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Are Agents Really to Blame for Outrageous Home Prices? An Agent Weighs In

A recent opinion piece by Meir Bergman excoriated a small subset of real estate agents for purposely hiking up house prices in Lakewood and surrounding areas. Boruch Schechter, a ReMax real estate agent serving the frum community, weighs in with the broker’s side of the issue. 

As a real estate agent, I read the recent article by Mr. Bergman with great interest. While I do understand why there are many people who are furious at real estate agents for the sky-high prices, I just want to make a few points and hopefully set the record straight.

The first point prospective buyers should understand is the effect Covid-19 had on the real estate market. During the height of the pandemic – roughly 6 months – the housing market completely shut down. There were no sales. The real estate agents who rely on sales to feed their families truly suffered. The financial holes real estate agents found themselves in due to those six or so lost months have still not been filled for many and forced a large chunk of them to turn away from their usual business models.

Additionally, the pandemic is still having an effect on home sales – including parts of the process that most people don’t even think about. For instance, there are many sellers who don’t want hundreds of people walking through their homes to check it out. Rather, they would prefer that a home be listed at a higher price, thereby only attracting people who are willing to pay that much, and thereby leading to fewer people walking through their home.

The truth is that a tremendous kudos is in order for the real estate agents who remained honest and yashar with their clients throughout the Covid-19 pandemic, which, as noted before, is still hurting the market.

There were two separate points made in Mr. Bergman’s piece that need to be addressed: 1) buyer-side agents are convincing their clients to pay astronomical amounts for a home, and 2) Seller-side agents are telling their clients to list their homes for above-market prices. Both of these aspects artificially raise the market. But there are a few points to understand.

Buyer-side agents are 100% free for their clients and they are paid when they make a sale by whoever is selling the home. Clients don’t pay the agents, and they can choose a new agent at any time that they wish.

Seller-side agents have one job: sell the house. The number one question a homeowner thinking of selling their house asks is how much the agent thinks they can get for their home. The goal is getting the most money for the seller. So, while potential home buyers are getting crushed in this market, home sellers are quite happy because their agents – who are hired by them – are able to sell the homes for above-market prices. The agent is simply doing their job.

A factor that is also causing home prices to be higher than usual is that lumber prices are very high right now. There are also severe supply chain issues, causing builders to have a very difficult time procuring even basic items that they need to build new homes. This is causing fewer new homes to be going up, and is particularly painful for a real estate market like Lakewood and surrounding areas where demand is so high. Thus, existing home prices automatically go up because there aren’t new homes for people to buy.

So, what’s the solution? For people that specifically want to live in the Lakewood area, the best option is to go to a new area with a few friends and/or family members. New areas are always more affordable. If you don’t want to be a pioneer and start a new area yourself, find an area that is still budding. Just such a place is Pine Lake Park in Manchester. There are already dozens of families there and people are now clamoring to get a home there, yet there are still many homes there that are available to buy for reasonable prices.

The other option, which many young families seem to be leaning to, is moving out-of-town. It used to be that Brooklyn was “in town” and Lakewood was “out of town.” Now, Lakewood is the most “in town” Orthodox Jewish city in America. So there are many moving to new or existing kehillos “out of town,” like Cleveland, Miami, Dallas, etc. In those markets, you will be able to find many homes that are cheap and kehillos that have the infrastructure in place to lead a frum life.

Last but not least, mortgage rates right now are still great for home buyers. If you are willing to pay a higher price on a home in exchange for a low mortgage rate, now is a good time to get in the market. If the prices scare you, it’s probably best to stay out. But, most importantly, get yourself an agent that has YOUR best interests at heart. Get an agent that isn’t going to push you into paying prices you cannot afford so they can make a few more dollars.

The market is what it is. There is no single solution that will fix it and bring prices down (other than perhaps a housing market crash in the US). All you can do – and all I can do as an agent – is help you find a reasonable home at a reasonable price that you can afford.

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There are 31 Comments to "Are Agents Really to Blame for Outrageous Home Prices? An Agent Weighs In"

  • david J says:

    seems like a bunch of random thoughts…

    one reason! Supply and Demand! right now there are people that will pay more for housing in this area, that is demand

    and there arent so many houses available, that causes the value to rise

    fairly simple!!!
    We do feel bad for the yeshivaleit that want to buy and can’t afford.
    Hatzlacha

    • Midnight says:

      I agree to your point. My question to you is whats with the”we do feel bad that ‘the Yeshivaleit’ want to buy what they cannot afford.

      Who told you this is a “yeshivaleit” issue? or are you just grabbing an opportunity to demean lomdei torah…?

  • By definision says:

    One correction here and with the original article: by definition, market price means what the property goes for on the open market, which means with multiple people competing for the same property. Above-market means more than what people are willing to pay on the open market. Typically, what a house sells for on the open market is market price. So if people are willing to bid higher than asking, the new bid price is by definition “at market”. The fact that the market price keeps on inching up is the way competition and “supply and demand” works.

  • faigy says:

    why do people feel pressured to be in yeshiva learning and also buy a house with two kids?? the answer is simple- people are spoiled

    • Midnight says:

      Another “yeshiva” comment, did I miss where this is a Yeshiva issue?
      Oh, and BTW, buying a house is a step in financial independence, by the simple fact that your money is going to your house as opposed to someone else in the form of rent.

      Being spoiled is when your “makpid” on the luxury of your home. Not on trying to purchase a home.

      Being mean is calling other people spoiled for trying to do what is yashar v’tov.

  • Bob says:

    Every agent wants to make a sale so they will do whatever it takes to make 1
    Therefore pushing ppl to give higher bids so they can make there customers happy

  • MS says:

    Many agents and developers advertised in NY because New Yorkers are willing to pay NY prices for houses. Now that there is an established community of Chasiddim in Lakewood, many are moving from Brooklyn. They would rather pay high prices for a nice house, then high prices for an old house in NY. And since agents get paid a percentage of the selling price, they make more money selling to New Yorkers. Some developers are not even advertising here in Lakewood because they do not want lakewood prices. Agents are also knocking on doors letting them know they can ask for additional 100k and knocking out lakewood buyers who cant afford more.
    This town became the new New York and its not a good thing.

  • anon says:

    Was personally told more than once by an agent that there was a bidding war on a house when in fact, no bidding war existed.

    Switched agents and I am now in contract

    Sorry Lying is never part of the job.

  • bewildered says:

    So you want the Yeshivaleit to move out of town??? The reason why this town is the #1 place to live is because of the highly esteemed Yeshivaleit!!

    We MUST MUST do whatever we can to help the Yeshivaleit remain here and hold up this town.

    P.S. Manchester in my opinion isn’t so practical for Yeshivaleit who travel to BMG 2-3 times a day.

  • Anon says:

    But you didn’t need to go to Brooklyn and make expos to bring in oot buyers! There are enough people buying in Lakewood just at a slower rate. You could’ve left Lakewood as is and the houses would’ve sold without hiking the prices so high so quickly. The agents just want to sell houses overnight.
    I’m really sorry for the real estate brokers but so many ppl lost their incomes entirely. That’s not really an excuse

  • david says:

    basically hes saying move out of Lakewood.

  • Reb moshe says:

    BUYING HOUSES??? We live in Lakewood a shtut that Reb aaron zatzal built for Torah and that yeshivaliet could thrive in… when people would ask Reb Aaron about buying houses near yeshiva or out of yeshivas neighbourhood like across the 9 he would say “Men hut nisht gekumen Kevin Lakewood kofen hiezer” Torah Torah Torah!

  • House says:

    Clearly, as we all know, houses are terribly over inflated proved by the fact that your appraisal will be less than asking price… Thereby giving you a lower mortgage and having the buyer shell out even more cash from his own pocket.

    What the author of this article clearly didn’t address from the previous article was the fact that once the first house in an area sells at the overpriced rate, the next house is automatically listed at the over inflated price that the previous house sold at and so on and so forth until houses in that area are not only over inflated but priced entirely out of their league.

  • Careful how you write says:

    @faigy please be careful how you write especially about our esteemed yeshivaleit. And renting is not an option long term, so no ppl are not buying with 2 kids b/c they’re spoiled. They’re trying to think about how they’re gonna live long term. And again, please think before you write.

  • d says:

    May I point out, dear agent, there are people besides the Yeshivaleit who you’re escorting out of town that also want to buy?
    What’s going on in the 55 communities with retirees being priced out by artificial “price wars”?? Homes thrown back on the market within 6 mos. at 50 to 100K more, likely well orchestrated with each other? As mentioned by others, the buyers have the power to vote with their feet, if we could sit tight until FAIR market value returns…

  • Moshe says:

    Lakewood askanim need to find a solution for the yeshivaleit buy building developments just for them in lakewood.the rate we are going there won’t be any more yeshivaleit in Bmg.it’s sad that there are developments going up that weren’t even advertised in lakewood

  • Shtusim Mit Lukshin says:

    Some good points, but so much weirdness.

    “During covid real estate agents suffered…roughly six months”
    “Forced many to turn away from their usual business models”

    Oh, should I cry for the agents who had to pivot from their “usual business models”? I almost forgot that COVID killed many people’s income for a lot longer than six months.

    “the financial holes have still not been filled”

    Please. Knock off the hoity-toity stupidity. Write like a human being.

    Anyway, if they are killing it now, then they are doing just fine. We should feel sorry that they haven’t fully recouped the losses during those few months from a year ago? Do you live in a world of make believe?

    Agents are lucky to have suffered so little during covid (and make covid money by the way) and BH are now raking it in. So lay off the sob story

    Clearly you are attempting to use the sob story using as another reason why we should understand the poor, overworked, greedy real estate agent.

    I have an idea…maybe consider moving “out of town” to a really nice kehilah. I hear they are doing really well.

  • old timer says:

    I wonder what Rav Aaron would say if he saw Lakewood today.

  • Housing says:

    ….not to mention…. I am also still trying to recoup from my loses brought on by Covid….

    Yet now, although I make a decent income, I cannot afford a house in this market.

    Buyers who can hold out will, and if buyers stand together and say we will not pay 100 over asking for a house that is 100 under the value of that’s being asked, prices will be forced to drop.

  • Yanky gold says:

    There are a number or factors here. The arcticle blaimg agents was extremely misinformed.
    1) increased demand from chassidim, explosive organic growth, as well as OOT ppl moving to lkwd to be near their kids.
    2) non Jews not selling as home prices all across America have risen drastically. THIS ISN’T JUST A LAKEWOOD PROBLEM!!
    many private equity firms like Blackstone have been buying up single family houses across America.
    New housing starts have been delayed due to supply chain issues, so sellers won’t even make that much by selling in Jackson/TR and moving further out.

    3)the cost of capital is an important consideration- buying a 900k house at 2.875 is similar to buying an 850k house at 3.25. So rates do matter.

  • Noman says:

    So basically your saying, we lost out on money for 6 months please stand back and let us do our thing to make up the lost time and money….

  • Baruch was my agent says:

    I used Baruch to purchase my home and all I can say is that I couldn’t have asked for a better agent.

  • Hashem Helps says:

    We can continue the blame game one way or another.
    All I know is that a tremendous percentage of current Lakewood residents have been outpaced if buying homes in our own city.
    It’s challenging and frustrating to need more room but not be able to afford to move to a home. Whether Yeshivaleit or working families, makes no difference. We are all struggling.

    I don’t think Brooklyn newbies to town meant to make it so hard by paying the prices that the agents were offering but it did what higher paying did… raised the prices to outpace the locals who are now stranded or forced out ofntown or to move far from our yeshivas and stores.

    I guess it’s like the cleaning ladies. Once one person pays higher to grab a lady, then everyone loses out.

    So the only solution now is Hashem helping. Somehow, hope He will help us all soon

  • Say no to agents says:

    The agents are having a field day right now with ppl so frantic to buy houses. They are convincing homeowners to sell homes at insane prices because it’s a sellers market… well I personally heard from a few ppl that work until he real estate – mortgage business that this market is going to fall soon. That is why they are pushing ppl to sell and buy… the day will come…..

  • Choose an agent with a Shem Tov says:

    Unfortunately, many people take advantage of others in business. It’s not just a real estate thing, it’s everywhere. Find an honest real estate agent like Boruch (who doesn’t ever push you to buy out of your comfort zone) and trust that he wont take advantage of you. Granted, that doesn’t solve prices and bidding wars, but, at least you know your liaison is truly vouching for you.

    If the reality of 300K homes is only out of town, just accept it. Everyone loves Lakewood, just like you

    Lastly, PROS of moving out of town: Simplicity, less pressure, cheap housing, respect for the many types of Yidden, you have a voice. CONS: “only” one fridge of Chalav Yisroel yogurt options.

  • Sad says:

    We do it to ourselves. Money is a big monster that turns people into selfish brats. Sad.

  • We are brothers and sisters says:

    Aderaba ten bilineinu shenireh kol echad maalas chaveireinu vlo chesronum.
    Vshenidaber kol echad es chaveiro, bderech hayashar vharatzoi lfanrcha. VAL YAALEH BLIBEINU SHUM SINAAH meiechad al chaveiro chalilah.
    U sechazeik oisanu beahava eilecha kaasher galui veyadua lefanecha.
    Sheyehei hakol chachas ruach eilecha – amen ken yehi ratzon

  • Yaniv Waknin says:

    Hi
    A month ago I was working with a client to gave full asking price, As we were leaving the property, the home owner confirmed to me, that they don’t have any other offer, contract on the property.
    The listing agent at the same time demand that we should offer 40 K higher…. So yes some agents will make you to pay higher.

    In other cases many times it’s the buyers who is willing to pay more to be on a specific area, it’s a cool area making a statement.
    No one specifics to be blame. You got a higher inflation, price for construction material is high put all of this together.

  • Boruch was our agent too says:

    We used Boruch recently too from Reemax. Amazing person, honest and super helpful! Highly recommended to use him!

  • old time lakewood says:

    And the agents/developers give up prime location to a full group of chassidim. Try going to monroe and take up prime location and develop a litvishe community. Its understood that all types want to come to Lakewood but do they need to come right into center i.e. Oak and Vine????

  • Honest Landlord says:

    All this doesn’t excuse landlords for charging such Hugh rents for their basement especially to people learning or just starting their lives.
    Let me caveat by saying, I mean the landlords that purchased homes years ago for a cheap 500k and now also refinanced at 2.5%. Your costs didn’t rise other than maybe taxes a bit. (If you bought it currently in today’s conditions for 900k I get you). What right do you have to squeeze the rental markets like this? And yes I get it, charge a little more ($1200 vs $1000), but to charge $1600-$1800. Why ? Your costs are not higher and salaries didn’t rise by that much (again 10-20%, ok)
    I write this myself as a landlord who made up with my basement that i will only raise rent 5% a year and max it at $1100. I did this on my own bec it’s the right thing.

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