Advice from Silver Lake

My e-mail buddy Brock Harris has provoked much discussion here in the past (he's the guy set off a small firestorm here when he advised in September, "If you love it, Buy it!").

So I give him the floor, or rather this blog post, for another round of his breezy advice. Here goes, from Silver Lake real estate agent Brock Harris:

"HERE'S  WHAT TO DO IF YOU... (this is why you love me, I actually give advice):

"…OWN A HOME, NEED TO SELL: For the love of god, drop that price. Do NOT price high, thinking buyers will offer less. They don’t – instead, they’ll move on to the 50 other homes just like yours for sale. Only the best priced, best conditioned places are moving – be that house! Los Angeles has the country’s largest housing inventory, up 21% from last year, and nearly half of all currently listed homes in L.A. have reduced prices.

"…OWN A HOME, DON’T NEED TO SELL: Well, geez, don’t worry about a thing.

"…STILL RENT AND DON’T WANT TO MOVE: Enjoy rent control, and don’t freak out when your landlord raises you 5%. As landlords lose the appreciation on your home, they’ll look to rents to make up the difference.

"…NEED/WANT TO BUY A HOUSE NOW: Where to begin? It’s a great time to be a homebuyer. Stay in strong areas. Shop long and negotiate hard. Get a GREAT agent. Don’t fall into the trap of 'I’m willing to wait.' Realtors have a name for people 'willing to wait for the right house.' Renters.

"…OWN INCOME PROPERTY: Refi that sucker into a fixed, 30-yr loan. And pull money out, as much as the rents will cover! You will not be able to tap or leverage the property again, and that war chest will serve you well when it’s time to buy those bank-owned foreclosures."

Thanks, Brock. Comments? Insights? E-mail story tips to peter.viles@latimes.com
Photo Credit: "Across the Reservoir," Submitted to Your Scene by David

Comments

[Tim K.]

Peter, you are one clever baiter!

Your "guest" poster wrote:

Realtors have a name for people 'willing to wait for the right house.' Renters.

He says that like it's a derogatory term - it's just dripping with disdain from both sides of his mouth: "Renters - the societal losers who can't commit." But also known as "Renters - the people who waste my time and don't make it easy for me to earn my commission quickly by jumping on the 3rd house I show them."

One of the nasty things realtors have been known for is treating buyers like they owe it to them to buy a house after showing them only 8 or so properties. Then they pull the old "you can't commit" line.

This guy seems no different.

[Pete Viles]

Tim. K wrote, "Peter, you are one clever baiter!"

Funny, what grabbed me in Brock's email is the advice to sellers to lower their price (For the love of God!!!) -- not what you see as a cheap shot against picky buyers, or renters.

Although, you have to give Brock credit for the "renter" line -- it's pretty good.

[gautam]

PV -
Is this yet another blatant attempt to attract more blog hits/comments with high flying realtorbait?

OK - I'll bite....

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Advice from Silver Lake
My email buddy Brock Harris has provoked much discussion here in the past (he's the guy set off a small firestorm here when he advised in September, "If you love it, Buy it!").

So I give him the floor, or rather this blog post, for another round of his breezy advice. Here goes, from Silver Lake real estate agent Brock Harris:

"HERE'S WHAT TO DO IF YOU... (this is why you love me, I actually give advice):

"…OWN A HOME, NEED TO SELL: For the love of god, drop that price. Do NOT price high, thinking buyers will offer less. They don’t – instead, they’ll move on to the 50 other homes just like yours for sale. Only the best priced, best conditioned places are moving – be that house! Los Angeles has the country’s largest housing inventory, up 21% from last year, and nearly half of all currently listed homes in L.A. have reduced prices.

>> SUBTEXT: drop your price so that it's in line with the other single digit percentage reductions. That'll give enough time for the banks to dive below the plunging curve to unload their REO's while the plebes wallow...

"…OWN A HOME, DON’T NEED TO SELL: Well, geez, don’t worry about a thing.

>> SUBTEXT: Just go on merrily withdrawing from your HELOC ATM. Its Christmastime!! Spend SPEND SSPPEENNDD!!!!

"…STILL RENT AND DON’T WANT TO MOVE: Enjoy rent control, and don’t freak out when your landlord raises you 5%. As landlords lose the appreciation on your home, they’ll look to rents to make up the difference.

>> SUBTEXT: Aha an appeal to the cojones of those purported buyers - hey looky - rents might increase 5% ($100 on $2000 rent) but not to worry - home prices may only go down 40% (per Fortune Mag's assessment of LA/OC overvaluation). Save that $100 now! Who cares that your new lovely $800,000 Silverlake crackerbox a block off Sunset will only be worth $460,000 (in todays dollars, and they're faaaaalling) in 3 years.

"…NEED/WANT TO BUY A HOUSE NOW: Where to begin? It’s a great time to be a homebuyer. Stay in strong areas. Shop long and negotiate hard. Get a GREAT agent. Don’t fall into the trap of 'I’m willing to wait.' Realtors have a name for people 'willing to wait for the right house.' Renters.

>> SUBTEXT: That GREAT agent will skim 3%, maybe 4% or 5% if they are REALLY great and steer you to those properties with high co-ops! So thst $800K SilvLk cracker, well you only paid the agent $40K for being so GREAT! Oh yeah, remember its the seller who pays the commission, right, not the buyer. That the buyer is the source for the moolah is just being nitpicky - bad subtexter, BAD!

"…OWN INCOME PROPERTY: Refi that sucker into a fixed, 30-yr loan. And pull money out, as much as the rents will cover! You will not be able to tap or leverage the property again, and that war chest will serve you well when it’s time to buy those bank-owned foreclosures."

SUBTEXT: NONE!! He just said it like it is, like it ever was - "..pull money out..." The bottom line is usually revelatory.

Anyway, back to Peter - do you really have to resort to baiting us like this to stack the comments?

.

[JerryLndrs]

Thank you very much Peter, for giving a renter like me a heads up on a realtor I will definitely NOT be hiring when the time comes to get in the market. Life is way too short and buying a house is way too big of a deal to put up with flippant and disrespectful comments like the one Harris made about "renters." If he's broadcasting his smarmy used car salesman comments in front of thousands of potential customers, then just imagine how he'd treat you as a client. Sheesh.

And while you're at it, if you run across any realtors who do treat buyers with respect and with a great attitude towards providing excellent customer service, please let us know! We're keeping track out here.

[arroyogrande]

"Enjoy rent control, and don’t freak out when your landlord raises you 5%."

I own two rental houses. One is in the Inland Empire. If I were to lose the renter there, i would have to *drop* the rent by 7% just to stay competitive. Seems a lot of people got the same bright idea I had about "investing in real estate", and either became a landlord intentionally, or became one unintentionally by getting stuck without a chair in the game of "musical flips".

The house I am living in now is 300 square feet larger than the one I had been renting...it also has a back yard and an ocean view. We're renting the bigger house for the same rent. We rented the smaller house for two years with no rent increase.

As they say, 'your millage may vary', but don't you think the scare tactics about renting are getting a little old? Especially in the current housing environment?

"As landlords lose the appreciation on your home, they’ll look to rents to make up the difference."

As a landlord, all I can say is, they can keep looking to make up that difference, but if they need a $6000 monthly in a $3000 monthly market, they-a ain't gonna find it. In the current market, it's the guy *with* the cash that has the power, not the guy who *needs* the cash in order to avoid foreclosure.

"It’s a great time to be a homebuyer."

It may be an OK time to buy a home if:

1. You can afford it comfortably with a fixed rate mortgage, and with money down.
2. You are buying it to live in, not as your only 'investment'.
3. You plan on staying there longer than 10 years, as that is how long prices needed to recover, peak to peak, last time.
4. You don't get freaked out about how much "equity" you've lost, and just go about you business living life.
5. You have a very stable job, so you don't have to worry about being forced to move in the next 10 years.

"Realtors have a name for people 'willing to wait for the right house.' Renters. "

You say that like it's a bad thing. You forgot to mention that:

1. If you rent, people will think you are poor.
2. If you rent, your family will not think you are "grown up".
3. If you rent, your neighbors will not invite you to their fancy dinner parties.
4. If you rent, you are stinky.

- (stinky) arroyogrande

[Giacomo]

"It’s a great time to be a homebuyer."
(Hmmm, I guess "it's a great time to buy" is just getting laughs these days.)

It IS a great time to sit back and watch prices fall. There won't be many years in the history of California real estate that you'll be able save 50-200K on a home purchase just by being patient.

I will say, it's nice to see realtors turning on their overpriced sellers. It had to happen: stubborn sellers = no sales = no commissions.

[Dr. JwB]

You had me until, "It’s a great time to be a homebuyer." How exactly is it a great TIME to be a homebuyer? Keeping in mind this statement says nothing about the absolute value of owning a home - it only comments on the timing.

Many of us renters agree that owning a home is a good thing. But you want to argue the timing of buying (not owning), and thats where you lose me.

And why would I want to try to buy in a "strong area"? Can someone explain that to me? If you could find two areas that were "equal" to you in terms of personal appeal (unlikely, I know, but it is a necessary condition of his argument), wouldnt you be better off in the area that had already softened somewhat?

[chris]

sure the guy comes across as real charmer, but i've got to agree. it's a great time to buy. i am in the market for the first time, and i've been sitting back watching prices drop on an almost weekly basis. hopefully in a couple more months, the sellers will be a little less stringet on their wants, and price will come down further.

[caliguy2699]

"For the love of god, drop that price. " This is not the first time I've heard a RE agent plead with sellers to do this. Sounds like it still isn't working.

The renter comment is also amusing. So, the rent goes up 5% (not a given if the recession some are predicting comes true). What about when your mortgage doubles because the teaser rate on your adjustable wears off, and you realize you're stuck in a depreciating asset? I'll take the rent increase any day in these market conditions.

[MyLessThanPrimeBeef]

My advice to a brokers:

*** If you have a listing and need commission, for the love of God, lower the commission. Don't let it kill the deal. There are brokers dying to get your listing.

*** If you don't have a listing, where to begin? This is a tough time to be a broker.. Might think about getting another job. Don't fall for the trap 'things will get better.' People have a name for realtors who think that way. 'Steak knife set winners.'

[dog-walker]

Grrr!!!

Woke up in a mood today.

#@^&%(# stinky moron home buyers!! So proud of your investments??? How retarded can a person be? Renting is SMART, buying is... um... something the government hands out fat subsidies for because otherwise nobody would do it.

Investments??? Oh come on. Housing has only ever been a good "investment" during anomalous periods when markets deviate from historical norms (going back... like a LONG time.)

Okay if you plan to own for 30 years??? Are you KIDDING me??!!! The truth is that the LONGER you hold a home the WORSE it will be as an investment. All that equity you're "saving" is actually COSTING you the considerable opportunity of investing in genuinely prosperous enterprises, where the AVERAGE will net you 10% and where 1,000% and MORE is possible of you're a great "picker."

And if you're so smart you can time the INSANE real estate market, why can't you time securities and leave unctuous realtor guy in the DUST?!!!

Investment wise-heads have a name for people who look at residential real estate with intense skepticism and who are reluctant to buy in all but the most favorable markets and turn their noses up at 90% of anything any HUCKSTER sales-lier throws at them: SMART.

Grrr!!!

[dog-walker]

MyLessThanPrimeBeef,

Got to admit. Your comeback was way cooler than mine. Droll, to the point... um... cutting.

[tarbubble]

ha! i'm a landlord AND a stinky renter. why on earth would i want to buy a house for $550k (and that's still the low end in my area) when i'm happily renting a house with a nice huge yard for $2k a month here in sunny south OC? realtors can crow long and hard about "what a great time it is to buy" but obviously a lot of us are not listening.

Let's assume i wanted to buy a house at the "bargain" price of $500k. Any $500k house in my area is going to have issues that will need to be fixed. Now let's assume that i have $50k laying around for a down payment (which would require me to raid my retirement accounts & the kids' college savings). i would then have a mortgage payment of just under $3600 a month, plus just over $400 monthly for property taxes. So that's roughly double what i'm paying in rent right now, plus i'm responsible for whatever repairs might have to be done after i own it.

makes no sense whatsoever. yeah, my rent could go up. it won't go up $2k a month anytime soon. so i can take that extra income that i'm not dumping into a depreciating asset and place it in our retirement accounts and the kids' college accounts. $2k a month isn't a bad amount to be setting aside. i won't be buying my own home until i can get a mortgage payment of not much more than $2500. and if i never buy in south OC, boo-hoo. i can happily rent this house for quite a few years. i'll buy a retirement home in the place i've always wanted to live, some quiet small mountain town with low home prices, and hire a property manager to rent it out until i'm ready to retire, which with $2k a month going into my accounts should be at a reasonable age.

so tell me again why i should buy a house anywhere in LA or OC right now?

[MyLessThanPrimeBeef]

Dog-walker, thanks. You know, brokers are humans too and if I can help by giving them a little friendly advice, even if it's a little patronizing, they know it's for their own good.

[Horizontal Translation]

How bout buying a home and renting it to yourself. Corporations do it all the time. Is this even legal for homeowners? If you buy with no rent control, you can jack the rent up on yourself all you like and cover the huge mortgage with ease.

Better yet, lend yourself the money to purchase the home, and hit yourself with a 10% interest rate while you raise the rents to cover your own mortgage payment. Then, you can default on your loan and go get a government subsidy to cover your loss, laughing all the way to the piggy bank. If you charged yourself mortgage insurance, just write it off. If you sold your loan into a pool of other loans you made, to be sold on your own private hedge fund, you may find it hard to negotiate yourself out of your own mortgage derivative, but you already made your profit, so who cares?

Since you probably foreclosed on yourself and collected a nice commission for doing so, sell the home to yourself at a fat discount and then use the cash to buy it again -- this time disguised as a foreign investor. This way you can turn the buyer (you) into a rent slave and use the rental dollars and your stronger currency to go out and buy more properties you can rent to yourself.

Ok. That's just silly.

[Cal]

Such censorship, that was a great investigative journalistic post peter ;).

Im curious why Brock thinks we should listen to him. He has only been in the business during the boom and has never seen a downturn. He has no base of knowledge at all during the lean times.

[mike]

why beat up on a realtor??????when was the last time any of you people ever told someone not to buy your product??????

salesman to client:" no sir. right now is a terrible time to buy this new mercedes. it is a terrible investment that will only lose value and depreciate over the short and long term. i advise you to sit on the sidelines for now and wait until the new car is a good investment again" ha.ha. ha.ha.ha.....

real estate should be something that you buy for the long term because you love the house and/or the area. if you want to flip something,why not try cheap stuff from china . the owners of real estate in the good areas of los angeles have the means to withstand almost any length of downturn so you are not going to be picking up any good deals at the beaches or in the hills any time soon. the suburbs in good areas would be a good choice to catch a deal. just look for a unwashed b.m.w. in the drive with a flat tire or two. that will go first,then the house will follow shortly after. people in the good areas of los angeles are rich as a rule. they are NOT going to just let go of their beautiful houses!!!!!!!!!!!!!!!!!!!!!!!!!

GET REAL!!!!!!!!!!!!!!!!!

[gautam]

mike!!!???!!!??!!!??!?!?!?!???!!!!!!
you went to the realtorschule mit brock, dintja?????????????

[Cal]

"they are NOT going to just let go of their beautiful houses!!!!!!!!!!!!!!!!!!!!!!!!!"

And I aint going to just let go of my beautiful cash. After all I am not GIVING IT AWAY.. right?

The standoff continues.

As for your point about when would a salesman tell their client not to buy a product. I agree completely, realtors are just salespeople, nothing more, nothing less. The only 2 key differences between them and the average sales person would be that they passed a test and that they legally have fiduciary duty to their client (put the clients interest before their own). But they dont worry about such things about fiduciary duty, fiduciary duty doesnt pay the rent.

Realtors are not real estate experts, they are just sales people. The sugar coating that they are these knowledgeable real estate experts their to guide you through a real estate transaction is a farce. Get a lead and close it, that is all they live for. Give me a realtor that can define the market and values using business metrics and show some business savvy, I will consider using that one.

[toby]

OK this guy has no idea what he's talking about....which makes him very dangerous to his profession. He writes:

"…STILL RENT AND DON’T WANT TO MOVE: Enjoy rent control, and don’t freak out when your landlord raises you 5%. As landlords lose the appreciation on your home, they’ll look to rents to make up the difference.

First of all, not all rental apartments have rent control, only the ones built before 1979.

Of those, the landlord can only raise rent 3% a year UNLESS they cover a utility.

They get 1% for each utility they cover, water not included. (basically 1% for Power, 1% for Gas)

So for a landlord to raise you rent 5%, they would have be covering your gas AND electricity.

So Mr.Harris, please understand, if one has a 1,200 dollar apartment that includes all utilities, and you only get a 60 dollar rent increase (that you know about prior to the increase).

Well that's consider a good deal.

Were as, the deals you no doubly have done in the last few years...

You know that 1,200 dollars for 2 years then 3,600 dollars for the next 28....

That's considered a very BAD deal.

So please, in the future, try not to treat your potential customers like the ones you had in the market run up. You know, Baboons with opposable thumbs.

[T]

"Realtors are not real estate experts, they are just sales people....Get a lead and close it, that is all they live for."

Even though it sounds harsh I think that's very true and something everyone should be aware of. My dad was an agent for a couple of years and discovered that despite the legal rules and training at the end of the day its about selling. He was encouraged to process his clients as fast as possible so he could hit the phones and get more clients. Its the nature of commission only sales.

[Tex]

"Shop long and negotiate hard. Get a GREAT agent. Don’t fall into the trap of 'I’m willing to wait.' Realtors have a name for people 'willing to wait for the right house.' Renters."

That, in a nutshell, is the problem with Realtors. They have no understanding that half a million dollars is a LOT of money and people are not going to part with that much cash for a 1000 sq ft "fixer" in a marginal neighborhood. I am now on my 3rd Realtor and my experience so far has been there is no such thing as a "GREAT agent." No Realtor wants you to "shop long and negotiate hard" because that means they actually have to work for their commission. They also have no interest in getting you a good price because that means (1) their commission will be lower on this transaction and (2) they will lower the neighborhood "comps" resulting in lower commissions for themselves and others in the future. My experience with Realtors is that if you don't make an offer by the 5th house, they pigeonhole you as "not a serious buyer" and don't want to bother with you anymore.

The rub here is that I am serious about buying -- for the right price -- but the Realtors are not willing to work with me to get that price because they are either lazy or want to keep the market artificially inflated so they can get higher commissions. There is one house I really want to buy -- it's a fixer that needs *at least* $100K or more of repairs, but is priced the same as neighboring turnkey properties (which aren't selling either, by the way). I have now asked 2 different Realtors to put in an offer for me at about 20% below asking price (to account for the repairs) and guess what they said? They just won't do it. This just convinces me that Realtors don't want to work for their commissions and just want you to pay the highest price possible -- God forbid they have to engage in some hard negotiations to convince the sellers that their house is grossly overpriced. I don't think getting another Realtor will help -- I've talked to many of them and it seems to me they are all the same.

[arroyogrande]

"people in the good areas of los angeles are rich as a rule. they are NOT going to just let go of their beautiful houses!!!!!!!!!!!!!!!!!!!!!!!!!"

I know some of these people. Quite a few of the so-called rich use the following method of financial management:

1. Take the money you earn
2. Spend it all

It's #2 that makes them "look" rich. However, it leaves precious little wiggle room when something unforeseen happens, like a job loss, or a recession. Do you know of any big spending mortgage salespeople that have had to cut back recently?

However, the ones that do the following...

1. Take the money you earn
2. Save and invest a great deal of it.
3. Spend the rest

...are the ones that don't look as rich, but actually have more money...and more ability to weather a financial storm.

- arroyogrande

[Problemwithcaring]

I love Peter!

I wonder what Realtor on could truly advise the people who read this Blog about when to buy a house. We read posters like Cal, Amir, sunsetbeachguy, investorguy, etc. everyday, argue about the complex financial future of the nation and particularly this region. We struggle to estimate the net effect of housing fraud and the misuse of credit on the economy and our personal finances.

In such a learning environment, bringing this guy in as a guest poster to give advice is about as helpful as Nancy Grace guest lecturing at an NYU journalism class. Marginally relevant and laughably useless.

Still I loved reading it, though.

[Cal]

Tex, you want to be jealous, go read bubbleinfo.com. Jim is a broker in San Diego and runs that site, he is asking and wanting people just like you. The big problem is he is in SD.

Jim is smart, without buyers there are no transactions, "No Bid" can't be dealt with. A spread between bid and ask can be dealt with, but right now for many people.. it is simply "No Bid". Jim is willing to work the spread, all these other lazy realtors aren't because it is far too much work that they simply do not want to do.

[spinsLPs]

"For the love of god, drop that price."

I wonder if Brock's own clients will read this. This piece of property ( http://guests.themls.com/profile_page.cfm?mls=07-200611 ) has been on the market since July 8.

[Tex]

Cal: Wow, Jim the Realtor is like a breath of fresh air! Too bad he's in San Diego. I thought about sending the link to his blog to my agent, but I know she will just say "he's in San Diego - that's a completely different market from LA."

[monkeyboy]

I have to say that Horizontal Translation's take on the investment angles is one of the funniest comments I've seen on this blog. Too bad that's really how most of the Wall St crowd think. Money for nothing........ and the chicks for free.

[Todd]

Toby is incorrect. At this time the legal maximum increase is 5%, excluding utilities. Hence, the maximum is actually 7% if you add 1 point for each utility.

I also notice lots of angry people again in regards to what this dude Brock has laid down. He is making some simple market condition comments. I am not a realtor but am simply a decade long real estate investor who hasn't bought a damn thing since 2004 when things just got too out of whack. If one does not have to sell, then they should not. They need to stay out of the market. Someone who is interested in buying can set their terms and conditions. They can negotiate has hard as they want, as they do have the edge.

It is true that owning cash flowing income property is a great formula for riches. Brock is correct when he says this. Owning income property, with the cash flow and enormous tax advantages is a tremendous investment vehicle to be in. Granted we are in a cruddy time for valuations, but rents are still strong.

It is my opinion this market will take 4 to 5 years to smooth itself out. Too many ripples and wave in this pond. I think 2008 is going to be the worst year, especially in the last two quarters. 2012 is when the clouds will clear for the sun to shine once again.

In the meantime, do not be afraid to pick up an income producing property if, and only IF, it cash flow and produces income and runs in the black. There are a handful of Silverlake/Echo Park residential buildings which do run in the black using traditional loan and expense structures.

[joe shmoe]

For Cal (or others)

I'm curious about your thoughts on alternatives for Tex, who wants to low-ball but can't get a realtor to put in his/her bid.

A buyer could put the bid in directly to the seller's agent, and either allow the seller's agent to take the full commission of 5% or 6%, or offer the seller's agent a portion of what would go to the buyer's agent (e.g. the selling agent would get perhaps 4% total). That way the selling agent has a little incentive to take the low offer.

Since the buyer is doing the homework on everything anyway, the buyer can do it all the way through negotiating over inspection issues, etc. The seller's realtor would also become the buyer's agent and would have legal fiduciary responsibilities to the buyer, which are meaningful only to a limited extent anyway (strictly legal about not messing up paperwork or commiting blantant and provable fraud).

So why not just make the offer yourself to the selling agent? In truth, agents only work for the seller - their interest is in making deals for the highest price. An enlightened agent would take some interest in cutting a good deal for the buyer when it is necessary to make a sale. But a smart buyer who knows how much NOT to pay can do it him/herself, using an agent only to fill out the paperwork.

Added bonus: this practice could help to cut the number of agents in half!

Any reason not recommend making the offer yourself (ASSUMING THE BUYER KNOWS TO DEMAND INSPECTION AND LOAN CONTINGENCIES)?

Joe Shmoe

[Cal]

Joe,

I'd use Redfin.com or BuySideRealty.com instead, they arent working hard for you either but at least you get part of the commission kicked back and you would technically have someone who has fiduciary responsibility to you in the transaction.

But you can go to the listing agent directly and try it out as long as you realize anything you tell them they are obligated to tell the sellers and they are going to be pointing out possible pitfalls (bad school district, hookers hang out across the street, etc). The listing agent fiduciary duty is to the seller, to a buyer walking in to a property to bid the listing agent is required to give "fair and honest dealing" and nothing more.

It is too bad the banks cant get into real estate, it is an industry dying for disintermediation.

I just think at this point in the cycle it all has a low probability of success for quality properties so I'm keeping my money on the sidelines.

[Ann]

"I have now asked 2 different Realtors to put in an offer for me at about 20% below asking price (to account for the repairs) and guess what they said? They just won't do it. This just convinces me that Realtors don't want to work for their commissions and just want you to pay the highest price possible -- God forbid they have to engage in some hard negotiations to convince the sellers that their house is grossly overpriced. I don't think getting another Realtor will help -- I've talked to many of them and it seems to me they are all the same.

Posted by: Tex "

Haven't checked the CA realtors licensing rules BUT they are probably in line with other jurisdictions.

The realtor is employed by you and, as your agent, has the fiduciary duty to do one of 2 things:

(1) quit representing you as a buyer and that means giving you a letter releasing any claims to a commission if you do buy any property which that agent has shown to you but for which she has refused to submit the offer you want to make:

OR

(2) present your offer and keep her mouth shut to the other side as to her opinion of the offer.

Most states would yank the license of a realtor who refused to present an offer from the buyer to the seller. Might want to contact the state licensing board.

Here is what you can do:

(1) Tell her that if she will not present the offer you want to make that you want a letter (with written signature) waiving any claim to a commission if you deal directly with the selling realtor or owner and buy the property for any price up to 5% or so above the offer you wnated her to put in

(2) Then call the sellers realtor. Download the standard real estate offer to purchase form for CA from the internet, fill it in and send it by FAX and certified mail to the seller's agent.

OR

(3) FInd the name of the owner from the property records - county clerk who records deeds or the tax office will have it.

Contact the seller directly skipping the agents and give them the written offer. (You can just say that you find realtors to be a waste of money.)

[Steve Reynolds]

Why does a REALTOR always want you to take on more debt? It's obvious from the last go around of sales and mortgages; they have not a clue about economic impact of increases in leverage. I have yet to find one that says you're in a great position now that you own that property free and clear, keep your equity. Until this group starts to regulate itself, like requiring some decent educational requirements like a four year degree with post graduate Real Estate courses, they are going to be viewed as nothing more than bad used car salesmen or that guy selling Big Macs one day and homes the next.

[Ace]

Tex,

Don't let the seller's agent represent you in any way. Dual-Agency should be illegal. Only bribes from the real estate boards have kept it legal. You wouldn't let your wife's lawyer represent you in your divorce, would you?

I can't believe that you are having trouble finding an agent who will put it offers for 20 percent below asking price. You should have no problem finding someone. Just visit an office near your house to interview agents and tell them upfront that you are looking to buy a house and need an agent that will prepare low ball offers. You should have no problem finding 10 agents that are willing. Today's 20 percent off offer is tomorrow's full asking price offer.

[Tex]

Thank you everyone for your insightful advice. I already dropped one agent over his refusal to make my offer on this particular house. My current agent didn't outright refuse; she just said she did not think my price was "realistic" and we should see if the sellers drop the price after the new year. One other wrinkle is that the seller is in pre-foreclosure and the asking price is the amount the seller owes. That means that in order for me to purchase the house at the price I want, the bank would have to agree to a short sale which was 20% off of what the seller owes. My agent says the bank just wouldn't be willing to take that kind of loss. What do you folks think of that?

My current Realtor seems to be the best one I've had so far; she is willing to make offers below asking price, but I'd say 10% below is the height of her comfort zone. All Realtors believe, or claim to believe: (1) prices have hit bottom and will start going up again next year; (2) there are still "plenty of buyers" out there willing to pay last year's prices; (3) banks are not willing to negotiate and would rather just hold firm for their price (4) "investors" are still out there and are willing to pay more, because they know they can eventually sell at a profit; (5) most sellers don't need to sell and will just take their houses off the market, rather than sell for less than last year's comps. Because that is what Realtors believe, they would rather use their persuasive skills trying to persuade you, the buyer, that you are being unreasonable than trying to persuade the seller that his house is overpriced.

Cal: I tried interviewing a Redfin agent about making low offers; he said, "If I think the seller is going to line their cat box with the offer, I won't submit that offer." That is pretty close to a direct quotation.

I may ultimately decide to drop my current Realtor and if I do, I will keep everyone's suggestions in mind. I'm not in a huge hurry because I know the house in question is not going to sell at its current price.

[toby]

Toby is incorrect. At this time the legal maximum increase is 5%, excluding utilities. Hence, the maximum is actually 7% if you add 1 point for each utility.

Posted by: Todd

Actually Todd, we're both wrong. The new maximum base increase is now 4% (6% with both utilities covered).

http://www.caltenantlaw.com/LARSO.htm

But I think the point is albeit 50 dollar increase or a 60 dollar increase on 1,000 dollar rent...

How much do you think AC costs during the summer? I know my utilities for me and my wife run about 75 dollars a month on a big 2 bedroom.

And that's not including AC. Rent control with utilities included is a far better deal than...I don't know...buying at the wrong time in a market downturn.

As for the 4% increase, it's inline for inflation. In theory, you don't pay more or less for an apartment over time form your first year. In theory, if the rental market starts to lower, you can either renegotiate or move to a cheaper place or buy.

So basically what Mr. Harris is saying: Automatic rent increases are worse than being upside-down on a house.

And that's dangerous advice.

[poor student]

Sorry toby, you're 0-2. Todd's right, for fiscal year ending June 30, 2008, the max base rent increase is 5%, and 2% max utilities covered. Which equals 7%.

Check out

http://www.lacity.org/LAHD/landlord_tenant_handbook.pdf

Page 19

[sfvrealestate]

Brock, I'm a Realtor, too and I think your advice is exactly on point.

[shortseller]

Tex: they HAVE TO submit any offer you want to make. Tell them to get those sticks out of their asses and reread their licensing regs.