Truth in Advertising

I was minding my own business today at lunch. Idly munching on a sandwich reading the weekly Real Estate marketing newspaper's condo section when something dawned on me. It was like a bright light on a gray day, as if the clouds opened up and a single beam of sunlight had penetrated through creating my own little private opening of Highway to Heaven. What was this brilliant insight, you ask?

Truth in advertising. It's missing from the real estate market. But it's law in the securities industry. Why isn't truth in advertising required for the "investment" that is constantly being pumped in this town?

Case in point: The Julia is having a hard time selling out right now. The ad in question states "priced below market value to sell out the project." How can something be priced below market value? It simply can't. Market value is the value the market will bear and the only time somethings' market value can be determined is at the exact moment that it is sold. And market value is constantly changing as a result.

So they could have written priced below assessed value. Except that they haven't been assessed yet. They could have written priced below appraised value. Except appraised value has nothing to do with investing. And these "marketing systems" are about making me think I'm going to be rich by buying this over-priced 2-bedroom condo.

Market value tells me that there is a market for this product and the price will fluctuate. Telling me that I can buy a unit below market value is the same as telling me that I can buy the unit today and sell it for more tomorrow simply because I got it for less than market value. Which is clearly not true.

I also noticed that there are a number of Rennie wannabes springing up in this town. It seems every Realtor with a condo listing is somehow an owner of a Marketing System TM.

At one point in time in the BC Legislature a normal citizen could enter a bill for legislation to make a law. I'm not sure if this is still possible, but I believe it is time for all investments to be subject to the same disclosure laws as securities. I can see the headlines when the market turns "Angry citizens outraged by guaranteed investment salespeople, used to be known as Realtors."

Why Realtors and the MSM are suspect

Letters to the editor are offered primarily as a means to give voice to opposing viewpoints to those of original authors of works in newspapers. It is a means for people in the know about particular issues to raise concerns about editorial stances or facts that are misrepresented in particular articles.

Letters to the editor are often used by non-governmental organizations to advance a particular political viewpoint or belief. Rarely are letters to the editor a commercial venture meant to sell a product.

I guess someone forgot to tell the editors of Kelowna's The Daily Courier. A few days ago they published a story House out of reach for average family. It centred around one oft-kicked-around-here theme:

The average annual household income of a family in Kelowna is $65,139, well below the $88,000 a year needed to support the mortgage on a home selling for $500,000 – the average price for a single-family home in the city.

It was balanced and included a number of quotes from one relatively impartial expert and one from a totally commission compensated mortgage salesperson who stated:

Despite all the barriers, Wilkinson says now is the time to buy a home, be it an average single-family home or a little condo, because prices will only go up. Once you‘re in the housing market, you‘ll see your equity grow, allowing you to accumulate a down payment that can be used to move into a bigger and better place.

Hardly accurate or impartial. Don't believe me? Ask all the Americans who "begged, borrowed and stole down payments, or took out negative amortization (zero down) or got parents to co-sign," and still lost their shirts. Even though they were told real estate had nowhere to go but up. Remember that Canada isn't the only North American country with a baby-boom generation demographic bubble. Regardless, that statement offset the earlier statement by an impartial economist that claimed an average family income could not support an average single family HOUSE (not condo or townhouse, but HOUSE). That is accurate.

This story gets better. A Realtor by the name of Damon Enns wrote a letter to the editor that was published yesterday. It's a dandy. And it's conveniently not available online, so I'll republish it here in its entirety for your reading pleasure. Enns "felt" the story was inaccurate so he needed to "clarify"--read repeat what Wilkinson said; but what Enns was really doing was getting a plug for himself and his property listings.

The Daily Courier (Kelowna), Page A11, 18-Oct-2007

Homes aren't out of reach for new buyers
By Damon Enns

This letter is in reply to the article Home out of reach in Tuesday's Daily Courier.

I want to encourage all the renters, and those who are tempted to give up on buying a home, that owning a house is not an impossibility.

In a matter of two short years, I went from being unemployed, broke, and living in the home of a benevolent family, to owning my own five-bedroom house with a two-bedroom in-law suite.

I was able to perform this "miracle" by getting a job, saving some money, buying a condo, getting married, selling the condo for a profit, using my real estate profit as a down payment, and using the combined income of my wife, myself, and two bedroom in-law suite to qualify for a loan.

I am employed by Re/Max now, and my wife and I have a heart and mission to help people fight the giant that we faced, and to get into their own home.

Many of my clients who bought homes when I first started as a realtor have already sold their "starter" homes and have moved up a level or two.

I strongly encourage everyone who dreams of owning their own home, as I did, to find out what they can afford right now, and find out how to buy it. Get on the train because it isn't stopping anytime soon. I am currently marketing an $80-million condominium project on KLO Road called Orchard Springs.

Sales start soon, but the condominium will not be completed for approximately 18 months. But what an excellent opportunity to step up into a house. CMHC has a "flex down" program, and different lending institutions and bond companies have informed me that they may even "spot" qualifying buyers their 10 per cent deposit. What an opportunity.

All a person has to do is save and/or borrow some money for the deposit, and then watch their leveraged investment grow to the point where they have the down payment for the house that they want.

Unless the hundreds of thousands of Easterners "fixin' to retire" in the Okanagan change their minds, fine condo projects like Orchard Springs (with its rich interiors, indoor pool, and beautiful landscaping) will continue to be a hot commodity.

I should mention that there were other important motivating factors for getting married besides home ownership, but the point remains the same. House ownership is not out of the reach of the average Okanagan family - there just may be a couple of extra steps to make the dream home a reality.

Damon Enns,
Kelowna

Check out my bolds. How the F&%$ did those get past the editor! The guy is getting free advertising. Now in all likelihood, he's actually paid for this advertising through his copious contributions to the classifieds and real estate sections of the Daily Courier. This guy is a gem. Almost as much as the editor of the paper is.

I have to continue with my BS-o-meter analysis. I'll cut and paste statements this guy passes off as "facts" in his "letter."

• Get on the train because it isn't stopping anytime soon.
• All a person has to do is... watch their leveraged investment grow to the point where they have the down payment for the house that they want.
• Unless the hundreds of thousands of Easterners "fixin' to retire" in the Okanagan change their minds...

Wow. I just puked a little in my mouth. This guy is why Realtors get such a bad name. And that paper's editor is why many of us don't trust the MSM anymore. They published a response letter calling them out today, also not available online. The letter writer didn't challenge Enns "facts", just the editor's misguided publishing of advertising as "expert" opinion.

I'll leave the rest of the discussion up to you, folks. I'd especially like to hear from the 3 or 4 Realtors that I know are frequently reading this blog (you people really should stop reading from your office if you want to remain incognito). Please feel free to comment anonymously. How do you justify or defend this kind of BS? Is it a savvy marketing strategy? Is this "gorilla marketing" or "viral marketing"? Do you take sales and marketing seminars on this sh&t? Inquiring minds would like to know.