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Fox News dishonest or misleading real estate-related ads

Posted by John T. Reed on

I have recently noticed three dishonest or misleading real estate related commercials on Fox News.
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One says, “it’s always a landlord’s market” and is pushing you to invest in a fund that buys apartments. That is a childish lie, like the rich get richer. Generally, the rich get poorer. It’s called regression to the mean.
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A landlord’s market means very low vacancy rates, like below 5%.
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https://fred.stlouisfed.org/series/RRVRUSQ156N
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Another ad pushes a service that rates real estate agents. It says the average house takes a certain amount of time to sell and sells at an average discount off asking price. They promise to tell you which agents sell the FASTEST and for the LEAST DISCOUNT OFF ASKING.
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Give me a freaking break. If the house sells fast it means the price was too low in relation to market value. And the percentage of asking price is also a function of of the ratio of asking price to market value.
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This company is not going to send you to the best agent for you. Rather, they will send you to the CREAM SKIMMER agents. Those are the most experienced agents. What they are good at is maximizing THEIR income per hour spent on a client. You do that by getting the seller to ask the lowest possible price and by getting the seller to clean the place up and fix it up before putting it on the market.
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Every book on being a real estate agent has a chapter on how to get the seller’s price lower. To be fair, in most cases that means getting the seller’ absurdly high asking price DOWN to market value. The vast majority of sellers are ridiculously greedy idiots.
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In the vast majority of those cases, the seller eventually gets educated by the failure of the house to sell and cuts the price to the right level. Although that often means they fire the first agent and simultaneously lower the price then claim the second agent was better when in reality the house finally sold because the seller finally did what the first agent kept asking him to do all along: cut the price
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But the most successful cream skimmer agents are good at getting you to lower your asking price BELOW market value. That is how they sell faster and at a lesser discount off asking, each of which minimizes the time they spend on you.
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The book Freakonomics has a chapter on this. Real estate agents brag about how fast they sell. But when author Steven Levitt compared how long it too for agents to sell THEIR OWN home with how long it took to sell their CLIENTS’ homes, the agents took LONGER to sell THEIR OWN home than their clients’.
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Why? They priced their own home closer to market value and lied to their clients about the best asking price FOR THE CLIENT. In other words it is in the best interest of the SELLER be to close to market and take a month or two to sell, but it is in the AGENT’s interest to price the house BELOW market so the agent can spend less time per hour on each client.
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Is that illegal? It is a subtle, unethical violation of the fiduciary responsibility of the agent to put his client’s interest ahead of the agent’s self interest.
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The cream skimmers prey upon ignorant sellers, and as long as that company who promises to send you to the fastest, highest-percentage-of-asking agents, they are also preying on ignorant sellers and aiding and abetting that unethical behavior by the cream-skimmer agents.
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At the moment, I forget the third dishonest or misleading real estate ad on Fox News. Maybe a reader remembers what it is and will refresh my recollection. If not, I will hear it again and add it to this article at that time.

FRED.STLOUISFED.ORG
Graph and download economic data for Rental Vacancy Rate for the United States (RRVRUSQ156N) from Q1 1956 to Q4 2019 about vacancy, rent, rate, and USA.

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