Posted by: 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.

75 responses to “Local Home Prices Hit 2012 Peak, Turn Down”

  1. Pegasus

    It’s amazing what some puffery from the real estate industry can accomplish when they put their minds to it. Unfortunately all of the false information being spread is exactly that, false information. As the mirage dissipates, once again we can see reality. Without an economic recovery in wages and employment temporary bounces in prices are just that, temporary. All of the hype can only boost pricing for brief periods. There is a reason mortgage rates are approaching 3.5 percent. It isn’t because the real estate market is in recovery.

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  2. Jill Schlicke

    Bill over at Calculated Risk has provided at least two different comprehensive blog posts giving reasons why home values may continue to bounce around along the bottom for a while. With the default rates still so high (yes, they are falling but still seriously elevated from historical standards) I don’t see how we could be at the bottom for home prices/values. We still have a long way to go to work out all the non-performing loans. Lemme see if I can find it. Here you go:

    http://www.calculatedriskblog.com/2012/02/housing-two-bottoms.html

    And here is Bill again on inventory:

    “Another key driver of lower inventory is price expectations. As I noted: “When the expectation is that prices will fall further, marginal sellers will try to sell their homes immediately. And marginal buyers will decide to wait for a lower price. This leads to more inventory on the market. But when the expectation is that prices are stabilizing (the current situation), sellers will wait until it is convenient to sell.”

    http://www.calculatedriskblog.com/2012/06/housing-inventory-and-negative-equity.html#Xsjrl3jshDdmmbVf.99

    So “the bottom is here!” say some. Not me. I agree w/Pegasus.

    I DO believe that all the short sales and loan mods going on in 2012 will really help with the non-performing loan levels. I’m interested in seeing what the default levels look like for all of 2012 this coming Jan. I am hoping for a substantial drop. The key word is “hoping.”

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  3. Jonness

    RE: Pegasus @ 1 – Yeah, the truth hurts, so voters just bury their heads in the sand and pretend Santa will be here soon with an armload of free gifts. Unfortunately, when you borrow more money than you can afford to pay back, there is no easy way out. It really hurts to pay back loans, so people vote to continue to borrow more and more money in order to keep the charade alive. But the longer it goes on, the more debt they owe, and the more pain they need to suffer through ever get out of the hole.

    http://farm4.static.flickr.com/3199/3077829000_1434e89fdc.jpg
    http://blog.usw.org/wp-content/uploads/2012/05/Santa.jpg

    In 2011, the U.S. took in a total of $2.3 trillion dollars. That covers defense, social security, and medicare expenses, which are a little over $700 billion each. The other $1.3 trillion in expenses (food stamps, education, etc, etc) were paid with money we borrow. But wait, there is a huge expense I forgot to mention. The interest on the national debt outstanding in 2011 was $454 billion.

    Now think about what happens when interest rates go to a normal rate, which is roughly double what they currently are. Almost half of all U.S. income will go to paying the interest on the debt. Ouch! How sustainable is that going be? No wonder Bernanke is frantically printing money to buy the majority of US debt outstanding in order to keep interest rates artificially low. It’s a ticking time bomb just waiting to go off.

    OK, so the housing market is pretty much the same debt-binging Ponzi scheme as outlined above. If I buy a house right now with an FHA loan and pay 3.5% down, at $12K/yr in interest payments, the same house at double the mortgage rate will cost me $24K/yr in interest payments. IOW, I will have to fork out another $1K per month to buy the same house.

    Now that’s means you better buy now right? Wrong! Since wages are not going up (another half million people dropped from the labor force last month because they can’t get jobs), people will not be able to afford to fork out an additional $1K/mo to buy your Ponzi-scheme house. So the price must drop by the equivalent of $1K/mo in interest payments. Oh bummer, that means your house price will drop roughly in half.

    Welcome to HeII!

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  4. Jonness

    Already a thumbs down for my post. It never ceases to amaze me how much some people hate to hear the truth!

    http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm
    http://en.wikipedia.org/wiki/File:U.S._Federal_Receipts_-_FY_2007.png
    http://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_FY_2011.png

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  5. Jonness

    The U.S. borrowed and spent more money last year than the entire U.S. Individual income tax and corporate tax revenue combined. We are living in very scary times. I’m not saying not to buy a house. I’m just saying that the economy is much worse than we are being told. We are in uncharted territory. Thus, one should proceed with caution.

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  6. Erin

    Hello everyone – I am hoping that someone here might have constructive suggestions for the following situation:

    At approximately 10:30PM Sunday night, I was overjoyed to received the news that I had prevailed in a multiple bid situation on a house. The seller’s agent informed my agent that we had a deal and she was “sending over the paperwork for mutual acceptance right away.”

    This agent did not send the paperwork right away. Instead, she called lower bidders and invited them to match or best my offer. Around 10AM this morning (after spending over an hour on the phone with my mortgage broker, sending application materials, etc.), I received the word that this agent had succeeded in persuading a lower bidder to match my offer. The house will be sold to someone else for XXXk. Incidentally this is a lesser amount than my best offer, which included an escalation to XX6k. My offer included an inspection contingency waiver and all the customary incentives.

    I understand that a seller can always accept on a basis other than price if they prefer. But the selling agent’s nonsense of calling people and bidding the house up by playing both ends against the middle strikes me as monumentally unprofessional especially given the fact that we were the highest bidder. The very worst part of this is the breach of a verbal agreement last night. I was prepared to lose the house, but not 12 hours after I was told I had prevailed.

    Adding to the mess, I was told that the sellers accepted the lower offer because they wanted to sell their house to a young family instead of a single woman. I note that marital status is a protected class in the State of Washington.

    Do I have any recourse? I’m not looking to put a family through what I’ve gone through, but I would at least like to recover my costs (inspection) since the sellers did not negotiate in good faith.

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  7. Pegasus

    RE: Erin @ 6 – Sounds like you got “Facebooked”. The real estate industry has always been a place for slimy operators. With as much bad exposure since prices started declining it appears the tactics used by the industry have not declined.

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  8. ARDELL

    RE: Pegasus @ 7

    I wrote a post on this recently.

    http://raincityguide.com/2012/08/18/discrimination-love-letters-to-sellers/

    Surprisingly, while I thought the answer was crystal clear, both Craig and David did not agree in the comments to that post. In my situation I did create a stink and was able to achieve a good result for my clients, at less than asking price even. They too had an escalation clause at over asking price.

    I’m wondering in your case if the agent simply called all of the buyer’s agents. Yours to say your offer had prevailed and everyone else’s agent to say they had not. That seems to make more sense. By not waiting until the offer was formally accepted and delivered to you, the agents getting the call to say they had “lost” decided not to take no for an answer, which is what I would have done.

    I clearly would have freaked out about the family vs single person, as noted in my post in the link above. However both Craig and David seemed to feel I was overstepping my authority when I did that. I ended at good result for my client, but I must say Craig and David’s comments both surprised and disappointed me.

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  9. softwarengineer

    RE: Pegasus @ 1

    Not Enough Extrapolation Data in Today’s Real Estate Market to Make Valid Predictions

    When listed numbers fell through the floor recently, so did any data trending. With this type of low volume market, using high [desparate] bids as the “going price” in an underwater listing shortage has no mathematical basis and is plain wild eyed logic.

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  10. softwarengineer

    RE: Erin @ 6

    Same Sort of Scenario Occurred Against Me in 1999

    I just pushed my realtor off her office chair, completed the bid papers myself immediately and told her get these in the seller’s hand that evening or I’d find another realtor.

    I beat the other offers and bought the home.

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  11. Craig Blackmon

    RE: Erin @ 6 – [the following is not legal advice and I am not your attorney until you sign my fee agreement] If you’re looking for some “recovery” then you need to contact an attorney.

    How do you know the seller wanted a “family” and not a single woman? Is that comment in an email by any chance? If you have a solid case of discrimination, then this might be worth pursuing. But if all you have is seller’s failure to negotiate in good faith… Well, that’s a very weak claim at best.

    And while I can appreciate your desire to recover the $400 for the inspection, it’s hard to justify hiring a lawyer for that sum of money. And by hard I mean impossible. Seek recovery in small claims court instead.

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  12. Craig Blackmon

    RE: ARDELL @ 8 – This thread has now been officially hijacked, but no lengthy response here. I encourage the reader to see the RCG post and comments if interested at all in the discussion. Needless to say, Ardell has mischaracterized my comments.

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  13. Ira Sacharoff

    RE: Craig Blackmon @ 11
    The inspection had not been done, as I read this.
    Strikes me as sleazy. Might be legal, I’m not in a position to know. And hard to now how it really went down. Did the agent for the family who ultimately got the property threaten a lawsuit because of discrimination? Did this decision mostly come from the sellers themselves or did their agent have too large of an influence? Either way, telling someone they got the house and then 12 hours later saying “oopsie, my bad” is clearly unprofessional.
    At the very least, I’d consider filing a complaint with the state real estate commission/Dept. of Licensing if it appears that the listing agent acted unethically. Even if it goes absolutely nowhere, getting the guy to squirm a little should bring at least a little measure of satisfaction. And hopefully change their behavior in the future.

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  14. krs

    RE: Erin @ 6

    Erin, I understand why you are upset. I lost a great house in almost exactly the same way, but the listing agent ended up doing me a huge favor, This was just after the market peaked and that house is now worth at least 30% less than I offered for it. In addition, the house was infested with ants and dry rot. The people who bought it ended up suing the listing agent when it became clear he knew about the problems. Sometimes not getting what you really want turns out to be a stroke of good luck. I think that’s especially true in a multiple offer situation. At every open house I attended after that I told the realtor on duty what had happened and named the realtor. It made me feel better, but I didn’t want to waste anymore energy than that. Now I am really thankful the listing agent for that house was such a jerk and if I find myself in a multiple offer situation I immediately withdraw my offer.

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  15. Kary L. Krismer

    By softwarengineer @ 10:

    RE: Erin @ 6

    Same Sort of Scenario Occurred Against Me in 1999

    I just pushed my realtor off her office chair, completed the bid papers myself immediately and told her get these in the seller’s hand that evening or I’d find another realtor.

    I beat the other offers and bought the home.

    That won’t necessarily cut it in today’s market (and it doesn’t describe the situation).

    As to my point though, earlier this year I previewed a house on the first day, drafted the contract, my client looked at the house and signed it that night, it was transmitted that night, and we still were not the only bidder. Fortunately we were picked though, even though not the highest bidder.

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  16. softwarengineer

    RE: Kary L. Krismer @ 15

    Today’s Market Is Weird

    I agree Kary….but even positive conversations about a specific house can be overhead [or beans spilled] to like a cash flipper and a seller will likely close with cash for sure offer from the flipper than some pending bank loan drama….even for a lower price offer.

    That’s why it might be a good idea to discuss “Gem” buys outside of public offices with flipper ears, hades, do the bid paperwork at a Starbucks.

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  17. David Losh

    RE: ARDELL @ 8

    You were talking solely about your negotiation skills. What is being presented here is a matter of professional ethics with some more discrimination charges thrown in.

    Nothing is done until it is signed all the way around. The buyer’s agent should have known that, but failed to communicate.

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  18. softwarengineer

    RE: Kary L. Krismer @ 15

    In My Case Kary

    There were 5 other offers competing against me at the same time….I’d been there before and knew the rabbit can beat the turtle, especially on a full price offer….the realtor did get me to ask the seller to pay the closing costs, which I reluctantly agreed to, albeit, the realtor’s wrench in the gear works saved me 50% of the closing costs on a quick compromise….so I got the house before the others and saved a bit of closing cost money pretending I was a broke youth with no money.

    A realtor in my housing development was so mad at me for closing the deal in lightening speed he turned my house in for an upgrade lacking a State Inspection he knew about….my realtor and the “guilty” contractor paid for the inspection costs BTW, so I pocketed $80 for my trouble.

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  19. David Losh

    RE: Erin @ 6

    You have presented the very best example of Real Estate agent crap that I have ever seen.

    Your agent was an idiot, and the selling agent was slime.

    When you put idiot, and slime together you get what we have going on today in the Real Estate market place.

    This is just one example of the type of low life scum that have taken control of the Real Estate Agency business.

    I recognize this is the internet, so Erin could be anybody with an axe to grind, but I know her experience, and perception of that experience, is getting to be more, and more common place.

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  20. Conor MacEvilly

    If you look at the quarterly sale price of Seattle single family homes they have essentially just been going sideways since the summer of 2009 and just like upper price “resistance” and lower price “support” you see in day trading, the price has been bouncing up and down between these two limits for the past 3 years. The same data holds up even for a hot selling neighborhood like Ballard. Here’s a blog post I wrote about it:
    http://www.mynorthseattlehome.com/2012/08/is-the-seattle-real-estate-market-really-going-up-or-just-going-sideways/

    Last quarter the median sale price once again touched the resistance price and right on cue (from Tim’s data), may be headed back down again to have a chat with the lower support price. Until price emphatically blows out of this price zone we are just going sideways.

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  21. ARDELL

    RE: David Losh @ 17

    I was talking about “your client isn’t going to get the house and it’s not about price”. Same situation as Erin’s. My client got the house without having to overpay. Discrimination should not be in the room…ever…and no one should allow it to be. What good is a law against it if people are going to nod and wink about it and say “oh well…PROVE it”. Difficult to prove…easier to not let it happen in the first place.

    If your client is in any type of protected class as to familial status or sexual orientation or race or creed and someone says “your client isn’t going to get the house and it’s not about price” or financing type…there should be a showdown to insure that discrimination is NOT the reason. One of the ONLY ways to prove there is no discrimination is for the protected class to get the house. Yes…that is how I negotiated it and is indicative of negotiation skills as well. But the primary issue was to eradicate the discrimination and being the best and better negotiator as well was secondary.

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  22. Julie Lyda, RE/MAX Northwest Realtors

    RE: Conor MacEvilly @ 20

    Coner is right. The bubble watchers have a tendancy to over analyze the most recent data without really studying the bigger picture.

    Good blog article too. Nicely layed out.

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  23. Kary L. Krismer

    By Craig Blackmon @ 12:

    RE: ARDELL @ 8 – This thread has now been officially hijacked, but no lengthy response here. I encourage the reader to see the RCG post and comments if interested at all in the discussion. Needless to say, Ardell has mischaracterized my comments.

    It’s a bit hard to tell from Ardell’s blog piece what exactly the facts were in her situation described. Rather than advising someone what the law was though, it sounds like she might have been threatening someone with a claim of having violated the law. That also may be problematic. The way though I would phrase the issue is the agent needs to know the law so that they themselves can avoid violating the law. I agree with Craig that they should not be advising clients as to how to not violate the law, although they can make broad non-specific statements like: “You cannot discriminate in the listing and sale of your house.”

    Overall I would agree with Craig. Surprisingly Losh also had a good idea over there at RCG–the listing agent should throw out the love letter and pictures when presenting the offer to the client, particularly where certain impressions are conveyed in the love letter. I wonder whether the buyer’s agent might be violating the law passing along some love letters?

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  24. Kary L. Krismer

    By ARDELL @ 21:

    If your client is in any type of protected class as to familial status or sexual orientation or race or creed and someone says “your client isn’t going to get the house and it’s not about price” or financing type…there should be a showdown to insure that discrimination is NOT the reason.

    There are many other terms besides price that are important. And there are other important things which are not terms. The buyer’s agent being an idiot is one of the big reasons another offer might be selected. Sometimes the idiot agent makes an offer and your seller client isn’t in the position to be picky. Then you simply have to take your chances, and more often than not when you’re in that position there will be a closing delay.

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  25. David Losh

    RE: ARDELL @ 21

    Discrimination is a larger issue than who gets the house, or what price they pay.

    By your reasoning any person of a “class” that is discriminated against should make that a part of their offer, “Hey, you have to sell to me because I’m of a discriminated class.”

    People throw around the term discrimination like they are “entitled” to special treatment. Your article crossed the line, especially when you referred to the sellers as a “lovely older couple.”

    That kind of sounded discriminatory to me. So, to me you seem to use the term discrimination to suit your needs.

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  26. Ira Sacharoff

    RE: David Losh @ 19
    One idiot, and one slimeball. Sounds like a typical election choice.

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  27. Kary L. Krismer

    RE: Erin @ 6 – What strikes me as odd about this is that the listing agent would never have incentive to call and give verbal acceptance on an offer where the inspection was waived. That would only allow the buyer to get second thoughts/cold feet and send in a revocation of their offer before the acceptance was made. With an inspection contingency that verbal acceptance might be in their interest, because it would be better for the buyer to get cold feet before the listing status was changed. But with no inspection contingency and a good enough earnest money, I think it would be risky.

    One practice which isn’t that common is to have the client sign a revocation of offer or counter-offer form whenever an offer or counter-offer is signed. That way if the client does change their mind, the offer can be quickly pulled.

    I raise that point though because without having given the verbal acceptance there would have been nothing sleazy at all about what the listing agent did (ignoring the protected class issues). Where there are multiple offers it’s very common to ask if it is their best offer, or if they want to improve it, etc.

    One other point–if the listing agent was a Realtor then there might be an issue if he/she gave some buyer’s agents more information than other agents.

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  28. David Losh

    RE: Craig Blackmon @ 12

    You’re right, once again, this thread was high jacked. I’m sorry I fell for the bait, once again.

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  29. Kary L. Krismer

    By Ira Sacharoff @ 13:

    At the very least, I’d consider filing a complaint with the state real estate commission/Dept. of Licensing if it appears that the listing agent acted unethically..

    Are you using the term unethically broadly? I’m not sure DOL does anything at all with ethical violations. You either have a licensing violation or not. Ethics don’t really come into play, except defining the term broadly. For example, you could argue that not giving the signing party a copy of the Law of Agency is an ethical breach, but really it’s just a violation of RCWs and WACs.

    Similarly, in Ardell’s RCG post she wrote: “Every real estate agent receives extensive and continuous training on ethics and the laws regarding protected classes.” I’m not sure what she’s talking about. Unless you’re a Realtor, there is no requirement at all to take any courses on ethics. And you can go forever not getting a refresher course on “protected classes.” Continuing education is about more important things, like what color of house sells better. /sarc

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  30. ARDELL

    RE: David Losh @ 28

    Erin’s comment #6 was off topic, that’s true, but I don’t think it’s fair under the circumstances to complain that she hijacked the post. She had a problem and to her time was of the essence. Perhaps you meant we should have ignored the comment, but I doubt The Tim would have wanted everyone to be rude to her and ignore it.

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  31. Kary L. Krismer

    RE: ARDELL @ 30 – If Tim is upset he could always move all the off-topic posts to the Monday thread.

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  32. David Losh

    RE: ARDELL @ 30

    No, I meant you high jacked the comment thread by interjecting your post. Then you called out Craig, and I.

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  33. ray pepper

    RE: Erin @ 6

    Erin, its YOUR FAULT for entering a multiple bid situatiion. Nothing EVER comes good out of it! Find another Agent and use this as a learning experience. Anything verbal stated is as valuable AND BINDING as a fart in the wind. I assure you that you will find a better home anyway!.

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  34. Nick

    There are some terrible analysis skills displayed in these comments. Those charts are textbook examples of *expected* seasonal variation in *rising* market.

    If you take this as a sign that prices are falling, you’re flat wrong. Prices are increasing on a seasonally-adjusted basis.

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  35. ricklind

    By Erin @ 6:

    snip…
    This agent did not send the paperwork right away. Instead, she called lower bidders and invited them to match or best my offer. Around 10AM this morning (after spending over an hour on the phone with my mortgage broker, sending application materials, etc.), I received the word that this agent had succeeded in persuading a lower bidder to match my offer. The house will be sold to someone else for XXXk. Incidentally this is a lesser amount than my best offer, which included an escalation to XX6k. My offer included an inspection contingency waiver and all the customary incentives.

    …unsnip

    Looks like, smells like, feels like (ewww), not gonna taste it. Chocolate colored dung.
    Ethically challenged agent. Move on. It just feels, “yucky” but a shower helps. The good news is you are still the same person,and the agent is still, “yucky.” Language approved version.

    OK, back to “Local Home Prices Hit 2012 Peak, Turn Down.” I think that Conor at #20 who pointed out that this price action is essentially sideways within a range is spot on. If you are trying to buy or sell at a high or a low within this range because you need to buy or sell then lots of this dialogue is good. But if you are looking for longer term trends for investment or other micro/macro reasons then we just do not have a breakout up or down, still a trading, uncertain, market.
    The economic drags outweigh the recent seasonal bump, I think. I predict more sideways to down, but can easily be wrong. My opinion is worth exactly what it cost.
    How will Presidential politics affect this? I think a Romney/Ryan victory would bump this temporarily to the upside but would be unsustainable and is not likely in any event. The Obama/Biden crew will succeed in painting Americans as better off than 4 years ago and will win, baring a major new development. I think regardless of who wins there will be a temporary “fel temp reparatio,” good times here again, bump. Go long, then short, fast.
    Thanks,
    Rick

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  36. Kary L. Krismer

    By ray pepper @ 33:

    RE: Erin @ 6

    Erin, its YOUR FAULT for entering a multiple bid situatiion. Nothing EVER comes good out of it! Find another Agent and use this as a learning experience. Anything verbal stated is as valuable AND BINDING as a fart in the wind. I assure you that you will find a better home anyway!.

    I agree with you on the fart in the wind comment, but your attitude toward multiple bids is rather defeatist. It is actually possible to get good value in a multiple bid situation, but beyond that, you don’t know that Erin knew about the multiple bids when the bid was submitted. To withdraw your bid just because you discover the house is popular is absurd! If you were willing to bid $XXX,XXX, why would you no longer be willing to pay that just because other people also like the house? Such a strategy will not leave you with a GEM, it will leave you buying a PoS that no one else will touch.

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  37. ray pepper

    well obviously Kary…come on now. I ASSUMED she entered a multiple bid knowing there was other offers. If her offer MAGICALLY went in and she was blind to knowing there was other offers from the listing agent then I still say she dropped the ball by choosing a lousy Buyers Agent.

    The fact is this. In multiple offers , EVEN IF YOU WIN, you lose. Your leverage is damaged when the seller knows many people are waiting in the wings and this becomes VERY apparent when you begin to ask for work orders post inspection or further seller concessions of some sort ..

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  38. Erin

    I just want to thank each of you above for offering your thoughts. And I do apologize for hijacking this thread; I was obviously quite upset and had nowhere else to turn for advice.

    I will of course continue to look – have no choice there. Everything decent is attracting multiple bids these days, so if I declined to pursue those homes I would have nothing left to pursue. The situation for buyers just seems hopeless.

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  39. Kary L. Krismer

    RE: ray pepper @ 37 – There is ALWAYS a first person submitting a bid in a multiple offer situation. You’re making a lot of assumptions that simply may or may not be true.

    And as to less bargaining position after mutual acceptance, sometimes the price is so good you really don’t care. You’re being like the consumer that doesn’t want to offer list price. You seem to think list price is some magical number indicating value. Sometimes list price is very low such that you’d be more than happy to deal with minor inspection items (while still doing an inspection to make sure there’s nothing major).

    Your position on this issue has merit only if the buyer doesn’t have a good agent and good lender. It’s hard to win multiple offer situations in that type of situation absent outbidding the other bidders.

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  40. Kary L. Krismer

    By Erin @ 38:

    The situation for buyers just seems hopeless.

    It’s tough, but not hopeless. As someone here said, the bottom is not as fun as we thought it would be. But the situation was just as bad for buyers at the peak, but with much higher prices in most locations.

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  41. murrcat

    RE: Erin @ 6

    Erin,
    Speaking as a layperson (non-real estate agent) I think that the listing agent acted in a sleazy manner.
    I think that your agent acted in an incompetent manner–your agent should have been on the phone to the listing agent within minutes when the mutual acceptance papers weren’t sent, and should have alerted you to the situation.
    I suggest you find a new agent to help you who is much more savvy and pro-active, or that if you keep this agent you stay on top of him/her to follow through in your next offer.

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  42. Chris

    Comparing the KC sq ft data versus the Case-Schiller index (which is accurate through June now), it can be used to predict the next two CS data points. Based on my analysis the CS will be 142.25 for both July and August.

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  43. Chris

    I got eviscerated by at least one poster on this board because I finally took the plunge and bought a house which closed in November. I’ve calculated (based on CS) that I have actually positive “real equity” (defining real equity as the amount you keep after a sale including the 8.5% in fees lost, minus the loan). Considering the “net wealth effect,” which includes the money saved in NOT renting a similar residence, the calculation is even more above water. It just goes to show that negative mentality concerning the housing market is as contrarian an indicator now as much as the unrealistic positive mentality was back in the hay-days (or what Tim calls the Pink Pony days).

    I still contend it is an excellent time to purchase a home for long-term horizon investment purposes and nothing in the recent data would indicate this long term trend is not currently intact.

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  44. Kary L. Krismer

    By murrcat @ 41:

    RE: Erin @ 6 – Erin,
    Speaking as a layperson (non-real estate agent). . .
    I think that your agent acted in an incompetent manner–your agent should have been on the phone to the listing agent within minutes when the mutual acceptance papers weren’t sent, and should have alerted you to the situation.

    I wouldn’t be so quick to judge the buyer’s agent. Getting documents transmitted is seemingly a very complicated task for some agents, so it’s not unusual for an agent to get a call from another agent saying documents will be coming, and then have them not arrive for a long time, if at all. Also, it’s possible if not even likely that the place the documents would be transmitted to would be the buyer’s agent’s office, not their home or email address. At 10:30 on Sunday night no one is likely at the office.

    What a good listing agent would do in that situation is fax the documents to the buyer’s agent’s office, then scan the offer to PDF, together with the fax confirmation sheet and then email that PDF to the buyer’s agent. That type of procedure probably occurs on less than 10% of the transactions, but it does create the best record of what occurred.

    Stated differently, it really is on the listing agent to do the task, and there’s little or nothing that a buyer’s agent can do to get them to send a document, particularly at 10:30 on a Sunday evening.

    If I were to be critical of the buyer’s agent it would be for presumably not explaining to the buyer that nothing is final until the signed off offer is actually received.

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  45. Kary L. Krismer

    RE: Chris @ 43 – Your cat looks like my cat Rocky Sylvester.

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  46. corndogs

    RE: ricklind @ 35 – First of all, as a full grown man, do not ever under any circumstances use the word ‘ yucky’ again… RE: this guy Conor and his blog… this guy is just another non-techy blunt skull realtor playing with charts… like a 3 year old lighting off fireworks… bad idea! A person should never hand draw-in trend lines. if the trend lines were computer generated, they’d look much different. I could draw in my own trend lines on his POS chart and sell a completely different concept….
    If the price went above or below this arbitrary price range which he drew in with crayons it would be meaningless. Not at all predictive of the future.

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  47. corndogs

    RE: Julie Lyda, RE/MAX Northwest Realtors @ 22 – Hey Lady! You shouldn’t stereotype Seattle Bubble bloggers. If I were to stereotype you and your hubbies real estate team, I’d say you do all the work and your husband is a drone that you lead around with a leash and hope he doesn’t say anything stupid. I would also assume that you guys have been hitting the happy hours since 2007 to load up on free tacos so you don’t have to eat dog food when you get home. But, you know, I wouldn’t stereotype…

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  48. Kary L. Krismer

    RE: corndogs @ 47 – I think she has a good point. Look how much time here gets spent discussing the C-S numbers two months after the same basic data came out from the NWMLS. Maybe, just maybe that discussion has decreased some since the market flattened out a bit, but really there’s been a lot of talk about very little change.

    That said, some here have tried to focus on the “bigger picture,” but for some it is all about the raw numbers.

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  49. David Losh

    RE: Erin @ 38

    Your comment was on topic because it shows the exhuberance of the market place we just had. You, along with many others, entered a multiple offer market place.

    That shows the trend upward in pricing that is reflected in Tim’s chart.

    Many agents also involved the buyer’s they represented in these multiple offers which I find distasteful.

    Ray is right, the buyer doesn’t win in a multiple offer. Multiple offers are a sales gimmick.

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  50. ARDELL

    RE: David Losh @ 49

    Without giving confidential detail I will say that Erin contacted me privately and revealed the property address, and I can say with a fair degree of certainty that this was NOT a situation where the multiple offers were “a sales gimmick”.

    The home was priced fairly by the listing agent…not too low and not too high. The only reason it went to multiple offers at a price considerably over asking price was the fact that a handful of people all wanted it enough to bid it up that high.

    It was not a super low asking price aimed at garnering multiple offers. In fact it would appear that the staging of the home might have significantly influenced the buyer’s opinions of value. If the home were shown vacant and empty, the asking price was likely pretty spot on.

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  51. Kary L. Krismer

    By David Losh @ 49:

    Many agents also involved the buyer’s they represented in these multiple offers which I find distasteful.

    Ray is right, the buyer doesn’t win in a multiple offer. Multiple offers are a sales gimmick.

    An agent that shies away from multiple offers because they are afraid of failure is a failure. An agent that shies away from multiple offers because they are afraid their client will pay too much either doesn’t know how to determine value or they have a client that they can’t control (is too eager). The latter reason can be a legitimate reason to be afraid of entering into a multiple offer situation, but at that point the agent should consider dropping the client. If the client is going to pay too much in a multiple offer situation, they’re going to pay too much in any situation (or more likely buy a PoS house that they shouldn’t buy at all).

    The idea that a buyer can’t be a winner in a multiple offer situation is complete nonsense. It depends entirely on the situation. To know whether it’s a good situation or a bad situation you need to understand how to calculate value. If an agent can’t do that, they claim all multiple offer situations are bad. If an agent’s skill set is so low that they can’t win any multiple offer situation, they claim all multiple offer situations are bad.

    Each situation is different. There are some multiple offer situations you do want to avoid, and some you want to take advantage of. They’re just like any other listing, but they’re likely more attractive properties. What you need to do is put yourself in a situation to be the successful bidder without being a foolish bidder.

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  52. Kary L. Krismer

    By ARDELL @ 50:

    RE: David Losh @ 49 – The only reason it went to multiple offers at a price considerably over asking price was the fact that a handful of people all wanted it enough to bid it up that high.

    And presumably a relative lack of inventory in that area. Nice houses get a lot of attention in this market. Trying to avoid multiple offer situations means avoiding nice houses.

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  53. Marc

    RE: Kary L. Krismer @ 51 – I have to agree with Kary on multiple offer scenarios. I don’t like them but that doesn’t mean I won’t get in their and mix it up.

    On the flip side this is the first year where I’ve really dealt with multiple offers from the listing side and it was a lot more difficult than I anticipated. You often get presented extremely similar offers from similarly qualified and (apparently) motivated buyers. Choosing between them begins to feel almost arbitrary which I really don’t like as I like to think I’m a fair, impartial person. But, I and my seller client have limited and imperfect information so we have to make the best decision we can.

    Certainly we want to get the best price but that is not always the highest price. The perceived ability of the buyer and the buyer’s lender to get the deal done and their motivation to get it done quickly rises in importance in a multiple offer scenario because the price is usually at or even above the list price so price becomes less of a concern. We want the person who can and will deliver on their promise.

    The quality of the buyer’s representative and their lender can go a long way in distinguishing one offer from another. Because of this I make it a point to speak with the listing agent before presenting an offer so that I can demonstrate for them that I know what I’m talking about and that they can count on me to do what I say I’m going to do. It’s no guarantee of success but I’ve seen numerous times where it seems to have helped.

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  54. Kary L. Krismer

    By Kary L. Krismer @ 52:

    Trying to avoid multiple offer situations means avoiding nice houses.

    Now I’m talking in absolutes, like Losh. :-(

    That statement is not entirely true. For example, you can also avoid multiple offer situations by looking at overpriced houses and trying to determine which ones might be most likely to drop their price. In addition, you can try to avoid multiple offers by being very fast, but as I’ve noted even making an offer the same day as the listing goes active won’t guarantee that.

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  55. Siddharta

    QE3 is here and its HUGE. The housing (and Gold) bull market has just started. It’s time to move away from cash and into assets asap.
    Don’t fight the fed.

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  56. David Losh

    RE: ARDELL @ 50

    Sales gimmick means the buyer’s agent sold them the property. It’s a sales gimmick to jack your buyer around, or lead them to believe tney should “jump” on this one, there will be more.

    Then you go on to say the staging was maybe a motivating factor.

    This market place is screwed up. Buyers are being jacked up to jump on properties.

    It’s not fair.

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  57. Kary L. Krismer

    By David Losh @ 56:

    RE: ARDELL @ 50 – Sales gimmick means the buyer’s agent sold them the property. It’s a sales gimmick to jack your buyer around, or lead them to believe tney should “jump” on this one, there will be more. .

    David, you’re in no position to make assumptions about what occurs in the real world, particularly as it pertains to real estate or as to what real estate agents do.

    Buyer’s agents are not going to steer their clients toward properties that are likely to get multiple offers unless there’s a reason to do so. That would be foolish. Why run from competition?

    But when the agent sees such a reason (e.g. it’s a really good fit for the client who has been having a hard time finding a property they like) they shouldn’t just throw up their hands and say: “Oh no! This will be a multiple offer situation which I will surely lose because I totally suck at being an agent and it’s obvious whenever I submit a contract to a seller’s agent.” Only bad agents run from competition.

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  58. Kary L. Krismer

    RE: Kary L. Krismer @ – The second paragraph should have ended “Why run to competition.”

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  59. ARDELL

    RE: Kary L. Krismer @ 57

    Can’t you disagree with David without the personal insults? It’s getting old.

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  60. Kary L. Krismer

    RE: ARDELL @ 59

    First, I treat people the way they have treated me in the past. You of all people should know that.

    Second, I’m tired of him insulting agents when he doesn’t have a clue what is going on. To suggest that agents push clients into multiple offer situations for no reason whatsoever is absurd.

    Agents are doing their job. Losh doesn’t understand what agents do. He shouldn’t try to guess what they are doing in a public forum, because he doesn’t have the experience to make such guesses.

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  61. David Losh

    RE: Kary L. Krismer @ 60RE: Kary L. Krismer @ 57

    No, Kary bad agents involve clients in bad deals, which are becoming common.

    There are always good deals in the market, but you have to get out of your chair to find them.

    I’ve treated you very well, even though you insult me, and any one else you has information you refuse to grasp.

    We have all been kind to you.

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  62. Kary L. Krismer

    By David Losh @ 61:

    RE: Kary L. Krismer @ 60RE: Kary L. Krismer @ 57

    No, Kary bad agents involve clients in bad deals, which are becoming common.

    Correct, but you don’t have a clue what a bad agent is or when an agent is getting their client into a bad deal. It does not involve simply getting involved in a multiple offer situation as you claimed above.

    There are always good deals in the market, but you have to get out of your chair to find them.

    Again correct, but I don’t see how that in any way has any relevance at all to the discussion at hand.

    I’ve treated you very well, even though you insult me, and any one else you has information you refuse to grasp.

    You’re the one who started with the insults. Before that I actually had commented about how your posts were sometimes very insightful, for example pointing out how back in the day RCG was merely a tool for the then owner to get real estate business for his wife.

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  63. David Losh

    RE: Kary L. Krismer @ 62

    There is no need to engage me.

    I’ve been doing this a long time, through many cycles.

    There is nothing in this selling season to justify this type of multiple offer exhuberance.

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  64. Kary L. Krismer

    By David Losh @ 63:

    RE: Kary L. Krismer @ 62 -I’ve been doing this a long time, through many cycles.

    David, don’t deceive people here. You have minimal experience,

    There is nothing in this selling season to justify this type of multiple offer exhuberance.

    David, you don’t understand the market. Multiple offers are the result of low inventory much of which is of poor quality. Even the non-agents here understand that.

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  65. corndogs

    RE: Kary L. Krismer @ 48 – I agree the markets been pretty flat since 2009… I think we’ve established that here once people quite blindly looking at the median price charts… I don’t think we should be hand drawing in trend lines and thinking we are looking for a ‘break-out one way or the other…. this is the goofy stuff baby boomers were doing when they lost all their money in the stock market during the tech boom… I think it’s stupid… Charts in themselves are not predictors…

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  66. Ira Sacharoff

    RE: Kary L. Krismer @ 64
    David’s not deceiving people. He’s been a licensed real estate agent for many more years than you and I have been, so he has a lot more experience in the industry.. Of course, one can argue that experience does not necessarily give one wisdom or competence.
    You’ve attacked Ardell before on what you believe to be her lack of knowledge, and I’m not really in a position to know or recall the particular arguments, but…Ardell has been selling real estate since you were half the age you are now. There are a few of us who post on SB who are members of the ” Old Curmudgeon” club. They include Ardell, you, me, Scotsman, One Eyed Man and perhaps a few others who are better at appearing ” hep”.
    It has it’s benefits. People see my white beard and assume that I’m just chock full of wisdom.

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  67. Kary L. Krismer

    By Ira Sacharoff @ 66:

    RE: Kary L. Krismer @ 64
    David’s not deceiving people. He’s been a licensed real estate agent for many more years than you and I have been, so he has a lot more experience in the industry..

    I wasn’t going by years. I’m talking about experience actually listing and selling properties and representing buyers in actually buying properties in this century. Just paying your licensing fees and taking continuing education classes that teach a bunch of incorrect things does not count as experience.

    Also, as I recall he gave up his license for a while, so you can’t just add up the years.

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  68. corndogs

    RE: David Losh @ 63 – Losh, why don’t you tell us what would justify multiple offer exuberance? You keep making unsupported statements but you have certain people who keep coming to your defense….. maybe I’m wrong after all, you seem like an absolute nitwit to me…… but maybe you can clarify this…… what factors would need to be in place for this exuberance to occur?.. Do you have an answer? I really want to know from an expert like yourself…. What factors should make a person excited about buying real estate?

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  69. Kary L. Krismer

    RE: Ira Sacharoff @ 66 – Now that I have more time, most the arguments I have with Ardell are legal in nature. She seems to have a lot of disagreements with attorneys over legal issues. As to that if JLS has Annie Fitzsimmons teach the Core class again I’ll see if I can get you invited. That will clear up any question as to who is right.

    The only real estate argument I recall having with her is over offers and the condition of the house. I argued that if a house had an obvious bad roof, that asking for a new roof as part of the inspection response would likely be a deal killer. She claimed that there was no way that a real estate agent could know if a roof was defective, and laughed at my description of the condition as being patent or latent. Then about 2-3 years later she rights a blog piece about how you have to consider the condition of the property when making an offer, because if it has a bad roof . . ..

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  70. ARDELL

    RE: Kary L. Krismer @ 69

    Kary…I said a buyer has the right to ask for a new roof after inspection whether it was obvious that it needed a new roof at the time they made the offer or not. I said the buyer has the right to ask for a new roof if it is 23 years old and a 20 year shingle whether it is leaking or not. THAT was our disagreement. The rest was just our dancing sideways ad nauseum, which we have learned not to do. :)

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  71. David Losh

    RE: corndogs @ 68

    I started working for investors in the 1970s. Some would send me to the Assessors Office to look up records. In those days the same group of guys were there every frigging day looking at papers, Deeds, Plat maps, contracts, Sherrif sales.

    The tunnel between that office connects to the Court House, and the same group of guys would look at court filings.

    No one was going to talk to me, or tell me anything, so I figured it out for myself.

    From the court-house auctions guys would send me to swamp out properties. It’s what I did for the first ten years of my career, until I could buy my first house.

    After that I bought the restaurant that wreckingbull talked about. I have bought properties since, but also work with businesses. It’s all Real Estate. I prefer businesses to property, but you are right, it’s best to own the property the business is in.

    There are no economic factors to indicate property will go up in price, except exhuberance. Wages are flat, and falling.

    You can read about the economy, but from this very site I have found that a lot of these bubble guys make more sense than Real Estate sales people. It’s my choice, but I’m not to concerned about it.

    There is always more money, there are always better deals. I just don’t see any property deals right now.

    However, there is a lot of bar, coffee shop, and cafe deals to be had for some one who knows how to operate. In a recession people like to party.

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  72. Jen

    RE: Kary L. Krismer @ 69 – Actually I’m looking to buy a house now, but I would never consider you as my agent. From your comments, you don’t sound like you are on your client’s side. You just care about your commission!

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  73. Kary L. Krismer

    By ARDELL @ 70:

    RE: Kary L. Krismer @ 69

    Kary…I said a buyer has the right to ask for a new roof after inspection whether it was obvious that it needed a new roof at the time they made the offer or not. I said the buyer has the right to ask for a new roof if it is 23 years old and a 20 year shingle whether it is leaking or not. THAT was our disagreement. The rest was just our dancing sideways ad nauseum, which we have learned not to do. :)

    I never said they didn’t have the right to do that. Clearly the buyer can do literally whatever they want on the inspection response: (1) Ask for repairs: (2) Ask for a credit); (3) Waive the inspection; and/or (4) Walk from the deal, or some combination thereof. In fact in that thread I commented on how the NWMLS inspection contingency is weighted rather heavily on the side of the buyer.

    What I said back then was those expensive patent repair issues should be accounted for in the original offer, and that it was unethical to make a deal with a seller and then try to add on obvious and expensive defects after mutual acceptance. The analogy was buying a car subject to a mechanics inspection and then coming back and asking for a new paint job on the car. I also noted that it might affect the seller’s willingness to do other repairs. If you ask for four reasonable things and one unreasonable thing, the seller might say no to everything.

    But the point above was despite all your rejection of those ideas, you later come back with a blog piece that’s entire premise was that you need to deal with the issue of needed repairs in your original offer, or else the deal might not close for one reason or another. That was my main point! Sure the buyer can do whatever they want, but they need to be warned that taking extreme positions is more likely to make the deal fail. And if there is an expensive repair needed, they need to figure out a route to get to that point one way or another before making the offer. Some buyer/seller combinations simply don’t work because of the condition of the house, and the limitations of the parties or the buyer’s financing.

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  74. Kary L. Krismer

    By Jen @ 72:

    RE: Kary L. Krismer @ 69 – Actually I’m looking to buy a house now, but I would never consider you as my agent. From your comments, you don’t sound like you are on your client’s side. You just care about your commission!

    No problem. I explain several times a week to salespeople how I don’t want to get clients from the Internet. If I was trying to troll for clients here do you think I’d be talking about politics in the other thread?

    But you totally misunderstand my concern. It’s not about getting the commission, it’s about getting the client what they want. If you reach a deal with someone and then act by overreaching on the inspection, or worse (acting unethically), you are going to end up with a worse deal, or more likely no deal at all. You will have wasted your time. You will have gotten yourself excited about something, and then become very disappointed when the deal falls through. I’ve seen people do that. It’s not pretty.

    Also, keep in mind I’m discussing things like replacing a roof which cost at least 5 figures. Things the seller is not going to swallow easily. For smaller patent conditions (e.g. replacing failed Thermopane windows), the seller is not as likely to get upset, and is possibly even likely to expect that to be requested.

    Finally, because the inspection contingency is so heavily weighted in the buyer’s favor, the buyer can ask for anything, if they’re prepared to give up receiving anything. Only the buyer can cancel the deal based on inspection. So yes, you can ask for the roof with five to ten years of life to be replaced, but just beware that’s going to make it more likely you won’t get those windows replaced. As I noted in Ardell’s piece, asking for a patent condition to be fixed is not going to result in the seller having to take any action whatsoever when it comes to dealing with the next buyer. The buyer has much more leverage with latent or difficult to find conditions. Not disclosing those to the next buyer would likely be fraudulent, and possibly a licensing violation for the listing agent.

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  75. Kary L. Krismer

    By Ira Sacharoff @ 66:

    RE: Kary L. Krismer @ 64 – David’s not deceiving people. He’s been a licensed real estate agent for many more years than you and I have been, so he has a lot more experience in the industry..

    One more thing on this topic. One thing you’re not accounting for is that as a bankruptcy attorney I dealt with dozens of real estate transactions. So my experience in the industry did not start when I first obtained my real estate license.

    As a bankruptcy attorney I did many of the same things that short sale agents are (improperly and incorrectly) doing today. Sometimes the recommended solution was letting the house go to foreclosure or possibly curing the default, but sometimes the recommended solution was selling the house. That meant dealing with real estate agents, escrows and title companies on many different transactions. Some of the agents I dealt with were very good and some were very bad. I learned quite a bit from the good ones about the nuts and bolts of listing a property when they were brought in to fix someone else’s mess. My main regret was that most of the information I would get would be second hand. Very seldom would I actually go to a property to view it first hand.

    Don’t get my wrong. Dealing with real estate transactions was anywhere near 50% of my business and I would never refer to myself as having been a real estate attorney. Real estate attorneys are much more immersed in the many different areas of law that affect real estate. My focus was much more limited–getting the particular property sold if that was the client’s goal.

    Just to give you some idea though of the issues I deal with, I dealt with condemnation issues, fraudulent claims by real estate agents and sellers, unwinding special real estate tax treatment after a sale (or preventing such unwinding), but also more mundane issues like agents not properly preparing a listing for sale or the impact a major road nearby can have on value. So much of it was related to what I do now, but what I do now has a much different focus.

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