NWMLS: Strong Demand As Pending Sales Hit All-Time High

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May market stats were published by the NWMLS yesterday. Before we get into our monthly stats, here’s a quick look at their press release.

Housing inventory shortages persist
Just as expected, the month of May had an uptick in new listings (12,272), but just as many buyers (12,275) made offers on homes during the month to keep inventory depleted, according to the latest figures from Northwest Multiple Listing Service.

“Inventory is being squeezed from all directions,” reported Frank Wilson, branch managing broker at John L. Scott in Poulsbo. He said the pool of house-hunters includes young first-time buyers, renters whose rents are escalating, buyers who are returning to the market after recovering from a foreclosure or short sale, investors, and baby boomers who are purchasing for their retirement needs.

“The May housing market was not just hot, it was frenzy hot,” commented J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “Brokers are working like bees in a hive as the housing market creates a buzz of sales activity in the Seattle-Central Puget Sound area.” By his analysis, 80 percent of the homes coming on the market in King and Snohomish counties are selling within the first 30 days. “Many sell within the first week,” Scott reported, adding, “A healthy/normal market would have 30 percent selling in the first 30 days.”

Interesting. So if you parse what Lennox is saying here… he is admitting that this market is not healthy.

CAUTION

NWMLS monthly reports include an undisclosed and varying number of
sales from previous months in their pending and closed sales statistics.

Here’s your King County SFH summary, with the arrows to show whether the year-over-year direction of each indicator is favorable or unfavorable news for buyers and sellers (green = favorable, red = unfavorable):

May 2016 Number MOM YOY Buyers Sellers
Active Listings 2,696 +3.7% -17.8%
Closed Sales 2,509 +16.5% -6.5%
SAAS (?) 1.28 -11.3% +5.9%
Pending Sales 3,500 +15.5% +1.5%
Months of Supply 1.07 -11.0% -12.1%
Median Price* $560,000 +3.7% +16.4%

Pending sales of single-family homes in King County hit an all-time high in May. This does not bode well for buyers hoping for any sort of relief from stiff competition and fast-rising prices. Inventory did increase month-over-month, but barely.

The current market is the best time we’ve ever seen to sell a home, and conversely one of the worst times ever to buy a home. The only positive for buyers in this market is low interest rates.

Here’s your closed sales yearly comparison chart:

King County SFH Closed Sales

Closed climbed at a fairly normal rate in May, and came in as one of the better years, but still not as high as 2003-2007.

Pending sales hit an all-time high in May, but comparing the current pending sales data to anything prior to July 2008 is somewhat deceptive, since the NWMLS changed their defintion of what they consider to be “active” and “pending” that month.

King County SFH Pending Sales

Here’s the graph of inventory with each year overlaid on the same chart.

King County SFH Inventory

Total inventory is at its lowest May level on record. After turning in reasonably strong month-over-month gains earlier this year, May was much weaker despite an increase in new listings. The big spike in pending sales no doubt contributed to this, taking many of those new listings off the market very quickly.

Here’s the supply/demand YOY graph. “Demand” in this chart is represented by closed sales, which have had a consistent definition throughout the decade (unlike pending sales from NWMLS).

King County Supply vs Demand % Change YOY

The blue supply line turned back, going deeper into seller’s market territory. Demand as measured by closed sales is still shrinking slightly year-over-year, which is just about the only glimmer of hope for buyers in this market.

Here’s the median home price YOY change graph:

King County SFH YOY Price Change

Year-over-year price growth shot up again, from 13 percent in April to 16 percent in May.

And lastly, here is the chart comparing King County SFH prices each month for every year back to 1994 (not adjusted for inflation).

King County SFH Prices

Pretty much every month this year, it’s been a true statement that there has never been a better time to sell your home.

May 2016: $560,000
July 2007: $481,000 (previous cycle high)

Here’s this month’s article from the Seattle Times: Home prices soar again; some buyers camp out to lay claim to a future condo

Check back tomorrow for the full reporting roundup.

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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.

239 comments:

  1. 1
    resistance says:

    The next “Vancouver” is the sick, twisted hope of many in the community.

    Boomers selling to REITs and Chinese, nuking the prospects of their children and grand children being able to afford a place of their own in the process.

  2. 2

    Tim wrote: “Interesting. So if you parse what Lennox is saying here… he is admitting that this market is not healthy.”

    This is not really a market all agents would like, particularly buyers’ agents. But beyond that, this market creates a lot of practices firms wouldn’t like. Sellers doing pre-inspections, buyers being allowed to do pre-inspections, buyers getting pre-inspections which are only cursory and maybe even only with an oral report, agents having to deal with presenting multiple offers properly, escalation clauses, etc. Lot’s not to like if you’re looking from the level above the agent. The owners of our two firms were so concerned about those type of things they brought in an attorney to address the issues as part of a seminar.

  3. 3
    David B. says:

    From the Seattle Times article Tim cited:

    Chad Zinda, founder of the Seattle-based Metropolist brokerage, waited in line for four hours to reserve his spot in the building as he prepares for an empty nest next year. He was frustrated at the lack of condos available in the city and felt “a sense of urgency” despite the long wait until the tower’s opening.

    “I know if I buy in a year or two or three years, the prices are going to be higher,” Zinda said. “No one got a deal, but part of the bargain is you’re locked in.”

    So at least some of the present demand is there because people are buying because they believe prices will continue to go up. I.e., at least some of the price increases we are seeing exists simply because people believe prices will increase. Which is of course the classic definition of a bubble.

    The question is how much of the current market is being driven by such beliefs.

  4. 4
    Blurtman says:

    RE: Kary L. Krismer @ 1 – And what about the kickbacks? BTW, we still have not received those concert tickets. Can you please check?

  5. 5
    Erik says:

    Sweet mother!!!! Look at pending sales! That’s crazy. 3500 pending sales and 2850 houses for sale. The year/year charts are just as high as they were in 2013 when things went crazy and everyone was saying prices bounced off the bottom. I knew I needed to hurry and buy before I was priced out forever and I am sure glad I did. Alki isn’t nearly as hot as the downtown, but 2017 may be my year. Don’t worry, next time I sell and hit it big, I won’t brag on here because I have already done it once and I was unsure of myself. Now I’m confident in creating this pattern.

    This is great news for people that took initiative and bought. Thanks Tim.

  6. 6
    Carl says:

    RE: resistance @ 1 – I actually like free market capitalism. Better than the alternatives so far. If the REITs and Chinese want to be fleeced, the free market allows that. Hard to tell sellers not to cash out when they have a chance.

  7. 7

    By Blurtman @ 4:

    RE: Kary L. Krismer @ 1 – And what about the kickbacks? BTW, we still have not received those concert tickets. Can you please check?

    Sorry I thought you heard. I can’t get you the tickets you wanted because Bieber isn’t coming to Seattle! :-(

  8. 8
    wreckingbull says:

    RE: Carl @ 6 – Privatize profits and socialize risk. It’s “free-market capitalism” at its best!

  9. 9
    ESS says:

    Question for both real estate professionals and prospective buyers

    How many offers will a prospective buyer place before becoming discouraged in purchasing a type of residence in a specific neighborhood? Is it a matter of time, or is it a matter of the number of offers before a prospective buyer gives up? How long and how many offers have prospective buyers placed without results, but yet they keep on trying?

    If the prospective buyer becomes discouraged, what is the usual response?
    stay in the desired neighborhood and continue to rent?
    continue to look in the desired neighborhood, but lower expectations as to the size and type of residence?
    start to search in areas adjacent to the desired neighborhood?
    other responses?

    If a discouraged buyer starts to search in adjacent areas, how far away from the desired neighborhood will the buyer search?
    What are the primary considerations when looking at alternative areas? Transportation, schools, costs, shopping, walkability?

    What impact will all of the above have both on the highly desirable areas in the longer term, as well as less desirable areas? Will the highly desirable areas continue to escalate with only the very wealthy occupying those areas? Will the less desirable areas become “gentrified” and prices rise there as those who are priced out of the more desirable areas compete against each other in less desirable areas?

    What impact will the above have on both rents, and the development of more rental units to meet housing needs?

    I think some of the above information can be useful in determining some broad trends in the various markets over the next couple of years. What ever the results, there are going to be some clear winners and losers. It will be interesting to see how it all plays out.

  10. 10

    RE: ESS @ 9

    ESS: “Question for both real estate professionals and prospective buyers.How many offers will a prospective buyer place before becoming discouraged in purchasing a type of residence in a specific neighborhood? Is it a matter of time, or is it a matter of the number of offers before a prospective buyer gives up? How long and how many offers have prospective buyers placed without results, but yet they keep on trying?

    Ardell: It is part of my job to not facilitate their having started out on a futile journey in the first place. So this never happens in my practice. How long it takes to complete the journey depends on when they come to me. Those who come to me in late August and early September usually have a longer journey because they are on the downside of new inventory. Those who come to me ASAP after Jan 1 or during the Winter Holidays are usually getting fed enough new listings to be in their new home by end of June and usually earlier. Those who come to me in August end up with the same final scenario, their lead time is just longer. Generalizing of course but I can give exact specific examples of date they contacted me to date they are in their new home. How many offers is really a client to client thing as some clients blow the first one or even the first three before “getting it”. Those who follow my lead well often get the first one…or the second. Most buyers create their own losing scenario. Sometimes the buyer gets the first one or second one with me, but they have already made offers with a former agent before hiring me, so I don’t have that count of offers before me. Though I do ask for copies of their losing offers and almost always the reason they lost was something they elected to put in that offer and I make the correction.

    ESS: “If the prospective buyer becomes discouraged, what is the usual response? stay in the desired neighborhood and continue to rent? continue to look in the desired neighborhood, but lower expectations as to the size and type of residence? start to search in areas adjacent to the desired neighborhood? other responses?

    Ardell: Usually people ask me up front. Someone came to me in early 2008 and I told them to renew their lease for a year and get back to me when the lease is coming up because the market was heading down soon and for at least a year. A year later when their lease was up they bought a short sale in their desired area and it took only one offer. Off the top of my head, three people came to me in August and I told them we can look now and at every new listing, but odds are they wouldn’t be in a house before Jan to April. One closed in February (this year and in their desired area). One closed April 30 (2014). One (2015) got lucky and closed in November. The Journey is usually shorter if people come to me in Feb. – March. The real estate cycle contributes a lot to the timeframe unless it is a 1 or 2 bedroom condo.

    ESS: “If a discouraged buyer starts to search in adjacent areas, how far away from the desired neighborhood will the buyer search? What are the primary considerations when looking at alternative areas? Transportation, schools, costs, shopping, walkability?”

    Ardell: That doesn’t really ever happen because I am the person they hire on day one who is supposed to know if their parameters are realistic. If they are not then I reject the client but more often when I reject them…they change their parameters at the start somewhat. I do have a client right now and from time to time with unrealistic objective. But that compromise of parameters often takes quite some time. Not because we don’t know the end game, but because there are two people, husband and wife, with slightly different parameters. And which one is going to “give” in that regard…is a “process”. Kind of a power struggle with lots of mind games. :) There is no way to speed up that scenario and the answer is not that “they” change their area or parameters, it’s just that one wins and one loses to some extent. I can assist with that, but it has to play out. They each kill the offers back and forth until they both get tired of fighting for their own wants and someone gives in. The one she wants…he says yes but kills the offer some other way. The one he wants…she says yes but kills the offer some other way. This goes back and forth until one of them gives up. Sometimes the husband wins and sometimes the wife wins. I have no way of knowing which will win unless one of them is actually “wrong” in which case I step in. But often that is not the case. It just has to play out. They don’t get tired of the market…they get tired of blocking each other. Though it’s all very passive-aggressive and sometimes they don’t even realize themselves that they are doing that. Sometimes I tell them. Sometimes I don’t.

    ESS: “What impact will all of the above have both on the highly desirable areas in the longer term, as well as less desirable areas? Will the highly desirable areas continue to escalate with only the very wealthy occupying those areas? Will the less desirable areas become “gentrified” and prices rise there as those who are priced out of the more desirable areas compete against each other in less desirable areas?”

    Ardell: None of what we are saying is impactful. What IS impactful are the external changes. People want close in when traffic increases and when gas prices increase BUT increased lightrail and transportation that is not “a bus” or string of buses can easily counteract that if those were coming from the “right” places like The Eastside and North of the City vs South. Cities that have trains to take in don’t experience the desire to be “close in” at all the way this area does. Reading your paper on a fast train to work is preferred to living “close in” to The City for families outside of NYC and Philly, as example. Transportation that is not a bus is the key. I would say where work is has an impact, but not really. Most downtowns are employment centers so the issue is ease of getting to town…or not.

    ESS: “What impact will the above have on both rents, and the development of more rental units to meet housing needs?”

    Ardell: I do do windows but I don’t do rentals. Someone else will have to hit that ball.

    ESS: “I think some of the above information can be useful in determining some broad trends in the various markets over the next couple of years. What ever the results, there are going to be some clear winners and losers. It will be interesting to see how it all plays out.”

    This is not a good time for hindsight based projections as the wind is already starting to shift. More sellers are coming out and more buyers are getting out of “the game” by getting houses as the increased pending sales are reflecting. I expect a slightly elongated season this year and a shift in balance of supply and demand by mid August or end of July. That process and progress could continue well into fall and possible even spill over into next year.

    Disclosure: My perspective is skewed by my “service area”. I have no idea why people buy in Pierce County nor have I ever had a buyer who is looking in my areas of North King County and South Snohomish County shift to Pierce. To Monroe…yes. To Everett….no. To “Union Hill 98053…yes”. To Renton-Issaquah School District…hmmm, they thought about it, but ended up in Issaquah or Sammamish.

    What they are chasing, as one commenter here noted in the last thread, is a NEW or NEWER house. It is not the multiple offers that is chasing them. That is true IF they have at least 20% down. If they are VA, FHA, 5% Conventional or 10% Conventional…slightly different. Their sense of futility comes from their lack of ability to compete. I’m in the middle of one of those now and while we did “win” in multiple offers with a VA loan…getting that to stick and close is a whole nuther story that is still in progress. I have a an agent friend with a similar scenario for a t 10% down buyer. Low downpayment “deals” appraise for less as the lender is funding more of the purchase. So apparently more sellers are seeing more offers from less qualified buyers right now. That’s another shift…playing out. Anecdotal of course.

    My $.02 Look forward to reading other replies.

  11. 11
    David B. says:

    @9 – What I did was adopt a flexible attitude: I started looking both for a better rental I’d be comfortable in for several years as a I waited out this sellers’ market and continued to keep an eye on listings in case anything that satisfied my standards came up (because, after all, it only takes one house to satisfy those). Since rentals are also scarce in my area, I didn’t find any of either option for some time.

    I happened to find something suitable for sale first. It did go to a bidding war, but I was able to stay within my budget and I didn’t have to do anything foolish like waive standard contingencies, so I ended up buying it. I had thought enough about must-haves and prioritized them well before hand, and the subject property basically had all of them, so I was able to decide to make an offer within hours of it being listed. It helped that it was a townhouse in a small development that had previously caught my eye as being one of the best for me, and in which I had been wishing a listing would come up.

    But I could have just as easily ended up living in a rental and waiting the sellers’ market out. I was not fixated on owning something soon. It just ended up that way. And even then, it took most of a year to find something.

  12. 12
    Amy says:

    By David B. @ 11:

    @9 – What I did was adopt a flexible attitude: I started looking both for a better rental I’d be comfortable in for several years as a I waited out this sellers’ market and continued to keep an eye on listings in case anything that satisfied my standards came up (because, after all, it only takes one house to satisfy those). Since rentals are also scarce in my area, I didn’t find any of either option for some time.

    But I could have just as easily ended up living in a rental and waiting the sellers’ market out. I was not fixated on owning something soon. It just ended up that way. And even then, it took most of a year to find something.

    This is my strategy as well. I have a few desired neighborhoods in mind and check listings every once in a while (including a daily Redfin email that I always read) in case I find something that fits really well, but I have a couple of factors that make sitting on it a very easy option.

    – Significant other in med school, so very likely a larger income stream in the future.
    – Currently living in an apartment in a really walkable area with a *very* convenient commute to/from work and good neighbors.
    – Strong desire not to get into crushing debt during a legendary seller’s market when it’s very likely I’d be overpaying.

    If I keep saving, because of #1, we can immediately jump on any house that suits us in the future. If prices become more reasonable in a couple years, all the better, but we can handle it either way. In the meantime, the savings give a lot of flexibility in case of unknowns. Because of #2 and #3, I really have no immediate need to buy a house.

  13. 13
    Blurtman says:

    RE: Kary L. Krismer @ 7 – Oh well, maybe Amon Armath, then.

  14. 14
    Deerhawke says:

    I kind of thought that we were going to be seeing more balance between supply and demand starting this spring. Clearly if you compare the growth in pending sales to the growth in inventory, that is not the case. In fact if we look at it objectively, we have to believe that standing inventory (if there even is such a thing anymore) will be nibbled down even further.

    Here is a question for some of the pros on this site. I have a new home that is about a week away from being finished. The agent who is owed the listing (he found the dirt and brought me the deal) believes in putting the house on the market with offers to be reviewed on X date (usually a week or so later. Another agent tells me this is a terrible idea. You look weak if no offers are received on that date.

    What are the pros and cons here?

  15. 15
    Dana says:

    RE: ESS @ 9

    My wife and I just bought a house and close next week. We have made 10 offers over the past year and a half, even going as much as $130k over asking and not getting a house. I am afraid of the bubble, the the fact is our rent has gone up 25% over the last two years (Mt. Baker) to the point where our rent would have been $35,000 after tax per year assuming he doesn’t raise it anymore, which he will. We have a small child and just wanted to have some consistency.

    We got lucky by writing a letter. We have done this on every house and most of the time it doesn’t work, but for some reason on this one it did. Both wives are nurses, we moved from Portland, they were moving to Portland. We just got lucky. We had our eyes on Seward Park to Central District, and just kept at it.

    I am definitely not happy that we bought a house at an all time peak, but with the low interest rates, high as hell rents, what appears to be a strong tech market, foreign buyers, I don’t see it going down any time soon that would allow us to just “rent until the market cools”.

    Super frustrating, but hopefully something works out.

  16. 16

    By Deerhawke @ 14:

    The agent who is owed the listing (he found the dirt and brought me the deal) believes in putting the house on the market with offers to be reviewed on X date (usually a week or so later. Another agent tells me this is a terrible idea. You look weak if no offers are received on that date.

    I almost included “review date” in my first post above, but that at least is not something that will get a firm sued, so I left it out. I think though that review dates are a bad practice and something agents only do because most only do things they’ve heard of rather than trying to think about how things can be done better.

    There are two disadvantages to the review date. The agent mentioned one, but that is a minor issue. The other is that buyers will play the system like an ebay auction, getting you their offers as late as possible so that you don’t use them to get higher offers. Whether or not that is done up to the seller, but the problem with late offers is it doesn’t allow your agent as much time to review the offers, contact lenders and do whatever other investigation your agent might want to do. You could set an offer submit date with a review date the next day, but I’ve seldom if ever seen that done.

    I much prefer a “please allow two business days for offer review” type system, with a Thursday list. That gets you through the weekend. (Speaking of which, there are some agents which will put a review date on the weekend, which is a horrible idea.)

    Finally, unrelated. After attending that seminar I mentioned, I think on my future listings I’ll recommend to sellers that they not allow escalation clauses. That’s something banks typically do and something any seller can do. The attorney at the seminar had legal reasons to avoid them, and I’ve never really been comfortable with them on the buyer side, only using them rarely. But I do think from the seller side they may cause some buyers to hold back (unless maybe you just want to risk countering for their highest escalation price), and/or cause other issues I don’t want to get into. So you might want to consider that as a strategy of getting buyers to make their highest and best offer.

  17. 17

    RE: Kary L. Krismer @ 16 – Third disadvantage to a review date system. Some buyers might purposefully wait until the deadline has passed to avoid a bidding war. They don’t have that option with a 2 business day review period.

  18. 18
    Deerhawke says:

    Thanks Kary. You always have a thoroughly thought-out perspective.

  19. 19

    RE: Deerhawke @ 14

    I do them all the time and am doing one tonight. That said…they are not a tool for new construction given the property has technically been available while it was being built. So it doesn’t make a lot of sense to put a short fuse on it at this point. Rarely does a builder use them for new construction. I don’t think I have ever seen one used for new construction. But I do firmly believe in them for a variety of reasons that do not apply to new construction.

    Heading over to put the lockbox on the one I am listing with a “will look at offers on” tonight so I’m answering a bit hastily. I will be doing 4 or 5 others in the next 3 weeks or so and at least 2 of those are “will look at offers on” candidates.

    The primary reason we do that is so a buyer doesn’t tie up the property as soon as we list it with an inspection clause so he can think about whether he wants it or not. That was happening a lot in low inventory. One agent even tied up 5 properties that way for a buyer who was coming to town on the weekend so he would have 5 properties to show the buyer. The buyer’s came to town and bought none of them.

    A seller deserves at least 3 to 4 days to market the property. That is what “will look at offers on” is for. Builders don’t usually need that or want that.

  20. 20

    By Ardell DellaLoggia @ 19:

    A seller deserves at least 3 to 4 days to market the property. That is what “will look at offers on” is for. Builders don’t usually need that or want that.

    In this market most builders are selling multiple houses and selling them long before they’re finished. That doesn’t seem to be the case in the situation described.

    But the main reason for “offers reviewed” isn’t to prevent someone from tying up 5 properties–they could do that with an offer review system too. The main reason is to allow the property to be exposed to the market for a sufficient time to know whether the offer(s) received are likely to be the “best” offers received.

    If you accept an offer too quickly you’ll never know how much you might be giving up. Of course you could extend that even further, and want the property to be on the market for at least two weeks or two months, but at some point the cost of doing that exceeds any likely benefit.

  21. 21

    RE: Kary L. Krismer @ 20

    Kary: “But the main reason for “offers reviewed” isn’t to prevent someone from tying up 5 properties–”

    Your main reason may be different…but that IS why the practice was started in the first place. It started before the market was this hot and was a response to low inventory vs a game plan for multiple offers. You can’t make getting higher than asking price the “main” reason for the whole industry because the main mls rule is the seller has to be willing to sell it at asking price. The practice started because buyers were jumping on the listings and cancelling after having a few days to think about whether they wanted the house or not.

    Even The Tim agrees that is not good. :)

    https://seattlebubble.com/blog/2014/01/15/one-five-pending-sales-failed-close-q4/

    “Will look at offers on” is not about greedy sellers. It is about buyers tying up properties before they decide if they really want it or not and then cancelling. It gives the buyers a few days to be more sure about their commitment to the purchase so they can “proceed in good faith” and results in fewer pending sales failing.

  22. 22

    RE: Ardell DellaLoggia @ 21 – We’ll just have to disagree on that, because again it doesn’t stop the problem you describe. But you might be right, it wouldn’t surprise me that agents would come up with an ineffective solution to a problem.

    The practice came up as I recall about the same time there were rumors that DOL would sanction agents for having a history of accepting offers too quickly–not allowing adequate exposure to the market.

    In any case it clearly is not the best solution for the reasons I mentioned. I think I may have only done it once or twice, but I’ve done “allow two business days” for years because a some of my clients were bankruptcy trustees, estate administrators, etc., and needed the time. After doing an offer review date once (or maybe twice) I realized its shortcomings, and have since advised clients accordingly.

  23. 23
    Hamlet says:

    I live in a condo, and would like to move into a house. I don’t see why anyone would want to live in a condo. As has often been said, condos combine the worst aspects of owning a house and renting an apartment, with none of the benefits.

    * Shared walls and floors. You hear your neighbors, and they hear you. Over the years I’ve heard crying babies, barking dogs, people making love, music, arguments, and construction work on other units.

    * Regimented rules. Lots of CC&R rules about when you can and can’t do.

    * Condos don’t appreciate as much, or as fast, as do houses.

    * When other residents default on paying their HOA fees, it becomes the other owners’ problem.

    * You don’t own the land, which is a significant part of the value of owning a house. A person might want to buy your house just to tear it down and build a better house on the land. But you can’t sell the land if you live in a condo.

    * Some older condos (such as mine) don’t allow in unit washer/dryers. I have to share community washer/dryers with other residents in the building.

  24. 24

    RE: Kary L. Krismer @ 22

    I think we just work in different markets. :) It’s a lot more commonplace where I work.

    Here’s the one I did last night looking at offers on Tuesday. It’s the first time in 26 years I am doing a duplicate listing in both Residential and Condo. It just doesn’t feel like “a condo”, though I doubt anyone would miss it either way.

    http://www.zillow.com/homedetails/13811-SE-Allen-Rd-Bellevue-WA-98006/2098302313_zpid/

    It really does decrease the chance of someone cancelling. It just depends how good you are at picking. :)

  25. 25
    ess says:

    RE: ESS @ 9

    Thank you to those who responded to my various questions. I appreciated reading the various perspectives.

  26. 26

    By Ardell DellaLoggia @ 24:

    RE: Kary L. Krismer @ 22

    I think we just work in different markets. :) It’s a lot more commonplace where I work.

    Not really. But unless you’ve polled all the agents you’ve dealt with, you don’t really have any idea why they are doing it. Probably the most likely answer is “because I’ve seen some other agents doing it.” And that’s likely the reason why they allow pre-inspections, which is a much worse practice, or why they have their sellers do their own pre-inspection, which is an even worse practice. Monkey see, monkey do.

    But ignoring why agents do it, it IMHO is not as good of practice as allowing X days for review, unless the listing agent does nothing at all to screen the buyers or requires submital at least a day before they are actually going to be reviewed and their seller doesn’t want them to do anything to try to increase offers. Of the things mentioned in this post, a review date is the least risky for a seller from a liability point of view, but it can affect price and screening.

  27. 27

    By Hamlet @ 23:

    Shared walls and floors. You hear your neighbors, and they hear you. Over the years I’ve heard crying babies, barking dogs, people making love, music, arguments, and construction work on other units..

    A lot of your points are valid, but this one really depends on the building. The condo I lived in had no major issues. The apartment I lived in during a remodel was horrible.

    The one thing a condo can get you is a better location for under seven figures, at least within Seattle proper.

  28. 28
    Erik says:

    RE: Hamlet @ 23
    I live in a condo over the water on Alki point, which I purchased for $300k in 2014. No way could I have afforded that as a house. Like Kary said, it would have cost me millions if it were a house. I like being involved and talking with the neighbors though. Buying on the top floor is best because you cannot hear the neighbors. I live on the 2nd floor, which is the worst of both worlds, but I got a really good deal.

    I like that I can do whatever I want and I’m not chained to anything like mowing my yard if I owned a house. I just come home and plop down. With a condo, you spend time tackling the goals you want to tackle as opposed to maintaining a house. After work you can take dance lessons, workout, go to school, buy more real estate, etc. and not have to worry about house maintenance.

    People freak out about any noise they hear after work even if they are watching tv, but it doesn’t bother me. Maybe I’m weird, but the benefits of living in a condo outweigh the drawbacks for me.

  29. 29
    kenmorem says:

    By Erik @ 28:

    RE: Hamlet @ 23
    Maybe I’m weird….

    understatement of all time?

  30. 30
    David B. says:

    By Hamlet @ 23:

    * Shared walls and floors. You hear your neighbors, and they hear you. Over the years I’ve heard crying babies, barking dogs, people making love, music, arguments, and construction work on other units.

    As Kary said, that depends. Better construction avoids much of that. So does avoiding living in units below someone else if you’re noise sensitive. My condo is in a duplex (it’s a small HOA of three duplexes). I have only one neighbor, to my side, and three of my four walls are outside walls. I almost never hear the neighbors. Being noise sensitive myself I would never buy a condo under anyone else.

    * Regimented rules. Lots of CC&R rules about when you can and can’t do.

    True, but many single-family homes in newer subdivisions share that same attribute.

    * Condos don’t appreciate as much, or as fast, as do houses.

    I did not buy my home primarily as an investment. I’ll be fine if I don’t make a killing on it.

    * When other residents default on paying their HOA fees, it becomes the other owners’ problem.

    There’s ways to deal with such owners (late fees, collection agencies, liens, etc.).

    * You don’t own the land, which is a significant part of the value of owning a house. A person might want to buy your house just to tear it down and build a better house on the land. But you can’t sell the land if you live in a condo.

    My earlier comment on appreciation applies here.

    * Some older condos (such as mine) don’t allow in unit washer/dryers. I have to share community washer/dryers with other residents in the building.

    Most all newer condos do have in-unit washer/dryers. About the only ones that don’t were originally built as apartments then later turned into condos. Those also happen to be precisely the same condos with the least noise insulation between units.

    Finally, I’ll second what Erik the Troll said about condos and spare time. It’s nice not to have to blow spring weekends on yard work when there’s hiking trails beckoning in the mountains.

  31. 31
    Marc says:

    RE: Ardell DellaLoggia @ 24 – Sorry Kary but I’m with Ardell on this one. I can see why someone might conceptually dislike offer review dates but this is not academia. In the Seattle/Eastside markets, the reality is that offer review dates on resale homes (as opposed to new construction) have become commonplace and both buyers and agents have acclimated to them to the point that if a review date is not stated in the listing, the listing agent will get panicked phone calls from people desperate to know if there’s time for them to get in to see the house before it is sold.

    Admittedly, this is a love/hate relationship as nobody likes the stress of a multiple-offer bidding process (except the seller but even the seller is nervous until that first offer rolls in). I believe that most rational people will far prefer this to the alternative of houses selling to the first person who can send an offer over.

    Offer review dates also provide a modicum of assurance for the seller that the buyer has had at least some amount of time to see the house, way their alternatives, and make a somewhat reasoned offer.

    I also firmly believe the escalation clauses are extraordinarily better than the classic Bank REO practice of insisting on “highest and best” offers. That forces the buyer to bid in a vacuum with no knowledge of whether there will be any other bidders or what they might bid. Thus, there’s a real possibility that they will be the only person to bid or that they will bid unnecessarily high. How does a rational buyer respond to that risk? By being conservative on how much they offer. Thus, the seller is more likely to get lower offers than they would have if they permitted escalation addendums. With an escalation addendum the buyer knows they will get to see the competing offer that triggered their escalation. Is there risk that the seller or listing agent will fraudulently produce a fake offer just to escalate the price, sure, but there is no risk-free solution, only lesser or greater risk alternatives so you gotta pick. Also with an escalation addendum there’s a paper trail you can potentially follow unlike the highest and best where the seller has no obligation to share any other offer that they allegedly received (yes, Kary, I know you could add such a term but that is rarely done and you know it).

  32. 32

    By Marc @ 31:

    RE: Ardell DellaLoggia @ 24 – Sorry Kary but I’m with Ardell on this one. I can see why someone might conceptually dislike offer review dates but this is not academia. In the Seattle/Eastside markets, the reality is that offer review dates on resale homes (as opposed to new construction) have become commonplace and both buyers and agents have acclimated to them to the point that if a review date is not stated in the listing, the listing agent will get panicked phone calls from people desperate to know if there’s time for them to get in to see the house before it is sold.

    They can get that same assurance “with allow X business days for review” if the seller lets the LA disclose whether any offers have come in and when they will be reviewed. So no real difference, particularly since even with a review date the seller can accept an offer earlier.

    I also don’t consider reducing the number of phone calls a listing agent gets to be a valid reason to set terms of sale.

    Admittedly, this is a love/hate relationship as nobody likes the stress of a multiple-offer bidding process (except the seller but even the seller is nervous until that first offer rolls in). I believe that most rational people will far prefer this to the alternative of houses selling to the first person who can send an offer over.

    Offer review dates also provide a modicum of assurance for the seller that the buyer has had at least some amount of time to see the house, way their alternatives, and make a somewhat reasoned offer.

    Again, they don’t have that assurance–an offer can be accepted earlier. They have that same basic level of assurance if the seller requests that offers allow X business days to review.

    The real difference is X business days allows the seller to control things better. I don’t know why any seller would prefer an offer review date system which allows the buyer more control (ignoring the fact the seller could accept earlier than the review date). And I don’t know why any agent would want it when it allows them little control over their being able to review offers in a reasonable period of time.

    I also firmly believe the escalation clauses are extraordinarily better than the classic Bank REO practice of insisting on “highest and best” offers. That forces the buyer to bid in a vacuum with no knowledge of whether there will be any other bidders or what they might bid. Thus, there’s a real possibility that they will be the only person to bid or that they will bid unnecessarily high. How does a rational buyer respond to that risk? By being conservative on how much they offer.

    That’s a huge assumption. They could also bid a lot more, and we are looking at this from the side of the seller. I see a fair amount of offers that start fairly low and escalate a rather large amount. What would they offer without the escalation clause in this market?

    And in any case an offer with a high escalation clause doesn’t do you any good if there’s not an offer to escalate it–absent maybe just countering since the buyer has tipped their hand. And if there’s any technical defect in the offer that the agent thinks is escalating the offer, the seller just accepted the offer at the un-adjusted low price! And that is probably one of the many reasons why the forms manual for 35E says: “EXERCISE EXTREME DILIGENCE. No matter who you represent, use of this form is risky and requires the utmost care and diligence in order to protect your client. NWMLS does not recommend the use of escalation provisions and this form is provided merely as a courtesy to our members . . ..” [This goes on, there are also at least two more paragraphs of warnings about using the form.]

  33. 33
    Marc says:

    By Kary L. Krismer @ 32:

    By Marc @ 31:

    RE:

    I also firmly believe the escalation clauses are extraordinarily better than the classic Bank REO practice of insisting on “highest and best” offers. That forces the buyer to bid in a vacuum with no knowledge of whether there will be any other bidders or what they might bid. Thus, there’s a real possibility that they will be the only person to bid or that they will bid unnecessarily high. How does a rational buyer respond to that risk? By being conservative on how much they offer.

    That’s a huge assumption.

    Kary, you would make a staff sergeant proud the way you defend a position. Is it “an” assumption, sure. Is it a huge assumption, no. I’d call it a safe bet.

  34. 34
    pfft says:

    By Carl @ 6:

    RE: resistance @ 1 – I actually like free market capitalism.

    yeah, the 1800s put that myth to bed. we have (somewhat)regulated capitalism and it’s much better than market capitalism.

    In other news, mr market capitalism stiffs his workers and contractors. no surprise there.

    USA TODAY exclusive: Hundreds allege Donald Trump doesn’t pay his bills
    http://www.usatoday.com/story/news/politics/elections/2016/06/09/donald-trump-unpaid-bills-republican-president-laswuits/85297274/

  35. 35
    Hamlet says:

    The best feature of a condo, for me, is security. My condo has 24/7 doormen. So I can travel for months at a time, and not worry about burglars.

    But even that has a down side. Labors costs are high, so high HOA fees.

    I do live in an older building — constructed in the early 1960s, as apartments, later converted to condos. So the walls are thin, and no in unit washer/dryer.

  36. 36
    Ben says:

    By Marc @ 31:

    I also firmly believe the escalation clauses are extraordinarily better than the classic Bank REO practice of insisting on “highest and best” offers. That forces the buyer to bid in a vacuum with no knowledge of whether there will be any other bidders or what they might bid. Thus, there’s a real possibility that they will be the only person to bid or that they will bid unnecessarily high. How does a rational buyer respond to that risk? By being conservative on how much they offer. Thus, the seller is more likely to get lower offers than they would have if they permitted escalation addendums.

    Spot on.

    I just bought a house and in hindsight this was exactly my behavior psychologically as a buyer. My so-called highest and best was usually the highest I “wanted” to pay within my valuation range of the house, while my offers with escalation clauses would often go somewhat beyond what I thought the house was worth. In other words, I was willing to overpay some for a house IF that was the only way I could get the house.

    In a highest and best offer, I was not comfortable assuming I had to overpay to get a house and would not offer a number over my range. For whatever reason, with an escalation clause I was totally ok going out of my value range if I knew it would only get to that level if that’s what it took to get the house.

  37. 37
    Erik says:

    RE: kenmorem @ 29
    Good one…

  38. 38

    RE: Kary L. Krismer @ 32

    From ghoulies and ghosties
    And long-leggedy beasties
    And things that go bump in the night,
    and Escalation Clauses
    and “Will Look at Offers on…”
    Good Lord, deliver us!

  39. 39
    Erik says:

    RE: David B. @ 30
    That’s Mr. Troll Erik. I’m an avid hiker myself. I’d much rather hike than mow my lawn or fix something.

  40. 40

    By Marc @ 33:

    By Kary L. Krismer @ 32:

    By Marc @ 31:

    RE:

    I also firmly believe the escalation clauses are extraordinarily better than the classic Bank REO practice of insisting on “highest and best” offers. That forces the buyer to bid in a vacuum with no knowledge of whether there will be any other bidders or what they might bid. Thus, there’s a real possibility that they will be the only person to bid or that they will bid unnecessarily high. How does a rational buyer respond to that risk? By being conservative on how much they offer.

    That’s a huge assumption.

    Kary, you would make a staff sergeant proud the way you defend a position. Is it “an” assumption, sure. Is it a huge assumption, no. I’d call it a safe bet.

    Three years ago I might have agreed, but this is a different market. If a buyer finds a property they like in this market and have lost out on a number of prior properties, they are going to offer a lot more than what their base price would be if they were allowed an escalation clause. But let’s put some numbers to it.

    You list a property for $500,000 and allow escalation clauses. Buyer A bids $505,000 with an escalation up to $550,000 with $5,000 increments.

    What are you going to tell your seller if there is no Buyer B that is above $505,000? And keep in mind you offered Buyer A’s agent a commission if they bring you a buyer, which they did. Your seller will know that the buyer would have paid a lot more than what their offer is, but it will be risky for them to try to counter.

    I list a property for $500,000 and don’t allow escalation clauses. What is Buyer A going to bid? It might not be $550,000, but it damn well will be above $505,000. Let’s say it’s $525,000. My seller will be better off as long as no one else bids above $520,000. And if they do get above that amount, they’ll only lose out on $5,000, up to a $545,000 competing bid (because they’d take the competing bid). So they’ll gain $20,000 only risking $5,000.

    Keep in mind I’ve only recently come to the conclusion that not allowing escalation clauses might be a good idea. I’ve yet to implement it, and might change my mind before I do. But you can’t deny that escalation clauses allow buyers to make lower bids based on the non-escalated amount. It allows them to offer less than the most that they are willing to pay. I’m having a hard time seeing how that is good for a seller.

  41. 41

    RE: Ardell DellaLoggia @ 37 – If you don’t want to try to think “How can I do things better” that’s your choice. I don’t pat myself on the back after any transaction. On even the best I try to think how could I have done things better. And that is why I don’t like offer review dates. I thought about it, rather than just following the pack.

    But as I put some numbers to Marc, let me put some dates to you.

    You list a property on Thursday the 2nd, with a review date on the Tuesday the 7th with an offer deadline of noon (which btw is not really enforceable, but lets assume rational agents comply).

    I list a property late on Thursday the 2nd, with a two business day review period. Assuming the earliest an offer comes in is Friday the 3rd, my offers should be expiring on Tuesday the 7th or later.

    You get in 8 offers, 6 of which come in on Tuesday.

    I get in 8 offers, 2 of which come in on Tuesday because the buyers don’t have a deadline they can play like an ebay auction.

    How is your seller better off? We both get a full weekend of showings. The situations might be equal, assuming you do absolutely no seller or lender investigation and just look at the contracts, but assuming you do an adequate investigation it will be rushed. It will be even more rushed if more offers come in. Or they might be equal if you don’t want to advertise the offers that come in to the other buyers (something I let clients decide). I will also be able to contact the earlier offers and get requested technical changes made to their offers so that I could just accept them. So what’s the benefit, other than “that’s what a lot of agent do and what a lot of agents expect!” ???? I don’t care what agents do or expect. I care what is best for my client.

  42. 42

    RE: Kary L. Krismer @ 40 – Ardell, If you don’t want to try to think “How can I do things better” that’s your choice.

    Kary…every possible scenario you have given I have seen first hand and they work VERY, VERY badly. I am not saying I won’t try YOUR “new” things. I am saying they are NOT “new and better” things and the things most of us use are proven to be better…and we know it…but it’s my 62nd birthday today and I’m not going to argue with you about why I am right. Because I know I am and I’m busy and it’s my birthday.

  43. 43

    RE: Ardell DellaLoggia @ 41 – In what way did it work badly? I’ve been doing offers reviewed in X days for years in many different markets. I think I’ve already said that, so I’m not saying it’s new. The only thing new is I now recommend it to most clients–not just the clients who need it.

    So tell me how it didn’t work well! I’m willing to listen and in fact I through these things out to test my theories. I’ve given you three ways that it works better. Give me one way it doesn’t.

    (Same statement could be made to Craig on escalation, but there you could come up with numbers where it actually didn’t work well in one particular instance. The issue with escalation is which way is it likely to work the best the most often.)

  44. 44
    greg says:

    RE: Kary L. Krismer @ 39

    Oh Kary …

    You are at it again.

    You form an opinion on one thing or another and then foolishly stick to it as if your very life depended on you being right.

    Escalation , sealed bid and such like are extremely common and in fact the default in many markets, across the globe. They are a very solid way to encourage overbidding in a hot market, or for a rare in demand property.

    Of course there are some downsides with escalation clauses, that is the nature of the beast. And yes you are correct some buyers will not want to play, others will simply fire out many bids and hold off on adding such a clause until they find their dream home. BUT that is the whole point. It is to ensure if you happen to get a couple of few people who love the property or in fact see hidden value others failed to detect, they will put in very high caps to avoid missing out.

    As to review dates / bid date.
    Again this is a very common practice and is used across the globe for a very long time. Why? Well it works. By setting a firm date you achieve a number of things. First and foremost you make it very clear to buyers that the seller believes they have priced at or below market and that they have sufficient supply of buyers. It also forces buyers to make a choice, they either setting the ball rolling right away or they walk away. No dithering allowed, all players must commit or exit the field.

    And you are correct some clients will in fact hold off and wait until after the date has past in order to avoid a bidding war with folks who met the date and might have escalation clauses too.. But those buyers are the ones who would have most likely lost in the bidding war anyway, they represent the value seekers.

    The cool thing is once you start to see the percentage of apparently correctly priced homes failing to find a buyer on the preset date, you know the market may have shifted and it might be time to reduce the usage or end the usage of that particular tool.

    RE is a dynamic beast, what is a good method one month is a bad one then next. So for now escalation , bid dates are great tools and by next fall they might be the worse way to sell a house you could dream up.

    BUT KARY!! You are an agent , you should know this already! You should be smart enough to not to argue as to which is best, that is nonsense. For there is no “best” method, only the most suitable method for the task at hand.

  45. 45

    RE: wreckingbull @ 8
    Yes Wrecking Bull

    To quote Trump on foreclosures….all businessmen buy up bargains during bad times. SWE included….LOL

    Why is this wrong?

  46. 46

    By greg @ 43:

    RE: Kary L. Krismer @ 39

    Oh Kary …

    You are at it again.

    You form an opinion on one thing or another and then foolishly stick to it as if your very life depended on you being right.

    Go back and read my last post, specifically: ” I’m willing to listen and in fact I through these things out to test my theories. I’ve given you three ways that it works better. Give me one way it doesn’t.” Or my last one to Craig where I said: “Keep in mind I’ve only recently come to the conclusion that not allowing escalation clauses might be a good idea. I’ve yet to implement it, and might change my mind before I do.” The point of this isn’t to prove which method is best, it’s do discuss the advantages and disadvantages of different methods.

    Escalation , sealed bid and such like are extremely common and in fact the default in many markets, across the globe. They are a very solid way to encourage overbidding in a hot market, or for a rare in demand property.

    Of course there are some downsides with escalation clauses, that is the nature of the beast. And yes you are correct some buyers will not want to play, others will simply fire out many bids and hold off on adding such a clause until they find their dream home.

    I said no such thing about buyers holding off or not using them, so I’m not correct in saying that. Did you even read what I wrote?

    As to review dates / bid date.
    Again this is a very common practice and is used across the globe for a very long time. Why? Well it works. By setting a firm date you achieve a number of things. First and foremost you make it very clear to buyers that the seller believes they have priced at or below market and that they have sufficient supply of buyers. It also forces buyers to make a choice, they either setting the ball rolling right away or they walk away. No dithering allowed, all players must commit or exit the field.

    And you are correct some clients will in fact hold off and wait until after the date has past in order to avoid a bidding war with folks who met the date and might have escalation clauses too.. But those buyers are the ones who would have most likely lost in the bidding war anyway, they represent the value seekers.

    But I’ve submitted an alternative procedure that accomplishes the same thing without the downside of buyers holding off. State a single downside to my alternative procedure that accomplishes many if not all of the same benefits. That’s what I’m asking for. To say it’s commonly used around the world is not responding. Agents commonly don’t properly transmit documents to the other agent. That doesn’t mean that common practice is a good thing!

    RE is a dynamic beast, what is a good method one month is a bad one then next. So for now escalation , bid dates are great tools and by next fall they might be the worse way to sell a house you could dream up.

    That I agree with. Offers I write for buyers now tend to be a lot different than offers I wrote say three years ago. And offers in one area are different than offers on properties in another area. In a slower market I might not recommend to as many sellers that they request 2 business days for review, but that’s another matter.

    BUT KARY!! You are an agent , you should know this already! You should be smart enough to not to argue as to which is best, that is nonsense. For there is no “best” method, only the most suitable method for the task at hand.

    Again, read my prior posts. Unless someone comes up with one disadvantage to my X days to review, I’d say that by definition makes it the best. But if there are disadvantages, I’m willing to listen. But you can’t say some method is not best if you can’t come up with a disadvantage to using it.

  47. 47

    RE: Kary L. Krismer @ 42

    It not only works “badly” Kary, it actually doesn’t work at all. The only way to say Tuesday…is to say Tuesday 6/14. I actually would have said Monday, but I don’t like a deadline falling on the “13th” :)

    On mine it says offers DUE by 2 p.m. on Tuesday 6/14. So that resolves your issue better than the way you are trying to do it. Of course all written offers received must be submitted to the seller, so if I get one at any time prior to seller accepting an offer it is not excluded. The law always trumps our best laid plans of mice and men and agents.

    Back to you. You are taking your “2 review day instruction” and erroneously applying Paragraph L “Computation of Time” to it in order to get to Tuesday. It won’t work. Your 2 review day instruction will be in the Agent Remarks section of the Listing Contract and the MLS Listing. Paragraph L. of Form 21 (assuming Single Family for a moment) only applies to the Purchase and Sale Agreement and not the contracts and Forms executed PRIOR to the Purchase and Sale Agreement. So your “2 day review” instruction does not bypass the weekend, except in your mind.

    The Agent for the Buyer has to take your “Agent Only Remarks” instruction of “2 day review period” and convert it from “2 day” to an actual “Offer Expiration Date” when they are inserting it into the Form 21 Offer-Purchase and Sale Contract. Your assertion that Friday “becomes” Tuesday because you said “2 day review” in the Agent Only Remarks is incorrect.

    The Agent for the buyer writing the offer on Friday has to put a DATE not “2 day” on the Form 21. That’s where your idea falls apart and 2 days becomes Sunday and not Tuesday. The ONLY way for it to say Tuesday…is to just say Tuesday!

    The best and better way, that also resolves your apparent concerns, is the one I use most often (except sometimes there aren’t enough character spaces allowed in that Data Field), is to say Offers Due by Tuesday at 2 and Offer Response Date to be Wednesday. Sometimes I put “Offers due by Tuesday 6/14, call Listing Agent if your are writing for further instruction”. Most often I say “Offers due by Tuesday 6/14 at 2 p.m. with a response date of Wednesday 6/15”. I have to add that if I have enough space on the current one because I had to allow room for the MLS to insert their “duplicate listing” instruction as to not using Form 21 for Offers.

    So to achieve your goal all you have to do is say “Offers due on Tuesday with offer response date of Thursday.” Simple as that and the ONLY way to get there.

    Personally I almost always try to finish on Tuesday night, but ask the agents to put the response date as Wednesday because once we are IN the Form 21 (again assuming SFH) Tuesday ENDS at 9 p.m. and rarely are we complete with reply back to the buy side by 9 p.m. Anything AFTER 9 p.m. on Tuesday…is Wednesday. So even if we reply by 11 p.m. on Tuesday as to completing the final paperwork, and I almost always require the buyers and buyer agents to make the changes SAME day of Tuesday vs hanging over to the next day, I still want Wednesday Offer Expiration date on the offer.

    One might argue that Tuesday did not end at 9 p.m. making the contract invalid. But I think that’s a weak argument, so why take the chance.

    KISK it! (Keep It Simple, Kary) Just put Offers DUE by Tues with an offer response date of Thursday if you want two days to review. Simple as that! Applying Paragraph L wording per your comment above won’t work.

  48. 48

    RE: greg @ 43

    Agree, but would like to add that my seller clients are often people who work for a living and have children to put to bed at night. Having several offers with different response times just doesn’t work well. The manner in which I set the review day and time and response date involves having the seller clear their calendar at that specific time and usually for the entire evening well into the night. They can’t set aside every night of the week. They have lives.

    Kary’s 2 day review is for Kary. Kary wants to call every agent and grill them and every lender and grill them and apply his everyone else is likely an idiot thinking during that two day review period. The seller rarely wants to spend two days “reviewing”. It’s Kary who wants two days to drive everyone nuts. LOL!

  49. 49

    RE: Ardell DellaLoggia @ 46 – I don’t have time to respond to that all, but I specifically say “2 business days” in the agent only remarks, so the terms of the P&S agreement are not even referenced. So yes, I do get to Tuesday.

    I’ll look later to see if you’ve come up with any other disadvantages.

  50. 50
    Carl says:

    RE: pfft @ 34 – Capitalism might be the lesser of evils. Sure it has its problems, but it provides the most opportunity as well. Other systems don’t seem to allow that.

    As far as regulated capitalism, I can see it’s advantages over free market capitalism. I agree we need regulations in certain areas – environment, food, drug, etc . . . .

    But in the context of real estate sales, I am for less regulation, and certainly against limiting who can buy and at what price a seller can sell as was implied by Resistance @1. So I would be against rent control, discriminatory tax on transfer, etc . .

  51. 51

    RE: Kary L. Krismer @ 48

    Last night I said I didn’t have time and it was my birthday. Today is a new day. How does Friday become Tuesday in your world except in your brain? If you are not applying Paragraph L then 2 days is Sunday. I have never in any other State seen 2 days from Friday BE Tuesday!!! The only possible way you get there…is by using Paragraph L. No…you didn’t say that. But without it…you don’t have a leg to stand on.

  52. 52
    greg says:

    RE: Kary L. Krismer @ 45

    I said

    Escalation , sealed bid and such like are extremely common and in fact the default in many markets, across the globe. They are a very solid way to encourage overbidding in a hot market, or for a rare in demand property.

    Of course there are some downsides with escalation clauses, that is the nature of the beast. And yes you are correct some buyers will not want to play, others will simply fire out many bids and hold off on adding such a clause until they find their dream home. .

    you said….

    I said no such thing about buyers holding off or not using them, so I’m not correct in saying that. Did you even read what I wrote?.

    Let me help you remember what you said earlier you seem to have completely forgotten again… post 16 if that helps you Kary.

    This is what you said….

    Finally, unrelated. After attending that seminar I mentioned, I think on my future listings I’ll recommend to sellers that they not allow escalation clauses. That’s something banks typically do and something any seller can do. The attorney at the seminar had legal reasons to avoid them, and I’ve never really been comfortable with them on the buyer side, only using them rarely. But I do think from the seller side they may cause some buyers to hold back (unless maybe you just want to risk countering for their highest escalation price), and/or cause other issues I don’t want to get into. So you might want to consider that as a strategy of getting buyers to make their highest and best offer.
    .

    so my comment was pretty much in line , particularly when one considers that I was paraphrasing, I think I got it close enough .. no doubt you will wiggle and whine , but clearly you said what you said.

    Shame you have to nit pick rather than try to learn something. But I guess I am partly to blame for even engaging you.

  53. 53

    By Ardell DellaLoggia @ 47:

    RE: greg @ 43 – Kary’s 2 day review is for Kary. Kary wants to call every agent and grill them and every lender and grill them and apply his everyone else is likely an idiot thinking during that two day review period. The seller rarely wants to spend two days “reviewing”. It’s Kary who wants two days to drive everyone nuts. LOL!

    Well first, I read your other post, and you didn’t have another disadvantage, just a huge misunderstanding of one item. A very lengthy misunderstanding at that!

    As to this, I can’t believe you are critical of my actually doing some work and calling agents and the lender! You need to contact the agent! You need to contact their lender (and/or verify funds). To do otherwise is just lazy and hardly in your client’s interest. But that’s another matter. But admitting shortcomings in your processes is not creating a disadvantage to my system.

    You also misunderstand that the goal is not to get to Tuesday specifically. The goal is also to allow a minimum amount of time to have the property exposed. So if my system creates a situation where the first offer comes in on Monday and that offer expires on Wednesday, that is not a disadvantage.

    Finally, your argument about clients not being able to deal with different response times is nonsense! You don’t need to present your offer to clients on the date of expiration. But if you have that concern, then you should put in a provision that allows your clients X days (business or real depending on the situation) to review offers, because they obviously have time contraints and that will last longer than the first few days of a listing.

  54. 54
    Blurtman says:

    The MSM weighs in:

    Median home price: $245,000

    Rising consumer confidence, coupled with the economic recovery, is creating heavy demand for homes in Washington state, leading to a record number of pending sales in the state’s western part.

    “Long building pent-up demand is being unleashed,” Ken Anderson, the managing broker and owner of Coldwell Banker Evergreen Olympia Realty, told the Northwest Multiple Listing Service (NMLS).

    Median sale prices for homes in Washington have risen 8.89 percent in the last year. “We are still very clearly in the midst of a seller’s market and unless we see a significant increase in listings, it will remain that way for the foreseeable future,” OB Jacobi, president of Windermere Real Estate, told NMLS.

    The state’s January median sale price of $245,000 ranked No. 9 nationally. Washington homes are expected to appreciate at a higher rate than in most other states, with a one-year price forecast of 7.15 percent vs. 4.45 percent in the U.S. overall.

    FindTheHome rates the health of Washington’s real estate market at 62 out of a possible 100.

    http://www.cbsnews.com/media/the-11-most-expensive-us-states-to-buy-a-home/4/

  55. 55

    RE: Kary L. Krismer @ 52

    Kary…on a side note, remember you laughed at Hef for his listing tactics…the property sold to the next door neighbor founder of Twinkies. :)

    I do not need to talk to EVERY agent and their lender…ONLY the ONE who WINS!!! Seriously…why are you asking the cash buyer to wait until you talk to the agent and lender of the FHA buyer with potentially the lowest offer????

    Some day I’ll show you how I do multiple offers and I GUARANTEE it is better than yours hands down.

    Just stop it. The way we ALL do it IS the right way so stop trying to re-invent your own version for other people. We consider OUR client’s needs and not OUR needs. Each client is different in that regard. You don’t have to re-invent some way to get to TUESDAY without saying the word TUESDAY!

  56. 56
    Marc says:

    By greg @ 43:

    RE: Kary L. Krismer @ 39

    … be smart enough to not to argue as to which is best, that is nonsense. For there is no “best” method, only the most suitable method for the task at hand.

    I couldn’t have said it better. Only a fool subscribes to a rigid belief that prevents consideration of alternatives. I don’t believe Kary is a fool and exhibit A is his statement that he has not yet advised sellers to disallow escalation addendums. If anything, he is wise to consider whether he should. My opinion is that he should but only when he believes that approach will lead to an optimal outcome for the seller. I further believe that will seldom be the case.

  57. 57

    RE: Marc @ 55

    Notice of “final and best” was largely instituted by the Relocation Industry a VERY long time ago. We did not give “notice of final and best” until we had enough offers to warrant it.

    1) We never did it before we had any offers in hand.

    2) We usually did not, and clearly not automatically, send the notice of final in best when we only had two offers…rather we waited to see if we were getting 3 or more.

    We very seriously considered if notice of final and best with only 2 offers would scare both of them away. We had no obligation to give the notice and from the seller’s perspective we had to take into consideration that sending that notice might change having two offers into having none at all.

    3) Once we had 3 or more offers notice of final and best often went to all of them BUT we carefully notified the agents one by one verbally first to soften the blow of the “notice”. Notice of “final and best” can be very offputting and cause the seller to have no offers.

    Consequently to suggest ALL listings should start out from the getgo with notice of final and best is NOT considering the best interest of the parties. Not the buyers and not the seller.

    I don’t know how banks do it but it doesn’t matter because they ARE the seller. So the considerations of Relocation Properties applies better since like us, they are representing 3rd party sellers in most cases.

    Only the SELLER can make the foolish move to start out with “Final and Best” and so banks can do that on their OWN properties. None of us can be that careless with our seller clients.

  58. 58
    ess says:

    I spotted this article by a local builder. His perspective is most interesting, especially in his belief that this market will not reverse anytime soon. Any thoughts as to the assertion that this is not a bubble, but a more permanent shift in real estate dynamics for this area?

    http://www.seattletimes.com/nwshowcase/jaymarc-homes/why-is-it-so-hard-to-find-a-house-in-seattle/

  59. 59

    By Ardell DellaLoggia @ 55:

    RE: Kary L. Krismer @ 52

    Kary…on a side note, remember you laughed at Hef for his listing tactics…the property sold to the next door neighbor founder of Twinkies. :)

    I saw that, but do we know the sales price or whether it included the quasi-life estate that Hefner wanted? It was the latter I thought bizarre. That might also be perhaps a text-book case of a neighbor buying the neighboring property after living through the neighbor from hell!

    do not need to talk to EVERY agent and their lender…ONLY the ONE who WINS!!! Seriously…why are you asking the cash buyer to wait until you talk to the agent and lender of the FHA buyer with potentially the lowest offer????

    I never said I talked to every one, but you’re going to talk to more than just one. As an agent you have a statutory duty to present all offers received (a duty DOL takes very seriously), and your buyer may not think that the cash offer is the one they want to go with, even if you do.

    But you do hit on something that would be an advantage of your system over mine. With mine I might end up talking to more agents and lenders because two or three subsequent offers might drive those offers from serious consideration.

    Just stop it. The way we ALL do it IS the right way so stop trying to re-invent your own version for other people. We consider OUR client’s needs and not OUR needs. Each client is different in that regard. You don’t have to re-invent some way to get to TUESDAY without saying the word TUESDAY!

    Again, I’m just interested in learning what possible disadvantages of using my system might be. But if you want to keep using a system that benefits buyers when you represent sellers, feel free to keep doing that.

  60. 60

    By Marc @ 56:

    I don’t believe Kary is a fool and exhibit A is his statement that he has not yet advised sellers to disallow escalation addendums. If anything, he is wise to consider whether he should. My opinion is that he should but only when he believes that approach will lead to an optimal outcome for the seller. I further believe that will seldom be the case.

    I’m actually coming to the conclusion that it will be very property specific. The biggest problem I see (ignoring the legal risks that the drafters of the forms see) is that you might get only less than 5 offers, only one of which has an escalation clause and where that would would escalate much higher than any of the other offers. If you have a property where you think that it’s likely to get over 15 offers that problematic situation of having an unused escalation amount is much less likely to develop (and also be less likely to have as many of the legal concerns).

    BUT, I’ve also come to the conclusion that like whether or not to allow pre-inspections, what to disclose about other offers, etc., it’s a discussion that you should have with a listing client before listing. After all it is their decision, and based on one discussion I recently had some people do have strong feelings about it. And if your seller doesn’t want an escalation clause, and that’s not mentioned in the listing, a buyer who makes an offer with an escalation clause might withdraw their offer rather than resubmitting it.

  61. 61

    By Ardell DellaLoggia @ 57:

    RE: Marc @ 55

    Notice of “final and best” was largely instituted by the Relocation Industry a VERY long time ago. We did not give “notice of final and best” until we had enough offers to warrant it..

    Different topic. That’s the topic about whether you disclose other offers and how much you do disclose about those other offers (e.g. highest price offered). You could do that even if you allowed escalation clauses.

    Note though that if you do have an offer with an escalation clause, disclosing other offers could have the impact you mention–causing a withdrawal of the “competing” offer which would then make it no longer a competing offer, (probably) reducing your escalated price. So even if you discussed the disclosure of other offers with the seller before listing, you might want to revisit the topic before actually doing it if an escalation clause offer is involved. I’ve had exactly that situation arise in the past.

  62. 62
    whatsmyname says:

    Pretty much every month this year, it’s been a true statement that there has never been a better time to wait another month to sell your home.

  63. 63
    Blurtman says:

    By whatsmyname @ 62:

    Pretty much every month this year, it’s been a true statement that there has never been a better time to wait another month to sell your home.

    The incredible magnificence of the unchained free market economy. I say it is time for leisure suits to make a comeback.

  64. 64
    Blurtman says:

    BREAKING: HELOC default tsunami threatens Sanders’ first term!

    Monday Morning Cup of Coffee: Rising HELOC demand is not housing crisis 2.0
    Amazon, Microsoft, Google’s impact on Seattle housing
    http://www.housingwire.com/blogs/1-rewired/post/36611-monday-morning-cup-of-coffee-rising-heloc-demand-is-not-housing-crisis-20

    Tim, are you tracking HELOC’s? Any news on trends?

    The hillbillies in the foothills where I live are all taking out HELOC’s to grow their crystal meth manufacturing capabilities and further invest in foreign slave importation. The Obama economy is thriving!

  65. 65

    Kary,

    Rather than answer each comment of yours I will try to hit all of the topics you raise in one.

    1) Will look at offers on almost always includes a couple of week days and a full weekend. It recognizes that not every buyer can jump up from their desk at work on a weekday and that some people go out of town and/or work weekends. Usually I have Thursday, Friday, Saturday and Sunday as viewing days. Having enough photos that represent the property well so that when a buyer arrives they basically see exactly what they saw online prior to viewing in person seems to cut down on the need to view, in person, repeatedly. Second showings prior to offer are becoming more rare as a result.

    Allowing “2 business days” may be ok for that buyer and that seller, but the purpose of providing a seller with “sufficient time on market”, and 4 days is not an excessive amount of time, is to allow a time frame that provides access to all or most active buyers. In the real world of residential real estate, MANY buyers need the weekend, especially at times of year when it gets dark at 5 p.m. and they work “on business days” until after 5 p.m.

    That is why I think 2 business days PLUS 2 weekend days equals minimally “sufficient” time on market.

    2) A listing that will not allow Escalation Clauses is problematic because a seller is bound to accept the asking price…unless the buyers cause it to go over the asking price. For a seller to create a situation where the sold price may be more than asking even without any other offer causing it to do so, is problematic. That is why a buyer must be able to say (via an Escalation Clause) “I will pay full price…or more…but only more than asking IF and AS needed due to another offer causing me to do that.” You really can’t create a situation where a buyer pays more than asking…and then it turns out that buyer was the ONLY offer. I have seen that happen and it is a bit creepy. Yes, I agree the seller gets the most money that way. But setting up a buyer to pay more than asking without their being any need to do so is possibly false advertising as to the original list price. It’s a gray area…but clearly it is WRONG for a buyer to have to pay over asking price…for no good reason.

    3) It is VERY uncommon for an agent who is bringing an offer to me to not call me before and/or after the offer is submitted. In fact it is not uncommon for an agent to call me more than once before they write the offer and again after I have it in hand. If you are getting paper with no conversation, that is unusual and you should wonder why agents may be afraid to talk with you. :) I try not to create a situation where I have excessive multiple offers. If I think per your example that I likely will get 15 or more offers, I usually consider increasing the asking price. In fact I did do that very recently. I find 1 to 12 offers to be more the norm and often 6 give or take to be the norm, if I price it correctly. I have had 9 and 11, but that likely had more to do with stellar online presentation than asking price deficiency.

    I am more likely to note things agents say well BEFORE there is an offer. I find they answer my questions carefully but reveal more relevant negatives during the course of the viewing days. I also keep meticulous notes as to when and how many times the buyer viewed the property. If the best offers comes in from the buyer who saw it for the first time 5 minutes before the offers due time, that is something that needs to be discussed. Allowing 4 days does not mean people took 4 days to think about it prior to offer. Noting the day and time the buyer first saw it on the offer review paperwork is important to me. Though I have had a successful transaction where the last buyer in and shortly before offer review did end up being the buyer. Our being skeptical of their commitment to the property and noting that in a conversation with them, did influence their offer and actions.

    That I do not need 2 days to talk to agents after I have offers…doesn’t mean I didn’t speak with them. In fact getting an offer from an agent who never called me either before or after the offer was submitted is a bit suspicious as to why not, don’t you think?

    4) Speaking with lenders – On this point we differ GREATLY. I have spent a large part of my real estate career being mindful of raising the bar as to buyer’s rights and giving them the dignity of their side of the transaction. Calling a buyer’s lender is VERY “need to know basis” and given I have never in 26 years had a transaction fail on the buyer not being qualified, I apparently have found some other means to be assured of that without needing to grill every buyer’s lender.

    I think if you have 9 offers and you call all 9 lenders you are excessively invading the privacy of buyers without the need to do so. Clearly you can narrow the field down to the top 3 or 4 front-runners, but even then best to narrow it down even further before sticking your nose into a buyer’s personal finances and lender relationship.

    ALSO and most importantly, the lender is NOT really permitted to disclose to the Agent for the Seller, up front, prior to offer acceptance, ANY negative information. In the middle of the transaction there is a difference if and when the lender is asking for additional time or information because of a snag. Then all parties to the transaction are entitled to a fairly detailed explanation of what is causing the problem and how long it will take to resolve and the likelihood that it in fact can be resolved.

    I have no idea why you are talking to the lender of every buyer who submits an offer. The Right to Privacy comes first and if the offer doesn’t have a chance in h*ll of making it to acceptance, how could you possibly justify invading their privacy for no good reason?

    To me, “grilling” a buyer’s lender is first of all fruitless because if that lender issued a pre-approval letter and then verbally told you it wasn’t worth the paper it was printed on…well, that just wouldn’t happen. More importantly I believe an agent needs to “stay on their side of the fence” until and unless there is a compelling reason to be invasive as to the other agent’s client.

    Again…this may simply be a difference in the markets where we each work, though I have been an agent for 26 years n 5 different states, so maybe not. Before you tell me I am “lazy”, which I clearly am not given I personally stage all of my listings, let me remind you that I have NEVER in 26 years had a sale fail on the buyer’s financing. To be clear I am talking about the buyer’s ability to get a mortgage and not the property being the problem, as that is a seller side problem and not a buyer and buyer’s lender problem.

    In multiple offers if there were a buyer as front runner with suspected lender issues…well, not likely they would be a front runner the way that I do them. I know most of the lenders that show up. I know when a lender is hedging a full approval in the wording of that letter. But bottom line is, I know for FACT that in my case, invading the buyer’s privacy when the buyer is NOT my client is completely unnecessary. Perhaps you want to find out why it is different in your case. Could just be a different market.

    I have had a single offer from a “shakey” buyer that we accepted knowing the end result might be iffy. But not in multiple offers. For the record, unlike many agents, I do NOT call 2 offers “multiple offers”. I call it 2 offers. It has to get to 3 or more before I call it “multiple”. This is a pet peeve of mine where the seller’s agent tells the appraiser they had “multiple” offers to upgrade the appraised value, when they in fact had only 2…and one of them sucked.

    Calling a buyer’s lender…when you do not represent that buyer…is an invasion of privacy UNLESS there is sufficient and immediate cause to do so. They should not tell you anything anyway until after IN contract, so it is also and hopefully fruitless. As to your not having any idea who the “frontrunners” are unless the seller tells you which are, well that’s a whole ‘nuther issue. :)

  66. 66

    RE: Blurtman @ 64 – HELOCs (and to some extent reverse mortgages) became problematic in a downward market. The bank we had our HELOC with on the old house froze it–but it was after we sold and they had requested too high of a payoff. So they froze it when they owed us money! :-D

  67. 67

    By Ardell DellaLoggia @ 65:

    Kary,

    Rather than answer each comment of yours I will try to hit all of the topics you raise in one.

    1) . . .

    Allowing “2 business days” may be ok for that buyer and that seller, but the purpose of providing a seller with “sufficient time on market”, and 4 days is not an excessive amount of time, is to allow a time frame that provides access to all or most active buyers. In the real world of residential real estate, MANY buyers need the weekend, especially at times of year when it gets dark at 5 p.m. and they work “on business days” until after 5 p.m.

    That is why I think 2 business days PLUS 2 weekend days equals minimally “sufficient” time on market.

    Not sure of the point of that. Both systems allow that time. Typically my system would allow the weekend and four business days (Friday, Monday, Tuesday and Wednesday) unless an offer did come in on Friday. So no difference, except mine continues to allow more time for the seller to act after the initial time.

    2) A listing that will not allow Escalation Clauses is problematic because a seller is bound to accept the asking price…unless the buyers cause it to go over the asking price. For a seller to create a situation where the sold price may be more than asking even without any other offer causing it to do so, is problematic. That is why a buyer must be able to say (via an Escalation Clause) “I will pay full price…or more…but only more than asking IF and AS needed due to another offer causing me to do that.” You really can’t create a situation where a buyer pays more than asking…and then it turns out that buyer was the ONLY offer. . . .

    You have that exactly backwards. The risk is where the property is listed for $500,000 and an offer comes in at $500,000 with an escalation to $550,000. If no other offers bump that up, it is risky for the seller to try to counter to get the price up–but they will have a strong urge to do that because they know that buyer is willing to pay $550,000.

    And while you might not be able to create a situation where a buyer pays more than asking with that being the only offer, you can create the circumstances for that to occur. Going back to that other situation, perhaps with a “no escalation clause” notice the buyer would have offered $525,000 instead of $500,000 going up to $550,000. We already discussed that and it happens all the time that there are offers over list without escalation.

    3) It is VERY uncommon for an agent who is bringing an offer to me to not call me before and/or after the offer is submitted. . . .

    Not sure how you talk about what items there are in an offer that a seller wants changed or clarified before you actually see the offer. But yes if you talk to them first you could talk to them about a lot of things, like what you’d like to see in the offer, ask how the buyer found the lender, etc.

    I also keep meticulous notes as to when and how many times the buyer viewed the property.

    You realize Supra does that for you automatically, right? Do you make those notes on stone tablets too? Use roman numerals to count?

    If the best offers comes in from the buyer who saw it for the first time 5 minutes before the offers due time, that is something that needs to be discussed. Allowing 4 days does not mean people took 4 days to think about it prior to offer. Noting the day and time the buyer first saw it on the offer review paperwork is important to me. Though I have had a successful transaction where the last buyer in and shortly before offer review did end up being the buyer. Our being skeptical of their commitment to the property and noting that in a conversation with them, did influence their offer and actions.

    You can do that with either system. Not an advantage of one over the other.

    4) Speaking with lenders – On this point we differ GREATLY. I have spent a large part of my real estate career being mindful of raising the bar as to buyer’s rights and giving them the dignity of their side of the transaction. Calling a buyer’s lender is VERY “need to know basis” and given I have never in 26 years had a transaction fail on the buyer not being qualified, I apparently have found some other means to be assured of that without needing to grill every buyer’s lender.

    No, you’ve apparently just been lucky or maybe forgetful, but the seller has a strong need to know. Why do you think that 22A was amended to allow for the Paragraph 2 information? (Why the forms drafters thing sellers need that information after MA is another matter). Maybe if you actually spent some time talking to lenders you’d have some idea what you can learn by talking to them. As it is, you’re just talking about something you apparently don’t have any experience with.

    I think if you have 9 offers and you call all 9 lenders you are excessively invading the privacy of buyers without the need to do so. Clearly you can narrow the field down to the top 3 or 4 front-runners, but even then best to narrow it down even further before sticking your nose into a buyer’s personal finances and lender relationship.

    We already addressed the fact that I don’t necessarily investigate every offer, but that I might investigate more with my system than yours because early offers might get knocked out of contention. And again, the seller clearly has a need to know before they take their property off the market where a buyer is using 22A. To suggest otherwise is amazing.

    ALSO and most importantly, the lender is NOT really permitted to disclose to the Agent for the Seller, up front, prior to offer acceptance, ANY negative information.

    I’m not trying to get negotiation information, but I do want to know how long the lender has been dealing with the buyer–how rushed the loan approval was. Interesting that you care how recently a buyer looked at the property, but don’t care how long the lender has had to gather information and issue their approval.

    I have no idea why you are talking to the lender of every buyer who submits an offer. The Right to Privacy comes first and if the offer doesn’t have a chance in h*ll of making it to acceptance, how could you possibly justify invading their privacy for no good reason?

    Again, not every buyer and again the seller has huge reasons to want to understand the lending before taking their property off the market. Perhaps you need to re-read this earlier piece: https://seattlebubble.com/blog/2015/11/16/statewide-form-22a-financing-contingency-the-sellers-perspective/

    I don’t even know how an agent could say with a straight face that a seller has no reason to know everything possible about a buyer’s financing before taking their property off the market with a 22A contingency.

    . . .

    Already addresed

  68. 68

    RE: Kary L. Krismer @ 67

    1) “Both systems allow that time…” Not if you list on a Sunday or a Monday or a Tuesday or a Wednesday. Again different markets I think, Kary. Perhaps you are not in a market where you get an offer an hour after the property is listed. I had that that a few times before I switched to “will look at offers on” as did other agents in the markets where I frequently work. Not that EVERY listing has to be a “will look at offers on”, but not having an inspection contingency makes a huge difference. One offer with an inspection contingency within one hour vs several offers of which at least a few have no inspection contingency is the most common result. “Did it go straight to pending?” Is what I look at first when reviewing comps. I think you don’t like offers without inspection contingencies, but that is not the thinking in my markets.

    2) I may have that “backwards” in your mind, but you have it just flat out wrong. A seller cannot counter an offer over asking price if there is only one offer. The warning you get from the mls if you underprice a listing is that a seller must be willing to sell at the price listed to price it there in the first place. Otherwise it is false advertising. To tell an individual, sole buyer that they have to pay over the asking price to get the house is false advertising.

    3) Back to NEVER in 26 years had a “failed” on buyer not being qualified. So I’m doing something right. I just don’t do it your way. The buyer has a right to privacy and that issue should not be treated lightly. YES if I ever have a problem with buyers making offers who can’t afford to buy the house…I would rethink that. But in the markets where I work, vs yours apparently, there aren’t a lot of buyers running around making offers who can’t get their financing. PLUS that is WHY we have pre-approval letters in the first place. Until and unless NOT calling some other agent’s client’s lender appears to be any kind of problem for my seller clients…no reason to invade the buyer’s personal relationship with their lender.

    If you are 2nd guessing the pre-approval letter without good cause and telling your seller that the buyer can’t get a loan when they can…dirty pool.

  69. 69
    Justme says:

    RE: Blurtman @ 64 – Nice one, Blurtman, but I am not sure everyone is getting the sarcasm: An article pointing to an article pointing to an article that says

    “The city has seen a huge influx of technology workers in recent years. Amazon, Microsoft, Google, and Facebook are just a few of the companies relocating employees to the Seattle market.”

    Note “in recent years”. Any data? Nooooooooo!

  70. 70
    Erik says:

    RE: Justme @ 69
    I don’t understand a lot of what blurtman says. I have a funny feeling he is on a higher level than me.

  71. 71
    ess says:

    As per more high tech workers showing up in Seattle, here is another company that is moving to the downtown Seattle area. They are not huge – but they help/hurt rents and prices (depending on which side of the ownership divide one finds oneself.

    The beat (with higher rents and housing costs) goes on

    http://www.seattletimes.com/business/technology/avalara-signs-deal-to-anchor-new-headquarters-near-stadiums/

  72. 72
    Dave says:

    RE: Justme @ 69 – I have at least one associate moving to Seattle from NC/CA around late summer thanks to the Google expansion so there’s that.

    http://www.seattletimes.com/business/technology/google-plans-big-expansion-to-south-lake-union/

  73. 73

    By Ardell DellaLoggia @ 68:

    RE: Kary L. Krismer @ 67

    1) “Both systems allow that time…” Not if you list on a Sunday or a Monday or a Tuesday or a Wednesday. . . .

    Let’s try to stick to what I’m talking about. In my original response that brought this up I said:
    By Kary L. Krismer @ 16:

    I much prefer a “please allow two business days for offer review” type system, with a Thursday list.

    Yes, you’re limited to listing on a Thursday or Friday, or maybe a Wednesday with a 3 day review. Not a huge disadvantage.

    2) I may have that “backwards” in your mind, but you have it just flat out wrong. A seller cannot counter an offer over asking price if there is only one offer. The warning you get from the mls if you underprice a listing is that a seller must be willing to sell at the price listed to price it there in the first place.

    That’s exactly what I said. The risk is where you have an offer at list that escalates well above list, and no other offers that bump it up. There the seller will have a strong urge to counter, but the risk is having to pay the buyer’s agent’s commission if you cannot otherwise sell the property in a timely manner (e.g. grab another offer).

    3) Back to NEVER in 26 years had a “failed” on buyer not being qualified. So I’m doing something right. I just don’t do it your way.

    No, you’ve just been lucky, and when it does happen to you it won’t be good. You’ll be on record as saying you do nothing to prevent it from happening. As I mentioned in another thread we have had it happen only once, and it wasn’t a lack of communication that caused it. The LO was a lying bitch who not only wasn’t being up front (claiming she just needed a confirmation back of mortgage payments from one lender when she really had huge underwriting problems) and who hadn’t even applied for the right type of loan. So my system won’t entirely prevent it, but it can help.

    And the other thing it hopefully will do is catch those situations where there might be a delay in closing due to lending. Sometimes having no delay is critical, but any delay would be annoying.

    If you are 2nd guessing the pre-approval letter without good cause and telling your seller that the buyer can’t get a loan when they can…dirty pool.

    You live in a really funny world where you think all loan officers are created the same and have the same abilities. That’s not true in any profession, but when a client is selling what is likely their most expensive asset they don’t want an agent that is lazy and/or more worried about the buyer than the seller!

  74. 74

    By Ardell DellaLoggia @ 68:

    Not that EVERY listing has to be a “will look at offers on”, but not having an inspection contingency makes a huge difference. One offer with an inspection contingency within one hour vs several offers of which at least a few have no inspection contingency is the most common result. “Did it go straight to pending?” Is what I look at first when reviewing comps. I think you don’t like offers without inspection contingencies, but that is not the thinking in my markets.

    So your market is where there are a bunch of ignorant agents who don’t understand that they are held to the level of conduct of an attorney? Those agents are likely committing malpractice unless they are warning their clients (preferably in writing) of the risks of not having an inspection. Do you think they are doing that? Do you think they even know what I am talking about so that they can give that adequate warning?

    Even ignoring the legal risks of accepting an offer without an inspection contingency, I don’t understand why agents are suddenly afraid of inspection contingencies in a market where sellers have so much power! It’s not like the negotiating power of the buyer suddenly becomes huge during the inspection contingency. They know there are other buyers out there!

    I did come across one practice that I really liked on inspections. The buyer’s offer contained two Form 35s where the seller could pick the form they wanted. Either one with an inspection or one that waived the inspection. That allowed her buyer to have the advantage of no inspection for the situation where you have an ignorant listing agent or a seller willing to take the risk after being advised of the risk, or an inspection where the agent is informed and/or the seller risk adverse. And most importantly, it allowed their offer to not be downgraded by informed agents who know of the importance of an inspection contingency. I’m not crazy about that from the buyer’s side, in that it is risky for the buyer, but if they really want the house and are willing to waive the inspection that’s a good way to go. So that agent did something extremely smart, but it’s not a common practice that I know of. Common is common, and I don’t know why anyone wants to be common.

  75. 75
    ARDELL says:

    RE: Kary L. Krismer @ 74

    No Inspection Contingency doesn’t mean no inspection any more than no appraisal contingency means the lender isn’t going to send out an appraiser. Two 35s puts the seller in the position of choosing whether or not the buyer does or doesn’t. No seller should be choosing that for the buyer. Completely disagree as to seller being the one to decide whether on not a buyer has an inspection contingency.

  76. 76
    ARDELL says:

    RE: Kary L. Krismer @ 73

    If you think the loan rep is part of the loan approval process you are misinformed. They are a sales rep. You don’t get to chat with the underwriter. It is the buyers’ qualifications that determine whether or not they get a mortgage, not which lender.

    Also the buyer per contract does not have to use the lender on the preapproval. The buyers shop rates after they have an accepted contract when they can actually lock a rate.

    If your satisfaction is the criteria you would be better to require that buyers be preaporoved through your lender of choice. They would still choose their own lender after accepted contract, but you would know if there were issues preventing them from using any lender. Do you get angry if the buyer after shopping rates uses a lender that is not the one you spoke with? Should a buyer pay a higher rate because you don’t like the one with the lowest rate?

  77. 77

    By ARDELL @ 76:

    RE: Kary L. Krismer @ 73

    If you think the loan rep is part of the loan approval process you are misinformed. They are a sales rep. You don’t get to chat with the underwriter. It is the buyers’ qualifications that determine whether or not they get a mortgage, not which lender.

    Also the buyer per contract does not have to use the lender on the preapproval.

    They are more than a salesperson–they are the ones who get everything ready to submit to the underwriter. And there are also questions you can ask about their underwriting.

    As to being able to switch lenders, that is true, but it seldom happens. I view that as a problem with the forms. I don’t know that I ever recall a buyer switching lenders.

    I’ve considered requesting that they use or get approved by lenders I’m familiar with, but that has a huge disadvantage of reducing the number of interested buyers.

  78. 78
    Blurtman says:

    RE: Kary L. Krismer @ 66 – Sure. But perhaps the paper gains are too tantalizing not to tap. It might be interesting to track HELOC’s and see if they are heading up. Could be a compressing spring? Leverage can cause an overreaction in a downturn.

  79. 79

    By ARDELL @ 75:

    RE: Kary L. Krismer @ 74

    No Inspection Contingency doesn’t mean no inspection any more than no appraisal contingency means the lender isn’t going to send out an appraiser.

    Yes it does! The buyer has no right to enter the property to do an inspection without an inspection contingency. Without the proper box selected on Form 22D they have no right to ever enter the property again prior to closing.

    The only exception to that is on some properties some lenders may require an inspection, so it could fit into the same situation you describe with the appraiser coming through. But I would question whether that type of inspection would give the seller the same type of protection as a regular buyer inspection. And a cash buyer would clearly have no such right.

    Two 35s puts the seller in the position of choosing whether or not the buyer does or doesn’t. No seller should be choosing that for the buyer. Completely disagree as to seller being the one to decide whether on not a buyer has an inspection contingency.

    What you’re missing is that in educated seller will pick allowing the buyer an inspection. The uneducated and/or risk/taking seller will not allow an inspection, but they’d be in exactly the same risk situation as if they accepted an offer without an inspection contingency. I don’t see that they are increasing their risk much, if at all.

    As to the buyer side, a buyer would only do that if they are willing to waive an inspection. I wouldn’t recommend that for any buyer, but if they are insisting on waiving inspection, giving the seller a choice is better because they may very well end up being able to do an inspection even though they offered to waive.

    I think it’s incredibly cleaver, and in the situation I saw it the buyer’s agent got the buyer into the house with an inspection, where if they had just waived the inspection another offer very likely would have been picked.

  80. 80
    ARDELL says:

    RE: Kary L. Krismer @ 79

    Agree to disagree.

    The issue is only to remove the seller from needing to address the result, whether it is an appraisal result or inspection result. Key words being ” not contingent …on result”. Aka “as-is”.

    I’ve seen a flipper use the 35 to try to back a price up $50,000 after “winning” in multiple offers toward the cost of “repairs” needed to successfully flip the house. I’m being kind when I suggest our differences are due to different markets. Protection in multiple offers is about protecting it from falling out and back on market.

    Choosing the right buyer who won’t cancel or change the price after winning is the reason for “will look at offers on…” It is done so a buyer can’t waltz in and tie up the house on day 1 “subject to inspection”.

    You don’t seem to care if the buyer cancels causing the seller to move back to square one. If that is the case then no reason to not let a buyer tie it up on day one. No reason whatsoever. Just list it without any instruction. Nothing wrong with that. No right or wrong here Kary. You do it your way; Everyone else is not wrong to NOT do it your way.

    You choose to protect a seller from something that may be, at best, 1 in 1,000 cases. I’m protecting them from something that happens every 1 in 5 cases, as are most agents.

    If the seller is fully disclosing defects, they don’t have to worry all that much about your issue.

    Plus it is totally unfair to the buyer who came in 2nd for the house to end up selling for less than their offer due to an inspection negotiation. You’re not looking at the bigger picture.

  81. 81
    Justme says:

    RE: ess @ 71

    ESS, you are such a bubble cheerleader. Dave, you left out that your linked article says:

    “Construction would begin in 2017 and be completed in 2019. GLY Construction is the general contractor.”

    Okay. So Google may rent space for 3-4000 workers in Seattle toward the end of 2019. That is (1) THREE YEARS away from today (2) the number 3-4000 is not very large, (3) there was no mention of whether these are all new jobs OR a mix of office space consolidation that includes existing employees, (4) 3-4000 *potential buyers* is ~one month worth of SFH (house) transactions at the current pace, AND (5) a lot can happen with “the economy” between 2006 and 2019.

    And ESS, 100k ft2 is MAYBE enough for 1000 employees.

  82. 82

    By ARDELL @ 80:

    RE: Kary L. Krismer @ 79

    Agree to disagree.

    . . .

    Choosing the right buyer who won’t cancel or change the price after winning is the reason for “will look at offers on…” It is done so a buyer can’t waltz in and tie up the house on day 1 “subject to inspection”.

    /Pounds head against wall

    Yep, I think we’ve beat this to death, particularly since you still don’t even understand why what we’re talking about is done.

    And BTW, quite saying your area is different. There’s no reason why your smaller geographic/lower price market (whatever you fantasize that to be) is different than the areas I practice in.

  83. 83
    Dave says:

    RE: Justme @ 81

    UR correct, big companies are playing the long game in this uncertain climate and moving their chess pieces accordingly, (my friends said they plan to rent when they arrive). If you’re looking for macro-demographic data and projections here are some good starters.

    Washington State OFM “Office of Financial Management”
    http://www.ofm.wa.gov/pop/april1/default.asp

    Puget Sound Regional Council
    http://www.psrc.org/data/forecasts

    The consensus numbers paint a clearly bleak portrait. The Puget Sound needs greater housing density to accommodate foreseeable needs. Future housing development must be quite the buzz with local mayors.

    Like Seattle Mayor.
    http://www.seattle.gov/dpd/cityplanning/populationdemographics/aboutseattle/population/

    Even my favorite Edmonds Mayor.
    http://edmondsbeacon.villagesoup.com/p/city-to-develop-affordable-housing-strategy-by-2019/1522888

    You get the idea, no bubble here, just low supply and high demand.

  84. 84
    Blurtman says:

    By Justme @ 81:

    RE: ess @ 71

    ESS, you are such a bubble cheerleader. Dave, you left out that your linked article says:

    “Construction would begin in 2017 and be completed in 2019. GLY Construction is the general contractor.”

    Okay. So Google may rent space for 3-4000 workers in Seattle toward the end of 2019. That is (1) THREE YEARS away from today (2) the number 3-4000 is not very large, (3) there was no mention of whether these are all new jobs OR a mix of office space consolidation that includes existing employees, (4) 3-4000 *potential buyers* is ~one month worth of SFH (house) transactions at the current pace, AND (5) a lot can happen with “the economy” between 2006 and 2019.

    And ESS, 100k ft2 is MAYBE enough for 1000 employees.

    We need someone to suck up the massive inventory that will be coming on line in Sammamish. You’ll currently need $200k for a 20% down for many of these homes. If you are a longer term owner, you may be feeling some glee. But the commute will only continue to get worse, but people will put up with a lot, it seems. If you do sell, and want to live in the area, you may or may not be going into more debt. If you had a $400k home from the ’80’s that is now worth $800k or more, and you want something nicer, it’s going to be over $1 million. If you bought in the ’90’s, it is likely your equity is less and you may still be paying off a mortgage. Of course, you could pocket the change and move to the boonies.

  85. 85

    By Blurtman @ 83:

    Of course, you could pocket the change and move to the boonies.

    Which is a very good option for people who don’t commute or just care more about where they live than how long they have to commute to live there.

  86. 86
    Marc says:

    I think one important piece that both Kary and Ardell did not expound on is the analysis and consideration the listing agent and seller should do before they list the house to help decide on pricing and offer review strategy. A crazy seller’s market like this often permits them to make much more confident predictions about what they can expect at various price points.

    Thus, they should do an objective review of the subject property and of comps in the area to come up with a range where the home is likely to sell. From this they can decide on what strategy seems most likely to lead to the best combination of high price, fewest contingencies, and most capable and motivated buyer.

    Two strategies that I see frequently are to either price modestly in hopes of attracting multiple offers or price high and look for one good offer.

    For a single family home in Greenlake/Wallingford/Fremont/Ballard with 3 beds and 2 baths up, it’s an extremely safe bet that a modest price will get plenty of offers and drive the price up. In that case, an offer review deadline is paramount because you’re counting on multiple offers to set the price and you absolutely do not want to accept the first offer in particularly if it’s only at list and has various contingencies.

    On the flip side, if the comps indicate that similar homes in the area are taking 15, 20, 30 days or longer to sell and that most sell at or below list price, then the modest pricing strategy is not a good idea. Instead, it may be better to price at the upper end of the range and look for one good offer.

  87. 87
    ess says:

    By Justme @ 81:

    RE: ess @ 71

    ESS, you are such a bubble cheerleader. Dave, you left out that your linked article says:

    “Construction would begin in 2017 and be completed in 2019. GLY Construction is the general contractor.”

    Okay. So Google may rent space for 3-4000 workers in Seattle toward the end of 2019. That is (1) THREE YEARS away from today (2) the number 3-4000 is not very large, (3) there was no mention of whether these are all new jobs OR a mix of office space consolidation that includes existing employees, (4) 3-4000 *potential buyers* is ~one month worth of SFH (house) transactions at the current pace, AND (5) a lot can happen with “the economy” between 2006 and 2019.

    And ESS, 100k ft2 is MAYBE enough for 1000 employees.

    ———————————————————————————————————————————

    Whether anyone likes it or not, this area is rapidly growing, and housing is not keeping up. From my perspective, I see rents going up and more and more people trying to get into moderately priced rentals. And we all know what is happening to housing prices – they continue to escalate. Puget Sound is known as a great place to live, and many are eyeing a move to this area from other parts of the country. And while this one company is “only” adding 1000 jobs, it all adds up as each job supports a few others. To paraphrase Everett Dirksen – a thousand here, a thousand there, and soon you are talking about real employment gains. And interestingly, the prices to either rent or buy are still much cheaper than most other cities on the west coast. For many that move here – housing is a relative bargain.

  88. 88
    ess says:

    By Kary L. Krismer @ 84:

    By Blurtman @ 83:

    Of course, you could pocket the change and move to the boonies.

    Which is a very good option for people who don’t commute or just care more about where they live than how long they have to commute to live there.

    =======================================================================

    Which is exactly what we are going to do next fall when we take a trip to the “boonies” in the southwest to check out housing in a number of cities and towns. This place isn’t what it used to be, and traffic is not getting any better. There is a great deal to be said for “boonies” – cheaper housing, much lower taxes, and no traffic

  89. 89

    By Marc @ 86:

    I think one important piece that both Kary and Ardell did not expound on is the analysis and consideration the listing agent and seller should do before they list the house to help decide on pricing and offer review strategy.

    Expound more? You think that’s possible? ;-)

    Seriously, yes, there are things that should be discussed beforehand. Pricing (sometimes less is more and too much is less). Pre-inspections. Buyers waiving inspections. Escalation clauses. What to disclose of other offers. All this stuff is the client’s decision, and much of it needs to be discussed before listing, but some of that discussion can occur after (e.g. wait about discussing disclosing offers until you actually get an offer).

    There are even a few things that need to be discussed by NMWLS rule, like keeping an owner’s phone number private and some listing terms which might deter offers.

    As to pricing, Ken Harney had a piece last week on pricing, and the topic of agents “buying” listings. I don’t think he got it quite 100% right, but it is an interesting piece.

    http://www.telegram.com/article/20160609/NEWS/160609400

  90. 90
    Blurtman says:

    By ess @ 88:

    By Kary L. Krismer @ 84:

    By Blurtman @ 83:

    Of course, you could pocket the change and move to the boonies.

    Which is a very good option for people who don’t commute or just care more about where they live than how long they have to commute to live there.

    =======================================================================

    Which is exactly what we are going to do next fall when we take a trip to the “boonies” in the southwest to check out housing in a number of cities and towns. This place isn’t what it used to be, and traffic is not getting any better. There is a great deal to be said for “boonies” – cheaper housing, much lower taxes, and no traffic

    The boondocks is an American expression that stems from the Tagalog word bundok. It originally referred to a remote rural area,[1] but now it is often applied to an out-of-the-way city or town considered backward and unsophisticated.[2]

    The expression was introduced to English by U.S. military personnel fighting in the Philippine–American War (1899-1902).[3][4] It derives from the Tagalog word “bundok”, which means “mountain”.[5][6] According to military historian Paul A. Kramer, the term originally had “connotations of bewilderment and confusion”, due to the guerrilla warfare the soldiers were engaged in.[4]

    In the Philippines, the word bundok is also a colloquialism referring to rural inland areas, which are usually mountainous and difficult to access, as most major cities and settlements in the Philippines are located on or near the coastline.[6] Equivalent terms include the Spanish-derived probinsiya (“province”) and the Cebuano term bukid (“mountain”).[7] When used generally, the term refers to a rustic or uncivilized area. When referring to people (taga-bundok or probinsiyano in Tagalog; taga-bukid in Cebuano; English: “someone who comes from the mountains/provinces”), it acquires a derogatory connotation of a stereotype of unsophisticated, ignorant, and illiterate country people.[8]
    https://en.wikipedia.org/wiki/Boondocks

  91. 91

    RE: Blurtman @ 90

    Now I can’t get Billy Joe Royal’s one hit wonder out of my head. “Lord have mercy on a boy from down in the boondocks”.

    https://www.youtube.com/watch?v=dWw9-iygCfM

  92. 92
    Blurtman says:

    By Ardell DellaLoggia @ 91:

    RE: Blurtman @ 90

    Now I can’t get Billy Joe Royal’s one hit wonder out of my head. “Lord have mercy on a boy from down in the boondocks”.

    https://www.youtube.com/watch?v=dWw9-iygCfM

    It does have a RE tie-in. ;>)

    Down in the boondocks, down in the boondocks
    People put me down ’cause that’s the side of town I was born in
    I love her, she loves me but I don’t fit her society
    Lord have mercy on the boy from down in the boondocks

    Every night I watch the light of the house up on the hill
    I love a little girl that lives up there and I guess I always will
    But I don’t dare knock on her door ’cause her daddy is my boss man
    So I’ll just have to be content to see her whenever I can

    Down in the boondocks, down in the boondocks
    People put me down ’cause that’s the side of town I was born in
    I love her, she loves me but I don’t fit her society
    Lord have mercy on the boy from down in the boondocks

    One fine day I’ll find a way to move from this old shack
    I’ll hold my head up like a king and I never, never will look back
    Until that morning I’ll work and slave and I’ll save every dime
    But tonight she’ll have to steal away to see me one more time

    Down in the boondocks, down in the boondocks
    People put me down ’cause that’s the side of town I was born in
    I love her, she loves me but I don’t fit her society
    Lord have mercy on the boy from down in the boondocks

    Lord have mercy on the boy from down in the boondocks
    Lord have mercy on the boy from down in the boondocks

  93. 93

    RE: Marc @ 86

    It’s a conundrum.

    It is my position that a Listing Agent has a duty to list at a price they are reasonable certain it can appraise for, no more and no less. Otherwise they would have to put “cash only” the same as is done for properties that can’t be financed for other reasons.

    I have both scenarios running concurrently as we speak. On the one where I am the listing agent I am the 3rd in as to properties for sale in a small T/H complex. The other two agents listed at the prices supported by the comps and the market bid them up…except they are both still pending. The prices we think they sold for are hearsay. Even though I am 90% sure of what they both sold for, neither was close enough to closing at the time I chose my price. I did jack the price up $25,000, but the general buying public can’t see those sold but pending prices either. Pricing my smaller one for more than the larger one as to asking price was really not an option given their asking is the only real data point until it closes. Neither will be closed by the time we look at offers tomorrow so they are not “comps”. I chose a slightly middle ground…we’ll see what happens. I’m not worried about appraisal because the other two will close before mine…well but maybe not before the buyer’s lender is done on mine…but we can always wait a few days to a week for at least one of these to close if need be and get a reconsideration of appraised value. Still, my having jacked it up $25,000 is not going to curtail multiple offers as far as I know. So it really didn’t resolve your concern.

    On the other scenario…agent listed at a price he “HOPED” it would sell for without comp supports and he was correct. Basically what you are somewhat suggesting is possible, “A crazy seller’s market like this often permits them to make much more confident predictions about what they can expect at various price points.” He did that. His prediction came to fruition but received only 2 vs more offers. BUT both were from VA buyers and the house is stuck in not appraising.

    An agent really cannot recommend a price that is not certain to appraise given known “comps” vs hearsay pending prices. You can’t knowingly put a buyer in the position of spending money on home inspection and appraisal only to find that the buyer’s lender won’t lend against the list price. If the buyers bid it up over asking price, that’s different.

    If the seller lists at a price that can’t be supported…dirty pool. Possibly grounds for the seller having to pay for the buyer’s costs up to the point where it doesn’t appraise if the buyer didn’t pay over the list price, which is the case in my 2nd scenario where I represent the buyer vs seller.

    You can’t just price at what you are fairly certain a buyer is willing to pay…unless…you show “cash only” in the possible financing options data field. Even if you are 100% correct that it will in fact sell at that price, if there is one buyer at full price or even 2 (cutting down on the # of offers). Why? Because OFTEN the property appraises ONLY because the appraiser knows it had 6 or more offers and that “story” helps support the higher appraisal even when the comps don’t.

    Moral of the story: “You can’t be smarter than the market”. 3% to 5% over known and closed comps is reasonable for an asking price. Beyond that if the market wants to bid it up 10% or more over asking price…there’s nothing you can ethically do to jump in front of that train, without someone potentially getting hurt in the process.

    The buyer can do that knowing he/she has the cash to make up the difference between appraised value and sold price. A seller cannot create that scenario by listing too high or it is “false advertising” when the seller suggests it can be financed at that asking price.

  94. 94

    By Ardell DellaLoggia @ 93:

    The buyer can do that knowing he/she has the cash to make up the difference between appraised value and sold price. A seller cannot create that scenario by listing too high or it is “false advertising” when the seller suggests it can be financed at that asking price.

    A seller is not suggesting it can be financed at any price, only saying that they will accept an offer that requires financing. But in any case, the buyer can obviously make their own determination.

    I find the opposite situation more disturbing. Offers that are bid up well over list where the buyer won’t commit to putting down additional funds if the appraisal is low. That is really nothing more than an offer to buy the property for whatever the appraiser says the property is worth.

  95. 95
    Justme says:

    RE: ess @ 87

    >>Whether anyone likes it or not, this area is rapidly growing, and housing is not keeping up.

    I’m calling BS on your remark. I just debunked your and Dave’s jobs data as being insignificant and/or applying in 2019, 3 years from now, and your response was to circle back into anecdotal mode. And then you add the “whether anyone likes or not”, as if that brings any more credibility to your data-free anecdote.

    >>I see rents going up and more and more people trying to get into moderately priced rentals.

    Uh, we are talking house prices here, not rental prices. But, yeah, there will be some additional low paying jobs following each high paying job. But these $15-in-2019 jobs will not increase demand for houses, only for rentals, and not for “luxury” rentals, either.

    In summary: We have another case of Bubblers are gonna Bubble, whether they have any meaningful data or not.

  96. 96
    Justme says:

    On the topic of the $15-in-2019 minium wage, I thought a reference would be useful.

    Reference:

    Schedule 2 employers (500 or fewer employees in the U.S.) with minimum compensation
    http://murray.seattle.gov/minimumwage/

    Note the many significant caveats of the $15 for Schedule 2, such as fact that tips can be included in the wage calculation, and the long delays before actually reaching $15 (2019).

  97. 97

    RE: Kary L. Krismer @ 94

    I didn’t say seller…I said agent…the one who checks the boxes in the mandatory potential financing options data field. “cash”, “conventional”…stop. being the most common. If you check the FHA box and accept an offer from an FHA buyer and the property can’t be financed using FHA, then the listing erroneously let a buyer into paying for a home inspection and appraisal cost with no possible good conclusion.

    Take that a step further. If you check cash and nothing else…well but that hurts the seller so most don’t. If you check only cash and conventional, then it should appraise for a conventional mortgage.

    You are technically correct that it is the seller “saying it” except the agent is expected to know a lot more than the seller, and protect the seller, from making promises they can’t keep based on knowledge the agent is expected to have. Last I looked, ignorance might be a defense for a seller…but not an agent.

  98. 98

    RE: Kary L. Krismer @ 94

    Again…different markets…though you don’t like that answer.

    You say “Offers that are bid up well over list where the buyer won’t commit to putting down additional funds if the appraisal is low.” I say, in what world does THAT happen? Not my world. Obviously yours.

    So we must be either working in different markets OR doing something differently. My guess is you don’t like countering with a strike out of the must appraise clause and that causes you to run into this problem. I know when the price is jumping over a reasonable appraised value…and address that in the contract…BEFORE it becomes a problem. That is why I said that I was being “kind” to suggest it was merely a case of our working in “different” markets, even though we both know that is not entirely the case.

  99. 99

    RE: Blurtman @ 92

    Well…yes. It sounds like “An Ode to Erik” a bit. He’s holding “his head up like a King” in Kirkland first and now West Seattle on the water. As to the home he left behind in Everett…he “never, never will go back” from what we have heard him say. Not only RE oriented…but hitting very close to home in our little SB community. :)

  100. 100
    Justme says:

    Speaking of luxury rentals: SF market is buckling, but that could not happen in Seattle, could it? Maybe those web designers from SF will come to Seattle for their bartending jobs, and that will keep rents soaring? (sarcasm alert for the impaired)

    http://www.sfchronicle.com/business/networth/article/Free-rent-offers-abound-but-only-for-those-who-8000714.php

    The San Francisco Chronicle in California. “Thanks to a glut of new high-end apartment buildings, some Bay Area landlords are offering incentives such as free rent for a month or more, six months of free parking, free electricity for a year or up to $1,500 in gift cards. Some are waiving application fees and cutting security deposits to $1,000 or less on units that rent for $3,000 a month and up. But with so many buildings opening around the same time, the incentives are getting bigger and spreading to somewhat older buildings that compete with new ones. South of Market, South Beach, Mission Bay and Potrero Hill are San Francisco’s ground zero for new construction — and rent concessions.”

  101. 101

    By Ardell DellaLoggia @ 98:

    RE: Kary L. Krismer @ 94

    Again…different markets…though you don’t like that answer.

    You say “Offers that are bid up well over list where the buyer won’t commit to putting down additional funds if the appraisal is low.” I say, in what world does THAT happen? Not my world. Obviously yours.

    So we must be either working in different markets OR doing something differently.

    It’s the latter.

    You’re the agent who has repeatedly said you don’t even check into the buyer’s finances, or even verify that they have the funds for the down payment, so I don’t know how you would possibly know that. Seems like it’s more likely the difference is you’re just not aware of the facts because you’re too concerned about the buyer’s privacy! ;-)

  102. 102

    By Ardell DellaLoggia @ 98:

    My guess is you don’t like countering with a strike out of the must appraise clause and that causes you to run into this problem.

    You do know that just striking that language doesn’t do any good unless the buyer has additional funds to put down, right? If you just strike that language and then the property doesn’t appraise, the buyer can still rely on the financing contingency to get out of the transaction if they don’t want to or can’t put down additional funds.

    The only time I have ever just struck the appraisal language in a Form 22A is where both buyers were putting down over 40%. For other situations you need to know how much extra money they have over their required loan amount (e.g. over 20%, over 5%, whatever), and then you need to know a bit of math to know how to draft that language.

  103. 103
    Blurtman says:

    By Ardell DellaLoggia @ 99:

    RE: Blurtman @ 92

    Well…yes. It sounds like “An Ode to Erik” a bit. He’s holding “his head up like a King” in Kirkland first and now West Seattle on the water. As to the home he left behind in Everett…he “never, never will go back” from what we have heard him say. Not only RE oriented…but hitting very close to home in our little SB community. :)

    Re: Erik – Yes, had the same thought. The story is found throughout the world – person of meager means sets sights higher, works hard, takes risk, and succeeds. And the girl basically marries a guy just like dad who did the same.

    You’ll hate me for this once the melody doesn’t go away, but this is actually Erik’s biography in song.

    “My papa was a great old man
    I can see him with a shovel in his hands, see
    Education he never had
    He did wonders when the times got bad
    The little money from the crops he raised
    Barely paid the bills we made

    For, life had kick him down to the ground
    When he tried to get up
    Life would kick him back down
    One day Papa called me to his dyin’ bed
    Put his hands on my shoulders
    And in his tears he said

    He said, Patches
    I’m dependin’ on you, son
    To pull the family through
    My son, it’s all left up to you

    Two days later Papa passed away, and
    I became a man that day
    So I told Mama I was gonna quit school, but
    She said that was Daddy’s strictest rule

    So every mornin’ ‘fore I went to school
    I fed the chickens and I chopped wood too
    Sometimes I felt that I couldn’t go on
    I wanted to leave, just run away from home
    But I would remember what my daddy said
    With tears in his eyes on his dyin’ bed

    He said, Patches
    I’m dependin’ on you, son
    I tried to do my best
    It’s up to you to do the rest”

  104. 104

    RE: Blurtman @ 103

    You don’t have to put all the lines to the songs for my benefit. I know them by heart. :) I grew up in Philly on top of my Dad’s record store and my 12 year biz partner in work and life is the founder of Easy Street Records and Queensryche. We have a massive music collection. He even has an unreleased Beatles Album. Still in plastic. We don’t play that one. LOL!

    My 2nd choice was Johnny Rivers “Poor Side of Town”. https://www.youtube.com/watch?v=CnxDnVe27cA

    That said…I don’t totally agree with your definition of “boonies”. I’ve been using the term “out in the boonies” well before I was a real estate agent. To me Sultan, as example, is “out in the boonies”. Monroe, Lake Stevens…all those places people chased “New Construction at an ‘affordable’ price” back in 2005 and 2006…only to cry the blues when gas prices went over $4.00 temporarily.

    Out in the boonies is actually where people go to buy a NEW house or to get a lot more for their money than they can “close in”. A possible “derogatory” reference, but not in the way these songs and your definition suggest. The negatives are not the neighborhood or the house…as people won’t go “to the boonies” to get that, except maybe SWE. :) They go “to the boonies” to get a mansion for less. My hairdresser back in 2005 bought a place out in Sultan for that reason, and I heard his tales of woe regarding commute every time he cut my hair. Nice house though.

  105. 105
    Doug says:

    RE: Justme @ 100 – Those areas suck to live in, though. It’s equivalent to someone building a luxury building in White Center here.

    Build a luxury building in Russian Hill, the Marina, or Pac Heights and it’s probably a different story.

  106. 106
    Buyer says:

    By Ardell DellaLoggia @ 10:

    RE: ESS @ 9

    Ardell: Usually people ask me up front. Someone came to me in early 2008 and I told them to renew their lease for a year and get back to me when the lease is coming up because the market was heading down soon and for at least a year. A year later when their lease was up they bought a short sale in their desired area and it took only one offer. Off the top of my head, three people came to me in August and I told them we can look now and at every new listing, but odds are they wouldn’t be in a house before Jan to April. One closed in February (this year and in their desired area). One closed April 30 (2014). One (2015) got lucky and closed in November. The Journey is usually shorter if people come to me in Feb. – March. The real estate cycle contributes a lot to the timeframe unless it is a 1 or 2 bedroom condo.

    What do you tell your buyers now? buy or renew their lease for another year (assuming you think the market will head down soon)?

  107. 107
    Blurtman says:

    RE: Ardell DellaLoggia @ 104 – That’s great! I had spent a good amount of my misspent youth and early adulthood in record stores, and like it all.

    So yeah, if you have a flexible commute, or little to none at all, then no problema regarding the boonies. But there have to be good restaurants nearby, and just the right amount of Jim Bob neighbors. And for families, good public schools and good private schools.

    I am frankly surprised at the pricing farther east. Snoqualmie, for example. So perhaps many boonie areas are already discovered. Everything expands and civilizes over time. When I lived in San Diego, there was nothing east of 5. And now it is endless instant communities as far east as you can see.

    North Bend will become Bellevue 2. Mark my words!

  108. 108
  109. 109
    Marc says:

    Ardell,

    Can you direct me to the statute that requires an agent to only list a home “at a price they are reasonably certain it can appraise for” and the MLS rule that says a seller cannot list their home for a price that is more than 5% above “known and closed comps?”

    I was not aware of either and perhaps I foolishly believed that this is America and you can list your house for any price you want. If these are the rules, should there not be a corollary that a buyer may not buy a home for less than appraised value? If so, then we clearly need a new government agency to decide for us what the appropriate price is for every home in the land.

    One thing that frustrates me to no end is the importance people put on “the appraisal.” If we send 10 appraisers to appraise the same house we may get ten different values and ten different measurements of the house’s square footage. Even among the appraisers’ whose valuations are similar, I’ll bet dollars to donuts that the analysis each used to derive that value will be remarkably different. I see this time and time again.

    Appraising real estate is no more objective than appraising art. It’s one person’s subjective opinion on one given day based entirely on their personal selection of relevant information. The big difference with an appraiser is that they use a complicated looking form which has a side (if not primary) benefit of looking “official.”

  110. 110
    Marc says:

    By Ardell DellaLoggia @ 98:

    RE: Kary L. Krismer @ 94
    You say “Offers that are bid up well over list where the buyer won’t commit to putting down additional funds if the appraisal is low.” I say, in what world does THAT happen? Not my world. Obviously yours.

    Don’t be disingenuous. It is extremely common for offers with both financing and escalation addendums to include and not waive the low appraisal provision (in fact, more so than not even in this market). Yes, the seller and listing agent can and should try to get that waived or at least modified so that the buyer is committed to covering all or some of a low appraisal. But, that doesn’t always happen and when it doesn’t the seller does not always have a superior alternative (yes, triple negative word score!). Particularly where the second buyer has limited means (or may be overstating his means) and is really just willing to risk his earnest money on a roll of the appraiser’s dice. Heck, if a buyer has lost out on multiple houses already why not roll the dice, most appraisals come in “at value” anyways.

  111. 111
    Marc says:

    RE: Marc @ 110 – To be fair, I have definitely observed what appears to be a growing trend of buyers waiving the financing contingency in its entirety. I first noticed it on the eastside and now I’m seeing it more in Seattle. To wit, I had a listing last week receive 4 offers all well over list price from buyers who were all using financing and all waived financing completely.

    Afterwards I spoke with two of the losing agents and we all agreed that this market is far more brutal than what we experienced in 2006-2007. At least then inventory was relatively plentiful so if you didn’t get one house, another would come along soon enough. Not so, today.

  112. 112

    By Marc @ 111:

    RE: Marc @ 110 – To be fair, I have definitely observed what appears to be a growing trend of buyers waiving the financing contingency in its entirety. I first noticed it on the eastside and now I’m seeing it more in Seattle. To wit, I had a listing last week receive 4 offers all well over list price from buyers who were all using financing and all waived financing completely.

    That at least is an effective way to deal with the low appraisal language! :-)

    I think you may be seeing that because Annie Fitzsimmons has been saying that’s how you waive the low appraisal provision. Just striking the low appraisal provision doesn’t work in “most” situations.

    https://www.youtube.com/watch?v=ME6g-BnmnVo&list=PLsU-Dcv-PIXbri-X07QPAB7N9-B7xFmvv&index=3

    The seller needs to realize though that the transaction is still subject to financing–it’s just that if the financing fails the seller will get half the earnest money rather than nothing. So it doesn’t really provide assurances of closing.

    And the agent drafting the contract needs to realize: (1) They need to draft language allowing the appraiser into the house; and (2) They need to use 22EF to show that they have a contingent source of funds (or otherwise disclose the intent to get a loan).

    Between going without a financing contingency and going without an inspection contingency, I’d be much more likely to approve of the former–assuming the loan officer were known to me.

  113. 113

    By Marc @ 109:

    Ardell,

    Can you direct me to the statute that requires an agent to only list a home “at a price they are reasonably certain it can appraise for” and the MLS rule that says a seller cannot list their home for a price that is more than 5% above “known and closed comps?”

    Particularly if you’re putting $250,000 down on a $500,000 house–the appraisal is not likely to be an issue. The listing doesn’t say how much you have to put down, only that they’ll accept financed offers of certain types.

    I have much more trouble with agents who have listings that say conventional or FHA financing where the condition is such it should be cash only. That is an agent thing, rather than a seller thing. There’s little change a seller would know of such things.

  114. 114
    Marc says:

    By Kary L. Krismer @ 112:

    By Marc @ 111:

    RE: Marc @ 110 – I think you may be seeing that because Annie Fitzsimmons has been saying that’s how you waive the low appraisal provision. Just striking the low appraisal provision doesn’t work in “most” situations.

    https://www.youtube.com/watch?v=ME6g-BnmnVo&list=PLsU-Dcv-PIXbri-X07QPAB7N9-B7xFmvv&index=3

    The seller needs to realize though that the transaction is still subject to financing–it’s just that if the financing fails the seller will get half the earnest money rather than nothing. So it doesn’t really provide assurances of closing.

    In that video Ms. Fitzsimmons says that if the buyer gives notice of low appraisal and the seller rejects it, that the buyer has only two choices: terminate or waive financing. I’ll concede this (and set aside the option to try and persuade the seller to accept some sort of compromise). She goes on to say that if the buyer and her agent believe the seller will respond by rejecting the low appraisal (and not the other two options available to seller), the buyer would be better off by not giving that notice at all because that way the financing contingency will remain in place and run through closing. If they do give it and the seller rejects it, she’s saying that effectively waives the financing contingency in its entirety thereby putting the earnest money at risk.

    Kary, go read paragraph 7(c) of the 22A, specifically, the sentence at lines 79-80 and tell me if you believe that to be correct. That sentence states “Buyer’s inaction during this reply period shall result in termination of the Agreement and return of the Earnest Money to Buyer.” Sounds to me that if the buyer gives notice of low appraisal and the seller flatly rejects it and then the buyer does nothing, the agreement will terminate by default and the buyer gets to keep the earnest money.

    This seems inapposite to the inspection contingency which defaults to the contingency being waived if the buyer does not obtain the seller’s signed agreement to a resolution.

    Her analysis of striking the appraisal clause is also suspect because it will then give zero meaning to a material term actively negotiated by the parties. You know contract law strives to apply reasonable meaning to the parties objectively manifested intentions.

  115. 115
    Erik says:

    RE: Ardell DellaLoggia @ 99
    Thank you for your help Ardell and the rest of the SB community that helped me. I couldn’t have made those decisions without your guidance. And thank you for all the other things you helped me with that have not been discussed on this website.

    Being broke sucks. I got very lucky.

  116. 116
    ARDELL says:

    RE: Erik @ 114

    You may have to pop by my Kirkland listing going on market Wednesday night. Remember that $200 wicker basket floor lamp I bought at Pier 1 for your condo? You put it together and I don’t know how and the bulb just went out as I’m staging this house. I may need you to change a light bulb, as the old joke goes. Seriously though. :)

  117. 117
    Erik says:

    RE: ARDELL @ 115
    Okay, will do.

  118. 118
    Justme says:

    RE: Doug @ 105

    >>Those areas suck to live in, though. It’s equivalent to someone building a luxury building in White Center here.

    Hell no. For example, The Mission District and SOMA is full of googlers that bus down to Mountain View every morning on the company luxury commuter buses. Where have you been? Maybe you are not entirely in touch with SF and Silicon Valley reality?

  119. 119

    RE: Marc @ 109

    The ethics are on the agent, not the seller. An agent is supposed to walk away from a listing that is misleading to buyers.

  120. 120
    greg says:

    RE: Justme @ 100

    Hey that can’t happen here, we have good jobs and we are the new San Fran, so we can’t have any problems San Fran is having,….

    OK , sorry I see the logic flaw, now.

  121. 121
    ess says:

    Some here don’t believe that there are underlying factors for dramatic price increases for both houses and rentals, and that the bubble for both is going to pop any day. I say great – don’t buy. Being an owner of two rental houses, as well as an owner of at least one real estate rental as far back as of the 1970s – who am I to encourage potential renters to leave the rental market and buy a residence? Who am I to indicate that interest rates are at all time historical lows, and that the low interest rates offset the higher prices? I want the pool of renters to expand and be as big as possible – growing faster than available real estate rentals. So if people think there is going to be a real estate collapse – I say keep on believing it and keep on renting. Just don’t complain about rising rents – they are related to rising house prices and the shortage of housing that this area is experiencing. I am even thinking of turning my residence into a rental if we relocate to a less expensive place. Some higher prices and rents – and that may happen!

  122. 122

    RE: Buyer @ 106

    As I’ve said here many times recently, it’s a better time to sell than it is to buy. Just as in 2007 and 2008, I shift to more sellers than buyers. If a buyer is both selling and buying and doesn’t want to rent in between, then we usually decide to proceed.

    Most recently I told a buyer to not be in a hurry, to answer your question.

    It is not as clear at this time as it was in the 2nd half of 2007 and in 2008. A swift change in financing in August 2007 that impacted jumbo loans to the point where for 6 months it was widely believe that no one could get one, and zero down was halted almost overnight was a much clearer signal than Trump may become President.

    But still…to answer your question, as recently as Saturday I told a buyer to wait at least until fall and preferably after the election UNLESS something awesome comes along that can be had at a reasonable price. I may say different things to different buyers depending on their individual circumstances. But for the most part I’ve been talking to sellers 3 x more than buyers in the last several weeks.

    It’s not a good time to jump on anything that moves.

  123. 123
    GoHawks says:

    Mortgage rates are moving back to lows for the year. While prices are making new all-times highs, affordability is still below the previous peak. Room to go still for prices.

  124. 124
    Justme says:

    RE: ess @ 121

    >>who am I to encourage potential renters to leave the rental market and buy a residence? Who am I to indicate that interest rates are at all time historical lows, and that the low interest rates offset the higher prices?

    Who are you?? I guess you are a hero saving the poor renters from being under your thumb, by informing them about rising house prices that will keep rising because Amazon, Google, Avalara(!), Tableau and others will grow into the sky. It is mighty grand of you do do that, ESS! Think about all the poor people you are saving from their fate of being renters.

    Personally I think it would be better for the world if you just stopped posting bubble-blowing propaganda. On this very thread, we now have ESS posting (1) Avalara lease info turned employment propaganda puff piece (2) personal anecdotes of demand given that Avalara puff-pice was debunked, and (3) house prices and rents will keep rising because mortgage rates are still low (3.8% I guess, for posterity). What is next? Back to making a link to some insignificant data, or does your stool of propaganda have a fourth leg?

    Propaganda affects people. That’s why propagandists engage in it. But if you want to help people, just stop the propaganda .

    Bubblers gonna bubble.

  125. 125

    RE: Justme @ 124
    We All Vote Our Own Pocketbook

    Never trust any political opinion….first ask where its coming from…

  126. 126
    Justme says:

    RE: softwarengineer @ 125

    >>We All Vote Our Own Pocketbook

    Someone has to call out all the propaganda that makes people vote and act AGAINST their own pocketbook. I imagine you would agree.

  127. 127
    Blurtman says:

    BREAKING!. Dogwalker acquaintance said this home sale closed recently. Buyers were from China and they agreed to pay the asking price, $760,000, according to the Shiba Inu family.

    4 beds 3 baths 2,640 sqft

    Stunning 1999 built Craftsman 2 story on park like .25 acre lot.

    27 days on Zillow.

    Stunning!

    http://www.zillow.com/homes/for_sale/Sammamish-WA/house,land_type/49088374_zpid/26938_rid/47.608165,-122.056424,47.605847,-122.060152_rect/17_zm/0_mmm/

  128. 128
    redmondjp says:

    RE: Blurtman @ 127

    I can top that one – three of the four homes in Grasslawn Estates in Redmond have now sold! Only one left! Buy today!!!!

    Prices in the $1.3 – 1.6M range – a new record high for this neighborhood.

    http://www.quadranthomes.com/find-your-home/grasslawn-estates/

    I’ll give some credit to the builder on these homes, though – they actually put the furnace in its own utility closet upstairs, complete with a leak pan and water detector alarm. So servicing the furnace and replacing filters is as easy as opening the closet door. This is far superior to some other newer homes I have seen where the furnace is mounted horizontally in the attic crawlspace (inside the opening in the trusses), where you have to crawl through 18″ of blown-in fiberglass insulation just to get to it (and don’t even think about what it will take to replace it in ten years).

  129. 129
    Erik says:

    RE: Blurtman @ 127
    My goal was to buy in Sammamish when the next bubble bursts and flip a house to some poor unsuspecting computer programmer for a huge profit and watch the market collapse on him or her. Now after reading redmondjp’s post, maybe I should modify my scope slightly and do it in Redmond. Afterall, $1.5M>$760k, which means more profit to be had when the market recovers.

    Either way, when the next opportunity strikes, I’m gonna make some easy money off the eastside nerds and run back to Seattle to spend it. It was so easy last time… they didn’t even see me coming.

  130. 130
    Erik says:

    RE: redmondjp @ 128
    You provided a link to a quadrant homes website that builds houses in Redmond. I didn’t see any relevant information backing up your claim. I expected you would share these sales as Blurtman did. Lame.

    I need to extract as much money from the eastside as I can during the next real estate crash. Please share the best areas to rip off programmers.

  131. 131
    ess says:

    RE: redmondjp @ 128

    I keep on hearing that prices can’t keep on going up because salaries haven’t kept up with housing prices. Prices keep on going up, but the housing keeps on getting sold. Obviously there is a great deal of money out there, and some folks have the ability to purchase houses in the 1.3 – 1.6 million dollar range.

  132. 132
    redmondjp says:

    By Erik @ 130:

    RE: redmondjp @ 128
    You provided a link to a quadrant homes website that builds houses in Redmond. I didn’t see any relevant information backing up your claim.

    There is no information to provide because the sales have not closed yet. I talked to the agent at the open house on Sunday who gave me the information. These houses are priced like items on a fine restaurant menu – if you have to ask, you can’t afford it.

  133. 133

    By redmondjp @ 128:

    I’ll give some credit to the builder on these homes, though – they actually put the furnace in its own utility closet upstairs, complete with a leak pan and water detector alarm. So servicing the furnace and replacing filters is as easy as opening the closet door. This is far superior to some other newer homes I have seen where the furnace is mounted horizontally in the attic crawlspace (inside the opening in the trusses), where you have to crawl through 18″ of blown-in fiberglass insulation just to get to it (and don’t even think about what it will take to replace it in ten years).

    Most I’ve seen have had a platform near the entrance to the attic, so it’s not all that bad, but IMHO the furnace should be in the garage, not a closet where it will make more noise, and not an attic where it will make more noise and be more difficult to service. Also, who wants a service repair person to be walking through their house every year or two for routine servicing?

  134. 134

    RE: Kary L. Krismer @ 133 – Also, ceiling and attic installations typically have ceiling mounted vents, which I’m not sure is optimal for an area where the heating season is much longer than the cooling season. I wonder if there are any studies or research on that?

  135. 135
    Blurtman says:

    RE: Erik @ 129 – Sammamish is a bedroom community for Seattle and certainly Redmond/Microsoft. The name Sammamish is derived from samma, meaning “the sound of the blue crane” and mish, meaning “river.” Now it means land of million dollar new homes, disappearing trees, and perhaps programmer nerds. There are lots of alright places in this beautiful state.

    Will a massive RE crash be once in a lifetime, will it return in several years, or not at all? Place your bets!

  136. 136
    ess says:

    Here is an interesting article about the price of rents, and increased rental construction in various Seattle neighborhoods. As with most longer trends, one will notice a healthy increase of rents after accounting for inflation during a time period that included one of the worst housing crisis in memory. Obviously the price of housing and existing rents are highly correlated, as more renters will wish to own their own residence if rents equal or in some cases outstrip the cost of owning a residence. And interesting to note – rents have not decreased although there has been a rental construction boom, and rents have continued to escalate from 2014 to the present.

    http://kuow.org/post/rent-too-high-compare-seattle-s-neighborhoods

  137. 137
    Blurtman says:

    But truth be told, you can live in a wetter Marin Hills type environment. No Jerry, though.

  138. 138
    AJT says:

    RE: ess @ 136
    That article is a year old. Here’s one that is only 6 months old :) that seems to have conflicting info.
    http://www.bizjournals.com/seattle/blog/2015/11/bad-timingas-thousands-of-new-apartments-open.html

  139. 139
    Screenname345 says:

    Do realtors still say March is the time of the year where I will get the most money for my house and there is the greatest demand or has that changed recently? I have plans to cash out next spring and move to a more affordable up and coming city where I can buy a house outright with my gains. Thanks.

  140. 140
    Marc says:

    RE: Screenname345 @ 139 – March is pretty much always a good month to list and there’s little doubt it will be in 2017. However, I wouldn’t say it is definitively better than April or May. Depends on the pros and cons of the specific house in question, the competition around it (or lack thereof), the market in general, the economy, and numerous other factors.

    As for this year (2016), a house listed in March probably would have sold for less than had it been listed in May and quite possibly June as well because prices have been flying. As we get deeper into summer and then fall, historically the frenzy tends to mellow and so too do prices.

  141. 141
    Blake says:

    By Blurtman @ 135:

    RE: Erik @ 129 – Sammamish is a bedroom community for Seattle and certainly Redmond/Microsoft. The name Sammamish is derived from samma, meaning “the sound of the blue crane” and mish, meaning “river.” Now it means land of million dollar new homes, disappearing trees, and perhaps programmer nerds. There are lots of alright places in this beautiful state.

    Will a massive RE crash be once in a lifetime, will it return in several years, or not at all? Place your bets!

    Blurtman… Thanks! I was watching the LPGA tournament in Sammamish Sunday and wondered what Sammamish meant! My guess: “stupid f*cking white man”

    As far as bets on the future… looks like $8,300,000,000,000 is now “invested” to earn negative returns right! Hmmm… me thinks that is not an especially optimistic bet?
    Idea: Let’s start a business selling mattress safes!??

    http://www.reuters.com/article/markets-bonds-jp-morgan-idUSL8N19515W
    “The value of government bonds with negative yields has hit a record high of $8.3 trillion, with Europe’s share rising as benchmark 10-year German borrowing costs sink towards zero, according to JP Morgan. Sub-zero bond yields have rattled world markets, with investors increasingly concerned that the global growth outlook is darkening rapidly and that central banks are powerless to do anything about it.”

    Who says the central banks are powerless? Helicopter Ben is still pushing for a money drop from up on high!
    http://www.marketwatch.com/story/bernanke-says-so-called-helicopter-money-could-work-2016-04-11
    … “Under certain extreme circumstances—sharply deficient aggregate demand, exhausted monetary policy, and unwillingness of the legislature to use debt-financed fiscal policies—such programs may be the best available alternative. It would be premature to rule them out,” Bernanke writes.

    That said, he does see a number of obstacles.

    One is simply the legality. So-called people’s QE, as has been advocated for by U.K. Labour Party leader Jeremy Corbyn, would be illegal in most or all jurisdictions, Bernanke points out. That would involve the central bank printing money and giving it away.
    (end quote)

    Legal-schmegal! We’re talking about FREE MONEY!!! (queue Patti Smith’s song Free Money…)
    And we’ll roll, dream, roll, dream, roll, roll, dream, dream
    When we dream it, when we dream it, when we dream it
    We’ll dream it, dream it for free, free money
    Free money, free money, free money, free money, free money, free money!!!

  142. 142
    Doug says:

    RE: Screenname345 @ 139 – What up and coming city? This might be my play too.

  143. 143
    Blurtman says:

    RE: Blake @ 141 – “I was watching the LPGA tournament in Sammamish Sunday and wondered what Sammamish meant! My guess: “stupid f*cking white man””

    Embrace the recovery, hater. ;>)

  144. 144
    Screenname345 says:

    @Marc thanks for the response. I guess the next few months will tell the tale but I am not seeing things selling at higher prices here in Capitol Hill since a flurry of listings in March but maybe I am wrong. This is why I was asking since that is when a bunch of houses seem to have hit. There is still barelyanything listed right now.

    @Doug I am thinking about the Research Triangle area in NC. I know it’s going to be more boring but seems like a good spot for my family and sort of like Portland.

  145. 145
    resistance says:

    For the kool-aid-drinking, we’re-special, it’s-different-this-time, but-this-is-Seattle clowns:
    http://www.zerohedge.com/news/2016-06-15/subprime-mortgage-back-its-2008-all-over-again

    Rampant subprime is back. So is mortgage fraud. Mix in some Asian money laundering, artificially low rates stemming from FED money printing, mark-to-fantasy accounting rules, and, viola! $500k crackshacks!

  146. 146
    AJT says:

    RE: Ardell DellaLoggia @ 122

    Ardell, what do you think of articles like this. Is this something to consider when determining a buying horizon?
    http://www.bloomberg.com/view/articles/2016-06-15/china-sends-bubbles-to-north-america
    We are looking to buy next year but could hold off until 18.

  147. 147
    ess says:

    By AJT @ 138:

    RE: ess @ 136
    That article is a year old. Here’s one that is only 6 months old :) that seems to have conflicting info.
    http://www.bizjournals.com/seattle/blog/2015/11/bad-timingas-thousands-of-new-apartments-open.html

    Thank you for that article – I had already read it when it was first published. I was interested in the KUOW article, because it showed the increase of rents ( accounting for inflation) during a time in which many thought the real estate market was going to collapse, as well as the increased number of units built in in each area during that time. I was just observing that longer term – rents and housing prices tend to go up, regardless of short term issues. If someone had bought an investment property 15 years ago – that investment survived the “great recession” in pretty good shape.

    I rather suspect many of those new apartment units are condo wannabes, that are being placed on the market because building a condo these days in Washington State is so legally challenging with the new liability issues that have been discussed here previously. I imagine the rent for the new construction is going to go at a premium. But your point is taken – there are many projects because the demand is so great and investors see the potential. I have observed these things going in cycles over the years I have been involved in the rental market – there is a shortage of housing, lots of new construction to meet the shortage (although not in the area of affordable single family houses), and then rents level off or even decrease because there is a temporary glut. But the level of rent increase has been so dramatic in the past few years that even a decrease in rents will not hurt those investors who bought property some years ago. They will lower their rents and carry on as I have in past recessions and housing gluts.

    Thus we shall see if rents moderate in the future years, and which segment of the rental market cools down. On the other hand – if we still are getting all those newcomers – they are going to need to live somewhere. In addition, many people have doubled or tripled up for years, and perhaps they may decide it is time to get their own digs as they get older.

    And who knows – maybe the Washington State legislature will amend the condo law and limit liability to a lesser amount of years and a flood of condo conversions will hit the market.

    While there may be lots of new apartments in the pipeline, there is a tremendous demand for moderately priced single family housing. I presently have a small house for rent that we rent for a fair- slightly below market price, and I have never seen such a response on Craigslist as I have gotten this time around. People still want to live in a house – even if they have to mow the lawn. There is glut of moderately priced single family houses – even small ones, and no one is building them now and they will not be building them in the future for reasons that have been discussed on this site as well as other places.

    Or in other words – exciting times for the Puget Sound real estate market! We will all have to wait and see how it plays out!

  148. 148

    RE: AJT @ 146

    The most important sentence to me in the article is “However, the fact that money is flowing into housing, rather than into bonds,…” The problem is interest rates have to be higher, whether that is a popular move or not. Average Joe needs to make more money on their short term savings accounts. Bonds need to be a higher income producing asset again. Low rates have really not served anyone except the builders.

    As to your question: “We are looking to buy next year but could hold off until 18.” I don’t see anything in that article that changes how I feel on the subject. There are many forces at work and the biggest deterent to buying now or even later is wanting something new or newer.

    What are your parameters for home? What might you hope to buy next year or 2018? If it’s a brand new house or less than 10 years old or even less than 15 year’s old, that scrambling of many for a limited commodity is creating a false sense of “low inventory”. There’s not enough of what people want because there are existing homes in the best of area. We can’t throw them all in the trash.

    What? Where? comes before When?

  149. 149
    Justme says:

    RE: Ardell DellaLoggia @ 148

    >>The most important sentence to me in the article is “However, the fact that money is flowing into housing, rather than into bonds,…”

    There is a bit of a fallacy here. Since most mortgages end up being sold as bonds, you cannot have money flowing into housing without having money flowing into bonds, with the exception of cash buyers (some of which sell bond holdings to raise at least some of their cash). But in the big picture, QE3 ended in 2014, and therefore mortgage-funding bonds will NOT be bought by FRB/Fed and “paid” with out-of-thin-air “reserve credits”. Unless ECB or some other foreign central bank is buying US MBS bonds, some private entity has to buy them (perhaps the very same people who sold houses?),

    Anyway, my point is that the mortgage bond market must be in balance with the mortgage loan market. That is true whether or not some buying is with cash. The only exception is when central banks buy MBS with “reserve credits”.

  150. 150
    Justme says:

    RE: AJT @ 138

    Thanks, AJT, for debunking Ess. Ess circled back to posting misleading data again. I guess his stool of propaganda has only three legs after all: Insignificant or misconstrued employment data, selective anecdotes, and saving renters from landlords like himself by turning the into buyers.

    Everyone note data from AJT link says apartment completion in 2015 was going to be 17000 units. This with google maybe hiring 3-4000 people in 2019 when their new office bldg is done. Lots of dogwalkers and bartenders will have to rent luxury apartment for that supply to be demanded.

    QUOTE:There are 22,000 units projected to open this year (2015) and next. Combine that with the 7,400 units developers opened last year. – the highest level of production seen locally since 1991 – and it’s easy to see why landlords are concerned. ENDQUOTE.

    My prediction: Seattle Luxury apartments will decline in 2016, just like in San Francisco.

    Finally, to Ess, how about you give credit to my writings on May 9, where *I* was the first person to point out that some of the Class A apartment looks like they are specifically aimed at future condo conversion.

    https://seattlebubble.com/blog/2016/05/06/nwmls-home-prices-hit-another-record-sales-slow/#comment-255156

    Bubblers gonna bubble, and they don’t have time or inclination to give credit where credit is due.

  151. 151
    ARDELL says:

    RE: Justme @ 149

    That’s an odd way to look at it and not what it means. It means rates are so low that real estate is the alternative asset group. Not the mortgages on that real estate. The real estate itself. The rent and appreciation.

  152. 152
    Justme says:

    RE: ARDELL @ 151

    Nothing odd about it. It is an accounting certainty. Credit must equal debit. It is what it is and it means what it means :-)

  153. 153
    Anonymous Coward says:

    RE: Justme @ 150 – Quote: There are 22,000 units projected to open this year (2015) and next. Combine that with the 7,400 units developers opened last year. – the highest level of production seen locally since 1991 – and it’s easy to see why landlords are concerned.” Umm… You can’t look at supply only to try and analyze price movements on a supply and demand curve. The linked article has 22,000 new units in 2015 and 2016 (in an undefined “region”). Per the state’s (OFM) 2015 data, 35,000 people moved to King county last year alone. If we “assume” that continues into this year, the math gives us 70,000 new people over two years and 22,000 new units. If we throw in SFHs and I think we get something like 70,000 people chasing 26,000-28,000 new units. That doesn’t look like massive oversupply to me…

  154. 154
    ess says:

    The Seattle City Council doesn’t believe that the shortage of housing will be reduced by dramatic increase of construction over the next few years. If anything, there should be more concern about regulating and taxing short term rentals as any business, as well as zoning and neighborhood issues. But their focus seems to be on increasing the housing supply. Guess they haven’t heard the good news yet…..

    http://www.seattletimes.com/seattle-news/politics/seattle-may-slap-new-rules-on-airbnb-to-ease-rental-crunch/

  155. 155
    ARDELL says:

    RE: Justme @ 152

    I agree that you meant what you said. :) But Real Estate being an alternative asset class to bonds per the article does not translate back to bonds per your comment.

    That said I don’t agree with using real estate to replace bond holdings in an investment portfolio. Not even as REIT holdings.

  156. 156
    Blake says:

    By Ardell DellaLoggia @ 148:

    RE: AJT @ 146

    The most important sentence to me in the article is “However, the fact that money is flowing into housing, rather than into bonds,…” The problem is interest rates have to be higher, whether that is a popular move or not. Average Joe needs to make more money on their short term savings accounts. Bonds need to be a higher income producing asset again. Low rates have really not served anyone except the builders.

    Interest rates are plummeting the last few days… especially this morning:
    http://www.bloomberg.com/news/articles/2016-06-16/global-bonds-entering-new-abnormal-as-japan-leads-yield-meltdown
    The bond rally is sending benchmark 10-year yields to unprecedented levels in some countries. Japan’s tumbled to minus 0.21 percent. Australia’s fell below 2 percent. Germany’s plunged below zero. Even Switzerland’s 30-year yield briefly turned negative, as sub-zero yields, once considered unthinkable, are becoming more common.

  157. 157

    RE: ess @ 154 – I just noted that my auto insurance renewal had new provisions excluding coverage while on the clock with any ride sharing service (e.g. Uber). I’ve heard there’s coverage limitations for these type of activities too. I wonder how many of the owners of such properties even look into such things.

    I suspect there are some owners in some condo complexes who are really hoping that the city passes these restrictions.

  158. 158
    ess says:

    By Kary L. Krismer @ 157:

    RE: ess @ 154 – I just noted that my auto insurance renewal had new provisions excluding coverage while on the clock with any ride sharing service (e.g. Uber). I’ve heard there’s coverage limitations for these type of activities too. I wonder how many of the owners of such properties even look into such things.

    I suspect there are some owners in some condo complexes who are really hoping that the city passes these restrictions.

    Kary

    I can understand why auto policies limit drive services coverage. What insurance company is going to take on more risk without higher premiums? I know when we used our car for our business, we informed the insurance carrier and they wanted to know how many miles we drove per year, as that determined if we had to pay a higher premium.

    And as per renting housing on a short term basis with one of these companies, I think you bring up a valid point. I don’t know too much about these outfits, so I don’t know if they provide some blanket coverage as part of their fee (rather suspect not), or if they instruct the folks using their service to get the proper insurance coverage. I also suspect that sooner or later – there will either be an injury accident in one of these short term places, or a fire caused by a short term resident, and the underlying primary insurance carrier will deny coverage for the reasons you brought up. Then it will be all over the news and everyone will then scramble to get the proper coverage.

    Furthermore, what if you have a hold over tenant in one of these short term deals – how do you get them out? Does that type of short term rental come under the Land Lord Tenant Act, as these rentals are in private residences and not licensed hotels that are covered by other statutes ( I would assume hotels are covered elsewhere in the RCWs or WACs but I have happily not worked in that area for many years :) )

    And as to your point about other regular homeowners in condos – absolutely agreed. If lived in a condo and other units were being operated as a hotel next to or near my unit, I would be rather upset. But it is interesting that the issue has been framed by Seattle City Council in terms of affordable housing – not the safety and welfare of condo owners. So either the city council is so focused on affordable housing to the exclusion of other issues, or they feel there is more political hay to be made by ignoring the concerns of condo and home owners.

  159. 159
    Blurtman says:

    RE: Blake @ 156 – The beasts sense danger.

    Here is Bob Reich on RE:

    Housing prices are rising because high-end and luxury construction far exceeds new affordable homes (which in turn has a lot to do with widening inequality);

    Full piece from his FB page:

    Do you want to know how bonkers U.S. policymaking is when it comes to jobs and wages? Despite the fact that the economy is producing jobs at a snail’s pace, and more Americans are seeking unemployment insurance, the Fed is poised to raise interest rates and thereby slow the economy even more.

    Why? Because of the ghost of inflation – the fear that there’s so much demand for goods and services that prices will start accelerating. That’s utter baloney.

    Inflation is only 1.6 percent – and that’s almost entirely because of housing and healthcare. Housing prices are rising because high-end and luxury construction far exceeds new affordable homes (which in turn has a lot to do with widening inequality); healthcare costs continue to rise because boomers need more of it, and also because insurers are gaining market power to raise prices (and expand deductibles and co-payments) as they consolidate.

    In other words, there’s no real demand-driven inflation, and this is the worse possible time for the Fed to raise interest rates and slow the economy. The fact certain members of the Fed are pointing to increases in housing and healthcare costs as justification for a rate rise shows they don’t have a clue what’s happening to the typical American family.

  160. 160

    RE: ess @ 158 – I agree with most of that. As to the City Council’s position, I suspect that might be a hangover from their Uber fights, where some people took the simplistic position that if you can do something with a mobile app that it should be legal. Housing affordability would be something popular, and as a plus, I think it clearly does have some impact on affordability–it’s not just a made up concern.

  161. 161

    By Blurtman @ 159:

    Inflation is only 1.6 percent – and that’s almost entirely because of housing and healthcare. Housing prices are rising because high-end and luxury construction far exceeds new affordable homes (which in turn has a lot to do with widening inequality); healthcare costs continue to rise because boomers need more of it, and also because insurers are gaining market power to raise prices (and expand deductibles and co-payments) as they consolidate.

    Insurers are losing a ton of money, at least in the private policy (not group policy) market. Some are even starting to drop out of that market, which isn’t a bit surprising. The question wasn’t if but when.

  162. 162
    greg says:

    RE: Blurtman @ 159

    the fed wants to increase rates simply to get it off the floor. You can’t go too far below zero without people taking drastic action.

    The best example might be , when it costs money to hold money people will pre pay bills, take on far too much debt and buy safes. Banks have adjusted the model somewhat, but how does a money market fund work when they are requesting payment.

    Real neg rates seem to be acceptable to people but nominal ones somewhat force you to take action… Moving the rate up creates room to move it down when the fit hits the ban.
    They are stuck between a rock and a hard place, increase rates and the dollar gets too strong. stay where you are and what do you do if we have a black swan event. They are hoping to avoid painting themselves into a corner but clearly we are already there.

  163. 163
    Blake says:

    By greg @ 162:

    RE: Blurtman @ 159

    the fed wants to increase rates simply to get it off the floor. You can’t go too far below zero without people taking drastic action.

    The best example might be , when it costs money to hold money people will pre pay bills, take on far too much debt and buy safes. Banks have adjusted the model somewhat, but how does a money market fund work when they are requesting payment.

    Real neg rates seem to be acceptable to people but nominal ones somewhat force you to take action… Moving the rate up creates room to move it down when the fit hits the ban.
    They are stuck between a rock and a hard place, increase rates and the dollar gets too strong. stay where you are and what do you do if we have a black swan event. They are hoping to avoid painting themselves into a corner but clearly we are already there.

    Main reason they want to raise interest rates is to help the banks who rely upon net interest margins for a large portion of their profits. Banks tend to “borrow short and lend long,” so when the yield curve gets this flat they get creamed:
    https://www.stlouisfed.org/on-the-economy/2016/may/banks-more-profitable-interest-rates-high-low

    The insiders really, really want to raise rates, but the economy is barely limping along as it is and the inflation excuse just doesn’t cut it! Today they said inflation was about 1% the last 12 months and the trend is down True demand-push inflation is characterized by M2 money velocity. Here’s the graph of M2… that’s the image of an economy grinding to a halt!
    https://research.stlouisfed.org/fred2/series/M2V

    Of course, if and when the Fed does raise interest rates and tip the economy into a recession, those with lots of money and credit will be able to buy up assets on the cheap! That’s the way the system “works!” I put works in quotes there… ;-)
    (12 months from now the Fed statisticians will probably run the numbers and tell us that we entered the recession in May 2016!)

  164. 164

    RE: Blake @ 156

    Honestly I think 7% rates on moderate term and 5% rates on short term are what is best for the Country. The worst thing that happened to the average citizen was the eradication of the old “5% passbook savings account” that was a mainstay of the U.S. for at least a few decades. During double digit inflation the masses screamed for Money Market accounts at higher rates…they got it…but the benefit was short lived. They were better off with the 5% passbook savings.

    It’s not the return so much as the incentive to save. Everyone had a passbook savings and a separate “vacation” passbook savings. Life was good. :)

  165. 165

    RE: Blake @ 156

    The bigger issue for bonds vs real estate is the security of the bond maturing at face value. What would shake up the bond market would be a rash of defaults, not rates so much. People never bought bonds to “make money” hand over fist.

  166. 166
    Mike says:

    By Kary L. Krismer @ 134:

    RE: Kary L. Krismer @ 133 – Also, ceiling and attic installations typically have ceiling mounted vents, which I’m not sure is optimal for an area where the heating season is much longer than the cooling season. I wonder if there are any studies or research on that?

    Given that the furnace itself puts off heat it makes the most sense to put it inside the building envelope from an energy efficiency perspective. Anything – furnace, ducting, chimney that is outside the envelope is heat lost to the environment. If noise is an issue, insulating the closet with Roxul in the walls and putting a heavy door on it should quiet it down substantially.

    Thankfully much of the new construction I’ve looked at lately did away with the furnace entirely in place of a heat pump. A few years ago the ductless heads were viewed as an eyesore whereas now they’re a standard accessory in any contemporary home. They’re usually much quieter than old fashioned forced air heat as well.

  167. 167
    Klondike says:

    The NIMBY’s were out in Sammamish yesterday…

    http://www.theeastside.news/sammamishreview/news/local/residents-call-for-responsible-growth-in-protest-near-conner-jarvis/article_29116e1e-335a-11e6-94d5-5ff1fd551eda.html

    “Save the trees” is doublespeak for “stop new development so my property value keeps rising”

  168. 168
    Blake says:

    RE: Ardell DellaLoggia @ 163
    Agree.. the insane monetary policies of the last 7+ years punish savers and those looking to invest conservatively for their retirement… they encourage more debt! Plus dis-inflation in wages makes it much harder for consumers to pay off debts, even if those debts are at 3.5%… 5%… 9% (credit cards?) Combine that with the increasing difficulty for debtors to declare bankruptcy (students cannot do this) and the 99% are trapped… But the 1% wonder why the peasants are restless??

  169. 169
    Erik says:

    RE: Blurtman @ 135
    2024 til 2027 RE prices will go down. I will boot a programmer out of one of those sammamish homes, then sell it to another programmer for 3x what I paid. Very similar to what I did last time, except this time I will be able to afford more, therefore make a bigger profit.

    Buy for $600k in sammamish and sell for $1.8M. Then I’ll move out of this puget sound rat race and live like a king somewhere more affordable.

  170. 170

    By Mike @ 166:

    By Kary L. Krismer @ 134:

    RE: Kary L. Krismer @ 133 – Also, ceiling and attic installations typically have ceiling mounted vents, which I’m not sure is optimal for an area where the heating season is much longer than the cooling season. I wonder if there are any studies or research on that?

    Given that the furnace itself puts off heat it makes the most sense to put it inside the building envelope from an energy efficiency perspective. Anything – furnace, ducting, chimney that is outside the envelope is heat lost to the environment. If noise is an issue, insulating the closet with Roxul in the walls and putting a heavy door on it should quiet it down substantially.

    Thankfully much of the new construction I’ve looked at lately did away with the furnace entirely in place of a heat pump. A few years ago the ductless heads were viewed as an eyesore whereas now they’re a standard accessory in any contemporary home. They’re usually much quieter than old fashioned forced air heat as well.

    With a high efficiency furnace I don’t think outside would be a huge concern, but you’re right to some extent for the lesser efficiency.

    As to ductless, I still consider them an eyesore, unless you go with some of them that are hidden in the ceiling, but what I really don’t like about them is that it’s too many components if you have more than one zone, and you may get locked in to a particular brand (or worse) if a component breaks. I suspect that if you couldn’t get a replacement component you might be looking at an install of entirely new equipment that would rival the cost of an original install. I’d appreciate peoples’ thoughts on that.

  171. 171
    Ross says:

    By Kary L. Krismer @ 169:

    By Mike @ 166:

    By Kary L. Krismer @ 134:

    RE: Kary L. Krismer @ 133 – Also, ceiling and attic installations typically have ceiling mounted vents, which I’m not sure is optimal for an area where the heating season is much longer than the cooling season. I wonder if there are any studies or research on that?

    Given that the furnace itself puts off heat it makes the most sense to put it inside the building envelope from an energy efficiency perspective. Anything – furnace, ducting, chimney that is outside the envelope is heat lost to the environment. If noise is an issue, insulating the closet with Roxul in the walls and putting a heavy door on it should quiet it down substantially.

    Thankfully much of the new construction I’ve looked at lately did away with the furnace entirely in place of a heat pump. A few years ago the ductless heads were viewed as an eyesore whereas now they’re a standard accessory in any contemporary home. They’re usually much quieter than old fashioned forced air heat as well.

    With a high efficiency furnace I don’t think outside would be a huge concern, but you’re right to some extent for the lesser efficiency.

    As to ductless, I still consider them an eyesore, unless you go with some of them that are hidden in the ceiling, but what I really don’t like about them is that it’s too many components if you have more than one zone, and you may get locked in to a particular brand (or worse) if a component breaks. I suspect that if you couldn’t get a replacement component you might be looking at an install of entirely new equipment that would rival the cost of an original install. I’d appreciate peoples’ thoughts on that.

    Agree they look ugly, but I’ve seen creative ways of hiding them in ceilings, walls and even in kitchen cabinets (with louvered doors).

    As for replacement parts, I don’t expect it would be worse than parts for an older furnace. The heat pumps already have huge volume in Asia, and the parts used are basically the same. So long as you stick with one of the bigger manufacturers, you’ll be fine (same as with a furnace).

    Also, one of the big costs for the initial installation is running electrical and the hoses. Those should be reusable, so a replacement install should be much cheaper (though I suppose some installers may take advantage).

  172. 172
    Cap''n says:

    RE: Kary L. Krismer @ 169

    I switched from in-wall forced air electric heaters to a heat pump. Kept the electric in-walls live in the bathrooms so those could still be heated individually without a separate ductless air handler. Best upgrade I have made. Plus you get AC at the press of a button. Which is really nice on 85+ degree days. There are really not that many components for what you get. I think the cost is totally worth it. Even if I had to replace everything at once years down the line.

  173. 173
    Justme says:

    RE: Anonymous Coward @ 153

    >>Per the state’s (OFM) 2015 data, 35,000 people moved to King county last year alone.

    That is incorrect. Allow me explain. That number matches the number 35,550 from page 8 of
    http://www.ofm.wa.gov/pop/april1/poptrends.pdf, so I will assume that is your source. That number is population increase, which is defined by the equation

    increase=births-deaths+netmigration.

    When you say “moved to King County”, the relevant number is NetMigration, not births-deaths+netmigration!! Why is the distinction important? Well, for the purposes of housing, children aged 0-1 (births) are not going to buy houses, nor rent apartments.

    Now, I have looked up the OFM data for 2014-2015, and the spreadsheet says NetMigration=23005 for King County. Your number is 52% higher than my number, which is the correct number. Additionally, some of these 23005 migrating persons are children and again will not be buying houses or renting apartments. Moreover, 12705 persons died, and it is a safe bet that more than half of them were single at the time of death. Let’s say 6354=12705/2 housing units are vacated due to death (and some of these units will be entire houses for sale, or for rent to presumably larger family units of net migrants than those that move into apartments. In reality, some surviving spouses will downsize and free up more bedrooms. Clearly, paying close attention to the details matters!

    Now, putting it all together, 22000 new apartments for 2015+2016 does not seem tight for LESS THAN 16651=(23005-6354) new needed bedrooms per year. 16651*2=33302 for 22000 apartments does not seem tight to me. Keep in mind that many apartments have >1 bedrooms, and some have a couple in each bedroom.

    In summary, the apartment and vacated house supply coming online in 2015+2016 can absorb the entire net migration, and then some. I’m sure the the bubblers will go right ahead and ignore this much more carefully analyzed data, but here it is.

    Reference:
    http://www.ofm.wa.gov/pop/components/ofm_april1_components_of_change_1960_to_present.xlsx

  174. 174

    By Cap”n @ 170:

    RE: Kary L. Krismer @ 169

    I switched from in-wall forced air electric heaters to a heat pump. Kept the electric in-walls live in the bathrooms so those could still be heated individually without a separate ductless air handler. Best upgrade I have made. Plus you get AC at the press of a button. Which is really nice on 85+ degree days. There are really not that many components for what you get. I think the cost is totally worth it. Even if I had to replace everything at once years down the line.

    Thanks–I would imagine they would be much better than resistance electric wall heaters.

    On the component issue, what I was thinking is if you have three zones you have a minimum of four components–three heads and at least one compressor. With a heat pump connected to a forced air furnace you’re only going to have two components (assuming only one furnace), one of which doesn’t have any mechanical or electrical components.

  175. 175
    Anonymous Coward says:

    RE: Justme @ 171 – Wow! Constituent data doing back >50 years! Outstanding! You are correct that I’m conflating “net population increase” with people moving to King county. And I do really like your use of “bedrooms” instead of “units” when trying to ascertain supply. But if you’re going to look at “bedrooms” on the supply side, by what logic can you ignore births on the demand side? Sure a 3mo isn’t going to be going to out and procuring housing when they get tired of sharing the 2nd bedroom of a 2 bedroom apartment with their 2 year old sibling. But I bet the parents might… I would argue that the best we could do would be to look at net population increase and adjust by the median number of persons/household. Census data implies that number would be 2.4 for King County. Which gives us 35550/2.4 or a net demand for ~14,812 units/year. Or 29,625 over two years. Which could lead us to conclude that we’re way too unbalanced on the demand side. Except we haven’t adjusted for non-apartment supply. A quick redfin search shows ~8000 sales of houses built 2014-2015 over the past two years. Which would lead us to conclude we’re in a pretty balanced market.

    Wait! We made an assumption! The article didn’t say “King County” it said “the region”. Did the author really mean the census’ “Seattle Metropolitan Area” which would add Pierce and Snohomish Counties? Or did it mean the US OMB “Seattle-Tacoma-Olympia Combined Statistical Area” which would further add portions of Kitsap, Mason, Skagit, and Island Counties? I’m going to leave it as an exercise for the reader to work out the numbers when you include the net housing demand from those areas as well as the non-apartment supply.

    And if we really want to be exacting on the demand side, we’ll have to adjust for the loss of units as many of the “new” units are created by demolishing existing units.

    In conclusion, I think it’s pretty safe to say that the article looked only at the supply numbers and said “that’s a big number, therefore we can expect rents to go down in Seattle” whilst ignoring the equal or bigger numbers on the demand side.

  176. 176
    Doug says:

    RE: Erik @ 168 – This is an interesting strategy. What do you expect your holding period will need to be to triple your money on a SFH investment? As long as we avoid any sort of recession or upward rate movements during that time, I see no reason why 3x wouldn’t happen.

    I’ve always struggled with market timing, but your model seems to have identified the exact moment to buy and sell. Those programmers are such easy targets!

  177. 177
    Blurtman says:

    RE Pricing Review (will be on final)

    111 210th Pl NE,
    Sammamish, WA 98074
    4 beds 4 baths 4,360 sqft
    57 days on Zillow

    FOR SALE
    $998,000
    Price cut: -$100,800 (6/16)
    57 days on Zillow

    312 211th Pl SE,
    Sammamish, WA 98074
    4 beds 3 baths 2,640 sqft

    PENDING
    $760,000
    Zestimate®: $775,550
    29 days on Zillow

    Of course the seller of the currently unsold home bought at the peak, and may just be trying to break even (nominally) after the 6%. I am considering starting a GoFundMe page for Erik to buy the home.

  178. 178
    Justme says:

    RE: Anonymous Coward @ 173

    AC, your response is good and I think you raised some valid additional points. I think progress is being made by using better data and better analysis, although the final word may not have been said yet.

    If I get some time this weekend I’d start looking for more detailed housing unit and housing occupation data. Housing unit creation/destruction data with exact bedroom counts I have not been able to find yet. Also needed is historical data on persons/bedroom as a function of (meaning: broken down by) bedroom count.

    Average household size was remarkably stable averaging 2.4 in King County in 2000-2010, so that is a good estimate, but a breakdown is needed.

    REFERENCE:
    http://www.ofm.wa.gov/pop/april1/hseries/ofm_april1_intercensal_estimates_2000-2010.xlsx

  179. 179
    redmondjp says:

    By Kary L. Krismer @ 172

    On the component issue, what I was thinking is if you have three zones you have a minimum of four components–three heads and at least one compressor. With a heat pump connected to a forced air furnace you’re only going to have two components (assuming only one furnace), one of which doesn’t have any mechanical or electrical components.

    So, Kary, which one component is it that doesn’t have any mechanical or electrical components?

  180. 180
    Action says:

    RE: Anonymous Coward @ 173

    You also need to take into consideration demographics in terms of household formation from millenials who were already in the area. These would not show up in the population but we are just at the front end of a large slug of millenials hitting the point where they can afford their own apartment and even their own SFR. http://www.ofm.wa.gov/pop/census2010/sf1/data/county/wa_2010_sf1_county_05000US53033.pdf

    Here’s an Redfin article today looking at this trend nation wide.
    https://www.redfin.com/blog/2016/06/were-building-6-homes-for-every-10-new-households-where-will-people-live.html

    Even if new construction is now beginning to keep up with population growth, it will take several years of new construction exceeding demand to fill the hole left from the recession when new construction came to a screeching halt.

    Although it appears that there is a lot of SFR inventory being constructed on the Eastside, this is nothing compared to the huge swaths being cleared in the late 90s to early 2000s. NIMBYism has now boxed us in from the east. http://www.theeastside.news/sammamishreview/

    And to the north and south where land is cheap (Covington, Black Diamond to the south, Snohomish, North Creek, Maltby to the north) the commutes become too heinous for those areas to be desirable. Unless the region’s transportation improves there is not going to be significant expansion in housing and we’ll continue to see infill development and increased density and, as a result, higher property prices.

  181. 181

    By redmondjp @ 177:

    So, Kary, which one component is it that doesn’t have any mechanical or electrical components?

    Not certain of the name (evaporator coil?) but the part that goes under the furnace in a down draft system to cool the air running through the system. As far as I know, that part doesn’t have any moving parts, and may have a life expectancy measured in decades. Where in contrast, the head units of the ductless system at a minimum each have a fan, sensors for a thermostat and some electrical components.

  182. 182
    Mike says:

    By Kary L. Krismer @ 172:

    By Cap”n @ 170:

    RE: Kary L. Krismer @ 169

    I switched from in-wall forced air electric heaters to a heat pump. Kept the electric in-walls live in the bathrooms so those could still be heated individually without a separate ductless air handler. Best upgrade I have made. Plus you get AC at the press of a button. Which is really nice on 85+ degree days. There are really not that many components for what you get. I think the cost is totally worth it. Even if I had to replace everything at once years down the line.

    Thanks–I would imagine they would be much better than resistance electric wall heaters.

    On the component issue, what I was thinking is if you have three zones you have a minimum of four components–three heads and at least one compressor. With a heat pump connected to a forced air furnace you’re only going to have two components (assuming only one furnace), one of which doesn’t have any mechanical or electrical components.

    A forced air heat pump isn’t as quiet or efficient. A secondary issues is location of the vents – cooling should be “up” and heating “down” for maximum circulation. Ductless heads solve this with an adjustable vane. Forced air registers have some adjust ability but generally not enough force to really get both hot and cool air to circulate effectively. It’s a bigger issue when both the vents and air return are at floor level. You end up with a nice cool blanket of air at foot level only.

  183. 183
    redmondjp says:

    By Kary L. Krismer @ 178:

    By redmondjp @ 177:

    So, Kary, which one component is it that doesn’t have any mechanical or electrical components?

    Not certain of the name (evaporator coil?) but the part that goes under the furnace in a down draft system to cool the air running through the system. As far as I know, that part doesn’t have any moving parts, and may have a life expectancy measured in decades. Where in contrast, the head units of the ductless system at a minimum each have a fan, sensors for a thermostat and some electrical components.

    OK, so that is what you are referring to, commonly referred to as the ‘A’ coil, which does function as the evaporator when the system is in the air conditioning mode. Yes, that part of the system should last for decades. But good luck finding a contractor that will just fix what is broken – they love to yard out the entire works (including that still-perfectly-functional ‘A’ coil) and charge you buku dollars for the effort.

    I reworked the auxiliary heat circuit board on my friend’s heat pump furnace a couple of years ago (who knew that running 15KW of power through tiny relays on a 6″ x 10″ circuit board wasn’t a good idea?). A replacement circuit board is no longer available, so I built a control box containing three contactors (one for each 5KW heating element) that is controlled by the still-functioning controls portion of the circuit board. Furnace contractors wanted to change out the entire furnace and exterior compressor unit for $8K+. That furnace is still alive and well today.

  184. 184

    RE: redmondjp @ 180 – Thanks for that explanation. If the compressor dies though, is there typically any need to replace those other components on the furnace side?

    What I’m getting at though relates to that. I could see a situation on a ductless where a head unit dies, similar units or replacement parts are not available, and you’d have to replace the compressor and all the other head units on the same compressor. Basically that other head units might not be compatible. Do you think that’s a concern?

  185. 185
    Matt says:

    RE: Justme @ 171

    You can’t just completely ignore births. Sure babies aren’t buying houses, but they definitely effect what their parents choose to do with their housing money. Seattle has been a relatively young and childless city recently (top of the list in both of those metrics as I recall). Now we’ll see if the demographics are shifting. Are the new incoming, highly-paid yuppies going to settle down here? Are they going to get married and have children at a higher rate than Seattle has seen recently? Will they cram into 2BR apartments or buy a house? Or maybe all the families will bounce out of here when they realize how much it costs to live here and raise kids. Who knows what will happen, but there is no doubt that births are a part of the equation.

  186. 186

    By Mike @ 179:

    A forced air heat pump isn’t as quiet or efficient. A secondary issues is location of the vents – cooling should be “up” and heating “down” for maximum circulation. Ductless heads solve this with an adjustable vane. Forced air registers have some adjust ability but generally not enough force to really get both hot and cool air to circulate effectively. It’s a bigger issue when both the vents and air return are at floor level. You end up with a nice cool blanket of air at foot level only.

    I’ll give you quiet, because they are smaller units, but I think they make more efficient whole house heat pumps (ignoring the fact that you’re heating and cooling the whole house).

  187. 187
    Matt says:

    RE: Doug @ 174

    It is reasonable, but it would take a good many years for it to triple. There is an old real estate saying, that real estate doubles in value every ten years. (This would suggest an average rate of appreciation of 7.2%/yr.) Well, nowadays, that seems pretty modest. I’m not sure what the current rate of appreciation is, but I’m looking for something huge in the next couple of years on an old apartment building in Fremont, like 20%/yr., or whatever. But to triple in value, wow, that would be the long-haul, but yes, you would get there eventually…

  188. 188

    RE: Matt @ 184

    I like to check this neighborhood when looking for fairly max potential.

    6019 143rd Ct NE, Redmond 98052

    1985 sold for $140,950 brand new – built by Burnstead
    1993 same house sold for $230,000
    A couple of weeks ago sold for $871,000 in what appears to be original condition

    A $152,000 new in 1984 just sold but is pending. No other sales since it was new. List price was $929,000.

    One of my clients bought there in 2012 for $615,000, so a lot of that price bump was since 2012.

    Seems to have tripled from 1993 to 2012 and now it’s about quadruple 1993 prices and 6 x original prices from the mid 80’s.

  189. 189
    redmondjp says:

    By Kary L. Krismer @ 181:

    RE: redmondjp @ 180 – Thanks for that explanation. If the compressor dies though, is there typically any need to replace those other components on the furnace side?

    Back in the day when we repaired things instead of replacing them, one would just replace the failed part, such as the compressor. It seems more typical now that the whole system is replaced every 10-15 years, lock stock and barrel. Whether that is the ‘right’ thing to do is a different discussion.

    I have seen claims that the ‘A’ coil and the outdoor unit are a set and must be replaced as such. It is true that they need to be sized to match each other, so if you are changing the capacity of the system then both would need replacement. But otherwise one could theoretically keep the same ‘A’ coil and blower fan (which only needs the motor oiled every so many years, and maybe an occasional motor capacitor replacement) for the life of the house.

    What is more likely is that the controls change over time and aren’t necessarily backwards compatible (planned obsolescence or design improvement).

    Because of the high parts and labor costs, combined with the estimated remaining life in the unit, it often tips the scales toward full replacement on a heat pump (or most other home appliances) these days, sadly.

    All I can say is that the Lennox air conditioner that was installed in 1967 at the house I grew up in, is still functioning just fine, on its original compressor and freon charge (at least the last time I checked). The don’t build them like that any longer, sadly.

  190. 190
    Matt says:

    RE: Ardell DellaLoggia @ 185

    Thank, Ardell, for that information and those prices! Interesting stuff!

    Can I ask a question that was inspired by a post last month? The poster, Deerhawk, referred to you when mentioning a “rule of thumb” regarding land costs for developers. It was along the lines of paying one-third for land, and one-third for construction costs, and one-third in profit. (Roughly speaking!) Do you think this still holds true today, in Seattle? I mean, land cost being about one-third of the value of the completed project? It sounds reasonable to me, but I don’t really know, since I don’t know what it costs for new construction, or what a reasonable profit goal is, either.

  191. 191
    Erik says:

    RE: Doug @ 174
    I’m setting up that hypothetical situation in my mind in case we have a crash like last time. I basically extrapolated the 18 year real estate cycle and what happened last cycle. Last cycle I held the property for 2 years and sold the property for over 2.5X what I paid for it with a very small investment. If the same thing happened again, I could hold it a little longer and perhaps make 3X what I paid for it. Next time I will buy at the auction for a larger discount like the great and powerful ray pepper did.

    Programmers are low level thinkers walking around with loads of cash. They are an easy target. That’s what makes the east side such a great place to invest. They just go mmmmm… house…. and shovel cash over. They aren’t capable of understanding that the market is overpriced. Tim is trying to help his colleagues out, but he can only do so much. They likely will not understand.

  192. 192

    RE: Matt @ 187

    The Rule of Thumb you are referring to is “3 x lot”. It doesn’t suggest what it costs a builder to build or what his profit is. It is the way we as agents price “a tear down”. That term does not suggest the home is in terrible condition. It simply means that the values in the area have climbed to the point where the value of the land without a home on it is the same as the value of the land with the home on it.

    When we list a “tear down” we try to get the seller 1/3rd of what a builder will later sell the new house for. If the builder can get $1.2M for a new house there, then we price the old house at $400,000. If the builder can get $1.8M then we price it at $600,000.

    Is it still relevant? Here’s a recent example.

    https://www.redfin.com/WA/Kirkland/810-7th-St-S-98033/home/463780

    New House sold for $1,848,000. If you look down at the price history you will see that the old house was sold to the builder for $565,000 almost exactly a year prior. $565,000 x 3 = $1,695,000. Close enough. The $565,000 was a tad low because it was a short sale. The $1,848,000 was a little on the high side of expected a year ago as the market appreciated by that amount in that year’s time. The builder gets the benefit of the market upswing from the time the tear down is purchased until his new product is sold. Some builders will hold a lot for awhile for that reason in an upwardly mobile market.

    It’s easier for me to find one in Kirkland because I know exactly which streets to look on, but I’ll try a Seattle example since you asked.

    Didn’t take long to find one in my other favorite area, Green Lake. This is an awesome example.

    http://www.zillow.com/homedetails/6540-1st-Ave-NE-Seattle-WA-98115/49140932_zpid/

    The old tiny house was listed at $450,000. That means the agent listing the “tear down” estimated that a new house on that lot would sell for $1,350,000 back in November of 2014. A bidding war pushed the price up from $450,000 to $611,000. The builder listed it about a year and a half later for $1,795,000 and sold it for $1,710,000.

    So you can see where the 3 x lot proves out and is somewhat influenced by time and bidding wars as builders can’t make money if they can’t find place to put a new product. But in an upwardly mobile market, if they overpay for the tear down a bit they can just delay the new construction and sale of the new house to compensate for that higher price.

    Not saying that the above people did what I am surmising. Just saying that is how it works…or not.

    The application of the rule is twofold:

    1) If you are selling a house you thing the builders will want to tear down, then you don’t look at comps of houses sold that are like your house. You calculate the sold price of a new house on that lot. Your comps are the new houses, not the old houses. After you set the value of a new house on the lot you divide that by three to get your asking price.

    2) If you are buying a brand new house that is built on a straight lot that previous had a single family home on the lot, and it was torn down to build the new house, you don’t want to pay $1.5M for a house that the builder paid $350,000 for the house that used to be on the lot. I just saw one like that in Seattle. So to answer your question…it should still be relevant…until someone is willing to pay over 4 X lot…and that is what happened in the last bubble.

    When 3 x lot fails on a regular basis as to buyers paying 4 or more times what the builder paid for a teardown…you are in a real estate bubble. 3 x lot plus a but is appreciation since the teardown was purchased. New houses regularly selling for 4 x lot or even 5 x lot is an extreme bubble market.

  193. 193

    Sorry for the typos in the last few paragraphs. I rely too much on the edit function and it wasn’t there. :)

    Re-doing just the end.

    The application of the rule is twofold:

    1) If you are selling a house you think the builders will want to tear down, then you don’t look at comps of houses sold that are like your house. You calculate the sold price of a new house on that lot. Your comps are the new houses, not the old houses. After you set the value of a new house on the lot, you divide that by three to get your asking price.

    2) If you are buying a brand new house that is built on a straight lot that previous had a single family home on the lot, and it was torn down to build the new house, you don’t want to pay $1.5M for a house if the builder paid $350,000 for the house that used to be on the lot. I just saw one like that in Seattle.

    So to answer your question…it SHOULD still be relevant…until someone is willing to pay over 4 X lot…and that is what happened in the last bubble.

    When 3 x lot fails on a regular basis and buyers start paying 4 or more times what the builder paid for the teardown on that same lot…you are in a real estate bubble. 3 x lot plus a bit is appreciation since the teardown was purchased. But new houses regularly selling for 4 x lot or even 5 x lot is an extreme bubble market.

    Every once in awhile a builder rips off some old lady by paying her a lot less than her home is worth. That can create a once in awhile $350,000 tear down selling for $1.5M. But if you see new houses regularly selling for 4 x lot or more…that is clearly a bubble market.

    Some parts of Seattle are at 3.5 x lot. The market will either correct itself or the bubble will get larger. Likely it will correct itself IF the tear downs go on market so they can be sold at fair market value vs being sold off market. Many are sold off market.

    Reply – Quote

  194. 194
    Doug says:

    RE: Ardell DellaLoggia @ 190 – Great stuff, Ardell.

    How would you price something that is somewhere between a tear down and yet a very livable SFH? For example, a home built in 1941 with no modern amenities but livable enough to attract the attention of a family?

  195. 195
    Anonymous Coward says:

    RE: Doug @ 191 – I can answer that one. That’s where you have two sets of comps: new houses on similar lots and similar houses (aka traditional comps). That will get you an estimate of what developers will offer and another estimate of what traditional buyers will offer. The expected sales price would be the higher of the two estimates. Things get interesting when the two estimates are very close which implies s bidding war between the developers and the traditional buyers. Note that this is exactly where a cover letter on the part of the traditional buyer can make a big difference.

  196. 196
    brian Le says:

    Re: Ardell- Most in the Tukwila or South end of Seattle Lots are selling on 5 x lot… (http://www.zillow.com/homedetails/4015-S-126th-St-Tukwila-WA-98168/117747823_zpid/ ).. This builder buying 2 lots for 210k .. What your comment on the South end of Seattle… are you suggestion Tukwila is better investment to buy lots and develop ?

  197. 197

    By redmondjp @ 186:

    By Kary L. Krismer @ 181:

    RE: redmondjp @ 180 – Thanks for that explanation. If the compressor dies though, is there typically any need to replace those other components on the furnace side?

    Back in the day when we repaired things instead of replacing them, one would just replace the failed part, such as the compressor. It seems more typical now that the whole system is replaced every 10-15 years, lock stock and barrel. Whether that is the ‘right’ thing to do is a different discussion.

    Thanks for the detailed explanation. Yes I was assuming to some extent things would be repaired, or just a partial replacement. I know that’s not true with a lot of things these days, but I’d assumed AC components were still expensive enough that would still be the case. The things we don’t repair tend to be rather cheap, like TVs, Blu-Ray players and even computers.

    I guess my issue would depend to some extent on the setup of the ductless, because there if you had three separate compressor units controlling 9 heads, the risk might be less than if you had only two compressors. Also, to some extent you might be able to salvage/save head units or a compressor from one system that was replaced to keep another system going later.

  198. 198
    Matt says:

    RE: Ardell DellaLoggia @ 190

    Thanks again, Ardell! That is very helpful and interesting, and those were some excellent examples that you provided!

    Here is an example of what I will be trying to AVOID, and it’s in Green Lake, too… Now, this example isn’t too good, because I think it sold about 15 months ago (and had a long closing period of 12 months) but here’s what was sold, for 1.65 MM:

    http://www.realtytrac.com/property/wa/seattle/98115/417-ne-73rd-st/216307812

    Here is what will get built there (eventually!):

    http://www.seattle.gov/dpd/AppDocs/GroupMeetings/DRProposal3019917AgendaID5882.pdf

    OK, so what was sold was the 6,000 sf parking lot for Rosita’s restaurant, and what will get built (someday) is about 45 apartments plus ground floor retail. Zoning allows 65 feet high, or six floors, and the folks in that neighborhood weren’t too pleased about it for all the usual reasons (lack of parking, etc.)

    But in addition to all that, my thought was that the completed structure, once it’s fully leased up, will be worth around 10 MM+, based off the rents! So I’m thinking that the land sold for way too cheap, even at 1.65 MM. But the land did sell 12-15 months ago, so things have changed a bit since then. Also, I realize that is a smaller market than the SFH market, and that it’s a totally different animal, involving tons of work and hassle…

  199. 199
    Doug says:

    RE: Ardell DellaLoggia @ 190 – And here’s a real world example I’ve been watching since it was listed in December 2015: https://www.redfin.com/WA/Black-Diamond/22951-SE-292nd-Pl-98010/home/22601270

    Land was purchased in 2014 for $260k and now the new home is being sold for $1,270k. A multiple of 4.89!

    I’ve always thought the home was worth no more than $1mm which still puts the multiple at 3.85. What are your thoughts on the pricing here?

  200. 200

    RE: Matt @ 194

    What do you mean by “Here is an example of what I will be trying to AVOID,…”

    P.S. LOVED Rosita’s! One of my favorite restaurants. Though my friends always wanted to meet at Latona Pub. Haven’t been over there for awhile.

    One of my clients bought this one on Green Lake not too long ago. Very interesting sale. It was the first time there was a resale since the lots were subdivided and purchased back in the late 1800’s. 3 or 4 generations ago a man bought 3 lots when separate lots were first subdivided and sold at Green Lake. He put 2 houses on three lots. One for himself and one as a wedding present for his son.

    The one my client bought was “the wedding present house”. There were a few quirky problems caused by originally 3 lots now 2. These quirks tend to work themselves out over time each time it sells. But given it had never, ever sold before, it was the first time in history the quirks commanded attention. A fun puzzle.

    https://www.redfin.com/WA/Seattle/5750-E-Green-Lake-Way-N-98103/home/304405

  201. 201

    RE: Doug @ 191

    Used to be if the builders want it then an owner occupant buyer had to pay $50,000 more than the builders. Still pretty much true except the builders are overbidding more recently, so that $50,000 over what builders will pay is higher.

    If a buyer would get it at the same price as a builder will pay, then they are getting a free house. That is the answer to “why do people pay so much money for a crap house”, a constant question in Seattle. Because the house is free. They are paying the price of the land alone. OR more often they are paying $50,000 for the house and all the rest is lot value. That’s where “no inspection” is “fair”. If you want the seller to fix things or give a credit for repairs or back the price up for needed repairs after a home inspection…he might as well sell it to the builders who are going to tear it down and throw it away.

    If you want to buy a “tear down” because it is “affordable” you can’t expect the seller to fix it up NOR should you be putting a lot of money into a worthless asset…that you just paid a half a million dollars for because the land value is half a million dollars.

    Again, “a tear down” does not mean it isn’t “livable”. A tear down means the value of the land is the same whether there is a house on it or not. Often it is a very livable but very small house. Generally anything with a main floor foot print of less than 1,000 sf.

    But to answer your question, often it depends on the zoning when it comes to Seattle vs The Eastside. If it is a SF5000, as many are, then the method is simply the regular Principle of Substitution method. BUT if it is LR2 or LR3…whole ‘nuther ballgame. OR when the house is on a 3,400 sf lot in a SF5000 zone, like the infamous Zillow CEO house that was both too much infrastructure and not enough land to value out the land value at anything reasonable. Another thing to look for is lot is technically the “right” size but the street frontage is short. A builder once told me that less than 40 frontage, regardless of total lot size, was not ideal. So there was a big difference between 3800 sf on an sf5000 and 4,000 sf on an sf 5000. Basically once the builders don’t want it at all…you can only go the route of Principle of Substitution.

    At this point in time if there are NO newer houses on the block or on “your” side of the block, “newer” meaning built since 2000 or so, then you have to think harder about pulling new house comps from other nearby streets.

  202. 202

    RE: Doug @ 195

    Agents are not allowed to discuss Active listings that are not their own listings in public forums. :(

    Coincidentally I am heading over to value a lot. Have a meeting at 11 a.m. today. This for a client of mine who I think needs to build a house because we are never going to find “the one”. :)

    The lot is priced as being large enough for multiple lots. This comes up often. I once had a 4 plex client selling to a builder and the # of townhomes that could be built on the lot determined. Yes he needed a tiny variance to put 5 vs 4, but we all knew the City would give it to him. He wanted to pay the without variance price of 4 townhomes and we wanted the variance price of 5 townhomes. We won. Though the builder did lose his shirt unfortunately because he closed the day before the market started heading downhill.

    The one I’m looking at today could be 5 lots by zoning…except no…there are wetlands and wetland buffer. Ideally I would want to take it to a one home per the lot price. It’s currently valued at 3. So doing the simple math of say an sf 5,000, 25,000 sf = 5 lots, does not work. You have to line up where those lots will be and subtract for the access since almost never is there enough road frontage to put them side by side.

    Real Estate logic is a fun puzzle sometimes. I only try to get to fair and “a good deal is a good deal for everyone”. But generally most builders are trying to get a screaming deal on the land OR conversely if they are running out of projects and have no place to build the next one, they move to the opposite extreme.

    Only talking basic single family lots here or convert to townhome lots. I don’t ever do or want to do large mixed use projects.

  203. 203
    Justme says:

    RE: Matt @ 182

    >>You can’t just completely ignore births.

    I agree. AC already pointed that out as well. But then we also should not ignore cohabitation, which reduces bedroom demand and presumably precedes any births. Cohabitation reduces demand, and it will take more than one birth to increase the demand past the presumably 2 total bedrooms needed by couple+child. What’s the net result of it? Hard to say, but probably not an increase in apartment demand, which is primarily what we were discussing here.

    Data on cohabiting couple formation would be useful. That number is not the same as household formation. Household formation includes any person getting their own dwelling after living as part of a family.

  204. 204
    Matt says:

    RE: Ardell DellaLoggia @ 196

    Loved the story about the ‘wedding present house’! Thanks for sharing it!

    I’m sorry I was unclear about what I was trying to “avoid” — what I meant was that I perceived the lot as undervalued, based on the zoning, and the development potential. (But maybe that was fair market value for it 15 months ago.) What I was trying to say is that sometimes I see some undervaluations (in hindsight) with certain properties, but that I’d like to try to avoid my own property being undervalued, in such a way.

    The Rosita’s parking example is ok, as a possible undervaluation, but not the best example. A better example would be just over I-5, to 69th and Roosevelt Way. The sale of this apartment building (which happened to have a large gravel parking lot behind it, on the property):

    https://www.redfin.com/WA/Seattle/844-NE-69th-St-98115/home/2086419

    Well, that apartment building got renovated, and this new building was built in the old parking lot:

    https://www.redfin.com/WA/Seattle/838-NE-69th-St-98115/home/106714060

    Both buildings sold together, last year. Quite the value-add, that new building!

    A recent SFH example on Queen Anne Hill is:

    https://www.redfin.com/WA/Seattle/356-Galer-St-98109/home/132492

    This house, on a large corner lot, had a large side yard (and was zoned LR1) which allowed 3 rowhouses to be built on the corner, and sold for over 1.5 MM each:

    https://www.redfin.com/WA/Seattle/350-Galer-St-98109/home/103716893
    https://www.redfin.com/WA/Seattle/352-Galer-St-98109/home/103707242
    https://www.redfin.com/WA/Seattle/354-Galer-St-98109/home/101611109/nwmls-901437

    And the original house itself is still worth a fortune, even with the 3 rowhouses in the (former) yard.

    Anyway, that is the kind of thing I was referring to as undervaluation that is tough to avoid, but which I am trying to avoid nonetheless…

  205. 205
    Mike says:

    By Kary L. Krismer @ 183:

    By Mike @ 179:

    A forced air heat pump isn’t as quiet or efficient. A secondary issues is location of the vents – cooling should be “up” and heating “down” for maximum circulation. Ductless heads solve this with an adjustable vane. Forced air registers have some adjust ability but generally not enough force to really get both hot and cool air to circulate effectively. It’s a bigger issue when both the vents and air return are at floor level. You end up with a nice cool blanket of air at foot level only.

    I’ll give you quiet, because they are smaller units, but I think they make more efficient whole house heat pumps (ignoring the fact that you’re heating and cooling the whole house).

    Moving the heat to it’s destination via refrigerant lines instead of ducts is in the real world going to be more efficient. With forced air, the ducts and air act as the conductor. With ductless, the idea is to keep everything within the building envelope at a constant temperature. It’s a different type of heating.

  206. 206
    Ross says:

    By Matt @ 184:

    RE: Doug @ 174

    It is reasonable, but it would take a good many years for it to triple. There is an old real estate saying, that real estate doubles in value every ten years. (This would suggest an average rate of appreciation of 7.2%/yr.) Well, nowadays, that seems pretty modest. I’m not sure what the current rate of appreciation is, but I’m looking for something huge in the next couple of years on an old apartment building in Fremont, like 20%/yr., or whatever. But to triple in value, wow, that would be the long-haul, but yes, you would get there eventually…

    Doubling every 10 years is not possible (on a sustained basis) when wage inflation is ~2%. It might have been possible in the 80s when inflation and rates were much higher.

  207. 207
    Anonymous Coward says:

    RE: Ross @ 201 – Sure it is. What if the population doubled every 10 years with no increase in the number of housing units? Now that we’ve gotten rid of the silly example, let’s discuss the real world. Another way to do it is to change the income distribution (aka increase income inequality); i,e, take the bottom half of a normally distributed income curve and move it all to the left. Take the top half and move it all to the right by a corresponding amount. You now have 1/2 of the population with a lot more money to throw out home purchases and no change in median income. Now that I’ve shown two ways it’s possible to do what you thought was impossible, I’m going to leave it as an exercise for the reader to consider if the house doesn’t move and is in a close-in neighborhood while the population increases (with no change in median income, just assume increased population for your income distribution plot), does house get bid on by buyers from a different point on the curve? And is the median income really the median buyer and what would you need to determine if this is a good assumption or a bad assumption?

  208. 208

    By Mike @ 200:

    Moving the heat to it’s destination via refrigerant lines instead of ducts is in the real world going to be more efficient. With forced air, the ducts and air act as the conductor. With ductless, the idea is to keep everything within the building envelope at a constant temperature. It’s a different type of heating.

    That would certainly help offset the lower efficiency ratings the best ductless units have relative to the best split units. But from what I’ve seen the larger split units(traditional heat pumps) do tend to come with higher ratings (although there are also a lot with very low efficiency ratings–the splits tend to be higher on average).

    For example, this Carrier unit, Seer 20.5, EER 16, HSPF 13 and only 58 db, the latter of which is very good for that type of system. I’d probably hate to know the price tag though!

    http://www.carrier.com/residential/en/us/products/heat-pumps/25vna0/

  209. 209
    ess says:

    A very interesting article that cuts right to the heart of the purchase or rent debate. This couple did not have their rent raised for 8 years – now the rent is being raised to market rates and the couple is very upset and they are moving. Mostly the risks that homeowners take in terms of price is discussed here – but this article highlights the risks that renters take – especially in a tight real estate market. I found the comments by the readers of the article particularly interesting.

    http://www.seattletimes.com/business/free-lunch-is-over-for-tenants-1000-hikes-hit-some-older-seattle-rentals/

  210. 210
    wreckingbull says:

    RE: Mike @ 166 – By Mike @ 200:

    By Kary L. Krismer @ 183:

    By Mike @ 179:

    A forced air heat pump isn’t as quiet or efficient. A secondary issues is location of the vents – cooling should be “up” and heating “down” for maximum circulation. Ductless heads solve this with an adjustable vane. Forced air registers have some adjust ability but generally not enough force to really get both hot and cool air to circulate effectively. It’s a bigger issue when both the vents and air return are at floor level. You end up with a nice cool blanket of air at foot level only.

    I’ll give you quiet, because they are smaller units, but I think they make more efficient whole house heat pumps (ignoring the fact that you’re heating and cooling the whole house).

    Moving the heat to it’s destination via refrigerant lines instead of ducts is in the real world going to be more efficient. With forced air, the ducts and air act as the conductor. With ductless, the idea is to keep everything within the building envelope at a constant temperature. It’s a different type of heating.

    Many are not aware that ductless systems also offer hidden units which interface with traditional ducts. Great if you don’t want the air handler to be seen. I installed this for my living room/foyer:

    http://www.mitsubishipro.com/en/professional/products/heat-pump-systems/m-series-multi-zone/m-series-heat-pumps—indoor-units-%28multi-zone%29/sez

    Once you go with this technology, traditional heat pumps just seem archaic.

  211. 211

    RE: ess @ 204 – You could put that article in other terms–that buying real estate is a hedge against inflation, or in this case market fluctuations.

    I knew someone like that one tenant, where they were getting a sweetheart deal on rent for years and years and then the situation changed. The sweetheart deal made it make little sense to buy a house, until it didn’t, and by then the price of houses had skyrocketed relative to when he started renting, or even several years into the renting. When everything comes to an end you can fully understand why they did what they did, but it also becomes apparent what they missed out on. But hindsight is 20/20.

  212. 212
    Blurtman says:

    RE: ess @ 204 – Tenants Peggy Haug, 68, and her wife, Juanita Merrifield, 74, said they can’t afford the 64 percent rent hike on Social Security and their retirement nest egg. Their pleas for a smaller, phased-in rent hike were rejected.

    “We couldn’t believe it. All my friends have just said that it’s not right,” Haug said. So now, they’re getting ready to move out.
    —–
    “These people are all about the investment,” said Wilson, an out-of-work security officer who’s also looking for a new place. “There’s no help for people. They can do whatever they want.”
    ——
    Soylent Green – it’s people!

  213. 213
    ess says:

    By Kary L. Krismer @ 205:

    RE: ess @ 204 – You could put that article in other terms–that buying real estate is a hedge against inflation, or in this case market fluctuations.

    I knew someone like that one tenant, where they were getting a sweetheart deal on rent for years and years and then the situation changed. The sweetheart deal made it make little sense to buy a house, until it didn’t, and by then the price of houses had skyrocketed relative to when he started renting, or even several years into the renting. When everything comes to an end you can fully understand why they did what they did, but it also becomes apparent what they missed out on. But hindsight is 20/20.

    Kary – yes, buying a residence is almost always a hedge against inflation. But as we know – there are all sorts of factors involved when purchasing a residence. This is why I have always maintained that buying property, especially one’s own home involves a combination of factors including but not limited to financial, emotional and personal factors. Sometimes it makes sense – sometimes it doesn’t. I even know someone that lost money on a Greenlake house years ago. And folks that are residing in an area for only a few years that hope to make a few bucks in a quick turn around – good luck.

    Furthermore, while we don’t have much officially acknowledged inflation at present or on the horizon – circumstances, and the inflation situation can change – especially over the longer term. And of course if inflation and subsequently house values take off- the financial gain is magnified by the fact that the purchaser has generally only put 10-20% of his or her own money down which is risky business in buying stocks, but accepted practice in the residential financing world.

  214. 214

    By ess @ 207:

    But as we know – there are all sorts of factors involved when purchasing a residence. This is why I have always maintained that buying property, especially one’s own home involves a combination of factors including but not limited to financial, emotional and personal factors. Sometimes it makes sense – sometimes it doesn’t.

    Wait, you mean it isn’t just drawing a line out on a chart to predict future prices, or trying to find a pattern to how often we reach a peak? ;-)

    Seriously, I agree with what you said.

  215. 215
    Blake says:

    By Blurtman @ 206:

    RE: ess @ 204 – Tenants Peggy Haug, 68, and her wife, Juanita Merrifield, 74, said they can’t afford the 64 percent rent hike on Social Security and their retirement nest egg. Their pleas for a smaller, phased-in rent hike were rejected.

    “We couldn’t believe it. All my friends have just said that it’s not right,” Haug said. So now, they’re getting ready to move out.
    —–
    “These people are all about the investment,” said Wilson, an out-of-work security officer who’s also looking for a new place. “There’s no help for people. They can do whatever they want.”
    ——
    Soylent Green – it’s people!

    “But one of the points of markets is that they are amoral. Not immoral — although much of the wrongdoing uncovered after the financial crisis certainly was — but unconcerned with morality at all. They are deliberately unfeeling, heartless and unsympathetic, because they exist to balance out millions of individual views in order to allocate capital and assess risk.”
    http://www.wsj.com/articles/after-jo-coxs-killing-a-heartless-but-necessary-market-assessment-1466111163
    http://wallstreetonparade.com/2016/06/stock-market-rallies-on-murder-of-jo-cox-wall-street-journal-defends-it/

  216. 216
    Justme says:

    RE: Anonymous Coward @ 202

    >>Sure it is.
    >>Another way to do it is to change the income distribution (aka increase income inequality);

    A house, and ESPECIALLY a rental house, is only worth the discounted cash flow of the rent one can get for it. Even with your highly strained assumption of radical income inequality, somebody in the bottom half has to rent all those houses bought by the top half. The conclusion is that your equation does not have a solution that involves 2x price increases every 10 years. Feel free to test your claim with some real economic data, and without moving any goalposts. I think it is not possible.

  217. 217
    Matt says:

    Hello? Is this message board working ok? I wrote an amazingly awesome comment to
    Ardell about 24 hours ago, and I think it is still “awaiting moderation”??!! Can we please get the comments posted immediately, instead of waiting 24 hours? Is that too much to ask for? Thanks!

  218. 218
    Matt says:

    RE: Matt @ 210

    Who in the ***** is the “moderator”? Who “moderates” the comments? WTF is going on here?!

  219. 219
    Mike says:

    By Kary L. Krismer @ 203:

    By Mike @ 200:

    Moving the heat to it’s destination via refrigerant lines instead of ducts is in the real world going to be more efficient. With forced air, the ducts and air act as the conductor. With ductless, the idea is to keep everything within the building envelope at a constant temperature. It’s a different type of heating.

    That would certainly help offset the lower efficiency ratings the best ductless units have relative to the best split units. But from what I’ve seen the larger split units(traditional heat pumps) do tend to come with higher ratings (although there are also a lot with very low efficiency ratings–the splits tend to be higher on average).

    For example, this Carrier unit, Seer 20.5, EER 16, HSPF 13 and only 58 db, the latter of which is very good for that type of system. I’d probably hate to know the price tag though!

    http://www.carrier.com/residential/en/us/products/heat-pumps/25vna0/

    That’s 58db for the exterior unit. The interior noise is mostly due to the central blower and ducting. Theoretically on a new build you could optimize and insulate the ducts for heating and cooling quietly. On a retrofit that doesn’t include ripping the house down the studs a central unit is unlikely to be superior in noise or efficiency. Most of the old houses around here don’t even have central duct work with the capacity for cooling.

  220. 220
    ess says:

    By Kary L. Krismer @ 208:

    By ess @ 207:

    But as we know – there are all sorts of factors involved when purchasing a residence. This is why I have always maintained that buying property, especially one’s own home involves a combination of factors including but not limited to financial, emotional and personal factors. Sometimes it makes sense – sometimes it doesn’t.

    Wait, you mean it isn’t just drawing a line out on a chart to predict future prices, or trying to find a pattern to how often we reach a peak? ;-)

    Seriously, I agree with what you said.

    Well – we can usually predict future taxes – they are going up. Taxes on my residence increased faster as a percentage as compared to the percentage increase in the value of the house. But so long as voters are going to vote for any and all initiative proposals – that trend will continue. And landlords are just going to pass those increased taxes on to tenants through higher rents. It is no accident that counties are placing information as to the percentage of taxes that were voted on by initiative on property statements. It is almost as if they are saying – “don’t blame us – you all voted for those big tax increases”. Add all the other activities that are demanded by the public (ex – restricted development) that increase the cost of housing, and here we are.

    I wonder how many renters understand that in many cases, the landlord could be applying 20% or more of the monthly rent to fund the property tax burden. A half a million dollar residence probably has a property tax rate of about four hundred dollars a month. That is a hefty amount that the tenant is indirectly paying to the taxing authorizes, and the tenant doesn’t get a tax write off. But I don’t recall an initiative that would tax property that has ever failed – although there probably has been one or two. But proposed a tax on a cup of coffee to pay for some program – and all of a sudden there is outrage and the initiative went down in flames. I refer to the coffee tax proposed by Seattle some years ago for pre school education (?) that lost by a huge percentage accompanied by a huge outcry of outraged coffee drinkers.

    Or to paraphrase it in a way that is related to Seattle – “there are no free lattes”.

    Or for the older gang that remembers the comic strip Pogo, it can be paraphrased as follows ” we have met the reason of all these increased rents, and the reason is us”.

  221. 221
    Justme says:

    RE: ess @ 204

    >>Tenants Peggy Haug, 68, and her wife, Juanita Merrifield, 74, said they can’t afford the 64 percent rent hike on Social Security and their retirement nest egg. Their pleas for a smaller, phased-in rent hike were rejected.

    Ah, yes, more one-of-a-kind anecdotes from ESS and the seattletimes business page. What rubbish. Want an anecdote in return? I know a landlord that enacted a significant rent increase on his mom-n-pop rentals last year, and as a result 25% of the units moved out, and these units stayed vacant for between 3 and 5 months. And this was in a prime location in Silicon Valley. The word is that the market has softened significantly. SF and Silicon Valley apartment rates are dropping. Anyone who think Seattle is more “prime” than Silicon Valley and SF is delusional.

  222. 222

    RE: Matt @ 210

    I’ll be watching for it. :)

  223. 223
    Screenname345 says:

    It sounds like there are some realtors on this thread? I could use your advice. My house does not have a master bath. In this market does this matter if I go ahead and list without it? Everything else is dialed and it’s a great house, this is the only thing where I don’t stack up against other houses I have looked at for sale. I’m in Capitol Hill. Thank you.

  224. 224

    RE: Screenname345 @ 216

    Not uncommon for homes in Seattle, old ones, to not have a master bath. Does the house have only 1 bathroom? If you email me the address I’ll check the tax record and comps. ardelld@gmail.com

    Only 1 toilet is more of a negative than no “master” bathroom.

  225. 225
    Screenname345 says:

    Thanks for the response Ardell. No we have 2 full baths and 1 half bath.

  226. 226
    whatsmyname says:

    By Justme @ 214:

    I know a landlord that enacted a significant rent increase on his mom-n-pop rentals last year, and as a result 25% of the units moved out, and these units stayed vacant for between 3 and 5 months.

    I take it these units are full now? Did he have to lower the rents?

  227. 227

    RE: Screenname345 @ 218

    I generally don’t recommend a big remodel project prior to listing. In this market the house may sell for the same price either way and you might be wasting your money.

  228. 228

    By ess @ 220:

    Well – we can usually predict future taxes – they are going up. Taxes on my residence increased faster as a percentage as compared to the percentage increase in the value of the house. But so long as voters are going to vote for any and all initiative proposals – that trend will continue.

    Well I don’t think they’re necessarily going up all that much, but you’re right to the extent they are it’s largely due to voters, because the voter approved taxes tend to be the ones that are X center per thousand of value.

    And landlords are just going to pass those increased taxes on to tenants through higher rents. It is no accident that counties are placing information as to the percentage of taxes that were voted on by initiative on property statements. It is almost as if they are saying – “don’t blame us – you all voted for those big tax increases”. Add all the other activities that are demanded by the public (ex – restricted development) that increase the cost of housing, and here we are.

    I wonder how many renters understand that in many cases, the landlord could be applying 20% or more of the monthly rent to fund the property tax burden. A half a million dollar residence probably has a property tax rate of about four hundred dollars a month. That is a hefty amount that the tenant is indirectly paying to the taxing authorizes, and the tenant doesn’t get a tax write off. But I don’t recall an initiative that would tax property that has ever failed – although there probably has been one or two. But proposed a tax on a cup of coffee to pay for some program – and all of a sudden there is outrage and the initiative went down in flames. I refer to the coffee tax proposed by Seattle some years ago for pre school education (?) that lost by a huge percentage accompanied by a huge outcry of outraged coffee drinkers.

    I think you may be right as to how people vote for things, but you’re wrong as to the ability of a landlord to pass along a tax. Landlords are going to price at as high of price as they can at the time. If say a school levy fails one year, the landlords in that city are not going to suddenly all reduce rents. And if there are 20% vacancies at the time, but taxes go up, landlords are not going to be able to pass along any tax increase. Landlords don’t add up all their costs, add a profit margin and then set the rent. They learn what tenants are willing to pay and try to charge the highest amount.

    Now over the long run taxes might affect the number of buildings built, but that would be very speculative.

  229. 229

    By Ardell DellaLoggia @ 224:

    RE: Screenname345 @ 216

    Not uncommon for homes in Seattle, old ones, to not have a master bath. Does the house have only 1 bathroom? If you email me the address I’ll check the tax record and comps. ardelld@gmail.com

    Only 1 toilet is more of a negative than no “master” bathroom.

    I put the cutoff at 1.75 bath. A 1.5 bath house is not that much more valuable than a 1 bath house because people think about showering in the morning, particularly if they have kids.

    But what screenname seems to be discussing is one that doesn’t have a bathroom off the “master bedroom.” [Edit: 2nd post seems to confirm that.] That’s somewhat uncommon in most houses with 1.75+ bath, but it happens, particularly in remodeled houses. But when you have that situation, value is affected.

  230. 230
    ess says:

    By whatsmyname @ 226:

    By Justme @ 214:

    I know a landlord that enacted a significant rent increase on his mom-n-pop rentals last year, and as a result 25% of the units moved out, and these units stayed vacant for between 3 and 5 months.

    I take it these units are full now? Did he have to lower the rents?

    —————————————————————————————————————-

    If the rents were not lowered, the owner will recoup the loss of income due to the vacancy over time. And even in a hot market, some units are kept vacant for a month or two for maintenance and improvement purposes.

    In addition, headlines that rents are going down due to a housing glut may not present the entire picture. Most landlords that have owned property over time experience times where the market is soft, and they may have to lower rents to attract tenants. For example, a landlord may have to lower rents ten percent in a slow market. On the other hand, rents may have gone up 20% over the past few years, so that landlord is still ahead (even accounting for tax increases and higher expenses due to inflation). Unless the market is totally destroyed by external forces (see Detroit), most rental markets and rents go up over time in a zig zag motion. In normal years, rents still may increase due to inflation and new taxes, but not enough to attract the attention of the media.

    The population of the this country, as well as major urban areas is increasing at a dramatic rate, and people have to live somewhere. Yes, Seattle has had periods of increased residential construction, but over the last 20 years or so, a majority of people who have bought in the Seattle market have done very well and are probably paying less than those renting similar residences. But this is what makes America great – those who believe the end is near for the real estate market can continue to rent over the long term and take their chances with increased rents, or reap rewards if the rental market cools off.

  231. 231

    By ess @ 230:

    By whatsmyname @ 226:

    By Justme @ 214:

    I know a landlord that enacted a significant rent increase on his mom-n-pop rentals last year, and as a result 25% of the units moved out, and these units stayed vacant for between 3 and 5 months.

    I take it these units are full now? Did he have to lower the rents?

    —————————————————————————————————————-

    If the rents were not lowered, the owner will recoup the loss of income due to the vacancy over time.

    It might be almost as soon as the units are rented if the owner is planning on selling, because the sales price would be highly dependent on the current rental income.

  232. 232

    RE: Kary L. Krismer @ 229

    Likely they are not on the same floor and why one is not an “in-suite” to a bedroom. Possibly a 1 1/2 story with basement built in the 20’s. Master baths didn’t come out in a big way until well after the 50’s. Virtually not a factor prior to that time and became more commonplace in the 80’s and 90’s. More often the unfinished space in the basement or “attic” now 2nd floor or 1/2 story added a bathroom up and down as part of the “stack” for the sewer line.

  233. 233
    Screenname345 says:

    Ardell and Kary thanks again for your opinions. So to be clear there is a full bath on the top floor that is not connected to the master bedroom it just serves all 3 bedrooms. I have been thinking about taking out our walk in closet opening up the wall which actually connects to the bathroom and making the current bathroom smaller and making the closet the master bathroom using part of the pre existing bathroom space as well. I would then create a closet in another corner of the room. All of this is going to be expensive of course and would like to not do it if it wasn’t necessary. I am more interested in a quick sale if and when we sell rather than trying to make more money by making this addition although that would obviously be nice. From what I am seeing in this neighborhood many new buyers are doing remodels to put their stamp on their new homes anyway included what looks like very expensive landscaping projects. So it seems like I should leave it as is and let the new buyer have fun redoing everything to their own specifications.

  234. 234

    RE: Screenname345 @ 233

    I’m slammed until after 4th of July but would be happy to pop my head in to see it and give an opinion.

    For now I think the answer is no, not worth doing that. Closet space is hard to come by and a walk in closet is often as much of an asset as the private bath entrance. At best you would put a door acccess from the bedroom into the existing bathroom without making two tiny ones. If there is no door from the bedroom into a bathroom it is technically NOT a “master” bedroom at all It is bedroom #1. But having a door into the same single bathroom makes it a master the same as if you added a bathroom by eliminating some other good features.

    It depends how large the room is now and what the usable size would be after you move the closet. It also depends on how much less closet space there will be after the change and how small the existing bath would become. You are basically adding and subtracting value at the same time, and the balance is not likely worth it.

    It’s like when someone converts a garage to living space and wants to add the benefit of the additional square footage…without subtracting the value of the garage now gone.

    From an appraisal standpoint, you already have enough bathrooms.

    But an answer after having seen it is different from an answer making some assumptions. I should be over that way fairly often in July during the last two weeks and in August. No formal visit. Just a quick pop my head in if you like. Though if you bought it within the last 5 years the inside photos are likely still in the mls, so if you email me the address I can “view” it without needing to come there.

  235. 235

    By Ardell DellaLoggia @ 234:

    If there is no door from the bedroom into a bathroom it is technically NOT a “master” bedroom at all It is bedroom #1.

    I would tend to agree, but I’m not sure that’s the technical definition–or at least I couldn’t find any such definition. Seemingly just being the larger bedroom that the owner would likely sleep in makes it a master.

    What’s odd is that unless I missed something, this is the one thing you cannot search for in Matrix–whether a bathroom is connected to a master. You can search for whether or not it has a ceiling fan, but not that. And that means you sometimes end up going out to look at a house and then find out that 3/4 bath is at the opposite end of the house from all the bedrooms, or downstairs when the bedrooms are all up (although that is something you should be able to see in the listing).

  236. 236
    Screenname345 says:

    Thanks for all the info Ardell. My wife is not ready to talk to a realtor just yet. I am warming her up to the idea of moving still. :-)

  237. 237
    Justme says:

    RE: whatsmyname @ 226

    Yes, the rents had to be revised downward to near or at previous levels. Also there is some vacancy again among those same units.

  238. 238
    Justme says:

    RE: ess @ 230

    Haha, those are quite some rationalization you are trying to contort yourself into there, ESS.

    1. “experience times where the market is soft,”:

    So it is just a soft patch? Really, for 3-5 months??

    2. “Landlord will recoup the losses if he didn’t have to reduce rent”:

    Well he DID have to reduce rent again, and I estimate that for 4 months he was grossing 15% less than before. How long to break even on a failed rent increase amount A% leading to an average 4 month vacancy and a 25% vacancy rate? Answer: MAYBE NEVER. The rental market does not have rent memory the same way house sales have sticky prices. The landlord should have increased by B% and kept all units full.

    3. “…so that landlord is still ahead” :

    No. Ahead of zero profit, probably, but that is NOT the benchmark. He is still making less profit than he would have if he was less aggressive about rent increases.

    4. “The population of this country, as well as major urban areas is increasing at a dramatic rate, and people have to live somewhere.”:

    Oh, poppycock. There is no dramatic rate of population increase. And also note that the peak of the echo-boomers (aka. “millenials”) are now 24yrs old, and the <24yrs crops are SMALLER, as can be seen from the histogram at http://www.census.gov/popclock/ . And the old "People have to live somewhere"? Well, not in Seattle, and apparently not in Silicon Valley/SF, either.

    Conclusion: You are full of propaganda, as always. False generalities abound in your arguments.

    Bubblers gonna bubble.

  239. 239
    redmondjp says:

    RE: Screenname345 @ 236 – The idea of connecting the master bedroom to the main bathroom is a good one. My 3BR 1.5BA rambler has this feature, using a pocket door.

    With guests staying over, the pocket door stays closed and locked. When just the family is home, we keep the pocket door open, and we can lock both the bathroom and bedroom doors (we have kids) so it functions like a master suite.

    If you do install a pocket door, pay just a little bit more and install a solid-core door for noise-transmission reasons. I replaced the original hollow-core sliding door with a six-panel (to match other doors replaced already in the rest of the house) solid-core door and it made a significant difference in quieting down the bedroom when somebody is using the bathroom or taking a shower.

    If you are planning on selling, I don’t think you’ll get your money back on a major bathroom remodel. Plus, it may end up taking far longer than you expect, especially right now when it’s hard to find a good contractor that isn’t booked up for months.

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