Surefield Pricepoint Home Pricing Tool

Surefield Releases New Map-Based Home Pricing Tool to Compete with Zillow & Redfin

Full disclosure: Surefield is a Seattle Bubble advertiser, and Tim worked with co-founder Rob McGarty during his time at Redfin.

Local alternative brokerage Surefield added another slick new tool to their arsenal this week: A map-based home pricing tool that they are calling Pricepoint. Together with their flagship 3D home tour technology (previously spotlighted here), this new offering strengthens Surefield’s focus on home sellers.

The tool offers an interactive, transparent alternative to Zillow’s black box “Zestimates,” and is touted by Surefield as “the most accurate and reliable way to price a home.”

Surefield Pricepoint Home Pricing Tool

I’ve been playing around with the tool for a few weeks, and I really appreciate the clean interface that communicates a lot of great information. You can see all the comparable homes (sold and currently listed) on a map, in a list, and on two different charts all at once. It’s easy to flip through the photos of the homes, exclude homes from your estimate, or adjust the matching criteria.

Surefield Pricepoint Home Pricing Tool

The feature is somewhat similar to Redfin’s Home Value Tool (which I worked on some as a product manager when I was at Redfin), but offers a lot more flexibility and displays more detailed information.

If you’re thinking of selling your home, you’ll get a much better idea of where you should be pricing it if you start with something like Surefield’s Pricepoint tool than you would by just looking at your “Zestimate.”

Here’s some additional coverage of the feature from other local outlets:

GeekWire: Surefield challenges Zillow with new tool to figure out how much your home is worth
Puget Sound Business Journal: Redfin founder calls his new Seattle real estate startup a ‘Zestimate killer’

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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.

38 comments:

  1. 1

    Seemingly it just determines a price per square foot based on other sales and actives in the area, and then comes up with a price. Rather amateurish (even ignoring the fact that you have to enter the square footage of your house yourself–it apparently can’t look it up).

  2. 2
    David Eraker says:

    Hi Larry – PPSF is a straightforward approach to initial home pricing and our approach makes it quick to do. If not PPSF, what other metric would you recommend using for initial residential real estate valuations? Zestimate?

  3. 3
    Keith says:

    The layout is totally broken on Chrome for Android, so I have no idea how well it works.

  4. 4

    By David Eraker @ 2:

    Hi Larry – PPSF is a straightforward approach to initial home pricing and our approach makes it quick to do. If not PPSF, what other metric would you recommend using for initial residential real estate valuations? Zestimate?

    Assuming you mean Kary instead of Larry, whenever I hear someone focus on price per square foot I immediately assume they don’t know what they’re talking about. It might be a straightforward approach, but it’s not an accurate approach.

    But my comment was more pointing out the irony of a system that relies heavily on price per square foot, but you have to input the square footage of the subject property.

  5. 5
    kenmorem says:

    RE: Kary L. Krismer @ 4

    i agree, kary. i checked out the website and found it annoying with a poor interface. when i found out that it was just using PPSF, i was like WTF? i’m no real estate expert, but i’m pretty sure when your home value is assessed, there is a “finishes” category (1-12?) that looks at the level of finishes in your house. i presume this value would be multiplied (or could be, at least) by an appropriate corresponding PPSF #. so, if your interior is 100% trashed and needs to be gutted, i’m pretty sure a 3000 SF house is not worth $600k just because the neighborhood value averages $200/SF.

    and yes, manual entry for the SF? c’mon…

  6. 6

    RE: kenmorem @ 5
    Hi kenmorem,

    Cynthia from Surefield here. You’re right! There is more to a home valuation than price per square foot and it sounds like we have some work to do to get people to the next step — review photos and analyze data. One thing that makes Pricepoint different is the ability to exclude homes from your analysis with different amenities and levels of finish than your home. We’ll take a look at how to make this more clear and would welcome your feedback.

    (… this part is for Kary too) Asking users to enter square footage wasn’t taken lightly, but our testers preferred it. We found (and were told) that county records didn’t match MLS data, home search sites conflicted with what people saw on home tours — some sellers add unfinished space to the total, and tax data was just confusing. So, as the homeowner, you know your home the best and can intelligently input the right number. For example, my basement is completely finished with plans inspected and approved by the city, but county records say — finished sqft – 3,670, unfinished sqft – 440, total sqft – 4,110. So, when pricing my home I would be remiss to accept the lower number and frustrated if I was forced to do so with Pricepoint.

    I hope this addressed your questions and comments, and you’ll give Pricepoint another try.

  7. 7

    RE: Keith @ 3 – Hi Keith,
    Cynthia from Surefield here. We are so glad you alerted us to this issue! We are working on it and would appreciate it if you would give Pricepoint another go when you have time. Thank you.

  8. 8

    RE: Cynthia Nowak @ 6

    Basement sf is not counted at the same ppsf by an appraiser as the above ground sf. The market varies on that. You can only use ppsf if all of the comp properties are of like kind that are also calling basement sf finished sf.

    A 2,500 sf house with no basement does not value the same as a 2,500 sf house with 1,400 above ground and an 1,100 daylight basement. In other words a 1,400 sf house with a finished basement is not worth the same as a 2,500 sf house. Seattle Area is one of the only areas in the Country that thinks this might be the case. But since the appraisal industry is nationally uniform as to its forms and rules, a quick look at any appraisal will tell you differently.

    Also I do not find this to be true, “. So, as the homeowner, you know your home the best and can intelligently input the right number.” Most times when the data is stretched to include more sf than it should it is the owner wanting to show the house as having the highest possible value vs the “correct” value. The bias of an owner toward more vs less is stronger than an agent bias in that regard.

    I am seeing many listings showing 4 bedrooms, a den and a bonus room when there are only 5 rooms and not 6. Do you call it a bedroom OR a den OR a bonus room. Many are calling one room both things giving the appearance of an extra room. Does the seller correct that over-statement of rooms? Apparently not.

  9. 9
    Keith says:

    RE: Cynthia Nowak @ 7 – If you did a tweak it helped, as I can now at least fill out the form and submit it. However the bottom half of the screen it’s still covered over by grey.

  10. 10
    Jay says:

    RE: Ardell DellaLoggia @ 8 – In this crazy market, many potential buyers are looking for a decent house that is affordable, in a great neighborhood, great school nearby, and no bidding wars. I see a lot of sellers are overpricing their houses recently, and are not dropping the listing price. It is really tough to be a buyer right now, and a lot of them ignore details like you have mentioned.

    So the price per square foot is a totally useless feature that is unpractical in this market. A lot of first time home buyers would prefer to pay a move-in ready house in a great neighborhood that is $400 per square foot, 1000 square foot, the total price would be $400,000. Unfortunately, they are also competing with all cash buyers who will turn them into rental housing.

    The lack of inventory is not helping buyers at all. They need more houses that are for sale, not more internet tools to help them to search. After all, there isn’t that many houses to search for in this market.

  11. 11

    By Jay @ 10:

    So the price per square foot is a totally useless feature that is unpractical in this market.

    It’s always been totally useless to determine value (as opposed to determining whether the value you came up with is out of line). Earlier I was looking at an appraisal from about 3 years ago where the PPSF of the comps ranged from $224 to $266. That was the range of PPSF of houses an appraiser thought was comparable, not just unfiltered houses in the area. For a 2,000 SF house that would be a price difference of $84,000.

    PPSF is something that is easy to understand but it really makes no sense. If you were looking for cars would you find out what each model cost per pound and then somehow grab a reasonable price per pound from that sample to price another model of car based on its weight? Of course not, but that’s exactly what using PPSF is doing.

  12. 12
    Kamal Jain says:

    I checked a few homes, where I knew, Zestimate is inaccurate. It turns out that Pricepoint is equally inaccurate on these homes. As an example, try Spencer’s home, Zestimate is about $1.6M and Pricepoint is about the same number too. I know a couple of more examples where Zestimate is grossly inaccurate, and Pricepoint is grossly inaccurate for those same homes.

    Is there a better way? I do not know. Predicting markets have always been hard. The sqft approach is useful post-PSA for lending purpose, just to make sure that the purchase price is realistic. I wish there is a better way to price a home.

  13. 13

    By Kamal Jain @ 12:

    I checked a few homes, where I knew, Zestimate is inaccurate. .

    That’s not limiting the field much! ;-)

    I just checked two recent sales, and one Zillow was high by 22%, and Surefield about half that.

    The other Surefield was high by about 10% but Zillow only off by about 1%.

    Neither had anything unusual in the listing or pictures that would make you question it being a normal sale value.

    I realize that’s a very small sample, but I don’t have that much interest in proving what Zillow already admits–that automated pricing isn’t very accurate.

    http://www.zillow.com/zestimate/#acc

  14. 14

    If you’re in Pricepoint they have three charts you can scroll through on the right hand side. One is price per square by finished size, which makes sense. The other two are “Baths by Bedrooms” where they chart the number of bathrooms by the number of bedrooms and “Lot size by Finished Size” where they chart those two variables. What is the intended purpose of that?

    When I went to look at those I assumed it was showing value by number of bathrooms, and I wanted to see if they dealt with half and 3/4 baths (they do). I just am not seeing how those two charts would be useful. Ideas?

  15. 15
    boater says:

    I find it somewhat amusing people are talking about accuracy and home pricing. It’s not like the sales price is necessarily an accurate measurement of current home value.

    Maybe if you own a new construction tract home you can call the sales price accurate but beyond that we’re all just taking our best guess at what will get the maximum price in a time frame.

    I’ve worked on auction theory in illiquid markets an these markets are highly dependent on a single player to determine maximum sales price. If you’re outsd8of a conforming mortgage you can bet you’re in that single player group. Anyone claiming an estimate is off by 1% just sounds silly to me.

  16. 16

    By boater @ 15:

    I find it somewhat amusing people are talking about accuracy and home pricing. It’s not like the sales price is necessarily an accurate measurement of current home value.

    Maybe if you own a new construction tract home you can call the sales price accurate but beyond that we’re all just taking our best guess at what will get the maximum price in a time frame.

    You’re correct that actual sales prices can be off, either direction, for many different reasons. I think I mentioned here before a bidding war situation where both buyers acknowledged the property would not appraise for the amounts they were bidding, and it didn’t even come close. And obviously if a seller prices a house very low or it is sold on bad terms (REO/Short Sale) it will go for a lower price. Sales price is not perfect in every case. But that’s a different issue. The purpose of Zestimate and similar automated systems is to give someone an idea of what the property is likely to sell for in current market with normal marketing.

    But let’s take the automated part out of the equation for these Zestimate-like systems. Let’s say you have an experienced broker or appraiser who is asked to give a valuation for a property. The number that they come up with just sitting at a computer and looking at the statistics for the house in many cases will be considerably different than if they go and see the house in person. That is the main reason that these things are inaccurate. Computer models cannot account for what the property is like in person.

  17. 17

    “In short, the land is what appreciates, not the improvements to the land.”

    One of the potential absurdities of PPSF valuations as a primary tool is it doesn’t account for positive or negative attributes that run with the land. Not only as to more or less land, but to pluses and minuses that attach to the land vs the house.

    As I read the comments over time I almost never see someone picking up the issue of not enough land. Beyond personal taste as to more or less land, there is always zoning. If the minimum land per zoning is 7,200 sf and the house being sold is on a 4,100 sf lot, then the value of that land does not appreciate the same as a house on a 7,200+ sf lot. Less land than zoning requires is not uncommon for a small % of the market. To value that house on a 4,100 sf lot the same as the one on a 7,200 sf lot (minimum zoning requirement) just because the houses on the two lots are identical is absurd. Less of an issue between a 7,200 sf lot and an 8,000 sf lot in a 7.2 land zone. A lot size lower than zoning allows without variance granted is a considerable negative.

    http://www.millersamuel.com/note/november-13-2015/ “The Power of Land: Truly a 4 Letter Word”.

    A quote from Jay: ” a decent house that is affordable, in a great neighborhood, great school nearby, and no bidding wars.

    The “great school” and “great neighborhood” is part of the land value, not the house value. I have seen a school ranking go from a 10 to a 7 almost overnight. Those who didn’t know the 10 was a temporary aberration, overpaid during the brief period it was a 10. The buyer that only looks at current vs historical school ranking would be wiser to buy a 7. It’s better to buy a 7 that has most always beforehand been an 8 to 10 than to buy a 10 that has most always beforehand been a 5 to 7.

    A bidding war is simply appreciation in play. To want to always avoid them is not realistic. If a seller prices accurately based on hindsight at the amount that can unquestionably appraise based on comps, then the market has to “bid” the appreciation factor into that list price. If a seller adds the anticipated appreciation accurately, then it will sell at or close to asking price. If buyers screw up and over bid based on value and not asking price, they create a bubble. Low inventory = a bubble. To what extent differs from one house to the next. A buyer must first ascertain the value and quickly and actually most can. It is why some houses sell in 7 days or less and others sit for 4 months. Generally the market isn’t stupid.

    Every buyer values the house. Some will want to pay 5% more than the highest possible “value” for their own good reasons and will do it knowingly. As long as they know they are doing that and do it willingly, there is nothing wrong with that. In my experience the difference is the length of time the buyer intends to stay in the house or hold the house (as a rental) even if they do leave. People who may need to sell within 3 to 7 years are more conservative on price than those hoping to stay for 20 years, and rightly so.

    As to boater’s quote: “Maybe if you own a new construction tract home you can call the sales price accurate…” That is probably the LEAST true statement I have ever seen. Everyone knows that there is a premium (that will quickly erode) for NEW. Rule of thumb is new equals 1/3rd land value to 2/3rds house value. A brand new $900,000 house should be on a $300,000 lot. Lately I have seen some paying $1,100,000 on a $300,000 lot. That $200,000 difference is a bubble. The rest of the erosion to value is normal deceleration of the premium for new. A new “house” will always depreciate. NO QUESTION. The only question is will the land appreciate to the same extent or more.

    A house will automatically decrease from new and in a normal market the land will rise and the house will fall and level out at 50% land value to 50% house value. When the land value appreciates greatly and the house is not maintained adequately, the value of the land alone surpasses the value of the land with the improvement on it and that is what we call “a tear down”.

    Automated Valuation Methods should always work better in cohesive areas with hundreds and hundreds of similar homes built in the same 5 or 6 year time frame on fairly similar lots. Parts of Education Hill, most of Lakemont just to name a couple of examples.

    The biggest mistake buyers make is to say “I don’t care about that…” and they do it EVERY day. You have to value property based on solid principals and what you SHOULD care about vs what you do care about. It’s OK for you to prefer the 4,100 sf lot in a 7,200 sf zone. It is not OK for you to pretend in the valuation that it IS a 7,200 sf lot for valuation purposes.

    Home valuation is NEVER the result of boater’s “single player” theory, whether that single player is you or someone else.

  18. 18

    RE: Ardell DellaLoggia @ 17 – I can understand why buyers don’t like bidding wars–that’s fairly obvious. But the bigger concern in this market is if you bid on a property and you’re the only one. The best scenario there is the property is priced too high and you’re offering less. The worst scenario is the house has some attribute which would make it difficult to sell in a poor market.

  19. 19
    boater says:

    RE: Ardell DellaLoggia @ 17

    You say things that seem to agree with me but then say they contradict.
    Your comment about Automated valuation in cohesive areas is essentially the same as what I was saying about tract new construction homes. When the minimum number of variables change and you have a good number of transactions it’s easier to determine sales price.

    A bidding war is the method used to find the single player. We must be using different terminology. When I say single player I mean the single entity willing to pay the maximum price. If you have four offers who all max out at the same price you have a higher degree of confidence that price reflects the value of the house+land.
    But value in this discussion is pretty loosely defined. It’s not just it’s value as a roof over your head with a number of beds/baths or you could just base it off of rental prices. You’re trying to find what price overlaps with a large enough number of likely buyers that you can sell in the time frame important to the seller. Luxury items like a home are problematic to value in some absolute sense because they aren’t a necessity. A place to live is but a place you own isn’t. The best you can say is a meaningful number of people won’t think you’re insane for paying $X for something.

    Your example of a person paying 5% more than everyone else because he plans to be there for 30 years is the single player. He or she is the one who doesn’t care what everyone else’s maximum is and just wants that home.

  20. 20
    Jay says:

    The best website to find out about school performance is the Washington State Report Card, http://reportcard.ospi.k12.wa.us/summary.aspx?groupLevel=District&schoolId=1&reportLevel=State&year=2014-15. It lists every school in the Washington State with detailed statistics and scores! It is pretty easy to compare schools when you have the exact scores.

    Don’t ever trust your realtor or other websites for school information!

    Bidding wars are evil! Period!

  21. 21
    boater says:

    Bidding wars are undesirable because you don’t have enough information at the time if the bidding to make an informed decision.

  22. 22
    Jay says:

    RE: boater @ 21 – Exactly! If my realtor advised me about increasing the offer price and having an escalation clause for the bidding war, I would have fired that person right away! There are lots of desperate realtors. Bidding war only drives buyers insane and you have no clue what you are getting into.

    I haven’t seen anyone paying 5% more than listing price and winning the bidding war. It is more like paying $50,000 to $100,000 more than the listing price for a decent house, that is like 10% to 20%!

  23. 23

    By boater @ 21:

    Bidding wars are undesirable because you don’t have enough information at the time if the bidding to make an informed decision.

    No one is saying bidding wars are desirable for buyers. My point was that if no one else is interested in a house in a market with very limited inventory, then you should be very worried about buying that house because it may be very difficult to sell later when the market is not such a seller’s market. You always should think about selling whenever you buy.

    As an entirely different example, an older couple may not care that two of the three bedrooms in the house they are buying are small, because they have no use for those two bedrooms. But when it comes time to sell many of the people looking at the house will care, and rule it out.

  24. 24

    By Jay @ 22:

    RE: – Exactly! If my realtor advised me about increasing the offer price and having an escalation clause for the bidding war, I would have fired that person right away! There are lots of desperate realtors. Bidding war only drives buyers insane and you have no clue what you are getting into.

    I haven’t seen anyone paying 5% more than listing price and winning the bidding war. It is more like paying $50,000 to $100,000 more than the listing price for a decent house, that is like 10% to 20%!

    This entire post is just really bizarre. I’m fairly certain I’ve only used an escalation clause once, so I don’t think they have a frequent use by any means, and they have a ton of drawbacks. But there are some situations where they could be useful. Firing your agent because they happen to see such a situation and recommend its possible use is rather ignorant. And in any case, whether to use an escalation clause is always the buyer’s decision.

    Next, the desperate people in these situations are often the buyers, not the agents. Even outside bidding war situations, if your agent is desperate for a transaction you have the wrong agent.

    Finally, as to the first paragraph, what buyers typically have no idea what they are getting into is simply what other buyers are bidding. But that is dependent on the seller. The seller could instruct their agent to disclose exactly what the existing high bid is. That might not be that useful of information though, because the high bid might be crap, and other bids may come in later. What the seller is going to do though is whatever they think best suits their interests, so it’s not surprising buyers might not like the process.

    As to the last paragraph, what a property goes for over list is dependent on what it is listed for. Buyers are not totally ignorant of value. But conversely, I’ve seen listings where the sellers ended up with too little because they priced it too low. In the one I’m thinking of the buyer did pay about 18% over list, but they got the property at a fairly good price because there’s a limit to how much someone will bid over list.

    That limitation on what buyers will likely bid is a variation on the stupid bidding strategy when the market was weak of some buyers always wanting to bid X% under list. A house could be a perfect house for a buyer and underpriced, but some buyers would still want to bid 10% less than what was asked, and if a house was overpriced by 20% they’d still want to bid 10% less. Getting overly hung up on what you’re paying relative to list just leads to bad decisions.

  25. 25

    RE: boater @ 19

    boater: “You say things that seem to agree with me but then say they contradict.
    Your comment about Automated valuation in cohesive areas is essentially the same as what I was saying about tract new construction homes. When the minimum number of variables change and you have a good number of transactions it’s easier to determine sales price.”

    ARDELL: Change that to newER homes vs new construction and we’ll agree. New Construction is never FMV and too old contains a large variance for deferred maintenance vs remodeled. Ideally 5 to 10 years is the most stable valuation period. Once you know that value you can increase it for new and decrease it for old. But you can’t start at the new construction price as valuation method. There are a few times when you can, but now is not one of them. I am watching one where the builder as asking over 5X lot! In the areas where I work, new is an even more limited commodity than “good house” and that is skewing the prices for the must have brand new people.

    boater: “When I say single player I mean the single entity willing to pay the maximum price. If you have four offers who all max out at the same price you have a higher degree of confidence that price reflects the value of the house+land.”

    ARDELL: Yes. That is the difference between “Multiple Offers” and a “Bidding War”. The seller pricing at proven hindsight recent comp value and the buyers adding the appreciation in group form in multiple offer scenario is the most efficient valuation method. In effect, the group of buyers all bidding about the same for the same house is more efficient than an appraisal at determining true current value. When I see “single player” it is one buyer who “jumps in front of the train” by offering the seller a price he can’t refuse to “shut down the show”. The buyer offers substantially over list and value to block out the other offers with the condition that the seller respond quickly (short fuse). That is true “single player”.

    boater: “Your example of a person paying 5% more than everyone else because he plans to be there for 30 years is the single player. He or she is the one who doesn’t care what everyone else’s maximum is and just wants that home.”

    I think our difference there is you are talking maximum sale price and I am talking fair market value. I rarely deal with maximum sale price since often that is the buyer least likely to close. Not always; but often.

  26. 26

    To Jay and Kary, I use escalation clauses and see escalation clauses more as the norm than the outlier. But that likely has more to do with the areas where I work vs ones where you may be working (Kary) or buying (Jay).

    An escalation clause is not “a bidding war”. An escalation clause is just assurance that you won’t lose the house over a few bucks. You can have a house listed over value at $715,000 and offer $650,000 OR $1,500 over another offer. Then if the seller gets two offers at $650,000 you get the house for $651,500. An escalation clause is not in and of itself indicative that there will be a full out “war”. It’s a tool.

    Whether all of the offers are similar, with only increment in the escalation difference, is largely dependent on time of year. If the market is going to go up 8% to 12% in a given year and sellers price on comps from last Spring-Summer market because there are none since, then the first sales in a neighborhood are going to add the appreciation in the bids more so than after June-July. Appreciation happens, everyone agrees. Jay disagrees with HOW it happens while at the same time not complaining that the market isn’t flat. That is just immature and emotional and not a good way to approach buying a half million dollar give or take product in an open market. If a market goes up 12% in a year it is more likely to be in 2 or 3 large spurts early in the year and by June than at the rate of 1% per month to get to 12%. Those “spurts” of appreciation are not the same as a “bubble” caused by one or two irrational bidders in a “war”.

    In the bubble years we added 5% for each next house and so volume of sales created the larger appreciation. That appreciation was controlled more by sellers. This market is different where the seller is better off pricing at appraisable value and letting the buyers price the house and control the market by using a “will look at offers on period” to give a fair amount of time for buyers to view and consider the property and their offer. That is why “must appraise clause” being removed is always a buyer function and not a seller demand. The seller’s asking price should be what will appraise. The buyers take responsibility for the amount they add to that for this year’s appreciation.

    By June and sometimes May the appreciation amount is built in using comps from Jan to May 1 or June 15 (depending on the year). That’s why they call it “Spring Bump”.

  27. 27

    By Ardell DellaLoggia @ 26:

    To Jay and Kary, I use escalation clauses and see escalation clauses more as the norm than the outlier. But that likely has more to do with the areas where I work vs ones where you may be working (Kary) or buying (Jay).

    An escalation clause is not “a bidding war”. An escalation clause is just assurance that you won’t lose the house over a few bucks.

    I was just talking about my use of escalation clauses as a buyer’s agent. After discussing the pros and cons few of my clients want to use an escalation clause. In any case, I don’t see that many situations where they are useful. and that undoubtedly affects my advice and my clients’ decisions. The grossly under-priced listing is the is the main exception, and even there risks are still present. The main disadvantage of an escalation clause is you’re disclosing the maximum amount you’re willing to pay, and the seller can just counter for that amount, even absent any other offers.

    The last thing the escalation clause does is give any “assurance that you won’t lose the house over a few bucks.” The seller is still going to have to like the buyer, the buyer’s agent and if financed the buyer’s lender. The seller could easily use an offer with an escalation clause to escalate (or even counter) another offer that is lower in maximum price.

  28. 28

    RE: Kary L. Krismer @ 27

    It really depends on the situation and the market you work in Kary and also the time of year. I did have a client who wouldn’t “break a tie” with an escalation clause and lost the house over $1,500. They thought they would have had to bid $20,000 and didn’t quite understand the situation until it closed and the other buyer got it for only $1,500 more. They were very upset that they didn’t respond appropriately and learned a very valuable lesson which did apply on the house they ended buying for just a smidge over asking. At best an Escalation Clause is a “tie breaker”.

    Escalation clauses are very important in neighborhoods whose values are shifting outside of normal market conditions where a new business has moved in hiring many employees, as example. In a stable area without much change other than supply and demand then I might agree with you. I think we just work in different markets creating the appearance of disagreeing. I agree with you much more recently than I did back when you first started in real estate.

    One thing we will always disagree on, I think, is at least peeking at the Tax Value. I think in one example you would have to agree which was the 46 offer example from I think a little over a year ago. The asking price was about $200,000 under the Tax Value. You can’t totally fine tune a value using Tax Value, but pricing that much under Tax Value created 46 offers. So hopefully you now agree, though you didn’t years back, that at least knowing the Tax Value regardless of how you choose to apply that information is of some considerable value vs ignoring it entirely to the point of not even knowing what it is.

  29. 29
    Weasel says:

    RE: Ardell DellaLoggia @ 8

    Re the bedroom “issue”, its very clear what makes a bedroom – http://www.buellinspections.com/what-is-a-bedroom-when-is-a-room-not-a-bedroom/ if a room doesn’t meet the bedroom requirements, then it is not a bedroom regardless of what whacky logic some people use to count bedrooms.

    Our place has a finished ground level basement, aka “family” room and a 1/4 bathroom down there. Having that room is actually quite valuable to us at least, its a nice space where you can go to get away from the rest of the house, watch TV, use the computer, have a run on the treadmill, or take a nap on the spare bed in there. Its also great when other family come to stay we put them in that room, and it gives them their own space, and outside access via the slider. Being a large room is worth more to us than a house with a pokey small 4th bedroom wedged into it somewhere.

  30. 30

    RE: Weasel @ 29

    My point is not whether or not it is a bedroom. My point is it can’t be both a bedroom and a den/study. Often the agents are saying 4 bedroom and a den calling the den both a bedroom and a den. It is a bedroom OR a den. It qualifies as either. But it shouldn’t appear as two rooms when it is only one.

    If you have ever had an appraisal for purchase or refinance after the basement space was finished, look at that appraisal and you will see what I am talking about. Did you mean to say 1/4 bath? Is it a “service toilet” with no sink?

  31. 31
    Jay says:

    RE: Ardell DellaLoggia @ 28 – This is why a bidding war drives buyers crazy. You never know how much the other buyers are bidding, unless you bribe the listing agent! It is much better to put an offer on a dated house that has no bidding war, and has been on the market for a while. Unfortunately, so many people fall in love for the same house that has been staged, and start bidding insanely!

  32. 32

    RE: Jay @ 31

    I know what you are saying Jay, I deal with it every day. I’m dealing with it right now. You are saying you don’t want the market to be what it is. Maybe buy a house with a lower quality school or lower quality school district. My clients don’t do that. They deal with the market as it exists. You can’t change a market. It’s not a store where you buy houses. It’s a market. It fluctuates. It has multiple offers. You can buy the house no one wants so you “feel” better. You can buy a house worth $450,000 with an asking price of $550,000 for $525,000 so you “feel” better. But that is just the wrong way to deal with the situation. But if it makes you feel better…go for it. Buy the house no one else wants and see if it makes you feel a lot better. My clients don’t usually go that route.

  33. 33

    By Jay @ 31:

    RE: Ardell DellaLoggia @ 28 – This is why a bidding war drives buyers crazy. You never know how much the other buyers are bidding, unless you bribe the listing agent!

    Again, that is up to the seller. They very well could tell their LA to disclose the number and amount of bids. But that won’t get you anywhere because agents tend to game the system–putting in offers right before the deadline.

    But even on that dated property that has been sitting on the market for a few weeks you never know when a competing offer will come in.

  34. 34

    RE: Ardell DellaLoggia @ 28 – I’m not sure much of this really matters. You think escalation clauses are useful in more situations than I do. I think though it does prove my original point to Jay that escalation clauses do have some situations where they are useful. To fire your agent because they think they see such a situation is rather bizarre.

    It does though bring up an issue I’ve mentioned a lot in the past. There are a lot of buyers out there who lose out on multiple offer situations because their agent is not very good. Unfortunately that is not a situation a buyer is likely to be able to spot. But my point in the first paragraph is people might fire their agent for the wrong reason, while in this paragraph I’m saying they might fail to fire their agent for reasons they don’t even see.

  35. 35
    ARDELL says:

    RE: Kary L. Krismer @ 33

    Agree that some are doing unannounced right before the deadline and more so in the last year. That is why I almost always have an escalation clause. I do not worry that the seller knows our upper limit. That’s like saying you have to pay more if you are a known rich person. That’s the whole point of an escalation clause. The upper limit is often irrelevant if you do them correctly.

    I’m very good at separating the chaff from the wheat as to new listings making the 35e a necessity almost always.

    Boarding the plane…

  36. 36

    By ARDELL @ 35:

    That is why I almost always have an escalation clause. I do not worry that the seller knows our upper limit. That’s like saying you have to pay more if you are a known rich person.

    It’s quite a bit different. It’s the seller knowing the most you are willing to pay for the house.

  37. 37
    ARDELL says:

    RE: Kary L. Krismer @ 36

    It doesn’t matter Kary. That most is over asking and it can’t go over asking without the bounce. I have a foolproof method of predicting early on how many offers there will be. Works every time. But I know how you hate predictive strategy. ;)

  38. 38
    Mike says:

    RE: Jay @ 22

    How would you ever find a house in the hot Seattle neighborhoods such as Greenlake, Ballard, Bryant without being in a bidding war with other buyers? We have found that it is the Seattle norm, caused by too few houses for sale and too many buyers wanting to be in the same neighborhoods.

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