Reporting Roundup: The bottom is in, unless it isn’t.

Time for yet another thrilling installment of “see how the local press repackaged the NWMLS press release.”

First, for comparison, here’s the NWMLS press release that accompanied yesterday’s numbers: Western Washington Home Buyers Starting to Grasp “unique housing opportunities”

“I believe these results are reflective of what might be called a “mental filibuster” for potential home buyers — they are struggling between the desire to buy a home and the uncertainty of what might come next in the way of government stimulus, tax credits or lower mortgage rates,” observed Ron Sparks, managing vice president of Coldwell Banker Bain. Agents are reporting “tremendous activity” at open houses, with the last few weekends generating the best activity in several months. Despite the high interest, what’s stopping buyers, according to Sparks, is weak consumer confidence.

Ron Sparks also commented on housing affordability, saying it’s at its best in decades. “This certainly appears to be a once in a generation home buying opportunity, but it’s also coupled with a once in a generation economy,” he stated. The question for all potential home buyers is not whether the current economic troubles, or the unique housing opportunities they now possess, will end, Sparks suggested, adding, “Rather, they might ask where they will be living once they do.”

Mr. Sparks’ statement regarding housing affordability is flat out false, unless his definition of “decades” is “four years.” 2005 was the last time affordability was as high as it is now. In reality, home prices will still have to drop at least another 15 percent or so just to bring affordability back to its 1993-2002 average.

So what’s the story from the press going to be this month? Have we “hit bottom” yet again? Are buyers flocking to open houses, with the market “set to get its mojo back” in March, just like it was last year? Read on to find out.

Eric Pryne, Seattle Times: February home sales figures in King County continue yearlong decline

The numbers, already bleak, just get bleaker.

King County single-family homes sold last month for a median price of $375,000, the lowest since May 2005, according to a report released Wednesday by the Northwest Multiple Listing Service.

I still don’t see what’s so “bleak” or “dismal” about affordable housing. I thought that was something everybody was in favor of.

So, against such a dismal statistical backdrop, how do you explain what happened late last month when Windermere agent Dorothy Franklin listed an 82-year-old, five-bedroom house in Green Lake, just four doors from busy Aurora Avenue North?

Simple. Because at $390,000, the home was priced 5-10 percent below both the “Zestimate” and the neighborhood median, and more importantly, nearly $100,000 below nearby comparable properties on the market. When a realistically-priced home sells, it’s no mystery.

Aubrey Cohen, Seattle P-I: Prices still dropping as city’s home sales lag

The only sign of stabilization was a drop in the total number of homes on the market. After posting their first year-to-year declines in nearly three years in January, inventory levels dropped again last month — down 2.6 percent in Seattle and 4.2 percent countywide from February 2008.

“I’m delighted to see that the inventories available for sale are stabilizing and in most cases are below the same month last year,” said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University. “Clearly, we need to reduce inventory in order to get the market stabilized.”

The lack of life in sales numbers is a problem, he said. “I see no reason to think that the market is going to pick up a great deal of steam in the short term. Prices are continuing to soften, but they’re not low enough yet to encourage large numbers of buyers back into the market.”

As I pointed out yesterday, inventory may be slightly lower than last year, but it’s just barely below record highs right now, and climbing just as fast as it did in 2008. Crellin’s comment that even lower prices are needed to bring back home buyers. We’re seeing it happen in California, and it will happen here too, once prices get low enough.

Mike Benbow, Everett Herald: County’s real estate brokers hope market has hit bottom

The recession may still have a ways to go, but some real estate brokers think home prices are done making major drops.

“I think we’re pretty close to the bottom,” Vern Holden, who owns the Mill Creek Windermere office and several others, said Wednesday.

Holden said people aren’t buying things they don’t have to buy these days, and that includes homes. “It’s partly psychology,” he said.

Buyers “are just not interested in getting a Mustang or free landscaping,” he said.

He said he believes potential buyers either need to see a series of things happen that make them feel better about the economy or they need a financial deal that they can’t refuse. “The biggest factor now is interest rates,” Holden said. “They’ve been pretty good, but they could be better.”

Excellent. I have noticed that since I called him out, our former bottom-calling champ Dick Beeson seems to have backed away from the bold bottom predictions. It’s nice to see someone else stepping up to the plate.

Kelly Kearsley, Tacoma News Tribune: Slouching toward recovery?

The area’s inventory is shrinking. The number of homes and condos for sale decreased by 20 percent over the year to 6,262 active listings last month. Those in the real estate industry regard this as good news as declining supply tends to bolster home prices.

Cheryl O’Brien, an agent with John L. Scott in Gig Harbor, said her office is done taking what she calls “unmotivated listings,” or homeowners who maybe don’t need to sell but wanted to see what they could get for their homes.

“If you need to sell, we can get your house sold,” she said. “But you have to really want to sell.”

How delightful. A real estate agent boycott of wishy-washy sellers. More power to them. It’s best for everyone involved if we can clear the market of the dreamers and get down to realistic valuations from truly motivated sellers. I don’t think that’s what Ms. O’Brien has in mind, though.

Rolf Boone, The Olympian: Decrease in houses available could boost market, agent says

South Sound real estate professionals said Wednesday they were surprised by February’s home-sales results. Real estate agent Bob Jorgenson of Coldwell Banker Evergreen Olympic Realty said prospective buyers might have “crawled back on the fence,” waiting to see how the federal government’s stimulus plan would affect the housing market.

He acknowledged, too, that some prospective buyers are waiting to see whether mortgage interest rates drop below 5 percent.

Still, Jorgenson said he has been busy, showing some houses three or four times a week, and “street traffic” has been strong, with prospective buyers picking up 25 to 30 fliers at some properties.

What possible use could a “prospective buyer” have for 25 to 30 fliers from the same house? Free wallpaper? Free fuel for their barrel fire under the bridge? I don’t get how that’s a sign of market activity picking up.

(Eric Pryne, Seattle Times, 03.04.2009)
(Eric Pryne, Seattle Times, 03.05.2009)
(Aubrey Cohen, Seattle P-I, 03.05.2009)
(Mike Benbow, Everett Herald, 03.05.2009)
(Kelly Kearsley, Tacoma News Tribune, 03.05.2009)
(Rolf Boone, Olympian, 03.05.2009)

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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.

57 comments:

  1. 1
    sarcasm affects reading ability says:

    you misread the prospective buyers thing. read it again. it wasn’t singular

  2. 2
    sarcasm affects reading ability says:

    also I think the general public at this point is very suspicious of the real estate articles they read. so i wouldn’t worry about these talking heads actually having any sort of impact on buying activity. We probably have atleast another 20% to drop in prices before we start to level off

  3. 3
    The Tim says:

    RE: sarcasm affects reading ability @ 1 – You’re probably right, although if that’s what the reporter meant, wouldn’t the sentence have been better if it read “with 25 to 30 prospective buyers picking up fliers at some properties.” As is, it could mean a married couple “prospective buyers” that picked up multiple fliers, or that there are multiple “prospective buyers” taking 25 to 30 fliers at some properties.

  4. 4
    dogwood says:

    It’s telling that LAST February NWMLS observed “increased traffic at open houses and reports of homes fetching multiple offers” and that these were seen as “signs of an emerging spring market” that never materialized.

    Let’s see… We can’t blame “unseasonable weather”, elections, or solar flares, so how about the greatest abstraction so far, the “mental filibuster” (!).

    Don’t get me wrong – I don’t think that people are pessimistic about price trends, concerned about the devastation occurring on Wall Street, or worried about losing their job. I think this is more a reflection of “a tremendous increase in pent-up optimism” than anything else.

  5. 5
    The Tim says:

    From the Times article:

    Kathy Estey, managing broker at the John L. Scott downtown Bellevue office, said her office has been involved in 11 single-family-home transactions recently, from West Seattle to Bothell, that drew competing bids. All but one were priced at $390,000 or less. Almost all the bidders were first-time buyers.

    “If a house is well-priced and in good condition, it’ll sell,” Estey said.

    I love this comment from a reader going by “Andrews-Dad”:

    “If a house is well-priced and in good condition, it’ll sell,”

    I sense a Nobel Prize in Economics in someones future.

  6. 6
    rose-colored-coolaid says:

    The Eric Pryne article was my fav. Think housing prices are crashing? What about this singular anecdote? How do you explain that???

  7. 7
    The Tim says:

    RE: rose-colored-coolaid @ 6 – It’s like he’s channeling the spirit of our dearly departed (aka voluntarily laid off) Elizabeth Rhodes.

  8. 8
    TheHulk says:

    By dogwood @ 4:

    Let’s see… We can’t blame “unseasonable weather”, elections, or solar flares, so how about the greatest abstraction so far, the “mental filibuster” (!).

    Cmon dawg, what about that huge snowstorm they had all over the east coast last week? Those poor people couldn’t make it to Seattle to buy all the extremely “affordable” houses. And that will be the reason why sales tanked in February.

  9. 9
    alex says:

    [quote from the article]
    | “King County single-family homes sold last month for a median price of $375,000, the lowest since May 2005,
    | according to a report released Wednesday by the Northwest Multiple Listing Service.”
    ===========

    I have a very simple-minded question: When the stock market has already rewound back to 1997 levels, what is it that keeps housing up at 2005-ish prices?

  10. 10
    Ray Pepper says:

    Agents not taking listings from unmotivated sellers? Whose fault is that? #1 rule of real estate. Know your client!! Good Lord! Have the seller put some “skin” in the game. After a CMA (which are basically worthless now in a deteriorating environment) why would an Agent take the listing when they know it wont sell?

    I tell you why……………………INCOMPETENCE……………………then the Agent complains that the seller is not motivated, or the market is too hard, or people cant get loans, or or or…………………..

    God help the remaining 25000 Agents that do not adapt to what the public wants.

  11. 11
    deejayoh says:

    Re: Bottom calling

    Please check here

    http://isthisthebottom.com/

  12. 12
    Thomas B. says:

    http://www.redfin.com/CA/Novato/667-Canyon-Rd-94947/home/1130604

    Almost 50% off buying price and still on the market. I wonder how many realtors called the bottom 20-30% ago.

  13. 13
    Gary says:

    Re Thomas B @ 12

    Look at the TAXES on that place!!!

  14. 14
    EconE says:

    By Gary @ 13:

    Re Thomas B @ 12

    Look at the TAXES on that place!!!

    Man. You got me all excited thinking I was going to see some astronomical tax bill…some of the property taxes that people are paying (or not) are out of this world.

    Perhaps the overinflated property taxes are preventing people from coming off the fence even as sellers (ever so slowly) become more realistic with their pricing.

    If a buyer get something at a “fair market value” but is taxed at bubble levels, why bother coming down off the fence?

    Not only do housing prices have to “find a bottom”, property taxes need to follow suit.

  15. 15
    DaveyDave says:

    By alex @ 9:

    I have a very simple-minded question: When the stock market has already rewound back to 1997 levels, what is it that keeps housing up at 2005-ish prices?

    My feeling on this, Alex, is that the stock market is more liquid and therefore arrives at market stable prices more quickly. Also, there is ‘smart’ money in the market with professionals trading with current information. Residential real estate moves more slowly due to illiquidity and a higher degree of emotional attachment.

    This translates to higher volatility as well. Traders at this point are more worried about missing the bottom by getting in too late. A property buyer should be more worried about missing the bottom of the market by getting in too early.

  16. 16
    patient says:

    Regarding decreasing/increasing inventory, what happend with the inventory tracker at the time below?
    A 1000 units added in one hour? We’ve seen 1000 units drop at the end of the month when stale stuff seem to be purged but I can’t recall having seen a 1000 unit increase?

    03.03.2009 19:00 11319 8979
    03.03.2009 20:00 11323 9849

  17. 17
    CCG says:

    “also I think the general public at this point is very suspicious of the real estate articles they read. so i wouldn’t worry about these talking heads actually having any sort of impact on buying activity. We probably have atleast another 20% to drop in prices before we start to level off”

    We’ll have hit bottom when these shills, along with those who quote them as though they were disinterested experts, are finally forced to go find honest work.

  18. 18

    EconE,

    CA is one of the few places in the Country where tax assessments reset at sale price at the time of each subsequent sale. Not sure if that is true in all of CA, but 99.9% sure it is true in L.A. and possibly the entire state.

    In most of the Country tax bills are more consistent for like housing in the same area, and not revalued and taxes jacked up at the time of each sale for only the house that changes hands in the neighborhood.

  19. 19
    EconE says:

    Ardell…

    Yeah…I know about CA tax assessments and how an individual property can see it’s taxes increase ten-fold upon sale. Prop 13. If you go house by house down a street, you can see the disparities down there.

    Still…when I look at what people pay in taxes here…and how they have gone up over the years…I feel that the assessor was a little “overzealous”.

    In CA…the buyers received the short end of the stick…not the longtime owners.

    Here…everybody took the hit.

  20. 20
    Groundhogday says:

    By alex @ 9:

    [quote from the article]
    | “King County single-family homes sold last month for a median price of $375,000, the lowest since May 2005,
    | according to a report released Wednesday by the Northwest Multiple Listing Service.”
    ===========

    I have a very simple-minded question: When the stock market has already rewound back to 1997 levels, what is it that keeps housing up at 2005-ish prices?

    Real estate prices are “sticky” on the downside. Always have been. Actually, current price drops are relatively rapid in historical context.

  21. 21
    Groundhogday says:

    RE: EconE @ 19

    In WA state property tax aggregate assessments are fixed. Property valuations only determine the proportion paid by each property owner. So in this state, thank goodness, rising and falling property values in aggregate have no impact on the total amount of property taxes collected.

  22. 22
    Kary L. Krismer says:

    By EconE @ 19:

    Still…when I look at what people pay in taxes here…and how they have gone up over the years…I feel that the assessor was a little “overzealous”.

    What the assessor does is revenue neutral as to the government. As between you and your neighbor, not so much, but rising prices (or falling prices) do not lead to changes in total revenue.

  23. 23
    Novastar says:

    RE: Ray Pepper @ 10

    Ray- I find it very entertaining how you and your Tacoma office failed to close any home sales in over 2 months according to the NWMLS yet you say your company is the wave of the future. Fine example….

    Well at leastyo can fall back on your fulltime job

  24. 24
    Ray Pepper says:

    Our company is the wave of the future? I wish it was. Its just another option for Buyers and sellers. Just like Shop Prop, MLS 4 Owners, Findwell, etc. Yes, its true. We had one closing this month and have 6 that are either in the pending stage or home is still being built. But our data base of Pre-Approved Buyers is nearly 100. yet, they continue to wait. We only closed 38 or 40 last year but I suspect this year we will double again. But, you see we have no debt, about 30k in the bank, and all our Agents are financially secure so we let people come to us. Sure we do the Seattle Home Show but we cut out ALL advertising this year. No more head knocker commercials! You cant take a vegetarian to a steak house you know.

    Time is on our side and I assure you by the end of the year we will have 50+ closings. Not bad for a soft market but theres only 6 of us. Red Fin will sell more but there overhead is 100x ours so they should do 500x more business. Their model is inferior in every way except they have one heck of a website.

    Be happy we are here allowing 100.00 listings and 75% back. If we disappeared you would have to resort to 50% cash back and 595.00 listings.

    Again, I assure everone, time is on our side. The hardest part we have is educating people what we do. They still have no clue. Our fellow real estate professionals continue to distort our product but, its OK. There will be hundreds of companies like ours coming as long as the NWMLS stands. brace yourself…CHANGE is coming!

  25. 25
    Ray Pepper says:

    Oh I forgot. I’m happy I entertain you. This blog gets a little depressing at times. As for my RN license. 1 day a week my friend. I contribute my services Friday nights. While you sleep I take care of vent patients. I will do this most likely the rest of my life. Just like real estate. Just my way of making life better for those around me. I let my wife do the full-time bit at Favorite Nurses. I’m too busy blogging, watching the futures, the kids sleep, and Family Guy.

  26. 26
    deejayoh says:

    By Ardell DellaLoggia @ 18:

    EconE,

    CA is one of the few places in the Country where tax assessments reset at sale price at the time of each subsequent sale. Not sure if that is true in all of CA, but 99.9% sure it is true in L.A. and possibly the entire state.

    In most of the Country tax bills are more consistent for like housing in the same area, and not revalued and taxes jacked up at the time of each sale for only the house that changes hands in the neighborhood.

    It is the same all over California. Prop 13 – property tax = 1% of “assessed value” which cannot increase by more than 2% per year. Assessed value is reset based on the purchase price whenever the property trades hands..

    Been that way since 1978

  27. 27
    Jonny says:

    real estate is now officially a cargo cult.

  28. 28
    Cris says:

    Besides the mortgage mess, RE agent fees should be leveled to 1,5%.
    I am wondering when will someone touch that subject.. 3% was set when the median house price was much lower than today’s rates. Now the house prices are still peaking, how would anyone justify this earning?

    And then of course companies like RedFin, ZipRealty ,Rap Pepper 500 are popping up to give us back the part of the commission money that per today’s house prices they never deserved to get in the first place.

  29. 29
    ARDELL says:

    RE: Cris @ 28

    Commissions are not regulated. One of my clients just got a fabulous house because the commission offered was a little under 2%. I can’t tell you how happy I am for them. If the commission offered had been higher, there might have been other offers, and they wouldn’t have been able to afford it. They got it for 35% less than the previous owner paid for it!

    Varying commissions are part of the marketplace. This buyer did well because the seller offered “less” (bank owned property) and I am not crying, I’m thrilled!

    It really is a myth that most commissions are 6%.

  30. 30
    what goes up must come down says:

    Novastar I can tell you if I was ready to buy I would use Ray before any of those other outlets — JLS or Windermere, etc…. He can be a little over the top sometimes but when it comes to saving myself money it would be foolish to go with a full price RA.

  31. 31
    Ray Pepper says:

    RE: what goes up must come down @ 30

    Thanks for the plug but honestly if you dont use us I suggest Findwell, Red Fin, Shop Prop, Handspring etc…just anyone that gives a sizeable amount back. Forget Zip Realty…Last I checked it was 20%. Heck, you can go to most any agent at Skyline and ask them to write it up for you and they will give you 50% back. They are independents and will most surely do it for 50%. 75% would be a stretch.

    If your selling for god sakes dont pay more then 500.00 to get your home on the market. Seattle Bubble has educated the masses here that they should even question if they need an Agent. I agree. But, if you choose one don’t throw your money away. Pass it onto the BUYER as an incentive to buy your home.

    Its just common sense.

    I emailed Kelly Kearsley at the News Tribune. That newspaper is hanging on by a thread financially and never respond to anyone that challenges what meager revenues they bring in on real estate advertsing. Reading real estate articles in the local newspapers are self-serving profit driven BS. They are non-informative and the people they interview rarely bring anything to the table.

    The truth of how property values will continue to decline is very poor on revenues.

  32. 32
    shawn says:

    BTW, on the Eastside it did snow today, so I predict slow sales for March.

  33. 33
    PublicEnemy#1 says:

    By deejayoh @ 26:

    It is the same all over California. Prop 13 – property tax = 1% of “assessed value” which cannot increase by more than 2% per year. Assessed value is reset based on the purchase price whenever the property trades hands..

    Been that way since 1978

    This will probably get changed soon. A place that like home in Novato, selling for half the assessed value will probably cut that tax bill in half (or more) when it finally sells.

    Cali can only take so many of those before the cities and counties are either bust or have to run extremely lean. When was the last time you saw a Cali government run lean?

    By the time we are through that home in Novato will only be worth $200K max.

  34. 34
    Tim says:

    Can a morning of frost account for slow sales? There was a little bit in the shady areas around my house when I woke up.

  35. 35
    Cheap South says:

    RE: Thomas B. @ 12

    Did you see the satellite photo? The place is next to a strip mall or something like that.

  36. 36
    Kary L. Krismer says:

    By Cris @ 28:

    And then of course companies like RedFin, ZipRealty ,Rap Pepper 500 are popping up to give us back the part of the commission money that per today’s house prices they never deserved to get in the first place.

    But are any of them making any money? I not sure Redfin was making money even during the better times, and someone already mentioned Ray’s revenues for the year.

    I actually like having Redfin around (and even mentioned Ray in a thread on Trulia), so I don’t look forward to their disappearing. But I wouldn’t be surprised if one or more of the discount brokers do disappear. One on the East Coast already did over a year ago.

  37. 37
    Novastar says:

    RE: what goes up must come down @ 30

    Well using a limited service broker/agent is an option. I would certainly ask anyone who you buy or sell through what their experience is with buying and selling. Be cautious of those who manage to close a handful of sales a year. Their lack of experience could cost you more than your initial rebate.

  38. 38
    Ray Pepper says:

    RE: Novastar @ 37

    using ANY Agent or Attorney could cost you more then any rebate or non rebate. Personally I closed 500 transactions + In Washington, Oregon, Texas, and Nevada in my lifetime. That doesn’t mean there is no risk. Just because a Dr. completes 500 surgeries it doesn’t mean he won’t make a mistake on you.

    The fact is discount Brokerages are full service except they want YOU to go look at the homes 1st. Then call when you find one you like. They all open doors and they all do the paperwork just like any Agent. We just don’t give you a tour in our cars. I mean, seriously….Does anyone wanna go spend a day with an Agent in their car? I’d rather go sit at a time share and get 50.00 then spend 1 minute in the car with an Agent.

    Everyone and I mean nearly everyone finds their own home. They all make the same mistake though and call the name on the sign. We are here to educate people to NEVER do that. NEVER.

    Novastar you appear to be an agent. Care to disclose who you are? I think I personally sold 15 or 16 properties in just Washington last year. Are you even close?

  39. 39
    Ray Pepper says:

    RE: Kary L. Krismer @ 36

    Kary, there will be hundreds more discount Brokerages coming. Bank on it. Their overhead will be minimal and they all will be quite profitable like 500 Realty. Remember our profits do NOT come from commissions. That is what is flawed with the conventional model of real estate. When a party has a huge vested interest in the closing of a transaction their needs will always supercede their clients. I assure you this.

    Lead Generation is the key in the NEW Era of real estate. The Buffet is over!

  40. 40
    Kary L. Krismer says:

    By Ray Pepper @ 38:

    RE: Novastar @ 37

    using ANY Agent or Attorney could cost you more then any rebate or non rebate. Personally I closed 500 transactions + In Washington, Oregon, Texas, and Nevada in my lifetime. That doesn’t mean there is no risk. Just because a Dr. completes 500 surgeries it doesn’t mean he won’t make a mistake on you.

    Actually, it doesn’t even mean they didn’t make a mistake on 200 of the prior 500 transactions. I’ve seen some experienced agents make mistakes on forms, and I’ve seen some relative newcomers do everything perfectly. Even back in my attorney days, experience didn’t mean quality.

  41. 41
    Ray Pepper says:

    RE: Kary L. Krismer @ 40

    Oh Boy do I agree with that! I have a New Agent that is a whiz and has incredible attention to detail. His flaw………….He doesn’t know when he is wasting his time with a client. This truly comes with experience.

  42. 42
    BoyOhBoy says:

    By Ray Pepper @ 24:

    Our company is the wave of the future? I wish it was. Its just another option for Buyers and sellers. Just like Shop Prop, MLS 4 Owners, Findwell, etc. Yes, its true. We had one closing this month and have 6 that are either in the pending stage or home is still being built. But our data base of Pre-Approved Buyers is nearly 100. yet, they continue to wait. We only closed 38 or 40 last year but I suspect this year we will double again. But, you see we have no debt, about 30k in the bank, and all our Agents are financially secure so we let people come to us. Sure we do the Seattle Home Show but we cut out ALL advertising this year. No more head knocker commercials! You cant take a vegetarian to a steak house you know.

    Time is on our side and I assure you by the end of the year we will have 50+ closings. Not bad for a soft market but theres only 6 of us. Red Fin will sell more but there overhead is 100x ours so they should do 500x more business. Their model is inferior in every way except they have one heck of a website.

    Be happy we are here allowing 100.00 listings and 75% back. If we disappeared you would have to resort to 50% cash back and 595.00 listings.

    Again, I assure everone, time is on our side. The hardest part we have is educating people what we do. They still have no clue. Our fellow real estate professionals continue to distort our product but, its OK. There will be hundreds of companies like ours coming as long as the NWMLS stands. brace yourself…CHANGE is coming!

    LOL.
    Ray 30k in the bank? Hehehe. Definatley a wave of the future.

  43. 43
    Ray Pepper says:

    When you have no debt, no expenses, free rent courtesy of our lenders 30k goes a long long way. Especially when we do 0 advertising! At the current pace I see us able to survive indefintely!

    Wave of the future? Like I said there will be a 100 of these type Brokerages coming. Some bigger then others. Lead Generation for revenues will be the key for all of them.

    Bank on it B.O.B!

  44. 44
    voight-kampff says:

    Ray,
    I love the model, and I will be using it FOR SURE when I buy at the protracted bottom,
    but I am curious if you have ever had an agent leave your firm. At some point one of them must think, “uh… did I just give away 75% of my paycheck?”
    just curious.

  45. 45
    Ray Pepper says:

    RE: voight-kampff @ 44

    nope. Remember I only hire people who are financially secure. The commission they get, I believe, most use for vacations or who knows what. I mean how much do they deserve? They open doors, write up offers, attend inspections, and facilitate close. The average time they spend with a client is between 20-30 hours. They are guaranteed 2000 per transaction. Thats still 100.00 an hour! Good Lord!

    Not to mention they all get an unlimited supply of 500 Realty shirts. Not the sweat shirts. THOSE ARE LIMITED!

  46. 46
    Novastar says:

    RE: Ray Pepper @ 38

    Actually Ray I am a designated broker for a large regional firm. When I was selling I did 20 to 30 closings per year. I have been a broker for the past 13 years and in just the past 3 years I have participated and overseen the successful closing of over 2,800 transactions in Washington State.

    I am curious, how do you get your lender to pay your rent? Do you direct your buyers to those lenders? Also I am shocked that you say you NEVER had any agent ever leave your company. Did I read your response correctly?

  47. 47
    Ray Pepper says:

    Yes, I never had an Agent leave our firm. I have terminated 1, 1 never completed Licensure, and I have rejected many because they all NEED to sell to survive. In this market and with our model not yet known by the masses its quite difficult. So we just sit back and wait.

    Our lender does not pay our rent. They give us an office that is not used by them in their building with no compensation implied or inherit value contributed. However, most of our Agents work out of their home. Every now and then we have a client who needs to pick – up a lock box or cannot fill out forms on-line so we meet them there. 95% of the time we meet our clients at the home of interest , Escrow, or Starbucks.

    We used to have 5 lenders on our website all competing for Lead Generation. We took them all off because we are rolling out 500 Mortgage by the end of this year. They will be a combination of Mtg reps from Washington Financial Group, Wells Fargo, and what is currently now National City. As you know there are a great many laws against receiving gratuities from Lenders, Title, Escrow, and home inspectors. But, to utilize 500 Realty in our Buying services we must have a current Pre-Approval on file before we show a property. We encourage the Buyer to go where ever they want to get it. If they do NOT have a Lender they can search from our list. Either way its Buyers choice in everything from Lender, Escrow, Attorney, Title, Home inspector etc. We cannot profit from any of these partners. But, you should know that.

    Novastar we are much smaller then you. There are 4 partners, 10 staff, bookkeeper, and me. With the collapse of the banking system we chose to sit back and wait, not to pursue any more partnerships. Our goal is to refund 100% of the commission back to clients but due to the current collapse, Lead Generation spending has been greatly reduced.

    We know as the conventional Model of real estate begins to collapse more each and everyday the more people will seek out the Red Fins, Findwells, Handsprings, and 500 Realty’s. Once this occurs and people actually understand why they are throwing their money away on Listing and Buying the “dirtly little secret” of real estate will have been exposed. Novastar if it wasn’t me it would have been someone else. Time has come! The buffet is over! Long over!!!!!!!!!!!!!!!!!!!

  48. 48

    Ray Pepper said “Yes, I never had an Agent leave our firm.”

    Kind of like the Mafia. They too have “terminated” a few, but you don’t voluntarily leave 500 Realty and live to tell the tale.

  49. 49
    mukoh says:

    Ray,
    I thought the point of business was to make money not to run around earning extra $$ for vacation? Or is this the new progressive way of thinking? To take financially secure individuals make them fill out contracts with fill in the blanks part time for some extra cash on the side.

  50. 50
    Jonness says:

    Despite Pepper’s low sales, he is the Sam Walton of the RE world. It’s a tough market, and everyone’s sales are down. But Pepper hangs on like a champion, and the day is coming where he will become a mega millionaire from having endured the early years of his business model having been developed at the same time the housing bubble popped.

  51. 51
    Novastar says:

    Yes Ira I agree. Terminated agents apparently don’t leave their company. The thought of part time agents representing buyers and sellers is a concern. Biggest complaints I hear as a broker is the consistent ineptness of agents who are working part time. They work some place fulltime and fall into a Real Estate transaction from time to time. We can’t reach them when necessary because they are not on their lunch break or something. They are using the wrong forms or incorrectly advising their clients. It happens often which is why I advocate higher educations standards to enter the business but more importantly remain in the business. The claim that selling Real Estate is just opening a door, filling out forms and attending inspection is simply wrong. These activities are simply a sampling of what agents and brokers really do.

  52. 52
    Ray Pepper says:

    I disagree Novastar. Your assuming our agents are part-time. They are all full-time but understand people don’t know what we do and our message is constantly being distorted by fellow Agents. Our Agents attend our Home Shows and constantly are working their local network but again they are lets say ,”partially retired” and not motivated like your Agents to make a sale. Again the “golden carrot” of YOUR realtors is what has flawed the model. 6% is insanity and the public knows it. They tell us everday on the phone, email, and in-person. Come sit with us in a booth and try to listen what REAL people are telling us. All of them say “We found our house anyway.” They all need representation and a way to get into the home. They don’t need private tours.

    I have been stating this for many years, even when I was a “conventional” broker. Agents do not need to get paid per hour what we pay our surgeons. The model is broken and I warn everyone that P/T Agents, Full-Time Agents, Retired-Agents, Seasoned Agents, and New Agents can cost you more in litigation and headaches and each one (like a doctor) must be interviewed before YOU enlist their services.

    There are 25k agents left at the NWMLS. I look so forward to this population be carved down to less then 10k. I have NEVER come across such incompetent people in my life. Coming from Health Care and working for years in the ICU around REAL professionals, real estate is a true “eye-opener”. The model of real estate trying to be preserved is as ridiculous as the don’t ask don’t tell policy in the military. Both will fall in due time.

    Jonness too funny, but there will be a hundred companies like ours in 5 years just here in Washington. Any Broker can do it. I wish they would too. Education takes a long time. This recession/depression HAS indeed worked out well for us in that time is most definitely on our side. People are willing to LISTEN now because they need the money.

    Mukoh…yes, the idea is to make money and last year we made over 100k and it was our first complete year. We will double that this year. While increasing our cash in the bank to 50k+ plus. No advertising this year other then the shows. Thats our projections. Watch our numbers.

    Ira I watched Casino a few nights ago. Yes, I see an uncanny resemblence of our “upper management” toward our Agents……..

  53. 53
    David Losh says:

    RE: Novastar @ 51

    Broker?

    I sincerely hope not!

    Ray has a toe hold, as well as something like SkyLine, along with a thousand mom and pops, because Large Real Estate concerns have a complete disregard for the buying public. Large Corporate Real Estate Companies have been on membership drives for the Board of Realtors and Master Builders Association.

    The Real Estate Industry has broken the trust of the consumer. You are feeding into the scripted text of more education rather than taking responsibility.

  54. 54
    Ray Pepper says:

    BTW Novastar. Do you know how many so called “full-time” agents are now working second jobs because they have not sold anything for 6months or even a year? Try and get a hold of one of these people. At best you receive a call back at 6pm after initiating the call at 9am.

    Unfortunately it took a collapse in housing to bring about change. Change is good. PCLN is a direct benefactor of change in an industry. The NAR is next followed by the MLS system as we know it.

  55. 55
    Hugh Dominic says:

    RE: Jonness @ 50
    Not if he keeps that website he wont…

  56. 56

    Novastar talks about the real estate industry, suggesting that it’s biggest problem is the existance of part time agents. To me, that’s like suggesting that Jeffrey Dahmer’s biggest problem is that he litters.
    During the big run up of the last few years, prices were escalating rapidly, and a lot of people became real estate agents. Large real estate brokerages were encouraging this, as much as they were preaching to potential buyers that if they didn’t buy right now they’d never be able to afford a home.
    Some of us saw that prices had gone up too much and too quickly, but nothing coming out of the big brokerages suggested that the responsible thing for buyers to do might be to wait until prices dropped to a more affordable or rational level.
    Sure, there are too many real estate agents out there, and nobody benefits from dealing with an incompetent part time real estate agent. But isn’t the bigger issure credibility?
    I don’t know about you, but I’d trust a brand new part time agent before I’d trust a J Lennox Scott.

  57. 57

    […] nice to see Mr. Pryne changing his tone from last month, as he comes to realize that lower home prices are not “bleak” but rather […]

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