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RE Broker Seeking Gullible Buyers

Years ago, many real estate brokers and agents pitched buyers on the monthly costs of carrying a house, totally ignoring the price.  Thus, lots of buyers who could afford $1,000 or $2,000 or $3,000/month ended up buying over-priced homes, ensuring four things:  sellers often saw a larger profits on their homes, brokers earned more commissions, the lenders wrote higher mortgages (with larger closing costs), and buyers ended up with houses that didn’t hold up in value.  Bottom line is the buyers should have looked more carefully at the prices (I begged them to do so), but quite a few were taken in by the same sales techniques as  those used to move many makes and models of cars.  If you can lease a big honkin’ luxury SUV for only $4,500 down and low monthly payments of $399 for four years, why buy that sensible sedan for $18,000?

Real estate brokerage marketers conferred with sales execs, and after some speculating and a lot of extrapolating, some have hatched a new pitch designed to distract buyers from basing their decisions on the price of a home.  It is targeted at the existing homeowner who believes she has “lost” all her equity in the house, and/or the one who realizes he is seriously underwater. 

Here’s how it goes:  Now’s the time to move up to a larger house and eradicate any loss on your present house!  How, you say?  Come a little closer and I’ll explain:  If you bought a house for $350,000 and it is now worth only $280,000 (20% less), you have only “lost” $70,000 if you sit still and do nothing.  But if you buy that really big house in the nicer community that used to be worth $550,000 and is now also 20% lower, the moment you close on that house at $440,000, you’ve gained $40,000 ($110,000-70,000).  And hey, that’s before you get the $6,500 tax credit! Plus, have you seen how low the interest rates are? 

I’m sure you know see how you can turn a negative into a positive just by selling your first house for less than you owe and then taking on a much bigger mortgage.  Not to mention what a public service you’re doing by allowing your friendly agent to earn two commissions!

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