Letting go is hard to do, but giving up outmoded ideas and behaviors is exactly what’s needed throughout the real estate sector today. Home buyers, home sellers and homeowners need to let go of unrealistic expectations, while Realtors, mortgage brokers, lenders, home builders, real estate technology companies and even real estate journalists need to let go of dysfunctional business practices that aren’t applicable to today’s markets.
Home sellers need to let go of quick sales and contingency-free purchase contracts, and multiple-offer, bidding-war, rising-market pricing. They need to be ready to negotiate both the price and terms of the deal, and they need to open their minds and wallets to home repairs, redecorating allowances, lease-to-own contracts and other buyer-friendly strategies.
Buyers need to give up no-documentation “liar” loans, no- and low-down-payment mortgages, minimum “option” mortgage payments and negative amortization that turns diminished equity upside down. Instead, buyers need to get serious about their mortgages. They need to question the advice of commission-compensated mortgage brokers, and they need to read their loan documents before they sign them. And prospective buyers who are still renters need to ditch that smug superiority of having not bought a home at the top of the market or with an esoteric mortgage.
Homeowners need to forget about 20 percent annual appreciation, houses that doubled as automated teller machines, easy refinancings, fat wads of cashed-out equity and massive home-improvement projects. Those whose homes have been repeatedly damaged or destroyed by natural disasters need to let go of living in yet another new-built home in the same place despite the inevitability of yet another fire or flood in the future. Some homeowners need to lose their own smug superiority of having bought a home even though they really couldn’t afford it. And the saddest reality is that far too many homeowners will have to let go of their home altogether.
Realtors need to let go of easy-money deals; commissions that aren’t justified on a dollar basis for the amount of work that’s performed or the value of the services that are provided; dual agencies that benefit the brokerage at the seller’s expense; overly restrictive MLS rules that restrict competition; and unofficial boycotts of so-called “discount” brokers who compete openly on price. And please take down those long-dormant blogs that consist of nothing more than an outdated photo, a couple of badly written posts that are no longer relevant and some copyrighted content that’s been stolen from other Web sites.
Mortgage brokers need to let go of business practices that prey on ignorant, stupid or greedy buyers to earn obscene profits; loans that put well-meaning homeowners in precarious financial situations; and yield-spread premiums that benefit the broker at the borrower’s expense. And let’s lose those ads that tout minimum payments and teaser interest rates in big print only to hide negative amortization, blink-of-the-eye adjustment periods and prepayment penalties in the small print.
Lenders need to let go of their arm’s-length distance from mortgage brokers’ business practices; meaningless appraisals that rubberstamp the purchase price; predatory loans that don’t benefit borrowers; and bait-and-switch ads that tout low interest rates that evaporate after the borrower applies for the loan or reset less than a year after the loan is originated. And those inflated and unnecessary fees that mysteriously appear at closing? Those should have been dropped in the dustbin years ago.
Home builders need to let go of land that’s too close to fire hazards or within known flood plains, and they need to stop building massive mansions that don’t respect the character of older neighborhoods and condominium projects that squeeze too many units onto lots sized for detached single-family homes. Dicey financing packages and cozy deals with affiliated businesses should be off the table as well.
Real estate technology companies need to let go of business models that don’t generate revenue, products that offer no measurable benefits and user content that’s neither screened nor moderated to remove blatantly offensive or illegal commentary.
And finally, real estate journalists have much to let go of as well. We need to do without one-sided news stories; high-profile, overexposed sources; headlines that shout out trivialities; and rewritten press releases that masquerade as news. We need to stop tiptoeing around bad practices in the industry, turning a blind eye to copyright scofflaws and giving away our work free of charge.
Copyright 2008 Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.