Confessions of the Real Estate Industry

I've been thinking about this for a long while. Why are home owners in so much trouble?
Here are my answers:
Every "professional" who deals with home owners is commission based.
The Realtor - The mortgage broker/Loan officer for lender or bank - are commissioned.
The appraiser's first question when hired for an appraisal - where $$$$ does it need to be. (what's the sales price).
So - if you are selling a house - you and the Realtor come up with the highest price possible (remember- the Realtor gets a commission based on the sales price) The Mortgage Broker (or Loan Officer) hires the Appraiser, who will look for comps (comparable homes in the price range of the sales price). Sometimes they have to look a little harder, because he depends on the mortgage person and Realtor for his income.
This is how prices are driven.
Want to know how you can learn about the "how to" of making the largest purchase of your life? Who will you turn to? Who teaches first time home buyer classes? The Realtor or the Mortgage Loan officer. The same people who benefit from your transaction. Will they tell you what they don't want you to know? How they can rip you off? Will they tell you that the mortgage company they "recommend" belongs to the Real Estate Company they are working for. It DOES benefit them to steer you there, and they ARE encouraged by their Real Estate company to do so - keep it in house. Do they tell you that this is a conflict of interest? That between all of them, they drive up your costs and the value of your loan and your house. This is artificially driving up the cost of housing! It pays them more money - that's how it goes.
Is there a way to fix this, so that we are not building another "bubble" in the future?
Take these people off commissions and pay a set fee for their services. Itemize the services and add monetary values to each part of the service.
For example:
For a $2000 fee, the Realtor will list you house with MLS, put one ad into a paper, hold two open houses, and write a sale agreement.
If you, the seller, want more, then there are fixed costs for running ads, open houses etc which you, the seller has to agree to.

The same with Mortgage Brokers (independent or working for banks or Lenders) A fixed price (let's use the same amount of $2000)for transacting a purchase or a refinance.

Whether the house value is $100,000 or $500,000 - it should not make a difference - it's the same amount of work. Listing the house, advertising is and writing a contract and have a couple of open houses - how much is that per hour?

A sales contract is a sales contract, and a mortgage is a mortgage. The work is repetitive and you don't need to be an Einstein to do it.

Furthermore - the idea of interest rates, points, and yield spread.
Interest rate + points = the customer pays the broker
Interest rate + yield spread = the bank pays the broker...WHY would the bank pay the broker???? ANSWER - for selling a higher interest rate.

Brokers in some cases can make up to 4% of the loan amount in yield spread - and often also charge you 1 point(%) for a $250,000 loan - that's a total of $12,500, just for collecting papers and finding a lender to do the loan? Maybe a total of a days worth of work? Guess who pays that...YOU - In one way or another and sometimes both ways.

Flat fee service would stop all of this. I'm sure many Realtors and Mortgage Brokers/Loan Officers would find something else to do - but for all the right reasons.
IT IS TIME - RIGHT NOW - TO GET THE FOX AWAY FROM THE HEN HOUSE or Predators with friendly faces and smooth demeanor away from clients in vulnerable positions.
Help send this blog to someone who may be able to make a difference.