EmptorMaven

Since I think the residential real estate market is bottoming out, and my family will soon need more space anyway, I recently began shopping for houses. Based on my reference post on this subject it won’t surprise people to learn that I have a low opinion of the real estate marketing cartel (a.k.a. “Realtors”).

Following my own advice I did not enlist a “buyer’s agent.” Instead I did my own searches through listings and, when I wanted to see a house, I contacted the seller’s agent directly and drove myself to the appointment.

Overall my experience with these “Realtors” continues to be dismal. Of the dozen or so licensed listing agents with whom I have interacted in the last few weeks at best only three struck me as professional and ethical. Many were incompetent, lacking basic knowledge of the houses they were contractually and ethically obligated to sell. Some were more interested in selling themselves to me than in selling the particular property they listed and in which I had expressed interest. And of course many, on learning I wasn’t being “represented” as a buyer, tried to convince me that I should let them be my “buyer’s agent.” After all, they explained, their “services” as my representative wouldn’t cost me a penny.

This argument, by licensed professionals, is not only unethical but should also be illegal: Traditional buyer’s agents are not free. They collect a substantial fee from the sellers of any house purchased by their client — usually 2.5%-3.5% of the selling price. This is known as a “co-op commission.” On a $1MM house a buyer’s agent expects to walk away with about $30k. As I asked some of these Realtors, “What could you possibly do as my representative that would be worth $30k?” It became a rhetorical question.

At best they run the same computer searches I do and contact the same listing agents I do. If I didn’t have a car I could probably get the listing agents to drive me to their showings. In fact, I consider it detrimental to have a house shown by someone other than the owner or listing agent. After all, a buyer’s agent typically doesn’t know any more about the house than I do from reading the listing, requesting copies of the floor plan, or walking through it. At least when the listing agent is showing it there is a presumption that they have studied the property and are prepared to answer questions that might be asked by a buyer. And when they don’t know the answer (as happens ridiculously often) at least I’m one person closer to the answer.

As I mentioned in my previous post, a buyer’s agent doesn’t even fully represent the interests of the buyer. I want to find a house that most closely matches my objectives at the best possible price. A buyer’s agent wants me to buy a house with as little work on their part as possible. Their interest is in getting me to make a purchase producing the biggest buyer’s co-op, so not only would they prefer I pay as much as possible, but they would also prefer I didn’t see houses with reduced commissions.

So there are already plenty of principled reasons to avoid buyer agents. But the money is the biggest: When I submit an offer on a house and make it clear that I am waiving the “buyer co-op,” it’s like adding 3% to my bid. Some Realtors may quibble that they contract with sellers for a fixed commission rate, and if the buyer doesn’t present a licensed agent to claim it then they get to keep the full commission for themselves. Hopefully neither sellers nor courts will countenance such an anticompetitive gambit. Though if push comes to shove, I can confirm that there is no shortage of licensed Realtors eager to list my old house. It won’t be hard to find one who will agree to be my buyer’s representative at settlement and refund their commission to me.

[Update: How to access MLS if you're not a Realtor. Several comments note that only Realtors have access to the MLS, and without that you can't effectively do your own searches. The reality is that you can get full access to listings with one more step: In addition to trulia.com and homefinder.com, most real estate agency web sites allow you to run searches against the entire MLS. None of them reliably come back with the complete MLS listing, but they will tell you which agency has the listing. I have found that if you then go to that agency's web site and search for the property they will provide the complete listing information, including contact info for the listing agent and often other details.]

Consumer High Speed Video Cameras

It has been more than a year since Casio began shipping the EX-F1, and it is still the fastest consumer video camera on the market. However, at its top speed of 1200 frames per second it only captures a very coarse 336 x 96 resolution.

Memory bandwidth and data buffering have previously been the bottleneck of high-speed video. Pros pay tens of thousands of dollars for specialty camera systems capable of capturing high-resolution video up to 10,000fps. (Higher frame rates require lighting power that would be beyond the means of amateurs.) But now that high-capacity solid-state data drives with write speeds over 500MB/sec are shipping for just a few hundred dollars the technology exists to produce a sub-$1000 consumer video camera that can capture full-resolution video at thousands of frames per second. I can’t wait to get my hands on one.

Better Console Gaming Controllers

Ten years ago Microsoft introduced a radical new gaming controller under its Sidewinder line called the Dual Strike. Apparently nine years ago they took it out of production. I used it to play several PC versions of Grand Theft Auto and liked the controller so much that when I discovered it was discontinued I scooped up a few more boxes at clearance. The Dual Strike is the best first-person shooter (“FPS”) controller I have ever used: It combines the precision and speed of a mouse with the convenience of a single hand-held gamepad that doesn’t tie you to a flat surface.

I recently picked up a PS3 and was excited to check out the state-of-the-art in FPS games. What I can’t believe is how bad the standard console controllers are for this purpose. Apparently people who are serious about these games buy split controllers like the FragFX which basically put you back at a desk with a mouse. Not exactly the setup one is looking for when plugging a console into a home theater system and sitting back on a sofa.

Though stockpiles of Dual Strike controllers are still available they are not compatible with the current crop of gaming consoles. I hope it’s not long before the console gaming complex rolls out a FPS controller to meet this need.

Computerized Ballistic Optics

Given how cheap and compact computer power is I can’t understand why the $1500 Barrett BORS is the only integrated ballistic computer on the market. Of course a professional shooter can do ballistics in his head for any shot one could take with a man-portable firearm (i.e., up to .50BMG shooting up to 1.5 miles). And serious amateurs cobble together their own ballistic computers, typically using a combination of smart-phone ballistics applications, Kestrel weather meters, laser rangefinders, and perhaps some angle gauges. Hopefully this is the year that scope or laser rangefinder manufacturers begin to integrate atmosphere and angle sensors along with ballistic data to provide precise firing solutions, perhaps even automatically adjusting the scope’s reticle for a particular shot. Before long I also hope to see laser rangefinders that integrate laser doppler anemometers to determine average windspeed and direction over the ballistic trajectory, making first-shot hits as precise as the rifle and the shooter’s trigger finger.

Bullpup Single and Double Rifles

As a fan of bullpup firearms I was excited by Steinkamp’s SW1 double rifle. But since their pricing is over the top I’m hoping that this year some domestic manufacturers will pick up on the concept to produce single or double bullpup rifles and shotguns.

Subsonic .22LR Ammunition and Barrels

As I wrote late last year, there are significant benefits to be had with heavier subsonic .22LR ammunition. I hope ammunition manufacturers step up their offerings of .22LR over 40 grains, and that .22LR barrel manufacturers switch to the higher twist-rates needed to shoot the stuff well.

After I bought a PS3, primarily to serve as a Bluray player, I decided it was time to put rear speakers on my home theater system. I last tried this at least five years ago with several pairs of speakers priced around $100 each. None of them could keep up with the old premium Fosgate Audionics speakers I have on my front three channels, so I gave up.

This time I asked a friend who’s an A/V fanatic what to get and without hesitation he sent me to Aperion Audio, where I ordered two 6-IW in-wall speakers for $150 each. My initial impression was that they are actually superior to my Fosgate speakers. Having put them through my Pioneer receiver’s autocalibration they are a seamless part of my surround sound system.

Nominal investment performance numbers give us a false sense of how hard our money is working for us. Real returns, which are adjusted for inflation, look much worse over the long term.

One analyst also factors in the effects of taxes and fees to produce “real-real returns,” which are even more pathetic:

Garrett Thornburg, founder of Thornburg Investment Management in Santa Fe, N.M., calculates what he calls “real-real” returns, adjusting stock performance not only for inflation but also for real-world drags such as taxes and fees. Nominally, a dollar invested in the stocks of the Standard & Poor’s 500-stock index at the end of 1978 had blossomed to $22.88 at the end of 2008, including dividends, a sweet gain even after the 2008 meltdown. But once estimates of inflation, taxes and costs are removed, he figures, the investment was worth $3.76.

All of this might be enough to put investors off stocks entirely, until they consider the long-term alternatives. Measured over the 1978-2008 period, rather than over just one decade, stock performance in real-real terms actually is better than that of just about any other major investment class, Mr. Thornburg found: 4.5% a year. Stocks’ ability to keep up with inflation over the very long haul may be their best selling point.

In real-real terms, stocks did better over that period than municipal bonds (2.5% a year), long-term government bonds (2% a year) and corporate bonds (0.2% a year). Real-real home prices were unchanged over those 30 years. Both short-term government bonds and commodities suffered losses.