Housing Is So Ripe for Major Disruption
EDITOR'S NOTE
Hi everyone! I'm out today, so you're getting an extra special dispatch from my executive producer, Sandy Cannold, on a topic near & dear to my heart after going through our own home-buying experience.
Sandy here…I have spent the better part of the last year trying to sell our home and buy a new one in New Jersey. To give you some insight into how painful this process has been, I'd rather go to a car dealership and haggle with a salesman every day of the week and twice on Sunday than do a real estate deal again!!
The home sales numbers this spring have been sluggish – even after the recent slump in mortgage rates. People have blamed this on everything from a lack of inventory to rising prices to the impact of losing the SALT deduction. And I definitely agree that the inventory struggle is real. In our area of Bergen County, New Jersey, it's been like the Sahara when it comes to new homes hitting the market, and sellers have been really stubborn about pricing.
But I contend that the real problem right now is that once you actually find that home of your dreams you have to swim through what seems like a sea of paperwork and process sewage – think Andy Dupresne in Shawshank Redemption -- to come out on the other side as a new homeowner.
One example of this virtual financial colonoscopy is getting the mortgage. Thanks to the after-effects of the financial crisis, I had to provide the bank with 3-years of tax returns, months of pay stubs, months of bank and brokerage statements, months of 401K statements and multiple credit checks!! And even after providing that mountain of material, with less than a week to go before signing on the dotted line, I had to repeat a number of these steps. Talk about stressful. Don't even get me started on the fight to get the best rate – to pay points, or figure out a rate lock, etc.—and as the buyer, you're at an incredible disadvantage against an extremely opaque industry.
And the fun doesn't stop there! If you even make it through this process, you're greeted with the dizzying array of home inspections, title searches, land surveys, inspection fixes, legal reviews – all of which are controlled by opaque local authorities acting like they're still doing business fifty years ago (office hours 10am til 3pm? What if you have a day job?!).
And this all translates into money, money & more money spent on top of the house price itself. You keep telling yourself, what's a few hundred dollars here or a thousand dollars there when you are making a six or maybe seven figure purchase? And that's exactly why they can extract money from you every step of the way.
And finally, look: It doesn't help that the one person who is supposed to be your advocate – your real estate broker – well, isn't really. Sure, for the most part they do a great job, but they can't really go to bat for you because once they're done with your deal they have to do another and another and another with the same set of lawyers and other brokers and town inspectors. How can they really fight for you if it hurts them in their next deal?
The whole process just seems so random, up to interpretation, and a straight-up money grab at every turn.
I contend that real estate is ripe for disruption, and I hope that before we have to move from our new dream house (which is hopefully never!) the nightmare we just lived through will be fixed.
Share your thoughts--we at the Exchange are all ears!! And enjoy the show today,
Sandy
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