Seattle Bubble Census Results

It’s been nearly four months since we ran our month-long census of Seattle Bubble readers, and it’s high time that I shared the results.

During the month the survey was open, 1,147 people responded. While there were ten questions on the survey form, I won’t bore everyone with a complete, detailed breakdown of every single result, cross-tabulated with every other result. Instead, here are a few highlights.

Seattle Bubble Census Results

On this question I apparently did a poor job of wording the choices, since most of the people who marked “other” wrote in that they were renters. I was trying to capture all the renters with the other options, but I guess I should have been more explicit. Overall though, the results here are what you would probably expect: most Seattle Bubble readers (a little over 60%) are in the market to buy a home.

Seattle Bubble Census Results

This one surprised me a little. Anyone who spends a little time visiting the comments can see that we obviously have a few serious fans who spend a lot of time here every day, but I wasn’t expecting over a quarter of you to visit at least daily. Nice! At least it makes me feel good about making a special effort to produce something new here seven days a week.

Seattle Bubble Census Results

Nothing too surprising here. Three quarters of you are between 26 and 45—prime homebuying age.

Seattle Bubble Census Results

As it turns out, Seattle Bubble readers tend to be a pretty well-educated bunch. Nearly nine out of ten of you have at least a Bachelor’s degree. No wonder you’re so good at keeping me honest!

Seattle Bubble Census Results

Not only are most of our readers well-educated, but you’re making pretty good money, too. Over 60% of you are making six figures or better.

The last page of the survey was an open-ended question: “If you could teach realtors one thing about homebuyers in today’s market, what do you believe they still need to learn?” Over 500 of you responded. Here are some especially thought-provoking comments.

  • How to listen. The agent we worked with before decided to stop looking didn’t listen to what we said we wanted in a house. Instead she kept taking us to houses “she though we’d like”.
  • Affordable home prices are GOOD for the market.
  • Encourage buyers to limit spending to roughly 70-75% of what the bank is willing to loan you. And, under NO CIRCUMSTANCES, should a realtor ever encourage spending more than buyer is comfortable with (especially on the false assumption that the “value of you home always goes up” or “you’ll have instant equity” or “a home the best investment you can make”, etc…)
  • Buyers have access to a lot more info than they used to. That includes individual property records, and a long list of stats for each area (zip code, city, county , state).
  • We have access to so much information now that realtors need to make a strong case, preferably a quantitative one, for exactly what they bring to the table. They need to sell not just a service but the value of that service, and this needs to be done on a per-buyer basis because every buyer and every transaction will require different service levels.
  • Stop saying that, “Now is the best time to buy a home” or “Real estate is a great/best investment you can make.” Those lines of rhetoric have not differed over the past 15 years that I’ve dealt with Realtors. They simply aren’t blanket truths. I’d like to see even one Realtor who can do more than a cursory analysis based on the buyer’s actual inputs (e.g., equity in an existing property, costs to sell, closing costs on the new place, interest expense over time, property taxes over time, expected appreciation, etc.).
  • I would like realtors to be honest with me about market status. The majority that I’ve talked to assume that buyers are idiots, and try to convince me that this is the time to buy, rates will never be lower and prices are as low as they’re ever gonna get—so buy now, it’s a panic! It would be refreshing to have a realtor be honest with me.
  • If more people knew how easy FSBO + lawyer was, you’d be out of business. Love how Redfin has attempted to change the industry and Zillow offers easy access to more info and comparisons.

Thanks for all your responses!

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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.

97 comments:

  1. 1
    MoData says:

    The moment a realtor says this is the best time to buy, you’re throwing money by renting etc. he’s lost all credibility with me.

  2. 2
    gee says:

    Re Ryan Comment 5: If the broker won’t get paid for the deal, then can we really say that s/he has a client. If the “client” is unwilling to ensure that the broker is paid for the work, then I see no reason that the broker should do the work. I would challenge you to do your job with full knowledge that it will not lead ot a paycheck.

  3. 3
    Buford says:

    “This one surprised me a little. ……., but I wasn’t expecting over a quarter of you to visit at least daily.”

    Don’t you keep a rolling visitor log on your server?

  4. 4
    Ryan says:

    Quick question for all those in the know:

    The last comment Tim put was in reference to FSBO+lawyer. To sell this way, I understand it that the seller pays the attorney but does not pay a 3% seller concession to a realtor since one isn’t being used. Does the seller have to pay 3% to the buyer’s agent or can one just stipulate that no concessions are being offered?

    Thanks in advance for the replies.

    Ryan

  5. 5
    One Eyed Man says:

    RE: Ryan @ 3

    There’s no one way all FSBO deals get put together. I did a number of them as an attorney some years ago. Sometimes a broker will go to the FSBO and say they have a buyer but want the seller to pay a commission or they won’t show the house. The seller might say yes or they might say no. If they say no, the broker might get an agreement from their buyer to pay a commission from the buyers side, and they might reduce the offer by all or part of that commission. If the seller won’t pay a commission and the broker found the house, the broker may not tell the buyer about it. If the buyer found the house and the seller won’t pay a commission and the buyer won’t pay a commission acceptable to the broker, the buyer might get their own attorney to write up the deal, or they might get another broker to do it for a discounted fee (often discounted to 1% but sometimes even as low as a flat fee of perhaps $1000 to write up a deal for a friend without showing any homes if its close to full price and extremely likely to close).

  6. 6
    Ryan says:

    Thanks OEM, very helpful and exactly what I was looking for. I guess everybody has to put food on the table but it is amusing to me that a broker would either hide a house from a client or refuse to do a deal b/c a commission isn’t paid. Despite what any broker says, they are in it for themselves. Not saying I disagree with that, just that it is funny that every broker I have ever seen says they put their clients first and their interests ahead of their own. Tough dilemma.

  7. 7
    Pegasus says:

    RE: Ryan @ 5 – Ryan it’s what they cal a Win-Win situation….the real estate agents want to get paid for their work like most of us in this world…they can’t eat without an income and they can’t operate for long when they are broke.The buyer wants a good deal. Agent gets paid ..you get your house. Win Win!!! The question is who wins the most. That’s the rub. Most of the time when someone has told me that it was a Win-Win they were trying to con me into believing I was still winning while they were trying to take advantage of me…..

  8. 8

    By Ryan @ 5:

    Thanks OEM, very helpful and exactly what I was looking for. I guess everybody has to put food on the table but it is amusing to me that a broker would either hide a house from a client or refuse to do a deal b/c a commission isn’t paid.

    Do you work for free?

  9. 9

    RE: Pegasus @ 6 – Beyond that, let’s assume the buyer is willing to pay the commission. How many buyers do you think you exclude from the pool by doing refusing to pay a commission?

    In this market sellers often have to go beyond paying commissions as concessions. There are also financing concessions. If you refuse those you’re cutting into your pool of buyers too. Even some 20% down buyers need concessions so that they can still have 20% down.

  10. 10
    Ryan says:

    lol at your last sentence pegasus.

    Kary, no I don’t work for free and I was being honest when I made note of it being a tough dilemma. I have no problem with someone charging for a service; provided that they disclose how and why they are being compensated along with the disclaimer that they have an incentive to see the highest transaction price possible. It is not true that the client’s best interest is first and foremost b/c if it was, the transaction would be pro-bono or at a reduced cost. Honestly, IMHO, I don’t care what service you provide, 3% is robbery.

    I have worked as a financial advisor (salesman) in my past and I know exactly what it feels like to try and balance a client’s interests with my own. And sometimes, depending on how the rest of my month was shaping up, I got a better deal than I did on the exact same type of transaction a month prior. That was one of the reasons I left that business; I would rather help/educate for free than charge for something someone could do on their own with minimal education. Just my .02.

  11. 11

    By MoData @ 1:

    The moment a realtor says this is the best time to buy, you’re throwing money by renting etc. he’s lost all credibility with me.

    Most realtors always say that this is the best time to buy, no matter when. If prices are escalating, you better buy before you can’t afford it. If prices are declining, you better buy before prices start to rise again.

  12. 12
    uwp says:

    I would assume there is quite a bit of work involved for the agent to the buyer, even in a simple transaction. Why would they work 10+(probably more?) hours for free.

    I always assumed FSBO deals are usually put together with the standard 3% to the agent working with the buyer, but the seller keeps the 3% that would usually go to the seller’s agent beause they are (hopefully) doing the work of the agent (or paying a lawyer to do it).

  13. 13

    RE: Ryan @ 5

    If a house is listed on the MLS, there’s going to be some compensation for the buyer’s agent, whether it’s 3% or less. Real estate agents do a lot of things they don’t get paid for. I’m not complaining about it, but it’s the nature of the beast. I’ve shown houses to clients for months, and then they got sent to the other end of the US for work. I’ve shown houses to clients for months, then they’ve been laid off and need to continue renting. Other times, a client insists on making an offer on the first house he sees.
    I feel like I do put clients needs first. But if it’s a seller who is selling the home on his own without an agent, the property is not on the MLS, and they are not paying the buyer’s agent a commission, then what do they need me for?
    If you work for a brokerage, the brokerage has certain rules that their agents are required to follow. One of them is that you don’t do a deal without compensation. If you own the brokerage, I suppose you can choose to waive the commission, but how long can you stay in business?

  14. 14
    Pegasus says:

    RE: Kary L. Krismer @ 8 – I understand it is difficult market and many concessions are being given in order to close a transaction. If I were a seller I would not be doing a FSBO in this market. It I were a buyer I would be talking to guys like Ray if I had my ducks in a row…down payment, great credit, financing, etc. The cut in commissions has just broken the ancient frozen barrier and the flood is coming when real estate returns to normal(still a few years away). How many sellers now are negotiating the commission down before they list? How many buyers? Welcome to the world of the Internet and competition. The days of easy commissions are over because of the market and public perception of fees. There will always be a need for true professionals…just a lot less of them.

  15. 15

    RE: Ryan @ 9 – Your post said no concessions being offered. If you want to propose something else to an agent besides 3%, that’s entirely within your rights. But if you propose to pay nothing, and there isn’t a buyer’s agency agreement where the buyer has agreed to pay the commission, there’s no reason the agent has to show the house. And that’s what your post indicated.

    Beyond that though, as a practical matter, there’s no reason the agent would know about the house. When we’re out previewing houses we seldom see another agent’s sign and then go to the MLS to see what the house characteristics are. It works the other way around. If we looked up the information on every agent’s sign we saw, that’s all we’d be doing. For a sign to attract our attention there would have to be something really special about the house that was apparent from driving by. Or it might have to be very similar and almost next door to a house we do know the information on. But agents tend to be looking for rather specific things, and just seeing a house for sale isn’t that likely to attract an agent’s attention (unless perhaps they want to try to convert the FSBO into a listing).

  16. 16
    Lurker says:

    RE: Ira Sacharoff @ 10

    Except for Kary. If I remember correctly he said it is never a good time to buy!

  17. 17
    Ryan says:

    So does a FSBO home have the option of showing up on the MLS listings or not? And just to be clear, I am not saying realtors/brokers should be working for free.

  18. 18

    RE: Ryan @ 16 – They would have to go through some type of broker. There was a free one a few years ago, but I think they’re probably out of business. There is potential liability to listing a property, so doing it for free makes no sense at all.

    But there are many discount brokers out there. If you’re going to go that route, two things is to find out are whether they will put up at least 10-15 pictures and give you a lockbox. Believe it or not, not all of them do that, which is crazy because all it involves is uploading photos and a lockbox isn’t very expensive. (Actually I don’t know how the broker keeps from getting fined, because I thought a lockbox was a required item on a listing unless the seller refuses it.)

  19. 19
    Ryan says:

    Kary-

    Makes sense, thanks for clarifying.

  20. 20
    query_squidier says:

    “…it makes me feel good about making a special effort to produce something new here seven days a week.”

    …Which is why I (and I suspect many others) visit the site nearly every day. :)

  21. 21
    David Losh says:

    Buyer Agency is a contract between an agent, and a buyer. Even if the buyer finds the home, on their own, and closes with an attorney, a Buyer’s Agency Agreement pays the Buyer’s Agent the commission.

    I can hear the yelling now, but it is a contract.

    Before an agent works with a buyer they should have the contract signed.

    Here’s how it works with me, when I work as a Buyer’s Agent. After the contract is signed I look at everything. FSBO, expired, current, months on the market, high price, low price, and anything that looks like it might be coming on the market. Dumpster in front, painter inside, yard clean up, or other cosmetic work is a good indication a house is being prepared for sale.

    For your Real Estate agent it’s all money, it’s all work, it’s all potential commissions. So for the Buyer, with the Buyer’s Agency Agreement, they should be getting more work out of their agent rather than some one just hanging around the computer waiting for some thing to happen.

    A good reference on the subject is Jim Stacey, the father of Buyer Agency in the State of Washington.

  22. 22

    By David Losh @ 21:

    Buyer Agency is a contract between an agent, and a buyer. Even if the buyer finds the home, on their own, and closes with an attorney, a Buyer’s Agency Agreement pays the Buyer’s Agent the commission. .

    It would depend on the terms of the contract. Most agreements probably provide that the agent gets the SOC.

  23. 23
    wreckingbull says:

    RE: Ira Sacharoff @ 13 – Ira, at that point, why not propose an hourly fee to finish the deal your buyer? Buyer gets represented in the deal, and you get paid what you feel your services are worth.

    Is it your broker that disallows this sort of arrangement?

  24. 24

    RE: Ira Sacharoff @ 36

    Thanks for the plug Ira. Our fee is actually $3,995 although it’s not a “minimum” fee per se. It’s just our normal flat fee for any house under one million dollars (we charge an extra $2,000 for each million over the first).

    Additionally, through our law firm we also do plenty of FSBO deals as well without any brokerage fees. For both buyers and sellers we offer a $1495 flat fee or they can hire us by the hour and pay only for the specific services they need.

    While Ryan knows there are alternatives, his comments are indicative of the challenge and opportunity a business model like ours has: most people have little or no idea that there are good alternatives to the traditional 6% model (present company on this blog excluded). That’s true even in western Washington which is a hotbed for innovation in this industry (e.g., Redfin, Findwell, $500Realty, WaLaw, etc.) and it’s much worse in other parts of the country. Especially states like Oklahoma that actually outlaw commission rebates and have a militant realtor establishment to fight anybody who challenges the status quo.

  25. 25
    Ryan says:

    Kary (or anyone else)-

    Can you please explain to me what service you provide on a 500k purchase that you don’t provide on a 400k purchase to justify the increase in commission from 12k to 15k?

  26. 26

    RE: wreckingbull @ 23 – Not too many buyers are interested in paying hourly. My broker would allow it.

  27. 27

    RE: Ryan @ 24 – The amount of work isn’t always correlated well to price, although I must say I’m unlikely to go check on a $200,000 listing after every showing like I would with a more expensive staged listing. Conversely, sometimes a lot of work is done on a low priced listing.

    And for the record, I don’t always charge 3%, although again on a $200,000 listing I probably would be much less likely to discount. There are some people that need more assistance than others, and that can occur well before the property is listed. And again, as noted in the prior post, I’d be willing to work on a non-contingent hourly system. Not many people want to pay me $600 to do an open house.

    There are lots of things where the amount paid is based on a percentage of the sales price. Auctions come to mind. Do you think the auctioneer yells louder on the more valuable items? ;-)

  28. 28
    David Losh says:

    RE: Ryan @ 24

    The slide of commission is pretty well established. It’s all in presentation.

    You see a lot of newer agents doing lower priced transactions because there is less juice. When you move up in price you usually have to be a little more experienced. There are subtle differences. Your agent needs to be able to handle the comfort level.

    A Real Estate transaction can be a contest of wills. It doesn’t have to be, but some times it is. For me, I always find there is a breaking point. There is a point where it goes past negotiation.

    If your agent has done the job you hired them to do, you are getting what you want. Usually when people talk about win/win it’s when both people have as much into the transaction as they are willing to go.

  29. 29
    wreckingbull says:

    RE: Kary L. Krismer @ 26 – I think it is an interesting angle. I would pay a good agent by the hour to help me make an offer in a complex FSBO situation. I am sure the agent would need to define the minimum amount of work they would do, to protect their interests, but that is fine.

    Glad-handing at an open house, not so much.

  30. 30
    Ryan says:

    Kary-

    Not saying you always charge 3% but I am sure you have charged the standard rip when you haven’t had to do much more than write up the offer. Conversely, I am sure you have discounted your services when you feel like maybe you shouldn’t have. Considering the fee should be agreed upon up front, it sounds pretty tough to retroactively go back and adjust the price to what you think it should be. I would venture a guess that you charge 3% much more often than not…especially on a purchase since it “doesn’t cost the buyer anything”. So really, how do you go about agreeing upon your fee? Do you automatically default to 3% unless the person you are working with asks for a lower rate? It would seem that the actual cost of your services doesn’t depend on what you do for your client but whether or not they are smart enough to ask for a discount?

    The real question is why do you think your services are worth $600 for several hours? Are you taking an average commission and then backing into how much you are worth based on the average amount of hours you spend on a home?

    Yes, lots of things are transacted as a percentage of the price…that doesn’t mean it is the fair or logical way to do it. I commend you on being open to an hourly rate although I disagree with the value you place on your services (unless you can convince me with explaining your $600 figure).

    Finally, can you please explain why you are less likely to discount on a 200k transaction? That sounds suspiciously like the 6k pocket change is not really worth the hassle, regardless of the time involved?

    David-

    What do you mean by subtle differences and comfort level? Is there really that much you do differently on say a 250k and 300k home? What point are you referring to where it goes past negotiation?

    It would be interesting to see a running tally of sales/purchases per month by all of our professionals on board here and the fee/percentage that they charged for each one. Also would be nice to see transaction price for reference. Not being rude but I am thinking that the less sophisticated/educated the buyer/seller, the closer to 3% the deal is done at.

    Thanks for your replies earlier guys.

  31. 31
    David Losh says:

    RE: Ryan @ 29

    You’re talking, again, as though Real Estate is a commissioned sales position. Real Estate is a way of life.

    I make my money from a variety of Real Estate services. I personally like the renovation of older homes. You can pay me $250 per hour to walk you through a property and give you a written report. Most people opt for the $60 per hour for me to be their buddy for a few hours. Many people pay us $90 to $180 per hour to “fix” properties.

    Many properties that I have personally “fixed” have been bought by people who were ill equipped to make a purchase of Real Property.

    While you’re out with some ham bone, or redfin flunky, other people are looking at numbers. Real Estate, building a Real Estate is all about numbers. Money in, money out, what it costs, and what you are willing to put up with. It’s a way of life.

    Many times in my life all I knew were buyers, sellers, and Real Estate agents. Years have been spent on one property to maximize profit.

    Honestly the higher end, more educated client, realizes there is a cost for service. More professionals come to grips with the idea that a Real Estate commission is cheap, because it is cheap.

    Most Real Estate agents reach a point where they realize there is more money in buying Real Estate for them selves than helping other people buy, or sell Real Estate. As those agents create a residual income they are less inclined to listen to nonsense.

    It makes no sense to provide a service of value for little or no compensation. Just because people hire agents who have low, limited, or no experience doesn’t mean that the industry should stop, and suddenly pay attention to your concerns.

    Real Estate is constant. It is the basis of wealth. You can chose to take advantage of that vehicle, or put your money in the bank, or the stock market, or mutual funds. How’s that going?

  32. 32

    RE: Ryan @ 29 One of the most common instances of discounting a listing fee is when the fee is 3% and the client is being unreasonable, or something needs to be done, etc. It’s nice to have that cushion to be able to get the deal done.

    As to the $600, when I charge hourly it’s $150 an hour. 3 hours of open house plus 1 hour prep time.

    Finally, on the discount for $200,000 properties, go check the discount brokers, like even Ray’s site, where below a certain price they don’t discount.

  33. 33
    Ryan says:

    David-

    Real Estate may be a way of life for you but I don’t think that is the case for most people. They simply want a place to call home and hopefully pay off one day. It seems cavalier to discount the value of an agent thru Redfin when the majority of people are looking for a bread and butter purchase or sale. You certainly provide a value with your background and in your niche but every agent/realtor I know would be clueless in comparison. Specialty services command premium prices, I get that. How much time does an average purchase or sale take?

    I also don’t agree that real estate is the basis for wealth but I would be interested in reading more about that if you could provide any links. I may be mistaken, but I believe historically (and adjusted for inflation) the market has been better overall for building wealth. I don’t have any money in the market (i used it all for a downpayment in aug 08, oops) but I moved all of my parent’s money to cash over a couple of months time earlier this year. Even I know to stay out of that market.

  34. 34
    D. in Ballard says:

    RE: David Losh @ 21 – I would never sign a buyer’s agreement for the very reason that I may wander over to see a fsbo and want to buy it. In addition, I am deeply suspicious of any real estate agent who would require me to sign a buyer’s agreement contract to work with them. And it would be a deal breaker.

  35. 35
    Lake Hills Renter says:

    I have a great agent. Laid back, no pressure at all. No stupidity like buyer’s agreements. Answers all my questions with great patience. And after I pretty much disappeared off the face of the earth for a few months due to life issues, he still emails me interesting listings.

  36. 36
    Ryan says:

    By Kary L. Krismer @ 31:

    RE: Ryan @ 29 One of the most common instances of discounting a listing fee is when the fee is 3% and the client is being unreasonable, or something needs to be done, etc. It’s nice to have that cushion to be able to get the deal done.

    As to the $600, when I charge hourly it’s $150 an hour. 3 hours of open house plus 1 hour prep time.

    Finally, on the discount for $200,000 properties, go check the discount brokers, like even Ray’s site, where below a certain price they don’t discount.

    So what would you say you spend in time on an average listing? And what would your average commission be? Even if you wasted 50 hours of work and pulled in a 10k commission, that gives you an hourly of $200. I would be stunned if you spent anywhere near 50 hours per home. So at $150 an hour (again, that seems ridulously high), I would save money assuming a standard 3%.

    Again, not trying to be rude but I personally feel like this industry is living in the stone ages and has not come to grips with it’s diminished value.

    I worked as a financial advisor for several years. As an advisor, I would charge based on a percent of a client’s portfolio. I was taught/mentored by other advisors and staff that we don’t discount our standard 1.5% if the portfolio was less than 100k. That always bothered me and I felt like I was ripping these people off b/c I wasn’t spending any extra time on someone’s account with 500k than I was the guy with 100k. I never did get an answer as to why we don’t discount aside from the standard “that’s how its always been done and that’s how everyone else does it”. Your answer to that question is kind of like this since you tell me Ray does the same thing so it must be ok. Not apples to apples (portfolio charged annually vs 1 time for home sale/purchase) but you get the picture. I still don’t get why a lower home price means no discount? Is it taboo to just flat out say that it isn’t worth your time to bank 2% on a 200k home?

  37. 37

    RE: Kary L. Krismer @ 31
    If I’m not mistaken, Redfin charges a minimum 5500 dollar commission and won’t write up offers on properties costing less than 175,000. Findwell charges a minimum of 6500. Ray’s 500 Realty charges a minimum of 3900. I think WA Law Realty charges 2995.

  38. 38

    RE: Ryan @ 35
    When you’re an agent ( now called a broker) affiliated with a brokerage, very often you have to split the commission with the brokerage. Until you make a certain number of sales per calendar year, the split is 50/50, when you work for one of the biggies like Windermere or John L Scott. Some other brokerages charge a hefty monthly fee into the hundreds of dollars per month, whether or not you’re earning any money.
    So if you’re listing a 200,000 dollar house, and you work for Windermere, for example, if you were to list the property at 2%, the total commission for the listing brokerage would be 4000 dollars. Then you get half of that, leaving 2000, then you have to pay taxes out of that and many brokerages also charge a transaction fee from their agents also in the hundreds of dollars. So, using your example, if 50 hours were spent on the listing, and you net 1500 after taxes and transaction costs, that amounts to 30 dollars per hour, which does not include the cost of buying signs, advertising, gasoline, etc. That’s why an agent will typically not give a discount on a listing for 200,000 dollars.
    Plus, sometimes the listing just won’t sell. If the property is in a area that nobody wants to live in, or is just unredeemingly ugly, or the economic climate is such that there are just no buyers out there, then the agent can spend all those hours working hard to sell it with absolutely no results.
    I love the idea of getting rid of commissions entirely and charging fees based on services performed. And I agree that the industry is still kind of in the dark ages. But that’s the way the system currently exists, for the most part.

  39. 39
    Ryan says:

    Thanks for the concise answer Ira; what you say makes perfect sense. On the other hand, sometimes being a mere mortal and making around 30 bucks an hour like me isn’t that bad :)

    Thanks again ira :)

  40. 40
    Ryan says:

    Oh yeah, before I forget….thanks Tim for pretty much daily posts. I don’t comment very often but I do lurk quite a bit and it is always nice knowing that everyday I show up there will be something new. You’re kinda like the Tyler Durden of real estate.

  41. 41
    Whidbey Islander says:

    Can an agent explain why another agent would willingly take on a ludicrously over-priced property? In an example out here, a pleasant six-house water-view plat of 2 – 5 acre places has four of the six houses for sale. Three are priced in the 450-550 range, the high one being an actual salt-waterfront 5 acre parcel with a huge view of the sound and Rainier. Then there is the other house of the four, which is 659, and probably the least appealing of them (we considered buying it back in ’04 when it sold for about 415). They are all literally next door to each other, you could park the car once and visit them all.

    What was the incentive in our tough, tough market for houses over 400 out here to accept the listing at 659? The fair market on that place is no more than 460, and possibly 440. If I were an agent, why would I want the expense of the listing when it has zero chance of selling?

  42. 42
    Ryan says:

    Ira-

    Thx also @13, not sure how I missed that comment/post.

  43. 43

    By D. in Ballard @ 33:

    RE: David Losh @ 21 – I would never sign a buyer’s agreement for the very reason that I may wander over to see a fsbo and want to buy it. In addition, I am deeply suspicious of any real estate agent who would require me to sign a buyer’s agreement contract to work with them. And it would be a deal breaker.

    The agreement could be written in a way that it wouldn’t prevent you from doing that if you didn’t want to be represented on such a transaction. Although I do understand your second point. I’m not a big fan of buyer agency agreements, and typically only use them when the buyer wants to use them for a reason (e.g. they want to deal with commissions that are not 3%).

  44. 44
    David Losh says:

    RE: Ira Sacharoff @ 37

    That’s just the cost of doing business.

  45. 45

    By Ryan @ 35:

    So what would you say you spend in time on an average listing? And what would your average commission be? Even if you wasted 50 hours of work and pulled in a 10k commission, that gives you an hourly of $200. I would be stunned if you spent anywhere near 50 hours per home. So at $150 an hour (again, that seems ridulously high), I would save money assuming a standard 3%.

    50 hours isn’t uncommon at all. And of course there are the ones you spend even more time on that you never get paid on at all.

    Besides hourly, another commission agreement would be a flat fee non-contingent. Say $5,000 to list for X months, with possible renewals at lower rates. Paid regardless of whether it sells.

    There are all sorts of options when it comes to commission agreements.

  46. 46

    RE: Whidbey Islander @ 40
    I’ve got some theories:

    1. Some agents are delusional and are convinced that they can sell ice to eskimos.

    2. The agent knows the house won’t sell for 659, and tried to convince the client to list it at 459. Maybe the agent believes that as we head into the slow season, the client will take off those rose colored glasses, lower his price to 425, and the agent will be vindicated and sell the house.

    3. The agent is new, doesn’t know much about real estate, doesn’t read Seattle Bubble, and was telemarketing to get clients. No other agent would take the listing until rookie agent Joe Schmoe called out of the blue.

  47. 47

    RE: Ryan @ 38
    I agree. I don’t consider 30 bucks an hour to be a low wage.
    But just taking a listing doesn’t mean that listing will sell. A lot of stuff has been on the market for a long time. And just because something is listed at 200,000 doesn’t mean it isn’t worth 100,000. I’ve shown some godawful 200,000 dollar crapholes, described as ” needs just a little TLC.”

  48. 48
    David Losh says:

    RE: Ryan @ 32

    There are no bread and butter purchases. The family home is the biggest investment most people make. Your attitude is exactly why we are in the mess we have today, economically.

    The stock market is an interesting vehicle to wealth. A stock can be an asset. Owning ATT&T, over the years has been both an asset, and liability. Real Estate can be termed the same way.

    What people get confused about is that Real Estate is a variety of things, residential, commercial, leasing, and business opportunity. A mall can have all aspects. Commercial leasing depends on how well a business inside might do.

    It all comes down to the numbers. A purchase of a property is a business decision based on a plan. You pay to get a plan in place, and negotiate the best terms for yourself.

    Again, it’s the cost of doing business. Your agent either knows what they are doing or not.

  49. 49
    Herman says:

    By Ryan @ 35:

    Even if you wasted 50 hours of work and pulled in a 10k commission, that gives you an hourly of $200. I would be stunned if you spent anywhere near 50 hours per home. So at $150 an hour (again, that seems ridulously high), I would save money assuming a standard 3%.

    I’ve been studying the RE agency industry for a few months.

    They would say that you cannot value the commission in terms of the hours of labor on the search and the transaction.

    The primary argument is that the agent will get you a better price than you would have on your own. If a savvy professional can negotiate the deal in your favor by 5%, then it doesn’t matter whether they spent 100 hours or ten minutes on the deal, they are a benefit to you even at 3%. The average person does not negotiate deals for a living, and is at a disadvantage when they sit across the table from someone who does.

    There are some other non-hourly, intangible factors that they would also argue. Finding the RIGHT home for you amid all the noise, putting you in the right neighborhood, helping you avoid costly mistakes, and simply winning the deal are examples. These come from expertise, not hourly labor, and are difficult to quantify.

    There are plenty of rebuttals to these arguments. I’m not taking their side, just repeating what I’ve heard.

    IMO most agents are noobs and do not actually live up to these arguments, and yet they all basically claim the same fee. So if you buy into them, the lesson is to scrutinize and interview your agent rather than pick Suzanne just because she goes to Pilates with your wife.

  50. 50

    Any idea why the comment I just posted in response to Ira @36 wound up at # 24?

  51. 51
    ray pepper says:

    RE: Ira Sacharoff @ 36

    Ryan……………………….Your DEAD ON with so many of your comments…You have earned FREE tickets to The Seattle Home Show from me…Oct 8, 9, and 10th………….Just email me if interested as the date nears. We will be having our booth set up across from the usual Coldwell Banker, Remax, etc……

    Its the same old line we hear from consumers since day 1..”Ray I’m not gonna pay an Agent more then my surgeon.”

    As an RN for many years working in vent units, Med Surg, and drug detox making about 30.00 an hour I’m hear to tell you …………………..brace yourself………………….REAL ESTATE IS VERY EASY!!! and an Agent making 2000-5000 is more then enough.

    What agents need to do is pick their clients they represent cautiously and make sure the expectations are set forth early on. We at 500 will NEVER show a property without a verified Pre Approval within the last 30 days and without a Buyers Agency Agreement signed.

    More importantly Agents need to realize they have NEVER EVER SOLD a house. They must understand their limited role and realize they are simply facilitators to their client in helping them buy or sell their property. When they truly realize this and adjust their business models appropriately (while utilizing Lead Generation), they will be a survivor in the new age of real estate.

    The brick and mortar have about 10 years left and we will all look back and laugh. A whole new generation of **RYANS** are FINALLY starting to get it……..

  52. 52
    David Losh says:

    RE: Marc at WaLaw @ 50

    OK, guys, and gals, what does a transaction coordinator charge, $350? paper work generation another $250? and you are at $600? Why would any one pay a redfin, findwell, walaw, or, sorry Ray 500 Realty any more than $1200 to do a Real Estate transaction?

    Heck, the buyer, and seller, are already paying for title, and escrow, so they don’t need anybody.

    You’re right, why pay more than $1200? OK, maybe $2400 for over a million, just to keep the conversation going.

  53. 53

    It Still Amazes Me That Banks Give 30/40/50 Year Loans to 45+ YOs

    They’ll be retired or unable to work likely long before that and IMO a high risk. I don’t think banks care about risk anymore.

  54. 54

    RE: softwarengineer @ 53 – Most of the loans will be paid off within 10 years, one way or another. Also, if it were an interest only loan you’d have a point, but a 30 year loan would decline in balance significantly in 10 years, and more so after that. Finally, I’d note that 99 year leases are somewhat common, and although they are often corporate entities, the people behind those leases will not be around for most, if any, of the second half of the lease.

    Rather than life expediency, I’d look more at credit risk. Someone that wants to go 40 years on a $400,000 loan, to simply reduce their payment by $200 a month can’t be a great credit risk. While it might not always be the case, seemingly what they’re trying to do is buy more home than they can afford by going with a longer term. If they’re making that financial decision, what other bad financial decisions will they make in the next 10 years?

  55. 55
    Ryan says:

    By David Losh @ 48:

    RE: Ryan @ 32

    There are no bread and butter purchases. The family home is the biggest investment most people make. Your attitude is exactly why we are in the mess we have today, economically.

    Again, it’s the cost of doing business. Your agent either knows what they are doing or not.

    David-

    Not sure what you mean by that? My attitude is why we are in this mess? You advocate building wealth thru real estate; isn’t that what caused this mess?

  56. 56
    David Losh says:

    RE: softwarengineer @ 53

    This will be the next shift in Real Estate. The 30 year loan may always be around, but the people who invest in those mortgages will want to see some hope that the Note will mature, or be paid off.

    What keeps coming up is the number of people who are refinancing. They pay $2K to $4K to save between $50 to $200 per month. It also starts the amortization clock all over again.

    Really what it does is get the Note holder whole again. That is the purpose of the refinance, that is what investors are counting on. So even if you keep the principle balance the same, and even if the interest rate continues to go down, a home owner can be making payments forever with this strategy.

    The 30 year mortgage is a safety net. Most people should be paying a property off within 15 years. You convert the 30 year to a 15 year by making the extra payment. In these tough economic times you have the option of just making the 30 year payment, the loan still amortizes, just not as quickly.

  57. 57
    Ryan says:

    RE: Herman @ 49

    Good points Herman, thanks. I don’t like the references to the intangibles b/c there is no way for sure to know if you are getting the best deal or not! I guess in my ideal world, a flat fee or hourly rate would be ideal (as Kary mentioned @45).

  58. 58

    By David Losh @ 56:

    The 30 year mortgage is a safety net. Most people should be paying a property off within 15 years. You convert the 30 year to a 15 year by making the extra payment. In these tough economic times you have the option of just making the 30 year payment, the loan still amortizes, just not as quickly.

    That’s part of the reason I didn’t make an absolute statement about people getting 40 year loans. They could do such a thing planning on making the extra payments (sort of a do it yourself option payment loan). I did that on my last car loan. 5 year that I paid on a 3 year schedule and actually paid off in about 2.5.

  59. 59
    Ryan says:

    RE: ray pepper @ 51

    LOL, I read thru your whole comment with trepidation thinking it was sarcasm and you were going to blow me up at the end!

  60. 60

    RE: Ryan @ 57 – Also, keep in mind that whenever you’re paying on a contingent basis, the hourly rate will seem very high. Thus, for example, if you had a personal injury action, you would probably recover more if you paid hourly.

  61. 61
    Ryan says:

    By Kary L. Krismer @ 54:

    RE: softwarengineer @ 53 – Most of the loans will be paid off within 10 years, one way or another. Also, if it were an interest only loan you’d have a point, but a 30 year loan would decline in balance significantly in 10 years, and more so after that. blockquote>

    After 10 years, a 30 yr loan declines approx 20%….hardly a significant amount.

  62. 62
    David Losh says:

    RE: Ryan @ 55

    Real Estate, buying property, is a business decision. Every property you buy is for a return. People in the Real Estate business say that mom, dad, and kids (that’s what residential buyers are called) buy towering tress, and babbling brooks, all they see is the white picket fence. One of the duties of a good agent is to prevent the buyer from being blinded by an emotional purchase.

    There are no little deals. This is your money, and your financial future. Building wealth is a part of that financial well being.

  63. 63
    Ryan says:

    RE: Kary L. Krismer @ 60

    Understood, thx.

  64. 64
    Ahau says:

    I’m not an agent, nor do I fully support the fact that it is primarily comission-based. That said, I work in real estate for a corporation and have worked with a number of brokers professionally, as well as a buyers agent when we purchased our first home in May.

    We used a traditional 3% buyers agent, and the sellers had a “1% full service” listing agent. Their agent cost the sellers WAY more than 2% of that home’s value because he was an idiot, a liar, and he did not spend enough time on our transaction. He somewhat undervalued the home because he didn’t realize that the included garage unit (a separate condo with its own tax parcel) was included in the transaction when he listed it. He was slow to respond, lied in his listing and to my face (he was not pleased when I corrected him and he had no recourse), and he nearly cost his clients the sale.

    Now, I realize that this guy may be the exception and not the rule, and there are certainly well qualified, detail oriented folks who are working for less than 3% and doing a great service for their clients. But, the fact remains that a good agent is worth their commission. Mine was great, and after all that she got put through on our transaction, I wish I could have paid her another 3%. Between her time and her assistant, plus the split with her broker, I know she wasn’t making as much per hour as I do.

    A lot of transactions are cookie cutter, but when you find yourself in the middle of a clusterf*** like I did (the gory details of our transaction are too long to include here), you want to be damn sure you have the right person representing you.

  65. 65
    David Losh says:

    BTW I have done the hourly calculations per transaction and they aren’t paying me very well. I make more doing other things.

    Honestly most Real Estate professionals that you will never meet are looking for property for themselves. Not everything meets what they are looking for, so they don’t mind sharing what they find with a potential buyer.

    I have, several times, partnered with people of a like minded interest. They buy the property, and my company does the work. With rebate brokerage I could do this much more often now, then I could 20 years ago. It takes out the conflict of interest.

  66. 66

    By Ryan @ 61:By Kary L. Krismer @ 54:

    Most of the loans will be paid off within 10 years, one way or another. Also, if it were an interest only loan you’d have a point, but a 30 year loan would decline in balance significantly in 10 years, and more so after that.

    After 10 years, a 30 yr loan declines approx 20%….hardly a significant amount.

    Well people here argue 20% makes all the difference when it comes to default. Also, with even 3% appreciation (inflation), the equity cushion would be much greater.

  67. 67
    bubblebuyer says:

    I don’t understand why realtors claiming now is the best time to buy is still such a hot button issue. Anyone that relies on the advice of a realtor regarding timing a purchase, offer $s, what home inspector to use or valuation deserves what they get. A Realtor is the same as a used car salesman. They earn a living by completing transactions. They’re not going to turn down a transaction…ever.

    IMO, using a realtor for your first home purchase may make sense purely to understand the process, navigate the purchase agreement especialy the contingencies or when buying in a new city. Next purchase, save money by using redfin and a real estate lawyer.

  68. 68

    By bubblebuyer @ 67:

    I don’t understand why realtors claiming now is the best time to buy is still such a hot button issue. Anyone that relies on the advice of a realtor regarding timing a purchase, offer $s, what home inspector to use or valuation deserves what they get. A Realtor is the same as a used car salesman. They earn a living by completing transactions. They’re not going to turn down a transaction…ever..

    I would agree on the timing issue. But the rest is simply wrong. Agents are going to be far better at knowing what to offer, or what inspectors are good. As to not ever turn down a transaction, I guess that’s why I’m paying an attorney to give a buyer client an opinion letter about a transaction I consider risky. The client thinks it is risky too, but I don’t think they fully understand the risks (and in this case, I don’t either), so I’m paying to make sure they do. If that blows up what would otherwise be easy money, that’s fine by me.

  69. 69
    Dawn Glover says:

    RE: ray pepper @ 51 – I may be stating the obvious, but in the last decade Real Estate increasing in value for all the wrong reasons brainwashed people into believing that they can make money for nothing. Of coarse they thought nothing of paying Real Estate fees in the hundred’s of dollars an hour and sharing the wealth because it was easy money. People dropped $50 grand into a small yard for landscaping, I couldn’t believe what I was hearing when I moved here 3 years ago. When I even dared to share my point of view I was alienated. I still can’t believe that anyone would still pay 6% commission to sell in this market. When sellers are no longer making profit but losing money this model will crumble and alternative models will be the norm. Where I come from when you have to sell a house in a hurry and undervalue, you plant a for sale by owner sign on the front lawn and pay a lawyer a minimum fee to close. Alot of people here unfortunately missed the boat on that plan, last year was their window, but they still believe that if they hold out they will get their price. I know several people that I really care about that are going to rent out at a loss for 2 years thinking that the market will return to normal. It’s sad because they believe that the market was normal when it wasn’t and is not. I read the Seattle Bubble daily along with other investment news because I am trying to make good choices for my family and our future. The type of talk here on these comments is scary to alot of folks and they think that it is fear mongering. Some even think that it’s because of this negative talk that we are somehow causing this to happen. I’m thankful to have an outlet to discuss my opinions openly and intelligently.

  70. 70
    ray pepper says:

    RE: Ahau @ 64

    Care to share with us who your outstanding Agent was that deserved to get payed more? Also the “discount 1% Agent” so we can all take note..

    After all………….. we are family here…

    I’m building a list of Agents who deserve the full 3% and in 14 years I don’t have one name on the list. Maybe yours will be the first…

    Dawn…we have come a long way in the last 5 years….I used to be bashed incessantly………Now the bashing has subsided and its people like you and Ryan that will educate millions in the coming years.

  71. 71

    “A Realtor is the same as a used car salesman. They earn a living by completing transactions. They’re not going to turn down a transaction…ever.”

    I’m calling BS here. Maybe a lot of them, but…”ever?”
    I’ve turned down listings, a whole lot of them. I’ve talked clients out of making offers. I’ve suggested to potential clients that they’d be a lot better off continuing to rent.
    I completely agree that there are a fair number of sleazoid, high pressure, prevaricating, smiling, slimy realtors. And that just finding a realtor because you walked into a John L Scott office could be akin to walking into a lion’s den.
    I’ve got no problem with Redfin, and I recognize that they don’t work on commission, but don’t they also depend on transactions being completed? Why are they all saints and the rest of us lower than ticks and leeches on the totem pole?

  72. 72
    Ryan says:

    By David Losh @ 62:

    RE: Ryan @ 55

    Real Estate, buying property, is a business decision. Every property you buy is for a return. People in the Real Estate business say that mom, dad, and kids (that’s what residential buyers are called) buy towering tress, and babbling brooks, all they see is the white picket fence. One of the duties of a good agent is to prevent the buyer from being blinded by an emotional purchase.

    There are no little deals. This is your money, and your financial future. Building wealth is a part of that financial well being.

    David-

    I thought we were all purchasing a home as shelter, nothing more, nothing less? I can certainly agree with your comment about eliminating emotion but I don’t think you are necessarily helping to “build wealth”….sounds very “missed fortuneish”. As an agent, I would expect you to find me the best home to meet my criteria within my price range and then represent me or present an offer to a seller. Where exactly do you assist in the wealth building? Are you researching the price of building materials, monthly household bills for the home in question, etc. and then crafting an offer that is a discount to this? Or are you taking the listing price and just putting in an offer anywhere under it….thereby creating “value” b/c you didn’t pay full price? Maybe I missed something but I thought we were supposed to be getting away from the idea that a home is an investment to make money on?

    Either way, I really think you value your services too high. I see the role of the agent/realtor as that of a financial advisor: a commissioned salesman. Referencing my past again, we would tell ourselves that we were licensed professionals, much like an attorney or cpa and that we should be paid accordingly. It embarasses me to think about that (then and now) because we all know that is not true. As a financial advisor, I was very limited in what I could advise on and I was restricted from offering advice on taxes, estate planning, legal, etc. unless I brought in a professional in this area to assist. The real estate game is flawed in that anybody can become an agent/realtor and they then proceed to advise on topics that are either way over thier head or are best left to professionals. You trying to build wealth thru real estate for a basic buyer or seller is starting to get into that gray area, imho.

    Who would have ever thought that the cheapest option on anything would be to use an attorney (WaLaw)….it feels like the twilight zone. Marc @24 is spot on when he states that many people are unaware of the alternatives to a standard listing.

  73. 73

    By Ira Sacharoff @ 71:

    “A Realtor is the same as a used car salesman. They earn a living by completing transactions. Theyâ��re not going to turn down a transactionâ�¦ever.”

    I’m calling BS here. Maybe a lot of them, but…”ever?”
    I’ve turned down listings, a whole lot of them. I’ve talked clients out of making offers.

    I’ve told the story before of a client that made 2 or 3 offers higher than what we recommended. They knew that we thought it was too high. No deal ever came together, and the clients quit looking.

    But they did eventually buy something through us, and they have also referred other people to us who have used our services.

    Not looking out for the interests of the client is a good way to be unsuccessful in the long term.

  74. 74
    Ryan says:

    Ira-

    I didn’t see the comment you reference above but I certainly don’t agree with the sentiment. I think there is def a role for a tradional realtor/agent; my issue is the cost. The car salesman reference is a tad unfair….many financial advisors I used to work with would have def fit that description!

  75. 75
    Ryan says:

    By bubblebuyer @ 67:

    IMO, using a realtor for your first home purchase may make sense purely to understand the process, navigate the purchase agreement especialy the contingencies or when buying in a new city. Next purchase, save money by using redfin and a real estate lawyer.

    +1

  76. 76
    Dawn Glover says:

    On a side note…I’m not a hater, I just like reality. During the boom times I rode it too, but I knew very well that we were on a high. As a business owner for the past 15 years there was an environment to make money. I might even dare to say it was easy money. Times have changed and supply and demand has curved alot of business models. I closed my business in 2008, it was a good decision. I believe that people that hold on to the past, miss out on opportunities in the future. Often they rode the high, but ride the lows right into the ground because they are not willing to accept or see that things are changing.

  77. 77
    ray pepper says:

    “redfin and a real estate lawyer”???—-Don’t get me started on this one……..

    Seems to me Bubble heads that I have met from this site are FAR more competent then the average Real Estate Agent and Lawyer. No Agent or Lawyer will look out more for you then yourself……………………

    Attorney’s get far too much credit and I must tell you just as there are incompetent overpriced Agents………… there are incompetent overpriced Attorneys who have very HIGH student loans they MUST get paid off…

    No running from those student loans guys…………………..

  78. 78
    Pegasus says:

    RE: Kary L. Krismer @ 45 – Kary are you counting the time that you post here and other forums as working on a listing? Multi-tasking?

  79. 79

    By Pegasus @ 78:

    RE: Kary L. Krismer @ 45 – Kary are you counting the time that you post here and other forums as working on a listing? Multi-tasking?

    If that were the case he’d be making sixty five cents an hour :)

  80. 80

    RE: Pegasus @ 78 – No. But do realize that I’ll do work related things before 7:00 a.m. and as late as 9:00 p.m. But in any case, today is my day off. Even so, I’ve dealt with about 4 matters. Edit: Now 5 matters.

  81. 81

    By ray pepper @ 77:

    “Attorney’s get far too much credit and I must tell you just as there are incompetent overpriced Agents………… there are incompetent overpriced Attorneys who have very HIGH student loans they MUST get paid off…

    There are incompetent anythings. Try not to think about that the next time you go to the doctor for a procedure.

    Trying to convince yourself that you can protect yourself as well as a competent professional is foolish.

  82. 82
    bubblebuyer says:

    Kary,

    You are in the minority then. I used the home inspector recommended by my realtor, primarily due to timing constraints on inspection. To date, that decision has cost me $4,200 ($7,400 if you include the paint job I had done 3 years after buying the place – I believe an inspector should be able to look at paint quality on trim and estimate the life remaining before it needs to be repainted) in work that needed to be done and that any competent home inspector should have picked up on during the inspection. (BTW, I exclude the cost of rectifying only having 1 of the 3 furnace air returns connected and the basement not sealed, something I have not repaired yet). I have no doubt that this home inspector was not really working for me, but for the realtor, and minimized a lot of the issues in order to not place the deal at risk. Use the home inspector recommneded by your realtor at your peril.

    As to valuation, this is extremely subjective especially in Seattle where there is great variety in housing type, quality, neighborhood to neighborhood variation and realtively low neighborhood sales volumes. It is easy for a realtor to choose comps to come up with a valuation they want. There is enough publicly available information for buyer to come up with valuation they are comfortable with, or at minimum, validate realtor estimates.

    By Kary L. Krismer @ 68:

    By bubblebuyer @ 67:

    I don’t understand why realtors claiming now is the best time to buy is still such a hot button issue. Anyone that relies on the advice of a realtor regarding timing a purchase, offer $s, what home inspector to use or valuation deserves what they get. A Realtor is the same as a used car salesman. They earn a living by completing transactions. They’re not going to turn down a transaction…ever..

    I would agree on the timing issue. But the rest is simply wrong. Agents are going to be far better at knowing what to offer, or what inspectors are good. As to not ever turn down a transaction, I guess that’s why I’m paying an attorney to give a buyer client an opinion letter about a transaction I consider risky. The client thinks it is risky too, but I don’t think they fully understand the risks (and in this case, I don’t either), so I’m paying to make sure they do. If that blows up what would otherwise be easy money, that’s fine by me.

  83. 83

    RE: bubblebuyer @ 82 – Well first, your example of one transaction on the inspection doesn’t really prove anything. It’s possible the inspector was incompetent, or just that they missed something (although it sounds like the former). The situation where the inspector missed something the most critical (expensive) in my past was a situation where the client picked the inspector. It was something that could have been easily missed, so it’s possible one of the inspectors I recommend would have missed it too, but as it is, it’s an example opposite yours.

    As to what to offer, it’s not just comps, but even picking comps the agent should have an advantage. I recently had a non-represented buyer make an offer on one of my listings and he was off by so much he didn’t have a chance. In his case he was about 15% low because he didn’t understand what the proper comps were for the area. If he’d been wrong the other way (e.g. using the type of property I was selling as a comp for the other type of property) he would have made a huge mistake.

  84. 84
    bubblebuyer says:

    Kary,

    Yes, a sample of 1 is not representative but there is clearly an agency problem when a realtor recommneds a home inspector. Home inspectors rely on realtor referals for a significant portion of their business. If a home inspector is too honest, he risks complicating or killing a deal. Too many of these and no more referals. Therefore you are always better off eliminating the agency issue by hiring an independent inspector.

    Also, it is not a black and white issue between inspector incompetence and working for the home buyer. An inspector can eliminate risk of liability by pointing out an issue in a way that does not emphasize it as a big issue and minimize risk of killing a deal. e.g. there are some areas where you need to remove soil from foundation and grade away from home when in fact the foundation is under 2 ” of soil which means removing 9″ of soil along the entire length of home to come within standard and then regrading to 4 ft away from home.

    You should do the same due dilligence hiring an inspector as you do hiring a contractor. The home inspector must be impartial and should work for the home buyer not the realtor.

  85. 85
    Jillayne says:

    Hi Software engineer,

    “It Still Amazes Me That Banks Give 30/40/50 Year Loans to 45+ YOs They’ll be retired or unable to work likely long before that and IMO a high risk. I don’t think banks care about risk anymore.”

    Lenders cannot discriminate based on age. We need to make our decisions based on a person’s ability to repay the loan and not their age. For example, if a 19 year old trust fund baby applies for a loan, if she qualifies to repay the loan, we grant the loan. If a 90 year old man applies for a 30 year loan, if he qualifies to repay the loan, we grant the loan and ignore the person’s age.

    Here is a link to the Equal Credit Opportunity Act.
    http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre15.shtm
    Washington State has added to the protected classes to include sexual orientation, military veterans, disability, and a person who uses a service animal.

  86. 86
    deejayoh says:

    RE: bubblebuyer @ 84 – I’ve generally found the inspectors recommended by my real estate agent to be not so useful. they seem to find enough to keep the buyer happy they’ll get some concessions, but nothing that will kill the deal. Way I see it, they are going to work for you (the buyer) one time – but they may get dozens of referrals from an agent. Who do you think they are more interested in keeping happy?

    My for instance is my first house, which had a flat roof. Turns out the previous owner had taken great pains to conceal the fact that water pooled on the roof – painted refective coating on it to hide water marks, swept it every day while it was on the market, etc. The inspector SHOULD have found this but didn’t. I of course found out the next winter. From that point on, I’ve always relied on friends in the construction business to walk through with me + I learned enough from working on that house to be able to ID problems/issues. But the average person doesn’t have enough knowledge to tell a good inspection from a bad inspection.

  87. 87
    ray pepper says:

    RE: deejayoh @ 86

    “There is enough publicly available information for buyer to come up with valuation they are comfortable with, or at minimum, validate realtor estimates.”

    Dead on!!! Realtors are no better at valuing the price of a home, in this market, then a well educated Buyer who is doing his due diligence in his market area.

    “Trying to convince yourself that you can protect yourself as well as a competent professional is foolish”

    Kary, I trust NO professional more then I do my own due diligence. Be it in real estate, law, health care, you name it. When you begin to rely on others for EXPERT advice (without doing your own research) you will inevitably be burned. I always look for guidance, and I ask questions, but in the end its ALWAYS my decision…………

  88. 88

    RE: deejayoh @ 86
    As an agent, I don’t want to recommend an inspector who is going to softpedal the problems to make sure that the deal happens. Sure, it can mean that I’ll get the commission, but it’ll cost me over the long term. I don’t want clients who think that I’m in cahoots with inspectors to make sales. I don’t want clients who , when their friends are looking to buy a house, say “”Don’t use our agent Ira, he’s a lying scumbag.”
    So, I’m of two minds on this. If you’re a first time home buyer who doesn’t know inspectors or trustworthy people who can refer you to a good, honest inspector, you may not do too well finding an inspector through Craigslist or the Yellow Pages. But I’m not sure you’d do worse by getting a referral from a real estate agent who you don’t trust.

  89. 89

    By bubblebuyer @ 84:

    Kary,

    Yes, a sample of 1 is not representative but there is clearly an agency problem when a realtor recommneds a home inspector. Home inspectors rely on realtor referals for a significant portion of their business. If a home inspector is too honest, he risks complicating or killing a deal.

    If he’s not honest enough, the agent gets sued.

  90. 90

    RE: deejayoh @ 86 – Well first, flat roofs are problematic around here. Second, where the seller is actively trying to hide something, it’s difficult to blame the inspector. Inspectors look for signs of problems that exist during conditions that don’t exist during the inspection (e.g. lots of rain during August). If the seller is taking action to hide the signs, they will likely fool the inspector.

  91. 91
    David Losh says:

    RE: Ryan @ 72

    Like I said, that’s the attitude that got us into this mess. The only reason to buy Real Estate is to create wealth, and financial security. Using your reasoning only the welathy should have access to good representation. Most people should be relagated to “do it your self” status, and not seek professional advice.

  92. 92
    Ryan says:

    By David Losh @ 91:

    RE: Ryan @ 72

    Like I said, that’s the attitude that got us into this mess. The only reason to buy Real Estate is to create wealth, and financial security. Using your reasoning only the welathy should have access to good representation. Most people should be relagated to “do it your self” status, and not seek professional advice.

    That’s pretty ballsy to say that the attitude that a home is not an investment got us into this mess. I say the exact opposite. If someone is planning to use their home to leverage their income, portfolio, etc. then yes, they should seek professional advice. If someone is looking to purchase a home at a fair price and treat it as a place to live in, then they do not a “professional” who is going to charge exhorbitant fees.

    I guess my reference to missed fortune really hit home with you.

  93. 93
    Kary L. Krismer says:

    By Ryan @ 92:

    If someone is looking to purchase a home at a fair price and treat it as a place to live in, then they do not a “professional” who is going to charge exhorbitant fees. .

    From a dollars and cents point of view, if someone stays in their house 30 years, overpaying by 5 or 10 percent probably wouldn’t matter much. But there’s still the factor of the buyer’s time, and also whether they would be able to find as good of a home by themselves. 30 years in a home that is not as nice is a major factor, IMHO.

  94. 94
    MacroInvestor says:

    As usual I’m late to the thread because I only tune in once a week. I think being cheap is self defeating. If the sales commission is so hard for you to take, then perhaps you can’t really afford a home right now, and you should be renting and saving a while longer.

    As a first time buyer, I would gladly pay for top quality advice. Correctly understanding the risks is the difference between a successful investment, and one that is an instant money pit. By that I mean timing the market, analyzing the neighborhood, understanding what features are worth paying for, and getting a good quality inspection. Any one of these things done wrong will cost you a lot more than a commission.

    The problem is how do you find a good realtor and inspector? If all they do is push transactions, then of course they aren’t worth anything, and in fact will cost you a bundle. If you are educated and experienced in these areas, of course you should self represent. Frankly, from the comments on this site, only a few of the professionals or clients sound very knowledgeable.

  95. 95
    Ryan says:

    By MacroInvestor @ 94:

    As usual I’m late to the thread because I only tune in once a week. I think being cheap is self defeating. If the sales commission is so hard for you to take, then perhaps you can’t really afford a home right now, and you should be renting and saving a while longer.
    blockquote>

    Being cheap and refusing to pay excessive fees for a service that many could do on one’s own or thru a discount broker are two different things. And I don’t understand your comment about renting and saving…as a seller, the commish comes out of the proceeds. As a buyer, there is no out of pocket cost so what exactly would I be renting and saving for?

  96. 96
    David Losh says:

    Purchasing property is an investment. Finding a home to live in forever sounds nice, but the realities are much different.

    In Real Estate there are assets, and liabilities. You may look at the sales portion of the transaction, but that is only one part of Real Estate. The majority of my business is to market properties for sale.

    Life changes constantly. What I see, many times, are the people who are stuck with a property. The exit strategy always seems to be a second thought. Right now we are seeing millions of people who don’t have an exit strategy.

    Yes, I really talk that way, most Real Estate professionals do. Most Real Estate professionals have made mistakes, all have been stuck, at one time, or another. That’s the experience that a professional brings to the table.

    I realize your some sort of schill or whatever, because no one could be this obtuse, but hey, it’s late, so why not.

    A lot of people read some books, or hear stories, and think they know what building a Real Estate is all about. You just may some lame ass statement about leverage in residential property. Come on, we are talking about the family home, you never leverage the family home.

    There are maybe 200 Real Estate agents in the Seattle area who can bring something to the table for you, but you will never meet them. Even when you do meet some one who can help you, you will make some absurd comments, or have some grandiose thought process, where you know what’s best. These are the things Real Estate sales people prey on.

    A Real Estate sales person convinces you, you are right, and you are in control, making all the decisions. You know best, so your new found Real Estate sales buddy is just there to help. Your Real Estate sales buddy may even know you are making the biggest mistake of your life, but hey, why stop you? They have already sat and listened to your BS whining for over 68 hours, so why not get a pay check. Most Real Estate sales people will do the take away, that’s when they stop you from buying that property, so you can focus on this property. It doesn’t make any difference to them because you are a pay check.

    Real Estate professionals are engaged in the business, have done it over long market segments, or are interested in the property aspects. Most know that hawking property is a tough way to make a buck. Many start by managing properties, interning, working with a working agent, or have some related field, like book keeping for an office. Some are transaction coordinators. Some just have a knack, they are good with people, or come from a related sales environment.

    It’s a package that adds value to your experience, but yes, it is all about you making money, and keeping it.

  97. 97

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