Saturday, May 19, 2012

Home owners try to sell by themselves as S. Florida market rebounds

I have always wondered why commissions to agents are so high here in the USA vs what we pay in Australia. Aivars Lode

By Paul Owers, Sun Sentinel

4:36 p.m. EDT, May 19, 2012

As the once-beleaguered housing market improves, homeowners are showing more interest in selling solo.

Delray Beach-based says home sales in Miami-Dade, Broward and Palm Beach counties are up 200 percent this year, compared with the same period of 2011. Listings have increased 150 percent, the company said., a Chicago-based site, has seen a 400 percent increase in Florida sellers visiting the site from January through April, compared with the same period a year ago. That far outpaces the 183 percent increase in sellers nationally. The two websites declined to release specific figures.

"People are starting to hear more stories from their neighbors about how quickly they're selling," said Eddie Tyner, general manager of ForSaleByOwner. "There's more confidence now that the market is recovering."

ForSaleByOwner is owned by a division of the Tribune Co., which owns the Sun Sentinel and other newspapers.

During the housing boom of 2000 to 2005, homes often sold themselves for top dollar, prompting many sellers to eschew a real estate agent charging a standard 6 percent commission based on the sale price. A homeowner selling for $300,000, for instance, would save the $18,000 commission.

The housing crash that followed sent many sellers back to agents and the multiple listing service, the collection of homes for sale in a particular area.

Now, though, multiple offers and bidding wars have returned, mostly on homes $200,000 or less. That is convincing owners of homes near that price that they may be able to sell on their own through Craigslist or one of the for-sale-by-owner sites.

Sellers can buy packages on the websites, spending less than $100, up to a few thousand dollars.

Basic packages give sellers a handful of home photos and listings on various websites. More-expensive services include access to a local MLS and assistance handling the contract from a real estate attorney.

For-sale-by-owner isn't for everyone, said Jon Holbrook, president of BuyOwner. One of his employees, Dan Bodenstein, has sold three houses by himself, including one in October.

"Cash-wise, it's silly not to try it," said Bodenstein, 43, of Royal Palm Beach.

Some solo sellers don't save as much as they first thought because they end up hiring lawyers to review the contracts. Also, some have to pay a 3 percent commission to a real estate agent who brings them a buyer.

Agents, of course, say for-sale-by-owner generally is a bad idea.

They're trained negotiators who earn their money in casting a wide net for buyers and coordinating appraisals and home inspections, said Jon Klein, an agent for Real Living 1st Choice Realty in Coral Springs.

"The hardest part is from the signed contract to the closing," Klein said. "There are so many things that can happen."

Some buyers will insist on price discounts because no commissions are involved, said Joe Kohn, a Fort Lauderdale real estate lawyer. In other cases, uninformed sellers don't make as good a deal as they could have because they don't know the market, he said.

"Are there exceptions? Yes," Kohn said. "But overall, most people who do it on their own have problems."

Friday, May 18, 2012

Masters of our own domain

An interesting perspective from a young person. Aivars Lode 

May 18, 2012 - 7:59AM

Alecia Simmonds

"Our obsession with real estate goes hand in hand with cultural constipation and socially conservative politics."

"Our obsession with real estate goes hand in hand with cultural constipation and socially conservative politics."

Dinner parties are delicate creatures. It doesn't take much for merriment and mirth to descend into the conversational equivalent of Dante's inferno. It might be the ghoulish cries of a vegan trying to impose their culinary straightjacket upon the world. Or the seemingly innocent gurgle of a baby that has the effect of binding and gagging all adult discussion. But nothing, not even the tedium of a friend's ill-chosen partner, can send a perfectly happy dinner party into the fires of a medieval hell like the words: 'we're thinking about putting a deposit on a gorgeous house in...'


I can't even hear the rest. All I hear from that point on is thunderous Gregorian chant. I see faceless men in brown hooded robes nursing candles as they carry the conversation to its grave.
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How many dinner parties around Australia have been murdered by discussions of real estate? How many frolicking picnics and sunshiny BBQs have turned into slasher films featuring  knife-wielding amateur property speculators? Even as I write there are conversations - once lively and curious- being held captive by a monster of mythological proportions: the Great Australian Dream of Home Ownership.

If we are to liberate conversation from the chains of real estate, it is important to know our enemy. Why is it that we, a highly educated, creative and culturally eclectic nation, fall victim so easily to its lures? Is it just a serious case of Stockholm syndrome where we love our warden for locking us inside a brick-veneer prison with Miele appliances, a home theatrette and crushing debt?

Let me say firstly that it hasn't always been this way. Real estate is not, as John Howard once said, a 'timeless dream'. According to the 1911 census we were (by a slim but pleasing majority) a nation of renters. Only around 49 percent of the population owned a home, compared to around 70 percent today. Our imaginations shrivelled to the size of a fibro cottage when Robert Menzies took the national stage.

Our obsession with real estate goes hand in hand with cultural constipation and socially conservative politics. Under Menzies we became one of the world’s leaders in home ownership at the same time as we became suffocatingly insular and infinitely stupid. The White Australia Policy was pursued with vigour, cultural life died, intellectuals fled and women – dosed up to the eyeballs on valium – returned to the comfortable concentration camp of the home.

Much the same thing happened under Howard. McMansions vomited out into lonely suburban blocks while Australia closed its national doors to refugees, fretted about immigration and replaced a robust welfare state with a very gendered idea of home and hearth. Fortress Australia could be seen in the neurotic architecture of the suburbs as much as in our shameful policies towards anyone not white.

It’s tragic that economic prosperity spawns cultural poverty.  The minute we have a chance to build solid public infrastructure, a welfare state, and a rich artistic life, we become a self-centred nation of mean-spirited renovators.

As we embellish our private lives, we impoverish our public spaces. Our houses are larger and more Swedish than ever before. But we still don't have a metro, there are suburban streets without footpaths and it's hard to find a place to socialise where you aren't also forced to consume.

I know, I know. It’s not all greed and self-interest. Shelter is a basic need. People buy homes for security. The point, however, is that there is no reason why renting should be so costly and insecure. In Italy a four-year lease is the norm and in France you can’t kick someone out during winter. In Australia, the price you pay for a debt-free life is the possibility of eviction with two weeks notice, stingy landlords, leaking dishwashers and a bill of around 250-300 dollars per week.

And if renting is insecure then property ownership is not much better, as the American sub-prime mortgage crisis showed. In Australia, people are taking on higher mortgages so that they can invest everything they have in one asset that, on a median salary, will take them around 20 years to pay off. And why? Because we’re investing in the third (Sydney) fourth (Melbourne) or sixth (Brisbane) most unaffordable housing market in the world.

The question should no longer be why it’s unaffordable. We all know the story of how house prices doubled from 1996-2006 and how avaricious baby-boomers locked the rest of us out of the market. We’ve clawed at the cement out the front of our parents’ properties and bewailed the injustice of it all.

The question should be why we continue to call a nightmare a dream. Why do we search for security and identity in the over-priced boredom of bricks and mortar? We need to question whether working weekends so that we can pay off the pool that we never get to swim in because we’re too busy working to pay off the pool is REALLY worth it. And we need to believe in a world where property no longer cannibalizes every conversation.

The best thing about cocooning ourselves away in national and domestic homes is that chrysalis is inevitable. Let the metamorphosis begin!

Thursday, May 17, 2012

FDIC Watchdog Asked to Take Over Troubled SEC Office

This makes it hard to invest in public stocks. Aivars Lode

By Joshua Gallu 

May 17, 2012 12:23 PM ET

Federal Deposit Insurance Corp. inspector general Jon Rymer is in final discussions to temporarily take over the Securities and Exchange Commission’s internal watchdog office as it grapples with allegations of possible misconduct by its own employees, according to people with knowledge of the talks.
Rymer would take over the post on an interim basis as the SEC looks to fill the inspector general job that was left vacant when H. David Kotz stepped down in January, said the people, who declined to be identified because the decision hasn’t been made public. The move isn’t yet final, the people said.

The office has been in turmoil since David Weber, an employee of the internal watchdog unit, complained to the SEC that possible conflicts of interest related to Kotz’s past conduct could have tainted the integrity of his reports on the agency’s failure to catch the Bernard Madoff and R. Allen Stanford frauds. The agency said it is hiring an independent investigator to review the claims.

Weber was later placed on administrative leave after some of his co-workers said they were bothered by his suggestions that he and others should be able to carry guns on the job, people with direct knowledge of the situation said.

Last week, SEC Chairman Mary Schapiro scrapped a plan to have Donald Hoerl, head of the SEC’s Denver office, temporarily run the office after some Capitol Hill staff members expressed concern that Hoerl wouldn’t be independent enough from the commission, the people said. Noelle Maloney, the deputy inspector general, has been the acting head of the unit since Kotz’s departure.
Audit Committee
Rymer, a certified internal auditor who previously worked at accounting firm KPMG LLP, has been inspector general of the FDIC since July 2006. He also serves as chair of the audit committee of the Council of the Inspectors General on Integrity and Efficiency, according to the FDIC’s website. Rymer holds degrees from the University of Tennessee and the University of Arkansas and also graduated from the U.S. Army’s Inspector General School. He has served for 29 years in the Army, including active and reserve duty.

Fred Gibson, the FDIC’s deputy inspector general, said Rymer wasn’t immediately available for comment. SEC spokesman John Nester declined to comment.

Tuesday, May 15, 2012

World edges closer to deflationary slump as money contracts in China

The USA had the contagion first, then Europe. It was only a matter of time before the Bricks have their shot. Aivars Lode

All key indicators of China's money supply are flashing warning signs. The broader measures have slumped to stagnation levels not seen since the late 1990s.
If China were a normal country, it would be hurtling into a brick wall. A "hard-landing" later this year would already be baked into the pie.
By Ambrose Evans-Pritchard, International business editor

6:32PM BST 13 May 2012

Narrow M1 data for April is the weakest since modern records began. Real M1 deposits – a leading indicator of economic growth six months or so ahead – have contracted since November.

They are shrinking faster that at any time during the 2008-2009 crisis, and faster than in Spain right now, according to Simon Ward at Henderson Global Investors.

If China were a normal country, it would be hurtling into a brick wall. A "hard-landing" later this year would already be baked into the pie.

Whether this hybrid system of market Leninism – with banks run by Party bosses – conforms to Western monetary theory is a hotly contested point. The issue will be settled one way or the other soon.
What seems clear is that China's economy did not bottom out as expected in the first quarter. It is flirting with real trouble. Yao Wei from Societe Generale says a blizzard of awful data "screams out for easing".

China's electricity output – watched religiously by bears – slumped in April. It is up just 0.7pc over the last year. State investment in railways has fallen 44pc, with an accelerating downward lurch over recent months. Highway construction has dropped 2.7pc. "The data shows extreme weakness in the Chinese economy," said Alistair Thornton from IHS Global Insight in Beijing.

The Yangtze shipyards tell the tale. Caixin magazine said eight of the 10 largest builders in the country have not received a single new order this year. "A wave of closures in the shipbuilding industry has yet to begin. A hurricane is approaching," said one official.

Housing sales slumped 25pc in the first quarter, testimony to the zeal of regulators. This has since fed into a drastic fall in new building. Mr Thornton said floor place under construction fell 28.3pc in April.

This is hardly a sideshow. The sector employs 10pc of the Chinese work-force, and a further 20pc indirectly. Land sales provide 70pc of tax revenue to local authorities and 30pc to the central government. It is the "fair weather" financing illusion, as
we saw in Ireland. China's scope for fiscal stimulus may be constrained if property goes into a long slump.

The property correction is deemed benign because it is planned. Premier Wen Jiabao wishes to forces down prices as a social welfare policy. Yet did the Fed not slam on the brakes in 1928 to choke an asset boom? Did the Bank of Japan not do likewise in 1990, only to find that boom-bust deflation has its own fiendish momentum? Once you let credit rise by 100pc of GDP in five years – as China has, more than in those US or Japanese episodes – you are at the mercy of powerful forces.

Something odd is now happening. The People's Bank said new loans fell from $160bn (£99.5bn) in March to $108bn in April. Non-conventional lending seized up altogether. Trust lending fell by 96pc, bankers' acceptance bills by 90pc. This is astonishing data.

It may not be as easy for Beijing to turn the tap back on again. Loan demand has been falling for months. Banks are offering credit. Companies are refusing to take it. This is the old Japanese story of pushing on a string, or the European story today.

"China is in deflation," says Charles Dumas from Lombard Street Research. Yes, consumer price inflation is 3.4pc – though falling – but consumption is a third of GDP. Fixed investment is 46pc, and here prices have dropped 3.5pc in six months. Export prices have dropped 6.6pc.

The authorities have belatedly responded, cutting the reserve ratio by 50 points to 20pc over the weekend. It is thin gruel. Are we to conclude that the People's Bank is bent on breaking excess capacity in a cathartic Schumpeterian purge, or that leadership battles have paralysed the Party? Hard to tell.

All the BRICs need watching. India's industrial output fell 3.5pc in March. The country seems caught in a 1970s stagflation vice. Brazil has softened too, with car sales down 15pc and industrial production contracting in March. The bad loans of the banks have reached 10.3pc, higher than post-Lehman.

The bubble has probably popped already, but hoteliers in Rio are hanging on. The European Parliament has pulled out of the UN's Rio forum on sustainable development in June because the rooms are exorbitant. "We are short the vastly over-vaunted and over-owned BRICs," says hedge fund contrarian Hugh Hendry.

My fear has always been that the credit cycle in the Rising World would blow itself out before the Old World has safely recovered, or reached "escape velocity" to use the term in vogue.

Europe will slide further into 1930s self-destruction until it equips itself with a lender of last resort and takes all risk of EMU sovereign default off the table, though that may come too late. The US has functioning institutions at least but growth is barely above stall speed. Ben Bernanke's "massive fiscal cliff" looms this autumn. The Economic Cycle Research Institute (ECRI) has not yet withdrawn its US recession call.

The BRICS helped save us in 2008-2009. If we now face a global crisis on all fronts – and such an outcome can still be avoided – it will test the mettle of world leaders. Interest rates in the G10 are mostly zero already, and budgets are frighteningly stretched.

Sensing what is coming, Citigroup's chief economist Willem Buiter says global central banks have not yet exhausted their arsenal. They can "and should" crank up quantitative easing (QE), buy everything under the sun, and do "helicopter money drops".

I would go even further. sovereign central banks have the means to defeat any depression thrown at them by launching mass purchases of assets outside the banking system, working through the classic Hawtrey-Cassel quantity of money mechanism until nominal GDP is restored to its trend line.

The problem is not scientific. A world slump is preventable if leaders act with enough panache. The hindrance is that the Euro Tower still haunted by Hayekians, and most G10 citizens – and Telegraph readers from my painful experience – view such notions as Weimar debauchery, or plain Devil worship. Economists cannot command a democratic consent for monetary stimulus any more easily today than in 1932.

One can only pray that helicopter drops do not become necessary in the chilly winter of 2012-2013.