I Love Getting Fan Mail!

I love it when I get fan mail. Here’s a delightful message that a thoughtful reader sent me yesterday:

From: GOD <f███offidiot@youarealoser.com>
Subject:

Message Body:
You are a f███ing idiot. You are like the rest of the broken clock con artists that keep preaching doom. You have been claiming Seattle is in a bubble for how many years now? Fact is you are pitching doom while misinforming the suckers who are naive enough to pay attention to your BS because you want to sell ads. Rest assured your ad sponsors shall be notified. Get a job loser.

That last bit wasn’t a hollow threat, either. One of my sponsors forwarded me what was sent to them:

Name: John
Email: [OBVIOUSLY_FAKE]@gmail.com

Comment: Do you think it’s a goo business idea to sell ads on a website tat has been fear mongering about a bubble in the Seattle real estate market since 2005? The site I am speaking of is seattlebubble.com

Why would any sane reasonably intelligent person who works in the real estate industry sell ads on a site that has been telling people since 2005 that Seattle real estate prices are too high?? I certainly wouldn’t deal with you based on your association with that site because quite simply, it makes you look like an idiot. Why would I trust your judgment???

Another sponsor confirmed getting a phone call from this fun-loving individual as well.

It is probably safe to assume that “John” is not reading the site—or that he ever read anything more than just the title of the site, since I have been anything but a “broken clock.” It’s hard to imagine why someone who is constantly “pitching doom” and always believes that “real estate prices are too high” would buy a house in 2011 and explicitly call the bottom in 2012.

Of course, you would need to demonstrate a capacity for basic reading comprehension in order to understand that twelve years after it was founded, a site called “Seattle Bubble” is not necessarily still promoting the idea that the Seattle-area real estate market is in an overheated bubble.

Lately we have just been posting basic market statistics without a lot of in-depth analysis or insights, and certainly no “doom.” It has been a while since we explicitly addressed the question of whether or not we’re in another bubble, and at the very least this entertaining tirade of ignorance is a good reminder to revisit the subject with some thoughtful analysis. Look for that on these pages soon.

So anyway “John,” I just want to say thanks for the 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.

91 comments:

  1. 1
    SS says:

    Man, I wish I had that kind of time.

  2. 2
    S-Crow says:

    I had a couple nice calls and emails to me as well during the last crash. Threatening boycotting our small business, trashing our name, etc. As if escrow people are clueless about what is going on. There is no better seat in a market than escrow. None.

    Rhonda Porter, beware you are next!

    ~ S-Crow

  3. 3
    The Tim says:

    RE: S-Crow @ 2 – Who do you think forwarded me the second email I quoted in the post? ;)

  4. 4

    RE: The Tim @ 3 – Did you mean to have the email address showing in that second email?

  5. 5
    The Tim says:

    RE: Kary L. Krismer @ 4 – Considering that it’s an obviously fake email, I didn’t feel like it was worth censoring.

  6. 6
    Erik says:

    Tim, I’d be careful if I were you. I’m not kidding. This person sounds like a crazy maniac. If they go to the extent of calling people and yelling them, no telling what else they will do.

  7. 7

    The funniest part is that you do this because “you want to sell ads.” Personally I can hardly wait for your IPO, so that we can all start living the easy life.

  8. 8
    Erik says:

    RE: S-Crow @ 2
    What does it mean to be in escrow? Does that mean you sell mortgages?

  9. 9

    RE: The Tim @ 5 – It may be fake to the sender, but real to someone else.

  10. 10
    The Tim says:

    RE: Kary L. Krismer @ 9 – Fair enough. I edited it.

  11. 11
    S Sounder says:

    You called the last bubble. You called the bottom. And you haven’t called anything since. Seems like a golly good track record to me.

    Thanks for all you do Tim!

  12. 12
    Brian says:

    Do you think it’s a goo business idea to sell ads on a website tat…

    This is just too goo.

  13. 13
    S-Crow says:

    RE: Erik @ 8 – Escrow handles money and closes transactions as a neutral party in a purchase or refinance transaction. Once a purchase agreement is signed around by agents or homeowner/buyer they hand the transaction off to us to handle it from there. Escrow is different from Title Insurance entirely. However, Title Insurers typically have escrow depts.

    In a nutshell, we are the people that heavily work with lenders and Title Companies, prepare your legal docs in a purchase or refi, prepare your settlement statements, receive loan documents from lenders, receive funds from lenders and clients, payoff mortgages & Helocs, payoff cars, visa’s/MC’s, payoff IRS liens, clear lien clouds on Title, meet with sellers & buyers to sign their paperwork, overnight documents to lenders and other parties across the USA and get documents recorded at the county (sometimes record them in person when the “#*it ” hits the fan). In other words, it is a very fast moving environment, pressure cooker and looking at the clock all day meeting deadlines. It is a lot of technical work for very high liability and low return.

    Our escrow company is an authentic independent (not many left) in that we are not owned by or affiliated (even loosely) whatsoever with any Real Estate Co, Title Co, or Mortgage Lender. It’s the way escrow was intended.

    ~S-Crow

  14. 14
    Erik says:

    RE: S-Crow @ 13
    Thanks for the explanation. Sounds like you do a lot the paperwork.

  15. 15

    RE: S-Crow @ 13 – I usually describe escrow as being like a stakeholder holding money for two people betting, but rather than just money you also hold (and prepare) documents too. Then when everything is ready to go, they send papers out for recording and then transfer money after that.

    And for the most part, escrows are independent, not favoring one party of the other. Surprisingly the only exception I’ve seen to that wasn’t an REO transaction, it was new construction.

  16. 16

    By Erik @ 14:

    RE: S-Crow @ 13
    Thanks for the explanation. Sounds like you do a lot the paperwork.

    Erik, the place where you likely signed your condo sale and condo purchase transfer documents (not the real estate contract) was likely the office of the escrow agent for your transactions. The exception would be if you had a “mobile signing” at your home, work or favorite Starbucks. But yes, they dealt with all that paperwork you signed.

  17. 17
    S-Crow says:

    RE: Kary L. Krismer @ 15 – Sometimes I describe it as a “referee.” And you know how referee’s are treated. ;)

  18. 18
    WS says:

    Tim, I would welcome an updated analysis from you. its getting scary out there for middle class families trying to figure out if its too late to buy in the burbs given prices have doubled from the low, the stock market has more than tripled and rents keep rising (even if Zumper shows them down). Have we ever had a time that prices have run up so fast?

  19. 19
    Stu says:

    When I was testing the market and inevitably bought in 2015, I also thought your website was crap and fatalistic. Turns out I just didn’t like content at odds with blue skies. Haters gonna hate. Appreciate your website, Tim.

  20. 20
    Hugh Dominic says:

    I was JUST SAYING that it’s time to check with Tim on whether or not we are back in the bubble zone. I can’t wait to find out.

  21. 21

    I received an email from this person about advertising on Seattle Bubble. I was tempted to write a “Dear John” response to him and decided not to. I don’t think there is anyway to have a conversation with someone like this and I don’t think that’s what they’re after. “John” would probably not appreciate me telling him that some of my best clients have been readers of Seattle Bubble!

    The email reminded me of tone I would receive from some real estate agents pre-burst of the bubble.

  22. 22

    RE: Hugh Dominic @ 20RE: WS @ 18 – I’m not sure when Tim last updated the “About” tab above, but it details his opinion of different points in time. It might be nice if Tim would add a “last updated” line to that page.

  23. 23
    Kit says:

    People are terrible. Thanks for keeping stats up on this site all this time – I’ve retraced stuff through the history of the site and had a blast doing so. I also read the comments when I have time.

  24. 24

    By Rhonda Porter @ 21:

    The email reminded me of tone I would receive from some real estate agents pre-burst of the bubble.

    Odd you mention that, because I think not only have agents changed, but also consumers on this site have changed. I wasn’t here from the beginning, but we don’t have nearly as many bears as what we once had.

    I think the Great Recession and period after taught most people some things, including that real estate doesn’t always go up and that things don’t necessarily get as bad as they could (they didn’t “all come back”). Beyond that though, on this site there seems to be more of a realization that some people have a lot of money and that those people may want to do things with their money that is not necessarily the same as what others might do. Before it was: “Who would want to pay $XXX,XXX for a small old box in Ballard.” Ignoring the ignorance of why someone might prefer certain older types of architecture, now people seem to realize that the low inventory results in high prices if you are going to buy, and that some people have the money to make that choice.

  25. 25

    On the topic of a lot of money, there’s this FYI Guy piece in the Times today. I’ve often had the impression that statistics are not his strong suit, but can someone tell me what range he considers to be middle class? Seemingly for a family of four it’s the very narrow range between $65,000 and $75,000. Am I missing something in the article? Personally I’ve not really thought that $100,000 would even get you to upper middle class.

    http://www.seattletimes.com/seattle-news/data/will-the-last-middle-class-person-leaving-seattle-turn-out-the-lights/

  26. 26
    Minnie says:

    RE: Kary L. Krismer @ 25

    I agree. Whenever I read an article about “income” I assume its a per-person and not household. To be honest, I don’t know if a per- person income (2 adults in the household) would get you into middle class territory in Seattle. It if does, I don’t know how people do it while actively building a savings and contributing to their retirement.

    I moved here 10 years ago out of school and made $65,000 per year. Since then I have progressed in my career and I’m certain that I would not have chosen to move here now on that salary out of school, nor would I move here for $75K. I wouldn’t be able to afford to.

    I have a fairly low mortgage, my car is paid off, I have no student loan debt, no credit card debt, I do not live a frivolous lifestyle by any means and I still believe that if I had a salary of $75K I would just be scraping by.

  27. 27
    jon says:

    Speaking of bubbles, I’ve noticed that usually the inventory tracker pops up on Fridays, but today it has done the reverse. Supply is not keeping up with demand.

  28. 28
    WS says:

    By Kary L. Krismer @ 24:

    I think the Great Recession and period after taught most people some things, including that real estate doesn’t always go up and that things don’t necessarily get as bad as they could (they didn’t “all come back”).

    Some learned but I think your being generous to say most people. From what I gather these days most people on the street completely forgot the recession and feel the good times will last forever. The fact there aren’t a few more bears given how far we have come is probably a testament to this as well. As I heard in the lunch line one day:

    “Do whatever you need to do to buy whatever you can now.” As this mentality becomes more common red flags start going up in my mind.

    More and more talk of an overpriced stock market, this chart is interesting showing historical bear markets:
    http://awealthofcommonsense.com/2017/04/preparing-for-the-next-bear-market/

    The last time we had a decade with only one bear market was the 1950’s, we have one bear market so far this decade (unless you want to be technical and not count a 19% drop as a bear market.

  29. 29

    RE: jon @ 27 – It is down, but up from yesterday (counting townhouses too which are not condos).

  30. 30
    Brian says:

    RE: jon @ 27

    Wow, just dropped another 40. However, my personal search (mostly condos and townhomes) is actually showing the most results of this year. Good for me I guess.

  31. 31
    Minnie says:

    RE: WS @ 28
    Interesting article! It’s common sense (?), but I really liked this sage advice:
    “The best way to prepare for severe market disruptions is to anticipate how you’ll react when they happen, and then faithfully follow that plan no matter what happens next.”

    This would seem to be the antithesis to your remark overheard in the lunch line ““Do whatever you need to do to buy whatever you can now.” (lol).

    I think that some people learned things during the ’07 recession. Others had forced lessons, where they lost their homes and will now be renting forever (some of the people I work with). But is it possible that someone that was 20 back when the bubble burst is now 30 and they could have largely been sheltered from it?

    Do you think that Student Debt will play a role in the next recession? This keeps coming up again and again in articles I read.

  32. 32
    Blurtman says:

    RE: Minnie @ 26 – Depends on your age and experience, I think. A lot of high-priced areas are fun, have lots to offer, but make it difficult to get ahead financially. So for folks looking for that, frequently younger folks who aren’t into building families, it may be OK up to a point.

    A not atypical evolution is: seekers of lower cost areas migrate to an area and transform it, via urban renewal, or via seeding with artists, musicians, small business people including restauranteurs, also seeking to survive in a lower cost area. Then the area becomes trendy, and desirable to wealthier professionals, who believe it is now safe and desirable to enter the water. Then things cascade to the point where only the very wealthy can enter and survive. Earlier risk-taking settlers see their home prices go up, but see the area transform into something that may no longer be desirable to them. And so it goes. If you want to find such areas, look to where the artists are migrating and in which they can survive.

  33. 33
    jeff says:

    Just change the name of the website…maybe something like…
    “Kary Kismers comments”

  34. 34

    RE: jeff @ 33 – Hey, I get it. You are not capable of intelligent thoughts, and my thoughts are way over your head. That’s why you can’t post an intelligent post of your own or even try to respond to one of mine, or even point out which of my posts you think was unnecessary or not useful.

    How about you don’t post unless you can post something useful? Stated differently, how about you don’t post anything at all?

  35. 35
    Minnie says:

    RE: Blurtman @ 32

    Good insight, Blurtman! Thanks for the reply!

    I love this blog, thanks Tim for sharing your creation with us. Sorry about the abuse you got from that “fan”….however, way to spin it into a funny and positive post!

  36. 36
    GoHawks says:

    RE: jon @ 27 – Several school districts were on spring break this past week. Wonder if we get a modest uptick in inventory this coming week. After Easter too, can’t be as many opens tomorrow.

  37. 37

    Has anyone run into the practice of the listing agent asking for detailed financial information from buyers? Annie hears about some extreme situations, but I never have heard of this, and I really don’t understand what the listing agent is thinking (unless as Annie notes they might be a licensed loan officer too, but even then it doesn’t seem like a good idea).

    https://www.youtube.com/watch?v=XbD7_cP8-tI&list=PLsU-Dcv-PIXZ1SxR0yfh1mwOIoNN3V9ah&index=5

  38. 38

    By GoHawks @ 36:

    After Easter too, can’t be as many opens tomorrow.

    That could easily be a factor given the relatively numbers we are talking about. All you need is either an agent or a seller who has plans for Easter (or who doesn’t want the issues of having a non-listing agent hold the open house).

    And it wouldn’t surprise me that Easter has been a bigger issue the last year or two. More and more agents have realized the importance of holding open houses and the benefits of multiple offers.

  39. 39

    RE: Erik @ 6

    Sounds like an agent. Often they think mere mention that the market may go down could cause the market to falter. They can get pretty nasty, though anonymously so.

    I do recall Tim thinking to maybe change the name of the site to something else some years back. I think he even did a poll on it as a post. Around the time he started selling data subscriptions, but I think the rationale at the time was elevated lending guidelines and disappearance of zero down as a rule vs an exception.

  40. 40

    The Bottom Line

    There’s a million good ways to skin an onion….same with real estate….but be careful with the knife….it cuts fingers too…

    or as many Bubbleheads put it….”juggling with knives”….and taking in too much personal debt expecting continuous gains to cover for you.

    Seattle Bubble will always be true, at the end of the day, the only shield from collapse is assuming cash assets [not just employment] will still be around decades from now. A big unlikely assumption and was proven false in 2007. Sessions yanking the drain cork on the Sanctuary City gold mine soon at a theater near you, makes it more risky lately?

    Keep up the great work Tim, us veteran Bubbleheads aren’t fooled by fake news, we center on actual prices and trends….and the economic surprises against the NWO have been outnumbering the old fake establishment stability 10:1 lately. It ain’t over until the fat lady sings.

  41. 41
    Macro Investor says:

    Sometimes I wonder how agents are doing. Inventory and sales are way down. But the few attractive properties sell fast with very little effort.

    Feast or famine. If you can get the few decent listings or well-heeled buyers it’s a gravy train. For everyone else, hard times.

    One or two constant/OCD contributors here will undoubtedly brag about how smart and successful they are. As always, their comments will be passed over unread. But if anyone else has an opinion to share, please do so.

  42. 42

    RE: Macro Investor @ 41 – It’s okay. If you don’t want useful information I can avoid giving any information to you.

    But hey, it’s not like you’d be able to understand it anyway if this is what you think is going on: ” If you can get the few decent listings or well-heeled buyers it’s a gravy train. For everyone else, hard times.” As Terry Bradshaw would say, “Now that’s funny!.” Seriously, where did you come up with that? Once again the moniker you’ve given yourself makes me laugh. If there’s anyone who can’t see the big picture . . ..

  43. 43

    This is a variation of an idea I expressed earlier, that people are staying in their places longer, fixing them up to make them nicer. I doubt this “retire in place” is happening as much in this area, or high price areas in general, because moving to a less expensive location can provide funds to live on.

    http://www.seattletimes.com/business/real-estate/boomers-remodel-their-homes-so-they-dont-have-to-move/

  44. 44
    Blurtman says:

    RE: Kary L. Krismer @ 43 – A neighbor is contemplating a move back east. She said they can buy a new home where they will relo to with cash, and wouldn’t need the cash from their Sammamish home sale, and may contemplate renting it. Rent would cover their mortgage payment. Their current home is 3,000 sq.ft., 4 beds/3BR. Lots of families in the hood. Thoughts?

  45. 45

    RE: Blurtman @ 44 – The main thing that comes to mind is if there’s significant appreciation, they might end up losing the tax exemption on the sale of residence. That’s a huge benefit to give up, particularly if determining the basis is difficult (e.g. the basis is affected by an ancient transaction under the older rollover rules, or extensive improvements make over several years, etc.).

    Also, being a distant landlord is not an ideal situation (property management highly recommended), and another concern is something I’ve said many times before: If you have ten rental units a tenant from hell is an irritation, if you have only one rental unit a tenant from hell is a nightmare.

    Those would be my main concerns, but there are obviously other positives and negatives to doing that sort of thing. There is no one right answer.

    They should also probably consult their tax adviser. For example, I think it makes sense if they rent to leave the debt on the rental rather than having debt on their residence, even if they could get a lower rate on the new house. On the rental they can deduct the first dollar of interest because it’s a business expense. But there may very well be other tax issues floating under the surface that might make that irrelevant. And in the non-tax area, Washington law on non-judicial foreclosure may be more favorable to debtors than the state they are moving to, so before they get a loan in another state they might want to consult an attorney there.

  46. 46

    By Kary L. Krismer @ 45:

    And in the non-tax area, Washington law on non-judicial foreclosure may be more favorable to debtors than the state they are moving to, so before they get a loan in another state they might want to consult an attorney there.

    I probably should also mention the possibility that the other state’s laws might be better than Washington’s, but I think that’s probably unlikely on the east coast. But there are some states with better laws.

  47. 47
    Erik says:

    RE: ARDELL DellaLoggia @ 39
    Figures it’s an agent. ;)

  48. 48

    RE: Blurtman @ 44 – I was thinking about this further, it’s sort of sad that what should be a rather simple decision gets caught up in so many issues. The federal side is complicated by potential tax reform, as unlikely as that might be, so ideally the tax adviser would be doing something to keep their ear to the ground. And whenever you’re dealing with differences between state law it becomes really had to get advice, because an attorney here is not likely to know the issues there, and visa versa. Finally, even the tax adviser here might need to know about the tax system in the other state if that other state has an income tax. There really should be a better way, but the answers being so fact specific to the individual makes it even more difficult.

  49. 49
    wreckingbull says:

    This email correspondence to Tim reminded me of that real estate agent Larry Cragun, who used to dedicate entire blog posts to ad hominem attacks on Tim. If I recall, his main claim was that Kendra Todd agreed with him, so he must be right – there was no bubble in 2007. You unwashed renters know nothing!

  50. 50
    wreckingbull says:

    By Erik @ 8:

    RE: S-Crow @ 2
    What does it mean to be in escrow? Does that mean you sell mortgages?

    Serious reply, Erik.

    I cringed a bit when I read this. If you want to be the real estate mogul you claim, it is vitally important that you pay attention to the process of buying and selling homes. Your real estate agent can help you understand this process. If they can’t, find a new agent. You have bought and sold at least three homes, it’s time to start understand the moving parts. You have to look out for yourself and your own interests.

  51. 51

    RE: Macro Investor @ 41
    So True Macro Investor

    You are a savvy investor….not those clueless buyers with late daddy’s old money in their brainless pockets to splurge….I don’t even trust my Milenial daughter with my left over money after death. They just don’t have our street smarts yet.

  52. 52
    Anthony Cacallori says:

    April 16, 2015 – Warning: New Housing Bubble Ahead!

    http://seattlebubble.com/blog/2015/04/16/warning-new-housing-bubble-ahead/

    I’d wager the hate mail is from someone who – unlike Ryan above (+$90k since buying two years ago) – chose not to take the plunge and needs someone to blame for their decision. The thing is – you’ve always hedged your calls by basically saying “I don’t know what will happen.” It’s unfortunate, but your blog is widely read and you’d get even more mail if the theme was the opposite.

  53. 53

    By wreckingbull @ 50:

    I cringed a bit when I read this. If you want to be the real estate mogul you claim, it is vitally important that you pay attention to the process of buying and selling homes. Your real estate agent can help you understand this process. If they can’t, find a new agent. You have bought and sold at least three homes, it’s time to start understand the moving parts. You have to look out for yourself and your own interests.

    I would tend to agree with most of that, but perhaps not the specific criticism of Erik. “Closing agent” is a synonymous term, and the one used in our local contracts. The only use of the term “escrow” might be on the earnest money check. And it is good Erik is asking questions when he sees a term he doesn’t understand.

    But as you imply, it’s possible that an agent might not really understand what an escrow does and therefore not be able to explain it to their clients. That would be concerning, because you wouldn’t know what else they didn’t understand.

  54. 54
    Blurtman says:

    RE: Kary L. Krismer @ 45 – Hi Kary, Thanks very much for your input. I have directed her to Tim’s blog to read your comments. She bought in 2004, and said she has between $500-600k in equity in her Sammamish residence. My advice was that she’d have to factor in the cost of a local property manager as she was moving out of the area if she decided to go rental. I told her to buy a condo in Hawaii with the cash and retire.

  55. 55
    Deerhawke says:

    Tim, I think it is pretty clear that you have a perspective that leans toward Seattle real estate being a bubble. If your critic has a problem with that, he should go and read something else.

    In late 2006 and early 2007 I totally agreed with you. From 2008-2011, it is pretty clear you were right and that the bubble had burst. Eventually the market crawled back and the real question was whether this was a real recovery or not. Could the market gains be trusted or was this just another bubble? Were the people who were buying being fooled? Were they being set up for a fall?

    My own perspective from 2012 onward is that the market had over-corrected during the downturn. My sense is that this was not a bubble, but a long-term structural change in the market.

    But who knows? I am seeing things right now that are so crazy that they again really make me question whether this is a bubble. When everything is being bid up and you sometimes see houses being bid up by $100K to $400K beyond what looked like a reasonable asking price, it feels like 2006 again. In other words, no matter what the data says, it sure feels like a bubble.

    I don’t think you have been a perma-bear from 2012 onward, but even if you were, that is a valid perspective. We need to hear all sides of the debate.

    When everyone is a bull, that is a sure sign that you should take your money off the table and get out of Dodge.

  56. 56
    jon says:

    This article has a table that shows why so many people are moving into King County.

    http://www.bizjournals.com/sanjose/news/2017/03/21/silicon-valley-tech-workers-seattle-housing-costs.html

    The disposable income for tech workers, after taxes and housing for both owners and renters, is significantly higher here than elsewhere in the country. The migration won’t change until that differential goes down. That doesn’t mean that there won’t be a bubble in the meantime if people try to jump on the bandwagon.

  57. 57
    Erik says:

    RE: wreckingbull @ 50
    I knew stuff goes into escrow, but I don’t actually know what they do. I wanted to hear it from the horses’ mouth.

  58. 58
  59. 59
    Blurtman says:

    No liars loans this time around.

  60. 60
    Erik says:

    RE: WS @ 58
    Warn notices come out Friday. Warn is 60 days until you have to leave. Tough times right now for us aerospace engineers. If I get booted out of here again, I’ll try my hand at real estate flipping/renting as a full time gig.

  61. 61
    redmondjp says:

    By Erik @ 60:

    RE: WS @ 58
    Warn notices come out Friday. Warn is 60 days until you have to leave. Tough times right now for us aerospace engineers. If I get booted out of here again, I’ll try my hand at real estate flipping/renting as a full time gig.

    I look forward to reading about your exploits, Erik, especially in light of your recent comments regarding escrow.

  62. 62
    Ron says:

    I really don’t know how Erik bought condos without knowing what escrow does…

  63. 63
    S-Crow says:

    RE: Ron @ 62 – Actually it is not unusual at all. I also don’t fault agents. They don’t know and most don’t want to know and I really can’t blame them. It’s like asking someone to be a Software Developer or Engineer when they just know how to use WordPress in its most simple form. Escrow is a totally different business and skillset with LPO’s (limited practice officers) employed who are licensed by the Washington State Bar.

    Consumers pretty much are “along for the ride” as their agent writes in the company in the purchase and sale agreement. I could discuss a lot more but maybe some other time.

    S-Crow

  64. 64
    Jon says:

    To be fair, the question might have been how do they get paid rather than what they do. It’s hard to imagine agents not knowing that though. Don’t they require that kind of basic knowledge for a license?

  65. 65
    Erik says:

    RE: S-Crow @ 63
    Feel free to discuss all you want, that’s why I asked the question. I knew it was a neutral party that holds the money, but I didn’t realize you guys have so many other responsibilities. Sounds stressful having deadlines all day that must be met.

    You said “title insurers often have escrow departments.” The tasks that the escrow department does then in this case would be to send/receive money, and prepare documentation? I’m asking because they are no longer a neutral party, which is what I thought was the whole point of escrow.

  66. 66
    Erik says:

    RE: Ron @ 62
    Been buying condos at the auction lately. I just bid, then sign the docs for the hard money. Then if I don’t flip the property, I get Fannie/Freddie financing by refinancing that loan. Escrow is in the background preparing documents and holding money. According to S-Crow, the get documentation from the lender and title company as well. Probably a lot of check sheets to make sure they don’t forget anything.

  67. 67
    Erik says:

    RE: redmondjp @ 61
    Thanks for showing interest. Well, I bought a couple more Seattle condos so far this year. I’d like to continue buying until I have 20 rentals in hand. It seems like it’s pretty difficult to lose in Seattle right now even for a dummy like myself that doesn’t know the day to day tasks of escrow.

  68. 68
    Erik says:

    RE: wreckingbull @ 50
    I’ve bought and sold a lot more than 3. I’ve been roaming from remodel to remodel since I got out of my undergrad. I did do 5 years of hard time in North Everett where I rented rooms to the drug addicts and child predators that are very common in North Everett. Since then I have moved from condo to condo in nice areas where the people are not yucky like in North Everett.

    Now that I have a little better understanding of what escrow does, I’m still not sure why you think it’s necessary information for me to know? I was filling a curiosity.

  69. 69
    Anonymous Coward says:

    Ok, everyone, I’m calling it tops and a bubble. I know, I know the demographics and income data point to “no bubble, just the inevitable result of a population and high income jobs boom combined with the GMA”, BUT… Erik’s building a condo empire. Housing to tank hard in 2017!

  70. 70
    Erik says:

    RE: Anonymous Coward @ 69
    Could happen. If it did, I would devise a plan like the great and powerful Ray Pepper did and get rich while others parished.

  71. 71

    By Erik @ 70:

    RE: Anonymous Coward @ 69
    Could happen. If it did, I would devise a plan like the great and powerful Ray Pepper did and get rich while others parished.

    Erik, give it up about Ray. He may have received and spent a lot of money, but someone who has to do an Offer in Compromise with the IRS did not get rich (unless they also engaged in criminal fraud).

  72. 72

    By Erik @ 66:

    RE: Ron @ 62 – Been buying condos at the auction lately.

    That might explain why you’re not familiar with escrow. Not sure how you deal with the financing issue on the purchase, but you probably don’t get the normal escrow experience on a foreclosure purchase (I’ve never gone through that process).

    Buying at a foreclosure auction is risky, but buying a condo at a foreclosure auction is even riskier. With a foreclosure you do not get a “Resale Certificate” and so it’s conceivable you might have a significant building problem and/or special assessment. Sure you can have building issues with a SFR house too, but those issues can compound in a condo if the other owners can’t perform.

    I hope you get title insurance on your purchase. Supposedly it’s available, but you’d need to set it up right away. Just last week I saw an attorney asking about an issue where the deed of trust trustee apparently didn’t give proper notice to one of the junior lienholders. That an attorney was asking likely meant that buyer didn’t get title insurance, because otherwise they wouldn’t be spending their own dollars.

  73. 73

    By S-Crow @ 63:

    Consumers pretty much are “along for the ride” as their agent writes in the company in the purchase and sale agreement. I could discuss a lot more but maybe some other time.

    S-Crow

    Actually, the past few years it’s been the listing agent writing in their preferred escrow and title in the agent only remarks of the listing. Prior to that it was typically the buyer’s agent who as a practical matter selected title and escrow, and the reason they picked those entities was one of two things: (1) That the title company representative at their office was physically attractive and/or gave away free things; or (2) The title company and escrow did a good job getting everything in place for a timely closing.

    More recently buyers agents are more likely to concede the title/escrow choice made by the listing agent so that their clients’ offers will be more likely to be accepted in a multiple offer situation. I can only assume that most listing agents pick title and escrow based on #1 above, because I’ve seen some horrible escrow agents picked by listing agents.

    By Erik @ 65:

    You [S-Crow] said “title insurers often have escrow departments.” The tasks that the escrow department does then in this case would be to send/receive money, and prepare documentation? I’m asking because they are no longer a neutral party, which is what I thought was the whole point of escrow.

    Escrow is neutral between the buyer and seller. As between title and escrow they more work together. I’m not going to touch the issue of whether or not affiliated escrow works with title better or worse, but sometimes if you don’t use an escrow company associated with a title company the lender will require a sub-escrow to handled the borrowed funds.

  74. 74

    By Jon @ 64:

    To be fair, the question might have been how do they get paid rather than what they do. It’s hard to imagine agents not knowing that though. Don’t they require that kind of basic knowledge for a license?

    The typical agent can’t even understand a title report, so I really doubt they understand the basics of what escrow does. Having never worked in title/escrow I won’t purport to know the nuts and bolts of what they do, but I do understand the basics. And part of that goes back to my attorney days doing bankruptcy sales “free and clear.” There some of what the escrow needs to do gets short circuited, and so I would often have to teach the escrow agent what needed to be done (or more precisely, what didn’t need to be done that typically would be done). Bankruptcy sales is one area where the seller has traditionally picked the escrow agent because the bankruptcy trustee didn’t want to spend attorney fees having their attorneys educate the escrow.

  75. 75
    wreckingbull says:

    Sorry to Erikize this thread, it was not my intent. The point I am trying to make is that you are on your own, even when you have a real estate agent helping you. You must do everything possible to understand the transaction. I have a neighbor who spent five years in litigation because he and his agent did not closely read the title report.

    I feel confident in saying that about one quarter of the real estate agents I have dealt with over the years really understood the process. There are some great agents out there, but most go into the profession because they are inept at other vocations.

  76. 76
  77. 77
    pobodysnerfect says:

    RE: Erik @ 60 – Since you’re in the know and this is a real estate discussion: do you know which Washington offices the engineering cuts will affect? And any idea whether they’re likely to be younger engineers who will need to relocate — as opposed to older ones who are more likely to take early retirement and stay put? I assume most of the machinist cuts will be folks up in the Everett area.

    I’m wondering what effect the cuts will have on inventory this summer.

  78. 78
    Deerhawke says:

    Erik the easiest way to understand escrow is to understand what it is not. They are not lawyers. They are limited practice officers.

    The first condo I bought was in New York City. All closings in NYC at that time were done by attorneys. What that really means is that 100% of the work was done by paralegals for the attorneys (with the same or lesser skills as our escrow officers) but the lawyer tacked on another 2.0% for his fee / golf green charges. So in addition to paying your agents 6% you would pay the attorneys 2.0%. Plus NY city, state and other charges. Pretty crazy system.

    Having a good escrow closer is essential. If they are good, they take a lot of the stress out of the process. If they are bad, you can end up with a lot of hassles that you didn’t even knew existed, including tax hassles with the IRS.

    I tend to do a lot of hairy transactions with a lot of complications so it is even more important for me to have a competent closer. I also get my title insurance from the same company. By getting title and escrow from the same company and doing a lot of repeat business, they cut me a break on fees. But that needs to be disclosed in the purchase and sale.

    I have never known anyone to actually collect any money on a title insurance policy. There is a lot in the fine print of a title policy that essentially lets them off the hook unless they make an actual mistake in researching the title. All the other things that can come up (unrecorded liens, adverse possession claims, polluted sites, etc) are not the basis for getting a check from them. You need to do your own due diligence.

  79. 79
    Kit says:

    Eh, I think I’m ready to give up on any sort of useful correction here. Yay for tax money coming into Seattle, but I’m not here to compete with tech workers influx and what seems to be a still growing rich foreign investor influx too. I got a headhunter contact me for a job in Thailand – perhaps it’s time to travel and move again instead of settling down.

    http://wolfstreet.com/2017/04/17/warren-buffett-berkshire-hathaway-markets-u-s-homes-in-china-juwai/

  80. 80

    By Deerhawke @ 78:

    I have never known anyone to actually collect any money on a title insurance policy. There is a lot in the fine print of a title policy that essentially lets them off the hook unless they make an actual mistake in researching the title. All the other things that can come up (unrecorded liens, adverse possession claims, polluted sites, etc) are not the basis for getting a check from them. You need to do your own due diligence.

    I always say title insurance companies pay claims they don’t need to and don’t pay the claims they should!

    I don’t think any title insurance policy would pay for a contaminated site, but they will pay some unrecorded liens (which is why they ask the seller if they’ve paid for recent repairs–and that may require a homeowner’s policy–I don’t remember) and even a limited amount on adverse possession claims (moving a fence if a “homeowner’s policy.)

    I have had a client get a payout on a title policy to get rid of a lien, but it was an issue everyone was aware of before closing, and the same title company had an outstanding claim on the same matter for the seller. As I recall they paid out something in the range of $150,000. The title company thought they had a defense, so they litigated it unsuccessfully (reference my first sentence above).

    On contaminated sites, particularly oil heating tank issues, a buyer should make sure that the property has been insured for a significant time prior to the purchase, and then make sure they sign up themselves within the time allowed for retroactive coverage (6 months?). That insurance is free, but it has to be signed up for. If the property isn’t insured or there’s a gap in coverage, Just testing the soil and then signing up won’t guarantee that they’ll cover a future leak. They may argue that the test missed the leak.

    http://plia.wa.gov/

  81. 81

    RE: Kary L. Krismer @ 73

    ” Prior to that it was typically the buyer’s agent who as a practical matter selected title and escrow,…”

    Typically Seller chooses and orders Preliminary Title prior to listing the property so that the Listing Agent can review Preliminary Title before the home is listed to make sure the asking price is sufficient to cover the liens and the real estate commissions and other costs. Then buyer chooses escrow because they have a lot more paperwork on the average financed transaction than the seller does.

    As Deerhawke said, often there is a discount for a number of reasons like using the same Title and Escrow company for both services. When only the seller gets the discount it needs to be disclosed because the 50/50 arrangement as to payment of the escrow fee becomes altered and voided via the addendum Deerhawke referenced in his comment.

    Seller Chooses Title; Buyer Chooses Escrow by “custom”, or as otherwise agreed in the contract. This is not National as many States do not have separate “escrow” for Closing and paying for Title gives you all the services you need. That is one of the reasons why, as Deerhawke noted, some of those who do not use the “escrow system” use attorneys as closers, but can also just use “the Title Company” as in South vs North Jersey and many other places.

    Here the Buyer really shouldn’t “choose Title” because the Listing Agent should be ordering that and reviewing it long before there is a buyer in the room. It happens sometimes; but not often. More often Buyer uses the Title Company that already did the work before there was an offer made.

  82. 82
    Macro Investor says:

    By wreckingbull @ 50:

    By Erik @ 8:

    RE: S-Crow @ 2
    What does it mean to be in escrow? Does that mean you sell mortgages?

    Serious reply, Erik.

    I cringed a bit when I read this. If you want to be the real estate mogul you claim, it is vitally important that you pay attention to the process of buying and selling homes. Your real estate agent can help you understand this process. If they can’t, find a new agent. You have bought and sold at least three homes, it’s time to start understand the moving parts. You have to look out for yourself and your own interests.

    You cringed, I laughed. A supposed engineer who can’t run a google search? Either it’s a joke, or not an engineer.

    I believe “not an engineer” based on the many other cringe-worthy comments.

  83. 83

    By Macro Investor @ 41:

    If you can get the few decent listings or well-heeled buyers it’s a gravy train. For everyone else, hard times.

    I described this comment as laughable, but it could also be described as cringe-worthy given your moniker.

    Seriously, I don’t know how someone could look at monthly sales data that is higher than all but about 4 prior years, that shows about 6,000 more sales in 2016 than 2015 (if you read my comments you’d know that), at higher prices than ever before, and somehow conclude that agents were having a hard time!

    Oh, the inventory levels are low–that’s probably how you reached that conclusion. But if you were focused on that, why would you think the listings needed to be “good.” Again if you’d been reading my comments you’d know that this is the perfect time to try to sell a house with issues, and only the worst of the worst houses don’t sell, and then only if over-priced. And in any case, why would you focus on inventory? Is closing inventory the most important number in a Starbucks’ quarterly report?

    I’m sorry, but before you go around commenting on other peoples’ comments, you really should think long and hard about how your own comments don’t really contribute to this site because you don’t have an understanding of what’s going on.

    I believe not informed on macro anything and not in investor (or at least a good one) based on many comments.

  84. 84

    RE: Ardell DellaLoggia @ 81 – Changing title companies is a minor issue–typically they don’t even charge a cancellation fee, but in any case. the contract provides for the buyer to pay for the cancellation fee, so the seller shouldn’t care. And it is after all the buyer who will have to live with the title insurance going forward, so there’s no reason why they shouldn’t change it–in a normal market where it’s not likely to upset a seller or the seller’s agent. And finally, getting a second report from an unrelated company might allow you to catch something that was otherwise missed. I’ve seen the same title company issue conflicting reports, so duplication is not a bad thing.

    In this market though, changing from what the seller and/or listing agent wants . . ..

  85. 85
    Marc says:

    RE: Kary L. Krismer @ 84 – IIRC, there are national level protections that say the buyer is entitled to choose the title and escrow provider where a Fannie/Freddie/FHA/VA loan is being used. This is particularly important when buying an REO because the out of state title companies most big lenders want to use are terrible. The out of state escrow agents are just as bad and I’ve even seen ones that were not licensed in the state of Washington.

    Many REO seller contracts will say if the buyer wants to use a different title company, they have to pay for the title policy. In my case, I gladly did so when I bought an REO for my family in 2015. It was an expensive home so the cost was significant (something like $2,500) but worth it to me because I know trustees can screw up foreclosure sales. A law professor I had once said don’t ever get title insurance from the company that was involved in the trustee’s title guarantee and that’s precisely what REO lenders want to do because they’ve negotiated super low rates from subsidiaries of the big title companies.

  86. 86
    Erik says:

    RE: pobodysnerfect @ 77
    Well, most of the the voluntary layoffs have already been offered and taken by people near retirement. Involuntary layoffs will be given on Friday. There will be another round later this year. Should only be a few hundred this round although this is not the only round.
    Washington state will feel the brunt of the layoffs. The people that designed the airplane in Everett don’t have as much work right now, so I suspect they will get hit hardest. Everett airplane engineers need to watch out.

  87. 87
    Erik says:

    RE: Macro Investor @ 82
    I had trouble understanding what I read online, so i asked S-crow. Kary, Deerhawke, and of course S-Crow helped me understand better.

  88. 88

    The worst thing about being an escrow is they never get to pick the lender, and a bad lender can make what should be an easy transaction a miserable transaction. Having the worst real estate agent in the world on the other side of a transaction isn’t nearly as bad as having a bad lender.

  89. 89
    Erik says:

    RE: Kary L. Krismer @ 71
    Sounded like the compromise was in Ray’s favor and he came out rich. Nough said, hail to the mighty mr. Peppers!

  90. 90

    RE: Erik @ 89 – You still don’t understand. It meant that he wasn’t rich. It meant he was insolvent. Claiming to be rich is just part of the game confidence men play.

    I could come onto this site bragging about how you can make a lot of money pretending to be an owner of a property living abroad and pretending to be able to rent the property to gullible people. I could even earn a lot of money taking deposits and first month’s rent doing that. That would not make doing that a good idea nor would it mean I was rich. It would mean I was a scammer.

  91. 91
    David B. says:

    By redmondjp @ 61:

    I look forward to reading about your exploits, Erik, especially in light of your recent comments regarding escrow.

    “What?! I can’t just order that nonpaying tenant to leave on my own? I have to go to the courthouse and file for an eviction, and present documents, and wait for the whole process to work itself through, and then the sheriff does it? It may take a month?! What kind of crap gig did I get myself into?!”

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