Market Watch

[plowhog]

People leaving or Landlords fed up with being the punching bag after 3 years here

I have not followed or read the decision, but I heard that the NAR was accused of price fixing RE commissions and lost the case. Not so much on the percentage, but more so that the buyer winds up paying the Seller's cost/payment to the Seller's broker. So now the RE agents (and also new buyers) are the next punching bag.

Presuming that decision stands, it is going to fracture the way RE business is done. Without a doubt, across the board there will be a reduction in $$ to RE agents. And without a doubt, since there will be little-to-zero incentive for professional representation of buyers, there are going to be a LOT of buyers who get screwed in lots of ways that are obvious but also many non-obvious ones. Some of the buyers who are screwed will discover it fairly soon, others, maybe not until decades later when they sell.

A lot of people on this site cheer on criticism or misfortune of realtors or RE agents. I am always surprised when I see that as I know how wide and broad the complexities are from my experience and training. I believe some quantity of those who are now cheering for the misfortune of realtors will look back and wonder what happened after the pool of knowledge dries up and it becomes Wild West time doing real estate deals.

Saavy investors know how to navigate on their own-- which is true in any industry. I would *much* rather deal with a saavy private party than an average RE agent. But a great quantity of new buyers, likely in the millions of people, are going to get screwed on RE contract fine points where they are simply not knowledgeable or aware of how to protect themself. And not knowledgeable about what to even ask or consider.

If the decision stands, I will consider cancelling all of my RE licenses. As a licensee, I have a responsibility to protect any other party I do business with, such as if I sell one of my properties to a buyer. That becomes especially risky for people like me if the person I am working with does not have an agent or representation. On one hand, I need to look out for my own interests but also have a legal duty to look out for my (opponent) as well. If I give up my RE license, I no longer have that responsibility. I suspect some of the top tier RE professionals will surrender licenses and go out on the new "open range" seeing what sort of lucrative business they can pick up. That's not my style, but time will tell.

So, the property owners who are the current punching bag are likely to be getting some company ....

Progress!

 

[ultrarunner]

Few people do purchases with cash anymore. A credit card purchase doesn’t mean it is a debt situation. Some of us use them regularly for cash back and fraud protection, then pay the card off each month.

True enough but the shift in the 10 years he's run the business is profound...

Also few checks which is probably good... he has been stuffed a few times with checks.

 

[jyoutz]

True enough but the shift in the 10 years he's run the business is profound...

Also few checks which is probably good... he has been stuffed a few times with checks.

I have shifted in the past ten years from using checks to only writing one every few months. A profound shift. Stores will hardly take checks anymore, and online direct pay or debit cards have mostly replaced checks.

 

[ultrarunner]

Yep... I did passed the test and fulfilled education and background for my license but decided not to get it as I saw it would restrict my options as an individual investor... plus the liability of being a licensed professional and associated costs.

As a private individual I am free to talk to anyone and write and present my offers, etc...

My brother holds his brokers licence and has never bought or sold earning a commission...

He is a commercial portfolio manager with transactions in the hundreds of millions of dollars... shopping centers, hotels, theme parks, industrial and condo development...

His philosophy is the deal makes sense or not and the firm is willing to pay full commission to those bringing in deals so they are often in first position.

I have not followed or read the decision, but I heard that the NAR was accused of price fixing RE commissions and lost the case. Not so much on the percentage, but more so that the buyer winds up paying the Seller's cost/payment to the Seller's broker. So now the RE agents (and also new buyers) are the next punching bag.

Presuming that decision stands, it is going to fracture the way RE business is done. Without a doubt, across the board there will be a reduction in $$ to RE agents. And without a doubt, since there will be little-to-zero incentive for professional representation of buyers, there are going to be a LOT of buyers who get screwed in lots of ways that are obvious but also many non-obvious ones. Some of the buyers who are screwed will discover it fairly soon, others, maybe not until decades later when they sell.

A lot of people on this site cheer on criticism or misfortune of realtors or RE agents. I am always surprised when I see that as I know how wide and broad the complexities are from my experience and training. I believe some quantity of those who are now cheering for the misfortune of realtors will look back and wonder what happened after the pool of knowledge dries up and it becomes Wild West time doing real estate deals.

Saavy investors know how to navigate on their own-- which is true in any industry. I would *much* rather deal with a saavy private party than an average RE agent. But a great quantity of new buyers, likely in the millions of people, are going to get screwed on RE contract fine points where they are simply not knowledgeable or aware of how to protect themself. And not knowledgeable about what to even ask or consider.

If the decision stands, I will consider cancelling all of my RE licenses. As a licensee, I have a responsibility to protect any other party I do business with, such as if I sell one of my properties to a buyer. That becomes especially risky for people like me if the person I am working with does not have an agent or representation. On one hand, I need to look out for my own interests but also have a legal duty to look out for my (opponent) as well. If I give up my RE license, I no longer have that responsibility. I suspect some of the top tier RE professionals will surrender licenses and go out on the new "open range" seeing what sort of lucrative business they can pick up. That's not my style, but time will tell.

So, the property owners who are the current punching bag are likely to be getting some company ....

Progress!

 

[ultrarunner]

I have shifted in the past ten years from using checks to only writing one very few months. A profound shift. Stores will hardly take checks anymore, and online direct pay or debit cards have mostly replaced checks.

Often run into payment issues on Surgery day for elective procedures.

The hospital accepts checks and credit card payments and no cash.

Anesthesia docs accept cash and checks but no credit card...

Two weeks ago a patient was dropped off with cash for her surgery and it was going to be cancelled because the hospital does not accept cash.
h
So this is how I get myself into trouble... she very much wanted the procedure and no one could help with no family available.

I said put it on my card in exchange for cash... she cried saying than you.

I did run it by the hospital administrator at 6 am who expressed concern and said don't make it a habit...

Strange times when cash is a burden...

As for cases we are up... many put off surgery during pandemic and the there is incentive to get it done now because waiting to next year starts new co-pay and deductibles, etc.

This may be busiest November/December in my 33 years.

 

[rScotty]

Inflation is up only 5% ???
I don't know where you live but our cost of living has gone WAY up over the past 3 years
Gasoline up 40%
Groceries up 25% -30%
Water up 25%
Electric went up 45%
Propane heating up 50%
Ext. Ect. our cost of living has skyrocketed

Yes. There is a whole lot of Skewed Math out there by people wanting to sell you a "pig in a poke".
Don't fall for their game.

If you want to see how much things have really changed, instead of what the various politicians want you to believe - just go to this site. It's by geeks without an axe to grind either way.

CPI Inflation Calculator

www.bls.gov

Enter any number you want - I like to use $100. Then select how far back you want to go fom this October (Noember. figures aren't in yet), push "calculate" - and the increase on your $100 is how much TOTAL that the CPI = average cost of living prices around the country have gone up.

You may be doing better or worse than this, but that will tell you how the country is doing as a whole.
Play with it and you'll see it isn't great, but it is what it is.
Lately it has been better than it was around Covid time.

Hopefully your wages aren't going up by that amount. If not, you are losng money.

rScotty

 

[2manyrocks]

I would be careful about concluding that the CPI is a fair measure of actual inflation. For one thing, it takes increases in property rental into account, but does not include increases in the cost, maintenance, property tax or insurance cost of homes. Some people pay more than 50% of their monthly income just to cover their home mortgage which means that the CPI does not even pretend to measure what is the biggest monthly expense for many households.

 

[edgarrian]

I see help wanted signs everywhere. When there are more jobs than people to fill them, then isn't it up to working people to make sure they get a decent wage? Business owners can try every way to maximize their profit, but without workers nothing good happens at all.
Wages are also the responsibility of the workers.

I believe your estimated costs for repairing things are way higher than reality. Perhaps you are looking at the cost of having a repairman do the job. I'm looking at the cost of doing it yourself.
Alternatively, every town I know of has a used appliance store packed with appliances that work just fine.

About fixing old clothes..... Edgeman, there is a limit to all things, and there you and I agree.
Mom always said, "People won't judge you by the patches as long as the clothes are clean."
Unfortunately, Mom was wong about that. I wish it were otherwise,
BTW, I still patch my favorite old clothes - but now it is more hobby & sentiment than necessity.

rScotty

Estimation for fixing an appliance can be over estimated. Take for instance my dishwasher isn't getting the soap wet enough to dissolve and the water jets on top are not spinning. I order an 8 dollar part to fix it. We have had a part cost 500 just to replace. At that point new is a better option in my opinion. I do my upkeep with vehicles. I still have a 2007 Mustang GT that runs better than most new vehicles. So i understand costs saved by me versus a mechanic or handyman

We have help wanted signs here as well. But if people are finding themselves worst off now than before. Its b/c wages are not keeping up with inflation. Is the responsibility of the working people. I suppose u are right when you are seeking employment. Negotiating salary or hourly is part of it. But if the job requires very little skill such as a warehouse person. Then what do you think starting pay is going to be 20 an hour maybe. Now raises are a different animal. Thats entirely up to the company. You can certainly ask for more than what they are giving you but how often does that happen. If you do well 1.50 -2.00 is what you can get. Average is 1.00. Now if you make 20 an hour thats a 5% raise. If you make more and still only get a dollar an hour raise then ur percentage is going down. So you can see here that raises have not kept up with inflation. I have been fortunate enough to make good money. My wife and I do well. So i could say that just like you everything seems fine. But im afraid its not. I hope im wrong. Rents, mortgage are extremely high. You are most likely not buying right now so maybe you dont know. Car interest rates are high and so are vehicle pricing. Even though they are coming down.

Id say most people would disagree with you.

 

[rScotty]

I would be careful about concluding that the CPI is a fair measure of actual inflation. For one thing, it takes increases in property rental into account, but does not include increases in the cost, maintenance, property tax or insurance cost of homes. Some people pay more than 50% of their monthly income just to cover their home mortgage which means that the CPI does not even pretend to measure what is the biggest monthly expense for many households.

Yes, we need to be careful with the math. Politicians can get away with being biased and sloppy, but we need to be smarter than that.

An investment can cost money, but it is not the same as an expense.

CPI is only for "non-investment" expenses. It is simply to be a way to measure the change in non-recoverable spending. i.e. the basic costs of living. Renters don't get to recover any of their rent, so for them their rent is purely a cost - and that is why rental increases are part of the CPI.

When you get into home ownership - or any investment where you have costs versus appreciation, then we change over to discussing investments. And investments are a whole different animal. Although a mortgage eats up a lot of income while it is being paid off, property tends to go up. Home ownership ultimately makes money for the owners. At worst it breaks even. So unlike rent, mortgages pay back. That is why they are not included in CPI calculations. Investing is always optional.

rScotty

 

[rScotty]

Estimation for fixing an appliance can be over estimated. Take for instance my dishwasher isn't getting the soap wet enough to dissolve and the water jets on top are not spinning. I order an 8 dollar part to fix it. We have had a part cost 500 just to replace. At that point new is a better option in my opinion. I do my upkeep with vehicles. I still have a 2007 Mustang GT that runs better than most new vehicles. So i understand costs saved by me versus a mechanic or handyman

We have help wanted signs here as well. But if people are finding themselves worst off now than before. Its b/c wages are not keeping up with inflation. Is the responsibility of the working people. I suppose u are right when you are seeking employment. Negotiating salary or hourly is part of it. But if the job requires very little skill such as a warehouse person. Then what do you think starting pay is going to be 20 an hour maybe. Now raises are a different animal. Thats entirely up to the company. You can certainly ask for more than what they are giving you but how often does that happen. If you do well 1.50 -2.00 is what you can get. Average is 1.00. Now if you make 20 an hour thats a 5% raise. If you make more and still only get a dollar an hour raise then ur percentage is going down. So you can see here that raises have not kept up with inflation. I have been fortunate enough to make good money. My wife and I do well. So i could say that just like you everything seems fine. But im afraid its not. I hope im wrong. Rents, mortgage are extremely high. You are most likely not buying right now so maybe you dont know. Car interest rates are high and so are vehicle pricing. Even though they are coming down.

Id say most people would disagree with you.

You are right about all of that, and it means that the best time to set wage expectations is at the beginning.
We should all try to include an annual cost of living increase.... on my jobs I tried and didn't always get it, and some jobs I took anyway. But it just makes sense to write cost of living into the initial work agreement.

That's all it takes. Taking the trouble to think about the future. A cost of living increase It is usually a fairly small amount per year... hardly worth the quibble when being hired. Any employer should be giving that to employees anyway - might as well give him the chance to be a good guy.

It is only when you DON'T get that cost of living increase after a few years that it begins to hurt.
So please protect yourself & write it right into the initial job offer.

rScotty