Reader Question: Is Seattle just for the super wealthy now?

I received the following question this morning from a frustrated home buyer:

We recently lost our second offer on a home to a all case buyer. I know that many other buyers have been at this longer than a year and spent far more than we have but before I get to that poverty point I would like to show everyone what is going on.

The first time we made many mistakes such as: inspection contingency upon acceptance of offer, financial contingency, asking for rent from the owner if they wanted to stay past closing. Our first realtor was not informed and we just used wisdom from previous house buying experiences on the East Coast. So, the second time we made an offer, we came in extremely strong.

Here are the facts that I would like to share with you to expose what we see as a scam.

  • House: ~3,000 square foot 5-bedroom home Ballard in great condition with an asking price ~$850k
  • We offered $10K over asking with an escalation clause up to $77K over asking.
  • We gave $30K as earnest money and allowed the seller to talk half upon acceptance of our offer.
  • We allowed the seller to stay in the property for 2 months after closing – rent free.
  • We spent $430 for a partial inception and sewer scope.
  • We dropped all contingencies – another words we would loose our 30K if our financing didn’t come thought or we changed our minds.

So tell me – how is our offer not as good as cash? So what is the short answer? Listing agent and real estate agencies in general are uses financing offers to drive up the amount for cash buyers – thus making the seller’s agent’s commission higher and they will get it 2 weeks sooner.

How can a hard working person, smart with their money, buy a home. Currently Seattle is on sale to China or the super wealthy for the highest cost at the middle classes expense.

Your thoughts?

It’s super frustrating out there right now for buyers. Unfortunately it’s a lot more difficult to predict the likely outcome of the frenzy this time around. Back in 2005 when I started Seattle Bubble the market was very similar, but it was obviously being propped up by a bunch of dangerous, unsustainable stuff like risky mortgages and financial derivatives.

This time around, as the reader points out, all-cash buyers are driving much of the frenzy. It’s very difficult to compete with, and also highly unlikely to collapse in a spectacular bursting bubble like last time.

What’s your advice for this reader? Sit it out for a year or two? Keep trying until maybe, two dozen offers later, they finally land a house? Lower their standards?

If you’ve got a question you’d like to get thoughts on from me and the community here, drop me a line.

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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.

245 comments:

  1. 1

    Lot’s of questions here, some of them loaded. So I’ll focus on just the one: The short answer for why your offer wasn’t as good as cash. The answer: the need to appraise.

    The slightly longer answer: If you are financing a portion of the purchase, your lender will order an appraisal. A licensed professional will then assess the house and render an opinion as to “fair value.” The bank will only lend on the value of the house as appraised, and NOT the contract price. So if an appraisal comes back low, that can easily create problems for getting the loan. And sellers want to avoid that, obviously.

    In a typical market, the appraisal is something close to a formality. After all, the contract itself is evidence of market value, because buyer and seller are market participants and they agreed on that price. But in a seller’s market like the current one – an historic seller’s market no less – a house can be “bid up” much higher than what other similar properties recently sold for (i.e. the “comps” or comparable sales).

    So an all cash offer eliminates this issue entirely. And that has value to the seller. Particularly if the competing offer is being financed by 20% down. All things being equal, following a multiple offer escalation scenario, a seller would be foolish to not accept the cash offer over the financed offer, that in turn requires the house to appraise.

    And I agree, it is tough tough tough out there for buyers. My advice, as a real estate broker: Look for homes off the MLS. Currently this is the “FSBO” market, you can find these listings on Zillow, Redfin, and elsewhere. But soon you’ll find real estate brokers willing to help these folks sell, just without incurring the costs of a buyer’s agent as required by the MLS.

  2. 2
    Kris S says:

    The short answer for a lot of people is going to have to be: Move to somewhere else. A lot of these cash purchases are being converted to rentals, at continuously increasing rates. This pressure really hits the middle classes the hardest, and people who might be trying to buy or saving to buy a house are suddenly not able to save anymore because the rent in their neighborhood went up 40% in 2 years, in addition to the issues outlined in this post.

    Once current leases are up, these people are now priced out of their housing range, their wages haven’t increased, and now they either have to forego savings, move further away from work or to an undesirable area, or simply pack up and hope for the best in Portland or Austin or somewhere the cash buyers haven’t found yet.

  3. 3
    Blurtman says:

    Cash – zero risk.

  4. 4
    Anthony Cacallori says:

    This time around, as the reader points out, all-cash buyers are driving much of the frenzy.

    Bolded for emphasis. Cash buyers are contributing to the seller’s market, but I wouldn’t say they are the primary impetus. There are always cash buyers and IF Zillow’s data is correct we’re at about 25-30% of sales being all cash compared to a ~15% long run average.

    What is driving the frenzy is the lack of inventory.

    The good news is that building permits for new residential units (for multi-family at least) just had a record quarter, up something like 200% YOY. As these and other units come online it will hopefully staunch the rapid rise in rents. That said, I can see a scenario where there are two-to-three more years of pain for both buyers and renters.

  5. 5
    Blardian says:

    Dream home != average home.

    People incessantly cry “I can’t live in as large and nice of a home, in as nice of an area as I want! Life’s unfair!” — well tough chocolate, babies. Everyone always wants more than they have. Millionaires want to be billionaires, their yachts are too small. Be grateful for what you have. This is an amazing place for us to live, even the impoverished have it pretty good, and the average have it great.

    Where I come from, everyone is envious of anyone who lives in the Pacific Northwest, *especially* in any of the major urban areas. Seattle is the cream of the crop. Anyone in any of the area suburbs is considered to live “in Seattle”. You can live “in Seattle” with a Mill Creek mailing address.

    Even within Seattle proper, there are affordable neighborhoods (lower your standards!). Even within the most expensive neighborhoods, there are affordable options (small studio condos).

    The quoted poster is whining about the high price of one of the most desirable residences in the world: a large single-family home in an urban neighborhood in one of America’s fastest-growing cities. Get real. Appreciate what you have, live within your means and stop complaining.

  6. 6
    igoy says:

    RE: Kris S @ – links to data supporting this?

    Don’t care either way just would like to know where to find data like this

  7. 7

    RE: Craig Blackmon @

    Yes Craig

    Wait for a foreclosure to plop on your lap…..a relative or friend who’s a tenant lost his house due to foreclosure on the landlord….then buy it cheap directly from the bank. The old owner will short sell it to you then. Tell the bank the deal is “seamless” the old tenants aren’t evicted if you take over as landlord. You’ll be welcomed with open arms…

    Close fast before the cash bag sharks circle….

  8. 8
    redmondjp says:

    Short answer: yes.

    I’ve been looking on the Eastside for 4+ bedroom homes and even up in the foothills east of Duvall, you’re looking at $500K+, with no services (water, sewer, natural gas, cable/HS internet, paved road, etc) but still having insanely-high property taxes ($5-8K/year). You might be able to buy a double-wide on 5 acres (that you can’t do anything with since it is outside of the urban growth boundary) for $350K.

    Looking on the bright side, our prices are still lower than San Francisco . . .

  9. 9
    Macro Investor says:

    By Blardian @ :

    The quoted poster is whining about the high price of one of the most desirable residences in the world: a large single-family home in an urban neighborhood in one of America’s fastest-growing cities. Get real. Appreciate what you have, live within your means and stop complaining.

    Great comment.

    What makes people desperate to own a nearly $1 million house in ballard? I suspect the brain washing is strong here. So ballard has a few trendy restaurants and bars. So what. Nobody is really going to be impressed with your measly little 3000 square foot house.

    Millions of people live happy lives in a rental. Those who cannot are posers.

  10. 10
    I'm just here so I won't get fined says:

    As a person who could only afford to buy a house for $365k back in 2013 I have little sympathy. I would suggest checking out Shoreline for this buyer. I know people who live in Seattle proper only think of Shorline as the section of hwy 99 north of Seattle, however Shoreline has some really nice areas once you get a a mile or so away from I-5 and Hwy 99. For 850k this buyer could afford a much nicer house in the Richmond beach area and probably even get a nice view of the sound. Also the commute isn’t as bad as people think. My wife works down town and when we lived in Magnolia her commute was 30 min. When we moved to Shoreline her commute time went from 30 min to… well 30 min. And we have much nicer house than we could have purchased in Seattle proper. I guess I’m a little selfish. I want more “rich” people to move to Shoreline so my property value goes up even more.

  11. 11

    RE: redmondjp @
    The Only Good Thing About Our Insanely High Taxes in the Seattle Area

    It does a poor job of funding the public schools with progressives mucking up the system….but the social supports for special needs and Medicaid are alive and kicking. Stay in Seattle if you need the welfare money, Section 8 housing is scarce, but if you can land a unit ….count your lucky stars.

    The conservative states that block Medicaid are great places to live if you can stand on your own two feet and aren’t dependent upon welfare…less taxes there.

  12. 12
    Carl says:

    RE: Blardian @ – Agree. Why do people think Ballard is the only neighborhood in the area that is livable?

    We simply live in a capitalistic world where the seller tries to (as they should) get the best possible deal. Nothing wrong with that. You may not like that economic system, but its the one we have. Personally, instead of buying a house in Ballard that’s in “great condition”, I would buy one in Georgetown or Beacon Hill or Rainier Valley or West Seattle that is a fixer. This fixation with “in” neighborhoods is probably not helping your home buying stress.

  13. 13
    Ryan says:

    Has anyone put together a list of the deltas between asking price and close? I followed up on a few houses I had looked at in Wallingford and saw that several closed for $100k – $200k over. Just curious how fierce it really is for houses right now.

  14. 14
    Tired of SWE Rantings says:

    You can get a really nice house for that price in Shoreline or Edmonds.

  15. 15
    I'm just here so I won't get fined says:

    As someone who could only afford $365k back in 2013 (and I had to go to Shoreline to find something decent with yard) I have very little sympathy for this buyer. I would say expanding your search area is what you should do. People act like they have a right to live in the most desirable neighborhoods. Look up in Shoreline for $850k you could probably find a nice house with a view of the sound or Lake Washington. People who live in Seattle proper act like Shoreline is way out in the sticks or that its a horrible city to live in. Shoreline is more than just the area around hwy 99. Once you get a mile or so away from I-5 or hwy 99 you can find some really nice areas. Richmond beach for example, and the commute time to down town by car is actually comparable to commuting from Ballard or Magnolia. The Schools are good too.

  16. 16
    Kraft says:

    @Craig Blackman

    What does the appraisal matter if the financed buyer has waived all contingencies? The cash buyer can get cold feet just as easily as the financed buyer. I think anyone waiving a finance contingency knows the consequences and is ready to cover the remainder in cash.

  17. 17
    TheWoods says:

    There’s nothing middle class about buying an $850,000 house. To afford that much else you’re household is probably bringing in north of $200k. Maybe $250k? That puts your household somewhere between top 3% (ballpark) and top 1.5% (250k). Top 5% at absolute worst ($167k). [citation at bottom]

    You can get a lot of house in a spectacular area for that much money. You could have a view of the lake and mountains in Madrona, Leschi, or Mt Baker for that kind of money. And the type of property you could buy in West Seattle? My goodness!

    That’s not to say that the middle class have it easy. If folks in the top 5% are struggling to buy then you know it’s tough for the actual middle class. I just think it’s a little silly how many people like to self proclaim middle class status.

    http://en.wikipedia.org/wiki/Income_in_the_United_States

  18. 18

    RE: Blardian @ – These folks are from the East Coast, so that’s one thing, but it’s really hard when you’re actually from here and feel like you’re being forced to leave.

  19. 19

    RE: Kraft @ 16 – If the buyer has waived all contingencies and the financing fails (whether for a low appraisal or otherwise) then the seller may get to keep the earnest money. But the seller would much rather sell the house. And unlike a financed buyer, a cash buyer has zero risk of not having the money to complete the purchase.

    Yes, a financed buyer may have the money needed to cover a short appraisal. But maybe not. But not an issue in the first place with a cash buyer. So cash remains king, all other things being equal.

  20. 20
    A says:

    I’m surprised that no one else has noted that the writer’s initial “mistakes” were not mistakes. They were protections. The writer learned exactly the wrong lessons. Instead of this whiny victimhood narrative (over an $850K+ house), the writer should have broadened and deepened the search to match his/her risk mitigation standards.

  21. 21
    Yu says:

    Don’t blame on cash buyers.
    The percent of cash sales for all home purchases declined for years.
    http://www.worldpropertyjournal.com/real-estate-news/united-states/cash-home-sales-corelogic-real-estate-owned-sales-reo-home-sales-9085.php

  22. 22
    wreckingbull says:

    Wow – if I was the seller, I’m not so sure I would have sold to the OP either. That whiny tone-deaf email was a painful read, and I even suspect it was a troll.

  23. 23
  24. 24
    David B. says:

    Basically, what others have said:

    Things like inspection contingencies and requiring the seller to get out or pay you rent are not “mistakes”; they are merely prudent practice. It is your eagerly agreeing to be some seller’s doormat (by waiving reasonable contingencies and allowing them to live rent-free on your dime) that is the mistake. If that’s what it takes I’d say “phooey!” on buying in Seattle right now and either rent or move elsewhere and buy.

    But — it’s probably not what it takes. I sense unreasonably high standards at play. If nothing less than a 3,000 square-foot mini-mansion in one of the trendiest neighborhoods in the city is acceptable, the problem is YOU, not the market. Many people — families, even — do just fine in homes of 1,000 to 1,500 square feet in non-trendy neighborhoods. As a kid I lived like that (as part of a family of five) for a year or so after my dad moved to a town with a housing shortage.

  25. 25
    Blurtman says:

    RE: GoHawks @ – Risk premium.

  26. 26
    GoHawks says:

    RE: Blurtman @ – Exactly. This essentially quantifies the question we’ve all been asking on here, how much more is a cash offer worth. $25,000.

  27. 27

    RE: Craig Blackmon @ – I would be surprised if the offer didn’t waive the appraised value… the buyer can make up the difference between appraised value and the sales price with cash.

    However, nothing beats a faster closing date for the seller (and the agents) with no lender to contend with.

  28. 28
    JustJoan says:

    Champagne problems. I think for top tier earners (spending $850K-$900K+ on a home) and no sense of loyalty/devotion to their native place, the world is their oyster. Even if this person faces competition in their current price bracket, they have ample cushion to secure a home in some other safe, suitable, and attractive community beyond Ballard at a lower price tag. I hardly have any sympathy…

    In all likelihood, they (and others like them) will cart their extra cash to a lower price bracket, pushing others out when they get there…and so goes the domino effect.

    But what do people toward the bottom do? What are their options? Where do they go next?

    JustJoan

  29. 29
    Blurtman says:

    RE: GoHawks @ – But likely tied to price. $25k for $710k+ Craftsman; Porsche, kidney or first born for $1.5 million Medina starter home.

  30. 30
    herrbrahms says:

    The failed buyer needs to realize that they were saved from the guillotine on this one. This is exactly the sort of purchasing decision that leads one to be house poor in the near term, and grossly underwater the moment that Amazon hiccups and lays a few thousand people off.

    Anyone who actually considers buying in WallingFreLard with these current outlandish prices/terms needs to have their head examined.

  31. 31
    redmondjp says:

    RE: herrbrahms @ – But as I pointed out earlier, it’s not just trendy Seattle neighborhoods that are affected. Look at Fall City prices right now as well. $350K gets you a mobile home on unimproved land.

    Personally, if you have to buy now, it makes sense to buy as close-in and in (or near) the most-popular locations. When the downturn comes, prices in the far-flung outer areas will drop first and fastest.

  32. 32
    herrbrahms says:

    “if you have to buy now” Nobody has to buy now. They could always choose to rent in Skyway while hoarding the extra cash. As you mentioned, the foolishness has reached the foothills now, and I wouldn’t buy there either for what they’re asking.

    As others have said, there are nice established communities like Shoreline & Edmonds within reasonable commuting distance. I expect more of the 1100 ft2 shacks to be razed, replaced with 3500 ft2 marvels on their 8000 ft2 lots. The gentrification of the near suburbs is coming; the only question is the pace.

    Or you could live closer to transit in White Center, wondering every night whether your car will still have its wheels in the morning.

  33. 33
    Jay says:

    Right now is REALLY a bad time to buy. We bought in January just before the market went crazy, and the house was on the market for 3 months at a great location close to MSFT near the lake. So I think if you want to avoid bidding wars, you need to be patient, and perhaps wait till the end of this year when there are a lot less buyers touring houses. We were looking to buy for 3 years seriously. So it can happen, you just need to be patient!

  34. 34
    Saffy The Pook says:

    By wreckingbull @ :

    Wow – if I was the seller, I’m not so sure I would have sold to the OP either. That whiny tone-deaf email was a painful read, and I even suspect it was a troll.

    Not to mention the atrocious spelling. I suspect the sellers were English majors.

  35. 35
    Cornix says:

    Our price range is fraction of the above buyer and we want to make sure we have all the protections in place before we enter into any large purchase. The current market is no friend to cautious buyers of modest means. We have given up looking for a house for the near future. If these prices and bidding wars are truly the “new way” then it is already too late for us to own a home in the city.

    Even though we are on vastly different price points, my advice to the posted buyer is to make sure owning a home will improve your day to day quality of life enough to be worth it. For us, home ownership is about stability and happiness rather than investment.

  36. 36
    Erik says:

    RE: wreckingbull @
    I can tell you this email above is not from a troll. Being a troll myself, I know how to speak troll and this isn’t that.

  37. 37
    Erik says:

    RE: I’m just here so I won’t get fined @
    That’s because shoreline is not as nice as Seattle. Accept that and move on. Hey, atleast you don’t live in Everett. When I lived in everett, i was listening to the radio working on my “historic” everett home. (I put the word historic in parentheses because that is how they sell money sucking dumps in Everett.) They were having people call in to rename Seattle. You know what name won for the new name for seattle? The name that got the most votes was “We’re not Everett.” At that point I could only laugh and come to the realization I made a mistake and I needed to earn more money to get out of that dump. I finally did in 2012 after wasting 6 years of my life there.

    Shoreline will continue to get nicer as it already has since it’s so close to Seattle. Hold onto that real estate. I’m out here in rural west Seattle. We are kinda of in the same boat except I actually live in Seattle although it is the undesirable part.

    Point is shoreline is definitely in the mix. Look on the bright side, atleast you dont live in Everett or Parkland.

  38. 38
    Erik says:

    RE: Cornix @
    Good points about buying for happiness. Maybe you could buy something less than what you want and sell it when prices go up so you can afford your dream home? It just seems like real estate is a good investment for the next 5 years.

  39. 39
    Mike says:

    Heh, back in 2005 a real estate agent might post a similar story about how they were actually able to buy an $850K house 0-down with a subprime loan in Kirkland. Times have changed.

  40. 40

    First I would like to offer my sympathies, because that was a beautiful house and I’m sure you are fiercely smarting over it not being your new home.

    To those saying he is “whining”, it is very upsetting to buyers who have their heart set on a unique and pretty much irreplaceable home. This one was that – not your typical Ballard house. More like one you’d find in the better parts of Capitol Hill. Have some compassion.

    Before I answer the questions you raise I am going to contrast the home with one I can post on the East Coast as to home vs market activity.

    “we just used wisdom from previous house buying experiences on the East Coast.”

    I can’t link to the house you are talking about, because agents are not allowed to do that in this area. I’m posting an East Coast “reasonable facsimile” from Princeton NJ.

    https://www.redfin.com/NJ/Princeton/16-Park-Pl-08542/home/36691395

    The house in the link is a little bigger, but on a slightly smaller lot. I say bigger vs smaller because I am excluding the basement level of both homes, since basements don’t value out the same as above ground square feet. The house in the link is a little older, but from the same era. Sold for $1.1 Million last year.

    The house you didn’t buy was completely remodeled inside. Beautiful. Makes the house in the link look like a shack. It sold for considerably less than the Princeton house sold for last year. So to the regular readers, many of whom think this is all about California “moving up” to change us, the prices here have not caught up with popular East Coast areas yet. Not even close.

    “So tell me – how is our offer not as good as cash?”

    Hard to say because you didn’t mention what % of the price was down payment and what % was loan. A 50% down may be pretty equal to cash. But a 10% down would not. 20% down in multiple offers in this price range is bare minimum and never equal to cash. I would say equal to cash might start at roughly 35% down.

    “… to expose what we see as a scam….Listing agent and real estate agencies in general are using financed offers to drive up the amount for cash buyers

    We don’t exactly have a magic wand that conjures up the offers. “real estate agencies” have absolutely zero hands on activity on each house, so drop that one. The Listing Agent “collects” the offers as submitted and helps contrast and compare them for the seller. The Listing Agent might even call the agents prior to reviewing the offers with the seller to “perfect” them so as not to waste the sellers time if something is missing. We have to give the benefit of the doubt that maybe it was an error of omission on the agent’s part. We try VERY hard to not have a buyer suffer because they possibly chose the wrong agent. We might not do that for all offers if there are 10 or so, but we will do it for the offers that are “in the running” most of the time, unless there is a ridiculously clear front runner. We mostly do this to avoid the seller having to counter over a minor administrative matter.

    We can’t interrupt the process as soon as we get a cash offer. We can’t hang a sign out front that says “don’t bother…we have a cash offer willing to beat any price you may bring”. Things have to play out, and frankly more often than not, the cash offers are often the lowest offers. Yes, a seller can and DOES counter the cash offer at the highest price on the table, without regard to cash vs financing. In that regard your wish came true…financing IS the same as cash when we are looking at the Escalation clause.

    “…thus making the seller’s agent’s commission higher and they will get it 2 weeks sooner.

    I can’t answer for everyone, but I can tell you from my personal experience that I often have to work VERY hard to convince a seller that the lower cash offer is not worth the amount being “left on the table”. It is the seller who often pushes for fast and easiest, and I agree many if not most agents would not argue with the seller as I often do. But the agent pushing that on the seller is not usually the case, and most sellers would not listen to that if they were not the ones inclined to go with fast and easy. Usually it is quite the contrary with the seller, lacking the experience to know better, wanting to opt for all cash, less price, quick close.

    Any time there is a really beautiful and unique house with more than one buyer wanting it, there is going to be a painful day after for one or more people. That was a pretty unique situation because it was a pretty unique house. Most times there is an equal one coming soon. That is not the case for you, and I truly sympathize.

    To those saying just go get something further North. this kind of home does not exist further North until you get up to where The Tim lives…and that’s a whole different ball game.

  41. 41
    Franke says:

    @ Erik

    If you can’t afford your dream home now, you’re not going o be able to afford it when prices go up either- unless you buy your starter home in Seattle and your dream home is in Des Moines.

  42. 42
    herrbrahms says:

    Based on Ardell’s clues, I’m pretty sure this is the house in question. Not being an agent, I can speculate all I want.

    https://www.redfin.com/WA/Seattle/325-NW-52nd-St-98107/home/302831

    And while that particular house is very ornate, there are certainly houses in the nicest parts of Richmond Beach & Edmonds that are every bit as nice.

  43. 43
    Mike says:

    By herrbrahms @ :

    Based on Ardell’s clues, I’m pretty sure this is the house in question. Not being an agent, I can speculate all I want.

    https://www.redfin.com/WA/Seattle/325-NW-52nd-St-98107/home/302831

    And while that particular house is very ornate, there are certainly houses in the nicest parts of Richmond Beach & Edmonds that are every bit as nice.

    And there have been a number of crapholes in the same neighborhood that have sold for under $600K that could be upgraded. What we’re seeing here is people paying top dollar to get a modern, move in ready house. A similar size new construction house in that area is around $1.25M, so whatever this closes at ($1M maybe) is a discount over new.

    People in this area are scrambling to get into bargain priced homes that are already upgraded. The style of house has very little to do with it. People want move in ready homes in that area. The fact that you can get a similar 100 year old house in Edmonds or Everett is irrelevant.

  44. 44
    herrbrahms says:

    RE: Mike @ – Buyers are certainly scrambling, but that house is far from bargain priced. What’s clear is that people are identifying with Ballard the Brand. It would kill them to live in a less trendy place, even setting aside a reasonable commute.

    If someone has their heart set on cycling down Dexter to get to their SLU job, they’d better be made of money, or they need to understand the opportunity cost of how much house they will *not* be able to buy because of their chosen lifestyle. The idea that that house was a special snowflake doesn’t help connect people to reality.

  45. 45
    Cornix says:

    RE: Erik @
    I suppose there have to be homes to buy for that! The other prong of this for us is the very low availability of livable houses. Things in our price range go very quickly unless they need a tremendous amount of work. When we first started looking we had nicknames for places like “the blood house” or “the slug house.” We would joke that we needed to bring the machete and flashlight for house hunting. Seeing those kind of properties over and over again gets daunting.

    As the market started to into the current feeding frenzy the prospect of house hunting started to make us deeply unhappy so we stopped. We can’t take off work to tour houses or offer over asking and we’re not comfortable waving inspections or putting down same day bids. That’s what it takes right now and we don’t have it. It is fun to make a drinking game of how far over asking things go though!

    Maybe our dream home is split between a studio apartment in the city and an A frame cabin on the coast. Maybe it has yet to be built. Maybe it’s somewhere else entirely. We’re going to wait and see.

  46. 46
    Mike says:

    By herrbrahms @ :

    RE: Mike @ – Buyers are certainly scrambling, but that house is far from bargain priced. What’s clear is that people are identifying with Ballard the Brand. It would kill them to live in a less trendy place, even setting aside a reasonable commute.

    If someone has their heart set on cycling down Dexter to get to their SLU job, they’d better be made of money, or they need to understand the opportunity cost of how much house they will *not* be able to buy because of their chosen lifestyle. The idea that that house was a special snowflake doesn’t help connect people to reality.

    If the listing is correct, it has a 2 bedroom ADU in the basement in addition to being ‘upgraded’. That’s good for another $1800/mo income significantly reducing the price of owning a $900K home at the base of Phinney Ridge.

    I know the area, it is in fact bargain priced as a finished home with an ADU. “Ballard the brand” helps considerably in marketing an ADU. Try getting that amount of rent for a basement in Richmond Beach.

  47. 47
    Erik says:

    RE: Franke @
    You are right. You never know though. If someone sold for a profit, rented, and the market crashed again, it is possible. I personally don’t think the market will crash for a long time though. I think Cornix is hosed.

  48. 48

    Back to waiving the Finance Contingency.

    If you omit the Finance Contingency in it’s entirety, that creates a problem because you will be asked to provide “Proof of Funds”, as the offer will appear to be all cash. If when asked to provide proof of funds you have to answer that you don’t have it because it is a financed offer without a finance contingency, that looks shady and really hurts your chances of getting the house. It’s shady because you are concealing a relevant set of facts…pre-approval letter…% down, etc. So if the offer is being reviewed as a cash offer and turns out to be a 20% down offer with no pre-approval letter submitted, because you were trying to conceal that it was a financed offer… not good. This did in fact happen exactly that way in a multiple offer situation on one of my listings. The buyer was wanting to win against a possible cash offer and didn’t realize when he was pretending to be a cash offer that there would be a proof of funds request. The agent who submitted the offer did not know the buyer did not have the cash until I asked for proof of funds. That buyer did not get the house even though there were no cash offers. Once the seller and their agent catch you at trying to fool them…not good. Seemed like a smart idea…but.

    Eliminating the “Must Appraise” clause.

    For Financed Buyers the norm is to omit the must appraise clause. That may or may not work depending on how you do that. Craig in Comment #1 says: ” The bank will only lend on the value of the house as appraised, and NOT the contract price. So if an appraisal comes back low, that can easily create problems for getting the loan. ”

    Craig is not correct on that, and this is why I say the person in the post omitting the % down is a tell-tale clue as to where the frustration really comes from. If the buyer has 50% down, then a low appraisal will not matter at all Craig, as no additional cash is needed for the loan to be approved or for the sale to close.

    Sold Price $900,000
    Loan Amount $450,000 – 50% down
    Appraised Value $800,000
    Loan amount still $450,000 since that is only 56% of Appraised Value
    No pressure on the loan approval as the loan amount is the same regardless of appraised value.

    The buyer doesn’t have to come up with any additional funds. The loan is not in jeopardy because the 50% down became 46% down based on sale price or appraised value, whichever is less.

    If the buyer only has 20% down, then a low appraisal kicks in PMI and the buyer may not qualify for the loan at less than 20% down. The higher the down payment, the less a low appraisal matters.

    It is not the sellers problem or concern if the buyer’s 50% down turns into 46% down because of a lower appraisal. The buyer doesn’t care, the seller doesn’t care, it closes.

    The MOST frustrated buyers are the ones trying to pull off FHA or VA or 3% down Conventional or 5% down Conventional or even 10% down Conventional. They are the ones who scream the loudest when it comes to cash vs financed offers. With 10 offers you may have 1 or 2 at less than 20% down. 5 or so at 20% down, a couple at 25% down. A couple of 30% to 50% down and a cash or two. The heavy down payment offers are considered along with the cash ones. The less than 25% down are negated because you need to narrow it down to the top 2 or 3 anyway.

    The frustrated buyer asks “So what is the short answer?”

    The short answer is that people buying a house for toward a million dollars don’t have to be all cash, but they have to possibly not be a jumbo loan. It is very common for people to be hired here at very high salaries which qualifies them for very high prices due to low interest rates, but they don’t have a large enough chunk of money for a significant down payment. A very high purchase almost always needs to have a considerable, and not minimal, down payment. If not at time of offer…then later after the appraisal comes in low and the down payment has to be increased.

    Expensive homes are not usually heavily financed purchases. The most expensive homes sold in the entire Country are almost always all cash…or at least half the time. So the incidence of all cash purchases at high prices happens whether there are other offers or not.

    Simply having enough income to qualify at 20% down is not usually the case for $1M + homes even in a Buyer’s market. A million dollar purchase is more often a $500,000 loan and a $500,000 down payment.

    To the Tim…Million plus homes only 80% financed are as bad if not worse than $300,000 purchases at 100% financing from 2005 and 2006. There’s your bubble, but only when the cash offers and high % down offers don’t win. That’s why they do win. It’s a good thing.

  49. 49
    Erik says:

    RE: Cornix @
    Yah, I hear ya. Sorry about your situation. I was stuck in a junk heap in Everett until I started reading this site daily and got out of my situation. Keep reading and if the market dumps again, buy at the bottom. Your best chance is if we have another huge crisis. If a bunch of software companies go bankrupt or the student loan bubble finally pops, you may get an opportunity.

    Come out here to Wild West Seattle. It’s nothing like downtown, but it is cheap out here. There is a lot o growth in Fauntleroy. Buy something cheap there and let the city grow around you. They are getting whole foods, la fitness, and a bunch of condos. There is probably more to come.

  50. 50
    Cornix says:

    RE: Erik @ – I’m hoping that we’ll be able to afford something without other folks having to suffer. We came a whisker’s hair close to buying a place by Camp Long so West Seattle isn’t out of the question at all.

    If I had the posted buyer’s means I would have a beautiful place close to light rail on Beacon Hill. I remember when Ballard was longshoremen and old Norwegians. Good for them on cashing in.

  51. 51
    Jay says:

    RE: Mike @ – It is a very bad idea to get involved in a bidding war just buy a renovated modern house! The $150 K that buyers pay more to win the stupid bidding war is more than enough to renovate the whole house in modern style. Right, Eric? You can even hire a designer to help you to come up with modern designs if you can’t do it yourself! Lots of buyers fall for the wrong things that are easy to renovate, and they ALL COMPETE for the same renovated house.

  52. 52
    Erik says:

    RE: Jay @
    That’s right, as long as the house isn’t really old. You want something that needs carpet, paint, and appliances. Maybe windows too. You don’t want to do plumbing, electrical, or make structural repairs. Everything has a service life.

  53. 53

    Good Luck Trying to Weed the Money Pits from the Honest Stock

    A building inspector only sees what is uncovered for inspection, not covered in new sheetrock or plastic goop and repainted. Unfinished basements allow inspections, until the basement get’s finished or partially finished….

    Roofs’ interior structures can be inspected if the past leakages left evidence, but even that can be covered up with plastic and paint….

    Remember the movie “Money Pit”, the great looking staged house with massive hidden electrical, plumbing and rot problems the buyers never noticed until it was too late…I’m convinced buying the unit with flaws exposed is better than buying it on the word of the seller, “not to worry, we fixed it all”.

  54. 54

    RE: Ardell DellaLoggia @ 47 – I hate getting called out in an 800+ word reply! :-( Thankfully I didn’t have to go further than the first sentence to find the most egregious point meriting a reply:

    “If you omit the Finance Contingency in it’s entirety, that creates a problem because you will be asked to provide “Proof of Funds”, as the offer will appear to be all cash.”

    Wrong, Ardell. The offer WILL be “all cash” per the the standard language in the “Purchase Price” paragraph (I believe “a”), where buyer represents he has cash on hand absent a financing contingency. Since the buyer DOESN’T have the cash on hand in this hypothetical, the buyer would be in immediate breach of contract upon mutual acceptance. Not good.

    Otherwise I’m not taking the bait Ardell! ;-) Needless to say we have different interpretations of the form contract language (including your assertion that you can simply strike the “must appraise” clause without concern, which we have discussed previously). It looks like you’re never going to convince me, so we’ll have to agree to disagree forever on this one.

    Finally here’s some advice for other readers: If your agent is monkeying around with the forms, seriously consider hiring an attorney as well. To oversee your broker’s unauthorized practice of law.

  55. 55
    Mike says:

    By Jay @ :

    RE: Mike @ – It is a very bad idea to get involved in a bidding war just buy a renovated modern house! The $150 K that buyers pay more to win the stupid bidding war is more than enough to renovate the whole house in modern style. Right, Eric? You can even hire a designer to help you to come up with modern designs if you can’t do it yourself! Lots of buyers fall for the wrong things that are easy to renovate, and they ALL COMPETE for the same renovated house.

    I wasn’t endorsing the idea, but if you’re suggesting this is a viable alternative for most buyers I’m guessing you haven’t lived through a major remodel. If I had to do it over I’d prefer not to live in the house at the time, and that comes with costs and/or major inconveniences well in excess of the cost of the work. Then you have to deal with the financial issues, either getting a construction loan or having 40%+ of the purchase price in cash. (20%+ down, 20%+ in reserves to pay for renovation work). And then… what if it doesn’t go as planned?

    A young single guy with DIY skills is going to have a much easier time doing and living through a renovation than a married person with children. The two scenarios are not comparable at all when it comes to actually finishing a major remodel project. Likewise, remodeling a 1970’s condo is going to be MUCH easier than a 1920’s SFH 3 times the size. This is how people get in bad situations when buying fixer uppers – vastly underestimating the scope of the work. Just a few months ago a young couple with a kid threw in the towel on a major fixer down the street from me. From what the listing agent said they ended up moving into a new condo or town home in Ballard. It took them just over a year to figure out that they’d never be able to complete the project they’d taken on.

  56. 56
    redmondjp says:

    RE: Mike @ – And here’s something else to consider for those thinking of renovating: “Nail Guns For Hire” typically give preference and priority to their best customers (typically builders). So if you happen to be low in their customer pecking order, the contractor could up and leave in the middle of your job to work for their more-important customer (who they don’t want to lose, whereas you are a one-time job), coming back on nights/weekends, or weeks/months later to finish your job.

    It doesn’t always happen this way, but it can and does happen. Ask a lot of questions (and get references, etc) before you go this route. Right now it’s tough because everybody is busy working on new construction.

    As a married person with young kids, I will personally attest that my own remodeling efforts on my house have ground to a complete halt. With only kid #1, I was still doing some, but after kid #2, fugeddaboutit! YMMV

  57. 57
    maggie says:

    LOL…I’m a lurker but had to comment. My husband and I are trying to buy on an actual middle class salary (which means our price point is less than half what this letter writer wanted to pay for this Ballard home) and trying to use a VA loan, which no one likes. Yes, it sucks out there, but I bet it sucks less if you have more than $800K to drop on a home. With the costs of pre-inspections and the amount of time and stress it takes to try to get a house, I’d say we’ve got about one more offer in us before we give up and hope we aren’t completely priced out of Seattle altogether in the next year. We’re long term residents in our apartment building and they seem to like us and haven’t gouged us too much yet.

  58. 58

    RE: Mike @

    Bingo! Cash still gets in the way, and sometimes unexpectedly. Fixers bid up too, and they are even less likely to appraise at the bid up price. When the buyer makes the initial offer they think they have enough money to do the remodel. But then the bid up and lower appraisal can cause the fix up money to get sucked into the transaction during the bidding war and escrow process.

    Then they end up with a fixer…with no money to fix it…or not as much money as they started out with. Not good.

    These days the flippers get the fixers and the end users buy them from the flippers, more often than not. If you are buying to get away from your rent going up a few hundred a month, and many are, getting into a $50,000 project house is not a good answer to that problem.

  59. 59

    RE: maggie @

    VA is tough in this market. Instead of going after the next next new listing out the gate, which is the norm these days, try fishing deeper into the pond for a good house that has been overpriced for a long time. Negotiating price on a one on one on a longer on market listing, 60 days plus, likely your best bet.

    It’s doable if you stay away from the “just listed” and “will look at offers on Monday” crowd.

  60. 60
    David B. says:

    RE: Ardell DellaLoggia @ – I’m sure there’s a sting to losing out for this buyer, but the fact remains that for the vast majority of buyers, a 3000+ square-foot 5-bedroom house is not a need, it is a want. Yes, there’s a few buyers out there with big families who truly can make a case for needing such space, but families of such size are a small fraction of all households.

    In a world where all-too-many are homeless, and many more than that struggle with the expense of keeping a roof, however modest, over their heads, I really don’t have much sympathy left over when the privileged and affluent don’t get everything their heart desires on their first attempt. When put in context, such problems are basically non-problems.

  61. 61
    Erik says:

    RE: Mike @
    That’s why you buy a 70’s condo. Keep the scope small. The big obstacle is battling the hoa. I would rather do that than battle a huge remodel.

  62. 62

    RE: David B. @

    The way it usually plays out David is a nice young couple, possibly already with children, get transferred here or take a new job here for double what they are making where they are. It sounds like a no-brainer “YES!!!” to take a job doubling your income. Until you leave Oklahoma or VA or Wisconsin or Georgia, etc…and leave your beautiful big home that you sold for $320,000 (double what you paid for it, yippee) and find out no one will rent to you with three kids and two dogs and a bunny.

    So for those saying no one “has to” buy, in the real world people don’t want to lose their two dogs and a bunny in order to get rental housing. Near impossible to tell the wife and kids “Great News! I got a new great job 3,000 miles away…but we have to lose the dogs and the bunny.”

    They don’t have a lot of money saved because they were making only half of what they are “going to be making” here. They have had 2 paychecks at the new higher salary by the time they need to put a roof over the family’s head…and landlords mostly say “no pets”. They would say no kids too if they could…but illegal to do that. But they can give the rental to someone with less baggage. There are bidding wars of a different kind in the rental market, and sometimes just as hard to get the rental as it is to get a house in multiple offers.

    To make it worse, most often only one of the parents gets a job here right off the bat and the other is what is called “a trailing spouse” who will work soon…but…they need to get here to get in line with other job applicants. Juggling the kids into their new surroundings and schools means the wife likely won’t start working until they are here for at least 6 months. They would rent…but really, do you think there are readily available rentals for a family with 3 kids, 2 dogs and a bunny? Not everyone fits into an apartment rental and most of those don’t allow a couple of pets or large dogs or certain breeds of dogs even if you only have one of those.

    Yes he could drop down to a smaller house, but that doesn’t really help because there’s an even bigger bidding war on that! Yes he could go further north, but Ballard is newly popular because people are taking jobs, usually around 34th and Evanston, and they are going to walk or take a bicycle to work. Don’t we like that? Seattle says they love that. Fewer cars, less traffic, environmentally friendly. That’s how Ballard popped up on the “best places to live” map almost overnight and in many cases replacing Queen Anne. No one wants to bike up Queen Anne Hill to get to 34th and Evanston. Fremont-Ballard blew up for that among other reasons. But that is probably the biggest reason. Terrain, not distance. Flatter…no big Queen Anne hills from house to work. No car needed. No parking needed.

    Not to mention the newly re-located family wants to see Dad or Mom once in awhile. These new high paying jobs come with mountains of extra time at work. These are not union jobs where the whistle blows and people pack up their lunch pails and speed out the door at 5. Spending any time with the family usually involves living as close to work as possible.

    No one’s problems are “non-problems”, David. You can say “Not my Circus; Not my Monkeys” and turn a blind eye and an unsympathetic heart. But that doesn’t make their problems less real.

    Speaking of which, Hallmark, we need a “Relocated Wives Day”.

  63. 63
    Weasel says:

    RE: maggie @ 56 – You can do it, just not in Seattle. You’ll need to think outside the box, if commuting into Seattle each day is a requirement, then look for places near the Sounder southline stations. We ended up buying in Puyallup late last year, one “middle class” income buys a fairly nice place there, only tricky part is finding something that is serviced by a busline that happens to line up with the train schedules.

  64. 64
    David B. says:

    RE: Ardell DellaLoggia @ 61 – Sorry, I’m not buying it.

    First of all, there’s this thing called “personal responsibility”. It’s common knowledge that housing costs can vary widely from city to city. Responsible adults, when considering an out-of-town job offer, will research the cost of living in the prospective new city and use that information in the salary negotiation process. If unable to negotiate a suitable salary, they will refuse the job offer. Those who don’t can expect to suffer this thing called “the consequences of one’s foolishness”. This is not the market’s fault, the government’s fault, or the new employer’s fault.

    Second, something very similar happened to my parents back in the late 1970s. My dad had been dreaming of moving to the West, and got a job offer in New Mexico and accepted it, but there was a severe housing shortage in the town we were moving to. We ended up moving into a much smaller house (on a fairly busy street, a family of 5 in a 1250-square-foot rambler) because it was the only thing he could afford of the literal handful of things on the market.

    Dad didn’t exactly like it. Neither did any of us. Yet, we survived. Dad still had a very comfortable middle-class salary, and we never worried about losing the roof over our heads or where our next meal was coming from.

    I don’t recall much self-pity on the part of my parents about it. They had wanted to move West, and this was something they had to sacrifice in order to do it. Instead, they accepted having to live in the smaller house for a few years and started strategizing how to move up. In a few years, things sorted themselves out and we moved into a far nicer custom-built home.

    On the large scale of things, a relatively well-off household not getting everything it wants the moment it wants it is not a problem. Particularly when many others are worrying about being able to afford any sort of home at all.

  65. 65
    maggie says:

    RE: Ardell DellaLoggia @ 58 – LOL! Yes, my agent keeps telling us to look for these magical, overpriced, been-on-the-market properties that are also liveable but we aren’t seeing a lot of them pop up on the market unless they are really icky. We aren’t so desperate to buy that we will buy ANYTHING. We want to like where we live and be there for the long term.

  66. 66
    herrbrahms says:

    The failed buyer could look into this house, and contribute further to the gentrification of the CD:

    https://www.redfin.com/WA/Seattle/164-25th-Ave-98122/home/142452

    I think even bunnies would be allowed.

  67. 67
    maggie says:

    RE: Weasel @ 62 – What is your public transit commute like? Commuting into downtown Seattle every day is a requirement for me and I work 10-12 hour days so I am trying to avoid anything too arduous. My husband and I currently share a car and we have opposite work schedules so carpooling doesn’t work. Adding a car and associated expenses takes away from a lot of the savings you get from moving further afield.

  68. 68
    CDer says:

    With all of the complaints about all cash and how aggressive the market is, I’d like to add my little slice of experience that is counter to this. We put in our first offer (ever) in January on a small (1000 sq ft) home in the Central District. We like the neighborhood, the walk score was good, so we were ok with forgoing the extra square footage. Our offer had an escalation clause, but it never got to that point because the offers were different and we got the house for asking ($450, 000). We did not waive inspection. I’m not saying that our situation is common or typical, but I will say that these kinds of opportunities do happen. One thing I think that also made a big difference was that it was right in January before things started to pick up big time, and we bought it brand new (not from a previous owner) who just wanted to sell the group of houses as quickly as possible.

  69. 69
    Erik says:

    RE: maggie @ 66
    How about a condo?

  70. 70
    Mr.Chang says:

    I am with @DavidB
    The problem is not with the market,
    it is with buyers having unrealistic expectations.
    Life is full of compromises – adjust your priorities and sacrifice irrelevant.
    In many EU countries people will NEVER have an opportunity to own a house.
    And not because they don’t work or don’t save.

  71. 71

    RE: maggie @ 64

    VA is a lot more common further south toward the base. Very nice homes in Renton as example. Last time I did one was an icky in Maple Leaf. So yes. Further south or icky. But sometimes icky can just be sweat equity. Kind of six of one half dozen of the other. A very nice house near where Kary lives would cost less than an icky in North Seattle.

    I did a great house that was very dirty and smelly. The buyers got a great deal and love it now and dirty and smelly only took a weekend to eradicate for the most part. The overgrown yard took a bit longer, but the house was great! The owner had all of his services shut off for non payment as was flushing his toilet with buckets of water he borrowed from the neighbors. His trash service was shut off so it was a mess. But before that it was fully remodeled. Most buyers wouldn’t go in because of the smell…toilets and dogs. But it really was well worth overlooking those easily correctable negatives. That was in Kirkland. Still some good deals in 98034 and Kenmore where the The Tim grew up.

  72. 72
    Erik says:

    RE: Ardell DellaLoggia @ 70
    Icky in Kirkland is massively different than icky in Everett. I bought an icky repo in Kirkland and it was great. Needed small updates and windows. Icky in Everett means you gotta chase the crack heads out and invest $60k to make it liveable. Maggie needs to be very careful and understand icky is okay if the construction is 70’s or better.

    When I remodeled in Kirkland it was awesome. I didn’t really worry about anything. My advice to Maggie is to buy something new and dirty in a nice area.

  73. 73
    redmondjp says:

    By Erik @ 71:

    RE: Ardell DellaLoggia @ 70
    Icky in Kirkland is massively different than icky in Everett. I bought an icky repo in Kirkland and it was great. Needed small updates and windows. Icky in Everett means you gotta chase the crack heads out and invest $60k to make it liveable. Maggie needs to be very careful and understand icky is okay if the construction is 70’s or better.

    When I remodeled in Kirkland it was awesome. I didn’t really worry about anything. My advice to Maggie is to buy something new and dirty in a nice area.

    That’s all great advice, Erik, but inventory is so low that this is next to impossible to find (new, but dirty, and in a nice area; pick any two). Most agents are pretty good about getting the place ready to sell (cosmetics, staging, color-infused listing photos, etc).

    One strategy to use now is to target homes that are currently off-market, contacting the owners directly to see if the are willing to sell.

  74. 74

    RE: redmondjp @ 72

    Not really JP. Think about it. The house with the big tree in front as example. You only need a short gap to negotiate a VA loan. That one dropped $40,000 and went pending inspection last night…but….VA doesn’t need a big window. They just need enough play to not be competing. And there are plenty of those…big tree house just being one example. Don’t post the link to the house. But you and I know what I’m talking about.

    VA loan is not usually asking for a better price than others are willing to pay…just an opportunity to win. Even a little overpriced and no one else beating the door down will get a VA going to negotiate and get accepted with that type of loan program. They just need a little breathing room. Most any “will look at offers on” with no offers on that day is a possible.

  75. 75
    Erik says:

    RE: redmondjp @ 72
    Yeah, inventory is super low. Maybe Maggie could buy an auction house with a bridge loan? Mr. Peppers always said a home search should include auction properties.

  76. 76
    Weasel says:

    RE: maggie @ 66 My commute is a little on the long side mainly because of the bus connection from Sounder in Puyallup, my employer is fairly flexible about start and finish times so long as the work gets done :) You’d have to look at the train schedules, and see how it lines up with your hours, and how much time you want to invest in commuting.

    Basically the train gets from King St to Kent in 20 minutes, another 10 to Auburn, another 10 to Sumner, Puyallup another 5 for a total of about 45 minutes.

    I came up with a “time budget” and if a place we liked didnt fit with-in my allowed commute time, it got scratched from the list.

  77. 77
    ongsomwang says:

    By Weasel @ 62:

    RE: maggie @ 56 – You can do it, just not in Seattle. You’ll need to think outside the box, if commuting into Seattle each day is a requirement, then look for places near the Sounder southline stations. We ended up buying in Puyallup late last year, one “middle class” income buys a fairly nice place there, only tricky part is finding something that is serviced by a busline that happens to line up with the train schedules.

    The reality is that many younger adults who want to own a decent sized home are going to have to be looking in South King County or Pierce County. There just isn’t much that is affordable along I-90 anymore.

  78. 78
    David B. says:

    RE: Mr.Chang @ 69 – “In many EU countries people will NEVER have an opportunity to own a house.”

    The chart here would appear to contradict that assertion:
    https://en.wikipedia.org/wiki/List_of_countries_by_home_ownership_rate

  79. 79
    Erik says:

    RE: David B. @ 77
    ThiS isn’t math where you need to be accurate 100% of the time to be right. Switzerland is 44% and Germany is around 53%. Can’t those be the many countries mr Chang was talking about?

  80. 80
    David B. says:

    RE: Erik @ 78 – Even Switzerland’s 44% is far different from “people will NEVER have the opportunity to own a house”. And those two countries are the outliers. Most of the Western European EU nations seem close to the USA when it comes to home ownership. The EU nations in southern and eastern Europe have significantly higher home-ownership rates.

  81. 81

    RE: Ardell DellaLoggia @ 39
    I’ve spent a lot of time in Princeton, and grew up 15 miles from there. Other than the hot humid summers and nasty cold winters, Princeton really is a lovely town. If you have 1.1 mil to spend on a house, and you have to live in New Jersey, I might pick the shore first, but Princeton would be right up there.

  82. 82

    By Cornix @ 34:

    Our price range is fraction of the above buyer and we want to make sure we have all the protections in place before we enter into any large purchase. The current market is no friend to cautious buyers of modest means. We have given up looking for a house for the near future. If these prices and bidding wars are truly the “new way” then it is already too late for us to own a home in the city.

    Even though we are on vastly different price points, my advice to the posted buyer is to make sure owning a home will improve your day to day quality of life enough to be worth it. For us, home ownership is about stability and happiness rather than investment.

    Indeed, the current market is no friend to cautious buyers of modest means. In 2007, people were saying that prices were just going to keep going up. Then the market crashed. In 2012, people were saying that prices were just going to keep going down, that it was too risky to buy. And prices are up 30-50% in some parts of the Seattle area since then.
    So…this can’t be the new normal. It appears unlikely that we’ll see any kind of significant price drops within the next couple of years, locally. But home prices don’t continually head upward, inventory levels don’t stay continually miniscule, and , at some point, the market will be more balanced towards home buyers. When inventory is this low, you have to make more choices when buying a house. Live further out and endure a more painful commute? Buy something dumpier? Buy something tiny?
    Another choice is to not buy. You don’t have to buy. And you don’t have to buy in Ballard.
    If it were me, and I had my heart set on buying a house in Ballard, I’d have to ask myself why. It’s an okay neighborhood, I like Ballard. But we’re not talking the Trocadero in Paris or NYC’s Upper East Side. It’s just Ballard. Find someplace a little less frenzied, or wait. Participating in the house buying game is really stressful. Nothing wrong with owning a home, but even in the best of times, buying a house is stressful. When the market is as crazy as it is right now, and you’re trying to buy a house?
    Eat right and get plenty of exercise. You don’t need a stroke.

  83. 83
    redmondjp says:

    RE: Ardell DellaLoggia @ 73 – The overpriced house with the tree – to me, that house is not at all what Erik described or anything like the extremely dirty one that you mentioned in an earlier post. In a nice neighborhood, check. 1970s design/décor, yup. But it was clean and showed well (at least from the pictures I saw).

    My house, OTOH, when I bought it was more in line with what you and Erik were describing (even worse, actually). There were rodent droppings around the perimeter of every room in the house. The first thing I did was to rip out the carpets (and burn them, no just kidding, but I probably should have). The flippers by most of these types of houses and have them back on the market within the year.

    I’d suggest a foreclosure but that really seems like a minefield that even I wouldn’t want to cross. Maybe somebody else with direct experience with one can comment on that (would make an excellent topic for a separate blog post). Biggest concern (to me) being buying a house that somebody is still living in, and having to get the sheriff to evict them. Lots of ways that can go wrong.

  84. 84
    Jay says:

    RE: Erik @ 71 – Erik is right! Don’t ever buy a nice house in a bad neighborhood!

  85. 85

    RE: redmondjp @ 82

    Any house where she is the only offer will consider VA. The house with the big tree sat on market for a variety of reasons for just enough time for someone without competitive financing credentials to slip in. The reason why is somewhat irrelevant. Financed doesn’t have to be the same as cash if you’re the only buyer in the room.

  86. 86
    Seattleboomerang says:

    As a small anecdote, we were recently in the area to firm up a job offer and look for housing. We were only in the area for 6 days so didn’t expect to buy but the few homes that we did look at already had offers and a feeding frenzy within 24 hrs of listing and we declined to take part. So we focused on rentals.

    We were looking at quite a few neighborhoods that would put us within 10 minutes of a commute to work and schools. All these rentals were at the top of the market for price (OK excluding waterfront mansions) and were good sized family homes in close in neighborhoods. We looked at a total of 6 homes and 5 were owned by people who were not American born; two of the owners were out of the country (one was shown to us by an agent and we didn’t find out who the owner was). We have excellent credit and a few of the owners were keen to rent to us. We were really quite stunned at the state of some of these homes. One was virtually a tear-down it needed so much work, all maintenance and updating had been deferred for decades, yet the owner was asking top dollar. Two homes were shown to us by two different owners where each owner explained they had lived in the house for 5 YEARS and they had done absolutely no meaningful updating so both homes looked like they dated for the 70s in the interior at best. Again, both were asking enormous rents.

    We actually started to get pretty angry when we left one home after the owner said she didn’t think she had to paint before she left, wanted to leave all her old furniture behind and expected to come and go using the MIL unit (within the home) whenever she wanted and she was asking the largest rent of the lot! We lived in the area for 12 years previously and have a pretty good idea of the neighborhoods and market but we were truly shocked. We can pay a substantial rent and yet it is extremely slim pickings out there. God help anyone with more modest means.

    The night before we were about to fly out a listing came on and we asked to see it immediately, so had a showing around 7pm. It was clean and updated and 5 minutes from work and school and we completed the application before we flew out in the morning. During the follow up that week the agent told us she had a long waitlist of interested renters. Again, it is not a cheap rental.

    The way things are I think companies will start to have problems getting people with families to relocate if they can’t find housing. Also there are obviously plenty of potential renters and buyers at all levels of the market who are struggling. At the hotel we were staying at we heard a number of people saying they were in-town for a real estate tour.

    Since watching the market in the past few months we have seen a couple of homes we may have attempted to buy if we already back on the Eastside, both sold quickly and then became rentals. Tim has previously dismissed the impact of foreign investors on the market and I believe he came up with a figure of 6% of total sales. However, I wonder if this is skewed toward high end neighborhoods? The people who showed us their homes were German, Chinese, Taiwanese and Canadian. None of the owners were born in America except for the one I mentioned earlier where we don’t know the owners national origin. Can I just mention I am also an immigrant? : )

    I have no desire for a bullish sentiment, I would love the market to cool down but it seems more and more investors from a wide range of nations are deciding to buy in the area. We also considered moving to another part of the US and looked at a number of other cities but found we couldn’t beat the combination that makes the Seattle area so desirable.

  87. 87
    Wanttobuybutnotatthatprice says:

    I understand the other posters comment about feeling forced out. The house I grew up in on the east side is selling for $575k. It really sucks that I can’t give my kids that same thing I had. My price range is at the popper level at 225-260k. I guess I’ll have to learn to talk loud over the gun shots and airplane noice. Hope my kids will be able to learn at the schools with the score of 1-3 on the scale of 1-10. All these high income earners that are moving here for tech jobs and foreign investors are driving up the prices. There should be some type of penalty like higher taxes ( I believe they do that in California) or a special tax at closing then put it into some of these crappy scoring schools.

  88. 88

    RE: Wanttobuybutnotatthatprice @ 86

    They do that in California…or did in some areas when I moved there back in the late 90’s It’s called a Mello Roos tax. But it was mostly and possibly only used for new construction to support the cost of needing new schools vs upgrading crappy ones. More people, more children, more schools needed in areas that converted from 1 farm to 200 houses was the basis for the tax on new construction.

    http://en.wikipedia.org/wiki/Mello-Roos

    Somewhat like the extra sewer fee in King County for new construction or new sewer connections that created a need for more treatment capacity.

    I do think more effort, possibly volunteer after school tutoring, should be made to upgrade the schools so they are more evenly ranked. But do know that will also increase the home values where they are now less expensive. The school ranking is factored in to the value of the land.

    I say tutoring as most often the schools and teachers are not different. It is usually a case of more parents who don’t speak English and so have more difficulty helping their children at home. It is usually the home experience vs the school experience that creates the lower ranking problem.

  89. 89
    midwest transplant says:

    In the summer of 2012 my husband and I were looking for a place on the Eastside. We were fixated on Bellevue (for a variety of reasons) but ended up buying in Bothell (also for a variety of reasons, but primarily for affordability). Bothell has turned out to be a better fit for us than Bellevue would have been, and we are very happy here. My husband’s commute to Renton, the primary strike against Bothell, was cut in half a year later when he took a different job in Bellevue. I think anybody who is buying a house would benefit from thinking a little outside the box and actually check out different neighborhoods, different styles of houses, etc. than they think they want. They may find something they weren’t expecting and actually like more. If you are focused on one particular type of house in one particular neighborhood for one particular price, then you are just going to have sit back and wait, and that wait may approach infinity in this market.

  90. 90
    Wanttobuybutnotatthatprice says:

    I think more effort voulenteering is a great idea but don’t most the people in the low income areas have to work more than 40hrs a week to pay the bills? The point is that they don’t have free time to voulenteer. So I guess this is all further evidence that Seattle is becoming only for the top 3%. I would be curious to know if these people are truly the top 3% or fakers. Can the people buying these houses truly afford them? Have they overextended themselves beyond belief? I bet very few of them have there 6 months safety net, and are underwater with a straw paying student loans, credit cards and car payments. Did they buy at the top of what they qualified for and not consider what would happened if they were laid off? Still just shocked over these prices!!!

  91. 91
    Seattleboomerang says:

    Unfortunately it was very shortsighted not to put in more infrastructure for mass transit two decades ago when everyone knew they were coming (all the others who want to live here!). I guess there is no point harking back to the lack of leadership that meant we kicked that can down the road and well into the 21st century. It has meant that now close in neighborhoods with good schools are super desirable and yet many very nice areas that have a great community and schools are very hard to get to. It seems to be just a matter of time until all the areas that are less prosperous in Seattle will catch up but as Wanttobuy says it is a challenge for those families who are on the sharp end of transforming schools. OTOH I hate to think that all blue collar and lower paid workers will be forced out and we end up with a metro area that is not economically diverse.

    It has become the new pattern of urban American that the central city reverts to the city of old (pre-car) and becomes expensive due to it’s convenience, while the working class end up in distant suburbs.

  92. 92
    John Wake says:

    RE: Craig Blackmon @ 1 – Along the lines of Craig’s comment, “My advice, as a real estate broker: Look for homes off the MLS. Currently this is the ‘FSBO’ market, you can find these listings on Zillow, Redfin, and elsewhere,” and @redmondjp’s comment, “One strategy to use now is to target homes that are currently off-market, contacting the owners directly to see if they are willing to sell,” is to tell everyone you know what you’re looking for and if they know anyone who might be thinking of selling such a home. Use Facebook. Tell everyone what you’re looking for.

    About half of the homes sold directly to buyers (seller didn’t hire an agent) in the U.S. (~4%) are sold with no marketing, meaning the homes were sold by word of mouth before the sellers got around to actively marketing them as FSBOs or hiring real estate agents.

    Also, if the buyers had a particular neighborhood they loved, they could walk the neighborhood and knock on doors. I bought a house that way, although it was my agent who walked the neighborhood and found the unlisted house. It’s a long shot but about 1% of homes sold in the United States weren’t for sale, the buyer approached the future seller.

    Awesome comment thread! It gave me a nice little trip to the Seattle real estate market.

  93. 93

    RE: Wanttobuybutnotatthatprice @ 88

    Most of my clients who buy at those prices are buying below their means and can afford a lot more and have considerable reserves after the purchase. They are not “from” this Country often, but I don’t call them foreign investors if they live and work here. I see someone above referencing anyone who isn’t “from” this country as a foreign investor. To me they are just new residents whether they are coming from another State or another Country. I was surprised by that comment above.

    To me foreign investment is someone who is IN China and sending money to buy sight unseen and never moving here. Have seen that in U-District and they rent it until they have a child possibly coming in a year or two to go to U-Dub, as example.

    But people living here for awhile and working here who just happen to be Chinese or another nationality? I wouldn’t call that foreign investors like the commenter above does.

  94. 94
    Seattleboomerang says:

    Well Ardell I am assuming you are talking about my comments. As I mentioned I am an immigrant myself. In my comment I said “none of the owners were born in America” I know this because I talked to them and they told me themselves because we have that experience in common, they also clearly did not grow up in the US. At least one third of the homes we looked at are owned by investors who do not reside in the US. Our visit was a snapshot and in that small sample we discovered a third of homes were bought by overseas investors.

    The broker of the house we rent is Taiwanese and so is the owner (who lives in Taiwan) and the entire brokerage she represents consists of agents from Taiwan and China. We can assume they are permanent residents of the USA but the fact they see a large market for Chinese language buyers on the Eastside speaks for itself. My point is not to criticize immigrants – I am an immigrant – my comment was to say that many buyers of real estate in close in Eastside neighborhoods are clearly coming from outside the US, perhaps in larger numbers then in the past creating greater competition for homes. There have been numerous articles about this nationally and locally in the press and TV news, real estate agents will tell you, neighbors will tell you.

    My POV is purely to add to the many different voices and perspectives on this blog which discusses the Seattle Metro housing market. Many of these investors pay in cash and quickly turn the home into a rental, thus less inventory for those hoping to buy a home for their family to live in.

    My experience is anecdotal and I clearly state that.

  95. 95
    boater says:

    We have a foreign investor in our neighborhood. Bought the house sight unseen and rents it out. Looks to me like they get about 4% in rent and they’ve probably seen about 20-40% in appreciation aince they bought.

  96. 96

    RE: Seattleboomerang @ 93

    “They are not “from” this Country often, but I don’t call them foreign investors if they live and work here.”

    Thanks. I didn’t think most people would call them foreign investors if they live and work here, even if they buy investment properties in addition to their own personal residence. Hopefully not.

    You said “Tim has previously dismissed the impact of foreign investors on the market and I believe he came up with a figure of 6% of total sales. However, I wonder if this is skewed toward high end neighborhoods? The people who showed us their homes were German, Chinese, Taiwanese and Canadian. None of the owners were born in America except for the one I mentioned earlier where we don’t know the owners national origin.”

    You said the people showed you the homes, so they obviously live here. Lamenting about home prices and in the same thread noting locals and “national origin” just didn’t seem right to leave standing. Though admittedly when people single out race or national origin they are usually complaining about falling prices vs rising ones, same principle, and best not to mention national origin.

    So when you said The Tim’s 6% was skewed did you want him to include the “German, Chinese, Taiwanese and Canadian” people who were physically here to show you those homes?

    I know many people who speak many languages from many countries, especially in North Seattle, who continue to rent out homes they grew up in when they first moved to this Country with their parents. When their parents passed away they kept the homes as rentals. Sometimes because they can’t bear to part with them. Other times because the family believes in continuing to hold their family home pretty much indefinitely and rent it out with no plan of ever selling it. Noting that they may not have been born here is a slippery slope and inappropriate, I think, under our laws regarding national origin and not making distinction based on national origin.

    Many, many people keep their first property as a rental when they buy a new home. Noting which of those people were born in this Country and which weren’t…not a good thing.

  97. 97
    Jay says:

    RE: Seattleboomerang @ 85 – Be patient, rent an apartment if you have to. It is best to wait till the end of the year, and to start shopping seriously after Thanksgiving! It is almost June already, wait 4 months and start touring again. That was what we did, and we got the house without bidding war, and were able to negotiate. It worked out beautifully for us. The Real Estate Market at the end of 2014 was very different from now, even at the same interest rates. Bidding wars only help the sellers and brokers, so it is best to stay away. Good luck!

  98. 98
    Mike says:

    By Wanttobuybutnotatthatprice @ 89:

    I would be curious to know if these people are truly the top 3% or fakers. Can the people buying these houses truly afford them? Have they overextended themselves beyond belief?

    At the $600K price point, most buyers can probably afford the homes they’re buying. It’s above the limits on FHA/VA and being a fairly competitive price range it’s not as likely buyers with weak financing are going to win the majority of bidding wars in popular areas.

    The other thing to consider is a lot of the move up buyers at this price point may have 30-50% down from a home they bought a few years ago. Perhaps they’re not in the top 3% income wise, but that’s not necessary if they’re only financing $350K of the purchase price. In that case, unless they’re buying a $600K fixer-upper, a single white collar income or two ‘working class’ incomes are enough to pay the mortgage. Beside, they’d be paying about the same or more in rent.

  99. 99
    Seattleboomerang says:

    Ardell I am surprised you need to express the same point you have already made. How do you know what my native language is? And you quote yourself as if you are quoting me which is misleading. My only point is that there is severe competition for homes. I have said nothing to imply that someone having a national origin other than American is a negative thing. I am not an American citizen and it is likely we will buy another home so I include myself in that illustration, does that make you feel better? The Eastside is a diverse community due to the highly educated people attracted to moving here from around the world – that is a given.

    I am not a real estate agent and therefore I am free to make comments upon people’s national origin and I will. People’s national origin is part of their identity and they are proud of it, no need to pretend it doesn’t exist. Local Real Estate agents who are not blind to who their customers are have brought onto their team people who speak Mandarin, Urdu and Farsi. I think you have got the entire wrong end of the stick here and run away with your assumptions. Not a good perspective if you hope to sell to international buyers such as myself.

    And your last point only reiterates mine; many owners are turning properties into rentals and therefore this reduces the inventory for buyers.

  100. 100
    Seattleboomerang says:

    Ardell –
    Rereading my last post I think I come over as somewhat harsh – so my apologies. I am not someone who lives, thinks or acts the way I feel you are assuming and as a result I overreacted.

  101. 101

    By Ardell DellaLoggia @ 39:

    We don’t exactly have a magic wand that conjures up the offers. “real estate agencies” have absolutely zero hands on activity on each house, so drop that one. The Listing Agent “collects” the offers as submitted and helps contrast and compare them for the seller. The Listing Agent might even call the agents prior to reviewing the offers with the seller to “perfect” them so as not to waste the sellers time if something is missing. We have to give the benefit of the doubt that maybe it was an error of omission on the agent’s part. We try VERY hard to not have a buyer suffer because they possibly chose the wrong agent. We might not do that for all offers if there are 10 or so, but we will do it for the offers that are “in the running” most of the time, unless there is a ridiculously clear front runner. We mostly do this to avoid the seller having to counter over a minor administrative matter.

    I’ve avoided posting in this thread because my first and second reactions were: (1) Great, another piece based on anecdotal evidence; and (2) How does this buyer not know that it wasn’t their second agent that caused them to lose out? As to the second point, and the material I quoted from Ardell . . .

    I think Ardell may be being a bit generous saying that she tries so hard, or maybe she gets in better quality offers than what I do. In my experience if you get in multiple offers you can typically exclude roughly half based just on the quality of the buyer’s agent’s drafting of the offer, and that won’t be because they made a “minor administrative” error. It will be because they showed significant incompetence in drafting their client’s offer. So, yes, if an offer doesn’t include proof of funds or has some box not marked that probably needed to be marked, calls will be made if the offer was in the running, so that the additional offer can also be considered. But if the offer is a horrible mess it may be set aside. Of course this is mainly the seller’s call, but that’s typically my advice to sellers (and the last time a client didn’t follow my advice it came back to bite them in the butt, because the slightly lower price better offer went away).

    People worry a lot about the inspection contingency. What about the contingency of a buyer having to accept a counteroffer? That’s a huge contingency. Buyer’s agents should strive to write an offer than can be accepted without change if they want to win out.

    I’ve mentioned many times in the past that buyers are often clueless about the quality of their agents. Buyers are not experts understanding the forms so they don’t understand that their agent is making numerous mistakes. But when a listing agent and seller are reviewing offers, it is mainly the written offer which “sells” the buyer’s offer (ignoring possibly “love letters”). Even if you’re not in a multiple offer situation a badly drafted offer can harm your chances of success, unless maybe the seller is desperate.

  102. 102
    redmondjp says:

    RE: Kary L. Krismer @ 99 – You’ve gotten awfully close to the fire, there, Kary, talking about incompetent RE agents! You’re absolutely correct however . . . buyers, in general, don’t know what they don’t know about the business, so what chance to they have to know whether their agent is a good one?

    So what can we do about it?

    Who is going to start the ‘Yelp’ of the real estate industry?

    I know, let’s call it ‘Relp’!

    Now, let’s get some crowdfunding going and startup another startup!

    (and hooray, another 100-comment post)

  103. 103

    The problem of low quality buyer representation will never be resolved as long as sellers pay the buyer agents’ fee. I’ve said it before: The SOC is bad for buyers .

  104. 104

    RE: Seattleboomerang @ 98

    No need to apologize. In fact I left your name out of it when I first addressed the issue. Whether or not someone is an agent is irrelevant in this case. It is a matter of law (national and local) that we not consider national origin in real estate transactions, be they purchase and sale transactions or rental transactions. “without regard to national origin”. Not just agents but sellers and landlords as well.

    Please don’t take it personal, as what I am addressing is the many articles quoting the number of “foreign” investors. You and many others are trying to identify who is and isn’t foreign in order to come up with that percentage with more accuracy. I’m saying it doesn’t matter if the person is from Kansas or India or New York or Germany. Referring to “foreigners” and separating foreign from not foreign is pretty much against the law when it comes to residential real estate. Even if you are not a buyer or seller or landlord or renter when doing it, but a writer of an article, highlighting national origin can lead to bad thinking as in “darned foreigners messing up our home prices”. There are plenty of plain vanilla’s pushing home prices, and in greater numbers. So why single out the “foreigners”?

    As to your being an immigrant, no it doesn’t make me feel better, but it may explain why you may not know that discussing a person’s national origin in real estate is taboo.

    My family didn’t exactly jump off the Mayflower in 1620 either. :)

  105. 105
    wreckingbull says:

    RE: Ardell DellaLoggia @ 102 – Enough.

    How can you police everyone here with your unsolicited sensitivity training, then use the term ‘plain vanilla’s’ [sic]?’ Just stop.

  106. 106

    By Craig Blackmon @ 101:

    The problem of low quality buyer representation will never be resolved as long as sellers pay the buyer agents’ fee. I’ve said it before: The SOC is bad for buyers .

    I don’t see how who pays affects competency. It’s not like the attorney field is filled only with competent attorneys, and most people pay their own attorney fees. Some of those who pay the most get the worst representation.

  107. 107

    RE: Kary L. Krismer @ 104 – “Attorney field”? Where is that coming from? Please don’t hijack the thread Kary. I am a broker these days, and only a broker. And we’re talking about the competency of brokers. Yet now you’re talking about lawyers….

  108. 108

    RE: Craig Blackmon @ 105 – I brought up attorneys because consumers face the same difficulties there picking an attorney as they do picking an agent. In both cases they can pick based on a referral by friends or family, but the person they get a referral from may not have a clue how good of an agent or attorney they really had (my often repeated story about a client’s divorce attorney who sucked, but the client thought they were great).

    Or they can go to BS websites that have ratings and recommendations which are based mainly on the agent/attorney’s participation on the website (or paying the website money).

    For the attorney side I used to joke that the best way to find a good attorney was to go to law school and then practice in that subject area for a few years.

    But the point was, consumers paying their attorney directly doesn’t raise competency in the legal field, so I don’t see what it has to do with competency in the real estate field. It would help buyers in this market only because it would reduce their competition by reducing the number of buyers, but it wouldn’t raise agent competency.

  109. 109
    Deerhawke says:

    I first wanted to make a comment on the title of this post. “Is Seattle just for the super wealthy now?” Did I miss the first thread discussing “Is Seattle just for the wealthy now?” Or is it already a settled question that you have to be wealthy to live here and we are now discussing whether you have to be super wealthy?

    Just to establish my bonifides, I am one of those “born here in the USA” Americans, unlike those “not born here in the USA” Americans like Seattleboomerang. And my parents. And my in-laws. ;)

    Actually, I wanted to thank Seattleboomerang for raising the question of whether there are a good number of buyers who are buying to re-rent the properties and have become a part of the inventory problem. For a long time, friends on the East Side were complaining that Asian (mainly Chinese) buyers were buying things in Clyde Hill and other premium neighborhoods and then (often after a long period of vacancy) renting them out. I have a foot in both the for-sale market and the rental market in Seattle. I keep an eye on what is coming on the market on Redfin and what is for rent on Craigslist. Within the last year, I have seen nice houses in Seattle go on and off the MLS and then show up on Craigslist for rent a month or so later. I checked into this and found that some listings were by Chinese-American brokers acting on behalf of Chinese buyers. From my perspective, what was strictly an east side phenomenon now seems to be an issue in Seattle too.

    Having said that, I have become part of the inventory problem as well. I am buying a 4-bedroom 2-bath property from a neighbor here in Greenlake and after fixing it up and dealing with years of deferred maintenance, will be renting it out in September. Given the rents right now, it makes a lot of sense.

  110. 110

    RE: Kary L. Krismer @ 99

    Kary said: “In my experience if you get in multiple offers you can typically exclude roughly half based just on the quality of the buyer’s agent’s drafting of the offer,…”

    I learned a long time ago that “A professional acts as he must; not as he feels.” We get that incompetence annoys you. But our job as the listing agent reviewing multiple offers is to help the seller get the highest price, in the shortest time, with the least contingencies from a truly ready, willing and able to close buyer.

    I don’t care if the best offer comes in on a napkin written in poop. I am going to flush out every detail of that best offer and help the agent as needed to perfect the written offer IF and when it serves my seller client best for me to do that. To some extent this touches on the @SeattleBoomerang issue as often the sloppy and poorly drafted offer is coming in from an agent whose first language is not English. It is a lot of work and very challenging at times to assist them. I spend hours on the phone with agents to get to the true meeting of the minds, and get that on paper properly, before the seller is choosing from the offers.

    No I do not agree that the agent on the other side is more important than the buyer and the seller. We are not parties to the transaction. We have a service to perform well, and helping the other agent get things right for the benefit of our client is part of the job.

    Kary said, “People worry a lot about the inspection contingency. What about the contingency of a buyer having to accept a counteroffer? That’s a huge contingency. Buyer’s agents should strive to write an offer than can be accepted without change if they want to win out.”

    Clearly there is risk to both the buyer and the seller in that case, but most of that risk falls on the seller side. I wholeheartedly agree. That is why I contact “the front runners” before offer review time to instruct them to be available between x and x time, in contact with their clients, and be ready to send me initials as needed while I am with the sellers. I don’t get up, sometimes it gets to be after 11 p.m., until we are “pending”! That’s hard work. That’s our job.

    Most often the initials are needed because we are matching the best price with the best buyer or removing contingencies that based on the offers as a whole would need to be removed. That involves calling the agent and telling the buyer’s agent to make that change…not the seller countering with that change. I tell the agent to send me that change initialed by the buyer…now. Right now. Then my seller initials it and we are “signed around” before I stand up.

    So I agree that the seller shouldn’t have a counter floating…but I don’t toss out good offers that need a little tweaking to get that result.

    I would never let an agent’s incompetency put my client at risk. But I would also not ignore the best offer, from my client’s standpoint , when the best answer is for me to do everyone’s work for them if needed.

  111. 111

    Tenants are Over-flowing from the Seattle Sink at $2000/mo+

    Not.

  112. 112

    By Ardell DellaLoggia @ 108:

    RE: Kary L. Krismer @ 99

    Kary said: “In my experience if you get in multiple offers you can typically exclude roughly half based just on the quality of the buyer’s agent’s drafting of the offer,…”

    I learned a long time ago that “A professional acts as he must; not as he feels.” We get that incompetence annoys you. But our job as the listing agent reviewing multiple offers is to help the seller get the highest price, in the shortest time, with the least contingencies from a truly ready, willing and able to close buyer.

    I don’t care if the best offer comes in on a napkin written in poop. I am going to flush out every detail of that best offer and help the agent as needed to perfect the written offer IF and when it serves my seller client best for me to do that. To some extent this touches on the @SeattleBoomerang issue as often the sloppy and poorly drafted offer is coming in from an agent whose first language is not English. It is a lot of work and very challenging at times to assist them. I spend hours on the phone with agents to get to the true meeting of the minds, and get that on paper properly, before the seller is choosing from the offers.

    My point is that an agent who can’t do the first steps right in a transaction is less likely to do the subsequent steps correctly too. And that means the transaction is more likely to fall apart, perhaps very late in the game. It’s not like buyers’ agents are merely sitting on their hands once an offer is accepted.

    I once had an agent present an offer that was so poorly drafted I had to completely redraft the contract instead of doing a counteroffer. My seller was very desperate to sell, so we had to plug our noses and hope for the best. And yep, the transaction did almost fall apart, although it ended up going through with only about a week delay.

    IMHO, the risk of dealing with a bad agent is much worse than the risk of dealing with an inspection contingency, particularly if you are lucky enough to have multiple offers.

    But again, this is really the seller’s decision what follow up is done and which offers are considered. My advice to sellers is to avoid incompetent agents, and again, the last client that didn’t follow that advice paid for it.

  113. 113
    Mellon says:

    Just another data point for this thread:

    I also bid on what was most likely the house in question.
    https://www.redfin.com/WA/Seattle/325-NW-52nd-St-98107/home/302831

    The ‘thanks for playing’ email I saw from the seller’s agent to mine said the house went north of $1M in cash. Nice house, but it was not worth that much to me, but I thought it easily could be to someone. Sounds like the OP wanted it more than I did, but still not enough by at least 50k.

  114. 114

    RE: Mellon @ 112

    If you don’t mind, were you all cash or at least a significant, over 20%, down? I’m thinking the definition of “super wealthy” for this post is more about all cash or large down payment than it is offer price.

  115. 115
    ARDELL says:

    RE: wreckingbull @ 104

    Tell me. Why does it matter if the cash buyer is from a different Country? Why are there even articles about that? Cash is cash. My cash buyers that beat in multiple offers were not foreign. Why the distinction? Why the desire to identify where cash buyers are from? Talking about the news articles and posts vs comments here.

  116. 116
    boater says:

    By ARDELL @ 114:

    RE: wreckingbull @ 104

    Tell me. Why does it matter if the cash buyer is from a different Country? Why are there even articles about that? Cash is cash. My cash buyers that beat in multiple offers were not foreign. Why the distinction? Why the desire to identify where cash buyers are from? Talking about the news articles and posts vs comments here.

    On an individual transaction it shouldn’t but it does it matter from an overall market perspective. If I live in Colfax WA I probably don’t care what’s going on in NY because their economy has little impact on my real estate. If I live in Spokane I might because being a larger metropolitan city I may have some folks from NY moving there but I sure don’t care what’s going on in Germany because as a percentage of sales it’s irrelevant. But if the greater Seattle area has moved from being just a regional/national market for buyers to an international market it changes the calculations on who could afford to live here. Go look at Vancouver and see what happens when you see meaningful international interest in your city real estate. Prices go up. The pool of buyers goes up substantially.

    Beyond that good old fashioned racism is usually the reason to identify an international buyer.

  117. 117

    RE: ARDELL @ 114

    Tim Brought This Imaginary Foreign Buyer Conundrum Up In a Past Article

    The imaginary buyers from China were just that, imaginary.

  118. 118

    This market it tough. And it will get even tougher.

    Depending on a buyer’s specific circumstance, places like Edmonds and Everett might be the best option. Seattle is already growing too populous for its size , and in 2-3 years, those northern communities will be sought-after areas in their own right. If the Seattle market is too fierce for you, don’t ruin your life with debt–be smart. Look at the future market and buy ahead of the curve.

  119. 119
    redmondjp says:

    RE: Real Estate Gals @ 117 – Ahh hah hah hah! Sorry, but you said to buy “ahead of the curve.” And that can only mean one place: Renton!!!

  120. 120
    Mike says:

    By redmondjp @ 118:

    RE: Real Estate Gals @ 117 – Ahh hah hah hah! Sorry, but you said to buy “ahead of the curve.” And that can only mean one place: Renton!!!

    Yeah, Renton! I know one real estate agent that sold her Ballard home and moved to Renton in 2006 because it was the next hot area. I probably don’t need to mention how that worked out.

  121. 121

    By Craig Blackmon @ 53:

    RE: Ardell DellaLoggia @ 47 – I hate getting called out in an 800+ word reply! :-( Thankfully I didn’t have to go further than the first sentence to find the most egregious point meriting a reply:

    “If you omit the Finance Contingency in it’s entirety, that creates a problem because you will be asked to provide “Proof of Funds”, as the offer will appear to be all cash.”

    Wrong, Ardell. The offer WILL be “all cash” per the the standard language in the “Purchase Price” paragraph (I believe “a”), where buyer represents he has cash on hand absent a financing contingency. Since the buyer DOESN’T have the cash on hand in this hypothetical, the buyer would be in immediate breach of contract upon mutual acceptance. Not good.

    Otherwise I’m not taking the bait Ardell! ;-) Needless to say we have different interpretations of the form contract language (including your assertion that you can simply strike the “must appraise” clause without concern, which we have discussed previously). It looks like you’re never going to convince me, so we’ll have to agree to disagree forever on this one.

    Finally here’s some advice for other readers: If your agent is monkeying around with the forms, seriously consider hiring an attorney as well. To oversee your broker’s unauthorized practice of law.

    On the no financing contingency where a loan is actually contemplated, I would go further and argue that in addition to breach of contract you might have a fraud claim. The buyer’s agent might also have some explaining to do to the DOL. It’s rather bizarre that Form 22EF doesn’t include a check box for loan types, so that people can easily disclose that they are relying on contingent funds in the form of a loan without making the loan a contingency. Fail to get the loan and the EM goes to the seller.

    On the striking paragraph 6 issue I would agree with Ardell. As long as you don’t cross some magical threshold of the bank (e.g. needing 20% down) the buyer should still be able to get a loan with the low appraisal. If however the low appraisal requires the buyer to bring in more funds, then they may have an out based on the paragraph 1 down payment language, and could still back out. So you would need some extremely complex language to deal with that situation, and I don’t think it would be something an agent should attempt to do.

    [BTW, in case people are wondering, this appraisal issue popped up somewhere else, so I thought I would deal with it here too. That’s the reason for the delay in not responding to it earlier today.]

  122. 122
    John says:

    RE: Mike @ 119 – Renton worked out OK for me. I bought in the Highlands near Newcastle in 2011 and it has appreciated 50% since.

  123. 123

    RE: Kary L. Krismer @ 120

    Geez Kary, I was trying to ignore that and you reposted it. Well at least you agreed with me on both counts when you did repost it. :)

    As to Craig’s “Wrong, Ardell. The offer WILL be “all cash” per the the standard language …”

    Language does not make money appear out of nowhere. It WILL NOT be “all cash” if the buyer doesn’t have the money and it won’t be “breach of contract” unless the listing agent screws up and has their seller client sign the bogus cash offer, which hopefully is never.

  124. 124
    Erik says:

    RE: Real Estate Gals @ 117
    This is the dumbest comment of all time. I laughed out loud when I read it.

    Everett is a dump and will remain a dump forever. Like Tacoma it is industrial. Edmunds is old retired Boeing engineers. When Boeing finally leaves Everett, the retirees will die off and the area will only be left with child molesters and meth addicts.

    The truth is Seattle just gets more and more expensive. Seattle is a great city and other people around the world see that too. Auburn and Everett are where the rejects go that we kicked out of Seattle.

  125. 125
    Erik says:

    RE: Ardell DellaLoggia @ 121
    Kary gets intense.

  126. 126
    Andy says:

    The simple reality of the American situation is that we increasingly live in what I would describe as a parasitocracy. If you’re young and middle class you’re screwed. You pay taxes so the idle 40-50% percent of society can enjoy the social security you will never receive, the free school lunches for their half dozen crotch fruit your 1.2 children have to pay for, emergency room “health care” you have to wait weeks to receive, and subsidized rental housing that turns marginal neighborhoods to slums. To attempt to enjoy anything close to what your family enjoyed when you were a kid on a single parent income you AND you spouse will now need to work 60 to 70 hours a week at the same skill level job and enter into a lifetime of debt slavery to the money manipulators and sociopathic sycophants of the banking and political classes. Your single child will likely be raised by his/her high school dropout day care providers and crackpot, Marxist, public school social engineers rather than you because youre constantly away working yourself to death.

    American’s ruling elite have substituted immigration for procreation, accumulation for innovation, and mindless, empty consumerism for healthy civic life. The end result? A increasingly rapid descent into an ugly, violent, sprawling, overcrowded, impoverished, cultureless, soulless, meaningless, trash-festooned, too-many-rats-in-a-cage existence. Think I’m being overly dramatic? Just ponder the sort of ethos that allows for such a thing as a 30 year mortgage in the first place. What kind a of society forces young families in their prime to enter into a lifetime of debt slavery just to afford a glimpse of what the previous generation enjoyed as commonplace, for infinitely less heartache. Do you remember the America you enjoyed as a kid? The one typified in those Normal Rockwell paintings everyone recognizes? That America is dead and gone. It’s been killed off by an ever expanding hoarde of human detritus at the bottom and tiny and maniacal ruling elite at the top. Both feed off you like maggots.

  127. 127
    herrbrahms says:

    Erik, Everett may be on the punishing side for a commute to downtown Seattle, but people commute from Shoreline & Edmonds to Seattle every day with only occasional drama. You can also buy a sparkling house with a view on a 1/4 acre for the same price that you would otherwise pay for a serious fixer on Phinney.

    While I don’t expect WSDOT and SDOT to do a single thing about road capacity from the north end, don’t forget that in maybe 10 years’ time, light rail will run from downtown up to the Lynnwood transit center.

    People in these areas by and large aren’t made of money, but still take pride in the upkeep of their properties. There are also notably fewer nightly gunshots than you’ll find at Columbian Way & MLK. Nothing discourages appreciation like gang turf battles.

    If you don’t believe me, believe the developers. Teardowns are becoming more common in this area, replaced by new construction that is then sold off in the high 600s. I’ve shown up at a few open houses of these places, and while their view of builder’s grade is certainly humbler than you find in the hot neighborhoods, these houses get sold.

  128. 128
    wreckingbull says:

    RE: herrbrahms @ 125 – Most here don’t remember, but Ballard of the ’80s was a lot like N Everett today. Hell, even The Anchor Pub has a new, young owner and is being semi-gentrified.

  129. 129
    Erik says:

    RE: wreckingbull @ 126
    Anchor pub was always a biker bar By the railroad tracks. One night I was in there and one of the bikers pulled a gun on someone. I’d be surprised if all the patrons change. It use to be super cheap drinks and full of the banditos biker gang and fat sluts. I had a girlfriend that rented a condo around that bar and all night these people would rev their engines and scream.

    Anyway, Everett is too far from Seattle to ever get nice. Everett has a bad crowd.

  130. 130
    Erik says:

    RE: herrbrahms @ 125
    Shoreline and Edmonds will get nicer. I would live in those places. Everett is where the bad people go for whatever reason. There is not a lot of gang activity in Everett except biker gangs and groups of meth addicts.

  131. 131

    RE: Andy @ 124

    We’ve Lost the traditional Liberal and Conservative

    They’ve joined the same party with lobbyist backing….Fascism or you may want to call today’s liberals Marxists? You vote by plugging your nose.

  132. 132
    Weasel says:

    By Mike @ 119:

    By redmondjp @ 118:

    RE: Real Estate Gals @ 117 – Ahh hah hah hah! Sorry, but you said to buy “ahead of the curve.” And that can only mean one place: Renton!!!

    Yeah, Renton! I know one real estate agent that sold her Ballard home and moved to Renton in 2006 because it was the next hot area. I probably don’t need to mention how that worked out.

    Problem with Renton is it sucks for public transit into Seattle unless you live near the Tukwila Amtrak/Sounder station, near Rainier Beach Link, or along one of the bus lines that gets on I5, otherwise you’re looking at 1hr+.

  133. 133

    Holy Caboley! Craig’s ditching “the mls”! I just scanned it and have to run to meet a photographer at a coming soon Shoreline. Kary…take a look at this! I’ll get over to it when I get back. Wowser!

    http://raincityguide.com/2015/05/19/withdraw-from-multiple-listing-service-mls-single-broker-listing/

  134. 134
    Tau says:

    Whenever someone is saying Seattle is unaffordable and just for the rich, you have to take it with a healthy dose of perspective. I lived in Seattle for 12 years as an engineer before moving to Silicon Valley. And if you think Seattle housing is impossible, all I have to say is that “I laugh in your general direction.” Sorry…but I’ve benefitted from a bidding war as a seller in Seattle. But bidding wars in Seattle is nothing like your average run of the mill 10% over asking entry level home in Silicon Valley. And it’s not fueled just by all-cash buyers. It’s simply the market reality. There’s 3 class of buyers in Silicon Valley (rich Asian investor, newly minted IPO guy, or dual income engineers, doctors, and lawyers that have saved for years). Everyone else that owns a home makes an average wage and has lived in their homes for many decades thanks to operation tax shield (i.e. Prop 13), and pay a fraction of the property taxes new buyers pay and never bother to renovate their home before cashing out and bailing. Global markets also matter more so today than a decade ago. The rich SE Asian investor wasn’t as prolific 10 years ago as it is goday. Getting a U.S. citizenship is as easy as investing 500k in a public works project here. Chinese don’t truly own their own home. It’s a land lease from the government. Buying here make sense for them. Plus it serves as a convenient way of getting a U.S. passport by having their kids here as well, raising them back home, and then sending them back here for college. Point is, there’s a lot more international money, and the U.S. is for sale (more so today than ever before).

    As for Seattle, be grateful for the miserable weather. It’ll serve as a rate inhibitor for sun-loving out of state migrants and keep the expat rate consistent. Go watch the viral Amazon Recuitment video of Seattle and then watch the parody version. Good stuff.

    Seattle is trying to upgrade from a beta class city to an alpha class city. It won’t get there, which is a good thing, but it will change the dynamics of home affordability and who the median home buyer is and is not.

  135. 135
    Rebecca says:

    RE: Andy @ 124 – I agree with much of this. LIfe is all about balance. A healthy, broad middle class could, and for a while did, protect by creating a buffer zone between both the upper and lower classes. The lower classes had something attainable to aspire to, and so did the middle class and in that scheme each class could abide the one above it as long as they could hold out the dream of getting to the rung above some day. Perhaps it was an idle upper class, with no where to “go” that turned to heartlessly mining the classes below by manipulating policies. People of all classes are just people and the end game was never considered with clarity and so as the middle class is destroyed we will be left with two polarized groups and a deeply diseased system that can no longer be sustained. And after things get much worse they will right themselves again , but what our world will look like then is another story.

  136. 136

    RE: Ardell DellaLoggia @ 131 – From the press release: “Quill frankly admits that sellers will lose some market exposure when they forego listing on the MLS.
    But not much. Ninety two percent of all home buyers used the internet themselves in 2014 when looking
    for the home to purchase. Quill anticipates being able to put its listings on numerous, highly trafficked
    web sites, such as Zillow, Redfin, and Realtor.com, exactly those places where buyers are searching
    today. ”

    So he’s going after the ignorant buyers who look for listings on Realtor.com, Zillow and Trulia, but have enough money to pay their own agent/attorney. That’s got to be a pretty small group of people. But that answers the question I had–where’s he expect to get the eyeballs from?

    Don’t get me wrong–I think listings should be on those three sites (and others), but I don’t think limiting yourself to those sites is a great idea.

  137. 137

    RE: Kary L. Krismer @ 133 – This is me, taking the bait, and pushing back. All in good fun, of course!

    (1) You forgot to list Redfin, Kary, and that’s an important one (you swapped it with Trulia in your list). I’ll be getting my listings up there as well. And that’s an MLS IDX feed, just like any other, except that it also shows non-MLS (soon to be known as single broker) listings. In other words, it’s the BEST place to search, you get the access to all homes for sale, both on and off the MLS. And you DON’T have to pay a cooperating commission to be listed there.

    (2) You think buyers generally don’t have a few grand to pay for professional fees incurred? Are you working mostly in far out mobile home parks, or something, where property values are extremely low? ;-) They have the funds, I know because I’ve been doing it this way for about 9 years.

    (3) Quill is not limited to anything, whether those three sites (plus Redfin!) or any other marketing channel. The only thing we are limited by is NOT being a member of the MLS. But that, in turn, allows us to charge 1/6th of what most listing agents charge. How much value does the MLS add? 6x??? No way.

    (4) I’m assuming you don’t have much work these days (other than helping folks buy trailers ;-) ) because otherwise you would know this is an historic seller’s market. The notion that, absent a listing on the MLS, buyers won’t find a house for sale, is absurd. Particularly today, where listings are readily available elsewhere. And buyers are literally scouring the city looking for a home to buy.

    Is it a “great idea” to use a single broker listing? Hey, why not give it a try? Start with Quill, and see if you can sell your home for 1% (I’m betting my future that you will!). If not, then you can go the old-fashioned cooperative broker route and shell out 3% for the buyer’s transaction costs.

  138. 138
    Blurtman says:

    RE: Andy @ 124 – Inspired writing, Andy, and well said.

  139. 139
    Erik says:

    RE: Kary L. Krismer @ 100
    Craig is calling you out on the World Wide Web!! What I heard him say is “Kary, I publicly outwit you!”

    Fight back harder than you’ve never fought before. This has gotten personal. And remember, there is no such thing as a low blow at this point. That line has been crossed.

  140. 140
    whatsmyname says:

    RE: Andy @ 124 – You think that 40-50% of the population lives on social security? You begrudge SSI payments to people who paid into it for 40 years? You think the poor have it so good, but you don’t you choose to join them?

    You think the 30 year mortgage is something new to your generation, and your youth was typified by Norman Rockwell? How young are you …75?

    What’s holding you back is 10 lbs of wet diaper. Put on some dry pants, and man up.

  141. 141

    By Craig Blackmon @ 134:

    RE: Kary L. Krismer @ 133 – This is me, taking the bait, and pushing back. All in good fun, of course!

    (1) You forgot to list Redfin, Kary, and that’s an important one (you swapped it with Trulia in your list). I’ll be getting my listings up there as well. And that’s an MLS IDX feed, just like any other, except that it also shows non-MLS (soon to be known as single broker) listings. In other words, it’s the BEST place to search, you get the access to all homes for sale, both on and off the MLS. And you DON’T have to pay a cooperating commission to be listed there.

    (2) You think buyers generally don’t have a few grand to pay for professional fees incurred? Are you working mostly in far out mobile home parks, or something, where property values are extremely low? ;-) They have the funds, I know because I’ve been doing it this way for about 9 years.

    (3) Quill is not limited to anything, whether those three sites (plus Redfin!) or any other marketing channel. The only thing we are limited by is NOT being a member of the MLS. But that, in turn, allows us to charge 1/6th of what most listing agents charge. How much value does the MLS add? 6x??? No way.

    (4) I’m assuming you don’t have much work these days (other than helping folks buy trailers ;-) ) because otherwise you would know this is an historic seller’s market.

    1. I didn’t mention Redfin because it is a broker site and has all the listings. Are you really an agent and don’t know the difference between broker sites and non-broker sites?

    2. I don’t think they would have money because buyers who look at only Realor.com, Zillow and Trulia are ignorant in that area. Being ignorant in one area suggests that they are ignorant in other areas and thus don’t make much money. But maybe they won a lottery or something.

    3. You will be limited in that you won’t show up on the broker sites (except I guess Redfin–not sure about that).

    4. As long as you’re going to resort to insults, why don’t you disclose how many listings Quill Realty has sold in the past two years? Go ahead and include the prior three letter named firm if you want to pad those numbers. I wasn’t going to go there, but as long as you’re going to be insulting . . ..

    But you’re absolutely right that your model is only one that would work in a historic seller’s market. That’s the problem with most the alternative models–they don’t work in all markets. Your WALAW Realty model being the exception.

  142. 142

    Fair enough, Kary!!

    Not many listings – no need to pad – so I decided to finally differentiate myself from the 20+k other NWMLS brokers. So now I can sell a home for 1%. Remind me, what do you charge as an NWMLS member?

    “FSBO” listings appear on Redfin. Go ahead, check it out, you’ll see. My single broker listings will occupy that same space, so they will appear on Redfin along with yours that are on the MLS. Except my clients will be paying me 1/6th as much….

  143. 143

    By Craig Blackmon @ 139:

    Fair enough, Kary!!

    Not many listings – no need to pad – so I decided to finally differentiate myself from the 20+k other NWMLS brokers. So now I can sell a home for 1%. Remind me, what do you charge as an NWMLS member?

    “FSBO” listings appear on Redfin. Go ahead, check it out, you’ll see. My single broker listings will occupy that same space, so they will appear on Redfin along with yours that are on the MLS. Except my clients will be paying me 1/6th as much….

    Good luck with that. Another agent here was charging even less and that didn’t work. And here are other things which are really cheap! ;-)

    http://liliputing.com/2015/05/super-cheap-smartphones-really-worth.html

    As to the 1/6th as much, is that going to be like the Surefeld scheme, where you let your clients know that they are likely going to have to pay a buyer’s commission? So that I don’t have to repeat myself, my posts 1, 16 and 25 in the Surefield thread are relevant to your model too!

    https://seattlebubble.com/blog/2014/11/13/surefield-expands-from-3d-tours-in-attack-on-commissions/

  144. 144
    Erik says:

    RE: Kary L. Krismer @ 138
    This has turned into a c*ck measuring contest. You nailed him good for not having a lot of listings. He was able to reveal his fees were very low which may entice some new clients though.

  145. 145
    Erik says:

    RE: Craig Blackmon @ 139
    Kary isn’t being as progressive as you. It’s difficult for me to come up with any amo for you since I’m not a realtor myself.

    He took a blow below the belt… ouch! If this was a face to face interaction, you could just ignore his mean words. The problem is that everyone in the world could view this. You need to find some dirt on Kary and shame him.

  146. 146

    RE: Erik @ 142 – OK Erik, honestly, great work today. But your shift is over. Call it a day, head on home back under the bridge, and we’ll see you tomorrow.

  147. 147

    RE: Kary L. Krismer @ 140 – Kary, c’mon, you’re not tracking. I agree, Surefield is a debatable approach, I query whether it is in the seller’s best interests (where the SOC is a nominal $2k). THAT’S WHY I AM LEAVING THE MLS.

    By leaving the MLS, I can offer an SOC of zero. So I can sell a home for 1%, period.

    Or 1/6th what you charge.

  148. 148
    Joe says:

    Let there be no confusion. The Seattle housing market is driven by investors as opposed to traditional home buyers looking for long-term residence. Housing prices should be viewed like stock prices, with big rises and dips expected.

  149. 149
    igoy says:

    Kary

    I only search via redfin. See no value in other means.
    I am not in a mobile home either.

  150. 150

    RE: Kary L. Krismer @ 140

    I require that all of my clients use Redfin links when we are speaking unless I need to show them inside photos that no longer appear on Redfin for one reason or another.

    If they are buying a flip I want them to see the inside photos before the flip remodel. Since the new Redfin and Zillow listings erased the old photos, I need to send a direct from mls link of the previous sale photos for that. But otherwise…all of my clients use Redfin alerts and links when we “talk” in email. Kim even uses it for new listing alerts. :)

    In fact it bugs me when I see the new Realtor .com ads saying they are the most accurate home search tool. SO not true here in the Seattle area. I know they are only talking about between the 3 big 3rd party sites only, though they don’t say that. Realtor .com, Trulia and Zillow. But it’s still a big fat lie to say they are the most accurate home search site, given our mls hasn’t fed to it automatically for quite some time. False Advertising.

    In this area Realtor .com is not better or more accurate than Zillow and Redfin beats everyone hands down. I will warn people however to VERIFY SCHOOLS. The schools Redfin is currently showing are not accurate in some cases for the new school year starting in September. Check the school district sites for the new changes. Even the district maps are wrong for next year. You have to search on the district site for “2015-2016” school changes. They will likely change the main map sometime during the summer.

  151. 151
    JadeIsMyStarbucksName says:

    In short, yes.

    I feel your pain, Letter Writer. My spouse and I just lost out on a house in Queen Anne. ~2000 sq ft, 4 bed, 1.75 bath, listed at $820,000. We offered $900,000 with a $20,000 escalator up to $952,000. Winning bid was all cash and above our max.

    We’re both working professionals in our early 30s, making a combined income of ~$250k per year, which I thought was doing pretty well all things considered. I guess not?

  152. 152
    boater says:

    If you’re on Redfin you’re on the only MLS that most of the buyers out there care about. I can’t think of a single person I know who doesn’t use that as their primary search tool for residential real estate.

    It’s not that different from just finding a buyers agent who’ll work for a fixed fee and kick back to you the rest of their commission. They’re out there but you get what you pay for. Someone who pushes papers for you and shows up on closing day and that’s about it.

    Oh and for those of you looking for residential homes you might try searching on some of the commercial MLS’s for properties that are in fact single family homes but are marketed on commercial sites only due to them being rentals. It doesn’t happen a lot but some folks slip up and have commercial agents who only list on the commercial MLS’s. Sure you’ll probably have to either kick out some tenants or wait out a lease but that’s life.

  153. 153

    By igoy @ 149:

    Kary

    I only search via redfin. See no value in other means.
    I am not in a mobile home either.

    ?????

    I think you need to go back and re-read. I said nothing bad about Refin’s site, and it was Craig that was mentioning mobile homes. Redfin has one of the top 3-4 sites in the Seattle area.

    What Craig is doing is really the flip side of what some agents do that drives me nuts. They don’t want to list their listings on Trulia, Zillow or Realtor.com because they think it impacts their leads, basically putting their own interests ahead of their clients’ interests. Craig isn’t necessarily doing that, but it leads to the same issue.

    If you are a buyer, Zillow, Trulia and Realtor.com are horrible places to look, but if you are a seller you want your listing there because you cannot control where buyers look and you want as many buyers to see your listing as possible. Craig’s system will leave his clients’ listings off of the broker sites (except apparently Redfin). So his clients’ listings will not get as great of exposure.

    And citing that 92% of buyers use the Internet does not solve that problem. First, that’s nonsense, because buyers who have agents send them listings via email or their firm’s website are using the Internet. But even if it really were only 8% of buyers who you would miss out on, that’s way too many. I left a firm once because their listings weren’t getting to Realtor.com (pre-Postlets).

    And BTW, I think it’s Trulia that already accepts FSBO listings, and there’s a Postlets like service which bypasses Zillow’s exclusion of FSBO listings (and possible also posts to Redfin–not sure). So I’d ask Craig what are the clients really getting for that 1%?

  154. 154

    By Ardell DellaLoggia @ 150:

    RE: Kary L. Krismer @ 140

    I require that all of my clients use Redfin links when we are speaking unless I need to show them inside photos that no longer appear on Redfin for one reason or another. .

    Okay, I need to go back and look to see if I accidentally typed Redfin.com rather than Realtor.com. I have nothing against Redfin.com, and mention it as one of 3-4 broker sites for consumers to search. And back when I was with KW I didn’t mention its site, because its tech was horrible. So I was sort of in your same boat back then–having to recommend other brokerages’ sites.

    But I don’t agree Redfin is the best for all users. Each broker site has some advantages over the others, but even the worst broker site is better than Zillow, Trulia or Realtor.com.

  155. 155

    By boater @ 152:

    Oh and for those of you looking for residential homes you might try searching on some of the commercial MLS’s for properties that are in fact single family homes but are marketed on commercial sites only due to them being rentals. It doesn’t happen a lot but some folks slip up and have commercial agents who only list on the commercial MLS’s. Sure you’ll probably have to either kick out some tenants or wait out a lease but that’s life.

    I would guess that’s due to zoning, and the sellers are probably looking for a higher price because of that. But in some areas that might not be such a bad price (but it probably would be a busier street, and settling for what you buy because of a strong seller’s market is a huge mistake).

  156. 156

    By Craig Blackmon @ 147:I really wish you would quit claiming all agents charge 6%. I’ve been ignoring it in prior posts, but when you just leave it hanging there like you did in this post and repeating the claim it’s really troublesome. Making such statements repeatedly really makes me wonder.

    I’ve not focused on your commission structure at all, or even mentioned it except to ask if you’re following the same deceptive approach as Surefeld, which by their own words apparently involves setting a SOC but letting people know it can be circumvented. I’m focusing on what will be the inferior marketing of your listings.

    I could focus on other inferior aspects of your new scheme, such as not being able to fasten a Supra lockbox to the client’s doorknob, or to assuming you can still use Supra lockboxes that you won’t be able to set the operation times to what the client asks. And you won’t be able to see which agents have used the lockbox, assuming you can continue to use them.

    Or how you’re going to deal with buyer’s agents probably not having to follow any of the rules of the NWMLS. You set showing terms–buyers’ agents can ignore them. You want offers presented through you–they can ignore that, leaving your client completely out in the cold. And you better tell your clients to add their phone number to the Do Not Call List, because there is nothing that would stop agents from calling your clients trying to solicit your listing after expiration.

  157. 157
    Saffy The Pook says:

    By Kary L. Krismer @ 153:

    If you are a buyer, Zillow, Trulia and Realtor.com are horrible places to look, but if you are a seller you want your listing there because you cannot control where buyers look and you want as many buyers to see your listing as possible. Craig’s system will leave his clients’ listings off of the broker sites (except apparently Redfin). So his clients’ listings will not get as great of exposure.

    Yes, but if enough potential clients are willing to trade reduced exposure for a 5% greater effective sale price then he’s got a business. This is not a disservice to the clients, they’ll go in fully aware of the tradeoff and I think it can work if he markets his services broadly and well. The current market conditions will give this business model a tailwind as it gets off the ground and, assuming he can get critical mass by the time the market turns, the extra 5% will be compelling in a soft market too. It’s smart and I’d take advantage of it myself if I didn’t plan to be carried out of my current residence.

  158. 158

    RE: Kary L. Krismer @ 156 – I didn’t say “all agents.” I said you. Do you charge 6%? What do you charge usually? What’s the least you would charge to list on the NWMLS?

    I know the answer to that last one, based on your prior comments that the SOC system works just fine for sellers: 3% + some fee for you. I will charge 1%. A dramatic savings. Over you and every other NWMLS member broker.

    Yes, there are many challenges ahead, you identify just a few. But they are all manageable. Tours via my office. Negotiation of any commission to be paid, so buyer can finance the fee. I am 100% certain all of these problems are surmountable.

    Thank you Kary for the conversation!

  159. 159

    By Craig Blackmon @ 158:

    RE: Kary L. Krismer @ 156 – I didn’t say “all agents.” I said you. Do you charge 6%? What do you charge usually? What’s the least you would charge to list on the NWMLS?

    Wow, I asked if you were an agent before, but now I’m going to ask if you’re really an attorney! You want to discuss with me what I charge my clients? I am not going to enter into any such discussions with anybody, anywhere, the exception being clients and potential clients. Did they not teach anti-trust law where you went to law school?

  160. 160

    As the Bible Says in Proverbs

    “The Haughty Man Goeth Before the Fall”

    All you folks that think its special to brag about how you’re spending $1M on a $100-200K Seattle shack….and multiple bids too. Remember your health, jobs and career dead ends aren’t controlled by you. They’re controlled by billionaires that would love to half your pay….LOL….

  161. 161

    By Saffy The Pook @ 157:

    By Kary L. Krismer @ 153:

    If you are a buyer, Zillow, Trulia and Realtor.com are horrible places to look, but if you are a seller you want your listing there because you cannot control where buyers look and you want as many buyers to see your listing as possible. Craig’s system will leave his clients’ listings off of the broker sites (except apparently Redfin). So his clients’ listings will not get as great of exposure.

    Yes, but if enough potential clients are willing to trade reduced exposure for a 5% greater effective sale price then he’s got a business. This is not a disservice to the clients, they’ll go in fully aware of the tradeoff and I think it can work if he markets his services broadly and well.

    Well first, you’re assuming the buyer isn’t going to ask for their fees to be paid, or if not, that they aren’t going to expect to split the difference with the seller. The “5%” that Craig keeps mentioning is nothing more than marketing spin, and IMHO deceptive marketing spin. There is nothing that will prevent any buyer from coming in and asking for any commission to be paid, and with their financing, that might be necessary for many buyers.

    And second, as long as we’re focusing on seller costs, a FSBO seller might be better advised to do their own FSBO listing, getting it on the third party sites and Redfin, and then hiring another real estate attorney on an hourly basis. This is sort of the opposite of WALAW’s model, which cherry picked the high end buyers. This model only makes sense for the low end properties.

    And speaking of WALAW, I want to take back what I said above. While I do think it was one of the best alternative models, I don’t think that works well in all markets, because it doesn’t necessarily work that well in a super hot seller’s market where there are multiple offers. This is a tough market for any system which focuses on buyers.

  162. 162

    RE: Kary L. Krismer @ 159 – Did I mention I was withdrawing from the MLS? Thus, I am relieved of ALL of its shackles, including the ban on any discussion of commissions. Since I’m out of the monopoly, I don’t have to abide by the anti-trust restrictions imposed upon it.

    So we’ll leave it: Craig charges 1% to sell your home; Kary charges something he can’t say (but we know it is north of 3% because he thinks a buyer’s agent should be paid as much, and very likely 6% because that is the most common total fee for agents like him – but he can’t say). I’ll take that value proposition, and run with it.

  163. 163

    By Craig Blackmon @ 162:

    RE: Kary L. Krismer @ 159 – Did I mention I was withdrawing from the MLS? Thus, I am relieved of ALL of its shackles, including the ban on any discussion of commissions. Since I’m out of the monopoly, I don’t have to abide by the anti-trust restrictions imposed upon it. .

    Wow, that IMHO is extremely ignorant. Not being a member of the NWMLS doesn’t relieve you of anti-trust law, unless maybe your business is professional baseball (virtually the only business exempted from anti-trust law). And in any case you were asking me to discuss it, so your explanation makes zero sense. That you even said such a thing makes my value proposition advanced make even more sense–use another real estate attorney!

    But hey, why don’t you address the other impacts of not being a member of the NWMLS, raised in post 156?

  164. 164
    Erik says:

    RE: Craig Blackmon @ 146
    I started coming here to learn more about real estate in my dreams to be a real estate mogul one day. I got addicted to the drama and I’m here for a good time now. My job is to design and analyze stress all day. I do like it, but you real estate people are fun. That is why I’m pitting you two lawyers against one another in a head to head battle.

    Are you ready Craig? Are you ready Kary? Fight!!!

  165. 165

    RE: Erik @ 164 – Erik, I’m not kidding when I say this: Thank you.

  166. 166
    Erik says:

    RE: Craig Blackmon @ 162
    That was a good one. 1%>3%. This is something we can all understand.

    Since Kary wouldn’t divulge his information, you assumed the normal fee or possibly higher. Fair assumption.

  167. 167

    Kary, you need to buy the book sitting on my desk titled “Thank You For Arguing”. In fact I would be happy to lend it to you. You can borrow the book too Craig, but I’m sure you already know what the book says and possibly already have your own copy. :)

    As to the anti-trust issue, come June 1 I will have been in this business for 25 years. In all that time there have only been 2 major “cases” involving the real estate industry vs ancillary ramifications on brokerages from individual transaction suits. Both were about anti-trust law. NEITHER was about commissions. BOTH were largely about what Kary is doing here to Craig. (see below)

    1) Kary, One day you wake up and smell the coffee, or throw up all the kool-aid, and realize that the pounding into your head by brokerages to never discuss commissions due to anti-trust issues is really the way they have managed to keep the commissions high all these many years. In theory, and the spin they put on it, is to protect the consumer from brokerages colluding to raise commissions. But the net result has been to keep commissions high, and pretty much the same, for decades. Time to look at the net result vs the rhetoric.

    2) The two major cases regarding brokerages and anti-trust have been against an mls and/or a group of mls member brokerages for trying to block, boycott or otherwise undermine the attempts of new brokerages and new business models attempting to enter the market place. One of the cases looks like, and probably is, many cases by now including the counter suits and appeals. But I call it one big cat fight that started back in 1993 and as of 2014 was still running in more countersuits or additional suits and appeals. Kind of like War of the Roses at that point with everyone still “working together” while constantly suing each other over one thing or another.

    All that based on one company claiming “that it would turn antitrust law on its head to use it to compel one company to license its intellectual property to its competitors.” and ““cut off access to information that is critical to any business attempting to compete with them,” and dominated the “market and information regarding home listings,” to preserve the extant business model…” Referring to Kary’s comments here and the other main principle which would be Craig’s fair warning to be careful of this “Plaintiffs alleged x failed to adequately disclose the consequence of dual agency to consumers, including that buyers could become privy to confidential information passed on by the seller’s agents.”

    Kary…there is only one way to treat news of a new and different business model. “It’s so wonderful to see someone trying something new. Best of luck to you and do let us know if there is any way we can be of assistance at any time. I’m always here for you.” Write that on the blackboard 100 times.

    Craig…the more current case(s) hinge on the words “adequately disclose” not only the principle of dual agency but the consequences of dual agency. This is not about what you tell people and get them to sign as to disclosures claiming it really isn’t dual agency. But rather whether or not they were capable of fully comprehending the consequence, or was their agreement to not have an agent clouded by the fact that it was the only way for them to get the house they wanted, using your new model.

    Are you backing them into a corner saying do you want the house OR do you want fair and equal representation? You might want to record those conversations vs doing the lawyer thing of sign, sign and sign again. A recorded conversation is really the only way to prove they fully and completely understood what they were giving up in or order to get the house.

    Back to work for me…but it’s fun to see something new going on! :) Best of luck, Craig!

  168. 168

    RE: Ardell DellaLoggia @ 167 – Ardell, as is typical, you don’t have a clue about legal issues. Surprising though that Craig doesn’t either.

    But hey, if Craig won’t address the shortcomings I see in his model (e.g post 156 and others) perhaps you can address them.

    1. Do you think it’s a good thing for sellers to limit who sees listings? (either agents on listing on Z, T or Realtor.com or Craig’s listings not showing up on most brokerage sites).

    2. Do you think it’s deceitful for Craig to claim such savings when many/most buyers are still going to ask for their commissions to be paid, and when using Craig’s model there is no limitation at all on their doing so?

    3. Do you think it a good thing for consumers to avoid the safety benefits of a lockbox?

    I like some alternative models, but when they are BS I will call out the BS, and this model is BS. It only works in one type of market, and it does so in a way that is typically going to be very expensive (getting attorney representation for 1% of the sales price). In contrast, I’ve said good things about other alternative models (e.g. WALAW and Rebate).

  169. 169

    RE: Kary L. Krismer @ 168

    First list all of the shortcomings of your model because, well, of course all have shortcomings. Then we can maybe address, or not, the shortcomings of others.

    Do you really think your model has no shortcomings?

  170. 170
    Erik says:

    RE: Kary L. Krismer @ 168
    Thank you for answering the call and keeping this thing fun.

    Here is what I see as a reader… It may be effective if you did a side by side comparison why you are the best. This is not for me in particular, but rather potential clients. We all think you know law well and you are sharp. What are some other reasons you are the best choice if a reader was buying or selling real estate? A consumer can choose whatever agent they want. What separates you from your competition? How has your knowledge of law helped your clients save money?

  171. 171

    By Ardell DellaLoggia @ 169:

    RE: Kary L. Krismer @ 168

    First list all of the shortcomings of your model because, well, of course all have shortcomings. Then we can maybe address, or not, the shortcomings of others.

    Do you really think your model has no shortcomings?

    My point is that by trying to avoid a single NWMLS rule (no zero percent SOC listings), Craig is throwing the baby out with the bathwater and creating all sorts of problems for his future clients. Don’t you consider having a client inundated by sales calls from agents wanting the listing (unless the seller is on the DNC list) to be a significant problem? Don’t you consider agents being able to present offers directly to the seller, without any notice at all to their agent, to be a serious problem? Don’t you consider not being able to fully utilize Supra lock boxes to be a serious problem? So far Craig has remained silent on all of these issues. Maybe he has answers, or maybe he hadn’t even thought of these issues until I raised them. Right now it’s looking like the latter.

    And here’s another issue. How are people going to contact the seller for a showing? By putting their phone number in an ad on the Internet? Or is Craig going to be the point of contact for scheduling all showings (assuming agents don’t just show up at the door)? The latter would be far preferable to posting personal phone numbers on the Internet, but I doubt that’s his plan.

    The point is I think his plan has a ton of shortcomings, and he’s failing to address a single one. Instead he just keeps repeating his extremely questionable claim that his scheme will save sellers 5%.

    On the showing topic, apparently in other parts of the country there are third party services that serve as the point of contact between buyers’ agents and sellers to schedule showings. I wish the NWMLS would consider at least offering that as an option. It would beat the hell out of some listing that says: “Vacant, MLS Keybox, Appointment Only, See Remarks” and then there’s nothing in the remarks about showings.

  172. 172

    By Erik @ 170:

    RE: Kary L. Krismer @ 168 – Here is what I see as a reader… It may be effective if you did a side by side comparison why you are the best.

    Thanks for the invitation, but I’ll pass. I don’t post here to promote myself, just to clear up misconceptions or make observations.

  173. 173
    John Wake says:

    Regarding, “Don’t you consider having a client inundated by sales calls from agents wanting the listing (unless the seller is on the DNC list) to be a significant problem?”

    If they make it clear on Zillow, etc. that the seller is represented by an exclusive agent, I believe it would be unethical for agents to call the seller directly.
    =============
    Code of Ethics and Standards of Practice
    National Association of Realtors

    Article 16

    REALTORS® shall not engage in any
    practice or take any action inconsistent
    with exclusive representation or exclusive
    brokerage relationship agreements that
    other REALTORS® have with clients.
    ==============

  174. 174

    I don’t think you’re getting the full picture, Kary. It’s a brokerage that shows and sells their own listings. Many brokerages still operate that way in many parts of the Country. It’s the way all real estate was sold for decades and decades.

    The reason it may make more sense now than then is because of the internet. But more real estate has been sold Craig’s way over the last Century than the real estate agent world you are currently familiar with. I am in the biz long enough to remember it well. I’ve done it…I’ve done the work around if I have a buyer that wants one of Craig’s listings. It’s pretty simple really.

    Don’t be so aghast. Remember that originally the offer of cooperation by a brokerage was ONLY if they needed the help! If they didn’t, they sold it themselves. The history of real estate is as Craig is going to do it…and it is still done that way in close knit areas like NYC and most major cities. They won’t use lock boxes. You have to pick up keys at their office. :) Mostly to discourage you from selling their inventory.

    You need to get out more. :)

  175. 175
    Erik says:

    RE: Kary L. Krismer @ 172
    Suit yourself. I would totally read these comments and select you or Craig to represent me if Ardell wasn’t the best agent in the world.

    I guess it all depends what you want. You either want a lawyer just in case or you want an artist to get you top dollar.

  176. 176
    boater says:

    By John Wake @ 173:

    Regarding, “Don’t you consider having a client inundated by sales calls from agents wanting the listing (unless the seller is on the DNC list) to be a significant problem?”

    If they make it clear on Zillow, etc. that the seller is represented by an exclusive agent, I believe it would be unethical for agents to call the seller directly.
    =============
    Code of Ethics and Standards of Practice
    National Association of Realtors

    Article 16

    REALTORS® shall not engage in any
    practice or take any action inconsistent
    with exclusive representation or exclusive
    brokerage relationship agreements that
    other REALTORS® have with clients.
    ==============

    Well let’s be clear realtors in this current market are ignoring that dnc list. I’ve been called by several repeatedly.

  177. 177

    By John Wake @ 173:

    Regarding, “Don’t you consider having a client inundated by sales calls from agents wanting the listing (unless the seller is on the DNC list) to be a significant problem?”

    If they make it clear on Zillow, etc. that the seller is represented by an exclusive agent, I believe it would be unethical for agents to call the seller directly.
    =============
    Code of Ethics and Standards of Practice
    National Association of Realtors

    Article 16

    REALTORS® shall not engage in any
    practice or take any action inconsistent
    with exclusive representation or exclusive
    brokerage relationship agreements that
    other REALTORS® have with clients.
    ==============

    If you go to my post 156, I said make contact to get the listing “after expiration.” Simple state law would prevent them from trying to get the listing cancelled, because that would be an interference with Craig’s contract. The difference is, the NWMLS rule keeps agents from contacting sellers while the listing is still active, even to get a new listing after the expiration date. So what I was suggesting would not violate the Realtor rule (even ignoring the fact that agents would have no prior knowledge that Craig had an exclusive listing agreement, because they wouldn’t know what his agreement with them was since it would be his own form).

    But I’m glad you raise that point, because the NAR rules have been in the back of my head. It wouldn’t have surprised me that Craig might have pointed to some NAR rule that covers something that the NWMLS rules cover. But even if he did, those rules only apply to Realtors, so there would still be issues.

    There are basically two or three sets of rules agents have to abide by. Everyone has to abide by the Department of Licensing rules, and until Craig’s latest scheme I thought everyone had to abide by the NWMLS rules. The former tend to be rules that prevent harm to consumers and the latter tend to be rules that keep agents from annoying consumers and other agents. Left to their own devices, agents will come up with a lot of practices that are annoying. I’ve only scratched the surface with some of my suggestions of annoying practices agents might do because with Craig’s listings they can.

    NAR rules only apply to members of the Realtor entities (locally NAR, WA and SKCAR), and tend to be ethical rules.

  178. 178

    By boater @ 176:

    By John Wake @ 173:

    Regarding, “Don’t you consider having a client inundated by sales calls from agents wanting the listing (unless the seller is on the DNC list) to be a significant problem?”

    If they make it clear on Zillow, etc. that the seller is represented by an exclusive agent, I believe it would be unethical for agents to call the seller directly.
    =============
    Code of Ethics and Standards of Practice
    National Association of Realtors

    Article 16

    REALTORS® shall not engage in any
    practice or take any action inconsistent
    with exclusive representation or exclusive
    brokerage relationship agreements that
    other REALTORS® have with clients.
    ==============

    Well let’s be clear realtors in this current market are ignoring that dnc list. I’ve been called by several repeatedly.

    While your listing was still active, or after it expired? There’s nothing that keeps an agent from calling after it is expired (assuming your prior agent too no action to protect you from such calls). And many agents do make such calls to expired listings routinely on a daily basis. It’s one of the annoying practices I mentioned in the prior post, but after expiration no rule against it. They are supposed to check to make sure there’s no new active listing prior to making each call, and can be fined for not doing so. At a minimum you should probably call the agent’s designated broker if you get such a call in violation of the rule.

    There’s also the Do Not Call List, which they should follow even if the prior agent doesn’t take action to protect their client in advance. That’s good to be on for other reasons, but as I recall there’s a lag time before it goes into effect. So if you haven’t done it well before your listing expires it probably won’t help.

  179. 179
    Deerhawke says:

    I am reminded here of evolutionary biology as taught by Steven Jay Gould. You can have stability in an environment that lasts for long, long periods of time. And then there is a sudden change that pushes things to the tipping point and you get tremendous change and evolutionary experimentation in a very short period of time. It is a model called punctuated equilibrium.

    It strikes me that the rise of the internet in general (and Redfin in particular) is causing a lot of evolutionary experimentation with business models for buying and selling real estate.

  180. 180

    RE: Deerhawke @ 179 – Insightful stuff. And why I am so excited about Quill’s evolution.

  181. 181
    Deerhawke says:

    The internet is clearly causing the same kinds of havoc in real estate that it did with online brokerages in the 90’s. Remember that at one point in time, people would pay an absurd amount of money to a stockbroker to simply buy or sell a stock– and it was a time consuming process to boot.

    People who are selling a house focus on the fact that they are losing about 8% of their hard earned equity right off the top (3% listing broker, 3% selling broker, 2% for excise, title and escrow). That is pretty hard to take given the fact that they were the ones who took the investment risk, funded the remodels and took care of the honey-do list on weekends.

    It is natural that they will want to cut their outlay. The problem though is that FSBO has never been easy. And any model that looks like an Assisted FSBO is going to have a lot of the same problems and transaction costs. Lots of appointments, lots of showings, lots of people interested but a fair number of flakes in the mix who are really not serious buyers. And then you get the seller’s “friends” who are actually agents and though you warned them several times that there is no commission on offer, they present a commission agreement as part of the purchase and sale. And somehow you also find out that most agents are telling their sellers that they think your FSBO is already pending.

    Good luck, Craig. Always glad to see someone challenge the existing business model, especially when it is in such need of a challenge.

  182. 182

    By Deerhawke @ 181:

    The internet is clearly causing the same kinds of havoc in real estate that it did with online brokerages in the 90’s. Remember that at one point in time, people would pay an absurd amount of money to a stockbroker to simply buy or sell a stock– and it was a time consuming process to boot.

    . . .
    It is natural that they will want to cut their outlay. The problem though is that FSBO has never been easy. And any model that looks like an Assisted FSBO is going to have a lot of the same problems and transaction costs. . . . . And somehow you also find out that most agents are telling their sellers that they think your FSBO is already pending.

    Buying a house is in no way similar to buying a fungible product like stock, once you select the house or stock. That’s an even worse analogy than the travel agent analogy.

    As to your last point, that would be a licensing violation for the agent (violating the “honesty and good faith” duty), but there would be zero duty to inform a buyer client of Craig’s listings in the unlikely event that they learned of it. RCW 18.86.050(1)(e). That’s another huge difference in Craig’s model.

    http://app.leg.wa.gov/rcw/default.aspx?cite=18.86.050

  183. 183
    teh says:

    Disagree with the premise that cash buyers are the problem. Most sales are not cash buyers. The boom is caused by Fed keeping interest rates low. People can borrow a half million at 3.5% with monthly payments of just $2300.
    Also disagree with Tim thinking it can’t end badly this time.

  184. 184
    Not buying it says:

    RE: Mr.Chang @ 70 – the problem is actually with the unrealistic expectations of the seller. Costs in real estate are simply shifted down the line to the next set of transactions. The extra 100 – 150k the seller got holding out so an investor or foreigner could by with cash just means their buying power is reduced, not that they’ll be upwardly mobile in the housing market. They will likely be able to afford a lesser home than the one they just sold. And as each neighborhood blows up, so the prices of comparable housing in further out neighborhoods blow up. I’m all for YOY gains in property prices, but at a realistic level. So sell to people who live/work in the city and deal with financing, just like the people who sold to you did. In the end the city will be better off for it. No one wants a rental desert of vacant houses like they have in Vancouver.

  185. 185
    Deerhawke says:

    Kary, I agree with you that buying a house is a lot more complicated than buying a stock. But let’s remember that when the discount brokerages started up, traditional brokerages jumped up and down and told anyone who would listen that they performed a valuable role in analyzing and vetting and selecting and… well, anyway that is the way it had always been and by golly, they deserved their commission.

    Let’s face it. It is now a do-it-yourself world.

    I remember doing an internship in the mid-80s at a prominent bank on Wall Street. I was told to write a report and asked where the computer was. They looked at me like I was insane and instead handed me a calculator and a stack of yellow legal pads. Then they showed me the window for the typing pool where there were 25 women typing away like mad on Selectrics.

    In a few years, we may look back on the way we sell real estate now the way that I looked at that typing pool. I guess it met somebody’s needs at some point. But in the age of computer and internet technology, what an extraordinarily expensive anachronism!

    I think that FSBO and assisted FSBO business models have a ton of problems. But sooner rather than later, we will see a much more segmented market that is served in a lot of different ways with a lot of different pricing strategies.

  186. 186
    John Wake says:

    RE: Deerhawke @ 179 – Thanks! http://en.wikipedia.org/wiki/Punctuated_equilibrium. Systems don’t evolve gradually. Environmental pressure can cause a system to collapse “quickly.”

    We certainly saw that with newspapers. People constantly talked about the threat from the internet but newspapers generally ignored it because they were making big money. Their highest revenue in history was in 2005. ‘We’re not afraid of the internet, we have record advertising revenues.’ But revenues tanked in 2007 and 2008, and today total U.S. newspaper print advertising revenue is less than half of what it was at the peak 10 years ago.

  187. 187

    By Deerhawke @ 185:

    Kary, I agree with you that buying a house is a lot more complicated than buying a stock. But let’s remember that when the discount brokerages started up, traditional brokerages jumped up and down and told anyone who would listen that they performed a valuable role in analyzing and vetting and selecting and… well, anyway that is the way it had always been and by golly, they deserved their commission.

    Let’s face it. It is now a do-it-yourself world.

    I remember doing an internship in the mid-80s at a prominent bank on Wall Street. I was told to write a report and asked where the computer was. They looked at me like I was insane and instead handed me a calculator and a stack of yellow legal pads. Then they showed me the window for the typing pool where there were 25 women typing away like mad on Selectrics. .

    Yes, but the stock brokerages were simply telling their clients to buy what they were selling. ;-) But seriously, most their advice even ignoring that was little better than real estate agents who try to predict the future. If that’s all there was to real estate brokerage services I would agree with you.

    As to your second point, it reminds me of when I moved from a small technologically advanced law firm to a large backward firm. At the old firm we had a networked word-processing system (remember Wang?), and many of the attorneys, including myself had notebooks. The large firm had secretaries with memory writers, but they did have a small word-processing section. It was really taking several steps backward in time.

  188. 188
    Deerhawke says:

    As a builder, I am exposed to a range of different real estate agents. The dirty secret of spec building is that “you need to dance with the one who brung ya.” In other words, whoever brings you the land gets the listbacks, usually at a full 3% listing fee. (Yes, Kary, I am sure that some MLS rule or another prohibits this. I am also sure that this is irrelevant in the real world I inhabit.)

    I have therefore had a chance to see some of the best agents in the business. I have certainly seen some of the most talentless, money-motivated ones.

    On that basis, I am pretty sure that the 55-year-old full service agent who is a great negotiator, really knows real estate law and shows up at 5:30 am on the morning of an open house with a broom and tool-belt will still be in business until he retires.

    I am also pretty sure that the cut-throat dirt guy who would definitely get his fill of coffee in the world of Glengarry-Glen Ross will still be doing deals and skating one step ahead of the MLS ethics board slowpokes.

    The internet is going to make it harder for those in between, those in the middle, to make a living. The last quarter century has been all about the disappearing middle. We are losing our middle class nationally and of course locally (that is what started this thread). We have lost the middle market in retailing as Costco took over one side and Nieman Marcus took over the other. We have lost a lot of our middle-sized manufacturers as they were nibbled by nimble startups on one side and bludgeoned by global behemoths on the other. The middle is being hollowed out in so many areas of our economy.

    So if you are that agent with an associate’s degree who has to get help writing marketing remarks, you have to wonder why anyone would pay you 3% to list their property. Enthusiasm is not enough when there are flat-fee brokerages that will do it for so much less. And some of these companies like WaLaw will get you a real estate agent who is a lawyer to draft or review your paperwork. Maybe it is a bit of a gimmick, but that strikes me as a compelling new business plan. There are bound to be others on the way given the amounts of money involved.

  189. 189

    By Deerhawke @ 188:

    As a builder, I am exposed to a range of different real estate agents. The dirty secret of spec building is that “you need to dance with the one who brung ya.” In other words, whoever brings you the land gets the listbacks, usually at a full 3% listing fee. (Yes, Kary, I am sure that some MLS rule or another prohibits this. I am also sure that this is irrelevant in the real world I inhabit.)

    . . .

    So if you are that agent with an associate’s degree who has to get help writing marketing remarks, you have to wonder why anyone would pay you 3% to list their property. Enthusiasm is not enough when there are flat-fee brokerages that will do it for so much less. And some of these companies like WaLaw will get you a real estate agent who is a lawyer to draft or review your paperwork. Maybe it is a bit of a gimmick, but that strikes me as a compelling new business plan. There are bound to be others on the way given the amounts of money involved.

    There would be no NWMLS rule against that, but I’m not sure it’s enforceable under state law. Finding that out would require paying someone attorney fees, and yes I do recall an attorney asking a question about that sort of thing in the past year or so. I don’t recall if the discussion went further.

    And I would agree that WaLaw was a compelling idea, but it is also one that works best in the market environment it was created–one where it’s relatively easy to represent buyers. Craig’s new model, to the extent it works at all, only works well in this market where it’s easy to represent sellers. Redfin’s model tends to work okay in either market, or balanced markets, but I have noticed they seem to have a hard time transitioning focus from one to the other. Note for a long time you hardly saw any Redfin signs–that’s because they were focusing on buyers. Nothing wrong with that–it was a smart business move.

  190. 190

    RE: Deerhawke @ 188

    “The dirty secret of spec building is that “you need to dance with the one who brung ya.” In other words, whoever brings you the land gets the listbacks, usually at a full 3% listing fee.”

    It’s not a secret and it’s true in most places around the Country where tear downs are common. Usually the reason is the builder needs scouts to find the tear down lots or sub-dividable lots. The agent who finds the lot and helps the builder buy it, usually forfeits the commission on the purchase of the tear down lot to keep the builders costs down. In exchange the builder agrees to list the newly built house with that agent.

    Not always 3% on the new listing side. Depends how active the builder is and if it is a single home built on that lot or 4 to 8 townhomes. The forfeited commission on the front end is actually deferred and included with the commission on the back end. So if you add the price of the first transaction to the price of the second transaction, and calculate the commission on the total, the commission is much less than the single transaction it is coming from.

    Do you pay the lot finder at the time he finds and you buy that lot and then again after the new home on it is sold?

  191. 191
    Deerhawke says:

    Ardell, to answer your question, it depends on the economy and the agent.

    In 2010 it was common that the agent got paid 3% on the front end by the seller and 3% on the listbacks by the builder. Right now, I would say the average is 1% on the front end from the seller and 3% on the back end from the builder. I have one deal now where I am paying the agent a 2% commission on the front end (nothing from the seller) and promising him 2% on the back end.

    I would say the average over time is that the “dirt guy” gets paid 1.5% on the sale of the tear-down by the seller and 3% on the new construction by the builder. If you are not paying 3% on the back end (the new construction) your telephone soon stops ringing.

    So with respect Ardell, I don’t think you understand the math here–at least the way it works in Seattle. There is no forfeiting going on. This is not about agent altruism toward the builder. The dirt game is in fact about double dipping. Getting paid not once but twice.

    Scenario 1– An agent sells a tear-down on a SF 5000 lot to a builder for $450K and gets 1.5% from the seller plus then getting paid the full 3% on the listback of the new $1.25 million SF home.

    Scenario 2 — An agent sells a tear down in an LR zone to a builder for $700K and gets 1.25% from the seller plus the full 3% on the listback of 4 new townhomes at $600K each.

    These are real recent examples that are representative of the model. Do the math and you will see why there is such competition for dirt deals.

  192. 192
    redmondjp says:

    RE: Deerhawke @ 191 – Thank you very much for these real-world examples (that, let’s face it, very few if any real estate agents want people to know about). It perfectly illustrates why there has been constant, pestering interest in the (lived-in) teardowns in my neighborhood. I just got asked again, this time by my Russian neighbor, if I owned the field behind my house (because I was mowing it, for my other neighbor who owns it) because he has ‘investors’ who would love to buy it.

    In contrast, another teardown in my neighborhood was sold directly to a developer (no RE agents involved) – the owner made one phone call and that was it (except for the paperwork of course).

  193. 193

    By redmondjp @ 192:

    RE: Deerhawke @ 191 – Thank you very much for these real-world examples (that, let’s face it, very few if any real estate agents want people to know about). . . .

    In contrast, another teardown in my neighborhood was sold directly to a developer (no RE agents involved) – the owner made one phone call and that was it (except for the paperwork of course).

    Why do you think agents would care that people know about that sort of arrangement?

    Your last paragraph sounds like a situation ripe for abuse of the seller. They probably don’t have a clue what their property is really worth, at least compared to the developer. It’s probably how some developers get some really good deals on dirt.

  194. 194

    RE: Kary L. Krismer @ 193 – You realize you just answered your own question, right?

  195. 195

    RE: Craig Blackmon @ 194 – So addressing one different situation involving no agents answers a question about another situation that involves agents?

    Ironic that you can read so much into my answers, but not answer any of my questions. I realize my criticism of your scheme and the marketing thereof has been somewhat difficult for you, but to not make a single attempt to refute a single thing I’ve said is rather telling. Some people would call it an admission by silence.

  196. 196

    RE: Deerhawke @ 191

    You are missing that this is not a double pop, but a triple header. It only looks like 2 to you for your side, but there is usually not a different agent on the seller side of the first sale.

    The dirt guy finds a tear down and convinces the seller to sell – 3%. Then he matches the seller with a buyer (you) – add 3%. Then he sells the same or new place for that buyer now seller (you) – 3% = total 9% – triple header. (dirt used to be 10% (both sides combined) btw and still is where dirt is cheap, but usually for vacant unimproved land vs tear downs). If he also gets the buyer for the new house, then that’s a home run. Add another 3% to the four person set up of 2 sellers and 2 buyers. You are only 2 of the 4 parties in interest, and that is why you see it as a “double dip”. But a double dip is a buyer and a seller on the same transaction, which is the tear down purchase only. Used to be more common before buyer agency.

    So the forfeit is on one of the two sides or more of the first sale, which is in and of itself a double dip transaction where the dirt guy is usually running both the sell and buy side on his own.

    You said, “I would say the average over time is that the “dirt guy” gets paid 1.5% on the sale of the tear-down by the seller”. What you are actually saying is he is dropping the finding a seller (list) fee down to 1.5% and forfeiting the buy side commission. (see math below)

    The math of it is usually the tear down price is 1/3 the final product price. $300,000 tear down = a $900,000 new home sale.

    – List a $300,000 get $9,000 (your math dropped that to $4,500 for the pocket listing from the seller)

    – Help a buyer buy a $300,000 get $9,000 (your math dropped that to zero from buyer-forfeit)

    – Help that buyer sell it for $900,000 get $27,000 (your new math puts that at $18,000 list fee plus $9,000 so that the dirt guy continues to give you first option on his pocket listings.)

    – Help a new buyer buy it from that seller get $27,000 (If another agent brings the buyer you would usually pay that other agent $27,000. If your own dirt guy sells your newly built home to an unrepresented buyer, he probably offers the discount to the buyer to close the deal vs to you these days, unless you already knocked that down and over to your side when it was listed.)

    So on the triple header we were talking about, the dirt guy does both sides of the tear down and one seller side of the newly built house and gets $4,500 + $27,000 vs $9,000 + $9000 + $27,000. $31,500 for “3 sides” vs $45,000 for 3 sides. ”

    Your math = 50% discount on the sell side of the tear down and forfeit on the buy side in exchange for a promise of a full commission on the 3rd leg. Not sure what happens if he also brings you the buyer of your new product.

    Note: I just realized that the scout works for the dirt guy and the dirt guy pays the scout. The scouts I meet are not usually licensed agents and I wondered how they got around that. Your noting that you deal with the dirt guy and not the scout pointed me in the right direction as to the scout not being the builder’s scout, but rather the dirt guy’s scout.

    Back to your original “you need to dance with the one who brung ya”. That is because he forfeited the buy side commission on your side of the first sale in exchange for the eventual listing from you of your newly built product (as I originally said). PLUS he knocked down the pocket listing fee to 1.5% to help convince the seller to let you have it vs listing the tear down, which probably saved you something for not having to compete in the open market on price of that tear down.

    Go hug your dirt guy. He may not be altruistic in your eyes, but at least see what is really going on as to his forfeiting your entire buy side commission on the first sale and discounting the seller side so you can get it at a lower price with no competition. Kary’s going to say the seller of the tear down is getting screwed…and he’s probably right. But that you don’t realize the math of this and appreciate your dirt guy for what he is actually doing kind of bugs me.

    That you say it’s because I don’t understand the difference between a double dip and a triple header and a home run…well only when you’re talking baseball and not real estate. :)

  197. 197
    redmondjp says:

    RE: Ardell DellaLoggia @ 196 – No offense here, but do you and Kary really think that all sellers are so clueless that they must have an agent to tell them what their property is really worth? I would argue that it is much easier to place a value on unimproved land than it is on developed land with a home (where a myriad of factors can affect the structure’s value). The land developer has to put significant money into the ground before a stick of wood goes into the air. Shoot, just the buried stormwater vault (which is as big as my entire house – no joke) at the 4-lot short-plat behind me cost $240K – that’s $60K per lot of additional cost to the developer.

    And if the sellers leave a few thousand on the table, money that they would have had to pay to an agent anyways, what’s the difference? If both the seller and buyer are happy with the deal they made, why should that bother anyone?

  198. 198

    RE: redmondjp @ 197

    “No offense here, but do you and Kary really think that all sellers are so clueless that they must have an agent to tell them what their property is really worth?”

    Depends on the market. In this market NO AGENT or expert can tell a seller what his house will sell for. We can tell him what it is “worth” using hindsight and some professional guesstimating. BUT in this market the buyers will do what the buyers will do with that “what the house is worth” calculation.

    That’s why so many “must appraise” clauses are coming out of contracts. Even the appraiser wouldn’t put THAT price on it…the one the buyers are willing to pay. Without listing in the open market, no one knows that. Appraisers often toss out “comps” that were not prices based on “open market” conditions.

    Take the Montlake tax assessment $818k, listed $880k, Zillow $923k that just sold for $1.6 Million.

    No seller should sell without testing the price in the open market right now (other market conditions may vary) because NO ONE could possibly have calculated that $1.6 Million as what the house was “worth”. You can’t be smarter than the market, and that seller would have left a MINIMUM of $675,000 on the table if he sold it off market.

    I’m working on a market valuation in Montlake myself right now…but I also know the buyers can take it to the moon if they want to, because someone (two someones) just did that and there.

    I never said Kary would be mad that he or I didn’t tell a seller what the property was worth. I said Kary would be mad that an agent talked a seller into not putting it on market to see what the market would bear. Most of those owners who sell to builders through dirt guys, many if not most, are old people. Senior Citizens. You want to rethink that? There’s a fine line between getting a great deal for your builder pal and preying on senior citizens…and that line gets crossed…and often.

    But we’re just talking math here and 4 sides does not turn into 2 sides just because Deerhawke’s participation is only 2 of the 4.

  199. 199

    Here’s a dirt guy story for you, JP. My client bought a 4 plex in Ballard. About 2 years later a dirt guy approached him to sell so they could tear it down and build townhomes. My client said he wasn’t interested in selling. I got an offer faxed to me (they could see I was his agent when he bought it). It was for $700,000 with a non-refundable deposit (carrot) and offer “expired upon receipt”. I contacted my client and he told me about the previous contact noted above. He also told me that after he said no, every night since, someone had been banging on the outside walls of the units every night at 3 a.m. or so. One of his tenants vacated and he was worried all of his tenants would leave.

    We decided to put the property on market for $750,000 which is “what it was worth”. The same builder’s dirt guy faxed the same offer but at $750,000…a different builder bought it for $855,000.

    You can’t be smarter than the market, JP. No one can. It’s not about having an agent…it’s about “open market conditions” and not being able to guess what a market will do when there is abnormal competition in the marketplace.

    Maybe a For Sale by Owner on Zillow and Redfin is enough. I’m not saying it’s about agents as you are perceiving what I am saying, JP. Craig’s method may be good enough and should be for dirt guy sales. The owner putting it on Zillow and Redfin himself as a For Sale By Owner instead of Craig, basically the same thing, may be good enough too. But an agent approaching a seller (same as my example above) who is working for the builder is almost always shortchanging the seller. No way to know for sure without exposing the property to Open Market conditions.

    I have seen the opposite. I have seen an owner occupant buyer on many occasions offer a seller WAY more than the property was worth, off market or as a pocket listing through an agent, because the buyer just had to have it. But rarely does that happen with a dirt guy-builder deal, because they have to watch their numbers. Could happen…but rare.

    In a market where buyers are taking an honest valuation and converting it to a much higher “what the market will bear”, there is no substitute to selling in “open market conditions”.

  200. 200
    Erik says:

    RE: Kary L. Krismer @ 195
    You did the same thing earlier when I asked you to layout why you are better representation. You didn’t answer, so Craig and readers assumed you charge standard fees and offer standard representation.

    We are getting into the final rounds and at this point you need to need a knockout blow. Craig has you on the ropes. You need to gain your composure and knock him out.

  201. 201
    SS says:

    The house you are referring to here sold for a $1Mill cash, obviously you had no chance here even with escalation clause. Just hard luck I would say as you ran into wrong kind of buyer (read rich) at wrong time.

  202. 202
    redmondjp says:

    RE: Ardell DellaLoggia @ 199 – Fair enough. In this crazy market, one probably can get the highest price by getting buyers all frothed up in a massive bidding war.

    But my other neighbor also sold direct to a land developer (who did the 4-lot short plat, did all of the site improvements, and flipped it to Quadrant) a couple of years ago when things weren’t as crazy as they are now. If you look at what new houses are selling for at a given time, plus the relatively fixed costs of doing the short-plant and developing the land, it’s not that hard to figure out what you can get for the land. If you don’t leave enough meat on the bones, no developer will touch it.

    There are examples in my area of land that has sat overpriced and on the market now for a long time (there is one east of the creek near me that is $1.3M or something with an ancient, tiny house and I think most of the land is too close to the creek to do anything with).

    Let the bidding wars commence before the frothiness dissipates!

  203. 203

    RE: redmondjp @ 202

    An owner occupant will typically pay more than a builder, as the builder pays zero for the house and possibly even deducts for the demo. Someone happy to have an old beat up house in a good location will fix it up as they go along. So at minimum what they are leaving on the table is what an owner occupant would pay for the house. Some “tear down” houses are not bad really, and people are happy to have them.

    Talking about a single family to single family trade out and not your example where Quadrant is putting 4 houses where 1 used to be.

  204. 204

    By redmondjp @ 197:

    RE: Ardell DellaLoggia @ 196 – No offense here, but do you and Kary really think that all sellers are so clueless that they must have an agent to tell them what their property is really worth? I would argue that it is much easier to place a value on unimproved land than it is on developed land with a home (where a myriad of factors can affect the structure’s value).

    I would say it’s just the opposite, depending on location. The owner of a house could much easier determine the value of their house in an area filled with other houses of similar size and type, than say the owner of a house on a lot which is much larger than others in the area and sub-dividable.

    Now if you’re dealing in an area where there have been a lot of land transactions, perhaps it would be easier (no opinion).

  205. 205

    By Erik @ 200:

    RE: Kary L. Krismer @ 195
    You did the same thing earlier when I asked you to layout why you are better representation. You didn’t answer, so Craig and readers assumed you charge standard fees and offer standard representation..

    The difference being I stated a valid reason for not stating my compensation–avoiding any anti-trust concerns. FYI, the LOC isn’t stated on the NWMLS. There’s no reason for anyone who is not a client to know that information, so it isn’t given to other agents. The only time I would see that information for other agents where I am not the listing agent is sometimes I will see a HUD statement with the commission stated.

    And on the topic of LOC, it’s not that Craig is charging a lower rate for his compensation that I’ve objected to at all. That’s his business and none of mine. It’s his implicit if not explicit claim that the entire SOC will be avoided just because his system doesn’t make an offer of SOC for buyer’s agents. As mentioned, most buyers in the range where his scheme makes sense to sellers will need their agent’s commission to be financed. But even ignoring that, it’s extremely naive to think that a buyer will pay X for a house if there is no offer to pay SOC, but X + 3% (Craig’s number) if there isn’t an offer to pay SOC. Craig is correct that the buyer might negotiate a lower commission for their agent than what a seller might offer as SOC, but the savings from such negotiations is extremely unlikely to be 100%.

  206. 206

    By redmondjp @ 202:

    RE: Ardell DellaLoggia @ 199 – Fair enough. In this crazy market, one probably can get the highest price by getting buyers all frothed up in a massive bidding war.

    No probably about it. If a seller can list a property in an area and in a manner that will get more than 5 offers, they will almost undoubtedly get more than what they could otherwise. One of the reasons I don’t like sellers allowing pre-inspections is that IMHO it discourages buyers from making offers. Sellers want a bidding war and should do nothing to discourage one!

    And in this market sellers can even get away with claiming features which don’t exist (e.g. bedrooms), price the house as if they do exist, and still get multiple offers over value. It really is a “crazy market” as you said.

  207. 207
    redmondjp says:

    By Kary L. Krismer @ 206:

    By redmondjp @ 202:

    RE: Ardell DellaLoggia @ 199 – Fair enough. In this crazy market, one probably can get the highest price by getting buyers all frothed up in a massive bidding war.

    No probably about it. If a seller can list a property in an area and in a manner that will get more than 5 offers, they will almost undoubtedly get more than what they could otherwise. One of the reasons I don’t like sellers allowing pre-inspections is that IMHO it discourages buyers from making offers. Sellers want a bidding war and should do nothing to discourage one!

    And in this market sellers can even get away with claiming features which don’t exist (e.g. bedrooms), price the house as if they do exist, and still get multiple offers over value. It really is a “crazy market” as you said.

    Funny you should mention that about bedrooms. One of the homes I toured recently had a small room upstairs without a closet, but the owners had a armoire in there (and the realtor made a point to say that it stayed with the house) so they could call it a bedroom, and it was listed as such (while KC records show one BR less). This drives me crazy – if I want this kind of treatment from a so-called sales professional, I’ll visit a used car lot on North Aurora as it will cost me a lot less in the end, even if I do end up with a lemon. Is honesty that hard? I guess it’s all about making that commission, right?

  208. 208
    Erik says:

    RE: Kary L. Krismer @ 205
    I do understand that the other agent needs to be paid and they may not budge. In comment 162, it looks like Craig is directly saying he gets paid 1%. He goes on to say it is 1/6th of what you get paid is crap because that assumes for his scenario he gets his 1% and the other agent gets paid nothing, but I think he’s having a good time and exaggerating.

    You still save Craig’s 2% for sure and possibly more because he will try to get you some commission out of the other agent. 2% of a $500,000 home is $10,000, which you’d get for sure. I bet he can talk the other agent out of 1%, so that is a total of $15,000 on a $500,000 sale. That would be worth while to most people. He’s a lawyer to boot, which makes clients more comfortable with his alternative model.

    Ray pepper made loads of money charging $500 to sell a house. He put himself in the industry, made friends, made good decisions, and as a result got rich. I’m guessing Craig doesn’t plan to get rich off of 1%. My guess is that he wants to make lots of friends in real estate. If you have a lot of past clients that like you, I’m sure he’ll get repeat business and get to know a lot of people. Not sure what his plan is, but I’m guessing he has one.

  209. 209

    By Erik @ 208:

    RE: Kary L. Krismer @ 205 – Ray pepper made loads of money charging $500 to sell a house. He put himself in the industry, . . .and as a result got rich.

    LOL. This is a good example of what I’ve been talking about of consumers not having a clue about the volume of these alternative models.

  210. 210

    By redmondjp @ 207:

    Funny you should mention that about bedrooms. One of the homes I toured recently had a small room upstairs without a closet, but the owners had a armoire in there (and the realtor made a point to say that it stayed with the house) so they could call it a bedroom, and it was listed as such (while KC records show one BR less). This drives me crazy – if I want this kind of treatment from a so-called sales professional, I’ll visit a used car lot on North Aurora as it will cost me a lot less in the end, even if I do end up with a lemon. Is honesty that hard? I guess it’s all about making that commission, right?

    The one I was thinking of was even worse. The third bedroom was basically what might be considered a family room or rec-room, but they put a bed in it and counted it as a bedroom even though you had to walk through it to get to the office area and one of the two real bedrooms. It sold for about 33% more than its 2006 price when it was listed as a two bedroom.

  211. 211
    Erik says:

    RE: Kary L. Krismer @ 209
    I imagine he used it as a tax shelter to flip houses. I don’t know his exact scam, but he obviously had one.

  212. 212
    Erik says:

    RE: Kary L. Krismer @ 209
    I do know that being a lawyer and a real estate agent is like throwing a snake in to a pit of bunnies. I’m sure you lawyers will shank someone, it’s in your nature. You guys can’t help it. I only get a lawyer if I want to shank someone else so they can do the dirty work.

    The point is by that Craig is putting himself into a pit of bunnies. I have no doubt he will legally figure out a way to consume bunnies. You can sense a fellow lawyer is doing something that doesn’t make financial sense and it doesn’t make sense yet. Takes one to know one and I’m sure he has a longterm plan.

  213. 213

    RE: Erik @ 212 – Erik, you smoked me out, nice work….

    And this is in reply to you as well, Kary, @163 et seq. Oh, and so I don’t have to repeat myself (this is a great trick, Kary!), please check out the links below – including the links within the links – before we continue the conversation.

    There has been price pressure on the listing side of the commission for a long time, essentially since the advent of the internet. Today a seller can list on the MLS for as little as few hundred bucks. But the other side of the commission, the commission paid to the selling broker (usually the buyer’s agent, known as the selling office commission or SOC), remains stuck at 3%. And as I’ve been explaining for a very long time, the SOC – mandatory on the NWMLS, almost always 3% – is a actually a bad thing for buyers too.

    Quill is about to solve this entire problem in one fell swoop. The answer is to bring real estate into the 21st Century. Where the client pays for the professional service received. Where the marketing professional relies on her marketing skills, not on “cooperating brokers,” to sell a home. Where the transactional cost is commensurate with the value received.

    Kary, many of the concerns you have raised in this thread flow from rules and laws made to address the shortcomings inherent to the cooperative broker system. And the heart of that system is the SOC. It is literally the fuel for the 100+ year old, only-game-in-town real estate broker industry. Quill is doing away with it, so the rules and laws and ethical concerns that flow from it simply don’t apply.

    Does that mean Quill sellers will refuse to pay a buyer’s agent’s fee? Of course not!! Quill is in the business of selling houses, and any reasonable request that facilitates that outcome should be entertained. Like everything else in real estate, it will be negotiable. But no commission will be offered, ever.

    Will there be logistical issues in moving to this brave new world? Uh huh. Lots. For example, my Memorial Day Weekend is being devoted to drafting forms that will be used by clients and customers of Quill Realty to buy and sell houses. But logistical issues are surmountable. The underlying model is, quite simply, the evolution of real estate, finally arrived. It wasn’t Zillow or Redfin – although they both have made this evolution possible. And to have the chance at being the first real estate firm of the future….

    That’s my plan. To learn more, keep your eye on the Quill blog, or the local media…

  214. 214

    By Craig Blackmon @ 213:

    RE: Erik @ 212 – There has been price pressure on the listing side of the commission for a long time, essentially since the advent of the internet. Today a seller can list on the MLS for as little as few hundred bucks. But the other side of the commission, the commission paid to the selling broker (usually the buyer’s agent, known as the selling office commission or SOC), remains stuck at 3%. And as I’ve been explaining for a very long time, the SOC – mandatory on the NWMLS, almost always 3% – is a actually a bad thing for buyers too.

    Okay, let’s assume all of that is true (and totally ignore facts and Surefeld, etc.). You’re going to be representing sellers! The SOC system is good for sellers because it brings in people who know a lot of buyers, namely agents. So your model apparently helps those you don’t represent because you don’t like SOC systems. Interesting.

    Kary, many of the concerns you have raised in this thread flow from rules and laws made to address the shortcomings inherent to the cooperative broker system. And the heart of that system is the SOC. It is literally the fuel for the 100+ year old, only-game-in-town real estate broker industry. Quill is doing away with it, so the rules and laws and ethical concerns that flow from it simply don’t apply.

    Okay, I’ll give you that agents ignoring showing hour limitations and presenting offers directly to sellers may be because the agent wants to have an advantage over other agents getting the SOC. It could also just their being overly zealous in representing their clients, or simply making a mistake. I don’t see that removing the SOC eliminates that problem. But I also don’t see that agents trying to steal listings is because listings offer a SOC. They’re after the LOC. And seller phone numbers not being posted on the Internet for all to see is not because listings offer a SOC. Simply put, the SOC is not the cause of all the problems which resulted in the NWMLS rules.

    I appreciate your trying to be creative, but this system has so many issues for the sellers you will be representing I’m surprised you even got to the point of drafting a press release.

  215. 215

    RE: Erik @ 212

    I love this! Maybe the best sentence you ever wrote here!

    Erik said: “I do know that being a lawyer and a real estate agent is like throwing a snake into a pit of bunnies.”

    Maybe I love it just because I like the imagery of bunnies or maybe because I know Craig personally and would love an actual picture of him in a pit of bunnies with a cobra wrapped around his shoulders. Hard to say.

    But my question is this. Are Kary and I the bunnies or are the buyers and sellers the bunnies? Or are just the buyers with no agent the bunnies? Based on Agency Law generally…the bunnies would be the buyers. But would like to know who you are calling “the bunnies”.

  216. 216

    RE: Ardell DellaLoggia @ 214 – It would be even more confusing if he had said put a snake into a pit of rats. ;-)

  217. 217
    Erik says:

    RE: Craig Blackmon @ 213
    Gotcha back in!

    Kary and I feel like you saying your fee is 1/6th of Kary’s simply is not true. Perhaps you charge 1/3rd of what Kary does. For your fee structure you only counted 1 agents fee, yours. For Kary’s fee counted 2 agents at the standard rate.

    Here is the big concern… You are a smart guy with a law degree. It doesn’t make financial sense to me that you are charging 1% while agents with a GED are charging 3x what you are charging.

    Lawyers are all about making money and you are going to extract it from somewhere. How are you planning to make your money? I don’t believe you will be satisfied living just above the poverty line when you could make so much more money in your field. And I would never believe a lawyer just wants to give back to society out of the kindness of their hearts.

  218. 218
    Erik says:

    RE: Ardell DellaLoggia @ 215
    The bunnies are inexperienced agents and possibly their clients. A lawyer’s job is to consume as much money as possible based on rules he or she knows. If you put a lawyer(snake) in with a typical agent(buyer), then the snake will devour the bunny.

    I know you are an experienced agent that researches everything and you consult lawyers when anything looks fishy. You put a lot of effort into being able to identify laws. You are very smart. The typical agent is not as smart as you and would get devoured by a lawyer. Kary is an actual lawyer, so he could combat one of his kind.

    To summarize your the answer:
    Lawyer = snake
    Typical agent = bunny

  219. 219

    RE: Kary L. Krismer @ 214 – The SOC system works because it uses “people who know a lot of buyers, namely agents.” How quaint. For THAT people pay 3-6%??? How absurd.

    One word, Erik: Scalable. I’m not building Craig Blackmon, REALTOR (TM); I’m building Quill Realty.

    Thanks you two. With that, it’s, goodnight, and remember to tip generously! See you on another thread.

  220. 220

    RE: Erik @ 218

    We need a different animal then Erik, because the bunnies in the pit with Craig are clearly the buyers who want to buy his seller’s listings.

    I have only met one “bunny” agent in 25 years. Her name was Bunny and she was more like a little pit bull with a bone. I’ve met a few sharks, more than my fair share of weasels, a whole lot of penguins (only egotistical animal reference I could find) some lions, some lambs tho they usually turn out to be wolves in sheep’s clothing. :)

  221. 221
    Carla says:

    RE: Erik @ 130 – Erik, stop, just stop. I have lived and worked in Everett for 23 years. Crime is low. You are referring to a small pocket of crime in an area around 23rd and Wetmore. The rest of the city is filled with hard working middle class families. The homes are nice and well cared for. The Everett Schools are well thought of. I don’t know where you spent your time, but you are way off.

  222. 222
    Erik says:

    RE: Craig Blackmon @ 219
    I see. You are the bait then.

    I would like to see a few case studies on your website where you got a client and your cohorts sold them services and it actually saved the client money. You could compare Quill’s service to the standard service(Kary’s service). If you can show the consumer or flipper how you can save them money, I think that would help us mainstream folk be comfortable with your alternative approach.

    Saying goodnight a little after noon? You must have partied hard last night.

  223. 223
    Erik says:

    RE: Ardell DellaLoggia @ 220
    Okay, then let’s just call a typical agent a rat then as Kary the house salesman suggested. Moving forward when Craig is involved in a sale, the people involved are as follows…

    Craig = snake
    Typical agent = rat
    Typical agents client = bunny

  224. 224
    Erik says:

    RE: Ardell DellaLoggia @ 220
    It would be interesting to throw you in a pit with one of these agent/lawyer hybrids to see who would win. I would put my money on you.

  225. 225

    By Craig Blackmon @ 219:

    RE: Kary L. Krismer @ 214 – The SOC system works because it uses “people who know a lot of buyers, namely agents.” How quaint. For THAT people pay 3-6%??? How absurd..

    I think I’d have a bit less problem with what you are doing and saying if you weren’t being so damn deceptive. 3-6%? When have you ever seen a 6% SOC? Your magnitude of error is even worse than Ray’s old website which couldn’t even calculate the commission savings correctly.

    But yes, sellers paid SOC in the market that was 4 years ago so that they could find a buyer. And many were damn lucky to get that buyer. Agents who knew buyers were extremely important to sellers, and having a good listing agent back then was also important. Some sellers even offered more SOC than average.

    In today’s market in North Seattle (roughly north of the Ship Canal Bridge), houses in the 400-750k range, in the past 60 days, have sold for roughly 6% over list. (Number from NWMLS sources, but not compiled by or guaranteed by the NWMLS.) And that is because those listings get a lot more exposure than just Trulia, Zillow and Realtor.com (some are already in contract before they even show up there). So even if we stick with the upper end of your range, not a bad deal for sellers.

    But let’s look at this from the other direction–the buyer What makes you think that a buyer who is going to bid $500,000 on a listed property offering a 3% SOC is going to be willing to pay $500,000 on one of your future listings where they have to also pay their own agent/attorney? The simple fact is they will not be, even assuming they don’t need to finance their own commission. $500,000 is what they are willing to pay, not $500,000 plus some other number.

    And how about looking at this from the position of the buyer’s agents? Yes buyers might negotiate a lower commission with their agent, but they can do that even with a SOC by negotiating a rebate. But I would again point out that the only market areas your system works in are the extremely hot areas which are extremely tough markets for buyer’s agents. Buyer’s agents in those areas have their own multiple offer situation–making multiple offers for clients where only a small percentage is accepted. And the offers that are accepted are typically written by the better agents unless a seller is foolish enough to think the highest offer is automatically the best offer. Do you see the really talented buyer’s agents offering deep discounts? Just where do you see the savings? Cash buyers would perhaps be in the position to negotiate a lower commission, because their offers may be more likely to be accepted, but they can also try to negotiate a rebate of an offered SOC. So other than those cash buyers, this market is the one where buyer’s agents would be least likely to negotiate their commission down because the agents have to do a lot more work and the really talented agents are worth the money.

  226. 226

    RE: Kary L. Krismer @ 225 – P.S. You’re weird. 3-6% is what you pay for the cooperative broker listing, i.e. to list on the MLS. You’ll pay Quill 1% for a single broker listing, i.e. to list other than on the MLS. It’s not complicated.

  227. 227

    By Craig Blackmon @ 219:

    RE: Kary L. Krismer @ 214 – The SOC system works because it uses “people who know a lot of buyers, namely agents.” How quaint. For THAT people pay 3-6%??? How absurd.

    We were talking SOC. And specifically you were responding to my post about why sellers offer a SOC and that buyer’s agents “know a lot of buyers.”

    The reasons people pay a listing agent their LOC are entirely separate.

    So yes, saying 3-6% is deceptive, in the same manner you try to claim that people will save 5% because you only charge 1%. From your press release: ” This will allow Quill to sell homes while charging owners only its own, single broker commission of 1%. So home owners will soon be able to sell their houses using the services of a fully licensed REALTOR™ for far less than the 3% to 6% of the MLS. ” Unless you’re assuming you’re going to be dealing only with unrepresented buyers, claiming they will only pay 1% is deceptive. Many buyers will still ask for their commission to be paid, and as I just explained, if not it will affect the total amount they are willing to pay.

  228. 228

    RE: Kary L. Krismer @ 225

    You’re making Craig’s case when you say “The simple fact is they will not be, even assuming they don’t need to finance their own commission. $500,000 is what they are willing to pay, not $500,000 plus some other number.”

    What you are saying is if there were true transparency, buyers would not be paying what they are paying now. So bring on the transparency and let the buyers decide for themselves.

    Craig’s model is the same as when you or I sell a FSBO. We have to figure out how to show it and how to get paid. Nothing new. Been around for all of the 25 years I have been in this business.

    Why is everyone acting like this is new? I have seen an agent and several agents try it in an mls by offering $1 to the buyer agent. Then the buyer agent had to fend for themselves the same way that listing agents do when they have a commission discussion with their seller clients.

    Why shouldn’t agents have a commission discussion with their clients? It’s not rocket science…and it really isn’t even new. :)

  229. 229

    By Ardell DellaLoggia @ 228:

    RE: Kary L. Krismer @ 225

    You’re making Craig’s case when you say “The simple fact is they will not be, even assuming they don’t need to finance their own commission. $500,000 is what they are willing to pay, not $500,000 plus some other number.”

    What you are saying is if there were true transparency, buyers would not be paying what they are paying now. So bring on the transparency and let the buyers decide for themselves.

    No, that’s not what I am saying at all. What I am saying is that the buyer will not pay more if the seller fails to offer a SOC. The buyer has what they are willing and able to pay, and will take into account what the seller is offering in making their offer.

    Let’s assume a different market which is more balanced so that we don’t need to worry about multiple offers, being out-bid, etc. There is a buyer with an agent and let’s assume they have a buyer’s agency agreement requiring a 3% commission (since Craig likes that number so much). And let’s assume the most this buyer is willing to pay is $500,000, plus their normal closing costs (so they won’t have to ask for seller financing concessions). Let’s assume they are looking at three houses, all listed at $510,000.

    A. An NWMLS listing offering 3% commission.
    B. A Surefeld listing offering $2,000 commission.
    C. One of Craig’s future advertisements, offering no commission.

    What is the the most the buyer going to offer on any of those properties? $500,000, with a provision that the seller will pay 3% SOC on offers B and C. The idea that they will pay more because no SOC is offered is complete fantasy.

    Change the scenario slightly, and the buyer can pay more, but thinks that each of these properties is worth no more than $500,000. Same result.

    Change the scenario slightly to be this market and a listing in a hot area and the only difference is the buyer is less likely to be able to negotiate a commission below Craig’s favorite number. And that’s because they will be more likely to be subject to multiple offers, requiring more work of the agent to get to mutual acceptance on a property.

    The idea that the buyer will somehow pay more without a SOC is no more valid than the idea that a buyer’s agent will be loyal to a seller because the seller is paying the SOC. The SOC is ultimately coming from money paid by the buyer.

  230. 230

    By Ardell DellaLoggia @ 228:

    Craig’s model is the same as when you or I sell a FSBO. We have to figure out how to show it and how to get paid. Nothing new. Been around for all of the 25 years I have been in this business.

    Why is everyone acting like this is new? I have seen an agent and several agents try it in an mls by offering $1 to the buyer agent. Then the buyer agent had to fend for themselves the same way that listing agents do when they have a commission discussion with their seller clients.

    I’m not saying it’s new, I’m saying it’s deceptive! Craig is trying to claim that sellers will save 5%, which is complete BS! For one thing, they could go to Redfin or any other discount broker and save something. For another they could go to Surefeld and only offer $2,000 SOC. Or Craig today could agree to list a property for 1% with a $1 SOC. Craig is trying to fix a problem for which there are already solutions, and with a fix that resurrects a number of other problems for sellers.

    And Craig is also trying to claim the only disadvantage is lack of the same exposure, and again being deceptive in that claim by immediately noting in his press release that 92% of buyers use the Internet. Even ignoring the fact that brokerage websites are “on the Internet” there are a lot of other serious disadvantages to his system.

    So again, my problem is the savings he claims are illusory and he’s not disclosing or addressing the disadvantages of his scheme. I have nothing against different levels of commission or commissions being transparent and negotiated. And I don’t care that he’s leaving the NWMLS. If he could some up with a novel system that made sense that would be great. But as you mention, this is nothing new!

  231. 231

    RE: Kary L. Krismer @ 229 – P.P.S. It’s not that a buyer will pay more; it’s that the seller will pay less.

  232. 232

    Related to this discussion, Ken Harney has an article addressing the problems with lower SOC listings. When I’ve dealt with the issue in the past I’ve said part of the problem might be just agents subconsciously talking down the lower rate listing, but it is possible agents would simply not show it. Note that would violate Washington licensing law, in addition to the Realtor Code of Ethics. But I would be shocked if it never happened.

    http://tucson.com/ap/commentary/harney-commission-split-not-a-simple-issue/article_9c1357ae-b449-5166-b1c9-8b41a8d17952.html

  233. 233

    By Craig Blackmon @ 231:

    RE: Kary L. Krismer @ 229 – P.P.S. It’s not that a buyer will pay more; it’s that the seller will pay less.

    In the first and second versions of my three scenarios they would be offered the same amount, and the buyer would not be willing to pay more (or able to in the first). It doesn’t matter who pays what–what matters is the net amount received by the seller! And it would be the same in each of the three cases.

    Focusing on who pays what when the net to the seller is the same is deceptive.

  234. 234

    RE: Kary L. Krismer @ 233

    Kary,

    You are being too “glass half empty” on this. Think of all of the benefits to SOME sellers and also the potential for Craig’s model to resolve some of the current housing market problems.

    The reason we need more options and many and varied “Alternative Brokerages” is to fill in the gaps we leave with all of our “rules”.

    1) It has been noted in the past that part of the reason inventory is low is because move up buyers are not allowed to list their current homes in the our mls (not true of all mls services) “subject to seller finding suitable replacement housing”. Other mls’s I have worked with allowed this, but ours does not.

    They can list with Craig.

    You are saying all sellers are better off IN the mls system. But you need to think out of the box here. That seller CAN’T list in the mls AT ALL if he wants to condition his sale on “finding suitable replacement housing”. So Craig is better than…can’t list it in the mls.

    Glass half full, Kary, not glass half empty. I can probably come up with at least five other scenarios where the mls rules can get in the way of a seller’s needs.

    I’m not saying Craig’s is always better than…but clearly there are instances where Craig’s IS better than. And this is why we need more alternative brokerages. People need MORE options! “Ours” is not the only and best way for everyone.

    Put down the Kool Aid and think about it. I bet even you can come up with at least one example of a situation where Craig’s model would work better than “in the mls” if you try just a little.

  235. 235

    RE: Kary L. Krismer @ 232

    Here’s how I really feel.

    1) Buyer Agency is still an experiment and NAR, Brokerages and individual agents get a big #FAIL on effectively incorporating Buyer Agency into the industry well. MOST offices still run the exact same way, talking about how to get the listings sold vs how to help their Buyer Clients make WISE decisions…the same way that they did before Buyer Agency. Most agents still try to “close” their buyer clients vs really approaching the buyer from a client vs someone to sell to standpoint. A couple of decades with very little progress. Do you see Brokerages helping agents figure out when and why to advise their client NOT TO BUY “that house”? NO. It’s a job in title only unless the agent figures it all out on their own.

    Where’s the NAR commercial about why you should NOT buy “this house” and be sure to hire a “Realtor-Member” to help you to “Just Say NO!”.

    Two decades Kary….and the biz pretty much still runs the same from the NAR and Brokerage side of things. Good agents…good people who are good agents…fend for themselves in trying to be what a buyer client needs them to be…and only a fraction of them can do it without sufficient training and guidance.

    Craig’s model fills the gap when a buyer can’t find someone who they believe truly represents their needs. No one is better than paying 3% for the wrong some one.

    2) Brokerages have made NO, NO and no again strides on making all commissions negotiable from the buyer side of the fence the same as it is on the seller side of the fence. Two Decades and NO progress on the buyer side of the commission equation as to at least having a commission conversation, always, vs telling a buyer that their agent services are “free” or “paid by the seller”.

    When and where we as an industry fail in part. Not in whole, but in part. That gap of where we are failing needs to be met by alternative brokerages.

    Yes…many traditional individual agents vs brokerages have modified the way they hand commission discussions with buyer clients…BUT they would not be doing that if there was never a Redfin.

    Craig’s model FORCES the agent to have a commission discussion with their client. That doesn’t mean discount. It means giving the buyer the DIGNITY of having some say in commission issues, the same as a seller. No more and no less. The same as a seller client.

    Craig’s new model has many advantages and it is a “statement” boutique brokerage. Stop playing “glass half full” and start seeing the clear benefits to SOME people. Your only seeing the dark side is getting annoying.

  236. 236

    RE: Ardell DellaLoggia @ 235 – You get it Ardell. Thank you. I would only add that these two problems you identify? They will never, ever be fixed as long as the seller pays a cooperating commission. These are flaws inherent to the MLS.

  237. 237

    RE: Kary L. Krismer @ 232

    Now go to your quiet place and let the big light bulb go on as to how we fail sellers!!! Above answers how we fail buyers.

    You said “the problems with lower SOC listings. ”

    It is OUR JOB in representing sellers to sell their home at the highest possible NET PROCEEDS and our advice as to what to offer as an SOC should ONLY…ever…be predicated on the LOWEST amount the seller needs to offer in order to sell their home.

    Why, why, why is it the same in a strong market vs a weak market. Why in a seller’s market would you possibly recommend to your seller client the same SOC that you would in a weaker market?

    EVERY agent having a commission discussion with their seller should be discussing when NOT to offer 3% and why and weighing the risks. When a seller gets 10 offers…ask yourself…why didn’t they offer less than 3%. Seriously…you think 10 buyers would have run away? Maybe one or two…but 10! If you end up with 7 offers vs 10 and save $4,500 or $9,000 on a $900,000 house. Do you think every listing agent is having that discussion with sellers? Weighing the pros and cons? Or are they just saying “you have to” and scaring them with nightmares of no agents coming to show their house. It depends on the house, doesn’t it?

    Craig’s model will get the buyer’s side over where it belongs. IF agents were addressing the SOC properly with their seller clients, and advising when and if they actually CAN offer less (and come on…sometimes they can) then maybe we wouldn’t need more and varied and better alternative models.

    But Brokerages are NOT handling the SOC issue in favor of their client’s best interest vs their own best interest. We have lost the right to be “self regulated” because the industry is putting itself ahead of their client’s interests on all counts most of the time. So stop talking about deceptive practices. Saying you are doing everything only for your clients best interest but really doing it for the brokerage best interest is happening every day in every office in the Country.

    “Take the plank out of thine own eye.”

  238. 238
    ARDELL says:

    RE: Craig Blackmon @ 236

    Get a key box system going and I’ll be with on that. Just do it.

  239. 239

    By Erik @ 223:

    RE: Ardell DellaLoggia @ 220
    Okay, then let’s just call a typical agent a rat then as Kary the house salesman suggested. Moving forward when Craig is involved in a sale, the people involved are as follows…

    Craig = snake
    Typical agent = rat
    Typical agents client = bunny

    I’m crying foul. Rats are hard working, intelligent creatures. And you’re comparing them to typical real estate agents. You need to apologize. To the rats.
    Also, just to clarify, up until a couple of years ago, real estate agents were not required to have a high school diploma or GED. Then they relabeled us as brokers, and raised the standards. They grandfathered in the existing brokers, but newer agents are required to have a HS diploma or GED, and have to demonstrate that they can walk and chew gum at the same time.

  240. 240

    RE: Ardell DellaLoggia @ 235 – I feel like I need to quit beating up on Craig, because I’ve made very compelling arbuments which completely destroy his model as being viable (particularly since any benefit is to buyers and not sellers and sellers will be his only clients) and he’s not doing anything to defend it.

    But as to your point about negotiating commissions, he could do the same thing by setting a low SOC and then stating in the marking remarks that seller waives any rule preventing negotiating the SOC.

    There are so many easier ways he could accomplish the same thing, but he has such an extreme dislike for SOC he is blinded and coming up with a complex solution which will not benefit his clients.

    BTW, the only good use I can see of his model is that being a non-member of the NWMLS he doesn’t have to run all his listings through the NWMLS, so he could “list” one of the foreclosure redemption period listings without violating any NWMLS rules. There maybe 1-2 of those a year in King County (that’s a wild guess), so not a huge market. But there probably are other off-list listings he could do, like the one you mentioned. But both those are not run of the mill transactions where the seller is trying to get top dollar.

  241. 241
    Ajax says:

    This interesting thread went south when 3 agents started into a private pissing contest.

  242. 242

    RE: Ajax @ 241 – Ardell posting a link to Craig’s post here rather than in the misc thread was a major hijack, I’ll give you that, but the thread was boring beforehand. Seriously, do you really think a post about a buyer losing out on a house offer is worth a thread?

    I had a semi-hijack at post 101, which dealt with dealing with multiple offers. IMHO there were only two posts in the first 100 which were in any way interesting. At least Craig’s situation is something new. Buyers have been losing out to other offers for various reasons forever.

  243. 243

    RE: Kary L. Krismer @ 242

    It’s one of the reasons, as Craig notes on his blog, that the industry has not changed much in favor of consumers for two centuries. I would say one century, but why quibble over 100 years this way or that. :)

    I remember being at a City Planning meeting on McMansion house issues some time ago. There was a huge outcry from residents about large square footage, zero lot line houses with flat roofs. But in the middle of the meeting Council asked, would anyone who isn’t an agent or an architect or a developer please raise their hand? No one. They shut down the meeting and said…well if no one really does care, let’s just go home and keep building them.

    Alternative models are supposed to give the old guard a shot in the arm, and mostly from a consumer perspective. When the consumer doesn’t care…it goes back to business as usual…for 100 years or more.

  244. 244
    Erik says:

    RE: Carla @ 221
    I’m sorry Carla. Unfortunately it’s too late for you.

  245. 245
    Kate says:

    RE: Ryan @ 13 – I’d be extremely interested in seeing a list like this, have you found anything?

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