Friedman proposed vouchers, not "private schools only". He envisioned schools that would accept students for the face value of the voucher alone. After all, private enterprise can operate more efficiently than the public school system.
I have found very little in Milton Friedman's writings that I can wholeheartedly agree with.
Well that says a lot more about you than about him. Friedman, a Nobel Laureate, was one of the most important 20th century economists. His contributions to the field are on the level of Friedrich Hayek. If you ever find yourself disagreeing with Friedman on monetary theory or consumption analysis, then you should engage in some serious self-reflection on why you have gotten it wrong. You will find that the overwhelming majority of economists will tell you the same thing. I highly recommend that you put down Free to Choose, and pick up A Monetary History of the United States.
[a] corporation's management is under a legal obligation to ensure that the company makes as much profit as possible
Well, I own three corporations and no one has ever made me aware of that law. Could you please cite it? I'll not hold my breath.
a few moments' thought should be enough to show that any for-profit entity operating in the field of public services is going to provide the least possible service at the highest possible rates.
This is absurd, and patently so. A few moments' reflection would yield this: Let's say you run a school under your model (lowest service and highest cost), and let's further say that I open up a school next door to your school that provides higher service at the same cost. Whose school do you think would be more profitable?
In reality, the free market will supply many different products and many different price points. Can a Safeway survive next door to a Whole Foods? Of course it can. And what can you see happening? Have you been inside a Safeway recently? You'll see better quality foods and more organic foods. That's free market competition raising the bar for everybody.
Fobbing such services off onto the private sector produces other problems as well, as corporations are by their very definition protected by legal limits on their liability.
This is silly. There are plenty of private daycare centers, and those are incorporated. Private schools are incorporated. You'll find that the officers of corporations have little liability protection for willful misconduct and illegal activity. Just ask Dennis Kozlowski or Jeff Skilling, both of whom you'd have to visit in prison.
Why would companies suddenly spring up to take over the role of schools?
What difference does it make? So what if private enterprise does not create any schools? Or did you not even read Free to Choose? Friedman advocated vouchers, not the selling off of public schools to private enterprise. If public schools are meeting the needs of the community, then certainly no for-profit schools would survive. But then, how is that a problem? All that means is that the public school system is A-OK.
His model is also flawed in ignoring the very real geographical constraints of schools
I don't get your point here. If the market dictates a need for a school in a certain location then it will spring up there, not 1 hour away.
Why would parents just suddenly decide they wanted to give money?
You ever hear of private school?
But if, as Friedman apparently describes, the basic idea is that the government would subsidize education, then the basic budget should be completely covered,
Ahh, OK. I see you haven't even read Free to Choose, yet feel the need to open your mouth anyway. That explains a lot.
Primer: Friedman envisions a voucher system where each pupil gets a voucher equal to the amount the public school system spends per pupil. That pupil can take that voucher and enroll in any school, including the local public school. Private schools could open up and accept as tuition either the face value of the voucher, or the voucher plus a supplement (just as private schools currently charge tuition). I suppose if a school
First, you do understand that all presidents' policies are created by a bunch of academics and advisors, right? They don't come up with all that by themselves, so no matter where you go it will be a bunch of guff, to a certain extent. Well, the man does have a degree in political science with a specialization in international relations from Columbia University and a Harvard law degree. I should hope he could create a policy or two on his own. As an economist, I happen to agree with a lot of what he wrote about the economy before he went into pander mode. And that's my real complaint with him--I probably should have been more clear.
Your stance is fair, though, though seems a bit dismissive if you believe what I've said above. I'm not sure I can comment or argue much more on your position, so I suppose a more constructive question might be as follows: Has a candidate ever come out before the election and really laid out concrete issues and how exaclty they will deal with them? You're 100% correct I'm being dismissive. But what choice do I have?
I agree with you that most candidates hold their cards close to their chests during their campaigns, but Obama rightly realized that he could never get away with it. After all, he's the candidate for "Change We Can Believe In", and it's a little hard to believe in the change without having the foggiest notion of what the changes are going to be.
But here's why I'm dismissing him. Have you read his Blueprint For Change? If not, I suggest you do and you'll see where I'm coming from. Look at any issue, and then look at all the promises. He's promising everything that anyone who has interest in that particular issue could ever ask for plus the kitchen sink and then some. He can't possibly intend to implement even 1/4 of what's in that document, and even if he did, the president only has but so much political capital. He could probably get, what, 5% of all that crap accomplished? If he's lucky? He's been in politics for a long time, so he knows this.
The problem with him is that he is not speaking from the heart. He's just telling people what they want to hear. Did you read his speech at the AIPAC conference? All of the opinion page writers only noticed that he's continuing to backpedal on his earlier statement that it's "ridiculous" not to talk to nut-job, hostile foreign dictators. But imagine for a moment that you are a member of the American Israel Public Affairs Committee and hold their same viewpoints on Israel. Now read the speech.
Do you really think a US Senator with a lifetime 88% Liberal voting record (perspective: Hillary Clinton's lifetime is only 79.4%) believes all that hogwash? Of course not. Current Liberal thinkers agree that Israel is an apartheid state, and our alliance with them is the main reason the rest of the world hates us.
He does the same thing with every other issue. He's a chameleon--changing his rhetoric to whatever people want to hear. And because he's so good at it, you can never know what he truly believes and where his priorities truly lie. If he can only accomplish 1/20th of his Blueprint For Change, this voter wants to know which 20th is going to be his priority. What will he really do as president? I've done a lot of reading, and I don't have clue #1 what Senator Obama stands for. But I do know when I'm just being told what I want to hear.
Read some of his positions, and listen to some of his speeches, and ask yourself: Do you really think he cares about you? Or is he just promising everything to everyone?
Sorry, I really don't care to read a bunch of position papers written by a bunch of academics. I want to know what's in his heart.
I want to hear it from the horse's mouth. Even then, it's hard to know what the man stands for. In "The Audacity of Hope", he's for free trade. Now, he's for dumping NAFTA and a return to protectionism. Which is it, Barry?
Look, you got my vote in the primary because I'd rather have anyone other than that crazy bitch in the White House. Now, it's time for you to face the music and reveal your stance on the issues. This chameleon crap ain't gonna cut it any longer.
An agent could afford a lower percentage fee with either a higher priced houses or by moving more houses with the same effort. Absolutely. And I'm seeing that a lot in my area, where property values are through the roof. 6% was a typical commission just 10 years ago, but nowadays you will get zero pushback if you ask for a discount. 5% is a no-brainer for full service agents now. That will probably continue to drop as more agents embrace time-saving technology and are able to take on a higher volume of business without sacrificing quality.
It wouldn't make sense to give me a good rate if I put 20% down on a $300K loan for a home worth $100K home and then used the additional $200K to pay for other transactions. Why would they let me do it on a smaller scale? I think you'll find that a bank will not participate in such a transaction. If the value of the collateral is $100k, then you'll need to put down $20k and finance $80k for the best rates. During the bubble, there were ridiculous 105% LTV and even 110% LTV (using a second trust) loans out there. And people wonder why we had a mortgage meltdown?
That banks let you finance the sales commission is established tradition and is factored into the bank's risk models. If you think about it, none of that sales commission is unsecured debt. Let's say the commission is 5%. That means on a $100k house, there is still a $20k equity cushion, but the sales commission was only $5k. A foreclosure costs about $5k, and figure the bank loses 5-10% for doing a quick sale at auction. And what are you down to? 80k, which is the bank's exposure. There is very little risk to the bank on a traditional 80/20 fixed rate loan, which is why they are able to provide such absurdly low rates.
Traditional 80/20 fixed rate loans are time-tested, and they are well-understood by lenders and the financial markets. It's all of these newfangled Option ARMs, High LTV loans, etc., whose risk was totally misunderstood and mispriced on the secondary markets.
Even if the chance of child abduction is very low, I don't see a system like this as "security theater", but as both necessary and useful. (It's the type of system that you hope never has to be used, but you're happy that it is in place when it is needed.) Then you are not thinking very hard.
The hospital where my kids were born at had one of those fancy RFID tag systems where a tag is attached to the umbilical stump. During the mandatory hospital tour, when they made a big deal about this state-of-the-art security, how they do kidnapping drills all the time, etc, I wondered to myself, "It's a little plastic tag. Why couldn't the baby-napper just snip it off?"
Fast forward a few months to when my first child was born. Part of the discharge procedure is, of course, to remove the RFID tag, which the nurse unceremoniously did with a small wire cutter. When I made light of how easily the security system might be defeated, the nurse assured me that a kidnapper would never have a wire cutter. I would have asked how she could be so sure, but I really just wanted to go home at that point.
It wasn't until after having my second child that I realized the true security measure: "Newborns are a royal pain in the ass." I'd have 12 kids if there were some way to just pick 'em up after 9 months or so.
If the landlord requires you pay someone else, you do or you don't get the place. No matter what, he doesn't pay a penny. I'm speaking from the LL's perspective. My point is I'm not going to use that "someone else" because that is just "someone else" who wants money that should be going to me!
Give me $1500 or I won't rent the place to you, no it isn't a deposit, it's a "move in" fee." How would that go over? Or is that even legal? Move-in fees (usually called cleaning fees) are legal in my jurisdiction, but this will vary by state and local law.
But why even go there? I can just charge more for rent. Don't believe me? "Oh, I know that my rents are slightly above average for rent, but you won't have to pay any $1500 fee to some do-nothing real estate agent. Have I told you yet about our security deposit refund policy? On each yearly rental anniversary, provided all rent payments were on-time and all inspections were passed for the preceding 12 months, you'll receive 1/4 of your security deposit back until it's gone."
Tenants love that kind of thing, and it's a no-brainer for me. If inspections are always passed, why do I need to hold a damage deposit? And if you do cause damage, I'm still going to sue your testicles off, security deposit or not.
This is an interesting legal and accounting sleight of hand, but it has been pointed out elsewhere that it is really just that. The reality is that these ancillary costs are always split between the buyer and the seller by being rolled up into the price of the home. There's really no way around that. Who writes the check is really just a formality. You are obviously under age 40.;) There is a bit of history involved here, as true buyer agency is a relatively modern concept.
It used to be that the seller paid the listing agent to market the property and the selling agent (what you would now call a "buyer's agent") to deliver a willing and able buyer. Both brokers (listing and cooperating broker) were fiduciary to the seller. In fact, when I sold my first home, I point blank asked the selling agent for the maximum price her client was willing to pay. She stammered something about not feeling comfortable discussing that, so I reminded her fiduciary duty was to me and to fail to reveal any and all information that would benefit me would be in direct violation of state law. This is how life used to be.
Now, we have buyer agents who are fiduciary to their buyers (which makes a lot more sense, frankly). But as a matter of tradition, the buyer agent's fee is still paid at closing by the seller. Realtors are comfortable with this, lenders are comfortable with this, settlement agents are comfortable with this, and the actual buyers and sellers are comfortable with this. It's what everybody's used to. Will it change in the future? Perhaps. I can't think of what would be the driving force for change, but we've already touched on the reason for its persistence: the ability to finance that fee.
I suspect that the "seller pays the fees" construct is really only useful to the agent, as it allows the agent to charge a higher fee because the agent's price gets rolled into the price of the house and the buyer gets to finance his portion of it rather than having to come up with cash up front. Perhaps. But good agents put in a lot of work for their clients and deserve to be compensated. No one is forcing you to use one, but if you don't, you'll have to do all that work yourself.
Of course, prices for Realtors have been on the decline. In many markets, paying 6-7% was the norm 10 years ago. Now, you can easily find an agent who will work for something more reasonable.
In order to represent his client's interests properly, the buyer's agent would simply add his price to the expected price of the house and other fees and see if it's comparable to other properties listed on different terms. We just got through saying how that doesn't quite work. There is a big difference between cash out of pocket and financing the cost. People save like crazy to make their down payments. The idea of spending thousands of dollars of cash that could be used toward the down payment is a nonstarter for most buyers.
As a buyer, all I really care about is how much comes out of my pocket at the end of the transaction. Whether I pay $1 to the seller and everything else goes to the agent, the government, or gets torched in a big bonfire doesn't matter to me. An analysis based on whether the agent's fee is laundered through the seller first is just not helpful. Make sure your agent knows that, and he or she will act on it. The fact of the matter is, most buyers want to finance that fee, and with good reason. It's often cheaper for them to do it. Think about it. If financing that fee is the difference between being able to put 20% down or not, the buyer is going to get much better loan terms by putting 20% down and financing the cost of the Realtor.
Are you a landlord in NYC? Also, why should you market your places when you can have someone do it for free? Is your time worth nothing to you? It's not in NYC, and it's not free. Not even in NYC.
Every dollar you pay to your LL or to your agent is money you spent on housing. I want all the money you spend on housing to go to me. Not some agent.
A typical agent around here will want to be paid one month's rent. Or on the other hand, you could pay that money to me. Oh, gee whiz, guess what I'm gonna choose.
Try this one the next time you meet with a Realtor: "How would you like to get paid whether or not I purchase a property? I propose to pay you a flat $50/hr for your professional services whether or not I buy anything."
Agents get jerked around all the time with "buyers" who never buy. I bet you have no difficulty finding an agent to accept your proposition.
Are you saying that I can list my house on MLS without having to promise to pay multiple percentage points of the sales amount to the buyer agent? ie, list it for ~$200 without any other obligations? Yes, you can do that in my market. I don't know where you live, but I do know it's possible here. You could say you're not paying a buyer's agent any commission. With the caveat that then the buyer would be responsible for 100% of his agent's commission, of course. Put yourself in a buyer's shoes and try to decide if that makes your property more or less attractive.
Are you saying the buyer's agent would first find out the seller will only pay him 3k$ instead of the 15k$ (3%) he'd rather have and then refuse to represent his client in that transaction if his client didn't pay him more? And that's in the best interest of the client? It has become clear that you have either: a) never purchased property before with a Realtor, or b) never read the document you signed when you contracted with your agent.
The buyer agency agreements have some variation of the following stipulations. The buyer agent's compensation amount and format (percentage of sale, hourly rate, flat fee, retainer, etc.) will be stated. Next, it will stipulate that the buyer is responsible for his agent's compensation. And just to be clear, the agreement will further state that often times a property seller will pay for the buyer agent's compensation from funds at closing, but that if this is not the case, that the buyer will be responsible for paying his agent.
So it's not a question about the buyer's agent refusing to represent the buyer. The buyer's agent will still represent the buyer, but the buyer will have to pay for his own agent, which he was probably not expecting to do, and also probably does not have the funds to do.
Think about it. If I were to buy your property through an agent, because you would not be compensating my agent, I would have to come up with (to use your numbers) $15k out of pocket (and that's $15k I can't use for my down payment) to pay my agent. This is $15k that I cannot finance, so it really is going to have to come from what would have been my down payment. Maybe I couldn't even get a loan anymore if I can no longer make enough of a down payment.
So, yes, I assert that an agent would probably not be acting in his client's best interest by showing your property. Not unless the buyer specifically mentioned that he wanted to see properties where the seller wasn't willing to compensate his agent for bringing a willing and able buyer.
I don't know how it is in Texas, but in my state, a real estate salesperson need not join any association. There is training and a test. You take the training and pass the test, you get a license.
Once you have your license, you still need a broker to hold it (and QA your work). Of course, you can always become a broker yourself.
And I would be perfectly willing to pay someone like your wife a flat fee for those services. What I won't pay is a percentage of the sale value of the house. There is no law that say you have to pay a Realtor a percentage of the sales price. Negotiate a flat fee. It can be done.
a) get it on MLS, the defacto system for communicating listings to all local agents without being extorted 15k$ (3% promise to buyer agent) Call around. In my market, you can get a local Realtor to list your property in MLS for ~$200.
b) not get blacklisted by every agent in town for offering -only- 3k$ (0.6%) to a buyer agent Realtors are required to show properties that are in their client's best interest. It's hard for me to see how your listing would be in the client's best interest to show. After all, you'd be leaving the client to come with remaining $12k to pay the agent. If I were that client, I'm not sure I'd want to see your property.
I don't need to pay someone 3%-6% to tell me that cleaning my house will make it sell easier. But do you know what type of cleaning will make it sell easier vs. what is wasted time and money?
You better tell your wife she might want to start thinking of her next career because the $50 listing on housetrader.com isn't very far away into the future. The future is now. You can buy a full-blown MLS listing for $200. Why, again, are you bitching?
Personally, I do not use Realtors to sell my properties because I have a lot of experience in the industry. I can market my properties a hell of a lot better than some greenbean with a newly-minted salesperson's license.
But I certainly use Realtors for buying property. I work with a few agents who are constantly scouring their markets that they know best and bringing me deals. They know what I want, and they go out and find it for me. These are not deals I would find on my own because there is only one of me. I'm glad to pay their commissions because they are making me money. Money that I wouldn't have made had it not been for them.
The landlord will never pay the fee, because there is always someone who will step in and pay it for them, because of the permanent housing shortage in NYC If the demand for rentals is as robust as you say it is, why would landlords sign exclusive agency agreements with Realtors in the first place?
I am a landlord, and I do not use Realtors to list my rentals. I can market rentals better than most Realtors, anyway. Why should I pay so much money for something I can do better myself?
That's the logic I apply to your situation. If demand is so high, why wouldn't landlords give the Realtors the boot so they can have that money for themselves?
That plan would put owning a house out millions of people's reach, I'm afraid. That's actually a load of crap.
Look at California. All purchase money mortgages are non-recourse by statute. That means the bank's only recourse in the case of default is to foreclose on the asset. Could you please explain how this has decimated home ownership in CA?
2) All the anti-discrimination provisions of federal housing law are public. Try http://www.ftc.gov/bcp/edu/pubs/consumer/homes/rea08.shtm for a start. None of it has anything in it about lowering standards, only prohibiting discrimination. There is a difference between what is in the law vs. what is prudent business practice. Remember, even an accusation of discrimination is costly to a company, and to a small business (which many mortgage brokerages were), defending against an accusation could bankrupt the company.
As a landlord, fair housing is something that I take very seriously. It's good business practice not only to avoid discrimination, but to avoid making people feel like they could have been discriminated against. That means things like accepting an application from anyone who cares to apply. If I were to tell someone, "Oh don't even bother applying. You'll never qualify," I might as well just write a check for $10k to my attorney right then and there.
The same thing happens with mortgage brokers. They've got their compliance officers saying, "Take an app from anybody!" and "If they qualify for any mortgage, even if it is an expensive one, you must tell them!" That's life in this overly-litigious country.
3) People can accuse of discrimination all they want; if they can't prove it who cares? There's no way defending those cases would be as expensive to mortgage companies as having the loans blow up. This is false. Mortgage brokers suffer no financial consequences if the borrower defaults. But they are definitely on the hook when it comes to the Fair Housing Act.
Look, there were a lot of reasons that the meltdown happened. The most basic reason was mispriced and misallocated risk. The market became inundated with new, complex products that were not well understood by anybody in the market.
1. Consider the Option-ARM. How many borrowers really understood them? I understand them, and I've used them before. They are a great tool if you know what you are doing. But most mortgagors do not understand them.
2. Then you have the mortgage borker/salesperson who is compensated by dollars lent. What a great incentive model to minimize risk, no? Especially since the broker bears no default risk. Especially since it's very easy to confuse an unsophisticated buyer with new, complex products.
3. Then you have the actual lender. You'd think the lender assumes the default risk, but that is not the case after a certain time period (usually a year). Why? The lender is going to sell the loan anyhow and use the proceeds to make more loans. So the lender has no incentive to make sure the borrower can safely make more than 12 of his 360 payments. What a great business model to minimize risk, no?
4. Then you have the secondary market makers who buy the loans from the lenders. They slice and dice them up, pool them together, and issue securities which they sell off to investors (and use the proceeds to purchase more loans). There are a dizzying array of different types of mortgage-backed securities out there of all different risk grades. Ultimately, the risks on many of them weren't well understood. When it became clear to investors in MBSs that they didn't understand what they were buying and if they were being correctly compensated for their risk, they dumped their MBSs and refused to buy any more. In fact, investors lost faith in much of the credit market and just stopped buying until the dust settled. That is the liquidity crunch that the fed has been working on.
Summary: The mortgage market had serious issues at every level, and one big part of it is at the broker level and one big part of that is the Fair Housing Act. If the broker were to say, "Sorry, you don't qualify for a loan," when the buyer did in fact qualify for a loan (albeit an expensive one), that could be a costly mistake.
Racial discrimination carried on because people are still racist, and it is possible to determine a person's "race" (whatever "race" means) by looking at him or her.
Genetic makeup, on the other hand, requires analysis of a person's DNA in a laboratory. This bill makes it illegal to require a DNA sample.
But genetic discrimination has always gone on and will always continue to go on. Case in point: when you apply for life/health/disability insurance, the application will ask things like "Do either of your parents have heart disease?", "Do either of your parents have cancer?", etc. Doesn't that sound an awful lot to you like genetic discrimination? After all, they're trying to ascertain your genetic disposition toward various disorders.
This is definitely "obvious" legislation, as no one is comfortable having their DNA used against them for employment or insurance decisions. It just seems too Orwellian or something. But as an Economist, this legislation is awful. It creates adverse selection in the health insurance market, because while I can go out and get my DNA sequenced and interpreted and make health insurance decisions accordingly, my insurer can't have access to that information and can't price my insurance properly. If I'm genetically predisposed to some expensive health problem, I'm going to purchase a more comprehensive policy, whereas if my DNA looks clean, I'll purchase less insurance. This is a breakdown in the very purpose of insurance. Purchaser and insurer need to have the same information or insurance doesn't work.
Nevermind that while the topics of the forums are "polygraph testing", they couldn't possibly be more different. One is pro, and the other is anti polygraph.
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Friedman proposed vouchers, not "private schools only". He envisioned schools that would accept students for the face value of the voucher alone. After all, private enterprise can operate more efficiently than the public school system.
I have found very little in Milton Friedman's writings that I can wholeheartedly agree with.
Well that says a lot more about you than about him. Friedman, a Nobel Laureate, was one of the most important 20th century economists. His contributions to the field are on the level of Friedrich Hayek. If you ever find yourself disagreeing with Friedman on monetary theory or consumption analysis, then you should engage in some serious self-reflection on why you have gotten it wrong. You will find that the overwhelming majority of economists will tell you the same thing. I highly recommend that you put down Free to Choose, and pick up A Monetary History of the United States.
[a] corporation's management is under a legal obligation to ensure that the company makes as much profit as possible
Well, I own three corporations and no one has ever made me aware of that law. Could you please cite it? I'll not hold my breath.
a few moments' thought should be enough to show that any for-profit entity operating in the field of public services is going to provide the least possible service at the highest possible rates.
This is absurd, and patently so. A few moments' reflection would yield this: Let's say you run a school under your model (lowest service and highest cost), and let's further say that I open up a school next door to your school that provides higher service at the same cost. Whose school do you think would be more profitable?
In reality, the free market will supply many different products and many different price points. Can a Safeway survive next door to a Whole Foods? Of course it can. And what can you see happening? Have you been inside a Safeway recently? You'll see better quality foods and more organic foods. That's free market competition raising the bar for everybody.
Fobbing such services off onto the private sector produces other problems as well, as corporations are by their very definition protected by legal limits on their liability.
This is silly. There are plenty of private daycare centers, and those are incorporated. Private schools are incorporated. You'll find that the officers of corporations have little liability protection for willful misconduct and illegal activity. Just ask Dennis Kozlowski or Jeff Skilling, both of whom you'd have to visit in prison.
Why would companies suddenly spring up to take over the role of schools?
What difference does it make? So what if private enterprise does not create any schools? Or did you not even read Free to Choose? Friedman advocated vouchers, not the selling off of public schools to private enterprise. If public schools are meeting the needs of the community, then certainly no for-profit schools would survive. But then, how is that a problem? All that means is that the public school system is A-OK.
His model is also flawed in ignoring the very real geographical constraints of schools
I don't get your point here. If the market dictates a need for a school in a certain location then it will spring up there, not 1 hour away.
Why would parents just suddenly decide they wanted to give money?
You ever hear of private school?
But if, as Friedman apparently describes, the basic idea is that the government would subsidize education, then the basic budget should be completely covered,
Ahh, OK. I see you haven't even read Free to Choose, yet feel the need to open your mouth anyway. That explains a lot.
Primer: Friedman envisions a voucher system where each pupil gets a voucher equal to the amount the public school system spends per pupil. That pupil can take that voucher and enroll in any school, including the local public school. Private schools could open up and accept as tuition either the face value of the voucher, or the voucher plus a supplement (just as private schools currently charge tuition). I suppose if a school
I agree with you that most candidates hold their cards close to their chests during their campaigns, but Obama rightly realized that he could never get away with it. After all, he's the candidate for "Change We Can Believe In", and it's a little hard to believe in the change without having the foggiest notion of what the changes are going to be.
But here's why I'm dismissing him. Have you read his Blueprint For Change? If not, I suggest you do and you'll see where I'm coming from. Look at any issue, and then look at all the promises. He's promising everything that anyone who has interest in that particular issue could ever ask for plus the kitchen sink and then some. He can't possibly intend to implement even 1/4 of what's in that document, and even if he did, the president only has but so much political capital. He could probably get, what, 5% of all that crap accomplished? If he's lucky? He's been in politics for a long time, so he knows this.
The problem with him is that he is not speaking from the heart. He's just telling people what they want to hear. Did you read his speech at the AIPAC conference? All of the opinion page writers only noticed that he's continuing to backpedal on his earlier statement that it's "ridiculous" not to talk to nut-job, hostile foreign dictators. But imagine for a moment that you are a member of the American Israel Public Affairs Committee and hold their same viewpoints on Israel. Now read the speech.
Do you really think a US Senator with a lifetime 88% Liberal voting record (perspective: Hillary Clinton's lifetime is only 79.4%) believes all that hogwash? Of course not. Current Liberal thinkers agree that Israel is an apartheid state, and our alliance with them is the main reason the rest of the world hates us.
He does the same thing with every other issue. He's a chameleon--changing his rhetoric to whatever people want to hear. And because he's so good at it, you can never know what he truly believes and where his priorities truly lie. If he can only accomplish 1/20th of his Blueprint For Change, this voter wants to know which 20th is going to be his priority. What will he really do as president? I've done a lot of reading, and I don't have clue #1 what Senator Obama stands for. But I do know when I'm just being told what I want to hear.
Read some of his positions, and listen to some of his speeches, and ask yourself: Do you really think he cares about you? Or is he just promising everything to everyone?
Sorry, I really don't care to read a bunch of position papers written by a bunch of academics. I want to know what's in his heart.
I want to hear it from the horse's mouth. Even then, it's hard to know what the man stands for. In "The Audacity of Hope", he's for free trade. Now, he's for dumping NAFTA and a return to protectionism. Which is it, Barry?
Look, you got my vote in the primary because I'd rather have anyone other than that crazy bitch in the White House. Now, it's time for you to face the music and reveal your stance on the issues. This chameleon crap ain't gonna cut it any longer.
That banks let you finance the sales commission is established tradition and is factored into the bank's risk models. If you think about it, none of that sales commission is unsecured debt. Let's say the commission is 5%. That means on a $100k house, there is still a $20k equity cushion, but the sales commission was only $5k. A foreclosure costs about $5k, and figure the bank loses 5-10% for doing a quick sale at auction. And what are you down to? 80k, which is the bank's exposure. There is very little risk to the bank on a traditional 80/20 fixed rate loan, which is why they are able to provide such absurdly low rates.
Traditional 80/20 fixed rate loans are time-tested, and they are well-understood by lenders and the financial markets. It's all of these newfangled Option ARMs, High LTV loans, etc., whose risk was totally misunderstood and mispriced on the secondary markets.
My kids' doctor doesn't mess with any of this faxing BS. He just calls their prescriptions into the pharmacy.
The hospital where my kids were born at had one of those fancy RFID tag systems where a tag is attached to the umbilical stump. During the mandatory hospital tour, when they made a big deal about this state-of-the-art security, how they do kidnapping drills all the time, etc, I wondered to myself, "It's a little plastic tag. Why couldn't the baby-napper just snip it off?"
Fast forward a few months to when my first child was born. Part of the discharge procedure is, of course, to remove the RFID tag, which the nurse unceremoniously did with a small wire cutter. When I made light of how easily the security system might be defeated, the nurse assured me that a kidnapper would never have a wire cutter. I would have asked how she could be so sure, but I really just wanted to go home at that point.
It wasn't until after having my second child that I realized the true security measure: "Newborns are a royal pain in the ass." I'd have 12 kids if there were some way to just pick 'em up after 9 months or so.
But why even go there? I can just charge more for rent. Don't believe me? "Oh, I know that my rents are slightly above average for rent, but you won't have to pay any $1500 fee to some do-nothing real estate agent. Have I told you yet about our security deposit refund policy? On each yearly rental anniversary, provided all rent payments were on-time and all inspections were passed for the preceding 12 months, you'll receive 1/4 of your security deposit back until it's gone."
Tenants love that kind of thing, and it's a no-brainer for me. If inspections are always passed, why do I need to hold a damage deposit? And if you do cause damage, I'm still going to sue your testicles off, security deposit or not.
Anyway, yeah. I want that money. Screw the agent.
It used to be that the seller paid the listing agent to market the property and the selling agent (what you would now call a "buyer's agent") to deliver a willing and able buyer. Both brokers (listing and cooperating broker) were fiduciary to the seller. In fact, when I sold my first home, I point blank asked the selling agent for the maximum price her client was willing to pay. She stammered something about not feeling comfortable discussing that, so I reminded her fiduciary duty was to me and to fail to reveal any and all information that would benefit me would be in direct violation of state law. This is how life used to be.
Now, we have buyer agents who are fiduciary to their buyers (which makes a lot more sense, frankly). But as a matter of tradition, the buyer agent's fee is still paid at closing by the seller. Realtors are comfortable with this, lenders are comfortable with this, settlement agents are comfortable with this, and the actual buyers and sellers are comfortable with this. It's what everybody's used to. Will it change in the future? Perhaps. I can't think of what would be the driving force for change, but we've already touched on the reason for its persistence: the ability to finance that fee. I suspect that the "seller pays the fees" construct is really only useful to the agent, as it allows the agent to charge a higher fee because the agent's price gets rolled into the price of the house and the buyer gets to finance his portion of it rather than having to come up with cash up front. Perhaps. But good agents put in a lot of work for their clients and deserve to be compensated. No one is forcing you to use one, but if you don't, you'll have to do all that work yourself.
Of course, prices for Realtors have been on the decline. In many markets, paying 6-7% was the norm 10 years ago. Now, you can easily find an agent who will work for something more reasonable. In order to represent his client's interests properly, the buyer's agent would simply add his price to the expected price of the house and other fees and see if it's comparable to other properties listed on different terms. We just got through saying how that doesn't quite work. There is a big difference between cash out of pocket and financing the cost. People save like crazy to make their down payments. The idea of spending thousands of dollars of cash that could be used toward the down payment is a nonstarter for most buyers. As a buyer, all I really care about is how much comes out of my pocket at the end of the transaction. Whether I pay $1 to the seller and everything else goes to the agent, the government, or gets torched in a big bonfire doesn't matter to me. An analysis based on whether the agent's fee is laundered through the seller first is just not helpful. Make sure your agent knows that, and he or she will act on it. The fact of the matter is, most buyers want to finance that fee, and with good reason. It's often cheaper for them to do it. Think about it. If financing that fee is the difference between being able to put 20% down or not, the buyer is going to get much better loan terms by putting 20% down and financing the cost of the Realtor.
Every dollar you pay to your LL or to your agent is money you spent on housing. I want all the money you spend on housing to go to me. Not some agent.
A typical agent around here will want to be paid one month's rent. Or on the other hand, you could pay that money to me. Oh, gee whiz, guess what I'm gonna choose.
Have you even tried?
Try this one the next time you meet with a Realtor: "How would you like to get paid whether or not I purchase a property? I propose to pay you a flat $50/hr for your professional services whether or not I buy anything."
Agents get jerked around all the time with "buyers" who never buy. I bet you have no difficulty finding an agent to accept your proposition.
The buyer agency agreements have some variation of the following stipulations. The buyer agent's compensation amount and format (percentage of sale, hourly rate, flat fee, retainer, etc.) will be stated. Next, it will stipulate that the buyer is responsible for his agent's compensation. And just to be clear, the agreement will further state that often times a property seller will pay for the buyer agent's compensation from funds at closing, but that if this is not the case, that the buyer will be responsible for paying his agent.
So it's not a question about the buyer's agent refusing to represent the buyer. The buyer's agent will still represent the buyer, but the buyer will have to pay for his own agent, which he was probably not expecting to do, and also probably does not have the funds to do.
Think about it. If I were to buy your property through an agent, because you would not be compensating my agent, I would have to come up with (to use your numbers) $15k out of pocket (and that's $15k I can't use for my down payment) to pay my agent. This is $15k that I cannot finance, so it really is going to have to come from what would have been my down payment. Maybe I couldn't even get a loan anymore if I can no longer make enough of a down payment.
So, yes, I assert that an agent would probably not be acting in his client's best interest by showing your property. Not unless the buyer specifically mentioned that he wanted to see properties where the seller wasn't willing to compensate his agent for bringing a willing and able buyer.
I don't know how it is in Texas, but in my state, a real estate salesperson need not join any association. There is training and a test. You take the training and pass the test, you get a license.
Once you have your license, you still need a broker to hold it (and QA your work). Of course, you can always become a broker yourself.
Wanna sell your house?
There is no law that says you have to pay your agent a percentage. You can specify a flat fee instead if that makes you more comfortable.
Personally, I do not use Realtors to sell my properties because I have a lot of experience in the industry. I can market my properties a hell of a lot better than some greenbean with a newly-minted salesperson's license.
But I certainly use Realtors for buying property. I work with a few agents who are constantly scouring their markets that they know best and bringing me deals. They know what I want, and they go out and find it for me. These are not deals I would find on my own because there is only one of me. I'm glad to pay their commissions because they are making me money. Money that I wouldn't have made had it not been for them.
That's adding value.
I am a landlord, and I do not use Realtors to list my rentals. I can market rentals better than most Realtors, anyway. Why should I pay so much money for something I can do better myself?
That's the logic I apply to your situation. If demand is so high, why wouldn't landlords give the Realtors the boot so they can have that money for themselves?
Look at California. All purchase money mortgages are non-recourse by statute. That means the bank's only recourse in the case of default is to foreclose on the asset. Could you please explain how this has decimated home ownership in CA?
As a landlord, fair housing is something that I take very seriously. It's good business practice not only to avoid discrimination, but to avoid making people feel like they could have been discriminated against. That means things like accepting an application from anyone who cares to apply. If I were to tell someone, "Oh don't even bother applying. You'll never qualify," I might as well just write a check for $10k to my attorney right then and there.
The same thing happens with mortgage brokers. They've got their compliance officers saying, "Take an app from anybody!" and "If they qualify for any mortgage, even if it is an expensive one, you must tell them!" That's life in this overly-litigious country. 3) People can accuse of discrimination all they want; if they can't prove it who cares? There's no way defending those cases would be as expensive to mortgage companies as having the loans blow up. This is false. Mortgage brokers suffer no financial consequences if the borrower defaults. But they are definitely on the hook when it comes to the Fair Housing Act.
Look, there were a lot of reasons that the meltdown happened. The most basic reason was mispriced and misallocated risk. The market became inundated with new, complex products that were not well understood by anybody in the market.
1. Consider the Option-ARM. How many borrowers really understood them? I understand them, and I've used them before. They are a great tool if you know what you are doing. But most mortgagors do not understand them.
2. Then you have the mortgage borker/salesperson who is compensated by dollars lent. What a great incentive model to minimize risk, no? Especially since the broker bears no default risk. Especially since it's very easy to confuse an unsophisticated buyer with new, complex products.
3. Then you have the actual lender. You'd think the lender assumes the default risk, but that is not the case after a certain time period (usually a year). Why? The lender is going to sell the loan anyhow and use the proceeds to make more loans. So the lender has no incentive to make sure the borrower can safely make more than 12 of his 360 payments. What a great business model to minimize risk, no?
4. Then you have the secondary market makers who buy the loans from the lenders. They slice and dice them up, pool them together, and issue securities which they sell off to investors (and use the proceeds to purchase more loans). There are a dizzying array of different types of mortgage-backed securities out there of all different risk grades. Ultimately, the risks on many of them weren't well understood. When it became clear to investors in MBSs that they didn't understand what they were buying and if they were being correctly compensated for their risk, they dumped their MBSs and refused to buy any more. In fact, investors lost faith in much of the credit market and just stopped buying until the dust settled. That is the liquidity crunch that the fed has been working on.
Summary: The mortgage market had serious issues at every level, and one big part of it is at the broker level and one big part of that is the Fair Housing Act. If the broker were to say, "Sorry, you don't qualify for a loan," when the buyer did in fact qualify for a loan (albeit an expensive one), that could be a costly mistake.
I'm still waiting for it to load. But when it finally finishes, I bet it will be real good. I can hardly wait.
Racial discrimination carried on because people are still racist, and it is possible to determine a person's "race" (whatever "race" means) by looking at him or her.
Genetic makeup, on the other hand, requires analysis of a person's DNA in a laboratory. This bill makes it illegal to require a DNA sample.
But genetic discrimination has always gone on and will always continue to go on. Case in point: when you apply for life/health/disability insurance, the application will ask things like "Do either of your parents have heart disease?", "Do either of your parents have cancer?", etc. Doesn't that sound an awful lot to you like genetic discrimination? After all, they're trying to ascertain your genetic disposition toward various disorders.
This is definitely "obvious" legislation, as no one is comfortable having their DNA used against them for employment or insurance decisions. It just seems too Orwellian or something. But as an Economist, this legislation is awful. It creates adverse selection in the health insurance market, because while I can go out and get my DNA sequenced and interpreted and make health insurance decisions accordingly, my insurer can't have access to that information and can't price my insurance properly. If I'm genetically predisposed to some expensive health problem, I'm going to purchase a more comprehensive policy, whereas if my DNA looks clean, I'll purchase less insurance. This is a breakdown in the very purpose of insurance. Purchaser and insurer need to have the same information or insurance doesn't work.
Nevermind that while the topics of the forums are "polygraph testing", they couldn't possibly be more different. One is pro, and the other is anti polygraph.
Which one do you think has more posts?
What a stupid waste of an article.