Are real estate agents and mortgage lenders adding to the problem by "creating transactions"?

Are real estate agents and mortgage lenders
adding to the problem by "creating transactions"?

I read a blog post today by Carra Riley titled No Guts! No Blue Chips! The premise of her post was stated in the very first sentence:

"Let's talk about getting 'out of the comfort zone' to generate some blue chips."

Carra goes on to say early in her post:

"As a real estate consultant, I am encouraging existing home owners wanting to move up, to do it now. Many families are reorganizing with the employment changes where children and grand children are coming to live with parents. Why not buy a bigger house and enjoy the change while the prices are down.  Individuals who purchased a home in 2002 or before could be in the perfect equity position to move up now too! Do you want that two or three car garage or the den and 4th bedroom? The time could not be better to start looking to see if you can make the move."

In one of Carra's own comments to her post (#3), she said that in one of her continuing education classes, they were talking about "creating transactions."

If we have a past client, and we keep in touch with them, it has always been fairly easy to create a transaction:

• New baby? Convince them they need a bigger house!
• Interest rates fell a quarter of a point? Convince them they need a bigger house!
• Last child graduated from high school and went off to college? Convince them they need a smaller house!
• If you're a mortgage broker, you could always convince them to get a HELOC to remodel the kitchen, add a new bedroom, or get that new car with built-in GPS.

I understand why people would want to move up or move down, and I think I understand what Carra is saying, but I also think that creating transactions might be part of the problem with the real estate market and perhaps the economy in general. It creates fairly easy money for us because we've already worked with them, but isn't all this easy money part of the problem with the real estate market and the economy in general?

Personally I think that everyone who buys a property should be required to put 10% down, and that 10% equity should never be allowed to be taken out. That would force people to take a little pride of ownership in their own homes. Would it deter some people from buying a home because they don't have that 10%? Possibly. But on the other hand, I don't think it should matter where someone gets the 10%, as long as it is legal — birthday gift, graduation gift, anniversary gift, Christmas gift....

I also think that if you're not an investor buying and renovating properties, or buying a property as part of your investment portfolio, you should only buy a home if you are willing to live in it, raise a family in it, retire in it, and perhaps even die in it.

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If you're looking for a great real estate agent in San Diego, well,
let me Google one for you.

I'm available 24/7, so feel free to contact me by phone or email.

Jim Frimmer, Realtor
Century 21 Award Mission Valley
California DRE License #01458572
619-729-5701
jimfrimmer@century21award.com
Mission Valley Condos Information

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