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2019-09-16 12:01 by Karl Denninger
in Consumer , 174 references Ignore this thread
**** Amazon And Beelzebezos
[Comments enabled]

No, really.....

The WSJ has published what anyone with a modicum of intellect had to already know -- that Spamazon has "doctored" it's search results to favor products which had the highest return for Amazon, whether their product or a third-party "partner" listing.

Of course this goes on all the damn time in various industries.

Let me give you an example: Real Estate.

Go to sell your house and all the "helpful" Realtors will suggest this or that which you should do before listing.  All of them cost money, of course.  Now some are very low-risk -- such as painting any room that shows signs of wear on the walls.  They're low-risk because the choices you would make are probably the ones that a buyer would make, and the buyer is likely to do the same thing.

Not so for anything else, but here's the rub -- all of them get tagged with an extra 6% "sales tax" in the form of Realtor's commission on the improvements you make before listing, which is not to either your or the buyer's advantage, and further it runs the risk of a reassessment on sale which hurts the buyer forevermore in the form of higher property tax bills!

Let's say you sell your house "as it sits" for $250,000.  The buyer knows the place needs interior paint, carpeting in a couple of rooms, and maybe the tile in the kitchen and baths could use a replacement.  It's all functional but a few have hairline cracks in them, etc.

Ok.

So said Realtor will, before you list it, tell you to do those things.

Wait...... who's interest is that in?  The Realtor's; it is to everyone else's direct disadvantage.

Think about it -- let's say I replace the floor tile in my kitchen.  Ok, I spend $3,000 having that done.  Now someone comes in and doesn't like the pattern, and thus doesn't buy the house.  I just lost a transaction!  By the way, that just happened with me -- I looked at a place that I liked except for the flooring replacement the seller had just made.  I therefore valued that replacement at zero since to suit me I'd have to do it over again.  The seller still has his house and I still have my money.

But what if the do like the pattern?  All is well, right?  Uh, not really.  I might get $3,000 more for the house this way (since it really is an improvement according to the buyer -- and assuming the buyer gives me full credit for the expense I undertook) but the Realtor got 6% of that $3,000!  That's $180 that the buyer paid for..... nothing.

Further, the $3,000 might wind up in the assessment since the total sales price is reported.  If the buyer closes and then has the floor replaced the same $3,000 comes out of the buyer's pocket but the 6% tax from the Real Estate agent doesn't and it also can't show up in the assessment since such work is not subject to a permit and thus doesn't get reported in same.

Now this is definitely not the case for things that are structural; for example if the roof needs replacement or there's a problem with the foundation, well, then you got a different game entirely because the property is generally not marketable without the fix.  The bank won't underwrite a mortgage, for example, so now you're limited to cash buyers which is going to have a material impact.  So when you get to issues that prevent mortgage underwriting you're now in the area of things that must be done, because nearly everyone who buys real estate does in fact take a loan.

But for cosmetic things - like that older, but functional refrigerator - this is simply never true.  You never get back every dollar you put into a remodel or improvement in any house, ever.  Look at the percentage returns in that link -- "It's worth the money you spend!" on a new roof supposedly -- yeah, 68.4% of what you spend, plus the Realtor gets to extract 6% of the increased price in what amounts to a sales tax on the work.  The people who wrote that article should have gone to prison for it as it the claims of it being "worth it" are flat-out false as documented by their own data in the same article!

In other words if you are remodeling because you want it, for you, to live in the house then have at it.  That's perfectly fine; you are getting utility value from the improvement which, one would assume, equals or exceeds whatever you're doing.  But in basically every case if you're doing it with the intent of immediate or near-immediate sale of the property (e.g. within the next couple of years) you're going to lose a very material percentage of what you put in -- every single time.

How does this apply to what Amazon is doing?  It applies exactly to what they're doing; it's just a computer doing it instead of some smiling cute individual.  Every bit of their "advice" and its "propriety" is aimed at them, not you.  And why shouldn't it be?  They're not in business to lose money.

Where the line is crossed is when an entity with whom you have a relationship makes a recommendation that is per-se false.  That is, when a Realtor tells you to do "X, Y and Z" to make the house sell faster knowing that you will not recover the invested funds and that they will get a 6% "sales tax" on the increased price they're flat-out screwing you out of thousands so they can make a few hundred more bucks.  Since they're professionals this ought to be felonious and result in people going to prison, but of course it never does.  The house will sell just fine with the older tile in it -- at a price that reflects the new owner replacing it at a time of their own choosing with a product and pattern of their choosing.  Ditto for the new refrigerator, stove and similar.  Never mind that for major appliances in particular (stoves, refrigerators, washers, dryers, etc) timing can be everything; it's not at all hard to get a 20 to 30% discount on price (and sometimes more) if you wait for a sale and if the older, less-pretty one is perfectly functional why wouldn't you as a buyer do exactly that?  Who in their right mind likes overpaying for things on purpose?  I did exactly that 10+ years ago when I replaced my washer and dryer; the old ones worked but were ugly.

Likewise, when Amazon claims it is returning the "most relevant" search results and isn't; if it is instead returning those that are most profitable to Amazon then Beelzebezos should be charge with felony consumer fraud and tossed in prison.

Each of these schemes individually is worth a few pennies, dollars, or hundreds of dollars.  But collectively, over the entire base of transactions in a given year, it's worth billions that are siphoned off.

There is nothing wrong with salesmanship and trying to make a profit -- that's called business, and is both lawful and expected.  That does not extend to deliberate falsehoods, whether by act of omission or commission, that screw people.  Those are supposed to result in criminal charges -- but today in the world where "asset prices" such as houses and stocks must always go up they never do because taking the screwing out of the transaction is likely to interfere with that continual asset price increase.

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Drifter
Posts: 354
Incept: 2016-02-11

Pacific Northwest
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Agree 100%. Some parts of my house are pretty out of date-- in the looks department. My living room could use a fireplace and be expanded out one side 7'. However, I'm not going to do it: I'll get zero return on the expense, I rarely entertain anyway, and the weirdly decorated bathroom is functional... **** it. Whenever I move, which I hope will be feet first out the front door, I'll just discount the price some or let my heirs handle it.

Realtors-- never use them; don't respect them.
Click
Posts: 615
Incept: 2017-06-26

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The only remodeling I need to do to the house is some red-flag-law remodeling - if you know what I mean...

... yesterday and this morning I already added some extra fuel storage capacity. Not that I can't afford higher gas, diesel, propane and kerosene prices, but it's just the principles I live by, e.g., stockpile now while fuel prices are 15% lower. I might want to also expand my bunker, just in case Trump has to show Iran who's the boss ... I wonder how much value a big, beautiful bunker adds to the value of a house?
Nickdanger
Posts: 783
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Right on, I figured Amazon was doing this. I've been doing a much better job in the last few years of researching everything I buy online, and find in a lot of cases, you can get it cheaper than Amazon. And I can't think of any instances, at least recently, that I've needed delivery in 2 days.

You are so right about the real estate scam! An interesting (and probably common story) along this line --

Our neighbors across the street recently put in around $10K to remodel their outdated kitchen because the realtor told them it would make the house sell faster. The new buyers came in and gutted it all, took out a wall, and completely redid the kitchen/den area. They would not have cared whether or not the seller had updated the area.

I would much rather have a functional good-bones house that needs remodeling than one that has already been done (to the seller's taste, or the latest trend on the market) so I could re-do with what I want. I would mentally have to deduct the cost of the seller upgrades to make the price possible to remodel the house to my standards. And of course, a lot of the "upgrades" are done in the cheapest manner possible to look good.

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Grammar: the difference between knowing your **** and knowing you're ****.
Whossane
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You also have to watch the quality of the work that gets done on the home in question. Friends of mine were selling their house and the realtor told them that it wouldn't sell unless they replace the old linoleum floor in the kitchen. They picked out an Armstrong Luxury Vinyl Plan and had it installed by a handyman. The problem? The nails in the subfloor had worked loose and every square yard of the floor squeaked when stepped on. A professional would have pulled the loose nails and screwed the entire subfloor to the joists before installing the new floor.

They didn't get a dime for their efforts.

On the other side of things, I've been looking at a few homes with my oldest son. Homeowners are evidently watching too many house flipping shows. We've seen the above issue with flooring, "new" tile showers that wouldn't drain water, "finished" basements that look like they needed to be gutted and redone, and of course DIY plumbing and electrical that wouldn't come close to meeting code. I can pretty much look at most finishes and tell whether or not they were done by a pro. If not, I have to assume that the product itself not only doesn't look good but is probably also not installed correctly. Tile is a big red flag for me. If it doesn't look good (consistent grout joints, clean cuts, level or plumb, etc.) then it's worth less than zero since I figure it will need to be removed and the most likely the substrate beneath it will need to be replaced.
Ntb
Posts: 1325
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UK - the flat earth middle bit
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**** your Realtors too. 6% commission? smiley Is there no competition?

The average in the UK is 1.42% which is bad enough but there are fixed fee operators like Purplebricks e.g. 899 for sales outside of London.

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Science is interesting. If you don't agree you can f*ck off.
Hot-dog-guy
Posts: 111
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Imagine if the Sears tried the same thing a century ago. Forget the catalog.

Inquire by mail to find your special price on any damn thing you want in this world! Include your home address, household size, your profession, your annual income, a picture of your house, your gender, your age, your interests, your medical condition, the age and medical condition of your horse and on a scale of 1-5 how happy you are. We'll come back with your special price. The price is so special that nobody else might get that price. It's just for you because you are special.
Tickerguy
Posts: 159446
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A True American Patriot!
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Tile is a huge problem and even "professional" jobs are FREQUENTLY done wrong. My house was done partly-wrong. It was fine for a good long while, but it appears they either didn't use the correct thinset or (more-likely) stretched it, as when I went through and re-did parts of the bathroom where it had broken loose from the substrate I found HUGE sections in all of the loose tiles where the tile was NOT bonded to the thinset AT ALL. The thinset didn't fail -- it was never bonded in the FIRST PLACE, and since tile has basically ZERO elasticity the bonded part "works" against that tiny gap when you step on it until it breaks it free. If there's enough gap there the tile fractures, but if not it just breaks the bond with the thinset and now it's loose.

That doesn't show up for a good long time -- a decade or two. Interestingly enough in the lanai there is NOT ONE loose tile nor ONE cracked one either. I suspect the reason is that it appears in the lanai they installed it over mud which (duh!) is nice and consistent while still wet and as a result got a 100% bond on all the tiles and they're all evenly supported -- thus no cracks or disbonding ANYWHERE, despite the lanai getting a LOT more abuse than anything inside the house (water and weather exposure to begin with, never mind dropped items.)

The part I fixed (gee, you mean the part I step on every day and thus gets "worked" the most) won't have that problem in the future BUT what I have no way to know is what part of the REST of it has the same issue. I would assume, given the age (~25 years, more or less) that when whoever buys this place gets tired of it in the future that the correct answer is to rip it all out and do it over. I can't go through any material part of the kitchen which has a few cracked pieces because I have no spares and you WILL break some percentage of the tiles you pull up and clear the adhered stuff off of in the process -- if you have no spares you're ****ed. For the bathrooms I have a decent stash of spare pieces that were in the house when I bought it so they're an exact match. Of course you CAN'T get a match on the grout but the old sections can be cleaned and all of it painted so it's consistent.

The good news is that if you want to rip the whole thing up when it comes to tile it's fast - they make a power machine you can rent (and the pros have) that basically strips it all. It breaks up everything as it comes up so you can't use it if you want to fix sections or individual tiles (those you get to do the hard way) but it'll strip an entire floor in a couple of hours.

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Winding it down.

Whossane
Posts: 64
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Sounds like they may have spread out too much thinset and some of it skinned over before they set the tile. The lanai was probably what is called a floating mortar bed. It's basically a concrete sub base with a decoupling membrane and then a wire/lath reinforced mortar bed and of course the tile.

Demolition isn't too bad on installations over concrete floors but when the install is tile over tile backer over plywood subfloor it can be a real PITA, especially when the install was done right.



Stee_man
Posts: 209
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From the article "In some ways, Amazons broader shift from showing relevant search results is noticeable on the site. Last summer, it changed the default sorting optionwithout publicizing the moveto featured after ranking the search results for years by relevance, according to a Journal analysis for this article of screenshots and postings by users online. Relevance is no longer an option in the small sort by drop-down button on the top right of the page."

So it's right in your face that searches are no longer for the customer's benefit.

I have other problems with amazon. If you go with free shipping, they INTENTIONALLY wait several days to package your order and send it out for shipping. I called and complained about that. Why does it take 5 days for your robots to pull inventory and box an item? It's another fraud to get you to pay for prime or expedited shipping.

But my biggest complaint is how they use their knowledge of third party sales to compete with those vendors. That should get them sued and broken up for restraint of trade. Maybe the EU can do something because we know the corrupt US authorities are just counting their bribes.
Tickerguy
Posts: 159446
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A True American Patriot!
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Yeah it's straight on the slab and was done like ****; the bad news is when you get one that's half-bonded -- that ain't coming out without breaking it, and you better have spares. The section of the bathroom I did was ~20 tiles re-set, and of those I broke four. If I didn't HAVE four....

This is the sort of **** I'm talking about; I did NOT scrape anything off; that's how it came off the floor!
Inline

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Winding it down.

Aztrader
Posts: 8437
Incept: 2007-09-10

Scottsdale, AZ
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We noticed that our Amazon store was lacking a lot lately and I figured that they were putting their listings ahead of everyone elses. We also noticed that they intentionally set us up to buy priority or UPS for small items sent within our region. I can ship just about anything in Arizona and it's a one day delivery. They forced us to buy their label at priority for over double the cost that they were paying $2.00 for to the USPS. They have been gutting us on the shipping for the past 6 months and after Christmas, we are dumping their Prime BS and going back to printing our own postage.
Fedex is offering a program called One Rate. They give us 2 Day air in a small box for about $11.00 or 13.50 for a medium box. This works well for our customers on the east coast and it makes us look good. Amazon is no different then the ***** bankers with their 18% interest rates. If you don't watch it, they will rob you blind and most of the sellers never notice because they can't do basic math. Both UPS and Fedex are trying their best to now give fair pricing to small business if you know where to look. Too bad the USPS keeps raising prices with lower quality. They are no longer our preferred shipper.
Flappingeagle
Posts: 3289
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Aztrader, you do mind sharing the name of your Amazon store?

Flap

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Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
No sign that housing, equities, or farmland are in a bubble- Yellen 11/14/13
Trying to leave the Rat Race to the rats...
Mangymutt
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Vancouver WA
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Flap - It is in his profile.
Xanares
Posts: 2605
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Copenhagen, Denmark
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Seems they have walked the retard plank when it comes to Customer Service too. (Guess: moved it to India?)

Wife bought some earplugs for a present, said on the site it was in store.
After 3 days of nothing, she has them on the live chat. Idiot Savant tells her she should have contacted Amazon to check if it was in stock before ordering.
She asks to speak with a manager - after a fight, gets on the phone with someone who mildly excuses the behavior of the Idiot Savant and cancels the order.
All good? Nope. She has to call them again 3-4 days later because oups, the order is cancelled alright but the payment has been processed. A week more and money is finally back.

She did get a $6 credit though. smiley
Whossane
Posts: 64
Incept: 2018-01-25

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Yeah, it's good to have some spares when dealing with tile. We needed three boxes of tile for our kitchen remodel and were pleasantly surprised to find the Dal still made the same tile that we used 13 years ago. When we got it it was nothing like the original. Did some investigating and were told that Dal had moved production from one plant to another. We were able to obtain some of the tile from the old production run and again nothing like the original. I was finally smart enough to look at the backside of the original tile and found a very faint stamp "Italia". My wife got the wood floor that she wanted. I got this:




Inline
Thorvold
Posts: 267
Incept: 2013-09-12

NY
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People I know in FL have knocked down the assessment by purchasing personal property (furniture, artwork) of the seller with the house and convincing the assessor that it has a high value.
Aztrader
Posts: 8437
Incept: 2007-09-10

Scottsdale, AZ
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Flap,

My dealer uses the name JPX DEFENSE on Amazon. The prices are all inflated to cover Amazon's 15%******job. Our websites at Firestormdefense.com have the normal pricing.
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