Today’s Slow Market “Is a Different Animal”

Posted by The Tim on July 18th, 2008 at 10:05 AM · 141 Comments

From an article on home staging in the Puget Sound Business Journal:

For [Seattle home stager Jan] Sewell, who is also a Realtor with Windermere Real Estate and owner of her staging business since 1997, today’s market is unlike anything she has ever experienced.

“I have been through a couple of slow markets in Seattle before, but this is a different animal,” she said.

Sewell says she is already starting to feel the market’s traditional August sales slowdown.
…
“Most of my listings, up until this year, have sold within a week,” she said. “I am having staged things sit longer than I ever have.”

Take it for what it’s worth as an anecdote, but I thought it was interesting that even staged new construction is taking an unusually long time to sell.

(Clay Holtzman, Puget Sound Business Journal, 07.18.2008)

Categories: News
Tags: anecdote, Business Journal, staging

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141 responses so far ↓

1 Captain Kirkland // Jul 18, 2008 at 10:22 am

What a shock.
2 EconE // Jul 18, 2008 at 10:47 am

Noooooo! Couldn’t be…not NEW condos.

They must not be luxury.

Oooops…my bad. There’s a Windermere broker trying to dump a downtown 1BR for more than 100k less than she paid for it in 2006. And it’s really nicely staged.

Cosmopolitan has a Penthouse listed at 899k. Same floorplan below it sold to a relative of my L.L’s for over 1.2MM in 2007.

Nope…nobody here is getting "lick"ed.
3 Greg Perry // Jul 18, 2008 at 11:11 am

Staging does help, however……

You cannot market, or stage an overpriced pig to sales success.

Competitive isn’t good enough. The offering must be compelling.
4 Ubersalad, Ph.D // Jul 18, 2008 at 11:14 am

Speaking of over-priced bubble, have you checked the EBay price on iPhone?
5 economist // Jul 18, 2008 at 11:35 am

today’s market is unlike anything she has ever experienced.

Well Jan, why don’t you buy a DVD of Saturday Night Fever to help you get in the mood of these changing times.
6 vboring // Jul 18, 2008 at 12:05 pm

why is the Puget Sound Business Journal trying to destroy the economy?

somebody must’ve forgotten to send them the “only good news gets published” memo.
7 mukoh // Jul 18, 2008 at 12:09 pm

LOL. One funny thing came out another day from a Windermere Realtor who was interviewed by a builder. She told the builder that Windermere Agents do not show houses that are listed with discount brokers to their clients. I almost fell off my chair on that one.
8 deejayoh // Jul 18, 2008 at 12:36 pm

Love the title of the article:

Jan Sewell, which prepares homes for sale in Seattle, slows down in current real estate slump

Do they proofread much at the PSBJ?
9 Lionel // Jul 18, 2008 at 1:03 pm

Something new in my hood - foreclosures on craigslist —

http://seattle.craigslist.org/see/rfs/759643313.html

http://seattle.craigslist.org/see/rfs/759616726.html
10 SeatteMoose // Jul 18, 2008 at 1:29 pm

House won’t sell?

Overpriced by $200K?

No problem….just move the couch a few inches.
11 Bits_of_Real_Panther // Jul 18, 2008 at 1:30 pm

Anyone know how Burien Town Square is doing? Just curious, can’t find anything on it. Maybe the nicer units will be reasonable by next year, they were supposed to sell in the 500s
12 Demersus // Jul 18, 2008 at 2:25 pm

“Jan Sewell, which prepares homes for sale in Seattle, slows down in current real estate slump”

Easy to explain as grammatically correct; Jan is a thing. What sort of thing is Jan? That’s up to personal interpretation.
13 softwarengineer // Jul 18, 2008 at 3:25 pm

MCMANSIONS ARE SELLING IN THE UPPER 100S

Assuming Seattle is a mirror of California homes; here’s the new home construction advertisement signs I saw in Fresno this week:

Old price $445K, new price $335K….

Gated Community McMansions in the mid 200s.

New large gated community homes for sale, below builder cost, in the upper 100s….
14 Scotsman // Jul 18, 2008 at 4:05 pm

Both mortgage rates and the 10 year bond are up significantly over last week. I’m sure “Jan” may find things even slower as we go forward.

It’s not enough for a home to be nicely staged and well priced. Given the public’s growing awareness of market issues, a seller has to price so aggressively buyers do a double take. And even then, a bit of luck helps..
15 Joel // Jul 18, 2008 at 4:17 pm

What sort of thing is Jan?

She’s a home selling machine!
16 explorer // Jul 18, 2008 at 4:46 pm

You know, even a staged house is empty, no soul, no life, no Je nais se quois, no Joi la vive!

Perhaps if you hired a bunch of actors to demonstrate a good cocktail party, or a family with children watching TV, having a food fight, or even yelling at the kids to do their chores or homework, you might make that human sales connection a little stronger, and the insticts to buy irresistable.

Sorry, could not resist. Remember stagers, you owe me.
17 disbelief // Jul 18, 2008 at 5:09 pm

Ahh, “staging” …

another passe bubble-era anomoly, gone the way of pot smoking 20-something “senior loan officers”. Shame, really.
18 Jillayne Schlicke // Jul 18, 2008 at 5:25 pm

Hi Lionel,

Looks like the craigslist ads are using the foreclosure auction properties as bait to try and get you to attend their “investors meeting”

I’m sure they will try and sell you all kinds of books, tapes, coaching, or “systems” on how to get rich buying foreclosures.

I’d flag it.
19 Jonny // Jul 18, 2008 at 5:38 pm

“Perhaps if you hired a bunch of actors to demonstrate…”

Something like the happy family from “parents” maybe?

http://www.imdb.com/title/tt0098068/
20 faster // Jul 18, 2008 at 7:09 pm

Cue the deer!
21 economist // Jul 18, 2008 at 7:53 pm

Perhaps if you hired a bunch of actors to demonstrate a good cocktail party,

They were actually doing this in California a couple of years ago.

http://www.accessmylibrary.com/coms2/summary_0286-15989558_ITM
22 uwp // Jul 18, 2008 at 8:04 pm

Wasn’t someone around here staging condos with mannequins?
It was kind of freaky.
23 Ira Sacharoff // Jul 18, 2008 at 8:53 pm

“another passe bubble-era anomoly, gone the way of pot smoking 20-something “senior loan officers”. Shame, really.”

The pot smoking may not be passe, but the twenty something senior loan officer is about as au courant as Boy George.
24 mikal // Jul 18, 2008 at 9:42 pm

Hey Eleua, How is the weapons bunker building going? The apocalypse is right around the corner. BE PREPARED.
25 Lanny Poffo // Jul 18, 2008 at 9:58 pm

Well - credit goes to faster for originally finding the listing with these classic staging photo’s

http://i-0.rfimg.us/photo/1/bigphoto/44 … 44_3_1.jpg

http://i-0.rfimg.us/photo/1/bigphoto/44 … 4_12_0.jpg

But - the place DID eventually sell - I think the this was the original listing: http://www.redfin.com/stingray/do/print … id=1342428

Lanny
26 Lanny Poffo // Jul 18, 2008 at 10:00 pm

Oops sorry about that - fixed the links:

Well - credit goes to faster for originally finding the listing with these classic staging photo’s

http://i-0.rfimg.us/photo/1/bigphoto/444/27212444_3_1.jpg

http://i-0.rfimg.us/photo/1/bigphoto/444/27212444_12_0.jpg

But - the place DID eventually sell - I think the this was the original listing:
http://www.redfin.com/WA/Seattle/3647-Greenwood-Ave-N-98103/home/302516

Lanny
27 didn't just fall off the turnip truck // Jul 18, 2008 at 11:11 pm

Hey Lanny,
Are you Leapin’?
28 TJ_98370 // Jul 18, 2008 at 11:17 pm

mikal -

What’s with the snarky comment directed at Eleua? He hasn’t even posted on this thread. You’re coming across as a bit defensive. Bad day at the sales office?
29 ekim // Jul 18, 2008 at 11:43 pm

nice language there, # 2, Econ E. very mainstream.
30 Eleua // Jul 18, 2008 at 11:53 pm

mikal,

Obsess much?
31 Lake Hills Renter // Jul 19, 2008 at 2:14 am

“Cue the deer!”

Hah! I loved that movie!
32 db // Jul 19, 2008 at 7:47 am

> LOL. One funny thing came out another day from a Windermere Realtor who was > interviewed by a builder. She told the builder that Windermere Agents do not show > houses that are listed with discount brokers to their clients. I almost fell off my chair > on that one.

I had another realtor tell me the same thing, specifically naming FSBO and Redfin. Is that actually legal? Its certainly immoral to not pursue the best deal for their client, regardless of listing agreements, but generally agents are pretty immoral people (imho).
33 S-crow // Jul 19, 2008 at 9:42 am

DB-

Was that on the news? That seems like the kind of anti-trust issues that NAR and DOJ are in court over.
34 Riley Smith | Coconut Grove Realtor // Jul 19, 2008 at 9:50 am

Well, of course the new constructions aren’t selling because the builders are trying to recoup their costs. With such high construction costs they have to price their homes at a premium. However, the longer a new construction sits on the market the more negotiable a builder will be - this is due to the carrying costs such as taxes, maintenance and loans.
35 EconE // Jul 19, 2008 at 11:07 am

Sorry Ekim…

didn’t mean to offend your god-"golly" "lick"ing PNW passive-aggressive sensibilities.

was that better?
36 Greg Perry // Jul 19, 2008 at 11:08 am

“> LOL. One funny thing came out another day from a Windermere Realtor who was > interviewed by a builder. She told the builder that Windermere Agents do not show > houses that are listed with discount brokers to their clients. I almost fell off my chair > on that one.”

Windermere brokers and attorneys, as well as NWMLS attorneys are repetitive in their training and commentary regarding the concept of commission fixing, competition and negotiation.

Unless an agent has a written agreement with a buyer, they are obligated by agency law to show all properties with a reasonable SOC. (1 cent, $10, $100, any extremely low offering is not considered reasonable by any standard)

Windermere agents in fact do show properties listed with discount brokers and builders. FWIW, Windermere’s market share is approx 1/3 of all homes sold to buyers on the Eastside and a greater percentage in Seattle and that happens because they show properties.

This anecdotal story may be true, and may not be true. If in fact an individual agent did say such, the agent was incorrect. If the agent practices in this way without a specific written agreement with his/her client, then they could be in violation of Washington license law.

As a buyers agent, I can strike an agreement with the buyer for the amount of my compensation. If the SOC commission offered is less than the agreement, it would be up to the buyer to make up the shortfall. This includes FSBO’s and distressed properties.

Two final points:

Properties are transparent to the consumer. The properties are online and often the client requests the showing. The agent has limited control of the process.

FWIW, we’re seeing SOC commissions going up in certain circumstances due to increased competition.
37 Greg Perry // Jul 19, 2008 at 11:20 am

S-crow
Like the new look!
38 disbelief // Jul 19, 2008 at 1:19 pm

“nice language there, # 2, Econ E. very mainstream.”

Well ekim, if you think that civility can only be expected from elevated (i.e. not “mainstream” people), then I guess you have nothing to complain about. Perhaps you can find a more high-society version of the SeattleBubble that won’t offend your polished sensibilities?
39 mukoh // Jul 19, 2008 at 2:00 pm

Greg:
Quote
Windermere brokers and attorneys, as well as NWMLS attorneys are repetitive in their training and commentary regarding the concept of commission fixing, competition and negotiation.
End Quote

Windermere Brokers are repetitive in telling their agents not to take listings below 6%.
As far as the comment above on Windermere agent, it was funny since with that she was trying to demonstrate how superior a Windermere agent is to another discount agent. :)
She did not get to list the builders product however. It was still funny to hear that.
40 Greg Perry // Jul 19, 2008 at 2:36 pm

“Windermere Brokers are repetitive in telling their agents not to take listings below 6%”

Each broker owner has the ability to establish his/her company commission policy and business standard. Each broker allows for situational negotiation. You will find that commission amounts will vary between core areas and outlying areas.

And you know what? In Kirkland alone there is close to 250 Windermere agents. Many Windermere agents are very experienced and talented and some not so hot. I know outstanding agents from JLS, Re/Max, CBB,Keller Williams,Skyline, Lake and Company, Prudential, and other companies……and some not so hot.

A Seller or Buyer should carefully interview their agent for character and competency and make their own value decision.

In my mind, discount brokers are fine. They serve a need to the marketplace.
41 Ira Sacharoff // Jul 19, 2008 at 3:02 pm

There is no official policy from Windermere, or JL Scott, or ReMax, etc to not show Refin listings…That said, I know a few agents who will not send listings to their clients of homes that are listed with Redfin…I don’t know what they’d do if the buyer specifically requested to see a Redfin listed property, I know they’re supposed to. and I’ll second what Greg said. There are good and bad agents at just about every brokerage. I’d probably avoid a brokerage if it were named ” The Shyster Agency” or “Fly By Night Real Estate.”
42 mike2 // Jul 19, 2008 at 5:14 pm

There are good and bad agents at just about every brokerage.

This phenomenon is a BIG contributor to the generally poor opinion people have of Real Estate Agents.

I’m always amazed that the “profession” itself doesn’t do more to improve the average quality of the “professionals”. At the very least, the individual brokerages could implement MUCH higher qualifying standards. (I’m sure some do, but it’s not apparent to consumers)
43 Captain Kirkland // Jul 19, 2008 at 6:01 pm

Mike 2-

Very good point. The ‘weed out’ process is Real Estate is minimal at best. About 20 classes and a 1 hour easy test and you’re ready to be the fiduciary for the biggest investment in most people’s lives….doesn’t make sense. Compared to the CPA, Med Boards, and the Bar, its a total joke.
44 Ray Pepper // Jul 19, 2008 at 6:11 pm

Ira not sure if you are a big Rush fan like me but I would **definitely** use a Brokerage called **Fly by Night!**assuming they give 75% back to the consumer.

Agents that don’t show listings from 500 Realty, MLS 4 Owners, Red Fin, or anyone else paying a fair Buyers Agent commission don’t have a Buyer anyway!

Ray Pepper
Broker
http://www.500Realty.net
45 jon // Jul 19, 2008 at 6:50 pm

We had our house on the market briefly last year before we had a change of plans. We used MLS4Owners and had reasonable traffic considering the market. Biggest problem was we couldn’t do a broker’s open house without having an agent there. I would definitely go with them again, especially knowing that the buyer’s agent commission wouldn’t be going to a 6%er like Winderless.
46 ekim // Jul 19, 2008 at 8:24 pm

Just curious, the rest of you think this trash is acceptable?

————————————–

EconE // Jul 19, 2008 at 11:07 am

Sorry Ekim…

didn’t mean to offend your god-"golly" "lick"ing PNW passive-aggressive sensibilities.

was that better?
47 Captain Kirkland // Jul 19, 2008 at 9:44 pm

Ekim- I think you’re putting fuel on the fire by making an issue of it. We’re all adults here.
48 TJ_98370 // Jul 19, 2008 at 9:46 pm

EconE is a long time visiter of this blog and I would rather read any of his honestly felt opinions as opposed to the inaccurate tripe others like rentersarelosers post.
49 [troll] // Jul 19, 2008 at 10:11 pm

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RL
50 Herman // Jul 19, 2008 at 10:28 pm

Here’s a true story.

About 2-3 years ago I toured a Windermere-listed home. I liked it, and was going to work with a lawyer to put a standard offer together. (This was before I’d heard of Redfin) I told the listing agent that I intended to split the savings on buyer’s agent fees with the seller via a slightly lower pricing of the offer.

The agent called the next day to tell me they had another offer and that I had to act fast. She also said that, “her broker is not interested in looking at offers unless they come from another agent.”

This would have been a violation of state law, which requires her to present all offers made in writing to her seller. Of course, should could have given slanderous advice like, “I think this guy will be hard to work with, I recommend you decline it” and I never would have known.

But, meh, I didn’t want to deal with the hassle and let the house go.
51 Ira Sacharoff // Jul 19, 2008 at 10:44 pm

“honestly felt opinions can be inaccurate tripe”

But you can’t make menudo without it.
52 Greg Perry // Jul 19, 2008 at 11:07 pm

Jon,
Of course! It’s all about one’s personal philosophy.

Years ago, I wanted to do everything myself. Home improvements, taxes, investments, you name it. I felt I could do just as well and was convinced that I saved money. That was my personal philosophy at that time.

Today, I use the best accountants, investment counselors and contractors that I can find. I even have someone else mow my lawn. Why? My personal philosophy changed.

Brokerages like MLS for Owners have a position in the marketplace for those with a DIY philosophy. It’s a good outlet.

And here’s the deal, (please do not read this as a put down –remember I was where you are once) I rarely work with a guy like you. I generally work with a client who values their time more than their money……or simply does not have the time or the desire to research the subject. The client who is attracted to me has a different value philosophy.

Which is why the full service brokerages have a position in the marketplace.

A large portion of the audience that reads this blog and other blogs make real estate a hobby. Do not underestimate the TIME in research that reading and following the blogs take. However, if one persists, a higher understanding of the process may allow a reasonable DIY experience. This portion of the audience is using their time (to save money) for research.

FWIW, not all that read this blog are attracted to the DIY experience. I served back to back, avid SB readers in February and March (totaling 1.4 million), who were attracted to what I offered and contacted me to help them buy a home. The commissions were paid, and they both felt they received high value. In fact, they are now great referral sources.

For those who are frustrated with general “agent competency”, as agents we often get just as frustrated. If the majority of consumers would do a modicum of diligence, or not hire precious granddaughter who is barely licensed up, most of the yo yo’s would never get hired and would be forced to go away.

Mike2,
Many agents are past corporate executives (like myself), ex lawyers, professional negotiators, professors, coaches and others who have achieved at high levels in the workplace, who view real estate as a profession and educate themselves in this business as such.
53 TJ_98370 // Jul 19, 2008 at 11:41 pm

Good one, Ira.
54 Ray Pepper // Jul 20, 2008 at 12:01 am

You know Greg I have to tell you this. I believe we are both trained professionals in the field of Real Estate. What I cannot understand is how any Agent can continue to justify accepting 2-3% representing a Buyer or seller.

I just closed the most difficult client I have had in 5 years. I showed her 29 homes over 5 months. I logged the time spent. Purchase price was 222k . My pay was 2050.00 with 500.00 going to the house. I worked 37.5 REAL hours when it was all done. I made 55.40 an hour. Remember this was the most time consuming client I have had. As an RN I get paid 35.00-41.00 when I take a NOC shift with an Agency.

Real estate is just fundamentally flawed with the high commissions. Change is happening and I know the Big Brokerage doors will swing both ways eventually offering 2-4% and a 1-3% plan. It will be better for all of us and the consumer will win!

Sadly the blood will continue to spill and the name-calling will continue. We are very proud to be a part of the change and PRAY for people like you to assist us in changing the system and giving the consumer what they want.

Ray Pepper
Broker
http://www.500Realty.net
55 Greg Perry // Jul 20, 2008 at 12:56 am

“You know Greg I have to tell you this. I believe we are both trained professionals in the field of Real Estate. What I cannot understand is how any Agent can continue to justify accepting 2-3% representing a Buyer or seller.”

Ray, because some people will shop at Nordstrom and some at Wal Mart. Some agents fly away with the commission check in their beak after the close, I serve my clients long after the transaction closes as a trusted advisor. Again it comes down to an individuals personal philosophy.

We negotiated for 6 weeks on a house for one of those SB readers that I described above. House was worth over $700k the year before, on the market for $680k and we secured it for $635K. My client was happy to see that I received my 3% commission for over $53,000 in negotiation. (We also negotiated over $8,000 in inspection repairs). I’ll be hosting a house warming party for him next month and continue to assist him with any needs associated with the house purchase.

I had a top exec with MS who I assisted with a finding a lot, identifying an architect and a builder. My $36,000 commission (for just the house, I was paid separately for the lot) was on HIS HUD 1 as a buyer expense. After the project was completed, he told me sincerely that he couldn’t believe my commission was only $36,000, and that I was worth much more to him than that. He gave me a bottle Quel Ceda Creek Cabernet Sauvignon as a thank you. Since, he has referred 3 family members and 4 others who have moved into his department, all whose homes have closed.

I often see the rank and file MS workers with different personal philosophies than the MS executives (I see this in every company). There is a reason people rise to the top of their fields.

You see my friend, there is nothing, nothing at all you can do with your present broker business model to attract these clients. You give T shirts away, my client gives me a gift of a bottle of wine worth several hundred dollars, after a $36,000 commission plus several referrals that have netted me thousands.

And no matter what the big broker decides to do, I can still charge what I negotiate for my services.

Some people only see price, others see value.

I will always have a market…….. And so will you.
56 victorchai // Jul 20, 2008 at 1:12 am

now that is a show off…………dah……
57 Greg Perry // Jul 20, 2008 at 1:24 am

Ray,
“I just closed the most difficult client I have had in 5 years. I showed her 29 homes over 5 months. I logged the time spent. Purchase price was 222k . My pay was 2050.00 with 500.00 going to the house. I worked 37.5 REAL hours when it was all done. I made 55.40 an hour. Remember this was the most time consuming client I have had. As an RN I get paid 35.00-41.00 when I take a NOC shift with an Agency.”

Ray, you didn’t come close to making $55.40/hour. You’ll be lucky to break even. From your gross you need to pay your taxes, health insurance, marketing and expenses. The gas alone on this one would be expensive. And how are you factoring risk? This isn’t looking like a sustainable model to me.
58 Scotsman // Jul 20, 2008 at 1:40 am

While I’m sure Greg will indeed always have a clientèle, over time I expect Ray’s side to win out. And the reason is simple- as in other fields, technology continues to lower the cost of relevant information while improving content and timeliness, all the while providing better access to competition. The MLS lock on data is being broken down, allowing buyers and sellers to connect more directly, more efficiently, and at lower cost. The need for an agent, especially one without any real skills, is being marginalized. And with the current national interest in real estate fraud, etc as a result of the collapsing bubble, i wouldn’t be surprised to see a push for nationalized standards and forms for completing transactions, making the current specialists even less necessary. While some buyers and sellers will always require or want personalized treatment, the majority will seek and be able to find lower cost alternatives that meet their needs.
59 what goes up comes down // Jul 20, 2008 at 2:11 am

Greg the future holds something for you = Dodo Bird

See you might not understand this but you don’t create anything. You skim.
60 Ray Pepper // Jul 20, 2008 at 7:45 am

Greg, the majority of our customers usually find their home and then call us so I would say we average 2-3 showings. That one case was an exception to the rule. But, the concept of paying someone to negotiate for you is absurd. On each and every 500 Realty transaction the Buyer makes an educated decision, with our guidance, based on recent sales and current market conditions. You saving 1 client 53k is the standard in this environment. Please review my closings and see what 500 Realty Buyers are saving from their list price. I will give you a few here off the top of my head:

249k list sold 222k
234k list sold 199
495k- 465k
939k -878k
739k -677k

You see Greg I firmly believe people need door openers, expert guidance, and trained negotiators. I have turned down the last 4 agents who applied to 500 Realty. None of them fit the bill of what I see is the future of Real Estate.

People love looking for their homes and more and more Agents are paying their clients to do it. We just pay the most and make most of our money off Lead Generation. There will be thousands of Real Estate companies that build advertisers and develop a Loan network.

When there are high commissions the incentive to sell by the Agent is increased and the Buyer or Seller loses their edge in the transaction.

The current professional realtors will find a place in Real Estate for the future but we will all be looking back at the 6-7% concept and laugh. The professional realtor has nothing to fear as long as they can adapt. The MLS system, as we know it, will come to an end.

Ray Pepper
Broker
http://www.500Realty.net
61 Sniglet // Jul 20, 2008 at 8:12 am

Ray,

Changing subjects a bit, I am curious as to whethere there could ever be regional or economic circumstances in which you would recommend that most prospective buyers consider postponing purchases?

For example, would you recommend that most people should forego buying if you saw a bunch of indicators that led you to conclude that real-estate prices would decline 30% or so in a couple years?

Are there any places in the US where you feel people should NOT be buying today (i.e. because there are significant price declines still ahead)?

Or maybe you feel there is no such thing as a “bad” time to buy, and that it all just depends on finding a house you like that fits your budget. The prospect that prices might decline are just an irrelevancy that buyers shouldn’t worry about.

I recall you making comments about how there are “always” good deals to be found. I guess that if someone had been able to buy a home in Sacramento in 2004 for 40% less than the average list price for similar properties that they would have had a good deal which would have held up well even despite their price declines. Maybe it just takes good realtors to help buyers find those kinds of screaming deals…
62 [troll] // Jul 20, 2008 at 8:21 am

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63 [troll] // Jul 20, 2008 at 8:27 am

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64 Greg Perry // Jul 20, 2008 at 8:36 am

Scottsman, you bring up good points for discussion.

We have to honestly evaluate society? With technology, people have more information. Do people have more time? or less time as a result of technology and information?

Can real estate be broken down to a simple transaction? The long AND current trend is the opposite. Every year the forms get longer and more complicated. Why? Somebody sued somebody and won. Or, the Legislature pass a new consumer protection law that creates new rules and procedures —with penalties.

Yes, you bring up the issue of fraud. What has really happened? It is now a FELONY for an agent to be a party to real estate fraud in lending. Now in the minds of the attorneys, there is a lot of gray area where fraud begins. The stakes are higher. We now have increased risk. How many brokers and agents will willingly give up money for more risk? Also, the State of Washington is raising the bar on agent qualification.

Now as you point out the market is correcting. Are FSBO’s being successful in this market? Are we seeing a trend for commissions to go up? or go down. Commissions are definitely trending up. New construction commissions which are always lower are now above customary market driven commissions. Sellers are enticing buyers agents with a better offering to assure showings. Commissions drop when the market heats up.

Nationwide forms? Not a prayer. At least not in our lifetime. The States are too scattered and too independent. Real property is transferred differently state by state.

And yes, people have access to data. Other than those who make Real Estate a hobby, much like you, how many people actually absorb themselves in the data to be able to make any kind of quality decision. From my experience, very few.

And finally, people don’t know what they don’t know. The other day on the RCG, The Tim was relaying that his intense study and research yielded many surprises and busted a few misconceptions.

What I will wholehearted agree with is that there is a transfer of money in a real estate transaction. Enterprising businesspeople everywhere will try to work and create a model to capitalize on this money. It’s called Capitalism. It’s a good thing.

I really don’t see real estate becoming a simple transaction anytime soon, however. Real Estate is too litigious and often acrimonious.

One of the biggest obstacles for a new model is the thingy called a lawsuit. The first suit wipes out the E&O IF E&O pays out if there is no negligence. If there is negligence or a 2nd lawsuit happens, it’s bye bye now.

There’s a lot of room for debate in these issues.

WGUMCD,
“Greg the future holds something for you = Dodo Bird

See you might not understand this but you don’t create anything. You skim.”

I understand that’s your paradigm. You get to keep it.

Here’s my dirty little secret. My clients don’t see it that way. They come out the transaction satisfied with value and use me over and over again and refer me others. It’s an awesome thing working with good people. Good people know other good people. Those agents who work transactionally often get quite a few “jackasses”. I don’t see jackasses in my business. Only the good, fun ones!
65 Ira Sacharoff // Jul 20, 2008 at 8:39 am

“So why does Redfin hire amateurs with very few closings under their belt?”

You may not like Redfin or how they do business, but they require their new hires to have closed 20 transactions. I’d say that if you’ve closed 20 transactions, you can’t really be called an amateur.
66 Greg Perry // Jul 20, 2008 at 8:43 am

Ray,
Again, we’re working with a completely different profile of consumer. You are working with the price driven consumer. I am working with the value driven consumer.

I get to keep ongoing relationships and deeply serve after the transaction closes. You huck your wares at home shows etc. hand out t shirts.

We’re different and have a different client profile. And I’m happy you’re out there doing your thing.
67 [troll] // Jul 20, 2008 at 8:54 am

W hv t hnstly vlt scty? Wth tchnlgy, ppl hv mr nfrmtn. D ppl hv mr tm? r lss tm s rslt f tchnlgy nd nfrmtn?

Hr’s my drty lttl scrt. My clnts dn’t s t tht wy. Thy cm t th trnsctn stsfd wth vl nd s m vr nd vr gn nd rfr m thrs. t’s n wsm thng wrkng wth gd ppl. Gd ppl knw thr gd ppl. Ths gnts wh wrk trnsctnlly ftn gt qt fw “jcksss”. dn’t s jcksss n my bsnss. nly th gd, fn ns!
…………

GRG, GR 100%
68 Sniglet // Jul 20, 2008 at 8:54 am

Rentersarelosers,

I would love to hear your thoughts on the question I posed to Ray as well. Do you think there is such a thing as a “bad” time to buy? Are there any indicators you think prospective buyers should look for that would be warning signals that prices are going to fall significantly, and that they should postpone a purchase?

For example, do you think it was a “bad” time to buy in Sacramento back in 2004? Was there some particular factor that Sacramento area buyers should have been looking at to warn them against buying back then?

I respect your view that the Seattle market is healthy, and that people shouldn’t hesitate to buy right now. I am just trying to undersand what you think would constitute an “unhealthy” market.
69 Ray Pepper // Jul 20, 2008 at 8:55 am

RAL we screen our Buyers to see if they are a good fit for 500 Realty. Since we give back 75% of the dough they must do 75% of the work. Finding the home is always the hardest part in real estate. Our Agents let all of our clients in the home but the discussion goes like this:

1. Are you Pre-Approved? We must have your Pre-Approval on file to begin showing homes.
2. After they locate a home or homes. Our Agent will ask did you look at the pictures on line? Have you driven the neighborhood? Have you talked with neighbors? Is this the property you plan on purchasing?

The Buyer when working with 500 Realty should do what every Buyer should do anyway before Buying a home. Then we step in.

Sniglet–Prices are coming down and people have to sell. Your home this year will be worth less next year. However, cost to build will continue to go up. It sounds like you have read my blogs before. There are Gems in every market. We bought at the height of the boom in Reno. But, I stepped 50 miles away in Fallon and bought blocks of homes that were 139k with fellow investors. Why–the cost of materials—? So when Reno came crashing down the Fallon properties we bought went from 139k to about to a high of 229k to now about 195k. When they were completed they were worth almost 80k more so I sold off 2 and held 3. Same thing I did in Oregon and Texas.

In Oregon now I have targetted areas near Albany and Salem where once again new homes can be bought for under 150k so we plan on hitting the trails again around Thanksgiving. I don’t have as much time as I used to now but I assure you that there will always be GEMS in any Bubble as well.

Again it doesn’t matter when you buy…Its what you buy and what you pay for it. What is the cost to rebuild it? What is the rental rate? Is it easy to rent? If I knew prices were coming down another 30% (and they may) would I buy now. Absolutely but my offers would reflect that. ..PEOPLE ALWAYS NEED TO SELL..The hardest part is always finding the deal. It always has been and always will be.

One blogger on here said it well.. In this market I will not Buy unless I can sell it the next day for a profit. I like that statement. It is what I always did. However, there will be thousands of GEMS hitting the market over the next decade and for me to personally buy anything now I look for Seller financing. These will always be the BEST GEMS in any market!

Ray Pepper
http://www.500Realty.net
70 [troll] // Jul 20, 2008 at 9:00 am

Y r wrkng wth th prc drvn cnsmr.
Trnsltn: Byrs tht cn brly ffrd wht thy r lkng t nd rlly nd tht “rbt”.

m wrkng wth th vl drvn cnsmr.
Trnsltn: Ppl rlly lkng fr hm nd r qt sccssfl n thr crrs. Hndl th dtls fr m Grg!
71 Greg Perry // Jul 20, 2008 at 9:08 am

“RAL we screen our Buyers to see if they are a good fit for 500 Realty. Since we give back 75% of the dough they must do 75% of the work. Finding the home is always the hardest part in real estate. Our Agents let all of our clients in the home but the discussion goes like this:

1. Are you Pre-Approved? We must have your Pre-Approval on file to begin showing homes.
2. After they locate a home or homes. Our Agent will ask did you look at the pictures on line? Have you driven the neighborhood? Have you talked with neighbors? Is this the property you plan on purchasing?

The Buyer when working with 500 Realty should do what every Buyer should do anyway before Buying a home. Then we step in.”

This demonstrates a fundamental difference between how we approach the consumer.

Before we go with a consumer we schedule a 60-90 minute consultation. With the aid of power point we:
1. Discuss the current real estate market.
2. Interveiw in-depth the customers wants, needs desires in a home.
3. Discuss what to look for in a realtor.
4. As the client “What is your expectation of a Realtor?”
5. Define OUR expectations of our client.
6. Go through the real estate process top to bottom, from pre-approval through closing so they have confidence in their decisions as the move through the process.
7. Discuss the common consumer issues.
8. Discuss agency and compensation.

After this we know if we’re a good fit and start the process.

I use this process with CEO’s and first time buyers.

Another secret: Front loading this time makes the entire transaction go quicker and smoother.

While we’re in process we discuss ideas like economic and functional obsolescence and the future resale of their selection.

So Ray, again different ways to approach the business.
72 Ray Pepper // Jul 20, 2008 at 9:10 am

Greg all this talk of litigation and risk. When I graduated nursing school we were well aware of the ability to get sued anyday. Any many fields of work it is the same and none more then health care.

“real estate is too litigious”—society is….This is not confined to Real Estate and has nothing to do with receiving high commissions.

The home show circuit, sign holders, CNBC, blogging, and Giant signs are the only way we know to educate the state. Lord, knows the local newspapers will not assist us in telling the truth. If they do their Sunday advertising will be crippled. The home shows exhaust me. However, I will know I did my part in change when I see another 50 companies doing what we do here in Washington.

Now off to the Bite of Seattle. You know what I will be wearing!

Ray Pepper
http://www.500Realty.net
73 [troll] // Jul 20, 2008 at 9:22 am

wld lv t hr yr thghts n th qstn psd t Ry s wll. D y thnk thr s sch thng s “bd” tm t by? r thr ny ndctrs y thnk prspctv byrs shld lk fr tht wld b wrnng sgnls tht prcs r gng t fll sgnfcntly, nd tht thy shld pstpn prchs?
………….

Th ndctr (jst lk n th stck mrkt) :

Sll whn thr yllng! Y dn’t wnt t by whn th mrkt s “frthy”

By whn thr cryng! Yr bst dls r whn th glm nd dm prcptn s vrywhr.

Nw sk, whr r w? f y ntnd n byng hm n Sttl nd wll lv n t fr 5+ yrs, nw s gd tm t gt grt dl n “Gm” s Ry pts t.

r y ll wrkng? Yp
Y ll hv lds f csh? bsltly!
Bsnss s prtty gd? Sms prtty stdy!
S, whr’s th Rcssn?
h, n lctn yr y sy? Gtt cmpln bt smthng,

BTW Th fllwng s 100% Rght n n my pnn, (ldr flks (vr 50) hr wll ndrstnd, yngr ns wll mst prbbly dsgr)

Grmm, wh dvsd McCn n cnmc mttrs, md th cntrvrsl cmmnts whl dscssng th cnmy.

“W hv srt f bcm ntn f whnrs. Y jst hr ths cnstnt whnng, cmplnng bt lss f cmpttvnss, mrc n dcln,” th frmr Txs sntr sd. “Y’v hrd f mntl dprssn; ths s mntl rcssn.”
74 jonness // Jul 20, 2008 at 10:00 am

“Just curious, the rest of you think this trash is acceptable?”

It is your opinion that this is trash. It is difficult for some people to accept, but we live in a culturally diverse nation. IMHO, it is a good thing that we don’t all think and act exactly like you. Or for that matter, that we don’t all think and act exactly like me.
75 Ira Sacharoff // Jul 20, 2008 at 10:17 am

“Now off to the Bite of Seattle. You know what I will be wearing!

Ray Pepper”

Ummmm….your bikini?
76 Greg Perry // Jul 20, 2008 at 10:25 am

” when I see another 50 companies doing what we do here in Washington.”

Ray, be careful what you wish for!

Pretty soon someone will come along with http://www.425Realty.com —-wait a minute! That’s my web address! (I picked the Eastside area code)

Ok then 400Realty, then 375Realty, then 350Realty. The eventual winner will be 000Realty.com

On the discount side of things, the area of competition is focused on the amount of the discount.

Those competing in value have a different set of rules.

Have a good time at the bite, Ray. The weather is awesome. Pay attention to business and don’t sample all that food. It could be hazardous to your health!
77 EconE // Jul 20, 2008 at 10:31 am

Sorry if you guys don’t like my coarse, vulgar, nasty language….can’t say I really care though.

If you ever get screwed by someone…they’ll probably do it with a smile, a handshake and a pat on the back…they will probably be very “positive”, and most likely have extremely polite and polished language. They’ll call you “brother” and tell you that you’re “like family”.

I actually considered buying a condo at one point. Paying an agent 6% is not an issue for me nor do I really care (whether you attribute that 6% to the buy side or the sell side is no matter to me)…what I WONT do is buy a house from a "lick"ING REALTOR that not only wants to make a commission, but also a profit from flipping the unit.

So…to Realtor/Flippers (condo’s that is…not fixer upper houses)…I say…

"lick" YOU VERY MUCH!!!
78 Ira Sacharoff // Jul 20, 2008 at 11:00 am

In answer to Sniglet’s question which wasn’t asked of me, but that won’t stop me from answering:
I’ve told clients that now is not a good time to buy. But it’s not a hard and fast “never”.
In any given market, there are going to be relative bargains, and if you want to buy a home because you want to buy a home, and plan on living in it without ever foreseeing yourself selling it, and you can afford the payments, and you can buy it at a relative bargain, and you just don’t like being a renter….sure, why not?
But if you think that you’re going to make a killing and think that real estate is a fabulous investment right now, well, to put it politely, you’re a bit misguided.
79 disbelief // Jul 20, 2008 at 11:27 am

“The Indicator (just like on the stock market) :

Sell when their yelling! You don’t want to buy when the market is “frothy”

Buy when their crying! Your best deals are when the gloom and doom perception is everywhere.”

Oh, what sage advice! All armchair-investors and other assorted imbiciles should write this on the back of their necktie, so they can produce evidence of their saviness at cocktail parties, Realtor conventions, etc.

The problem with this advice / strategy is that it really isn’t much advice or strategy at all. Like other vague, cliche sayings, it’s best applied in retrospect-after the fact.

So you bought a property because you were hearing a lot of gloom and doom talk about real estate? What’s that…and then the value fell another 15%, and now after three or four years you have yet to break even? Well, silly you! Didn’t you know that at the time the gloom and doom talk was just getting started!? Things didn’t really get going until several years later! By that time EVERYONE was on the gloom and doom bandwagon. Now THAT was the time to buy! Oh well better luck next time!

Yes, there’s some good advice for ya! in addition to this fail-safe strategy, we should also preferably purchase a “GEM” ( translation: “a really, really good deal!”)

How can you go wrong with such invaluable advice?!
80 [troll] // Jul 20, 2008 at 11:38 am

dsblf,

Thr r n grnts n lf. f y dn’t hv th blls t by th stck r rl stt mrkt ftr gd tmbl, wll stck yr dgh n yr mttrss. Bnks r nt sf thr y knw. h nd gt sm lmnm fl fr yr hd nd strt bldng n rk. Th wrld s cmng t n nd.
81 Captain Kirkland // Jul 20, 2008 at 11:41 am

RAL- terrible analogy.

Real Estate prices are much easier to predict that stock prices.

Why? Supply and Demand. The only way to increase supply in the stock market is for the Board to issue new shares (no way for the public to know if and when this would happen). Granted, there are techincal indicators to trade by that can be effective, but not nearly as easy and reliable as pure supply and demand.

Real Estate- supply numbers are easily accessible to the public. In fact, they are rising exponentially as we speak. If I could ’short’ real estate in Seattle, I’d have ever last penny into that investment.
82 [troll] // Jul 20, 2008 at 12:23 pm

f cld ’shrt’ rl stt n Sttl, ’d hv vr lst pnny nt tht nvstmnt
…………………

Why nt shrt th ntr rl stt mrkt thn wth shrt TF?

D y thnk tht Sttl wll g cntrry t th vrll ntnl R mrkt lng trm?
83 mukoh // Jul 20, 2008 at 1:57 pm

Ray.
Quote
Sniglet–Prices are coming down and people have to sell. Your home this year will be worth less next year. However, cost to build will continue to go up. It sounds like you have read my blogs before.
End Quote.
How do you factor costs to build are going up? Lumber is down, labor is down, there is a line of siders, H&S finish guys out the door.
84 mukoh // Jul 20, 2008 at 1:59 pm

EconE
You are obviously not really a buyer or have bought. Agent commissions are paid by seller.
85 Ira Sacharoff // Jul 20, 2008 at 2:16 pm

Mukoh,
Of course the agent commissions are paid by the seller, but….where is the seller getting this money to pay this commission??? So, who’s really paying the commission?
86 jon // Jul 20, 2008 at 2:36 pm

“where is the seller getting this money to pay this commission???”

Ummm, by selling the house that he owns?
87 deejayoh // Jul 20, 2008 at 2:54 pm

Well, let’s see. If you actually buy a house without using a buyers agent., and you’re the least little bit smart, you’ll get that 3% back in your pocket as a discount.

In other words, you won’t have to pay that money.

And the seller? Doesn’t care one bit - because he still nets the same amount.

So who’s paying the commission?
88 mukoh // Jul 20, 2008 at 3:22 pm

Ira, and you are an agent? Geez…

You mean to tell me when you meet a client for a listing you present here is the market price of your property taking into the account CDOM 30 solds. It is $450k and my comission is 6%, and we put it on top of the market price?

Or do you present here is the market price of $450k, and your net is $450k - my 6%.

Market price is market either comission is 10% like it is on commercial/land or 1% from a repo discount broker.
89 mukoh // Jul 20, 2008 at 3:24 pm

Deejayoh,
LOL. Good luck agents out there who are on the listing side will definitely be jumping for joy happy when you ask them to give 50% of the commission to you.
90 Ira Sacharoff // Jul 20, 2008 at 3:34 pm

“Or do you present here is the market price of $450k, and your net is $450k - my 6%.”
That and minus excise tax, minus escrow and title fees, etc…
Of course, technically the seller is paying all of the commission. I spent so much time arguing this one in real estate classes…Without the buyer coming in with the money, there is no money and there is no commission.
91 Scotsman // Jul 20, 2008 at 3:36 pm

Mukoh- i think everyone grasps this but you. Have a beer, think it over, and get back to us.
92 EconE // Jul 20, 2008 at 3:47 pm

mukoh // Jul 20, 2008 at 1:59 pm

EconE
You are obviously not really a buyer or have bought. Agent commissions are paid by seller.

——————————————–

Huh? Not really a buyer or have bought?

I’ve already been an owner. Now I’m a renter. I’m sure I’ll be a buyer again sooner or later and I don’t care who pays the commission…I’m just anti “condo-flippers”. Even more so when a Broker or Agent is the “flipper” who then pays themselves the commission. (or sucks it out of my pocket)

As I said…I have no beef with commissions.
93 mukoh // Jul 20, 2008 at 3:55 pm

EconE
Sorry misread on my behalf.
94 mukoh // Jul 20, 2008 at 4:04 pm

Scotsman, I am grasping things better then most here.

Ira, you are not grasping the point, market prices are what they are with commissions in them whether it is 1% or any other charge by a realtor. And the seller pays them. Just because the buyer is paying the market price for a house, he is not ultimately paying the commission the seller is, weather it is an arms reach transaction for a friend 0% or 6% regular or more.
There is no technically who pays it as a hud it is showing a debit to seller.
95 jon // Jul 20, 2008 at 4:08 pm

Isn’t it true that if a buyer makes a full price offer, but the seller does not accept, then the listing agent can claim the commission anyway?
96