Tim's Atlanta Real Estate Blog: November 2008

Does your buyer's agent seem to be pushing you towards one house vs. another one for no appearant reason?  Like the saying goes, follow the money.

There was a featured post this morning that disturbed me.  It suggested that sellers should increase the buyer's agent commission on their homes in order to take advantage of the fact that buyer's agents are really getting financially desperate.  Over 80% didn't have a closing last month.  So if you wave a bigger commission in front of them, they are more likely to promote your home vs. another similar home that has a smaller commission.

Many agents will say that a buyer has no right to affect what the seller pays in commission.  That's true, but since the commission paid to the buyer's agent seems to affect the transaction, it seems that it is only right to have that amount be known by all parties involved.

As a buyer, I would want to know if my agent is pushing me towards a house because more commission is being offered.  It's called transparency. 

As a buyer, you might want to address this in your Buyer's Agency Agreement that you sign.  As a buyer, I would write a special stipulation stating that my agent gets whatever the listing agent is offering up to a maximum of 3%.  Anything over this or any extra agent incentives are to be credited to the buyer.

If you don't already know, most buyer agency agreements have a place to write in a specific commission amount in the case where there is no seller commission being offered.  It  states that if seller doesn't offer a commission, the buyer is responsible for coming up wth the stated commission.  Make sure you know what you are signing.

 Here's what the Georgia contract states:

Broker shall seek to be paid a commission from the listing broker under a cooperative brokerage arrangement or from a prospective seller if there is no listing broker. In the event the prospective seller or listing broker does not pay Broker a commission, then Buyer shall pay Broker at time of closing the following commission:

Agents are human and humans, by nature, usually look out for what's best for them.   So, be aware that some agents will avoid showing listings that offer less than some amount such as 3%.  Be upfront with your agent about this possibility. 

It's best to know what is motivating all the players in the game.   Confront these things early on in order to avoid hard feelings later.

I just saw the deal of the year.  A home that I had tried to sell 3 years ago for $450,000 went into foreclosure and just got listed for $152,000. 

This home was built in 2004 on the foundation of an old home.  It was built in the craftsman style of the original home so it fits in well with the neighborhood of older homes.

The original owner bought it for $430,000 in 2004.

It is a really nice home.  I would say that it is probably worth $350,000. 

I called the listing agent and they said they received two offers on it but there is time to submit another.

I don't know what it will take to be the winning offer but if you got it for $300,000 it would be a great bargain.

If you are interested in more details, give me a call.  You'd probably have to put in an offer by tomorrow.

The Onion does some great satire.

This one made me laugh just because it's so true.

The world runs on trust.  When you can't trust someone, you stop doing business with them.

I'm feeling that way with the government and the Federal Reserve. You can't trust  a word they say anymore.  Paulson says that he changed his plan about the bailout before the legislation was even passed.  It would have been nice if he told everyone ahead of time. 

Then the members of Congress told us that the $700 billion was going to go to buy up troubled assests to unclog the banking system.  We were assured that the money would be used to help domestic banks and there were plenty of safeguards to make sure that the money wouldn't go to bonuses for the bank managers. 

We see in their own words that all this was just a bunch of lies.  Watch the video below and I hope you begin to get mad as hell about all of this.

They've been lying about social security forever.  There's no trust fund that they can put in a lockbox.  It's all one big Ponzi scheme that would get a regular person prison time without question. 

Can anyone really have any trust in the whole banking and money system after you see how they lie?

But as it stands now, there's not much you can do to boycott the system as long as the FED has control of the money system.  If we'd all stop paying taxes, all they would have to do is print more money.  They do this already.  It's the invisible tax we call inflation. As long as they have power to create money from nothing, they have the power to do whatever they want. 

The system is totally corrupt.  We need to put an end to the FED and create a system based on money you can trust. 

I trust gold and silver as money.  It's more than just a promise. It's something of real value that can't be created out of thin air like our fiat money can.  Politicians hate it because it puts limits on how big govenment can grow.  Since we see how little you can trust these guys, I think it would be great to have the system structured to keep itself contained. 

My kids used to have a book, "When You Give a Pig a Pancake".  The pancake here is the Federal Reserve system.  We're always going to have the pigs, so we better be careful what we feed them or we'll be like "Animal Farm" where the pigs take over the farm. 

Government bailouts are nothing new.  Whether or not the government should get involved in helping a particular group of people at the expense of society at large has been debated for centuries. It was written about back around 1850 by a French economist named Frederic Bastiat.  His book, The Law, is his reasoning of why he was against the French government becoming socialist. He uses the term "legal plunder" for a long list of things that make up the socialist state, such as:

tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on

Socialism has worked itself into our current system so much that many of the items on his list are just accepted as being good and American.  Begin to talk about abolishing one of these items and you can expect people hollering about how wrong it is, just as it was back in 1850.

The person who profits from this law will complain bitterly, defending his acquired rights. He will claim that the state is obligated to protect and encourage his particular industry; that this procedure enriches the state because the protected industry is thus able to spend more and to pay higher wages to the poor workingmen.

Do not listen to this sophistry by vested interests. The acceptance of these arguments will build legal plunder into a whole system. In fact, this has already occurred. The present-day delusion is an attempt to enrich everyone at the expense of everyone else; to make plunder universal under the pretense of organizing it.

I think that this very short book which is online should be required reading for every citizen.  I challenge anyone to read his arguments against socialism and tell me where he is wrong.

Is it too late to purge the legal plunder that has crept into our whole system?  

Maybe my memory is going bad.  Weren't we just told last month that it was so critical for the government to buy troubled mortgage assets in order to unclog the system?  Here's the latest:

Paulson also said the government is no longer planning to buy troubled mortgage assets, the original goal of the plan.

Does anyone trust these guys anymore?  Have things changed so much in the last month or were they lying to us from the beginning?

China announced it's own $600 billion bailout last week.  China is in a good position because it holds $2 trillion in foreign reserves, $500 billion which are US Treasuries and related debt.  The US depends on China to lend us money for our deficit spending. 

The big question is whether China will cash in their US Treasuries in order to do their bailout.  The bigger question is will China continue to buy more US Treasuries so the US can continue to finance it's own bailout?  China's decision is key to the US financial system.

This article give some indication:

The Chinese government made it clear yesterday that domestic stability is its main concern, despite requests for China to provide funds for international loans and bailouts.

China's top priority is to "put our own house in order," Foreign Ministry spokesman Qin Gang told reporters yesterday.

Peter Schiff has put out an email report that talks about this sticky situation.  It's a good read. 

The Chinese cannot follow such a course without unleashing intolerable inflation at home. Selling down their vast reserves of U.S. debt and using the proceeds for domestic infrastructure projects (or anything else for that matter) is a vastly superior stimulus mechanism than "lending" to Americans so we keep "buying" their products. When Chinese authorities finally figure this out the United States will suffer the consequences

He has been mostly correct over the past 2 years in his economic predictions.  Watch this video of his contrarian calls over the past two years. 

Is it still legal in this country to voice an opposing viewpoint?

Is it only legal to voice that viewpoint to others who agree with you?

Is it legal to wear a political t-shirt into a crowd of people who support an opposing candidate?

If a mob intimidates a person who is wearing a t-shirt that they don't like, should the police defend that person's right to make his statement or should the police arrest the person in order to appease the angry mob in order to keep a riot from starting?

How big of a mob does one need in order to have the police help you shut up an opposing viewpoint?

Should a person wearing an Obama t-shirt be arrested if he attended a public McCain rally?

These are a few questions I had after I watched this video.  It's making me do a lot of thinking.