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CALLING ALL ANGELS: Can homebuyers separate real estate predators from protectors?

 
st_michael_slaying_satan

Created after the Second Vatican Council, today’s Feast of the Archangels is a very modern feast day and points to the Feast of the Guardian Angels on Thursday October 2. Is there a way for CruxNow — a new publication launched by the Boston Globe to reach approximately 3 million Catholics across Massachusetts — to use the next four days to demonstrate the contemporary nature of these twin feasts by talking about the role of / need for PROTECTORS in both our ordinary lives and struggles between good and evil worldwide?

Revisit the Homily of the Holy Father at the Inauguration of his Papal Ministry, and you will see that he uses the root word “PROTECT” thirty-three times in his thirteen paragraph address:

http://bit.ly/FrancisProtect33

Tragically, there are too many examples of predators prevailing over protectors in the 50 years since Vatican II. For example, Citizens Rising Anti-Corruption Weekend at MIT exposed “how a predator elite took over the country politically,” and Charles Ferguson’s book addresses the same phenomena from another perspective, Predator Nation: How Wall Street Crashed the Economy & Got Off Scott Free

Is there a way to develop this predator vs protector theme by inviting @Crux readers to share their own stories, or to point out examples in their own lives — personal and professional — where guardian angels / human protectors have made a difference or are urgently needed?

Case study: Predators versus protectors in residential real estate

A recent “unconference” for real estate professionals hosted at District Hall in Boston exposed 25+ ways “Real Estate is Broken.” Ironically, real estate is the same industry that encourages hundreds of thousands of homeowners to bury St. Joseph, the protector of the universal church to bury statues upside-down to help sell homes. Can thinking Catholics and other believers demonstrate that we’re not interested in superstition, but that we are agents of social justice who are willing to protect people against injustice?

Right now in real estate, calls for disruption echoing insider and outside the industry point to the need for reforms and innovators to protect consumers. There’s no need to limit that quest to believers or type of real estate professional, but in an industry that has a system bias towards sellers, there is a special role for REAL buyer agents as guardian angels as this Google search reveals.

So two weeks after “Real Estate is Broken,” we’d like to host a real estate roundtable online and off on Thursday, October 2nd — the Feast of the Guardian Angels – to help homebuyers, particularly first-time homebuyers, under the difference between buyer agents and counterfeit buyer agents.  Significantly, too many of the 25+ ways real estate is broken can be traced back to the failure to understand and act in accordance with agency duties.

If there is interest, we’d also like to invite real estate consumer advocates to gather again at District Hall, or another local venue as well as online to acknowledge and celebrate our role as protectors, and to develop strategies to correct ways Real Estate is Broken.  Homebuyers, sellers and technology innovators are invited to participate in that ongoing conversation by joining us offline or following #RE2020 on Twitter.

Posted in Buyer agent, Consumer protection, Defensive Homebuying, Designated Agency, Dual Agency Detective, Dump Dual Agency, Real Estate Consumer Bill of Rights, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance

Pocket Listings: Smoking gun outs conflict of interest in real estate

 
opposingteams

The first round of Real Estate is Broken, a hard-hitting agent-to-agent critique of the residential industry last week in Boston, began with this one-two punch:

“When I grew up in the industry, pocket listing was a bad word; now Zillow has a category for pocket listings called ‘Coming Soon.’”

That rant echoed a headline three months earlier in Inman News that predicted, Zillow’s new ‘coming soon’ feature puts pocket listings on steroids.

Given Zillow’s scale and market penetration, it’s not hard to imagine that “Coming Soon” will institutionalize a two-tier housing market: pre-MLS listings and active MLS listings. Like pocket listings that are shopped in-house at company meetings as described below, “Coming Soon” will pressure homebuyers into dual agency and designated agency relationships so they don’t miss their “dream property.” (And brokerages get to collect both sides of the commission.)

Think we’re exaggerating? Read this “smoking gun,” an excerpt from an email sent to one of our buyer agent referrals:

“If we do not sign “dual agency” I believe that we are doing you a disservice. Let me explain why. Our office has approximately 70 agents, we meet for weekly marketing meetings, we discuss our buyer needs, and many times an agent at the meeting has a seller who is then contacted and a deal is put together. This is before it has ever hit the “open market” or MLS. By us not being able to use dual agency we would not even be able to promote your needs at our company meeting!! I am willing to not personally represent you and a seller if that makes you more comfortable, but I think that if you don’t even want me to represent you if anyone in my entire company has a listing, then you may very well miss out on your ‘dream property’.”

If pocket listings result in class action lawsuits someday, as Sam DeBord posited in his column on January 22, 2014 in Inman News, think the explanation above meets the legal test of “informed consent”?

http://bit.ly/PocketLiability (please share this URL via social networks)

Rather than manipulating buyer with fear of loss, what if the law required agents to record themselves as they explain risks or loss of benefits of agency options before buyers or sellers give up their right to be represented by their own agent, without conflict of interest?  Think many agents could provide sufficient information to obtain informed consent — Or is the industry so immersed in conflicts of interest that they see nothing wrong with the picture above?

Or what if the tables were turned and homebuyers present their own contract terms which agents could accept — like the Pledge of Allegiance authored two decades ago by the State of New York.

http://www.caare.org/PledgeOfAllegiance (please share this URL via social networks)

Or better still, what if buyers and sellers could simply exchange their own IntentCasts pre-MLS and involve agents if and when they want, at a price the consumer sets?  To some extent, that’s already happening with and without the benefit of technology.

Those are among the Idea Starters in our reVRM-Minifesto, a vision of an open ecosystem in real estate by 2020.  If you’d like to cocreate that future, follow #RE2020 or contact us to begin meeting on and offline.  You can help simply by sharing this URL via your social networks:

http://bit.ly/SeedRE2020

Posted in Bidding wars, Buyer agent, Consumer protection, Defensive Homebuying, Designated Agency, Dual Agency Detective, IntentCasting, Pocket Listings, RE2020, VRM, Whisper listings

Divorce real estate commissions, let homebuyers & sellers negotiate their own fees

Are the stars aligning?  Last Thursday, participants of @REBarCampBoston talked openly about how “Real Estate is Broken” and the conversation continues, agent to agent, on Facebook.  There a a list of 25+ industry flaws includes one that the Consumer Federation of America first proposed nearly 25 years old and it still has the disruptive power for consumers save billions of dollars annually —

divorcing or uncoupling real estate commissions.

If buyer agents and listing specialists have different skills, experience and value they bring to their respective clients, doesn’t it make sense to finally uncouple commissions and let buyers and sellers negotiate their own compensation agreements?  That’s the question that springs out of this morning lead story on Inman News entitled, “Listing specialists and buyer’s agents are not created equal.”

So today, the Equinox, is a good time to ask if buyer agent and seller agent should always get equal slices of a “one-size-fits-all” commission pie when listings can sell in days or weeks, but buyer agency relationships can extend over months or years because of unsuccessful offers on bidding wars.  Sometimes the opposite is true, and when listings expire or are canceled agents walk away empty handed.

How can real estate commissions be uncoupled / divorced to deliver BILLIONS in consumer savings annually, and unleash the potential of fee-for-service real estate business models so buyers and sellers can request proposals that meet their specific needs and willingness to pay?

The question has been asked before, but the debate is newly ignited by the combination of the Inman News article today and a REMax multiple office owner who told @REBarCampBoston that the prevailing real estate commission “antiquated” because it was…

“…designed when all agents represented seller, [and] now has Seller’s agents negotiating professional fees for Buyer’s Agent.”

Back to the future

Previous conversations about uncoupling commissions peaked sometime between 2005 and 2009, causing the RECafe to write the following about the slideshow above:

“At that time, 10 mega-trends were pushing the two-sided real estate commission to a “tipping point” and some real estate consumer advocates hoped the FTC / DOJ would require MLS’s to “uncoupled” or “decoupled” commissions in 2006, fifteen years after the Consumer Federation of America first called for that reform.

Although dated, here’s some of what Real Estate Cafe has written in the past on our blog and wiki about divorcing or uncoupling real estate commissions:

http://bit.ly/UncplRE

http://bit.ly/DivorcePosts

Next Steps:  Reform or Disrupt? Where will real estate commissions be in 5 years?

What appeared to be a tipping point a decade ago, did not pull the commissions apart.  We’d like to collect perspectives on why commission reform and money-saving options — like discounts or rebates — haven’t been more widespread, particularly when there was so much pressure for homeowners to preserve home equity following the real estate recession as stated so well by this video from the National Association of Real Estate Consultants:

http://bit.ly/SaveHomeEquity

If you’d like to participate in a round table discussion on commission reform, or join a working group / synergy circle to develop a plan to uncouple / divorce real estate commission with five years, contact us about participating.  Follow the hashtag #RE2020 to learn more about other real estate reforms and innovative new, money-saving business models.

Posted in commission rebate, Commission Reform, Do-it-yourself, FSBO: Best Practices, IntentCasting, RE2020, Real Estate Consumer Bill of Rights, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance, reVRM, Tipping Policy

Using Anti-Corruption weekend to expose real estate case study

 

DumbDumber_Reduced

Academics, activists and innovators are gathered this weekend at MIT for Citizens Rising Anti-Corruption Weekend to build awareness about the role big money and special interest groups play in shaping (buying?) government policies.  As consumer advocates who DEFEATED designated agency twice in public hearings know, industry lobbyists can by-pass (“buy”-pass?) the public process with back room deals.  Here’s Boston Magazine’s account of how Designated agency became law in Massachusetts.  Next year marks the 10th anniversary of Designated Agency in MA, and an ad-hoc group called RECALL — Real Estate Consumer Alliance — is exploring ways to neutralize or repeal Designated Agency, a business practice industry critics call an act of fraud.

EXCERPT from Double Agent. Boston Magazine, September 2005

An enormous amount of power is now concentrated in the hands of a
few real estate companies. ERA Real Estate, Century 21, and Coldwell
Banker Residential Brokerage, among others, for instance, are all owned
by Cendant, the world’s largest brokerage franchiser. Coldwell Banker,
in turn, is the largest real estate firm in New England, with
Massachusetts residential sales volume last year of more than $14
billion. In some Massachusetts towns, these companies control more than
half the market. Understandably, they like the status quo. The
traditional industry attitude is “defend, defend, defend; resist,
resist, resist,” says Bill Wendel. “[They say,] ‘If we change anything,
we’ll change the law to protect what we’re doing.’”

Few examples of this are as stark as a measure that quietly became
effective in this state on July 1. Primarily supported by large real
estate agencies, it offers greater liability protection to brokerages
that tread on the dangerous ground of representing both the buyer and
seller of the same house—so-called designated agency.

Opponents compare this to the same law firm representing

both sides in a divorce—a clear conflict of interest.

The measure died in committee when it was first proposed in 1997,
thanks to spirited testimony against it. But its strongest backer, the
Massachusetts Association of Realtors, helped get a streamlined version
tacked onto this year’s state budget as a last-minute amendment. This
time there was no public hearing.

Critics of the new law worry that customers will sign the required
designated-agency consent form amid a stack of other papers without
understanding what it means. “It’s an innocuous form that describes
what’s happening, but explains nothing about the potential
consequences,” says independent agent Barry Nystedt, who owns Buyer
Brokerage Realty in Newton. “Once the consumers sign it, they’ve signed
away their rights.”

FULL TEXT:  http://bit.ly/DblAgents (please share via social networks)

Can RECALL ask one of the Anti-Corruption teams at Hack for Democracy to build an app to support our mutual cause or should we recruit our own group of hackers?  Learn more about other issues facing real estate consumers, or share your victim story, by visiting:  http://bit.ly/JoinRECALL

Posted in Consumer protection, Defensive Homebuying, Designated Agency, Dual Agency Detective, Dump Dual Agency, Investigative Reporting, RE2020, Real Estate Consumer Bill of Rights, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance

Reform or disrupt? Where will real estate be in 5 years? #RE2020

 

SYNCHRONICITY: Truck outside #REBCBos mirrors 5 year plan to create open ecosystem in RE? http://bit.ly/DisruptFunding  #RE2020

SYNCHRONICITY: Truck outside #REBCBos mirrors 5 year plan to create open ecosystem in RE? http://bit.ly/DisruptFunding #RE2020

Loaded words were flying yesterday at Real Estate BarCamp Boston and it wasn’t real estate consumer advocates taking cheap shots, it was real estate brokers — even company owners and at least one attorney calling out the industry’s shortcomings and flawed practices with words like “shame” and even, dare I repeat it, “criminal”?

In his first speech on real estate 22 years ago, Ralph Nader told a fledging group of buyer agents and consumer advocates that you can tell a lot about the health of an industry by the way it’s members address each other.  

Yesterday, civility and hospitality reigned at #REBCBos, but so did candid admissions of 25+ ways “Real Estate is Broken.”  A public Facebook page has been launched to continue the conversation online at 

http://bit.ly/BrokenRE

As CAARE, RECALL, and nearly 800 posts on this blog attest, it’s not the first-time efforts have been initiated to reform the trillion dollar real estate industry, but transformational momentum may be building from forces inside and outside the industry, including headlines like this

Can Someone Please “Disrupt” Real Estate Agents?

In less than a month, the focus will turn to disrupting the commercial real estate industry with another event — http://DisruptCRE.com — at District Hall in Boston’s Innovation District.  And, across the country, it’s association convention season for real estate agents and mortgage brokers.

What’s the best way to use those events to create awareness and synergy with efforts and innovators trying to reform or disrupt residential real estate?

RECALL (Real Estate Consumer Alliance) wants to work with others to sustain momentum post #REBCBos, mobilize reforms, embrace innovations and support strategic disruption to better serve the consumer.  Who should RECALL invite to the conversation, and what apps can consumers — particularly DIY homebuyers — begin using (or testing) immediately to save money or make better decisions?  

PS.  We have our own thoughts about where real estate will be in 5 years; in fact, we’re in the early stages of developing a five year plan to cocreate an open ecosystem.  To learn more about #RE2020, read our open letter to @REBarCampBoston:  http://bit.ly/DisruptFunding

Posted in Commission Reform, Consumer protection, Mlllennials, Pocket Listings, Real Estate Consumer Bill of Rights, Real Estate Roundtables, RECALL: Real Estate Consumer Alliance, reVRM, Savings & Rebates, Tech Trends

Open letter to @REBarCampBoston: Realtor, disrupt thyself? vs Disruption funding

reVRM_VisioningExercise_IIW

Greetings, @REBarCampBoston, Curious to see that you’re featuring a participatory discussion about disrupting the residential real estate industry at your upcoming unconference on Thursday, September 18, 2014 in Boston.  As you may know, reforming the real estate industry has been the RealEstateCafe.com’s mission for the past two decades, so glad to see that local Realtors are willing to address what’s wrong with the industry.

For fellow real estate consumer advocates, that’s an inquiry that’s engaged our best efforts for the past 20 to 25 years or more.  Consequently, some of us are already collaborating on a disruption road map as well as seeding a campaign to cocreate an open, transparent real estate eco-system by 2020 (see image above).  We invite anyone else interested to use and follow #RE2020 to cocreate synergy with innovators inside and outside the current real estate industry.

FYI — If word hasn’t reached you yet, the featured story today on Inman News is about angel investor eager to disrupt the real estate industry:

http://bit.ly/FundRE (please share this short URL via social networks)

Here’s the comment we posted on LinkedIn in response to the same offer to provide disruption funding (see original at http://bit.ly/RFProtoRE):

How do we get there [disintermediation] from here, not just more user-driven apps but an open, transparent real estate eco-system?

In 15 days http://REBarCampBoston.com will feature a keynote presentation on DISRUPTION — what’s not working with real estate? Significantly, it’s a conversation from the agent and broker’s perspective, not the consumers. So no need to wait for that event for real estate consumer advocates, including Doug Miller of http://CAARE.org; REAL buyer brokers from http://NAEBA.org; and technology innovators to begin collaborating on the following:

1. A disruption road map — an infographic identifying all of the trends and forces pushing on the current real estate model / marketplace; and

2. #RE2020 — a vision / roadmap to cocreate an open, transparent real estate marketplace by 2020. Here, the focus is on “what wants doing” — like a real estate consumer bill of rights — to reset the industry on right alignment, not disruption for disruption’s sake.

This slideshow includes 22 idea starters:

http://bit.ly/reVRMgameChanger

Posted in Uncategorized

Bidding War Drone: In-House Intelligence Report raises questions

BidWarDrone_InHouseIntel_May2014

So far, no one has been injured by a real estate drone taking photos of their listings or homes for sale, but we’re glad the FAA is implementing regulations to prevent that in the future. Contrast that to bidding wars. For six months we’ve been blogging about runaway bidding wars creating real estate refugees in Cambridge, Massachusetts.  More recently, our findings have echoed in this frustrating headline out Seattle:

When bidding $100,00 over asking price isn’t enough

Thankfully, a fellow real estate agent in Toronto, where various regulations are being considered to mitigate “unnecessarily sleazy” bidding wars, wrote an expose entitled The Blind Offer: How it Works and Why Toronto Should Get Rid of It

Overall, the lack of transparency in this system – which only helps the seller and hurts the buyer – sets our housing market up for disaster. If people continue to pay dozens, and even hundreds, of thousands of dollars over listing prices, the value of Toronto real estate could eventually reach an unsustainable level – and then decline.

http://bit.ly/BlindOffers (please share this URL via social networks)

Rather than sounding similar warnings, local coverage — particularly by Curbed Boston and blogger / real estate agent David Bates — has sensationalized bidding wars.  Without a crowdfunding campaign, we don’t have the resources to launch a counter offensive; so with all of the buzz in the real estate industry around drones, we decided to deploy one to document the “inside story” — LITERALLY! — on bidding wars.

Before overreacting, rest assured that our Bidding War Drone is on a Peace Keeping mission.

Our goal is to protect consumers by identifying what’s really happening on the ground; and to invite homebuyers, consumer advocates, elected officials and industry regulators to address the questions in this blog post:

Will Bidding Wars trigger local regulation or global reformation?

http://bit.ly/BidReform (please share this URL via social networks)

Right now our Bidding War In-House Intelligence is a Top Secret document, but if you would like to a preview a copy and join our coalition of Peace Keepers, please contact realestatecafe@gmail.com  Better yet, if you’ve lost a bidding war and want to see corrective action, please contact us about crowdfunding options we’re exploring.

Posted in Bidding wars, Bubble map, Buyer agent, Consumer protection, Defensive Homebuying, Designated Agency, Dual Agency Detective, Investigative Reporting, Luxury homes, RECALL: Real Estate Consumer Alliance

Will Bidding Wars trigger local regulation or global reformation?

Click on icons above for details of homes sold $100,000 or more over asking price from April 1 to May 15, the first six weeks of 2Q2014 in Cambridge, Boston & Somerville.

As Cambridge goes, so goes Lunenburg.​”​​  Really?  When a credible news source like the Boston Globe publishes statements like that, it’s time to ask what role the media has been playing in the return of self-perpetuating bidding wars in Boston and beyond?  Thank God, others — including at least one member of Boston.com team, question whether runaway bidding wars in Cambridge are a harbinger of The Biggest Home Price Boom Ever?

Think Cambridge is immune from housing downturn?  These flashbacks might cause you to question your assumptions:

Part I: Housing slump hits Cambridge: 1 in 3 single family homes selling below assessed value
Part II: Million Dollar Markdowns coming to a neighborhood near you?

While we’re asking questions, here are some others to consider — and maybe rank in order of importance:

1.  In an age of transparency, why are home buyers forced to use a blind bidding process that manipulates them into overpaying?
2.  If you are a homebuyer, how do I know if you’re bidding against myself?
3.  What role are conflicts of interest playing bidding wars?
4. What role are automatic escalator clauses playing?
5. What happens when bidding wars castrate mortgage contingencies, and take the brakes off mortgage market?
6.  What are the risk and potential costs to taxpayers who are now guaranteeing 90% of mortgages up from one in three in 2006?
7.  What are the social costs of moving rungs of the housing ladder further and further out of reach of first-time homebuyers and others?
8.  After the last boom / bust, what did the real estate industry and industry regulators learn about containing speculative cycles?
9.  How are other cities around the world responding to bidding wars & real estate speculation?
10.  Bottom line:  Is it time to pass an Emergency Bidding War Transparency Act?

Regulatory response

Those are some of the questions the Real Estate Cafe has blogged about and discussed privately with elected officials and the Cambridge Consumer Council since January.  More recently, we’re pleased by the interest of investigative reporters and dream of using http://CrowdSwell.com to raise awareness and funds to mount a Bidding War Backlash, potentially in several cities in the US and even around the world.

What’s the case for a regulatory response, and what might that include?  Let’s begin that conversation where the New Yorker ended an article called:  Real Estate Goes Global

“The challenge for Vancouver and cities like it is that foreign investment isn’t an unalloyed good. It’s great for existing homeowners, who see the value of their homes rise, and for the city’s tax revenues. But it also makes owning a home IMPOSSIBLE (emphasis added) for much of the city’s population. And the tendency of foreign buyers not to inhabit investment properties raises the spectre of what Yan has called “zombie neighborhoods.”

One option would be to severely restrict foreign ownership, but that’s politically difficult, and not great for a city’s economy….”

Restricting foreign ownership would require verifying identity, which is the first step to regulating BLIND bidding wars as we wrote three years ago, before bidding wars reached EMERGENCY levels.  What else should be included in the proposed Emergency Bidding War Transparency Act?

Victims or fools, time for Emergency Bidding War Transparency Act
http://bit.ly/FoolishBids  Please share this URL via social networks

How does the emergence of two housing markets in America shape your response, particularly given this stunning quote:  Incomes for recent college graduates are down sharply from 2006. And the median net worth for graduates under 40 is a paltry $8,700.

NEXT STEPS:  Want to be part of our Bidding War Lab?

Homebuyers, innovators, policy makers, and elected officials:  Please let Real Estate Cafe know if you’d like to collaborate on decision-making tools like the map above, showing bidding war data for the first six weeks of 2Q2014 in Boston, Cambridge and Somerville. The interactive map was created from MLSPin data during the #DigitalFluency workshop hosted recently at the MIT Media Lab. Special thanks to writer and editor Kristie Reilly for her creative insights into the analysis and data visualization. We’re both pleased that the findings generated a strong response from other participants, see http://bit.ly/RELunacy.

Tagged with:
Posted in Affordable housing, Bidding wars, Bubble Hour, Crowdfunding, Defensive Homebuying, Dual Agency Detective, Housing bubble, Investigative Reporting, Real Estate Bubble, Real Estate Consumer Bill of Rights, RECALL: Real Estate Consumer Alliance

Victims or fools, time for Emergency Bidding War Transparency Act

To see how far winning bids are above or below original asking prices, run your cursor over individual sales in this scatterplot.  Each data point shows ($K over or under, as well as %).  Too zoom-in, drag a box across the area you want to expand.

Around the country, homebuilder associations showcase their new subdivisions with an annual “Parade of Homes; ” but blog comments on Boston.com’s post today about homely properties selling $86,000 to $126,000 over asking price in Cambridge might cause one to ask if “Parade of Dumps” is more fitting.

Or is it “Parade of Fools” — homebuyers who are being fooled into overpaying by a blind bidding war process?

Historical or hysterical context?

Writing twenty-five years ago in The Behavior of Home Buyers in Boom and Post-Boom Cycles, Nobel-prize winning economist Robert Shiller and fellow housing economist Chip Case made this observation:

“…we see a market driven largely by expectations. People seem to form their expectations on the basis of past price movements rather than any knowledge of fundamentals.  This increases the likelihood that price booms will persist as homebuyers in essence BECOME DESTABILIZING SPECULATORS!”

That was when just 6 to 10% of homes selling over asking price was considered overheated.  The Cambridge housing market was at that pace in 4Q2010; but by 4Q2013, the pace increased ten-fold to 60% over asking price.  And last month it rose to 75%.

So when speculation becomes self-perpetuating expectation as stated today’s in Boston.com : “just about any habitable patch of real estate in Cambridge is sure to spark a bidding war these days, isn’t it time for more transparency about what’s going on behind the scene?

Consumer protection

In Toronto, another city blinded by bidding wars, regulators are stepping up efforts to protect homebuyers from phantom bidders, but that’s not enough.

http://bit.ly/PhantomBid  Please share URL with your social network

In an age of transparency, where ingredients are routinely disclosed on products in grocery stories, can’t reasonable people agree that homebuyers should be able to make more informed offers on the most expensive transaction in their lives?  Otherwise, buyers are easily manipulated as this scenario describes below:

“The selling agent said repeatedly that the top two bidders were “really close,” so the buying agent and his client spent hours crafting new offers before relinquishing. The eventual sale price was $70,000 over their highest bid, meaning that the final buyer was probably competing against herself for at least the last $50,000.”

What’s the answer?  Several are proposed in Toronto including this call for transparency:

“Mainly what’s needed is tearing down the curtain of mystery dividing buyers from the Realtors of Oz. “All bidders should see all other bids,” says my friend Dave, who finally triumphed over another buyer this March after four months touring $650,000 houses that all sold for $800,000. ‘There needs to be less opacity, and less chance for sellers and agents to collude to squeeze the buyer.’ ”

Bidding War Backlash

For the past four months, Real Estate Cafe has been blogging about runaway bidding wars in Cambridge, and asking what risks bidding wars pose to taxpayers who now guaranteeing 9 out of 10 mortgages, up from just three in 10 before the collapse of the housing market (2006).

Is it time for a ground swell of bidding war backlash, or call for public intervention?  Regrettably, the first might be unlikely because the housing market pits bidder against bidder, so ordinary first-time homebuyers are competing with cash investors — one of whom complained that other cash buyers are also competing against the most irrational or poorly advised homebuyer in the market.

Is there a case for public intervention?  If there were a water shortage, people would not think twice about rationing water, perhaps limiting or alternating days when homeowners could water their lawns.  Similarly, the Cambridge Consumer Council has submitted testimony to support emergency price disclosure regulations in other marketplaces.  Isn’t it time to extend transparency to the real estate marketplace as well so homebuyers can make informed offers by knowing the truth about competing bids, including whether they are from straw bidders or phantom buyers?

What’s the solution?

As we have written before, the technology exists (see bit.ly—VerifyThis), time for those we’ve elected to protect us to enact an Emergency Bidding War Transparency Act?  If taxpayers are guarantee 9 of out 10 loans, doesn’t it make sense for all of us to stop turning a blind eye to the current BLIND BIDDING PROCESS in real estate?

Without that transparency, conflicts of interest expose us all to risk:

http://bit.ly/GotRisk  Please share URL with your social network

So do irresponsible practices, like competing escalator clauses which can knowingly or unknowingly create in-house sales at inflated prices that make all of us look like fools.  Maybe that’s where legislators and investigative reporters will begin to find tangible evidence that there’s need for transparency and regulatory reform.  Anyone want to look?

http://bit.ly/BetrayME  Please share URL with your social network

Posted in Uncategorized

Is growing inventory a bright spot or was housing recovery a giant blind spot?

 

To see how far winning bids are above or below original asking prices, run your cursor over individual sales in this scatterplot.  Each data point shows ($K over or under, as well as %).  Too zoom-in, drag a box across the area you want to expand.

More than 24 hours after it’s publication, only six shares and one comment so far on Boston.com’s latest real estate blog post.  Is that because this “Bright spot for Buyers” is a boring spot or is something more serious going on?

Scan industry and mainstream media headlines this Spring, and many are talking about housing’s slow start.  This provocative blog post goes further, boldly concluding:

The Housing Recovery that Never Was Is Over

http://bit.ly/REconOver  Please share this URL with your social networks

So what’s the real story here: is growing inventory a single bright spot or was the housing recovery a giant blind spot?

More specifically, if you live in Boston, how do you reconcile headlines like this with a scatter plot above showing single family homes selling well below asking prices?

Bidding Wars Are Back: Buyers Face Stiff Competition

“Baltimore and Boston had the largest year-over-year increases in bidding wars, a rise to 50.9 percent and 75.9 percent, respectively.”

http://bit.ly/RedSpin  Please share this URL with your social networks

Contrast that industry spin with the large number of single family homes selling at discounts across Massachusetts, and it’s enough to make you cross-eyed.

To their credit, one Redfin agent is California ends the article above by saying:

“The past two years we’d compete against people camping out in their cars or entering lotteries to win new homes. This year, a bidding war is more likely to drive the price of a home higher than it’s worth competing for, and I think it will be easier for us to walk away from a situation like that.”

Homebuyers in Boston, what are local Redfin agents saying, or any other agents for that matter?  Are they / their advice part of the solution or part of the problem?

DIY homebuyers, what would help you see the housing market more clearly?

Call to Action:

Would be homebuyers, particularly first time homebuyers, please contact us if you’d like to preview our seminar, “Defensive Homebuying:  What they don’t teach in Homebuying 101″?

Posted in Bidding wars, Buyer agent, Consumer protection, Defensive Homebuying, Housing bubble, iCovery, Market trends, Price reductions, Price trends, Real Estate Bubble
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