Cost of Home, Who's winning?

Question

Homes have become very expensive. But guess who's winning. Realtor agents who make a percent on the gross sale and of course the Tax office because as the housing market increases assessments will follow, leaving our posterity to foot the pocket empting taxes. In the long run when someone sells a house for well above the replacement cost they ultimitely need another place to live. So who's making the money, not the seller and certainly not the buyer, but when a realtor who makes 6%, sells a home worth 150,000 and boosts the price to $200,000 it's a $3000 dollar difference. Recently, I found a piece of property which sold for $76,000 in 2004 which consists of 1/3 acre and small cottage. The realtor has it on the market since 2004 for $199,000 as is. Only waiting and ignoring offers of 100,000. By waiting he will eventually get the price, but when taxes are accessed this amount will increase the surrounding properties yearly taxes.

Do you think the housing market is justified?

Answer 1

The realtor has to submit any offer given to his sellers, so it may be the seller's are greedy and want to wait it out.

The realtor only makes 6% if he is on the selleing and listing side, and as most things are, it is completely NEGOTIABLE. In this market when there are more houses than realtors and more sellers than buyers, it is totally negotiable.

Also remember, in order for a buyer to obtain a loan to purchase that property, it has to be actually WORTH what they're asking for, so chances are they're passing up on good offers. Just figure they're greedy fools and you're probably being saved a huge headache not having to deal with them.

If he does get the price he wants, their taxes will be raised, not the surrounding properties. They may get the benefit of being able to sell higher, but their taxes are based on their worth at the time of their sale and any normal increases.

No, I don't think the housing market is justified at all. I moved a year ago from an 1100 sf old piece of junk house worth $850,000 to a place 100 miles away that's 2500 sf and is worth $450,000 .. go figure! Unfortunately, people will pay stupid prices.

Answer 2

Why do we forget the old adage "You get what you pay for"!!!

So let me first start by explaining how Real Estate works. Foremost, a home does not have a fixed MSRP. How does a Realtor / Buyer / Seller arrive at a price for a property. I am a Realtor and I am learning to get to a point where I can arrive at an approximate estimate for a property.

First is we find out comparable properties (Sq. Ft., Schools, Amenities, lot size and neighborhood). We then adjust the comparable properties for differences. We then arrive at a ballpark rate for how much others have paid for the property in the past. This is the going rate. Now if a Realtor listed a property for 2.5 times the Comparable Market Analysis (CMA), I would doubt his / her marketing skills. As much as the seller and the Realtor understand selling the buyers understand buying. No one will even look at such a over priced property and will stay on the market for a very long time. People will not only find fault with the property because it is not selling, but will start thinking that there are other problems with the property.

Now let's analyze who is making money. If you were to buy a similar property 5 years back, it would have appreciated atleast 30%. The appreciation (upto a 500,000) would be tax free if you were married filing jointly. Give me another example of income where capital gains are not taxed. How much would 500,000 before tax be? You will need to earn atleast 900,000 pre-tax.

Let's go to your cash flow each month. Mortgage interest is tax deductible. Now imagine that you are paying a mortgage interest on 300,000 Mortgage of about 2100 per month. The tax rate you are in (Fed 25 + State 9 for california) 34%. You will save almost $700 a month in taxes. Guess who makes money every month. I think you should go out and check what kind of property you can get for 330,000. Looking at your exemplary numbers, I guess it will be a palace with a golf course. You would pay atleast 4000 per month in Rent for that kind of a place. Guess who is winning.

If you stay out and watch. You will always keep seeing other people make money except you the person watching from sidelines.

I hope I am explaining it right.

I am a Realtor in California.

Answer 3

real estate is always a wise investment

except on the coast of california

or in the middle east

Answer 4

nup