Thursday, May 1, 2014

Why Give Right Reasons When Wrong Ones Are There?

When the tobacco companies paid for studies saying no link existed between lung cancer and smoking, did people believe them?

If the contractor who does your home inspection includes a bid to do the repair work along with the inspection report, would you give your head a skeptical scratch?

When a mechanic tells you your car is kaput and then offers to buy it, wouldn't you roll your eyes and sidle towards the door?

Someone please tell me, then, when a real estate agent tells you now is a great time to buy a home, why does he or she think you'll believe it? When was the last time you ever heard one say now is not a good time to buy?

Having once been a real estate agent, I can sympathize with them. Many work pretty long unpaid hours, spending a lot of time on clients who aren't that serious, who think their homes are worth more than they are, who make absurdly lowball offers in competitive markets, or who just turn to another broker to write the offer for no apparent reason.

In other words, if no one buys a house, brokers don't make any money. That's arguably not optimal in 2014 America. Why not tout home ownership at every opportunity?

But still. Isn't a little authenticity in order? I recently read a real estate broker's article in Realty Times which said that people who bought at today's low rates and low prices would build up equity in four years and get money back when they sold, unlike the hapless renter schmucks who forked the monthly payment into the landlord black hole. Moreover, the article intoned, there are all those tax benefits from owning a home.

I've heard the same arguments for more than thirty years. Rates are always low and about to go up. Same for prices. National Association of Realtors economist Lawrence Yun touted the opportunity of home ownership in 2006, and was still doing it in 2009. And oh, those tax benefits!

Did the writer of this article miss the memo on the number of underwater homeowners? And how about the niggling little point that more than seventy percent of homeowners don't itemize on their tax returns, and therefore don't use the tax benefits? I'll give this writer a tiny bit of credit, though. She didn't call a home an "investment," which these broker-writers generally do.

Sometime, I'm going to write a post on five compelling reasons to own a home. None of them will be equity buildup and none will involve tax benefits.

And someone just might actually believe it.