Tag: housing

The 5% Factor in Finance

by jcafesin, posted in Uncategorized

I had a conversation with my former financial advisor when the markets were crashing back in ’08. I asked him to give me an estimate, his best, ostensibly educated guess when the market might turn around or at least stabilize. He assured me it would be soon. The credit default scandal had already been exposed. Real estate foreclosures had been assessed and the losses factored into financial projections. The fact is, he offered with conviction, in any industry one had to account for a certain amount of corruption. Maybe 5% of the people in any given field were evil. The evil had now been weeded out and the markets would bounce back to its mean of 8 to 10% growth or better annually soon, he’d promised.

Turns out, evil abounds in the financial industry. From Michael Arougheti (Ares), $85 million in 2024, to Jamie Dimon (JPMorgan Chase), $39 million to Varun Krishna (Rocket), $25.89 million, and their corporate cronies with eight figure bonuses, these bank execs and mortgage brokers horde properties, creating our current housing shortage turning us into a renters nation, and control the markets at their whim with risky investments (which they call ‘financial products’) for personal gain. My advisor had to be grossly low on his 5% estimate of evil in finance.

According to forensic psychologist and author Robert Hare, it is possible, even likely, that the percentage of evil is greater in the financial industry than most any other field. Money attracts greedy people. Those who choose a career pursuing money, instead of building, inventing, engineering, teaching, are generally looking for what they can get from society instead of what they can give to it. In Snakes in Suits, Mr. Hare claims at least 10% of all those in finance are psychopaths.

The 5% (or more) who callously exploit the rest of us is what makes the free-market system they support a myth. That 5% evil controls 95% of the financial markets of the world. The enormous scale of capital they play with has proven to collapse economies, robbing millions of their life savings, their jobs, their homes.

Most of us put our earnings in the bank or the market and hope our savings will grow. We depend on those in charge of most everyone’s money to know what they’re doing and manage the money we entrust to them wisely. Most of us don’t have the time or inclination for in-depth study and monitoring of the markets. Even if we did, it is rarely possible to get an intimate and transparent view inside most corporations. We rely on our government to monitor and avoid financial catastrophes. The ‘08 crash is an example of what happens when they don’t. The Trump administration is another, while he and his 5% — bankers; brokers, energy and tech execs — sets up our economy to profit themselves at the cost of 95% of the rest of us.

A ‘free market’ system strives to maintain very few restrictions, touting supply and demand will regulate economics. And though this is a lovely idea, like communism, it doesn’t work in the real world. The economy collapses when demand is only from the [wealthy] 1% of the population that can afford anything. Public companies with no limits on growth, minimal regulations, limited liability, no accountability, and lack of transparency virtually invite exploitation by the few, but none the less formidable percentage of evil. Our ‘free market’ invariably becomes controlled by a small minority of wealthy shareholders who represent only their own interests. This corrupts the entire society by shifting the balance of power to a handful of narcissists, if not out and out psychopaths, as Robert Hare claims.

Republicans and conservatives scream socialism if the government regulates the markets beyond ‘protection of property and against force or fraud.’ But everyone pays the price for the 5% that continually redefine the term ‘fraud.’ The 5% evil controlling the financial industry continues to take ridiculous risks and impose absurdly high costs and interest for excessive yields to line their pockets. And the fact is, it IS socialism when taxpayers are forced to bail out banks and brokers who were, and are still indifferent to the suffering they cause — the very definition of ‘Psychopath.’

We will never be able to ‘weed out’ evil from humanity. A certain percentage of our population will always be narcissists, care exclusively about their own welfare over the society in which they live.

Regulations on our financial industry must be imposed and upheld to keep evil in-check and limit the damage the 5% will surely cause again and again. We are more than willing to put sanctions on countries that support terrorism. If we are truly ‘by the people, of the people, and for the people’ of this nation, we must sanction the evil in our system as well.

The Problem with Realtors

by jcafesin, posted in Uncategorized

I’m looking to buy a new home in Northern California. I peruse Redfin 5xs a day, (and yup, I’m OCD about real estate), then send links of homes that spark my interest to our real estate agent. This agent quickly and efficiently sold our last home a few years back. She made $81,000 on the sale. She’d sold our home in mid-summer 2021, racking up her 35th sale that year.

Our agent, Karen, knew us for 2 weeks collectively. Two weeks! And she didn’t focus on our property alone in those 2 weeks, so hours spent on selling our house was likely less than 40. That’s $2,025 an hour. That is obscene!

I’ve heard many realtors say, “Well, we have to split our commission with the buyer’s agent and our brokerage,” as if this is an excuse for how much they make off home sellers, and now buyers as well. Karen has a 70/30 split with her brokerage meaning she keeps 70% of $81,000, which is $56,700. Even splitting her commission with the buyer’s agent, Karen made over $700 an hour for placing an ad on MLS, showing our home to whoever showed up, and “staging” our home, which we paid for out of pocket.

Honestly, realtors are greedy middlemen/women, who offer little to no value. In fact, for private buyers and sellers of property, they are literally in our way, an anchor we are forced to engage with and pay because the real estate industry has set it up this way. The National Association of Realtors (NAR) is the largest lobby in the country, lobbying congress and city councils to do their bidding. Try selling your home as a private owner and agents won’t show it to clients unless they get a commission on the sale. Worse, they bad talk the FSBOs to their clients. I know. Tried selling a rental property on our own and the few potential buyers who came by told us their agents refused to show our house because they wouldn’t, ‘in all good conscience, waste their client’s time showing them crap housing.’

I’ve never actually met a real estate agent or broker with a conscience.

I get this is offensive, but is it not offensive, in fact vulgar to be ripped-off for tens of thousands of dollars with every sale of property?

While it’s true I do not trust realtors, the real estate agents/brokers I’ve known, and I’ve known many, have taught me not to. My half-brother is a residential agent. His IQ is below 100 (making academic or practical learning difficult), busted for stealing cars to robbing houses again and again through his teens, failed out of middle school then high school, and retired at 55 a multimillionaire from his home sales in Simi Valley, a Christian enclave north of Los Angeles.

My half-brother is Born-Again and used his influence in the local churches to promote his real estate business to the mostly immigrant Latino influx. These were hardworking men and women, generally with two or more kids. They’d gathered together just enough savings for a very small down payment on a new home in the housing developments popping up across the valley. Of course my half-brother knew all this about them. Yet, he convinced these folks that an adjustable-rate mortgage would get them into a house because ARM loans require little down, and had relatively low monthly payments.

In 2008, the real estate industry crashed and the low ARM loans his buyers signed on for turned monthly mortgage payments from $2500 to $4500 virtually overnight. Thousands lost their homes to foreclosure in the following 5 yrs, unable to maintain their monthly payment. Brokers and agents manipulated the numbers to get these folks an absurdly low down payment, not caring or even considering that in as few as 3 yrs their payments would skyrocket. How would my half-brother know he was screwing his clients pushing ARM loans? All ARM loans “balloon.” The ARM “teaser rate” is attractive to lure the low-income in, but screw them over time. Banks always win, get the most they can.

Like realtors, I’ve never actually met a banker, lender, or person in finance with a conscience.

While the banks, regulators, and rating agencies were publicly slapped in the 2008 Crash, I heard no mention nor read one article about realtors pushing deceptive loan practices on buyers.

My sister flips housing with the help of her husband. My brother-in-law is a commercial broker. The two of them are millionaires 10xs over from their adventures in real estate. From drowning a kitten in a neighbor’s pool at 5, to forging our mom’s signature on report cards, to shoplifting, to wearing whatever facade necessary to get what she wanted, my sister seemed without conscience growing up.

I’ve worked with well over 20 realtors in the purchasing and selling of personal and rental properties over the last 30 yrs. Without exception, they all have only one agenda — too make as much money as quickly as possible. They claim their value add is an extensive knowledge of the housing market, but with tools like Redfin, I am able to find homes that interest me as quickly or quicker than agents do while they’re busy showing properties or marketing for more clients.

Last Saturday my DH and I went to several open houses. The realtors didn’t know virtually any details about the houses they were selling. No clue where the water heater or furnace were, whether the house was gas or electric, age of roof, the crime rate or local schools…etc. The prices were hugely variable, some hundreds of thousands less than comparable houses only a block away. The realtor likely recommended the seller undervalue their home, as our agent, Karen, did with ours when she sold it. “I want to create a bidding war,” she’d told us. Well, of course she did with the house so undervalued. Our $150k hit only translated to a few thousand in commission loss for her.

Realtors claim to have their clients’ best interests at heart but charge a 5–6% commission extorting sellers and now buyers too for homes close to or over 1M, which is the average cost for most single-family homes around any major city today. November 2024, a law was passed forcing buyers to sign agreements with a realtor before viewing any property. This nationwide law also requires buyers to give an average of 3% commission to the agent were forced to sign with. Now, realtors get upwards of 7% — 9% commissions making it impossible for most first-time buyers to get a home with the additional payouts agents require.

There are realtors on every corner because it is a simple test to pass with no real education required, and the monetary rewards can be limitless. These are middlemen/women with their hand out, greedy, manipulative, ugly people. They are not ‘on your side.’ They are not your friend. Yet, we are forced to work with them, by the laws the NAR lobby put in place.

Sent a link to a home I wanted more info on to Karen a few days ago, as I, a private buyer, can now only get data on houses for sale through an agent. She sent me back the home’s disclosures (details about the house) and tried to convince me to buy it even though the house was flooded so badly in the crawlspace it could not be inspected. The traffic noise from the fwy “doesn’t bother me,” she told me, though the background hum of traffic drown out her voice on the videos she sent me. “You should start your opening bid at 1.7 to make sure you bid high enough to be in the running,” she said, though the house was listed for 1.5M, and a wreck. Another home I sent her for more info was literally falling off the side of a hill that I couldn’t see in the photoshopped images from Redfin. Karen assured me that the home was “just fine,” even though the inspector found massive cracks in the foundation. And again, she insisted we overbid. She undervalued our home for sale to make money fast. She’s overvaluing any home we look at buying to make the most commission possible.

Want to know why you can’t afford to buy a house?

Your realtor will tell you that you can, even when you can barely cover your current rent. They’ll tell you the house is solid even when it’s flooding or falling off a cliff. They’ll tell you to overbid your offer to “be competitive” regardless of the real value of the home. And they’ll demand upwards of 6% or more in commission from the seller if they can’t negotiate 3+% from the buyer (or likely even if they can).

My family of realtors, to the 20+ I’ve worked with over the years, I’ve never found an honest agent. When I was a kid, I too felt proud of my half-brother watching him dance with our mom around the living room of our childhood home because she was so proud of him passing the realtor’s test (third time’s a charm). Now I understand it was the only career he could have had — real estate agent, or car salesman, or insurance salesman, or pill pusher for big pharma — morally corrupt, greedy middleman careers without a conscience.