Revolution in Buying a Home? Get paid for your own work!
Chuck Ponzi June 15th, 2006
Hi all readers, I came across a company recently that if I were in the market to buy, I would definitely use. Personally, I see this type of marketing to be the future of the real estate industry.
Basically, his Craigslist ad stated that he would credit a buyer of a specific home $18,750.00 on close of escrow of a property. Interested, I visited his website at www.wehelpubuy.com to check to see if this is actually legal, since a buyer would have a huge interest in working with someone who shares their commission, especially such a high amount. Basically, Brad Davidson credits his buyers for any commission over the 1% that he takes.
Before any of you start thinking that I’ve sold out, I just have to point out; he and I won’t see eye to eye on the belief of a local housing bubble, but regardless, I believe his business model will attract more buyers and earn him more money on volume.
I sent Brad an email and posed a few questions about his business that I will copy exactly:
1. This seems like an exciting way to attract buyers in a buyers market. What was your primary purpose in offering this type of incentive?
I was looking for a way to set myself apart from hoards of other agents and came up with the plan for We Help-U-Buy Realty after seeing the number of realtors offering discount services to list and sell homes. With home prices in the stratosphere, there’s plenty of money to be made working on one percent in Orange County, especially since I don’t split my commissions or have hefty advertising costs associated with listings. Plus the fact that I make the cost of homeownership slightly more affordable for the buyer.
2. Do you see more of your colleagues in your profession changing to this type of model?
Real Estate is dominated by the large brokerages and they don’t allow their agents to offer this sort of discounting. There are a few independents that offer discounts but I haven’t seen any others who offer to work for one percent. I’m not too concerned because the big money in real estate is in getting listings.
3. How has customers’ access to the MLS on the internet made the job of a buyer’s agent easier?
Everyone now has multiple sources to access the MLS and do their own searches for property. They don’t need or necessarily want a real estate agent holding their hands and/or deciding which properties to show them. Once a client has told you their preferences you set them up to automatically receive new listings that become available and meet their criteria. Most agents have their clients drive by homes without them and just show the houses after the clients preview the property. I do the same thing but rebate approximately $10,000 on each transaction.
4. It appears that there is a loan pre-qualification with your affiliate. Is this required, or can buyers use their choice of lender?
I offer lending but it is in no way a requirement for using my services. However, if I can offer a competitive loan, your real estate transaction will be much smoother with my being involved in the loan process.
5. Are there any indications that other agents might be retaliatory? If so, how do you plan to overcome those obstacles?
I haven’t had any problems and all of the seller agents I work with are very professional. There really isn’t much they can do if they don’t like my business model since what I do is perfectly legal and ethical.
6. How do you currently see the real estate market (please be candid)?
Frankly I do not see a “Socal Bubble”. Yes, Socal real estate prices are astronomical and we could live like kings and queens in Houston, but have you ever been to Houston in the summer? Southern California is one of the most desirable places to live in the nation and people are not going to stop coming here. Particularly in Orange County, we are almost out of buildable land and new homes are not keeping up with demand. Combine that with a good national economy, low local unemployment and reasonable interest rates and there is no bubble to burst. The pace of sales and appreciation has certainly slowed but barring some unforeseen catastrophe, there is no sign of a precipitous drop in real estate prices.
I appreciate the opportunity to tell your readers about my services. Anyone who would like more details may contact me at 949-697-5467.
Brad Davidson
We Help-U-Buy Realty
brad@wehelpubuy.com
Once again, this is not just a plug (but if you’re buying a home and doing most of the work yourself over the internet, why not get paid for it?)
I personally believe that the real estate market will continue along its path of disintermediation much like many other businesses have with the Internet. While I don’t believe that the standard 6% (or 5%) commission will change substantially to 1% like Europe, I believe that there will start to be concessions both on the sell and buy sides.
Sell side agents will begin cutting commissions to be placed in an online forum (such as MLS or Ziprealty) and will be paying Help-you-sell prices of 1% to sell. Buyers agents will continue to recieve 2-3% commissions, but full-service agents that drive you around and meet with you if you are internet impaired will still retain the entire commission. For Gen-x and Gen-y and beyond, the agent will retain a percentage and the remainder will go to the buyer.
Let’s hope that this is the beginning of a new kind of real estate model for buyers. It is often this type of revolution with early pioneers that will be shaping an industry. Here’s a good luck to Brad in his work
John, there is SO much wrong with your beliefs that it boggles the mind to even know where to start.
Michael said…
John, there is SO much wrong with your beliefs that it boggles the mind to even know where to start.
Thanks for not popping my bubble, I’m happy to stay in my own deluded world for the time being.
Nozferatu,
Please Leave ASAP!
If I need to eat crow, Serve It Up! I’ve been wrong before but the last time was when I stopped buying property 2 years ago. I couldn’t believe that the median priced home in Orange County was over $500,000. The naysayers have been predicting a drop in prices for years and one of these days they are going to be right.
That being said, I personally would not be buying a home right now. While I do have a home right now, this is not the time I’d choose to be a move up buyer. Myself and my friends who own homes (including many in real estate) are not just sitting in our lawn chairs enjoying the weather. The price of real estate is frustrating for me too. I’d love to move to a larger home closer to the ocean but even if I could afford the mortgage the taxes would be greater than my current payment.
There probably will be some sort of a sell off in the next few years and bargains will be had for those who are ready to move (read - have cash) but if you are waiting for the market to crash, I just don’t think it’s gonna happen. This isn’t “Dot Com”, there is actual value in real estate. As grandpa said, ”God’s not mak’in any more land”.
Brad Davidson
God’s not making any more land, but people are mobile.
Most of us aren’t looking for a crash so much as seeing the signs, such as over 1 trillion in ARMs set to readjust next year… and to adjust upwards. Or the fact that the median income comes nowhere near the median house price.
Or the fact that there is a greater percentage of homeowners— many of them new— than before, indicating, perhaps, a saturated market.
But this sort of scenario takes years to play out, and many things can happen to change it. We shall see what happens.
Oh, and good luck with your business. I mean that sincerely. Niche markets are often good targets, since you don’t have to figure out the “lowest common denominator.”
Brad,
Thanks for contributing. In essence, at least IMO, the bubble has popped and now the debate has turned to the degree of damage. I believe the definition of a crash in housing is a 20% nominal price decline. So you are right its not a dot com of which most lost 100% of value basically because there was nothing there. I think they use 20% as a benchmark because back in the old days thats what people used to put down on a house, so if the value goes down 20% you lost your equity. Using that as the definition IMO So Cal is in easy striking distance of a crash. And if you factor in the no money down exotic loans that became the norm over the past three years this will be a historic crash. Right now this market is playing out a classic textbook example of an asset bubble. Unprecedented sales and appreciation, bidding wars, lax lending, peak, declining unit sales, balooning inventories, the first reports of falling prices and a strong uptick in foreclosures.
These trends are strongly in place and lead in one direction. Capitulation.
The So Cal economy has been very dependent on RE related businesses throughout this boom. One could even say as dependent as it was on defense spending in the 80’s. The bust of the early 90’s was caused by the shock of defense and aerospace layoffs. The downturn of RE itself could be as shocking to the economy this time around. So Cal home prices today are about double the multiples of the peak in the late 80’s. Point being there is a greater distance to fall. The magnitude of this makes my stomach feel a little quizzy. And like yourself I could be wrong.
larenter and brad,
Nicely put. I personaly tend to believe that the key to massive foreclosures (unemployment) will not reach the level required to cause nominal price declines of more than single digits over the next couple of years, but all predictions on either side are speculation based on differing but reasonable assumptions.
What we are seeing now, steep volume drops with slow appreciation drops, has happened before. From ‘78 to ‘82 sales volume dropped 62% while appreciation eventually went to flat (not declining).
I’m saying then = now, just pointing out the reality of the “stickiness” of home prices in the absence of economic exogenous events.
Correction:
I’m NOT saying then = now.
Bitterrenter,
You’re right. Noone knows for sure what happens; I believe that Bernanke and international growth holds the key to this debate of Core Inflation vs. Asset Deflation. I don’t think anyone argues that incomes are out of whack with asset prices of homes. The question is how we get back to equilibrium. If it happens through core inflation (weak FED and strong overseas growth), incomes *should* (and could) rise strongly while home prices are flat. Alternatively, if inflation is held in check by a strong arm FED and declining overseas demand, asset prices could fall.
The unknown variable here are our trading partners’ monetary policies. They have been every bit as liberal as our own in the past, but they are also experiencing strong core inflation (look at the over 1B chinese living on less than $1/day). If they continue their growth pattern; meaning they’re not just selling us cheap goods and begin to consume more, we could see 70’s style inflation which would even us out just right but leave boomers with severely inadequate retirement savings. (as if that weren’t the case already)
john doe,
You nailed it. Right now the key central banks seem to be draining the pond of excess liquidity, namely Japan by greatly reducing their reserves. Now will they sustain this or is this a facade to manage inflation expectations on a global scale only to inject that liquidity back into the markets next year. Personally I think BB has to be mindful of the US Dollar. If the US dollar crashes the entire financial system collapses. We all lose. So that could mean, no matter how bad it coud be for the economy that RE is the sacrificial lamb, it being the lesser of two evils. I think in reality much of this situation is beyond the central banks control. We defintely live in interesting times.
Bye Bye Anonymous…
It may be the best day of my life to finally know that I won’t be coming back to this polluted, egocentric, ugly city every again…filled with ugly, arrogant people like yourselves. Try smelling your own feces sometime…because believe…it stinks too.
It’s funny that California’s wealthiest spend over 70% of their time outside of California (even the US)…they’re too busy enjoying the South of France to remember this place…
Since some of you who say you were born here and “love it”, perhaps you should buy an airline ticket and travel more with an open mind…(with your home equity-line of credit)…maybe you’ll realize there’s life outside the 405…you know…that freeway you guys are stuck on everyday for 3 hours.
JOHN DOE:
You bring up a glaring fact that many of your friends left and won’t come back in current state of affairs.
I can’t blame them….look at this place. People here are in denial and the smartest ones left a while back because 1) they could before the got stuck here and 2) they realized it very early on.
Nozferatu,
You will not be missed. If you have any trouble getting out of our fair county please let us know and I’m sure John could put up some sort of paypal contribution link to insure your rapid departure.
Please let us know where you’re moving to so we can watch for signs of deterioration. You see, you are not leaving the problems behind, you’re taking one of them with you.
Thanks,
Brad
Don’t worry BRAD:
At the rate things are going here, you’ll be one of the only losers left still “enjoying” the overcrowed, polluted, congested, overpriced, over-rated city.
No I’ll be leaving all the problems related to living here behind.
See a professional pysch. regarding your denial and contempt issues. It’ll help you out bigtime.:)
Brad:
Why are you insulting someone anonymously on the web?
I think you are a bit naive getting a plug on a bubble blog, denying a bubble, then giving a weak story designed to draw sympathy and then getting into a flamefest with a bit of a troubled anonymous poster.
That kind of behavior shows a lack of discretion and/or people skills. Not exactly who I would want to represent me in an RE transaction.
Have a nice day!
Anonymous said…
I like that realtor. Great idea. Even if it drops a ton people will still buy and realtor will be needed. So why all the hush about declining sales/prices? No big deal it just means instead of making 15-25k on commission you will then make 10-20k (with big ass decline). So if I was a realtor I’d scream that it’s not looking good but there will always be buyers at ANY point of a market and as long as you plan to live there a long long time it is no big deal (and don’t care to have lost money not waiting). That’s for the people that need the security blanket of owning a home now (renting from the bank owning I mean). A totally honest realtor is hardest thing to come across and would gain more business for sure.
Now for me renting is half the price and buying would make it more than double the price without the cost of property taxes and maintenance (even with the shitty tax break which sucks if you really look at it). So if you buy now you are stupid. Hands down to the point simple. If you bought in 2005 your stupid. I have many homes on my list that sold for a loss already in the San Diego area and any disputes can be pointed towards the flipper that lost their asses off. Prices will have to hit fundamentals regardless of prices of homes staying flat for 16 years, (http://piggington.com/bubble), wages doubling (ya f*ing ****Expletive Deleted*** right), or price declines. Either or but one of those three have to happen no matter what. There hasn’t been 1 time EVER in history where the stock market or RE wasn’t in tuned with the basic fundamentals or cost vs. wage.
1 THING IS FOR SURE. This whole mess so far in inventory points down more so than up right now. I am still waiting for the price increase sign on top of that for sale sign.
Good luck Brad I will definitely look you up when I buy man
Saturday, June 17, 2006 7:17:29 PM
Hey all you guys. I kept Anon’s post intact and only deleted the expletive and reposted it…
Please don’t post profanity (within reason, ass, butt, crap etc. are allowed as long as it is reasonable). I don’t allow profanity on my blog. Maybe I need to write a rules of engagement for the blog so that people will not do that any more.
Thanks for keeping it clean.
John
Nozferatu,
I’ve been reading this blog for sometime now, and the bulk of your comments are negative towards America. This country definitely has problems (housing bubble, illegals, crowds, etc …), but make no mistake America is still the best country in the World … BAR NONE!
We’re all a little sick and tired of your crap … please don’t let the door hit your rump as you exit OUR great country!
Nozferatu said
“It’s funny that California’s wealthiest spend over 70% of their time outside of California (even the US)…they’re too busy enjoying the South of France to remember this place…”
What is your problem Pal?
That shows how little you know about America … we overwhelmingly do not like the French. It really has little to do with politics or the War in Iraq, but rather the lack of trust. To this day many Frenchmen (and women) are unappreciative for what The Greatest Generation did for them in WWII.
Despite what you say, this country is great!
Hey Sunset,
Talk about weak stories. When did I ever insult anyone anonymously? My full name, e-mail address and phone number are posted here. And insult? I didn’t resort to name calling, profanity or personal attacks. If you would like to defend a statement from Noz such as ,
“It may be the best day of my life to finally know that I won’t be coming back to this polluted, egocentric, ugly city every again…filled with ugly, arrogant people like yourselves. Try smelling your own feces sometime…because believe…it stinks too.”,
be my quest.
I’m most appreciative of the opportunity to get some favorable press by being on this blog. However. I’m not going to pull my punches and not be critical of the wieners like Noz. He is a hate America malcontent and I don’t need him. My people skills rating may suffer with the people with whom I disagree but that makes me a excellent advocate to have on your side in a negotiation. If that’s not who you want on your side, good luck.
This is a great time to be in real estate if you are a buyers agent. It’s a lot more fun to be on the strong side in a negotiation and get more concessions from the buyers. After being involved in the bidding wars of years past to buy property, it’s good to see the pendulum swing the other way. The next year is going to be very interesting. All of you who have been predicting the bubble for quite some time now are going to get to find out if you are right this time.
“The next year is going to be very interesting. All of you who have been predicting the bubble for quite some time now are going to get to find out if you are right this time.”
Yep, I believe this is where the rubber meets the road. Keep your eye on the job numbers, the last few months have not been good in So Cal. Also be mindful of domestic out migration. Right now there is a constant stream of MONIED population leaving the state. One of my favorite tools for anecdotal evidence of this is UHAUL.com. If you go on this site pick a truck and compare the difference in cost of moving into CA and leaving CA. I used San Antonio and Irvine. It is 1000%, yes 1000%, more expensive to rent a truck in Irvine to San Antonio than vice/versa. That leaves babies and non monied immigrants to support the housing market. By this time next year the verdict will be coming in. If it is to occur the most severe price drops would be the fall of 07 and 08.
“Monied” people use U-Haul, do they?
Alright Frank,
This is from United Van Lines;
The other “high-outbound” states in this year’s study were: • California (55.7%) – 2005 marks the first time the state has seen a high outbound number since 1995
When they say “2005″, do they mean the “year” 2005 as in real estate record-setting 2005?
frank,
It’s funny how they coincide isn’t it. This is pretty complex stuff here so bear with me and lets follow the logic, home prices peak in 2005 and people start leaving en masse. I don’t know but maybe it’s because people can’t afford to buy houses here anymore so they make a decision and leave.
For everybody else reading this, I know, don’t feed the trolls.
A couple quick thoughts.
1. The bubble will not burst until 2008. That’s when a majority of Arms will come due and foreclosures will start to saturate the market. In 2009/2010 you will see people think they are picking up real estate at a low value, so we will get another small peak in real estate. End of 2010 will start a recession type period and home values will really plummet over the next four years. I do not want to put all the stats here, but read some of the literature by Harry Dent.
2. People who claim that Southern California is a desirable place to live and there is a lot of demand for housing have to realize that there was not a worldly climate change that suddenly made Southern California so great. It has been desirable for a long time. It is merely speculators with deep pockets looking for a quick buck that made buying desirable.