Link Roundup Trio: Condos, Lies, Lawsuits

Here’s a minor roundup post for you, with a few stories from the last few days that are worth a brief mention:

After selling just 17 out of 114 units, an in-progress condo complex near Seattle Center will instead be completed as “luxury apartments.”

In recent months, developers have shelved plans to convert several Seattle apartment buildings to condos and changed some new projects from condos to apartments. Another example of a new apartment project that was once condos is Aspira, a 37-story tower at Stewart Street and Terry Avenue, by Los Angeles developer Urban Partners.

Developers have attributed the shift to a glut of announced condominium projects, skittishness among the investors who fund condo towers, and an apartment supply that’s shrinking because of conversions and a lack of new construction since the dot-com meltdown in 2001.

Apparently, the Skagit County real estate market is even more special than Seattle, because up there, real estate agents claim that the worst is already over.

Despite continued fallout from the subprime mortgage markets and growing talk of a recession, local real estate professionals believe that the worst may already be over for the Skagit County housing market.

Looking back, the low point came sometime in spring 2007.

And also entertaining is this one from today’s New York Times: Feeling Misled on Home Price, Buyers Sue Agent (also reprinted in the P-I).

CARLSBAD, Calif. — Marty Ummel believes she paid too much for her house. So do millions of other people who bought at the peak of the housing boom.

What makes Ummel different is that she is suing her agent, saying it was all his fault.

Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission.

They’re also talking about this one over at the Seattle Real Estate Professionals blog today.

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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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.

104 comments:

  1. 1
    Olaf says:

    File this under Schadenfreude… something new for (un)realtors to worry about: getting sued by the people they fast-talked into dropping seven figures on a stack of drywall:
    http://www.nytimes.com/2008/01/22/business/22agent.html?_r=1&hp&oref=slogin

  2. 2
    newbie says:

    If I go to Nordstroms and buy a 100 dollar shirt could i sue them because they didn’t tell me JC Penny had the same shirt for less? I think not. But it is the American way….if you don’t get your way start suing people.

  3. 3

    Hi newbie,

    real estate agents owe higher duties to their clients.

    Retail shops like Nordstrom and JCP only have a retail relationship with their clients.

    Agents have higher duties that would be spelled out in each state’s agency law. If that agent is a member of the Nat’l Assoc of Realtors, the Realtor owes fiduciary duties to put the client’s interests ahead of the Realtor’s interests.

    I read that news story this morning while lying in bed, not able to sleep, listening to the financials on the radio. I was thinking about what my dad said when I asked him, “During the Great Depression, what kinds of businesses did well?”

    He said, “The lawyers.”

  4. 4
    vboring says:

    newbie, the analogy would be if i paid somebody to go find a shirt for me to buy, the same shirt could be bought in two places and they chose the more expensive one because they were paid as a percentage of transaction cost.

    if i’m not paying my agent 3% to tell me what the market looks like and what a fair price is, what am i paying them for?

    “i’m not” is the right answer.

  5. 5
    Brian says:

    People need to ultimately be responsible for themselves. If you bought based on hype, that is your problem. If you bought because you were afraid to miss out on the boom, that is your problem. My wife and I chose to wait because the housing market was out of control and not based on fundamentals. Sorry, but it does not matter how unscrupulous or money grubbing banks, real estate agents, mortgage brokers, or appraisers are. The only thing that matters is the choice you make as a person. Do I believe that the aforementioned group of people/institutions can be shady? Sure, but people have to be responsible for themselves. Many of the buyers over the last couple of years were not financial prepared to buy. If they make the decision to buy anyway, that is their problem. (Note: This post does not mean I believe the aforementioned people/institutions should not be regulated and forced to have stricter standards, but I do not believe they are the only culprits in this mess – people can be stupid and they need to be responsible for themselves.)

  6. 6
    Grvetti says:

    What happened to the “empty nester” and “young childless professionals” that would flood the Seattle condo market with ravenous buyers?… I don’t get!

    Once again the local press forgets about its past claims and its parroting of the Greg Nickels, Mayor Condo’s utopian blather…

  7. 7
    michael says:

    If I had the opportunity I’d sue a real estate agents. I’ve listened to so much BS while I’ve been looking at homes. It is one thing to point out the features and another to blatantly lie about the value and neighborhood. I had a friend with children that bought a place on the edge of Capital Hill (central district) that happened to be next door to sex offender housing. Not one sex offender but an entire building.

    I write everything down and that agents say and then research every fact. I don’t have a problem with someone trying to sell me something, that is their job. I have a big problem with an agent lying about the price of other sales in the complex or telling me about my executive neighbors who don’t exist. I had an agent tell me that a well known MSFT VP had just bought the house next door. The Vice President didn’t even exist.

    In fact I’ll even send her a donation.

  8. 8
    newbie says:

    I agree agents “should” keep your best interests in mind but you if they find a house you like and your willing to drop the cash on it…..it sounds like they did their job. Though I am probably the least knowledgeable poster here =). I am 23 and I graduated recently and for my whole life people told me buying real estate was the best investment I would ever make…so naturally I went looking to buy. But after 1 week of researching I found that buying real estate was not all that it was cracked up to be. So if a naive recent grad with zero experience can figure out that its a bad time to buy (and if i was going to buy in a neighborhood i would defiantly look at every house on the market weather my agent showed me the house or not) then someone dropping hundreds of thousands of dollars I should know what they are getting into. Putting 100% faith into a person that is making a commission is just plain stupid.

  9. 9
    Bits_of_Real_Panther says:

    re: Skagit County, there actually was a sizable positive gap between the cost of renting and the cost of buying in towns between Everett and Bellingham until about a year ago. Now it’s close to even, maybe slightly negative. I doubt the worst is over as the article claims but the affordability problem was and is nothing like the most desirable parts of the Seattle metro area (Bellevue/Redmond, Ballard/Wallingford e.g.) though I’m guessing a potential landlord could come pretty close to breaking at today’s prices in certain Seattle neighborhoods, Georgetown comes to mind

    The Western Washington bubble is not a smooth one

  10. 10
    The Tim says:

    newbie, I am reminded of my favorite (unsourced) Albert Einstein quote:

    Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.

  11. 11
    jimmythev says:

    Ok, I was just reading the real-estate blog in the PI and came accross this:
    http://blog.seattlepi.nwsource.com/realestate/archives/129941.asp

    My favorite comments come from a real-estate agent named Kary L. Krismer. A couple of my favorite ones are listed below:

    “I know an agent who was having a heck of a time selling a property prior to foreclosure, and out of despiration signficantly raised the price–it sold. When you run out of good ideas, I guess you try the other ones, right?”

    “I only look at the competition after I determine the price, and might make a small adjustment at that time.”

    My theory is this guy must own a pink pony :)

  12. 12
    Nozferatu says:

    MARTY UMMEL can kiss my a$$….TOUGH sh&t she overpaid for her house…no one put a gun to her head. I’m sick and tired of hearing this crap. We didn’t buy and fall into this trap so what are we supposed to do? Be considered losers for not buying?

    What a bunch of crap.. I really hope people like Ummel eat it and eat it HARD.

  13. 13
    patient says:

    I think it’s great that she is suing and that it becomes headlines. People in general need to be made aware of or reminded that it’s actually the seller who pay’s the buyer’s agent and that they have an incentive to sell the buyer the most expensive home. To somewhat mitigate this confilct of interrest the “higher duties” that Jillayne mention exists. If cases like these can show that this arrangement is not working hopefully it can lead to a change in this crazy setup.

  14. 14
    officeboy says:

    Anyone want to bail out a hard up developer?
    http://windermere.com/index.cfm?fuseaction=Listing.ListingDetail&ListingID=19240769
    These individual lots have been for sale since summer, and the only house started is the developers personal one.

  15. 15
    vboring says:

    say she wins the lawsuit, what does that mean?

    that RE agents have a legal responsibility to serve their client’s best interest. or, at least, not to lie to them about market conditions and available alternatives.

    and if she loses the case?

    that means RE agents have no legal responsibilities whatsoever. they are simply sales agents employed by the buyer.

    the NAR should be supporting the buyer’s lawsuit and removing the credentials from the RE agent in order to demonstrate that RE agents serve some useful function.

  16. 16

    vboring,

    You got it. I have no idea if the agent is a member of NAR, but if so, you are absolutely right.

    Codes of ethics mean NOTHING if they are not enforced by the professional association.

  17. 17
    Chris says:

    Speaking to the first article, about condo projects converting to rentals, I continue to be amazed at the number of condos for rent in my neighborhood.

    This one:
    http://seattle.craigslist.org/see/apa/547674228.html
    Is in the ‘fini condos.’ There is also another ground-floor unit for rent. Both are trying to get $1950/month for a one-bedroom in Greenlake. You can rent a nice house in greenlake for that. I wonder whether these are failed ‘flips’ owned by individuals, or whether the developer itself is trying to rent out a few units.

    Even more interesting is the Florera:

    http://floreragreenlake.com/

    I run and drive by it almost every night. That building seems done, and the retail tenant (Key Bank) moved in months ago, but its all dark every night except for the top floor corner unit. I’ve never actually seen anyone in it, though, and I wonder if it isn’t just staged with a timed light.

    One block from the Florera, there is a huge hole for a building basement that takes up an entire block. They were building condos, but construction stopped in late fall. I bet they are converting that one to apartments.

  18. 18
    CCG says:

    “But it is the American way….if you don’t get your way start suing people.”

    That and walk away from your mortgage contract when you’re no longer getting the double-digit appreciation that you “deserve”.

  19. 19
    Morel Hazzard says:

    #
    Olaf said,

    on January 22nd, 2008 at 8:49 am

    File this under Schadenfreude… something new for (un)realtors to worry about: getting sued by the people they fast-talked into dropping seven figures on a stack of drywall:
    http://www.nytimes.com/2008/01/22/business/22agent.html?_r=1&hp&oref=slogin

    ——————————————————

    Seattle agents would never try to get their clients to pay more than the property is worth for real estate here – Seattle agents are “special”.

    Oh wait ….

    Thank you for your offer on the home on XXX. My name is XXX, and I’m the Regional Director for <A>. I’m assisting our staff by helping with the intake process this weekend, and have your offer in front of me.

    Initially, I couldn’t find the home on the MLS, but now have that information, probably because it was just relisted this past XXX. As I’m sure you’re aware, your offer price of $XXX,XXX is well below the current list price of $XXX,XXX, and some history of the property might help this discussion.

    The home was originally listed last June for $XXX,XXX, clearly overpriced, and it wasn’t until they dropped the price to $XXX,XXX and waited a month that they finally had an offer. The home cleared the inspection, and was Pending, just waiting to close, when the transaction fell apart. I don’t know why that was the case, but financing is the most likely, as this was right when the mortgage meltdown was occuring last November.

    The home was immediately relisted at $XXX,XXX on Nov X, dropped to $XXX,XXX on Dec. X, and expired on Jan X. I surmise that the lower list price is indicative of what they probably had it sold at before in November.

    The home was relisted the same day, now for $XXX,XXX, just 3 days ago.

    As an agent, this information is important to me, as I need to understand where a seller is coming from in order to know how to get the best deal for a buyer. In summary, we have a seller who nearly had their place sold for something above $XXX,XXX (my professional guess, here) and is now down under $XXX,XXX . I would expect that there is probably some wiggle room in there price, though they haven’t been on the market at this new price long enough to concede much more money.

    I gather from your offer price and comments about the price of the home being about 20% above value of the property that you probably wouldn’t consider anything above $XXX,XXX . I’m quite sure that long before the seller accepted such an offer, they’d drop the price to $XXX,XXX , at which point I’d expect them to get multiple offers on the property and sell it near $XXX,XXX . It’s also worth noting that the seller’s paid $XXX,XXX for the home 3-1/2 years ago. Since then, we’ve had 3 years of strong growth, followed by a cooling trend the last 6 months. During those growth years, Seattle was seeing 8-15% appreciation, with the last 6 months bringing a flattening of prices, but very little devaluing.

    In re-reading my e-mail, I can appreciate that it might seem I’m on the side of the seller. I sometimes need to have these conversations with customers that perceive us as a sort of “bidding service” for homes. In fact, each offer is handled by a professional agent on our staff, and submitted with care. Because we submit the offers to listing agents, and do so under our banner, it’s important that other agents view us as a respectable and professional brokerage. In order to best serve you and our other customers, its important for us to review offers, provide counseling about what might realistically get you the home you want at the best terms, and then move forward. This way, other agents and brokerages will know that we’re dead serious about what we do, rather than labeling us as a brokerage that wastes their time.

    In my professional opinion, I think that to get this home under contract right now, it would take an offer of $XXX,XXX or better to get the discussion going, and I would be very surprised if the seller accepted anything less than $XXX,XXX

    I know this is lengthy, and I would normally have this conversation on the phone rather than e-mail. Please feel free to call me and discuss this further.

  20. 20
    WestSideBilly says:

    say she wins the lawsuit, what does that mean?

    that RE agents have a legal responsibility to serve their client’s best interest. or, at least, not to lie to them about market conditions and available alternatives.

    and if she loses the case?

    that means RE agents have no legal responsibilities whatsoever. they are simply sales agents employed by the buyer.

    the NAR should be supporting the buyer’s lawsuit and removing the credentials from the RE agent in order to demonstrate that RE agents serve some useful function.

    You got it. I have no idea if the agent is a member of NAR, but if so, you are absolutely right.

    Codes of ethics mean NOTHING if they are not enforced by the professional association.

    What really got me was the arrogance of the buyer agent. It blows me away that anyone with a lawsuit pending against them would say, in an interview, “The lady’s a nut job. I didn’t do anything wrong.” That alone will usually get a judge/jury on the other guy’s side.

    In fairness, I don’t think that he did anything wrong. He just didn’t do enough to meet his obligations and/or merit his commission, which is essentially what Ummel is suing him for. Sticky case, but as vboring and Jillayne said, if the agent is in the legal right, then no agent has any legal responsibilities.

  21. 21
    steve-o says:

    I’m with patient, vboring, and Jillayne. This issue isn’t about a buyer overpaying, it’s about a real estate professional (the buyer’s agent) committing fraud. Also, keep in mind that the buyer’s agent wasn’t trying to keep the price inflated to earn a higher commission, he was worried she’d back out of the deal and he wouldn’t get ANY commission.

    In cases like this, where police can’t or won’t prosecute, it is the fear of litigation that helps keep people honest. It is one way to give check and balance to the system.

    I don’t look down on anybody that decides to hire a full commission agent. I can think of instances where I would use one – like if I was moving to another city, or if I made more money working the extra time instead of spending that time searching for properties.

    I’m surpised that there isn’t more support for this on this blog. This is the sort of thing the system needs and is in the best interests of the house buying public (which I believe most of us are).

  22. 22
    willamina says:

    and i’m still getting evicted so they can knock my building down and build more bloody condos in the ghetto, a neighborhood the very demographic buying condos is scared to death of.

    (okay, really, they’re just doubling my rent, but $600 to $1200 on a 1br/1.5ba in Lake City and “no further leases, all rentals will be month to month”…yeah, that’s eviction, even if it doesn’t meet the legal definition.

  23. 23
    Nozferatu says:

    You’re all missing the point….do you all believe for a moment that MARTY U didn’t know what she was getting herself into? Do you think we’d be sitting here talking about her sue if she had made out bigtime and made alot of money?

    She got into this deal most likely to make money…to turn around and flip it. I won’t shed a tear for her while she pummels into the ground.

  24. 24
    Brian says:

    Seriously, these are the posts a lot of you are offering? I’m a renter like many people that post here, and I chose to be a renter. People on this board seem to be sue happy and very supportive of the antics of stupid people. Give me a break and grow up people. You’re not “duped” if you’re the person that is greedy. There are a lot of buyers out there from 2005-2007 that were overly greedy – just like banks, real estate agents, mortgage brokers, appraisers, etc. – and they deserve what they get. Any support for frivolous law suits like this are pathetic. Greed is a mortal sin for a reason. The person got greedy, lost money, and is now crying foul. The reason companies like Redfin will flourish is because of bad antics by real estate agents and the fact they don’t buy into the 6% service charge to agents. In my opinion, people should be opposing such silly lawsuits filed by greedy people and focus their energies elsewhere.

  25. 25
    Brian says:

    I’m surprised to see the building owner who thinks they’ve have a much better time renting than selling. Rent to price ratios would make me think that lowering the price and selling would still be a better idea. Or maybe they’re just waiting a few months before double digit appreciation resumes? ha!

  26. 26
    vboring says:

    Brian,

    the lawsuit, as i understand it, can be understood without reference to housing.

    basically, i intend to make a purchase of a good. i pay somebody to advise me on this purchase. they only give me part of the information that they have. i act on this information and it turns out badly for me.

    when i hire a professional adviser, they should be legally required to give me the best information they have. aka act in my best interest, instead of their own.

    sure, if the lady had made money she wouldn’t be suing anybody today, nobody forced her to do or buy anything, and she was an idiot to trust salesperson, but that is all aside from the point.

    she hired a person claiming to be a professional adviser representing the customer’s interests and that person intentionally gave the customer bad advice for the sake of their own personal gain.

    so, if RE buyers agents are salespeople, then they are useless and the market will abandon them. if they are advisers, then this lawsuit will stick and the customer will get their commission back because the customer paid for services that were never provided.

  27. 27
    Wm Swanson says:

    To vboring: I thought the seller typically pays the agents commission. Did the article say the buyer paid for services that were not provided?

  28. 28
    The Tim says:

    I thought the seller typically pays the agents commission.

    I feel like I say this a lot, and I hate to sound like a broken record, but agent commission is not paid by the seller. The only person that comes to the closing table with a check is the buyer. If there is no buyer, no commission is paid. In fact, the buyer is paying the agents, not the seller.

  29. 29
    vboring says:

    the buyer paid for market advice from a RE professional and didn’t get it.

    buying at the top is bad and completely the buyer’s fault.

    buying the wrong house or the right house at the wrong price because of bad advice from the agent is the agent’s fault.

  30. 30
    Wm Swanson says:

    To: The Tim…..IF a buyer buys a house with zero down and has most or all of the allowable closing costs paid for by seller, then who pays for the agents commissions? The literature I have read, and Brokers I have spoken with all relate that the agents commissions are paid for by the seller unless stated otherwise in the form of a agent to buyer contract. It is also noted on the HUD.

  31. 31
    Brian says:

    vboring: It is still a frivolous lawsuit and if the person would not have sued if things went splendidly for them and prices kept skyrocketing as you state, than it doesn’t have merit. End of story.

  32. 32
    Bits_of_Real_Panther says:

    Not sure if it will be tossed out as frivolous or not but it almost certainly won’t be a winner. It would be a nice wake up call to the NAR if it did at least make it to trial and either way it’s more ammo in the battle against the automatic 6% commission

  33. 33
    Brian says:

    Sorry for posting multiple times today (I’m at home sick). The best ammo against the automatic 6% commission is the free market. Support companies like Redfin, not lawsuits like this one.

  34. 34
    S-Crow says:

    Wm Swanson,

    True, the Settlement Statement (HUD-1) shows commission disbursed via the seller and for reasons more complicated than I’d like to discuss here, that is what you will see. But Tim Ellis is correct. In spirit, buyers are paying for commissions via sales price.

  35. 35
    just_checking says:

    While I totally agree that frivolous lawsuits are a waste of money, lawsuits are unfortunately the check-and-balance available in this country. A lawsuit here and there will help get the NAR to enforce their code of conduct.
    BTW, after we bought our house we found that our agent
    did not give a complete list of all houses sold recently in that development as part of the CMA. A couple of low-priced sales were missing – neglect or fraud ?
    No we did not sue :)

    Morel Hazzard –

    As a buyer, if i make an offer on a property at the average annual gain (5-6%) from the 2002-2003 (pre-bubble) period, today in the seattle area,
    would you present it or consider that a lowball offer ?

  36. 36
    jon says:

    “The only person that comes to the closing table with a check is the buyer.”

    But the seller brings the keys. As long as it is the seller that can cancel the listing, the agents are working for the seller. The agent doesn’t get a dime from the buyer unless the seller says yes.

  37. 37
    Brian says:

    A lawsuit isn’t the best check-and-balance available in the US. Boycotting is much better than a lawsuit. Starting a company to compete against someone else is better than a lawsuit. Obviously, neither of these alternatives are as easy to do as say, sue someone, but they are more productive. Oh, with regards to who pays the commission, the seller does. The buyer can always offer less money than the seller is asking for. If the seller does not budge the price, the buyer can always move on. If they don’t move on, that is their own fault. They are not obligated to purchase until they sign their name on the dotted line.

  38. 38
    Bits_of_Real_Panther says:

    Besides the surprisingly subtle point that it is only the buyer’s money that is on the table at closing there is also the fact that commission is effectively built into the seller’s price

  39. 39
    Mike2 says:

    Anyone know what happened with 9090 Ravenna? 8 unit condo that was built 2 years ago but, as far as I can tell never sold. Last time I was in Seattle it was still vacant and had grafitti on the front.

  40. 40
    Wm Swanson says:

    T0: S-Crow….I understand that. Guess it is a matter of semantics though I anticipate not all buyers realize this. In the case of the buyer suing the agent for commission I would anticipate it would be difficult for the buyer to prevail to collect her agents commission due to the recorded HUD. I have bought several rental houses in the past few years and have always used an agent friend who not once has asked me for their commission:-)

    If I am not mistaken, there is even a question in the 30 clock hour course regarding Principles Of Selling Real Estate in Washington provided by the Rockwell Institute that address who typically pays the agents commissions on a successful transaction and the answer is “seller.”

    Okay…end of subject!

  41. 41
    Geode says:

    A RE is not an appraiser. Did this person not get an appraisal? That is the true measure of the houses worth (Pink Pony). My assumption is the buyer got an appraisal and it was close. She paid the price, now she owns it. The realtor in best faith (Ridin the Pony) assured her the house was worth it for the neighborhood, but that don’t make it an accurate appraisal. Too many people just want to abuse the legal system to sue for their own stupidity.

  42. 42
    WestSideBilly says:

    Did some of you not read the whole article?

    She’s not a flipper. She’s a near-retiree who moved to a different city to be closer to her children. It wasn’t a rash decision; the agent being sued was their second agent and they spent 6-8 months looking. The lawsuit is based around two listings in the same neighborhood, one for $105k less (the house in question was $1.2m) and another for $175k less that closed the same day. It’s also not a money grab; she’s spent nearly the difference in legal fees already.

    The agent *should* have known about the two other houses. And he *should* have informed the buyer.

  43. 43
    vboring says:

    i agree that frivolous lawsuits are silly.

    this lawsuit, if it fails, will indicate that RE agents are also silly, unaccountable for anything and therefore pointless.

    i refer to the role of RE agents in the economy, not to people who happen to be RE agents. i’m sure, as people, they are far from pointless or silly. it is just their jobs that i object to.

  44. 44
    WestSideBilly says:

    A RE is not an appraiser. Did this person not get an appraisal? That is the true measure of the houses worth (Pink Pony). My assumption is the buyer got an appraisal and it was close. She paid the price, now she owns it. The realtor in best faith (Ridin the Pony) assured her the house was worth it for the neighborhood, but that don’t make it an accurate appraisal. Too many people just want to abuse the legal system to sue for their own stupidity.

    Why ASSume when you can just read the article?

    Mr. Little also worked as a mortgage broker. The Ummels say he encouraged them to get their loan through him. Mr. Little ordered an appraisal of the house but did not respond to the couple’s requests to see it, the suit charges.

    This is probably the only failing of the buyer – she shouldn’t have closed without seeing the appraisal.

    Ms. Ummel’s original suit included the appraiser, who was accused of skewing his report to make the Ummel’s house seem worth the purchase price, and the mortgage broker. Modest settlements have been reached with both.

    Shocking – an appraiser towing the RE line. *eyes rolled*

  45. 45
    Ray says:

    1 person I see nailed it. (Bryan) Big commissions “CAN” lead to Big problems! Take away the golden carrot and the consumer wins all the way around. It will just take time friends! 500 Realty, Red Fin, and MLS 4 Owners.

    Educate yourself!

    Ray Pepper
    http://www.500realty.net

  46. 46
    Chris says:

    A developer needs about $400 psf to get out of an apartment deal vs. $450 psf (net saleable) to do a condo deal, assuming 5-over-1 construction in a “typical” development projects in the north end. the $400 psf equates to about $2.15 psf rents in today’s dollars, assumes another 6% increase through construction and a cap rate similar to recent levels. Both for-rent and for -sale are optimistic, but given the troubles with condos moving at all I can see why projects are going rental – if they can do so BEFORE they instal condo-level finishes.

  47. 47
    Ken Mott says:

    Seattle Times is reporting that king county prices were up 7.4%

    How is that. I thought december to december was down.

    http://seattletimes.nwsource.com/html/businesstechnology/2004138665_webhomesales22.html

  48. 48
    jon says:

    “Besides the surprisingly subtle point that it is only the buyer’s money that is on the table ”

    If it is only the buyer’s money then why are all the mortgage companies cratering?

  49. 49
    patient says:

    “Seattle Times is reporting that king county prices were up 7.4%

    How is that. I thought december to december was down.”

    My guess is that they are grasping for straws. They probably took the median of all properties sold in 2007 and compared with the median of all properties sold in 2006. This of course gives a totally scew picture of where the median is now compared to a year ago. The desperation and spin couldn’t be more obvious.

  50. 50
    Everett_Tom says:

    I wonder if that’s the median price for the year (i.e. all sales in 2006 vs. all sales in 2007) instead of the median price in Dec 2007 vs. median price in Dec 2006…

    Another one of those “Wait, Wait .. it still looks good… “.

  51. 51
    Everett_Tom says:

    Doh..

    patient just said that… Someday I’ll learn to read…. ;)

  52. 52
    deejayoh says:

    Wow – that is sooooooo misleading. Prices fell 10% between July and December -so you had 6 months of rising prices, and six months of falling. If you take the median for the year, you get the price in on March 31 or October 1.

    Lies, damn lies, and statistics I say.

  53. 53
    Everett_Tom says:

    And if I remember correctly, the number of home sales was higher in the start of the year then the end of the year, moving the median numbers off even more to the high side….

  54. 54
    dg72 says:

    At first reading I thought this was a frivulous lawsuit but after thinking about it I have to side with the plaintiff. The RE agent is there to provide a service and if it can be proven that he willfully failed to provide this service to the detriment of the plaintiff then I think she should be awarded his commision and the difference in price between what she paid and what the actual value was plus any damage modifiers. Just because she wouldn’t have sued if the house went up in value has no relevance. If your car blows up because of a manufacturer defect are you going to agree with me because I say that if it didn’t blow up you wouldn’t sue so therefore “too bad”? Does that sound even remotely logical? No.
    She is responsible for buying a house at the top of the market but the agent is responsible for the price difference she paid over market value, if he fraudently advised her to pay more than it was worth. If he’s not then why would anyone every use a real estate agent if they have no accountability? If the facts say he indeed committed fraud and there are no actions taken against him then I’ll never never use a full service RE agent. I’m not paying anyone for the opportunity to screw me except for the gov’t and that’s only because they take it out of my check every payday.

  55. 55
    Brian says:

    That article is ridiculous. Who cares if houses sold for less in the nearby area. Anyone here ever watch Seinfeld? Remember the episode where George buys a car simply because Jon Voight allegedly owned the car? Well, George could have bought a similar car for less, but opted for that car because he believed that Jon Voight owned it. Anyone that opts to buy a house does so for a wide variety of reasons. The person selling the car to George told him Jon Voight owned the car (even though it was another Jon Voight, not the actor). They didn’t lie. It was George’s fault for not a) figuring out that it wasn’t the actor’s car or asking the right questions to figure it out, and b) caring so much about what someone else said and allowing the other person to dictate the price of the good for them. Real estate agents will make the claim that home prices always go up over the life of the mortgage. They don’t tell the whole story, but are they to blame for the buyer not asking the right questions? Give me a break. If I’m going to spend hundreds of thousands of dollars it is my responsibility to be informed and ask the right questions. If I don’t get the right answers, I should move on. If I don’t, why should I have the right to blame others? Do your homework people. Real estate agents, car salesmen, etc. get paid to sell you something. They get paid to sell it for the maximum amount of money you will spend. If you can’t control your spending, that is your problem, not theirs.

  56. 56
    Brian says:

    dg72: How are you going to prove fraud in this case? It’s not the real estate agents responsibility to give a buyer every reason not to buy a house. The person wanted to buy a home and were willing to spend the money. If they were not satisfied with the purchase price, they should have offered less or walked away. Oh, your car blowing up example is silly and not related. If the person’s home after being purchased imploded because of shoddy building, the person would sue the builder and/or inspector if they paid for one. If you want to claim logic, try and use some.

  57. 57
    patient says:

    Brian, I think you are missing the point. This is a case where an agent is suspected of intentionally having misrepresented a client for personal gain. That sounds criminal to me indendent of the circumstances.

  58. 58
    Brian says:

    patient: I’m not missing anything. Suspected is much different than proof. Filing a lawsuit like this is ridiculous. There are much better methods to beating the real estate status quo than filing lawsuits. Don’t buy, that’s a good step. Start a company of agents that refuse to take the same 6% cut like Redfin. What crime exactly did the real estate agent commit here? Look, I for the most part can’t stand real estate agents (Ira seems ok, but he may be doing the smart play by posting here as the anti-real estate prototype – not saying that is the case, but it is possible.), so I treat them with extreme skepticism. I don’t really trust anyone that has a vested financial interest in convincing me of anything. Look, this lawsuit is ridiculous. The buyer and the agent were both greedy and the buyer is ultimately responsible for the type of real estate agent they will use and how much money they are willing to spend.

  59. 59
    Moe Ronn - Realitor® says:

    Burn baby, burn. I just got my free credit reports yesterday. And no, I didn’t use one of those damn free credit report services that advertise on TV. The law says I have a right to this information once per year, free of charge, directly from the credit reporting agencies. How many people do you think understand this? Few, I would suspect. Why? Because they believe what’s on TV and don’t do any research for themselves. I’m nearly middle-aged now, and I’ve known this for nearly 20 years. How did I come to know this? I got royally screwed on a car purchase. I’ve never been screwed by a car dealer since. I say it’s about time people feel some pain and learn from it. However, I also believe it high time that misleading and just plain false advertising be abolished. So, yes, the buyer was dumb, but she did pay someone to represent her interests. Her interests where not represented; ergo breach of professional obligation. I say they are both culpable, but the agent is CRIMINAL!

  60. 60
    Jonny says:

    The http://floreragreenlake.com/ site is pretty funny. Reminds me of “White Lightning” condos in my area. I mean, they obviously know their prices are wildly out of whack because they don’t list them.

  61. 61
    disbelief says:

    Moral of the story: Sometimes both the plaintiff and the Defendant are A**holes?
    He refused to show them the appraisal?!
    And they still bought?!
    Nice profession, where you can make a substantial commission, and not have any obligations / responsibilities :-)

  62. 62
    david losh says:

    Money and asset comes to the table and it was determined by law that the buyer is represented as well as the seller some many years ago. It’s the Law of Agency in the State of Washington.
    The law suit article caught my eye and I agree the buyer has a case. She was represented in a Real Estate transaction. The agent claimed she should have done due diligence, in my opinion, that was the agent’s responsibility.
    There should be thousands of these law suits. All those attorneys that are scratching around for a couple of hundred bucks to write up a Purchase and Sale Agreement should be sueing Real Estate companies that are lax about agent over sight. There’s a little trick that says the Broker is responsible for the agent. It’s the Broker, the company, that’s liable for the agent’s lack of concern for his buyer.
    As I always say, Real Estate is a complicated business. There is a lot to educate yourself about and the comments here make that point.

  63. 63
    Matt says:

    The only thing the agent could have misrepresented was the alleged appraisal that he had done (as I take it) with his own money and not for the buyer. If she didn’t see an appraisal before she bought, that is her own fault. If she did see an appraisal before she bought, she should be sueing the appraiser.

    It’s interesting that the agent had an appraisal done, why would he do this? If she had already decided to purchase (and did in fact purchase it without seeing an appraisal)… then he’s just wasting his own money. My guess is he tried to convince her to do an appraisal but she would not (cheapskate?… or maybe she loved the house too much to admit to herself it was over-priced… or maybe she plain didnt care). If she paid for the appraisal and he with-held it there is no question he would lose his license immediately. Since she has picketed the office for a year and he still has his license, i’m guessing she is exactly what the realtor said she was… a nut job. It also tells tales that her husband is basically like “ok hun go do your thing just dont talk to me about it”. You would think he would care a bit more about his 1.1 million dollar purchase?

    If you are wronged by someone and you have a legitimate case, you sue them. You don’t picket their office for a year. This lady is crazy and wants revenge. I can’t wait to see her not only lose the suit, but have to pay the realtor’s lawyer fees.

    I like to read this blog, I own a condo in seattle, bought in 2005. Yes I’ve made some good appreciation on it but there’s nothing i’d love more than a 50% drop in real estate prices. I’d happily lose all that nice appreciation i made in the last few years so I can upgrade to a house at a realistic price.

    You guys need to realize it is not the realtor’s who drove up the housing market… it is the buyers who were willing to pay X amount per month for X amount of square feet. Take realtors out of the picture and homes would have sold for the exact same prices. It was a bubble fed by many things – easier credit

  64. 64
    Matt says:

    Oops I hit post before I was done on that last one. Anyway… a bubble made by many things – easier credit probably being the biggest. But at the end of the day, it’s your own decision to drop your cash on something, and your own fault if you made a bad decision.

  65. 65
    Wm Swanson says:

    To: David Losh…..Dont worry David Losh…..this RE market will weed out the part-timers, bored housewives, and others who should have never been practicing Real Estate on others shortly if it has not already started to happen. Those jobs at McDonalds and Burger King will be filling up quickly.

    Agree that the hiring of newbie agents over the past few years is the responsibility of the Brokerages and I suppose the Errors and Omissions insurance will be rising shortly too.

  66. 66
    Moe Ronn - Realitor® says:

    Matt,

    I disagree that prices would have risen as much without the sales hype and manipulation of RE agents. They are paid on commission, plain and simple. It’s a broken system, but I’m pretty sure we’re seeing the revolution beginning. They will not be trusted for decades to come. There are exceptions, such as Ira. In two years, when I’ve raised my down payment and prices have plummeted, I just might look him up.

  67. 67
    david losh says:

    Unbelievable, Real Estate agent hype made prices go up? You hire some one who was cutting hair one week and got a real estate license, then they hyped the Real Estate market? I don’t think so. I think as long as you, I mean you, are spending thousands of dollars on a Real Estate commission you should get service.
    I would pick a Real Estate agent with experience to work for me.

  68. 68
    economist says:

    “agent commission is not paid by the seller”

    You might as well say that a used car salesman is not paid by the car dealer, or the sales person at Nordstroms is not paid by Nordstroms, because the money they are paid with is coming from the customer.

    Does the used car salesman have an obligation to tell you that you could get the same car at another lot for cheaper? Does the guy at Nordstroms have an obligation to tell you that you could buy the same outfit cheaper at Sears?

    Commissioned salespeople are contracted by the seller, are paid by the seller, for working in the interests of the seller, i.e. getting the best price for the seller.

    Period.

  69. 69
    Moe Ronn - Realitor® says:

    David Losh, have you ever heard of a guy named David Lereah? Do you see the ads by the NAR on TV? Do you not perceive the pandering of the media to RE interests? Do you need an extra hand to assist in pullling your head out? Most people are easily manipulated. If you saturate the media with hype, it will affect the average person’s rationality. And, I already said I’d likely trust a guy like Ira. However, guys like Ira are few and far between when it comes to RE sales and ethics. The NAR and the REIC in general had a motive to perpetuate false truths. They have massive resources available to do so. I have an advantage; I’m not easily manipulated, I don’t swallow BS without choking on it. I am an exception to the norm.

  70. 70
    Brian says:

    economist: Supply and demand. Sellers are responsible for the supply, and buyers are responsible for the demand. Buyers will spend only what they are willing to pay. Buyers that are greedy will pay a premium. Buyers that focus on fundamentals won’t. Buyer is responsible for buyer’s actions. Period.

  71. 71
    Moe Ronn - Realitor® says:

    “Buyers that are greedy will pay a premium”

    Whereas this may be true, it’s also true that others will buy out of fear that they’ll be “priced out forever”

  72. 72
    Brian says:

    Moe Ronn: And? If you are dumb enough to believe you will be “priced out forever” because prices are going up, you probably should take a hard look at yourself in the mirror. You may need to go back to school. Get a better job. Basically, you should stop being such a dumb ass.

  73. 73
    Moe Ronn - Realitor says:

    Brain,

    Can you honestly say that you’ve never been mislead or manipulated by someone whom you percieved to know more than you, whom tauted themselves as the “expert”? Taking advantage of people’s emotions isn’t necessarily illegal, but it’s amoral and unscroupulous. Funny how you want to judge these poor saps who number probably in the hundreds of thousands, if not millions. You are affected by their duping as well, look at the mess we have now. In society, what’s bad for your neighbor is probably going to be bad for you eventually. Maybe you should read some Rousseau, college boy.

  74. 74
    Brian says:

    Moe Ronn: Amoral and immoral mean different things. You know that, right? Also, people lie to people all the time. When it comes to making the largest purchase of your lifetime, you should probably study up for yourself. What happens to my neighbor, happens to my neighbor. Are we entering a recession? Yes. Will it impact me? Yes, one way or another. Will it matter to me? No. Why? Because my wife and I are responsible for our situation and don’t rely on others or blame anyone else for bad things that happen to us. I prefer to look at down times like these as opportunities. If I were a person that spent recklessly, had zero savings, and no future, I would probably be concerned. Otherwise, when there is blood in the streets and no one is buying, it presents an opportunity. Now, that doesn’t mean my wife and I will buy a house tomorrow, but it does mean we will be on the lookout for real estate that makes sense to us. Maybe buy our vacation house before we buy our primary residence. Taking responsibility for yourself shouldn’t be looked down on. Pimping, promoting, or defending the idea that it is ok to sue because a person was greedy and it didn’t work out should be looked down on.

  75. 75
    Moe Ronn - Realitor® says:

    Hmm, so your livelyhood does not depend on a healthy economy? How may recessions have you lived through as an adult, son?

  76. 76
    Moe Ronn - Realitor® says:

    And, for the purposes of my statement, amoral is exactly what I meant.

    amoral

    having no moral standards, restraints, or principles; unaware of or indifferent to questions of right or wrong: a completely amoral person.

  77. 77
    Brian says:

    First, don’t call me son unless you provided the sperm, which I know you didn’t. Second, if you are financial responsible, have a good education, and don’t waste all your money on crap, amazingly, over the course of several years, you’d be amazed what saving over 60% of your income (75% if you count money you put into retirement – this is possible if both you and your wife have good jobs and good educations) can do. Recession or not, you’ll survive and even if you lose a little money, if you keep your wits, you’ll be able to take advantage of a bad situation.

  78. 78
    Brian says:

    Go back to your comment. In that context, you would have used immoral.

  79. 79
    michael says:

    Brian,

    According to statistics Seattle is one of the most educated cities in the United States, in fact it is ranked number one for literacy in some studies. The average household income in Seattle is somewhere in the range of $60,000 to $70,000 a year, depending on the source. If the average house price is $450,000 then to safely pay a 30yr fixed you would need MORE THAN $120,000 in household income. With a recession looming a lot of people could be out of work for at least some period and will miss payments. Buying an overpriced pile of drywall and broken promises is financial suicide. Real estate is the new Amway.

    The smart move is to sell short the housing and finance sectors with a good short ETF. If you look at the prices for SKF and SRS you can see that the smart money to be made at the moment in betting against real estate. I love it. Agents, thank you for this wonderfully lucrative bubble, you’ve given me so much. I’ll be in the market around 2009 or 2010.

    Brian, maybe you should quit real estate. You could go back to night school and finally get that GED that your mom has been nagging you about.

  80. 80
    Brian says:

    Michael: I’m not in real estate. If you look above I said my wife and I are still renters because we didn’t buy into the hype.

    The article is talking about a person buying a house that cost over $1M. It says nothing about the persons education. The person should have known what they were getting into.

    Not sure why you are assuming so much about me. There appear to be a bunch of cry babies on this board that enjoy lauding the merits of frivolous lawsuits or crying about real estate. Apparently, you’re one of them.

  81. 81
    old_B says:

    Brian, you have not exactly made a good case as to why the lawsuit was frivolous. In fact, most of your posts seem to be emotional venting about “suit-happy society” and some other random bogeymen. I think you don’t understand the proper role of legal recourse in our free market system.

    I read the emotional, tonal content of what you’re saying. But if you pull back and read a little, you’d realize that a real estate agent and member of the NAR has, as f’ed up as it is, something of a duty. Someone earlier provided a direct link. See also this: http://realestate.about.com/od/representationagency/p/client_remedy.htm

    (my opinion: the NAR in general, and buyers agents are something of a joke, and I wouldn’t trust one with a purchase larger than a candy bar)

    It’s pretty clear that you’ve become unhinged in the pursuit of your argument, but haven’t refined or clarified it. Heck, you may be a bored troll from RCG here to blow off some post-bubble steam. But when everyone but you remains unconvinced of your point, that’s a sign that you need to go back and think about the merits of your argument, not just throw up your hands and make increasingly exasperated posts, name calling, etc.

    You keep saying the lawsuit is frivolous, but you haven’t backed that up with anything other than your opinion (which doesn’t seem very well grounded in anything other than… being against using the court system to settle contractual disputes and punish dishonest actions). It also appears that you think a buyer, no matter how stupid or smart, is better off starting a competing real-estate broker cartel, rather than taking an individual case to the courts.

    *makes kuckoo gesture with hand in the air*

    Be more charitable in your argumentative style, figure out some way of getting smarter, or just lurk for a while so you know what’s going on here. Or, alternatively, just go away. That might work, too.

  82. 82
    EconE says:

    Need more info…lots more before I can go one way or the other WRT the lawsuit.

    Such as…what was the asking price of the comp that sold prior to sale? What date were the offers and for how much?

    I do expect to see quite a bit of this in the next couple of years and don’t doubt that the government will find a way to meddle in that too.

    Let’s see what the courts have to say.

    Common Sense…an oxymoron…tells me that with his published salary he should have been smart enough to know that he can’t afford a $1.2M home.

  83. 83
    Brian says:

    old_B: Sorry, I’m neither unhinged nor do I believe in the bogeyman. My points are simple, but I’ll dumb it down a little more for you so you can understand. I don’t think this lawsuit has merit, because I believe the buyer is ultimately responsible for how much they are willing to spend on any good. I believe the real estate agent this person used did a terrible job and I would advise the person not use the agent or the broker again. Over the course of the next few years we will see plenty of lawsuits because people are unhappy they greed was not met with double digit appreciation and it is not right in my opinion. I think many of you posters on this site are unhinged for a variety of reasons. You’re unhappy because housing is expensive. You’re unhappy because real estate agents are out for their own interests. You’re unhappy because prices appreciated by double digits for several years. You’re unhappy because people were greedy (this is why I find the posters on this site defense of this lawsuit so laughable). You’re unhappy because “fill in the blank”. I’m not saying prices are affordable for most or that real estate agents are any good. I actually have a distrust for real estate agents and would not use one. I believe in the free market. That is why I support sites like Redfin. That is why I believe in boycotting companies with bad practices. There are better options than lawsuits.

  84. 84
    economist says:

    Buyer is responsible for buyer’s actions.

    That’s what I said too (i.e. the salesperson’s job is to look after the seller), but the style of your post seems to indicate that you think you are disagreeing with me.

  85. 85
    Buceri says:

    Inventory has been quite steady these last few days. As someone mentioned last week, the “casual sellers” are realizing the market has cooled and jobs might disappear; the prospect of moving (selling) does not sound cozy in turbulent times, so they will stay put. Only places on sale will be job/no job relocations, resetting loans, and the clueless. Let’s see the numbers in the next few weeks.

  86. 86
    what goes up comes down says:

    Brian when is a lawsuit not frivolous? I know a simple question but I am curious what you think.

  87. 87
    Affluent Bitter Renter says:

    “Only places on sale will be job/no job relocations, resetting loans, and the clueless. Let’s see the numbers in the next few weeks.”

    You forgot foreclosures – if prices really start to slide, people who have an interest-only loan who are way underwater and paying twice as much for their mortgage than they would pay in rent may just say “screw it”, and mail the keys back to the bank. Since Washington is a non-recourse state, the bank can only take the house – they can’t go after you for their loss on the foreclosure.

  88. 88
    SLTO says:

    few things…

    1. realtors are not simple sales persons… a buyer’s agent is hired and paid to provide a duty to the buyer so they can understand the market which is the realtor’s professional expertise… this lawsuit has good merit… she was duped by her agent who should have been looking out for her…. key word is fiduciary obligation… look that up in wikepedia..

    a buyer’s agent is not a salesperson… they’re more than that… if you don’t understand this part… read back all the posts… there was deception involved…

    2. she moved from San Francisco… she probably made off with tons of equity…

    3. this would be a good reminder to realtors that the market has laws and it’s no longer a walk in the park… that’s why the commission is huge… (work for pay or get paid less for less service)

  89. 89
    WestSideBilly says:

    Brian, there’s a vast difference between buyer’s remorse that you’re arguing against and paying someone a substantial amount of money to represent your best interests and having that person fail to do so. The closest analogy I can think of, ironically, is that of a lawyer who does not do everything possible to represent their client’s best interest – not calling witnesses, pleaing a lesser charge, etc. The Seinfeld episode (which was excellent) isn’t a valid comparison; George didn’t pay someone 3% of the cost of the car to research the car’s history for him.

    From NAR’s code of ethics: “REALTORS® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.

    I don’t know if the agent was a member of NAR, but the bold part (my emphasis) is the basis for the lawsuit. The RE agent knew the value of the home, should have known about the other properties selling for less in the area, and didn’t relay that information.

    In general I agree that people should research their purchases, especially big ones (that’s how I ended up here). I agree that paying someone a % commission gives them no interest to ensure you get the best price. I agree the lady may very well be a nutjob. But it’s far from frivolous, and the CA courts will decide whether her case has merit or not.

    I do see a wave of lawsuits coming in the next couple years as people who bought into the promise of 10%+ annual appreciation discover it’s not there. That’s a different situation in my eyes, and I would not support those lawsuits. Those have nothing to do with the property or transaction; merely personal greed.

  90. 90
    Wm Swanson says:

    To SLTO….correct…..IF…..a buyer/agent contract was mutually signed to perform those services and the agents commission paid for by the buyer. However, it is my understanding that this is in the minority and that sellers pay the agents commissions. Matter of fact, before the agency laws were revised several years ago in Washington State, all agents were agents of the seller.

  91. 91
    Buceri says:

    Affluent Bitter Renter –
    Yes; I guess I was throwing Foreclosures in with the resets. Since I consider both stressed properties. First desperate selling, then pass the keys to the bank.

  92. 92
    bitterowner says:

    In more general terms, I can relate to Brian’s point of view. Regardless of the specifics of this particular case, Brian is correct that there seems to be a propensity for people to avoid owning up to their mistakes, or even to accept the fact that sh*t happens in life and not every untoward event should be a source of financial compensation. I’m not sure why otherwise reasonable posters would attack him so mercilessly (even calling him a realtor, for the love of god) for his position. It seems that many societies function very well without the lawsuit scourge that afflicts us.

  93. 93
    nitsuj says:

    “Brian is correct that there seems to be a propensity for people to avoid owning up to their mistakes”

    Personal responsibility went out of style in the 80s. Now days sue your teachers, sue your parents, sue whomever, but never EVER admit personal responsibility!

  94. 94
    Q says:

    I had a real estate agent selling my house once, who related the story of being told some material info by someone about a house they had a buyer getting ready to buy. She then told me she wish she didn’t know that info, because it could be a problem. We ended up almost suing her ourselves later on.

    The real estate industry appears to want it both ways, they want to represent you as a ‘professional’, yet if you use their advice to make a purchase they don’t want any responsibility.

    Yes, I don’t care to use a realtor in the future at this time, so call that a boycott if you want. I will hire a lawyer to write my contracts, who I will definantly sue if they intentionally misrepresent something to me that damages me.

    I don’t know why it is Brian believes that giving people advice with whom you have a contract and withholding material information isn’t a good time to sue. I think it’s a great time to sue for the right reason.

    If you are a professional and you materially misrepresent information to someone who is relying on those facts, you should not be able to skip out. It would make selling houses harder, but more honest.

  95. 95

    So lemme get this straight:
    The Federal gov’t should not get involved to help out underwater homeowners who got bamboozled by unscrupulous agents or lenders,because they need to take responsibility for their own actions but it’s cool for the bamboozled home owner to sue the agent?
    I don’t have a strongly held opinion on this one,but all agents, realtors or not, have “sworn” to be ethical, yet it’s very common for agents to shoot their mouths off acting like experts whether they know anything or not…I was meeting with a listing agent for a Beacon Hill home a couple of days ago, and he was saying that buying a home and holding it for 10 years was a “no brainer”.
    I suggested to him that may be true, but anything less than that might be a major risk, which he disagreed with, of course. It’s always a good time to buy.

  96. 96
    david losh says:

    The law changed to protect everybody.
    My clients have me scout properties they want to buy for a financial gain. At the heighth of the market, about a year ago, a client of mine made an offer of $500K on a property listed for $650K. The agent on the other side had obviously over priced the property. My client prevailed.
    This was an estate sale for a family of plumbers. Money was not an issue for the seller. For many months the house sat on the market. It was not pretty. It was substantially built and maintained, but it wasn’t pretty so the new batch of Real Estate agents passed it by.
    My buyer divided off a building lot and rents the house for a cash flow. It has three seperate kitchens, nine bedrooms, and five bathrooms.
    That’s my job. I find what others pass over or ignore. My niche is finding those gems Dr. Pepper is talking about.
    The agency law changed because of guys like me. I look at For Sale By Owners as an opportunity. It’s a seller beware world out there.
    My sellers also get the benefit of today’s market place. We make places pretty. I pre-inspect a property so for me there are no surprises down the road. I research each and every property I represent or sell. People pay me to know the market place.
    Many times I buy and sell for myself. For thirty years and a thousand transactions I sit in my dirty jeans while some Real Estate guy tells me his tale. We buy what makes sense.
    This is the Real Estate business. We buy and sell for profit. The law changed to protect every one. The law is there so every principle has representation. That’s what the commission is for. In some circles the commission is the bank of attachable damages.
    The problem as I see it is that the Board of Realtors, and large Real Estate companies went on a membership drive. These organizations collect fees from Real Estate agents. The more agents the more fees.
    Take Skyline properties. You pay a $400 desk fee to have a license there. They don’t care if you know anything; you keep all of your commission and pay only a $400 per month desk fee.
    There is no over sight for the agents. It makes sense for a guy like me who buys or sells a couple of properties a year for myself. For some one hiring an agent for a commission wouldn’t you want the best agent at a full service brokerage to represent you?
    All the rebate brokerages are a reaction to the bottom of the barrell Real Estate desk fee Real Estate offices. There are some, I mean some, good agents that pay desk fees. Most professionals prefer to have the resources of a split commission office.
    I’m sorry this is so long. It’s a lot to absorb. Real Estate is a business. It involves all other facets of business.

  97. 97
    Shawn says:

    a lot of people talk about people needing to take responsiblity. However, we do have fraud laws in place. This is because we as a society believe that no one should be allowd to lie to someone to get their money. This whole re/appraisial/mortgage broker bubble is very close to fraud. I see a fall out coming. Before the dot com bust people used to belive in brokers and now no one believes a word they say. Now many, maybe most, buy stocks on their own via the internet. I predict the re agents and thier thug buddies are going to become extinct. There are a lot of people who have been burned, and a lot of us have watched a lot of people get burned. This bubble occured due to A LOT of lies, A LOT of dishonesty. I trust zero that comes from any re agent or their pals.

  98. 98
    The Tim says:

    economist said,

    You might as well say that a used car salesman is not paid by the car dealer, or the sales person at Nordstroms is not paid by Nordstroms, because the money they are paid with is coming from the customer.

    Commissioned salespeople are contracted by the seller, are paid by the seller, for working in the interests of the seller, i.e. getting the best price for the seller.

    Period.

    Here’s the thing though, it’s not as cut and dry as that. Because you definitely can say that a used car salesman is paid by the car buyer, and the Nordstrom’s sales person is paid by the suit purchaser. Why do you think it is so much cheaper to buy a car from a private party? One of the big reasons is because you’re not paying the salesperson’s commission.

    I agree that the salespeople work in the interests of the seller, but if a buyer never shows up with the money, then they don’t get paid. So yes, they are still being paid by the buyer.

    My main beef with this point is when people talk about hiring a buyer’s agent, and use the justification that “hey, you may as well, because for the buyer, it’s freeeeee!” No. It’s not free. 3% of the purchase price that you, the buyer are paying is going to that agent (and their brokerage). You can buy a home without an agent, and pay less. People do it all the time.

    (See, I can use bold, too :) )

  99. 99

    This is in response to David Losh’s assertion about Skyline Properties. I Happen to be an agent at Skyline. I haven’t and won’t attack David or his brokerage. I don’t know the guy, and he may very well be a perfectly nice guy and a great, honest agent. But he happens to have his facts wrong.
    For one thing, they don’t charge a 400 dollar per month desk fee. 299 is the maximum, where the agents keep 100% of the commission, but they also have plans where the agents pay less desk fee and keep less commission, as low as a 69 dollar per month desk fee.
    I’m not saying it’s good or bad. I have my own style, and Skyline attracts independent types, some good, some bad. They do require agents to take and pass certain classes over and above the licensing requirements.
    What they don’t do is require agents to come into the office and telemarket, which some brokerages do.
    All I’m saying is that nobody knows, by seeing what brokerage an agent is affiliated with, whether that agent is honest, or ethical, or competent.
    Skyline may have it’s share of incompetents, but would y’all pick an agent just because he works for John L Scott, or Windermere?

  100. 100
    old_B says:

    Brian,

    While I believe there was a lot of incompetence and certainly fraud on both the sales and the buying side over the last few years, I think that whatever is frustrating you is clouding your thought process.

    As far as reading motives into each and every poster here, you have your work cut out for you. There is a large and diverse body of readers and posters. Quite a few of them own property, or have in the past.

    Regarding emotions, I for one am elated that I do not have a mortgage on a recently purchased house, right now. I am not quite sure how it would make sense that people would be angry, bitter, etc about NOT holding the biggest boat anchor of an investment that was possible to make over the last few years.

    Detach your feelings on the lawsuit from whether either party is stupid or greedy. Do the facts on paper merit the use of the law? There certainly seems to be a reasonably solid logic to support that. The case would be decided based on discovery of facts, rather than which person was stupider, greedier, uglier, etc. I can’t believe this has to be spelled out for you.

    Rant all you want about “personal responsibility”. We don’t exist in a vacuum, and functioning markets require a fair playing field and reasonable expectations of what a buyer’s agent is expected to do.

  101. 101
    Matt says:

    I guess my feeling is yes, you use an agent to represent you in the transaction. Agents can often times offer advice on what they think a property is worth. But ultimately it is just that – advice. It is up to the appraiser to accurately set the value of the property, and the buyer to determine how much it is worth to them.

    Keep in mind:
    1.) Many times the buyer has their own idea what the property is worth. They will offer that amount even if the agent says “i think it’s worth 90% of that”. Yes this happens all the time… loans come back because the appraisal came in substantially lower than the value offered and the bank wouldn’t write the loan.
    2.) Even if the appraisal comes in low, many times the buyer still buys. They put more down, use their own money, etc. to make the deal go through. For whatever reason, the BUYER felt it was worth more. Are you saying in this situation the agent should be sued for mis-representing the buyer’s interests?

    My question to the nut-job lady (if i could ask her one) would be… If there were so many homes on the same block that were selling for less, why didnt she buy one of those homes instead of the one she bought? It’s not like these homes were trying to hide the fact that they were for sale or their asking price… why did she chose the price she chose, and the house she chose. You can’t honestly believe she had no idea other houses in the area were also for sale? Her own appraisal puts the value at 1,050,000. (And I think we can agree she’s going to present the lowest appraisal she can find). Not to mention this is backward-looking and therefore has the advantage of hindsight… something you dont have in a “Hot” market. In her best case scenario we are talking about 150k out of a 1.2 million sale, or 12%. It’s a substantial amount, but I dont think it’s that far off considering she’s using the lowest possible appraisal, looking backward into a very hot market at the time.

  102. 102
    Matt says:

    Also, take into account this quote from the article:

    “It is clear the Ummels did not rush into a decision: They dismissed one agent and canceled deals on two houses before Mr. Little found them a prospect on a cul-de-sac in a five-year-old luxury development”.

    That does not sound like the “innocent little lamb being led astray by the hungry wolf”.

    These people were obviously savvy enough to fire their previous agent for whatever reason, and flip 2 deals that didnt end up meeting their expectations before settling on the house they bought.

  103. 103
    Shawn says:

    imagine the horrible outcome of this court case. If the lady wins, re agents and thier pals might have to start telling the truth! Expect web sites in the future that cut out the re agent. This has met much resistance from re, but this meltdown will get this going. That’s my prediction.

  104. 104
    Ray says:

    The Tim Said.”You can buy a home without an AGENT”

    Yes, you can. You maybe able to from all the “knowledge” you have gained from Seattle Bubble. I assure you 99.8% of the people out there need a 3rd party to negotiate, assist in the paperwork, and let you in the homes. If you can do these 3 and get a better price(then I can get you) then represent yourself. In the end the sellers money(or Buyers as you call it) is well worth the .75% paid to 500 Realty.

    http://www.500Realty.net

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