I’ve noticed a lot of pain, hand-wringing, and whining from those in the real estate market in the last year. I think it’s a great thing indeed.
Earlier today while watching C-Span, President Bush was questioned about the home finance crisis and mentioned that he believes that the American people are in need of “financial awareness training.” In short, Americans in general are math illiterate among many other lacking basic skills and world knowledge.
As of the writing of this article, 115 major U.S. lenders have “imploded.” This, after an amazing amount of appreciation in housing values, will send prices downward as foreclosures flood the market for the next couple of years. Tragically it may be the case that going forward, only those with money and the ability to pay for the things that they purchase will be able to qualify for loans.
How could this happen? It’s very simple. The fees charged in the housing market by brokers, lenders, agents, and title companies are very large. When you can sell your bad loans to someone else after issuing them, who cares if they go south? You (the loan originator) have been paid and are not responsible for it anymore.
I started reading about this more closely after seeing some petty whining from real estate agents on Yelp about Redfin. I was curious about how exactly Redfin was different from some of the other discount brokers that I have looked at previously in my real estate adventures.
I have to call them adventures because it really is the wild west of business. Everyone is out to rob you and is subtle and tricky about it.
Redfin’s blog has an entry with some of the most interesting comments I have ever seen between an ex-broker and a current industry insider. If you don’t want to read, or skim, the huge amount of comments, you should at least take a look at their heavily photoshopped Hall of Shame member. What is it about real estate people and looking like gameshow hosts with too much plastic surgery anyway?
Most of the discussion surrounds real estate and finance is an industry rife with obfuscation and back dealing. I know my personal experiences would be in line with that kind of experience, but it is interesting to read the individuals who were an active part of that industry say the same.
Other interesting links are made to sites such as the Open MLS Institute which is working to open up the information involved in the sale of houses. I wish them the best of luck in their efforts as it is a true David vs Goliath challenge considering the profitability of the industry, the lobbying power of the MLS-running real estate companies, and how vehemently they protect their market.
It reminds me a lot about how the established telecommunications companies freaked out over VOIP providers and how they wanted to maintain their artificial profit margin after several generations of technology increased efficiency from the 10 cents per minute levels of yesteryear to the 1 to 2 cent levels previous to the arrival of VOIP.
Since trunking systems were already in place, the adoption of VOIP into corporate systems was as simple as getting the bandwidth and quality of service right for the voice data.
Perhaps something along the same lines will evolve with MLS.