September 2011 Archives

Family reasons are causing me to move out of San Diego. I won't have internet access after I publish this until at least sometime Friday evening, and for some reason my software is not publishing things I schedule ahead of time. I could take my laptop to Starbucks at the appropriate time, but it works out that I've got sole adult charge of the originating end of the move, which includes 2 kids and a dog who is terrified of car rides despite the fact she gets more rides to the park than to the vet (and the ratio would be more lopsidedly park if it wasn't such a chore to deal with giving her a car ride). Let's be real: I'm not leaving them alone to go to Starbucks.

I never thought I'd leave San Diego, but circumstances force the move as the least bad solution. I'm a very private person by nature, but I owe readers at least a note as to what is going on. Those of you who may be close personal friends and were entitled to a more full picture, please respect my family's wishes to keep what has been shared private between us. I am not certain of what my professional future holds at this point. Due to moving away from my client base and the nature of the current economy, it's likely I'm going to have to take a job - as in working for someone else - at least for a while (if I can find one with the employment situation as bad as it is). If I'm not working real estate full time, it strikes me as likely that ignorance of changed conditions will leave me less able to write correctly about real estate or loans and less able to update past articles correctly.

At the very least, past articles will stay up for a while, but how long is unknown. Site revenue took a sudden dive a few months ago when Google decided to start paying a fraction of its previous rate for ads. Where revenue used to be well above costs to keep this up, that situation has now reversed. There's a bit of a pot built up (a couple hundred dollars - about a year at current burn rate), but we shall see what the future holds.

Every so often, you will see references to a "pocket" listing. These are usually bad for owners, and usually bad for buyers, but good for agents.

A "pocket listing" is one where there agent keeps the listing "in his pocket" rather than advertising it on MLS. This keeps it out of sight to nearly every potential buyer! If it's not known to be available, how many people are going to want to see it or decide to make offers?

But if not on MLS, how do people find out about it? Why agent advertising to buyers that there is this wonderful property available that they can only see through this agent. In order to see it, of course, they want an exclusive buyer's agency agreement. This gives them a means to lock up the buyer's business as well as the sellers. Of course, limiting the potential market is a violation of the duty owed to the seller because it also lowers the sales price.

It also gives the agent a lock on both halves of the sales commission, as they're pretty much by definition the procuring cause.

There is also a very high danger to the seller: If the agent does not have your property on the MLS, their buddy the property flipper may be the only one that the property gets shown to. This person then puts in the only offer - and even if other offers get put in, the agent plays gatekeeper by tossing them in the trash unbeknownst to the their client. The flipper offers a low-ball, owner takes it because it's the only offer, flipper turns around and sells at profit. Not that this doesn't happen with properties on MLS, but it's a higher danger if the property isn't on MLS.

There is one situation I can think of where a pocket listing is acceptable: if it is temporary, in order to deal with an issue that will make it difficult to market the property for what it's worth. The owner wants the property available, but it isn't really in their best interest to put it on MLS now.

If I take a listing in December, it's usually better to keep it in my pocket until people are done with the whole Christmas holiday thing and ready to get back to business - usually the second week in January. That way the "days on market" counter isn't 30 or more the first time any potential buyers really consider it. People really do refuse to look at property that isn't fresh on the market - it's dumb, but they do it. The San Diego market usually doesn't return to the usual level of activity until mid to late February, but I can guarantee that your potential market in December is a fraction of the interest the same property would generate at any other time of year, and the lowest ebb continues until everyone is back from New Year's. This period is the best time of year to be a buyer, but the worst to be a seller - and it's completely predictable.

If the property is undergoing work to make it more salable, that is also a potentially good reason to keep it in my pocket. This gives me a chance to explain what's going on before the prospective buyers see the current state - to frame the issue, so they know what's going on, and what's being done to fix it, before they see it. Especially since most people are visually oriented, if they understand it's going to look good eventually before they see the current mess, that's a much better chance of a good offer and a sale that my client the owner is happy with. Because I properly manage their expectations, they are better able to consider the property than if they see the mess made by construction cold. That's why there's a sign in the yard, but no entry in MLS yet. People who want to live in that neighborhood will see it as they drive around, and I will happily show it to them - with or without their agent - once they understand why it's not on MLS yet.

(I also do not do dual agency - ever. If I'm showing one of my own listings, the people seeing it sign a piece of paper that says I am not their agent, and that they understand I am doing this purely because I owe the sellers my best efforts to get the property sold.)

Temporary is the only thing that can make a pocket listing acceptable. There is a reason - whose end is marked by some definite date or event - that both the owners and the agent understand and agree means it will likely generate a higher sales price if this property doesn't go onto the MLS until it's over. Once it hits MLS, the Days on Market ticker starts going and I lose my ability to frame prospective buyer's expectations, because any listing good agent wants potential buyers to be able to see that property any time with only their agent for company.

Putting a property on MLS means that everybody can see that it's available, and (if the agent has explained the owner's financial interests to them property) that the ability to come see the property is as wide open as the owners can possibly make it. This maximizes the abilities of potential buyers to know the property is available and to come and see it, thereby generating the maximum possible interest and therefore, the maximum probability of highest sales price. Sales is always a numbers game, and you get the best results by pre-loading the odds in your favor. The only possible exception to wanting the widest possible exposure are if there is a temporary reason why people might not like it as much now as they will in a few days.

Caveat Emptor

Article UPDATED here

This has been bothering me ever since that debate, complete with all the left wing crap about conservatives cheering for a death. They weren't cheering for a death; they were cheering because someone running for public office wasn't giving an emotional knee-jerk response and managed to actually - and correctly in my opinion - consider the counterarguments.

Let us consider the question as asked. It posited a young healthy man who could have afforded health care - could *EASILY* have afforded health care as he was young, disease free, and had a good paying job. He makes makes a decision not to purchase insurance, and some such young men do every year, loses the bet he is effectively making by getting into an accident that puts him into a hospital in a coma.

Where does the money to treat him come from? Increased cost to the provider. But who really pays those costs? Why, the other customers of that provider, of course. This means they get less health coverage than their dollars would otherwise buy, or it costs them more. For some of them, it makes the difference between a bill they can pay and one they cannot. So paying that young man's medical bill means that these people cannot afford health coverage. Guess what happens? Some of them - a larger number this time - need care and cannot pay for it. We get another entire round of this whole circle. And another. At some point people start asking why they should pay at all, as they can "free ride" off other people's coverage. Soon, nobody is paying for it, and immediately after that, there is none. Doctors can't get paid, there is no money for the machines, no money for the hospitals, no NOTHING in the way of health care. Maybe there's a few charities providing small services somewhere, kind of like Doctors Without Borders, but there is NOT the entire edifice of aggressive, comprehensive health care like we have come to expect in the last several decades.

You think I'm making a mountain out of a molehill? I am not. This is elementary behavioral psychology and basic economics. Them's the facts. It takes time to get to the conclusion, but we're not starting from zero and it's a compound interest expansion. Furthermore, the farther down this road we travel the harder it is to reverse, and from the point we reverse it, it is at least as hard to get back to this point as it was to get here in the first place.

Make it a government program, and it gets worse faster because government employees have no sensitivity to cost or efficient care or anything along those lines, plus you have government paid people imposing nonsense rules on everyone involved - providers, consumers, and all points in the supply chain on the basis of all the minor abuses that have ever been found in the system, whether or not that abuse applies to the situation at hand. All of those rules have their own costs, which in turn means that the resources to treat even more people are wasted on bureaucracy, and fraud prevention, and investigation into the merits of every claim, which delays treatment and allows the condition to fester (assuming its not one that would get better on its own, in which case I ask does the person really need health care?)

There are alternatives. Family friends and charity could decide to pay the cost of the young man's care. It was stipulated in the question that the young man was in a coma, but if not unconscious he could use that income he has been earning to persuade someone to give him a loan that would pay for the care.

But the question was "what should the government do?" and once you have examined all the costs of the two alternatives, my emotional value driven judgment says that the course of action with the lowest cost in terms of preventable deaths, treatable lesser conditions becoming prohibitive, and general availability of healthcare to the population at large is likely - in fact almost certainly - for the government to do NOTHING in that situation. It's not a popular solution. That young man has those friends and family members all crying about what a tragedy this would be, while the victims are at this point unknown and nameless. But they're not any less real for all of that, and refusal to face precisely these facts is one of the factors driving up the cost of health care and therefore insurance to those who want to pay it.

By all means let us have this debate. But let's drag the actuaries into it so that we're all aware of all the costs - the real costs - and make our choices based upon that, while both sides are equally abstract and we can choose a compromise that everyone can live with. Because the choice given is a rotten one at the point you have a specific face to put with the course of action that actually costs more lives and more misery, and no comparable faces to put on the other side. Like say, a hundred 7 year old girls who don't get their medicines or who don't get quite enough medicine because the money that was used to pay for this clown's intensive care mean there's no resources left for them.

In short, the question itself was either so viciously dishonest and one-sided as to evidence a political partisan trying to score cheap points, or so deliberately ignorant of the real choices we face in health care as to evidence that they should not be allowed input into the issue.