I read a blog today, which was posted by a Real Estate Agent, who saw an interview on the Fox Business Show. I read her response and it was very interesting. The Fox Business Show premise seems to be that a Real Estate Agent showed someone a house and the consumer brought the house and now the house is worth less than it was when it was purchased. Now the house is back on the market and the question is should the Agent get paid for selling it again?
For me the answer is simple; YES! My reasoning is also very simple:
- Real Estate Agent & Lender do not twist anyone arm to purchase a house. The Agent shows the consumer houses that are available and that meet the consumers requirements. The Lender reviews the financial & Credit worthiness data of the consumer and the appraisal and lends accordingly.
- Everyone in the transaction who operates with integrity, makes the best decision at that moment in time based on the information available at that time.
- No Agent nor Lender knows when and if housing values will fall or rise; we do not know if someone will keep or lose their job; and for that matter any other unforeseen circumstance.
I think one of the basic misconceptions are that a house should consistently increase in value no matter what and that is not realistic. Consumers need to understand two basic concepts:
- A house is a long term investment and needs to be viewed as such, typically 5-10 years. Statistically a house will appreciate 3-5% per year over the time. But at any one point in time it might be higher or lower, but over a 5 -10yr period the house will increase in value
- Consumers need to look at the total aspect of owning a home:
- Tax write offs for Mortgage Interest and Property Tax Payments - how much did that save in Taxes paid to IRS and the State
- The fact that the consumer has gotten the usage of the house as well
- Neither the Agent nor the Lender participates when the house increases in value and then is sold, that money goes to the Seller
If you subscribed to the statements I just mentioned then, what also hold true is that Real Estate Agents and Lenders still perform the same function, therefore they should get paid when the deal actually comes together. As the Blog I read earlier alluded to; "When the deal does not close, neither the Agent nor the Lender get paid. Now imagine as a newscaster that you report on a news story, the viewers don't like your report so you don't get paid. Let's see how well they might like that situation.
It is time to stop complaining about what has already happened and to move forward in a positive manner and work diligently to fix the problem.