Now is a great time to buy Real Estate! Or is it?

By
Real Estate Broker/Owner with Bryant Tutas-Tutas Towne Realty, Inc BK607690

Hi folks. Yesterday I received an email from my local REALTOR® Association (OSCAR). In it was a plea request, from our new Association President, asking all REALTORS® to place a one liner in all our ads stating "Now is a great time to buy real estate!" Our Association has also started an ad campaign with this same theme. Here is a sample ad.

I guess the reasoning behind this is that if we all aggressively market "Now is a great time to buy real estate!" we can overcome the negative media and change the real estate market in Osceola County. According to our new president, "The most important thing I feel that our Association can do to help our members this year is to help put money in your pockets."

Here's the quote from our President:

"Now is a great time to buy real estate! I am asking for all REALTORS® and Brokers to join us in this campaign. There is so much negative media it would be hard for our Association to be able to battle this on its own. I am asking each and every one of you, that in any ad that you place, please put a one liner that says something about it being a great time to buy real estate, or a statistic about the interest rates, or any education that you feel will help the consumer realize that the market is not so bad. If all of our brokerages and Affiliate members make this a business practice in 2008, I believe that we can change the marketplace in Osceola County."

Now folks, I'm not quite sure how I feel about this. I certainly don't agree that things are as bad as the media portrays but I'm having a hard time getting my head around "Now is a great time to buy real estate!"

I'm a very optimistic person but I'm also a realist. I also know that the consumer is very smart. My success has been achieved by being 100% honest with folks. I believe in giving them the facts and letting them make their own decisions.

Is this request, from our Association, an attempt to manipulate the market? Is it less than truthful? Should we be telling folks "Now is a great time to buy real estate" when in fact, values are still declining? What if I told someone this and they bought based on, "Now is a great time to buy real estate" only to find out three years later, when they need to sell, that their property's value has declined?

Am I over thinking this? Should I just jump on the bandwagon and start running optimistic ads just so I can "put more money in my pocket"?

Why do I feel uncomfortable about this? What am I missing? Please help me out here.

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Rainmaker
889,621
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F
Too funny.  A contest.  The Orlando association started a similar campaign about a year ago. 
Jan 20, 2008 09:23 AM #51
Rainer
155,553
R. B. "Bob" Mitchell - Loan Officer Raleigh/Durham
Bank of England (NMLS#418481) - Raleigh, NC
Bob Mitchell (NMLS#1046286)

Bryant:  I just wrote a commentary for my local newspaper called, "Buying A Home In St. Louis, A Good Investment?" in which I go into the various economic reasons why I feel now is indeed a good time to buy, as long as you're pretty sure that you're going to be in the home for at least five years and are in an economic position to be responsible home owners.

The market here is down, but not as much as in some markets.  So, I guess that it comes down to each individual market, but nationwide, the population is continuing to grow and household formations are continuing to increase, so in the long run, I do think that buying a home is a good investment...again, as long as you're going to be in the house for a while.

 

Bob Mitchell

ValueList Real Estate Services, Inc. 

Jan 20, 2008 12:01 PM #52
Rainer
13,235
Heather Jemison
Keller Williams The Marketplace One - Las Vegas, NV
Las Vegas & Henderson, NV

I don't ever feel comfortable telling someone flat out: "Now is a good time to buy (or sell)" I let the statistics/facts do that for me. I never want to be responsible for someone elses actions. I will assist them in the direction that they want to go, so long as they always know that it is their decision, and they are comfortable with it.

I do have a suggestion for people that are buying in this market in particular: Buy to LIVE in your home. If you are buying for an investment and expect to sell in a year for a profit...think twice. For investment...make sure your numbers 'pencil out'.

Jan 20, 2008 04:07 PM #53
Rainer
3,400
John S.
RealtorRatingz.com - Canandaigua, NY
BB, as usual, I love ya for speaking the truth.  The thing that bothers me most about this OSCAR request is that it basically throws buyers under the bus.  Are Realtors who are buyers' agents supposed to also blindly run ads that "now is a great time to buy real estate"?  It seems to me that a buyer's agent (which you are not, of course) should be working for the buyer's best interests.  Or is a buyer's agent's first responsibility to his/her pocketbook?  If so, why do they call them "buyer's agents"?  Actually, the whole compensation method for buyer's agents is messed up, IMHO; the buyer should be the one paying them, then there wouldn't be such a conflict of interest.  Sorry for going off on a tangent!
Jan 20, 2008 06:28 PM #54
Rainmaker
1,120,282
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc

John S, Thanks for stopping by. I agree completely with your comment. I feel this ad campaign once again diminishes what we as REALTORS(R) really do. It's nothing more than a "sales pitch" and builds no value whatsoever. I see it as demeaning to REALTORS(R) and the consumer alike. We can certainly do better.

Heather, And that is exactly what we should be doing. Folks need to purchase a home not an investment. While real estate is a good investment over time it shouldn't be bought with the intent to get rich quick. Find a home you like, buy it and stay put for awhile. In my area it seems folks move in about 2 years. That's just not enough time to expect a profit on your home. It's an unrealistic expectation and is setting them up for failure. If you expect to move in 2 years then rent and save your money. That's what a buyers agent should be telling their customer/clients.

Bob, You should give us a link to that article. I'd like to read it.

Jan 21, 2008 03:24 AM #55
Rainmaker
889,621
Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F
I read on Earlybird from FAR that FAR just started a new website on www.floridarealtors.org that now is a good time to buy.  Maybe if we all say it enough, we can brainwash people into believing it.  LOL
Jan 21, 2008 08:28 AM #56
Rainmaker
1,120,282
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc
Hey Rob, I saw that this morning as well. Hey we are already accused of manipulating the market maybe we just need to go ahead and do it. I for one will just continue to sell my services. It seems to me houses take care of selling themselves!
Jan 21, 2008 08:30 AM #57
Ambassador
555,118
"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

Blog Boy...

"Houses Sell Themselves"...

Now there's a novel marketing idea :)

TLW...ROAR!  

Jan 21, 2008 09:08 AM #58
Rainer
263,693
Ginger Sala
Wilkinson & Associates, Wilmington NC - Wilmington, NC
Wilmington NC Real Estate & Relocation~

BB, Personally I would have a hard time regurgitating those REALTOR® Association "Talking Points." In fact the whole indoctrination approach makes me cringe. Where did the get their crystal ball??? 

Our market here in NC has not seen anywhere near the fall of other areas.  The experts forecast is good for our local economy. Whether we have reached a bottom here or not is still in question. I have seen blogs posted by agents in my area spouting the same "great time to buy spiel"... I refuse... It may be a great time to buy, we just won't know it until it's over. 

 Ginger 

Jan 23, 2008 05:42 PM #59
Rainer
3,252
MyMortgage MyChoices
MyMortgageMyChoices.com - Hayward, CA
My Mortgage My Choices
My humble opinion - it is a great time to buy! My advice - advertise your truth! I personally feel that with buyers choices at unprecedented levels and rates at a four year low it is a great time to buy. Consider this - wait another year to buy a $300,000 home. If rates go back up to 6.5% (1% increase) and values depreciate another 10% it's a wash! Same total cost for the house and you are one year closer to paying it off if you buy it now.
Jan 25, 2008 04:59 AM #60
Anonymous
dagg

 

Of course it's always a good time to buy, just look at these headlines.

60 Minutes: House of Cards 

http://www.cbsnews.com/sections/i_video/main500251.shtml?id=3756665n

Pain goes through the roof

http://www.latimes.com/business/la-fi-foreclosures23jan23,1,6863107.story?ctrack=4&cset=true

Housing prices to free fall in 2008 - Merrill

http://money.cnn.com/2008/01/23/real_estate/merrill_forecast/index.htm?postversion=2008012317

Ryland's CEO sees no end to the slump

 http://www.latimes.com/business/la-fi-ryland25jan25,1,3859695.story?ctrack=6&cset=true

 

Jan 27, 2008 05:08 PM #61
Anonymous
WarEagle

Bryant,

 

Thanks for displaying a beacon of conscience in a turbulent market. Please know that your honesty is what people are paying you for. Buyers/Sellers user Realtors (R) because they need advice from someone they can trust. For most people, buying a hom is the most significant expenditure that they will make in their lifetime. The idea that their Realtor(R) would have "money in their pocket" at that time, versus the well-being of their client is appalling. In all honesty, your profession is due a massive shake-up, and when it is all said and done, those that have had integrity will leave with their reputation intact and will not have to compete with all the greedy johnny-come-latelys for listings.

Again, thanks for the honesty.

 HB

Jan 28, 2008 02:17 AM #62
Anonymous
David

 As someone who is not part of the industry, I can tell you that I would NEVER use an agent who parroted that kind of garbage either in an ad or in person.  Really, it would be equivalent to you saying "I am either an idiot or a con artist, and I'm hoping you are dumb enough to believe this transparent propaganda.  Please hire me."

If you have built your business on honesty and trust, now is not the time to abandon that policy.  The era of the Huckster Realtor is coming to a crashing halt.  In a few years, with any luck, the only real estate agents left will be those who have distanced themselves from the NAR and its self-serving hype, and who have earned the trust of their customers.

 

Jan 28, 2008 04:53 PM #63
Anonymous
Weary Consumer

Mr. Tutas - I applaud and appreciate your integrity.

Stand by for something less pleasant for others: 

 

Regrettably, far too many agents are blind to the circumstances around them. A famous quote says "It's hard to get a man to understand something when his job depends on him not understanding it".

This is the current case with RE. QUIT CALLING BOTTOMS in the market. You are destroying your credibility as professionals. What if you are wrong? So you get the sale, you will be thought of as a swindler forever.

I am a high 700's FICO no-debt, non-contingent buyer with cash in the bank. And every time at an open house when some agent tries to tell me it's a great time to buy, I feel insulted.

As if most agents would ever tell you that it is a bad time. I've met a few, but not many. 

I DO PLAN TO BUY. I am not waiting for the bottom. But I am sick of these agents insulting my intelligence with their fast-talking sales hype.

I know there are good realtors out there. I am working with one. But the rest of you better get straight with the facts and quit blaming the media. Most of the gullible buyers are locked into an underwater house.

Now, you have the people like me. We didn't get in this position of power by believing sound-bite advice.



I sincerely apologize to the conscientious and competent agents who truly have their client's interests as a priority. But the rest? Your world is changing, and you need to realize it fast.
Jan 28, 2008 10:34 PM #64
Rainmaker
1,120,282
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc
Good morning. It looks like the consumers have arrived on this post. THANK YOU for your opinions. I hope my fellow REALTORS(R) read these comments and take them to heart. Dishing out propaganda is demeaning and harms us all. The consumer is very smart and wants nothing more than the truth. Give them the facts and let them decide if it's a"great time to buy" or not. 
Jan 28, 2008 11:14 PM #65
Anonymous
Ismaeel

By the time the housing market bottoms out, Realtors would have a worse reputation than used car salesmen. Most likely they will end up nearly extinct just like travel agents, with websites doing the job of bringing buyer and seller together. Only a few responsible ones like the blogger here will survive for specialty transactions. 

Several realtors above are making foolhardy statements that it's a good time to buy because interest rates are now low. If they knew basic math, they would realize that low interests rates are irrelevant when prices are too high, and salaries are stagnating. The primary issue is affordability. At current levels, prices have to decline by 30% or more, and salaries rise, adjusted for inflation, to get back to a healthy market. 

 Instead the country is headed to a major recession, the Federal Reserve is sacrificing the dollar to save Wall Street, and Joe Sixpack and Sally Soccermom will have a hard time at the grocery counter, let alone ponying up 6% or buying granite countertops.

 They'll simply rent, and that would be the smart choice, because in most cases they would pay less than half the cost of "owning", which in reality is renting money to buy a house. 

Jan 29, 2008 07:23 AM #66
Anonymous
Jim in L.A.

Wow, the Realtors who rationalize and BS about the market picking up and about prices being low really illustrate how corrupt the so-called profession has become. 

Prices are low after tripling and then dropping 15%?  Give me a break.  When it's possible to cash flow a property, it will be a good time to buy, and until then, real estate is a POOR INVESTMENT. 

The NAR is still actively running ads talking about the great returns on real estate investment - any Realtor who tells a client to buy and to expect anything other than a decline in value at this point is a deceptive piece of scum.  And the rest of you, when you support the NAR, and when you hem and haw and rationalize about how it's really not that bad, or that you don't know, rather than coming right out and admitting the truth, you help support the image of Realtors as less honest than used car salesmen.

Jan 30, 2008 10:51 AM #67
Rainer
3,252
MyMortgage MyChoices
MyMortgageMyChoices.com - Hayward, CA
My Mortgage My Choices

To the consumers bashing Realtors: More specifically-

"realtors above are making foolhardy statements that it's a good time to buy because interest rates are now low . . . If they knew basic math, they would realize that low interests rates are irrelevant  . . ."

"Realtors who rationalize and BS about the market picking up and about prices being low"

(Please read their entire posts above for full context)

I posted a comment on 1/25 and stand firm on my opinion. I presented fact above, the very basic of basic math. I will explain the math below. Is it fair to accuse someone of being foolhardy or BS when you don't know their values or their professional approach as a real estate consultant?

If a Realtor stated it was a good time to buy three years ago was he or she wrong? The market was appreciating yet you are better off buying now than three years ago.

Back to the math. Interests rate are just as relevant as home prices. In the late 70s and early 80s home prices became "too affordable". Our banking system and the Federal Reserve (which is neither Federal nor a reserve) have more control of affordability than you might think. What happens when home prices fall to the point that local rental rates equal a mortgage payment on a decent home? The market begins to turn around. What happens if prices continue to fall - the banking system takes advantage of the consumer by raising interest rates. Interest rates rose to as high as 19% if you had good credit in the early 80s.

Here's the "basic math". The table below is designed to show you how high the rate would have to increase if a home depreciated 10% in a given time period to keep the total pament approximately the same. Note that for fun I use 19% from the 80s in the last column and show you how low the house would have to drop to, again, keep the same payment.

Depreciation 10%10%10%10%10%
Interest Rate5.500%6.750%8.000%9.375%10.750%19.000%
House Value$300,000$270,000$243,000$218,700$196,830$122,000
30 Yr fixed payment$1,703 $1,751 $1,783 $1,819 $1,837 $1,938
Tax & Ins estimate$400$360$324$292$262$163
Total Payment$2,103 $2,111 $2,107 $2,111 $2,100 $2,101

 

I sincerely doubt that rates ever be that high again. But if a consumer believes that rates are irrelavent then then they are not looking at the entire picture.

Please do not make assumptions about Realtors without getting to know them first. There are many bad examples in almost any profession. There are also many good examples. Find one that helps you clarify your values so make good decisions. Find someone who is informative but not a salesman. The good one's are consultative in their approach - we are not all in sales.

Is it a good time to buy?

I can you show you dozens of properties with positive cash flow.

Your monthly payment won't go up and you can own a nice home.

You have thousands of properties to choose from.

Your interest rate will be based on some of the lowest rates in history.

Is it the best time to buy? That's up to you. No one can predict what the markets will do (interest rates and home values). Realtors aren't implying that the market has turned and neither is NAR. . . but I can almost guarantee that real estate is a great long-term investment and it's a great way to live (as opposed to renting). The choice is always yours - we give you more credit than you think.

Jan 30, 2008 03:09 PM #68
Rainmaker
60,957
Kevin Tomlinson
One Sotheby's International Realty- Miami Beach Real Estate - Miami Beach, FL
Miami Beach Real Estate

Living in Florida myself, it may or may not be a good time to buy.  If I said that, I would also have to add another one-liner to say "Now is a really bad time to sell!"

Jan 30, 2008 04:34 PM #69
Rainmaker
1,120,282
Bryant Tutas
Bryant Tutas-Tutas Towne Realty, Inc - Poinciana, FL
Broker/REALTOR, Tutas Towne Realty, Inc

Norm, Graet comment full of good info. That's the kind of service that REALTORS(R) provide and that is what NAR needs to be advertising. The consumers are pissed because we keep shoving the "It's a great time to buy real estate" down their throats. It doesn't matter if it's a true statement or not it's condescending advertising.

 

Jan 31, 2008 06:32 AM #70
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