Ignore the Masses, Part 318

By
Real Estate Agent with Price & Company Realty

Bill Lagan walked into my office on Friday, slapped June's Money Magazine down on my desk, and said, "You're gonna love this ." I knew I was in for something good, since I usually don't have to censor anything Bill says.

Do you remember the Bugs Bunny cartoons from years ago? I'm thinking specifically of Yosemite Sam hopping mad, jumping up and down, his face beet red, smoke coming out of his ears, yelling, "Oooooh, I HATE that rabbit!"

That's exactly how I feel right now about the editors of Money Magazine. And it galls me to think of how many of their readers will just accept what they write as excellent advice - and subsequently lose money because of it.

A few examples:

1. They quote a California-based economist who answered the question, "How will people know when it's okay to get back in(to the real estate market)?" His answer? "Simple. When prices stop falling for six months." Silly wabbit. His comments may hold true for California, but when it comes to Myrtle Beach real estate, wait six months and all of the great deals will be gone, interest rates will have risen another 50 to 100 basis points, and the Trumps and Buffets will be finished stuffing their real estate portfolios with home runs.

2. How about this zinger? "Face it: The house you buy today will more than likely be worth less next year." If this smackdown doesn't make the reader run screaming from a purchase, the writer's advice to ignore the seller's asking price and bid 10% below what comparable homes are selling for" sounds great but ignores the basic premise of buying the right home, as opposed to the best-priced home.

3. OK, more agent-bashing: "The real estate game has a built-in conflict of interest, since the listing agent and your agent both get paid by the seller." Are we really going to debate the value of real estate agents again? In what could be the biggest financial transaction of your adult life, would you rather go it alone or have the knowledge and advice of a professional who does this all the time? True, the seller pays the commission, but nobody gets paid until you find the perfect house and negotiate a 100% acceptable deal. If you're a serious buyer, using a buyer's agent (at the seller's expense) to help search, negotiate and advise just makes good sense.

4. "Up until now, you couldn't really operate in the residential real estate market without access to the National Association of Realtors' multiple-listing service. The monopoly meant that only realtors really knew what homes in your area were selling for. They'd be happy to share the data - in return for the standard 6% commission." Sorry, Money. Each of these three sentences is factually inaccurate. First, there has never been, and never will be, a national multiple listing service. All real estate is local, and the multiple listing services are, too. There is no monopoly. You can research the Myrtle Beach real estate market on our website as well as hundreds of others. You can search a wider area on realtor.com. Want to know what houses are selling for? There are numerous sources for this information - all of them free. And as for that "standard" 6% commission, well, now that's illegal. All commissions are negotiable, and shame on you for suggesting otherwise.

I could go on, but I've come to the conclusion that Money Magazine might best serve their readers by sticking to what it does best: continue recommend the good ol' stock market with its spectacular returns.
Hey, Money editors! With friends like you, who needs the rest of the national media?

 

- Richard Sander, P&C Sales Mgr

Comments (9)

Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

And the beat goes on.

I feel fully justified for bashing most of the financial and housing media. 

Jun 24, 2008 05:57 AM
Chris Tesch
RE/MAX Bryan-College Station - College Station, TX
College Station, Texas Real Estate

Yep, the "experts" are certainly dispensing some interesting advice!  I read an article about the impact of interest rate vs. pricing I believe in Newsweek a few months ago.  Good stuff!

Jun 24, 2008 06:18 AM
Anonymous
Steven Appraiser

What if someone informed the public that most Realtors don't know or care to learn, how to price a home?

Hi, I've been a certified real estate appraiser for 10 years. The problem I see with the majority of Realtors out there is, "Most Realtors cannot accurately price a residential property". Sorry, you know it's true. Homeowners think you have this skill.

Most CMA's developed by Realtors, do not include even one of the only three ways to value an asset. Throughout all of history, all the greatest thinkers could only arrive at only three ways to value any asset. The income, cost and market data approaches to value. If you verify of a forth approach, please contact me, so I can get the data published.  

You have access to the same data I have. Why can't you use a market data approach similar to the comp grid on an appraisal? Adjust your comps sale prices for differences between the subject and the comps. Your clients might be impressed if you could logically support an opinion of value.

Jun 25, 2008 03:59 AM
#3
Anonymous
Richard M. Sander

A couple of thoughts on what "Steven Appraiser" wrote above...

1. I'm confused. My blog post was a rant against Money Magazine and their continued bias against real estate.  Unless you are a writer for Money Magazine, WHY respond in this way?  And aren't you way off topic here?

2. Just as an aside... where are you an appraiser? Are you a member of ActiveRain? Why don't you add a link so we can see what you're all about?

3. One point I will agree with you on... Many real estate agents don't know how - or don't take the time - to do a CMA the way appraisers appraise property. But that's where our agreement ends.  You wrote, "Why can't you use a market data approach..." and, "Your clients might be impressed..."  Guess what, Steven?  We DO, and they ARE.  This, of course, leads me to...

4. As with any profession, do your homework before hiring a real estate agent. If, as a seller, a listing agent gives you a very high valuation of your home (perhaps just to get your business), ask them to show you how they came up with that number, and then ask for their action plan to get it sold. That's just good business sense.

Richard M. Sander, Price & Company Realty Sales Manager

Jun 25, 2008 04:48 AM
#4
Bobby Wallace
Vacant Land Solutions - Charleston, SC
Sell Your Vacant Land The Hassle Free Way!

Richard - What does Freddy Kruger and Money Magazine have in common? They both get paid to scare people! Don't drink the kool aid.

Nov 20, 2008 11:18 AM
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