Do you skip real estate agents when you buy property?

[pek1]

Now tell me, with all these extra options available, why we should still go with realtors, even when a) the prices are cheaper and b) we can still get the same services you tell us about?

Okay, I'm game. First of all, do you know who is selling your property? Do you know if they are bonded? Are the people looking at your property qualified for getting a loan to purchase your property or are they scoping your house out? You know your agent, but do you know those who list FSBO who let people in? There is no protection. How do you know who is casing your place for a possible burglary? It can happen with a realtor, I understand that. But, with a realtor, your interests are taken seriously and it is in safer hands.

I personally wouldn't let anyone in my house if I was selling FSBO that I didn't know, other than a shake of their hand. Realtor is bonded, FSBO isn't.

 

[Cousin Vinny]

I will agree with you one one thing. Historically, real estate is the best investment. There are regions near where I am now that have returns of up to 30% per year! There are also some pretty lousy regions as well.

I'd like to have what you're smoking!

The *cough* stock market *cough* is simply the way to go, for long term investment. Preferably invested in indexed mutual funds with minimal fee structures, and is part of a diversified financial portfolio. (Which also includes real estate holdings!)

While real estate is an investment, it is also so much more than that; It's a home. Plus, they are illiquid and extremely difficult to move in a slow market, like what much of the U.S. is now experiencing. Then there's the taxes, insurance, principal & interest, all eating away at your investment, not to mention the abhorrent possibility of depreciation of equity.

If I am to ever invest in real estate, other than purchasing a home, I'll choose a REIT. Or, if you want to avoid the professional fees inherent in a REIT, invest in securitized real estate loans. This way, I get all the benefits of investing in real estate w/o the liquidity or collateral risks. (Of course, the standard risks applicable to the stock/bond market are still relevant in either instance.)

 

[pek1]

I'd like to have what you're smoking!

The *cough* stock market *cough* is simply the way to go, for long term investment. Preferably invested in indexed mutual funds with minimal fee structures, and is part of a diversified financial portfolio. (Which also includes real estate holdings!)

While real estate is an investment, it is also so much more than that; It's a home. Plus, they are illiquid and extremely difficult to move in a slow market, like what much of the U.S. is now experiencing. Then there's the taxes, insurance, principal & interest, all eating away at your investment, not to mention the abhorrent possibility of depreciation of equity.

If I am to ever invest in real estate, other than purchasing a home, I'll choose a REIT. Or, if you want to avoid the professional fees inherent in a REIT, invest in securitized real estate loans. This way, I get all the benefits of investing in real estate w/o the liquidity or collateral risks.

Get a subscription to Money Magazine, Eyeth.

 

[me_punctured]

So you think people owe you things for free? You're better off investing in real estate because it is equitable. What makes you think your $12K in stock is going to be worth that much tomorrow, next week, next month, next year?

I never said that I was going to invest my hypothetical $12K in stocks. Nor did I claim that information should be free. Let's back up a bit and review my earlier statement.

"If I had $12,000 in my pocket, I'd invest it! Information should not come at such an exorbitant price."

Are you familiar with basic logic? There's a concept called entailment. It means that there's a relation between two statements in which the truth of one statement guarantees the truth of another statement. Here's a simple example:

A. Fido is a dog.
B. Fido is an animal.

If it is true that Fido is a dog, then it is also true that Fido is an animal. Why? Because a dog is a type of an animal. Thus, Statement A entails the truth of Statement B. However, if you reverse the order of the sentences so they read this way:

A. Fido is an animal.
B. Fido is a dog.

Then you will discover that Statement A does NOT entail the truth of Statement B. It is true that Fido is an animal, but it is not necessarily true that Fido is a dog. Why? Because Statement A does not specify what kind of animal Fido is. For all we know, Fido could be a 450-pound Bengal tiger. Or an orangutan. Or even a domestic cat named Peking Duck. But we still don't have an established conclusion here, so there is no guarantee that Fido is a dog.

Now apply the logic of entailment to the following sentences. Statements A are what I said, Statements B are the conclusions you reached without any sufficient grounds.

a. If I had $12,000 in my pocket, I'd invest it.
b. Thus, I will invest $12,000 in stocks.

There is nothing in Statement A that guarantees the truth of Statement B. I could invest the money in my future children's educational savings. Or I could even invest it in real estate. The possibilities are limitless.

a. Information should not come at such an exorbitant price.
b. Thus, information should be free.

Again, there is nothing in Statement A that guarantees the truth of Statement B. I may believe that information should come at a cheaper price, such as five dollars, or it should be done in a fair trade-off involving faberge eggs. You don't know anything more than what I said in Statement A and you cannot assume what I meant without jumping around in the pool of possibilities.

If the order of the statements were reversed, the entailment would work. But this is not the case here.

 

[Endymion]

I'd like to have what you're smoking!

The *cough* stock market *cough* is simply the way to go, for long term investment. Preferably invested in indexed mutual funds with minimal fee structures, and is part of a diversified financial portfolio. (Which also includes real estate holdings!)

While real estate is an investment, it is also so much more than that; It's a home. Plus, they are illiquid and extremely difficult to move in a slow market, like what much of the U.S. is now experiencing. Then there's the taxes, insurance, principal & interest, all eating away at your investment, not to mention the abhorrent possibility of depreciation of equity.

If I am to ever invest in real estate, other than purchasing a home, I'll choose a REIT. Or, if you want to avoid the professional fees inherent in a REIT, invest in securitized real estate loans. This way, I get all the benefits of investing in real estate w/o the liquidity or collateral risks. (Of course, the standard risks applicable to the stock/bond market are still relevant in either instance.)

These are true, that is no question. The benefits of accumulating non-primary property real estate are in favor of those who understand how to manage property efficiently and to those who understand information like what the standard deviation of property growth is in East Podunk and West Podunk are (the kind of information usually in the domain of analysts, not realtors).

Want to expand into other types of real estate? Might want to look at water rights, urban planning and so forth. It gets icky quick. Real Estate is, I assert, one of many tools in a smart investor's toolbox, and it has features that not even the 17.5% average return on small-cap stocks from 1926 to 2004 can rival. (Not considering, of course, inflation, taxes, etc.)

I should mention, for others, it's not impossible for Joe Average to make a comfortable living on property. It is important, however, that Joe Average create an investment plan (taking in consideration his risk comfort zone) and then define the role of property. Never should he just jump in the market like Colonel Kurtz into the wild. Anyone who's read Conrad knows what happens to Colonel Kurtz!

Re: 30%, that's a multimillion dollar home area. Most houses don't appreciate that fast. I was making a point.

 

[Endymion]

Just a bit on REITS too.

Many investors who seek income are attracted to REITs because they pay dividends (by law they have to pay out 90% of taxable income to shareholders). Realize, though, that this income is at the cost of high volatility. REITs fly up and down with fluctuations in interests rates, rental and leasing demands, vacancy rates, property values, and other things. They can get WILD!

I think REITs can be a great way to include real estate into your portfolio. They are, interesting enough, correlated to small-cap stocks in performance. Be careful, though. If your investing plan calls for more liquid, low-risk assets, they don't take the spot of bonds. Too much volatility there.

 

[me_punctured]

Thank you, Endymion, for answering my question thoroughly. (And clarifying my other statement to pek1!) Your explanation reminds me of how consumers face tradeoffs in everyday life and because of them, they have to make decisions.

They also make decisions based on what information they have. Unfortunately, for the majority of the time, the information turns out to be asymmetrical. The real estate industry is no exception!

Lemons, lemons, lemons...

 

[Endymion]

Thank you, Endymion, for answering my question thoroughly. (And clarifying my other statement to pek1!) Your explanation reminds me of how consumers face tradeoffs in everyday life and because of them, they have to make decisions.

They also make decisions based on what information they have. Unfortunately, for the majority of the time, the information turns out to be asymmetrical. The real estate industry is no exception!

Lemons, lemons, lemons...

If life gives you lemons, make lemonade! Nitrite-free lemonade! No cured meat carcinogens for you, eh?

 

[Endymion]

I will, Endy, if and when we do....or consult with Help U Sell who charges a flat rate and we do the rest, mainly keeping the place up and arranging for all showings by appt.

That's awesome. Let me know how that goes when you do it!

 

[me_punctured]

If life gives you lemons, make lemonade! Nitrite-free lemonade! No cured meat carcinogens for you, eh?

Of course. You can always count on my kiosk, open 24 hours everyday, to sell nitrite-free lemonade. If you want cured meat carcinogens, there's another kiosk that sells them right around the corner.

Crud! The police's here again. I don't have a vendor's license so I need to pack up and run for life...

 

[pek1]

I never said that I was going to invest my hypothetical $12K in stocks. Nor did I claim that information should be free. Let's back up a bit and review my earlier statement.

"If I had $12,000 in my pocket, I'd invest it! Information should not come at such an exorbitant price."

Are you familiar with basic logic? There's a concept called entailment. It means that there's a relation between two statements in which the truth of one statement guarantees the truth of another statement. Here's a simple example:

A. Fido is a dog.
B. Fido is an animal.

If it is true that Fido is a dog, then it is also true that Fido is an animal. Why? Because a dog is a type of an animal. Thus, Statement A entails the truth of Statement B. However, if you reverse the order of the sentences so they read this way:

A. Fido is an animal.
B. Fido is a dog.

Then you will discover that Statement A does NOT entail the truth of Statement B. It is true that Fido is an animal, but it is not necessarily true that Fido is a dog. Why? Because Statement A does not specify what kind of animal Fido is. For all we know, Fido could be a 450-pound Bengal tiger. Or an orangutan. Or even a domestic cat named Peking Duck. But we still don't have an established conclusion here, so there is no guarantee that Fido is a dog.

Now apply the logic of entailment to the following sentences. Statements A are what I said, Statements B are the conclusions you reached without any sufficient grounds.

a. If I had $12,000 in my pocket, I'd invest it.
b. Thus, I will invest $12,000 in stocks.

There is nothing in Statement A that guarantees the truth of Statement B. I could invest the money in my future children's educational savings. Or I could even invest it in real estate. The possibilities are limitless.

a. Information should not come at such an exorbitant price.
b. Thus, information should be free.

Again, there is nothing in Statement A that guarantees the truth of Statement B. I may believe that information should come at a cheaper price, such as five dollars, or it should be done in a fair trade-off involving faberge eggs. You don't know anything more than what I said in Statement A and you cannot assume what I meant without jumping around in the pool of possibilities.

If the order of the statements were reversed, the entailment would work. But this is not the case here.

:roll: Whatever . . .

 

[me_punctured]

Love your attitude, pek1. If I do get a real estate agent someday, I hope he will be friendly as you are.

 

[Endymion]

Of course. You can always count on my kiosk, open 24 hours everyday, to sell nitrite-free lemonade. If you want cured meat carcinogens, there's another kiosk that sells them right around the corner.

Crud! The police's here again. I don't have a vendor's license so I need to pack up and run for life...

QUICK! Buy some snake oil from me! It'll protect you from the police, and it's a cheap seventy five dollars per milliliter!

 

[Endymion]

Okay, I'm game. First of all, do you know who is selling your property? Do you know if they are bonded? Are the people looking at your property qualified for getting a loan to purchase your property or are they scoping your house out? You know your agent, but do you know those who list FSBO who let people in? There is no protection. How do you know who is casing your place for a possible burglary? It can happen with a realtor, I understand that. But, with a realtor, your interests are taken seriously and it is in safer hands.

I personally wouldn't let anyone in my house if I was selling FSBO that I didn't know, other than a shake of their hand. Realtor is bonded, FSBO isn't.

I disagree, but that's okay. I want to let this slide for a bit. We can come back to it later if you want.

I have a quick question. Since you're already doing the RE thing, who's your target market? Do you specialize in a deaf clientele?

 

[Cousin Vinny]

Never should he just jump in the market like Colonel Kurtz into the wild. Anyone who's read Conrad knows what happens to Colonel Kurtz!

You don't get props on the obscure reference, having read Heart of Darkness at Gally, and found it to be quite an insufferable experience, thank you very much. I'll admit to the guilty pleasure of liking The Secret Agent. But, I digress, as usual!

What do you think about securitized loans involving real estate? I assume the securities have all the inherent risks of investing in a bond market, though.

 

[GalaxyAngel]

LOL on charging extra. Let's bring this back into the ballpark. Let's list alternatives to realtors and how they work. ( source: http://www.realestatejournal.com/buysell/agentsandbrokers/20050511-hagerty.html?refresh=on )





Now tell me, with all these extra options available, why we should still go with realtors, even when a) the prices are cheaper and b) we can still get the same services you tell us about?

Endymion,

Thank you bring those informaition..
I'm don't know about real estate ageny in usa.
So far I know about in Canada issues Real estate.. sort of almost simaliar alike usa' system of real estate agent...

 

[pek1]

Do you specialize in a deaf clientele?

Yes! My business card states that an asl interpreter is available and this is set up. I'm hoh, but the signing would have to come from someone who is better at signing than I am.

 

[kmjbmama]

We are looking for a house right now and we don't want to use a real estate agent... The house we are living in right now belongs to my mother and she is filing banktupty (sp??) so we need to get out of here. The house that we actually own is way too small for us, so we will continue to rent it until they (the renters, AWESOME people!!!) are ready to buy it from us. There are 6 of us and that little bitty house has only 2 bedrooms! Anyway, J says it's much cheaper to just go straight to the owner. I have NO clue about that kind of stuff so I'm just following him like a duck. LOL We have found 2 houses that we love... and the owners of both houses are willing to work with us. We are waiting to see which house would be cheaper for what it is worth...

kmjbmama

 

[pek1]

We are looking for a house right now and we don't want to use a real estate agent... The house we are living in right now belongs to my mother and she is filing banktupty (sp??) so we need to get out of here. The house that we actually own is way too small for us, so we will continue to rent it until they (the renters, AWESOME people!!!) are ready to buy it from us. There are 6 of us and that little bitty house has only 2 bedrooms! Anyway, J says it's much cheaper to just go straight to the owner. I have NO clue about that kind of stuff so I'm just following him like a duck. LOL We have found 2 houses that we love... and the owners of both houses are willing to work with us. We are waiting to see which house would be cheaper for what it is worth...

kmjbmama

Bankruptcy is how it is spelled. Your sentence starting with, "I have NO clue . . . " kmjbmama, you need to have a clue and understand EVERYTHING that dh is doing, especially since real estate has its own language.