My unbelievable conversation with a realtor

You wouldn't believe the conversation that I had with a realtor last week.  Here's the backstory.  My Fiancee and I love to go to open houses.  Our timeline to actually make a purchase is sometime around 2008, after we get married.  As readers of my blog know, I am of the opinion that housing prices in Southern California will not continue to go up.  In fact, I believe we will see a nominal decline in prices.  Whether you want to call it a crash, a bubble, a soft or hard landing, doesn't much matter.  Although those terms seem to ignite quite a bit of controversy.

Even if prices drop 10%, that's a $50,000 saving on a half a million dollar place.  Anyway, the coming wedding and our outlook on the Southern California housing market are the two reasons we are not serious about buying at this time.  But our favorite thing to do on weekends is to visit open houses.

Two weeks ago we were in South Pasadena and saw the increasingly ubiquitous "Open House" signs.  We decided to stop at one on a very busy street.  It was a newly built four unit townhouse.  The front unit was being shown by a very lonely realtor.  Four bed, three bath with attached garage on a mere 1,400 square feet.  The finishes were not high end, and kitchen cabinetry was made from a cheap wood.  When I commented on that the realtor's response was, "well many buyers like to do things their own way, so the builder doesn't make it all finished."  Okay, that's fine if you are charging fixer upper prices.  This one was asking $815,000!

I signed in and actually put real email and phone numbers.  She asks us if we have a buyer's agent and if she can represent us.  I tell her that we are just beginning to look and are not ready to sign.  She persists just enough to be annoying, but I let it go.  I tell her to go ahead and email me once in a while, but don't go crazy.

So, last week I get a call from her. 

"Did you like that townhouse?" she asks.

Me:  "It was okay, but it was on a busy street, kind of small, a little unfinished, and beyond outrageously priced."

Realtor:  "Oh, okay, well I can show you other houses.  Can I be your agent?"  (seriously, stop asking.  It's not going to happen)

Me:  "No, we're not looking to buy anytime soon.  We're getting married in 2008 and plan to buy a house at that time.  We're just trying to see what's out there."

Realtor:  "Well, there are other places that you can buy and rent out until then."

Me:  (at this point I'm chuckling to myself, but okay, let's go down this road)  "Well, how much do you think we can get a three bedroom townhouse for in a decent part of Pasadena or the surrounding area?  Minimum, what $600k?"

Realtor:  "There are cheaper ones, but I'm not sure it's areas you would want.  There's lots of Negroes."  (I'm totally serious.  This is what she said.  I didn't even want to type this, but it's the truth.)

So, here I am, ready to hang the phone up on her.  I decide that I'm going to continue this conversation because I want to nail her on her B.S. sales tactics.  I'm not going to call her out on her apparent racism.  She didn't even say it mean spiritedly, or in that whispered "I shouldn't say this, but I'm hoping you see things that way I do" tone.  It was just very matter of fact.  I think that bugged me even more.

Me:  "Well, that aside, is $600k fair for a three bedroom townhouse?"

Realtor:  "yes"

Me:  "And I don't have 20% to put down, so let's say I put down 10%.  How much will my mortgage be, $3500?  Add in property taxes, insurance, HOA and PMI, and how much am I paying per month, $4500?  More or less?  Maybe some tax break and we call it an even four grand.  Is that right?"

Realtor:  "yea, about."

Me: "Okay, and how much do you think I could rent a place like that for?  $2000?  Maybe $2500?  Not $3000.  Right?  So, why would I want to do that?"

Realtor:  "Uh yea.  What did you say you do?  Finance?"

Me:  "Doesn't matter what I do.  I'm not a sucker.  Bye."

Man that felt good.  I wanted to yell in the phone, "Ohhh, FACE!  I got you!"

Comments

[Matt]

Nailed her!

[D]

Oh this one could have been real fun. I would have called one of my black male friends and set up an appointment to view a property.

When we met at the appointment I would have introduced my friend as my fiance and led her to believe my guy was my brother or cousin or something.

She is BAD!!!

[Charles Turner]

She also broke the law. "Steering" is an illeagal practice of sending buyers in or out of a neighborhood based on race.

It works both ways. A Realtor can't say that you should or shouldn't live in a certain area based on race but nor can the agent show properties exclusively based on a request like "I only want to live in an area with lots of _____s."

It goes back to ethics, barriers to entry in real estate and stupid Realtors. I feel qualified to say it since I'm a Realtor and have been outspoken about it on the Portland Real Estate Blog.

[lamoneyguy]

Thanks Charles,
I knew it was unethical, but didn't realize there were laws against it. Glad to hear it.

By the way, you and I have met. I'm friends with KC, go rafting every July. If you figure out who I am don't say anything. I'm anonymous here. Did he send you to my blog, or did you find me by coincidence?

[Charles Turner]

There is a little known secret kept from bacherlors: wives talk. We'll be wecloming you to our world soon.

I will have to hold you head under water on the raft trip 'til you turn purple if you ever by a house from the listing agent.

[financial freedumb]

@ D...that's funny. I wonder what she'd say...

LMD, Good job! Do you actually already have a realtor? If not call me...haha...

[MsMiniducky]

The agent was appalling, the lead-in to your Gotcha was good, but "Face!"? Priceless!! I didn't think anyone but BoyDucky still used that ...

[Ronald Smythe]

I don't want to bell the cat, but no whites want to live in a negro neighborhood.

Blacks destroy schools and property values.

[Roro]

FROM ABOVE: "There are cheaper ones, but I'm not sure it's areas you would want. There's lots of Negroes." (I'm totally serious. This is what she said. I didn't even want to type this, but it's the truth.)

MY RESPONSE:

Hilarious!

And to Ronald Smythe, wow! I did realize that I was so powerful! Just my presence can destroy an entire institution? Damn, why didn't I use that power before? I could extort money by threatening to visit colleges and primary schools across the nation. I'll start with USC and Berkeley first. I'll be RICH I tell ya!

AND I'll make sure my neighbors pay we homage every day so I don't leave my house. That way, the $950,000 value of our homes will not go down.

What should be rates be?

-->$1,000 to have someone of Latino descent mow my lawn (instead of me).

--> $500 if I don't sit on my porch furniture.

--> $1500 if I have my white friends sit on my porch furniture instead. An extra $250 to have me serve them lemonade while on the porch. (do you think I can push a higher price of this service?)

--> $250 if I wait until the garage door closes before getting out of the car.

Damn, what an idea. I'll be the first in my neighborhood to own my house outright!

P.S. Can you tell I'm Black? (Negro is so 1950s and African-American just doesn't roll of the tongue well).

[lamoneyguy]

Roro,
Great comments!

R. Smythe, what makes you think I'm white?

[GHoosdum]

Methinks "Smythe" was trolling for flames.

Roro, your response had me in stitches!

[Stephen]

She is the perfect example of a real estate "Professional". This is why the real estate industry must be dissolved.

[Charles Turner]

So, Ghoosdum, do you have a plan once you disolve the industry?

[lamoneyguy]

Charles, that comment was made by Stephen. But, of course, like any industry there are good ones and bad ones, ethical ones and unethical ones.

If I buy in Portland, I'm glad I know you.

[J]

I guarantee that in 2008 you will be paying more than now. Move to the northwest instead, such as Portland/Seattle. For $800K you can live in any home, anywhere.

[lamoneyguy]

J, you guarantee it? Really? What do I get if you're wrong? By the way, I passed this townhouse recently and not a single one of the four have been sold.

[Sodvi B.]

Ronald Smythe-Are you really black?!

[Jim]

I believe it was a fantasy conversation with a fantasy realtor. Do you have a real life? gimme a break!

[LA MoneyGuy]

Ha! Nice one Jim. The funniest part is that you read the whole thing and took the time to comment. I get paid to write this. I have a life. how about you?

[Cory]

Lets put aside the "negro" comment for a moment, as it totally degrades the reputation of the salesperson. Now, as someone purchasing a townhouse and renting, would you really be that upset about saving $2500(avg.) on a townhome in California? In several years you could sell with an excellent profit.

You are waiting for a "bubble"? I honestly wish you luck finding a home in 2008 at buyers market prices.

Consider the population explosion we will see in the next ten years... and how many new homes do you see? If you really want an investment, buy something now.

Back to the racist comment. Let us all know when you move into a neighborhood that is ethnically mixed.

[lamoneyguy]

Cory, I don't want an "investment," I want a house. I'm not sure what you mean by, "would you really be that upset about saving $2500(avg.) on a townhome in California?" If I were to buy a townhouse as the realtor suggested I would be negative $2500 per month. Plus, I get to be landlord for the privilege of losing that much.

Based on an initial price of $600k, losing $2500 per month over a year would be a 5% loss. Will prices rise that much or more? It's possible, but even the NAR is predicting price increases of less than 2% nationally. The CAR is projecting declines of 2% statewide for 2007.

I'll buy when my fiancee and I are ready to move in, not because I'm worried that prices will be out of reach in a year and a half.

[Ryan]

After getting a good laugh at this post, I realized there are definitely a lot of renters who believe in the bubble and a lot of homeowners/agents who absolutely deny the severity of a correction.

As a part time Real Estate Agent and a homeowner, I tend to believe that a long term approach is best when buying property. The market will fluctuate as will stocks. Timing the market is difficult, but not impossible.

I am not particularly happy about the drastic upswing in property values. All I do is pay more in property taxes. Furthermore, a lot of my business came from first time homebuyers who got excited at the prospect of a 1600 sq ft home, 2 car garage for a couple hundred more than rent or around 170K. Mind you, this was 2001.

Fast forward to 2007, try selling a condo conversion, no garage, 170K and 800 sq ft? Its difficult. Sure, you can sell the tax savings, but the product doesnt always warrant the price.

Still, homeownership is and can be the first step for a lot of people to aquiring real wealth. Just because the market is sour today doesnt make it a bad investment for everyone.

Im one of the agents who will tell you like it is, because I have a real job outside of real estate! Dont let them sour your opinion. There are a lot of agents getting out of the business now because they were in it for the money. Those with integrity will remain.

[FSBO Louisville]

I have to say, I am quite impressed that you didn't flip out on her! What a stupid realtor!

[1031 exchange]

real estate prices will always go up in the long run. 1031 exchange is a way to avoid paying taxes on appreciated real estate. Smart real estate investors know about 1031's

[rich]

http://www.1031exchangetotics.com/