Today’s Slow Market “Is a Different Animal”

From an article on home staging in the Puget Sound Business Journal:

For [Seattle home stager Jan] Sewell, who is also a Realtor with Windermere Real Estate and owner of her staging business since 1997, today’s market is unlike anything she has ever experienced.

“I have been through a couple of slow markets in Seattle before, but this is a different animal,” she said.

Sewell says she is already starting to feel the market’s traditional August sales slowdown.

“Most of my listings, up until this year, have sold within a week,” she said. “I am having staged things sit longer than I ever have.”

Take it for what it’s worth as an anecdote, but I thought it was interesting that even staged new construction is taking an unusually long time to sell.

(Clay Holtzman, Puget Sound Business Journal, 07.18.2008)

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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.

141 comments:

  1. 1
  2. 2
    EconE says:

    Noooooo! Couldn’t be…not NEW condos.

    They must not be luxury.

    Oooops…my bad. There’s a Windermere broker trying to dump a downtown 1BR for more than 100k less than she paid for it in 2006. And it’s really nicely staged.

    Cosmopolitan has a Penthouse listed at 899k. Same floorplan below it sold to a relative of my L.L’s for over 1.2MM in 2007.

    Nope…nobody here is getting fucked.

  3. 3
    Greg Perry says:

    Staging does help, however……

    You cannot market, or stage an overpriced pig to sales success.

    Competitive isn’t good enough. The offering must be compelling.

  4. 4
    Ubersalad, Ph.D says:

    Speaking of over-priced bubble, have you checked the EBay price on iPhone?

  5. 5
    economist says:

    today’s market is unlike anything she has ever experienced.

    Well Jan, why don’t you buy a DVD of Saturday Night Fever to help you get in the mood of these changing times.

  6. 6
    vboring says:

    why is the Puget Sound Business Journal trying to destroy the economy?

    somebody must’ve forgotten to send them the “only good news gets published” memo.

  7. 7
    mukoh says:

    LOL. One funny thing came out another day from a Windermere Realtor who was interviewed by a builder. She told the builder that Windermere Agents do not show houses that are listed with discount brokers to their clients. I almost fell off my chair on that one.

  8. 8
    deejayoh says:

    Love the title of the article:

    Jan Sewell, which prepares homes for sale in Seattle, slows down in current real estate slump

    Do they proofread much at the PSBJ?

  9. 9
  10. 10
    SeatteMoose says:

    House won’t sell?

    Overpriced by $200K?

    No problem….just move the couch a few inches.

  11. 11
    Bits_of_Real_Panther says:

    Anyone know how Burien Town Square is doing? Just curious, can’t find anything on it. Maybe the nicer units will be reasonable by next year, they were supposed to sell in the 500s

  12. 12
    Demersus says:

    “Jan Sewell, which prepares homes for sale in Seattle, slows down in current real estate slump”

    Easy to explain as grammatically correct; Jan is a thing. What sort of thing is Jan? That’s up to personal interpretation.

  13. 13

    MCMANSIONS ARE SELLING IN THE UPPER 100S

    Assuming Seattle is a mirror of California homes; here’s the new home construction advertisement signs I saw in Fresno this week:

    Old price $445K, new price $335K….

    Gated Community McMansions in the mid 200s.

    New large gated community homes for sale, below builder cost, in the upper 100s….

  14. 14
    Scotsman says:

    Both mortgage rates and the 10 year bond are up significantly over last week. I’m sure “Jan” may find things even slower as we go forward.

    It’s not enough for a home to be nicely staged and well priced. Given the public’s growing awareness of market issues, a seller has to price so aggressively buyers do a double take. And even then, a bit of luck helps..

  15. 15
    Joel says:

    What sort of thing is Jan?

    She’s a home selling machine!

  16. 16
    explorer says:

    You know, even a staged house is empty, no soul, no life, no Je nais se quois, no Joi la vive!

    Perhaps if you hired a bunch of actors to demonstrate a good cocktail party, or a family with children watching TV, having a food fight, or even yelling at the kids to do their chores or homework, you might make that human sales connection a little stronger, and the insticts to buy irresistable.

    Sorry, could not resist. Remember stagers, you owe me.

  17. 17
    disbelief says:

    Ahh, “staging” …

    another passe bubble-era anomoly, gone the way of pot smoking 20-something “senior loan officers”. Shame, really.

  18. 18

    Hi Lionel,

    Looks like the craigslist ads are using the foreclosure auction properties as bait to try and get you to attend their “investors meeting”

    I’m sure they will try and sell you all kinds of books, tapes, coaching, or “systems” on how to get rich buying foreclosures.

    I’d flag it.

  19. 19
    Jonny says:

    “Perhaps if you hired a bunch of actors to demonstrate…”

    Something like the happy family from “parents” maybe?

    http://www.imdb.com/title/tt0098068/

  20. 20
    faster says:

    Cue the deer!

  21. 21
    economist says:

    Perhaps if you hired a bunch of actors to demonstrate a good cocktail party,

    They were actually doing this in California a couple of years ago.

    http://www.accessmylibrary.com/coms2/summary_0286-15989558_ITM

  22. 22
    uwp says:

    Wasn’t someone around here staging condos with mannequins?
    It was kind of freaky.

  23. 23

    “another passe bubble-era anomoly, gone the way of pot smoking 20-something “senior loan officers”. Shame, really.”

    The pot smoking may not be passe, but the twenty something senior loan officer is about as au courant as Boy George.

  24. 24
    mikal says:

    Hey Eleua, How is the weapons bunker building going? The apocalypse is right around the corner. BE PREPARED.

  25. 25
    Lanny Poffo says:

    Well – credit goes to faster for originally finding the listing with these classic staging photo’s

    http://i-0.rfimg.us/photo/1/bigphoto/44 … 44_3_1.jpg

    http://i-0.rfimg.us/photo/1/bigphoto/44 … 4_12_0.jpg

    But – the place DID eventually sell – I think the this was the original listing: http://www.redfin.com/stingray/do/print … id=1342428

    Lanny

  26. 26
    Lanny Poffo says:

    Oops sorry about that – fixed the links:

    Well – credit goes to faster for originally finding the listing with these classic staging photo’s

    http://i-0.rfimg.us/photo/1/bigphoto/444/27212444_3_1.jpg

    http://i-0.rfimg.us/photo/1/bigphoto/444/27212444_12_0.jpg

    But – the place DID eventually sell – I think the this was the original listing:
    http://www.redfin.com/WA/Seattle/3647-Greenwood-Ave-N-98103/home/302516

    Lanny

  27. 27
    didn't just fall off the turnip truck says:

    Hey Lanny,
    Are you Leapin’?

  28. 28
    TJ_98370 says:

    mikal –

    What’s with the snarky comment directed at Eleua? He hasn’t even posted on this thread. You’re coming across as a bit defensive. Bad day at the sales office?

  29. 29
    ekim says:

    nice language there, # 2, Econ E. very mainstream.

  30. 30
    Eleua says:

    mikal,

    Obsess much?

  31. 31
    Lake Hills Renter says:

    “Cue the deer!”

    Hah! I loved that movie!

  32. 32
    db says:

    > LOL. One funny thing came out another day from a Windermere Realtor who was > interviewed by a builder. She told the builder that Windermere Agents do not show > houses that are listed with discount brokers to their clients. I almost fell off my chair > on that one.

    I had another realtor tell me the same thing, specifically naming FSBO and Redfin. Is that actually legal? Its certainly immoral to not pursue the best deal for their client, regardless of listing agreements, but generally agents are pretty immoral people (imho).

  33. 33
    S-crow says:

    DB-

    Was that on the news? That seems like the kind of anti-trust issues that NAR and DOJ are in court over.

  34. 34

    Well, of course the new constructions aren’t selling because the builders are trying to recoup their costs. With such high construction costs they have to price their homes at a premium. However, the longer a new construction sits on the market the more negotiable a builder will be – this is due to the carrying costs such as taxes, maintenance and loans.

  35. 35
    EconE says:

    Sorry Ekim…

    didn’t mean to offend your god-damn fucking PNW passive-aggressive sensibilities.

    was that better?

  36. 36
    Greg Perry says:

    “> LOL. One funny thing came out another day from a Windermere Realtor who was > interviewed by a builder. She told the builder that Windermere Agents do not show > houses that are listed with discount brokers to their clients. I almost fell off my chair > on that one.”

    Windermere brokers and attorneys, as well as NWMLS attorneys are repetitive in their training and commentary regarding the concept of commission fixing, competition and negotiation.

    Unless an agent has a written agreement with a buyer, they are obligated by agency law to show all properties with a reasonable SOC. (1 cent, $10, $100, any extremely low offering is not considered reasonable by any standard)

    Windermere agents in fact do show properties listed with discount brokers and builders. FWIW, Windermere’s market share is approx 1/3 of all homes sold to buyers on the Eastside and a greater percentage in Seattle and that happens because they show properties.

    This anecdotal story may be true, and may not be true. If in fact an individual agent did say such, the agent was incorrect. If the agent practices in this way without a specific written agreement with his/her client, then they could be in violation of Washington license law.

    As a buyers agent, I can strike an agreement with the buyer for the amount of my compensation. If the SOC commission offered is less than the agreement, it would be up to the buyer to make up the shortfall. This includes FSBO’s and distressed properties.

    Two final points:

    Properties are transparent to the consumer. The properties are online and often the client requests the showing. The agent has limited control of the process.

    FWIW, we’re seeing SOC commissions going up in certain circumstances due to increased competition.

  37. 37
    Greg Perry says:

    S-crow
    Like the new look!

  38. 38
    disbelief says:

    “nice language there, # 2, Econ E. very mainstream.”

    Well ekim, if you think that civility can only be expected from elevated (i.e. not “mainstream” people), then I guess you have nothing to complain about. Perhaps you can find a more high-society version of the SeattleBubble that won’t offend your polished sensibilities?

  39. 39
    mukoh says:

    Greg:
    Quote
    Windermere brokers and attorneys, as well as NWMLS attorneys are repetitive in their training and commentary regarding the concept of commission fixing, competition and negotiation.
    End Quote

    Windermere Brokers are repetitive in telling their agents not to take listings below 6%.
    As far as the comment above on Windermere agent, it was funny since with that she was trying to demonstrate how superior a Windermere agent is to another discount agent. :)
    She did not get to list the builders product however. It was still funny to hear that.

  40. 40
    Greg Perry says:

    “Windermere Brokers are repetitive in telling their agents not to take listings below 6%”

    Each broker owner has the ability to establish his/her company commission policy and business standard. Each broker allows for situational negotiation. You will find that commission amounts will vary between core areas and outlying areas.

    And you know what? In Kirkland alone there is close to 250 Windermere agents. Many Windermere agents are very experienced and talented and some not so hot. I know outstanding agents from JLS, Re/Max, CBB,Keller Williams,Skyline, Lake and Company, Prudential, and other companies……and some not so hot.

    A Seller or Buyer should carefully interview their agent for character and competency and make their own value decision.

    In my mind, discount brokers are fine. They serve a need to the marketplace.

  41. 41

    There is no official policy from Windermere, or JL Scott, or ReMax, etc to not show Refin listings…That said, I know a few agents who will not send listings to their clients of homes that are listed with Redfin…I don’t know what they’d do if the buyer specifically requested to see a Redfin listed property, I know they’re supposed to. and I’ll second what Greg said. There are good and bad agents at just about every brokerage. I’d probably avoid a brokerage if it were named ” The Shyster Agency” or “Fly By Night Real Estate.”

  42. 42
    mike2 says:

    There are good and bad agents at just about every brokerage.

    This phenomenon is a BIG contributor to the generally poor opinion people have of Real Estate Agents.

    I’m always amazed that the “profession” itself doesn’t do more to improve the average quality of the “professionals”. At the very least, the individual brokerages could implement MUCH higher qualifying standards. (I’m sure some do, but it’s not apparent to consumers)

  43. 43

    Mike 2-

    Very good point. The ‘weed out’ process is Real Estate is minimal at best. About 20 classes and a 1 hour easy test and you’re ready to be the fiduciary for the biggest investment in most people’s lives….doesn’t make sense. Compared to the CPA, Med Boards, and the Bar, its a total joke.

  44. 44
    Ray Pepper says:

    Ira not sure if you are a big Rush fan like me but I would **definitely** use a Brokerage called **Fly by Night!**assuming they give 75% back to the consumer.

    Agents that don’t show listings from 500 Realty, MLS 4 Owners, Red Fin, or anyone else paying a fair Buyers Agent commission don’t have a Buyer anyway!

    Ray Pepper
    Broker
    http://www.500Realty.net

  45. 45
    jon says:

    We had our house on the market briefly last year before we had a change of plans. We used MLS4Owners and had reasonable traffic considering the market. Biggest problem was we couldn’t do a broker’s open house without having an agent there. I would definitely go with them again, especially knowing that the buyer’s agent commission wouldn’t be going to a 6%er like Winderless.

  46. 46
    ekim says:

    Just curious, the rest of you think this trash is acceptable?

    ————————————–

    EconE // Jul 19, 2008 at 11:07 am

    Sorry Ekim…

    didn’t mean to offend your god-damn fucking PNW passive-aggressive sensibilities.

    was that better?

  47. 47

    Ekim- I think you’re putting fuel on the fire by making an issue of it. We’re all adults here.

  48. 48
    TJ_98370 says:

    EconE is a long time visiter of this blog and I would rather read any of his honestly felt opinions as opposed to the inaccurate tripe others like rentersarelosers post.

  49. 49
    Rentersarelosers says:

    EconE is a long time visiter of this blog and I would rather read any of his honestly felt opinions as opposed to the inaccurate tripe others like rentersarelosers post.
    …………………………..

    honestly felt opinions can be inaccurate tripe

    RAL

  50. 50
    Herman says:

    Here’s a true story.

    About 2-3 years ago I toured a Windermere-listed home. I liked it, and was going to work with a lawyer to put a standard offer together. (This was before I’d heard of Redfin) I told the listing agent that I intended to split the savings on buyer’s agent fees with the seller via a slightly lower pricing of the offer.

    The agent called the next day to tell me they had another offer and that I had to act fast. She also said that, “her broker is not interested in looking at offers unless they come from another agent.”

    This would have been a violation of state law, which requires her to present all offers made in writing to her seller. Of course, should could have given slanderous advice like, “I think this guy will be hard to work with, I recommend you decline it” and I never would have known.

    But, meh, I didn’t want to deal with the hassle and let the house go.

  51. 51

    “honestly felt opinions can be inaccurate tripe”

    But you can’t make menudo without it.

  52. 52
    Greg Perry says:

    Jon,
    Of course! It’s all about one’s personal philosophy.

    Years ago, I wanted to do everything myself. Home improvements, taxes, investments, you name it. I felt I could do just as well and was convinced that I saved money. That was my personal philosophy at that time.

    Today, I use the best accountants, investment counselors and contractors that I can find. I even have someone else mow my lawn. Why? My personal philosophy changed.

    Brokerages like MLS for Owners have a position in the marketplace for those with a DIY philosophy. It’s a good outlet.

    And here’s the deal, (please do not read this as a put down –remember I was where you are once) I rarely work with a guy like you. I generally work with a client who values their time more than their money……or simply does not have the time or the desire to research the subject. The client who is attracted to me has a different value philosophy.

    Which is why the full service brokerages have a position in the marketplace.

    A large portion of the audience that reads this blog and other blogs make real estate a hobby. Do not underestimate the TIME in research that reading and following the blogs take. However, if one persists, a higher understanding of the process may allow a reasonable DIY experience. This portion of the audience is using their time (to save money) for research.

    FWIW, not all that read this blog are attracted to the DIY experience. I served back to back, avid SB readers in February and March (totaling 1.4 million), who were attracted to what I offered and contacted me to help them buy a home. The commissions were paid, and they both felt they received high value. In fact, they are now great referral sources.

    For those who are frustrated with general “agent competency”, as agents we often get just as frustrated. If the majority of consumers would do a modicum of diligence, or not hire precious granddaughter who is barely licensed up, most of the yo yo’s would never get hired and would be forced to go away.

    Mike2,
    Many agents are past corporate executives (like myself), ex lawyers, professional negotiators, professors, coaches and others who have achieved at high levels in the workplace, who view real estate as a profession and educate themselves in this business as such.

  53. 53
    TJ_98370 says:

    Good one, Ira.

  54. 54
    Ray Pepper says:

    You know Greg I have to tell you this. I believe we are both trained professionals in the field of Real Estate. What I cannot understand is how any Agent can continue to justify accepting 2-3% representing a Buyer or seller.

    I just closed the most difficult client I have had in 5 years. I showed her 29 homes over 5 months. I logged the time spent. Purchase price was 222k . My pay was 2050.00 with 500.00 going to the house. I worked 37.5 REAL hours when it was all done. I made 55.40 an hour. Remember this was the most time consuming client I have had. As an RN I get paid 35.00-41.00 when I take a NOC shift with an Agency.

    Real estate is just fundamentally flawed with the high commissions. Change is happening and I know the Big Brokerage doors will swing both ways eventually offering 2-4% and a 1-3% plan. It will be better for all of us and the consumer will win!

    Sadly the blood will continue to spill and the name-calling will continue. We are very proud to be a part of the change and PRAY for people like you to assist us in changing the system and giving the consumer what they want.

    Ray Pepper
    Broker
    http://www.500Realty.net

  55. 55
    Greg Perry says:

    “You know Greg I have to tell you this. I believe we are both trained professionals in the field of Real Estate. What I cannot understand is how any Agent can continue to justify accepting 2-3% representing a Buyer or seller.”

    Ray, because some people will shop at Nordstrom and some at Wal Mart. Some agents fly away with the commission check in their beak after the close, I serve my clients long after the transaction closes as a trusted advisor. Again it comes down to an individuals personal philosophy.

    We negotiated for 6 weeks on a house for one of those SB readers that I described above. House was worth over $700k the year before, on the market for $680k and we secured it for $635K. My client was happy to see that I received my 3% commission for over $53,000 in negotiation. (We also negotiated over $8,000 in inspection repairs). I’ll be hosting a house warming party for him next month and continue to assist him with any needs associated with the house purchase.

    I had a top exec with MS who I assisted with a finding a lot, identifying an architect and a builder. My $36,000 commission (for just the house, I was paid separately for the lot) was on HIS HUD 1 as a buyer expense. After the project was completed, he told me sincerely that he couldn’t believe my commission was only $36,000, and that I was worth much more to him than that. He gave me a bottle Quel Ceda Creek Cabernet Sauvignon as a thank you. Since, he has referred 3 family members and 4 others who have moved into his department, all whose homes have closed.

    I often see the rank and file MS workers with different personal philosophies than the MS executives (I see this in every company). There is a reason people rise to the top of their fields.

    You see my friend, there is nothing, nothing at all you can do with your present broker business model to attract these clients. You give T shirts away, my client gives me a gift of a bottle of wine worth several hundred dollars, after a $36,000 commission plus several referrals that have netted me thousands.

    And no matter what the big broker decides to do, I can still charge what I negotiate for my services.

    Some people only see price, others see value.

    I will always have a market…….. And so will you.

  56. 56
    victorchai says:

    now that is a show off…………dah……

  57. 57
    Greg Perry says:

    Ray,
    “I just closed the most difficult client I have had in 5 years. I showed her 29 homes over 5 months. I logged the time spent. Purchase price was 222k . My pay was 2050.00 with 500.00 going to the house. I worked 37.5 REAL hours when it was all done. I made 55.40 an hour. Remember this was the most time consuming client I have had. As an RN I get paid 35.00-41.00 when I take a NOC shift with an Agency.”

    Ray, you didn’t come close to making $55.40/hour. You’ll be lucky to break even. From your gross you need to pay your taxes, health insurance, marketing and expenses. The gas alone on this one would be expensive. And how are you factoring risk? This isn’t looking like a sustainable model to me.

  58. 58
    Scotsman says:

    While I’m sure Greg will indeed always have a clientèle, over time I expect Ray’s side to win out. And the reason is simple- as in other fields, technology continues to lower the cost of relevant information while improving content and timeliness, all the while providing better access to competition. The MLS lock on data is being broken down, allowing buyers and sellers to connect more directly, more efficiently, and at lower cost. The need for an agent, especially one without any real skills, is being marginalized. And with the current national interest in real estate fraud, etc as a result of the collapsing bubble, i wouldn’t be surprised to see a push for nationalized standards and forms for completing transactions, making the current specialists even less necessary. While some buyers and sellers will always require or want personalized treatment, the majority will seek and be able to find lower cost alternatives that meet their needs.

  59. 59
    what goes up comes down says:

    Greg the future holds something for you = Dodo Bird

    See you might not understand this but you don’t create anything. You skim.

  60. 60
    Ray Pepper says:

    Greg, the majority of our customers usually find their home and then call us so I would say we average 2-3 showings. That one case was an exception to the rule. But, the concept of paying someone to negotiate for you is absurd. On each and every 500 Realty transaction the Buyer makes an educated decision, with our guidance, based on recent sales and current market conditions. You saving 1 client 53k is the standard in this environment. Please review my closings and see what 500 Realty Buyers are saving from their list price. I will give you a few here off the top of my head:

    249k list sold 222k
    234k list sold 199
    495k- 465k
    939k -878k
    739k -677k

    You see Greg I firmly believe people need door openers, expert guidance, and trained negotiators. I have turned down the last 4 agents who applied to 500 Realty. None of them fit the bill of what I see is the future of Real Estate.

    People love looking for their homes and more and more Agents are paying their clients to do it. We just pay the most and make most of our money off Lead Generation. There will be thousands of Real Estate companies that build advertisers and develop a Loan network.

    When there are high commissions the incentive to sell by the Agent is increased and the Buyer or Seller loses their edge in the transaction.

    The current professional realtors will find a place in Real Estate for the future but we will all be looking back at the 6-7% concept and laugh. The professional realtor has nothing to fear as long as they can adapt. The MLS system, as we know it, will come to an end.

    Ray Pepper
    Broker
    http://www.500Realty.net

  61. 61
    Sniglet says:

    Ray,

    Changing subjects a bit, I am curious as to whethere there could ever be regional or economic circumstances in which you would recommend that most prospective buyers consider postponing purchases?

    For example, would you recommend that most people should forego buying if you saw a bunch of indicators that led you to conclude that real-estate prices would decline 30% or so in a couple years?

    Are there any places in the US where you feel people should NOT be buying today (i.e. because there are significant price declines still ahead)?

    Or maybe you feel there is no such thing as a “bad” time to buy, and that it all just depends on finding a house you like that fits your budget. The prospect that prices might decline are just an irrelevancy that buyers shouldn’t worry about.

    I recall you making comments about how there are “always” good deals to be found. I guess that if someone had been able to buy a home in Sacramento in 2004 for 40% less than the average list price for similar properties that they would have had a good deal which would have held up well even despite their price declines. Maybe it just takes good realtors to help buyers find those kinds of screaming deals…

  62. 62
    Rentersarelosers says:

    Ray

    1) You see Greg I firmly believe people need door openers, expert guidance, and trained negotiators.
    ……………….

    So why does Redfin hire amateurs with very few closings under their belt?

    2) Greg, the majority of our customers usually find their home and then call us so I would say we average 2-3 showings.

    Ray, how do they get in to see the home without an agent? Most people will want to see what, 30-80 homes before they buy?

  63. 63
    Rentersarelosers says:

    Flippers are back in Seattle:

    http://blog.seattlepi.nwsource.com/realestatenews/archives/142801.asp

    I was wondering about that myself as I had a couple offers from investors/flippers. Do investors know something Bubbleheads don’t? Naaaah, you guys are the brightest! The “creme de la creme” as they say.

  64. 64
    Greg Perry says:

    Scottsman, you bring up good points for discussion.

    We have to honestly evaluate society? With technology, people have more information. Do people have more time? or less time as a result of technology and information?

    Can real estate be broken down to a simple transaction? The long AND current trend is the opposite. Every year the forms get longer and more complicated. Why? Somebody sued somebody and won. Or, the Legislature pass a new consumer protection law that creates new rules and procedures —with penalties.

    Yes, you bring up the issue of fraud. What has really happened? It is now a FELONY for an agent to be a party to real estate fraud in lending. Now in the minds of the attorneys, there is a lot of gray area where fraud begins. The stakes are higher. We now have increased risk. How many brokers and agents will willingly give up money for more risk? Also, the State of Washington is raising the bar on agent qualification.

    Now as you point out the market is correcting. Are FSBO’s being successful in this market? Are we seeing a trend for commissions to go up? or go down. Commissions are definitely trending up. New construction commissions which are always lower are now above customary market driven commissions. Sellers are enticing buyers agents with a better offering to assure showings. Commissions drop when the market heats up.

    Nationwide forms? Not a prayer. At least not in our lifetime. The States are too scattered and too independent. Real property is transferred differently state by state.

    And yes, people have access to data. Other than those who make Real Estate a hobby, much like you, how many people actually absorb themselves in the data to be able to make any kind of quality decision. From my experience, very few.

    And finally, people don’t know what they don’t know. The other day on the RCG, The Tim was relaying that his intense study and research yielded many surprises and busted a few misconceptions.

    What I will wholehearted agree with is that there is a transfer of money in a real estate transaction. Enterprising businesspeople everywhere will try to work and create a model to capitalize on this money. It’s called Capitalism. It’s a good thing.

    I really don’t see real estate becoming a simple transaction anytime soon, however. Real Estate is too litigious and often acrimonious.

    One of the biggest obstacles for a new model is the thingy called a lawsuit. The first suit wipes out the E&O IF E&O pays out if there is no negligence. If there is negligence or a 2nd lawsuit happens, it’s bye bye now.

    There’s a lot of room for debate in these issues.

    WGUMCD,
    “Greg the future holds something for you = Dodo Bird

    See you might not understand this but you don’t create anything. You skim.”

    I understand that’s your paradigm. You get to keep it.

    Here’s my dirty little secret. My clients don’t see it that way. They come out the transaction satisfied with value and use me over and over again and refer me others. It’s an awesome thing working with good people. Good people know other good people. Those agents who work transactionally often get quite a few “jackasses”. I don’t see jackasses in my business. Only the good, fun ones!

  65. 65

    “So why does Redfin hire amateurs with very few closings under their belt?”

    You may not like Redfin or how they do business, but they require their new hires to have closed 20 transactions. I’d say that if you’ve closed 20 transactions, you can’t really be called an amateur.

  66. 66
    Greg Perry says:

    Ray,
    Again, we’re working with a completely different profile of consumer. You are working with the price driven consumer. I am working with the value driven consumer.

    I get to keep ongoing relationships and deeply serve after the transaction closes. You huck your wares at home shows etc. hand out t shirts.

    We’re different and have a different client profile. And I’m happy you’re out there doing your thing.

  67. 67
    Rentersarelosers says:

    We have to honestly evaluate society? With technology, people have more information. Do people have more time? or less time as a result of technology and information?

    Here’s my dirty little secret. My clients don’t see it that way. They come out the transaction satisfied with value and use me over and over again and refer me others. It’s an awesome thing working with good people. Good people know other good people. Those agents who work transactionally often get quite a few “jackasses”. I don’t see jackasses in my business. Only the good, fun ones!
    …………

    GREG, I AGREE 100%

  68. 68
    Sniglet says:

    Rentersarelosers,

    I would love to hear your thoughts on the question I posed to Ray as well. Do you think there is such a thing as a “bad” time to buy? Are there any indicators you think prospective buyers should look for that would be warning signals that prices are going to fall significantly, and that they should postpone a purchase?

    For example, do you think it was a “bad” time to buy in Sacramento back in 2004? Was there some particular factor that Sacramento area buyers should have been looking at to warn them against buying back then?

    I respect your view that the Seattle market is healthy, and that people shouldn’t hesitate to buy right now. I am just trying to undersand what you think would constitute an “unhealthy” market.

  69. 69
    Ray Pepper says:

    RAL we screen our Buyers to see if they are a good fit for 500 Realty. Since we give back 75% of the dough they must do 75% of the work. Finding the home is always the hardest part in real estate. Our Agents let all of our clients in the home but the discussion goes like this:

    1. Are you Pre-Approved? We must have your Pre-Approval on file to begin showing homes.
    2. After they locate a home or homes. Our Agent will ask did you look at the pictures on line? Have you driven the neighborhood? Have you talked with neighbors? Is this the property you plan on purchasing?

    The Buyer when working with 500 Realty should do what every Buyer should do anyway before Buying a home. Then we step in.

    Sniglet–Prices are coming down and people have to sell. Your home this year will be worth less next year. However, cost to build will continue to go up. It sounds like you have read my blogs before. There are Gems in every market. We bought at the height of the boom in Reno. But, I stepped 50 miles away in Fallon and bought blocks of homes that were 139k with fellow investors. Why–the cost of materials—? So when Reno came crashing down the Fallon properties we bought went from 139k to about to a high of 229k to now about 195k. When they were completed they were worth almost 80k more so I sold off 2 and held 3. Same thing I did in Oregon and Texas.

    In Oregon now I have targetted areas near Albany and Salem where once again new homes can be bought for under 150k so we plan on hitting the trails again around Thanksgiving. I don’t have as much time as I used to now but I assure you that there will always be GEMS in any Bubble as well.

    Again it doesn’t matter when you buy…Its what you buy and what you pay for it. What is the cost to rebuild it? What is the rental rate? Is it easy to rent? If I knew prices were coming down another 30% (and they may) would I buy now. Absolutely but my offers would reflect that. ..PEOPLE ALWAYS NEED TO SELL..The hardest part is always finding the deal. It always has been and always will be.

    One blogger on here said it well.. In this market I will not Buy unless I can sell it the next day for a profit. I like that statement. It is what I always did. However, there will be thousands of GEMS hitting the market over the next decade and for me to personally buy anything now I look for Seller financing. These will always be the BEST GEMS in any market!

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

  70. 70
    Rentersarelosers says:

    You are working with the price driven consumer.
    Translation: Buyers that can barely afford what they are looking at and really need that “rebate”.

    I am working with the value driven consumer.
    Translation: People really looking for a home and are quite successful in their careers. Handle the details for me Greg!

  71. 71
    Greg Perry says:

    “RAL we screen our Buyers to see if they are a good fit for 500 Realty. Since we give back 75% of the dough they must do 75% of the work. Finding the home is always the hardest part in real estate. Our Agents let all of our clients in the home but the discussion goes like this:

    1. Are you Pre-Approved? We must have your Pre-Approval on file to begin showing homes.
    2. After they locate a home or homes. Our Agent will ask did you look at the pictures on line? Have you driven the neighborhood? Have you talked with neighbors? Is this the property you plan on purchasing?

    The Buyer when working with 500 Realty should do what every Buyer should do anyway before Buying a home. Then we step in.”

    This demonstrates a fundamental difference between how we approach the consumer.

    Before we go with a consumer we schedule a 60-90 minute consultation. With the aid of power point we:
    1. Discuss the current real estate market.
    2. Interveiw in-depth the customers wants, needs desires in a home.
    3. Discuss what to look for in a realtor.
    4. As the client “What is your expectation of a Realtor?”
    5. Define OUR expectations of our client.
    6. Go through the real estate process top to bottom, from pre-approval through closing so they have confidence in their decisions as the move through the process.
    7. Discuss the common consumer issues.
    8. Discuss agency and compensation.

    After this we know if we’re a good fit and start the process.

    I use this process with CEO’s and first time buyers.

    Another secret: Front loading this time makes the entire transaction go quicker and smoother.

    While we’re in process we discuss ideas like economic and functional obsolescence and the future resale of their selection.

    So Ray, again different ways to approach the business.

  72. 72
    Ray Pepper says:

    Greg all this talk of litigation and risk. When I graduated nursing school we were well aware of the ability to get sued anyday. Any many fields of work it is the same and none more then health care.

    “real estate is too litigious”—society is….This is not confined to Real Estate and has nothing to do with receiving high commissions.

    The home show circuit, sign holders, CNBC, blogging, and Giant signs are the only way we know to educate the state. Lord, knows the local newspapers will not assist us in telling the truth. If they do their Sunday advertising will be crippled. The home shows exhaust me. However, I will know I did my part in change when I see another 50 companies doing what we do here in Washington.

    Now off to the Bite of Seattle. You know what I will be wearing!

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

  73. 73
    Rentersarelosers says:

    I would love to hear your thoughts on the question I posed to Ray as well. Do you think there is such a thing as a “bad” time to buy? Are there any indicators you think prospective buyers should look for that would be warning signals that prices are going to fall significantly, and that they should postpone a purchase?
    ………….

    The Indicator (just like on the stock market) :

    Sell when their yelling! You don’t want to buy when the market is “frothy”

    Buy when their crying! Your best deals are when the gloom and doom perception is everywhere.

    Now I ask, where are we? If you intend on buying a home in Seattle and will live in it for 5+ years, now is a good time to get a great deal on a “Gem” as Ray puts it.

    Are you all working? Yup
    You all have loads of cash? Absolutely!
    Business is pretty good? Seems pretty steady!
    So, where’s the Recession?
    Aaah, an Election year you say? Gotta complain about something,

    BTW The following is 100% Right on in my opinion, (Older folks (over 50) here will understand, younger ones will most probably disagree)

    Gramm, who advised McCain on economic matters, made the controversial comments while discussing the economy.

    “We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness, America in decline,” the former Texas senator said. “You’ve heard of mental depression; this is a mental recession.”

  74. 74
    jonness says:

    “Just curious, the rest of you think this trash is acceptable?”

    It is your opinion that this is trash. It is difficult for some people to accept, but we live in a culturally diverse nation. IMHO, it is a good thing that we don’t all think and act exactly like you. Or for that matter, that we don’t all think and act exactly like me.

  75. 75

    “Now off to the Bite of Seattle. You know what I will be wearing!

    Ray Pepper”

    Ummmm….your bikini?

  76. 76
    Greg Perry says:

    ” when I see another 50 companies doing what we do here in Washington.”

    Ray, be careful what you wish for!

    Pretty soon someone will come along with http://www.425Realty.com —-wait a minute! That’s my web address! (I picked the Eastside area code)

    Ok then 400Realty, then 375Realty, then 350Realty. The eventual winner will be 000Realty.com

    On the discount side of things, the area of competition is focused on the amount of the discount.

    Those competing in value have a different set of rules.

    Have a good time at the bite, Ray. The weather is awesome. Pay attention to business and don’t sample all that food. It could be hazardous to your health!

  77. 77
    EconE says:

    Sorry if you guys don’t like my coarse, vulgar, nasty language….can’t say I really care though.

    If you ever get screwed by someone…they’ll probably do it with a smile, a handshake and a pat on the back…they will probably be very “positive”, and most likely have extremely polite and polished language. They’ll call you “brother” and tell you that you’re “like family”.

    I actually considered buying a condo at one point. Paying an agent 6% is not an issue for me nor do I really care (whether you attribute that 6% to the buy side or the sell side is no matter to me)…what I WONT do is buy a house from a FUCKING REALTOR that not only wants to make a commission, but also a profit from flipping the unit.

    So…to Realtor/Flippers (condo’s that is…not fixer upper houses)…I say…

    FUCK YOU VERY MUCH!!!

  78. 78

    In answer to Sniglet’s question which wasn’t asked of me, but that won’t stop me from answering:
    I’ve told clients that now is not a good time to buy. But it’s not a hard and fast “never”.
    In any given market, there are going to be relative bargains, and if you want to buy a home because you want to buy a home, and plan on living in it without ever foreseeing yourself selling it, and you can afford the payments, and you can buy it at a relative bargain, and you just don’t like being a renter….sure, why not?
    But if you think that you’re going to make a killing and think that real estate is a fabulous investment right now, well, to put it politely, you’re a bit misguided.

  79. 79
    disbelief says:

    “The Indicator (just like on the stock market) :

    Sell when their yelling! You don’t want to buy when the market is “frothy”

    Buy when their crying! Your best deals are when the gloom and doom perception is everywhere.”

    Oh, what sage advice! All armchair-investors and other assorted imbiciles should write this on the back of their necktie, so they can produce evidence of their saviness at cocktail parties, Realtor conventions, etc.

    The problem with this advice / strategy is that it really isn’t much advice or strategy at all. Like other vague, cliche sayings, it’s best applied in retrospect-after the fact.

    So you bought a property because you were hearing a lot of gloom and doom talk about real estate? What’s that…and then the value fell another 15%, and now after three or four years you have yet to break even? Well, silly you! Didn’t you know that at the time the gloom and doom talk was just getting started!? Things didn’t really get going until several years later! By that time EVERYONE was on the gloom and doom bandwagon. Now THAT was the time to buy! Oh well better luck next time!

    Yes, there’s some good advice for ya! in addition to this fail-safe strategy, we should also preferably purchase a “GEM” ( translation: “a really, really good deal!”)

    How can you go wrong with such invaluable advice?!

  80. 80
    Rentersarelosers says:

    disbelief,

    There are no guarantees in life. If you don’t have the balls to buy the stock or real estate market after a good tumble, well stick your dough in your mattress. Banks are not safe either you know. Oh and get some aluminum foil for your head and start building an Ark. The world is coming to an end.

  81. 81

    RAL- terrible analogy.

    Real Estate prices are much easier to predict that stock prices.

    Why? Supply and Demand. The only way to increase supply in the stock market is for the Board to issue new shares (no way for the public to know if and when this would happen). Granted, there are techincal indicators to trade by that can be effective, but not nearly as easy and reliable as pure supply and demand.

    Real Estate- supply numbers are easily accessible to the public. In fact, they are rising exponentially as we speak. If I could ‘short’ real estate in Seattle, I’d have ever last penny into that investment.

  82. 82
    Rentersarelosers says:

    If I could ’short’ real estate in Seattle, I’d have ever last penny into that investment
    …………………

    Why not short the entire real estate market then with a short ETF?

    Do you think that Seattle will go contrary to the overall national RE market long term?

  83. 83
    mukoh says:

    Ray.
    Quote
    Sniglet–Prices are coming down and people have to sell. Your home this year will be worth less next year. However, cost to build will continue to go up. It sounds like you have read my blogs before.
    End Quote.
    How do you factor costs to build are going up? Lumber is down, labor is down, there is a line of siders, H&S finish guys out the door.

  84. 84
    mukoh says:

    EconE
    You are obviously not really a buyer or have bought. Agent commissions are paid by seller.

  85. 85

    Mukoh,
    Of course the agent commissions are paid by the seller, but….where is the seller getting this money to pay this commission??? So, who’s really paying the commission?

  86. 86
    jon says:

    “where is the seller getting this money to pay this commission???”

    Ummm, by selling the house that he owns?

  87. 87
    deejayoh says:

    Well, let’s see. If you actually buy a house without using a buyers agent., and you’re the least little bit smart, you’ll get that 3% back in your pocket as a discount.

    In other words, you won’t have to pay that money.

    And the seller? Doesn’t care one bit – because he still nets the same amount.

    So who’s paying the commission?

  88. 88
    mukoh says:

    Ira, and you are an agent? Geez…

    You mean to tell me when you meet a client for a listing you present here is the market price of your property taking into the account CDOM 30 solds. It is $450k and my comission is 6%, and we put it on top of the market price?

    Or do you present here is the market price of $450k, and your net is $450k – my 6%.

    Market price is market either comission is 10% like it is on commercial/land or 1% from a repo discount broker.

  89. 89
    mukoh says:

    Deejayoh,
    LOL. Good luck agents out there who are on the listing side will definitely be jumping for joy happy when you ask them to give 50% of the commission to you.

  90. 90

    “Or do you present here is the market price of $450k, and your net is $450k – my 6%.”
    That and minus excise tax, minus escrow and title fees, etc…
    Of course, technically the seller is paying all of the commission. I spent so much time arguing this one in real estate classes…Without the buyer coming in with the money, there is no money and there is no commission.

  91. 91
    Scotsman says:

    Mukoh- i think everyone grasps this but you. Have a beer, think it over, and get back to us.

  92. 92
    EconE says:

    mukoh // Jul 20, 2008 at 1:59 pm

    EconE
    You are obviously not really a buyer or have bought. Agent commissions are paid by seller.

    ——————————————–

    Huh? Not really a buyer or have bought?

    I’ve already been an owner. Now I’m a renter. I’m sure I’ll be a buyer again sooner or later and I don’t care who pays the commission…I’m just anti “condo-flippers”. Even more so when a Broker or Agent is the “flipper” who then pays themselves the commission. (or sucks it out of my pocket)

    As I said…I have no beef with commissions.

  93. 93
    mukoh says:

    EconE
    Sorry misread on my behalf.

  94. 94
    mukoh says:

    Scotsman, I am grasping things better then most here.

    Ira, you are not grasping the point, market prices are what they are with commissions in them whether it is 1% or any other charge by a realtor. And the seller pays them. Just because the buyer is paying the market price for a house, he is not ultimately paying the commission the seller is, weather it is an arms reach transaction for a friend 0% or 6% regular or more.
    There is no technically who pays it as a hud it is showing a debit to seller.

  95. 95
    jon says:

    Isn’t it true that if a buyer makes a full price offer, but the seller does not accept, then the listing agent can claim the commission anyway?

  96. 96
    born in seattle says:

    joness, I think ekim meant the swearing, which I also find offensive. The comments are sometimes offensive, but that is hardly a matter to worry about. I personally think that swearing mildly is ok, ‘hell, damn’ but not S*%$ or F*#@ in any forum.

    Ekim, thank you for suggesting decorum.

  97. 97
    born in seattle says:

    sniglet asked when is a good time to buy. last year and the year before might not have been such good times. but if some of you think prices are heading down 30%, maybe even 40%, in the next 2 or 3 years, or 4 years, why wait?

    I plan to buy now, which should be 5 – 7% lower than last year, ask for 10 – 15% lower than that, and find the have the place I want, at a possibly 5 – 10% higher premium than maybe I’d get if I wait … but I don’t want to risk waiting and renting any longer. I hate renting.

    Waiting has risk as much as buying has risk.

  98. 98

    born in seattle,
    Sounds like a good plan to me. …But if Sniglet’s right and we’re gonna see prices drop another 50, 60 % or more, then maybe buying right now isn’t such a wise move?
    On the other hand, I’m a bit of a sucker for that ” net migration, low unemployment, Seattle’s not gonna get it as bad as other cities” line….I think we easily could see prices declining for another year, but I don’t think the bottom is much more than an additional 10% off from here…But what do I know?…
    It takes all kinds. Some folks never want to own a home, and that’s fine. Other folks hate being renters, and that’s fine too.

  99. 99
    Alan says:

    Waiting has risk as much as buying has risk.

    No it doesn’t. If I buy and prices fall 30% then I lose a decade of savings.
    If I rent and prices rise then I can move somewhere less expensive.

  100. 100
    mukoh says:

    Alan,
    There is enough laborers in Kentucky already. Can’t find a job there.

  101. 101
    EconE says:

    Ahhhh…nice to see the politeness police storming in demanding a level of “decorum”.

    I’m the fringe. Yes, we are part of society. Some of us don’t really care if “language” offends. If you have problems with it, take it up with the thought police and climb back in your protective bubble that insulates you against all that is “ugly” in this world.

  102. 102
    EconE says:

    P.S.

    I still have respect for the majority of RE professionals that comment here so Greg, Ira, Pepper, Losh and others…you guys actually provide some insightful information and I hope you don’t think I’m hating on you guys.

    Hell…Greg was the first one to even point out that the high end was looking ugly.

  103. 103
    jonness says:

    born in seattle: I was referring to the swearing.

    It might be some people’s opinion that certain words I chose to use make me inferior. But I could easily adopt the attitude that a person who doesn’t swear was brainwashed at an early age to not use words that mommy believed were bad. IOW, she was taught that some white dude in the sky with a gray beard would reward her for being good by not using these words. If I were from a different country and believed in a different god, I would say she wanted the best for her child and handed down the same ridiculous BS that was handed down to her. Then that poor kid went the rest of his/her life thinking and acting in a certain manner without ever questioning the ridiculous belief system that was the root of each and every thought.

    If this were the case, I would have to ask myself whether the child was given a gift from her mother or had been cursed with a liability for life. Is it better to conform for the validation of one’s peers, or is it better to know the truth? I can’t answer that for each and every person, nor should I, but I can answer it for myself.

    I might or might not believe the above culturally-based beliefs. It’s just an example of how people think and act differently, and if one assumes he is superior to another simply due to his choice of words, perhaps he is selling that other person short. In truth, most of us judge each other by the cover of our books because it takes too much time and effort to really get to know the other person. And if we take that time and effort, we have a lot less time to convince everyone of how great we are. And if everyone else doesn’t know how great we are, then perhaps we have wasted our entire lives doing the wrong things.

    Unfortunately, no matter how hard we try to convince everyone else of our greatness, in the end, we die and rot into the ground. We are remembered for about the same amount of time that the inheritance we leave behind remains unspent. After that, nobody gives a darned what words we chose to use. So why should it matter to us now?

  104. 104
    Rentersarelosers says:

    I am surprised “The Tim” didn’t tell EconE to “chill out” for post #77 as he did me for much lesser language.

    It’s either hypocracy on Tims part, or he is out at the “The Bite of Seattle” and not watching our ‘lil EconE act like a tough guy. That’s usually a Napolean complex..

    EconE, well what a guy! Did you say you were a teacher or have I mistaken you with someone else on this board (with an economics type name)

  105. 105
    david losh says:

    OK RAL, I didn’t read too much of what you wrote but I’m getting the idea you’re a Real Estate agent.

  106. 106
    Scotsman says:

    Dang- Zillow dropped my house another $500 over the weekend. That, and the fact that there were two open houses on my street today and neither had a single looker that I saw, suggests that we must be at the bottom. Time to get out there and BUY people. Or maybe not.

  107. 107
    EconE says:

    RAL…Tim’s probably out at the Bite O Seattle. He’s censored me before and I wouldn’t expect any less when he gets back. I’ve been put on moderation too before.

    My anger is not directed at any person in particular…rather the system that it became. Especially with condos. Houses weren’t flipped like condo’s with absolutely NO value added and people have been burned. Most of the people on the board are looking for houses. I’m not. Been there done that as an owner. I don’t work, so I prefer the lock and leave lifestyle that a condo affords but as far as I am concerned, with the Realtors, Developers, Lenders all in bed together on the condo projects I feel that a real mess was made with the flipping game combined with poor financing.

    I have the same feeling towards banks. So…I’ll be paying cash when I ultimately buy a place. Will it be here? Who knows? Maybe, maybe not. I’m fortunate to have that freedom. You’ve been making me reconsider sunnier climates however. ;o)

    WRT teaching. I was a substitute teacher for a couple years. Worked with Special Ed kids. Kind of a volunteer thing. Did the business/marketing classes also on occasion but preferred Special Ed as they actually wanted to learn and the business classes were a joke for high school. Our educational system is in shambles. It’s not the the teachers faults either…it’s the bureaucracy.

    And no…I didn’t “curse” in front of the kiddies and I always expect that there will be people out there that are offended by a simple four letter word.

  108. 108
    Ray Pepper says:

    I fell asleep last night with some infomercial channel on. I woke up about 4am listening to stories about colon cleansing.

    After today at the Bite I think I will sign up for one.

    I feel too ill and weak to talk real estate but I will say this and most will disagree with me……………………..

    I like Jack Nicholson as the original Joker far better then I did Ledger.

  109. 109
    david losh says:

    A short sale negotiator at GMAC a month ago was asking me if I have ever seen anything like this market and I had to admit I haven’t.
    Last night I had a dramatic conversation with a very conservative Real Estate investor who is scared.
    A couple of years ago my perception was that the money from the stock market bubble rolled into Real Estate. What I over looked was the amount of building financed by over extending loans. I can remember the day when I saw a $500K town house by Northgate and wondering who would buy it. It sold in a week.
    I began telling people not to buy and that they should sell in 2006. I concentrated on listings. Buyers I had were severly cautioned. Presenting low ball offers is a duty if that’s what I believe. I did sell a couple of properties where people insisted and just made sure it was the best deal they could make. I felt strongly that they were better served by me than some of the buyers who went on to be swindled by other Real Estate agents less skilled.
    This market is anything but normal. Seeing the run ups in commodity prices really seems shallow at this point. I can’t see the next investment strategy.

  110. 110
    Greg Perry says:

    ” I woke up about 4am listening to stories about colon cleansing.

    After today at the Bite I think I will sign up for one. ”

    Ray, Ray, Ray. I begged you to stay away from the food.

  111. 111
    Greg Perry says:

    “with absolutely NO value added ”

    EconE, FWIW, I’m with you on this one 100%

    I love you man…….. but you’re not getting my Bud Lite.

  112. 112
    disbelief says:

    RAL,

    Where in my comments do you read that I think that real estate, or anything else, is in some kind of doomsday scenario?

    I was merely pointing out that when pressed to give an example of when it’s not a good time to buy, all you can do is spew some trite nonesense that any idiot can offer (and you can’t figure out – is meaningless).

    You have a disturbing way of reading things that don’t exist into posts, and then being stupid enough to criticize them based on what you only imagine.

    Perhaps the tin-foil would be put to better use if it could be surgically implanted in your brain, so it can help to conduct your thought impulses, and you could make a “connection” for once.

  113. 113

    EconE,
    Just to let you know that I’m not at all offended by what you write, agree with you far more often than I disagree with you, and I also feel that many of the real estate pros on here add good insights and information..From Jillayne and Ardell to Greg and Ray and S-Crow and pepper and David Losh and Steve Tytler and others, I think their contributions make Seattle Bubble a better place. Me? hopefully I add a little entertainment value , at least.

  114. 114
    mukoh says:

    Market is irrational in a dysfunctional way, the pockets that are under my watch for inventory/sales/price decreases are all over the place. One area can be at 4 month supply then next month it is at 2.9 for the type of property.
    Other area goes from 8 months to 11 months in the same time frame.
    The outlying areas past Everett and Issaquah are just hurting big time.

    Then friends are calling telling me his gf realtor sold four houses in the $800s in a month, and the offers actually closed. Next month this realtor lists a house for $1.1m and sells it in a week. Of course that is all seattle areas.

    Nobody can really make sense of where it is at.

  115. 115
    what goes up comes down says:

    mukoh — you are full of BS.

    Greg —

    “” when I see another 50 companies doing what we do here in Washington.”

    Ray, be careful what you wish for!

    Pretty soon someone will come along with http://www.425Realty.com —-wait a minute! That’s my web address! (I picked the Eastside area code)

    Ok then 400Realty, then 375Realty, then 350Realty. The eventual winner will be 000Realty.com

    On the discount side of things, the area of competition is focused on the amount of the discount.

    Those competing in value have a different set of rules”

    It seems to me Ray isn’t too worried about this why should you be?

  116. 116
    mukoh says:

    Full of BS?

  117. 117
    Ray Pepper says:

    When we started 500 Realty my initial concern was 400 Realty, 300 Realty etc.

    Now I pray to the heavens for any and all Brokers to start companies such as 500 Realty. The general public has no clue what we do and our message is constantly distorted by fellow Realtors.

    I wish Red Fin advertised more on TV and newspapers. Furthermore I wish they went to trade shows like us and HAD giant signs up and down I5. When the public finally gets educated the Buyers will seek us out and the masses will know what YOU Bubble heads already do.

    I encourage you all to assist us in educating Washington!

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

  118. 118
    BrianL says:

    We’ve been looking at houses through Redfin for a little while after following the market for a year or so. As we planned to do a bunch of research on our own, it made sense.

    We aren’t in the ‘just scraping by’ bracket – we’re have 15% down on places in the budget we are looking at. This will be our first house purchase so we’re being reasonably conservative. We’re looking at places costing roughly 85% of what we’re preapproved at, are staying small/closer in to reduce other costs (heating, gasoline, etc) as well as (hopefully!) minimize the loss in value as the market decays.

    We found a pair of good places assuming we’d get a few thousand back through Redfin (ie maximize our downpayment by putting the refunded money towards closing). It turns out both places on selling with 1% commissions so there won’t be any money back after all; – there would have been no difference going with Redfin or a more traditional sellers agent on our end. Maybe that means there is a little more negotiation wiggle room, but that seems unlikely given the sellers call to opt for the lower commission.

    Perhaps as sellers are squeezed and get more thrifty, it seems like the Redfin/500 model loses its appeal. Aside from being more able to absorb hit, how can Redfin/500 position themselves under this model?

  119. 119
    faster says:

    Greg Perry – if you ever invent a time machine, go back in time and remove your comments from this article. They don’t make you look good.

  120. 120
    Herman says:

    Greg,

    I know where you’re coming from. 10 years ago I refused even to pay for parking, instead choosing to walk as far as it took to park for free. Now I’m too busy for that attitude and I will pay for services and expertise.

    In 2006 I went with an agent from Windermere (two actually). My expectations were that he would get an imprint of my tastes and scout homes for me, then call me when he found a perfect fit. Remember, I’m busy, I don’t have time to look at 50 houses.

    But he was lazy. From what I could tell, this was his idea of his job: create an electonic search. Run the search every weekend, and email the results to me. Ask what I wanted to see. He refused to look at them without me, saying things like ‘you never know what someone will like’ and ‘it’s too time consuming’ and ‘I need you with me to learn’. I fired him.

    Then the second. I remember standing on the back porch of a house on Queen Anne, yelling over the noise from the Aurora bridge that I thought their counter-counter-offer was too high ($890k). She yelled back that the neighborhood would support the price. I declined. Months later, that house sold for $795k. Her advice would have cost me almost $100k in value. I fired her, too.

    The trouble is, Greg, these are not exceptions, this is standard quality. Realtors are unqualified and lazy – and they got more lazy in the 2000’s when marketing a home was as easy as listing it on the MLS and collecting a check three days later.

    So you work in the upper tier of the market. It sounds like your clients are in the market at $1.5M and higher. At those prices, the clients should demand and get the types of services that I expect.

    But the vast majority of homes and clientele does not fit that profile, and for us, the 6% commission is not justifiable though the prices are still quite high. The commission structure is a legacy of the print-and-paper days when finding the homes was hard, and relative prices were lower. It’s an unstable system, ready to collapse.

    And further, the objectives of the agent are not aligned with the objectives of the buyer/seller. It’s a broken system. The agent wants to get a transaction as quickly as possible, because creating a marginal price advantage for a client works out to just a rounding error on the commission. That’s what I felt was going on at the Queen Anne house — that the agent thought her job was to help make the transaction happen, not put me in the house at the right price.

    I always thought the seller commission should be 1% on the first 80% of the home’s price, and 10% on the top. (That nets out to about the standard 3%) That puts the agent’s negotiating incentive on the marginal price. Point being, any cretin could sell a home for 80% of its value, and the agent’s value is really delivered on the margins.

    It’s a broken system. You may be the last agent to see his niche erode. You’re going to claim that you are really in it for the long haul, to deliver a great experience so you can build a relationship that you’ll cash in again on their 2nd and 3rd homes too. But you can’t deny that the erosion has started, and that most agents just want to flip transactions.

  121. 121
    Ray Pepper says:

    brian please provide me the MLS#’s of the listings that offer only 1%.. you said there are 2. In over a decade of Real Estate I never have come across a selling office commission of 1%. I believe you are grossly mistaken.

    Brian you are very wrong on your analysis. The more sellers get squeezed the more they seek out our model. Most of our listings come from larger Brokerages when people realize the benefits of listing with us…lower their price 3% and be the BEST DEAL ON THE BLOCK.. Instead of 290k they can list the same home for 280k and net the same…

    Again 500 Realty makes its money off Lead Generation. The 25% commission to us goes almost entirely to the Agent. They avg about 10 hours per client and still make 100 an hour or more.

    Trust me when I say this. Time is on our side. Now give me those 2 MLS #’s.

    Ray Pepper
    Broker
    http://www.500Realty.net

  122. 122
    jonness says:

    In early 2006, I contacted a Realtor because I was thinking of buying a house closer to work. I diligently searched the MLS and drove by perhaps 20 homes. I picked out 3 that I felt were worth a closer look.

    I met the broker I had chosen to work with, and we looked at 2 of the homes. On the 3rd home, he stated, “you need to start looking at these homes by yourself.” I stated that I did not have a way of getting inside the homes, and that was why I contacted him. I was a little put off that he was going to make $15K and didn’t want to even take the time to show me the insides of the houses.

    When we discussed listing my current home, he suggested I list it for a price that I knew was at least $100K less than it was worth. At that point, I realized he was entirely unethical and out to make a quick buck. I mean, this guy was literally looking to make $30k from my moving to a new house, and he didn’t want to spend more than 2 days of his time to do it. In the meantime, I would have paid $30k in commissions and lost $100k for listing my home way under the market value.

    I thought back to a home I had sold in Spokane a few years earlier. I had contacted an agent to list it and then left town to return home to Puget Sound. One night he called me up and said he was deer hunting and met a guy whom was interested in the house. When I told him the guy’s offer was WAY too low, he responded that there was a leak in the roof that had caused water damage inside one of the bedrooms. Well, to make a long story short, I drove all the way to Spokane and discovered there wasn’t a leak in the roof after all. The agent simply wanted to frighten me into selling the home thinking that I would not call his bluff and drive all the way over there to check it out. About 2 weeks later, I received a full price cash offer on the home.

    All of this has left a very sour taste in my mouth, and I have no qualms about hiring a discount agent whose fee is based on the amount of work actually spent brokering my transactions.

  123. 123
    EconE says:

    LMAO Tim! You rock!

  124. 124
    economist says:

    So, who’s really paying the commission?

    The seller, and the reason is simple.

    RE always sells for the highest price offered by a buyer. The buyers doesn’t care whether or not there is an RE agent or what the commission is, any more than they care whether the house has joint owners, there’s a mortgage that has to be paid off, etc. They don’t care about who’s getting the money. They just care about how much they pay for the house.

    So if the most willing buyer offers (say) 500K, the seller gets 500K minus x% commission. Again, the buyer doesn’t care how much of that 500K goes to the seller or to the agent. All he cares about is how much he pays.

  125. 125
    Rentersarelosers says:

    LMAO Tim! You rock!
    ……………..

    double standard

    noun
    an ethical or moral code that applies more strictly to one group than to another

  126. 126

    DISBELIEF; I’M WITH YOU ON RAL’S “ROSY BUSH ECONOMY” TAKE

    I call it the “doncha know” mentality:

    Doncha know we all make $100K a year
    Doncha know payments on a $500K loan are very affordable
    Doncha know the local economy is in high gear
    Doncha know Boeing and Microsoft are hiring massive groves of locals
    Doncha know your home will go up in price this year

    No RAL, I don’t know.

    Read today’s CBS news on your rosy Bush economy [all of June’s indicator’s are tanking badly, doncha know?]:

    http://www.marketwatch.com/news/story/us-economy-bumps-along-leading/story.aspx?guid=%7BEBC2C9DF%2D62AE%2D4B91%2D9280%2DFB76C78D6292%7D&siteid=bnbh#comments

  127. 127
    Greg Perry says:

    WGUMCD…………”It seems to me Ray isn’t too worried about this why should you be?”
    I”m not worried. I know from years of experience in business that when you compete on price, you have nothing to differentiate yourself –other than price– from the other competitors that compete on price. This eventually leads to competition by price cutting. Thousands of books have been written on business models and how to compete by differentiating and adding value.

    Faster: ……….”Greg Perry – if you ever invent a time machine, go back in time and remove your comments from this article. They don’t make you look good.

    Of course, I don’t look good to you, and I’m OK with it.

    Joneses: I agree. Anecdotal stories like yours exist. The industry swells with unqualified agents when the pickin’s are good. It drives me as nuts as it does you. Each year I lose clients to precious granddaughter who just got a license. The hardest thing of all is to overcome family love.

    When the market tightens the agents flock away just as fast, leaving the better agents. I said it above. If the consumer would do diligence, by and large they would have a better experience. Statistics show that on average less than two agents are interviewed by a Seller and fewer by a Buyer.

    If a discount agent is for you, I say fine.

    Herman,………”So you work in the upper tier of the market. It sounds like your clients are in the market at $1.5M and higher. At those prices, the clients should demand and get the types of services that I expect.”

    Yes I work that market, and I also work with first time buyers —– who get the same experience as the $1.5 million or higher client.
    My business primarily works by referral. My 1.5 mil client’s first referral was his sister who purchased a <$200.00 condo. The sister referred me to her boss who sold a $700.00 home. Because my clients are referred, I get people in all price ranges.

    When I get a referred client, I have 2 people to please. The person who I’m working with to earn future referrals AND the person who referred me so I continue to receive referrals.

    When I work with a client I NEVER look at the price of the house. AND because I have a predictable amount of new referred clients, I’m never in the position that I need a sale to close to pay my bills. I can focus on the client, serve them at their highest need, keeping their best interest at heart at all times.

    I am not arguing against other models at all. The thinking that discount models will take over traditional models is NOT NEW THINKING! Frankly I think having options in the marketplace is healthy. We have the option of buying clothes at Wal Mart, Macy’s and Nordstrom, don’t we? OPTIONS ARE GOOD!

    Here’s a POP quiz for all you real estate hobbyists:
    What is the most difficult thing (and yet the most important thing) that a real estate agent does?

  128. 128
    david losh says:

    The business model of put it on the internet, or look for a house on the internet, is exactly what people complain about in terms of commission. I mentor agents who I think can contribute to my network because that network is what gets listings sold. It’s not what you know, it’s who you know that gets a job done.
    In any market the properties that are well presented get shown. It takes skill. The agents who work, work constantly for thier clients. It’s a passion and obsession. Real Estate is a way of life. It’s an addiction.
    The problem with the Real Estate business is the number of get rich quick people who count commissions as the end result of the labor. We aren’t in the Real Estate business to sell it, we are in the business to buy it. Agents should be the resource you can trust to know what’s going on in the market place. They should know the market place because, like you, they are involved in the market.
    Buyers always ask me, “if it’s such a good deal why aren’t you buying it?” My answer is that it’s not what I’m looking for. I’m looking for dirty, disgusting, but not rat infested, properties I can clean up and sell for a profit. Along the way I talk with agents. I know what’s good, what the market is doing, what’s selling and what’s not. That’s the business. It’s being involved, knowing the inside information and using it to your clients advantage.
    Why not? As long as I’m looking, why not share what I know? Why not share what I know if I represent a property for sale? Why not tell you a purple door will sell faster than a red front door? Why not represent a property that I like to the best of my ability to a market place I’m comfortable with? It’s all money, it’s all business, but it’s my business, my choice, my obsession.

  129. 129
    deejayoh says:

    mukoh // Jul 20, 2008 at 3:24 pm

    Deejayoh,
    LOL. Good luck agents out there who are on the listing side will definitely be jumping for joy happy when you ask them to give 50% of the commission to you.

    Re-read my comment. I was talking about they buyer’s agent fee only, which is 3%, maybe less. If you know of any buyer’s agents getting 6%, I’m sure they’re jumping for joy anyway!

  130. 130
    TJ_98370 says:


    My personal adventures take me to the thriving metropolis of Pullman WA, once again. I am happy to report that residential construction of $400,000 homes is still underway. I continue to wonder who can afford these places, considering the local economy. There must be alot of duel proffessor-type income WSU families that I don’t know about.

    I’ve seen something I have never personally seen before, but maybe it isn’t all that uncommon elsewhere. I picked up a flyer of a new house that is still under construction and it featured interior spaces that are as yet unfinished! There is a nice picture of the unfinished living room, unfinished kitchen, unfinished entryway, etc. I guess Pullman realtors are not real big on “staging”.

  131. 131
    TJ_98370 says:

    Wow! Sorry about the multiple posts. I don’t know what happened. It must be the unique nature of Pullman electrons or something.

  132. 132
    The Tim says:

    FYI, there is now an automatic language filter in place.

  133. 133
    singliac says:

    Bravo, Tim. I’m not really offended by the bad language per se, but I don’t think it’s very useful in persuasive argument.

  134. 134
    Jimmythev says:

    Ok… just came across this listing on redfin… am I seeing things here, or did this guy buy the house in May of 2008 for $302k and is now listing it for $439k? They must have put $137k worth of “stainless steel” in the place ;)

    http://www.redfin.com/WA/Bellevue/16859-NE-14th-Pl-98008/home/431647

  135. 135
    obelus says:

    Jimmythev,

    That place isn’t even worth $200K. they want $400 a sq. ft. Incredible.

    Check out the price per sq. ft. for this place in SLU:
    http://www.redfin.com/WA/Seattle/401-9th-Ave-N-98109/unit-415/home/12526684

    Astounding. But, nice place if you want to live downtown.

    Speaking of downtown, the Seattle Times had an article over the weekend about how even real estate agents are predicting a slow down in jobs and economic activity. They predict a lot of empty space for lease next year and are telling clients to wait.

  136. 136
    deejayoh says:

    Jimmythev // Jul 21, 2008 at 10:24 am

    Ok… just came across this listing on redfin… am I seeing things here, or did this guy buy the house in May of 2008 for $302k and is now listing it for $439k? They must have put $137k worth of “stainless steel” in the place ;)

    You might have missed the note at the top of the page:

    This home is also listed as a bank-listed foreclosure.

  137. 137
    Markor says:

    All of this has left a very sour taste in my mouth, and I have no qualms about hiring a discount agent whose fee is based on the amount of work actually spent brokering my transactions.

    Hamptonwest.com is one to consider. They charge a flat fee (about $1K I think) and rebate the 3% buyer’s agent fee at closing.

  138. 138
    jimmythev says:

    So if it’s listed as a forclosure… what is the correct price? Is it $302k or $439k?

  139. 139
    jonness says:

    “Joneses: I agree. Anecdotal stories like yours exist. The industry swells with unqualified agents when the pickin’s are good. It drives me as nuts as it does you. Each year I lose clients to precious granddaughter who just got a license. The hardest thing of all is to overcome family love.”

    The big problem with the current model is the con artist agent costs the same as the ethical agent, and there is no way for the new client to tell the two apart until after he’s screwed.

    Since we are never going to see companies disclose value reports about their agents, the best we can hope for in the near term is a) people who need full service realty will eventually find an agent who will work in their best interest, or b) people who have grown tired of the lack of enforcement of ethical standards in the real estate industry can become informed and do most of the work of trading their house themselves.

    A Realtor once told me shortly before he attempted to screw me, “People that have been around this for a while told me the temptation to be dishonest is very great in this industry. But they warned me that if you want to be around a long time, you better work 100% ethically and 100% in your customers’ best interests. Do not be tempted into taking shortcuts.”

    You and I know the shortcuts exist. And we know the agents who take them eventually burn their own arse. IMO, there are many fundamental flaws in the current 6% model, and allowing conditions to exist that tempt agents into taking these shortcuts is one of the major flaws. Another one is to charge a flat 6% commission when each transaction involves a great variation in the agent’s time and level of commitment. Yet another flaw revolves around the illusion that using an agent to buy a home is free to the buyer. Nothing could be further from the truth. IMO, the companies of the future that are brave enough to admit these flaws and restructure their business models to account for them, are going to gain the greatest market share.

    The reason why so many clients of the 6% model are fuming mad at the fees they have paid is because they do not feel the agencies have earned the fee. Sure the guy who needs to be shown 50 houses before he buys probably feels he paid a fair fee. But the person who sees a house while driving by, contacts the owner, and then buys the house makes the seller a little wary of ever wanting to hire a Realtor again. In the future, the companies making the biggest money in real estate will be those that embrace paying Realtors hourly wages.

    I think the big myth in the Industry right now is that a war exists between full-service real estate and discount firms and that one or the other will eventually win out. But the truth is, the large companies of the future will offer a range of services and allow customers to choose based on their needs. This will be brought about through building consistency into the business model. Once clients of these companies realize they are assured high value because they only pay for the level of services rendered, it will restore faith in the real estate industry. In this model, customers who need full service realty will gladly pay for it, and those that don’t need it will choose a lessor service and gladly pay for that. High market share ultimately means offering a full range of services that are tailored to meet the full range of customers’ needs.

  140. 140
    Greg Perry says:

    Jonness, well thought out and articulate points.

    Value is more a feeling of satisfaction for the exchange of goods and services in relation to the $$ exchanged. Value is hard to quantify, but the consumer knows when they receive good value and when they don’t. Some full service agents provide good value, others do not. I appreciate your thoughts.

  141. 141
    what goes up comes down says:

    Tim, does the language filter remove things like — Buy now or be priced out forever — guess not, don’t see much use to it.

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