Archive | July, 2013

Real Estate Has Changed

5 Jul

…but the way most buy and sell it has not. After surviving the worst downturn since the Great Depression, brokers are using the same  business model they used just before things went south. You’d think they would have changed the way brokerage is now practiced:  one property; two brokers; one large commission.

As we still recover from the bubble that burst, we find values rising again along with interest rates–an anomaly.  Usually rising interest rates put a drag on rising prices, as buyers get progressively unable to qualify as rates go up.  Prices then stabilize, or begin to go down if rates continue the uptick.  But we’re somewhere between the lines as of this writing.  The only reason prices continue to rise is because inventory remains relatively low while demand is still increasing. Fence-sitting buyers are figuring this out and jumping into the game.  They know that if they don’t act soon, rising rates will keep them on the sidelines whether they like it or not.

So as the old Chinese curse says, may you live in interesting times.  We are in interesting real estate times to be sure.  Some of the hot hot markets are beginning to cool a bit, and the marginal markets around the state are still wondering when the latest boom is going to hit them.  Sellers succeed depending on where they are, while buyers are still having a heck of a time qualifying for mortgages and competing for available properties.

My favorite old non-Chinese proverb says:  if you don’t like the rules of the game, make your own game and write your own rules. If enough dissatisfied buyers and sellers did that, the rules of the game of real estate would change and we might avoid these dramatic imbalances in the market.  How about a buyer for every seller?  Sounds like a chicken in every pot, doesn’t it?  How about a listing broker who sells his or her own listing and charges only 1/2 the typical commission?  Crazier still.  How about banks who open the gates just a crack more to let more prospective buyers get loans?  I must be nuts…


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