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Crazy Talk – Real Estate Gone Mad

Sign Of The Times - Foreclosure

Creative Commons License photo credit: respres

Oh Man, It’s True…

It’s finally happened. The world has gone mad, and I’ve got two choices. I can either fight it, or I can slip into that stylish straight jacket along with everyone else and accept it.

First, there are my clients, the ones who used to be normal until they started watching the news — and listening to the stories of their friends.  “Our next door neighbor’s Uncle Sol’s poker buddy just bought a foreclosure that was listed at $14 million dollars, and he got it for $7.95 and a goat!” they say. It’s then that they decide that they want one of those, and it becomes my job to find it.

So we spend every day on the phone discussing the new listings. I warn my buyers, the ones who want a turn-key home with all of the amenities of the White House Red Room, that the latest listing is a “light fixer.” “The toilets and cabinets have been removed,” I counsel. “Let’s see it!” they cry. “For the right price, we can do some touch-up painting!”  “But it has NO ROOF!” I shriek.  And, so, off we go to what will be our 98th showing of the week, a showing which will culminate in my clients shaking their heads in disgust at this home that just needs too much work.

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Kickin’ it Into Overdrive

Occasionally we hit pay dirt, and on the rare occasion that our new “home of choice” doesn’t already have twenty-seven to the power of infinity offers, all above asking price, my clients kick it into overdrive. We study the comps; we consider the cost of repairs which will need to be done to make the home sort-of habitable, and then my clients instruct me to write an offer at a “fair price.” This “fair price” is typically determined by adding the ages of their children and then dividing by the number of homes we have seen year-to-date, multiplying by the price of crude oil in Danish kroner, and then subtracting a random integer (usually 3). And the owner rejects it. Rinse and repeat.

Now, before you argue that to be a doormat I have to lay down, let me point out that these are often past clients I am working with. I do not, practically speaking, have the luxury of firing them. They stuck with me in the good days, and I feel a fiduciary obligation to stick with them in the crazy days.

It’s Not All THEIR Fault…

I can’t blame the clients entirely. Agents today deserve some of the credit for the cloud of insanity under which we are operating. Let’s take that “asking price.” Particularly where short-sales and foreclosures are concerned, the asking price today is most frequently not based on perceived market values or an analysis of comparable sales and trends, but it is some mythical number intended to move that sucker as quickly as possible. We saw one of those homes make its debut in our area this week. It had eleven – eleven – offers in two days. It is times like this when I have to ask whose interests are being served (Answer: the bank’s), and I have to wonder if the agents are just firing into a crowded room (yes). And, so go the distress sales, go the rest. What we are now witnessing in many areas is a downward spiral, a spiral fueled by agents who are perhaps a little too opportunistic. They may be a little too quick to facilitate a short sale (heck, it’s a listing!) just because the net sheet is upside down, forgetting that the seller should be counseled on other options. And they may be a little quick to price that puppy to fly off the shelf, at any price, forgetting that even their clients in a short position would be better off registering a lesser loss.

Oh, and Don’t Forget the Banks

Finally, there are the banks. Not them again! The banks, one could argue, largely got us into this mess, and they are the gift that keeps on giving. While they are now busy mitigating their losses, the sellers who didn’t fall into the over-leveraging trap are watching their home’s equity and their chances of selling before the next time Thanksgiving falls on a Tuesday mitigated into oblivion. The lenders, having reclaimed their collateral, assign a single agent a hundred listings or more, homes spread across entire counties, when a single agent clearly cannot cover that much geography while wearing the hat of the neighborhood expert. They miss on the pricing – a lot – but there is no accountability, because the bank-owner just wants it gone, and there is no motivation on the part of the agent to do anything other than slap a crazy price on it, because the agent just wants it sold. Sure, the banks dispatch other agents to offer an independent Broker Price Opinion, but these agents too are stretched a little thin. Or, perhaps, the lenders just don’t care. They are clearing the books of the bad paper, but the problem is this “bad paper,” paper manufactured from greed, paper which used to represent families, is now being used to TP our neighborhoods.

These are crazy times we are living in. Unfortunately, I fear my stay in the asylum is going to last awhile longer. Pass the meds.

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Written By

Kris Berg is Broker/Owner of San Diego Castles Realty. She is the perpetrator of the San Diego Home Blog, a locally-focused real estate blog, and in her spare time enjoys fencing, luge, and kittens.



  1. Bob Wilson

    October 28, 2008 at 12:21 pm

    my clients instruct me to write an offer at a “fair price.” This “fair price” is typically determined by adding the ages of their children and then dividing by the number of homes we have seen year-to-date, multiplying by the price of crude oil in Danish kroner, and then subtracting a random integer (usually 3).

    I was lmao up to that last paragraph when I realized that you and I are working the exact same client. I’m happy to step aside on that one.

    You nailed it with the REO pricing, and I’m pretty sure the BPO values are randomly culled from the wrong answers gicen in the math category on “Are you Smarter Than A 5th Grader?”.

    I have one short sale listing where the latest offer received a counter from the lender $10k higher than the comp down the street – which is owned by this very same bank. When I questioned the value and supported it with their own comp, the reply was that the REO department determines value differently than loss mit.

    Which meds are you finding work best and wont interact too terrinbly with my caffiene addiction?

  2. Troy Steuwer

    October 28, 2008 at 2:49 pm

    This just made my day. Great post!

  3. Debbie Saffell

    October 28, 2008 at 6:21 pm

    This is an excellent post! It expresses the frustations we have in this market quite well.

    Many buyers want to write offers that are way below the listing price (which is already low). I have been fortunate enough to work with a fantastic client recently (Jen). She was willing to write an offer for a very, very fair price.

    What is most frustrating to me (and even more so to my clients) is that banks just seem to ignore reasonable offers. No response, no phone call, no letter, e-mail…nothing.

    I wrote an offer on a home that was very close to list price. I presented the offer August 1, 2008. Nothing!

    Granted, this bank (Indymac) has a lot on their hands right now but one would think they’d at least respond. To hear nothing back from them makes them look arrogant.

    So, our tax money is going to cover this loss when I had a ready and willing client to buy this home?

    So, although many clients want the deal of the century, it seems that the ones who are still sane get the shaft.

  4. Ruthmarie Hicks

    October 28, 2008 at 7:32 pm

    The other issue that keeps rearing its head with me is this: For our financial turmoil to come to an end, there needs to be a floor under housing prices. This activity, which has not hit my particular market (it may be coming) – is doing nothing to shore up the financial mess the credit and stock markets are in. Shoring up housing is essential for our economy – this blog makes that seem almost hopeless.

    However, it is absolutely hilarious! Congrats on a making my day with your humor.

  5. Vicki Lloyd

    October 28, 2008 at 9:24 pm

    Kris – even though your post hits our funnybones, there really is too much truth in this story to simply laugh it off.

    Banks, or their agents, are pricing low to generate activity, which leads to more of the buyer “froth” that we dealt with on the way up. Now we have to do it again on the way down! And we never know if our buyer’s lenders will really come through with funding at the end! This is a crazy time in real estate!

    I think I’ll just drink more margaritas – it helps take the edge off!

  6. Vicki Moore

    October 28, 2008 at 9:34 pm

    I’m seeing the same thing. A property just listed in my area for literally HALF its value. It’s ridiculous.

  7. Mack

    October 29, 2008 at 4:19 am

    Kris, I always enjoy reading your articles because you have a gift for using analogies that most of the time have me LMAO. The bad paper to TP our neighborhoods really got me in this post. Boy does that bring back some memories!

  8. Missy Caulk

    October 29, 2008 at 7:54 pm

    ROF, yea out of area agents have no clue in many cases and they come in throw a price on it and we either laugh or multiple offers come in and it is gone.

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