Vatamin, I can hear your anger, even contempt, in your post, for realtors, and I'm sorry for that. I really am. But you've asked a BIG question, with many facets, and I'm not sure where to go first in addressing this.
I can only speak for me, but the only time I'm aggressive in real estate is when I'm negotiating for my buyer or seller. I have never and will never try to talk someone into buying or selling (as if I could). I have been aggressive in pitching a FIT when a lender tried to give my clients an adjustable rate mortgage, and I'm a persona non grata at the local credit union because of it. I do not have one single buyer right now who is in danger of losing their home. That's because I circumvented the buying frenzy to get down to brass tacks with my buyers about what they needed, what they wanted, what they could afford. If you do your job as a realtor, the first thing you make your buyer do is get qualified, and then work ALL the numbers with them. Not just about what the bank will lend, but what they can afford. Even in this market, right now, where lenders are skittish and conservative, a buyer client of mine was approved for a $120k loan. But we did her numbers, and she really can pay no more than $90k for a house. And let me tell you, I had to pound into her head her new lower price range. Am I doing my job? I think so.
Two to three years ago? I never recommended one way or the other about the climate. I did not then nor do I now have a crystal ball. I did look at the home prices in my market, and wondered how many here could actually afford these prices. Even in our little rural market where appreciation on standard housing has ambled along at 3-5% annually forEVER. We started getting a bigger bump in 05 as buyers from out of state came in, who'd sold their houses in California or Maine or Florida, and would pay whatever price for a house; they could afford it because it was about half what they sold their old house for, and was a better house. Some of them never even got an appraisal. I thought that was crazy. I can't tell you how many potential sellers I talked down from that nonsense, and how many listings I lost because of it.
Which brings me to the next point that you need to hear, and which you're probably not going to like: I learned early on in real estate that Agents do not set the price, no way, no how. Sellers, even, do NOT set the price. BUYERS set the market price of a home or piece of land. Market value is what buyers are willing and able to pay. Do pay. the sold home/price becomes a comparable, and then other listing prices are set from there. That's the system, and as flawed as it may be, it's the system. Are there agents out there who told their clients, BUY THIS!? You can make a quick buck! I'm sure. But not here in my market. Not me. Mind you, I'm not saying I've never failed at my job, but I take very seriously my charge to protect my clients.. I guess I'm a bit insulated because of my market, but you have to know that there are agents out there who do try to do the best they can. Who try to protect, try to be reasonable. My faults? I wish that I were more of an economist. I wish that I had been better able to put together the rising prices, the easy money, the corporate greed that would cause people to lose their jobs, which rendered them unable to pay their mortgages. I didn't. If I'm around for the next cycle of this, I will.
And so now, here we are, again, when people bought at the height in 05/06, paid $320k for a house, (I didn't sell it to him; he bought it from the developer!) and his neighbor lost his job and sold cheap, or the builder with a house down the street who was carrying too many notes sold a house for cost to get his 2k/month interest only loan off his debit sheet...that house becomes a comp in the market, and here we go, down. Suddenly, that $320k house comps out at $250k, and my seller is $70k upside down. They bought the house as an investment, because they too wanted to participate in this wild profit center, but had the bad luck, or the lack of vision, or lack of education or crystal ball, or the inability to not be swayed by the developer, to not pay too much. I understand that. Hey, they could afford it then and hadn't a clue where the market was going. But since then, the husband has lost his job, and they're borrowing money from dad to pay the mortgage. They've gotta sell. What will they sell for? What comparable is this house going to become?
I remember a 20/20 show last year where in Florida, some condominiums had been flipped four times before the condo was ever built. This was my biggest eye opener. Who's to blame for that?
I would wager that just as all of America has learned in this, so have realtors -- the ones who give a damn, anyway. It's the affordability factor that makes real estate. It's the economy and job security that makes or breaks real estate. We have all been subjected to failure of foresight.