Here’s a minor roundup post for you, with a few stories from the last few days that are worth a brief mention:
After selling just 17 out of 114 units, an in-progress condo complex near Seattle Center will instead be completed as “luxury apartments.”
In recent months, developers have shelved plans to convert several Seattle apartment buildings to condos and changed some new projects from condos to apartments. Another example of a new apartment project that was once condos is Aspira, a 37-story tower at Stewart Street and Terry Avenue, by Los Angeles developer Urban Partners.
Developers have attributed the shift to a glut of announced condominium projects, skittishness among the investors who fund condo towers, and an apartment supply that’s shrinking because of conversions and a lack of new construction since the dot-com meltdown in 2001.
Apparently, the Skagit County real estate market is even more special than Seattle, because up there, real estate agents claim that the worst is already over.
Despite continued fallout from the subprime mortgage markets and growing talk of a recession, local real estate professionals believe that the worst may already be over for the Skagit County housing market.
Looking back, the low point came sometime in spring 2007.
And also entertaining is this one from today’s New York Times: Feeling Misled on Home Price, Buyers Sue Agent (also reprinted in the P-I).
CARLSBAD, Calif. — Marty Ummel believes she paid too much for her house. So do millions of other people who bought at the peak of the housing boom.
What makes Ummel different is that she is suing her agent, saying it was all his fault.
Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.
They’re also talking about this one over at the Seattle Real Estate Professionals blog today.
Jump to the bottom to add your comment. ↓
104 responses so far ↓
1
Olaf
// Jan 22, 2008 at 8:49 am
File this under Schadenfreude… something new for (un)realtors to worry about: getting sued by the people they fast-talked into dropping seven figures on a stack of drywall:
http://www.nytimes.com/2008/01/22/business/22agent.html?_r=1&hp&oref=slogin
2
newbie
// Jan 22, 2008 at 9:58 am
If I go to Nordstroms and buy a 100 dollar shirt could i sue them because they didn’t tell me JC Penny had the same shirt for less? I think not. But it is the American way….if you don’t get your way start suing people.
3
Jillayne Schlicke
// Jan 22, 2008 at 10:11 am
Hi newbie,
real estate agents owe higher duties to their clients.
Retail shops like Nordstrom and JCP only have a retail relationship with their clients.
Agents have higher duties that would be spelled out in each state’s agency law. If that agent is a member of the Nat’l Assoc of Realtors, the Realtor owes fiduciary duties to put the client’s interests ahead of the Realtor’s interests.
I read that news story this morning while lying in bed, not able to sleep, listening to the financials on the radio. I was thinking about what my dad said when I asked him, “During the Great Depression, what kinds of businesses did well?”
He said, “The lawyers.”
4
vboring
// Jan 22, 2008 at 10:11 am
newbie, the analogy would be if i paid somebody to go find a shirt for me to buy, the same shirt could be bought in two places and they chose the more expensive one because they were paid as a percentage of transaction cost.
if i’m not paying my agent 3% to tell me what the market looks like and what a fair price is, what am i paying them for?
“i’m not” is the right answer.
5
Brian
// Jan 22, 2008 at 10:19 am
People need to ultimately be responsible for themselves. If you bought based on hype, that is your problem. If you bought because you were afraid to miss out on the boom, that is your problem. My wife and I chose to wait because the housing market was out of control and not based on fundamentals. Sorry, but it does not matter how unscrupulous or money grubbing banks, real estate agents, mortgage brokers, or appraisers are. The only thing that matters is the choice you make as a person. Do I believe that the aforementioned group of people/institutions can be shady? Sure, but people have to be responsible for themselves. Many of the buyers over the last couple of years were not financial prepared to buy. If they make the decision to buy anyway, that is their problem. (Note: This post does not mean I believe the aforementioned people/institutions should not be regulated and forced to have stricter standards, but I do not believe they are the only culprits in this mess - people can be stupid and they need to be responsible for themselves.)
6
Grvetti
// Jan 22, 2008 at 10:21 am
What happened to the “empty nester” and “young childless professionals” that would flood the Seattle condo market with ravenous buyers?… I don’t get!
Once again the local press forgets about its past claims and its parroting of the Greg Nickels, Mayor Condo’s utopian blather…
7
michael
// Jan 22, 2008 at 10:28 am
If I had the opportunity I’d sue a real estate agents. I’ve listened to so much BS while I’ve been looking at homes. It is one thing to point out the features and another to blatantly lie about the value and neighborhood. I had a friend with children that bought a place on the edge of Capital Hill (central district) that happened to be next door to sex offender housing. Not one sex offender but an entire building.
I write everything down and that agents say and then research every fact. I don’t have a problem with someone trying to sell me something, that is their job. I have a big problem with an agent lying about the price of other sales in the complex or telling me about my executive neighbors who don’t exist. I had an agent tell me that a well known MSFT VP had just bought the house next door. The Vice President didn’t even exist.
In fact I’ll even send her a donation.
8
newbie
// Jan 22, 2008 at 10:32 am
I agree agents “should” keep your best interests in mind but you if they find a house you like and your willing to drop the cash on it…..it sounds like they did their job. Though I am probably the least knowledgeable poster here =). I am 23 and I graduated recently and for my whole life people told me buying real estate was the best investment I would ever make…so naturally I went looking to buy. But after 1 week of researching I found that buying real estate was not all that it was cracked up to be. So if a naive recent grad with zero experience can figure out that its a bad time to buy (and if i was going to buy in a neighborhood i would defiantly look at every house on the market weather my agent showed me the house or not) then someone dropping hundreds of thousands of dollars I should know what they are getting into. Putting 100% faith into a person that is making a commission is just plain stupid.
9
Bits_of_Real_Panther
// Jan 22, 2008 at 10:37 am
re: Skagit County, there actually was a sizable positive gap between the cost of renting and the cost of buying in towns between Everett and Bellingham until about a year ago. Now it’s close to even, maybe slightly negative. I doubt the worst is over as the article claims but the affordability problem was and is nothing like the most desirable parts of the Seattle metro area (Bellevue/Redmond, Ballard/Wallingford e.g.) though I’m guessing a potential landlord could come pretty close to breaking at today’s prices in certain Seattle neighborhoods, Georgetown comes to mind
The Western Washington bubble is not a smooth one
10
The Tim
// Jan 22, 2008 at 10:38 am
newbie, I am reminded of my favorite (unsourced) Albert Einstein quote:
11
jimmythev
// Jan 22, 2008 at 10:39 am
Ok, I was just reading the real-estate blog in the PI and came accross this:
http://blog.seattlepi.nwsource.com/realestate/archives/129941.asp
My favorite comments come from a real-estate agent named Kary L. Krismer. A couple of my favorite ones are listed below:
“I know an agent who was having a heck of a time selling a property prior to foreclosure, and out of despiration signficantly raised the price–it sold. When you run out of good ideas, I guess you try the other ones, right?”
“I only look at the competition after I determine the price, and might make a small adjustment at that time.”
My theory is this guy must own a pink pony :)
12
Nozferatu
// Jan 22, 2008 at 10:46 am
MARTY UMMEL can kiss my a$$….TOUGH sh&t she overpaid for her house…no one put a gun to her head. I’m sick and tired of hearing this crap. We didn’t buy and fall into this trap so what are we supposed to do? Be considered losers for not buying?
What a bunch of crap.. I really hope people like Ummel eat it and eat it HARD.
13
patient
// Jan 22, 2008 at 11:00 am
I think it’s great that she is suing and that it becomes headlines. People in general need to be made aware of or reminded that it’s actually the seller who pay’s the buyer’s agent and that they have an incentive to sell the buyer the most expensive home. To somewhat mitigate this confilct of interrest the “higher duties” that Jillayne mention exists. If cases like these can show that this arrangement is not working hopefully it can lead to a change in this crazy setup.
14
officeboy
// Jan 22, 2008 at 11:07 am
Anyone want to bail out a hard up developer?
http://windermere.com/index.cfm?fuseaction=Listing.ListingDetail&ListingID=19240769
These individual lots have been for sale since summer, and the only house started is the developers personal one.
15
vboring
// Jan 22, 2008 at 11:15 am
say she wins the lawsuit, what does that mean?
that RE agents have a legal responsibility to serve their client’s best interest. or, at least, not to lie to them about market conditions and available alternatives.
and if she loses the case?
that means RE agents have no legal responsibilities whatsoever. they are simply sales agents employed by the buyer.
the NAR should be supporting the buyer’s lawsuit and removing the credentials from the RE agent in order to demonstrate that RE agents serve some useful function.
16
Jillayne Schlicke
// Jan 22, 2008 at 11:20 am
vboring,
You got it. I have no idea if the agent is a member of NAR, but if so, you are absolutely right.
Codes of ethics mean NOTHING if they are not enforced by the professional association.
17
Chris
// Jan 22, 2008 at 11:43 am
Speaking to the first article, about condo projects converting to rentals, I continue to be amazed at the number of condos for rent in my neighborhood.
This one:
http://seattle.craigslist.org/see/apa/547674228.html
Is in the ‘fini condos.’ There is also another ground-floor unit for rent. Both are trying to get $1950/month for a one-bedroom in Greenlake. You can rent a nice house in greenlake for that. I wonder whether these are failed ‘flips’ owned by individuals, or whether the developer itself is trying to rent out a few units.
Even more interesting is the Florera:
http://floreragreenlake.com/
I run and drive by it almost every night. That building seems done, and the retail tenant (Key Bank) moved in months ago, but its all dark every night except for the top floor corner unit. I’ve never actually seen anyone in it, though, and I wonder if it isn’t just staged with a timed light.
One block from the Florera, there is a huge hole for a building basement that takes up an entire block. They were building condos, but construction stopped in late fall. I bet they are converting that one to apartments.
18
CCG
// Jan 22, 2008 at 11:53 am
“But it is the American way….if you don’t get your way start suing people.”
That and walk away from your mortgage contract when you’re no longer getting the double-digit appreciation that you “deserve”.
19
Morel Hazzard
// Jan 22, 2008 at 11:55 am
#
Olaf said,
on January 22nd, 2008 at 8:49 am
File this under Schadenfreude… something new for (un)realtors to worry about: getting sued by the people they fast-talked into dropping seven figures on a stack of drywall:
http://www.nytimes.com/2008/01/22/business/22agent.html?_r=1&hp&oref=slogin
——————————————————
Seattle agents would never try to get their clients to pay more than the property is worth for real estate here - Seattle agents are “special”.
Oh wait ….
Thank you for your offer on the home on XXX. My name is XXX, and I’m the Regional Director for <A>. I’m assisting our staff by helping with the intake process this weekend, and have your offer in front of me.
Initially, I couldn’t find the home on the MLS, but now have that information, probably because it was just relisted this past XXX. As I’m sure you’re aware, your offer price of $XXX,XXX is well below the current list price of $XXX,XXX, and some history of the property might help this discussion.
The home was originally listed last June for $XXX,XXX, clearly overpriced, and it wasn’t until they dropped the price to $XXX,XXX and waited a month that they finally had an offer. The home cleared the inspection, and was Pending, just waiting to close, when the transaction fell apart. I don’t know why that was the case, but financing is the most likely, as this was right when the mortgage meltdown was occuring last November.
The home was immediately relisted at $XXX,XXX on Nov X, dropped to $XXX,XXX on Dec. X, and expired on Jan X. I surmise that the lower list price is indicative of what they probably had it sold at before in November.
The home was relisted the same day, now for $XXX,XXX, just 3 days ago.
As an agent, this information is important to me, as I need to understand where a seller is coming from in order to know how to get the best deal for a buyer. In summary, we have a seller who nearly had their place sold for something above $XXX,XXX (my professional guess, here) and is now down under $XXX,XXX . I would expect that there is probably some wiggle room in there price, though they haven’t been on the market at this new price long enough to concede much more money.
I gather from your offer price and comments about the price of the home being about 20% above value of the property that you probably wouldn’t consider anything above $XXX,XXX . I’m quite sure that long before the seller accepted such an offer, they’d drop the price to $XXX,XXX , at which point I’d expect them to get multiple offers on the property and sell it near $XXX,XXX . It’s also worth noting that the seller’s paid $XXX,XXX for the home 3-1/2 years ago. Since then, we’ve had 3 years of strong growth, followed by a cooling trend the last 6 months. During those growth years, Seattle was seeing 8-15% appreciation, with the last 6 months bringing a flattening of prices, but very little devaluing.
In re-reading my e-mail, I can appreciate that it might seem I’m on the side of the seller. I sometimes need to have these conversations with customers that perceive us as a sort of “bidding service” for homes. In fact, each offer is handled by a professional agent on our staff, and submitted with care. Because we submit the offers to listing agents, and do so under our banner, it’s important that other agents view us as a respectable and professional brokerage. In order to best serve you and our other customers, its important for us to review offers, provide counseling about what might realistically get you the home you want at the best terms, and then move forward. This way, other agents and brokerages will know that we’re dead serious about what we do, rather than labeling us as a brokerage that wastes their time.
In my professional opinion, I think that to get this home under contract right now, it would take an offer of $XXX,XXX or better to get the discussion going, and I would be very surprised if the seller accepted anything less than $XXX,XXX
I know this is lengthy, and I would normally have this conversation on the phone rather than e-mail. Please feel free to call me and discuss this further.
20
WestSideBilly
// Jan 22, 2008 at 12:09 pm
What really got me was the arrogance of the buyer agent. It blows me away that anyone with a lawsuit pending against them would say, in an interview, “The lady’s a nut job. I didn’t do anything wrong.” That alone will usually get a judge/jury on the other guy’s side.
In fairness, I don’t think that he did anything wrong. He just didn’t do enough to meet his obligations and/or merit his commission, which is essentially what Ummel is suing him for. Sticky case, but as vboring and Jillayne said, if the agent is in the legal right, then no agent has any legal responsibilities.
21
steve-o
// Jan 22, 2008 at 12:12 pm
I’m with patient, vboring, and Jillayne. This issue isn’t about a buyer overpaying, it’s about a real estate professional (the buyer’s agent) committing fraud. Also, keep in mind that the buyer’s agent wasn’t trying to keep the price inflated to earn a higher commission, he was worried she’d back out of the deal and he wouldn’t get ANY commission.
In cases like this, where police can’t or won’t prosecute, it is the fear of litigation that helps keep people honest. It is one way to give check and balance to the system.
I don’t look down on anybody that decides to hire a full commission agent. I can think of instances where I would use one - like if I was moving to another city, or if I made more money working the extra time instead of spending that time searching for properties.
I’m surpised that there isn’t more support for this on this blog. This is the sort of thing the system needs and is in the best interests of the house buying public (which I believe most of us are).
22
willamina
// Jan 22, 2008 at 12:31 pm
and i’m still getting evicted so they can knock my building down and build more bloody condos in the ghetto, a neighborhood the very demographic buying condos is scared to death of.
(okay, really, they’re just doubling my rent, but $600 to $1200 on a 1br/1.5ba in Lake City and “no further leases, all rentals will be month to month”…yeah, that’s eviction, even if it doesn’t meet the legal definition.
23
Nozferatu
// Jan 22, 2008 at 12:55 pm
You’re all missing the point….do you all believe for a moment that MARTY U didn’t know what she was getting herself into? Do you think we’d be sitting here talking about her sue if she had made out bigtime and made alot of money?
She got into this deal most likely to make money…to turn around and flip it. I won’t shed a tear for her while she pummels into the ground.
24
Brian
// Jan 22, 2008 at 1:02 pm
Seriously, these are the posts a lot of you are offering? I’m a renter like many people that post here, and I chose to be a renter. People on this board seem to be sue happy and very supportive of the antics of stupid people. Give me a break and grow up people. You’re not “duped” if you’re the person that is greedy. There are a lot of buyers out there from 2005-2007 that were overly greedy - just like banks, real estate agents, mortgage brokers, appraisers, etc. - and they deserve what they get. Any support for frivolous law suits like this are pathetic. Greed is a mortal sin for a reason. The person got greedy, lost money, and is now crying foul. The reason companies like Redfin will flourish is because of bad antics by real estate agents and the fact they don’t buy into the 6% service charge to agents. In my opinion, people should be opposing such silly lawsuits filed by greedy people and focus their energies elsewhere.
25
Brian
// Jan 22, 2008 at 1:33 pm
I’m surprised to see the building owner who thinks they’ve have a much better time renting than selling. Rent to price ratios would make me think that lowering the price and selling would still be a better idea. Or maybe they’re just waiting a few months before double digit appreciation resumes? ha!
26
vboring
// Jan 22, 2008 at 1:41 pm
Brian,
the lawsuit, as i understand it, can be understood without reference to housing.
basically, i intend to make a purchase of a good. i pay somebody to advise me on this purchase. they only give me part of the information that they have. i act on this information and it turns out badly for me.
when i hire a professional adviser, they should be legally required to give me the best information they have. aka act in my best interest, instead of their own.
sure, if the lady had made money she wouldn’t be suing anybody today, nobody forced her to do or buy anything, and she was an idiot to trust salesperson, but that is all aside from the point.
she hired a person claiming to be a professional adviser representing the customer’s interests and that person intentionally gave the customer bad advice for the sake of their own personal gain.
so, if RE buyers agents are salespeople, then they are useless and the market will abandon them. if they are advisers, then this lawsuit will stick and the customer will get their commission back because the customer paid for services that were never provided.
27
Wm Swanson
// Jan 22, 2008 at 1:48 pm
To vboring: I thought the seller typically pays the agents commission. Did the article say the buyer paid for services that were not provided?
28
The Tim
// Jan 22, 2008 at 2:03 pm
I feel like I say this a lot, and I hate to sound like a broken record, but agent commission is not paid by the seller. The only person that comes to the closing table with a check is the buyer. If there is no buyer, no commission is paid. In fact, the buyer is paying the agents, not the seller.
29
vboring
// Jan 22, 2008 at 2:12 pm
the buyer paid for market advice from a RE professional and didn’t get it.
buying at the top is bad and completely the buyer’s fault.
buying the wrong house or the right house at the wrong price because of bad advice from the agent is the agent’s fault.
30
Wm Swanson
// Jan 22, 2008 at 2:17 pm
To: The Tim…..IF a buyer buys a house with zero down and has most or all of the allowable closing costs paid for by seller, then who pays for the agents commissions? The literature I have read, and Brokers I have spoken with all relate that the agents commissions are paid for by the seller unless stated otherwise in the form of a agent to buyer contract. It is also noted on the HUD.
31
Brian
// Jan 22, 2008 at 2:19 pm
vboring: It is still a frivolous lawsuit and if the person would not have sued if things went splendidly for them and prices kept skyrocketing as you state, than it doesn’t have merit. End of story.
32
Bits_of_Real_Panther
// Jan 22, 2008 at 2:25 pm
Not sure if it will be tossed out as frivolous or not but it almost certainly won’t be a winner. It would be a nice wake up call to the NAR if it did at least make it to trial and either way it’s more ammo in the battle against the automatic 6% commission
33
Brian
// Jan 22, 2008 at 2:30 pm
Sorry for posting multiple times today (I’m at home sick). The best ammo against the automatic 6% commission is the free market. Support companies like Redfin, not lawsuits like this one.
34
S-Crow
// Jan 22, 2008 at 2:34 pm
Wm Swanson,
True, the Settlement Statement (HUD-1) shows commission disbursed via the seller and for reasons more complicated than I’d like to discuss here, that is what you will see. But Tim Ellis is correct. In spirit, buyers are paying for commissions via sales price.
35
just_checking
// Jan 22, 2008 at 2:36 pm
While I totally agree that frivolous lawsuits are a waste of money, lawsuits are unfortunately the check-and-balance available in this country. A lawsuit here and there will help get the NAR to enforce their code of conduct.
BTW, after we bought our house we found that our agent
did not give a complete list of all houses sold recently in that development as part of the CMA. A couple of low-priced sales were missing - neglect or fraud ?
No we did not sue :)
Morel Hazzard -
As a buyer, if i make an offer on a property at the average annual gain (5-6%) from the 2002-2003 (pre-bubble) period, today in the seattle area,
would you present it or consider that a lowball offer ?
36
jon
// Jan 22, 2008 at 2:38 pm
“The only person that comes to the closing table with a check is the buyer.”
But the seller brings the keys. As long as it is the seller that can cancel the listing, the agents are working for the seller. The agent doesn’t get a dime from the buyer unless the seller says yes.
37
Brian
// Jan 22, 2008 at 2:44 pm
A lawsuit isn’t the best check-and-balance available in the US. Boycotting is much better than a lawsuit. Starting a company to compete against someone else is better than a lawsuit. Obviously, neither of these alternatives are as easy to do as say, sue someone, but they are more productive. Oh, with regards to who pays the commission, the seller does. The buyer can always offer less money than the seller is asking for. If the seller does not budge the price, the buyer can always move on. If they don’t move on, that is their own fault. They are not obligated to purchase until they sign their name on the dotted line.
38
Bits_of_Real_Panther
// Jan 22, 2008 at 2:52 pm
Besides the surprisingly subtle point that it is only the buyer’s money that is on the table at closing there is also the fact that commission is effectively built into the seller’s price
39
Mike2
// Jan 22, 2008 at 2:53 pm
Anyone know what happened with 9090 Ravenna? 8 unit condo that was built 2 years ago but, as far as I can tell never sold. Last time I was in Seattle it was still vacant and had grafitti on the front.
40
Wm Swanson
// Jan 22, 2008 at 2:53 pm
T0: S-Crow….I understand that. Guess it is a matter of semantics though I anticipate not all buyers realize this. In the case of the buyer suing the agent for commission I would anticipate it would be difficult for the buyer to prevail to collect her agents commission due to the recorded HUD. I have bought several rental houses in the past few years and have always used an agent friend who not once has asked me for their commission:-)
If I am not mistaken, there is even a question in the 30 clock hour course regarding Principles Of Selling Real Estate in Washington provided by the Rockwell Institute that address who typically pays the agents commissions on a successful transaction and the answer is “seller.”
Okay…end of subject!
41
Geode
// Jan 22, 2008 at 3:06 pm
A RE is not an appraiser. Did this person not get an appraisal? That is the true measure of the houses worth (Pink Pony). My assumption is the buyer got an appraisal and it was close. She paid the price, now she owns it. The realtor in best faith (Ridin the Pony) assured her the house was worth it for the neighborhood, but that don’t make it an accurate appraisal. Too many people just want to abuse the legal system to sue for their own stupidity.
42
WestSideBilly
// Jan 22, 2008 at 3:26 pm
Did some of you not read the whole article?
She’s not a flipper. She’s a near-retiree who moved to a different city to be closer to her children. It wasn’t a rash decision; the agent being sued was their second agent and they spent 6-8 months looking. The lawsuit is based around two listings in the same neighborhood, one for $105k less (the house in question was $1.2m) and another for $175k less that closed the same day. It’s also not a money grab; she’s spent nearly the difference in legal fees already.
The agent *should* have known about the two other houses. And he *should* have informed the buyer.
43
vboring
// Jan 22, 2008 at 3:26 pm
i agree that frivolous lawsuits are silly.
this lawsuit, if it fails, will indicate that RE agents are also silly, unaccountable for anything and therefore pointless.
i refer to the role of RE agents in the economy, not to people who happen to be RE agents. i’m sure, as people, they are far from pointless or silly. it is just their jobs that i object to.
44
WestSideBilly
// Jan 22, 2008 at 3:32 pm
Why ASSume when you can just read the article?
This is probably the only failing of the buyer - she shouldn’t have closed without seeing the appraisal.
Shocking - an appraiser towing the RE line. *eyes rolled*
45
Ray
// Jan 22, 2008 at 3:32 pm
1 person I see nailed it. (Bryan) Big commissions “CAN” lead to Big problems! Take away the golden carrot and the consumer wins all the way around. It will just take time friends! 500 Realty, Red Fin, and MLS 4 Owners.
Educate yourself!
Ray Pepper
http://www.500realty.net
46
Chris
// Jan 22, 2008 at 4:12 pm
A developer needs about $400 psf to get out of an apartment deal vs. $450 psf (net saleable) to do a condo deal, assuming 5-over-1 construction in a “typical” development projects in the north end. the $400 psf equates to about $2.15 psf rents in today’s dollars, assumes another 6% increase through construction and a cap rate similar to recent levels. Both for-rent and for -sale are optimistic, but given the troubles with condos moving at all I can see why projects are going rental - if they can do so BEFORE they instal condo-level finishes.
47
Ken Mott
// Jan 22, 2008 at 4:19 pm
Seattle Times is reporting that king county prices were up 7.4%
How is that. I thought december to december was down.
http://seattletimes.nwsource.com/html/businesstechnology/2004138665_webhomesales22.html
48
jon
// Jan 22, 2008 at 4:26 pm
“Besides the surprisingly subtle point that it is only the buyer’s money that is on the table ”
If it is only the buyer’s money then why are all the mortgage companies cratering?
49
patient
// Jan 22, 2008 at 4:29 pm
“Seattle Times is reporting that king county prices were up 7.4%
How is that. I thought december to december was down.”
My guess is that they are grasping for straws. They probably took the median of all properties sold in 2007 and compared with the median of all properties sold in 2006. This of course gives a totally scew picture of where the median is now compared to a year ago. The desperation and spin couldn’t be more obvious.
50
Everett_Tom
// Jan 22, 2008 at 4:55 pm
I wonder if that’s the median price for the year (i.e. all sales in 2006 vs. all sales in 2007) instead of the median price in Dec 2007 vs. median price in Dec 2006…
Another one of those “Wait, Wait .. it still looks good… “.
51
Everett_Tom
// Jan 22, 2008 at 4:56 pm
Doh..
patient just said that… Someday I’ll learn to read…. ;)
52
deejayoh
// Jan 22, 2008 at 5:04 pm
Wow - that is sooooooo misleading. Prices fell 10% between July and December -so you had 6 months of rising prices, and six months of falling. If you take the median for the year, you get the price in on March 31 or October 1.
Lies, damn lies, and statistics I say.
53
Everett_Tom
// Jan 22, 2008 at 5:10 pm
And if I remember correctly, the number of home sales was higher in the start of the year then the end of the year, moving the median numbers off even more to the high side….
54
dg72
// Jan 22, 2008 at 5:31 pm
At first reading I thought this was a frivulous lawsuit but after thinking about it I have to side with the plaintiff. The RE agent is there to provide a service and if it can be proven that he willfully failed to provide this service to the detriment of the plaintiff then I think she should be awarded his commision and the difference in price between what she paid and what the actual value was plus any damage modifiers. Just because she wouldn’t have sued if the house went up in value has no relevance. If your car blows up because of a manufacturer defect are you going to agree with me because I say that if it didn’t blow up you wouldn’t sue so therefore “too bad”? Does that sound even remotely logical? No.
She is responsible for buying a house at the top of the market but the agent is responsible for the price difference she paid over market value, if he fraudently advised her to pay more than it was worth. If he’s not then why would anyone every use a real estate agent if they have no accountability? If the facts say he indeed committed fraud and there are no actions taken against him then I’ll never never use a full service RE agent. I’m not paying anyone for the opportunity to screw me except for the gov’t and that’s only because they take it out of my check every payday.
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Brian
// Jan 22, 2008 at 5:37 pm
That article is ridiculous. Who cares if houses sold for less in the nearby area. Anyone here ever watch Seinfeld? Remember the episode where George buys a car simply because Jon Voight allegedly owned the car? Well, George could have bought a similar car for less, but opted for that car because he believed that Jon Voight owned it. Anyone that opts to buy a house does so for a wide variety of reasons. The person selling the car to George told him Jon Voight owned the car (even though it was another Jon Voight, not the actor). They didn’t lie. It was George’s fault for not a) figuring out that it wasn’t the actor’s car or asking the right questions to figure it out, and b) caring so much about what someone else said and allowing the other person to dictate the price of the good for them. Real estate agents will make the claim that home prices always go up over the life of the mortgage. They don’t tell the whole story, but are they to blame for the buyer not asking the right questions? Give me a break. If I’m going to spend hundreds of thousands of dollars it is my responsibility to be informed and ask the right questions. If I don’t get the right answers, I should move on. If I don’t, why should I have the right to blame others? Do your homework people. Real estate agents, car salesmen, etc. get paid to sell you something. They get paid to sell it for the maximum amount of money you will spend. If you can’t control your spending, that is your problem, not theirs.
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Brian
// Jan 22, 2008 at 5:44 pm
dg72: How are you going to prove fraud in this case? It’s not the real estate agents responsibility to give a buyer every reason not to buy a house. The person wanted to buy a home and were willing to spend the money. If they were not satisfied with the purchase price, they should have offered less or walked away. Oh, your car blowing up example is silly and not related. If the person’s home after being purchased imploded because of shoddy building, the person would sue the builder and/or inspector if they paid for one. If you want to claim logic, try and use some.
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patient
// Jan 22, 2008 at 6:02 pm
Brian, I think you are missing the point. This is a case where an agent is suspected of intentionally having misrepresented a client for personal gain. That sounds criminal to me indendent of the circumstances.
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Brian
// Jan 22, 2008 at 6:18 pm
patient: I’m not missing anything. Suspected is much different than proof. Filing a lawsuit like this is ridiculous. There are much better methods to beating the real estate status quo than filing lawsuits. Don’t buy, that’s a good step. Start a company of agents that refuse to take the same 6% cut like Redfin. What crime exactly did the real estate agent commit here? Look, I for the most part can’t stand real estate agents (Ira seems ok, but he may be doing the smart play by posting here as the anti-real estate prototype - not saying that is the case, but it is possible.), so I treat them with extreme skepticism. I don’t really trust anyone that has a vested financial interest in convincing me of anything. Look, this lawsuit is ridiculous. The buyer and the agent were both greedy and the buyer is ultimately responsible for the type of real estate agent they will use and how much money they are willing to spend.
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Moe Ronn - Realitor®
// Jan 22, 2008 at 6:38 pm
Burn baby, burn. I just got my free credit reports yesterday. And no, I didn’t use one of those damn free credit report services that advertise on TV. The law says I have a right to this information once per year, free of charge, directly from the credit reporting agencies. How many people do you think understand this? Few, I would suspect. Why? Because they believe what’s on TV and don’t do any research for themselves. I’m nearly middle-aged now, and I’ve known this for nearly 20 years. How did I come to know this? I got royally screwed on a car purchase. I’ve never been screwed by a car dealer since. I say it’s about time people feel some pain and learn from it. However, I also believe it high time that misleading and just plain false advertising be abolished. So, yes, the buyer was dumb, but she did pay someone to represent her interests. Her interests where not represented; ergo breach of professional obligation. I say they are both culpable, but the agent is CRIMINAL!
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Jonny
// Jan 22, 2008 at 7:08 pm
The http://floreragreenlake.com/ site is pretty funny. Reminds me of “White Lightning” condos in my area. I mean, they obviously know their prices are wildly out of whack because they don’t list them.
61
disbelief
// Jan 22, 2008 at 7:43 pm
Moral of the story: Sometimes both the plaintiff and the Defendant are A**holes?
He refused to show them the appraisal?!
And they still bought?!
Nice profession, where you can make a substantial commission, and not have any obligations / responsibilities :-)
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david losh
// Jan 22, 2008 at 7:51 pm
Money and asset comes to the table and it was determined by law that the buyer is represented as well as the seller some many years ago. It’s the Law of Agency in the State of Washington.
The law suit article caught my eye and I agree the buyer has a case. She was represented in a Real Estate transaction. The agent claimed she should have done due diligence, in my opinion, that was the agent’s responsibility.
There should be thousands of these law suits. All those attorneys that are scratching around for a couple of hundred bucks to write up a Purchase and Sale Agreement should be sueing Real Estate companies that are lax about agent over sight. There’s a little trick that says the Broker is responsible for the agent. It’s the Broker, the company, that’s liable for the agent’s lack of concern for his buyer.
As I always say, Real Estate is a complicated business. There is a lot to educate yourself about and the comments here make that point.
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Matt
// Jan 22, 2008 at 7:57 pm
The only thing the agent could have misrepresented was the alleged appraisal that he had done (as I take it) with his own money and not for the buyer. If she didn’t see an appraisal before she bought, that is her own fault. If she did see an appraisal before she bought, she should be sueing the appraiser.
It’s interesting that the agent had an appraisal done, why would he do this? If she had already decided to purchase (and did in fact purchase it without seeing an appraisal)… then he’s just wasting his own money. My guess is he tried to convince her to do an appraisal but she would not (cheapskate?… or maybe she loved the house too much to admit to herself it was over-priced… or maybe she plain didnt care). If she paid for the appraisal and he with-held it there is no question he would lose his license immediately. Since she has picketed the office for a year and he still has his license, i’m guessing she is exactly what the realtor said she was… a nut job. It also tells tales that her husband is basically like “ok hun go do your thing just dont talk to me about it”. You would think he would care a bit more about his 1.1 million dollar purchase?
If you are wronged by someone and you have a legitimate case, you sue them. You don’t picket their office for a year. This lady is crazy and wants revenge. I can’t wait to see her not only lose the suit, but have to pay the realtor’s lawyer fees.
I like to read this blog, I own a condo in seattle, bought in 2005. Yes I’ve made some good appreciation on it but there’s nothing i’d love more than a 50% drop in real estate prices. I’d happily lose all that nice appreciation i made in the last few years so I can upgrade to a house at a realistic price.
You guys need to realize it is not the realtor’s who drove up the housing market… it is the buyers who were willing to pay X amount per month for X amount of square feet. Take realtors out of the picture and homes would have sold for the exact same prices. It was a bubble fed by many things - easier credit
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Matt
// Jan 22, 2008 at 8:02 pm
Oops I hit post before I was done on that last one. Anyway… a bubble made by many things - easier credit probably being the biggest. But at the end of the day, it’s your own decision to drop your cash on something, and your own fault if you made a bad decision.
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Wm Swanson
// Jan 22, 2008 at 8:26 pm
To: David Losh…..Dont worry David Losh…..this RE market will weed out the part-timers, bored housewives, and others who should have never been practicing Real Estate on others shortly if it has not already started to happen. Those jobs at McDonalds and Burger King will be filling up quickly.
Agree that the hiring of newbie agents over the past few years is the responsibility of the Brokerages and I suppose the Errors and Omissions insurance will be rising shortly too.
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Moe Ronn - Realitor®
// Jan 22, 2008 at 8:37 pm
Matt,
I disagree that prices would have risen as much without the sales hype and manipulation of RE agents. They are paid on commission, plain and simple. It’s a broken system, but I’m pretty sure we’re seeing the revolution beginning. They will not be trusted for decades to come. There are exceptions, such as Ira. In two years, when I’ve raised my down payment and prices have plummeted, I just might look him up.
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david losh
// Jan 22, 2008 at 9:01 pm
Unbelievable, Real Estate agent hype made prices go up? You hire some one who was cutting hair one week and got a real estate license, then they hyped the Real Estate market? I don’t think so. I think as long as you, I mean you, are spending thousands of dollars on a Real Estate commission you should get service.
I would pick a Real Estate agent with experience to work for me.
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economist
// Jan 22, 2008 at 9:34 pm
“agent commission is not paid by the seller”
You might as well say that a used car salesman is not paid by the car dealer, or the sales person at Nordstroms is not paid by Nordstroms, because the money they are paid with is coming from the customer.
Does the used car salesman have an obligation to tell you that you could get the same car at another lot for cheaper? Does the guy at Nordstroms have an obligation to tell you that you could buy the same outfit cheaper at Sears?
Commissioned salespeople are contracted by the seller, are paid by the seller, for working in the interests of the seller, i.e. getting the best price for the seller.
Period.
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Moe Ronn - Realitor®
// Jan 22, 2008 at 9:52 pm
David Losh, have you ever heard of a guy named David Lereah? Do you see the ads by the NAR on TV? Do you not perceive the pandering of the media to RE interests? Do you need an extra hand to assist in pullling your head out? Most people are easily manipulated. If you saturate the media with hype, it will affect the average person’s rationality. And, I already said I’d likely trust a guy like Ira. However, guys like Ira are few and far between when it comes to RE sales and ethics. The NAR and the REIC in general had a motive to perpetuate false truths. They have massive resources available to do so. I have an advantage; I’m not easily manipulated, I don’t swallow BS without choking on it. I am an exception to the norm.
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Brian
// Jan 22, 2008 at 9:53 pm
economist: Supply and demand. Sellers are responsible for the supply, and buyers are responsible for the demand. Buyers will spend only what they are willing to pay. Buyers that are greedy will pay a premium. Buyers that focus on fundamentals won’t. Buyer is responsible for buyer’s actions. Period.
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Moe Ronn - Realitor®
// Jan 22, 2008 at 10:03 pm
“Buyers that are greedy will pay a premium”
Whereas this may be true, it’s also true that others will buy out of fear that they’ll be “priced out forever”
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Brian
// Jan 22, 2008 at 10:13 pm
Moe Ronn: And? If you are dumb enough to believe you will be “priced out forever” because prices are going up, you probably should take a hard look at yourself in the mirror. You may need to go back to school. Get a better job. Basically, you should stop being such a dumb ass.
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Moe Ronn - Realitor
// Jan 22, 2008 at 10:24 pm
Brain,
Can you honestly say that you’ve never been mislead or manipulated by someone whom you percieved to know more than you, whom tauted themselves as the “expert”? Taking advantage of people’s emotions isn’t necessarily illegal, but it’s amoral and unscroupulous. Funny how you want to judge these poor saps who number probably in the hundreds of thousands, if not millions. You are affected by their duping as well, look at the mess we have now. In society, what’s bad for your neighbor is probably going to be bad for you eventually. Maybe you should read some Rousseau, college boy.
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Brian
// Jan 22, 2008 at 10:35 pm
Moe Ronn: Amoral and immoral mean different things. You know that, right? Also, people lie to people all the time. When it comes to making the largest purchase of your lifetime, you should probably study up for yourself. What happens to my neighbor, happens to my neighbor. Are we entering a recession? Yes. Will it impact me? Yes, one way or another. Will it matter to me? No. Why? Because my wife and I are responsible for our situation and don’t rely on others or blame anyone else for bad things that happen to us. I prefer to look at down times like these as opportunities. If I were a person that spent recklessly, had zero savings, and no future, I would probably be concerned. Otherwise, when there is blood in the streets and no one is buying, it presents an opportunity. Now, that doesn’t mean my wife and I will buy a house tomorrow, but it does mean we will be on the lookout for real estate that makes sense to us. Maybe buy our vacation house before we buy our primary residence. Taking responsibility for yourself shouldn’t be looked down on. Pimping, promoting, or defending the idea that it is ok to sue because a person was greedy and it didn’t work out should be looked down on.
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Moe Ronn - Realitor®
// Jan 22, 2008 at 10:44 pm
Hmm, so your livelyhood does not depend on a healthy economy? How may recessions have you lived through as an adult, son?
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Moe Ronn - Realitor®
// Jan 22, 2008 at 10:47 pm
And, for the purposes of my statement, amoral is exactly what I meant.
amoral
having no moral standards, restraints, or principles; unaware of or indifferent to questions of right or wrong: a completely amoral person.
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Brian
// Jan 22, 2008 at 10:52 pm
First, don’t call me son unless you provided the sperm, which I know you didn’t. Second, if you are financial responsible, have a good education, and don’t waste all your money on crap, amazingly, over the course of several years, you’d be amazed what saving over 60% of your income (75% if you count money you put into retirement - this is possible if both you and your wife have good jobs and good educations) can do. Recession or not, you’ll survive and even if you lose a little money, if you keep your wits, you’ll be able to take advantage of a bad situation.
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Brian
// Jan 22, 2008 at 10:54 pm
Go back to your comment. In that context, you would have used immoral.
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michael
// Jan 22, 2008 at 11:03 pm
Brian,
According to statistics Seattle is one of the most educated cities in the United States, in fact it is ranked number one for literacy in some studies. The average household income in Seattle is somewhere in the range of $60,000 to $70,000 a year, depending on the source. If the average house price is $450,000 then to safely pay a 30yr fixed you would need MORE THAN $120,000 in household income. With a recession looming a lot of people could be out of work for at least some period and will miss payments. Buying an overpriced pile of drywall and broken promises is financial suicide. Real estate is the new Amway.
The smart move is to sell short the housing and finance sectors with a good short ETF. If you look at the prices for SKF and SRS you can see that the smart money to be made at the moment in betting against real estate. I love it. Agents, thank you for this wonderfully lucrative bubble, you’ve given me so much. I’ll be in the market around 2009 or 2010.
Brian, maybe you should quit real estate. You could go back to night school and finally get that GED that your mom has been nagging you about.
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Brian
// Jan 22, 2008 at 11:11 pm
Michael: I’m not in real estate. If you look above I said my wife and I are still renters because we didn’t buy into the hype.
The article is talking about a person buying a house that cost over $1M. It says nothing about the persons education. The person should have known what they were getting into.
Not sure why you are assuming so much about me. There appear to be a bunch of cry babies on this board that enjoy lauding the merits of frivolous lawsuits or crying about real estate. Apparently, you’re one of them.
81
old_B
// Jan 23, 2008 at 12:06 am
Brian, you have not exactly made a good case as to why the lawsuit was frivolous. In fact, most of your posts seem to be emotional venting about “suit-happy society” and some other random bogeymen. I think you don’t understand the proper role of legal recourse in our free market system.
I read the emotional, tonal content of what you’re saying. But if you pull back and read a little, you’d realize that a real estate agent and member of the NAR has, as f’ed up as it is, something of a duty. Someone earlier provided a direct link. See also this: http://realestate.about.com/od/representationagency/p/client_remedy.htm
(my opinion: the NAR in general, and buyers agents are something of a joke, and I wouldn’t trust one with a purchase larger than a candy bar)
It’s pretty clear that you’ve become unhinged in the pursuit of your argument, but haven’t refined or clarified it. Heck, you may be a bored troll from RCG here to blow off some post-bubble steam. But when everyone but you remains unconvinced of your point, that’s a sign that you need to go back and think about the merits of your argument, not just throw up your hands and make increasingly exasperated posts, name calling, etc.
You keep saying the lawsuit is frivolous, but you haven’t backed that up with anything other than your opinion (which doesn’t seem very well grounded in anything other than… being against using the court system to settle contractual disputes and punish dishonest actions). It also appears that you think a buyer, no matter how stupid or smart, is better off starting a competing real-estate broker cartel, rather than taking an individual case to the courts.
*makes kuckoo gesture with hand in the air*
Be more charitable in your argumentative style, figure out some way of getting smarter, or just lurk for a while so you know what’s going on here. Or, alternatively, just go away. That might work, too.
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EconE
// Jan 23, 2008 at 12:38 am
Need more info…lots more before I can go one way or the other WRT the lawsuit.
Such as…what was the asking price of the comp that sold prior to sale? What date were the offers and for how much?
I do expect to see quite a bit of this in the next couple of years and don’t doubt that the government will find a way to meddle in that too.
Let’s see what the courts have to say.
Common Sense…an oxymoron…tells me that with his published salary he should have been smart enough to know that he can’t afford a $1.2M home.
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Brian
// Jan 23, 2008 at 1:02 am
old_B: Sorry, I’m neither unhinged nor do I believe in the bogeyman. My points are simple, but I’ll dumb it down a little more for you so you can understand. I don’t think this lawsuit has merit, because I believe the buyer is ultimately responsible for how much they are willing to spend on any good. I believe the real estate agent this person used did a terrible job and I would advise the person not use the agent or the broker again. Over the course of the next few years we will see plenty of lawsuits because people are unhappy they greed was not met with double digit appreciation and it is not right in my opinion. I think many of you posters on this site are unhinged for a variety of reasons. You’re unhappy because housing is expensive. You’re unhappy because real estate agents are out for their own interests. You’re unhappy because prices appreciated by double digits for several years. You’re unhappy because people were greedy (this is why I find the posters on this site defense of this lawsuit so laughable). You’re unhappy because “fill in the blank”. I’m not saying prices are affordable for most or that real estate agents are any good. I actually have a distrust for real estate agents and would not use one. I believe in the free market. That is why I support sites like Redfin. That is why I believe in boycotting companies with bad practices. There are better options than lawsuits.
84
economist
// Jan 23, 2008 at 3:28 am
Buyer is responsible for buyer’s actions.
That’s what I said too (i.e. the salesperson’s job is to look after the seller), but the style of your post seems to indicate that you think you are disagreeing with me.
85
Buceri
// Jan 23, 2008 at 4:58 am
Inventory has been quite steady these last few days. As someone mentioned last week, the “casual sellers” are realizing the market has cooled and jobs might disappear; the prospect of moving (selling) does not sound cozy in turbulent times, so they will stay put. Only places on sale will be job/no job relocations, resetting loans, and the clueless. Let’s see the numbers in the next few weeks.
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what goes up comes down
// Jan 23, 2008 at 7:11 am
Brian when is a lawsuit not frivolous? I know a simple question but I am curious what you think.
87
Affluent Bitter Renter
// Jan 23, 2008 at 7:19 am
“Only places on sale will be job/no job relocations, resetting loans, and the clueless. Let’s see the numbers in the next few weeks.”
You forgot foreclosures - if prices really start to slide, people who have an interest-only loan who are way underwater and paying twice as much for their mortgage than they would pay in rent may just say “screw it”, and mail the keys back to the bank. Since Washington is a non-recourse state, the bank can only take the house - they can’t go after you for their loss on the foreclosure.
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SLTO
// Jan 23, 2008 at 7:50 am
few things…
1. realtors are not simple sales persons… a buyer’s agent is hired and paid to provide a duty to the buyer so they can understand the market which is the realtor’s professional expertise… this lawsuit has good merit… she was duped by her agent who should have been looking out for her…. key word is fiduciary obligation… look that up in wikepedia..
a buyer’s agent is not a salesperson… they’re more than that… if you don’t understand this part… read back all the posts… there was deception involved…
2. she moved from San Francisco… she probably made off with tons of equity…
3. this would be a good reminder to realtors that the market has laws and it’s no longer a walk in the park… that’s why the commission is huge… (work for pay or ge