Central Market for Real Estate Closings and Loans

March 12th, 2009 by Al Lewis (alewis)

Unlike the real estate brokerage cartel, the real estate mortgage lending/refinancing business is reasonably competitive and there is no obvious market failure. 

However, we cannot underestimate  the importance to the economy of reducing transactions costs for residential real estate.   (In case you have missed our other postings on this topic, perhaps because you’ve been living in Biosphere II, reducing transactions costs not only saves people money but also allows houses to flow more freely from people who can’t afford them to people who can, without foreclosures and bailouts.)   Therefore we would propose that the government carefully examine each element of closing costs and try to find ways to reduce them. 

Perhaps the easiest would be to commission a website where any mortgage broker can list their fees, in a transparent and comparable way, so that people can easily “shop around,” and then as a condition of licensure, insist that realtors send people to this website instead of recommending their friends in the mortgage brokering field.                                                                                                                                                                     

This proposal was inspired by Jerry Doyle,  www.jerrydoyle.com, who completely gets the importance of efficient national markets,  in his discussion with me on his nationally syndicated radio show 3/12/09.  And no, he is not eligible for the $1-million prize (for reasons I’m sure I will figure out before he tries to claim it)  so you can still win it.

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6 Responses to “Central Market for Real Estate Closings and Loans”

  1. lurkerbroker Says:

    Right on! I was a real estate broker. (And by the way every broker I show your blog to hates you. That must mean you’re right.)

    We used to recommend our friends. People CAN shop around but terms are often not comparable and people ususally don’t find the lowest rates

  2. econperson Says:

    You are thinking too narrowly. The governmetn should be creating or encouraging central markets for EVERYTHING which has no natural geographic limitations. Once they create these markets they will sustain themselves if they are a good idea. It’s not government interference — it’s just pushing the free market along and recognizing that evolution in markets takes place more slowly than you’d think left to its own.

  3. brokerhater Says:

    It should also be very clear how much of the fee goes to the bank and how much goes to the broker. There is highway robbery going on in mortgage brokering. That’s why there are so many of them

  4. person Says:

    it seems like mortgage brokers spend a lot of time selling. that makesd me think there are way too many of them. A more “transparent” market means buyers would find the brokers more easily

  5. edward Says:

    I found this while I was looking for mortgage brokers and you’re right. there is no central market. I am shopping around a lot. no idea whether I am finding the best rate and I get hounded by salespeople

  6. Foreclosures In Cumberland County Says:

    I found your blog via Google while searching for foreclosures in cumberland county, thank you for posting Market for Real Estate Closings and Loans | ThinkOOB!

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