muck

Real Estate ethics question

Real Estate ethics question  

44 members have voted

  1. 1. Is it unethical to do what is described in the first post below, or not?

    • Yes, it'll put the agent in a position to do something unethical
      5
    • No, that is just a good negotiating ploy on your part
      31
    • Other (please describe)
      2
    • Puddy
      6


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Nice knee jerk....but actually it was put in place to protect the consumer from a broker screwing over a consumer...the buyer not seller...Can you not see that logic in the very nature of a net listing or is you predjudice to blinding.

 

Oh yes I see. The poor realtors are always looking out for the customer. They want to make sure that their commission is kept down to the low low low 6% rate so the customer wont get screwed... :D

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Nice knee jerk....but actually it was put in place to protect the consumer from a broker screwing over a consumer...the buyer not seller...Can you not see that logic in the very nature of a net listing or is you predjudice to blinding.

 

 

Heck, I'm the guy proposing the "net commission" ... how is that a bad deal?

 

Most agents I've met will slightly overstate the actual price of a home in order to get a listing ... so, I'd like to give this one a chance to put her money where her mouth is.

 

:mad:

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Nice knee jerk....but actually it was put in place to protect the consumer from a broker screwing over a consumer...the buyer not seller

 

Doubtful.

 

Joseph Stigler won the Nobel Prize in Economics primarily on his work on "capturing" which is occurs when regulations are imposed not to make markets more efficient, but rather to benefit special interest groups:

http://en.wikipedia.org/wiki/Capture_%28politics%29

 

It is almost certainly the case that this is the main reason behind many of the regulations in the real estate industry.

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Saying that a "net listing" is a bad deal is like telling your investment guy that you don't want to pay for his services when he loses you money, but you'll pay a bit more than you'd have to otherwise if he does make you money.

 

Would you rather pay a fixed percentage (assuming it's a reasonable percentage) of the net assets under management each and every year regardless if you made money or not, or pay a fixed percentage (assuming it's a reasonable percentage) of the net profits of the entire account (and therefore 0% if there were no profits)?

 

And to carry this analogy out a little bit ... if it's a 'bad deal" for the buyer (not the seller), if an investment guy got paid only on profits (and not assets under managment), he/she would have to tell all the rest of the market participants, "I'm buying this 100 shares of IBM and I get paid on performance, so be advised that I think this stock is going higher." How silly is that ... of course you think it's going higher.

 

The buyer of a house ... they need a place to stay (or they want to own a rental property ... or they want to speculate on some raw land ... or whatever), so they buy a house for whatever they think is a reasonable price. And, if they over pay, no one should be able to legislate against stupidity. And, if they're defrauded by an unscrupulous person, there are courts to sort through this sort of stuff. What if the seller doesn't get a fair price because their RE agent was out for a quick close (i.e., less work) and convinced them to take the first offer that showed up?

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Doubtful.

 

Joseph Stigler won the Nobel Prize in Economics primarily on his work on "capturing" which is occurs when regulations are imposed not to make markets more efficient, but rather to benefit special interest groups:

http://en.wikipedia.org/wiki/Capture_%28politics%29

 

It is almost certainly the case that this is the main reason behind many of the regulations in the real estate industry.

 

 

Politics suck...I say that yet I am attending the republican two day debate event tonight in Columbia, SC....haha...but whether we like it or not special interest is in EVERY industry including non profit "do good-er" groups. What can we do? That's why I attend these events...just to see if there is absolutely anything I can do.

 

However no matter what a net listing IS most beneficial to the broker and not the buyer and seller. Muck I personally am not opposed to net listings. I think people need to take more responsibilities in there life. I honestly hope that one day RE transactions are done purely online with absolutely NO AGENTS. no regulations....but this isn't going to happen b/c we have soo many saps out there who have no clue how to take care of themselves.....but yet our more and more "take care of you society" is just making it worse....oh yeah add the RE special interest and we are gold...

 

Remember folks I am a RE agent b/c I do not like paying an agent any more then you do for my projects not b/c I love the profession.

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Update ...

 

The agent told me a couple of days ago that the second offer was higher than ours, but the seller elected to take ours (for reasons she didn't explain). Note to the agents credit, I do believe the seller was biased to sell the house to us (family with young kids) than to the others (empty nesters) as he's going through a divorce and getting a family in there probably has some psychological benefits to him (he told us as much when we were there for the house inspection last week).

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Update-

 

Agent on the house we are buying listed our house we're living in now on Tuesday. We had one showing Tuesday evening...one showing Wednesday evening and four showings yesterday. One of the showings from yesterday led to an offer and one of the showings led to a second showing to the same family at 9:30am today...plus, another of yesterday's showings said "please call me if anyone makes an offer".

 

We listed our house for three main reasons ... (1) we live in a small neighborhood (iirc, less than 100 houses) that gets VERY little drive through traffic (nobody would see our house if we FSBO'd it) because the neighborhood is small and houses rarely come up for sale, (2) it's been a very long time since any house that's been as updated as ours has hit the market in our neighborhood (we're currently priced about 20% above the highest price ever sold in our neighborhood), and (3) we're insanely busy and would not have the time to market it effectively ourselves.

 

Well, if we accept the first offer without a counteroffer, even after paying the commission, we will net about 8% above where we thought we could have probably sold it on our own (i.e., without the marketing arm of the broker network).

 

If we can get a deal done soon, this lady will have paid for herself ... even more so if she can gin up another offer or two and we can get a couple of buyers in a race to full listing price.

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Update-

 

Agent on the house we are buying listed our house we're living in now on Tuesday. We had one showing Tuesday evening...one showing Wednesday evening and four showings yesterday. One of the showings from yesterday led to an offer and one of the showings led to a second showing to the same family at 9:30am today...plus, another of yesterday's showings said "please call me if anyone makes an offer".

 

We listed our house for three main reasons ... (1) we live in a small neighborhood (iirc, less than 100 houses) that gets VERY little drive through traffic (nobody would see our house if we FSBO'd it) because the neighborhood is small and houses rarely come up for sale, (2) it's been a very long time since any house that's been as updated as ours has hit the market in our neighborhood (we're currently priced about 20% above the highest price ever sold in our neighborhood), and (3) we're insanely busy and would not have the time to market it effectively ourselves.

 

Well, if we accept the first offer without a counteroffer, even after paying the commission, we will net about 8% above where we thought we could have probably sold it on our own (i.e., without the marketing arm of the broker network).

 

If we can get a deal done soon, this lady will have paid for herself ... even more so if she can gin up another offer or two and we can get a couple of buyers in a race to full listing price.

 

 

Sounds great Muck..Good luck bro :D

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Update-

 

Agent on the house we are buying listed our house we're living in now on Tuesday. We had one showing Tuesday evening...one showing Wednesday evening and four showings yesterday. One of the showings from yesterday led to an offer and one of the showings led to a second showing to the same family at 9:30am today...plus, another of yesterday's showings said "please call me if anyone makes an offer".

 

We listed our house for three main reasons ... (1) we live in a small neighborhood (iirc, less than 100 houses) that gets VERY little drive through traffic (nobody would see our house if we FSBO'd it) because the neighborhood is small and houses rarely come up for sale, (2) it's been a very long time since any house that's been as updated as ours has hit the market in our neighborhood (we're currently priced about 20% above the highest price ever sold in our neighborhood), and (3) we're insanely busy and would not have the time to market it effectively ourselves.

 

Well, if we accept the first offer without a counteroffer, even after paying the commission, we will net about 8% above where we thought we could have probably sold it on our own (i.e., without the marketing arm of the broker network).

 

If we can get a deal done soon, this lady will have paid for herself ... even more so if she can gin up another offer or two and we can get a couple of buyers in a race to full listing price.

 

 

:D

 

Now where the hell is my check for $25K ... I have been very patient in this regard.

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:D

 

Now where the hell is my check for $25K ... I have been very patient in this regard.

 

 

Patience is a virtue. With the amount of virtue I'm going to help you get, you will grow wings, cr@p boquets of daisies and smell like lemon verbena.

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We listed our house for three main reasons ... (1) we live in a small neighborhood (iirc, less than 100 houses) that gets VERY little drive through traffic (nobody would see our house if we FSBO'd it) because the neighborhood is small and houses rarely come up for sale, (2) it's been a very long time since any house that's been as updated as ours has hit the market in our neighborhood (we're currently priced about 20% above the highest price ever sold in our neighborhood).

 

just as an aside, from everything i've ever been told, whoever ends up buying your place probably isn't making a great investment. "they" say you generally don't want to buy the nicest house in the neighborhood.

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There are a few other houses in the neighborhood that are bigger and as nice (or nicer), just they haven't seen the market in YEARS. Again, there is VERY little turnover in this neighborhood. Some of these 100 or so houses still have the original owners 40yrs later. The ones that do come on the market seem to think they're updated if they put ceiling fans in a couple of bedrooms. We, on the other hand, did about a 85% redo of the house (including finishing the basement), plus added a HUGH patio to the back yard.

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Very cool muck.

 

A friend of mine just told me about a house that the builder had to foreclose on in his parents neighborhood. Nice little town between Tahoe and Reno. 2500 sq. ft. home, 3 bed, 2 bath I believe, on an acre and half. House is very nice, but property needs landscaping and fence put up.

 

If I could afford it, I'd probably seriously consider it, as, add the landscape and fence and you could flip it for probably 200K more than the builder is looking for. Builder just wants to recoup what is still owed from the original purchase price. He origianlly listed it for full price, but, without the landscaping, etc. wasn't getting any action. My friend says it is very nice.

 

I may talk to my dad about it tonight, see if he wants to check it out and, if we can work out the financials consider it an investment, either to flip, or rent and hold as a retirement property for my parents.

 

(Didn't mean to hijack your thread muck, just figured I'd keep all real estate related posts in one thread, though I am going to start a new one)

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The first offer wasn't a serious one. We countered and they walked away ... trying to low-ball (their first offer was more than 10% below our asking price) after only three days on the market? I guess it's worth a try if you're the buyer. :D

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just saw this article and thought it was interesting.

 

Madison Wisconsin do-it-yourself home sellers beat the pros

Homes of people in Madison Wis. who avoided using agents reaped more profit than those who sold through real estate professionals, according to a study released Friday.

June 8 2007: 2:15 PM EDT

 

NEW YORK (CNNMoney.com) -- Putting a house on the market and cutting out the middleman could pay off for sellers in Madison, Wis., along with a little help from a for-sale-by-owner Web site, according to a study released Friday.

 

Economists conducted a study on whether paying for a real estate agent was worth the money, when having to pay 5 or 6 percent commissions, and found that people selling their own homes in Madison benefited more financially than those who sold their homes through agents.

 

The study found that an advantage in Madison is a heavily trafficked for-sale-by owner Web site FSBOMadison.com, which competes with local listing services operated by real estate agents.

 

Homes sold on FSBO received an average price of $175,068 during the seven years studied, while homes sold on the multiple listing services brought an average price of $173,205, roughly equal when taking into account the study's margin of error, first reported in the New York Times Friday.

 

Although home sellers who listed houses on FSBO fetched a higher profit, the study found that houses listed by real estate agents sold faster.

 

"Sellers in Madison appear to sort themselves as expected across platforms, the more patient and astute ones going to FSBO, and those who need more help or a quick transaction going (to real estate agents)," Francois Ortalo-Magné, an associate professor of real estate and urban land economics at the University of Wisconsin in Madison and one of the three authors of the study, said in a statement.

 

The Madison study flies in the face of other real estate studies. A 2005 National Association of Realtors report found that, nationally, sellers got more money for their homes through real estate agents, the Times article said.

 

The realtor group found that FSBO houses sold for a median price of $198,200, but those sold through an agent went for an average of $230,000, or 16 percent more.

 

Moreover, the Times article cited a March 2003 issue of Realtor Magazine Online which referred to a 2002 survey which found "on average, people who sell their homes through a real estate professional receive a price 27 percent higher than people who sell their home themselves."

 

 

the bolded part is what i found most interesting, because it fits right smack in with the criticism that it is in an agent's best interests to get a quick sell, even at the expense of not getting the greatest price.

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wiegie is smart as hell and it is at our own peril if we don't listen to him

 

yep, pretty much

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just saw this article and thought it was interesting.

the bolded part is what i found most interesting, because it fits right smack in with the criticism that it is in an agent's best interests to get a quick sell, even at the expense of not getting the greatest price.

 

But how much is holding on to that house longer costing the FSBOer? An extra mortgage payment here, maybe multiple mortgage payments not to mention all the other expenses of being a home owner. I wonder if this study took those expenses into account, or if they merely looked strictly at net closing price.

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But how much is holding on to that house longer costing the FSBOer? An extra mortgage payment here, maybe multiple mortgage payments not to mention all the other expenses of being a home owner. I wonder if this study took those expenses into account, or if they merely looked strictly at net closing price.

 

You are assuming that the sellers will be in a position that they own two homes at the same time (i.e. they have to take ownership of their new home before they are able to sell their old home)

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You are assuming that the sellers will be in a position that they own two homes at the same time (i.e. they have to take ownership of their new home before they are able to sell their old home)

 

 

I am not assuming that.

 

I am merely asking if those costs, if incurred, were taken into consideration when coming to the conclusion that FSBO folks were coming out ahead. There is no mention of that.

 

And, even if they are not taking ownership of another house(maybe they bought a motor home to live in or are moving in with relatives for free), they are incurring additional expenses that they would not have incurred had the house sold earlier, which reduces the profits they are seeing in the house.

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I am not assuming that.

 

I am merely asking if those costs, if incurred, were taken into consideration when coming to the conclusion that FSBO folks were coming out ahead. There is no mention of that.

 

And, even if they are not taking ownership of another house(maybe they bought a motor home to live in or are moving in with relatives for free), they are incurring additional expenses that they would not have incurred had the house sold earlier, which reduces the profits they are seeing in the house.

 

Here was my point--just because you don't sell your house right away does not mean that you will be losing money on net, because while they are staying in their old home, most people will avoid having to make mortgage and upkeep payments on their new home (since they won't have taken ownership of their new home yet).

 

If you want to assume that people have RV's sitting in their driveways just waiting for the people to move in or that most families go move in with relatives instead of moving into their new homes, then that is fine--but for the vast majority of home-sellers, this will not be the case. (And hence your concerns are somewhat less severe than they might seem at first.)

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Update:

 

Two agents have indicated that their clients will be making offers within the next 24hrs or so.

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Update:

 

We have terms verbally agreed to. Papers should be signed tomorrow.

 

We're pretty stoked about where we ended up and have had nothing but a good experience with this broker. She did a good job of getting traffic to a neighborhood that typically doesn't have any/much and the price is well above the highest ever in our small subdivision.

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I feel bad for not being around for this thread.

 

I can't imagine why you don't want to be a landlord anymore. :D

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Totally ethical.

 

I have my real estate license and commisions are 100% negotiable, regardless what anyone might tell you.

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