It looked so appealing on MLS, didn't it. The price is $90,000 below list/sale from two years ago, in a decent and workable area; your buyers are not only qualified but ready to go with their loan package, and the home? On market for 135 days. What could possibly be wrong?
Everything.
From special As-Is bank addendums and prerequisites such as dictating what type of lender and loan the seller will accept, to winterized and locked down homes buyers are expected to restore during the inspection process, greatly extended escrow days and lots of last minute grenades going off before closing and recording, the migraine headaches we never had before are festering back left of forehead.
It is true, especially now in Seattle, the Short Sale real estate industry has emerged as a huge segment of your Realtor's efforts in representing your purchase. And yes, it is indeed exciting to see SO many wonderful opportunities, but my advice is to proceed with caution and stay close to your agent, keep the phone by your bedside and increase your minutes package with the calling plan.
There are many, many pitfalls about this new market of shorts and preforeclosures. During the Go-Go years of 2003 - 2007 it was not unusual to waive disclosures and increase price to win the home. Today, banks want as many waivers as they can get and it's all about negotiation and justification of price.
Don't end up with someone else's nightmare. Be careful. Communicate. Stay centered. Be unemotional. Maybe, just maybe, that Short Sale could be yours.
I do not enjoy turning down business this year. Sadly, this has been the case among my sellers. Working in one of the strongest real estate markets left standing (Seattle) just isn't enough to sell a home anymore.
Here's why I've had to say No regarding taking on some of your listings:
The comparable sales in your area from the last six months are all I'm going to analyze. What happened in 2006 and the first four months of 2007 no longer apply.
It is true that Seattle is a beautiful place to live and a U.S. economic standout for 2008. Still, buyers perceive all national news to be bad news on your block, creating something of a vicious cycle. You don't want to negotiate your price. The buyer does not care. After all, what CNN said last night about Atlanta has an impact on your listing in Ballard, or so the buyer thinks. It is human nature. It is also my job to mediate these objections. You'll find I start with you during this process. A Win-Win requires us to be reasonable first and then work with the other side.
Your equity in the home is not like the stock market. It is the real estate market. However, had the home listed at the price your Realtor quoted and not the $40,000 premium you demanded, the home would have sold 90 days ago. Of course, this didn't happen. And now your listing is competing with similiar homes that are priced to move today, while yours is a 145 day old listing screaming Me Too! Me Too!
There are new Washington State MLS addendums dealing with pre foreclosure language. There are new rules about what Realtors can and cannot do to market short sales and pre foreclosures. This is serious stuff. So you will have to excuse me if I don't return your call after not hearing from you one year ago when I made the listing presentation, now that your cosmetic fixer is going to auction in next 60 days. I do not enjoy saying No. But best of luck to you anyway.
I am fortunate to have built my business based on systems. Five years ago many thought I was insane for spending money on print, radio, online and offline promotion, viral, peer to peer, direct mail, etc. The concensus being houses sell in a day or two anyway, why spend? Well, some of us did. Realtors who chose this route are in a much stronger position than the practitioners who jumped in simply to pick low hanging fruit from the market vine. They are gone now. With this in mind, a Realtor's value today is more important than ever. I do not enjoy saying No to your exhausting and cliched' demands for discounts. But I will.
You may not know it at the time we set up your listings, but Realtors around the country are spending real money on things clients don't even acknowlege. The signage is manufactured, stored and delivered by companies who charge for this. The full color flyers, the websites we have built for your home, the online marketing, the mailing campaign, the brokers open featuring those fantastic sandwiches from that new place in the square, the hours of open houses, and yes, the $4.50 per gallon gasoline it took to get us there.........it all costs. I do not enjoy saying No to clients, but now that you have read this paragraph, I'm positive you agree your Realtor does much to represent you and needs a little in return by way of cooperation and openness to his or her plan for your home or purchase. So let's work together in a way where all you hear is Yes, Yes and Yes.
I haven't forgotten the buyers: the effort it takes to represent your offer is large. If you think signing 16 pages of an offer is stressful to you as a buyer, what do you think your Realtor is going through to make it perfect? In the last four months alone many Realtors have taken another 8 hours in continuing education simply to grasp implications pertaining to ONE LINE of an MLS contract. And after we get home from school? Your midnight phone call about a house you found online and just have to see at 8AM tomorrow. Therefore, I do not enjoy saying No to your ridiculously low offer today simply because you heard there were problems at CountryWide this week.
I do not enjoy turning down business this year, but I will.
The seeming lack of excitement coming from the eastside regarding Google's move to Kirkland / Houghton is hiding a very large fact: this is a major, major thing to be occuring in the local real estate market! The low key style that is the Northwest hides an obvious elephant sitting in the corner of the room.
Values in the condo and casual luxury market have been stagnating for a year now and will most certainly rebound from this influx of hundreds of new Google associates. I don't think buyers at Boulevard have anything to worry about, considering how difficult it was to sell the last few units in late 2007. They took a very temporary hit from the downturn. In the long run, all residents will be considered geniuses for investing in new construction in downtown, east and west of market street, etc.
If there were an official Buy rating among Realtors, Kirkland certainly would be on top of my hot sheet for the next year.
You can look at it several different ways. Finding a home along the Blue Line light rail system between Tacoma and (eventually) Ballard will make it your personal energy policy for the future. Or, you just might end up being a landlord over the next decade. Regardless, if you follow the Blue Line route you won't go wrong for a home purchase.
It's a simple enough strategy. Growth in Seattle is not only inevitable, it's predicted to be three times larger by 2030. Public transit is going to be the biggest Hot button of the century. Why not make your real estate portfolio a small part of the plan as well?
Especially interesting to me is Rainier Vista. Already at a premium, there is more equity return coming. It's just the beginning. And the Blue Line station? Across the street.
Other very good opportunities exist near McMicken Heights in Tukwila/SouthCenter.
The phone call comes in like clockwork. John from HouseValues has leads! Leads leads leads. Accurate e mail addresses and phone numbers of people who filled out a form! Of course he does.
I'm sorry. It's not that easy, is it. Whether the market is up or down, real estate representation is entirely about relationships, networking and total management of a sphere. Filling out an online questionaire and reselling it as a neighborhood lead for $600.00 a month is not financially sound business to go after.
Like alot of agents, I tried a few programs here and there over the years. Search engine optimization via AdSense and Overture was ok, back when I could buy the keyword phrase Seattle Real Estate for 10 cents per click. Now of course it's something like $12.00 . While it lasted, did I convert anyone? Of course not.
Then there was RealEstate.com and their pay per lead program. Something like $45.00 each. I agreed to buy ten. I was later asked for specifics as to why I would not continue with them. Well, let's start with how two of those "leads" were two Realtors in my market who were testing out the system and filled out the online form! Isn't that fun...and the other eight? Their profuse apologies for not knowing what they were doing when they filled out an online page!
My advice to agents (including the two who were "leads" to me!), take a little budget out for coffee days and pick up your friend the home owner for a nice latte near their office or house. Deliver a floral bouquet unannounced on the anniversary of someone's home purchase. Send your existing client a year's subscription to Dwell or Organize. These are the things that count, not an "exclusive" neighborhood or regional leads list.
Finding new clients is an everyday challenge, but maintaining who you have already is an art. Sorry John!
That dark cloud looming ahead is not a mirage. The relative quiet and stillness of the moment is actually a vacuum building up dangerous power; when unleashed it could harm alot of consumers.
Let's set aside for just a moment last week's news about the nation's fifth largest investment bank having to take out a 28 day credit line from the Feds. Instead, listen to the printing presses as it begins to release more devalued currency.
It's a couch potato's prediction only, I'm not an economist. I am just a 1970's kid who sat in line with my mother as we waited for our turn at the gas pump in L.A. (I think we had Even days assigned from the license plate of the station wagon), and watched as she also tried to buy a $37,000 home in West Hollywood @ 18% interest with same home the following year at $55,000 @ 19.5% interest. I'm the same kid who watched bad monetary, foreign and energy policy at work, a war the country was still trying to forget, a foreclosure market that turned into an Industry.
My advice to my clients for March, 2008: It's time to price listings accordingly. Our 8 years of historic low interest rates are going away. While there is still plenty of profit left in the Seattle real estate kitty, give some back before our government's decisions take it away for us. The difference in rates are going to be absorbed by lower home prices. Adjustments will be taken. Do you still want a listing on the market should this happen?
To the client who thinks the Spring weather is going to make the acreage bloom and justify the 90k premium within asking price: It won't happen. For the seller who is timing his own sale by squeezing out the 20k above recorded comps: It's time to get real.
The financial weather report is coming: A storm is approaching. And the 1970's left a message at the front desk.
2008 is starting with a whimper in Seattle. All agents/brokers are having to keep ears to the walls and it's the only way to hear anything right now. And yet, Seattle is one of the strongest markets in the U.S. . Our employment and quality of life picture is bright. What is really going on? Are we the last important market to begin feeling the pain? Or is the Seattle market creating it's own downturn, as factors here are so different from the rest of the country? Is this human nature at work and not the fundamentals?
Based on my regional tour of homes for the past two weeks, sellers and buyers have become enemies.
I've noted this in previous posts, but today it's becoming more obvious to a wider range of real estate professionals; sellers feel entitled to their profits. Buyers do not care one bit and are waiting for their moment to make those offers. Neither is correct. Unless crystal balls have suddenly become envogue.
From Seattle to Snoqualmie, sellers are on average 30k above sold comparables prior to August, 2007. They are dictating to a market that isn't writing anything down. As for buyers, they have suddenly become experts and are wringing their hands, waiting for a giant correction that won't be coming in quite the way they think.
One thing I know as absolute truth is that buyers and their representation simply do not know how to work around a list price. We are simply not seeing negotiation skill at work. For sellers, they do not understand that list price to many is THE PRICE. You won't find this happening anywhere else. But Seattle? Nobody is having this conversation.
I enjoy being a listing agent, but I have my sphere of highly qualified buyers too. Just this past weekend, I watched my clients view four very good homes in Redmond/Sammamish and come down to an interesting but misguided conclusion. "It's worth 40k less to us, but we will wait until the listing price changes, thank you". Wha??
Nevermind that my buyers also need to sell their homes in order to upgrade. Don't even think for a second whether or not they are considering how this pays forward when they list their own homes, "oh no, Karma has nothing to do with MY home". Meantime, we go through the motions, create the CMA's and make the presentation, only to see the buyer, who also needs to sell, raise their own listing price 30k - 40k above where it needs to be at.
The circle is complete and the market is creating it's own problem. It's like smog in the L.A. basin, just hovering until something from nature comes along and blows it somewhere else.
To paraphrase and tweak Gordon Gekko in Wall Street; Greed, for lack of a better word, is NOT good.
Win-Win is.
Most markets are trying to survive. In Seattle? We fight over 150k -200k gross profit for a three bedroom "war box" and how much of that pie from ownership during 2003- 2007 the seller can keep.
Had I not been there to open the condo, the offer never would have been made.
The seller approached me after canceling the listing with someone else who had it for five months. I took one look at it and decided it needed three things.
1. Better photos
2. Carpet cleaning/paint in the master bedroom.
3. Open houses.
Seller hired carpet cleaner I recommended. My assistant and I painted the master. It took about a day and a half plus three coats, as the previous color was Hot Pink.
We placed it on market and did two open houses. It sold in six days. How?
A young couple was driving around the neighborhood with their agent and noticed the directional signs to the building. They knew about my recent listing but thought the price was above their range. Since it was open, they decided to look.
With their agent present, I told them the seller will look at any offer and not to be shy about it.
A price everyone could live with was negotiated.
The Seattle market is sometimes a little too polite. Many think the list price is THE price. If I didn't open this condo who knows if this opportunity would have presented itself.
I see alot of negative blogs about open houses, and it's just not so. The top agents know, Open House Today still works.
Just my opinion, but calling another agent's client within 12 hours of a listing "expiration" is way too soon. If you feel compelled to do so however, I naturally have a few small suggestions!
1. Make absolutely sure that everything said to my client can be repeated, as some people are not just clients, but years long friendships and business relationships.
2. Please do not say "list now because prices are just going to keep going down next year". Really. I had no idea we had economists and Fed regulators moonlighting as real estate agents in Seattle.
3. Please refrain from asking "Are you ready to work with the right agent now?". The answer you may hear is, "No, I only work with Democrats".
4. Try and preview the home during the listing period, this way when you call, you will be aware of the second full kitchen downstairs and MIL dwelling, and the new construction coming in across the street. Otherwise, you face being embarassed by the seller.
5. Don't ask the seller how long they've owned the property. As an agent trying to take my listing (poorly, by the way), a simple click of the mouse will get you to public record.
Happy selling!
P.S. We are re-listing after finding a property accepting contingency offers.
The song stylings and pointless riffing about real estate, brought to you by that jazzy agent and Industry observer, Gene Dexter @ www.GeneDexterHomes.com !
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