Monday, March 23, 2009

Just my opinion...Mortgage crisis...

So I'm sitting clearing up some paperwork, I have some real-estate reality show on DTV. Now I'm not really paying much attention...just kind of have it on as background noise. This show is featuring a family looking to purchase their first house. Simple enough, right? Well, not really.

As a former real-estate agent the dialogue taking place between the house hunters and the real-estate agent was capturing my attention. Oh my...what a disgrace.

The couple have discussed what they can afford (good move) and what they need space wise. For far, so good.

Now it's time to tell the 'agent' who is suppose to be a 'professional' and understand the seriousness of buying a home. They give the agent a dollar figure so as to help guide the agent in selecting homes they afford (another good move.)

Now comes the good stuff...

First house they are shown is $25,000 above what they have already figured they can comfortably afford. And, on top of this, the house needs a great deal of work.

Second house they are shown is about $45,000 above what they have figured to spend...this house doesn't need too much work, but the rooms are very small and would require that one of the children have their room in the basement (mind you this child is not a teenager, but maybe only seven years of age.)

Third house is absolutely perfect...and $55,000 above what they can afford. to make a decision...and, unfortunately, the couple buys the first house. Why do I say unfortunately? Because the couple should have told the real-estate agent to take a walk...and found another agent willing to work within their means. Here they will be spending $25,000 more then they initially knew they could afford and would have to invest at least another $20,000 just to make the kitchen over...never mind that the rest of the house needed a lot of work.

So when one asks...why did some of these people buy that which they couldn't afford...simple, they wanted to live the American dream and own a little space on this planet. They relied on the 'professionals' not to let them overbuy...figuring maybe the 'professionals' knew better then them in figuring what they could afford.

We should look to some of those that earn commissions on the sale and mortgaging of real estate. That is not to say that some buyers, if not many, are quite savvy when it comes to finances, and wanted to be the 'Joneses'...they knew darn well they were well over their heads and still they gambled. For those gamblers I say...ooh well...

I have seen it myself, time and again, the closing of the deal is what's all about the numbers.

In New Jersey I know that ethics is a major area to study in real estate and is included in a good portion of the licensing where is the breakdown?

When does the art of enriching the lives of others become second to the art of the deal?

Working the figures backwards is not doing most buyers a favor...putting them in a modest house that is well within their means is giving them the first step up to their dream home. Now of course this is just my opinion...

Peace to you and yours,

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