Consumers wish list

The inspiration for this post is from the existing homeowners, prospective homeowners and allied real estate professionals that have corresponded with me and commented on this blog over months past to the present.

I’ve learned and received much more than I’ve provided on this blog I assure you, but the common theme I’ve come away with is that consumers want authentic advice and to trust the people who are assisting them with their real estate endeavors. They want value and to know how real estate professionals will earn their business. The following is what consumers want:

Dear Real Estate Professional,

  • I want to be treated like a partner, not a “lead” or a means to an end.
  • I want relevant information, fast and accurate.
  • I want to know why I shouldn’t buy a particular home and why I should.
  • If my objective is to build equity, I want solid advice based upon my ownership horizon.
  • I want to know exactly how my agent is being paid and by whom.
  • I want to know if my mortgage broker’s company or my agent’s brokerage firm has any financial interests in the referrals they give me for third party providers (mortgage, escrow, title, insurance, etc….). I want to know these disclosures at the start of our working relationship, not when I’m signing my loan or closing papers.
  • I want to know how my mortgage broker is being paid or if any of the associated fees are duplicate in nature or unnecessary.
  • I want my best financial and personal interests to be looked after in my transaction.
  • I want to know exactly what the market conditions are. I don’t want to learn about the market conditions from other sources after the fact……

…..Three factors caused this decade’s housing boom to spiral upwards: 1) a run-up in home price valuations that spurred a high sense of urgency in home buying and selling; 2) poor lending practices, which caused many homebuyers to secure loans that they ultimately couldn’t afford over the long term; and 3) speculative purchases of homes also increased, with buyers investing in real estate with the hope of a quick return-on-investment.

  • I want to know what the benefits and detriments are of entering into a multiple offer situation.
  • I want to trust you.
  • I want to know if there is an incentive of any kind, financial or other benefit, from a seller to you (my agent) and how it impacts me.
  • I want my agent to be responsive, authentic and collaborative with everyone in my transaction.
  • I want to work with a professional.
  • I want you to anticipate potential problems before they occur, not react to them as they are upon us.
  • I don’t want to receive my loan documents to sign at the very last possible moment.
  • I don’t want to pay for inexperience at the same rate as I do for an experienced professional.

Comment Add on’s:

  • I would like choices in the service levels I would like to receive/purchase.

If you do this you for me you will have my business for life and I won’t have to go here when I decide to sell, buy or refinance again.

Sincerely,

Consumer

  

About S-Crow

"S-Crow" (Tim Kane) is co-owner (with spouse Lynlee, LPO-Designated escrow Officer) of Legacy Escrow Service, Inc., an authentic independent escrow firm closing residential purchase/sale and refinance transactions.

154 comments:

  1. 1

    Tim,
    isn’t this disclosed on the purchase and sale agreement:

    I want to know if my mortgage broker’s company or my agent’s brokerage firm has any financial interests in the referrals they give me for third party providers (mortgage, escrow, title, insurance, etc….). I want to know these disclosures at the start of our working relationship, not when I’m signing my loan or closing papers.

    I just had a consumer send me a GFE from a Mortgage Broker where no YSP is disclosed…it shows a range from 0-3%…guess this person is only going to make 0! Why are Loan Originators so afraid to explain how their paid? Mortgage brokers, Bankers and Correspondent Lenders included.

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  2. 2

    PS: Great post!

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  3. 3
    laxtosnoco says:

    How about adding: I want choices about the service level I would like to receive/purchase?

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  4. 4
    S-Crow says:

    lastosnoco,

    done.

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  5. 5

    HUD and state regulators will accept a reasonable range of YSP.

    RESPA (federal law) directs mortgage brokers to spell out a dollar amount and not just a percentage of YSP on the consumer’s Good Faith Estimate.

    Many, many mortgage loan originators that I meet have no problems at all explaining how they’re paid.

    It seems to me that the folks that are less than forthright about their fee chose to act this way because the amount that they are receiving is much higher than what they would like the consumer to know. Perhaps they have been coached to be less than honest. Maybe they are new and know that they are not worth that amount. Still others are not good negotiators.

    and MANY more were never trained on how to complete the Good Faith Estimate the way HUD intended.

    So the consumer is not given the opportunity to question the high fee because the form were not filled out correctly.

    0-3% YSP
    What’s that to an average consumer?

    When a consumer sees:
    $1,000 to $3,000
    Yield Spread Premium
    at least they see dollar signs in front of the numbers.

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  6. 6
    Ellie says:

    For me the most important of the requests above is to know how an agent gets paid and what other incentives are on the table. There’s so much misunderstanding of how buyer’s commissions work- anyone heard that buyers don’t pay anything to their agents lately?- that transparency has got to improve before the industry can regain the consumer’s trust.

    Last year Redfin published The Real Estate Consumer Bill of Rights that includes a lot of the points above: http://www.redfin.com/stingray/do/consumer_bill_of_rights. A lot of us who work here at Redfin do so because we believe that real estate can work better than it does. And I mean better for the consumer, not the agent.

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  7. 7
    ray says:

    Tim our company was built by consumers for consumers.

    Buyers have told us for many years they want to look for homes on their own but they need someone to let them in the property and represent them professionally with all the paperwork. They also want to be compensated for doing the work.

    We pound the table with education daily. We advise the consumer to go look for homes. Take your time. But, never call the name on the sign when you arrive at the home. Call us!. If you don’t YOU LOSE!

    When selling you need to be on the MLS. But, never and I repeat never pay a high fee to LIST your home. Pass the savings onto the Buyer. Our 500 Plan to list is the best in the industry. We assist with all the paperwork and have a REAL office with live Agents. We started with 1 office and 2 more are opening in 2008-9. We offer our 500 Plan to educate future Buyers on what we do. Once a client enters our data base. They NEVER leave. Why is this? Because they were educated!

    Thats it in a nut shell. Spin it, bash it but real estate is changing for the good of the consumer.

    As an RN for a decade I never even had to start 500 Realty. My wife and I have worked for years at many local hospitals. But, this message needed to get out there. As we grow weekly the praise from the public gets higher and higher.

    Now that we have arrived the customers that we have serviced in just our first 6 months give us the highest praise I ever heard of any company.

    I’m very happy to be part of the change. Were also very happy to have teamed up with ClearWire to bring our message for the 1st time to Seattle. See you at the Seattle Home Show!

    Choose who you desire Tim. If you don’t like 500 Realty then at the very least utilize Red Fin and MLS 4 Owners. Both with inferior models but passing on the same powerful message.

    Ray Pepper
    Broker
    http://www.500Realty.net

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  8. 8
    col says:

    How do you spell infomercial?

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  9. 9
    vboring says:

    S-crow,

    I like the list, but doubt it can be implemented within the current system. RE agents are incentivized to sell quickly. 3% of two deals each worth $400k is more than 3% of one deal worth $450k.

    so, seller’s agents will encourage their clients to accept lower prices and buyer’s agents will encourage their clients to pay higher prices.

    As long as their incentives are in direct contradiction with my incentives, I cannot trust them to represent me.

    this idea is covered in some detail in freakonomics. it goes on to show that when RE agents sell their own houses, they keep them on the market longer and get a higher price for it on average, demonstrating that they do a better job when their incentives are in line with their customer’s incentives (because they are the customer).

    come up with a new RE agent payment plan that isn’t a flat 3% and you might be able to improve their performance. otherwise, I expect little to change.

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  10. 10
    stephen says:

    And I would like world peace.

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  11. 11
    AndySeattle says:

    Ray-

    Just curious… What does the 500 in the 500realty mean?

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  12. 12
    Cougar says:

    If I took this list into a brokerage and made it a requirement for them to sign off on it before we started looking for a home I don’t think I would get an agent to work with me. Has anyone seen a full service gas station around anymore? I think RE will change dramatically in the near future and the for rent signs will be in old brokerage offices.

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  13. 13
    Garth says:

    There may be some changes going forward in the real estate / mortgage agent model, but I don’t buy redfin being the answer.

    If I had used redfin instead of my agent when I bought, with the number of houses we looked at redfin would have cost me the same amount as my agent did, and I would have spent my life on the internet and driving around checking out places before setting up a paid redfin visit. Open houses are just a showcase for the worst flips and renovations done by those watching too much HGTV in good times, I imagine there are more open houses now.

    If I was looking at another transaction I would be more likely to try and set up an arrangement with my agents that protected me against a huge windfall without much effort on their part (Lower rates if the property sells very quickly, or to someone I know) instead of using redfin.

    Second, very few people actually understand what redfin actually does, since Glenn Kelman has convinced himself he is a PR genius and muddled their story and alienated the industry he needs to be a part of to succeed. Ask a regular consumer about redfin, and if they have heard of it the probably think it is more like zillow then remax. Most of their traffic and costs are not related to their revenue.

    When dealing with salespeople, the consumer needs to filter out providers who don’t work with their personality. If you tend to totally depend on your service providers, and give in to high pressure sales tactics make sure you don’t get a high pressure real estate agent with a subprime loan provider for a real estate transaction.

    If you can say no each time they ask for the sale until you believe it is a good choice, aggressive agents can do a fantastic job for you.

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  14. 14
    S-Crow says:

    This post is about consumers for consumers, not business models.

    People will choose whatever agent/company or service provider they feel suits their situation whether it is Windermere, Redfin, Re/Max, Brio Realty, John L Scott or 500 Realty. I do wonder though, how may transactions/sales would take place if the transaction were less expensive. Perhaps it would not be such a hindrance to making a move if that were the case.

    What many people don’t read (I never see it) is that as much as the run up in the market frustrated homebuyers, it did the same for agents who were trying desperately to do the right thing for their clients.

    When John L Scott released their white paper, much of what they painted was accurate (as I quoted in the post above), but it also begged the question for people, “did this analysis and conversation ever take place with me and my agent? How was the market ‘framed?”

    I have always found the relationship of what HouseValues or any lead generation site provides for the real estate community to be terribly ironic. If the relationships with consumers, whether one is an agent or loan officer, were so solid, then why the existence of these businesses? There could be a variety of reasons for it.

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  15. 15
    S-Crow says:

    Stephen,

    me too!

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  16. 16
    ray says:

    Andy. The 500 name is simply the no frills name of our listing Plan. Its the best in the industry. No hidden costs nothing. Unless you need a lockbox. Then we collect a 100 refundable deposit. We need to get them back. They cost us a 100.00.

    Make no mistake. Our company was built for Buyers.

    The 500 listing educates our sellers who become buyers. The 500 listing is no source of revenue for the company. The Agent who takes it gets 400.00. The other 100.00 pays sign install and Pay Pal charges.

    http://www.500Realty.net

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  17. 17
    Marc says:

    “I want to trust you.”

    I think this sums it up. Trust is the most valuable thing the average real estate consumer needs from the professionals they choose to retain. Sadly, it is all too often the one thing the typical consumer fails to insist upon. Too many consumers hire the first real estate professional they meet that seems nice and reasonably competent. For such a large investment, consumers should insist upon and should work hard to find highly competent, motivated, trustworthy people to work with. They should also have a clear understanding of the level of service they can expect whether that be a full service provider or a la carte. Hiring an ethical, experienced professional is probably the best precautionary measure a consumer can take to help them make wise purchase or sell decisions, especially in a slowing market.

    In my real estate law practice I strive to provide prudent and timely advice to my clients and excellent customer service. My job is to provide quality counsel and to empower my buyer & seller clients to make good decisions given their individual circumstances. As an attorney, it is paramount that my clients are able to trust me and I take that responsibility very seriously. In the end, it is my clients who are selling their house or who will pay the mortgage and live in the house they’re buying, thus the decisions should be theirs. I serve to help make sure they have all of the information they need to make those decisions wisely.

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  18. 18
    david losh says:

    Very nice list. It’s true people want to trust the person who represents them. It’s unfortunate that so many people have entered the Real Estate business who have nothing to offer a consumer other than telling people to shop for yourself and I’ll write it up.
    Real Estate professionals make money by being involved in the Real Estate business. My first mentors told me we are not in the business to sell Real Estate, we are in the business to buy it.
    The guy who I recommend for mortgages makes loans. He’s financially conservative and has more money than he could spend in a life time. I trust him because he either does the loan or he doesn’t. He presents the very best loan packages available today. He’s in demand. Many clients of mine shop his loans, we wish them well.
    There’s no reason to be greedy in the Real Estate business. There is always plenty of money. If I need money I’ll buy something, or sell something. Anything is liquid at the right price. This is the Real Estate business.
    The almighty commission is a drop in the bucket. Most successful agents in the Real Estate business work because they themselves are involved.
    The internet is a beautiful thing. It gives you a window into the Real Estate world. The reality is much different. When I buy a place, I don’t sleep. Selling is worse. It’s hard to let go. Conservative long term growth is what drives the price of Real Estate.
    The trick of the trade is to know when, where, why, and how to buy. That consultation takes time. It is a partnership. We either work together or find another relationship that works. We wish you well.

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  19. 19
    Mack McCoy says:

    Dear Consumer.

    Most of these items, you can have with just about any good and experienced agent.

    I know, surprise, surprise.

    I would only quibble with a couple of usages – “partner,” for example, and “collaborator.” These do not accurately describe our relationships, in my opinion. I think the escrow agent, sworn to be a neutral third party, would prefer to not be considered a “collaborator,” for example.

    So far as trust goes, that’s truly completely up to you. We, as agents, can be completely trust-worthy while you doubt us throughout the relationship.

    When you’re feeling at wit’s end reading about the troubles that buyers and sellers have had with their real estate agents, remember: Dear Abby did not build her career taking questions from happy couples.

    With warm regards,
    — mack

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  20. 20
    squidier says:

    Change the “I want” terminology to “I demand” and I might be interested. :)

    It’s a good list though.

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  21. 21
    Owen Raun says:

    Rhonda, in response to:
    “I just had a consumer send me a GFE from a Mortgage Broker where no YSP is disclosed…it shows a range from 0-3%…guess this person is only going to make 0! Why are Loan Originators so afraid to explain how their paid? Mortgage brokers, Bankers and Correspondent Lenders included.”

    If the GFE was done for the client prior to locking in the rate then the broker didnt have a % to quote – however – the higher the rate, the higher the ysp so we’ve found that consumers understand the difference between a good offer and a “gotcha” offer. Also, correspondent lenders and banks are not required to disclose the YSP.. (thank the banking lobby for that)

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  22. 22
    biliruben says:

    “Most of these items, you can have with just about any good and experienced agent.” – Mack

    Which ones don’t we get?

    You seem to be saying that honesty, at least, is pretty much a universal trait among your RE comrades, and that you are certainly honest, right?

    But then I see you holler over at the PI:

    “Home values in Seattle are up.”

    That statement at worst dishonest Mack, and at best merely misleading and tricksee. I had thought you were above that. I would certainly want the agent I hire to be more honest than that.

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  23. 23
    patient says:

    One question would cover a lot for me at this point:
    Where do you see the market going the next two years? Anything less than down 10% and I would move on to the next agent since the agent is either not honest or I would not trust his/hers knowledge of the market.

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  24. 24
    old_B says:

    “I want you to unlock the door, step the !@#* out of the way, and let me and my redfin agent walk through the place so I can have a chuckle at the 90’s era granite countertops and stainless steel-veneer appliances.”

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  25. 25
    Greg Perry says:

    I like everything on the list.

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  26. 26
    Buceri says:

    Come on guys. It will always be about money, You are expecting this people to tell you “don’t buy now; wait another 2 yrs.” It’s honest but it does not put food on his table. A GM car salesman won’t tell you: “why are you buying this crap man??? Go across the street to Toyota.” Your doctor graduates swearing to put patients first. We all know he will take the insurance he wants and pays him the most; and sends you for testing to sites where he/she has financial interests. And so on…

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  27. 27
    Greg Perry says:

    “Come on guys. It will always be about money”

    Maybe for you….but don’t speak for everybody.

    In fact, many people value their time more than money. Some actually pay top dollar for everything in life….because they can.

    There are great doctors, great car salespeople, great insurance salespeople, great stockbrokers, great attorneys and great real estate agents. Trust in any service provider is a good blend of good character and high competence.

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  28. 28
    patient says:

    Buceri, I would not expect an agent to tell me when to buy. It’s not their job. I would require that they know the market conditions though.

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  29. 29
    david losh says:

    Inside of Real Estate there are maybe, maybe a couple of hundred Real Estate agents that work in any metropolitain area. In rural communities the pickings are slimmer. In order to get anything done, really, you have to be inside. The Northwest Multiple Listing Service is another window. What’s good today? What deals are there? As we would all say: by the time it’s on the Multiple it’s old news.
    If you want to shop for a house, get in your car, drive a neighborhood, and knock on doors. Write letters to houses you like or think are good. That’s how you find a deal. If I have a buyer that’s what I do. I shop. It helps my business and in many cases I find you what you want. If you don’t want it some one else might.
    That’s my job. You pay me to know. If you know better then we wish you well.

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  30. 30
    Nolaguy says:

    Wow….

    http://youwalkaway.com/

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  31. 31
    Buceri says:

    Greg – I am not saying that people don’t value their time or that there aren’t any good professionals. But financial interests will always be in the way.

    Patient – I agree; but again, in this market when the client asks “how are prices?” the honorable agent answers “going down by the second”, so the client asks “so should I wait?” and honorable agent says: “of course”. Client says I see you in a year honorable agent; and the agent replies: “in a year I will be greeting you at the front of your local WalMart; since with this attitude I won’t be involved in any transactions”. If the agent spins it or sugarcoats it; then he is being dishonest. And we are back to square one.
    I am with all of you in this blog – but let’s face it, we are expecting for every buying agent to tell their clients “buddy; in this market, if you wait 6 months that house will probably be down 10%”. Folks, I don’t think it’s going to happen.

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  32. 32
    patient says:

    Buceri, sadly you are probably right and that’s the problem. Agents do not like, do not want and fear the price declines that a buyer is looking for. Conflict of interrest? You bet. However, if you need to ask your agent if it’s a good time to buy you shouldn’t be buying…A good answer on the market outlook from an agent would be: We are probably looking at a decline in prices of 20% the next two years but I’m pretty confident that I can find you a deal close to 15% off the comparable sales making your risk reasonable. At least that will be my strategy when working with you.

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  33. 33
    Mack McCoy says:

    - One question would cover a lot for me at this point:

    If you shop for opinions, you will eventually find one you agree with.

    – But then I see you holler over at the PI:

    -“Home values in Seattle are up.”

    -That statement at worst dishonest Mack

    Sigh. For those who did not read my post, here it is:

    ————————————————

    Someone with a better math background than me (I feel like Paul Simon: where’s Art Garfunkel when you need him?) would be able to explain this better, but conceptually, I wondered how prices for your typical in-city Seattle Bungalow or mid-century modern or even seventies-split have been doing.

    So I just went to Locator, and did an Area Market Survey of solds, Seattle, houses (style 10-18) built before or in 1980.

    Date………Dec 2007…..Dec 2006
    Sales……….286………..411
    Avg Price….$542,330….$526,875
    $/sf………..$262……….$253
    Med Price….$447,475….$445,000
    $/sf………..$241………..$230

    A skeptic could accuse me of cherry-picking, but this subset reflects my client base – they want to know, has my house lost value over the past year?

    I think I have to tell them “No.”

    —————————————-

    Would it be honest to tell them that their house probably lost value last year? Do you prefer that I tell the truth, or agree with you?

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  34. 34
    Mack McCoy says:

    It’s a funny thing. Not many of you appear to have ever been in an exclusive agency relationship with a Realtor, and by telling me you have (anonymously, of course), I must believe every word you say. Like Norm McDonald on SNL – “I was going to say that! I knew that!” “He knew that. Ten points for Norm.”

    The general tone here sounds to me like a bunch of singles who can’t find anyone to spend the weekend with, complaining about how the gender of their attraction is somehow dysfunctional – “they’re only into how much you make, man; they only care what clubs you can get them into … you can’t trust them, man.”

    If you’re rooting for prices to come down, say it. If you’re rooting for the market to crash, admit it. People who already own homes, probably not rooting for the market to crash. The real estate profession, agnostic – we make money whether the market goes up or down, just like stockbrokers.

    But do yourself a favor – act as if you still have something to learn. Because, it’s what you learn after you know it all that counts.

    Real estate agents might be more valuable than you think. And maybe it would be useful to look behind the stats, rather than take them at face value.

    Then, again, it might just be too much fun sitting at the bar with a buddy complaining about the scene.

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  35. 35
    b says:

    Mack,

    Much like stockbrokers, the average person using a realtor is going the way of the dinosaur. Very few people pay a stockbroker a sales commission when they can use e-trade for $10. Realty is no different, the only thing you guys had going for you was a lockup on the MLS. With that gone, its going to be very few people using a salesman for 6% of several hundred grand to do the equivalent of a google search for them.

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  36. 36
    Buceri says:

    Mack;
    A stockbroker makes money because in a bear market people are selling but volume is steady. In your bear market the number of transactions go down drastically, prices go down and your commission decrease with those prices.
    I bought 2 houses and both agents were too hot to work at WalMart.
    I am married, own my house, and want prices to come down (my house is my roof, for investments I use stocks).
    And by the way, all of you Real Estate agents, get out of your offices and sell!!! Stop blogging!!!

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  37. 37

    It seems to me that there is a certain amount of tooting one’s own horn here, and that’s okay, that’s what people do.
    I’ve heard from several experienced realtors how important it is to use an experienced realtor, while some folks who claim to be knowledgeable and educated about real estate claim that the real estate agent is an anachronism, a relic of the past that will wither and die. I’m not sure that either of these beliefs are true.
    While I am an agent, I’m just kind of obsessed with economics and how the housing market ties into that, and my being an agent is incidental to why I’m here. I never post things like ” you can only trust agents who have large noses and greying beards.”
    I’ve purchased a fair amount of property over the years using full service agents who were very experienced. I would not say that their experience meant that they were more trustworthy, in fact I’d say that they were simply more masterful and manipulating me. It doesn’t mean that there aren’t wonderful trustworthy experienced, low pressure agents, I’m sure every agent on this blog fits that description.
    By the same token, will agents become superfluous and wither away? Karl Marx said that would happen to capitalism…Not saying it won’t happen, but it looks like capitalism may be here for a little while longer, and I expect that real estate agents, like cockroaches, have pretty good survival skills.

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  38. 38
    NotaBull says:

    Mack said

    “It’s a funny thing. Not many of you appear to have ever been in an exclusive agency relationship with a Realtor, and by telling me you have (anonymously, of course), I must believe every word you say. Like Norm McDonald on SNL – “I was going to say that! I knew that!” “He knew that. Ten points for Norm.””

    When are you going to shut up about this whole anonymous thing? Get over it. You’re just an anonymous to me as I am to you. You call yourself “Mack” and you write a bunch of stuff on a blog. If I told you my name was “Tom MacShutup” then I suppose my points are instantly more valid? Or are you going to look me up in some way in order to validate my credentials? Should I provide W2s, tax returns and certificates of professional qualification?

    FWIW, I’ve had good experience with real estate agents when I’ve both bought and sold houses. Not everyone shares that experience, however, and it seems to really burn you that most people trust real estate agents only slightly more than a used car sales dude who keeps jabbering on about the “payment”.

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  39. 39
    old_B says:

    Dropping the “you’re bitter” argument doesn’t get you very far. Not too many people here living out of cardboard boxes or homeless shelters.

    The game is broken, and there are whole classes of people for whom the market structure isn’t working anymore. Expect it to change. In fact, you can bank on it.

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  40. 40
    Joel says:

    If you’re rooting for prices to come down, say it.

    Absolutely I’m hoping for prices to come down. In my area they are far to high and way out of whack with fundamental valuations. I would love to buy a house someday, but I don’t want to have to commit financial suicide to do so. Is it really so bad to want prices to be at a more reasonable level?

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  41. 41
    biliruben says:

    Hey Mack – I appreciate you coming over here and adding your two-cents, but jeez. Maybe read a post or 5 before layin’ all those lazy-man assumptions on us.

    I realize that your median and mean in your selling ‘hood is up in the last year, but I can pretty much guarantee it is down in the last 6 months. That’s what’s dishonest. It’s a half-truth, and the half that matters you happened to leave out. We are at an inflection-point as any good Realtor worth his salt should be acutely aware, and the peak was this summer. If you aren’t sharing that with your clients, they are going to be very, very angry down the line. Maybe suing-angry.

    To knock down your nonsense:

    Yes, I have had an exclusive agency relationship with an Agent. We were pain’s in the ass, put offers on 5 houses, took 6 months to close, and she earned her commission.

    Yes, I own a home.

    I wouldn’t say I’m rooting for it’s value to decline, but it has, it will some more, and Seattle will be better off for it. Who the heck wants to live in a rich-man’s enclave. Give me youth, vitality, diversity, kids. Those things go away when starter homes require 140K/yr salaries.

    The only one around here who appears reluctant to learn is you.

    And it would behoove you and your clients if you took a closer look behind the stats. Perhaps start with the trends over the last 6 months as well as similar cities around the country and move on from there.

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  42. 42
    Greg Perry says:

    “I expect that real estate agents, like cockroaches, have pretty good survival skills.”

    I fully agree. (and got a good chuckle !).

    “Expect it to change. In fact, you can bank on it”

    Change is a constant. Of course there will be change.

    Another constant is that real estate is a complicated transaction and because of it’s litigeous nature will never be reduced to a commodity.

    Yet another constant is that there will always be a group of consumers that value their time more than their money. And…believe it or not, as life gets more programmed and technical, service and personal care are becoming extremely important to people. These people seek out agents and rarely haggle commissions.

    And how about those first time buyers? Well their biggest obsctacle to buying a house is fear. Fear of the process. Fear is a show stopper. They’ll use an agent who takes them under the wing to guide them.

    Yes, there will be changes, but I am not staying up at night worrying about my income.

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  43. 43
    Greg Perry says:

    Bili
    You whacked Mack pretty good there. Perhaps the intensity of the whack didn’t fit the misdemeanor!

    As a general rule, almost every year in every market (UP and DOWN) the last 6 months are down in relation to the first 6 months of the year in every measurable category. Markets are layered with both yearly and seasonal trends. This is just one of the problems in micro analyzing statistics and markets.

    As we also know median prices can be all over the map….especially in small samplings…..but it’s one of the main measurements we use.

    I can you tell that …..on the Eastside anyway…..that market absorption rates were [i]slightly[/i] worse than the week before, and the week before that, so the at least on the Eastside, inventory (as rated by absorption) is building.

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  44. 44
    Alan says:

    life gets more programmed and technical, service and personal care are becoming extremely important to people

    You know what the economy really is? It is people allowing other people to do things for them. If everyone was completely self sufficent then there would be no economy. Nor would there be a need for one. The willingness to receive is much more important than the willingness to provide. If 99% of the population is self sufficient then the remaining 1% are screwed unless they can band together to become self sufficient as a group.

    I have zero doubt that there will be people who need help in real estate transactions. And even through the miracles of automation there is not, there will be some need that former RE agents will be able to meet.

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  45. 45
    david losh says:

    It’s hard to know who to trust. I’ve also used Real Estate agents over the years. It surprises me when I find out I was duped.
    I use agents to get more of an arms length perspective, especially for selling. Commission works both ways. I tell people right now to sell and bank the money. At the same time there are some really cheap properties on the market.
    The perspective is the important thing. The Real Estate business doesn’t change. People want to buy or people want to sell. Agents get paid either way.

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  46. 46
    biliruben says:

    Perhaps I got carried away with the strength of my convictions, and perhaps I can allow that those stuck deep, deep within the trees, even apparently knowledgeable and intelligent RE agents, could find wiggle room to somehow miss the broad and sweeping view of the forest.

    Mack’s last post didn’t appear to be asking for quarter, and I’m sure he can more than defend himself. After casting broad aspersions on readers of this site, I assume he expected salty retort, and will give back in kind.

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  47. 47
    Greg Perry says:

    Bili,
    Here’s another cut on my comments above. Here is the year end median price study on SFH for the Eastside areas 500-600. Median prices dropped quickly in Sept, then started to rebound. From these numbers it clearly appears like the market is quickly coming back.

    The market in reality is still softening, but at this point not quickly. Absorption rates prove it.

    My personal guage for market activity is market absorption rates. With absoprtion rates I help buyers and sellers with their positions within their market position and negotiation.

    Here’s a copy post from the PI blog:

    Eastside Real Estate Statistics — 2007 Median Price Review
    By Greg Perry
    Eastside Realtor

    NWMLS AREAS 500-600 (Seattle’s Eastside) experienced YOY (Year on Year) median price increases in 12 out of 12 months in 2007. (Single Family Homes – not condos).

    January: 11.7% ($659,280 vs. $590,463)
    February: 18.7% (695,037 vs. $585,376)
    March: 9.9% ($671,385 vs. $610,825)
    April: 5.5% ($655,946 vs. $621,554)
    May: 10.6% ($691,632 vs. $625,405)
    June: 10.8% ($691,922 vs. $624,687)
    July: 10.4% ($682,630 vs. $618,442)
    August: 4.6% ($651,982) vs. $623,474)
    September: 1.2% ($646,375 vs. $638,867)
    October: 2.9% ($641,611 vs. $623,697)
    November: 3.3% ($625,492 vs. $605,687)
    December: 4.8% ($668,222 vs. $637,619)

    Here’s a pop quiz: In which month did the mortgage crisis come to a head?

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  48. 48
    Goldeneye says:

    I agree with Buceri. It is *always* about money. Greg, the whole aura about being a “good” realtor etc etc etc is also about money. Would you become a good realtor if dishonest realtors are making more money than you? Would you become a truthful doctor if other doctors across the street are making more money by making patients believe they have issues that they actually don’t and send them to other referrals who likewise do the same? If you are honest with yourself, you will find that the answer to both questions are “NO”. You would want to become a “good” realtor only when people are burnt by dishonest practices within the existing realty framework and you want more business (and hence more *money*) by convincing people that you are not like the dishonest folks in the RE industry. As long as people don’ t realize that they are being conned, no RE agent will worry about honesty.

    The buyer agent in a RE transaction has financial interests that are NOT aligned with the buyer, hence you will rarely come across a “good” buyer’s agent!! You will frequently come across a truthful seller’s agent because his interests align nicely with the seller i.e. get the maximum money for the house that is being sold.

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  49. 49
    Marc says:

    Without commenting on whether the terse exchange was appropriate or not, it’s gems like this that make this blog so fun to read:
    “Mack’s last post didn’t appear to be asking for quarter, and I’m sure he can more than defend himself. After casting broad aspersions on readers of this site, I assume he expected salty retort, and will give back in kind.”

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  50. 50
    Greg Perry says:

    Money is needed in this economy to eat. Everybody does what they do for money.

    There are 4 stages of growth:
    Survival
    Stability
    Success
    Significance

    In survival most likely anything will done for $$. Clients (leads) are scarce. People with high character resist the temptation to go illegal and cut corners and many, many people who end up with eventual success sacrifice greatly in this stage. REAL ESTATE AGENTS IN SURVIVAL ARE THE MOST LIKELY TO GIVE A DISCOUNT FOR THEIR SERVICES. Why? They need the money. They may even work against the needs of their clients because…..THEY NEED THE MONEY.

    As a business (in this case let’s say a Realtor) starts to move to stability, different choices can be made. This stage still requires sacrifice, but the provider starts to think less about himself and more about the client. More clients are coming and there starts to be some predictability.

    As success is bridged, wealth starts to occur. A steady and predictable stream of clients come into the business. They don’t have to really worry at all about their personal needs and can focus entirely on the client’s needs. Here also where you see real estate agents and other service providers start to serve his/her industry to make it better.

    Significance:
    So much wealth has been built that the person is free to create any lifestyle choice. Here is where decisions need to be made on how to give the wealth away.

    So yes, we do what we do for money. I don’t know about you, but I still enjoy food with my meals. However, motivations change as people grow personally and wealth is created.

    By the way, the best way to stay in survival in life is to never invest in yourself. I had a mentor tell me once, “If you argue for your limitations, you get to keep them.”

    Yes, there are real estate agents in survival. There are also many agents who are very successful. The consumer can have either one of them. All they have to do is to do some research to make a good choice.

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  51. 51
    Alan says:

    Money is needed in this economy to eat.

    You could be self-sufficient and grow your own food.

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  52. 52
    j6p says:

    Please, I think this thread could use more:
    1. successful persons (prefer owners of 50+ units with philanthropic business model) posting self-promotions (redundant as they should already be wildly popular by word of mouth)
    2. RE ‘professionals’ advising that now, errm ‘NOW’ is really the best time to buy and that anyone offering an opposing opinion is delusional (also include psychological deconstruction of said delusionals).
    -thanks

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  53. 53

    Money in Real Estate is made by buying and selling real estate, building and selling real estate or selling high profile properties(multimillion $$). I do not know of any Real Estate agent achieving that kind of success. I would like to know if someone has done that in recent years.

    Amarjit Sandhu
    http://www.500realty.net

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  54. 54
    leanne finlay says:

    Consumers Wish List …. geez, it matches my Agent Wish List … I want my clients to want these same things. There is nothing abnormal (or even “new and improved”) about this list, and for all of you buyers or sellers who feel it’s difficult to find an agent who will be “as good or better than this list”… something is wrong with the method you’re choosing for finding a good agent to represent you.

    Lax, you already know you can have difference service levels. There are a ton of choices out there, and individual agents also will negotiate with you depending on what value they feel you bring to the table, and what you are asking them to do at what price.

    Garth, you wrote a great piece.

    Marc, you sound like a fine attorney, although I gotta say I’m sick of that empower word :-).

    Mack, your wit is what keeps us smiling, and hoping for more.

    Biliruben, c’mon, at least admit you think Mack’s a great guy, and you’d trust him as an agent.

    Bucieri, you said “And by the way, all of you Real Estate agents, get out of your offices and sell!!! Stop blogging!!!”
    golly, are you my broker in disguise????

    Greg, you always write a good posts, with good stats. I especially liked your 4 Stages of Growth, and the ending comment “Yes, there are real estate agents in survival. There are also many agents who are very successful. The consumer can have either one of them. All they have to do is to do some research to make a good choice.”

    So people, do your research, it pays off in every field.

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  55. 55
    Scotsman says:

    I’d like to meet more Realtors who had some real business or economics education, had put some serious time and effort into meeting licensing requirements, and brought more to the table than big boobs and blond hair. Naw, real estate will forever be the last stop for the divorced bimbo who can learn how to sell…..

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  56. 56
    economist says:

    There are great doctors, great car salespeople, great insurance salespeople, great stockbrokers, great attorneys and great real estate agents.

    And just what is the point of lumping together providers of professional services with commissioned salespeople? To confuse the issue?

    A great commissioned salesperson – whether for used cars or used houses – is one who makes the most money for the seller. That’s what they’re getting paid for.

    The interests of the buyer and seller are diametrically opposed.

    And anyone being paid a commission on the sale of something is incented to work in the interests of the seller, no matter what he calls himself.

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  57. 57
  58. 58
    Mack McCoy says:

    - I’d like to meet more Realtors who had some real business or economics education, had put some serious time and effort into meeting licensing requirements, and brought more to the table than big boobs and blond hair.

    We all, in fact, “meet the licensing requirements.” Candidates with the other, uh, attributes, can make more money doing things other than selling single-family houses. Get a few million together and try to do a land deal or an office development and you’ll meet them. Then bring them the above list – don’t give it to them while they’re sipping a beverage.

    – – – – – – – – – – – – – – –

    The title of this blog is Seattle Bubble, correct? Not London Bubble, or Baltimore Bubble, or Toronto Bubble.

    Just because biliruben asked so nicely – oh, wait; he called me dishonest – well, **** him, then, he can do his own research, then, and “guarantee” you all on whether “it is down in the last 6 months.”

    But for the rest of you who are wondering, Gee, could values really have been stable over the past year while we’ve been screaming, Down! Down! Down! – well, there’s probably none of you, either.

    Here’s the tally, read ‘em and weep.

    Period Avg $………………Med $
    H1-07 $561,583………$474,475
    H2-07 $579,706………$481,000

    Sorry.

    But, don’t despair. If you wait long enough, values are certain to come down, and you’ll be right. How long have you guys been up and running – three or four years now? Hmmm.

    So where do values have to be for you to have been proven, “right.” Is it enough if they drop this month, or do they have to come down to 2004 levels?

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  59. 59
    economist says:

    But, don’t despair. If you wait long enough, values are certain to come down, and you’ll be right. How long have you guys been up and running – three or four years now? Hmmm.

    Where have I heard that comment before? Maybe on the Housing Bubble Blog ? Not lately, though.

    Oh right, it’s different here.

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  60. 60
    ray says:

    “big boobs and blond hair”

    One of the joys of being in this profession. Not to mention Title and Escrow!

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  61. 61
    david losh says:

    Holy Cow!
    We all want to believe doctors are honest and they are not; lawyers? What profession can you trust, completely? Especially in the United States there is some blind faith needed.
    This post seems to have attracted a lot of Real Estate professionals defending thier honor. Why is that?
    In this one post I think the argument can be made that the system is broken. I miss the old days. I miss big hair and plaid jackets. I miss the fun that the Real Estate business used to be.
    If you ever actually talk to a successful Real Estate agent you’ll find they are also complaining about Real Estate agents. The Real Estate business in the past ten years has attracted some very bottom of the barrell low life loser scum.
    We see Real Estate agents over pricing PsOS until the listing expires. We sit with sellers who bought at the top of the market or over paid; I for one know they over paid. Why did you do it? You’re bright capable people why did you listen to some person who just took a Real Estate licensing course? Why?
    Dr Pepper was an RN and is now dispensing Real Estate advice. Why? Glenn with rodfun is an internet business model promoter and he’s testifying at Congress. Why?
    It’s because the system is broken. Real Estate companies are counting commissions rather than providing over sight. When you actually see the North West Multiple Listing Service you see they hire the lowest wage earners they can to maximize profits. It did not occur to me until today that greed is a motivating factor in the Real Estate business.
    When I started we made money to create wealth. We were looking for that time on the beach, a couple of cocktails, and watching the kids play in the surf. We made money along the way, but it was incidental to building wealth.
    We actually helped people to build portfolios and that’s what being a Realtor for life meant. Share the dream and support each other.
    Today it’s all about having groups that will maximize profits. You’re right Real Estate agents are counting commissions. Real Estate companies are encouraging that. Let’s franchise to get more agents who can earn more commissions.
    What a crock!

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  62. 62
    Mack McCoy says:

    - This post seems to have attracted a lot of Real Estate professionals defending thier honor. Why is that?

    Because it doesn’t serve anybody to live in ignorance.

    I think that the best reason to proclaim that the system “is broken” is to garner support for replacing it with the one you already own, frankly.

    I was thinking about S-Crow’s list, which is the sort of thing that deserves republishing periodically, and while I already noted how that would go over at a commercial office, I was thinking about telling an agent in New York that you don’t trust her – she’d say something like, “So? Do you want this apartment or not?” Whine to her about how she seems more interested in getting a deal done than in looking after you, she’ll say, “Honey, do you want to buy yourself an apartment or hire yourself a babysitter?”

    New York does a lot of things better, but the West Coast does residential real estate a whole helluva lot better. Anything can be improved, but it could be a whole lot worse.

    You can make it better, by looking for the truth, rather than fodder for your beliefs. It’s annoying to be proven wrong, but making big mistakes is a whole lot worse.

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  63. 63
    ray says:

    David Losh….relax….Holy Macrel.. Slow Down!
    And thank you for referring to me as a Real Estate Professional. You R RIGHT on TARGET with that statement!

    The system IS broken and companies like 500 Realty will be giving the consumers choices that they have long been asking for.

    Embrace change! But, more importantly EDUCATE YOURSELF!. The big Gorilla is coming. But, will you be positioned and ready for it?

    In the end it will be the consumer who wins. This is good for us all.

    Ray Pepper
    Broker
    http://www.500Realty.net

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  64. 64
    col says:

    Real Estate Texbook from the year 2045

    Introduction:

    The public today needs real estate professionals. Trained appraisers, mortgage experts, and real estate lawyers. That’s what you will train to do.

    First though, some history. Over 30 years ago, there was another job in the industry: so-called real estate “agents.” Many of you may never have heard of this job, so a history lesson is needed.

    No economists today can explain what the incentive was for buyers or sellers of homes to hire these “agents.” Back then, real estate “agents” were paid to represent their own interests. The “agent” incentive was to hook sellers and buyers, and to make a quick deal with as little time and effort as possible. These “agents” also performed some services that we would not recognize or want today: for instance, they drove from house to house with their clients in vehicles that used internal combustion engines!

    The trouble started in the early 21th century after the Great Crash, when real estate “agents” started to lose the confidence of the public. First, they didn’t warn clients to be cautious as the Great Bubble was inflating. Some real estate “agents” were concerned, but the profession mostly pumped air in the unsustainable Great Bubble.

    In 2010 the government put in place the needed regulations we have today to prevent another Great Crash from occurring. The real estate agents fought these regulations. That battle also hurt public confidence in the profession.

    Of course, being an “agent” was not a sustainable business model in any case. With the rise of the net, “agents” were no longer needed to connect buyers and sellers.

    Today, a quaint remnant of the old real estate profession remains. 1 perecent of luxury home buyers do hire “personal shoppers” to find them a house. Some sellers of luxury homes will hire also professional salesmen to show the house to potential buyers or personal shoppers.

    Other than that, the “agents” became outmoded: like whalers or barrel-makers before them.

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  65. 65
    Mack McCoy says:

    Gee, economist, you seem like a sports fan – taking credit for other people’s accomplishments. Seems like -they- were right, and you’re waiting for your turn.

    I completely understand why those of you want to buy but won’t/can’t pay these prices are rooting for values to come down. Joel expresses it well – and I want you to know that there are always people who feel this way. I felt that way in New York in the 1980s, which is why I moved here.

    But not only am I on the other side of the fence now, I’ve sold houses to hundreds of people (who would have bought even if I’d stayed in New York), many of whom have become friends, some who have let me hold their babies (tip: if the parent rolls the baby into your arms, and you drop it, the scorer will not call it a hit), whose future is reliant on their houses maintaining their value, and I can’t imagine a circumstance where I’d want to root against them by pulling for a crash.

    I hope the businesses you work for have good years so they can pay you more money, so that you can take “financial suicide” out of the equation. You may still elect not to buy, but at least you’ll have the choice.

    Marc, I didn’t get your point. Would you elaborate?

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  66. 66
    Cougar says:

    In the end the consumer will be protected. I expect to see soon in the headlines across America “Buyer beware of Real Estate Professionals” that will trigger a landslide of unhappy people ready to picket, create lawsuits, and drama that will hurt all realtors. Its the American way~

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  67. 67

    Mack,
    Politicians running for office hold a lot of babies too. That makes them trustworthy?

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  68. 68
    just_checking says:

    If a commissioned salesperson comes up and says “I am here to help you (or hold your baby)” – Run :)

    Mark Mccoy – I am curious what your thoughts are about used car salespeople ? Do you think they are there to help you or the dealership ?

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  69. 69
    Greg Perry says:

    Well, will you look at what has happened here. Tim started an excellent well thought out and thought provoking thread on what the consumer is looking for in a real estate agent. There are many many agents that fit every one of the criteria posted. Tim’s list is a good check list for an agent interview.

    It’s turned into a “mine is bigger than yours” playground argument. The thing has degenerated to the point that there’s not a good service provider (in any industry) left standing.

    So there we have it. The consensus seems to agree that every service provider is a cheater liar scum money grubber.

    I won’t agree, however. I’m just not that cynical. I understand that there are unethical service providers in every industry. However, I still believe that I can find someone to look after my interests…in any industry.

    As I said in a reply above, when I find someone with high character and high competence, I want to do business with that person. In fact, I make sure my clients are surrounded by these people as well. I seek out mortgage originators, title reps, home inspectors and escrow partners who display high character and high competence to recommend so clients are well served in every step of the process.

    And I’m not jealous at all of what any service provider makes. In fact I want people who take care of me to be well paid. People who rise to the top of any profession, rise because they read, go to classes and seminars, and seek out the best mentors they can. Along the way the have wins and losses, but they strive to become the best they can be.

    While watching Tim’s (SCrow’s) writing contributions in the last year, I see character shining through. He’s concerned. He’s fighting for his clients. He’s fighting for the industry. He writes intellegently. I see him as an advocate.

    Thanks, Jillayne for pointing out Reba’s post.

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  70. 70
    patient says:

    Ah, the baby card. Haven’t seen that in this context. Desperation is building rapidly I see. Mack your story would almost be touching if it wasn’t for the fact the people you are now concerned about are where they are partly becuse they drank the poison of everlasting appreciation that you and your peers so happily dispense. While keep doing this without consideration to fundamentals, trends and economic circumstances you risk putting even more people in the same trap. You know it and thereby your heroic stance for troubled home owners rings very hollow.

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  71. 71
    economist says:

    But not only am I on the other side of the fence now, I’ve sold houses to hundreds of people (who would have bought even if I’d stayed in New York),.. whose future is reliant on their houses maintaining their value, and I can’t imagine a circumstance where I’d want to root against them by pulling for a crash.

    The market doesn’t care what I’m rooting for, any more than it cares what you’re rooting for. People why try to defy economic reality will pay the price for it.

    These people have been sneering at the bears for the last 5 years, and they are going to have to take a little sneering back. We have been offering them some free advice – don’t buy at inflated prices. What have they been offering us except contempt?

    “Experience keeps a dear school, but fools will learn in no other”

    Ben Franklin

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  72. 72
    Ben says:

    Mack,

    If you understood how Real Estate sold in a bubble environment, with credit conditions changing constantly, you would not be quoting median prices.

    As the market has been tanking, it becomes less and less affordable at the low end. So only the expensive houses are selling.

    Here is a thought experiment for you. You have an area with a median house price of $450,000. Imagine if all of a sudden, no house sells for less than $500,000, because the money is impossible to come by for most people. And 100 houses sell, but each of them for 10% less than the last buyer paid for them.

    The median price for this area will be more than $500,000. So the median house price has gone up, despite the fact that nothing is selling in the low end. But values have gone down for every single seller.

    This is why the Case-Shiller index is a much better indicator. Have you ever talked about the Case-Shiller index?

    http://en.wikipedia.org/wiki/Case-Shiller_index

    If you are a Realtor(TM) and you don’t know about this index or discuss it with clients, especially with current market conditions, then IMO you are subpar.

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  73. 73
    Greg Perry says:

    Hi Ben,
    “As the market has been tanking, it becomes less and less affordable at the low end. So only the expensive houses are selling.”

    At least on the Eastside, this is an incorrect assumption. Absorption Rates for the most affordable houses (low end) in each Eastside have a higher rate of sale at the lower ends. As the price points go up, the absorption rates are weakening.

    High end homes do however affect median prices. For instance, in December for area 600, the median jumped 18.2% from 2006 (SFR). Why? A couple of high end homes sold, one of them for 1.7 million that did not occur in 2006. By the way, last week in area 600 the price point under $400k actually slipped into a SELLER’S advantaged market, the price point from $400-$500K was a strong BALANCED market. The price point between $500k and $600K is a BUYERS market with about 68 wks of inventory.

    Real estate data is many layered. The CS index is a piece of data, for sure. It doesn’t tell you however, what is happening today. From the article, “The indices are calculated monthly and published with a two month lag on the last Tuesday of every month.”

    Yes, I look at CS, but hold more value on weekly AR’s by price range, by area.

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  74. 74
    Greg Perry says:

    I quickly scanned the Seattle “in city” and the rest of KC. It’s the same in all areas, the lower end is selling at a higher rate of sale than the upper end. A couple of Seattle areas (705 and 710) have dropped completely into balanced markets from buyers markets on a 7 week AR average.

    Bili, aren’t you in one of these areas?

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  75. 75
    EconE says:

    Greg…thanks for supplying us with the “weeks of inventory” for 500-600k homes. (I thought it was supposed to be months of inventory however)

    I wonder if one of the agents would be so daring as to provide us with “Weeks/Months of Inventory” for 750k+ condos without some excuse that “It’s not the market I handle”?

    Just the facts please.

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  76. 76
    Greg Perry says:

    EconE
    It can be weeks or months, depending on the way it’s tracked.

    Oh boy, now that’s a gruesome market (I actually looked above $700k). In the last 7 weeks 3 total on the entire eastside, and 4 on the westside with a boatload of inventory. 520 Bellevue alone has 69 units with only one selling in the last 7 weeks (over $2.5 million). Suffice it to say, at the current rate of sale, for the region there is YEARS, not weeks or months of inventory at the current rate of sale.

    I have the AR’s charted by area and price range. Give me the location and I can give you more precise numbers.

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  77. 77
    patient says:

    Absorption rate is not really a good measure of how and if home values hold either. If now the $400k to $500k is a sellers market in an area but the next tier $500k – $600k is not you can be pretty sure that homes from the higher tier will start trickling in to the lower tier. The resut is downward price pressure through the tiers and falling home values. The reason for the current inbalance is probably since most of the $500k to $600k listings are overpriced and should be in the $400k to $500k which would achieve a better balance.

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  78. 78
    patient says:

    I would add that absoprtion rate for specific price ranges is not really a good indicator but overall absorption rate is.

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  79. 79
    Greg Perry says:

    “Absorption rate is not really a good measure of how and if home values hold either.”

    This is not accurate. AR’s are the best way to track the market, especially if tracked on a weekly basis. It’s also not accurate to reason that most of the $500-$600 homes should be in the $400-$500 range. While there are many overpriced homes on the market, statistics show us that the seller should be positioned within 2% of the eventual sales price.

    Some homes will gravitate from one price range to another, and when tracked weekly affect that week’s AR’s. The tracking that I use has a weekly AR by price range for 7 weeks, then averages the 7 week period. This becomes even more powerful when I take 2 or 3 – 7 week period AR studies to a seller. We can easily see if the market is progressing or regressing.

    Having this kind of information takes a lot of emotion and guess work out of positioning for the market. The information is also invaluable for working with a seller for price adjustments.

    It also works with buyers, as we know how agressive to be with offers. I send the data along with the offer and many times the seller and LA for the first time see the market reality. I’ts helped me win some amazing negotiations on my client’s behalf —especally since September.

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  80. 80
    Greg Perry says:

    Again, not accurate.

    AR’s need to be used right down to price range. They can be drilled down to a zip code, or a neighborhood….even down to a house style.

    For instance, AR’s may show us that rambler style homes sell immediately in a certain neighborhood. For that house style alone, I may counsel a seller to position with a higher price –much higher than one would think—and get it. AR’s are just another way of saying supply and demand. They show us where the supply and demand is specifically. This kind of information, used correctly can make a client more $$.

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  81. 81
    patient says:

    Greg, I fully agree that it’s a very valid measure to use for buyer’s and sellers that enters the market or that are in the market to know how to currently price or make offers. However the absorption rate for a specific price range is pretty useless to predict if the value will hold or not without taking in consideration what the overall absorption rate is.

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  82. 82
    patient says:

    Greg, you seem to be good at what an agents job should be. Gathering data to assist a buyer or seller on how to buy or sell a home right now. Unfortunately the real estate agent community speerheaded by the NAR and Lawrence Yun has taken it upon themselves to predict the future of home values and dispense advice and propaganda from that. The trackrecord in a softening market is terrible at best and many recent home owners are suffering partly for buying into the propaganda and advice.

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  83. 83
    Greg Perry says:

    “However the absorption rate for a specific price range is pretty useless to predict if the value will hold or not without taking in consideration what the overall absorption rate is.”

    I disagree. ARs have been around forever, but the application the way I am describing has not. I’ve studied and tracked them now for well over 18 months (and have experiential). AR’s used the way I’m describing is the surest way to see where the market is going to value.

    I there is 68 weeks of inventory and inventory is still trending upward, do you think values will go up? Or down? It’s not rocket science, but it does take effort to track, study and apply.

    If you’re a seller, are you going to price at the top of your range? or if you really want to sell, position on the bottom, or possibly under?

    If you’re a buyer, how agressive will you want to be with your offer?

    I’ve laid my ears back with some agressive offers, backed them up with AR’s, and won.

    (Good grief, I know that’s counter to common belief for some here. Yes, I know I screwed up my eventual commission)

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  84. 84
    biliruben says:

    “Bili, aren’t you in one of these areas?”

    I’m low-end 720 and want to move 6-700K in 710.

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  85. 85
    Greg Perry says:

    patient,
    For me, I’ve become a market realist. The market is what the market is. I actually do my best to neutralize emotion when I work with a client and do what makes the most sense for the conditions at the time.

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  86. 86
    Greg Perry says:

    Bili,
    I’m away from my work computer that holds the data . Email me to remind me to send you an update on Monday.

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  87. 87
    biliruben says:

    Cool Greg. Thanks.

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  88. 88
    patient says:

    Greg, you are right in that a low absorption rates for a specific range means that prices will go down. What I argued though is that a high absorption rate in a price range is not a good indicator that prices will hold since you have dependencies on absorption rates in higher tiers as well as other market fundamentals, trends and economic factors. I think one of the biggest factors to distrust of agents right now and on this blog is the eagerness coupled with proven inability to do good predictions in a softening market. So my advice from a consumer to a supplier would be to either stay out the predictions or start to use models that works and be true to the results in messages and advice.

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  89. 89
    johnnybigspenda says:

    Affordability numbers for the US housing market since 2004… just fyi

    http://www.realtor.org/Research.nsf/files/REL0711A.pdf/$FILE/REL0711A.pdf

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  90. 90
    david losh says:

    Who do you trust?
    The pepper is a professional. He’s buying single wides in Nevada and lease optioning them for a two hundred dollar cash flow per month. That makes him a professional.
    rodfun or the cb attorney can generate paper work for between two hundred and two thousand dollars, they to have a profession.
    Real Estate agents working for a commission not so much.
    My wife and I sold three properties the last couple of years. A couple of my investor buddies did the same. We could all see the hand writing on the wall. It was just too much frigging money to leave sit there until next time.
    Real Estate agents would call me up asking if the house color was grey or blue; they couldn’t tell by the pictures. It was rebuilt inside and out to the studs; is it grey or blue? We were selling it for the price of the dirt.
    An agent told me the cupboard hinges needed to be reset because the doors didn’t close properly. It was white with beige carpet. It was completely rebuilt from the studs inside and out.
    OK, I give, we took it off the market painted it beige inside and put pansies in front, it sold in a week end.
    Another house we had to change the light fixtures, because Real Estate agents are busy selling cabinets, stainless steel, granite and light fixtures.
    It was a horrible experience.
    I do use real estate agents. I would use real estate agents all the time so I wouldn’t have to talk with another real estate agent. The problem is I can’t find a real estate agent who I can trust. Worse I can’t find a competent real estate agent to get the deal done.

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  91. 91
    david losh says:

    Sorry, the first property I co listed and the co listing agent sold it at the first open house after the repaint. The second house I listed with another agent, and the third I listed myself.

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  92. 92

    David Losh, a lot of traditional real estate professionals does not like the model being pursued by 500realty or redfin as they challenge the paradigm of doing business the conventional way. As history dictates change is hard to accept and comes at a price. I will give you some concrete examples, Swiss industry perfected mechanical watch making and was considered unbeatable in the world. They did not accept when one of their own professional proposed Quartz in the watches to completely change mechanical clocks. Japanese took Quartz concept and shifted the watch making practice. Another example closer to home, for a long time Boeing did not accept the fly-by-wire technique against the traditional mechanical signals. Airbus took that approach and beat Boeing in their own game. Finally Boeing accepted the model. American auto industry is another example, I can go on and on with these examples. Today it is the Real Estate industry that is facing such transformation. However, the fundamental concept remains it is the paradigm shift that most people chose to ignore.

    Amarjit Sandhu
    http://www.500realty.net

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  93. 93
    Greg Perry says:

    Mr. Amarjit,
    Personally I don’t care about you one way or the other as far as a competitor. I don’t care all that much about Rfin either. This comment is not any kind of defense of traditional models.

    I have questions and curiosity about your business model.

    First of all, discounters have been around forever. I’ve worked against discount companies every year I’ve worked in real estate. They come and go. Some do better than others.

    Here’s a few things I don’t understand about your model.

    When a company is only price driven through a discount, there’s no limit to how low the discount can go. You’re plastering your http://www.500realty.net on every one of your posts. $500 is a good deal right?

    Pssssst. Iggy’s house does it for free. Why would anyone spend $500 with you when free already exists? What I can’t figure is how anyone can profit when they take their expenses from $500. Or free. Do you have a war chest for future litigation? How about the inevitable MLS fines. Or the future captains of real estate that will go low in price than you. (My web site is http://www.425realty.com) Hmmm I have an idea!

    Ok so you’re taking on Rfin by undercutting thier pricing, but in your post your aligning with them. Your going to discount the rebater on the buy side of the transaction. If anyone will make it, Rfin might, but the jury is still out on their profitability……. and they’ve had the best marketing that money can’t buy! Personally, I see you more as a competitor to Rfin than to Windermere or JLS.

    The fundamental concept of business is to profit.

    I really don’t want to get into that traditional agents make too much money. I just have a basic curiosity on how you expect your model to become profitable, especially with a race by the discounters to give services away.

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  94. 94
    ray says:

    Greg if I may I would like to answer your question with a few facts.

    My good friend Amarjit if you don’t mind.

    I suggest you try Iggy’s house and see how you like it. No representation, no paperwork, no lock boxes, no sign, no pictures. etc. The 500 is no comparison. Iggy’s quite frankly is a non factpr.

    MLS 4 owners on the other hand is Great. However, no real Agents to help the buyer through the paperwork. We have LIVE AGENTS for support in the office and on the road.

    We were not built for Listings. We do it as an EDUCATION for buyers. We want the BUYERS, just like Red Fin. We have lower overhead and can afford to give 75% back. Red Fin is a non factor to us. They assist us by helping educate the public. We welcome Allen’s/Schultz’s money everyday. I invite many more models such as ours. We need help educating the public.

    Lastly, you appear smart. Can you not see how 500 Realty makes its money. Are you that blind? Do you think its the 500.00? Or the Buyers 2000-8000 average we get per transaction? Come on!

    We are in the internet Age my friend. its all about advertising. Do you think the 10 banks we have on the site are free. Well, there are a total of 20 that will be uploaded by the end of April. And how about the service providers? you think they get a free ride?

    I really thought the people on here are smarter then the average. Once again, i’m grossly mistaken.

    Ray Pepper
    Broker
    http://www.500Realty.net

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  95. 95
    Scotsman says:

    Ray- you were responding to a realtor- ’nuff said.

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  96. 96
    Mack McCoy says:

    - We have been offering them some free advice – don’t buy at inflated prices. What have they been offering us except contempt?

    Some of us have been advising you – free of charge – to consider the sources of your information before taking action.

    For those people who took your “free” advice in 2004, when they were ready and able to buy houses in Seattle, but convinced themselves that you were right and that the market was about to fall, they’re about thirty-five percent behind right now.

    You may be right that today’s prices are inflated – only time will tell. But to maintain that you were right about Seattle’s market in 2004 requires some acrobatics, don’t you agree?

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  97. 97
    Mack McCoy says:

    - Unfortunately the real estate agent community speerheaded by the NAR and Lawrence Yun has taken it upon themselves to predict the future of home values and dispense advice and propaganda from that.

    Yeah, not so much as you would have people think.

    We are independent agents, and many of us – if not most – do not much care what Lawrence Yun has to say.

    You can always shop for opinions, and you can always shop for corroboration of your beliefs.

    Certainly, if you search for real estate agents who make predictions, you’ll find them. But most of us are not in the prediction business, and few of us make predictions about the future.

    Remarking about the past is not the same thing as predicting the future.

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  98. 98
    Mack McCoy says:

    Ben, I know you’re not the kind of guy who would talk about stuff he didn’t know about, so let me ask you something about Case-Shiller: What obstacle does their method have to overcome in the New York market, and how do they overcome it?

    – – – – – – – – – – – – – – – – –

    This has been a better thread than most that I’ve read here – although I’ve only read eight or twelve or so.

    The polite people need no thanks, because living well is it’s own best reward. The others, well, who cares?

    The baby thing, for those who noticed, is for my pals who read Seattle Bubble and know of my aversion to handling fragile objects. Dennis Kucinich and Chris Dodd held babies, too, BTW.

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  99. 99
    Greg Perry says:

    Thanks Ray,
    I’ve been an operations guy in business pretty much all my working life…including a top corporate level. I know the numbers in this business.

    Of course you’re going for buyers. (So is Iggy’s House). So is Rfin. I also know Rfin, without angel money would be gone. Plus the downward pressure to keep going lower in price……like I said, the next guy will cut you.

    I do have a question. Your name is 500.net. It’s obviously a teaser. What do you say to the person who wants to list, when you admit “Your not built for listings.”? It smacks of bait and switch doesn’t it? Wouldn’t it be better to choose a different name?

    After paying agents and expenses, frankly I don’t see how the model can work.

    I don’t hold any ill will toward you. If you can make it work, more power to you!

    All the best

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  100. 100
    Greg Perry says:

    Hey Ray,
    One other point….some food for thought.

    You said,”I really thought the people on here are smarter then the average. Once again, i’m grossly mistaken.”

    Nobody’s taken more heat than Glen Kelman. Perhaps he has, however, but I’ve never read in instance where he put anyone’s intellect down, especially your insinuation that the “people” here are beneath your intellect.

    Glen passionately argues for his position without the personal slams. I have reservations about the longevity of his model as well, however I do hold personal respect for him by and large on how he’s conducted himself in the discourse.

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  101. 101
    Cougar says:

    It’s harder and harder to find a “Real Estate Professional” that won’t stab a potential customer like me in the back.
    Comments like;
    “In a brief phone interview, Mr. Little (ReMax) called the case “ridiculous,” adding: “The lady’s a nut job. I didn’t do anything wrong.”
    or
    ”I really thought the people on here are smarter then the average. Once again, i’m grossly mistaken.” (Ray Pepper with http://www.500realty.net)
    Thank you Greg, Ira and SCrow for agreeing to disagree in a respectful manner. Note to self; do not use or let my friends use ReMax or http://www.500realty.net

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  102. 102
    ray says:

    I personally feel Glen is not a great Spokesman for the message of Red Fin. I disagree and do NOT like how he has conducted himself in public forums. He has powerful backers and the company brings on a powerful message. I do NOT see the Passion and he always gets trumped by higher voices in the crowd.

    Please DO NOT take anything personal. The people that bash must at least do 5 minutes worth of research of what they are bashing. It is so readily obvious to everyone that 500 Realty Listings will not keep a company in business. We give this Listing Price as an educational tool. Our focus remains on buyers. Thats what keeps our advertisers fed. Do you think Red Fin wants listings? Yes and No. Every sign that goes up educates more people. But their 3500.00 at closing is nothing. They realized nobody would pay 3500 up front and adopted our 500 fee. But, why gouge the consumer another 3500 or 4k at closing? I tell you why..much higher overhead.

    Greg I personally do NOT know who you are. Someone stated you are a realtor. If you are insulted, I apologize. The only ones I know on Bubble are Amarjit, Tim, and a gentleman from Boeing named Steve. Its possible you did not take the time to look at our website.

    We at 500 Realty welcome any and all companies that help spread the message. Its very difficult for the public to understand where the money comes from. They think its another real estate scam. That is what years of real estate “professionals” have done to this business. We are clumped together with Attorneys and Used car sales people.

    We embrace Red Fin and MLS 4 Owners. We just need more of these companies. But, I know they are coming. personally I wish they would come quicker!

    See you at the Seattle Home Show Feb 16-24. We partnered with Clear WIre on the Main arena floor. You will easily find us. Mention this blog and get your Free T Shirt. **Greg mention who you are and lunch is on me!** I welcome intelligent real estate debate. Just don’t bring charts!

    Ray Pepper
    Broker
    http://www.500Realty.net

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  103. 103
    ray says:

    Cougar may I be so bold while sitting here in Phoenix waiting for another delayed flight.

    If you are a buyer and choose to NOT use 500 Realty please use Red Fin. If you are a seller and choose to not use us then MLS 4 Owners.

    Please make that a note to yourself as well! In the end you will be very happy you did!

    Ray Pepper
    http://www.500Realty.net

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  104. 104
    Affluent Bitter Renter says:

    “- Unfortunately the real estate agent community speerheaded by the NAR and Lawrence Yun has taken it upon themselves to predict the future of home values and dispense advice and propaganda from that.

    Yeah, not so much as you would have people think.

    We are independent agents, and many of us – if not most – do not much care what Lawrence Yun has to say.”

    Funny – I have a book in my library called “Why the Real Estate Boom Will Not Bust – And How You Can Profit From It”, by David Lereah (former chief economist of the NAR), written in -oh- 2005. The first two chapters are entitled: “The opportunity of a generation”, and “Why the real estate boom has wings”.

    I don’t recall Realtors protesting that a high official of the NAR was putting out such bad forecasts on behalf of their organization.

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  105. 105
    b says:

    Mack McCoy said,
    You may be right that today’s prices are inflated – only time will tell. But to maintain that you were right about Seattle’s market in 2004 requires some acrobatics, don’t you agree?

    Not really, maybe you should spend more time reading financial newspapers about the global credit markets and their implosion. Seattle house prices are just a symptom of the same disease that caused Arizona and California house prices, $0 down 0% APR Escalades, 300 credit card offers in the mail everyday, and inflated house prices in England, Spain, Italy, other EU states and of course the entire US.

    If you do not think the current, and ongoing, implosion of the worldwide credit markets and the acceleration of deflation is going to adversely effect house prices in Seattle then you are foolish. The EU housing bubble has not even officially popped yet, but it is about to. Mortgages are the biggest consumer driven way to create credit in the world, as they disappear who is going to buy homes at any price?

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  106. 106
    Ben says:

    Mack:


    Ben, I know you’re not the kind of guy who would talk about stuff he didn’t know about, so let me ask you something about Case-Shiller: What obstacle does their method have to overcome in the New York market, and how do they overcome it?

    At the end of the day, the important thing about the Case-Shiller method is the data that is collected. You have the individual price trends for houses, which you can then average out, rather than having prices for individual houses and making trends out of those averages. It is far less susceptible to differences in distributions of house prices.

    I don’t think much about the NY market, because I have spent a grand total of two weeks there, and I never plan to buy anything there. Not knowing much about the market there, I honestly would have trouble thinking about how to apply the Case-Shiller data to it.

    But I will take a stab anyway. From what little I have heard about the NY market, it has a concentration of people with loads of money to spend from outrageous bonuses. Not many people drive there, so I imagine people spending proportionally more money on houses.

    I also imagine that the market is stratified into different price segments, each of which probably reacts very differently to price changes (this is true in any market, IMO, but probably more extreme in NY). The market probably works very differently in Queens than the Upper East side, for example.

    Is the problem that averaging trends of vastly different markets into a single trend is no longer representative of anything? I think that would be a problem in any market, so I will run with that.

    The solution is to analyse the data for a particular region and break the samples into groups based on the trendlines, and then to average the trendlines in each group and describe the groups. It may be sufficient to do this geographically in NY, but describing the regions would probably be tough. This technique would definitely result in less variance in the averaged trends.

    If I could get my hands on the per property data that Case-Shiller has, then I would attempt to do this myself. I could probably try to gather the data manually using the KC parcel viewer or something, but it would take an eternity. Might be an interesting project, though.

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  107. 107
    Alan says:

    For those people who took your “free” advice in 2004, when they were ready and able to buy houses in Seattle, but convinced themselves that you were right and that the market was about to fall, they’re about thirty-five percent behind right now.

    Personally, I did not live in this area in 2004. In fact, I owned in another state. I moved here in 2006 fully planning to purchase and found prices that would break me. During my efforts to understand the market I found this blog and determined that buying at 2006 prices was financially risky and that I would be better off renting now. I give myself five years total here. If I can’t afford a house by then I will move to a less expensive market.

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  108. 108
    Ben says:

    BTW – on the subject of what to expect from agents.

    I am sick of finding incorrect data in the MLS. Three of the most common things that really piss me off:

    a) Saying that a townhome is a single family home. It is not. Condo title is not a single family home, period.

    b) Saying that the built date is the date that somebody did some renovation on the property. This is BS. Isn’t this tantamount to fraud?

    c) Not listing lot size. When I see this, it makes me think that you are either too incompetent to look it up in the records (parcel viewer tells you this in a minute) or that you are trying to hide something. Or just lazy. I don’t want to buy property from an incompetent / sly / lazy agent.

    Real estate agents – if you want your reputation to be better than used car salesmen, you need to crack down on this kind of behavior and do something about it.

    I feel bad for Ira, because he seems like such a straight guy. But with the quantity of bad listings out there, it is hard to have a high expectation of the average agent.

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  109. 109

    But you’re so right Ben. It pisses me off that all these dang townhomes are listed as single family homes rather than condos. but some townhomes have some land with them and no HOA dues, so they might be hard to classify.
    And I realize that some people want more house and less land, but I mostly consider townhomes to be a blight upon the land, where they tore down perfectly nice older homes to build these tacky, ugly overpriced POS’s.

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  110. 110
    leanne finlay says:

    Nice language, boys.

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  111. 111
    what goes up comes down says:

    Great addition to the discussion Leanne (sarcasm to be understood)

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  112. 112
    what goes up comes down says:

    Mack McCoy = BUY NOW, Housing never goes down.

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  113. 113
    notabull says:

    Mack said:

    “Remarking about the past is not the same thing as predicting the future.”

    Really? The problem with this is that remarking about the past with a nod and a wink is exactly the same thing as predicting the future. You can even state that you’re not predicting the future but statements like below leave people wondering, and the message is clear.

    Classic NAR/realtor comments:

    “I’m not going to predict the future, but I will tell you that real estate has never nationally gone down in value”.

    “Over the past decade or so, people have made a lot of money in real estate.” (wink wink, so could you!!!)

    “People that bought houses at the peak, in the past, still did well in the long run even when prices went down”. (true, but deceptive as these people would have done BETTER if they had waited)

    I’m glad we have the realtor “invasion” on this board as it will make the forum a more varied place, and there is no better place to get on-the-ground information than from a respected realtor. The problem is finding one that doesn’t drink their own Kool-aid.

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  114. 114
    Affluent Bitter Renter says:

    Mack said:

    “Remarking about the past is not the same thing as predicting the future.”

    Well, what about predicting the present? From Mack’s webpage:

    “Feel free to look around . . . some pages are in better shape than others, but all of them help to give you a feel for the raging hot Seattle real estate market, information on some of our communities, and a little bit about us.”

    How many people agree with the assessment that the current Seattle real estate market is “raging hot”?

    http://www.NiceSeattleHomes.com/

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  115. 115
    Scuba Steve says:

    Personally, I did not live in this area in 2004. In fact, I owned in another state. I moved here in 2006 fully planning to purchase and found prices that would break me. During my efforts to understand the market I found this blog and determined that buying at 2006 prices was financially risky and that I would be better off renting now. I give myself five years total here. If I can’t afford a house by then I will move to a less expensive market.

    Hey, that’s my story too! Except replace 2006 with 2007. I really don’t get how people are supposed to afford buying, unless they have 6-figure down payments or make that much more per year. Maybe buy with an adjustable mortgage and be sure to be out of there before the rates go up?

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  116. 116
    Mack McCoy says:

    “Afford” is key. Real estate problems are decidedly middle-class problems – there’s always people in a market who can’t afford to buy.

    And I’m not sure you encountered this thought here – it’s always financially risky to buy real estate. Always. Alla time. Risk risk risk risk risk risk risk risk risk. Anything can happen. Anything. People bought in Pompeii, 77 ad, didn’t work out long term. Northern England, 1938, ouch. Cuba 1956 – what’s yours is now the State’s.

    San Jose, Ohio & Michigan – it can all happen.

    But if you’re able to buy today, you’re essentially betting on whether it will happen or not, and gambling has its consequences. Those who bet in 2004 on Seattle houses built before 1980 are 35% ahead of the game at face value. Those who bet against …

    – – – – – – – – – –

    Ben, thanks for taking a stab at that one. Maybe some of us know more about Case-Shiller than you think.

    – – – – – – – – – – – – – – – – – – – –

    Between ABR’s “I don’t recall” and notabull’s “wink wink,” and “The problem is finding one that doesn’t drink their own Kool-aid,” it’s pretty clear that there are some people in the world that you’re never going to have a reasonable exchange with.

    I don’t know the future, but I think that if you predicted a crash in Seattle in 2004, maybe it’s about time you admitted you were wrong.

    But – there’s still hope! The market may crash this year! Wouldn’t that be great!!!

    Be careful what you wish for.

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  117. 117
    biliruben says:

    I predicted we were in a bubble 2004, bought a house anyway, and I’m pretty certain I was correct. In fact, I even predicted 2007 would be the peak, way back then. Look I even got the hard part, the timing, right.

    I could have gotten probably out in the spring of 2007 for 35%. Now, maybe 20% is my guess. Maybe. When I go to sell in a couple years, I’ll be happy as long as I don’t lose more than 20%. I think I’m safe, but I wouldn’t double down on it.

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  118. 118
    Everett_Tom says:

    …but I think that if you predicted a crash in Seattle in 2004…

    Can we start a Tally on the number of new visitors who show up don’t read enough of the previous post and just assume this?

    Mack, nothing personal.. it seems that people show up and make that assumption at a VERY high rate.. You might try reading the 2nd post under “Read These First” on the right.

    from that post:

    One thing I do know for certain is that the recent trend of rapidly increasing property values (double-digit increases year-on-year) cannot possibly continue indefinitely. If it did, eventually everyone would be priced out of real estate. There has to be a slow-down sometime, and I think it’s coming fairly soon (within the next 3-5 years). I don’t know if it will take the form of a leveling off of values, or a slow decrease, or a sudden decrease (bubble bursting), but I know it is coming.

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  119. 119
    Affluent Bitter Renter says:

    Mack,

    “Between ABR’s “I don’t recall…”” Hmmm… I don’t recall having said that “I don’t recall” (grin).

    It was fairly obvious that a bubble was developing in 2004 – however, predicting the timing on when a bubble will burst is difficult. Only a few people can get out of a bubble at the top of the market – if a lot of people want to get out, then you aren’t at the top anymore. Taking out a suicide loan to buy a house, where I’m financially ruined if the house doesn’t appreciate would never strike me as a good idea under any circumstances – I like sleeping at night.

    Warren Buffet explained the bubble timing problem best:

    “But booms get wild towards the tail end. Its like Cindarella at the ball before the clock strikes midnight. You know that everything is definitely going to turn to pumpkins and mice so Cindarella should leave in advance. But you are having so much fun and the temptation is there to stay for just ONE MORE dance. “The other big problem is that there are no clocks on the wall to tell you when the party will end. Just like with Internet stocks in 2000 and uranium in the 1050s, its easy to get caught when everything turns back to pumpkins and mice again.”

    http://www.valueinvesting.info/2006annualmeeting2.htm

    So, to return to my earlier question, do you think that the current Seattle real estate market is “raging hot”?

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  120. 120
    NotaBull says:

    “Between ABR’s “I don’t recall” and notabull’s “wink wink,” and “The problem is finding one that doesn’t drink their own Kool-aid,” it’s pretty clear that there are some people in the world that you’re never going to have a reasonable exchange with.”

    Mack, I bought a house in 2003 during a time that it was becoming obvious that a bubble (or significant run up in price) was happening. I made a lot of money on that house, and I’m certain I’ll make some money on the next one too once I buy it at a lower price than I could buy it for today.

    The problem isn’t that most people on this board can’t have a reasonable exchange with realtors. There are many on this board that I have a great deal of respect for:

    -Ira
    -Greg
    -Ray “GEMS” Pepper
    (sorry if I missed anyone)

    The problem, Mack, is you. You’re just a bit of an ass, and you know it. In fact, you thrive on it while you wield your “I don’t have to be friends with everyone” sword. Good job, I say… Your like that guy who says “hey, I shoot from the hip” as an excuse to be a prick.

    Mack said:
    “I don’t know the future, but I think that if you predicted a crash in Seattle in 2004, maybe it’s about time you admitted you were wrong.”

    Sigh. Not even the Economist predicted a crash in Seattle in 2004. It may be convenient to lump everyone on this forum in the “zealot bubblehead” camp, but it’s just not true. I suppose if you were to believe that most of us are reasonable people that have actually made reasonably accurate predictions over the last couple of years, then you might have to believe that prices will continue to come down and that you, a realtor, are probably in for quite a hard time, financially. I hope your entire household income is not in real estate sales. Or maybe I do! Hey, just shooting from the hip!! I’m not here to make friends you know!

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  121. 121
    Mack McCoy says:

    Actually, you didn’t ask a question.

    http://www.msnbc.msn.com/id/8475859/

    – – – – – – – – – –

    Everett Tom, do you just walk into clothing stores and tell them, you don’t have my size?

    If the shoe doesn’t fit, don’t wear it. It fits some people, and those are the ones I’m admonishing.

    You can have it both ways, but you don’t get any points for it. May-be is a great hedge, but it doesn’t get you points for being right, and it doesn’t get you off the hook when you’re wrong.

    Somebody wrote that the Seattle market was going to crash “real soon now” in 2004, and they were wrong. Somebody wrote that the Cleveland market was going to crash “real soon now” in 2004, and – I think, I’m too lazy to do the research – they weren’t correct in 2005, but by 2006 they were proved correct.

    Everyone is entitled to their opinion – even, I hope you agree, a Realtor like myself – but be honest when you’re keeping score. You can only count a “victory” in the Cleveland market the way a sports fan says, “We Won! We Won!”

    2005 wasn’t down from 2004.
    2006 wasn’t down from 2005.
    2007 – it’s hard to argue honestly that values fell from 2006, isn’t it?

    Stopped clocks …

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  122. 122
    Mack McCoy says:

    - The problem, Mack, is you. You’re just a bit of an ass, and you know it.

    You make me feel all warm and fuzzy inside.

    – The problem isn’t that most people on this board

    Did I say “most,” or “some?”

    GIGO.

    – then you might have to believe that prices will continue to come down

    Here’s the difference, my new friend. I don’t – and really have no need – to “believe” any such thing. The future, in my view, is uncertain. Always.

    The fact that -you- believe you know the future is one of the ways that -we- are different.

    Then, again, there would have to be a shift in direction, at least in my part of the market place, for values to come down.

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  123. 123
    NotaBull says:

    “The fact that -you- believe you know the future is one of the ways that -we- are different.”

    I don’t believe I know the future. I simply strongly believe that there is a *much* higher chance of prices continuing to come down than there is of a substantial rebound. If prices go up, I’ll say “screw it” and buy anyway. If they go down then I’ll keep waiting until my research indicates that they are not likely to go down much further.

    “You make me feel all warm and fuzzy inside.”

    That’s disgusting! ;)

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  124. 124
    Mack McCoy says:

    - Taking out a suicide loan to buy a house, where I’m financially ruined if the house doesn’t appreciate would never strike me as a good idea under any circumstances

    Yeah, but really – who disagrees with you? Can you name one person who thinks you should risk near-certain bankruptcy in order to buy a home? Really?

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  125. 125
    NotaBull says:

    “Yeah, but really – who disagrees with you? Can you name one person who thinks you should risk near-certain bankruptcy in order to buy a home? Really?”

    No, because nobody who got those stupid loans thought house prices would ever go down. In fact, they thought that they’d continue to go up at 10-20% per year, for the next decade or so (actual study done in LA).

    You and I may see this as a risky proposition, but I believe that most people in those loans figured they’d get out (with profit) before it became a problem. Bankruptcy was never in their mind because they were going to get rich. RICH!!! Muh ha ha ha ha ha ha!!!

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  126. 126
    Affluent Bitter Renter says:

    “Can you name one person who thinks you should risk near-certain bankruptcy in order to buy a home?”

    I think numerous people believed (and were told) that “real estate always goes up”, so you will always be able to refinance your interest-only loan before the ARM resets, or before you actually have to start repaying principal on the mortgage.

    A lot of people out there have loans that they can’t repay unless they can refinance the loan through appreciation in the value of the house – which is the nub of the current problem. Waiting out a lengthy decline in the real estate market isn’t an option for them.

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  127. 127
    Alan says:

    Yeah, but really – who disagrees with you? Can you name one person who thinks you should risk near-certain bankruptcy in order to buy a home? Really?

    The message I take away from Marc’s posts is that I should risk near-certain bankruptcy to buy a house in this market. But certainly I’m getting the wrong message. Right?

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  128. 128
    Alan says:

    or rather Mack…

    Rate this comment: Thumb up 0

  129. 129
    Everett_Tom says:

    Everett Tom, do you just walk into clothing stores and tell them, you don’t have my size?

    Sorry, I’ve got no clue what your trying to say with this…

    Somebody wrote that the Seattle market was going to crash “real soon now” in 2004,

    Ok, that’s fine.. who (if it wasn’t someone on this board, then it seems kinda silly to bring it up..)? There’s all kinds of prediction out there from all kinds of people.. I’m for the ones that seem to get it right most of the time based on models. If your point is that there’s lots of places to get wild quotes that are inaccurate, I agree!

    Everyone is entitled to their opinion

    you certainly are.. but don’t expect to get a lot of respect for it unless you can back it up with something more then anecdotal evidence or NAR quotes (who have had trouble making good predictions)

    oh.. and the stopped clock accusation has already been tried..

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  130. 130
    Mack McCoy says:

    - Sorry, I’ve got no clue what your trying to say with this…

    If my statement doesn’t apply to you, ignore it. If the shoe doesn’t fit, don’t wear it.

    You’re right, I don’t spend much time here, I haven’t lived my life reading all of the posts and catching all of the disclaimers and nuances.

    As you say, there’s all kinds of predictions, from all kinds of people. I’m guessing that you’re not making any, and I’m not making any, so we’ve got no quarrel.

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  131. 131
    Mack McCoy says:

    Alan, I think that -you- should risk near-certain bankruptcy. Just teasing. ABR shouldn’t, either.

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  132. 132
    b says:

    Mack,

    If someone sold all of their Nasdaq index funds on 1/99 because they saw a tech bubble, you would probably call them a moron and chicken little until 2002 and you’d be “right”. Except selling then and sticking it in treasuries you would have yielded more money today than riding it out, let alone if you sold in 99 and bought in 03. The Nasdaq took until last year to reach what it was at in 1999, and that is a far more liquid investment than home buying on margin and the tech bubble was minuscule compared to the credit bubble deflating right now. Hope none of the people you convinced to buy in 2005, 2006, 2007 who are so rich with equity need to sell in the next 5+ years or they might be bringing a bag of cash to the table with them.

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  133. 133
    common1sense says:

    Markets go up and markets go down. Real estate boomed in 1978 – 1979, maybe thru 1980. From 1982 – 1984 it was fairly pathetic in Seattle anyway. 1988 – 1989 was another boom, lots of multiple offers. March of 1990, market quit booming. We just didn’t know the word bubble back then. 2000 another bust, this time caused by dot.commers failing, and it’s my opinion if we had not had 911 bring us to our knees, that market correction time would have gone on for at least 3 years. 911 just helped bring prices to the zone where people felt comfortable to buy again, but certainly not till spring of 2002.
    So, here we are in 2008 with the very predictable market correction happening, and all of you youthful doomsayers think you invented it …

    Gack.

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  134. 134
    common1sense says:

    Oh! And don’t let me forget to mention that in 1971 the Seattle housing market was THE WORST since the depression, due to THE BOEING BUST. Check out this site for a great story and picture of the famous billboard “will the last person leaving Seattle turn out the lights”.

    http://www.historylink.org/essays/output.cfm?file_id=1287

    So, I guess you bubbleboys will enjoy starting to predict that in 2016 or 2017 we’ll see the next bubble. Or will you want to call it a correction by then?

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  135. 135
    Everett_Tom says:

    If my statement doesn’t apply to you, ignore it. If the shoe doesn’t fit, don’t wear it.

    It might apply, I just don’t understand it.. I don’t know what your trying to suggest..That’s all.

    You’re right, I don’t spend much time here, I haven’t lived my life reading all of the posts and catching all of the disclaimers and nuances.

    And I don’t think anyone expects you to. However, I’d really appreciate it if you tempered you comments with the knowledge that there’s a good chance the point you bring up has been discussed.

    As you say, there’s all kinds of predictions, from all kinds of people. I’m guessing that you’re not making any, and I’m not making any, so we’ve got no quarrel.

    Your right, I’m not making any predictions.. However, I am putting my money on Tim’s guesses (by waiting on my home purchase.), so I do have a horse in the race.

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  136. 136
    george says:

    common1sense: So far it’s the biggest housing “correction” since the depression. What, me worry?

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  137. 137
    Matthew says:

    Nocommon1sense,

    Give this train wreck whatever name you like, prices are coming down… WAY DOWN! I don’t think anyone on this blog claims to have coined the word “bubble”, but to deny that Seattle is about to undergo a painful correction at this point in time, (to quote Chris Rock) “IS JUST PLAIN IGNANT!”

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  138. 138
    Mack McCoy says:

    - However, I’d really appreciate it if you tempered you comments with the knowledge that there’s a good chance the point you bring up has been discussed.

    You might, but you do know that there are people reading here who have not sat through the party the entire time.

    – However, I am putting my money on Tim’s guesses

    That’s fine. Time will tell.

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  139. 139
    Mack McCoy says:

    So clearly, there’s not much discussion on agent services – it’s clear that you can have most of the items on that wish list, and a couple of them do require some level of partnership – being treated as a person rather than a lead, for example, comes from developing a relationship of mutual trust.

    The thing is, some people – and I think that some of you fit into this category – don’t really want to know what market conditions are, you want agreement that what you already believe is correct.

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  140. 140
    what goes up comes down says:

    Well then Mark why don’t you educate us.

    Since you said “The thing is, some people – and I think that some of you fit into this category – don’t really want to know what market conditions are, you want agreement that what you already believe is correct.”

    Is the Seattle market for 2008 in your opinion going up, going down, or will it be flat. I say Seattle in general if you want to remark on a specific area please do.

    I am curious what you think.

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  141. 141
    notabull says:

    “So, here we are in 2008 with the very predictable market correction happening, and all of you youthful doomsayers think you invented it …”

    So, common1sense, when did *you* predict the market was going to come down? Obviously the market has its ups and downs, but there were *plenty* of local real estate types that told us Seattle was different and that prices wouldn’t come down. Less subprime, good jobs, Microsoft, Boeing, blah blah blah.

    These days there seem to be a lot more people saying that it was OBVIOUS that we were in a bubble and that prices would come down, than there were just six months ago.

    The problem a lot of us on this forum have is that the “professionals” on the whole got it wrong. So if you’re one of those professionals that’s predicting something or other (not all are) then you should expect to reach a cynical crowd. You can’t pull out your professional credentials and expect it to be taken seriously when others that have done so before you did the same and got it wrong.

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  142. 142
    Matthew says:

    Even at this stage in the game it truly amazes me that people have no clue as to WTF is going on.

    This isn’t a real estate problem. It is a massive credit crunch. Banks made loans to everyone with a pulse. They took these slimy, filthy loans (many of which are now worthless) rolled them into mortgage backed securities, and sold them throughout our nation and throughout the world. These loans are in your 401k, in your life insurance policy, in your mutual fund, and your money market account.

    They have infested the entire financial system. 120 billion has already been written down by major financial institutions with more to come. The entire financial system has been leveraged to the hilt.

    A middle class problem????? WTF are you talking about? We are just in the beginning innings of the game my friend. CEO’s have already lost their jobs, Citigroup and WAMU have just begun to lay people off. Before all is said and done this financial mess is going to have impacted people from the top to bottom. Our entire financial system is headed for a massive reset.

    Sure people have been wrong about the timing of the bubble. Tops and bottoms are tough to call. However, the information available, suggests we are currently undergoing a correction. I have no idea how severe the correction will be or how long it will take, but I know that it is here and Seattle will not be unscathed.

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  143. 143
    Everett_Tom says:

    You might, but you do know that there are people reading here who have not sat through the party the entire time.

    Couldn’t agree more.. hence the request to “tempered” instead of “keep it to yourself”.. Many topics are worth looking at again, even if they have been covered.. :)

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  144. 144
    bitterowner says:

    b, your point re: Nasdaq is a good one and it dispels the nonsense that as long as you are investing for the long term (whether in stocks, real estate, whatever) you will weather short term corrections and end up with historical x% gains over time. This theory overlooks the very important fact that assets purchased at or near the peak of historically inflated values will not yield anywhere near the historical returns. I don’t think you painted a sufficiently bleak picture of the Nasdaq, though. It actually peaked at close to 5000 in early 2000 and is barely hanging on to half that value today….8 years later. Add in whatever inflation number you believe to be appropriate, compounded yearly, and anyone who went “all in” in the NAZ around late ’99 or early 2000 would still be down more than 75% on their investment. How’s that for your 7-10% long-term annual returns? I think the same will be true of housing. Historical returns won’t look so bad even after this correction, but for those having purchased in the last year or two, particularly adjusted for inflation and including all other housing-related expenses (taxes, maintenance, interest, etc) it seems that a long time may pass before any real equity is seen. The same may not be true for those who purchase after a significant correction.

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  145. 145
    b says:

    bitterowner,

    Yes, most people seem to be unable to critically think about this kind of “long term” investing strategy. Sure, you can buy a house at the absolute peak and not care about values because you are not going to sell and can make the mortgage payment. But it puts you in the very precarious situation of being leveraged underwater for an unknown number of years. If you bought with 0% down, then you might be under for 10 years or more. This is not a situation most people want to live in, psychologically you know you are getting screwed every month and if you do have to sell due to a life event you are going to have to pony up cash to unload it. Buying a house last year in Seattle was like buying QQQQ on margin in Feb of 2000. “Oh, maybe there is a tech bubble, but it doesn’t matter if you are buying for the long run!”. Timing bubbles to profit perfectly is very difficult, but timing bubbles roughly enough to be ahead of the average is not.

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  146. 146

    Two things come to mind here:
    If you bought a home or a strong stable stock every six months for 25 years, you probably will end up doing pretty well, that’s the concept of dollar cost averaging so one buys when the market is low and buys when the market is high. To simply buy a house or a stock at the peak of the market and say ” the market always go up” is foolish and naive.
    2. Yeah, most real estate agents have a vested interest in their predictions. They are not always going to be wrong, but do they have some motive in making a certain prediction?
    Winter 05 Spring 06 I was in a real estate class predicting local price drops and was generally scoffed at and called “Mr. Doom and Gloom”.
    I like to make predictions about everything from elections to football games to the housing market, but I won’t claim that my being a real estate agent makes me any more of an expert in predicting home prices than anyone else here. But I usually win money when I make bets about sports and politics.

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  147. 147
    Ben says:

    Mack,

    So what do you think is the problem with Case-Shiller in NY? I had a stab at it, and I did so politely. Please return the favor and explain what you think the issues are. Being cryptic like you were with your response to me comes across as rude, and does not build credibility with anybody.

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  148. 148
    bitterowner says:

    Ira –
    That is exactly the problem. You cannot really dollar-cost average on the price of a single property the way you can with stocks, although I imagine that real-estate investors (successful ones who know what they are doing and not J6P flipper) do so indirectly by buying different properties over a longer time frame. I am referring to your average family who buys and sells one house to live in at any given time. Regardless of how you finance, you basically are going all-in on the market price at the particular point in time when you decide to buy. Doing so with any inflated asset would seem very risky. However, I keep hearing that if you plan on staying in your house long term (one of the discussions at RCG seems to define this time frame as 2 yrs!) then it would be just fine to buy a house now even if you expect the market to tank as you can ultimately count on recuperating your losses and having a substantial amount of equity. That is likely to be as untrue for real estate now as it was for the NAZ in 2000, and even moreso as owning Nasdaq stocks does not come with carrying costs, maintenance costs, yearly taxes on unrealized and possibly never-to-be-realized gains.

    We haven’t even touched on the opportunity cost of throwing away money in a depreciating asset, which “b” also alluded to above. IE the loss in value of your asset in this type of scenario is compounded by the fact that the money that has been spent and lost is no longer available to grow in other ways.

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  149. 149
    Mack McCoy says:

    - Is the Seattle market for 2008 in your opinion going up, going down, or will it be flat. I say Seattle in general if you want to remark on a specific area please do.

    I don’t know.

    – Being cryptic like you were with your response to me comes across as rude, and does not build credibility with anybody.

    And I’m the first poster here who is rude and in-credible?

    Ben, you took one for the team here, and are to be commended. All of us are in the habit of regurgitating somebody else’s information to support arguments that express our beliefs, without fully understanding what that information represents.

    But we work with what we have. And what we have is a future that is uncertain, just like always.

    There were down markets in 2000, when I first noticed the word “bubble” next to “housing market.” Those who predicted correctly were, well, correct.

    In 2002, there was a long piece in the New Yorker. I’m sure that well-respected venue gave some readers enough food for thought to bail on the market. If they were in New York or Seattle, that didn’t work out so well.

    2003. 2004. 2005. 2006. 2007. And now, 2008. This Year, It Really Will Crash.

    Maybe.

    But don’t you think those who -were- right in making predictions about the market going up, back in 2000 and 2002 and 2004 deserve some props?

    And if we don’t acknowledge the past, how “credible” are we?

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  150. 150
    Affluent Bitter Renter says:

    Mack McCoy said:

    “- Is the Seattle market for 2008 in your opinion going up, going down, or will it be flat. I say Seattle in general if you want to remark on a specific area please do.

    I don’t know.”

    That’s not the impression that you are giving potential purchasers, Mack:

    “Feel free to look around . . . some pages are in better shape than others, but all of them help to give you a feel for the raging hot Seattle real estate market, information on some of our communities, and a little bit about us.”

    http://NiceSeattleHomes.com/

    “Every year, the same old thing!
    Prices of Seattle real estate keep going up, and the chart above illustrates the rate of increase.”

    http://www.NiceSeattleHomes.com/prices/historic.html

    “As usual, we don’t know what the future will bring. But after a rocky 2001 and a sort of unenthusiastic 2002, the market has caught fire here again.”

    http://www.NiceSeattleHomes.com/prices/historic.html

    “The rash underwriting of sub-prime loans helped push the real estate market to record heights, and those gains won’t be evaporating any time soon.”

    http://www.NiceSeattleHomes.com/newsletter/currentnewsletter.pdf

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  151. 151
    Thomas says:

    Mack,
    I’m also curious about the answer to your previous challenge. What is the case-shiller data problem in New York and how do they solve it?

    I’m more curious about another question though: Since Real-Estate is now hyper-local, what does the problem with Case-Shiller data in New York have to do with C-S data for Seattle?

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  152. 152
    biliruben says:

    I owe Mack an apology. Here’s a cut and paste from this thread:
    http://blog.seattlepi.nwsource.com/realestate/archives/130561.asp#comments
    if you are interested.


    I didn’t realize you were fishing for one.

    Ok. I suppose I can accept that there is a possibility that you are merely deluded and number-challenged. I apologize for calling you dishonest. I realize that being thought of as careless with the truth would be a pretty big albatross for a RE agent, so I’ll give you the benefit of the doubt.

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  153. 153
    Mack McCoy says:

    I stand by my data, and I thank biliruben for his apology.

    Thomas, the way you put it is self-answering – if there’s a problem in one market, what makes one think that there’s not a problem in another market?

    I’ll leave you with this:

    In 1989, prices in Seattle went up 20%, in 1990, 33%. In 1991, the C-S Index showed eight consecutive months (May-Dec) of YOY declines. The year ended with a small increase (0.7%) and 1992 was also flat (0.4% gain). Since then, C-S has shown 191 consecutive YOY up months.

    the last time the C-S Index showed six consecutive month-to-month declines in Seattle was Sept 91- Feb 92. Their last four reports (Aug-Nov) have shown declines.

    How can you honestly use this information to predict – or support your argument for – a significant market crash?

    Good luck, kids.

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  154. 154
    Mack McCoy says:

    Oh, ABR. Forgot about you. Well, I’m not coming back to this thread, so how about this: you’re right, I’m a jerk.

    Good luck.

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