Real Estate: September 2008 Archives
The inspiration for this article came when I checked my referral logs and found an article where somebody was essentially saying "If you want to be depressed, go read this site and then go rent somewhere for the rest of your life".
I can understand where the sentiment is coming from, particularly if they were of the sort of person who wants to meander around occasionally looking at houses until they find one they like, then sign a couple of papers and move in. Lest it not be obvious to you, these are the elements of disaster. I would never put an offer in without looking at at least ten to fifteen properties in the area, without aggressively shopping the mortgage market, or without taking positive steps to insure that I have at least as much leverage over the service providers as they do over me.
The fact is that for most people, the largest transactions of their life are all going to be real estate related. When the average transaction is in the hundreds of thousands of dollars, and those transactions are so complex as to defy understanding by non-professionals (and some alleged professionals), you have the elements for a system that's going to suffer abuses. Many past abuses have been corrected through the passage of legal impediments, but many others remain, and some are illegal but keep happening anyway (See my article on "What to Beware in Third Party Services).
What I am trying to do here is give you the insider's appreciation for what goes on (although not the professional's specialized knowledge. It may not be "rocket science", but to pretend you can pick up everything a working professional learns and gets exposed to every day by reading a few articles would be false, and of no service to you, the multi-billion dollar "self help" press notwithstanding). With this information, you can debunk the worst of the nonsense that you are told and get a better bargain for yourself no matter who your real estate agents and loan providers and financial planners and whatnot are. I am writing about knowledge that you need to have to understand the system, and I'm not pulling any punches about what goes on, anywhere in the transaction. I'm trying to show you limitations and blind spots in the information you may receive, and show you strategies that put you in a stronger position. Most of the articles I have written thus far pertain to real estate and mortgages, but I've written a few articles pertaining to finance as well (RULE: The best time to buy is when there is blood in the streets of the financial world).
If you're the sort of person who prefers to go on in an "ignorance is bliss" state of mind, the education may be disturbing. Indeed, many people seem determined to go about their real estate (and other) transactions in this state of mind. They resist when I attempt to educate them in the realities of the market, figuratively in the same vein as people who put their hands over their ears and say "la-la-la! I am not listening! la-la-la! I am not listening!" It's like they want to get conned, or at least not having to think about it is worth more to them than the money they're being taken for. Since the money they're being taken for can easily go into five figures whether it's a purchase or a refinance, and can be six figures for a purchase or sale, I find this difficult to believe. If you're making that much, you shouldn't need a loan, for one thing, let alone be concerned about minimum down payment. Nor would you be concerned about affordable housing and getting the best deal possible for your money. You would be so wealthy, and your time so valuable, that it would make economic sense to buy the first property that met your needs - and you'd be buying properties in the unique custom home range ($2 million dollars or so around here).
Nobody does loans for free. Nobody does real estate for free (nobody does financial planning for free, legal advice for free, etcetera). "Free" is likely to be the most expensive service of all (This is different from at such a rate that yield spread pays all costs, or the custom that sellers pay the costs of both agents - but the only source for those funds is the money the buyer brings to the table). If something about a loan, a real estate deal, or some aspect of financial planning seems "too good to be true," that should set alarm bells ringing right there. If the payment or interest rate on a prospective loan is nothing like what everyone else is talking about, they are looking to pull a con job on you.
If you're of the school that forewarned is forearmed, what you're reading here should give you the information you need to guard yourself against the deceits in the system. I've done lists of "red flags," warning signs not to do business there, "Questions to ask" that you can print out and take with you, "Salesgoodspeakian to English Translations," debunking of pat phrases used to mislead you and what they really mean. I've given you strategies that, if adhered to, give you more leverage right down the line. I've gone through what real closing costs are, what points are, and warned you of the dangers of shopping for loans or real estate by what they tell you the payment will be. Most importantly, I've shown you how to keep control of your transaction by being aware at the start of the process what the likely bumps are going to be.
Not everyone in the business does everything I've warned you against. There are ethical providers out there; people like myself who will walk away from business or tell clients the pitfalls if something is not in the client's best interest. You can find us if you look, but we can't help you if you close your ears to the things you don't want to hear. Nor are those who practice otherwise necessarily evil, and there is an entire range of practice from best to worst. Real Estate, financial planning, and many other fields are set up such that someone new in the business learns from somebody experienced. In many cases, they've been told "This is the way things are," and they just don't know any better. The person who taught them didn't know any better. It is my aim to ensure that people "know better." The change is not going to come from within the industry - the system is set up for the practitioner's best advantage, and any one agent or loan provider unwilling to toe the industry line is at a competitive disadvantage, and their business is likely to fail. It's kind of the tragedy of the commons: their own individual behavior shows them nothing to gain, and everything to lose, by full truthful disclosure, and where there are people who do it anyway, we are comparatively few. Therefore, the change must come from outside the industry. So by being knowledgeable consumers and helping yourselves, you provide impetus for practitioners to reform their practices for everyone. It may take a long time, and it may never be complete, but if it's never started I can guarantee that things will not get any better.
Caveat Emptor
Original here
blog advertising
--Blogads--
blog advertising --Blogads--
C'mon! I need to pay for this website! If you want to buy or sell Real Estate in San Diego County, or get a loan anywhere in California, contact me! I cover San Diego County in person and all of California via internet, phone, fax, and overnight mail. If you want a loan or need a real estate agent
Professional Contact Information
Questions regarding this website:
dm (at) searchlight crusade (dot) net
(Eliminate the spaces and change parentheticals to the symbols, of course)
Essay Requests
If you don't see an answer to your question, please consider asking me via email. I'll bet money you're not the only one who wants to know!
Requests for reprint rights, same email: dm (at) searchlight crusade (dot) net!
Add this site to Technorati Favorites
Subscribe to Searchlight Crusade
My Links
-
Heavy Lifters
- Instapundit
- Michelle Malkin
- Scrappleface
- Volokh Conspiracy
- Hot Air
- Wizbang
- Victor Davis Hanson
- Q and O L
- Eject! Eject! Eject!
- Michael Barone
- The Victory Caucus Places I get to as often as I can
- Icerocket
- MEMRI
- Soldier's Angels
- Technorati
- Transparency International
- Wide Awakes
- The Anchoress
- Argghhh! R
- Armies of Liberation R
- Asymmetrical Information
- Austin Bay
- Belmont Club
- Big Lizards
- Tim Blair
- Dr. Sanity
- Kevin Drum
- Gateway Pundit
- Hugh Hewitt
- Iraq the Model
- Jeff Jarvis
- Jihad Watch
- Little Green Footballs
- Mudville Gazette
- Neo-neocon
- WSJ OpinionJournal
- Powerline
- Protein Wisdom
- Real Clear Politics
- Mark Steyn
- Strategy Page
- Don Surber R
- Vodkapundit
- Watching America
- Michael Yon Personal Finance, Economics and Business Sites
- Bloodhound Blog
- Blueprint For Financial Prosperity
- Consumerism Commentary
- Eidelblog L
- The Entrepreneurial Mind
- Expert Real Estate Louisville
- Financial Rounds
- Free Money Financea>
- In Cash Flow We Trust
- I Will Teach You To Be Rich
- Mortgage Cicerone
- Mortgage Fraud Blog
- No Credit Needed
- Personal Finance Advice
- pfblogs.org
- Students for Saving Social Security Other sites I've linked and visit
- Accuracy In Media
- Ace of Spades
- The Agitator
- Ann Althouse
- The Anarchangel L
- Angry in the Great White North L
- Antigravitas L
- The Anti Idiotarian Rottweiler
- Atlas Shrugs
- Professor Bainbridge R
- Baldilocks
- Barcepundit
- Beldar
- Below The Beltway L
- Blackfive
- The Buck Stops Here
- Chapomatic
- Chequer-Board of Nights & Days
- Classical Values R
- Combs Spouts Off L
- Countertop Chronicles R
- Coyote Blog
- Daily Howler
- Daily Pundit R
- David's Medienkritic
- Dean's World R
- Decision '08 R
- De Doc L
- Brad DeLong
- Different River
- Digger's Realm R
- Done With Mirrors R
- Drudge Report
- DUmmie FUnnies
- enrevanche R
- Eschaton
- Evolution R
- Fearless Philosophy L
- Generation Why?"
- Happycrow's Eyeball Factory L
- Hold The Mayo L
- Huffington Post
- IMAO
- INDC Journal R
- Iowahawk
- It Comes In Pints?"
- The Jawa Report R
- Just One Minute
- Justus for All R
- Kausfiles
- Ezra Klein
- Daily Kos
- La Shawn Barber
- Libertarian Leanings R
- Liberty Papers
- Carol Platt Liebau
- Llama Butchers R
- Mensa Barbie
- The Moderate Voice
- Broadband Politics
- Mr. Completely L
- National Review Online
- No Angst Zone L
- Normblog
- Brendan Nyhan
- Ogre's Politics & Views L
- One Fine Jay R
- Patterico's Pontifications
- Peter Porcupine L
- Political Calculations
- Radio Equalizer
- Reasoned Audacity
- Respectful Insolence R
- Rhymes with Right L
- Riehl World View
- Right Place
- Right Wing Nut House
- ROFASix
- Samizdata
- SCOTUS Blog
- Roger L. Simon
- Stop the ACLU
- The Strata-Sphere R
- TacJammer
- TalkLeft
- Tempus Fugit
- Texas Best Grok L
- Tigerhawk
- Tinkerty-Tonk R
- Tom Rants RL
- Unalienable Right
- Unrepentant Individual L
- Villainous Company
- Oliver Willis
- Willisms
- The World According to Nick R San Diego Bloggers
- Ducksnorts
- Edward O'Connor
- Inside the Rabbit Hole
- Matt Browne
- Eric Bidwell '08
- San Diego Gaslamp and
- San Diego Home Blog
- San Diego Momma
- San Diego Traveler
- Shy Cloud
- Sociosophy
- Thaumatocracy
- Luke Stardust Link Exchanges, etcetera
- DANEgerus R
- A Dollop of Sour Cream
- Dust My Broom L
- Generic Confusion R
- Grim's Hall
- Heartless Libertarian L
- individ L
- Kesher Talk R
- Leaning Toward The Dark Side R
- Medary L
- Mondo QT L
- Nose On Your Face R
- Pererro R
- Pratie Place
- Random Fate R
- Ravings of John C. A. Bambanek L
- Signifying Nothing R
- The Skwib L
- Tel-Chai Nation
- TF Sterns Rantings L
- Windypundit L Consumer and Research Sites
- Better Business Bureau
- Consumer Reports
- NASD Home
- California Department of Real Estate
- California Licensee Lookup
- California Department of Insurance
- National Association of Insurance Commissioners (NAIC)
- Do Not Call Homepage
- IRS Charities Search
- Internet Fraud Complaint Center
- SEC Home Page
- Stop Mortgage Fraud
- Report Mortgage Fraud Debunking Many so-called Real Estate Gurus
- John T. Reed Other research
- FactCheck.org
- Babel Fish Translation
- Snopes Worthwhile Web Comics
- Sluggy Freelance
- Day by Day
- User Friendly
- Kevin and Kell It is site policy to list the main page of every site I reference. Sometimes the real world intervenes and I haven't gotten to it yet, or one falls through the cracks on a long post with multiple references. It is also site policy to list the main page of every site that lists this one on their equivalent roll, as well as the main page of all sites that are members of any of the same groups this site is a member of. Please send me an email with a link to the main page of your site if I've overlooked you (dm at the domain name). For the clue-challenged, note that it is a requirement for your link to appear on every page of your site, just like mine does, and I will not link to spam sites. Honor Roll of Sites Banned by Paranoid Repressive Governments: (be the first on your block to submit a link!)