A thought (actually I LOL) just popped into my brain moments ago after reading all the quotes and comments over the last few weeks both here and at Rain City Guide, particularly since mid August when the liquidity crisis hit. This is meant to have fun on the Blog a bit, but I’m also sincere. “Who is going to be Tim Ellis’ Realtor when he decides it is time to buy?” I thought.
Tim Ellis (”The Tim”) is probably among the very top informed first time homebuyers when it comes to market knowledge, housing economics and mortgage finance…..and how to build those handy Genie Lifts we see all over the place on construction sites.
There have been many instances where Seattle Bubble readers have purchased over the last year. Today, I met another at our office. Thanks for supporting small authentic independant escrow firms (not owned by real estate broker, mortgage broker, title company or any other financial services business). So, when The Tim decides it is time to buy a home, I wonder how he is going to qualify the market knowledge of the Realtor (and Loan Officer) he works with, provided he utilizes a Realtor’s expertise. Working with a knowledgeable Realtor is advantageous, but, my understanding is that consumers rarely REALLY interview the individual assisting them in a very large purchase.
From my recent observations
Some of the consumers are leveraging the market conditions in their favor:
- watching time on market of subject home they are interested in
- being represented (buyer agency)
- closing costs paid by seller
- negotiating price down
- shopping for best service & price for third party services involved:
- inspectors
- repair contractors
- title insurance
- escrow service (those who finalize and close your transaction)
- mortgage loans
- Use of rebates by individual Realtors or other’s such as Redfin.
Continuing with my premise
One the one hand, a Realtor working with The Tim will probably be easy because he may have all his ducks lined up and ready to go. He will probably have financing already approved prior to jumping into the fray.
On the other hand, Realtors talk quite a bit about how difficult it can be to work with an “engineer” type buyer: those dang-gum-number-crunchers!. In addition, will he be a “marked” man, tongue-in-cheek, as a contributor to the demise of a local market and the idea that if enough people say we are in a Bubble, then mass psychology may start the self fulfilling prophecy? After all, Economist Robert Shiller was at it again today indicating that the unraveling of the market could be the worst since The Depression. Psychology is certainly a factor: we heard no objections when the media continually talked up the market and today it is quite a different story.
So who will be Tim Ellis Realtor? How would you qualify those service providers involved in your purchase? What questions would you ask of a Realtor to find one that is experienced, knowledgeable and works well with you representing your best interests?
Jump to the bottom to add your comment. ↓
37 responses so far ↓
1
Shannon
// Sep 19, 2007 at 8:19 pm
Redfin.
2
Ubersalad
// Sep 19, 2007 at 9:22 pm
some blonde bimbo who just looks good and keeps the mouth shut.
3
sourmash
// Sep 19, 2007 at 9:38 pm
My first choice would be to shop on my own, and have a real estate attorney ready for when it’s time to make an offer.
Problem there is getting in to see the place. Realtors still have a chokehold on showing. But I’m beginning to think that may be different in about 24 months when I’ll be ready to look at buying.
Second choice is Redfin, because their model at least treats you like you are an adult who can use the web.
4
Ubersalad
// Sep 19, 2007 at 10:19 pm
go to rockwell insistute and use automate and clock 60 hours in 2 weeks. study the materials over a weekend, take the test and get your own license. make offer on your own…
5
S-Crow
// Sep 19, 2007 at 10:41 pm
Sounds like Redfin may have a couple potential clients in the future.
6
crashcadia
// Sep 19, 2007 at 11:16 pm
Pick a bank, any bank. They will take you into the back room and show you a wall full of homes when you are ready to buy.
7
Lake Hills Renter
// Sep 20, 2007 at 12:35 am
I can’t speak for Tim, but when I get ready to buy, I know of a handful of specific realtors I won’t be using for sure. What you say and how you act online most definitely has an effect in my case, and I won’t be using specific people becase of it. I’d love to give my business to Jillayne, but I don’t think she’s an actual real estate agent? I do know that S-Crow will most certainly be getting my business.
8
Bellingham REnter
// Sep 20, 2007 at 6:50 am
FSBO + Attorney, you’re good to go!
9
just_checking
// Sep 20, 2007 at 7:09 am
First choice - represent yourself (listing agent will show the house or use open house)
Second choice - redfin
It is interesting that this topic came up now because we just made a “self-represented” offer on a house last week. We are still far apart from the price but i wanted to share an interesting side note here about the 6% commission scam.
We made it clear to the listing agent at the outset that he does not represent us. Our fair expectation was that the 3% SOC would be discounted due to this. But what happened was that he told the sellers (or atleast they claim) that they still have to pay the 6% because the listing agreement leaves the split to be worked out later and there is no need for him to discount it. Thoughts or comments ?
10
Buceri
// Sep 20, 2007 at 7:20 am
That’s correct. When you agree to use the realtor for your listing, the commission is also determined. 6% is 6% with you being represented or not.
11
Angie
// Sep 20, 2007 at 7:57 am
I’d be glad to refer The Tim to my RE agent when he’s ready to buy.
We met her purely by chance, stopped by a “First Time Homebuyer” workshop she was having at the Ballard Library. We actually already had a house in mind to buy, but it was a major fixer-upper, and we knew we’d need some help figuring it out. We ended up getting rehab financing, which required 3 bids on every job and tons of hoop-jumping…she was with us every step of the way. She worked her butt off for us, for probably the lowest commission she’d gotten in that year (98).
Since then we’ve referred her to probably a dozen friends and colleagues. All were impressed with her knowledge and negotiating savvy. Several worked with her again as they moved up or moved away.
We bought our second house last year. Again, we’d targeted the house and wanted her to take care of some tricky negotiations. Again it was a fixer-upper…she thanked us for our continued support by (a) buying a new water heater, (b) hiring a plumber to install it, and do several other repairs, (c) bringing her truck over to help us with a couple of dump runs, and (d) spending nine backbreaking hours on a Saturday hauling out debris and old carpet and prepping the living room floor for refinishing. Zoink!
She’s also given us great leads every time we need some kind of professional service (plumber, tree service). Altogether a great person and a terrific resource.
I gather that we completely lucked out. The only thing I’d recommend to find someone just as good is to make sure you’re working with someone who positions themselves as a buyer’s agent. Offering no-obligation informational workshops might be a good sign, too.
12
3nutTed
// Sep 20, 2007 at 8:07 am
I will be using a Redfin-like service in about 2-3 years.
“That’s correct. When you agree to use the realtor for your listing, the commission is also determined. 6% is 6% with you being represented or not.”
This again brings up something that I have been thinking about. Not only are we seeing a decrease in real estate related employment, but how big will the migration be away from using the old Realtor model (3% Buyer/Seller Commission).
Any guesses???
13
just_checking
// Sep 20, 2007 at 8:08 am
Buceri,
My understanding was that when the listing is entered in NWMLS database they have a field for SOC which needs to be filled out. This field shows the % that will be paid out and is often misused by agents to show properties that will pay them the highest.
This % is not public info but a realtor has access to it if I am right. Any realtors here who can confirm/deny ?
14
hesotrifln
// Sep 20, 2007 at 8:54 am
REALTOR and expertise should never be used side by side :-)
15
Marc
// Sep 20, 2007 at 9:03 am
just_checking you are correct.
However, as an attorney, I routinely represent buyers without an agent in making offers on both FSBO and MLS-listed houses. For MLS houses I insert contract language whereby the parties and the listing broker agree that the buyer will get the buyer’s agent portion of the commission since they are not using an agent. If agreed to, this essentially results in a modification of the listing agreement, thus, it requires cooperation from the listing agent. That is to say, the listing agent has the legal right to refuse to give up any portion of the total commission. My experience teaches that most agents don’t have the gall to look their seller in the eye and say no, I won’t give up anything because I’m entitled to the full 6%.
Buyers should be aware that everything is negotiable if you’re willing to stick to your guns. In a buyer’s market, using an agent to buy a house is a sucker’s bet. As for getting in to see listed houses without an agent, it ain’t that hard.
16
Grvetti
// Sep 20, 2007 at 9:04 am
Get your own realtor license.. how hard can it be?
17
on topic
// Sep 20, 2007 at 10:16 am
the realtor theoretically justifies their cost by adding value in terms of market knowledge, negotiations skills, process experience and resource access.
my impression is in line with the consensus here, that none of this adds up to being worth $12k (3% of $400k).
you still pay other people for inspections and estimates with or without the realtor.
what is the probability that a realtor will save you $12k worth of mistakes?
as for using a realtor to sell, it is a slightly different question:
what is the chance that the realtor will increase the sale price by 3% and how do you value your time that would be spent staging and selling the property
considering that any realtor is externally incentivised to sell or buy quickly, I would have to be convinced that I had found a realtor who is strongly internally incentivised to sell or buy well. I would have difficulty judging this, so I would tend to avoid using one at all.
my impression is that The Tim would consider the decision in a similar way.
18
nitsuj
// Sep 20, 2007 at 10:31 am
No Housing Woes in Booming Washington State
http://biz.yahoo.com/rb/070920/washingtonstate_housing.html?.v=5
19
Joel
// Sep 20, 2007 at 11:14 am
I would think that most people that are informed enough to know what questions to ask a realtor and judge whether a realtor is a good or not is informed enough to forego a realtor entirely.
List it on the MLS for free using Iggy’s House. Cleane the place up. Rent some nice furniture. Hire a professional photographer for a couple hundred bucks. Put up flyers and a sign. Buy some AdWords. Put up a website. List on craigslist and other FSBO sites. Hold an open house. This all can’t cost more than a grand or two.
20
Sniglet
// Sep 20, 2007 at 11:50 am
When I bought my last home (which I sold to get out of the bubble) I found a great realtor who was willing to work with me to write masses of low-ball offers on dozens of properties in the Bellevue area. We wound up choosing the home that we could get the best deal on (relative to what we thought the market rate was). We also hired our own appraiser (seperate from the appraiser the mortgage broker eventually hired) to give us an unbiased assessment of the property. This realtor also gave part of their commission to my father (who was helping us in our purchase, being a retired realtor himself).
I want a realtor who isn’t afraid of writing lots of offers and “insulting” the sellers. In return, I am willing to guarantee my business to the agent I am working with, and even work out a fee for their trouble in helping with so many offers, assuring them they will get something for their trouble.
21
Sniglet
// Sep 20, 2007 at 11:53 am
I should add that I won’t be in the need of another realtor for a while yet. It will take a bit for Puget Sound prices to come back to earth, and I won’t be in a purchasing mode until then.
22
just_checking
// Sep 20, 2007 at 12:19 pm
Marc said -
“My experience teaches that most agents don’t have the gall to look their seller in the eye and say no, I won’t give up anything because I’m entitled to the full 6%”
Marc -
Looks like we did find one such agent. I am going to let
the sellers battle it out with him :)
23
wreckingbull
// Sep 20, 2007 at 12:42 pm
I would not use an agent nor would I pay any organization to license me as one.
I would contact a good attorney instead. Saving tens of thousands of dollars is worth any slight inconvenience there may be. If any listing agent refused to show me a house, I would contact the owners directly and notify them of the situation.
I have used Realtors in the past and have been underwhelmed with the value they brought to the transaction. Even if you do use a Realtor to buy, you are a fool not to pay the several hundred bucks it costs to have an attorney give the paperwork a once-over.
24
Rob Dawg
// Sep 20, 2007 at 1:15 pm
A couple courses, a few dues and I say “The Tim” should be your next Realtor®.
Rob Dawg will certainly be my next Realtor®. Buying a rental for $220,000 I can get early data, better data and offer to “do all the hard work” for only a few thousand bucks. I win-win-win.
25
Buceri
// Sep 20, 2007 at 1:29 pm
The questions is: Will inventory be at 12000 by year’s end? By then, will the Dow Jones be below 12000, now that the Canadian dollar is 1 to 1 with the US peso? How soon before oil starts trading in Euros?
And most important of all; why am I so off topic??
26
Madrona
// Sep 20, 2007 at 2:02 pm
Oye. This is thinly veiled ego fuel for Tim. I was embarrassed just reading the title.
Personally, I feel a Realtor’s value is in the negotiation of the deal, rather than market advice.
27
Marc
// Sep 20, 2007 at 3:49 pm
just-checking,
I’m shocked whenever I run into an agent who won’t budge on the full 6% when there’s no agent on the buyer’s side. It goes against all reason and is flat out offensive in my view.
However, as you implied, it’s the seller’s problem and not yours. Well, I should say it’s the seller’s problem assuming the buyer will walk if he doesn’t get the price he wants. Otherwise, the buyer is definitely paying the commission.
28
ack
// Sep 20, 2007 at 4:21 pm
Tim’s Banker
29
Kneil
// Sep 21, 2007 at 7:32 am
If the agent won’t budge on the 6%, tell him you can still hire Redfin. Then he can chose between half of 6% or all of 3.5%
30
Ira Sacharoff
// Sep 21, 2007 at 10:17 am
Whoever asked the question of the SOC:
It’s not set in stone but even a Redfin listing will list the selling office commission at 3% because they want the property to receive maximum exposure. I’m an agent, and if I have a listing I’ll list my own side’s commission at 1.5%( because 3% seems excessive to me) but the selling office commission at 3%. If I’m representing a buyer I will then make an agreement with them that I’ll give them back between 1/3 to 1/2 of the selling office commission.
Me? I’m not a fan of the real estate industry in general ( they will always tell you that now is a good time to buy no matter what) but I’m not a fan of Redfin either, I think they may only be a tad more ethical than the typical broker.
31
CRichard
// Sep 21, 2007 at 1:53 pm
Hope I didn’t miss the action on this thread. I am the long time housing bear that Tim mentioned that just used Legacy Escrow to close on a house. I highly recommend them—great service and no BS.
The Tim can do it all himself relatively easy. It is not difficult to find a house, set up a showing, and do the negotiating if you have half a brain. The system is set up so that even realtors with no more than a high-school education can do this without screwing up. The bonus is that when you are doing all this yourself, you don’t have the incentive to screw the buyer, like an agent does. We negotiated much harder than a realtor would have and paid much less for the house when it was all said and done–and we even kept all of the buyer’s agent commission to boot.
By the way, now that this long-time bear has capitulated, there should be no more obstacles to calling the Seattle market top in Aug/Sept.
32
Jillayne Schlicke
// Sep 21, 2007 at 3:03 pm
Tim will take the real estate agent pre-licensing classes and the exam. Then he will open a new real estate company. Tim hires a broker, recruits agents, and steps back as the owner and lets the company unfold and grow, on the tenants that Tim has created here: transparency, open dialogue, critical thinking & analysis, and service with value. Tim applies for and gets venture capital funding, sells franchises, and becomes a successful businessman. Then he sells the company for millions so he can turn to his new passion: becoming a motivational speaker. “How I turned the housing recession of 2007 into a goldmine.” At his seminars, the audiences are made up primarily of Realtors, looking to capitalize on the next big run up 10 or so years from now.
Tim, go for it. You probably already have several thousand potential customers reading this blog.
But really….I believe Tim might try to buy a home on his own, with an attorney by his side, OR he’ll go with Redfin.
ANY question you have, one of your readers will know the answer, or we’ll know where to get the answer for you. It’s the least we can do for you, seeing as how you’ve kept this blog going for us.
33
S-Crow
// Sep 21, 2007 at 7:29 pm
Thanks CRichard.
I think the point that should not be lost is that people buy a home for reasons other than “I’ll make so much money on the sale.” There are many examples I personally know of where acquaintances and former clients are getting quite the financial education. It is not a joyful thing to watch the fallout: strained marraiges, for example. If people move forward with a purchase as a fully informed consumer both financially and understanding market dynamics, then I think it is great. There is a lot to ownership that makes sense.
34
Rhonda Porter
// Sep 22, 2007 at 4:05 pm
I’m picturing “The Tim Real Estate”…followed by “The Tim Mortgage”. I’m sure he’ll leave the escrow biz for Legacy!
35
haveaniceday
// Sep 23, 2007 at 10:14 am
I must just have really good luck. We bought a place and were really impressed with our realtor from John L. Scott. His expertise, availability, and follow-through was top-notch. The best bet to finding a good realtor is to have one recommended from someone you trust. Just like any other profession, some are much better than others. I don’t think that a blanket statment should be made that all realtors are either worthless or bad or don’t deserve their commission. And no, I am NOT a realtor. Just someone who understands that it is the person, not the profession that should be looked at here.
36
Formernoreasta
// Sep 24, 2007 at 9:59 am
Detached townhouse one block from mine (which is nearly identical, about 100 sq ft less) just sold for $599 (Fremont).
http://idx.seattlehome.com/srch_mls/detail.php?mode=&LN=27136672&t=Fremont&l=
Bought mine a year ago for $475.
This house was on the market for 4 weeks. The similar one next to it sold in a week.
37
Jane Davis
// Sep 27, 2007 at 9:02 pm
just_checking…It’s absolutely true that agents can search by commission. There is also a place for comments there. A real estate licensee only has access to the SOC not the tl commish.–About the 6%– Lower yr price at least 6%!! Hell ask for $15k at closing to be applied toward closing costs–Make them pay for the next yrs’ taxes! That seller is getting screwed. You should demand a 6% asshole tax from them just for having to deal with their agent..(I’ve threatened this…). –3nutTed. 2 1/2, 1 1/2% commission splits are not uncommon now. I always do it for 1/2. The traditional companies forbid them, but any agent who works in a “100% shop” can negotiate commissions.–Grvetti–It’s so easy to get a license–scary easy. About $4-500 and you can write your own.–IRA sacharoff-We have similar philosophies about this industry–do you find you are a rarity? I regularly have agents tell me “it’s illegal to give discounts” What a bunch of clowns…argh.
Jump to the top of the comments. ↑
Leave a Comment