educate them about the area, quality of home, etc.  It shouldn't be a Realtors responsibility to educate a buyer about their finances.  Thats the buyers responsibility.  Too many homeowners that are in trouble right now want to just blame the Realtor, Lender, etc. but they should really be looking at themselves.  A home is a huge purchase and buyers should go into it knowing what they are getting into and if they can afford it.

I think the media did a lot more to fuel the flames of the housing boom with shows like "Flip This House" than any agent ever did.  In my experience, agents ask people what type of home they want and what their budget is, and then show them those homes.  Since all (good) agents depend on referral business, I believe it's a fallacy to say that anyone would try to sell a buyer a more expensive home to make a bigger commission.

Debbie - It feels like there are a ton of people taking shots at the housing market and we as real estate agents are taking a few hits along the way.  The challenge is that the financial side of America has some obstacles ahead and many of these issues have occured because of previosly bad lending guidelines and higher risk loan programs.  When lenders were doing 100% financing, 80/20 split loans, interest only loans and stated income, no verification loans the writing was on the wall. 

Something that will surprise many folks on ActiveRain is that FHA mortgages currently have one of the lowerst foreclosures compared with the conventional loans during the past 5 years.  I believe this may be because FHA loans were better documented and because information may have been better verified for income and employment.

 

Debbie, For years I have joked that God invented REALTORS(R) so everyone would have someone to blame when something went wrong?  Wow, I didn't think we would be in charge of the entire bubble!! Ridiculous!

I think it is interesting that RealtyTrac is speaking poorly of another business since they disseminate information that many investors use to screw the homeowner in trouble. For example, they list notice of defaults meaning  people that are in trouble paying their mortgage. Yes, all of the information that they provide is public record but they brag about people buying at _________ below it's value. I'm all about finding a deal but they are casting stones at us (Realtors) and then essentially sharing their subscribers success stories. In essence, they are saying we will provide you with a desperate homeowners contact information (the service even let's you send a postcard) with the hopes that you will save a lot of money.

Of course, they will disguise this and say it's public record but they make it pretty easy to find a victim. Talk about he who is without sin, cast the first stone.

It is really to bad that people cant take responsibility for their own actions.  Home-buyers wanted bigger homes with lower payments that is it.  Then they used every dime they had on stuff and never thought about tomorrow.

Patti - There were some people that got in because they thought that they could get rich quick and you're right, they have gone back to their "real" jobs.  Most of us (REALTORS, Loan Officers, Mortgage Brokers, etc.) really take pride in helping people find that "right house". 

Maybe I can put a fresh spin on things. Maybe, just maybe, the Realtors and mortgage lenders are not the bad guys/gals that the media is trying to make us out to be.

It's easy to get caught up listening to the talking heads in the media. In fact, I'l bet if you asked 5 of them the same question on anything, you would get 6 answers. As far as the guy from RealtyTrac, show me some numbers. Start with the cold, hard facts and maybe we can believe you. Otherwise, keep it to yourself. The media loves controversy, so he has to be controversial to get his 15 minutes of fame......

Here is what Angelo Mozilo, CEO of Countrywide Financial, said in a presentation last fall. He gave the reasons for foreclosure and the percentages of foreclosures caused by them. Here are the top reasons.....

Curtailment of income......58.3%
Illness / medical .............13.2%
Divorce............................8.4%
Investment prop that they are unable to sell......6.1%

And, last but not least, those dirty, rotten mortgage lenders that wrote all those terrible ARMS should be ashamed, because the adjustable rate mortgages are responsible for 1.4% of the foreclosures.

Yes, 1.4% of foreclosures are caused by ARMs. Even with that low of a number, the buyers need to take some responsibility. What were they thinking when they signed the paperwork that says that their payment was SCHEDULED to increase by hundreds of dollars per month after only two to three years?

I know that there are loan officers and RE agents who played a part in this, but they are a small group, not the industry as a whole.

I can only speak for myself, but I feel very little to no responsibility personally for the foreclosures. After all, looking at the numbers, I did not cause anyone to lose their job, give them a disease or injure them, cause them to get divorced, or make them speculate on investment property because someone told them they could see double and triple digit appreciation per year. And, I'm proud to say, none of the loans I have written have ended in foreclosure. Maybe luck, but I'll take it.

Scott

One last thought. If the media would focus as much time and attention on how to help people avoid foreclosure and other financial issues instead of reporting on other's misfortunes, we would all be much better off. (But then we would have a lot more unemployed newscasters and reporters whose homes would go into foreclosure setting off another vicious cycle....  Yes, I'm just a little cynical)

I can sort of see both sides of this.  Let's assume you are a new loan officer in 2004.  Your boss tells you to go get a loan.  You ask:  "How?"  He replies:  "go ask some Realtors."  Hmmm.  Ok.  So you, industrious little loan officer go out an solicit every Realtor w/in a 20 mile radius. 

Guess what......You're going to connect with one of them.  Now let's assume that this Realtor does what so many do, which is to send them a piece of crap deal that no other lender can get done.  What does the new loan officer do?  They either do the deal, which most likely involves fraud or some other shady lending practice or they tell the Realtor "no."  What chance does that LO have getting another referral from that Realtor?  In fact, more often than not, the Realtor probably rubbed it in a little by saying that so and so lender down the street can do it!

How could this scenario, which happened a lot, influence the industry?  I certainly don't condone the actions of the LO's who caved into this pressure, though I can understand how they were pushed to do it.  Unfortunately, the lenders made it easy for everybody.

I'm glad you posted this.  I rarely see Realtors taking any responsibility for the situation that we are in.  From my vantage point, they are guilty as well.  Are they the most guilty?  Absolutely not, though they should be careful when listing glass houses.

Regarding ARM's, I rarely made more on an ARM than any other deal.  And when I did, i contributed it towards the closing costs.  I set my pricing so that I've served the client, remained competitive, and can sleep at night knowing that I served everyone involved in the transaction.

I have personally also told buyers, you can not afford to buy right now.  This upset the unethical mortgage broker they had, but my reputation is not worth it.  RealtyTrac is a waste of money....you can get the same data online at your county's website!  Maybe when no realtors will pay for his service and advertising he will stop bashing us.  I know a foreclosure expert who knows Rick personally and she says he has no real estate knowledge whatsoever - he capitalized on building a database.  That's it.

Guess they have to keep finding someone to blame. Gee now they are going after us. Who next?

Blaming anybody for this market cycle is like blaming the weather man for the trees losing their leaves in the fall.  Market cycles are a natural phenomenon that nobody has any control over.  Humans get overly optimistic when things are looking good and overly pessimistic when things are looking bad - it's that simple.

Rob Lusk, why are you throwing Realtors under the blame bus?  Come on, Loan Officers forced into shady deals because the Realtors pressured them?  The poor Loan Officer had no choice in the matter?  What about the buyer?  What about the Underwriter?  What about the investor?  There is no single person or profession more guilty or less guilty than any other.  It's simply a market cycle - and it will happen again and again and again as long as real estate is bought and sold.

Just like all other industries being thrown under the bus ... I am sure there WERE agents who acted less than ethically when they saw the potential dollar signs in front of them.  Like the brokers, appraisers, lenders, etc ... there are the good and bad participants in all industries. 

It is in poor taste for the news piece to broadly generalize ... but I think it is also a bit naive to say that NO agents saw dollar signs and acted without the best interest of the client.  

Just my humble opinion ....
Deirdre Hamilton    

PS - I get the feeling we have a mutual opinion of RealtyTrac ...

Debbie:  I find his line about mortgage brokers breaking their own rules rather silly.  Mortgage brokers get audited by the feds periodically.  If they are "breaking their own rules" they can, and do, lose their licenses to operate as mortgage brokers.  And... if in "breaking" their own rules... they commit mortgage fraud... they are liable for federal prosecution.  There are mortgage brokers and lenders who are actually "in the slammer" because of it.  My point is... that I cannot see mortgage brokers and lenders being so careless as to open themselves up to federal prosecution.  Somebody needs to take Rick Sharga of REALTYTRAC and put a sock in his mouth.

To Stefan... commenting above:

If you feel "greed runs rampant in this industry..." you might need to change offices.  That sounds pretty bad.  If you have "personally been witness to more unethical behavior that I can shake a stick at"... again, what kind of office do you work in?

I have been with RE/MAX for over seven years now, and cannot believe any reputable office would put up with the obscene behavior you describe.  In my seven years... once... just once... my broker/owner discovered one of her agents was "pulling stuff."  She immediately sent back his license, and notified the proper industry people about his actions.  Good, ethical offices would never put up this kind of nonsense.

Maybe Rick wants to bash REALTORS because there is no need to purchase foreclosure lists when there are so many on the market.

Hi Debbie-great post...but I have to ask...why blame?  Now is the time for the industry to come up with solutions...the news in our area to me is very doom and gloom...you would think...by the way our news runs we live in the world's most dreaful, horrid place but I know better.  

Solutions is what is important now...the blame game is getting old.   

Since when did it become my responsibility to tell a customer what he/she can afford to purchase?  Name me one industry that has that role in its job description. That idea is ludicrous.

I remember during the big BOOM in the market, I was looking into the possibility of purchasing a small home for my children and myself. I had just ended my marriage, sold the "shared" home and thought it best to "look into it". At that time I was making a mere $24,000/yr plus some unreliable child support. My credit wasn't the greatest...the Loan Officer told me I qualified for a $500,000 home!!! SUR-R-R-R-RE!!! On my salary??? It didn't take a whole lot to understand that I couldn't make those house payments not to mention utilities, groceries etc. Instead of "keeping up with the Jone's" homebuyers should look at the housepayment first. Can they really afford it? Most lenders I've worked with, now, will be more than happy to tell the buyer what te prospective mortgage amounts to in a house payment (although we all know there are a number of them out there that are still pretty shady!). They will also be more than happy to base "how much house can be purchased" on the payment the buyer would like to stay in. I truly believe that there is definitely a BUYER RESPONSIBILITY, as well, in making the choice between "can I really pay this mortgage EVERY MONTH WITHOUT FAIL? Will I be cutting my quality of life by not having any money left to feed the family or put in a savings plan?"

If you could see the storm aftermath here you would agree that the greed didn't lie only with Realtors(R) and mortgage brokers.  Investors or speculators taking out owner occupied loans and then placing tenants into the property.  HMMMM.  No money down, turn around and flip or rent out and then turn around and flip, make great money attitude.  Losing money on your "investment?"  Send it back to the bank!

A fifth grader instinctively knows whether they can make a house payment so an adult doesn't? So when many of the people going into foreclosure in the sub-prime area decided not to make the first payment and subsequent payments (and there are a load of those people out there) who is to blame?

95% of A paper performs fine. Since everyone is doing the blame thing how about throwing builders under the bus too. They have no business owning mortgage companies and it is no coincidence that the highest foreclosure rates in the five states are home to the big builders and their mortgage companies. Realtors have no business originating loans nor do originators have any business selling real estate.

If the real estate values turn around there is hope for some but if you did not buy within your means in the first place then shame on you. You either can or cannot make the payment regardless of value. Did you buy the place for your home? Then live in it and make the payment (unless of course you loose your job) which is another reason for the foreclosure rates going up.

We have record home ownership so naturally the statistics will the "highest" ever for everything so it seems to me no surprise that the foreclosure rate would be higher.

And ask yourself these questions. Where do loans come from? Where are they packaged up, rated and sold? If you can answer those questions you may find the real villain. HINT: They profited more than anyone else.

About two years ago, a mortgage broker sent me some referrals from out of the blue. They said they found me on our company website. They sent me buyers they have "pre-approved". I asked the mortgage broker and the buyers a lot of questions after I've seen the "pre-approval" letters. It looked like they have padded the buyers' stated income. The buyers were hardworking people who are new to this country. After working through the mortgage caluculator with the buyers' "true income", I was able to show them how much they will have to pay monthly including taxes, insurance, and other maintenance expenses with the price that they have been "pre-approved" by the mortgage broker. This made the buyers realize the situation before it was too late. One of the buyers who ended up buying a new home in GA to be closer to their family called me one day to thank me. BTW, they went with a reputable lender to finance their home. I was happy for them and sad at the same time that there are lenders out there who would do anything for profit without regard to a person's future.

Where does the buck stop?  When things go sideways, people start looking for scapegoata.  I agree that every level of the industry (lender, agent, client) is to blame on a per instance basis.  As Realtors,  we are sometimes limited to the information our clients will divulge to us.  How am I to know what they're budget is unless they tell me?  Even if they do confide in me, my opinion of what is a "good idea" may be very different from theirs (or their lender's).  In a world where people consider their daily latte a "need," why would we think that a client's budget isn't similarly flawed?

Isn't it just so easy for some to point the finger?  Why is it so remarkable to believe that Realtor's actually want to HELP people?

I guess everyone has their part in this crisis, but at the end of the day consumers know what they can and cannot afford. As a Realtor, I feel it is my obligation to listen & understand a buyers needs & wants, and provide the best service I can based on the information they give me. As a Realtor, I'm not in their purses & wallets, but a mortgage person is. They know what a buyers makes, their debt/income ratio, their savings, and the whole nine. It would be foolish of me to loan money to someone that I know isn't credit worthy, doesn't have a job, or some kind of savings. I'm sure a lot of us here have loaned money to someone, and as soon as the money changed hands, we knew we weren't getting that back. So who's really to blame?

This is why I strongly recommend all buyers to seek competent, professional financial guidance before even thinking about getting into the car to look at houses.  I want them to be fully informed about their financial situation and the implications of their purchase.  Frankly, that aspect is not my job and I can only rely on what they tell me to give them guidance.  I take on a big risk by getting involved in my clients personal finances, and I just don't think I am doing them justice otherwise...

Now...Is there a slight conflict of interest tying compensation to sales price?  Probably, but you must continually center yourself around your client's unique and particular needs...not your own.

My take...PMI...that's right mortgage ins. is the reason in large part for the issues we are having today. Look...banks came up with PMI as a way to reduce the chance of loss by insuring the top 20% of a home loan. Then they got bold (based on the fact that they had little to lose if the top 20% of the loan was insured) and got crazy! 106% loans, bad credit loans, first time buyer loans...all done in short because it seemed they could not lose! well now the market has dropped and banks are screaming about the money they have lost!

There's no one place to lay blame. I am sure there were some bad agents looking to profit. They make ALL of us look bad. It's the same for the lenders and brokers. You can't really place on one group.

What agent in there right mind would talk the buyer out of purchasing a home.  In my mind the buyer is responsible for there actions and how much home they can afford.  I treat people the same regardless if they are buying a 1969 single wide trailer or a 1.5 million dollar lake home.  If a buyer came in my office and asked me to show them lake homes in the range of 1.5 to 2 million and I said to them: Are you sure you can afford that?  I wonder what would happen.  Now don't get me wrong.  I think that it is unethical to talk someone into buying a home that is over the price range that they gave me because I would hope that they have done some research and found out how much they can afford.  So I stick to what they have told me.  It would be a bad business practise but I would still blame the buyer for letting it happen.  What about at the closing table when they see what their payment is going to be (hopefully before).  What do they do sign anyway if it is out of their budget.  That is crazy!  That is like blaming a pencil for misspelled words.  If one of my family members from another state called me and said I closed on my new home today and I wish I wouldn't have signed on the dotted line because the payment is out of my budget.  I would probably say for gosh sakes have you lost your mind.  Did they hold a gun to your head. 

Here is another thought.  What if someone came in your office and said I want to see homes in the $250,000 range and I want to pay cash.  Would you ask them if they can afford to do that.  I don't think so.  Whats the difference?

When homes were escalating in price I remember people blaming the Realtors for the higher prices. I remember Realtors blaming the greedy Sellers and I remember the Appraisers figuring out how to streeeetttch it just a bit more.

However, if the loans were as tight then as they are now for Buyers there would be less of all of the former points I was making!

It started with low interest rates then competitive lending programs getting more and more creative and lenient attempting to capture their share of the market.

I strongly believe that each one of us need to be educated in financing and take responsibility for our actions. The financing education  needs to  begin with the young children at home and in schools so that good decisions can be made  when purchasing homes. 

We all are to blame in some small way.  The "mortgage crisis" is a big part to greed.  Everybody wanted to get teir piece of the pie.  Sure, there are a few professionals that rose above that greed and did not sell that house tho the couple that could not afford it or the loan guy that recommended that that couple wait and save a little for a down payment before they buy.  Chances are that couple went to a different agent and loan guy so they could get that house that is now in forclosure.  Very rare is the sales person who does count his commission when a prospect knocks on his door.

When we focus on the well being of the client then we all win.  When we can look at our lives and see that we are guilty then we can rise above it and become a better agent.  When we point fingers, we are only doing damage to our profession. 

Patti - I just thought that someone who was profiting from all of the foreclosure and who's business is booming on the backs of hardworking people losing their homes was not the right person to speak to.  And his assumption that all contributing factor was that REALTORS influenced buyers to buy a more expensive home to make a bigger commission is a joke. 

Maria - You haven't heard, we are responsible for global warming!

Jennifer - You couldn't be more right.  Walking away from sellers who will not price correctly is something that every REALTOR should be doing.  I've had a buyer lose out on two homes (that were price correctly) in a neighborhood flooded with listings, everyone else is holding on to prices that aren't realistic... When those homes expire, I'll be the first to knock on their door.

Joan - Thank you for reiterating the fact that we (REALTORS) don't evaluate buyers financial situation, establish credit worthiness and qualification.   We help them purchase a house based on it.

Lane - People don't want to be told what they can and can not buy.  I also told a buyer that the homes that they were asking to see were outside their price range, and they too found someone else who showed them the homes they wanted to see.

Misty - It all boils down to the payment, can you really afford it?  And I think the answer is NO.

Kevin - Exactly! 

Sam - Why would anyone do a no income, no asset loan?  So they could get what they wanted, it didn't matter how they got it and now everyone is paying the price.

Audrey - I never had negative thoughts about REALTORS before I got in the business, I'm often surprised at how REALTORS are thought of, I don't get it.  I would have never been able to buy a home as a first time buyer without the guidance I received.  Blaming REALTORS for the Foreclosure Crisis is a joke...  I'm sure REALTYTRAC is laughing all the way to the bank.

Doug - I was surprised that Rick was their expert and so concerned about all these homeowners losing their homes.  All I could think of was him making money, a lot of money.

Bronson- You are right.  I showed a home in pre-foreclosure and they had every high tech gadget you could imagine and two new cars, but no money for a mortgage payment.

Rob- Thank you for taking the time to contribute to this post.  What I find interesting is that during our Seller's market in 2004 and 2005, only the best buyers were able to win in the bidding wars, with money down, strong financing, etc.  Who is really losing their homes? It's not those buyers. 

Jason- Thanks for the REALTYTRAC insights, I hope that Rick's advertisers know what he thinks about them.

Bob & Carolin- Rick pretty much covered everyone.  Our market came to a complete halt when hurricane Katrina hit, it was light someone flicked a switch. 

Craig & Amber - Great Point, it is a cycle and there are ups and downs...  No one wants to be on the ride down, but it happens.

Deiedre - Thank you for your opinion.  Certainly there were people who didn't look out for their customer's best interests, but no one forced a buyer to sign papers.  In every closing I sat through the closer explains the terms of the financing to the buyers and what their payment was and for how long.  How can I take responsibility for that.

Karen - I'm sure that if I posted a request for socks, we would have more than enough to do the job.

Paul - Great point, I'm sure that we are cutting into his business...  Hadn't thought about that, thanks for sharing different perspective.

Midori - I'm with you, we need to get past the blaming people and try to stop the bleeding.  Everyone needs to get on board and stop pointing fingers. 

Dan- I know, I know.  I do not want the liability of evaluating someones financing and determining what they can and can not buy.  That is not going to happen.

Bonnie - Great point.  I often tell people to work backwards based on how much they know they can afford for a house payment. 

Renee - I recently showed a home that was one of nine that an investor owned in a neighborhood, this person bought all of these homes as "personal residences" and rented them out to college students.  It was the strangest thing, the dining rooms, formal livings, dens were all closed in so that more students could cram into these single family homes.  I've never seen anything like it.

Kirk - I agree with you 100%, that there is only a problem with 5% of the mortgages...  Epidemic, not at all, but it that doesn't sell as well as the thought of a crisis.

Marta - I'm glad that these buyers found you, and like the 95% of all mortgages that are good... so are most REALTORS it is a small percentage of REALTORS, mortgage brokers and lenders that make it harder for everyone.

Greg - I think that the buck stops with the buyers who bought homes that they couldn't afford or misrepresented their position.  For the professionals that took advantage of people, there is no excuse for them.

Robin - I care about the families I work with, it isn't about the money.  There is nothing better than seeing people find the home that they have always dreamed of from a small condo to a grand estate... it doesn't matter to me, it's about a place that you can call home.

Eugene - The buck stops somewhere. 

Joe- I do not believe that REALTORS are qualified to advise consumers about personal finance, these buyers should be getting professional financial advise...  I help them find the right house, not plan their financial future.

 

Mortgage brokers and loan officers did 90% of the work on this market all by themselves.

My favorite was a large company out of Detroit that advertised $300,000 mortgages for $423 a month for 18 months in 2004 and 2005..."refi and save money".

In mid 2006 they started running "is your ARM broken", again trying to refi the people they got into the arm 24 months ago!!!

Good Marketing or Dishonesty?

When I met the owner of this company he told me "I am not in the Mortgage Business, I am in the marketing business, mortgages are simply my product". Wonder if that was disclosed to clients.

The owner of this company now owns an NBA franchise, makes me sick. 

 

Even our local news, in a strong market (Greenville, SC), keeps reiterating what the national news has said earlier that day.  Our local news will quote national numbers, without talking about our positive local numbers.  (Prices still rising, and the time it takes to sell a home still falling)

I am sure the local news out in Fresno can only talk about prices having fallen in 2007 by 8.65% compared to 2006, yet they somehow forget to mention the fact that prices in Fresno rose by 82.92% over a 5 year period. 

In fact, why hasn't the national news mentioned the fact that only ONE market, out of the 291 metro areas indexed, had seen the average sale price decrease over a 5 year period ending 12/31/2007?  This according to the most recent OFHEO House Price Index.

Guess a positive spin wouldn't be newsworthy.

Debbie,

The mortgage lenders have to be blamed.  In our office, we send the leads to the mortgage brokers and they qualify the buyers.  Unless they can afford the house, I take them as a lost cause.  They can wish all they want, if the mortgage brokers said they can't afford it, then I don't take them around.

I HAVE BEEN A SELF EMPLOYED BUSINESS OWNER MY HOLE LIFE A HEATING CONTRACTOR AND I HAVE ALSO BUILT THREE HOMES OWN MY OWN WHEN THE HOUSEING MARKET WAS GREAT REALTORS ARE THE CANCER THAT STARTED THE HOUSEING MARKET TO GO CRAZY BY DRIVEING THE COST OF HOMES OUT OF SIGHT PLAIN AND SIMPLE FOR THERE COMMISION FEE,S ON EVERY SALE PLAIN AND SIMPLE I EVEN HAVE A SISTER-IN-LAW THAT IS A REALTOR AND SHE HAS EVEN TOLD ME IT SHOULD BE A CRIME HOW MUCH MONEY THEY MAKE ON A HOME HER EXACT WORDS I HAVE BEEN AROUND HOUSEING NEW CONSTRUCTION IN OHIO ALL MY LIFE AND THERE IS NO DOUGHT IN MY MIND WHAT SO EVER THAT REALTORS ARE THE CANCER THAT STARTED THE HOUSEING DEATH WITH THERE GREED OF STEALING MONEY FROM HARD WORKING PEOPLE.