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