Many of you have been emailing me articles about dumped concerning being charged tax when you sell your home. This article from the MetroTex Association of Realtors should assuage those worries: Home Sale Tax Truth
Seth Godin is one of my favorite bloggers, as I have said many, many times over the last several years. I'm beginning to think that Seth has had one or more bad experiences with real estate brokers over the years, because it seems to me that each post he writes about real estate has a little bit of an edge to it. But, Seth's crafty. I can't really point to anything directly. He's built in plausible deniability.
In his latest real estate article, there are some truths, some half-truths, and some, shall we say, misinterpretations. First, let me deal with the obvious point that I, as a real estate broker, would differ with: number nine. Seth, I can't really speak to the laws of agency in New York, but in Texas, the first piece of paper an agent has to get signed, at the first substantive conversation about real estate, is a document called: Information about Brokerage Services. This document spells out clearly that a broker (all listings are considered to belong to the sponsoring broker here, as opposed to a particular agent) can represent the seller or the buyer, or can represent both in house through a process called intermediary. Intermediary would mean that both sides of a deal is being handled in-house. Intermediary requires the broker to appoint two agents - one to represent the interests of the buyer, and one to represent the interests of the seller, with the broker becoming the intermediary. Personally, I'm not a fan of intermediary, but it does happen.
Seth, I agree that no man can serve two masters, however, in our agency we clearly tell everyone involved who we represent, up front. When an agent walks into my office to ask me a question about a particular deal, the first question I ask is, "Who are we representing?" This clears up a lot, because we are legally bound to represent the interests of our client, just like an attorney.(Seth, why don't you pick on attorneys more often?)
Bottom line on number nine: you can't pretend that our "marketing" leads innocent lambs to slaughter. We are doing our job, and buyers buy houses because they want them, and agree to pay the price because that's what they have to pay to get the seller to agree to sell the house to them! We can talk all day about why people buy houses, but very little of it has to do with merely obtaining shelter from the cold, wind and rain. (See Seth's point number five.)
Now, I believe a lot of his other points are good ones, and deserve thoughtful reflection, except number eight. Nobody has a guarantee of being able to make a big house payment, even one with a "steady job." Boy, didn't this last recession prove that? What's the solution?: put more money down, and keep the payments low enough that you can survive any lull in income. Or, pay 100% down. But then that puts you in a neighborhood where you may not want to live, and that brings us back to...number five!
Seth, you of all people should understand that we all buy emotionally and justify rationally. The idea that a home is a great investment is how we as buyers rationalize the purchase we are making and that rationale applies not only to homes, but everything else we buy, like books on marketing, which could actually be more entertaining than factual, but we rationalize that the purchase is really an investment for our business.
This video from Lawrence Yun, chief economist at the National Association of Realtors, explaining the increase in number of pending home sales YTD 2009 vs YTD 2008, the end of Treasury Purchases (interest rates may rise), the end of the tax credit, employment, and more:
If you are thinking about buying or selling in the near future, you should start paying attention to articles like this one. All good things must come to an end, and if you don't know the effect an additional 1% on your interest rate has on your buying power, go here and run a quick mortgage calculation.
If you don't have time for that, here are some quick numbers: on a $271,000 loan (FHA loan limits in North Texas), a 1% difference in the monthly principal and interest payment when you go from 4.95% to 5.95% equals $169.56 per month. Times 360 months that comes out to $61,041.60!
Over the last two years I have seen so many good people suffering. Clients calling us crying, because they lost their job and were faced with losing their home. Most were worried about how it would affect their children and their future. Our entire industry - every supplier, builder, agent, construction workers - everyone's life was affected. I read somewhere that the recession wasn't personal - it was after all of us. Decisions that were made in 2007 and before looked like good decisions at the time.
Despite all this, I have seen great portraits of faith during these times. My wife's cousin is a builder in another state. Through these dark and desolate times for that industry, she has written often on Facebook about how proud she is of him for taking another job (economists call that underemployment) to support their family during these times. They aren't blaming anyone, or any thing - they are simply doing what they have to do, in faith, every day. Very touching.
I came to work this morning not expecting to be so moved and inspired. I starting reading my daily blogs (thanks as always, Seth) and followed the link to the Lemonade movie. I'm still thinking about it. Things are going to be okay, I think.