After the Bust

Just when we needed the government to recognize that their involvement in the private sector caused the current banking crisis and the subsequent recession, due to political pressure that caused funding to flow through Freddie Mac and Fannie Mae like it was water, we now have them meddling in the valuation business.

Nevada’s establishment of new Broker Price Opinion (BPO) rules that take effect on July 1, 2009 will allow about 20,000 real estate agents to express “price opinions” upon which decisions will be based by buyers, sellers, lienholders and third parties “making decisions or performing due diligence related to the potential listing, offering, sale, exchange, option, lease or acquisition price of a parcel of real property.”  In other words, for almost any purpose besides an application for a new loan.

One might ask, “are there any special qualifications required of an agent beyond the 1 or 2 weeks of real estate training required of agents for licensing to express such opinions?”  The answer would be no.  One might also ask, “is there any penalty for unqualified agents expressing opinions that are in error, and that may cost buyers, sellers, lienholders and others thousands or millions of dollars in losses?”  Again the answer would be no.

So what the Nevada State government has done with this law is allow the entry of thousands of untrained individuals into the valuation business at a time when valuing real property has become more difficult than it has been in the last 10 years.  Who exactly has this law been written to protect?

I have been a real estate broker for over 30 years and in 1991, after our country’s first financial fiasco with Savings & Loans, appraiser licensing was adopted based on a federal mandate.  The appraisal business has come a long way since then, and appraisers are so much better qualified than agents with regard to the valuation process that the professions have parted ways.  By allowing any real estate agent to act as a value expert is a giant leap backward.  

One wonders if this new law and its timing has anything to do with the fact that appraiser’s have not been willing to provide market value opinions high enough to support higher listings and the upward pressure on prices (see “Realtors Say Low Appraisals Sinking Deals“).

For those party’s buying “broker price opinion” products from real estate agents in Nevada, I guess the government has set up a situation for you where its “let the buyer beware.”  An army of unqualified real estate agents will be giving you a chance to purchase their opinion, but if it’s inaccurate you only have yourself to blame.

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The auto industry in earlier times employed over 600,000 individuals and after the bust there may remain a force of only about 40,000 employed.  What does that mean for Michigan?  The State is looking at huge budget problems trying to meet the tax shortfall that will be created by the job losses.  Police, schools and emergency services may be hit hard.  Healthcare will suffer, retail sales will plumet, property values already down will become frozen and drop futher and a wide array of support jobs will vanish as the “multiplier effect” that comes into play when core jobs are created works in reverse as auto jobs are lost.

The liquidation of well over a million vehicles, in what has been a poor market for vehicle sales, will negatively impact Ford and foreign manufacturers.  Some have predicted that the sell off will cause massive layoffs as production is decreased, and that prices may increase on other vehicles in response to the disruption.

While no one knows just how bad things will get, it is clear that even under some of the most optomistic scenarios Michigan will be suffering over the next several years, and Michigan’s losses affect us all.  The black hole that will be created by primary and secondary job loss in Michigan will ripple through the State and adjoining states.  The job losses from the closure of hundreds of dealerships will hit many more states at a time when job retention is critical. 

There will be more waves in time as iron ore mining, steel, aluminum and parts manufacturing plants are hit.  Regardless of your ideology regarding the necessity for the market to allow such failures, expect the adjustment process will be painful for many.

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Can you see what is on the horizon, looks like $11 a pack cigarettes, higher unemployment, higher gas prices,  the implemenation of a large value added tax (VAT)  increases and all while we are struggling to get through one of the most difficult time in years.  Many have already succumbed to living with increased stress.

I don’t have to tell you how bad stress is for you physical and mental health.  There are hundreds of articles and books already written about strees and the negative effects that it can have on your life.  Stress can make your life much more difficult, and ultimately it can bring you down.

Watching television and listing to radio doesn’t help, most of the popular shows take one side or the other, telling us how much better change will be or saying that we are headed into deep water with the changes proposed.

While I don’t think “don’t worry, be happy” is an entirely appropriate direction, I do think that simplifying ones life is a good idea.  Getting rid of excess baggage in our lives like expensive, gas eating toys is not a bad idea.  Do you really need that second boat or camping trailer?  How long has it been since you got on those ATV’s or motorcycles?

How about making a serious run at your boss regarding working from home?  Even a day or two a week would cut commute time, gas expenses, clothing costs and generally make you life less stressful.  If not, how about trying to get the work week shortened to four 9 hour days?  It takes an effort, but if you can find ways to increase the quality of your life by managing your time better, you will likely decrease your stress.

Popularity: 20% [?]