Washington Trying To Be A Helicopter Parent for Real Estate Industry
The real estate industry is feeling a bit like the teenager who missed curfew and is experiencing his parent’s wrath. Washington is acting like a helicopter parent for real estate players. Real estate agents and brokers are now on “double secret probation” and have more restrictions than inmates at a High Security Federal penitentiary. The United States government wants to be our “helicopter parent” and make sure we don’t bump our heads on any obstacles along the path of life.
Industry’s Past Actions are the Cause of All the New Restrictions
I see the justification for all these new rules and regulations as a real slap in the face for the vast majority of the industry’s practitioners. We have been told the real estate industry’s past actions are the cause of all the new restrictions. “Let me stop you right there,” is my first response. “My actions did not create the problems the industry is experiencing. In fact, the actions of 99% of my colleagues had nothing to do with the present turmoil in the real estate industry. And most of the 1% who created these problems have moved along to the next golden opportunity for fleecing the consumer. I would not be surprised to learn these trouble makers have moved along to an opportunity in the health care industry.”
Real Estate Professionals Are Working Harder Than Ever For a Smaller Reward.
Most real estate professionals are working twice as hard as they have ever worked and have less “staff” to assist them with the production of their goods and services. There are no easy commissions in the real estate business these days. Working short sales and foreclosures requires enormous amounts of time. Listing luxury homes for sale has a high degree of risk compared to the probability of sale in this market. I will not even mention the appraisal process even though it is the single most devastating regulation to come down the pipeline for the real estate industry.
Attention Vendors, Contractors and Industry Related Service Providers: We will Be CUTTING BACK On Our Expenses for 2010.
As real estate agents and brokers see their revenue decline as a result of the market meltdown and subsequent over regulation of the real estate brokerage industry, expect to see a dramatic cutback in expenditures by real estate brokers and agents. Far fewer dollars will be spent for third party services and materials. You will need to adjust your pricing structure. I have been a long time advertiser in Realtor.com. Recently I had some featured home contracts some up for renewal. The sales staff was stunned that we no longer plan to use some of the marketing products. We tried to explain to Realtor.com that the product was still attractive to us but we can no longer justify the level of expenditure based on our present revenue. Realtor.com has apparently seen no need to adjust the cost of these marketing spots even though demand is way down. Trust me, real estate agents and brokers have had to make financial adjustments based on a dampened market.
Government Regulation is Prolonging the Problem Versus Correcting Wrongs.
The attempt by Congress and regulatory agencies to correct past wrongs by passing a bunch of new laws and regulations is not helping to alleviate the massive inventory of foreclosed homes on the market. Over regulation of the industry will create even more problems than we are currently experiencing. Bad appraisals and draconian underwriting guidelines will stifle any reduction in the foreclosure inventory. As a new wave of adjustable loan holders seek to refinance to alleviate a huge jump in their monthly payments, we will see these burdensome appraisal and loan underwriting guidelines create new foreclosures rather than the intended outcome of reducing the future foreclosure inventory. Lots of regular folks are going to find themselves unable to refinance and unable to afford the new monthly payment dictated by the resetting of their existing adjustable loans. Helicopter parents have good intentions but their actions are rarely in the best long term interests of their children.