King Co. SFH New Listing Absorption Rate

New Listing Absorption Dropping Rapidly From December High

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By request, here are a few alternative takes on recent home listing activity. Since one of the biggest issues driving the current crazy market is a lack of enough home listings, we can get an idea of whether or not there is any relief on the horizon for buyers by looking at listing activity.

First up, here’s a chart I just created: New listing absorption. This is a simple look at the ratio of pending sales to new listings. If more homes are going pending in a month than there are being listed, this ratio goes above 100 percent, which is obviously not great for buyers.

King Co. SFH New Listing Absorption Rate

Unfortunately we can’t really compare this metric pre-2008 and today, since the NWMLS changed how they define “pending sale,” but what’s interesting to me about this chart is that just last December we saw new listing absorption an all-time high of 159%, while as of June it has fallen to almost the lowest level since the market bottomed out in 2011. However, this is obviously a very seasonal metric, and the low point for the year usually comes in June or July, so it would not be surprising if this is the lowest level we see this year.

I suspect that one of the first signs we’ll see of the market softening is when new listing absorption starts to drop, so I’ll be keeping an eye on this.

Next up: a comparison of total on-market inventory growth through June for each year:

On-Market Inventory Growth Through June

It’s interesting that last year was actually the strongest year on record for listing growth, only to be followed up by new all-time lows this year. At least the growth in the last few months is promising.

Next, here’s a yearly comparison of the total number of new listings just in the month of June:

Total New Listings in June: 2000-2017

2017 saw the largest number of new listings in a June since 2007, the year home prices peaked in the Seattle area. This is definitely a good sign, but we’re still quite a ways from what I would consider to be a “healthy” amount of new listings. We would like to see this number get above 4,000 in June for the market to be less insanely tilted against home buyers.

Finally, here’s a raw look at monthly new listings since January 2000:

New Listings 2000-Present

We’ve been on a slow and steady upward trend since listings bottomed out in 2012, but we still have a ways to go before we get back to a balanced market.


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.

168 comments:

  1. 1

    Based on the Accuracy Window of the Data Tim Shows

    Seattle’s real estate market hasn’t changed in 10-20 years…same old same old….

    Actually these general data issues were with us in the 70s and 80s too….Seattle has always been over crowded [and lacked a planning brain] with jammed freeways…welcome to an even far worse Seattle today. Hail to the Seattle Council Approved Income Tax [the Seattle Times made it front page “good news” this week]….its what the people wanted??? LOL

    Seattle has always been a bit organized crime….take the Under Ground Tour for the history facts on prostitution, etc…

  2. 2

    Thanks Tim!

    So seemingly new listings are down slightly, but considering we’re dealing with more units over time the downward trend is greater on a percentage basis.

    Interesting how so few people wanted to sell in 2012–given what happened after that actually was a bad time to sell. One of the few times the masses made the right decision! Also interesting how bad the 2000-2002 period was–before my time.

    Tim, would it be possible to do a more traditional absorption rate chart, where it’s charted against total inventory rather than just new inventory?

  3. 3
    uwp says:

    Interesting stuff!
    Thanks Tim.

    Crazy how many listings there were being added throughout the 2002-2005 era.

  4. 4
    ronp says:

    Amazes me how critical national loan qualification standards are and were. They really define the demand curve. I guess Texas avoided a lot of the 2007 bubble. We need to emulate them in WA perhaps?

  5. 5
    Erik says:

    RE: ronp @ 4
    The Seattle housing market is based on software and airplanes. The Texas market is based on oil and taco sauce. Are you suggesting we drill for oil and start competing with la victoria taco sauce? Don’t think so pal. We are winning as the biggest thriving city for the second year in s row. We want to continue innovating and inventing. Let Texas produce the taco sauce.

  6. 6
    greg says:

    RE: Erik @ 5

    Erik, the poster is likely referring to the stricter lending limits in place in Texas. In fact stricter limits are common in a number of countries and when enforced they do help prevent markets going out of control.

    Not claiming it is a perfect solution but it does tend to keep prices in less aspirational areas more affordable.

  7. 7
    OA says:

    RE: ronp @ 4

    LOL

    Erik, almost every time I read your posts I just assume you’re trolling as you tend to say some crazy things. But then there’s a part of me that thinks that you legitimately might mean the stuff you say.

    So which one is it? lol

  8. 8
    Erik says:

    RE: OA @ 7
    My comments are made to be riddles. For instance, in the last comment I don’t really believe that la victoria taco sauce makes an impact on the economy in Texas. That said, I think I make a great point that what drives our economy is completely different than what drives the economy in Texas, so how does anyone expect the areas to behave the same? My guess would be that Texas went through an oil boom during the last crash, which kept their housing prices stable.

  9. 9

    RE: ronp @ 4

    People who own houses are not busy trying to find ways for them to be worth less. People who don’t own houses do that. One of the reasons why living (and usually owning) in the area you represent is usually a pre-requisite to holding public office.

  10. 10
    MGSpiffy says:

    As someone who owned 2 homes in Texas before moving here in 08… There are two factors that contributed to much lower home purchase prices in Texas, and as a result, mortgage payments that more people could still swing in a downturn.

    1) Lots and lots of flat land to build on, with few to no restrictions – the metro areas in Texas just continue to expand outwards for the most part. One year you will drive by empty fields, the next year it’s a sea of rooftops. Already the I-35 corridor is just one or two counties away from being a continuous mega-city of it’s own.

    2) High property Taxes, usually around 3% of assessed market value, and throw in another 0.5 to 1.0% for insurance as escrow items, and you have effectively added 4% to the interest rate if most of the house is financed. The monthly payment is a limiter for a lot of people, so if half of it is going to escrow items, that’s only half available for the P & I portion.

    I had a house in a nice area: 4k sq ft, 3.5 car garage, .7 very treed acres, lots of custom touches, 1 lot away from large lake, with great view, 1400sq ft of deck, 40k gal 11′ deep pool. bought for $300k in ’02, sold for $245k in early ’08 (was divorcing and saw the crash coming/reading Ben’s blog, had to dump it). It resold as a bank repo around Dec ’14 for $199k. Taxes & Insurance were almost $10k/yr

  11. 11

    Interesting post! However, I think things are worse than they appear because the inventory needs to be adjusted for population. I did a quick and dirty version here for those interested.

  12. 12
    wreckingbull says:

    By Erik @ 8:

    RE: OA @ 7
    My comments are made to be riddles. For instance, in the last comment I don’t really believe that la victoria taco sauce makes an impact on the economy in Texas. That said, I think I make a great point that what drives our economy is completely different than what drives the economy in Texas, so how does anyone expect the areas to behave the same? My guess would be that Texas went through an oil boom during the last crash, which kept their housing prices stable.

    Oooh clever – I like riddles! By the way, Austin, MN is not in TX. Confusing, right? How can two cities have the same name????

  13. 13
    S-Crow says:

    From Ben Jones Housing Bubble Blog July 4th personal remarks regarding “Supply”:

    Article Ben Quoted:

    ‘We saw in the 2000s with the United States, Ireland and Spain, they went on absolute building sprees and yet, all the while, their economists were saying high prices were caused in part by shortages’

    Ben’s Remark:

    Isn’t that interesting, because they say the same thing now we heard endlessly in the early 2000’s. Right before guys in tuxedos started auctioning off new shacks in California (instantly making FB’s out of their recent buyers).

    The obvious question is why economists say these things? For hundreds of years houses were adequately supplied and prices barely moved above inflation. I watched a video where Chinese developers were throwing up a tower in days, 24/7. San Francisco is at a 70 year high in construction, Boston 60 years. You will more commonly hear the word glut than shortage associated these days with New York City or Miami. And if these big cities with relatively strong economies can be overbuilt, why would there be a shortage in Boseman Montana or Omaha Nebraska?

    There isn’t. Let’s take a little wander in time, to the last time shortage turned to glut. When the dam broke last decade, this wasn’t the only myth that was destroyed. Trees didn’t grow to the sky. That mobile home in California wasn’t worth a million bucks, soon to be three million. Suddenly people weren’t going to live with their parents into their 40’s to save a down payment. All new paradigm mental creations to explain away what hadn’t been logical ever before and never will be.

    We were getting back to reason. Then they started: housing was to create wealth in the mind of the public and save the economy. Every lever was pulled and stayed pulled. Prices shot up: “Oh, it’s just that prices had gone down too much!” we were told. Then as prices exceeded old highs that was discarded: “We aren’t building enough, it’s a shortage!”

    And that’s why they do it. Yes, these economists who talk about shortages are plain and simply full of sh#t.

  14. 14
    Erik says:

    RE: wreckingbull @ 12
    Here’s a riddle for you wreckingbull… How does a complete moron make a lot on money and retire early???? Well, the story begins early in a young man’s life when he was shoved in the lockers by other boys. Given swirlys in the bathrooms. Chosen last on the playground. As a result this young boy made a best friend named hewelett packard because it was the only one that would hangout with him.

    After a few years went by and hewelett packard and wreckingbull, I mean this young social reject became the best of friends. The boy would program hewelett for hours and hours to avoid being picked on and made fun of on the playground.

    To the young man’s surprise people that could program hewelett were offered a lot of money to program him. The young man who previously lived in the basement of a musician’s house was now able to afford more.

    This now full grown man was told by the mainstream to diversify his money. The man made much more than most men because of his special skill, so he diversified his money. He bought stocks, real estate, etc. His goal was diversity so he didn’t lose it. He was able to retire early not because he was smart or a money genius, it was because he lacked social skills and got lucky.

    This now old man goes around trying to offer financial advise even though he knows nothing of finances. He bumped into the right skill at the right time that he gained not because he was a go getter, but instead he was pushed into a secluded life by society.

    The End

  15. 15

    RE: Erik @ 14

    Article yesterday on Boeing leading the Dow and being up 35% YTD, You’re supposed to keep us up to date on these things, Erik. :) http://www.cnbc.com/2017/07/12/a-surprising-stock-is-leading-the-dow-this-year.html

  16. 16
    uwp says:

    By S-Crow @ 13:

    From Ben Jones Housing Bubble Blog July 4th personal remarks regarding “Supply”:

    I made the mistake of reading the comments on that blog. Pretty much what I expected.

    Then, just for fun I checked back to posts the last few summers:

    June 2012: Shades Of 2005 In Florida
    June 2013: Putting Some Additional Air Into The Bubble
    June 2014: Did Housing ‘Recover’ Too Much?
    June 2015: The American Dream Continues To Fizzle
    June 2016: Their Wager Might Be Shakier Than They Thought
    June 2017: It’s A Long Time Coming

    Yes, someday house prices will come down.
    It may even be in the coming year.
    But, man, at least The Tim only had endure a couple years before he was right about Seattle. (And most US markets were turning over within the year of Seattlebubble’s founding.) Then he bought at almost the exact bottom. This is truly the best bubble blog!

  17. 17
    Erik says:

    RE: Ardell DellaLoggia @ 15
    Yeah, Boeing stock is doing great partially because they took pension and pay away from employees. Leadership robbed the employees and fed the share holders and themselves.

  18. 18
    Dave says:

    RE: Erik @ 17
    On the topic of local economics, I did observe that the C919, (China’s upcoming aircraft,) was quite the buzz at the 2017 Paris air show. That and the cool weapons.

    These days Amazon should pick up the future fallen Boeing labor pieces for the Seattle economy so no worries.

  19. 19
    Dustin says:

    Last year in July, I was looking for rentals up to $1000/mo in the Seattle area using craigslist’s map search tool and was frustrated by the apparent lack of inventory. Out of curiosity, I used the tool to compare the number of available rentals in my price range to the total number of rentals of any type, and was surprised how small my “affordable” fraction of the housing market had become. I made a graphic showing the side by side comparison.

    Today, a little less than a year later, I repeated the same process to compare the results. While the number of rentals under $1000/mo has declined somewhat, the total number of rentals has increased to about double what we had a year ago. These are just general numbers reflecting unfiltered (and possibly erroneous or duplicative) results, but if you’re interested you can see the numbers here.

    I’m aware that the Seattle building boom has been responsible for adding a lot of new rental units to the market, but we wouldn’t necessarily see this degree of an increase in the number of available units over the long term if population growth were keeping pace with new construction and rental rates were balanced with the needs of the market.

    Since high rents have been a major factor driving buyers to accept increasing prices for real estate, the prospect of significant deflation in value of the rental market could mean relief on the horizon for anyone waiting on the sidelines for more affordable housing opportunities.

  20. 20
    uwp says:

    RE: Dustin @ 19

    Looks like about a 10% difference in Seattle (North of Burien and South of Edmonds). Not that drastic.

    Do you know that dates of those two screen shots? I know inventory for homes varies based on day of the week, it might be the same in rentals. A screen shot of Seattle housing inventory on a Tuesday evening is going to be lower than the following Sunday night.

  21. 21
    Dustin says:

    RE: uwp @ 20 – I saw a larger % difference, but it’s possible that was due to higher priced rentals outside the Seattle city limits. That might make sense, as in a glut situation I’d expect prices to come down in farther out, previously more affordable areas like Shoreline, Renton and Burien before they would come down in Queen Anne or Capitol Hill.

    You make an important point that the numbers would vary by date or day of the week, which I didn’t account for. The 2016 numbers were observed on 7/25, while the the 2017 set were observed today. Since most rentals start on the 1st of the month, there needs to be a margin to correct for the fact that the number of available rentals would be higher on on the 13th than on the 25th.

  22. 22
    uwp says:

    RE: Dustin @ 21
    Thanks for the extra info. More information is always good. :)

  23. 23
    Brian says:

    Since we’re on the topic of Craigslist rental inventories, I thought I’d share some data I’ve been gathering just out of personal interest for a few months.

    Weekly inventory levels from 3/16/2017 to 7/11/2017 for the following:
    5mi radius around 98101 (downtown Seattle)
    20mi radius around 98005 (central Bellevue)
    20mi radius around 98005, below $2K
    5mi radius around 98005, below $2K

    http://i.imgur.com/SfoUNfy.png

    I was more interested in Bellevue, hence more Bellevue data sets. I attempt to gather the data the same day of the week (Tuesday), but sometimes forgot til Wednesday. I also try to gather it at around 9am, as I imagine more listings may show up later in the day. A radius with a zoomed out view is the only way to get an accurate count week to week, as the count bubbles on the map seem to move around a lot.

    It doesn’t really tell you much yet, other than the heat of the spring/summer rental markets is eating up inventory that gathered during the winter. It will be more interesting to see what happens come this fall.

  24. 24

    One thing I haven’t seen, but haven’t really looked for either, is some type of analysis of the change in rentals over time. As more and more of the rental mix consists of units in newer buildings with perhaps better amenities, you’d expect the average rents to rise, absent perhaps a significant increase in vacancy rates. There rising rents wouldn’t be a bad thing because it would mean that there are new high paying jobs that allow people to live in the newer units being constructed. And you could even have a situation where the rents in some of the older lower-end rentals were dropping notwithstanding a rising average rental price.

    Has anyone seen that sort of an analysis of the rental market?

  25. 25

    RE: Erik @ 17
    The 737 Engineering Part Drawings are in Japanese Now

    We gave all our Manufacturing Aerospace secrets to Japan [and China too?]….but we got Amazon slave labor jobs in return….LOL

  26. 26

    By softwarengineer @ 25:

    RE: Erik @ 17
    The 737 Engineering Part Drawings are in Japanese Now

    Even more troubling are the implications of what Microsoft has been doing!

    http://www.pcworld.com/article/2038728/it-is-a-good-day-to-bing-microsoft-adds-klingon-support.html

  27. 27
    Kmac says:

    By softwarengineer @ 25:

    RE: Erik @ 17
    ….but we got Amazon slave labor jobs in return….LOL

    For all the crowing I hear online about all the high paying Amazonians being a contributing factor to excessive house valuations, I wonder.
    I’ve heard several first hand stories from Amazon employees in warehouses and they certainly are NOT making enough to send housing to stratospheric levels.
    They have to hustle like nobody’s business and many of them are working two jobs.

    I am sure that someone involved in the software end of things is doing much better, but how many are there doing that in relation to the total head count?

  28. 28
    StupidLifeDecisions says:

    By Kmac @ 27:

    By softwarengineer @ 25:

    RE: Erik @ 17
    ….but we got Amazon slave labor jobs in return….LOL

    For all the crowing I hear online about all the high paying Amazonians being a contributing factor to excessive house valuations, I wonder.
    I’ve heard several first hand stories from Amazon employees in warehouses and they certainly are NOT making enough to send housing to stratospheric levels.
    They have to hustle like nobody’s business and many of them are working two jobs.

    I am sure that someone involved in the software end of things is doing much better, but how many are there doing that in relation to the total head count?

    i don’t know the total headcount of their software and other high salaried employees, but it seems pretty obvious to me that it’s made a significant impact on housing/rent prices here. also, i think amazon has influenced other tech companies to hire more in this area. BUT, a lot of the people moving here to take these jobs are going to move somewhere else eventually.

    even if there isn’t some sort of downturn to trigger that, tech is going to start moving elsewhere.

    i’m very anti- amazon (so many reason why, my favorite one is the true story on how jeff bezos removed the tip jars from the amazon cafeteria because an amazon exec was told by cafeteria staff he couldn’t use the change from the tip jar to pay for his lunch, so he complained to jeff). hypocritical americans on both sides of the aisle might be too stupid, slow, lazy, in love with price fixing and fraud-friendly to see it, but it’s more likely than not that europe is going to go after them big time.

    stock tip: buy walmart.

  29. 29
    ronp says:

    RE: S-Crow @ 13 – So you are saying supply has no effect on housing cost? https://fred.stlouisfed.org/series/HOUST

  30. 30
    S-Crow says:

    RE: ronp @ 29

    Obviously not. Supply does have an effect. However, Heart Attacks are caused by high blood pressure, COPD, etc. Supply glut is caused by people who are exiting the market due to pressure to sell due to debt load. I’m seeing a lot of inventory build and if that is added to by people who have a lot of leverage in the game or they realize their debt load becomes unserviceable then it’s off to the races. There is a LOT of leverage buying homes to flip and very high LTV’s in more “affordable” ranges of $500K and under. People are using their homes as ATM’s for cash out refi’s (increasing CLTV’s) and to shift debt onto the homes increasing CLTV’s. This is the same play book from 2006-7 with all the cash out and shifting debt onto housing from refi’s and when our office was closing purchases where 7 of 10 homes were 100% financed.

    I don’t want to see people get their asses handed to them. I have no joy in seeing people stressed out financially and the fallout that comes from it: causing issues to family, marriages, health, etc.

    People had better have a plan and very local regional banks (lending to builders/developers) and credit unions lending into this environment had better have a plan. It is unsustainable to have 52% increases in some housing prices in the last 16-24 mos as I see and over 100% increases in others in the same time period.

    There will be no warning signs just like the last bubble. This debt load freight train will just blindside people because no one could have seen it coming down the tracks. Fannie and Freddie new policy at the end of July expanding debt to income ratios to an incredibly stupid 50% gross income guarantees no one will see this debt load freight train coming. It’s all Stealth.

    NWMLS Data= Sales
    Escrow Data: Real time data on Debt Loads, Income levels, Interest Rates, Loan Programs, CLTV’s, etc.

    If we are not in the Euphoric stage we are fast approaching it.

    Enjoy the weekend!
    S-Crow

  31. 31
    sfraz says:

    RE: S-Crow @ 30 – Thank you. Drops the mic….

  32. 32
    Erik says:

    Justme… Please ask the Tim to compare the Fred housing starts graph to median house prices.

  33. 33
    Erik says:

    RE: S-Crow @ 30
    You said “I’m seeing a lot of inventory build and if that is added to by people who have a lot of leverage in the game or they realize their debt load becomes unserviceable then it’s off to the races.”

    I’m not seeing a lot of inventory build. I believe we are at an all time low for this time of the year. What inventory are you referring to?

    Yeah, it’s not fun to see people in pain and lose their money, but America is full of opportunity. Unfortunately to create opportunity there has to be winners and losers, that’s kinda how it works. I’d rather see an intelligent hard worker bump out someone that inherited their wealth even though it cause pain and heartache.

  34. 34

    By S-Crow @ 30:

    Supply glut is caused by people who are exiting the market due to pressure to sell due to debt load.
    . . .
    There will be no warning signs just like the last bubble. This debt load freight train will just blindside people because no one could have seen it coming down the tracks. Fannie and Freddie new policy at the end of July expanding debt to income ratios to an incredibly stupid 50% gross income guarantees no one will see this debt load freight train coming. It’s all Stealth.

    NWMLS Data= Sales
    Escrow Data: Real time data on Debt Loads, Income levels, Interest Rates, Loan Programs, CLTV’s, etc.

    As to the first sentence, that can be a cause, but there can be a lot of other causes. Company relocation away from this area would be an obvious one. You can also have situations where rising prices cause increases in active listing inventory, which is typical, but you don’t see that this time due to the incredible buyer pressure. The concern is selling will leave you homeless, and that concern has apparently even lead sellers to breach their contracts–not a typical situation at all.

    As to the second quoted paragraph, I agree there very well may not be warning signs, or at least the warning signs won’t be the things we are looking at locally. And speaking of locally, your “escrow data” is too limited. As I’ve often said in response to Tim’s posts regarding reporting, no real estate agent don’t see enough of the market to really know what is going on overall, and the same would be true of escrows (although escrows do more transactions on average than real estate agents, but it’s still not enough). And even if an agent or escrow did have such broad data that they did have a decent understanding of the market, but may very well be something entirely external which causes or next set of problems.

  35. 35
    whatsmyname says:

    Very quiet here in the last 29 hours. Maybe some of the folks who have been waiting to buy since 2005 will chime in with their opinions/predictions?

  36. 36
    ronp says:

    RE: whatsmyname @ 35 – Waiting to buy? I think most have bought by now? http://www.calculatedriskblog.com/2017/04/corelogic-house-prices-up-70-year-over.html shows you were supposed to buy in January of 2000 and January of 2010. Hopefully we have no second bubble and people get hurt again.

    For the Seattle region if there is continued employment growth we will inch towards Bay Area prices. So plenty of home appreciation above overall inflation rate. In 2017 Seattle Metro $440,100 and San Francisco Metro $851,900 (per Zillow).

    Wow that metro price for Seattle seems low for someone in NE Seattle. Geez.

  37. 37
    Erik says:

    RE: ronp @ 36
    The computer programmers/software people on here refused to buy 2014 and beyond. It was like one programmer wrote a program in their heads and they all followed it. They complained about low inventory and didn’t like the color or whatever. The self thinkers urged them to put their dream of the perfect home to the side and buy something. They were unable to compromise. They continued to complain everyday thereafter about the lack of options and whatever else they could complain about.

    For people like whatsmyname and myself the whole thing was frustrating to watch these people complain and complain while being too afraid to buy. At this point, I really want to sell the homes I purchased during that time and sell it to them at the top of the bubble. We tried to help them, we tried to console them, now I just want to load them up with debt at the top of the market and watch them lose their home when the next bubble pops.

  38. 38
    sfraz says:

    RE: Erik @ 37 – Wipe that unbridled greed off your chin Eric, it isn’t becoming. This is a FALSE recovery. F.A.L.S.E. Pure manufactured BS, brought to you by the central bankers. They’ve added trillions to the 2008 debt. The economic indicators we have relied on no longer make sense. We have already passed the “sell by date” for these multiple bubbles. This crash is going to be a mother. http://news.goldseek.com/GoldSeek/1498230000.php

  39. 39
    GoHawks says:

    RE: sfraz @ 38 – you putting your money where your mouth is? Are you short the stock market etc?

  40. 40

    By whatsmyname @ 35:

    Very quiet here in the last 29 hours. Maybe some of the folks who have been waiting to buy since 2005 will chime in with their opinions/predictions?

    Maybe they were all out looking at houses this weekend?

  41. 41
    uwp says:

    By Kary L. Krismer @ 40:

    Maybe they were all out looking at houses this weekend?

    I went to an open house this weekend in Greenwood: https://www.redfin.com/WA/Seattle/921-N-88th-St-98103/home/98387.

    Nothing too special, but still crazy busy. Probably 8-10 groups in the 15 minutes we were there. Seems anything under 600k is pretty desirable (and I doubt that one will end up under 600k).

    Still sucks to be a buyer.

  42. 42

    RE: S-Crow @ 13
    Yes….Kent’s Watershed is Humongous [Endless]

    Kent sells its GIANT EXCESS of spring water to Seattle. 90-99% of this water drains into the sea “wasted” anyway.

    Yet the Socialists in Kent call it a water shortage using FAKE NEWS…..visit the Kent City Hall [where I go to Toastmasters]…the FAKE water shortage posters are displayed all over. The Progressive Fascists use this against our watering in HOAs, we break no bylaw, but they scream at us if we soak our Heather and drain on the road….LOL

    My solution: use your green garbage container, fill it 1/2 way with 15 gallons of water and just dump it on the heather and bushes needing soaking [or they die]….it shuts the Progressive morons up.

  43. 43
    Erik says:

    RE: sfraz @ 38
    I hope it is a false recovery and the next downturn cuts deep. I just need to sell at the right time, rebuy for pennies on the dollar, and have myself a nice little income stream.

    Nobody will becoming on my chin!

  44. 44
    StupidLifeDecisions says:

    By GoHawks @ 39:

    RE: sfraz @ 38 – you putting your money where your mouth is? Are you short the stock market etc?

    i kind of agree with sfraz’s post about the stock market. to adress your response asking about shorting the stock market :

    it’s still going to be up for a while, so why short something now if it’s going to be up for a while. but i really think it’s going to be a very different story in another year to year and a half. we’re peaked.

    seattle real estate is probably on that same timeline. once things go down, companies will stop hiring, do lay offs, and lot of the people who have moved to seattle from other areas for tech and peripheral jobs are going to move back home or other opportunities. i also think tech is in a bubble, and even i didn’t, i do think they are starting to lookat other areas now based on a lot of what i’ve been reading.

    one thing that i’m sure no one here cares about, but i think is worth pointing out. you don’t get much bang for your buck here if you are looking for a big city lifestyle and have a career in non-tech. at this point, i can pay similar rent in nyc but make more money there and have a more access to big city lifestyle than here. those cities also have better public transportation so it is much easier not to have a car. plus non-tech salaries have not kept up here, that is why someone like me can move to nyc and live a similar or even better lifestyle, because their salaries reflect the cost of living, seattle’s do not. i would not be investing in seattle real estate right now. i’m sure you know a lot more about real estate than i do, but still i think this is a very foolish time to buy. i was wavering for a while, but i’m now convinced we have peaked (or are very soon to finish peaking).

  45. 45
    Erik says:

    RE: StupidLifeDecisions @ 44
    Ha! Could be a correction, but not a collapse. We haven’t had a 10% correction since the collapse that bottomed out February 2012. It would be very strange to go from a collapse to a collapse. Most markets will have 2 corrections before a collapse. Can you name a market that collapsed like the last downturn and turned around 5 years later and collapsed again? I can’t.

    Don’t make more “stupid life decisions” by being afraid like the computer freaks on here. You aren’t one of them, are you?

  46. 46
    Ross says:

    By Erik @ 45:

    RE: StupidLifeDecisions @ 44
    Ha! Could be a correction, but not a collapse. We haven’t had a 10% correction since the collapse that bottomed out February 2012. It would be very strange to go from a collapse to a collapse. Most markets will have 2 corrections before a collapse. Can you name a market that collapsed like the last downturn and turned around 5 years later and collapsed again? I can’t.

    Don’t make more “stupid life decisions” by being afraid like the computer freaks on here. You aren’t one of them, are you?

    I admire your gumption, but also think you’re at times a bit too optimistic (irrational exuberance). I’m be no means a housing bear, but bull/bear cycles don’t always repeat themselves. “past performance is not a predictor of future performance” is a good maxime to follow. While there are echos of prior booms and busts in the current ones; they are also different and usually caused by a different extravagance.
    My personal thinking is to take some chips off the table when I’m doing well. I might miss some further upside, but at least I don’t go broke. Bulls make money, Bears make money. Pigs get slaughtered.

  47. 47
    QA Observer says:

    By sfraz @ 38:

    RE: Erik @ 37 – They’ve added trillions to the 2008 debt. The economic indicators we have relied on no longer make sense. We have already passed the “sell by date” for these multiple bubbles. This crash is going to be a mother.

    There is some chatter about the debt ceiling again. For the all the bears out there, this may be your dream come true, but the uncertainty and consequences are just too gnarly to ignore. I sure hope we don’t get this point come Q4. The markets would crash well in advance, and interest rates would sky rocket. Whoops, you said you had an ARM. OH MY!

    https://www.thebalance.com/u-s-debt-default-3306295

  48. 48
    Erik says:

    RE: Ross @ 46
    Thanks…I think…

    Have your read Irrational Exuberance by Robert Shiller? I have and I can tell you that is way overrated and pretty boring. Mr. Shiller uses a ton of words to make the point that bubbles come from too much credit expansion. Read “The Housing Boom and Bust” by Thomas Sowell. He gets to the point and again claims that what really causes housing bubbles is credit expansion and excess inventory. We do not have excess of either.

    Now lets look at the current market. We are at record low inventory and mild credit expansion. The rest of the United States’ housing prices are not going up like Seattle is, so we aren’t in a United States housing bubble like last time. Therefore, how can we be at the top of a bubble?

    The best tool we have to predict the future is the past. Looking at the past bubbles, we are not near the top. Ross, I’ve given you historical reasoning and I’ve given you specific housing market reasoning. All the signs indicate that we are not at the top of the bubble or even close.

  49. 49
    ESS says:

    Article describing who is buying where and from what countries the buyers come from. Our good friends from the north have been more active recently………

    http://www.cnbc.com/2017/07/18/foreigners-snap-up-record-number-of-us-homes.html.

  50. 50
    jon says:

    Seattle is now second only to the Bay area for the best tech city.

    https://www.geekwire.com/2017/look-bay-area-seattle-rises-2nd-best-tech-city-u-s-passing-washington-d-c/

    This is apparently because Microsoft and Amazon have brought in so many engineers that it is a good place for other companies to poach. As the UW expands its CS program that will further increase the attractiveness of the area.

    This causes a big gap in tech vs. non-tech salaries going after the same housing, which is going to cause a lot more friction.

  51. 51
    ESS says:

    RE: jon @ 50

    Interesting article, and the tech ingathering should only accelerate.

    Interesting to note that both housing and offices expenses – Seattle is not near the top. Which dovetails with other information that Seattle tech workers get more bang for their salary bucks in Seattle than just about any hi tech city in the US.

    I don’t know how much friction there will be. There are still reasonably priced places to live in the Puget Sound area, if not in the trendiest of places in Seattle and the East Side. Something for everyone.

  52. 52
    Erik says:

    RE: jon @ 50
    Yeah, good article. This would tell me that Seattle has a ways to go in regards to housing prices. That is good news.

  53. 53
    ESS says:

    By Erik @ 52:

    RE: jon @ 50
    Yeah, good article. This would tell me that Seattle has a ways to go in regards to housing prices. That is good news.

    To paraphrase an old saying – from your typing to my retirement plans!!

  54. 54
  55. 55
    greg says:

    RE: QA Observer @ 47

    to be honest a reset seems like a somewhat logical way out of this, but doing it would ensure whoever is in power gets their butt handed to them in 2018.

  56. 56
    uwp says:

    RE: Kary L. Krismer @ 54

    I know there has been a lot of back and forth on the dueling studies, but I just don’t understand how it’s costing jobs when Seattle unemployment is at all-time lows. It’s at like 2.5%. People who want to work are finding work.

    Would Seattle be at 1% unemployment with a minimum wage back at $11/hr? It’s basically impossible.

    Restaurateurs have gone from complaining about how the Fight for Fifteen will destroy their business to complaining they can’t find someone to wash their dishes.

  57. 57

    By uwp @ 56:

    RE: Kary L. Krismer @ 54

    I know there has been a lot of back and forth on the dueling studies, but I just don’t understand how it’s costing jobs when Seattle unemployment is at all-time lows. It’s at like 2.5%. People who want to work are finding work.

    Would Seattle be at 1% unemployment with a minimum wage back at $11/hr? It’s basically impossible.

    Restaurateurs have gone from complaining about how the Fight for Fifteen will destroy their business to complaining they can’t find someone to wash their dishes.

    The strength of the economy is masking the results if you just look at unemployment numbers. This study is focusing more on a particular part of the market and how many hours they are actually working. It’s sort of like how Obamacare is causing an uptick in part time employment for people who want to be full time employees.

    The restaurant situation is just one of the other side effects. I never really understood why restaurants thought it would hurt their business–given the economy. The ever improving economy would more than offset the extra they had to pay because the demand from high paid tech employees for for their goods and services would increase dramatically. They probably would have been raising prices even without wage increases. It’s actually good to know that some of their low end employees are apparently doing better off and finding better jobs than dishwashing. My fear was more that low paid employees living in the city of Seattle would be displaced by better qualified employees living outside the city.

    The point is though, businesses adjust to costs. Some employees will only be impacted in that their hourly wage will go up. They will be the winners. Other will have their hours reduced or they might even be laid off. They will be the losers.

  58. 58
    Erik says:

    RE: ESS @ 53
    I’m not really sure what that means, but I think you are saying that your retirement plan depends on the Seattle housing market, right? Mine too. Much easier to make money in Seattle real estate than by working hard for someone else. It would be nice to have a few paid off so that I have a constant income when I retire. If I had 5 condos paid for and just collected the income, I’d have $7500/mo, which I could easily survive on. My small pension could be used for beer money.

  59. 59
    ess says:

    By Erik @ 58:

    RE: ESS @ 53
    I’m not really sure what that means, but I think you are saying that your retirement plan depends on the Seattle housing market, right? Mine too. Much easier to make money in Seattle real estate than by working hard for someone else. It would be nice to have a few paid off so that I have a constant income when I retire. If I had 5 condos paid for and just collected the income, I’d have $7500/mo, which I could easily survive on. My small pension could be used for beer money.

    Erik – yes and no. My retirement plans don’t totally depend on the real estate market. We bought years ago – so the equity is there. But rising market prices gives us more options of what we can to do in retirement when it shows up in a few years. For us, real estate is only one part of the financial picture, as hopefully it will be with yours. There is financial safety in diversification, because there are no guarantees regardless of the particular investment vehicle employed.

    Hope for the best – plan for the worst. Worst case scenario for housing in Seattle? A 30-50% decline of residential prices with a similar softening of the rental market. Having been through those declines and survived – I know we can do it again. I would suggest the same review for anyone buying rental property. One should never plan for guaranteed increases in prices and rents – because it just won’t happen. There is a real good chance both will decline in the next few years. I also view our other investments in a similar manner. Real estate isn’t the only investment that can tank. It makes for much more realistic planning if negative returns are factored in as a worst case scenario. And if the various investments don’t have any significant decline – great – will have more income for retirement.

    But at least you are giving it a shot, and as I was a real estate investor who started out at age 22 – I find that commendable. And our first investment, my partners and I had no idea what we were doing, so you are already ahead of me. All I knew at the time was that I was really worried how we would meet the 180 dollar a month mortgage for a duplex in the U District. Well – we met it and then some over the 15 years we held on to that investment.

    Whether it is the stock market, real estate, or any other type of investment, there are always going to be negative individuals who will always have theories for you not to do anything. How much, if at all Seattle real estate will continue to rise is anyone’s guess. But in the last 30 years, whether one invested in Seattle real estate or stock market index funds, one made out reasonably well. No one knows what the future will be tomorrow for any investment – but in 5-10 years – most investments, if held, usually turn out OK. If one can’t hold that long, one should consider other investments vehicles

    To quote a well known investment advisor who recommends investing passively in diversified index funds through buying and holding via dollar cost averaging with US stocks, international stocks, and bonds: the secret to retirement success is not to get rich, but not to die poor. Sounds good to me.

  60. 60
    noogakl81 says:

    So for all of the news coverage Bremerton has received with KUOW’s Legion of Boom series, headlines in the Seattle Times like “Fast Ferry cuts Seattle / Bremerton Commute in Half”, and local TV stations promoting Bremerton’s affordable housing, I would like to mention some things that these sources fail to disclose.

    There are 3 round trip sailings of the fast ferry in the morning and 3 in the evening. The boat carries 118 passengers. So you can take 354 people per week day into Seattle on the fast ferry. There are thousands of people walking on to the Washington State Ferries. Contrary to the narrative, not everyone priced out of Seattle can move to Bremerton, buy an affordable house and count on taking the fast ferry to Seattle.

    Furthermore, there is a lot of uncertainty with taking the fast ferry. To secure a seat, you can make a reservation, but you must be at the dock 10 minutes before departure to get the seat. You can gamble in the walk-up line (33 spots available) But all of the spew about the Seattle / Bremerton fast ferry being faster than the bus to Ballard is not exactly true when you account for the time waiting in line.

    Also the bus comparison is not exactly fair, because it is easy to add more buses to bus lines when the capacity is filled. The transit agencies can much more cheaply purchase and operate buses, than they can fast ferry boats. It is also much more expensive to ride than a bus. $150 for a monthly pass + $50 for a Kitsap Transit bus pass if you commute. $12 round trip for individual trips.

    Also, it does not appear that the fast ferry was designed for warm summer days. There are no windows in the boat that open. The only opening is the door. When you ride it in the afternoon, temperatures can easily get to 75 degrees or warmer within the boat. And there is no place on the boat for people to step outside. During the trip you are required to stay inside the boat.

    And there have already been sailings cancelled due to mechanical issues with the boat and service only started 10 days ago. It isn’t a new boat, but you would have hoped to avoid these snafus during your highly publicized rollout of the new service.

    Finally, because Kitsap Transit is operating the ferry, and Kitsap Transit buses do not run on Sunday, neither does the fast ferry. This will really put a dent in the ridership, as there are a lot of major sporting and other events in Seattle on Sundays and if you live in Bremerton, you will have to take the slow ferry.

    I moved to Bremerton and bought a house a month ago and I am glad I did. Reduced traffic, greater proximity to nature and things to do for the kids, and a lower cost of living are big selling points. I do think it can attract people in tech who will be able to work on the slow WSF boat on their commute into Seattle and on their commute home.

    The fast ferry will probably get its issues worked out with time and people who need to be at their job in order to work will probably use it extensively. It is also super fun to be riding in a boat going 50 mph across the water like a car on a freeway.

    But it isn’t a scalable solution to grow Bremerton’s population. There are thousands of walk-on passengers on the Washington State Ferry boat every commuter day. The fast ferry can only take 354. If you decide to move to Bremerton to escape Seattle’s high cost of housing, plan on taking the slow ferry.

  61. 61
  62. 62
    Brian says:

    It’s kind of ridiculous how there are virtually no new listings except on Thursday and Friday every week. Don’t agents want their listing to stand out by listing on another day of the week?

  63. 63

    By Brian @ 62:

    It’s kind of ridiculous how there are virtually no new listings except on Thursday and Friday every week. Don’t agents want their listing to stand out by listing on another day of the week?

    This is one instance of “monkey see, monkey do” that I agree with.

    When there is so little inventory standing out is not really a concern.

    You want your listing to stay active through the weekend so that you increase the chances of multiple offers. Even with a review date some buyers will try to jump the process with an offer that expires earlier. Listing on a Thursday or Friday works best to accomplish the goal of getting through the weekend while minimizing the offers than come in to jump the review date.

  64. 64

    RE: noogakl81 @ 60 – Didn’t the prior passenger only ferry have issues with beach erosion? I haven’t seen that mentioned, nor have I seen that this vessel minimizes the wake.

  65. 65

    RE: Brian @ 62

    Kary ruined it. Buyers used to have 4 to 5 days to process and maybe get a pre-inspection. He hated that. For the life of me I can’t figure out why. It worked jus fine for four years. Then all hell broke loose with new interference from the haters.

  66. 66
    noogakl81 says:

    Re: kary @ 64, prior to starting the ferry service, they did a lot of testing with the boat and determined that there was little effect on shore erosion from the passenger ferry.

  67. 67
    Nate says:

    Hi,

    I am looking at buying a house in Kitsap Peninsula as well (probably more like Silverdale) and betting on improved Fast Ferry service. Kingston & Port Orchard Fast Ferries are coming online soon and more boats are getting added for the Bremerton service (Source: https://www.facebook.com/kitsapfastferry/).

    I can’t stand the I-5 (especially) & I-90 traffic and the stratospheric costs of buying a home anywhere that avoids taking them but still be <40 minutes at peak hours. Ferries are overwhelmingly attractive to me, no traffic jams, no accidents, no bad drivers and views! Hopefully they can scale the service that can truly meet the needs of commuters.

    Sources: https://www.facebook.com/kitsapfastferry/

  68. 68

    By ARDELL DellaLoggia @ 65:

    Kary ruined it. Buyers used to have 4 to 5 days to process and maybe get a pre-inspection. He hated that. For the life of me I can’t figure out why. It worked jus fine for four years. Then all hell broke loose with new interference from the haters.

    Huh? They still get 4-5 days. Thursday or Friday to typically Tuesday or Wednesday. I have no idea why you said that. I said just the opposite–that it keeps the property on the market through the weekend.

    And who in their right mind would think that pre-inspections are a good thing. Buyers spending money before they even have the right to buy a property? Sellers having multiple inspectors going through their properties possibly causing damage (and not knowing which inspector caused the damage). Buyers not knowing what damage was caused by inspectors after their inspector went through. Sellers possibly not getting the same legal protection that a post-mutual acceptance inspection woudl provide. And buyers being turned off knowing that others are doing pre-inspections and not making an offer at all for a property, reducing the number of bids received by a seller. You’ve completely lost your mind on that one! Pre-inspections are clearly one of the more stupid “monkey see, money do” things that agents adopted in this market.

  69. 69

    RE: Kary L. Krismer @ 67

    Kary,

    Saying it’s “Monkey See; Monkey Do” is like saying the only reason people don’t pay $1.00 for a gallon of milk is because they see other people willing to spend more than a dollar.

    It’s a Market and market conditions apply. I did this data again for you in case something changed, but on a smaller scale than last time as peeking inside every sale is tedious to get this data.

    Kirkland 98033 Sold in the last 60 days between $400,000 and $1,500,000.

    ONLY FIFTEEN of 123 buyers were able to do an inspection AFTER their offer was accepted.

    ONE HUNDRED AND EIGHT BUYERS vs 15.

    If you want to get legislation passed giving every home buyer the legal right to do an inspection before buying a house…go for it. There is legislation for condo buyers to be able to cancel on the Resale Certificate, so it’s quite possible. Go fight for what you believe in.

    In the meantime, stop it with wanting people to do what is not possible to do 88% of the time. Last I checked it was 86% so things aren’t getting better as to that issue.

    What exactly do you want people to do Kary? Stage a sit in until milk is $1.00 and no house is sold without an Inspection Contingency? 88% of the time Kary…not once in a blue moon!

    (Required Disclosure: Stats in this comment are not Compiled, verified or published by The Northwest Multiple Listing Service. They are hand calculated by Ardell in Real Time.)

  70. 70

    RE: Ardell DellaLoggia @ 69 – You don’t even know what “Monkey see, monkey do” means? It means someone does something because they see someone else doing it without thinking about whether it’s a good idea. It has nothing to do with buying milk for $1.00. It doesn’t matter that only 15 of 123 were able to do something (or more accurately whether 108 sellers did something stupid). What matters is whether that’s a good market practice.

    I listed five reasons off the top of my head last night that allowing pre-inspections is a bad thing. Four of those five things are items that are bad for the seller. You didn’t dispute a single one. Guess what? The seller controls whether pre-inspections are allowed. Sellers are allowing pre-inspections that are not in their interest. Why? Because of “Monkey (agent) see, monkey (agent) do.”

    I will note that part of your 15 out of 123 are also sellers accepting offers without any buyer inspection. Clearly a bad practice. The fact that it occurs with some frequency doesn’t make it a good thing. Again it just means “Monkey see, monkey do.”

    Finally, it is somewhat amazing to me that listing agents are so afraid of buyer post-mutual acceptance inspections when the market is so strong. Buyers have little negotiating ability when there are other known buyers willing to step in if the first buyer wants too much. To me it’s just listing agents being lazy. They want their commission, but they don’t want to have to hassle with negotiating an inspection response. So instead they allow virtually any buyer to do a pre-inspection on their clients’ houses. Some listing agents put buyers through more of a review before they are allowed to view a house than what many/most agents do to allow buyers to do an inspection!

  71. 71

    By Ardell DellaLoggia @ 69:

    If you want to get legislation passed giving every home buyer the legal right to do an inspection before buying a house…go for it. There is legislation for condo buyers to be able to cancel on the Resale Certificate, so it’s quite possible. Go fight for what you believe in.

    Legislation is only one form of law. Another is case law. The Alejandre v. Bull and Douglas v. Visser cases effectively did just what you are suggesting–for the buyers of informed sellers.

    But to make it clear, I don’t want to prohibit the practice. I just want sellers to be informed. Again they control whether there are pre-inspections. If they are told the four (or more) disadvantages and then still want to do it, that’s their decision. But instead what’s more likely happening is agents are coming in recommending allowing pre-inspections without any disclosure other than: “That way the buyer won’t be able to back out.”

    What’s sort of funny about that is I would guess that probably in many of those 108 transactions the buyer would have been able to back out by asking for the completion of Form 17 if an answer wasn’t filled in. Very few sellers fill out Form 17 correctly. And probably 10%+ of those had some defect in the contract that would have allowed the buyer to back out due to a defect in the contract.

    But the main point is listing agents and/or sellers are the ones allowing the practice that you claim is so widespread. Absent a seller’s permission there is no right to do a pre-inspection. If sellers were advised as to the advantages and disadvantages of the practice, it’s doubtful even 10% of them would allow pre-inspections.

  72. 72
    Minnie says:

    RE: Kary L. Krismer @ 68

    “And who in their right mind would think that pre-inspections are a good thing. Buyers spending money before they even have the right to buy a property? ”

    The last time I purchased a vehicle it was pre-owned, and before I bought it I took it to a mechanic for a pre-inspection….I believe I paid $100 (I can’t recall). I felt it was prudent to do so. I think pre-inspections are worth the money. I believe its a small price to pay to get a pre-inspection on a home. i

    The problem with submitting an offer with inspection is that a buyer does not have to give a reason for walking away from the deal. And then as a seller, you will have a black mark on your property as it looks like it failed on inspection. Additionally, your property could be tied up for days, up to a week.

    In the case of inspectors destroying property and not knowing which inspector did it, isn’t it up to the listing agent to organize this? Additionally, if an inspector causes damage they are supposed to declare it. I think that for 3% commission, the least that the agent can do is either be present during a Buyers inspector or heard the cats.

  73. 73

    This explains what I mean by “monkey see, monkey do,” specifically agents adopting a practice just because they see someone else doing it. The second example used is one we’ve talked about before–listing agents asking language to be stricken from the purchase and sale agreement that benefits their clients! And in that case there’s little or no downside if a buyer not to comply with the seller’s request.

    https://www.youtube.com/watch?v=esd0eLwkBRo

  74. 74
    wreckingbull says:

    RE: Minnie @ 72 – Why would you pay for a vehicle inspection before the seller accepts your offer? Wouldn’t you do it after an initial price is negotiated? If bad things show up in the inspection, you renegotiate. Perhaps I am doing it wrong, but this is how I have always purchased used vehicles.

  75. 75

    By Minnie @ 72:

    The last time I purchased a vehicle it was pre-owned, and before I bought it I took it to a mechanic for a pre-inspection….I believe I paid $100 (I can’t recall). I felt it was prudent to do so. I think pre-inspections are worth the money. I believe its a small price to pay to get a pre-inspection on a home. i

    Wreckingball already addressed this to some extent, but did the seller of the car give you permission to do that before they negotiated what you were going to pay, or even knew whether you could pay? In some markets over half the offers that come in are written by agents who cannot even draft an offer, but listing agents let their clients do pre-inspections without even knowing that!

    I suspect what you did on the car is what I am suggesting for houses. Do an inspection after you have come to terms on buying the property. I’m not saying don’t do an inspection at all. In fact my listings say that the buyer is encouraged to do an inspection after mutual acceptance.

    The problem with submitting an offer with inspection is that a buyer does not have to give a reason for walking away from the deal. And then as a seller, you will have a black mark on your property as it looks like it failed on inspection. Additionally, your property could be tied up for days, up to a week.

    The buyer not having to give a reason is actually something that benefits the seller. They don’t have to deal with dealing with whatever the reason was to back out–a reason that might even be made up if the buyer had to give a reason to back out.

    I’ve not noticed a difficulty of houses selling after they flip back. It’s even possible they might sell for more money. But again, in this market the buyer backing out is less likely than in other markets, so why sweat it?

    But yes that is the benefit. IMHO it doesn’t even come close to the disadvantages, particularly the risk of being sued.

    In the case of inspectors destroying property and not knowing which inspector did it, isn’t it up to the listing agent to organize this? Additionally, if an inspector causes damage they are supposed to declare it. I think that for 3% commission, the least that the agent can do is either be present during a Buyers inspector or heard the cats.

    The damage might not be noticed right away and/or there might be two inspections in a row.

    A listing agent should not be present during a buyer’s inspection. They do not want to hear anything that is said because their seller would then have to disclose it to future buyers. That would be almost as bad as a listing agent asking for an inspection report.

  76. 76
    Dustin says:

    By Minnie @ 72:

    And then as a seller, you will have a black mark on your property as it looks like it failed on inspection.

    From a buyer’s perspective, I would want to know the reason the previous buyer didn’t approve the inspection before crossing out a good option, especially in a low inventory/reduced choice market like this. I’d probably want to ask if the seller is aware why the previous buyer disapproved their inspection, which could be a good thing if the seller isn’t trying to hide that information. I think the “black mark” effect is more of a combination of factors related to the property’s condition and marketing. Sellers who do their homework can make smart decisions to avoid it.

  77. 77
    Anonymous Coward says:

    By Kary L. Krismer @ 75:

    Do an inspection after you have come to terms on buying the property.

    As the buyer, how can you price your offer if you don’t know whether or not there are major issues with the property? The pre-inspection is used by both parties to make all offers final offers, rather than having to deal with “Here’s a number on a piece of paper which I hope will be big enough to win a bidding war but which I’m going to lower (not at all? significantly? who knows?) when it comes time to write the big check at closing. Please take my offer and hope my final price (offer minus post-inspection deduction) is still big enough to make it the best offer on the table”. Serious question for you: how do you solve this problem for your sellers?

  78. 78

    RE: Anonymous Coward @ 77 – That’s actually a bigger issue for buyers on bank owned properties, because there the bank typically won’t make any post-acceptance adjustments to price or make any non-safety related repairs. So you have to offer based on assumptions, and with bank owned the assumptions should assume a number of things are bad (even if the bank has come in and made cosmetic fixes).

    But from the sellers’ side on normal transactions, except for one transaction where an engineer asked for 15 different repairs (including removing trees and their stumps from the side yard) and where an inspector called for very expensive changes which were not necessary (as later demonstrated by obtaining the opinions of the original architect and contractor), I don’t think I’ve ever seen repairs or adjustments that would exceed $10,000. That’s a small number in most transactions, and if I’m anywhere close to right about how buyers are discouraged by sellers who encourage pre-inspections, that number would probably be more than made up in most cases through the receipt of more offers possibly for higher dollar amounts. Keep in mind that offers will frequently vary by more than ten percent. Inspection adjustments are minor in comparison.

    Don’t get me wrong on this. Whatever local buyer’s agent was a genius who first went to a seller and said: “Can my buyer do an inspection before making an offer?” They were really representing their client’s interests well. And assuming the buyer obtained a written inspection report about the only impact on the seller would be any effect on a buyer who came to the house during the inspection, assuming the Douglas v. Visser case would still apply (not clear). The problems result as the practice has become more widespread and more listing agent/seller driven rather than just a rare event. The concern you’re expressing about adjusting price or even of a buyer just backing out are both minor relative to discouraging offers and increasing post-transaction liability.

  79. 79
    ess says:

    How will the rental market fare in Seattle? Apparently fairly well here and in other areas of the US, according to the article referenced. Also note, new housing construction of all types is not keeping up with population increases. And new apartment construction in Seattle is skewed on the luxury end of the price range, according to a recent Seattle Times article. While rents may become somewhat softer in the future, I don’t believe there will be any wholesale collapse of the rental market in this area, absence an economic catastrophe a la Boeing collapse of the 1970s.

    http://www.marketwatch.com/story/more-americans-are-renters-now-than-at-any-time-in-the-last-50-years-2017-07-19

  80. 80
    noogakl81 says:

    RE: Nate @ 67
    Nate,

    There have been discussions regarding the purchase of a backup boat for the Bremerton fast ferry, but nothing I have read about getting a second boat that would be in operation any time soon.

    Kingston is going to its fast ferry next year.
    Southworth (not Port Orchard) is scheduled to get its fast ferry in 2021.
    I am guessing that any additional ferries won’t happen until after Southworth gets its promised ferry. But maybe not.

    There are lots of nice things about the Kitsap Peninsula. Agree with you on all your points. Good luck with your move.

  81. 81
    Nate says:

    By noogakl81 @ 80:

    RE: Nate @ 67
    Nate,

    There have been discussions regarding the purchase of a backup boat for the Bremerton fast ferry, but nothing I have read about getting a second boat that would be in operation any time soon.

    Kingston is going to its fast ferry next year.
    Southworth (not Port Orchard) is scheduled to get its fast ferry in 2021.
    I am guessing that any additional ferries won’t happen until after Southworth gets its promised ferry. But maybe not.

    There are lots of nice things about the Kitsap Peninsula. Agree with you on all your points. Good luck with your move.

    Actually, a second boat is going to be operational as early as next year and they are supposed to be building one more – total 3 but that I don’t know when it’ll come to fruition.

  82. 82
    noogakl81 says:

    RE: Nate @ 81 – Where and when did you hear that they are adding another boat next year on the Bremerton line? I saw nothing on the Facebook page you mentioned earlier and I have seen nothing mentioned in the Kitsap Sun. The only thing I mentioned recently was discussion of having a backup boat for cases where the main boat is broken or needing repairs.

    I ask when you heard this because things have not exactly gone according to plan or according to what they originally said regarding the fast ferry service. I will give you two examples.

    1. The original plan was that Kitsap County would cut a deal with King County to have King County maintain / provide the labor for the Kitsap fast ferries. They were not able to make a deal, so Kitsap County had to hire all their own people to work / maintain the ferries.

    2. The original promise with the fast ferry was that you could transfer directly from a Kitsap County Bus to the ferry and vice-versa. They said that the whole cost would be cheaper than paying for a Kitsap transit bus pass and Washington State Ferry bus pass. See http://www.kitsaptransit.com/uploads/pdf/pof-presentation-10-25-16.pdf .

    However, this is not the case. A monthly pass on the fast ferry with a bus pass costs $40 more than than a monthly pass on the ferry only, and the cost is ~$40-50 more than buying a Kitsap Transit bus pass with a monthly WSF pass. For whatever reasons the economics that they envisioned for the fast ferry did not work out as they originally promised.

  83. 83
    noogakl81 says:

    RE: noogakl81 @ 82 – I guess I see in the link I posted that in the original fast ferry plans, a second Bremerton boat is supposed to be purchased and operational for 2019, but not next year. But this is the same link that said the fast ferry pass would be cheaper than Washington State Ferries, so who knows?

  84. 84
    Bubble Trouble says:

    A report from the other side of the state for anyone interested.

    Spokane/Coeur D’Alene r/e has gone crazy as well. Houses are sold within 24 hours, at least those under $250K (yes kids, you can actually buy a decent house for under $250K 300 miles away from Seattle :) ). Multiple offers are the norm. There is a never ending flow of people moving to the area, most of them from California. The story is usually this: sell the house in Orange County for $1.2M. Take the $500K equity in that house, buy something here for $250K here, put the other $250K in the bank. Rinse repeat a few thousand times a year. So now you have a no mortgage, vs a $3000-4000 mortgage “back home” and $250K in the bank, and no income tax, or if you live on the Idaho side, a much lower income tax and very low property tax.

    But there are no jobs in Spokane!! Well yes and no. There aren’t as many high paying jobs as LA or SF, true. But given the cost of living is a fraction of what it is in SoCal, you can get by making less and still come out ahead. And professionals like nurses, doctors, architects, etc still make close to what they’d make elsewhere. Or, as is often the case, people work remotely and/or travel for work. It’s the ultimate arbitrage. You earn a coastal salary with flyover cost of living. This is the case with people in tech and/or sales. Doesn’t matter where you live as long as you have access to an airport and high speed internet.

    Personally I have taken advantage of this bubble, having bought several properties between 2010 and 2012. Rents have skyrocketed to the point where my ROI is pushing 20%. That’s not including any appreciation. That’s around 50-80%, but that’s just gravy. It’s all about the cash flow for investment properties. There is a huge shortage of rentals in the area. There has been a building frenzy for apartments, so that supply has alleviated apartment shortage somewhat. But if you want a single family home to rent, in a good neighborhood, the supply is very low. To give you an idea, I had a lease end in June. The family that was renting decided to buy after 2 years of renting. I was sad to see them go since I couldn’t ask for better tenants. Anyway, I put up an ad on Craigslist and that same day I have over 10 inquiries and I had a signed lease 2 days later. Ended up getting 6 months rent upfront from the new tenants as well.

    Will this last forever? No. Nothing does. Will the crash come tomorrow or 3 years from now? Who knows. And even when it does, I bought so low at the bottom of the last crash, I’ll just ride it out and keep collecting rent until Bubble 3.0 starts again.

  85. 85
    piggyshooz says:

    Beyond the simple economics as additional building and local population growth, its important to consider the regulation impacts on the rental market. Specific to the city of Seattle, the socialist idiots at the city council are going after landlords to provide absurd rights in the favor of renters. After the city income tax fails in court, the communists will probably be trying to set up rent control. Landlords of residential properties will see their cash flow erode as prices rise but the yield for investment deteriorates. I know of 2 people in san Francisco locked in at rent rates so low that the landlord can’t cover tax and insurance prorated share from these tenants, so who picks up the difference?… the newer renters at higher rates since supply was artificially limited as the low rate renters will never move….counterproductive given what the policy was trying to achieve. Don’t underestimate the stupidity of our politicians when it comes to impacts on the local housing situation. RE: ess @ 79

  86. 86

    RE: piggyshooz @ 84 – Not politicians, but an initiative. Apparently whoever is behind this doesn’t have a clue about economics. They think price is determined by costs. (Link courtesy Rhonda Porter.)

    http://www.rhawa.org/blog/initiative-127-filed-in-seattle-may-require-landlords-to-open-their-books

  87. 87
  88. 88

    RE: Anonymous Coward @ 77

    You hit that nail right on the head! …and Kary didn’t answer your question. Mainly because he thinks the practice started because a monkey asked to do it and then some other monkeys copied the first monkey, which is not the case.

    The problem was created by buyers and their agents writing up offers on property “subject to inspection” before deciding if they were remotely interest in the property. Due to low inventory they were basically collecting houses to see at their convenience. They would write up everything that came on market Monday to Friday and then go see them on the weekend and decide which to buy…if any.

    This is why Listing Agents had to find a way to make “offers” more genuine and also have sufficient time on market to collect a few offers and hopefully at least one that wasn’t a flakey offer.

    That’s how “will look at offers on…” started and then with multiple offers the one with the inspection clause was usually the flakey one for reasons that had nothing to do with the actual inspection. It was just reserving a broad legal out. In fact it’s questionable that a buyer has to actually hire an inspector to cancel on the Inspection Congtingency since the buyer does not have to give the seller any info from the inspection in order to cancel.

    This could be solved with a better Home Inspection Contingency. In fact the one used when I started in real estate back in 1990 had a blank space for a $ amount saying buyer could cancel IF cost to repair items in the inspection exceeded X $. Some buyers put $1,000 and some put $5,000 and some put $10,000. This protected buyers from a house needing repairs over an amount that buyer was comfortable with. Every buyer was able to do an inspection, but not cancel for a $5 broken window lock, which under our currently used Inspection Contingency would give a buyer a valid right to cancel.

    Come up with a better Home Inspection Contingency form and this problem might just go away and give buyers better rights.

    There was also a limitation on type of repair. That would help with flippers who “win” with any price and then back it up to a price that incorporates the full remodel cost. That was happening a lot as well before no Inspection Contingency at all become the norm.

    All of these problems could be resolved with a little more thought as to the wording of the Inspection Contingency vs an outright legal out to cancel whether there is a good reason or not.

  89. 89

    RE: Ardell DellaLoggia @ 87 – I give up. You don’t understand how our inspection contingency benefits the seller. You don’t understand why the offer review dates exist. And you didn’t understand my answer to AC’s question, which he was apparently satisfied with.

    As to offer review dates, the Department of Licensing was actually threatening to sanction agents who had their listings go to pending/pending inspection too quickly too often. When I first heard that I thought it was sort of crazy. But having a listing stay on the market a minimum amount of time to get sufficient exposure is important. Yes a seller can accept at any time, but if an agent has a lot of really quick sales that indicates a problem with the agent not giving proper advice. DOL was concerned about that.

    If I have a buyer that backs out I won’t even typically tell the listing agent unless it’s a safety issue (e.g. no smoke detectors in a house with a Zinsco panel). The last time a client backed out I offered to tell the listing agent a couple of things that I thought could easily be fixed and help with a future inspection. They didn’t want to know. Sellers don’t pick a buyer’s inspector. They typically don’t want to know what some unknown inspector thinks.

    If the drafters of the forms totally lose their minds and the the forms are changed to require a buyer give a reason to back out, then that would be a reason to have a buyer do a pre-inspection. Fortunately I don’t think that will happen.

  90. 90

    RE: Kary L. Krismer @ 88

    If they were easily fixed, per your account, why did your buyer back out? You prove my point. Flakey buyers caused this problem. A minute ago you acted like buyers don’t cancel on inspection, now you remember a few of yours that did.

    AC was right. In a big bid up, price has to be final when you pick the “winner”. You ask why…because there are plenty of other offers. Because those offers expire by the time the first buyer cancels, which moves us to Minnie being right. The failed inspection you have no access to creates a stigma.

    You can’t recreate the same impact as when the listing was new.

    So back to AC’s question? How do you protect your seller from losing his initial, new on market momentum if you don’t pick a buyer who can’t flake out?

  91. 91

    By ARDELL DellaLoggia @ 90:

    If they were easily fixed, per your account, why did your buyer back out? You prove my point. Flakey buyers caused this problem. A minute ago you acted like buyers don’t cancel on inspection, now you remember a few of yours that did.

    Stop making things up. I didn’t say those couple of easy to fix things were the only things that caused my buyer to back out. There would have been no point in letting the listing agent the difficult to fix things that my client was concerned about. If my client had backed out over minor things I would have been upset with the client.

    Also, I never claimed that buyers never cancel on inspection. I said being able to cancel on inspection benefits the seller. You can’t seem to grasp that, but it does bring up another point on pre-inspections. If one of the buyer’s agents doing a pre-inspection gives the listing agent a copy of their inspection report, that would seriously upset the apple cart in dealing with the other offers. Everything “material” in that inspection would need to be disclosed to any other buyer before you accepted their offer.

    But other than that, another great post of nonsense as usual.

  92. 92

    By ARDELL DellaLoggia @ 90:

    So back to AC’s question? How do you protect your seller from losing his initial, new on market momentum if you don’t pick a buyer who can’t flake out?

    You do your due diligence on the buyer. You wrote earlier:

    The problem was created by buyers and their agents writing up offers on property “subject to inspection” before deciding if they were remotely interest in the property. Due to low inventory they were basically collecting houses to see at their convenience. They would write up everything that came on market Monday to Friday and then go see them on the weekend and decide which to buy…if any.

    Due diligence in that case would be reviewing the Supra records and cards to make sure that the buyer’s agent actually went into the house once. That’s just an example.

    Another example I gave in the past was two competing offers I advised the seller of an early 20th Century house to accept the slightly lower offer, because I discovered that buyer couple already owned an old house and would be less inclined to walk on inspection.

    BTW, this is one advantage of doing open houses, AND attending open houses. In this case the two competing buyers came back to the house during the open house a second time–both at the same time. We pretty much new their interest was legitimate.

    Due diligence.

    The only time I can recall a buyer on one of my listings just walking without asking for repairs was when the parents became involved after MA. They didn’t like the area. Not something that would be easy to know–not even the buyer’s agent saw that coming. That was a long time ago.

  93. 93
    Bubble Trouble says:

    RE: piggyshooz @ 85

    Don’t count on the income tax failing in court. If a Hawaiian judge can overrule SCOTUS and POTUS on immigration, the WA supremes will find a way to make an unconstitutional tax constitutional.

    The silver lining will be that the imbeciles who want to “TAX THE RICH” will soon find out when Democrats say rich, they mean anyone with an income above $0. Within 5 years the income tax will apply to everyone. And all the people making $140K a year who thought it was sooooo cool and progressive to tax evil rich people will find themselves paying the tax. And the schadenfreude will be delicious.

  94. 94
    Bubble Trouble says:

    This whole inspection discussion is interesting. I’ve never heard of doing an inspection before making an offer. Every home I’ve bought and sold had an inspection after an offer was accepted by the seller, with the inspection as a condition of executing the sale.

    Is this just a Seattle thing?

    And also as far as backing out, again every inspection I’ve been a part of, either as a seller or buyer, the inspection had some language like “buyer has the right to walk if the cost of needed repairs exceeds $X”. And yeah it’s pretty easy to find $X of work that a house needs if you look hard enough. There’s always something that can be improved. But the inspector does have to find something, theoretically, and you can’t just change your mind because you got cold feet.

  95. 95
    northender says:

    RE: Bubble Trouble @ 93
    Yes, there should be little doubt that if/when the income tax is implemented it won’t be long before the income cutoff drops. I don’t know about 5 years and all income though:)

    One thing I missed til recently is the proposed tax would be on total income over 500k (line 22 of 1040), not adjusted gross income or taxable income or some other reduced number.

  96. 96

    RE: Kary L. Krismer @ 92

    You are talking past history. That’s not the market right now, as I have proven with real data. Sometimes we disagree because you are in a different market. There’s no way with 15 offers the one with the inspection clause is the best one.

  97. 97
    ess says:

    RE: Bubble Trouble @ 93

    One just has to review the history of the federal income tax . That tax has gone through the same scenario as you outline. It started as a minor tax on the very wealthy, and here we are today, a giant mess that taxes anyone that either makes a half decent salary or has income from investments.

    And as to your report about Spokane – sounds as if you are doing well and what you did made sense. We had done business in Spokane and surrounding cities a number of times. We also looked at real estate in that city and noticed it was attractively priced. Nice city with a pleasant downtown. Manito park, with it various gardens is one of the nicest major city parks I have ever visited. A real gem.

  98. 98

    By Bubble Trouble @ 94:

    This whole inspection discussion is interesting. I’ve never heard of doing an inspection before making an offer. Every home I’ve bought and sold had an inspection after an offer was accepted by the seller, with the inspection as a condition of executing the sale.

    Is this just a Seattle thing?

    And also as far as backing out, again every inspection I’ve been a part of, either as a seller or buyer, the inspection had some language like “buyer has the right to walk if the cost of needed repairs exceeds $X”. And yeah it’s pretty easy to find $X of work that a house needs if you look hard enough. There’s always something that can be improved. But the inspector does have to find something, theoretically, and you can’t just change your mind because you got cold feet.

    It’s a “monkey see, monkey do” thing in reaction to the strong seller’s market. It’s like the related issue of crossing off the 10 day information verification period, which probably has been around for about the same time. There the agents do that not having the slightest clue what the effect of that is. But monkey see, monkey do.

    Our standard on the inspection has always been subjective, as long as I’ve been an agent. The reason for that is if you make a buyer come up with something they will make up something. They’ll say: There is evidence of water in the crawl space, install a perimeter drain system and sump pump.” Or they’ll say: “There is fungal/mold growth in the attic area, rectify by [insert description of most expensive way to fix.] Either case will leave the seller faced with having to disclose potential material conditions to future buyers, because disproving those things would be virtually impossible. Also, you don’t want to get into litigation where people are arguing over whether or not a condition existed or whether it was material.

  99. 99

    By ARDELL DellaLoggia @ 96:

    RE: Kary L. Krismer @ 92

    You are talking past history. That’s not the market right now, as I have proven with real data. Sometimes we disagree because you are in a different market. There’s no way with 15 offers the one with the inspection clause is the best one.

    You don’t get it. The seller controls whether there are any offers without inspection clauses waived due to pre-inspections. There should not be any such offers because there should not have been any pre-inspections allowed.

    I’ve now given six reasons that they are a bad idea. You’ve yet to even attempt to refute a single one of them, but just note that they happen. You’re not refuting my “monkey see, monkey do” point at all. You’re proving it.

  100. 100

    By Bubble Trouble @ 93:

    RE: piggyshooz @ 85

    Don’t count on the income tax failing in court. If a Hawaiian judge can overrule SCOTUS and POTUS on immigration, the WA supremes will find a way to make an unconstitutional tax constitutional.

    The silver lining will be that the imbeciles who want to “TAX THE RICH” will soon find out when Democrats say rich, they mean anyone with an income above $0. Within 5 years the income tax will apply to everyone. And all the people making $140K a year who thought it was sooooo cool and progressive to tax evil rich people will find themselves paying the tax. And the schadenfreude will be delicious.

    On the first point, a local income tax will make a lousy test case due to the state statute preventing it. You have to get past the state statute before you even get to the constitutional issue. And I wouldn’t assume that the current court would overturn past cases on the constitutional issue.

    If that does happen, then I agree with your second paragraph.

    I wonder if this new tax needs to be reported as an “adverse material defect” that needs to be disclosed on Seattle properties’ Form 17s? ;-)

  101. 101
    justme says:

    RE: ess @ 79

    I’ll see your bubbler landlord propaganda, and up you a dropping commercial property (incl. apartment buildings) price index, and record number of new apartments coming online in 2017.

    http://wolfstreet.com/2017/07/21/record-apartment-building-boom-meets-reality/

  102. 102

    RE: Kary L. Krismer @ 99

    Incorrect. Not allowing pre-inspections leads to people waiving inspection with no access to being able to do their due diligence. Not better for anyone.

    The last time and maybe the only time I saw a listing (in Fremont) stating “no pre-inspections; seller encourages the buyer to include an Inspection Contingency” I wrote it as waived and the seller chose our offer as a result. I’m sure the other bidders felt duped by that language given the seller chose the one without the Inspection Contingency.

    We did an inspection the day after closing and it was fine. Every house is different and I wouldn’t do that with every house. Also every buyer is different and some are more at risk than others. Rarely does an inspector find something we couldn’t know about before the inspector came. Usually that’s in the crawlspace or the attic. It was a newer town home that had no crawlspace.

    Once I had to show a property to a structural engineer as if he were a buyer because no pre inspections were allowed. I told the buyers to call him Dad. LOL!

  103. 103

    RE: Kary L. Krismer @ 98

    “Our standard on the inspection has always been subjective, as long as I’ve been an agent.”

    You should note how long you have been an agent in that sentence because there used to be two standard Inspection Contingency forms here. The second one had no right to cancel if the seller agreed to do the repairs. I remember it being used at the beginning of the last hot market, in 2004. Not sure how long it was around before they removed it as an option, but I think they removed it in late 2004.

  104. 104

    By ARDELL DellaLoggia @ 102:

    RE: Kary L. Krismer @ 99

    Incorrect. Not allowing pre-inspections leads to people waiving inspection with no access to being able to do their due diligence. Not better for anyone.

    The last time and maybe the only time I saw a listing (in Fremont) stating “no pre-inspections; seller encourages the buyer to include an Inspection Contingency”

    Thank you for refuting your argument in the very next sentence. It saves me a lot of time. ;-)

    That the seller in your situation didn’t tend to follow their agent’s advise is not a good thing. That you got your client into a risky situation is not something I would be bragging about either, but if that post-closing inspection had come out the other way the seller might have been the one that wasn’t happy. They could have been sued by your client.

    And note, it’s not the small things people are likely to be sued over. It’s the big things. And it will be someone else who decides in the repairs and drives the costs. And then there’s also the attorney fees. The seller in your situation got lucky.

    I had a buyer’s agent try what you did on one of my listings, but they did it better. They included two Form 35s, one with inspection rights and one without, and let the seller pick. I thought that was very clever. My seller followed their agents’ advice and picked the Form 35 with inspection rights.

  105. 105

    By Ardell DellaLoggia @ 103:

    RE: Kary L. Krismer @ 98

    “Our standard on the inspection has always been subjective, as long as I’ve been an agent.”

    You should note how long you have been an agent in that sentence because there used to be two standard Inspection Contingency forms here. The second one had no right to cancel if the seller agreed to do the repairs. I remember it being used at the beginning of the last hot market, in 2004. Not sure how long it was around before they removed it as an option, but I think they removed it in late 2004.

    Yes, that’s before my time. Note that they got rid of the second one. That should tell you something.

  106. 106

    RE: Bubble Trouble @ 94

    “This whole inspection discussion is interesting. I’ve never heard of doing an inspection before making an offer. Every home I’ve bought and sold had an inspection after an offer was accepted by the seller, with the inspection as a condition of executing the sale. Is this just a Seattle thing?”

    Not “a Seattle thing” and even in this hot market, not always the case. The issue is that a fair amount of houses are sold very quickly with more than one buyer wanting the house. The more buyers who want it early in the listing, the more likely someone will want it regardless of defects, especially if they plan to build a new house there or substantially remodel the existing house.

    A defect can be hugely different from one buyer to the next. Say you have a one story house that needs a new roof in an area where the value of the land is equal to the asking price of the house. (Saw at least two of these very recently). A buyer who plans to add a 2nd floor won’t care about the existing roof because it will be removed when adding the 2nd story. That buyer would be “correct” in not noting the roof defects. Another buyer who is going to use it as a rental property will have to repair that roof and work that cost into his ROI numbers as an investment property. Same defect…different buyers…changes the impact of the defect.

    What a house “needs” will differ from one buyer to the next. One of the burners doesn’t light? The buyer who is planning to put in a new stove won’t care as much as the one who doesn’t want to replace any of the existing appliances.

    When an agent has a buyer client, the offer they draft takes into consideration the particulars of that specific buyer, so even the same agent would write it differently for two different buyers. It’s not “monkey see monkey do” as has been suggested. Often the no inspection contingency involves a house that is bidding up by $50,000 or $100,000 or more. So even a $20,000 needed repair doesn’t come off asking price. It comes off the bid up. If it’s going to sell for a lot more than asking, then the seller is not usually involved in repair requests.

    Conversely, if you know for fact you are the ONLY buyer interested in the house, and usually that is after the first 7 days on market and often after the first 30 days on market, then the sale will operate “normally” with an Inspection Contingency most of the time. As to the latter part of your question, there are absolutely no rules as to what a buyer can ask for after they do an inspection. I even saw one where the repair request was to move the laundry room from the first floor to the second floor. It was here but in a weaker market. The seller didn’t move it, but he did offer a sizeable credit so the buyer could move it because the amount of the credit was less than the reduction to asking price the seller was considering.

    Even with inspections, two different buyers will see “defects” differently. For most people the laundry room being off the garage vs on the second floor would not be considered a defect of the home. But there is nothing preventing the buyer from cancelling on inspection if they choose to view it as a defect. Even if one could argue that point…there is always something else in the inspection the buyer could use to cancel, and since he doesn’t need to tell anyone why he’s cancelling, it’s just an ace in the hole in case the seller is reluctant to return the buyer’s Earnest Money if the Inspection Negotiation doesn’t work out.

    The Agent for the Buyer has the added ethical duty to not let a buyer who can’t afford to fix something truly needed like a safety hazard or a potential sewer backup or a roof ready to cave in buy the house, with or without an inspection, unless the agent is willing to correct that problem. Often that is the case. That the buyer waived the right to have the “seller” repair it, doesn’t mean it won’t be repaired by the buyer or the buyer’s agent. That there was no inspector there to point out that problem, does not mean the problem was unknown to the buyer ad the buyer’s agent. Most anyone can figure out 80% of what the inspector “finds”.

    More on “is this a Seattle thing”. It is actually pretty customary anywhere for a buyer buying a house selling for over a million dollars to not ask for minor repairs. An inspector will always point out no GFCI. A buyer can readily see if there is no GFCI in the kitchen or bathrooms without an inspector telling them that. It would be uncommon most anywhere for someone buying a house for a million dollars to ask for a $100 fix. Even if they wanted that fixed, more likely there agent would just have someone fix it right after closing vs requesting that of the seller. The lower the price and the longer the home has been on market, the more likely a cheap fix will require an “inspection negotiation” most anywhere.

    I once saw an agent spend 6 hours at the closing table negotiating an $85 fix. We laughed at him. Totally unnecessary even though yes…the seller should have agreed to fix that broken tiny basement window that happened after the inspection. Most agents wouldn’t start a fight between a buyer and seller over an $85 fix. Kary? I don’t know. :)

  107. 107
    Geoff says:

    Another statistic indicating in a similar direction to the low absorption rate is the following:

    Last month Sea-Bel-Ever area had the biggest drop in non-farm employment since 2009. The decrease was 4,100 jobs.

    Of course the lazy press didn’t notice and just reposted AP waffle about ‘holding steady’ etc.

    Dunno if this link will work, but here goes:

    https://beta.bls.gov/dataViewer/view/timeseries/SMS53426440000000001

  108. 108
    jon says:

    RE: Geoff @ 107 – The lack of concern is because 1) it is only one month, 2) the rest of the state gained enough jobs to more than make up for the loss locally, and 3) the number is preliminary.

    https://fortress.wa.gov/esd/employmentdata/docs/economic-reports/current-monthly-employment-report.pdf

  109. 109
    Geoff says:

    RE: jon @ 108RE: jon @ 108

    Thanks, when does the preliminary status change please?

  110. 110
    Bubble Trouble says:

    RE: Geoff @ 107

    Two points:

    1. Any monthly data is nothing to get worked up about. This goes for both the upside and downside.

    2. The jobs numbers aren’t how many jobs are there available, it’s how many people were hired less how many were fired. There are a lot of jobs out there going unfilled because employers can’t find anyone. Some are due to a mismatch of skills, some are due to employers not offering enough pay. But even though it’s counter intuitive, negative job growth could be because there are too many people working. I used to be skeptical about explanations like this. But I know from personal experience, the last 3-6 months several clients of mine have mentioned to me it’s really hard to find workers. The bodies just aren’t there.

  111. 111
    jon says:

    RE: Bubble Trouble @ 110 – True, if rising housing costs are driving people away, then the number of people being employed here will go down as they move away.

    Boeing is going through a big cut, but I didn’t see any news to suggest that a big batch went through in the June time frame.

  112. 112
    justme says:

    RE: justme @ 101

    Plenty of apartments to go around in Pierce and Thurston counties…should be room enough for all those supposed new American renters that Ess was frothing about earlier in this thread (jump back two links).

    “The regional apartment market might be softening just a bit, which would be welcome news for renters who have seen double-digit rent increases compared to last year. Apartment vacancy rates in Pierce and Thurston counties are climbing, according to Seattle research firm Apartment Insights. Plus, Pierce County is seeing record levels of apartment construction. Apartment vacancy rates in Pierce County in the second quarter of 2017 was 4.21 percent, up from 3.34 percent the year before, according to Apartment Insights, which studies apartment complexes with 50 or more units.”

    http://www.thenewstribune.com/news/business/article162149558.html

  113. 113

    By Ardell DellaLoggia @ 106:

    Even with inspections, two different buyers will see “defects” differently. For most people the laundry room being off the garage vs on the second floor would not be considered a defect of the home. But there is nothing preventing the buyer from cancelling on inspection if they choose to view it as a defect.. . .

    More on “is this a Seattle thing”. It is actually pretty customary anywhere for a buyer buying a house selling for over a million dollars to not ask for minor repairs. An inspector will always point out no GFCI. A buyer can readily see if there is no GFCI in the kitchen or bathrooms without an inspector telling them that. It would be uncommon most anywhere for someone buying a house for a million dollars to ask for a $100 fix. Even if they wanted that fixed, more likely there agent would just have someone fix it right after closing vs requesting that of the seller.

    First, the location of the laundry is not really an inspection item. That’s just the design of the house. Technically that wouldn’t come within the inspection contingency provisions, but because sellers are not entitled to an explanation they would likely never know that was the reason (unless the buyer’s agent for some reason pointed it out).

    Second, what you’re getting at with different buyers reacting differently to different conditions is another reason I don’t like seller pre-inspections. They may waste their time and money fixing things that a buyer wouldn’t ask for, and in some cases it may be something a buyer wouldn’t want a seller to do! Using your GFCI example, I personally would not want a seller doing any electrical work. I’d rather do it myself. But someone who cannot do electrical might ask for that to be done, in which case they should probably specify having it done by an electrician.

    I once saw an agent spend 6 hours at the closing table negotiating an $85 fix. We laughed at him. Totally unnecessary even though yes…the seller should have agreed to fix that broken tiny basement window that happened after the inspection. Most agents wouldn’t start a fight between a buyer and seller over an $85 fix. Kary? I don’t know. :)

    Just couldn’t quit without a jab. I’m a reasonable agent. You’re an unreasonable agent who on top of that doesn’t know what you’re doing. It’s irritating dealing with agents like you, but fortunately I’ve only come across one of your type in my years of practicing. It’s far easier to just go with the flow with such agents, except when it’s necessary (e.g. with the agent thinks that waiving the inspection contingency also waived the title contingency–which is what the Ardell-like agent thought). I only respond to you here so that others won’t be mislead by your nonsense. It’s a public service.

  114. 114

    By ARDELL DellaLoggia @ 102:

    The last time and maybe the only time I saw a listing (in Fremont) stating “no pre-inspections; seller encourages the buyer to include an Inspection Contingency” I wrote it as waived and the seller chose our offer as a result. I’m sure the other bidders felt duped by that language given the seller chose the one without the Inspection Contingency.

    BTW, one other thing on this. The listing just said “encourages” an inspection contingency, so technically what you did was not a violation of what they asked for. That the seller accepted your offer is no where near as bad as the issue that bothers us both–the offer review date language where because sellers can accept early notwithstanding a review date it’s sometimes necessary to call listing agents to get notice if that’s being considered.

  115. 115
    ess says:

    Another recent article about professional investors purchasing single family houses below.

    Has anyone here actually noticed a single family house in their area for rent that is owned by one of these corporations? Do they advertise that fact in their listings, or is it something that is discovered once a prospective tenant responds to the rental listing?

    Wonder which areas of Puget Sound these companies focus on where they believe they can make a decent return on their investment? Do these companies have any housing strategy in mind in terms of location, distance from major centers, square footage etc?

    http://www.foxbusiness.com/features/2017/07/21/meet-your-new-landlord-wall-street-2.html

  116. 116

    RE: ess @ 115 – Not only have I not seen it in my neighborhood, but I’d also never received such an offer on a listing. I would suspect they go for rather low end properties, possibly even fixers that wouldn’t qualify for financing. Otherwise buying multi-family would probably make more sense.

  117. 117
    Kmac says:

    RE: ess @ 115

    Two of the larger companies and I think they only show their available properties on the maps:

    http://www.invitationhomes.com/market/seattle-tacoma/
    and
    https://www.americanhomes4rent.com/States/WA

  118. 118
    ess says:

    Thank you Kary and Kmac.

    Kary -I think the article did mention that the companies often pay cash with the expectations that they will have to do some major repairs. And with deep pockets and streamlined operations, it does tend to keep the costs down compared to the average mom and pop. These companies are focused on single family houses as a specific investment, apartment complex have traditionally been the domain for these companies.

    Kmac -The maps are interesting insofar as they reveal that those two major companies are buying their houses in the less expensive periphery of the major Seattle/Bellevue market. Then again, I may be interpreting the websites incorrectly insofar as they may also own houses in Seattle and Bellevue but demand is so great that they have no vacancies at this time to advertise. One also wonders what impact, if any, these investors have in the single family markets in this area, both in terms of the price of housing and rental costs?

  119. 119
    uwp says:

    I really want Kary to have a buyer attempting to purchase a home from an Ardell-repped seller.

    It’s the world we deserve.

  120. 120
    wreckingbull says:

    RE: uwp @ 119 – I have often wished for a claymation celebrity death match between the two. Ardell cracks Kary over the head with a lockbox while Kary whacks her back with a rolled-up NWMLS form 35. J. Lennox Scott can referee.

  121. 121
    formerSeattleite says:

    By wreckingbull @ 120:

    RE: uwp @ 119 – I have often wished for a claymation celebrity death match between the two. Ardell cracks Kary over the head with a lockbox while Kary whacks her back with a rolled-up NWMLS form 35. J. Lennox Scott can referee.

    By uwp @ 119:

    I really want Kary to have a buyer attempting to purchase a home from an Ardell-repped seller.

    It’s the world we deserve.

    LOL

  122. 122

    By uwp @ 119:

    I really want Kary to have a buyer attempting to purchase a home from an Ardell-repped seller.

    It’s the world we deserve.

    Actually I would like to see the reverse. It would be interesting to see if Ardell could draft a contract that would get past the initial review of offers without being downgraded. We are very big on advising the clients about both the perceived quality of the buyer’s agent and the buyer’s lender (if any), because either can screw up a transaction. It’s part of the due diligence I mentioned above when reviewing offers.

  123. 123

    Here’s a good example of why you can’t learn anything from the press. The topic is appraisal concerns, and they try to hook the reader with the thought that the seller didn’t accept the highest offer (something that’s hardly uncommon, but whatever) and claim that sellers are turning to cash offers.

    While it’s true cash offers have some advantages, there are other ways around the low appraisal concern–specifically a buyer having extra cash over whatever their loan package would require (e.g. they have 30% and only need 20% for their loan.

    This even fits in quite nicely with the topic of Ardell, since she thinks that just routinely crossing off the language explaining what happens in the event of a low appraisal means that the buyer cannot back out if the appraisal comes in low. A better offer would be one that uses the poorly drafted NWMLS form, and an even better offer would be one simply stating the price at which the low appraisal provisions kick in.

    http://www.cnbc.com/2017/07/24/this-house-had-22-offers-heres-why-the-owners-didnt-take-the-highest.html

  124. 124
    Anonymous Coward says:

    By Kary L. Krismer @ 122:

    It would be interesting to see if Ardell could draft a contract that would get past the initial review of offers without being downgraded.

    I’d bet money that you’re the only person on this forum who thinks that scenario would be interesting.

  125. 125
    uwp says:

    Based on the inventory tracker, it looks like this summer is finally offering some relief compared to 2016 & 2015 in terms of rising inventory rather than dropping (although totals are still 15-20% below last year). Starting to look more like summer 2014 & 2013 when inventory started to build into September & October then tapered off.

    We’ll see what falls brings and if people keep listing (and purchasing) homes at these rates, or you get the more typical seasonality and action slows down.

    Still lots of activity when I was out this weekend in Greenwood/Greenlake, $600k to one million range.

  126. 126
    ESS says:

    By uwp @ 125:<blockquote
    Still lots of activity when I was out this weekend in Greenwood/Greenlake, $600k to one million range.
    ————————————————-

    The activity -lots of open houses, lots of people looking, or both?

  127. 127

    RE: Kary L. Krismer @ 123

    Haha!!! The example you just gave of 30% with only 20% needed you copied exactly from me in one of my previous comments or one of our private conversations. In fact when I told you about it and explained it to you, you hated it. Now you are posting it as if it was your idea in the first place. LOL! You are a hoot! It wasn’t just a comment of mine…it is exactly what I did on two of my recent transactions.
    I’m glad you live and learn, even if you don’t remember that you learned it from me. I don’t need the credit as long as you learned it so you know how to apply it properly.

    I don’t always do the same thing Kary and the market evolves. Do you always recommend the same thing for all clients and for all houses? That’s a bit absurd.

    What people don’t know is that there is a big reason why you pick on me, by name, all the time and never mention other agents by name when saying how “bad” you think they are. Maybe you want to let them in on the secret. :)

  128. 128
    Anonymous Coward says:

    By Kary L. Krismer @ 89:

    RE: Ardell DellaLoggia @ 87 – And you didn’t understand my answer to AC’s question, which he was apparently satisfied with.

    I wasn’t satisfied so much as bored with the discussion. Shorter Kary and Ardell:
    Kary: Waived inspection contingencies/Pre-inspections have risk for the sellers!
    Ardell: In theory, but in the real world I’ve never seen a buyer do that, particularly if the selling agent is smart.
    Kary: You don’t understand what you’re doing
    AC: Aren’t there risks to the seller in evaluating offers based on an assumption of buyers not gaming the inspection clause?
    Kary: In theory, but in the real world I’ve never seen a buyer do that; particularly if the selling agent is smart.
    Ardell: You don’t understand what you’re doing.

  129. 129
    Jamie says:

    Long time reader first time commenter here looking for advice.

    I’m about to list my house in Greenwood after Labor Day. I’ve chosen an experienced agent who is an acquaintance and whom I trust, but I feel like I need other opinions on one strategy – a seller-provided pre-inspection and sewer scope. The argument is that because we are being totally upfront about the condition of the house more buyers will be willing to make offers with confidence.

    I’m handy, re-acquainted with the inspection from when I bought the place 10 years ago, and am not expecting anything abnormal for a house this age that’s been well cared-for, but I’m concerned that we’re just giving buyers ammo to make a lower offer.

    Any thoughts? Other pros/cons?

  130. 130
    uwp says:

    RE: ESS @ 126

    Lots of people looking at the open houses I was at.
    A very scientific methodology :)

    I sound like a Realtor in an Elizabeth Rhodes Seattle Times article.

  131. 131
    Kmac says:

    RE: Ardell DellaLoggia @ 127

    YES!…..
    we want to know the secret…….

  132. 132
    whatsmyname says:

    By justme @ 112:

    RE: justme @ 101

    Plenty of apartments to go around in Pierce and Thurston counties….
    …..Plus, Pierce County is seeing record levels of apartment construction. Apartment vacancy rates in Pierce County in the second quarter of 2017 was 4.21 percent, up from 3.34 percent the year before, according to Apartment Insights, which studies apartment complexes with 50 or more units.”

    http://www.thenewstribune.com/news/business/article162149558.html

    Great article, but did you know that multi-family professionals, (i.e. investors, appraisers, lenders), underwrite apartments with a minimum 5% vacancy charge? They know even a full project will have turnover. 4.21%? – that’s better than perfect.

    Did you see the part where Pierce County median rents are up 17% YOY?
    Or where Thurston County has the lowest vacancies in the Puget Sound?
    Who wouldn’t want that kind of pressure, and a long drive too?
    How much more of this good news can you afford?

  133. 133
    Erik says:

    RE: Kary L. Krismer @ 122
    If I were to bet on the best agent, my money is on Ardell. Ardell is obsessed with real estate. She has taken time out of her busy day to teach you and other less experienced agents about the trade, and now you are turning on her?

  134. 134
    Bubble Trouble says:

    RE: Kmac @ 117

    Did you see the qualification? 3X rent income needed, 3 months bank statements required, no felonies in the past 6 years. Doesn’t sound like they’re in the slumlord business :)

    What I find fascinating is that the rents on these homes is just bit higher than what similar homes go for in the Spoakne/Coeur D’Alene area. Maybe 10-20% more. Yet the same houses, to buy are 50% more expensive, and in some cases a lot more than 50%.

    How on earth are these companies making money?

  135. 135
    ESS says:

    http://nbr.com/2017/07/24/nightly-business-report-july-24-2017/

    Tonight’s NBR broadcast on PBS for those who missed it. At about five minutes and thirty seconds into the program, two interesting discussions about the US real estate market. The first, focuses on Dallas’s really hot real estate market, and why homeowners are taking all cash deals and not the highest offer if it isn’t an all cash deal. Attention non all cash buyers in Dallas area – may have to plan on renting for a while! Then the next segment is with an economist from Seattle (great view of Space Needle to encourage even more people to move here – especially Californians with lots of equity!), discussing a related topic : are real estate appraisals restraining the price of housing. Seattle gets a heads up as one of the stronger real estate markets in the US .

  136. 136

    RE: ESS @ 133

    …and that is why agents have come up with creative ways for financed buyers to compete with cash offers. The sellers get more money and the buyer gets to finance his purchase and win against a cash offer.

    That is exactly what this discussion has been about. It’s a means to an end. Maybe not ideal from every perspective…but a necessity in this market.

    I have seen markets where only cash buyers can own a house. It’s sad. We are winning against that being the majority outcome here.

  137. 137
    ESS says:

    By ARDELL DellaLoggia @ 134:

    RE: ESS @ 133

    …and that is why agents have come up with creative ways for financed buyers to compete with cash offers. The sellers get more money and the buyer gets to finance his purchase and win against a cash offer.

    That is exactly what this discussion has been about. It’s a means to an end. Maybe not ideal from every perspective…but a necessity in this market.

    I have seen markets where only cash buyers can own a house. It’s sad. We are winning against that being the majority outcome here.

    Ardell.

    Glad that people can still get mortgages. My partners and I would have never been able to purchase our first investment property when I was 22 years old. That investment certainly did have a major impact on my subsequent life, and what I was able to achieve.

    What I found to be an interesting discussion in the NBR report was the claim that appraisers are holding down the value of the real estate in certain areas because they are not keeping up with prices. Potential buyers believe the property is worth more (to at least them) by placing higher bids than what the property will ultimately appraise for. I would assume this is not only a problem in the Dallas area, but in other hot markets such as Seattle.

    While there may be apartments coming on line, the gold standard for a majority of potential home buyers is that single family detached house. Apparently, they are not building enough SFHs and certainly not enough of what was once called the “starter” house. I would imagine there are no Levittowns being developed in Puget Sound these days

  138. 138
    Doug says:

    10s minus 3s clocked in at 1.08% on Friday. That is the flattest the curve has been since December 2007. Only 108 basis points to go before we get an early recession warning and Justme will finally be vindicated!

    Until then…stay long!

  139. 139
    Doug says:

    BREAKING: Seattle CS up 1.79% April-to-May. Again, not even close to the rest of the country.

    Best tweet so far: “No bubble, Case-Shiller says, but if I owned a Seattle home I’d cash out and invest in something safe, like bitcoin”

  140. 140

    By Ardell DellaLoggia @ 127:

    RE: Kary L. Krismer @ 123

    Haha!!! The example you just gave of 30% with only 20% needed you copied exactly from me in one of my previous comments or one of our private conversations. In fact when I told you about it and explained it to you, you hated it. Now you are posting it as if it was your idea in the first place. LOL!

    You’re delusional. That is hardly a unique situation and I was well aware of the various scenarios well before you and I discussed it.

    I’m one of the few agents who even understands the math involved or even understood that offering to put 30% down didn’t lessen the low appraisal concern from a seller’s point of view. I was complaining early on about the errors in the local brokerage forms, and unfortunately the statewide forms carried over that error with their extremely poorly drafted low appraisal form.

  141. 141

    By Anonymous Coward @ 124:

    By Kary L. Krismer @ 122:

    It would be interesting to see if Ardell could draft a contract that would get past the initial review of offers without being downgraded.

    I’d bet money that you’re the only person on this forum who thinks that scenario would be interesting.

    The reason I think that would be interesting relates to something I’ve said before. “Whenever someone tells you that they’ve been doing something for 20 years the next thing out of their mouth will be nonsense.” In all my life that has been universally true. People who are insecure in their abilities fall back on trying to convince others of their abilities by pointing out how long they’ve been doing something. There’s no other reason to disclose that information. It would be like disclosing your place of birth before giving an opinion. Having done something for years doesn’t mean you’re good at something, it only means you’ve been doing it for years.

    Back when I was an attorney there was little or no correlation between how long someone had been practicing and how good of an attorney they were. A crappy attorney does not improve with age. I’ve also found a low correlation to how long someone has been an agent and ability. In both professions though it amazes me how some can last for years without understanding even basic concepts.

  142. 142

    By Jamie @ 129:

    Long time reader first time commenter here looking for advice.

    I’m about to list my house in Greenwood after Labor Day. I’ve chosen an experienced agent who is an acquaintance and whom I trust, but I feel like I need other opinions on one strategy – a seller-provided pre-inspection and sewer scope. The argument is that because we are being totally upfront about the condition of the house more buyers will be willing to make offers with confidence.

    Both are bad ideas IMHO. If you do a seller pre-inspection you will have to decide what to do with every item discovered by the inspector. Either fix and/or disclose (or decide it’s not material, which is risky). Also, only a foolish buyer would rely on your inspection. I once even had a buyer back out because when they did their own inspection it was so much different than the seller’s inspection that they felt deceived by the seller and didn’t want to deal with them. So there the seller inspection clearly worked against the seller.

    But the real question is which would leave a seller better off price-wise? Is a buyer going to offer you more not knowing the condition of the house beyond what they can observe, or knowing that the house needs $20,000 of repairs? And if they discover that the house needs $20,000 of repairs from their own inspection, are they going to walk or are they going to just ask for a little bit and suck up the rest? The latter is the more frequent outcome in my experience.

    As to sewer scope, only about half the buyers tend to do those. So if your system has a problem there’s only about a 50% chance it will be discovered, but if you do it there will be a 100% chance (ignoring the fact you’ll also have to decide whether the condition is material). Assuming you don’t do one and the buyer does, that gets you back into the same scenario as above as to which would result in a higher price and which will result in a buyer backing out.

    Another question though is also over the scope of the seller protections of Douglas v. Visser? If a buyer has a right to do a sewer scope (as is typical if there’s an inspection contingency) and they don’t do one, is the seller protected? Or does their inspection actually have to discover at least some evidence of the problem? Personally I think that’s an open question, awaiting further court decisions.

    Yet another Douglas v. Visser issue is if you do an inspection as a seller and the buyer doesn’t do one relying on your inspection, are you protected by the Douglas v. Visser line of cases at all? Or do you just open yourself up for additional exposure as being the party who picked the inspector? I can tell you that real estate agents typically give the name of three inspectors because they don’t want to be responsible for having picked the inspector. If that’s the case, why would you want to have that same responsibility? Rather than reducing your liability, you very well might be increasing it.

    I did have a situation recently where the seller did their own inspection before contacting me. The seller then did a number of repairs over a course of weeks, and we had to deal with the Form 17 issues (which was complicated by the fact that the inspector would not allow their report to be attached to Form 17–if you do hire in inspector check their policy beforehand). The seller didn’t, however, fix everything discovered by the inspector, and the buyer didn’t ask for any repairs. Was the seller better off in the end? Maybe all their effort was wasted, but undoubtedly part of it was.

    Obviously there are a lot of legal issues involved, so I need to state that the above should not be considered legal advise as to your specific situation with your specific property and that it may be prudent for you to seek out a real estate attorney to advise you on your specific situation. Also not specific legal advice, but you can get a lot of information from these videos.

    https://www.youtube.com/results?search_query=Annie+fitzsimmons+seller+inspections

  143. 143

    RE: Jamie @ 129

    Sorry your comment went by without reply for so long. It doesn’t appear that your agent is on the fence about this and asking you to 2nd guess him. Always best to let your agent proceed with his confidence intact whenever possible. In your area there have been several, recent high bid ups where the buyers were supplied with both a sewer scope and a home inspection and some that did not. I do not see any reason for you to challenge your agent’s recommendation whether I would personally recommend that or not.

    This time of year you are more likely to have buyers who may be tired of shelling out money, time after time, for pre-inspections without winning in multiple offers. Your agent is your best source of info and since you trust that agent, continue to trust him to have your best interests in mind all the way through to the end.

    It should work out well as long as you don’t over price. In other words don’t follow his recommendation about inspections but then 2nd guess him by jumping his recommended price up to an amount that would be counter to the multiple offer strategy set up with the pre-inspections. Your agent knows the product better than anyone else and this decision is the type that is almost always product driven.

    Good luck!

  144. 144

    By ESS @ 135:

    http://nbr.com/2017/07/24/nightly-business-report-july-24-2017/

    Tonight’s NBR broadcast on PBS for those who missed it. At about five minutes and thirty seconds into the program, two interesting discussions about the US real estate market. The first, focuses on Dallas’s really hot real estate market, and why homeowners are taking all cash deals and not the highest offer if it isn’t an all cash deal. Attention non all cash buyers in Dallas area – may have to plan on renting for a while! Then the next segment is with an economist from Seattle (great view of Space Needle to encourage even more people to move here – especially Californians with lots of equity!), discussing a related topic : are real estate appraisals restraining the price of housing. Seattle gets a heads up as one of the stronger real estate markets in the US .

    LOL, that’s basically the same ignorant CNBC reporting I panned in post 123 above, which started the low appraisal discussion.

    On the topic though, as I’ve mentioned in the past low appraisals are more of an issue with condominiums, because the appraiser won’t feel as free to make adjustments for units which are basically identical. I even saw that happen recently on a condo my buyers viewed, where the location of the unit was very special relative to other units. Fortunately that wasn’t my seller or my buyer–just something I heard about.

    Appraisers are more inclined to make adjustments on houses where they are less likely to be identical (although in newer neighborhoods, maybe not so much). Even on SFR though they are a concern, so a buyer who will commit to bringing more money down may win out over a higher offer that cannot.

    Anyway, getting back to the CNBC article, cash has other advantages, such as being able to close quickly and not having to worry about appraiser required repairs. But their reporting on low appraisals is typical low quality reporting on a topic they don’t understand.

  145. 145

    By ESS @ 137:

    What I found to be an interesting discussion in the NBR report was the claim that appraisers are holding down the value of the real estate in certain areas because they are not keeping up with prices. Potential buyers believe the property is worth more (to at least them) by placing higher bids than what the property will ultimately appraise for. I would assume this is not only a problem in the Dallas area, but in other hot markets such as Seattle.

    Again, more of an issue with condos. I’ve even seen appraisers use same complex comps that were almost a year old and not make any adjustment for market conditions.

    For houses I’ve been surprised how well the appraisers have kept up with the market. That’s not to say though that just because some buyer is willing to pay X for a property that the appraiser should value it at X. There are probably a lot of transactions that should not appraise.

  146. 146

    By Ardell DellaLoggia @ 143:

    RE: Jamie @ 129

    Sorry your comment went by without reply for so long. It doesn’t appear that your agent is on the fence about this and asking you to 2nd guess him. Always best to let your agent proceed with his confidence intact whenever possible. In your area there have been several, recent high bid ups where the buyers were supplied with both a sewer scope and a home inspection and some that did not. I do not see any reason for you to challenge your agent’s recommendation whether I would personally recommend that or not.

    Ardell’s analysis in a nutshell: Others are doing it so it’s okay. Monkey see, monkey do.

  147. 147

    RE: Ardell DellaLoggia @ 15
    Follow the Boeing Money

    Its outsourced out of Seattle…

  148. 148
    N says:

    By Bubble Trouble @ 134:

    RE: Kmac @ 117

    Did you see the qualification? 3X rent income needed, 3 months bank statements required, no felonies in the past 6 years. Doesn’t sound like they’re in the slumlord business :)

    What I find fascinating is that the rents on these homes is just bit higher than what similar homes go for in the Spoakne/Coeur D’Alene area. Maybe 10-20% more. Yet the same houses, to buy are 50% more expensive, and in some cases a lot more than 50%.

    How on earth are these companies making money?

    Because they bought in wholesale blocks when prices were 50-100% lower. Your right, if they were buying at retail prices today the numbers don’t work.

  149. 149

    By Jamie @ 129:

    Long time reader first time commenter here looking for advice.

    I’m about to list my house in Greenwood after Labor Day. I’ve chosen an experienced agent who is an acquaintance and whom I trust, but I feel like I need other opinions on one strategy – a seller-provided pre-inspection and sewer scope. The argument is that because we are being totally upfront about the condition of the house more buyers will be willing to make offers with confidence.

    One more thought on this. Most the issues that are deal breakers are going to be in one of three places: (1) Your attic; (2) Your crawlspace; and (3) The sewer line/septic system. Of course that’s not complete, but hopefully a buyer will have noticed something patent like major foundation cracking before making an offer.

    Inspectors I deal with often advise buyers to periodically check their attic and crawlspace, at least once a year if not more frequently. Checking an attic can be as simple as sticking your head up and looking around with a flashlight, although an inspector would actually get up in there. But by doing the minimal checking you’d have some idea if there are any major issues (e.g birds in the attic, rodents in the crawlspace, etc.). The crawlspace would likely require a bit more crawling around, but it depends on the house. Of course you’ll still have to fill out a Form 17, and that will be affected by what you find, but my point is you might not have to have a full inspection done to get a good idea of whether your house has serious issues. And you won’t have to deal at all with deciding about the 20 or 30 items an inspector is almost certain to mention in their inspection report. So the point is that just looking around your house in ways you should have been doing anyway is another alternative course of action to consider.

    And yet another thing. I’m seldom if ever in the camp that something either should or should not be done. More in the camp that a seller should decide based on complete information (which does not include an analysis of what practices are common). I did see one use of a seller pre-inspection which I thought was probably good. A flipper bought a house and did all the typical cosmetic fixes, but seemingly they had not conducted an inspection before they bought (perhaps it was a foreclosure–I didn’t check). The inspection report indicated that the sill plates on the foundation were badly rotted. I found no evidence of that inside our outside the house even knowing of the condition, so a buyer would have likely made an offer without knowing of it. That is the type of thing that would likely get a buyer to back out, so it was probably a good idea to have it disclosed in advance, and lessen the chance of that occurring. This creates somewhat of a chicken and egg situation though, because without doing the inspection you wouldn’t know of the condition. But perhaps this flipper did learn of it during their remodel work. If so, their decision to get the pre-inspection done was probably a good one. One the other hand, that listing did go straight pending, so perhaps this flipper will have the additional liability concern that I mentioned because they did the seller inspection. The point is there are no right answers in every situation.

  150. 150

    RE: Kary L. Krismer @ 146

    That’s an interesting observation. Checking the actual and recent and local to the question data on the subject is a negative? My first thought was to check the available data. Most people think data is a good thing.

  151. 151
    Jamie says:

    RE: Kary L. Krismer @ 149

    Thanks for the thoughtful replies. I agree that there is no right answer. I’m hoping to find that intersection of good strategy for late-in-the-year fatigued buyers and reducing liability. My agent will be arranging for the pre-inspection, but I would assume that if I’m disclosing everything I know about the house (I’ve had my head in the attic and have improved every surface but the roof), providing an inspection report (can I include wording stating it’s informational-only to reduce my liability and place inspection responsibility on the buyers?), and *not* discouraging buyer inspections/pre-inspections, that should have me covered.

  152. 152
    Jamie says:

    RE: Ardell DellaLoggia @ 143

    Thanks, Ardell. The upside of this strategy seems to be exactly that – buyers who have spent the summer throwing offers at houses might be more comfortable giving it one more shot with a house where they’re provided with more information.

    My fears of the downside are that 1) Buyers that have not been doing pre-inspections with their offers, and have maybe never seen an inspection report, might be freaked out by seeing one for the first time. My house is a starter home, I’m anticipating first-time buyers. 2) A major issue is discovered – most likely with the sewer scope thanks to several mature trees – that will cause a big hit to offer amounts.

    I’m going to be pricing at the lower end of what my agent has recommended and let the market do its thing.

  153. 153

    RE: Jamie @ 152

    In my experience, and more in North Seattle than the Eastside, the sewer scope is needed and is so intrusive that the process done by many as pre-inspections could be more problematic than many home inspections. So once and shared, given we all use the same two companies for that, likely best. Somewhat like the HVAC inspect and service prior to listing or Septic Inspection prior to listing, it’s usually something that will require you to fix any problems you discover prior to listing. So not a mere “disclosure” issue. If you’re not going to fix it, don’t go there.

  154. 154

    By Ardell DellaLoggia @ 150:

    RE: Kary L. Krismer @ 146

    That’s an interesting observation. Checking the actual and recent and local to the question data on the subject is a negative? My first thought was to check the available data. Most people think data is a good thing.

    So if 30% of people are going 10 mph over the speed limit, that’s a good thing?

    Or on the real estate area, crossing off the information verification period language? Probably more agents are doing that than recommending seller pre-inspections, but that doesn’t mean it’s a good thing for the seller. It shouldn’t make their buyer’s offer more attractive, but they see it done, so . . .

    That gets to the heart of what I mean by “monkey see, monkey do.” Agents just do things because they see it being done and don’t even being to stop and think about the positives and negatives of actually doing such a thing.

    Edit: Here’s another common thing. Attaching a copy of an earnest money check to a purchase and sale contract. Really a bad practice, and totally unnecessary, but very common.

  155. 155

    By Jamie @ 151:

    RE: Kary L. Krismer @ 149

    Thanks for the thoughtful replies. I agree that there is no right answer. I’m hoping to find that intersection of good strategy for late-in-the-year fatigued buyers and reducing liability. My agent will be arranging for the pre-inspection, but I would assume that if I’m disclosing everything I know about the house (I’ve had my head in the attic and have improved every surface but the roof), providing an inspection report (can I include wording stating it’s informational-only to reduce my liability and place inspection responsibility on the buyers?), and *not* discouraging buyer inspections/pre-inspections, that should have me covered.

    The one place I would be most concerned it increasing your liability is if the buyer doesn’t do one because they see yours. That it’s your agent selecting the inspector doesn’t change that–it just means you would have a claim against your agent if the buyer sues you. Hopefully your agent is with a larger firm that has malpractice insurance. I would recommend that in any event. Unfortunately the Department of Licensing doesn’t disclose malpractice coverage on their website the way the Washington State Bar Association does. I could go even further on that topic, but I think it would be more a topic for agents choosing between firms.

  156. 156

    By Jamie @ 152:

    My fears of the downside are that 1) Buyers that have not been doing pre-inspections with their offers, and have maybe never seen an inspection report, might be freaked out by seeing one for the first time.

    Thank you for that. I’d never thought about that downside, but I think it’s a legitimate concern.

    One thing to keep in mind, your best offers are not necessarily going to come from buyers who have been looking for a long time. There are constantly new buyers coming on the market. That said, a buyer who has lost out on at least one offer is more likely to offer a higher price. At some point they get desperate, and that’s a good thing for sellers.

  157. 157
    Sid says:

    Seattle is special – 13.3% YoY change. Next is Portland at 8.9%.

    https://www.geekwire.com/2017/seattle-home-prices-rise-twice-national-average-u-s-tech-hubs-see-biggest-gains/

    According to Blitzer, U.S. home prices continue to climb and are outpacing both inflation and wages. Does that mean we’re headed toward a bubble? No, says Blitzer. He blames populations growing faster than housing supply.

    “Housing is not repeating the bubble period of 2000-2006: price increases vary across the country unlike the earlier period when rising prices were almost universal … The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices. New home construction, higher than during the recession but still low, is another factor in rising prices.”

  158. 158

    RE: Kary L. Krismer @ 154

    One of the data points was a very recent “starter home” in the same area that bid up almost $200,000 after having provided both the inspection and the sewer scope. That’s a relevant data point…not a “monkey see monkey do”. Research is important and relevant like-kind situations are better than guessing.

  159. 159

    By Ardell DellaLoggia @ 158:

    RE: Kary L. Krismer @ 154

    One of the data points was a very recent “starter home” in the same area that bid up almost $200,000 after having provided both the inspection and the sewer scope. That’s a relevant data point…not a “monkey see monkey do”. Research is important and relevant like-kind situations are better than guessing.

    I think you’re still having a problem understanding what monkey see monkey do means. Also that isn’t really nothing beyond one data point because you don’t know what the result would have been if marketed without that. I’m not suggesting such properties will never sell, but I have questioned which way they would sell for more money. AND it doesn’t address my biggest point–increased seller liability after the sale.

    But how about another example of monkey see, monkey do? Back in the day it was very common to reduce the price of short sale listings based on a schedule (e.g. $10,000 every two weeks). Lots of agents were doing that, and I and a few others were complaining about how stupid and annoying that was. It pretty much stopped once Micheal Hellickson and his wife both lost their licenses for 10 years, largely based on that practice. Fortunately I think they were the only two monkeys to actually be sanctioned over that.

    http://www.seattletimes.com/business/decision-to-yank-hellicksons-real-estate-license-upheld/

  160. 160
    Minnie says:

    RE: Jamie @ 152

    Short answer is “no” on both. But I want to offer you some advice….selling your home is a stressful process….do not make it more stressful on yourself. It will be over before you know it! :-)

    Sewer Scope: The life of a side sewer is about 80 years. Most Seattle homes were built before the 60’s. Many, many Seattle side sewers are at end of life and will begin to rapidly degrade if they haven’t already. My opinion on this is to suggest you do not do a side sewer pre-inspection. If your water and sewer lines have been running well since you have owned the home you have no reason to believe that they are in poor condition. Let a buyer do a side sewer pre-inspection if they want to do one. It isn’t that intrusive if you have a clean-out (side sewer access hole) on the outside of your home.

    Seller’s pre-inspection: My experience is that you can take 10 inspectors and get 10 different inspection reports. Some buyers like to use an inspector that they trust and have experience with, some buyers after having paid for many inspections will begin to see a pattern and will be confident in doing it themselves, and some buyers have contacts in the industry who will do an informal inspection at a reduced cost, etc, etc. What I am ultimately saying is that an inspection is highly subjective and by you choosing who does it doesn’t make it that much more lucrative to prospective buyers, please trust me.

    If your home is in good condition, I personally would let a buyer decide if they will do a pre-inspection of any kind.

    If your home is a tear-down, in visibly poor condition (such that a pre-inspection identifying issues may actually put a buyer at ease….which seems rare) then that is a different situation but I’m guessing your home is in a nice condition seeing as you are a prudent enough home owner to even consider getting a pre-sale inspection done :-)

  161. 161
    Jamie says:

    RE: Minnie @ 160

    That’s a good information about inspectors and subjectivity. I almost wonder if providing a seller inspection – and thus implicitly discouraging buyer inspections – would raise suspicions about disclosure and trustworthiness.

    I do feel confident about a good sale. It’s a solid house with good updates in a good area. But yeah, it’s my first sale and after being forced to sit on this thing through the housing crisis I don’t want any more bumps in the road :)

  162. 162

    By Jamie @ 161:

    That’s a good information about inspectors and subjectivity. I almost wonder if providing a seller inspection – and thus implicitly discouraging buyer inspections – would raise suspicions about disclosure and trustworthiness.

    I would add to subjectivity the quality of inspector and also quality of report. Many of them don’t know what they’re doing and even for ones that do some of their reports are not very informative/well laid out.

    As to your last sentence, if your hope is to go without a buyer inspection, that’s a risky game for the reasons I’ve mentioned above. And also as I mentioned above, if a buyer does their own inspection and then it doesn’t match up with yours, your credibility isn’t so much at risk, as is the buyer’s willingness to deal with you further.

    To go into further detail on the one where my client did back out for that reason, I don’t want to go over the major items not mentioned in the seller’s inspection report, but just one very small item. The seller’s inspection didn’t mention lack of GFCI outlets in the kitchen. Who here has ever seen an inspector fail to mention missing GFCI outlets? That the seller’s inspector didn’t mention those caused me to agree with my client’s assessment of the seller when he told me he wanted to back out.

  163. 163
    Geoff says:

    RE: Bubble Trouble @ 110

    Thank you for some good points:

    1. Of course one monthly data point does not make a trend, I completely agree. I am highlighting this point because it is unique in magnitude since ’09 and because it is one of only a couple of negative points since then.

    2. You can hire a concert pianist on the moon if you are willing to pay enough. I have seen no data to show that compensation is spiraling skyward at the same pace as housing. I can imagine newly minted engineers being keen to move here a few years ago because they could live large and buy fancy boardgames and artisanal pizza cheaply. Its different now though, and bearing in mind the weather and traffic, with increasing house (and everything else) prices here the big career in silicon valley is probably looking better. Anecdotally non-engineering wages could be more of an issue as expectations are even more detached from the increased cost of living.

  164. 164
    mountainfamily says:

    By Ardell DellaLoggia @ 143:

    RE: Jamie @ 129

    This time of year you are more likely to have buyers who may be tired of shelling out money, time after time, for pre-inspections without winning in multiple offers. Your agent is your best source of info and since you trust that agent, continue to trust him to have your best interests in mind all the way through to the end.

    Reading the legal side of this discussion was interesting. I’m just a jaded would-be buyer in NE Seattle. I really appreciate when inspections and sewer scopes are provided. We’ve paid for a few pre-inspections and been outbid, despite our offers being way over asking. (Maybe we’ve made the mistake of going for “attractively” priced houses that listed in the 500s. Maybe we should just swallow hard and go for some piece of crap cottage that is priced “realistically” at $700k.) I was relieved when the last house we looked at had a pre-inspection available. OF COURSE I realize there may be more issues with the house, and if we succeed in buying one we’ll probably do another inspection or have a contractor walk through with us. But houses around here are so run-down and overpriced anyway that we assume we’ll be taking full responsibility for its flaws and putting in work and money. (Which makes me question if we should even be trying to buy…)

    In my non-expect opinion, providing a pre-inspection will probably make your listing much more attractive and friendly, and will get you more desperate buyers who just want to be done with this mess.

  165. 165

    RE: mountainfamily @ 164

    When I am working with a buyer client, I like houses that have a pre-inspection and sewer scope available but ALSO say “Use 35P” for Pre-Inspections”. For me, every buyer is different and I know what the buyer needs more than the seller and the seller’s agent. Sometimes the sellers’ inspection is good enough. Sometimes it highlights the one thing I need an expert opinion on so we can bring a Structural Engineer instead of a general home inspector. Sometimes I recommend a separate, independent inspector and sometimes I don’t.

    To me a Seller Pre-Inspection is just an elevated Seller Disclosure and does not and should not preclude the buyer from doing their own Pre-Inspection. In fact it should clearly state that they are welcome to do one so that if they rely on the seller’s pre-inspection it is only the same as the Seller Disclosure Form given the buyer waived the right to conduct their own inspection.

    From the seller side I usually don’t recommend them. I do like HVAC pre-inspections and possibly some other items of note. But I don’t like putting the buyer or buyer’s agent in a position of having to interpret someone else’s cold full inspection or sewer scope report.

    The only time I do one is if the seller can afford to and wants to fix anything that might be defective. Then yes. But when representing a seller vs a buyer I don’t like to open Pandora’s Box unless the seller is prepared to deal with whatever monster may pop out prior to listing the house for sale.

    One thing I don’t like is a seller’s Pre-Inspection report all scribbled up with “fixed” on some items. If a seller does a pre-inspection and then fixes things, he should have the inspector come back and check those things and remove them from the report if they check out.

    In past years a lot of the late buyers are those with 10% down or 15% down or even 20% down but not an unlimited ability to compensate for a low appraisal. Those are the buyers who have already spent too much money on failed inspections. My lower down buyers were successful in North Seattle later in the year vs early due to less competition. But I have to admit that two of those got the house because the seller over-disclosed via a pre-inspection and chased the competition away. I don’t see it as a bad thing as my clients were able to get the house as a result.

    All ways lead to sold… There are really no wrong answers in this market. Just what is better for this seller or for this buyer given their particular set of circumstances and the specific product.

    Last week I wouldn’t write an offer without a pre-inspection because the one thing that could be wrong, based on my research and on site observations, could not be covered by a warranty and could not be discovered without a thorough examination of the roof under-layments vs shingle. Beautiful roof…but something not quite right at the same time. In that case a pre-inspection that said “new 50 year roof!” wouldn’t have been sufficient. Once in a blue moon a great roof that is not old is “bad” and there are some clues to at least investigate. This more The Eastside than Seattle. Seattle has a different set of suspect items, more often the foundation in Seattle than on The Eastside.

    Sometimes I have a client who doesn’t understand anything about a house and consequently can’t interpret the report. In that case the buyer needs to hire their own inspector. So a seller providing a pre-Inspection should still allow for buyers to do their own pre-inspection. Not all are equally able to comprehend the written report without having been at the inspection.

  166. 166
    Bubble Trouble says:

    By Geoff @ 163:

    RE: Bubble Trouble @ 110
    Its different now though, and bearing in mind the weather and traffic, with increasing house (and everything else) prices here the big career in silicon valley is probably looking better. Anecdotally non-engineering wages could be more of an issue as expectations are even more detached from the increased cost of living.

    Everyone in ever city thinks THEIR traffic is the worst. If you want to live in a big city, bad traffic is a part of life. In Seattle, in Dallas, in Las Vegas, in LA, Atlanta, SFB Bay, you name it.

    As for SV looking better….taxes in CA are much worse than Seattle. For starters, no income tax vs 10% in CA. Electricity is 30-40% less. Car registration is lower. As expensive as Seattle is, compared to SV, it’s still cheaper (for now).

  167. 167
    Bubble Trouble says:

    Just a note about the “cash” buyers from overseas. A lot of them (most maybe) take out loans overseas. So yeah they pay cash for the house, but they are still in debt. This is a global bubble, just like the last one was.

    And same with American “cash” buyers. How many of them simply refinanced a 1st home and took the cash out to buy a second home? Again technically they are “cash” buyers, but they’re really not.

  168. 168
    Bubble Trouble says:

    By Sid @ 157:

    Seattle is special – 13.3% YoY change. Next is Portland at 8.9%.

    According to Blitzer, U.S. home prices continue to climb and are outpacing both inflation and wages. Does that mean we’re headed toward a bubble? No, says Blitzer. He blames populations growing faster than housing supply.

    “Housing is not repeating the bubble period of 2000-2006: price increases vary across the country unlike the earlier period when rising prices were almost universal … The small supply of homes for sale, at only about four months’ worth, is one cause of rising prices. New home construction, higher than during the recession but still low, is another factor in rising prices.”

    Oh, an “expert” says there’s nothing to worry about. Phew. All is well everyone, an analyst said we’re good to go. And we all know analysts are NEVER wrong. Well except you know, those minor times they were 100% wrong like the .com bust, housing bubble 1.0, the election, things like that. But aside from that, they totally get predictions right. LOL.

    I’ve said numerous times I have no idea what will happen. But can we all please stop treating jokers like Blizter as some savants that know all? These are the same analysts who swore up and down pets.com’s valuation was low and you should BUY BUY BUY. Wake up folks.

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