Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

42 responses to “Olive 8′s Unconvincing “Reset” Marketing Strategy”

  1. Scotsman

    di·verge verb \də-ˈvərj, dī-\
    di·vergeddi·verg·ing
    Definition of DIVERGE
    intransitive verb
    1a : to move or extend in different directions from a common point : draw apart b : to become or be different in character or form : differ in opinion

    “The seller and the market were focused on divergent pricing strategies.”

    There’s what you want, what you need, and what you can get. It appears the parties involved are experiencing a “failure to communicate.”

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  2. softwarengineer

    The Owners of Olive Should Thank Their Lucky Stars

    That they have enough cash to sit around and wait for the impossible. This haughty thinking is expensive though and had they sold for big losses a few years ago, they wouldn’t be looking at even bigger losses a few years from now.

    They threw the baby away with the bath water a few years ago.

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  3. Hugh Dominic

    Deplorable. RE marketing at it’s worst. They don’t care how much risk of loss the buyers take on, they just want to unload those units without a second thought to morality.

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  4. deejayoh

    By Hugh Dominic @ 3:

    Deplorable. RE marketing at it’s worst. They don’t care how much risk of loss the buyers take on, they just want to unload those units without a second thought to morality.

    Morality? Sounds like capitalism to me.

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  5. GrizzlyBear

    I could only get through half of the video because it was just too nauseating to continue watching. I thought we’d seen the last of the “hurry up and buy now” crap, but apparently the delusion lives on.

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  6. Partial View

    By deejayoh @ 4:

    Morality? Sounds like capitalism to me.

    Intentionally misleading a potential client leads into one of the darker grey areas between morality and capitalism, and rarely good in the long term, as it destroys any potential for trust. I guess it just goes to prove that without regulation, capitalism is only as ethical as the most deplorable party involved.

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  7. Nick Sincere

    RE: deejayoh @ 4
    Exactly. However, then the point is that capitalism is amoral.

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  8. HappyRenter

    By Hugh Dominic @ 3:

    Deplorable. RE marketing at it’s worst. They don’t care how much risk of loss the buyers take on, they just want to unload those units without a second thought to morality.

    Unload? Do you think they will be able to sell any of those at that price?

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  9. EconE

    Psssssst.

    Hey, Buddy….c’mere.

    Yeah…follow me. Step into my office.

    Yeah, it’s an alley…so what?

    Ya wanna buy a condo?

    I gotcha deal right here.

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  10. deejayoh

    By Partial View @ 6:

    By deejayoh @ 4:
    Morality? Sounds like capitalism to me.

    Intentionally misleading a potential client leads into one of the darker grey areas between morality and capitalism, and rarely good in the long term, as it destroys any potential for trust. I guess it just goes to prove that without regulation, capitalism is only as ethical as the most deplorable party involved.

    Who is being misled? What if I sell a stock that Ithink will go down. Is that immoral? The seller has no more ability to forecast the future than the buyer. You are talking about an arm’s length transaction, and no one is forcing the buyer’s hand

    There is nothing deplorable, amoral, or immoral about it. If the buyer doesn’t like the price, don’t buy.

    The inference that I get from this is that there should be some system where in there is little or no risk for buyers and that they need to somehow be “protected”. That to me sounds like a serious sense of entitlement.

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  11. Ben

    This video is a clear violation of Vimeo’s terms of use because the video was created and uploaded for commercial use. Dorey Design Group should have read Vimeo’s terms before paying for a Vimeo PLUS account.

    If you have an account on Vimeo I suggest you flag this video as a “Moneymaker”: http://vimeo.com/18402186

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  12. Scotsman

    RE: deejayoh @ 10

    “The inference that I get from this is that there should be some system where in there is little or no risk for buyers and that they need to somehow be “protected”. That to me sounds like a serious sense of entitlement.”

    More than just entitlement- it’s socializing the losses while the profits remain private. It’s the system we have now. You’re a smart guy- I know you know this. It’s the current underlying factor in the stock markets rise- with the Fed behind you, how can you fail? As long as QE? continues the money will find its way into the banks and equities. Who cares about P/E, leverage, etc? Go for it! It’s all one never ending visit to Alice in Wonderland.

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  13. Lake Hills Renter

    By Partial View @ 6:

    Intentionally misleading a potential client leads into one of the darker grey areas between morality and capitalism

    They call it “advertising”.

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  14. EconE

    I have a dream.

    I dream that someday, after a RE professional tells me to buy buy buy, that when I look up the public records, I’ll find one that hasn’t hit up the home ATM.

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  15. Jillayne

    I want a “like” button so I can like comment number 6 from Partial View.

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  16. HappyRenter

    RE: deejayoh @ 10
    “There is nothing deplorable, amoral, or immoral about it. If the buyer doesn’t like the price, don’t buy.”

    Imagine that rent prices would suddenly go up of a five fold and that landlords could afford it to leave some apartments empty. Those who cannot afford it would have to leave Seattle or be homeless. Some people would call that immoral. It’s pure capitalism. In Switzerland, where rent prices are high, the local city governments have started defining some of the city areas as “capped rent”, i.e., the rent of existing apartments cannot exceed a given price (which is still high, but at least it can’t go higher). I doubt this would ever be done in the US where housing is not considered a right, but just another business.

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  17. Pegasus

    RE: HappyRenter @ 16 – “I doubt this would ever be done in the US where housing is not considered a right, but just another business.”

    Hahaha. You need to read your history books…price, wage, rent controls are part of our history and still exist in certain areas today.

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  18. Hugh Dominic

    By deejayoh @ 10:

    Who is being misled? What if I sell a stock that Ithink will go down. Is that immoral?

    It is if you represent yourself as an expert who believes that it will go up. (see the recent Goldman lawsuit for $500m of proof to that point)

    That is the problem here. They are not just selling a condo. They are wrapping the condo with the appearance of an expert opinion that the condo is a scarce asset whose value and price ought to rise. They are selling that package and it’s a lie, and it’s immoral.

    Once you unwrap it, it’ll just be a crappy condo.

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  19. When Will Olive 8 Sell Out?

    [...] help you out check out Tim’s recent post on Seattle Bubble, Olive 8’s Unconvincing “Reset” Marketing Strategy featuring a chart comparing unit prices over [...]

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  20. Daniel

    By deejayoh @ 10:

    There is nothing deplorable, amoral, or immoral about it. If the buyer doesn’t like the price, don’t buy.

    Right, abusing someones stupidity can not be immoral. I also believe little children should be able to sign legally binding contracts. Hah, I got a bridge for sale! Some tidal flats to build houses? After all if someone is stupid enough to buy it why not cash out?

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  21. Daniel

    By Hugh Dominic @ 18:

    Once you unwrap it, it’ll just be a crappy condo.

    I prefer the term “overpriced apartment”.

    Out of curiosity I looked at a number of condos when we first moved to Vancouver. All of them were postage stamps (compared to the places actually called apartments), featured a kitchen with a Fridge big enough to store food for 10 people, what I call a “jump in bedroom” and a “bonus room” that would not qualify as a walk in closet cause you probably could not walk into it anymore once all your clothes are in.

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  22. deejayoh

    By Daniel @ 20:

    By deejayoh @ 10:
    There is nothing deplorable, amoral, or immoral about it. If the buyer doesn’t like the price, don’t buy.

    Right, abusing someones stupidity can not be immoral. I also believe little children should be able to sign legally binding contracts. Hah, I got a bridge for sale! Some tidal flats to build houses? After all if someone is stupid enough to buy it why not cash out?

    Wow. That is some serious high moral ground you have there. Lets see, what percent of Olive8 units have they sold? Not much. And they’ve just had to change marketing companies. And drop prices. And pretty much no one thinks they’re going to sell out for, oh – another 3 or 4 years.. So who exactly are they victimizing?

    I don’t think there is any innocent waif to worry about here that is being taken advantage of by a big bad condo seller. Don’t get me wrong. These guys are pretty poor business people. And they’ll probably lose their butts on this building. But to suggest that they’re somehow immoral for trying to get as much as they can for the asset they own seems like a pretty unsophisticated view of real estate transactions.

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  23. Daniel

    RE: deejayoh @ 22 – The issue for me is not at all with real estate transactions or olive8, it is with your reasoning. The argument “If the buyer doesn’t like the price, don’t buy.” can clearly be extended to situations most of everyone would regard as immoral. It is my nature to take things to the extreme, call it the conditioning of the theoretical physicist in me: If you want to test if a statement is true in general first look at simple limiting cases.

    In my opinions they actually do try to mislead buyers, and in the same many advertisements do. They simply suck so bad at it that no one is falling for it. Does something immoral get better by failing or is it the intent that is immoral? Or to take it to the extreme again: Should attempted murder not be punishable if the potential victim was never in danger due to the gross incompetence of the wannabe murderer?

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  24. Hugh Dominic

    RE: Daniel @ 23 – I went to my doctor and he told me that I had a tumor and if I didn’t pay him $10,000 to remove it, I would die.

    Then you know what he said? “If you don’t like the price, don’t buy!”. Who am I to question the man’s morals?

    But seriously, these condos are a great investment.

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  25. EconE

    RE: Hugh Dominic @ 24

    Tobacco companies should bring back flavored cigarettes.

    Who cares if kids were smoking them? There’s a warning on the pack. Kids can read can’t they? Caveat Emptor.

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  26. Shoe Guy

    You mean to tell me that the Condo owner, Developer, Lender, and Real Estate Agent are all telling us to go out and buy RIGHT NOW BEFORE IT IS TOO LATE!!!

    INCONCEIVABLE!!!!!

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  27. AndySeattle

    RE: Ben @ 11 – Done and done

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  28. One Eyed Man

    RE: Hugh Dominic @ 24RE: Daniel @ 23 -

    I don’t personally disagree with your apparent contempt for the developers actions and marketing. But just so you know, you’re in danger of being called big government regulators who want to interfere with the free market. The general rule in the US is that in this context BS claims like those about future market trajectory are “sales puffing” and not warranties or representations by the seller that rise to the level of being actionable. Its only when the potential harm rises to the level of being a major danger to public health and welfare that the government has the authority to exercise its “police powers” to regulate by doing thinks like requiring that tabacco companies put warnings on their products and not advertise on TV.

    Absent a business person’s own moral compass, the only moral component of capitalism is whatever the body politic is willing to impose by decreasing its demand for the product or by increasing its level of regulation of the seller’s activity. Other than that, its survival of the fittest.

    Even though I find a lot of real estate marketing “sleazy,” I doubt that I’d hold that realtor and developer BS about market price trajectory is a danger to the public health and welfare or a major component of what put the US financial system and general economy at risk.

    Although my personal sample of buyers may not be representative, I know 3 people who bought luxury condos, one in Seattle, one in Tacoma, and one in Bellevue. The one in Seattle is a retiring doctor who is downsizing. The one in Tacoma is an empty nester doctor in his late 50′s who wants to be closer to the hospital when he gets called to go in in the middle of the night. The ones in Bellevue sold their Evergreen Point waterfront place for an 8 figure price.

    They’ve all lost money on their purchase but they weren’t children. They were people of means with the sophistication to protect themselves in commercial matters. I don’t think money was the biggest factor for any of them. And if they didn’t like what the doctor (who had an obvious financial incentive) told them, they all knew that they could get a second opinion.

    As to Olive 8, I’d be curious to know if the prices were actually set by RC Hedreen or if they were set in conjunction with a lender to meet release prices necessary to pay off the construction financing. I don’t know anything about the financing or financial structure of the Olive 8 deal but for all I know the prices are a feeble attempt to throw a lifeline back up to the top of the bowl while the project circles the drain.

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  29. Rick

    This idea that somehow people should be saved from their own stupidity is truly socialist in it’s creation. Whatever happened to caveat emptor? Maybe we need to wear helmets when buying real estate as well; and we should make it a law right? Grow up people!

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  30. Hugh Dominic

    RE: One Eyed Man @ 28 – I said immoral, not illegal.

    I think it would be interesting though, to compare what disclosures are required of purveyors of financial products and advice to RE professionals. I think RE agents who make market predictions for their clients (or to encourage their clients) may be in comparable positions and owe some accountabilty for that, unless similar disclosures are made.

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  31. Racket

    By Shoe Guy @ 26:

    INCONCEIVABLE!!!!!

    http://www.youtube.com/watch?v=1-b7RmmMJeo

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  32. Daniel

    By Rick @ 29:

    This idea that somehow people should be saved from their own stupidity is truly socialist in it’s creation. Whatever happened to caveat emptor? Maybe we need to wear helmets when buying real estate as well; and we should make it a law right? Grow up people!

    To clear up potential misconceptions:

    I never argued that government should intervene or that we should outlaw such behavior. I merely am pointing out that such behavior is not what I would call rational or moral and I am praising the community service people like The Tim render to their fellow human beings by critically examining ridiculous sales claims. While I do not think government should be involved I think in an informed society those of us who are capable of exposing immoral behavior are in a responsibility to point it out to the more gullible natures surrounding us. If those than choose to ignore that advice it is their freedom to do so.

    This brings me to my second point:

    The ability to make informed and free decisions is at the core of free market capitalism. As an example, if health care providers have an elaborate scheme that makes the change of insurance virtually impossible this is not a free market as it lacks the necessary element of competition. If our patent law is tailor made to the needs of large corporations this is not a free market, as it suppresses creative startups by government regulation.

    In that sense I like to be social but not socialist and I applaud and encourage helping those who have a hard time figuring things out to make an informed decision. If I was a religious man I might call it compassion, if I was of the muslim kind I might even consider helping my fellow human beings as one of the pillars of my faith. I am neither but I like to be social.

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  33. Fran Tarkenton

    By Daniel @ 23:

    Should attempted murder not be punishable if the potential victim was never in danger due to the gross incompetence of the wannabe murderer?

    You’re edging closer and closer to invoking Godwin’s Law. Go ahead, take the final step.

    There’s a difference between making a misrepresentation (either affirmative or through omission), and stating an opinion that many people disagree with. If the people selling Olive 8 believe that prices are going up in the near future (and they’re not the only people who believe that prices are going up in the near future), it’s their right to express that. I don’t believe it, lots of people here don’t believe it, but if they believe it, they’re welcome to say it. As a buyer, you’re able to value their opinion as you see fit.

    Stating an opinion about the future is quite different from misrepresenting a fact, e.g. concealing a structural defect with the building. That, of course, is prohibited by law. Where’s the misrepresentation of facts being made by Olive 8?

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  34. Daniel

    RE: Fran Tarkenton @ 33 – What we talk about here is nothing but the difference between immoral and illegal. To some that difference is obvious. Others may need help from their fellow human beings to understand it.

    Also, good joke that they actually believe their sales pitch. Maybe the community service The Tim delivers is to them and not to potential buyers =)

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  35. Ben

    Looks like Dorey Design Group has now marked this video as private so you can’t view it directly on Vimeo’s site, and subsequently can’t flag it as being against Vimeo’s terms of use.

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  36. justin bowers

    well done!

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  37. Eli

    Tim, what an incredible post. I love how you triangulated qualitative and quantitative reasoning here to cut so crisply through their sales bulls**t.

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  38. Bob

    I agree with the posts! I almost bought at Olive 8 and went through the gauntlet of negotiations with the developer and his side-kick, along with the sales team. I ultimately saw the value (price and quality) in the Escala and bought there.

    Olive 8 is only using a marketing ploy to get buyers in their doors.

    The prices are actually higher than they were really selling for before, during, and after the auction. Why is the typical buyer so uneducated? If you can possibly sit through Olive 8′s sleazy negotiation process!

    I have researched the prices and the same style units have sold for at least 100K less on one or two floors below the 27th floor.

    On the lighter side, olive 8 new sales ploy is very comparable to a short tale by Hans Christian Andersen, “The Emperors New Clothes.” As you recall, this tale is about two weavers who promise an Emperor a new suit of clothes that are invisible to those unfit for their positions, stupid, or incompetent. When the Emperor parades before his subjects in his new clothes, a child cries out, “But he isn’t wearing anything at all!” He was really naked.

    So to all the possible Seattle buyers! Look more closely and you will see that Olive 8′s prices are higher not lower. The reset prices are reset from the pre-construction prices from about 2006 and are higher.

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  39. Vinnie Babbarino

    Well maybe they see that now is the best time to buy, before they go broke and cant service your warantee. Dean Jones, isn’t he the guy who said in 2007 that if we didnt take a seat we’d all be screwed? How many developers has he personally bankrupted with his carnie pitchman approach to condo sales?

    Enough already.

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  40. JJ

    I heard (from an insider) there has been much inflation of prices with cash-back to buyers! I would question any new sales since the reset of prices!

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  41. unbiased observer

    Question: Why is the owner of Olive 8 purchasing units in Olive 8 under an LLC? Correct me if I’m wrong, but I believe he is attempting to create a “market value” above what is actually demanded of the current housing market. In buying his own units at unreasonably high prices, it looks as if they’re worth that much and allows his sales team to advertise as such. So, when a buyer comes along and believes comparable units to the one they are buying were purchased at higher prices (unknown to the buyer that it was the owner of the building who purchased them), this buyer would believe his is worth that much as well. Unfortunately, as the owner of Olive 8 cannot occupy the several units he’s purchased under his LLC, he will have to resale them once more units of Olive 8 are sold. Essentially then, pulling the rug from under those individuals who bought comparable units. Unfortunately for the general public, they cannot fact check this as the buyers are listed under the MLS. It would take an agent and a simple matching of the LLC’s office location with that of the building’s owner.

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  42. Olive 8: Past Pricing vs. "Reset" Pricing - Downtown Seattle Condos

    […] Olive 8′s Unconvincing “Reset” Marketing Strategy […]

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