9 ms·

Realtors And especially real estate brokers, have ripped apart our society with cartel like tactics so they can grab a few percent on each bit of the destructi

by anm89 3y ago

Realtors And especially real estate brokers, have ripped apart our society with cartel like tactics so they can grab a few percent on each bit of the destruction. I hope the book is thrown at them as harshly as possible. Claw back those earnings and put it into funds to clean up the mess that has been made

gigatexal 3y ago
I’m a home owner and a landlord (we rent out Condo while we are living in Germany) and I despise all the hustle porn millionaires on social media flaunting their real-estate empires. Speculating and amassing homes to what? To become slumlords doing the absolute minimum only to raise rents to the maximum possible? There’s no evidence that these “investors” spur the creation of new homes if anything they speculate up the price of homes for would be buyers. I also learned recently that the realtor lobby has fought hard to keep the mortgage interest tax deduction which helps home owning persons but hurts everyone else. Why am I able to use my single rental as a tax shelter? Because of decades of tax lobbying that has made real estate a fantastic investment. But has it helped the average family looking to get a home? To stop being beholden to the whims of the rental market? Has it spurred on builders to build homes? Have these lobbies lobbied local governments against NIMBY policies? F no. By keeping supply high and benefiting from high interest rates they bank — myself included — on renters without the means to buy a home or come up with the down payment to stay renters for even longer. And don’t get me started on the BS and corruption in the title industry. Why the f does it cost 1500 to 2000 to do a damn title search? And related to that why the f is the seller paying the buyer’s agent a commission? Wtf did the buyers agent do? Abolish the mortgage interest tax deduction and scale back all the tax breaks that make real estate so speculation friendly. Get rid of 1031 exchanges. Disallow real estate trusts all these tax haven things must go.
- BenFranklin100 3y ago
  As an aside, a big reason existing residential homes are often profitable speculative investments is because of bans on new homes. The lack of competition from new home construction drives up the price of older homes.
  - bluGill 3y ago
    It isn't just new homes, it is also replacing old homes. If I cannot tear down a house next to downtown because it is "historical" (because it is old, not because anything historically important happened there), then I can't replace it with an apartment and in turn that forces more people to move out to suburbs.
- ta1243 3y ago
  US realtors seem crazy -- charging tens of thousands for doing what exactly? The UK system is pretty bad, but you can choose to spend somewhere between about £1500 and £5000 to sell a £500k home, about about £1-2k to buy one (including conveyancing fees) The US seems to be an order of magnitude more?
  - FrustratedMonky 3y ago
    Generally, they help with Sales, Marketing, Negotiating, Psychologist, Logistics, etc... There are a lot of home owners that try to sell their home themselves. It can be done. So if you don't want to pay a realtor, then don't use them. Why complain about using a service you aren't being forced to use.
    - ta1243 3y ago
      Yes, we call them "Estate Agents" in the UK. Even the most expensive ones (with brick and mortar shop fronts) charge about 1.5%. Legal fees are typically fixed, and another 0.5% for the average house. The US seem to charge an average 5.4% - over twice the price.
    - a2tech 3y ago
      The problem is that its hard to get your house listed on the MLS if you're not using a realtor (you need to use a digital realtor that lists on your behalf), and many realtors won't even show those houses to their customers if they recognize that its being listed by one of those digital realtors. Realtors ARE a good idea. They should be helping you navigate a process that most people will only do once or twice in their life and is very complicated and full of pitfalls. However they've used their industry lobbying to carve out a very comfortable position and then stopped doing the thing everyone wanted them to do.
      - ssimpson 3y ago
        MLS also lists the rates the house is paying out. ie, the usual rate for selling a house is 6% and 1/2 goes to the selling agent and 1/2 goes to the buying agent. this is outside any kind of other fees you will pay such as closing costs, etc. If you list lower than like 5% on those rates or decide you don't want to pay the buying agent as much, they just wont show your house, even if its perfect for the client.
- FrustratedMonky 3y ago
  Wasn't the article about Realtors? You are describing people buying real estate. Rental Property owners, buy real estate to rent. Realtors are in the transaction of buying/selling real estate. Different Roles.
  - gigatexal 3y ago
    For small time real estate investors we still use realtors and pay their ridiculous fees.
- nulbyte 3y ago
  > I also learned recently that the realtor lobby has fought hard to keep the mortgage interest tax deduction which helps home owning persons but hurts everyone else. > Why am I able to use my single rental as a tax shelter? The tax deduction is only available on your primary and secondary residences. (Where secondary here refers to a second home, not a third, etc.) You don't get to claim a primary or secondary residence mortgage interest deduction on your rental properties, because you aren't living there. This arose out of a previous law that generally allowed for the deduction if interest on all loans because it was administratively unfeasible to differentiate between business and personal interest expense (or so said the wisdom at the time). Even today, business interest expenses are generally deductible. This is wholly separate from the mortgage interest deduction, which is for owner-occupied homes.
  - mdorazio 3y ago
    You didn't actually address any of the parent concerns about why. Why should anyone get a deduction on a second home when inventory levels are at historic lows? Why should homeowners get a fat tax deduction from their mortgage when I as a renter get nothing? Going further, why should anyone get to exclude a quarter of a million dollars on capital gains when they sell their home?
    - ethbr1 3y ago
      You, as a renter, are getting it -- your landlord is deducting their (commercial property) mortgage interest from their income (your rent). Probably in their Schedule E. [0] Furthermore, for homes purchased after 2017, the personal mortgage interest deduction has been capped on $750,000 of mortgage debt (first and second home only, combined). [1] Given the boosted standard deduction, thus isn't a major difference. If you're going to pick a windmill to tilt at, there are much larger structural issues in US housing. As mentioned elsewhere: zoning that precludes new unit construction, SFH zoning for areas that would support denser development, etc. [0] https://www.irs.gov/businesses/small-businesses-self-employed/tips-on-rental-real-estate-income-deductions-and-recordkeeping https://www.irs.gov/businesses/small-businesses-self-employe... [1] https://www.irs.gov/publications/p936#en_US_2022_publink1000229993 https://www.irs.gov/publications/p936#en_US_2022_publink1000...
- bluGill 3y ago
  I predict that in the next tax reform - in about 25 years - the mortgage deduction will disappear. It could not in the last round a few years back because so many people use it, but the standard deduction is now so high that most states only the filthy rich can use it and so most voters won't care. (sorry bay area residents, but your property values are something the rest of the country laughs at)
  - sneed_chucker 3y ago
    Actually a lot of people can still use it if they pay for points on a mortgage. The upfront cost of the points is treated as mortgage interest for tax purposes.
    - bluGill 3y ago
      Sure, but it is much less likely useful and so a lot less people care about it.
- cmrdporcupine 3y ago
  > fought hard to keep the mortgage interest tax deduction I think this tax deduction is insane, but it's notable that this kind of deduction on interest doesn't exist in Canada and other western countries, but we have in many cases far far worse housing price inflation than the US. So it's not really the culprit. It's really very simple. When people are buying a home, they are really buying a loan, not a home. 9/10 home buyers buy the home to fit the maximum loan the bank will approve them for. 15 years of insanely low interest rates means demand for those loans was crazy high, so the price of the thing that backed the loan -- the property -- also skyrocketed. Yes the tax break in the US likely worsens that, but it's certainly not the explanatory factor on its own. A large percentage of home buyers have no ability or intent to ever fully pay out their mortgages (and standard "financial advice" during low interest times was not to bother). So the commodity you're "buying" is not a house, but the loan itself, a long term rental arrangement with a bank. Now that rates are returning to normal levels, I hope to see that level out or fall. But there are strong lobbying pressures to prevent that. There's a whole generation that sees interest rates lower than 5% as normal/expected. Which is pretty crazy, really. Capital gains exemption on primary residence probably also plays a role. I personally think that exemption should only apply on a portion of the resale value below a certain threshold. That would help put a downward pressure on price inflation. But the core problem is that there is the most powerful voting demographic explicitly does not want this. Most baby boomers and much of the middle class are relying on the $$ in their properties to retire, because western countries have on the whole dismantled the concept of pensions and a financially secure retirement.
- lxm 3y ago
  > realtor lobby has fought hard to keep the mortgage interest tax deduction which helps home owning persons but hurts everyone else What you're saying is correct, but it's worth noting that as of 2017 the number of tax returns claiming mortgage interest deduction went from 20% to 8% https://www.brookings.edu/articles/chipping-away-at-the-mortgage-deduction https://www.brookings.edu/articles/chipping-away-at-the-mort... The reason being the increase in standard deduction, and more people opting for that vs going the itemized route. It's unclear how the current (or next) administration feels about the mortgage interest deduction, but it could be the last days of it. > Get rid of 1031 exchanges An exchange involves a sale followed by a subsequent purchase. Without the 1031 treatment the seller just might hold forever, which is probably the opposite of what you're trying to achieve.
  - gigatexal 3y ago
    Re the 1031 my original screed aside I concede that you’re probably right. I also didn’t know that re the standard deduction taking down the amount of folks that take the deduction. Hmmm
cmrdporcupine 3y ago
If you think it's bad in the US, you should see Canada. Every level of gov't and society is corrupted by the real estate industry. Worst housing price to income ratio in the G7. Feeding on the young.

by anm89 3y ago

gigatexal 3y ago

I’m a home owner and a landlord (we rent out Condo while we are living in Germany) and I despise all the hustle porn millionaires on social media flaunting their real-estate empires. Speculating and amassing homes to what? To become slumlords doing the absolute minimum only to raise rents to the maximum possible? There’s no evidence that these “investors” spur the creation of new homes if anything they speculate up the price of homes for would be buyers. I also learned recently that the realtor lobby has fought hard to keep the mortgage interest tax deduction which helps home owning persons but hurts everyone else. Why am I able to use my single rental as a tax shelter? Because of decades of tax lobbying that has made real estate a fantastic investment. But has it helped the average family looking to get a home? To stop being beholden to the whims of the rental market? Has it spurred on builders to build homes? Have these lobbies lobbied local governments against NIMBY policies? F no. By keeping supply high and benefiting from high interest rates they bank — myself included — on renters without the means to buy a home or come up with the down payment to stay renters for even longer. And don’t get me started on the BS and corruption in the title industry. Why the f does it cost 1500 to 2000 to do a damn title search? And related to that why the f is the seller paying the buyer’s agent a commission? Wtf did the buyers agent do? Abolish the mortgage interest tax deduction and scale back all the tax breaks that make real estate so speculation friendly. Get rid of 1031 exchanges. Disallow real estate trusts all these tax haven things must go.

BenFranklin100 3y ago
As an aside, a big reason existing residential homes are often profitable speculative investments is because of bans on new homes. The lack of competition from new home construction drives up the price of older homes.
- bluGill 3y ago
  It isn't just new homes, it is also replacing old homes. If I cannot tear down a house next to downtown because it is "historical" (because it is old, not because anything historically important happened there), then I can't replace it with an apartment and in turn that forces more people to move out to suburbs.
ta1243 3y ago
US realtors seem crazy -- charging tens of thousands for doing what exactly? The UK system is pretty bad, but you can choose to spend somewhere between about £1500 and £5000 to sell a £500k home, about about £1-2k to buy one (including conveyancing fees) The US seems to be an order of magnitude more?
- FrustratedMonky 3y ago
  Generally, they help with Sales, Marketing, Negotiating, Psychologist, Logistics, etc... There are a lot of home owners that try to sell their home themselves. It can be done. So if you don't want to pay a realtor, then don't use them. Why complain about using a service you aren't being forced to use.
  - ta1243 3y ago
    Yes, we call them "Estate Agents" in the UK. Even the most expensive ones (with brick and mortar shop fronts) charge about 1.5%. Legal fees are typically fixed, and another 0.5% for the average house. The US seem to charge an average 5.4% - over twice the price.
  - a2tech 3y ago
    The problem is that its hard to get your house listed on the MLS if you're not using a realtor (you need to use a digital realtor that lists on your behalf), and many realtors won't even show those houses to their customers if they recognize that its being listed by one of those digital realtors. Realtors ARE a good idea. They should be helping you navigate a process that most people will only do once or twice in their life and is very complicated and full of pitfalls. However they've used their industry lobbying to carve out a very comfortable position and then stopped doing the thing everyone wanted them to do.
    - ssimpson 3y ago
      MLS also lists the rates the house is paying out. ie, the usual rate for selling a house is 6% and 1/2 goes to the selling agent and 1/2 goes to the buying agent. this is outside any kind of other fees you will pay such as closing costs, etc. If you list lower than like 5% on those rates or decide you don't want to pay the buying agent as much, they just wont show your house, even if its perfect for the client.
FrustratedMonky 3y ago
Wasn't the article about Realtors? You are describing people buying real estate. Rental Property owners, buy real estate to rent. Realtors are in the transaction of buying/selling real estate. Different Roles.
- gigatexal 3y ago
  For small time real estate investors we still use realtors and pay their ridiculous fees.
nulbyte 3y ago
> I also learned recently that the realtor lobby has fought hard to keep the mortgage interest tax deduction which helps home owning persons but hurts everyone else. > Why am I able to use my single rental as a tax shelter? The tax deduction is only available on your primary and secondary residences. (Where secondary here refers to a second home, not a third, etc.) You don't get to claim a primary or secondary residence mortgage interest deduction on your rental properties, because you aren't living there. This arose out of a previous law that generally allowed for the deduction if interest on all loans because it was administratively unfeasible to differentiate between business and personal interest expense (or so said the wisdom at the time). Even today, business interest expenses are generally deductible. This is wholly separate from the mortgage interest deduction, which is for owner-occupied homes.
- mdorazio 3y ago
  You didn't actually address any of the parent concerns about why. Why should anyone get a deduction on a second home when inventory levels are at historic lows? Why should homeowners get a fat tax deduction from their mortgage when I as a renter get nothing? Going further, why should anyone get to exclude a quarter of a million dollars on capital gains when they sell their home?
  - ethbr1 3y ago
    You, as a renter, are getting it -- your landlord is deducting their (commercial property) mortgage interest from their income (your rent). Probably in their Schedule E. [0] Furthermore, for homes purchased after 2017, the personal mortgage interest deduction has been capped on $750,000 of mortgage debt (first and second home only, combined). [1] Given the boosted standard deduction, thus isn't a major difference. If you're going to pick a windmill to tilt at, there are much larger structural issues in US housing. As mentioned elsewhere: zoning that precludes new unit construction, SFH zoning for areas that would support denser development, etc. [0] https://www.irs.gov/businesses/small-businesses-self-employed/tips-on-rental-real-estate-income-deductions-and-recordkeeping https://www.irs.gov/businesses/small-businesses-self-employe... [1] https://www.irs.gov/publications/p936#en_US_2022_publink1000229993 https://www.irs.gov/publications/p936#en_US_2022_publink1000...
bluGill 3y ago
I predict that in the next tax reform - in about 25 years - the mortgage deduction will disappear. It could not in the last round a few years back because so many people use it, but the standard deduction is now so high that most states only the filthy rich can use it and so most voters won't care. (sorry bay area residents, but your property values are something the rest of the country laughs at)
- sneed_chucker 3y ago
  Actually a lot of people can still use it if they pay for points on a mortgage. The upfront cost of the points is treated as mortgage interest for tax purposes.
  - bluGill 3y ago
    Sure, but it is much less likely useful and so a lot less people care about it.
cmrdporcupine 3y ago
> fought hard to keep the mortgage interest tax deduction I think this tax deduction is insane, but it's notable that this kind of deduction on interest doesn't exist in Canada and other western countries, but we have in many cases far far worse housing price inflation than the US. So it's not really the culprit. It's really very simple. When people are buying a home, they are really buying a loan, not a home. 9/10 home buyers buy the home to fit the maximum loan the bank will approve them for. 15 years of insanely low interest rates means demand for those loans was crazy high, so the price of the thing that backed the loan -- the property -- also skyrocketed. Yes the tax break in the US likely worsens that, but it's certainly not the explanatory factor on its own. A large percentage of home buyers have no ability or intent to ever fully pay out their mortgages (and standard "financial advice" during low interest times was not to bother). So the commodity you're "buying" is not a house, but the loan itself, a long term rental arrangement with a bank. Now that rates are returning to normal levels, I hope to see that level out or fall. But there are strong lobbying pressures to prevent that. There's a whole generation that sees interest rates lower than 5% as normal/expected. Which is pretty crazy, really. Capital gains exemption on primary residence probably also plays a role. I personally think that exemption should only apply on a portion of the resale value below a certain threshold. That would help put a downward pressure on price inflation. But the core problem is that there is the most powerful voting demographic explicitly does not want this. Most baby boomers and much of the middle class are relying on the $$ in their properties to retire, because western countries have on the whole dismantled the concept of pensions and a financially secure retirement.
lxm 3y ago
> realtor lobby has fought hard to keep the mortgage interest tax deduction which helps home owning persons but hurts everyone else What you're saying is correct, but it's worth noting that as of 2017 the number of tax returns claiming mortgage interest deduction went from 20% to 8% https://www.brookings.edu/articles/chipping-away-at-the-mortgage-deduction https://www.brookings.edu/articles/chipping-away-at-the-mort... The reason being the increase in standard deduction, and more people opting for that vs going the itemized route. It's unclear how the current (or next) administration feels about the mortgage interest deduction, but it could be the last days of it. > Get rid of 1031 exchanges An exchange involves a sale followed by a subsequent purchase. Without the 1031 treatment the seller just might hold forever, which is probably the opposite of what you're trying to achieve.
- gigatexal 3y ago
  Re the 1031 my original screed aside I concede that you’re probably right. I also didn’t know that re the standard deduction taking down the amount of folks that take the deduction. Hmmm

cmrdporcupine 3y ago

If you think it's bad in the US, you should see Canada. Every level of gov't and society is corrupted by the real estate industry. Worst housing price to income ratio in the G7. Feeding on the young.