Friday Flashback: Should Have Listened to Mr. Sohn

From a NWMLS talking points memo that was circulated in June 2006:

…the forecasts for housing price growth are calling for booming values in the state of Washington. For the June issue of MONEY Magazine, Fiserv Lending Solutions and Moody’s Economy.com provided forecasts for the coming 12 months for 380 metro areas – they predict that five of the top 10 fastest growers will be in Washington.

…Much of the appreciation in housing is attributed to above average job and population growth and limited supply of housing.

Meanwhile, around the same time, our state’s Chief Economist ChangMook Sohn was sounding the alarm with a more realistic outlook:

ChangMook SohnHowever, people are spending more money than they’re making, which Sohn finds worrisome because it can’t continue indefinitely. Consumers appear to be cashing out some of the value of their homes to fuel their spending, he said.

“Clearly, the consumer is over-extended,” Sohn said.

…revenue officials raised warning flags, predicting that a slowdown in the construction industry will drag down the state’s economic expansion before long.

The state’s sizzling construction and housing sector is ripe for a major correction and other factors could hammer the state and national economies in the next few years, said ChangMook Sohn, the state’s chief economist.

His biggest concern is that the state’s recent economic and revenue expansion has been heavily dependent on a single sector of the economy, the construction and housing industry.

That sector accounts for about 7 percent of the overall state jobs, but the construction and housing surge in recent years has accounted for 20 percent of the job growth, he said.

That’s not sustainable and the number will surely drop back to more usual numbers, he said.

Too bad neither lawmakers nor pretty much anyone else bothered listening to Mr. Sohn. Even worse, he gave up his job as Chief Economist to run for State Treasurer in 2008, but lost in the primary.

Thanks to homebuyers’ and lawmakers’ choice to accept the home salesmen’s fantasy version of reality instead of Mr. Sohn’s sound advice, the rest of us get to deal with years of state budget shortfalls and a sagging economy. Thanks, real estate agents!

The purpose of our Friday Flashback series is to remind people why it’s never a good idea to base your home purchase decisions on the word of someone with a vested financial interest in selling as many homes as possible for as much as possible, no matter what. If you’ve got a good example of local home salespeople or other industry shills on record making fools of themselves in the years before the bubble burst, shoot me an email.
  

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.

94 comments:

  1. 1
    Hugh Dominic says:

    Ah, I love a good Friday Flashback.

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  2. 2
    Dorothea says:

    Ah, I love economists!

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  3. 3
    Ray pepper says:

    As a pleasant reminder… Red Fin Real Estate Agents along with Red Fin recommended mortgage Reps did not make anyone buy anything. It was the judgement of the purchaser led down a path being paved by a corrupt Wall Street that your Friday Flashback should be directed at.

    The real estate agent remains the simple pon in the game during the decade ahead of unwinding and free money that many bubble buyers will gobble up while those who waited continue to watch with amazement just how unfair life can be.

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  4. 4

    “Too bad neither lawmakers nor pretty much anyone else bothered listening to Mr. Sohn.”

    Hey now. Didn’t you launch SB around that time?

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  5. 5

    As much as I hate to admit it, Money Magazine was probably right on that 2006 call, because it was only a 12 month prediction.

    Interesting though that they totally turned around from October 2002 when Seattle was one of the three worst cities in the country.

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  6. 6
    Ray Pepper says:

    RE: Craig Blackmon @ 4

    The funny part is Tim still doesn’t get it…”Thanks, real estate agents!”

    After all your research Tim you still think real estate agents were to blame…

    As a father, soldier, RN, and Broker I’m here to warn EVERYONE that you NEVER TRUST anyone that has a vested interest in YOU making one decision or another with YOUR MONEY!!…In the end its YOUR decision and your life will be riddled with people trying to EDUCATE you on decisions that can help or hinder you. Most will have a VESTED interest but looking back and pointing fingers at people is FUTILE. You will find the errors you made in your own decisions but what really matters is how YOU PROCEED GOING FORWARD!

    Sure Agents added to the hysteria as did King 5, Komo, Mortgage, Title, Escrow, Lenders, Home Depot, Lowes and thousands of other entities during the Home Buying Bubble…Not to mention Bush and Greenspan…..I could go on and on but I don’t think it will help you Tim….You still don’t seem to understand..I will post this again for your review and hopefully ONE LAST EDUCATIONAL SEGMENT in an effort to get you to understand the TRUTH: http://www.500realty.net/crisisofcreditvideo.php

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  7. 7

    By Ray Pepper @ 6:

    RE: Craig Blackmon @ 4

    The funny part is Tim still doesn’t get it…”Thanks, real estate agents!”

    After all your research Tim you still think real estate agents were to blame…

    I agree with Ray, and would again point out that for the listing agents their job was to get a higher price for their listing. So you’re complaining about them doing their job well.

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  8. 8
    Mariya says:

    Real estate market is shooting up in Seattle. Bidding wars are on!!

    http://forums.redfin.com/t5/Seattle/Feeding-Frenzy-for-Houses-in-Seattle/td-p/313257/page/2

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  9. 9
    Ray Pepper says:

    RE: Mariya @ 8

    Nice find Mariya….Check out this Red Fin guy: “Expect the bidding wars to continue, its a fierce market right now, have a strategy!”…..

    “have a strategy”…this is from Red Fin coordinator Brian Carraway…What a buffoon…….A classic sales tactic creating a “sense of urgency”….Just like at The Honda Dealership….”I have 2 Buyers coming tomorrow for this new Accord”…..Please…………………

    Heres a strategy Red Fin Buyers………If I may………………..WALK AWAY from multiple offers!!

    Would like to see what HIS strategy is…………………..Maybe this Red Fin guy Brian can elaborate on what a good strategy is during a depreciating asset environment………….I would like to know ways he suggests we spend OUR MONEY!

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  10. 10

    By Ray Pepper @ 9:

    Heres a strategy Red Fin Buyers………If I may………………..WALK AWAY from multiple offers!!

    So you’d walk away from multiple offers even if you believed the list price was at least 15% below market? That would make about as much sense as having your offer always be 10% below list. You should make your offer in reference to what you think the property is worth, not the list price.

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  11. 11
    David Losh says:

    The situation is worse today than it was in 2006. In 2006 there was a hope of appreciation in the housing market.

    Real Estate agents didn’t over stimulate the economy with two wars, low interest rates, and banking deregulation that allowed the Mortgage Backed Securities to ripple through the financial markets.

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  12. 12
    Jonness says:

    Ray, while I agree with you that everybody is ultimately responsible for the decisions they make, I do not agree with you in allowing predatory RE agents off the moral hook. They played, and continue to play, their part in this corrupt game and should be judged accordingly.

    That’s not to say that all agents are bad, because there are certainly some good ones (at least one of whom works for you). But IMO, the majority of agents out there are extremely suspect.

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  13. 13
    David Losh says:

    RE: Ray Pepper @ 9

    Absolutely buyers should run from multiple offer situations. Next October prices will be lower for better properties.

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  14. 14

    RE: David Losh @ 13 – As to the better properties comment, there are people looking today who wish they had been looking six months ago. I don’t remember anyone here six months ago predicting that the inventory issue would be worse today than at that point in time.

    But as I indicated with Ray, you’re also ignoring the possibility of a property being listed below market value. Just because the market might drop 5-10% between now and some future date, it doesn’t mean you can’t pick something up 15% below market if you’re both fast and lucky.

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  15. 15
    Peter Witting says:

    RE: Ray Pepper @ 6 – So true, Ray, the individual homebuyers made their own decisions, which often singularly poor and collectively abysmal. However, it does overlook a certain level of human nature. Many “middle-class americans” who over-reached during the bubble thought they were “missing out” on the next great Powerball Lotto of Life, yet lacked the financial savvy or basic educational foundation to educate themselves into making an informed decision. Perhaps they thought that interest-only option ARMs were how the “big boys” played and they wanted in on the action, or believed that the nice real estate lady they met at an open house was looking out for their best interests.

    Aside from writing checks their “stash” can’t cash, as it were, these troubled borrowers lost sight of the absolute value of money. $150,000 is ALOT of money, especially when you have to pay it back – yet people thought “oh, my house is ‘worth’ a half-million, so relatively, $150k is nothing”.

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  16. 16
    Ray Pepper says:

    RE: Jonness @ 12

    Predatory real estate agents? To single out one component of the industry to blame is both incompetent and misinformed.

    Next you will tell me the house flippers were predatory……WAKE UP PEOPLE!

    Point your finger at 911, Greenspan, and Bush. To blame the street pusher for selling homes at what WAS their current market value is as STUPID as Millionnaire Mike bulldozing a 1.5 million dollar home, documenting every penny he spent on reconstruction with another million +, then stating ” I have no idea what my home is worth”….Good God!

    The Bubble Heads remain as inept as the simpleton on the street.

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  17. 17
    Ray Pepper says:

    RE: Kary L. Krismer @ 10

    Kary, 500 Realty and myself personally NEVER engage in multiple offer scenarios for our Buyers PERIOD. There is far too much inventory in the pipeline in the coming decade to be at the mercy of ANY seller nor do we desire the “highest and best” option because its not in the best interest of ANY buyer especially in a depreciating asset environment.

    Buyers who engage in multiple offers and highest and best scenarios never seem to be happy in that they feel they may have PAID TOO MUCH if they get the home and remain SAD if they do not..I would never give up ANY leverage as a BUYER during these times and would not expect my clients to either.

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  18. 18

    RE: Ray Pepper @ 16
    To suggest that real estate agents are blameless is to not take responsibility, even if they were just one component of the mess. ” You can’t blame me. I’m a commissioned sales person. Of course I’m going to lie, what do you expect? Blame Greenspan, blame the lenders, blame Bush, blame Barney Frank. But little ol’ me? It’s not fair to single me out now because I’ve always been a liar, cheater and thief.”
    On the other hand, people are stupid. The state’s chief economist warns that the housing sector is due for a major correction, but do people believe him? Why, no! They choose to believe the guy in the shiny suit and the Mercedes, who tells them that we have entered a new paradigm, where real estate only goes up.

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  19. 19
    Ray Pepper says:

    RE: Ira Sacharoff @ 18

    To suggest that real estate agents are blameless is to not take responsibility,= AGREE!…but their responsibility is VERY Very very limited…

    “Thanks, real estate agents!” = DISAGREE

    Who lent the money Ira? It wasn’t the agents….I will tell you…Corrupt Banks/Corrupt Wall Street..An agent without lending is as valuable as an ass with no hole.

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  20. 20
    wreckingbull says:

    RE: Ray Pepper @ 19 Not that simple. The NAR spent over $22 million dollars last year lobbying our policymakers.

    http://www.opensecrets.org/lobby/clientsum.php?id=D000000062&year=2011

    This is an all-time record. They are spending this money in an attempt to mold public policy to their own self-interest. Contrary to your beliefs, this DOES affect everyone. The day this stops is the day your argument begins to hold some water.

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  21. 21

    By Ray Pepper @ 17:

    RE: Kary L. Krismer @ 10

    Kary, 500 Realty and myself personally NEVER engage in multiple offer scenarios for our Buyers PERIOD. There is far too much inventory in the pipeline in the coming decade to be at the mercy of ANY seller nor do we desire the “highest and best” option because its not in the best interest of ANY buyer especially in a depreciating asset environment.

    Buyers who engage in multiple offers and highest and best scenarios never seem to be happy in that they feel they may have PAID TOO MUCH if they get the home and remain SAD if they do not..I would never give up ANY leverage as a BUYER during these times and would not expect my clients to either.

    That’s just nonsense. First, right now there’s very little inventory in the pipeline, and I don’t recall you predicting that six months ago, so your next decade predictions are pretty meaningless. Also, not everyone wants to wait a decade or even a year. Second, as noted, sometimes the list price is way too low, and the other bidders are reluctant to exceed the bid price by very much. You can still end up with a below FMV price.

    I’m not saying that a multiple offer situation should necessarily make you change your bid, but withdrawing because there are multiple offers is nuts. If you were willing to offer X thousand dollars not knowing of other offers, why would you withdraw knowing of other offers? I could see possibly not jumping into a known multiple offer situation, but that would depend on the property and the buyer.

    But hey, if you want to make offers only on properties that no one else likes–have at it. Sounds like a really poor decision model. Good luck reselling such houses.

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  22. 22

    By wreckingbull @ 20:

    RE: Ray Pepper @ 19 Not that simple. The NAR spent over $22 million dollars last year lobbying our policymakers.

    http://www.opensecrets.org/lobby/clientsum.php?id=D000000062&year=2011

    This is an all-time record. They are spending this money in an attempt to mold public policy to their own self-interest. Contrary to your beliefs, this DOES affect everyone. The day this stops is the day your argument begins to hold some water.

    I’m not a big fan of NAR (as opposed to WR and SKCAR), but at least part of that lobbying was done to get an extension on the tax exemption for discharge of indebtedness income in foreclosures and short sales. I would guess that another part was pursuing loan modification legislation. In the recent past they obtained federal legislation prohibiting transfer fees in certain situations, and been assisting state entities such as WR in getting state legislation on the topic.

    Just out of curiosity, do you have any examples of their lobbying on topics you disagree with?

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  23. 23
    David Losh says:

    Brokerages should take responsibility for hiring any one with a license, and turning them loose. Brokerages should be held accountable for the actions of the agents they are charged to oversee.

    More to the point of the bubble is the banks handing out money. If banks handed out money to leverage property purchases then why not take it.

    Today if banks were handing out money how many more people would be in the buyer pool? It would be a land rush rather than a frenzy.

    How about the government encouraging home ownership? Isn’t it the American Dream to own a home?

    It makes no difference what happened then, it’s happening now, we have a frenzy now. People are giving away life savings to have that American Dream now. People are in multiple offers now buying crappy properties and paying more than list price.

    This recessionary buying will do more harm than the bubble, so why aren’t we talking about that?

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  24. 24

    By David Losh @ 23:

    Brokerages should take responsibility for hiring any one with a license, and turning them loose. Brokerages should be held accountable for the actions of the agents they are charged to oversee.

    Brokerages are responsible and as far as I know, always have been. That’s why I don’t see some of the low fee (for agents) brokerages as being a good business model. Too much liability, too little reward.

    With the change in the law where we all are now called brokers, a designated broker or managing broker has to provide additional supervision to new agents.

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  25. 25

    RE: Kary L. Krismer @ 24RE: David Losh @ 23 – On the topic of brokerages being responsible, check out the appellants in Craig’s case discussed last week.

    http://www.courts.wa.gov/opinions/?fa=opinions.disp&filename=660713MAJ

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  26. 26
    One Eyed Man says:

    RE: Kary L. Krismer @ 22

    “Just out of curiosity, do you have any examples of their lobbying on topics you disagree with?”

    I’ve never checked their lobbying budget, but there’s probably a long list that many on this site would object to, starting with the home buyer tax credit and the mortgage interest deduction. But I think the somewhat questionable message of their advertising budget would be the spot where there’s “never been a better time to” object.

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  27. 27
    Ray Pepper says:

    RE: Kary L. Krismer @ 21

    I LOVE my predictions Kary and you should learn by now I’m ALWAYS RIGHT! One way or another all the prices will reflect their current value through short sale, conventional sale, deed in lieu, foreclosure, etc…..They are ALL coming back Kary but how the homeowner deals with this lead weight around their necks is all that really matters. These upside down homes are TRUE GEMS and are providing once in a lifetime opportunities for so many millions while others cry and complain about the unfairness…

    Mortgage Cramdown Kary..You said it would NEVER happen and its happening every day everywhere and now the BIG BOYS are on board….Keep denying the facts and listen to me and one day you will believe..

    With very little inventory in the pipeline we stand by our belief to NOT enagage in multiple offers or any form of bidding wars. It is the Buyers choice however, and we just direct them to Brokerages who will GLADLY support their offers. We feel very confident in what we are doing, have no sales goals or pressures to conform, and quite honestly we don’t care if we sell a house all year. Our time continues to be spent in Washington, Oregon, Nevada, California, and Arizona trying to get morsels during a time that 9x out of 10 we just decide to “keep the powder dry.”

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  28. 28
    Ray Pepper says:

    Flood of foreclosures to hit the housing market

    The golden age for foreclosure squatters may soon be coming to an end now that the $26 billion mortgage settlement has been approved.

    The settlement, agreed to by the nation’s five largest mortgage lenders, is expected to speed up the foreclosure process by providing stricter guidelines for the banks to follow when repossessing homes.

    The banks involved include Bank of America, JPMorgan Chase, Citibank, Wells Fargo and Ally Financial.

    Many foreclosures have been in limbo since fall 2010 following the so-called robo-signing scandal, when banks allowed employees to sign off on thousands of foreclosure documents a month with little verification.

    Lenders hit the pause button on foreclosures because they “were afraid that anything they did would be under a microscope,” said Eric Higgins, a professor of business at Kansas State University.

    As a result, borrowers who were seriously delinquent on their loans have been able to stay in their homes for months or even years without making a single payment. Nationwide, the average time it takes to foreclose on a home — from the first missed payment to the final bank repossession — stretched to 370 days during the first quarter, almost twice as long as it took five years ago, according to Daren Blomquist, the marketing director at RealtyTrac.

    In some states, delinquent borrowers have been squatting in their homes much longer. In Florida, the average time was 861 days, and in New York it was 1,056 days — close to three years.

    “Perhaps a million foreclosures could have been pursued last year but weren’t,” said Rick Sharga, executive vice president for real estate investment company, Carrington Holdings.

    But that’s all about to change, he said. “We’re going to see an increase in the speed of foreclosures and a higher number of foreclosure starts.”

    In fact, there are indications that the pace of foreclosures are already starting to pick up.

    While overall foreclosure activity was down during the first quarter, filings were up 10% in the 26 states where foreclosures must undergo court scrutiny, according to RealtyTrac.

    It was in these judicial states that the processing of foreclosures slowed the most following news of the robo-signing scandal, said Blomquist.

    Many banks in these states stopped filing foreclosures unless they were extremely confident it would pass muster in the court. (In non-judicial states, foreclosures are reviewed by a trustee, which is a third party such as a title company and less likely to parse every legal document).

    But now lenders can move more confidently, said Brandon Moore, RealtyTrac’s CEO.

    In the judicial state of Indiana, for example, foreclosure filings were up 45% year-over year. And in Florida, they were up by almost 26%, according to RealtyTrac.

    “The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity,” Moore said in a statement.

    The resulting flood could bring home prices down even further — yet another impetus for the banks to clear out their foreclosure pipeline as quickly as possible, said Kansas State’s Higgins.

    Then, industry thinking is, the housing market would be able to get back to normal and home prices could eventually find their true value.

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  29. 29
    MichaelB says:

    RE: Kary L. Krismer @ 14

    CoreLogic reports that almost 20% of homes in Washington State are in negative equity. There is no basis to believe home prices will be increasing any time soon. So this “supply and demand” argument is ridiculous!

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  30. 30
    David Losh says:

    RE: Ray Pepper @ 28

    Would that be on first or second position loans?

    I think banks have a mess to clean up, and clear out that will more than decrease housing prices. I don’t see holding property as an asset any longer for mom, dad, and the kids.

    Some one would have to show return on investment from this point forward. If we do take mom, dad, and the kids out of the home price equation, I mean the emotion of “owning” a home, and threat of foreclosure stigma, there is nothing really to prop up prices. At the same time land lords will be squeezed by the renters market place.

    We cut land lords a lot of slack in this country because renters have no rights. What would happen if landlords were made to be held accountable for the properties they own? What if we do have a new crop of renters who lobby the government for high quality housing at lower rental prices?

    Geez, for that matter what if we held babnks accountable for the loans they made before they collapsed the global economy?

    I see a lot of work for lawyers coming up.

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  31. 31
    Feedback says:

    ChangMook Sohn, we miss you. Please come back. All we have in your stead are snarky commentators and overly-elaborate Tableau graphics.

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  32. 32

    By One Eyed Man @ 26:

    RE: Kary L. Krismer @ 22

    “Just out of curiosity, do you have any examples of their lobbying on topics you disagree with?”

    I’ve never checked their lobbying budget, but there’s probably a long list that many on this site would object to, starting with the home buyer tax credit and the mortgage interest deduction. But I think the somewhat questionable message of their advertising budget would be the spot where there’s “never been a better time to” object.

    Undoubtedly so, but my question was more to determine whether the objection was just a knee-jerk reaction to NAR.

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  33. 33

    By Ray Pepper @ 27:

    Mortgage Cramdown Kary..You said it would NEVER happen . . …

    Why do you keep making that claim?

    Maybe you’re confusing Congress approving cramdown in Chapter 13. I may have said that bank campaign contributions would keep that from happening, but that’s something I’m in favor of.

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  34. 34

    By Ray Pepper @ 27:

    With very little inventory in the pipeline we stand by our belief to NOT enagage in multiple offers or any form of bidding wars. It is the Buyers choice however, and we just direct them to Brokerages who will GLADLY support their offers.

    In other words you are unwilling to spend your time on doing what your clients want. I hope you let them know that up front: “I’m not your agent, I’m your guardian.”

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  35. 35

    By Ray Pepper @ 27:

    With very little inventory in the pipeline we stand by our belief to NOT enagage in multiple offers or any form of bidding wars. It is the Buyers choice however, and we just direct them to Brokerages who will GLADLY support their offers.

    In other words you are unwilling to spend your time on doing what your clients want. I hope you let them know that up front: “I’m not your agent, I’m your guardian.”

    Rate this comment: Thumb up 0

  36. 36

    By MichaelB @ 29:

    RE: Kary L. Krismer @ 14

    CoreLogic reports that almost 20% of homes in Washington State are in negative equity. There is no basis to believe home prices will be increasing any time soon. So this “supply and demand” argument is ridiculous!

    Totally non-responsive. I suggest you go back and read what I wrote again.

    If you believe that 20% number, however, you are extremely gullible. http://blog.seattlepi.com/realestate/2009/08/06/have-we-become-a-nation-of-the-extremely-gullible-its-on-the-internet-it-must-be-true/

    Also, take a class on economics. Anytime anyone ridicules supply and demand, it just demonstrates total ignorance.

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  37. 37

    By Kary L. Krismer @ 33:

    By Ray Pepper @ 27:
    Mortgage Cramdown Kary..You said it would NEVER happen . . …

    Why do you keep making that claim?

    Maybe you’re confusing Congress approving cramdown in Chapter 13. I may have said that bank campaign contributions would keep that from happening, but that’s something I’m in favor of.

    And I know I’ve said that cramdown in Chapter 13 would work better than bank agreed cramdown.

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  38. 38
    Dirty Renter says:

    Make no mistake, Ray, predatory realtors and devil-may-care investors were ever bit as responsible for the housing bubble as predatory lenders. Own it; embrace it; laugh at it.
    It’s all good.

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  39. 39
    Jonness says:

    By Ray Pepper @ 16:

    RE: Jonness @ 12

    Predatory real estate agents? To single out one component of the industry to blame is both incompetent and misinformed.

    Your post makes a great IQ test. 6 people gave it a thumbs up, and two people gave it a thumbs down. Since nowhere in my post did I say anything about “singling out” predatory RE agents as the sole blame for the problem, I’d have to interpret the outcome of this IQ test as being, 6 people flunked, and 2 people passed.

    Other than that, I haven’t a clue why you are arguing with yourself.

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  40. 40
    Jonness says:

    By Ray Pepper @ 9:

    RE: Mariya @ 8

    Nice find Mariya….Check out this Red Fin guy: “Expect the bidding wars to continue, its a fierce market right now, have a strategy!”…..

    “have a strategy”…this is from Red Fin coordinator Brian Carraway…What a buffoon…….A classic sales tactic creating a “sense of urgency”….Just like at The Honda Dealership….”I have 2 Buyers coming tomorrow for this new Accord”…..Please…………………

    Wait, a minute ago you were arguing all predatory agents should be let off the hook from moral judgement, and you referred to me as an inept simpleton for believing otherwise.

    Suddenly, when it suits your agenda, you turn face and point out how bad of a person this particular redfin agent is for having a predatory sales tactic?

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  41. 41
    David Losh says:

    RE: Jonness @ 39

    The problem is the inexperienced agents much more than slime. Agents who don’t care about the business, do more damage than those who are out to do deliberate harm.

    Redfin is a prime example of a Brokerage that only puts up sales charts, and pretends that is what Real Estate is all about. I especially liked when Hugh Dominic told Tim his company could make a predictive algorithm. People actually talk that way here on these threads, over on the redfin forums, Trulia, or Zillow.

    Tim’s a guy who wanted to buy a house, and now he is a Real Estate scientist. Glenn buddy is some tech geek who is looking for an IPO cash in. Zillow already took the plunge, and Trulia, or Estately will be next.

    I’m saying the well intentioned do much more damage than slime.

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  42. 42
    Jonness says:

    By Kary L. Krismer @ 34:

    By Ray Pepper @ 27:
    With very little inventory in the pipeline we stand by our belief to NOT enagage in multiple offers or any form of bidding wars. It is the Buyers choice however, and we just direct them to Brokerages who will GLADLY support their offers.

    In other words you are unwilling to spend your time on doing what your clients want. I hope you let them know that up front: “I’m not your agent, I’m your guardian.”

    Based upon personal experience, it’s true that Ray’s firm has no interest in tricking buyers into partaking in bidding wars. For whatever reason they take pride in getting buyers good deals. I expect they would submit an offer if requested, but they would first attempt to talk some common sense into their client.

    Are you sure you are representing the best interest of all those buyers you fail to warn about bidding wars Kary? When you win, you look great for day, but what about all your clients from 2007 who have since defaulted. Did you represent their best interest back then as well as today?

    It’s an interesting moral question, that could be answered in many different ways by many different people. My interpretation is, working in the best interest of the client counts as much toward tomorrow as it does today. I expect most RE agents will disagree.

    I’m pretty sure Ira will agree though. For whatever reason, he strikes me as the kind of agent that cares more about his clients than he does about the money and the prestige. And that’s what it really comes down to for me. If your agent cares more about the money and prestige than he does about you, the probability of a successful outcome is greatly diminished.

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  43. 43

    By Jonness @ 42:

    By Kary L. Krismer @ 34:
    By Ray Pepper @ 27:
    With very little inventory in the pipeline we stand by our belief to NOT enagage in multiple offers or any form of bidding wars. It is the Buyers choice however, and we just direct them to Brokerages who will GLADLY support their offers.

    In other words you are unwilling to spend your time on doing what your clients want. I hope you let them know that up front: “I’m not your agent, I’m your guardian.”

    Based upon personal experience, it’s true that Ray’s firm has no interest in tricking buyers into partaking in bidding wars. For whatever reason they take pride in getting buyers good deals. I expect they would submit an offer if requested, but they would first attempt to talk some common sense into their client.

    Are you sure you are representing the best interest of all those buyers you fail to warn about bidding wars Kary? When you win, you look great for day, but what about all your clients from 2007 who have since defaulted. Did you represent their best interest back then as well as today?

    First, buyers are not tricked into bidding wars. Often they make a bid knowing of other bids, but sometimes the other bids are subsequent. As I said earlier though, if you were willing to offer $X for a property not knowing of any other bids, why would that be different knowing of other bids? That other people want the property just confirms it is not a PoS that you will have a hard time dumping when it comes time to sell. Ray’s method is a method of avoiding those situations is likely to end in failure years down the road when it comes time to sell.

    Second, Ray has made it clear that his firm will not enter into a bidding war.

    With very little inventory in the pipeline we stand by our belief to NOT enagage in multiple offers or any form of bidding wars. It is the Buyers choice however, and we just direct them to Brokerages who will GLADLY support their offers.

    There are possibly a couple of reasons for that. Most likely is with their low fee it isn’t worth their time. That’s fine as long as they disclose to the client up front what they’re doing (like Redfin used to do with short sales).

    Third, I’m only aware of two clients that has defaulted since 2007, and while I don’t want to go into the reasons for their defaults, they clearly don’t blame us for their decisions. One recently referred us a client, possibly because we had warned them when they bought that the deal wasn’t a good fit for them. Unlike Ray, my wife and I realize that we are real estate agents and that our job is to advise the clients, not to dictate what they can or cannot do.

    Finally, what you probably don’t realize is that it is usually a “highest and best” situation, not just a “highest” situation. Sometimes it’s the buyer that is better than another. As I’ve mentioned in the past once we advised the client to pick a lower offer because that buyer already owned an early 20th century home, and would probably be easier to deal with on inspection. After the inspection they requested a $500 price cut. Then there are some agents that could not write a best offer if you put a gun to their head. I’ve mentioned in the past receiving two equal offers, and having seen how much one of the buyers loved the house, but the other agent knew how to properly fill out forms. That’s an indication of less likelihood of issues heading into closing, so we picked that offer. Stated differently, there are some agents that could enter into a bidding war any never win, because they are incompetent. I felt really bad for that couple, because they didn’t have a clue that they didn’t get the house they wanted because of their agent.

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  44. 44
    wreckingbull says:

    RE: Jonness @ 42 – I am no fan of bidding wars, but do you really want to limit your choices like this? I feel that if you have done your homework, you can make educated decisions about whether an escalated bid makes sense.

    Remember, you still have to live in the home you buy, and you probably will need to resell it at some point. I think the moderate stance on bidding wars makes sense. Do so carefully, prudently, and in an educated manner.

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  45. 45
    David Losh says:

    Bidding wars are a sales technique. People are hyped to buy and an agent encourages that. This scam has been used successfully since 1997. It is a waste of time for the buyer, but the sellers make out extremely well, in most cases, not all.

    Let me point out again that people were complaining about the lack of decent inventory in December, and now those same types of properties are hot items.

    The pattern is the same, in Spring it’s bidding wars, in Summer it cools, then next fall we are back to people talking about over priced crap. Well that crap is over priced because Spring bounce buyers paid way too much.

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  46. 46

    RE: wreckingbull @ 44 – I would mainly agree, but entering into a bidding war doesn’t require an escalation clause. In fact, I would say it seldom requires an escalation clause.

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  47. 47

    By David Losh @ 45:

    Bidding wars are a sales technique. .

    Not necessarily. If the listing says “offers not reviewed until . . ..” then it likely is setup to get multiple offers. I have not seen that for some time (excluding HUD). Sometimes the listing is just inadvertently priced low (e.g. the agent thinks they need to compete with short sales and REO). Sometimes multiple offers just happen. And often none of the multiple offers are for full price, even in the first situation.

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  48. 48
    wreckingbull says:

    RE: Kary L. Krismer @ 46 – I did not mean ‘escalation clause’. I would never make an offer this way. No sense in laying the cards down like that.

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  49. 49

    RE: wreckingbull @ 48 – Sorry, I mis-read you.

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  50. 50

    RE: Kary L. Krismer @ 47
    Lately, on several occasssions, I’ve seen the ” All offers, if any, will be reviewed at such and such a date and time”.
    On one of these occassions, II submitted an offer on behalf of a client about 4% less than list price. Someone else got the house, there were 13 offers, and it went for over list price. And this was no charming Craftsman in Wallingford. It was a “cute” 40’s home in Mountlake Terrace. I think it just bespeaks of the lack of inventory of anything half nice out there.
    Of course this will change. People tend to be reactionaries, they see that there’s a frenzy to buy a house and feel compelled to join in. I’m not suggesting that if there’s a “all offers, if any, will be reviewed, etc” to not make an offer. What I’m suggesting is to exercise restraint. Over 50 dollars over the asking price if the asking price is at market value. Don’t start salivating , don’t get this idea that you have to “win” this house at any cost. It’s just a house.

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  51. 51

    By Ira Sacharoff @ 50:

    I’m not suggesting that if there’s a “all offers, if any, will be reviewed, etc” to not make an offer. What I’m suggesting is to exercise restraint. Over 50 dollars over the asking price if the asking price is at market value. Don’t start salivating , don’t get this idea that you have to “win” this house at any cost. It’s just a house.

    I would agree with that.

    BTW, a couple of weeks ago I thought that perhaps HUD had started a policy of pricing low to create bidding wars. My search results indicated otherwise (few listings sold over list). I’ll need to check that in a few weeks to see if perhaps it was a very new policy, and not showing up yet in sold listings.

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  52. 52
    Ray Pepper says:

    Kary, what you do not understand( because you are not of the investor mindset) is that any form of bidding war, multiple offer, escalation, etc. places Buyers at a disadvantage to the Seller.

    When inspections are completed and our represented Buyers want things performed or further concessions of any kind the Seller (now knowing many are waiting in the wings) will have the “control of the deck” if you may….In a depreciating asset environment you NEVER , EVER, give up control of the deck and always should desire to dictate the terms of the purchase…

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  53. 53
    Ray Pepper says:

    btw…not one comment from Tim on this thread?…No defense of Red Fin? Comment on “better have a strategy” from a fellow Redfinnian….

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  54. 54
    David Losh says:

    It’s common sense that if the market has over heated you step back.

    What’s the hook this time, be priced out forever? What’s the catch phrase for this, is it feeding frenzy?

    I tour every week. This week every house had offers on it, or were excepting offers on Sunday, or Friday. The agents, who have been starving these past three years, are giddy with the activity. Every body I know is busy, and getting to be listless.

    Seriously what is the fascination with having to buy crap now? Low interest rates at these prices? It’s insane. Insanity is doing the same things over, and over, and expecting a different outcome.

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  55. 55
    David Losh says:

    RE: Ray Pepper @ 53

    I think redfinian is spelled with one n.

    I like it, this may stick, the redfinians on the offensive!

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  56. 56
    ARDELL says:

    RE: Ira Sacharoff @ 50

    Just had a super annoying one. No “all offers will be reviewed” in the instructions, BUT there was a Broker’s Open the first day on market and the Listing Agent told all of the agents as they walked in “the owner will be looking at all offers on Monday”. This was Thursday and there was an Open House or two scheduled for the weekend. I saw it immediately as did most any agent who had an actual client who might be interested.

    Friday I get a call saying owner has changed their mind about waiting until Tuesday to review offers. I head over with my clients and listing agent must be present at all showings, so I ask when they will be reviewing offers. He says tonight. I ask what time. He looks at me like I have two heads. I said you said offers will be reviewed tonight. He said yes…and Saturday…and Sunday…and whenever. I say…this agent obviously doesn’t know what “when are you reviewing offers?” means.

    So we get the offer in and there are 6 offers. Plenty…right? Apparently not. Seller doesn’t choose one or respond at all. Saturday they do the Open House and I wander in like a fly on the wall and hear the agent tell a couple with no agent what the two highest offers are. They are too high. We don’t withdraw our offer, but we don’t change it either. No answer on Saturday. No answer on Sunday. Sunday they still have the same 6 offers they had 2 days ago, but at least 4 of the buyers are totally pissed off. :)

    Monday I get a call…finally an answer? No. Agent says seller is calling 3 of the 5 offers (one told them to fluck off on Sunday) to ask if they will pay X which is less than the two highest offers as to cap but almost 10% over asking price. They also want to know if the buyer will pay the difference between appraised value and purchase price in cash without negotiation (without even knowing what the difference is) and they also want to know if the buyer will close ASAP but let the seller stay for 4 to 6 weeks after closing. Not asking for a rent back. No kids in school waiting for the school year to end. Just wanted 30 day escrow PLUS 4 to 5 weeks to take their sweet old time packing and moving.

    Agent doesn’t even “get” that she is asking how far the buyer is willing to bend over. Hard not to laugh and say fluck you all at the same time on that one. Funny thing is my client was already in escrow on a different house by the time the seller and agent finished being selfish pickles, but we let it ride just for giggles. Will be interesting to see where that one closes…or if it even makes it past appraisal.

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  57. 57
    The Tim says:

    RE: Ray Pepper @ 53 – What’s to defend? Are you saying that buyers shouldn’t have any strategy? To the contrary, you’re suggesting a specific strategy yourself: If there’s a bidding war, walk away.

    I don’t see Brian Carraway urging buyers to outbid everyone else, or come in with escalation clauses, or anything else. He simply says that you should have a strategy to deal with the reality of today’s market. Your strategy should be whatever makes sense for you. If you’re Ray, that’s walking away. For others, the strategy will be different.

    What exactly is the problem with that statement that somehow requires me to “defend” it?

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  58. 58
    Bob says:

    [Currently sitting in a Starbucks in the Lake Union vicinity – s.o. was running errands after church and did not want to tag along]

    A real estate agent in talking to a couple (late 20’s) – seems like one of their initial discussion. “need to be ready to pounce on the right house with a offer right away”, “less than 1 week …”, ‘pre-approved to know what they can offer”.

    Nothing specifically outrageous – but after 20 minutes of this conversation, i could see them going down this decision tree. There was nothing about value, long-term best financial decision … I am so tempted to go say something … but wont …

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  59. 59
    ARDELL says:

    RE: Ira Sacharoff @ 50

    Just saw one where they are going to look at offers…wait for it…in TWENTY days! The house is listed 25% higher than the last home sold and has no unique qualities.

    I think someone’s pushing their luck a bit too far. Hope they aren’t fooling anyone with that one. If that sells at or over list price, we need to figure out how to make “a rule” prohibiting that kind of “strategy”.

    I don’t agree with Ray that people should run away from a good house just because someone else wants it too. But keep your wits about you, people. This one is a total scam. Kinda like stuffing tissues in a bra to make people think things are better than they actually are.

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  60. 60
    David Losh says:

    RE: ARDELL @ 59

    We are talking about today when there are 4000 properties listed, compared to 7000 listed last year. We are talking about a Real Estate industry induced reduction in “supply.” The truth is every property is for sale for the right price, and terms.

    The Multiple isn’t the end all be all of Real Estate inventory. Real Estate agents are playing a game, right now, that families will pay for for years to come. It’s all a scam.

    The number of listings quoted is whatever, but you can look at the graphs posted last week.

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  61. 61
    kfhoz says:

    By Ray Pepper @ 17:

    RE: Kary L. Krismer @ 10
    Kary, 500 Realty and myself personally NEVER engage in multiple offer scenarios for our Buyers PERIOD. …

    We missed out bidding on a home in Kennydale somewhat due to this advice. The selling agent misled our buying agent about the existing offers. The house sold for almost $100,000 less than we would have been willing to pay. The flippers who got the house fixed it up and sold it for about $200,000 more than they bought it for in a couple of months of cosmetic fixes. It was a bank-owned house. There had to have been an inside deal for this to happen. Bank doesn’t care I presume because they get the shortfall made up by whoever guaranteed the loan.

    If you are buying houses as an investment then there is always another house. But if you are buying your one house to live in for the next 20 years, and you have to deal with my husband, then there is about one house per year.

    Conclusion: put in the offer you want to make on the house that you want if it seems at all reasonable. If you are making an offer over listing price especially, put it in. I am not advocating making an offer way under both the listing price and the apparent current value, that would be wasting to many people’s time.

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  62. 62
    David Losh says:

    RE: kfhoz @ 61

    There is nothing to say on a bank owned property that you can’t put in an offer, and forget about it. Ray is correct that when the listing agent calls, and asks for more, you say no, thanks. It doesn’t matter anyway to what is going on today.

    I wanted to clarify that in 1997, maybe 1996, the MLS allowed listings to be e-mailed to buyers. It was a game that buyers were given pagers, and when a “hot” property came up the agent would page, the buyers would look at the property, and make the offer in a rush.

    Today it’s the same, maybe worse, with phone app technology.

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  63. 63
    ARDELL says:

    RE: David Losh @ 60
    ?? I wasn’t talking about “today” as I am on vacation in LA until Tuesday. I was talking about a week ago. Did something happen this week while I was in LA that totally changed the market while I was gone for the last 6 days?

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  64. 64
    Blurtman says:

    RE: Bob @ 58 – Yet another use for the pocket Taser.

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  65. 65

    By Ray Pepper @ 52:

    Kary, what you do not understand( because you are not of the investor mindset) is that any form of bidding war, multiple offer, escalation, etc. places Buyers at a disadvantage to the Seller.

    I would agree the considerations could be different for an investor than a buyer intending to occupy. But still, if they were willing to offer $X without knowing of the other offers, I don’t know why they would really care. The cost to inspect is relatively minor, and if that limits your chance to negotiate inspection issues, at least you’re getting a sought after property.

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  66. 66

    By David Losh @ 54:

    It’s common sense that if the market has over heated you step back.

    No, you work harder to find the properties faster.

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  67. 67
    David Losh says:

    RE: ARDELL @ 63

    Today, is today Ardell, it’s today’s market place of feeding frenzy.

    I’m sorry Real Estate agents, and Brokerages have to make a buck this way, but today’s buyers should step back, and let the smoke clear.

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  68. 68

    RE: ARDELL @ 56 – I would assume changing the review date would violate a NWMLS rule. The agent might be violating more rules if they are a Realtor.

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  69. 69
    David Losh says:

    RE: Kary L. Krismer @ 66

    OK, Kary, how many property owners did you approach in the past two months, to convince them to sell? I mean if you are working harder to find properties faster, how many sellers have you approached on behalf of your buyers?

    I mean random people who you know are going to sell, but the property isn’t on the market yet. How many of those have you talked to?

    I have the feeling you are watching the computer the same as most buyers today, in today’s market. It the watch, and wait mentality, then pounce.

    It’s not even a strategy.

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  70. 70

    By kfhoz @ 61:

    By Ray Pepper @ 17:
    RE: Kary L. Krismer @ 10
    Kary, 500 Realty and myself personally NEVER engage in multiple offer scenarios for our Buyers PERIOD. …

    We missed out bidding on a home in Kennydale somewhat due to this advice. The selling agent misled our buying agent about the existing offers. The house sold for almost $100,000 less than we would have been willing to pay. The flippers who got the house fixed it up and sold it for about $200,000 more than they bought it for in a couple of months of cosmetic fixes. It was a bank-owned house. There had to have been an inside deal for this to happen. Bank doesn’t care I presume because they get the shortfall made up by whoever guaranteed the loan.

    If you are buying houses as an investment then there is always another house. But if you are buying your one house to live in for the next 20 years, and you have to deal with my husband, then there is about one house per year. .

    That sounds exactly like what I’ve been talking about–a property priced too low. It happens, just like sometimes they are priced too high.

    As to your second paragraph, I would agree. We’ve been in our house over four years and looked at hundreds of houses in that time, and only a handful would I even consider at a similar price. That’s even with the decline in the market.

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  71. 71

    RE: David Losh @ 69 – You’ve gone completely bonkers. I suppose when you want to buy a used car you walk up and down the street until you find one you like, and then ask the owner if they want to sell!

    Seriously, that is one totally messed up post. How many houses do you take a buyer into before they find one they like? But you want go around asking sellers if they want to sell before a buyer has even seen it? (Assuming the purpose of that contact is not to get a listing).

    If, however, your comment meant it’s better to have listings now than buyer clients, I would agree.

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  72. 72
    Jonness says:

    By wreckingbull @ 44:

    RE: Jonness @ 42 – I am no fan of bidding wars, but do you really want to limit your choices like this? I feel that if you have done your homework, you can make educated decisions about whether an escalated bid makes sense.

    Remember, you still have to live in the home you buy, and you probably will need to resell it at some point. I think the moderate stance on bidding wars makes sense. Do so carefully, prudently, and in an educated manner.

    I’m not completely against bidding against other buyers, but I am completely against overpaying for a house. Unfortunately, most people who engage in bidding wars do so emotionally and end up overpaying, especially in the current low-supply/falling prices marketplace where FHA etc. loans are ubiquitous

    I agree with becoming informed, but that starts by using logic instead of emotions to make important business decisions. You know as well as I do, in most bidding situations, logic goes out the window in favor or emotions. My best advice is, if you want to buy a house, be patient and find the right house at the right price. Just because some giddy idiot, with no appreciation for what it takes to work, earn, and save money, is willing to overpay for the house using a GSE loan doesn’t mean you should pay even more than that person and put 35% down in the process.

    Also, just because your RE agent would prefer to show you 3 houses instead of 20 doesn’t mean it’s in your best interest.

    IMO, limiting myself from these predatory situations is the right thing to do. Admittedly, I’m of the extreme minority who views purchasing a home as an investment as well as a place to live.

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  73. 73
    ChrisM says:

    Tim, I think this warrants its own article, for maximum coverage. Ardell states: “Kinda like stuffing tissues in a bra” and I think we need some graphs, and other visuals. I will leave profit opportunities to your loyal readers…

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  74. 74
    Jonness says:

    By David Losh @ 45:

    Bidding wars are a sales technique. People are hyped to buy and an agent encourages that. This scam has been used successfully since 1997. It is a waste of time for the buyer, but the sellers make out extremely well, in most cases, not all.

    David, you are one of the few agents who will tell it straight. I put an offer on a house a couple of years ago, and the agent came back and told me there were multiple offers. My agent gave him a call a few days later, but he was out of town, so his associate looked into the file to answer a question. My agent also asked if the house had any other offers yet. The associate said there were no other offers on file. I ended up walking on the deal.

    You see, these crooks will lie and tell you there are multiple offers when there aren’t any other other offers. So all these giddy idiot buyers end up bidding against themselves to ensure they get the houses. Either that, or they never find out their original bid was $5 grand higher than buyer #2’s final offer; yet, they panicked and through in an extra $20K when they learned there were multiple offers.

    Behind the scenes, RE purchasing is a game of horse trading, and if you don’t know what you are doing, you are going to overpay. At the end of the day, your agent looks like a hero for getting you the house. And you never find out you paid an extra $20K only to see a better cheaper house pop up down the street a few months later.

    People who want to play this game correctly need to learn to control their impulses and emotions and instead think logically. How many ebay auctions have you seen where during the last minute of the auction, people have lost emotional control and ended up bidding almost as much for a used piece of junk as a brand new item? It’s the same phenomenon in RE bidding wars.

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  75. 75
    Jonness says:

    By Kary L. Krismer @ 66:

    By David Losh @ 54:
    It’s common sense that if the market has over heated you step back.

    No, you work harder to find the properties faster.

    This is exactly what most agents were saying during the bubble price runup and helps to explain why so many recent buyers are currently underwater.

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  76. 76
    Jonness says:

    By Kary L. Krismer @ 36:

    If you believe that 20% number, however, you are extremely gullible. http://blog.seattlepi.com/realestate/2009/08/06/have-we-become-a-nation-of-the-extremely-gullible-its-on-the-internet-it-must-be-true/

    Apparently, you are unaware that Core Logic has access to loan servicing records as well as HELOC records along with a plethora of other housing-related data not available at your local court house.

    http://www.corelogic.com/about-us/data.aspx

    Figuring out the amount owed per general area is trivial.

    As far as the supply/demand argument, there is a difference between how this works in regulated and unregulated markets (owners trapped underwater unable to sell, bank’s shadow inventory purposefully trickled out, etc vs red hot market with genuinely low supply). But I agree in most cases, a sign that demand is outstripping current supply is that prices increase. So far, other than the normal Spring bounce, we haven’t seen this occur in our area as a whole.

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  77. 77
    MichaelB says:

    By Kary L. Krismer @ 36:

    By MichaelB @ 29:
    RE: Kary L. Krismer @ 14

    CoreLogic reports that almost 20% of homes in Washington State are in negative equity. There is no basis to believe home prices will be increasing any time soon. So this “supply and demand” argument is ridiculous!

    Totally non-responsive. I suggest you go back and read what I wrote again.

    If you believe that 20% number, however, you are extremely gullible. http://blog.seattlepi.com/realestate/2009/08/06/have-we-become-a-nation-of-the-extremely-gullible-its-on-the-internet-it-must-be-true/

    Also, take a class on economics. Anytime anyone ridicules supply and demand, it just demonstrates total ignorance.

    Kary, you ignorant sluuutttt. I didn’t say the concept of supply and demand is ridiculous, I said your application of supply and demand as a key driver of house prices is ridiculous. If supply were really constrained, you would expect to see prices increasing, and yet they are not??? Hmmm… Please draw a chart of the intersection of supply and demand for homes to demonstrate how prices can DROP when supply has decreased, with demand unchanged. In fact, houses are not apples, or bread, or rice and there are many factors that are much more important than how many homes happen to be listed at a given time that determine home values.

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  78. 78

    By Jonness @ 72:

    By wreckingbull @ 44:
    RE: Jonness @ 42 – I am no fan of bidding wars, but do you really want to limit your choices like this? I feel that if you have done your homework, you can make educated decisions about whether an escalated bid makes sense.

    Remember, you still have to live in the home you buy, and you probably will need to resell it at some point. I think the moderate stance on bidding wars makes sense. Do so carefully, prudently, and in an educated manner.

    I’m not completely against bidding against other buyers, but I am completely against overpaying for a house. Unfortunately, most people who engage in bidding wars do so emotionally and end up overpaying,

    I agree with the first sentence. I really doubt you have any evidence at all of the second sentence, or that you even know 5 situations where people have bought at a bidding situation.

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  79. 79

    By Jonness @ 74:

    By David Losh @ 45:
    Bidding wars are a sales technique. People are hyped to buy and an agent encourages that. This scam has been used successfully since 1997. It is a waste of time for the buyer, but the sellers make out extremely well, in most cases, not all.

    David, you are one of the few agents who will tell it straight. I put an offer on a house a couple of years ago, and the agent came back and told me there were multiple offers. My agent gave him a call a few days later, but he was out of town, so his associate looked into the file to answer a question. My agent also asked if the house had any other offers yet. The associate said there were no other offers on file. I ended up walking on the deal..

    Your agent should have known that a contract doesn’t need to be “in the file” until after mutual acceptance.” So your story proves nothing.

    You may however be right that some agents will falsely claim there are multiple offers. There’s one agent out there that will do anything. But given the fact that saying you have an offer in makes it less likely you’ll get another offer in, rather than more likely, makes that practice hardly widespread.

    There’s a theme to my response. You don’t understand how the process works, so you don’t understand what’s going on.

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  80. 80

    By Jonness @ 75:

    By Kary L. Krismer @ 66:
    By David Losh @ 54:
    It’s common sense that if the market has over heated you step back.

    No, you work harder to find the properties faster.

    This is exactly what most agents were saying during the bubble price runup and helps to explain why so many recent buyers are currently underwater.

    Yes it is similar. In both markets you don’t have the luxury of taking a relaxed approach. But that doesn’t mean it’s the same.

    If you’re down in Phoenix you would want to be inside during 120 degree weather and during a microcell event. That doesn’t mean they are the same.

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  81. 81

    By Jonness @ 76:

    By Kary L. Krismer @ 36:
    If you believe that 20% number, however, you are extremely gullible. http://blog.seattlepi.com/realestate/2009/08/06/have-we-become-a-nation-of-the-extremely-gullible-its-on-the-internet-it-must-be-true/

    Apparently, you are unaware that Core Logic has access to loan servicing records as well as HELOC records along with a plethora of other housing-related data not available at your local court house.

    http://www.corelogic.com/about-us/data.aspx

    Figuring out the amount owed per general area is trivial.

    LOL, Read your own link:

    U.S. home equity databases

    7 million active loans
    80% of bank-owned home equity loans and lines of credit

    In any case, to make that determination of underwater they have to know what the house is worth. That’s part of the equation. But I’m glad you like Corelogic so much, because in my own example of my house sale/purchase, of the three services I checked they were showing that I am by far and away better off by having moved. Per Corelogic I would have lost $81,000 more in value by staying put. That’s because they think the old house lost more than 2x the value lost by the new house. You have repeatedly ridiculed my move because you don’t understand to to make or analyze financial decisions, but even the source you now think is great supports my decision (and that doesn’t account for the increased value of living in a better house).

    BTW, of the three services, I thing Corelogic is probably the least correct on the valuation of the old house, so their inability to value houses leads to an incorrect end result. I don’t think the old house went down so much that it is over 2x what the new house declined. I’m using the Corelogic numbers more as evidence that they cannot determine value accurately.

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  82. 82
    David Losh says:

    Yes you should be out looking for inventory. That is the job of a Real Estate agent. Real Estate is different than a used car.

    If you have a buyer in hand who wants to buy who is loyal to you that is a leverage you have in the market place. If your buyer is out of control and in a frenzy you lose either way, right along with them. In that case you become the person out of control looking to slam your buyer into any property you can to get a commission.

    Do you think your buyer, that you just slam dunked, in years to come is going to talk about what a great agent you are? They are going to tell people they helped you get a commission. They helped you, you did nothing for them, they helped put food on your table.

    That part of what Ray says is true, never trust any one with a vested interested in slamming a buyer into a property.

    Now if you want to talk about listing technique, which is the point of this discussion, great, that is what people need right now is inventory, that is where the money is.

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  83. 83

    By David Losh @ 81:

    Yes you should be out looking for inventory. That is the job of a Real Estate agent. Real Estate is different than a used car.

    You don’t understand real estate.

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  84. 84
    David Losh says:

    RE: Kary L. Krismer @ 83

    You don’t care about Real estate, or the Real Estate business. You are a guy with a Real Estate license. This is the job.

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  85. 85

    RE: David Losh @ 84 – Don’t claim to know what I care about. I know what you don’t know based on what you write. You don’t have a clue what I care about.

    Your idea of going around knocking on doors to find a seller is nonsense, unless perhaps your client is only interested in a very small area, such as a block or tiny subdivision.

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  86. 86
    Jonness says:

    By Kary L. Krismer @ 78:

    By Jonness @ 72:
    By wreckingbull @ 44:
    RE: Jonness @ 42 – I am no fan of bidding wars, but do you really want to limit your choices like this? I feel that if you have done your homework, you can make educated decisions about whether an escalated bid makes sense.

    Remember, you still have to live in the home you buy, and you probably will need to resell it at some point. I think the moderate stance on bidding wars makes sense. Do so carefully, prudently, and in an educated manner.

    I’m not completely against bidding against other buyers, but I am completely against overpaying for a house. Unfortunately, most people who engage in bidding wars do so emotionally and end up overpaying,

    I agree with the first sentence. I really doubt you have any evidence at all of the second sentence, or that you even know 5 situations where people have bought at a bidding situation.

    There are mountains of textbooks written on market psychology Kary. Human emotions affect all but the psychopaths among us, and even they are capable of feeling sorry for themselves.

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  87. 87
    Jonness says:

    By Kary L. Krismer @ 79:

    Your agent should have known that a contract doesn’t need to be “in the file” until after mutual acceptance.” So your story proves nothing.

    Right, the agent’s close associate didn’t understand how their office did business, and that there is a secret file where they keep all other offers separate just in case an associate has to look in the file to tell a client whether there are multiple offers on the house.

    But Kary, he’s such an expert, he knows this office he never stepped foot in in his life has a secret file cabinet that only the agent on vacation knew about. And this is where he safely hides all the other offers he doesn’t want his close associates to know about.

    Kary, sometimes it’s difficult for me to believe you take yourself seriously.

    You don’t understand what’s going on

    After having been through at least a dozen transactions, I’ve pretty much had my eyes opened wide to your kind Kary. I know exactly what you are up to and exactly what’s going on.

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  88. 88
    David Losh says:

    RE: Kary L. Krismer @ 85

    You don’t care about Real Estate, that’s for sure.

    I ran into David Prater at Windermere today, great guy, great agent, who was passing out flyers door to door. He is another listless Real Estate agent, who is looking for inventory, because that’s the job. You need to list to exist in the Real Estate business.

    Buyers are unsually focused on a neighborhood or school district.

    This is the nature of the business.

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  89. 89

    By Jonness @ 86:

    By Kary L. Krismer @ 78:
    By Jonness @ 72:
    By wreckingbull @ 44:
    RE: Jonness @ 42 – I am no fan of bidding wars, but do you really want to limit your choices like this? I feel that if you have done your homework, you can make educated decisions about whether an escalated bid makes sense.

    Remember, you still have to live in the home you buy, and you probably will need to resell it at some point. I think the moderate stance on bidding wars makes sense. Do so carefully, prudently, and in an educated manner.

    I’m not completely against bidding against other buyers, but I am completely against overpaying for a house. Unfortunately, most people who engage in bidding wars do so emotionally and end up overpaying,

    I agree with the first sentence. I really doubt you have any evidence at all of the second sentence, or that you even know 5 situations where people have bought at a bidding situation.

    There are mountains of textbooks written on market psychology Kary. Human emotions affect all but the psychopaths among us, and even they are capable of feeling sorry for themselves.

    So in other words, when you get caught making claims which are total BS, you go into personal attack mode.

    Face it, you don’t know what you’re talking about, but that doesn’t stop you.

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  90. 90

    By Jonness @ 87:

    By Kary L. Krismer @ 79:
    Your agent should have known that a contract doesn�t need to be �in the file� until after mutual acceptance.� So your story proves nothing.

    Right, the agent’s close associate didn’t understand how their office did business, and that there is a secret file where they keep all other offers separate just in case an associate has to look in the file to tell a client whether there are multiple offers on the house.

    But Kary, he’s such an expert, he knows this office he never stepped foot in in his life has a secret file cabinet that only the agent on vacation knew about. And this is where he safely hides all the other offers he doesn’t want his close associates to know about.

    Kary, sometimes it’s difficult for me to believe you take yourself seriously.

    You don’t understand what’s going on

    After having been through at least a dozen transactions, I’ve pretty much had my eyes opened wide to your kind Kary. I know exactly what you are up to and exactly what’s going on.

    No, you don’t understand. Agents are not required to turn a file into the office until mutual acceptance. See paragraph 7.

    http://apps.leg.wa.gov/wac/default.aspx?cite=308-124C-140

    Again, you don’t know what you’re talking about, but that doesn’t stop you.

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  91. 91

    By David Losh @ 88:

    RE: Kary L. Krismer @ 85

    You don’t care about Real Estate, that’s for sure.

    I ran into David Prater at Windermere today, great guy, great agent, who was passing out flyers door to door. He is another listless Real Estate agent, who is looking for inventory, because that’s the job. You need to list to exist in the Real Estate business.

    Buyers are unsually focused on a neighborhood or school district.

    This is the nature of the business.

    Again, please trying to make claims about things you don’t know about. You don’t know what I care about.

    Second, I don’t have to go door to door contacting people I don’t know to see if they want to be my client. I have never had to do that and I would never want to do that.

    Third, you really don’t know buyers, but assuming you’re right, I’m still not going to go knocking on every door in a school district to see if the occupant is the owner, and if they are if they want to sell to my client.

    If you think those things are “the nature of the business” then you don’t understand real estate.

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  92. 92
    David Losh says:

    RE: Kary L. Krismer @ 91

    You are not a Real Estate person. This isn’t your career.

    You are however on the internet dispensing opinions about Real Estate. Many people have tried to educate you, but you won’t listen.

    You don’t care about the business, or the people who work in the business.

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  93. 93

    RE: David Losh @ 92 – Total nonsense. First it is my career, much more so than it ever was your career. Second, the information you think I should learn is wrong, but you’re too ignorant to know that. The thread on the capacity charge clearly demonstrated your lack of knowledge of two important issues (the charge and title insurance). And for the third time, quit saying what I care about! I realize you like to express your opinion on a lot of things you don’t have the slightest clue about, but really, there has to be some limit to that. Why do you keep trying to claim you know how I feel?

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  94. 94

    “I ran into David Prater at Windermere today, great guy, great agent, who was passing out flyers door to door. He is another listless Real Estate agent, who is looking for inventory, because that’s the job.”
    Just to be clear, you mean by listless that he doesn’t have any listings, right?
    Otherwise, you mean that he’s “listless” which means he’s lacking energy and enthusiasm.

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