Dramatic . . . or Spooky?
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Social Stigma vs. Financial Self-Interest
Across U.S., Food Stamp Use Soars and Stigma Fades
–Headline, The New York Times (11/28/09)
[A new academic paper] argues that far more of the estimated 15 million American homeowners who are underwater on their mortgages should stiff their lenders and take a hike.
–Kenneth Harney, “The Moral Dimensions of Ditching a Mortgage“; The Washington Post (11/28/09)
During the Vietnam War, civil disobedience consisted of burning your draft card.
In Colonial New England, civil disobedience took the form of throwing highly taxed tea into Boston harbor.
Might civil disobedience, circa 2010, manifest as homeowners ditching their underwater mortgages, even though they still have the means — at least for now — to pay them?
Moral “Double Standard”
Called “strategic default,” the practice is the subject of a new academic paper by Brent White, a Professor at the University of Arizona Law School. White argues that strategic default is a rational response for millions of beleaguered homeowners:
“Homeowners should be walking away in droves,” according to White. “But they aren’t. And it’s not because the financial costs of foreclosure outweigh the benefits. Most owners are too worried about feelings of shame and embarrassment following a foreclosure, and ignore the powerful financial reasons for going through with it,” he said.
–Brent White, “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis”
According to White, would-be defaulters can organize their financial affairs to minimize the disruptions caused by the inevitable damage to their creditworthiness. That includes making major purchases prior to defaulting.
Aside from the morally repugnant nature of Wall Street executives paying themselves billions barely a year after their recklessness jeopardized the financial system, their behavior risks an even greater harm: it allows millions of Americans to rationalize their own bad behavior.
“The system screwed us,” they might logically conclude. “Why shouldn’t we screw it?”
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Can You Say, “No Boundaries?”
How about, “Unprofessional?”
To reduce stress and temper the disappointment of lower sale prices — and also to keep clients from dropping them for another agent partway through a seemingly endless sales process — some brokers are significantly expanding their job descriptions.
Beyond rearranging furniture and decluttering, they take on jobs like plant watering, bed making and floor scrubbing; they check on homes when the owners are out of town; and sometimes even apply a coat of sealer to the driveway or do real estate-related paperwork.
During the two years that their two-bedroom Glen Cove colonial was on the market, Jenna Caggiano and Rich Peck would often return home after yet another real estate open house to find dinner ready. Their brokers — Natalie C. McCray and Eileen B. Heimer of Daniel Gale Sotheby’s International Realty — had cooked it during the event, between visits from potential buyers.
–Marcelle Fischler, “A Little Alfredo With That Listing?”; The New York Times (11/27/09)
Would you expect a lawyer handling an especially drawn-out case for you to start repairing things around your home?
How about your doctor cooking you meals — elaborate meals, yet — if your illness lingered?
Apparently, there are some Realtors who think that their job duties include helping clients run their households if the listing doesn’t sell.
What exactly are these Realtor-Servants thinking??
“With all the things I have done for them, they stay with me. They will re-sign,” said one agent interviewed for the article.
Job Confusion
That would make perfect sense — if the object were to simply accumulate as many listings as possible, or to re-sign clients in perpetuity.
In fact, the Realtor’s job is to sell their client’s home (or at least procure an offer).
If a home has been on the market for an extended time, even in a soft market, one (or both) of the following is likely true: 1) the home is mispriced; 2) the home is poorly staged and marketed.
The antidote to #1 is a more realistic price; #2, another Realtor.
Realtor-performed household chores isn’t one of the choices.
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The photo above is a good example of what I call “the sideways shot.”
When done well, the angle shows off the building’s size.
When done poorly . . . it leaves you disoriented, with no feel for the building at all.
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