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It’s Going To Be Uncomfortable, And It Might Take A While To Sell Your House

A report from the Orlando Sentinel in Florida. “For the first time since 2012, home prices are falling in metro Orlando, new data and real estate experts say. After seven years of month-over-month increases, the median price of a Central Florida home dropped in May, according to Zillow. It ends an incredible 86-month streak where the value of the median home shot up 94% to $239,200, Zillow said.”

“The inventory of homes for sale has grown for six straight months, too, ORRA said. ‘It looks like we are at the end of a long market cycle,’ said Ken Johnson, a business professor at Florida Atlantic University who studies real estate. ‘It’s going to be uncomfortable, and it might take a while to sell your house. But it won’t be like it was in 2008.'”

“Agents across Central Florida said conditions have shifted during the eight or nine months. Homes take longer to sell, and multiple bids are more rare. ‘It does seem like it is getting slower,’ said Carrie Courtney, a real estate agent who operates mostly in the Kissimmee area. ‘The last few years we were seeing the multiple offers coming in, and that’s dried up. We’ve seen more price reductions, too.'”

“The biggest slowdown has come with the most expensive properties, she said. Homes selling for more than $400,000 have been slower to sell, she said, because of the abundance of new homes built in the area. New construction may be creating competition for existing homes. Builders started work on 16,238 homes in 2018, the highest number since 2006.”

From Mansion Global on Florida. “A 6,618-square-foot home on South Florida’s Fisher Island was relisted Wednesday for just under $12 million, according to listing broker Robert Conway of Douglas Elliman. That’s a more than $2 million price cut from November, when the six-bedroom, eight-bathroom condominium was listed by another brokerage for almost $14 million, according to property records.”

“Mr. Conway called that pricing ‘overzealous,’ and said the current asking price is more in line with recent sales on the island.”

The Houston Chronicle in Texas. “For the average Houston home, priced at $310,700, real estate agent commissions cost $18,600. If the same deal had closed in London, the homeseller would have only paid agents about $3,700. The reasons for the difference are at the center of a class-action suit that could dramatically change the way homes are bought and sold in the United States.”

“The case, brought by a Minnesota homeowner, seeks to strike down the standard practice of agents splitting commissions. If successful, the suit would potentially save individual home sellers thousands of dollars in commissions, but it would also cut the earnings of real estate agents across the country — including some 37,000 in the Houston area — and put more pressure on traditional brokerages, already contending with a host of discount and online competitors.”

“NAR, which is being sued along with Austin-based Keller Williams Realty, Re/Max Holdings, Homeservices of America and Realogy Holdings (owner of Century 21, Coldwell Banker, Sotheby’s International Realty and other household-name brokerages), argued the complaint characterized its rules incorrectly.”

“Court filings also showed the Department of Justice has opened an investigation into real estate agent fees. In the investigation, which is separate from the Moehrl case, the DOJ has demanded information from CoreLogic, which provides many real estate agents with platforms where they can share listings, known as multiple listing services. The inquiry centers on whether or not multiple listing services prevent competition in the real estate agent fee structure.”

“Gavin Brazg, the founder of the U.K. homeseller webite the Advisory , which conducts an annual survey of agent fees, said even in the pre-internet era, British buyers did not usually turn to agents to help them find homes. Instead, they would walk down to real estate agencies in the area they wanted to live and ask to see their listings.”

“Brazg said the internet made it too easy for real estate agencies to set up shop, and the oversupply of brokers is driving down revenues and pushing many brokerages to the financial breaking point. ‘There’s just too many real estate agencies in our countries,’ Brazg said. With the low fees come financial issues for the agencies. ‘There’s going to be massive closures,’ he predicted.”

“Alex Doubet, chief executive of the discount brokerage Door, said that he foresaw a similar winnowing of real estate agencies in the U.S. if real estate agent fees fall to U.K. levels. ‘If the average fee on the buy side is going to go from $6,000 or $7,000 to $1,000 or $2,000, you now have a situation where you have to do more volume to make that an economic business,’ Doubet said. He suggested that large firms could invest in technology allowing real estate agents to increase their volume of deals, but traditional firms without such technology may struggle. ‘You can’t survive if your fee is cut by two-thirds.'”

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  1. Eeee-bola central Florida!

    ‘because of the abundance of new homes built in the area…Builders started work on 16,238 homes in 2018, the highest number since 2006’

    Wa? Overabundance! But we can’t build shacks. And Thornberg said we weren’t overbuilding! Eat yer crowz Thornberg!

    1. Learn to code is only helpful if you are on h1b and under 40.

      Walmart greeter is their future.

        1. In the Walmarts I visit, they are still there, but not greeting people. They’re busy scanning the receipts of people leaving with their purchases.

          2. Same here. They used to welcome you on the way in; now they treat you like a criminal on the way out. I’ve seen some greeters in more rural Wal-Marts. Gee, I wonder if there’s a pattern.

          3. They used to welcome you on the way in; now they treat you like a criminal on the way out. I’ve seen some greeters in more rural Wal-Marts.

            Lots of business models we take for granted actually only work in a high trust environment. They have to be modified to work in other environments. And in some cases can not be modified enough to work. Hence the difficulty finding grocery stores, etc., in the hood.

      2. “Learn to code is only helpful if you are on h1b and under 40.”

        In silly valley there are plenty of over-forty vegan gurus wearing sandals and turtlenecks doing share buybacks and giving Ted talks.

    2. ‘You can’t survive if your fee is cut by two-thirds’

      Humans have a funny way of defining survival as whatever they are used to. You can’t possibly survive on less. Ex is having a fit at the moment about child support going away as our son starts college. She can’t “survive” without it.

      1. Hearing stuff like this, I can’t say I blame the MGTOWs. Child support is supposed to support the CHILD. Once the kid is 18 and off to college, parenting is DONE.

        (So I glad I missed out on the kid thing. Kids used to be an 18-year commitment. Now it’s a 60-year commitment. 20 years to raise, 20 years to subsidize, and 20 years to retire “near grandchildren.”)

        1. Child support is supposed to support the CHILD.

          I think most rational people get that. But…

          On a side note she also misinterpreted the legal advice she got. They told her that in Colorado child support gets paid through the age of 19. Which is correct. But she interpreted that to mean until their 20th birthday. Because it used the word “through” and the word “19”.

          Our situation is a little more complicated because originally I was supposed to have more than 50% custody but he wasn’t interested in living in China. So on the advice of both our lawyers, rather than go back to court we just agreed that I’d send her an extra $380/mo to compensate for the extra time she was taking care of him. Well…he just moved out for college and I just stopped paying that to her and sent it to him instead (I knew she was using it for herself all the time but chose my battles). TSHTF about that today…but no way I’m going to keep sending it to her and no way she can legally make me.

          2. Kind of. But also keep in mind she’s diagnosed bipolar. It’s hard to pin blame in any one spot.

          4. Isn’t bipolar a disability gig?

            In theory. I’ve heard rumors she may be getting some SSI money but that was after we divorced so I have no idea. If so, it’s even more lame than she can’t live on the money she has. But it would explain why she never looks for a job despite her frustration with money.

          6. Ohh goody, is there where I get to talk about my doctor-certified bipolar ex?

            Like Carl’s ex, she was never able to live on the money she got from me despite it being way more than enough on paper. She remarried less than 2 weeks after the last alimony check cleared, and her and new hubby have struggled. She since got the ‘Dave Ramsey Religion’ but I know at her core she hasn’t changed. She used to repeatedly scream at me that she could easily find a guy who made 2x what I do… and now she’s got Mr 1/3x as much.

            My ex is going to have a shit fit in a couple years when my youngest hits 18. She considers the child support a god given right and I know that she’s planning on trying to extend it out as much as she can, since my youngest (functioning autistic) is being homeschooled. But he’s also starting classes at local community college and has little filter at telling me what’s going on (that my ex hints to him to not to tell me) if it makes sense in the discussion.

            As it is, I could reduce the amount I am paying right now since my oldest turned 18 a couple months ago… but.. the order is so old, it predates the 2011 revisions to state guidelines which raised the maximum new-resources limit. So I could save maybe $150 a month for ~2 years, before attorney fees – not worth it really.

            Plus, and probably more importantly, by not going to back to court, I haven’t had to disclose my financials to her. I keep up a narrative with her that I’m just a paycheck or two away from ruin. She has no idea I’m a homeowner even. And it’s for the best – She’s the kind of persistent narcissistic witch that tries to make a big deal of and manipulate me any way she can with any scrap of information she can find out. I tune her out, hang up on her, whatever, but she”ll work it in and switch gears when I’m having to deal with her on something to do with our kids. I think she does some similar downplaying of their finances as well, as it looks like they finally are getting ahead now that her hubby isn’t paying child support to his ex.

          7. Long rambling post I just wrote .. eaten?

            tl;dr got one of those bipolar ex’s myself; she also will SHTF when child support ends.

          8. has little filter at telling me what’s going on (that my ex hints to him to not to tell me)

            A silver lining

          9. “…as it looks like they finally are getting ahead now that her hubby isn’t paying child support to his ex.”

            LMFAO!

          10. Plus, and probably more importantly, by not going to back to court, I haven’t had to disclose my financials to her.

            Exactly. My hope is for her to get just distracted enough by life to where we never end up back in court. My life improvements since our separation (not a coincidence, it was very difficult to make any progress together) would push her over the edge if she knew. I hated just giving her my new address that didn’t have an apt number in it but had no choice.

          11. I hated just giving her my new address

            I hid in the forest! The children and I moved way out in the countryside into a rented farm house. We never put up a mailbox and my official address was a PO box for ten years.

            Just thought I’d throw in my 2c while here at the pub.

          12. These neurosis and/or psychosis seem like something that should surface on a date or sleep-over, or is the power of that cooter enough to numb your defenses until after the wedding cake is finished? Sorry, serious curiosity here.

          13. should surface on a date

            I’ll touch on a few short points.

            Don’t underestimate the power of God’s little trick to perpetuate the species; pheromones. When you become enamored, all logic departs for about six months.

            People with a slight mania can be very attractive, energetic and charming, even if full of bs. When I got married at age 19, I had never heard of “Bipolar”. As a veteran, I can pick up on it quickly sometimes, back then no clue.

            Finally, it is a degenerative disease. Left untreated way more so. By her early 50s, my childhood sweetheart was cycling between many months long deep depressions and wild times of reckless self destructive behavior. She could blow through $50K like water, carry on with other men, wake the house in the middle of the night with blood curdling screams, wreck a sports car and even attack her own son with a kitchen knife. I tried to hold the universe together, but it got away from me.

            It came to an end with forced hospitalization. When she got out she ran. The horror was that she came back!

            Short version.

            I remain, and will continue, single.

            Hey bartender….

          15. From my cursory observations of the ladies, and gents too, are those who finished school and/or held-down a 40-hr/wk job were much better adjusted socially than the pikers looking for an angle.

          17. These neurosis and/or psychosis seem like something that should surface on a date or sleep-over

            Well…I WAS young and dumb. But in my defense the excitement of a new relationship also affects their behavior. Sometimes the extra stimulation/adrenaline can keep them on track and extra charming for quite a while. Like Blue said it does also get worse over years.

            One thing that fooled me in particular was that I met her in the Army (she was a soldier too) and she had a college degree. NOW I would see an underutilized college degree as a red flag. In my young and dumb state I thought it just meant that she was super squared away and ready for anything life might throw at her.

          18. I knew someone who, whenever weighty (or not) issues were being discussed, would always comment in the inevitable lull in the conversation “Who knew?”

            I would burst out laughing. Maybe you had to be there.

          19. I lived with a very attractive and street-smart young lady who was also mechanically inclined. She loved to go camping, dirt biking, etc., but strangely there was no ambition, no commitment, never signed anything, just living in the moment. Eventually the pieces came together…a product of a highly dysfunctional family, e.g., alcoholism, credit problems, sexual abuse and physical violence. One day I dropped a few thousand dollars on the coffee table and walked-out. A friend who kept up with her over the years said that she looks really run-down, bad teeth, kids from several men, etc., but I already knew having had a premonition. I understand she lost everything in the Paradise, CA fire. Another tragedy to add with the many others.

            Knock on wood, bartender?!

          20. Who knew?

            I’ll finish the thread by saying that young Spiffy was stupid and didn’t think anything of himself. And paid the price for decades. original, eh?

            I need to stop the off topic rambling – you guys here could write my biography.

    3. As much as we live to hate Zillow, Redfin et al, there probably isn’t a better, more ripe industry for technology to disrupt.

  5. Far be it for me to defend the real estate sales industry, but I do not quite understand the lawsuit.

    MLS listings have been around for 40 plus years and greatly expands the reach of listed properties and allows buyers to see a much greater variety of properties. Also does not really increase commissions since that is decided between owner and listing broker. If agent outside the broker’s office procures buyers then commission is split between the 2 brokerages.

    Brokers have always had the freedom to accept whatever commission rate they wish to contract for. Frequently it winds up in a 4 way split where an agent working for a brokerage secures listing and a separate agent working under a different brokerage secured buyer. Therefore parties to the commission are: listing agent, listing broker, selling agent and the selling agents broker. Sometimes broker is the lister and himself/herself secured buyer. In that case one person gets whole commission. Every deal is different.

    If this dynamic is changed (not sure to what) then ability to get seller’s property sold will be lessened. I have been a buyer at times and seller at times and MLS in all cases has been the cause of the transaction. Disruption of this process will make things much more difficult.

    If buyers have to shoulder the buyer’s agent fees, this will certainly change the efficacy and will likely not make the process less expensive overall. Do not understand the rationale with this action or how it will benefit the consumer. Sellers agents will become demotivated to outside offers, and buyers will be less likely to engage a buyers agent.

    1. It’s like any other cartel/monopoly. College/university another example. Very similar as gov’t. guarantees the loan in both cases, which drives up costs tremendously. 6% commission is ridiculous., esp. w/ sky-high prices. Bring on the competition and watch buyer/seller costs go down. Example: http://www.helpusell.com.

      1. In 2008, I listed FSBO, got blackballed. Then listed with a discount broker on MLS (like help u sell) got blackballed. Through in the towel, hired the local hotshot realturd, sold in 4weeks. Many people asked, “why haven’t I seen this one before?”

        They wont show anything but offerings from their tribe.

    2. IIUC, MLS isn’t the problem. The problem is that realtors hoard the information in the MLS so they maintain an iron grip which listings buyers and sellers see. It’s only in the last 10 years that Zillow has opened up the MLS listings to the general public. Breaking up realtors would make the MLS freely available to all, to the point where buyers and sellers can meet and negotiate with each other without spending upwards of $20K on a middleman.

      1. A lying middleman at that who just gets in the way. But they can open a lock, and point to high ceilings…. usually.
        Some even have water in their car for ya!

    3. If the status quo is the only way to go about selling a home then why are we the only country with this expensive approach?

    4. Before living in the USA, I bought and sold several houses in the UK which enjoys a process with only 1 Agent representing the seller. The buyer visits the advertised property under the supervision of the seller’s agent and then generally engages a property solicitor (lawyer) to perform the legal work, if they wish to proceed. The seller pays the negotiated commission to the Agent (typically 1.5 to 1.75%) and the buyer pays their own lawyer. Each party is paying their own side of the transaction and protecting their own interests. I was flabbergasted when I moved to the USA in 2005 and discovered that the house sale commission was 6%. Hence, when I sold my home in June last year, I used Purple Bricks and was delighted with the fee ($3200 plus 2.5% buyer’s agent commission) compared with the “norm” of 5 or 6%. The PB Agent was a 30 year industry veteran who provided exemplary service, saving me over $20k in commissions, when compared with the typical realtor arrangement. I am still shocked that so many people accept this archaic realtor system which seems to be a gravy train for realtors who are fortunate enough to secure qualified buyers that are ready and able to close on a home purchase. Like many others, I am now occupying a rental home, waiting for the economy to turn and house prices to move lower towards more realistic long term trends governed by overall affordability.

  6. Sold my home for 1 mill. Negotiated agent own from 6% to 5% which they said would make buyers agents less interested. Sold in 7 days. 50K for a week long MLS listing was pretty expensive!

    1. Yours is a perfect example of why these leeches need to cease to exist anymore. $50k for a week’s “work,” which involved filling out a couple pieces of paper, taking a few photos and loading them onto a website, and driving to the house a couple times.

      1. What’s fun is if they think you just questioned the size of the commissions – they’ll launch into canned marketing spiel how the sun won’t rise without them getting their 6%.

    2. In So Cal, when you get pulled over by the police the ask to see your “Realtors License.”

  14. If all ya (fed) have to do is cut interest rates, why have we ever had any recessions??

  15. Anyone given to macro analysis, I think this article is one the most concise I have read. Describes the 3 types of borrowing (hedge, speculative and Ponzi)

    Excerpt:
    Debt-fueled consumption is an expedient measure to take when economic growth stalls and immediate economic recovery is demanded. While the marginal benefits of such action fade quickly, a longer-term policy that consistently encourages greater levels of debt and lower debt servicing costs can extend the beneficial economic effects for years, fooling many consumers, economists and business leaders into believing these activities are sustainable.

  16. “The Goldsteins are among hundreds of families in Southeastern Pennsylvania who bought new homes since the start of the 2000s housing boom, only to learn, years later, that shoddy construction overseen by at least 27 different builders has turned their asset — for nearly all, the most valuable they have — into a liability, an Inquirer investigation has found.”

    https://www.inquirer.com/real-estate/housing/water-damage-home-construction-defects-rotting-toll-cutler-stucco-20181115.html

    Oopse…

    1. “has turned their asset — for nearly all, the most valuable they have — into a liability”

      It really bites when what one considered an asset turns out to be a liability. That is the worst surprise of all.

  17. “Agents across Central Florida said conditions have shifted during the eight or nine months.

    Odd, but these “shifts” seem to be exclusively downward.

    1. As I stated many times on this blog, with some exception (Miami, NYC), the east coast is about 1 year behind the west coast relative to the bubble bust 2.0.

  18. “For the average Houston home, priced at $310,700, real estate agent commissions cost $18,600. If the same deal had closed in London, the homeseller would have only paid agents about $3,700.

    The days when the NAR parasites can gouge home buyers for 6% are numbered. With people squeezed as hard as they are financially, and technology reducing the task of finding and selecting a house to a few mouse clicks, it is an anachronism that Used House Salespeople can force consumers to pay such an outrageous percentage of the transaction, especially given the caliber of most realtor “service” to “clients.”

    I will rejoice when “creative destruction” comes to the industry of dissemblers known as the NAR.

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