It's All About The Money

I want to start off by saying I have a lot of respect for realtors. Handling real estate transactions is a difficult, high-pressure job. I, personally, would have never bought my home without the help of a realtor. And no matter how popular the Internet gets, nothing can replace the human touch a realtor brings to the transaction.

I reserve my endorsement to the realtors who deal with the parties involved, face to face. And I will further limit it to true professionals, not people in it for a quick buck. I will not extend it to the brokers and agency owners behind the scene who really call the shots. They’re another matter, altogether, to be dealt with on a case by case basis.

In the very first column I wrote for this paper, “Selling (Out) Sierra Madre”, I alluded to the high-density condominium projects in our downtown having two aspects. First, the condos would have to be designed and built to undercut the market. How else would you generate sales in a market that’s the slowest we’ve seen since the bottom of the last crash 10 years ago? Second, creating a rapid decline in home values could have a very beneficial effect for realtors.

A story appeared on the front page of the February 13th LA Times titled “It’s Their Default Position” that clearly illuminates the second premise. The story describes the real estate “crash” that’s beginning out in Riverside and San Bernardino Counties, and how a real estate agency is exploiting it. They target homeowners who are behind in their payments.

The story follows the activities of two new realtors, one, a former route salesman for Peet’s coffee, and the other, a former body shop estimator who states his reason for getting into real estate as being; “It’s all about money.” However, the sentence that sums up their attitude best comes from their broker/boss. “Home Center Chief Executive Ron Barnard says that personally, he finds foreclosure sad, even tragic. ‘But as a business owner, I think it’s great. ’ ” Need I say more?

There are two major complications in real estate being reported in the financial press. One is the ever-growing glut of housing, especially condos. The other is the failure of mortgage lenders to correctly assess the risks of their exotic, sub-prime lending practices. This latter problem extends all the way to Wall Street, with problems developing in mortgage backed securities, a subject the LA Times story also touches on.

The thing everyone needs to understand is how ruthless the people are we’re dealing with. Did Joe Mosca get on the City Council through the help and planning of developers? What exactly are the opponents on Measure V capable of? I don’t know. But if we’re not careful, the disaster that’s developing out in Riverside and San Bernardino Counties will be coming to Sierra Madre.

A direct link to "It's Their Default Position."