Williams Marketing Finally Getting Realistic About the Condo Market

A reader emailed me an interesting little piece of marketing material from an 18-unit complex on the south side of Queen Anne. According to public records The Leona, which is being marketed by the ever-bullish Williams Marketing, has sold a whopping three of their eighteen units to date.

Nine of the fifteen unsold units are currently listed on the MLS, with days on market ranging between 90 and 328. It would seem that nearly a year of failing to move these condos has finally gotten the message through to Williams Marketing: Cut the prices, and cut them deep.

The marketing flier that was emailed out gives a sampling of some of the “dramatic” price cuts that these units have seen since entering the market nearly a year ago. One example currently listed on Redfin, Unit #4 shows an initial list price in May of last year at $475,000, a piddly $15,000 price drop in September, a more serious $60,000 price drop in January, and finally an admittedly dramatic price drop of $105,000 in April, bringing the price down to $295,000—38% off the original asking.

At $321 per square foot, it looks like prices at Leona are finally coming down from their fantasy world to meet the actual market. To give these huge price drops some amusing context, here’s a quote from Leslie Williams of Williams Marketing back in October 2007:

Leslie Williams, president of Williams Marketing, which works with condo developers, said the prices on her projects have not been cut.

“There’s no question that they’re not raising them anymore,” she said, adding that sellers who lowered their asking prices were asking for too much to start with.

Indeed, Leslie. Indeed.

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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.

40 comments:

  1. 1
    deejayoh says:

    Williams is really just the “marketer”” for these, not the developer, right? I wonder how much latitude they really have to set price. Kind of like an agent – I bet they can advise, but when it comes down to it the owner/developer dictates what the asking price is.

    I dealt with them once on a townhome I made an offer on, and I got the sense they were staffing the model unit and passing the offer straight through to the developer.

  2. 2
    Acerun says:

    Unit 4 actually appears to be a glorified studio, with no door to the bedroom.
    I wonder what amenities come with the $285 HOA fees?

    Unit #8 went from $649k to $450k.

  3. 3
    tomtom says:

    Interesting. The flyer from Williams Marketing lists contact info for a “Buyers Agent”, so they can’t legally be working for the developer as well?

  4. 4
    anony says:

    RE: Acerun @ 2 – Those HOA dues will go to maintaining the 15 unsold units and keeping up the common areas with only 3 owners. And they won’t be enough.

  5. 5
    Kary L. Krismer says:

    RE: anony @ 4 – I think they are typically set up so that the developer has to pay those amounts for unsold units. But it is somewhat common for the developer to set the fees too low to attract more buyers.

  6. 6
    Acerun says:

    RE: anony @ 4

    At least the HOA will be saving on their water/sewer use for some time!

  7. 7
    CCG says:

    Hell, if he wasn’t still gibbering about raising prices back in October 2007, I’d say he caught on sooner than most. What about “sending a message” to all those silly fence-sitters? :)

  8. 8
    JJL says:

    Williams Marketing is a real estate broker with appx 30 agents.

  9. 9
    b says:

    RE: Acerun @ 2

    Doors are $105k extra

  10. 10
    anony says:

    Seems like you could rent a place like unit 4 for around $750/mo and not much up front.
    http://seattle.craigslist.org/see/apa/1116505594.html

    With Williams you can put about $65,000 up front in downpayment and closing costs to get the privilege of paying $1800/mo for P&I + property taxes +HOA, not accounting for depreciation. Sounds like a great deal.

    Is it possible we aren’t at the bottom yet?

  11. 11
    Justin says:

    RE: anony @ 10

    I think saying the $750 / mo apartment is equivalent to the condo is pushing it a little. For starters, the apartment is an a beautiful old brick building, while the condo appears to be an ugly dump. And let’s not forget that there’s no plumber on call for free with the condo.

    Let’s be realistic here: the condo is more like a $650 / mo apartment.

  12. 12
    David Losh says:

    I would like to talk more about prices in city.

    At the Condo Expo two years ago there were compelling reasons to believe that in city condos would be in demand. Any one familiar with my views knows I think down town is a good deal. It depends on the project, but there have been good solid development plans surrounding down town. At the same time there is a lot of property still available for development.

    The question was raised by a colleague and I agree that if down town becomes a bargain place to live young affluent, employed, people will prefer to live closer to work than commute. Even people with young children may prefer to live close to see the kids from time to time. There again there is speculation that in time those incity properties may look like bargains that translates into equity on a move up.

  13. 13
    Dan says:

    David,

    I have a different perspective.

    I am a young professional with lots of young professional friends. I don’t know anybody who lives downtown (unless you count First Hill.) Capitol Hill and Queen Anne are just a few minutes by bus to downtown and offer a true “neighborhood” experience, with lots of convenient grocery stores, bars, and stores.

    I also saw an article on Forbes saying downtown Seattle was the 3rd most overpriced zip code in the US, with housing prices equal to 30 years of rent.

    http://www.forbes.com/2008/07/29/overpriced-zips-homes-forbeslife-cx_mw_0729realestate_slide_9.html?thisSpeed=15000

    So, in my opinion, downtown’s got a long way to go.

  14. 14
    David Losh says:

    RE: Dan @ 13

    Down town Seattle is a waste land. There are places that are, or could become, well priced the same as many areas around Seattle. Last week I met a woman who has lived down town and raised a child there who is now going to college. She made a great observation that there is a lot for kids to do, not so much for adults. There’s the aquarium, Seattle Center, library, museum, waterfront, parks, and it’s easy to tell kids to stay away from strange people.

    My impression has been that down town did get way over priced with the Paul Schell era of Seattle Art Museum, Benaroya Hall, and art walk mentality. What I think is that for some strange reason the focus was put onto a sophisticated buyer base of wealth, maybe like Park Avenue in New York. It just never happened.

    Now as prices come down and the reality of a working down town core settles in I think more people would consider living closer to work. In turn the communities of Capital Hill and Queen Ann will also see downward pressure on pricing.

    The real conversation was what this will do to suburban prices. If housing prices in a major job center become more affordable we were thinking that the price point further out will need to come down dramatically.

  15. 15
    joe says:

    RE: David Losh @ 14

    Whoever told you that the parks downtown are good for kids is smoking crack (much like the people in the parks downtown!)

  16. 16
    David Losh says:

    RE: joe @ 15

    Typical response and very true that our down town core has become a haven for homeless. In many nice neighborhoods it’s hard to tell the good guys from the bad guys. Down town it’s much more cut and dried.
    I myself have never left my children unattended at the park.

    What I think though is if more people lived down town a lot of social issues would be forced on our city council. Right now I look at that neighborhood as fragmented much more so than in the past. These last ten years have seen an extreme decline in social services in our down town area. In my opinion much more focus was put on urban villages than our urban core.

  17. 17
    voight-kampff says:

    I have lived downtown for eleven years (I own and rent), I have walked late at night, early dark mornings,I have even walked through parks & alleys(ooooh), Ive talked to strangers, less than savory types, and I have never had one incident that lead me to believe I was “unsafe”.
    Maybe I have been incredibly lucky? I dont have kids so I cant comment there.
    I am more scared of suburbs ( seriously… spoiled rich kids doing the pot…. no thanks!)
    something about being tucked in a nice highrise with hundreds of other people comforts me.

    I was in a contract to buy at a new highrise represented by williams marketing, and I walked from my earnest money ( 5% ouch!) I have always been baffled by the fact that they represent the buyer AND the developer in some quasi legal format.
    I also believe the developer sets the price, not williams marketing.

  18. 18
    Kary L. Krismer says:

    RE: voight-kampff @ 17 – What makes you think they represented you, the buyer?

    This seems to be a difficult concept even for some agents to understand, but the listing agent typically only represents the seller if there is no other agent involved. The buyer would simply be unrepresented. Further complicating the matter with these multi-family new construction situations is there are usually multiple agents at the complex, and who they represent isn’t determined by statute completely, but instead by the terms of the listing agreement and the broker’s policy. Thus, they could represent the seller or the buyer, and there’s no good way for a buyer to determine that. I really think the state statutes should change to clear that up.

  19. 19
    voight-kampff says:

    RE: Kary L. Krismer @ 18

    It is not a difficult concept, and you are wrong, I was represented( technically). I am not sure if your question is rhetorical, but anyways, a person employed by williams marketing was my buyers agent (not a listing agent) and was supposed to represent me as such. the onsite buyers agents are independent contractors of williams marketing and represent the buyer, Leslie Williams of williams marketing represents the seller/developer, but they are all in essence “under one roof” which is where my concern lies.

    as to whether my buyers agent was truly representing my interests or the developers is a different question .

  20. 20
    Kary L. Krismer says:

    RE: voight-kampff @ 19 – Do you know they represent you, or are you just assuming that? Whether they do would depend on the factors I mentioned (the terms of the listing agreement and the broker’s policy), neither of which you’d be likely to know.

    Did they actually claim they represented you, or are you just assuming they did because you didn’t have an agent?

  21. 21
    Kary L. Krismer says:

    RE: voight-kampff @ 19 – BTW, as I mentioned, a lot of agents don’t understand this. They think that if they’re the listing agent on a house and they hold an open house, that they’re a dual agent if a buyer walks in unrepresented and makes an offer. They’re not. They’re just representing the seller. They would be the “selling agent” under the P&S agreement, but not the buyer’s agent.

  22. 22
    David Losh says:

    RE: Kary L. Krismer @ 20

    Site sitters can represent the buyer. It’s like any other Real Estate company. The problem with new construction is that the builder does set criteria. There’s a bunch of builder addendums out lining the builders terms.

    A good site sitter can get you a deal, if they chose to. The goal of Williams is to move units which they have done successfully for many years.

  23. 23
    voight-kampff says:

    RE: Kary L. Krismer @ 21
    they claimed/stated they represent me, the words “buyers agent” is written/stated on countless letters and emails I have recieved over the last 3 years of construction.
    they call themselves buyers agents, they get a commission. So given all of that I am assuming I had a buyers agent.
    what exactly would you be looking for that would show I did not in fact have a buyers agent or representation?
    again, if they TRULY represent my best interest is hard to prove right?

    unrelated question
    Kary, have you worked much with, or followed downtown condos?

  24. 24
    Kary L. Krismer says:

    By David Losh @ 22:

    RE: Kary L. Krismer @ 20

    Site sitters can represent the buyer. It’s like any other Real Estate company. The problem with new construction is that the builder does set criteria. There’s a bunch of builder addendums out lining the builders terms.

    Yes, I know they can, and said so. But whether they do or not depends on the listing agreement and terms set by the broker. Not things a buyer can readily determine. That’s what I’m complaining about.

    If you walk into a listing of mine, it will have my name (and my wife’s name) on the sign. A buyer will know I’m the listing agent when they step inside. So if they’re familiar with the law of agency in Washington, they’ll know I represent the seller and not them.

    But if I have another agent from my office do an open house (something I seldom do), then a buyer walking in will not know who they represent, and I’d guess at 90% of listings hosted by non-listing agents, the non-listing agent wouldn’t know who they represent. By that I mean know the reason–because otherwise they’d have a 50% chance of guessing.

    I’m suggesting that the agency statute should address better who that non-listing agent represents when they’re connected with (sitting in) the building, and not accompanying the buyer from property to property.

  25. 25
    Kary L. Krismer says:

    RE: voight-kampff @ 23 – That’s pretty good evidence, but I’ve seen listing agents put that they represent the buyer on a purchase and sale agreement when really they only represented the seller. It’s possible that your agents are mistaken, but if they have the items you describe in their materials it sounds as if they’re following their broker’s policy. The best evidence of their representing you would be a written agency agreement, but that’s not necessary.

    The problem is a lot of agents think they need to represent the buyer to get the selling office commission (e.g. 6% rather than 3%). They don’t. That’s why it’s called selling office rather than buyer’s agent office. But thinking they need to represent the buyer to get the commission, they’ll put down on the purchase and sale that they represent both the buyer and seller.

    No, I don’t follow downtown condos. Years ago I lived in one on First Hill, so I remember the last time there was a condo bust. But in the past two years we’ve only had one client interested in condos in that area, and they were really more interested in Capitol Hill–downtown was just sort of spillover for them.

  26. 26
    David Losh says:

    RE: Kary L. Krismer @ 21

    If some one walks in to my listing and wants to write it up it’s in my seller’s best interest for me to do that. I can facilitate the transaction by representing niether party. I am just a conduit of information between the buyer and seller. Representing both parties is unrealistic.

    Site sitters are just that. The job they have is to move units. It’s in the best interest of the builder to move units and keep the buyer happy. Screwing the buyer, to use a technical term, is bad for business. I have heard and seen on more than one occasion site sitters giving inside information about the builder.

    The agent gets paid by doing a good job for the buyer. The buyer in a condo project, like any place else, can pick the brain of the person on site then go get some one else to write it up. The person on site may have registered the buyer, but the builder wants the deal.

  27. 27
    tomtom says:

    RE: Kary L. Krismer @ 20
    Kary,

    The Williams Marketing flyer posted above lists contact info for a “Buyer’s Agent”.

    https://seattlebubble.com/blog/wp-content/uploads/2009/04/reductionprospect040309.jpg

  28. 28
    Jonness says:

    The last place I bought, I walked into the listing agent’s office and made an offer. He made a few phone calls and did a little paperwork, and ended up with the full 6%. That’s one reason why I’m against paying a fixed percentage on transactions. I’m the type of buyer who ultimately ends up paying for the nightmare scenario all agents know and love. Why should I pay for someone else’s difficult transaction when my transaction was quick and easy? IMO, unless you need your hand held and are used to being spoon fed, the current RE model is a rip-off. I’m sure other types of buyers consider the current model an extremely good deal though. In order to do away with this diveregance of opinion, RE companies should charge by the hour. Unfortunately, if RE companies told the buyers up front how much they are collecting per hour, most buyers would limit their time with the agents, and the companies would not make as big of profits. Part of the whole luring the customer in is based on the principle that house showings are free, and there is absolutely no commitment.

    OK, we have a lot of agents here, so prepare to hate me. I believe what makes the current model completely unethical is the more the house costs, and the quicker the deal is made, the more the agent makes per hour. This is an extreme conflict of interest. However, it’s important that I state I believe there are agents that post here that work as close to humanly possible in the best interest of their clients, despite the conflict of interest involved in doing so. This is partially because they are smart, in it for the long-haul, and understand building a good reputation earns repeat sales and profitable business model. But beyond that, I think it really comes down to their being exceptionally good human beings.

    But the conflict of interest is definitely built into the business model as a whole. So my question is, why can’t an hourly rate RE model flourish? And what is a fair hourly rate for a knowledgeable and experienced agent?

  29. 29
    Kary L. Krismer says:

    By David Losh @ 26:

    RE: Kary L. Krismer @ 21 – If some one walks in to my listing and wants to write it up it’s in my seller’s best interest for me to do that. I can facilitate the transaction by representing niether party. I am just a conduit of information between the buyer and seller. Representing both parties is unrealistic. .

    Why on earth would you do that? You’re forsaking your existing client! How are you going to guide them through the inspection process and other issues if you’ve decided suddenly you represent no one? It makes no sense to abandon your client. Please explain.

    You can write up the offer simply representing only the seller. The purchase and sale agreement would indicate that the listing agent and selling agent represent the seller. The buyer would be unrepresented. You would still be entitled to the selling office commission.

  30. 30
    Kary L. Krismer says:

    By Jonness @ 28:

    TBut the conflict of interest is definitely built into the business model as a whole. So my question is, why can’t an hourly rate RE model flourish? And what is a fair hourly rate for a knowledgeable and experienced agent?

    Attorneys typically work on an hourly basis, but they still have a conflict of interest. If that advise you not to settle–they make more money. And there is the old joke about the lawyer who died at 45 but their time records indicated they were 65. That is not too unrealistic of a presentation of reality for a lot of attorneys.

    The simple fact is though that the fee model is contingent, and not many people want to pay hourly, the same as with say attorney personal injury work. In both cases sometimes the agent or attorney will make a killing on an hourly basis, and sometimes they will get nothing after spending hundreds of hours on a project.

  31. 31
    Kary L. Krismer says:

    By Jonness @ 28:

    However, it’s important that I state I believe there are agents that post here that work as close to humanly possible in the best interest of their clients, despite the conflict of interest involved in doing so. This is partially because they are smart, in it for the long-haul, and understand building a good reputation earns repeat sales and profitable business model. But beyond that, I think it really comes down to their being exceptionally good human beings.

    Thank you for stating this so that I don’t have to hate you! ;-)

    The biggest problem we have is holding clients back. This is a really fun time to represent buyers, because the buyers have a lot of negotiating power. Once a buyer finds a home they like, however, they want it now! I’ve even had a client want to rescind a not full price offer and make a full price offer within 24 hours of making the offer! And that was after only two days of looking, so they didn’t have a great amount of time expended in searching for a house, such that looking more looking would be all that unreasonable.

  32. 32
    voight-kampff says:

    RE: Jonness @ 28

    I would like to see a pay model for agents that reflects how much they negotiated down the purchase price!

    if a house lists for 500k, and the agent negotiates it down to 450k… they are entitled to a juicy commission on that savings. You would see agents busting ass to get the price down… sweet!

  33. 33
    Kary L. Krismer says:

    By voight-kampff @ 32:

    I would like to see a pay model for agents that reflects how much they negotiated down the purchase price!

    if a house lists for 500k, and the agent negotiates it down to 450k… they are entitled to a juicy commission on that savings. You would see agents busting ass to get the price down… sweet!

    You’re free to negotiate whatever pay terms you want.

    I once had a listing client ask if the commission could vary depending on how long it took to sell. I said sure, but which way do you want it to go? He was thinking more the longer it took to sell.

    But as to your plan, that really doesn’t make a heck of a lot of sense. Why would I agree to a pay scale where I get less money if you tell me to offer more money? The client is in charge of the negotiations, not the agent. The agent merely advises, and the client can either accept or ignore that advice. But in any case, if you want a lower price, don’t authorize a higher price to be offered. Pretty simple. ;-)

    Edit: Also, that would just encourage an agent to go after houses that are listed too high if you’re basing it on the difference between list and sold price.

  34. 34
    Kevin Lisota says:

    The developer of the Leona is ultimately responsible for their prices, not Williams Marketing. I find it difficult to draw any conclusions about the overall market from that particular project. I’ve been inside. It is a beautifully done historic building with great finishes, but it is a boutique property targeting people who want that location and want the historic charm. Some of the smaller units have unusual floor plans, which is why they have sat for so long. The larger units are expensive and are going to take a long time to sell regardless. I’m guessing that the developer is up against pre-sale % deadlines, which is driving the current aggressive price reductions.

  35. 35
    what goes up must come down says:

    kevin hmm, I think we can draw one conclusion the market will not go up anytime soon :-)

  36. 36
    voight-kampff says:

    RE: Kary L. Krismer @ 33RE: Kary L. Krismer @ 33

    I was only half serious in my idea( I still think there is somthing there), however, In my experience, the agent is much more interested in an offer being accepted than they are about getting a REALLY good deal for a client, as a deal with a 5k savings off list price makes little difference to the agents commision, but a huge difference to the client. that is the problem I was thinking of comming up with my commision “idea”
    You can say that the negotiating is up to the client and they have that ability currently, but I am certain most agents would rather close a deal than risk a deal going south by submitting low offers( and advise their clients with this in mind)

  37. 37
    David Losh says:

    RE: Kary L. Krismer @ 29

    How are you going to guide them through the inspection process and other issues if you’ve decided suddenly you represent no one?

    It’s the procedure. Representing both parties makes no sense and only increases the liability for every one. If I agree to only represent the seller I would want a long release of liability from the buyer. As a matter of fact in most cases I would reduce the commission or dedicate a portion of the commission to the Real Estate transaction if I were writing a Purchase and Sale on my own listing.

    I have a little speech saying that if it is an easy squeezy deal the commission goes to 4% if I do both sides. These days I prefer the buyer have separate representation. It’s easier and more profitable for me.

  38. 38
    Kary L. Krismer says:

    RE: David Losh @ 37 – I agree that dual representation is bad, but that doesn’t mean you need to jump all the way to no representation. It seems like an over-reaction to me. Your client hired you to represent them and to sell the property, and you’re doing away with the former to accomplish the latter, when that’s probably seldom necessary. I’ve yet to have a buyer demand no agency or dual agency.

    As I’ve said in the past, when I show a property to an unrepresented buyer I’ll go over their options (me writing it up, them getting an agent, them getting a rebate agent, them getting an attorney). My least favorite option is the first–me writing it up, even though I let them know they’d be unrepresented.

  39. 39
    David Losh says:

    RE: Kary L. Krismer @ 38

    First and fore most it is in my seller’s best interest to have an offer. It is also in my seller’s best interest for me, as the listing agent, to be in control of the transaction, because in my opinion I am the best person to see the transaction gets closed to every one’s satisfaction. That is a point many Real Estate agents miss. Many Real Estate agents manufacture an adversarial role in a transaction like that is doing something for their client.

    The buyer is represented from the moment I put pen to paper. There is no way for me to fairly represent both parties so it’s better to be as nuetral as possible and make that clear to my seller. Telling a buyer that you have written an offer to your seller for them, but you represent the seller is a disservice to your seller. You would be closing the door on free and open communication between both parties.

    You have to think of what is fair. Like I have said I think in terms of how things will look in court. Most courts have a tendency to side with the buyer. If you represented only the seller you would have to continually caution the buyer about statements they may make. When you brought up the inspection, how would that play out? The buyer is paying for the inspection, but the seller is the one who made the original disclosures about the condition of the property.

    The safest, cleanest way to facilitate a transaction where I’m the person in the middle is to simply remain nuetral and get the thing closed as professionally as possible so I can move on.

  40. 40
    Kary L. Krismer says:

    RE: David Losh @ 39 – None of that makes any sense. You can control the transaction and communicate with the buyer if you only represent the seller.

    Also, as to court I would think your liability would be far greater in the neutral role, because any time you stepped outside of that role at all, you’d be acting improperly, opening yourself to liability. If the buyer has a copy of the law of agency pamphlet, has signed documents that in 3-4 places indicate they received it, has signed an agency disclosure form indicating you represent the seller, and signed a no-representation document, they would be hard pressed to make a claim against you. But in any case, giving up representing your client to limit your own exposure to liability is probably actionable in and of itself, so any effort to not get sued by a buyer is merely likely to get you sued by a seller. At the very least it’s questionable.

    I realize that agents have some flexibility, but abandoning the representation of your client simply doesn’t sit well with me.

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