This interesting article from Wise Bread's Janey Osterlind concerning the status of the goverment reform of lending giants Fannie and Freddie is telling me something: It's time to act if you're thinking of buying anytime soon!
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
The national news is constantly running alarming headlines about real estate sales these days, and in many markets, there are good reasons to be concerned. However, you need to know what's happening in your local market before you make decisions based on faulty assumptions.
For instance, I went to the North Texas MLS (NTREIS), and ran a simple search for the entire North Texas region for properties that were posted as sold for year to date 2010 (through August 25th) versus year to date 2009. The results even surprised me, as the total number of residential single family sales were down barely 1% (about 500 sales less out of more than 43,000 total), but the average sales price was up almost 4.5%! Ask anyone on the street what they think those numbers are and I promise you the answers will be far, far different (more negative) and you have to ask yourself why that is, and more importantly, what it means for you. Who are you listening to?
Bottom line, a lot of people are still buying and selling homes in North Texas, contrary to what you might be led to believe by the national news, which is often reported by the local news as if it is local market conditions. And why shouldn't they be buying? I'm seeing interest rates now on a 30 year note near 4.0%, rates I've never seen in my career! Smart people are taking advantage of this opportunity of a lifetime. Run the numbers on a mortgage calculator and see how much more you can afford with a 4.0% interest rate versus a 7% or 8% loan. It's truly amazing, and the dollars you save over the years are astounding, and often never calculated by buyers. I've seen savvy buyers move their loans across the street to save 1/4 point, because they know the power of saving on an interest rate!
Ask a real estate professional to tell you what the actual market conditions are for your part of the country. Negative news always leads in the press, but that is often NATIONAL news, and the negative headlines are meant to get and keep your attention. You have to know your local market conditions in order to make a smart decision.
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.
As if real estate sales weren't complicated enough these days with homeowner's associations and mineral rights issues, along comes something that could complicate deeds for decades. Read this story by Jennifer Hiller of the San Antonio Express - News.
I have already seen the effects when developers try to stay in control of residential subdivisions long after the majority of lots were sold and built upon, and it's leading to more and more litigation.
Bottom line, this is an issue of which you need to stay informed.
P.S. I've been off the air for a while. Many of you knew about my accident and I want you each of you to know how grateful I am for the many good friends and family that lent a helping hand to me and my family.