Money and incentives

Our incentives created the messed up society and systems we are stuck in.

The System currently in place in the Real Estate Market, forces many, many, many people to do some interesting things in order to get what they want.

Money.

There is a fierce competition for this sacred and seemingly scarce resource.

If people only knew what goes on in the under belly of the RE world.

The System incentivizes many different levels and layers to work complicity in a well orchestrated symphony of deceit, deception, creativity and most importantly synergy.

We are all complicit is one way, shape or form.

If you turn a blind eye you are complicit as well.

Be real everyone.

Then maybe some of this shit can change.

I put out a tweet a few weeks back about a girl in a mall selling someone Jeans that they potentially couldn't afford and people lost their Collective s***.

It may have been the timing that I put this out. It was just following the CBC fraud expose. 😜

Darryl Frankfort @FrankfortReport

RE Agents are incentivized by the system to sell RE.Can we really get mad at them when they do their job? Do we get mad at the sales girl at the mall who tells us "your ass looks great in those jeans and yes we do take credit cards"she never asked if i can afford the jeans.

The idea behind the tweet, was that of a girl in the mall who likely gets compensated and/or bonused based on the amount of product that she sells. (This is why they ask us “Did anyone help you with that?”)

She is incentivized to tell you that “your ass looks mighty good in them jeans.”

In order for her to hopefully sell your ugly, fat ass a pair of jeans, she probably has to lie to a few people in the mall about the current state of their asses. Justified, so she can make more money and stay employed.

She doesn't care if your credit card is close to its limit, or maybe over its limit.

She doesn't care if you can't afford your next credit card payment or if you are about to lose your house because of your horrible shopping addiction. All she cares about is selling you the jeans so that she can afford to buy whatever crap she thinks is important.

I hate to break it to you but neither does your realtor or your banker, or your appraiser or your inspector or your contractor or your developer or your… you get the picture?

So if there is only so much housing inventory to go around and there are so many more Realtors then units, let the games begin! The competition for the dollars available is insane.

When the average ticket price of an item is $1 million, you can only imagine how motivated some people can get.

In my experience, when people are extremely motivated by extraordinary amounts of money, they can come up with some pretty creative ways to make that happen. What's great about real estate, is that the values are so large and when the market is heated and accelerating and growing at a consistent pace, there is a lot of money to be spread around in order for that creativity to come to light.

For example, in order to buy a piece of land to develop in the future, one must do many things that seem ridiculous. In order to assemble multiple houses or multiple properties in order to combine them for a higher and better use, often times the only way to get the deal done is to offer the current owners far more money than the properties are currently worth.

In order to be able to pay these owners more than the properties are actually worth, we must create a story that convinces multiple layers of that future potential value. The appraiser needs to give an appraisal with its basis a fictitious potential scenario. The lender and it's underwriting team must also be able to justify and believe the story, in order to sell the story to their investor pool so that the lender can accumulate the funds necessary to fund the deal.

And get their FEES.

Once the development has been approved by the municipality then we hire the sales team that convinces us that they can sell our units for the highest price per square foot in the least amount of time. Of course, in order to do that, the sales team likely has to create a compelling story to convince us that they can and will, in fact do what they say they can do. Once we decide on the sales team that is going to sell the units, the sales team now has to convince and create a story for the public to be willing to purchase future housing stock that will hopefully be worth more than what they are paying today.

As the public has been made keenly aware for a very long time, most of these units have been purchased by investors who are either planning to flip the piece of paper ((assignments) greedy stupid bagholders ) or rent the unit to a tenant ((landlords) evil scum bag investors). Both of which have currently been vilified by the media and the public.

Now we also have all of the resale units to go around. These of course are in just as tight supply if not tighter supply. So we have many people with huge incentives to push the boundaries in order to be the ones who gets the listing. Because as you know “list to last” baby! So you have a similar scenario in this market as well, where one layer after the other is incentivized to sell a property to someone for more than the last person paid for something similar in a similar area in a certain proximity.

I think the system should be changed to incentives that are best for society and its health. This will be what true prosperity and wealth looks and feels like. Not this landscape of scam after scam after scam.

And so you can see that it is all just marketing.

If you have any good ideas I would love to hear them.

Please do me a favor and help me grow. Please share The Frankfort Report with at least 1 friend you know will enjoy this nonsense. Thanks very much for reading. I really appreciate it!