THE CASTAWAYS: Empty Wallets On a Desert Island
Published On: November 11, 2024 Posted by: Jeremy Peterson
During the Great Financial Crisis, real estate sales transactions plummeted along with house prices and commission splits. This trifecta of doom shocked what was previously a plentiful real estate market. Like castaways starving on a desert island, Realtors began to distress as they scoured for sales. Healthy looking agents were suspected of hoarding and became targets of jealousy. Frequently, the call of “Procuring Cause!” was shouted in a form of commission cannibalism. Times were tough and the formerly friendly marketplace metamorphed into a scene from Lord of the Flies and survival of only the fittest.
Fast forward to today and a similar experience is happening, although in a different way. During the COVID-19 lockdowns, immense amounts of money were airdropped into the population’s bank accounts. The savings rate for the country ballooned as people socked this money away. Later, as inflation kicked in, people drew on this money to keep up their spending habits and standard of living. Unfortunately, that savings has now run out.
While the depletion of savings isn’t causing Realtors to view each other as their next meal (yet!), it is beginning to cause widespread discomfort throughout the community. For instance, we are seeing hungry eyes right now as tenants salivate over their security deposit refunds.
Over the past 9 months the number of disputes over deposit refunds has skyrocketed. Despite most of the disputes being unjustified, tenants are trying in desperation. The emotional intensity has reached a level we have not seen before. Many tenants have started the habit of telling us before they move out that they expect their full deposit back even if they damaged the property. Of course, that isn’t how life or their lease works. But at least we know they will likely be disappointed in advance.
Another strange example of this is a recent case where a former tenant took us to court to get her deposit refunded and collection fees paid. This tenant destroyed the unit and we charged her for damages incurred. This was nearly two years ago. Several months ago we were notified of her claim against us and our court date regarding the matter. At the hearing, the judge viewed our documentation and asked the former tenant some clarifying questions. In the end, the judge denied her claim and instead ruled against her with a $500 judgement and instructions to pay us immediately.
Certainly, people are feeling the pinch of inflation and stagnant wages. The depletion in savings is a warning to all of us. Be kind, honor your agreements, and watch out so you don’t become someone’s next meal.
