In 2016 Buenos Aires, real estate agents counted cash on machines because mortgages barely existed. Banks won't lend without foreclosure laws, so almost all property sales are cash-only. Agents knock on neighbors' doors to find comparable sales since there's no MLS, and sellers hide prices to dodge taxes, leaving the market opaque and risky.
Every time I'm out of the country speaking, the thing that agents will tell me is, you guys are so lucky to have an MLS. We would give anything to have one. And for those of y'all that really don't understand it, all right, look at Buenos Aires, which is my favorite foreign city. I love Argentina. I love Buenos Aires. I went into a real estate office. I was there to speak for a brand, and so I was touring a brokerage. And they had a cash machine on the desk, and it looks like one of those card shufflers in Vegas where you can load in a few decks of cards on the— where they're proving to you that they're not stacking the deck, haha. So it's this huge version of that. I said, what is that for? And so he pulls out a stack of bills this thick and he puts it in the machine. It's a cash counter. And I was like, shut the front door, I've never seen anything like that. And I said, tell me why that's in a brokerage. And this was in 2016. So this is a decade ago. They're still in the middle of drama because even with Javier Milei, it's a long process to come back out of a socialist system. Sure. But the money in the machine was to count for purchases because all purchases were cash. I said, why are all purchases cash? Nobody will do a mortgage here. Why won't somebody do a mortgage here? My mind's of course blown. Because there's no mechanism for foreclosure. And so it's too risky to a bank to lend money there. So it's all cash purchases. I said, okay, so it's all cash purchases. How does this even work? And they said, there's a white market and a blue market. And the white market is the above-board market. And the blue market is the under-the-table market because the government tax what it sells for. And so you only disclose a certain portion of the sale for the government to see it. And the rest of it's under the table. And I'm sitting here thinking, Okay, I said, I'm a practitioner. I've been a practitioner a long time. How do you price anything? And they're like, oh, you just have to ask people. I'm like, okay, so if I'm going to list a property over here, I have to go tap on the doors of neighbors and find out what they sold it for. And they have to trust me enough to give me the white and the blue market. Or is it just the white market because they don't want the government to know? Am I a spy for the government? Holy crap. How do you do any of this? And they said, well, you know, we don't have a a data source like the MLS. And even if you did, it would be very bad data because nobody's telling the truth because they have bad regulators in the government. And in looking at the layer upon layer of trouble they have, I still see in the middle of it agents that are like, it's fine, we figure it out. We go find the information, we tap on the doors, we get it. You have brokers that are hiring people, people that are buying and selling real estate in what can only be described as onerous conditions. And so people are still able to operate, but it's unnecessarily hard. And I'm watching what's happening here. And I've told this story as many times as I can. And I'm like, y'all are trying to go into the worst possible scenario where you don't just lose your access for your buyers, you lose the ability to run comps, which means your appraisers can't run comps, which puts all of your lending at risk because what financial institution is going to lend when they can't trust the appraisal because there was no data? So we're actually not just going to lose the ability to see houses. We're going to watch our lending market shrink. Tell me I'm wrong.
