Email from real estate agent today

[jggg]

Hi Josh!
I guess you talked to the Bank today! Personally this is the best time to buy, the market has already starting to change for the better. Us agents are very busy right now and my office is lined up with cars from buyers and sellers. IF you wait too long you will be in a market not willing to bargain as much anymore.
Some sellers that can are taking the homes off the market and renting them out instead of reducing the price. The sellers that have to sell are what is out there now. Check out the number of rentals out there now. That brings the inventory down and the amount of buyers have tripled in the last 6 weeks. The media is about 2-3 months behind what is really happening.
If you would like to look at any of these give me a call. I would like to see you take advantage
of your buying power while you still can.
Andrea xxxx 206-795-xxxx
PS Hope you where able to enjoy the weekend!

View Listings

Provided by:
Andrea xxxxxxxxx
John L. Scott R.E.


Is it me or is she sniffing glue? The rentals houses in my area (kent) are renting at $1200-$1500/month and similar houses are listed for $300-450K. This still looks like a disconnect in rent/PITI to me even though the asking prices have come down 5-10+% already in this area.

Example, new construction sold last year for 499K, exact same house next door now listed at 449K plus incentive of 10K. Many new developments in Kent and Covington with no traffic as of last weekend and many are still building at this time. All homes I looked at had price reduced signs and still no traffic!

Wake up RE agents. We who are informed will not fall for this sales tactic. I myself am in sales (successful I might add) and never use pressure or scare tactics on customers. What a shame she has resorted to this technique. I am sure to NOT use her in the future when I decide to buy.

J

[david_mcmanus]

What is it with Realtors(R) (real estate professionals) and lack of command of the English, languag? Don't be to stupid! Its a grate time to bye!!!

[crucifiction]

You should reply:

If the market is so hot why are you cold calling me? Don't you have customers lined up out the door you can be helping instead?

[jggg]

my reply...



Andrea,



Thanks for sending me the listings. I have decided we will rent something for a year and look again next year. I am finding larger and nicer townhomes and houses that are renting for $1000-$1500 per month. This is a significant savings relative to the asking prices of similar units for sale (example we are looking at a very nice 2000sqft home that is in excellent condition renting for $1500/month and a similar homes for sale are asking $300-$400K. After PITI and correcting for interest and tax write-offs we will still be saving $600-$1000/month by renting. The property we met at in Kent Shires has a 3+2.5 unit renting right now for $1050. If we were to buy the unit you showed us we would be paying $1346 in PITI, $78 per month in PMI insurance (assuming 10% down and 6% interest rate), and $196 in HOA dues for a smaller unit. That is $600 more per month or $6600 a year. We would not be able to make back $6600 in tax write-offs (remember I get a $5000 standard deduction as well).



I am sorry but the prices need to come down to historical levels where you can buy a property for the approximate price of renting. It has been this way in the past and I feel it will be this way in the future. The thing that allowed people in the past to buy was the ability to save a substantial down payment of 20%. All the properties I looked at over the past 2 weeks have been reduced about 10% from their original asking prices and there is still no interest.



I am glad to hear you are getting busy and people are starting to show interest, both buyers and sellers, but this is not what I have seen first hand or what the many RE agents I have been speaking with have told me. I understand there is a demand to buy right now but it is not demand that will allow people to purchase a home...It is the ability to obtain financing. The current conditions for obtaining this financing have cut out a large pool of potential buyers that have no substantial down payment.



I understand that the number of homes being taken off the market are rising, therefore reducing inventory, but inventory is higher now than at any time in any previous April EVER. At the same time, sales are down, pending sales are down, prices are down (a trend forms). Besides, the increase in rentals has brought DOWN the price I can rent an equivallent house for. This just makes renting make more sense for the time being. Eventually home sellers will have to dramatically lower the prices or prople will just keep renting and saving for the future.



If you find some desparate seller for me I will look at the property and make what I feel is a fair offer. If they have lived in the house for more than 7 years and have not HELOCed their equity, they should be in a position to aggressively lower the price. If they are in a short sell position, they are most likely an investor who made a bad bet and will most likely lose the house to the bank unless they bring money to the table (ie. a bad investor). If, however, they truely must move for job, medical, or unfortunate personal related reasons, they have my sympathy but are in the same boat as the investors unless the bank agrees to take a substantial loss.



I also don't agree that the selling market will be unwilling to bargain as much. As stated above, the financing is the problem here. More buyers that are unqualified don't increase the demand side of the equation. King County alone has over 15K listings (SFR and condos) and that doesnt even include new construction!!! The sellers will be lowering prices (already happening) and praying they get offers within 5% of their asking price (competing with new construction who is offering incentives and price reductions). Once the sales begin to accumulate at under asking price, the future listings will have to be listed an 5% under previous comps to be competitive. Currently the houses selling are at or below 2006 levels, so this is already occuring. This is the way it happened on the way up and this is the way it will happen on the way down.



If you look at the way markets correct historically, you will see they tend to over correct (ie. we will have much lower prices) before they get back to the normal rate of appreciation (historically appreciation is about the rate of inflation). At the rate we are going in the Seattle area, we will be at negative 10% year over year prices by the end of the summer. Kent and Covington will correct more as they are the burbs (rising gas prices make it more attractive to live closer to city centers and jobs) and Seattle proper should hold up a bit better.



I don't really listen to the main stream media (news media) to get my information on the housing market. I use publically available raw data and draw my own conclusions. Listening to any source with an agenda (the news, NAR, or home builders, RE agents) leads to a story with a spin/bias (see David Lereah and Yun from NAR). Even my own conclusion have a bias as I would like to buy a home at a lower price. What I can't do, however, is let that bias corrupt my conclusions. Fundamentals are what drive ANY system. The easy credit of the past 8 years has added a catalyst to the system and it is now correcting, just as any natural system does. Housing is no different. It will correct to its long term average and be back in line with income (3x median income = median home price).



Add to this we are in or entering what looks to be a very serious recession by looking at the fundamentals of the economy and the banking system, even here in Seattle. Look at WaMu and Boeing as local examples. This will add the the credit problems nationwide and locally. Seattle is not special.



Please don't take any of this as a personal attack, it is not meant as such. I am just letting you know why I have made my decision and on what that decision was based. You were a delight and Jennifer and I were pleased to meet you. If you can think of something I am missing please let me know and I will take it into consideration.



Best regards,

[Ubersalad]

is Andrea an alias of david losh?

[ira s]

Great letter, jggg.
If real estate agents are so well informed, months before the media is reporting stuff, where was she 18 months ago? Calling the peak, you suppose?
I was in a real estate investment class almost 2 years ago, a class full of agents, and the constant topic was "is it a good time to buy?"
I was the lonely pariah saying that we were going to see declines, and pretty soon.
Is it a good time to buy? Unless you're finding a great bargain, no, not in Seattle.
Maybe Reno or Little Rock, but not here.

[Ubersalad]

ira, you are a crappy RE agent. We all know that it's always good time to buy, and real estate price appreciates in a linear line, what happened in the last 4 years will continue to go up. We just set the new baseline and all those years before is due to Seattle market being undervalued.

[jggg]

Thanks Ira. I tried to not be mean in the letter and I hope I wasn't. I just don't think she understands the world as it exists today. When I looked at the place she was showing she offered me articles on why now was such a good time to buy and how seattle would never see a recession because of Boeing and MS, and WaMu. I almost laughed and my Fiance had to hit me to stop. I spoke with another RE agent last weekend at a new construction open house and she didn't know basic things about down payment requirements, short sales, or FHA loans and she was clueless about why the prices were going down. I'm not sure if she isn't supposed to answer those questions but I was picking her brain to see what she knew. Turns out it wasn't much. Oh and here's the kicker...She actually started the conversation with, "Of course its a great time to buy a house"...but I don't think she believed it herself. She was cute though...





Good luck, we're all counting on you...

[jggg]

Another thought...Is it just my friends or do all of your friends who currently own a house try to convince you to buy a house even in todays market? I have some come at me with...dude you should get into one of those Lease to own deals...you are just throwing your money away on renting you know.

I have recently educated/brainwashed my Fiance on why we are absolutely not buying anything right now. She is, however, being pulled the other way at the same time by all her friends who make half what we do and have recently bought homes. I tell her, do they have any disposable income? NO. Do they struggle to make the mortgage payment? Yes.

Lesson over.

[ira s]

It's true. New homeowners want to convince their friends to join the party and buy also. Is it simply that misery loves company?
No, I think it's more like they don't think you'd be interested in what they're interested in now, they don't think you'd like to give up talking about music, books, politics, movies, etc and start talking about lawnmowers, dishwashers, and flooring.

[mukoh]

I see plenty of non investor sellers right now making drastic drops to sell their houses. A friend of mine got himself a house in kirkland for $80k off its asking price, of $549k. He is 12 minutes from "M" his workplace and is loving it.

Its all a matter if you can't afford it then don't buy it. Just rent.

[davidlosh]

WTF, why did the ubersalad involve me in this.

two years ago i was selleing property, i told every body i knew to sell and bank the cash.

is now or in September a better time to buy, let's see...

Barrack Hussein Obama in a head to head contest with John McCain (sp?) a decorated war hereo. really let's speculate about that a while.

i really don't think any one would confuse me with fluff and fold Real Estate sales strategy.

[TJ_98370]

...Another thought...Is it just my friends or do all of your friends who currently own a house try to convince you to buy a house even in todays market?...

jggg - not to sound too harsh, but I believe your friends are seeking to relieve their own post-purchase anxiety by convincing you to buy and thus consequently, justify their own actions. You're thinking for yourself. Sometimes that's unpopular.

[deejayoh]

[Ubersalad]

Funny how he called me out on making fun of him. For the longest time I thought he was just ignoring me...I guess he never saw my previous comments about him.