Sunday, March 11, 2007

Would You Buy a House from this Man?

The CEO of the nation's #1 builder, D.R. Horton's Donald Tomnitz, told Wall Street analysts, according to The Associated Press: "I don't want to be too sophisticated here, but '07 is going to suck, all 12 months of the calendar year."

You have to love this kind of candor from a CEO. Let's face it, the guy has the balls to call it like he sees it, damn the torpedoes. Him, I like. But, more importantly, I find myself thinking that I could TRUST him.

Unlike most in the RE industry at this point, he's not trying to sell me some BS, pie-in-the-sky rhetoric about why I should buy a home now so he can land a couple of transaction. He's looking at the longer term, recognizing the fact that what he says today will be remembered tomorrow. He KNOWS that his reputation and credibility are on the line and he's behaving like a professional and telling like it is. There is one huge lesson here for everyone in the RE industry.

There's a saying in the Sales profession:

You buy from people you trust. You trust the people you like.

When I buy my home, you can be it bet it will be from parties I trust. Case in point, if I decided to buy new, my first stop is going to be at a D R Horton development. They have earned to right to try and win my business. These other developers? Not so much.

The same logic applies when you are buying an existing home. Why buy a home from a realtor where they're trying BS you about the market? If they're not being honest about the market, what else aren't they telling you? When a realtor tries to pump up the market, he is acting in HIS interest not YOUR interests. This ought to be a HUGE red-flag for you and you ought to really consider heading for the door.

Realtors have got to realize that every sales transaction requires TWO parties, both a seller AND a buyer. No buyer, no transaction: it's that simple. Yet, all the propaganda is coming out of the NAR is all bullish and pure bullshit. No self-respecting well-informed buyer is believes this nonsense and it is killing their credibility. Many agents aren't any better. Take these two yahoos as examples:

"Here we go again! For those of you who speculated a drastic decrease in residential property sales and prices... think again! Prices are increasing as I type this "opinion" and will once again result in a mad scramble for anything in Orange County with four walls and a roof. It likely won't be as ridiculous as it was last year however, but it will be similar. Buyers should buy now before summer prices escalate. Sellers should list their property around the beginning of April." As Quoted in Realty Times.

For buyers who have been waiting "for the bubble to burst," it's not looking very hopeful," says Realtor
Vicki Lloyd. "For the beginning of the year, it is starting to look a lot like last year, but with higher prices. County-wide, our inventory levels have fallen back to less than two months supply, and well-priced homes are again selling within days of coming on the market." As Quoted in Realty Times.

Do I even need to point out how severely these two are wrong? I won't bother. But I will ask you this question: "Would you buy a house from either of these people?" I wouldn't and I won't. If they can spread BS around like this, how could possibly consider involving them in a transaction of several hundred thousand dollars? They have NO credibility and I, for one, do not trust them.

We may be bears, but we have memories like elephants. We are going to remember who tried to manipulate the market and who was honest. If you're a realtor and you ever want a chance to earn our business you'd better start shooting straight.

Vivo los Osos!


Markus Arelius said...

This mess is going to take years to clean up. Years.

No one in America in there right mind will ever view a home realtor the same way again. The greedy, incompetent few have all but destroyed the former "profession".

All one can say now is this: Today's realtors damn well better have a billy-goat's stomach in order to look their customers in the eye over the coming months and years.

It is NOT going to be pretty.

Blank stares, fits of rage, maybe even postal tendencies. Homedebtors and homesellers will be, in a word, impossible to deal with.

The sub-prime meltdown will have all but erased the potential homebuyer clientele for realtors - and what clients (buyers or sellers) are left standing, will be more intransigent than ever and complete bastards to work for.

This time around realtors will earn that 6%.

HB Bear said...

Here's another thought for the RE industry and their agents.

As we've already seen, there are more than enough sellers around and there certainly are going to be many more in the near future. Realtors are not going to have to woo, if you will, sellers. They are going to have to woo buyers.

If we look at the recent inventory numbers there are 5 times as many listings as there are willing buyers. This strongly implies more sellers than buyers.

If you're an agent, don't you want to be the one brining the buyer to the sale? You represent the more scarce party in the transaction. I think you have a strong argument for a majority of the comission.

Guys, think it through. Do you want to keep talking up the market and killing your credibility and reputation? Or do you, be honest and earn the trust of your future clients?

Sunset Beach Guy said...

HB Bear:

What do you think of OCR's latest numbers for 92648?

It looks like the median is down 20% YOY.

HB Bear said...

92648: The Land of My Spent Youth.

I lived in downtown in my early 20s had a great time living there, very eclectic neighborhood back then. It had character and grit. But I digress.

You know, I don't know what going on there. Sometimes when I see a number like 20%, I think to myslef, "Nah, there's something hinky going on there. Must be something odd."

So I like to look at a couple of possible causes: Very low sales volume causing sample-size issues and unusually high prior year medians.

But, you know, I look at the sales volume and it's not only up month-on-month, but its also higher than the average sales volume for this last year. So that's not it.

And the median from all sales last year is $975,000; so the YOY number may actually MUCH more forgiving than a full's year of data. So that's not it.

(Good God, are prices really down over $250K for 92648, this month versus, all last year.)

So if you eliminate those two causes then you have to think that something's going on. My guess is that a drop in the price per square foot is contributing to the decline, but it's got to be a change in the blend of homes that are selling there that is causing most of the ruckus.

There are a lot of condos in downtown off of Lake with many, many units for sale. Maybe more of them (and other less-expensive condos)selling.

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