Absolutely no way should a serviceman buy a home if they are only going to be there 2 years. Only way that this would make sense is if they are prepared to be an absentee landlord. Not a real good idea either. Now about the loan products offered I don't think it makes any difference as long as there was no prepay penalty. Hell this might be one instance where a option arm was a viable alternative. But buying knowing your best case is two years there makes no sense. You are gambling that property appreciation will outrace the fees you will have. About 6 % commission when selling, plus fees so say seven percent. And about 2% in fees when buying. So you have to have 4% appreciation to break even and historically that is about all you get. Gambling on more is not very smart. And it is the realtors job to act in a fiduciary capacity and give sound advise. And the mortgage brokers as well. I don't give a damn what the law says, people should have some decency.

"This is simple mathematics - the typical real estate commission is 6% on each side - that is, 12% for a "round trip"."

Does that mean real estate agents are charging 12% on each transaction - i.e 6% from seller and 6% from buyer?

No, it means that to buy and sell one piece of property ("round trip" - one buy, one sell, you started flat and are again) 12% will be siphoned off via commissions.

Wow. Opening pump losing steam.

Do you live near the Naval Air Station at Jacksonville?

The durables report sucked. Goebbels would be proud.

We'll see how long it takes people to figure it out. Ex-defense it was negative, then subtract out the inventory build as a built-but-not-sold product is a net negative, not positive (it has a negative "carry")

The Gramm/UBS issue is revolting.

These leech****s should be impaled

Revolting is exactly what we might get if this **** doesn't stop.

Well, if you are paying 6% when buying AND same when selling - your counter party is paying the same fees as well. That makes 12% from both on each transaction.

Let's say I bought your house and paid 6% commission and that sold it back to you for the same commission. On both transactions I paid 12% (2 x 6%) and so did you, which means realtor pocketed 12% on each of two transactions. What am I missing?

No, its 6% total.

The "round trip" is the amount extracted from equity on a buy and sell. Who you claim pays it doesn't enter into it - the point is that this is the amount of value that is extracted through the transactions and handed to the realtor(s) for facilitating the transactions.

So, house must appreciate 6% in order for the buyer to break even (in nominal dollars) before the sale takes place, not 12% - correct?

How are you counting it Mvo?

You lose on both ends (you have to buy a new place, right?) but half of the loss is "hidden."

If you're performing a buy and a sell every 2 years, you are eating one full round-trip in transaction costs every 2 years.

6% comes out of the equity in the house for each half of the round trip.

Example: $200,000 nominal house value.
You sell a $200,000 house (and receive $188,000)
Now you go to buy a new "$200,000 house." You pay the $200,000 and think the seller got "hit" for the fee, that you didn't eat it.

Wrong. You ate it. You paid $200,000 for a house worth only $188,000 (what the seller received.)

In fact its worse than that, because there are also doc stamps on the mortgage and title insurance costs, plus other anciliary expenses.

Actually, we are all paying a little of that commission since the govt picks up that tab for servicemen/women that are transferred. It's been 20 years, so things may have changed. It also depended on the availability of family housing, which was always in short supply back then.

Gen

minor typo

you said: He is one of the architects of the Gramm-Leach-Baily Law that repealed the last pieces of Glass-Steagall.

It's actually the Gramm-Leach-Bliley Act - note the odd spelling of Bliley

Thanks for the catch - see what "Spell check" gets me?

Easy way to cut those fees in half - get a R.E. lic.! pass the test, pay your fees ($500-$1200) and keep 1/2 the commish. Works like a charm - I spent about $700 on the process and saved $9000 in fees when i bot my last house -

What's the statute of limitations for loan fraud? I'm feeling like the punishment is not dealt out until the crooks get enough distance from the crimes. Bush could make a formal pardon of 9 million financial industries employees and then socialize, er, i meant to say nationalize the banks (been listening to Congress) robbing their profits for the next decade and end this whole thing by instantly writing down the losses.

If I had a choice of industries to socialize, er I mean nationalize, I'd chose banking, insurance and finance over medicine.

The statute of limitations on fraud does not start ticking until you become aware of, or should have, the fraud.

Building inventory doesn't seem to necessarily be a bad thing. Especially if its seasonal. On the other hand building inventory into the teeth of decreasing overall spending seems really bad. Its all context.

Sometimes your posts don't make sense, because you assume a shared context.

Couldn't building inventory overall simply be a response to price inflation expectations? Rising input costs, as opposed to slackening demand? I tend to agree that inventory is building because of demand destruction, but need to ask the question, for context.

Are we aware yet?

Excellent Ticker. These fraudsters must be stopped and jailed. And Hillery wouldn't touch em.

Just figure on that 12% siphoned off that your paying 6% and the other side is paying 6%. But don't forget to add in other fees you are paying. Its going to be 3% for two transactions for you in a low cost state. Gen down in Florida they******you on transaction fees, even worse in Texas. So figure about 10 or 11% in high cost states. Whatever if you are going to be in a house for two years and then move, please don't count on turning a profit. You might - you might not. Statistical averages say you'll come out about even. But if you're only going to come out even, why the hell do you want to put up with the f'n hassle of dealing with a realtor, mortgage broker, title company. It does not make sense.

Karl, in your example you (as seller) eat 6% and then you (as buyer) eat another 6%. How come 6% comes out from the seller (agree here) AND A BUYER if you just stated that it was the seller that eats the loss (200-188)? If seller indeed was able to pass the commissions to the buyer - we wouldn't count it as a cost to the seller, would we?

Buying a replacement house is a second round - it is another transaction (and another round of costs), just like replacing AMD with INTC in your portfolio.

Seems like double counting to me...

Mvo, you as the buyer just bought a house worth $188k for $200,000.

Who ate that loss again? Remember, the seller's view of what the house is worth is EX COSTS.

This sort of misunderstanding is why people believe "their employer" matches their FICA "contributions."

Think your a little off on the RE example but what the hell we're in agreement in principle there. I'm saying 11% total costs - your saying 12%. Just arriving at the number differently.

But off to the FICA. Just had this conversation with one of our top loan officers today. He is looking at buying a part of our company eventually and was going thru how he would have to pay the self employment tax on earnings. I don't think people truly appreciate the employers contribution to SS. I would guess that most employees do not even know that the employer matches. And further do they not understand that if it were not for the match they would be earning that additional money. In my business its not just something we could keep if we weren't paying it. Top talent is paid the higher commissions and if I did not pay them the higher commission structure someone else would. I think that this is the greatest deception placed upon the american public in history. Hell I don't care if Jack Ruby was the second shooter on the hill and J Edgar Hoover knew it and took it to his grave - this is the greatest deception placed upon the public.

You collect 15% of everyones paychecks, don't ever let them have the money, promise to pay this back to them as about 1/2 of their average income, don't pay anybody if they die, their is no remainder left for your estate and after running this whole scam like this they still don't have enough money and are behind probably 50 trillion dollars in allocating money to take care of the future obligations. And nobody says anything. Well eventually they are going to have to run the printing presses to pay this off. Why not just ****ing do it now. I'll take the problems now rather than later please. The american public is fat, lazy, clueless, - **** it I can't truly describe my feelings.