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Saturday, October 17, 1981

Tuesday Open Thread

This is your open thread for today. Please post random links and off-topic discussions here.

I'm back from my long weekend, and I've got 132 emails / comments to catch up on! Yipes!

10 comments:

flopfolder said...

I know that RCG is out of fashion over here, but Ardell has a great post up at the moment. She is taking fellow real estate agents to task for not "representing" their buyer clients well amidst the rash of exotic loan packages.

Nothing new to those who post here, but the comments are interesting, nonetheless.

Grivetti said...

A possible worthy post

Figure s-crow might have some first hand experience...

Washington title insurance companies are wining and dining real estate agents, lenders and builders at the expense of home buyers, according to a state report.

Hmmm... a racket setup to bilk home buyers? pashaaah!

wreckingbull said...

grivetti,

That article reminded me of the dot-bomb era and its crazy parties. I know someone who used to plan them for a local company. Free booze, food, gifts for all. For one party she did in NY, they actually paid models to act as attendees at a post-conference party. The idea was to chat up the potential customers, hoping to soften then up before the sales guy swoops in.

In the end, it is always the little guy that gets stuck with the tab. Back then it was the 50-year-old that lost 90% of his 401K. Today it is the home buyer.

As far as I am concerned, this is another foul scent in the wind, portending bad things ahead.

Christina said...

Is Renting Really Throwing Your Money Away?

35% downpayment and you can get a house based on FICO score alone in Canada--no income documentation. Does that work the same way down here?

Also, having been in Vancouver very recently, talking to its citizens, I report that the Seattle housing bubble is small compared to Vancouver's. 35% overpriced? A mild inflationary value. Vancouver's nearing San Francisco prices. Good luck finding a SFH below $500,000 CDN in the city (multiply by .86 for an Oct. 15 approximation of USD). They can't even claim mortgage interest and real estate taxes as tax deductions.

S Crow said...

Grivetti-

Thanks for the title insurance information.

Take a look through all the real estate magazines. The pages are plastered with loan officers and title rep's. They may only pay for 1/8th of the page, but the implied cozy relationship goes without saying. The title rep is not adverstising to the public! They are advertising to all the agents in the book! If they want to change the way things are, have each title co. rep pay for their own full page ad.

The recent 'title insurance" report given to the Gov. in Washington DC is stunning. I'll link to it later today or tomorrow. It will blow your mind.

Title insurance is one of the most unique businesses in the country:

1) Largely refrains from advertising directly to the public. Why?

2) Advertises heavily to real estate professionals. Why?

3) Has espoused major advances and technology gains making the process so much more streamlined, yet those gains in efficiency (processing transactions)within the title firms have not led to decreases in premiums. Why?

4) Pays out less than 5% of premium in actual claims. What business do you know of that generates that kind of return?

5) The recent real estate gains in appreciation has been absolutely mind boggling in terms of revenue title firms have enjoyed. Why? Premiums are tied to the sales price of the home.

Everyone slams the NAR and alleges "collusion" for real estate commissions. That issue pales in comparison to the "cartel like" (not my quote, but that in the report) positioning of title insurance.

There are thousands of real estate agents competing for business.

There are largely four or five title insurance companies that do about 92% of business in the entire USA. Read that again. Could you imagine only being able to choose from five house floor plans across the entire country? Or five colors/sytles of trousers? Or Cars? Or Doctors?

A real estate transaction may be incredibly profitable IF you have your Octopus tentacles wrapped around each deal. It's why Affiliated Business Relationships have been created, to control the revenue stream. Illegal? No. Helpful to the consumer? Not financially.

When my wife and I started our small business about 3 yrs. ago, I was soooooooooo naive about the business.

I always got a kick out of the title insurance company who's M.O. was "experience the difference." I thought to myself, yes, consumers are experiencing the difference. The difference between what they could have saved by shopping vs. being steered.

Although our business is escrow and not title, I spoke about this issue the other evening with my wife and said we needed to calculate how much our clients have saved this year alone. It must be approaching $75K is escrow fees alone--more if you count all the garbage crap junk fees other firms charge....like $250 "e-mail" fees. That's just is unbelievable to me.

Iowa has banned title insurance companies and has saved their citizens a ton of dough. The state self-insures.

Lake Hills Renter said...

Some anecdotal information. A guy I know that works for a lumber mill in WA says his mill (didn't name it) just laid off 3/4 of their workforce because of the slowdown in the housing market. He also said that he knows of "many many" others, including Simpson, were doing the same.

synthetik said...

I just got back from lunch with a new friend.

About a month or so ago, he announced that he'd sold his house for full asking price! He understood the bubble conditions and that it was time to get out of the market, and therefore priced the home appropriately.

Unfortuantely, the buyer backed out of the deal last week. He was about to relist when another offer came in at full asking! Hooray!

They wanted a later closing date (Early Dec), so my friend had his agent suggest no hanky-panky on the inspection.

Well, they came back with a rediculous amount of money - almost 3X any reasonable amount - about $20K.

His house is priced right but he's nervous because he realizes the market has 'tipped' and more andm ore buyers are clueing into this fact.

I suggested he try to meet them half way and get the deal done. He's going to have his agent tell them that he's got other offers on the table... so I'm a bit nervous they'll back out of the deal. The buyer can usually make up issue with financing to get out of a purchase and the December closing could certainly pose a poroblem.

What will buyer sentiment be at that time?

While the RE market doesn't immediately dive like the stock market, it can 'tip' -- where the consensus goes from "healthy" to "sick" market almost overnight. Herein lies the danger and possibility of following the market down.

wreckingbull said...

I will refrain from obvious jokes, as it is never fun to be the victim of layoffs, but this don't look good for our gilded, untouchable, special real estate market.

Icos Corp., the largest publicly traded biotechnology company in the Seattle area and the developer of the erectile dysfunction drug Cialis, has agreed to be acquired for $2.1 billion in cash by its longtime partner, Eli Lilly and Co.

The proposed acquisition could spell trouble for Icos' 700 workers, with Lilly Chairman and Chief Executive Sidney Taurel commenting in a conference call Tuesday morning that a "significant number of jobs will be eliminated at Icos."

Eleua said...

LHR,

I chatted up someone who worked at a mill, and he said the same thing. It's not pretty.

Synthetik,

This is a common tactic. You pay full price to get all the other buyers out, and the house off the market. Then, you just jack up the inspection, and get your money back at that point.

Totally normal, and a sign of a buyer's market. If it was a seller's market, he would just bypass and go onto the next buyer.

synthetik said...

Yeah, that's what I told him too... I hope he just dumps it asap...