All-Cash Buyers Dominating the Low End of the Market

Full disclosure: The Tim is employed by Redfin.

As promised, I posted my all-cash buyer analysis to Redfin’s Seattle blog yesterday: 38% of Sales in King County Were Purchased With Cash in 2011

Here’s the chart from the post, with an added histogram based on your comments here earlier this week. Select which type of financing you want to view on the heat map or histogram (zero down, 20%+, or all cash), then drag the “Heat Map Year” control to view a zip code heat map for any year. Zip codes where less than 15% of the sales for that year were of the selected financing type are colored in blue shades on the map, while above 15% will show up in shades of red. Float your mouse pointer over a zip code or a point in the chart below to get the details for your selected year.

The viz takes a little while to load, but it’s worth it (in my opinion).

What I find really interesting about this chart is how closely the sales volume line (brown) and the zero down line (orange) trend to each other over the years. Meanwhile, as the bottom fell out of zero down purchases, the number of all cash sales has been soaring, up from just 12% of the market in 2006 to 38% in 2011. So far 2012 is following the same trend, as well.

What’s driving the big boost in all cash financing? My theory is that it’s a combination of investors taking advantage of low prices and increasing rents and purchases by well-paid tech workers as various cash-flush companies (Amazon, Microsoft, Google, Facebook, etc.) continue to ramp up their hiring.

All cash deals appear to be dominating the low end, making up over 50% of sales in the $100,000 to $199,999 range in 2011. Whether we’re “at the bottom” or not, it definitely looks like there are a non-trivial number of cash investors who feel like it’s a good time to buy up some cheap rentals…

  

About 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.

63 comments:

  1. 1

    Tim- Interesting stuff. Here in Leavenworth, which is mostly a second home market we have seen quite a high number of all cash transactions these past two years. We are seeing it in all price ranges and probably more in the upper end of the market ($600-$1 million). My experience is that these buyers took this money out of the stock market and have had it sidelined for a few years. In 2006-07 many of our cash transactions were from HELOCs, but we’re seeing a lot less of that these days.

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  2. 2

    I wonder if some investors are moving from gold to real estate?

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  3. 3
    Dave0 says:

    Great Stuff Tim. I don’t mean to be critical, but it would be cool to see another line in the chart showing percent of sales with between 0% & 20% down payment, which I’m guessing it just the remaining percentage after the other three categories have been taken out. I just did manual calculations for the past few years and it looks like that category is declining as well, although not as dramatically as the 0 down line. It looks like it was around 30% at the peak and has fallen to around 25%.

    It would also be nice to see a % of sales line in the histogram chart.

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  4. 4

    Cash is King

    Ask any seller.

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  5. 5

    RE: Kary L. Krismer @ 2

    Why Do Folks Buy Real Estate With Cash?

    In this confusing era we’re in right now, old rules are getting broken [like cash is apparently replacing debt to a large extent per Tim’s chart].

    One thing is slamdunk, ya gotta live someplace and if ya got a cash bag big enough and ya can afford it, go for it in my book. It beats monthly payments that go on forever with little or no principle reduction in a decade with like a 30 year loan.

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  6. 6

    By softwarengineer @ 5:

    Why Do Folks Buy Real Estate With Cash?.

    I think the reasons vary.

    On high end properties the buyer might not want a $4,000 a month payment (or can’t get financing at that level). Some are looking for inflation protection (as opposed to a hedge). Some want the free rent. Some properties might not qualify for financing at the time they are bought, and it might be cheaper to fix and then refinance.

    One other thing is the stats might be skewed. For very high end buyers willing to go with a variable rate there can be attractive unsecured financing. That would show as being cash, because there would be no deed of trust.

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  7. 7
    ARDELL says:

    Awesome post, Tim! I agree with you that the wait time is well worth it. Thanks for all the hard work on this.

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  8. 8
    MichaelB says:

    Interesting, but according to RedFin the Bubble has hit Bottom…Why? Because gadflies like Tim, who evidently wrote a thesis on it, bought a home in Everett… as per below:

    “But Prices Will Probably Stop Falling

    January will probably be down too just because the index is a three-month moving average but, as we predicted last year, the market is turning:
    •Pending sales for January 2012 rose 8% from January 2011.
    •The supply of homes nationwide dropped to a six-year low.
    •Over the past year, inventory declined in 145 of 146 U.S. markets.
    •In the last three months of 2011, foreclosure inventory dropped 27%.
    •A survey of 1,331 Redfin buyers shows that 73% are concerned about limited inventory.
    •Price-to-rent ratios are at 1998 levels, and rents are rising.
    •Futures contracts now reflect investor sentiment that home prices have bottomed.
    •The percentage of mortgages that are delinquent has declined for 23 months, but is still high.
    •In California, more than 65% of 2012 Redfin offers have faced competition. Nationwide, the number is one in three.
    •Bubble-bloggers, the gadflies who created blogs during the bubble dedicated to the thesis that real estate was over-valued, have mostly bought homes, in New Jersey, Portland, Seattle and San Diego.”

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  9. 9
    Blue Moon says:

    RE: MichaelB @ 8

    Did Tim run over your dog or beat you up in 5th grade?

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  10. 10

    RE: MichaelB @ 8 – Rebate brokers are sort of like buyers in that the bottom isn’t nearly as fun for them as what they thought it would be either.

    First, it takes way too much time to find a buyer a home they like. That’s a killer if you’re working for less pay and paying a salary out.

    Second, many banks apparently won’t approve fees going back to the buyer in a short sale situation. Sometimes they apparently won’t even approve the buyer getting back part of their earnest money if they paid too much in!

    The first is a bigger problem, because not that many buyers are even open to short sales.

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  11. 11

    I think these stats are indicative of a shift in the market. Most of the cash buyers are investors intent on renting these places out, so it should raise the percentage of renter occupied houses. If you remove all the all cash buyers, it really shows how slow sales really are. Which means either that very few people want to buy a house to live in or they’re not willing to buy right now or aren’t willing to sift through all the crap for sale out there. Inventory is very low, but the demand for what’s out there is also low. It’s an interesting contrast to the fact that when a nice house goes for sale in a nice neighborhood, it gets snatched up quickly. These are really strange times.

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  12. 12
    whatsmyname says:

    RE: Ira Sacharoff @ 11 – Investor money is as good as anybody’s money, and investor demand is as real as any other demand.

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  13. 13
    Saulac says:

    RE: Ira Sacharoff @ 11 – I think you are into somthing here. It is correct to conclude that very few people want to buy to live in – for what ever reasons. It would be interesting to follow these cash paid houses in the next couple months. I wonder how this investor buying phenomenon affect rental price? Rent only going up? I think not.

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  14. 14
    WannaBuy2012 says:

    Make no mistake about it. There are a ton of buyers out there standing by to buy a house to live in. Inventory has been terrible over the past 4 to 6 weeks. Trust me, I’m trying to find a humble abode on the eastside, not Sammamish or Redmond which have had a lot more listings in the past two month. I am more into up north Woodinville style into Snohomish. Nothing nothing nothing out there for the past many weeks.

    Over the past 2 or 3 weekends every decent open house in the Woodinville area has been a turnstile of desperate buyers. So much so that I have bonded with other desperate wannabe home buyers who we keep running into each weekend.

    Current problem for eastside north is that nearly every new listing is either about $80k overpriced or so dated that even Jerry Seinfeld would refuse to live there.

    On the bright side, heads up, in the past 48 hours, more properties meeting our criteria have come online than the past 4 weeks or so combined. Here we go, spring summer bump begins this week!

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  15. 15

    By Ira Sacharoff @ 11:

    I think these stats are indicative of a shift in the market. Most of the cash buyers are investors intent on renting these places out, so it should raise the percentage of renter occupied houses. If you remove all the all cash buyers, it really shows how slow sales really are. Which means either that very few people want to buy a house to live in or they’re not willing to buy right now or aren’t willing to sift through all the crap for sale out there.

    Or it means the house really isn’t out there for everyone looking, at least in some physical areas and price ranges. With fewer than 4,000 non-short sale active SFR listings in King County, that doesn’t leave a lot of choice, especially if maybe half of those are fixers at some level.

    <4,000 from NWMLS sources, but not compiled by or guaranteed by the NWMLS.

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  16. 16

    By WannaBuy2012 @ 14:

    On the bright side, heads up, in the past 48 hours, more properties meeting our criteria have come online than the past 4 weeks or so combined. Here we go, spring summer bump begins this week!

    Your story is exactly what I was referring to in my prior post, but I have searches set up where nothing good popped up in the past 48 hours. I might even have one or two where the only activity was listings going pending. Keep in mind those are relatively specific searches, but to have one where nothing shows up but pending (or sold) is very unusual.

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  17. 17
    ARDELL says:

    RE: WannaBuy2012 @ 14

    “…every decent open house in the Woodinville area has been a turnstile of desperate buyers.”

    I wouldn’t say the buyers are “desperate”, but I will add that the turnstile of buyers is not limited to weekend Open Houses. When I have been showing homes, even during the day during the week this past week, there has been a turnstile of agents and their clients waiting in line to view.

    Unlike Open Houses, it is more common for agents to wait for one agent to leave before entering with their clients. That is because we are registering our viewing via the blue keybox, and also because there is an expectation of privacy during a showing that is not normal for an Open House.

    This has led to cars piling up outside and agents and their buyers basically having to “take a number” or stand in a line outside to determine who is next in. Sometimes I am OK with the next agent viewing at the same time as me and my client, sometimes not.

    I am also seeing “offers will be reviewed on X date”, and for one of the “it” houses that instruction came in after the home was listed for 24 hours. It was listed late Thursday in the evening and the keybox doesn’t operate until 8.a.m. In the morning. by 8:30 or so there was already a line out in the street of agents and buyers, and buyers calling their agents from their cars to come over so they could get in.

    There is no written procedure for what to do when a regular showing day starts looking like an Open House, but keeping track of who has the key from the keybox becomes problematic when agents waltz in with their clients during a showing without activating the keybox. Some agents lock their clients in the house to prevent that from happening.

    It gets a little better as the days get longer and there is more daylight time into the evenings as the season progresses. The crunch happens more when daylight time after work during the week is short. When it stays late until 8 or 9 o’clock, you don’t see that as much. Right now the time between 6 p.m. and when it turns dark can get a bit hectic.

    I was surprised to see so many people viewing during the workday last week on a few of the “it” houses that just came on market on the Eastside. People actually taking a day off from work to do this. Waiting until the weekend to see the new listing is not the norm, given some have lost out on homes by doing that, and are more anxious to see the home ASAP after it is listed.

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  18. 18
    ARDELL says:

    RE: ARDELL @ 17

    P.S. to mine above…these are not screaming deals or bank owned/short sale properties. These are merely fairly priced homes sold by owners who are not under the gun. You don’t usually need to run and stand in line for a bank owned or short sale, as they are less likely to have the seller accept an offer by night of the first or 2nd day on market.

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  19. 19
    whatsmyname says:

    RE: ARDELL @ 18 – If sellers are accepting an offer on the 1st or 2nd day, they are not really getting full exposure to the market – and therefore exposure to the highest potential bidder. Or even a bidder who had to think hard about the purchase. I know the realtor wants to get paid ASAP, but is that really fair to the seller? And where are the sellers in all this? If you brought me multiple offers on day 2, I’d say you listed it too low.

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  20. 20
    David Losh says:

    RE: ARDELL @ 18RE: ARDELL @ 17

    I mentioned this in the twitter feed, but as long as I’m here, I’ll say I don’t get this hysteria at all. I was talking with a friend of mine the other day who is suddenly out of listings. He has had the same set of listings for months. He did sell off his bank repo inventory, that went for full retail, but his every day listing have sat there for months.

    Now BOOM it’s a two month set of hype, every body has to buy, OMG! the market is hot. It’s the same as last year if I recall, and sellers will hold properties off market waiting for a rebound in pricing that is fleeting.

    Buyers need to calm down.

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  21. 21

    By whatsmyname @ 19:

    RE: ARDELL @ 18 – If sellers are accepting an offer on the 1st or 2nd day, they are not really getting full exposure to the market – and therefore exposure to the highest potential bidder. Or even a bidder who had to think hard about the purchase. I know the realtor wants to get paid ASAP, but is that really fair to the seller? And where are the sellers in all this? If you brought me multiple offers on day 2, I’d say you listed it too low.

    What you’re missing is that the buyer isn’t likely to put a long expiration date on an offer, for the reasons you mention. So the seller is going to have to decide whether or not to go with the bird in the hand. The buyer controls those terms.

    As to getting multiple offers in two days, in this particular market not necessarily true that it means the house was priced too low. Buyers are actually looking during the week because they know they have to act quickly. On some properties you might get 30 or more buyers through the first 2 days, so having two of them make an offer wouldn’t be a surprise.

    Totally different scenario, but a couple of years ago I had a very rough listing in a somewhat rough neighborhood. There were two or three other similar houses for sale, and we priced something like 10k under them. We sold quickly, and a couple of the others had price reductions thereafter in excess of the 10k before they sold months later. If we’d priced 10k higher we might have been going through the same price reductions and waiting.

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  22. 22

    RE: David Losh @ 20
    Every once in a while, David Losh has a way of writing exactly what I was thinking. This is one of those times. Buyers need to calm down. If you’re buying a house to live in, whether you’re buying a house or not shouldn’t be wholly determined by what the market is doing. The market changes. Right now, there are very few decent homes currently for sale in nice neighborhoods. So when a nice house goes up for sale in a nice neighborhood, a frenzy occurs, a franticness that’s partially fed by salivating real estate agents. You don’t have to buy into that. Nicer homes will enter the marketplace. That’s not a ” Don’t buy a house now” statement. It’s more of a ” If your current situation is comfortable enough, you don’t have to buy into the pressure of feeling like you have to make offers on houses simply because ther’s very little for sale.” The scarcity feeds demand. There’s lots of reasons to want to buy a house, and some people aren’t truly happy until they buy one. In that case, buy a house. But remember that the current market situation is not permanent. In a few months, or in a year, there will be more houses to choose from. I’d bet on it, and I don’t usually lose bets.

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  23. 23

    RE: David Losh @ 20 – There’s panic selling and panic buying. Fortunately you can actually do transactions during such periods, you just have to make sure you don’t get caught up in the panic.

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  24. 24
    whatsmyname says:

    RE: Kary L. Krismer @ 21
    No, I am not missing the short expiration on the offer, (I have bought and sold real estate after all).

    What I am saying is that I would not want to be put in the position of immediately having a bird in the hand to worry about in this market. If 30 people are coming through your house in 2 days, it is not unreasonable to think that 60 might come through in 2 weeks.

    I would not be looking for multiple quick offers from desperate bargain hunters. I would rather have one solid offer at a better price. Perhaps someone who doesn’t get around to every new listing; or perhaps someone from the initial crowd who thought it a little pricey, but isn’t winning any bidding wars stops to consider how high he would really go. For example, I would rather accept a $350 offer on a $360 asking price after a month than get a $340 bid on a $330 asking price after 2 days. That is what I would want to pay a realtor for.

    I do totally get your example of a couple years ago. I just don’t think that is the market today.

    At least I got you to gallantly defend Ardell’s position. It’s a good day.

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  25. 25
    David Losh says:

    RE: whatsmyname @ 24

    The Real Estate market has never waited two weeks for a buyer. The first offer is usually the best offer. A seller is looking for a ready, willing, and able buyer. The seller needs a buyer who is motivated.

    What the seller needs to look at is the financing strength, and ability, as well as the motivation to close. If the seller were to wait two weeks the buyer pool would shrink. Real Estate is a snap shot in time. You have to deal with that moment.

    Buyers, however, need to be prudent. They should be willing to take that time to know this is what they want to do. This game of putting in an offer to “hold” the property, is just a game. There is time to make sure, look at the property, and even have a second opinion before you make an offer. A strong offer will beat out an offer made in haste in most cases.

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  26. 26
    whatsmyname says:

    By David Losh @ 25:

    RE: whatsmyname @ 24

    The Real Estate market has never waited two weeks for a buyer…….. If the seller were to wait two weeks the buyer pool would shrink. Real Estate is a snap shot in time. You have to deal with that moment.

    What on earth are you talking about? Over the last 30 years, what is the average marketing time for a house? 30 days, 60 days?

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  27. 27
    David Losh says:

    RE: whatsmyname @ 26

    You presented a criteria where 30 people are looking at a house in 2 days. Whether the offer comes in 2 days, or 2 weeks, the first offer is usually the best offer.

    The way I read your comment is you are suggesting a seller futz around for a month waiting for something better. That something better doesn’t come.

    I have a lot of anecdotal stories about this, but the best is a seller who did exactly what you presented. He waited for all the offers to come in. My buyer didn’t put in an offer, but also waited for the smoke to clear. After about a week past the dead line of when offers were to be presented, and the property didn’t go pending, he offered $20K less than the list price, which was obviously low to generate those multiple offer bidding wars.

    All the other buyers had gone away. The agents I talked to thought there must be something wrong with the property, or seller, or both. Even though the seller drug his feet, and the listing agent kept calling the other offers, nothing happened, and my buyer got the property at his price.

    The other side of that is that properties that are called over priced can always take an offer. This absolute nonsense about the seller being insulted by a low offer is just more sales hype. You can submit low offers any time, and persistence in many cases pays off.

    The big problem is you are talking about playing Real Estate agent games. That’s just a fact of life. Every Real Estate agent has a style, or way of doing business. You’re not going to change the game, you have to play well.

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  28. 28
    MichaelB says:

    RE: Blue Moon @ 9

    My comment is valid and I stand by it. However, you may have noticed that this site is called “Seattle Bubble”. The way Redfin use’s Tim’s buying a home in Everett as proof that the market has reached bottom only proves my point that Tim has sold out. In fact, he cannot afford to admit the market has further to fall as his livelyhood would be impacted by that CLM.

    My point is valid, but rather than attacking my point, you attack me…Hmmm.

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  29. 29
    MichaelB says:

    RE: Ira Sacharoff @ 22

    David Losh is absolutely correct. Remain calm! Do not panic! Housing not being put on the market, for whatever reason, is piling up like ice and water at Dry Falls at the end of the ice age. Eventually the dam will burst and houses will flood onto the market. Real Estate will take the next step down. Tim will call another bottom. Redfin will predict prices to remain stable going foward. Wash, Rinse, Repeat for at least 2-3 more years until the median home price is at least equal to 2.5 to 3 times the median household income. That’s right, about $200k. That’s all they are worth!

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  30. 30

    RE: whatsmyname @ 24 – Sellers don’t really determine when the buyers or offers come in. Almost every real estate agent can tell you stories of sellers who turned down early offers and never got as good of one again.

    The other risk with your strategy is pricing too high, such that little interest is generated. Ordinarily price cuts don’t have the same impact, but that’s not true today.

    Also, you can evaluate the buyer at any time. If you’re not getting any offers, that’s when you have to take the bad buyer.

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  31. 31

    By MichaelB @ 28:

    RE: Blue Moon @ 9

    My comment is valid and I stand by it. However, you may have noticed that this site is called “Seattle Bubble”. The way Redfin use’s Tim’s buying a home in Everett as proof that the market has reached bottom only proves my point that Tim has sold out. In fact, he cannot afford to admit the market has further to fall as his livelyhood would be impacted by that CLM.

    My point is valid, but rather than attacking my point, you attack me…Hmmm.

    I think maybe you’re expecting the site: Seattlebrokenclock.com.

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  32. 32
    MichaelB says:

    RE: Kary L. Krismer @ 31

    Kary, I’m going to pull this broken clock out in 2013 and see what time it is…

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  33. 33

    By MichaelB @ 29:

    RE: Ira Sacharoff @ 22

    David Losh is absolutely correct. Remain calm! Do not panic! Housing not being put on the market, for whatever reason, is piling up like ice and water at Dry Falls at the end of the ice age. Eventually the dam will burst and houses will flood onto the market. Real Estate will take the next step down. Tim will call another bottom. Redfin will predict prices to remain stable going foward. Wash, Rinse, Repeat for at least 2-3 more years until the median home price is at least equal to 2.5 to 3 times the median household income. That’s right, about $200k. That’s all they are worth!

    Regardless of the market it’s hard for some buyers to stay calm. That’s always been one of my biggest complaints. Buyers get too impatient.

    When we bought our house it was a 2 week plus negotiation period. There were significant gaps where there was no offer or counteroffer. Not many buyers have that kind of patience, and unfortunately (/sarc) agents don’t control their clients’ lives.

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  34. 34
    whatsmyname says:

    RE: David Losh @ 27 – “You presented a criteria where 30 people are looking at a house in 2 days.”

    David, the way you read my comment is absolutely wrong. Kary hypothesized that these days you might get 30 people through your house in 2 days, and therefore it is not unreasonable that you might generate multiple reasonable bids in that time. My response is that the 30 people who are right on top of every new listing may not be the best buyers a seller can achieve in terms of price. He’d be better off listing out of the “auction hall” range. If you can get 30 people through your house in 2 days, you can bet there are 30 more that would be seeing it if it was available for longer.

    Your “futzing” around for a month scenario assumes the seller goes for the low price auction strategy, and then waits around after having already sabotaged himself. It is idiotic, but has nothing to do with my point. Same with your example. An offer deadline is absolutely and auction technique.

    Your comment that an “overpriced” house can always take a lower offer is exactly what I was saying in the first place. The trick is to have it not so overpriced that people wouldn’t give up on it entirely.

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  35. 35
    ARDELL says:

    RE: whatsmyname @ 24

    Unfortunately he wasn’t defending “my position” as it wasn’t my listing. I was talking about houses I am viewing with buyer clients. As to why would the seller…? he had 5 or 6 offers and they were all asking price or better. A bird in the hand MAY be worth 2 in the bush…but 5 or 6 birds in the hand is plenty. :) Ignoring them because you want “more, more, more!” is just greedy.

    The home wasn’t underpriced really. In fact my buyers didn’t make an offer because it was just too small. The owner and agent were totally surprised by the market’s response. You might think everyone is supposed to be “smart” and know-it-all…but you can’t be smarter than the market. It can always surprise you, and often does.

    Another reason not to push price is if you have a considerable weakness. One of the “it” houses of today is expected to have mega offers from the viewing response…but could end up with none. I think it’s going to have multiple offers and sell for over asking price. But the low price brought out everyone and their mother, giving them enough people to get an offer from 1 out of every 20 people. Had at least 60 immediate showings before offers were to be reviewed. They’ll be lucky to get 3 offers out of all that due to the problem…but I think they will get at least 3 given their listing strategy.

    There is no one strategy that is best for every house. Though generally I agree with you, and usually do list a bit on the high side, never say never or always.

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  36. 36
    Randomness says:

    My cousin just bought a Condo in Redmond. Prior to that Condo, he bid on 3 different houses. Lost them all, and confirmed that the Seller agent did not submit the offer to their cilent, or the bank if it was a REO. This just demonstrates that the Realtards are still at their crooked activities creating bid storms. He finally bought a Condo by going direct to the seller agent, and using them as the buyer agent as well. When the opportunity to make 6% is there instead of 3%, I believe the crook is more likely to represent the buyer and screw the seller vs risking that 6% walking away.

    When I buy a home, I’m doing the same. I’ll find the crook that is most likely to benefit me.

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  37. 37
    whatsmyname says:

    RE: MichaelB @ 29
    One thing I like about this time of year is seeing another class getting ready to leave school and go out in the world. But here’s the weird thing; there is another class from a few years ago that thought they would be buying a house by now. I wonder if the houses are piling up as fast as they are?

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  38. 38
    whatsmyname says:

    RE: ARDELL @ 35 – I’ll agree. I wouldn’t ignore the 5 or 6 birds in the hand once I’ve got ‘em. (Not to mention, I would surely be obligated for a commission at that point). I just wouldn’t have been happy using that strategy in the first place. But as you said; never say never, or always.

    Sorry that the gallant Kary thing didn’t work out. I kind of thought you might respond that you just threw up in your mouth.

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  39. 39
    ARDELL says:

    RE: whatsmyname @ 36

    When they start teaching a thing or two about buying houses…or cars…or rational purchase and credit decisions while they are IN school…maybe you’ll see things change for the better. “Your biggest investment” doesn’t get so much as a sideways glance in your children’s curriculum.

    Family’s are often crushed by this lack of knowledge…and they become reliant on some slimy people as a result. Very little if anything is taught in school about buying and selling homes, dangers of excessive credit balances and high interest rates. Why is that? Why can they learn about Rip Van Winkle and not things relevant to their personal future?

    Why is that?

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  40. 40

    This should be sort of obvious, but if you don’t like the offer you get in at first, but it seems like a good buyer and good buyer’s agent (very important), then you can always counter the offer with a higher number/different terms.

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  41. 41
    David Losh says:

    RE: whatsmyname @ 34

    I reread your comments, and I did read them correctly. You don’t like the list ‘em low, and watch them go strategy. I don’t either, but it is a fine line.

    In December a fair market price may have been passed over, then in March that same price becomes a bidding war.

    I’m saying you have to play the market in the moment.

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  42. 42
    MichaelB says:

    RE: whatsmyname @ 36

    I guess it all depends on how much money they are able to earn and their outlook regarding the economy and where they plan to start their careers. It also depends on whether you believe the current economic malaise is structural or cyclical. I tend to believe it is structural, hence we are still moving toward a new normal. Today, being flexible and being able to move to another city for a job or promotion is pretty important. Also, I don’t believe the current generation views home ownership in the same way as previous generations. Most would be better off financially by focusing their time on building a career rather than mowing the lawn, pulling weeds, and building a fence. Sooner or later the Baby Boomers will be forced to sell and at that time prices may again become reasonable. The chances of being priced out of the market within 5 years is near zero. So there is really no compelling reason to buy at today’s prices. When interest rates eventually increase, prices will drop further. The current market is artificial as there is still a lot of shadow inventory, people who can’t afford to sell but would like to, bank properties, etc…

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  43. 43
    ARDELL says:

    RE: whatsmyname @ 37
    Why would I throw up in mine? Wouldn’t in his be better? #justsayin :)

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  44. 44
    whatsmyname says:

    By Kary L. Krismer @ 39:

    This should be sort of obvious, but if you don’t like the offer you get in at first, but it seems like a good buyer and good buyer’s agent (very important), then you can always counter the offer with a higher number/different terms.

    If you’re playing list em low and watch em go with Dave, you are not really in a position to counter anything that met your “under” market lead in. It’s like being called in poker.

    Me “How much are those apples?”
    You “A buck each.”
    Me. “Here, I’ll give you $1.00.”
    You “I like you, but I was expecting someone to offer a buck fifty.”
    Me “What?”
    Realtor: “You owe me ten cents.”

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  45. 45
    whatsmyname says:

    RE: ARDELL @ 42
    It’s getting hot in herre.

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  46. 46
    whatsmyname says:

    By MichaelB @ 41:

    RE: whatsmyname @ 36

    I guess it all depends on how much money they are able to earn and their outlook regarding the economy and where they plan to start their careers. It also depends on whether you believe the current economic malaise is structural or cyclical. I tend to believe it is structural, hence we are still moving toward a new normal. Today, being flexible and being able to move to another city for a job or promotion is pretty important. Also, I don’t believe the current generation views home ownership in the same way as previous generations. Most would be better off financially by focusing their time on building a career rather than mowing the lawn, pulling weeds, and building a fence. Sooner or later the Baby Boomers will be forced to sell and at that time prices may again become reasonable. The chances of being priced out of the market within 5 years is near zero. So there is really no compelling reason to buy at today’s prices. When interest rates eventually increase, prices will drop further. The current market is artificial as there is still a lot of shadow inventory, people who can’t afford to sell but would like to, bank properties, etc…

    The Republicans are crystal clear on preferring the economic model of the third world, and huge portions of our ill-travelled working class (formerly middle class) find it a religious imperative – or at least an inevitability of their own religious imperatives.

    So maybe normal is different now. Just for example, when I was a whippersnapper, it wasn’t normal for people who saw homeownership as irrelevant to their lives to spend so darn much time talking about home ownership.

    I don’t know how long you have been waiting to not buy, but there are people here who have been waiting since 2004, plus some from 2005, plus 2006…and on like that. Are there more of them than the shadow inventory you speak of? I don’t know; that’s why I asked. I think you don’t know either, but never thought to ask.

    I’m a boomer, and I’ll be ready for something smaller in about 10 years. I expect to be free and clear then, so it’s not like I’ll have to move. If you and all the people who’ve been waiting, and all the people to come up in the next 10 years can all wait another 10 years, well, I’ll wave at you from my too-large house.

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  47. 47
    MichaelB says:

    RE: whatsmyname @ 46

    Cool!

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  48. 48
    Mike 0 says:

    RE: ARDELL @ 39RE: ARDELL @ 39 – Yeah, there’s LOTS of stuff we should be teaching our kids – but teenagers have only as much interest in their future as the parents instill in ‘em. (my family was doomsday fanatics, not useful sans Armageddon) As far as learning it in SCHOOL, there’s no longer any excuse not to study whatever you want online – but there has to be a benefit. As long as Big Money can manipulate the “system” to make more Big Money, there’s no freeking point in learning economics – just as I was taught in economics class as a teen (we called it “HomeEc” – ‘member?) that real estate CANNOT devalue because here’s always more people, you could have taught YESTERDAYS’ teens whatever about “home finance” but tomorrow you’d be wrong. And =BAD= information is worse than none @ all. I’ve been carefully rebuilding my credit for over a decade (they changed what GOES in your rating and for how long, yeah?) to buy a home & =I= learned you HAD to have a down payment to buy a house or property. If I’d known (from ANY source) that they were selling no-down & 500 rating, I’d have jumped on it. And sold a kidney to keep up the payments…

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  49. 49

    By whatsmyname @ 44:

    By Kary L. Krismer @ 39:
    This should be sort of obvious, but if you don’t like the offer you get in at first, but it seems like a good buyer and good buyer’s agent (very important), then you can always counter the offer with a higher number/different terms.

    If you’re playing list em low and watch em go with Dave, you are not really in a position to counter anything that met your “under” market lead in. It’s like being called in poker.

    Me “How much are those apples?”
    You “A buck each.”
    Me. “Here, I’ll give you $1.00.”
    You “I like you, but I was expecting someone to offer a buck fifty.”
    Me “What?”
    Realtor: “You owe me ten cents.”

    You seem to be talking more about a strategy to create a bidding situation. I’ve never been comfortable with that as a listing agent, but I’ve not seen many of those fail.

    Another obvious thing. Unless you are trying to create a bidding situation, the seller should be happy with the list price.

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  50. 50
    ARDELL says:

    RE: Mike 0 @ 48
    Awesome response! Short version…because the story of Rip Van Winkle stays the same.
    None of my teachers for the first 12 years would have known squat about home ownership. They were all nuns who lived in the convent.

    I never had “HomeEc”. I had Latin. In my era HomeEc was for remedial students and they learned how to bake and sew.

    Seriously, thanks for the rant. Lots of good perspective there.

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  51. 51

    RE: ARDELL @ 50RE: Mike 0 @ 48 – It would be nice if more high schools taught basic economics. I don’t see the point of teaching home buying to people in high school, but perhaps more basic budgeting information would be useful.

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  52. 52
    ARDELL says:

    RE: Kary L. Krismer @ 51

    I haven’t seen it recently, but one of the things that needs to be taught is basic ratios as to how life might come back to bite them in the butt if they don’t follow a few basic “rules” that are not easy to know without someone making mention.

    i.e. Better to have two credit cards at 30% used and 70% available than one maxed out card. Now that FICO scores are so powerful as to what rate you will have to pay on your mortgage, some basic teaching of what all this is, and can mean in their lives, should be at least mentioned. No hard and fast rules, so “teaching” is not likely the correct word. But it shouldn’t be a big surprise when they hear it again as adults. There was no risk based pricing until FICO scores determined risk for lenders. This is an important issue for people to know early on. Yes, it will change. But at least they will know enough to ask the right questions.

    i.e. Car payments, credit card payments and student loans can prohibit your ability to purchase a home. Instead of jacking up the back end ratio to insane proportions to accommodate the debt load incurred prior to thinking of buying a home. Better to make some mention of the reasonable ratios before the debt ratio is out of whack when you push house payment or rent payment into the mix.

    Too many rely on…”if they give me the credit then it must be OK”. That is why they later blame the lenders for the failure of the big picture. Someone has to teach the big picture a few times along the way before they graduate from high school. Otherwise they are simply prey to “professionals” telling them what they “can” do.

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  53. 53

    By ARDELL @ 52:

    i.e. Better to have two credit cards at 30% used and 70% available than one maxed out card. Now that FICO scores are so powerful as to what rate you will have to pay on your mortgage, some basic teaching of what all this is, and can mean in their lives, should be at least mentioned..

    30% of your limit on two cards? IMHO it would be better to teach them not to carry any revolving credit card debt. ;-)

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  54. 54
    ARDELL says:

    RE: Kary L. Krismer @ 53

    That would be about as successful as teaching “abstinence” instead of violent love education…don’t you think?

    Once you lean towards the absurd…duck…the pendulum will swing.

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  55. 55
    Dweezil says:

    RE: Kary L. Krismer @ 51

    In high school, it was hard to care about a class if I could not see it immediately benefiting me. I worked all through junior high and high school, so budgeting had some relevance. But I get the feeling that less and less students these days start working until after high school or even college.
    Oh and in my day I had to walk to school uphill, both ways, in the snow etc. =)

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  56. 56
    GrizzlyBear says:

    “All-Cash Buyers Dominating the Low End of the Market”

    Well of course. This is the part where the robber barons amass fantastic wealth by buying up all the houses from their unsophisticated rubes, on the cheap.

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  57. 57
    David Losh says:

    RE: GrizzlyBear @ 56

    I understand the reasoning of thinking you are building an estate, that in a few years you can free up some cash with a refi, and buy even lower priced property so you can average out the purchase prices.

    The problem I see is property management. It costs money to manage a property well. Your best renter pool will be buying property as it becomes available. Most people are unprepared for turn overs, or maintaining property.

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  58. 58
    mukoh says:

    RE: Kary L. Krismer @ 2 – Kary, not sure what percentage of gold holders could have 160 ounces +/- even from the olden days.

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  59. 59
    Colin says:

    1. I really don’t think Tim’s bear credentials need defending.

    2. Re credit, it’s funny — I didn’t get a credit card until my 30s. One feature leading up to financial crises worldwide since the late 90s has been rapid consumer credit expansions. On real estate purchases in particular, I would put in a plug for accountants. My academic background in finance is pretty good, but several hours with loan documents and chatting up loan officers left me with enough doubts that I went to an accountant. It’s a couple hundred well spent.

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  60. 60

    RE: Colin @ 59 – Interesting an accountant rather than an attorney. Why type of information were you looking for?

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  61. 61

    […] or so will probably resemble roughly what it was from 2004 through 2006, but for different reasons (more cash buyers instead of zero-down […]

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  62. 62

    […] this what is happening when I read that there are more cash buyers? Are these likely real estate investors buying nice (move in condition), family (3 bed, 1.75 bath), […]

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  63. 63

    […] > anecdote. All-cash deals were 38% of the Seattle-area market in 2011. I happen to have just run these numbers for Q1 in King County, and it’s up to 42%. Mr. […]

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