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KAI RYSSDAL: We spent some time in the subprime world up at the top of the broadcast and what the whole mess might mean for the real estate market. One part of that market we haven't talked about much is real estate brokers. Wasn't that long ago a broker could sell a house without even trying too hard. Marketplace's Lisa Napoli explores the new reality for realtors in the once red-hot market known as Greater L.A.
LISA NAPOLI: For the six years Brock Harris has been in real estate in the trendy Los Angeles neighborhood of Silver Lake, houses have been practically selling themselves. Now he's learning to live with the subprime mess. Sales are down 33 percent from last year. Sellers are in shock. Buyers are biding their time.
BROCK HARRIS: It's like a really bad junior high dance. No one's doing anything. Everyone's just standing around.
On the other side of town, in super-pricey neighborhoods like Santa Monica and Beverly Hills, houses are still selling. But the bidding wars are long over and many homeowners are in denial.
Broker Steve Moritz says one listing he's got hasn't moved because the sellers haven't faced reality. They're still hoping to get what their house would have commanded a year ago.
STEVE MORITZ: What they say is they don't want to drop their price, but bring me an offer. They're willing to sell it for less but I'm not allowed to market it for less.
To make money, brokers have to spend it. They shell out thousands of dollars to advertise the properties they represent. There are newspaper ads, websites, glossy brochures. And then there's the time -- they have to man the open houses. Investing all that money and energy into something that isn't priced to sell doesn't make sense. Moritz says it's influencing the listings he accepts.
MORITZ: To take a property that you feel is maybe overpriced, maybe we'll think twice about that. Whereas in the past we were willing to give it a shot because there were a lot of properties that were selling at numbers that we didn't think would actually happen.
Those wild prices attracted a lot of people to the real estate business, they thought if they became agents, they could make a buck -- a very big buck -- quick. Now that the speculators and flippers have been driven out of the market by the disappearance of cheap, quick subprime loans, there's not enough business to go around.
Southern California real estate titan Fred Sands shocked a recent gathering of the California Association of Realtors. He said brokers who aren't making sales have to face reality:
FRED SANDS: Leave the business.
Realtor Brock Harris is in it for the long haul. But for now he's learning what it means to wait.
Take this two-bedroom fixer he's listed in trendy Echo Park. It's been on the market for five months. The price has been slashed $50,000 to $399,000. Still, no one will bite.
HARRIS: This is the kind of thing that a first-time buyer in the last five years ... they would have been fighting for this.
Finding buyers now isn't easy. And when you do, they may have trouble getting financing. But Fred Sands says this doesn't mean the real estate business is dead. Just sobering up.
SANDS: People can still buy homes. They have to be able to afford them. It's the old fashioned way.
In Los Angeles, I'm Lisa Napoli for Marketplace.