Do you want a “full service” real estate agent?

Do you WANT a “full service” real estate agent?

Many will say “NO, I don’t want my agent 2nd guessing ME!” Then don’t pay the price for one. Don’t hire one in the first place. Instead, find a lower cost “service provider” who would not presume “to tell YOU, the customer, that you are wrong”. Hire “less for less”.

But if you want someone 2nd guessing you, every step of the way from start to finish, so that you do not make even a tiny mis-step, without knowing it, when buying or selling something that costs hundreds of thousands of dollars…then you may not want to save those dollars by choosing “less for less”.

The reason we need many and varied “models” in real estate, more than are currently available, is because not everyone wants or needs a “full service” agent. If you need “less”, then “less” is full to you! Let’s explore the “full service” model so that you know when “full” is paying too much for what you may need.

The key is knowing which model suits YOUR needs best.

Full Service-1

The FULL service agent is represented by the blue person in the middle

who is managing and 2nd guessing ALL of the people

who will be involved on your behalf.

ONE of those people is YOU!

A “full service agent” is not a service provider who is giving you what you ask for and doing what you tell them to do. A “full service agent” is helping you get the right answers to the RIGHT questions…not merely those you happen to ask.

A “full service agent” also does not fully delegate the other services like lender and escrow and home inspector and does not keep their nose out of those valued roles in the transaction.

A “full service agent” does not merely help you buy a house that is for sale. A “full service agent” tells you when all of the best houses have just been sold off, and you are picking from an inadequate selection, and should wait for the next better home to come on market.

If you go to the market an hour before the next bread shipment comes in, and the only bread on the shelf is day old bread, do you buy that bread? No! You ask when the next shipment of bread is coming, and if they say in 20 do the rest of your shopping and come back to the bread aisle when the fresh bread is available. When you choose from only those that happen to be “for sale” at the time you are looking, you are not doing “it” right. You may be buying “the day old bread” at a GREAT price!

You should not be looking at homes with your agent to pick one to buy.

You should be looking at homes with your agent to determine what it is,

that may not be for sale today,

that you should buy.

IF you are looking for a hot commodity…one that the majority of home buyers want…then the one you are standing in with your agent is NOT likely “it”.

The odds are not in favor of it being for sale…and OMG! no one else found it in 72 days.

Let’s get the wrong “it” for less, because it is stale on market, is NOT how you buy a home for your family

to live in for 10 years or more.

Homes value on a relative basis. YES you can pick a lesser location or lower valued home style and pretty much anything you want. BUT a full service agent will make you think VERY HARD about your choices, and how they will impact you on resale…some day…in the future. A full service agent will tell you what price that “what you want” SHOULD BE…not what price you can get it for based on negotiations with the seller.

If the Seller is asking $700,000 and the “fair” price for that is $550,000, you need to know that. That is not a ludicrous example…I just ran into that the other day with a client. Do you want an agent who tells you that you can get it for $650,000 if it is only worth $550,000? Will you feel great that you saved $50,000…but paid $100,000 too much?

Most importantly…will you resent the fact that the agent pointed out it is only worth $550,000?

Will you hate the agent who is giving you a headache by forcing you to see all of the important things you need to consider before spending hundreds of thousands of dollars?

The NUMBER ONE feature of a lower cost service

that says they are FULL service…

is they do not 2nd guess YOU…the client.


1) Seller wants to price his house at $700,000. There is no way a buyer should pay more than $550,000 for it. $500,000 would be a screaming deal for a buyer. Anything OVER $550,000 would be great for the seller.

A FULL service agent will help the seller do what it will take to get $575,000 or $585,000 before it is listed for sale, and price it at $599,950.

A “service provider” will list it at whatever the seller wants to list it for and stick a sign out front and a lockbox on the door…and charge LESS for that and CALL IT FULL SERVICE for less. What it IS is “less for less”.

2) Future home buyer wants what 65% of all home buyers want. A new(er) home (or older one that needs NO repairs or upgrades) in the BEST schools in a quiet location that is near parks, playgrounds, stores and work…AND he wants it for $100,000 LESS than what it costs to get one of those. (Pretty standard scenario, BTW.)

A FULL service agent will show the buyer where they can shave off that $100,000 by compromising on the “correctable” deficiencies vs the NOT correctable deficiencies. OR, at mininum, HIGHLIGHT the deficiencies that come with that $100,000 “less” price. Often the buyer will put their head in the sand as to the weaknesses that cause the price to be $100,000 less than it should be. Some buyers want the agent to not mention those deficiencies. They want to pretend they don’t exist. A FULL service agent will make sure they are buying with “informed consent” regarding those deficiencies.

A “service provider” will help them buy the home they want and say “who am I do say “that” is a “deficiency”. If the buyer likes it…and is willing to pay for it…a “service privider” is there to help them get what they want. If they are happier not knowing…then it is the “service provider’s job” to make them happy and not point out the negatives. If the husband knows about the deficiency, but says “don’t let the wife know about that”…then that is the “instruction” a “service provider” will follow. That is “LESS for less.”

When is “less for less” FULL to you?

1) IF you don’t want your “agent” to 2nd guess YOU…less is FULL.

2) If you don’t want your agent treating both spouses as equal clients. If you want to keep things from “The Mrs.” because she over-reacts to negatives…less is FULL.

3) If you don’t want an Agent telling you that you are asking TOO MUCH for your home, or telling you what you need to DO to the house to maybe make it worth THAT much by creating a lot of “extra” work…less is FULL.

4) If you want your Agent to do what you say…

never tell you that you are wrong…

even when you are wrong…

less is FULL.

Do YOU want a “full service” real estate agent?

There is no ONE “right” answer to that question.

Are you a Customer or a Client?

If you are buying a home, it is important to know if your agent views you as a Customer or a Client. You may ask “What’s the difference?” until you read a post like this one written by an agent titled “Are you a Customer or a Client? Do you know the difference?” and the many comments by agents that follow.

Here is a quote from that post, written by a Real Estate Agent in Idaho, in case it is later removed by the writer from public view:

“As a Realtor, I work with both customers and clients.  Do you know the difference? I am a real estate agent when I’m working for my clients.  I am a non-agent when working with my customers.  The difference is whether or not you and I have entered into a written agreement for agency representation.”

I personally don’t agree that is the case in the State of Washington. Below is my comment on the above linked post:

“As Nathan said…in his State of Florida the default is NO representation. In my State of WA Buyer Representation IS the default.

NAR cannot legistlate this nationally …and this post is NOT true in the State of WA where all buyers are granted full representation by our Agency Laws, unless they are dealing directly with the listing AGENT not the listing Company.

There is only ONE person in this State of Washington who does not represent the buyer by Law vs by Contract, and that is the Listing AGENT.

Unfortunately, many agents here read posts like this and think it applies to them. Even the ABR class is taught that way here…that buyer is customer without a written contract…even though that is NOT TRUE here. Drives me bananas.

IF you work in the State of Washington…read that pamphlet on The Law of Agency that you hand to buyers. It says that you REPRESENT that buyer…by Law…without the need for a buyer signing a written contract to be a “CLIENT” vs a “customer”.

We have no buyer “customers” here unless the buyer signs a NO AGENCY agreement. You have to waive the representation by contract here…not get representation by contract. It is the opposite of most States, unless the buyer chooses to work with The Agent for the Seller aka The Listing Agent. All other agents, including every other agent in the Listing Brokerage…represents the buyer, by Law.

But likely 95% of agents don’t “get” that…because of writings like this one. There is NO national standard on this. State Laws apply.”

I run into agents all the time who do not understand that in the State of Washington ALL buyers are represented as CLIENTS, unless they choose to work with The Agent for the Seller or sign a NO AGENCY agreement. Agents read posts like the one I linked to…or take National Courses noting the distinction between Buyer as Client vs Buyer as Customer, and think they can treat a buyer as a customer they SELL something TO vs a Client that they represent in all facets of home selection and purchase.

Drives me absolutely bananas!

Ask your agent how you can become a Client vs a Customer. If they say you must sign a Buyer Agency Agreement to be a client…or if they say there is no difference…then they are likely treating you as a “customer” vs a client…and there IS a difference.

Seattle Eastside Housing – Buy or Wait?

Seattle Eastside Housing – Buy or Wait? is a Google Query that directed someone from Bellevue over to my blog about ten minutes ago, looking for an answer to that question.

Often people get confused by the big price tags and unfamiliarity of housing, so let’s use a simple every day analogy to explore “buy or wait”. The other day I decided I had nothing to wear. I don’t know how that happens all of a sudden…usually it’s because I gained weight. First the answer to “Should I buy now or wait?” in that scenario is you wait thinking you can lose that extra weight. Then one day you just say…this isn’t working…I need to go buy some bigger clothes.

Often people need to buy a house because they have “outgrown” their current home the same way that I outgrow my clothes. Every day that you live with something substandard to your needs, is really a day wasted, isn’t it? If you are having another child, and you are uncomfortable with the size of where you live without that new person…well, you can’t wait until the child is born and moves out really. So it’s time to go look for that bigger place. Not necessarily buy it…but yes, time to go looking for something you may buy.

I use having a child as an analogy, and it is very common for people to need a bigger place because the woman is with child, or because a couple decides it’s time to start having children. But the need for a bigger place can be because of other every day needs that just don’t fit where you are.

If you already own a home, waiting is almost never the answer. The value of what you have will often move to the same degree as what you are going to buy. If prices go down 5% in the interim and you own a $450,000 home and plan to buy a $600,000 home, you will lose $22,500 while waiting to save $30,000. For the move up buyer, waiting is almost never the answer unless the family is willing to sell…rent…wait…then buy, which is not the usual scenario. Happens…but not often. Usually because what is available to rent is substandard to what they already have…so they might as well bite the bullet…or wait. The extra move in between is rarely worth it. Sometimes…yes. Often…no.

The decision for the First Time Buyer is not as difficult as people may think. One of my favorite lines from my son-in-law Mike is “Mom, if THIS is what I can afford to buy…I’d rather rent for the rest of my life.” Gotta love that Mike. Straight forward, common sense decision.

The first stage of “Buy or Wait?” is to go find out what you CAN buy for what you can afford…THEN…take a step back and say “should I buy or wait?”

I’m revisiting a decision of one of my clients from 18 months ago. I know there are many news stories saying prices have changed a lot since my bottom call of February 2009…but really, that’s not the case. Not for good homes in prime neighborhoods on The Eastside. Maybe not at all, given Aubrey Cohen’s most recent article, the title of which is pretty much a direct quote from his article on me in early 2009. So it apparently still applies today.

Back to my clients who first approached me…sorting back through 260 emails to find the first one…here it is:

3/18/2010″ “My wife and I are looking at purchasing our first house, and we’d like you to be our agent…do you think now would be a reasonable time for us to buy? I saw in your latest post that you expect the prices to drop. How much do you expect them to drop? ”

Given I don’t think this year is really any different than last year, let’s check that against reality.

1) We looked at houses priced at around $450,000. There were a few that “would do”…but based on those particular houses, I saw no reason to buy now vs wait, unless they were willing to consider as far out as Issaquah vs Kirkland, Redmond or Bellevue near Microsoft.

We looked at homes for as long as it took to gather enough information to answer the question “Buy or Wait?” That takes shorter or longer for different people…and is largely dependent on the available inventory during the period of time.

2) On 4/23/2010 We had a breakfast meeting at the Brown Bag. Basically we looked at all of the options for about 30 days and then had a “Buy or Wait” meeting. One thing about real estate that people often miss as to Why You May Need An Agent is the perspective of my TWO clients was not the same. I remember the wife…due to have her baby in July…saying ideally she would like to be in a home by June. The husband finished her sentence with “…or July, or August…or next year…”

3) Given the husband and wife were not necessarily in total agreement there, not arguing…but not necessarily “on the same page” either, I asked to visit them where they were currently living. I don’t often do that when someone is in a rental…but I needed to test “by June” against “…or July, or August…or next year…”.

When I visited them in their small apartment and they showed me the dresser drawer where the baby would go IF they Waited…vs Buying now…the answer to “Buy or Wait” became CRYSTAL CLEAR!

So with renewed motivation and a price of $550,000 vs $450,000 we found “the home” for them to buy and made the offer on 4/26…only THREE DAYS from our “Buy or Wait” meeting. They closed on 6/10 as it was a somewhat difficult Bank Owned property.

Now…let’s revisit my client’s Buy or Wait decision and second guess it based on what has happened since.

They paid $550,000, 1.1 X Assessed Value (a green price in a blue area). They paid $215 per square foot. Now let’s look at what has sold there since they purchased a little over a year ago.

First, the other one on market at the time they purchased: Closed 5/29/2010 – just before their closing – sold for $587,000 – just over their max of $550,000. Multiple offers…they couldn’t make an offer on it due to price. It was assessed for slightly less (only $4,000) was smaller at 2,460 sf vs 2,550 sf. So even though the bank owned sale was troublesome…worth the effort. Not a huge savings…no “deep” discount for the bank owned home they purchased…but enough of a discount to make it a good “Buy Now vs Wait” option for them.

Recent Sale in Same Neighborhood: Sold in 9 days for $602,000 on June 8,2011 – assessed for $8,000 less than the one my clients bought last year – Sold for $244 per square foot vs the $215 per square foot my clients paid last year. It didn’t have anything better than the one my clients bought. It needs a new roof, does not have granite counters, needs the carpet replaced with hardwood floors in the living room and dining room…nothing more for that $244 per square foot vs the $215 per square foot my clients paid in June of 2010.

One house did recently sell for $540,000…but it backed up to Avondale Road…so…the relationship to assessed value and price per square foot is a non-issue, given backing up to Avondale Road is not “a comp”. Given they paid only $10,000 more for a house last year that is NOT backing up to Avondale Road…I’d say the Buy vs Wait decision has withstood the test of time.

One might say they could have waited 3 years or 5 years…well, we’ll look back on that in 3 years or 5 years…but the reality for most people is “Buy vs Wait” is usually a question with a max timeframe of a year to 18 months…not wait for 3 to 5 years.

Buy now or wait until next year…in Jan of 2008 = wait until next year. But since Feb of 2009…wait is not likely the answer…but buy WHAT is a huge question? Follow the process I have outlined in my 1), 2) & 3) up there…and you will find your best answer to that question for your family.

The Question Your Real Estate Agent Doesn’t Want You to Ask

What is the question you need to ask your Real Estate Agent…that no one ever asks?Buyer Clients-1

Will you help another of your buyer clients buy a home…

that is perfect for me and my family?

MORE IMPORTANTLY…will you even take on a new client…

who has the same ojective as mine?

People often ask me if I am “taking on new clients” and the answer is yes…as long as you do not have the same objective as one of my existing clients. I have been wanting to write a post on this issue ever since an Agent stood up in a class I was teaching here in Seattle and said “I showed the house to NINE of my “Buyer Clients”…

What??? NINE of your Buyer Clients??? How the heck can you take on NINE clients…who all want the same thing, in the same place at the same price???

There’s a lot of talk about Agent Commissions being less, when the truth of the matter is that what we should be striving for is getting back to the reason WHY “we make the big bucks”. It is because we can only devote ourselves to the objective of a few clients at the same time, in order to eradicate any potential conflict of interest or dilution of our efforts on the client’s behalf.

I have a client who wants a condo in Downtown Kirkland for about $350,000…possibly a townhome in Redmond for the same price…but more likely a condo in Downtown Kirkland.

I have a client who wants to buy a condo 2nd residence/investment condo for about $125,000 in Kirkland, Redmond or Bellevue.

I have a client who wants to buy a primary residence for about $600,000 in the prime areas of Kirkland near Downtown.

I have a client who wants to buy a primary single family residence for $400,000 give or take (depending on condition of property) in Redmond…possibly Kirkland.

I have a client who wants to buy a primary residence in Seattle between the U-District and Green Lake for $500,000 give or take.

So the answer to “Am I taking on any new clients” is yes…as long as you don’t want the same thing as one of my existing clients as listed above.

When I speak with other agents…they wouldn’t dream of turning a client away…EVER. Which is why some of the lower cost “agent services” do not list “assistance with property selection” as one of their offered Buyer Agent services.

Most all websites say “CALL ME IF YOU WANT TO SEE THIS PROPERTY” without regard to whether NINE people will all call to see

the SAME property.

It’s really as simple as this. IF your agent will show the SAME house to more than one of their clients OR if they will even “take on” a 2nd client who has the same objective as you do, then they are a SALESMAN and not a true representative of your goals and best interests.

Ask the question. If you find anyone else who says “NO, I will not take on a new client who also wants the same kind of property, in the same place, at the same price as you do”…let me know.

It will do my heart good.

Why there is no “LATE” in Real Estate

no crying in baseballWe all remember Tom Hanks in “A League of Their Own” and that great line “There’s no CRYING in Baseball!” That doesn’t mean it NEVER happens, that means it is not SUPPOSED to happen.

When it DOES happen it is usually a Joe Biden sized BFD!

Same goes for a Late Closing in Residential Real Estate transactions…with some exceptions. In a normal Residential Real Estate Contract, you put down Earnest Money WHICH YOU ARE SUPPOSED TO LOSE under certain conditions. People often don’t know this OR they forget this.

Most often agents probably don’t say “Oh, by the way you may lose that $10,000” while the buyer is writing the check. They just “assume” the buyer knows what Earnest Money is. Telling people they may lose $10,000 is just not something most agents like to say when someone is making an offer on a house. BUT if the day the buyer may lose it, is the first time they’ve heard of that possibility, the *chocolate* is going to hit the fan…and often does!

Earnest Money is the amount you ARE WILLING to lose if…

If you COULD NOT LOSE YOUR EARNEST MONEY we would not require Earnest Money as a “BINDER” in most Residential Real Estate Transactions. Still the minute the “you might lose your Earnest Money if…” situation comes up, people act like no one should ever utter those words. Odd…but true.

Buyers write those big, fat Earnest Money Checks without much thought to LOSING that money…until faced with the words “Your Earnest Money is NOW in Jeopardy”. Late closings enter that realm of possibility. Often that can turn into a “Let’s SHOOT the Messenger” knee-jerk reaction. But the reality is…someone, sometimes, has to be the bearer of that bad news.

So why IS the main rule  “No LATE in Real Estate

Why Agents Are Better than Lawyers

Craig’s written a few posts about Why Lawyers are better than Real Estate Agents. Seriously?
Are you KIDDING me???
I usually don’t post before pictures of my listings, but this seller gave me permission to do so.

People don’t know what we do. because it is PERSONAL. What we do for our clients is never known until someone who thinks this business is EASY walks a mile in our shoes. THIS is what I do BEFORE I even START! The Listing won’t even be in the MLS until Wednesday.

I clearly EARN every penny I make, and not ONE of my clients have ever disputed that. I have never had a client who thought I “made too much” when representing them either in a purchase OR a sale in 21 Freaking YEARS!

Every day (and today on my most recent post) someone says agents do NOTHING.

Well I don’t call THIS nothing. It took day after day and many hours. Because I can’t “market” a home until I have a home “to market”. This is a $250,000 house and I am only charging 2% (because it is a 2X past client).

If you hired an agent who did NOTHING…
well, come on guys, whose fault is THAT?!?



AFTER – Not finished yet,

have another full day tomorrow.

NO…this is not a vacant home…This is what it looks like today before it is finished.




Even staging the Linen Closet, the kitchen cabinets, the patio set out on the deck…you name it. Closets…anything a buyer will open and look inside.

And then some PISSANT will come along with a “Bad MLS Photo” post and complain that the light fixture is reflecting in the sliding glass door.

Don’t get me wrong…the seller is working his fingers to the bone too! This kind of transformation does not take ONLY one person. But I even personally, hand made the wall hanging in the dining room. I didn’t have anything “in stock” that was quite right and I wanted the largest 42″ X 42″ piece. I had this one:


But I wanted a “mid-century modern” feel, so I went to the cloth store and covered it with this:


And then I made a “Companion Piece” in cloth of the same colors and different design, and found the “starburst” mirror for over the fireplace that matched the circles in the cloth in the larger cloth covered.


If you are an agent who runs in with your cell phone and takes a quick picture of the open toilet and toilet paper…THIS is what we DO or “cause to happen” and WHY we make “the big bucks”.

And oh…


I didn’t see any LAWYERS in Joann Fabrics on 4th of July Weekend.

If you are one of my other clients over the last week or two who thought I looked a little tired…this is why. 🙂 A VERY rewarding business…and there is NO END to what “we” DO!

We do whatever it takes to have a successful client.

Mortgage Rates – A “volatile” market this month

Interest rates have been very volatile in June. This Poll Post on Seattle Bubble and the chart below are a good reminder that interest rates were at 5.5% in the Summer of 2009 and at or above 6% quite a few times in 2007 and 2008.

I thought you might find this chart of where interest rates have been for the last 40 years of interest. I borrowed it, with permission, from my friend Jay Thompson’s blog.

Personally I think they will run between 4.5% and 5.5%, but that’s a pretty big spread for people looking at homes to buy. A 1 point spread on a $417,000 conforming loan is $255 a month.


Of more concern to me is the variance in Real Estate Taxes from one property to the next.

When you get pre-approved, make sure you know what payment vs Purchase Price you are being approved for, and what assumptions are being made as to Taxes and Insurance.

I looked at the 30 homes sold in King County for $500,000 in the last 6 months, and the range of Annual Real Estate Tax went from $3,600 on the low side, to $8,000 on the high side. HUGE SPREAD. The Real Estate Taxes could easily turn your pre-approval into a Failed Pending Sale.

Be sure to know the underlying basis of your pre-approval, and make adjustments as needed from one house to the next. If it’s a super-deal, the taxes may be out of proportion to the sold price.

Redmond – Home Prices UP 12% YOY?

Median Home Prices get pulled on a monthly YOY basis by some interesting influences. About a week ago I did a post on King County non-distressed property being up 6% YOY.

In these stats, I am NOT excluding short sales and bank owned property from the mix.

Stands to reason if the better properties are selling quickly with multiple offers, that prices are NOT falling in the places where Supply and Demand factors are tipping toward more Demand than Supply. And if overall we are seeing 6% UP for non-distressed property, then some places must be UP OVER 6% for the net result to be 6%.

To find who went up more than the 6% average, I used Redmond 98052. It generally has a higher appreciation level than most of King County AND has little influence of short sales and bank owned property AND it has negligible influence of super inflated land values created by water view considerations. In other words, Redmond 98052 is “close in”, good “commute to” but no major snob factor or “value is in the land” considerations. In fact the lowest priced home sold in May of 2011 in Redmond 98052 was a great little house, and not a tear down at all.

The Median Home Price influence in Redmond 98052 is you need to separate NEW(er) homes from older homes, as the mix skews the median, as noted in the chart below.

graph (6)

The variance in the overall GREEN LINE median has more to do with the mix of new(er) construction vs homes built in 1999 or before. If you remove the undue influence of NEW HOME mix, you can see the true area appreciation and depreciation levels. Again, short sale and bank owned homes do not influence the median prices in Redmond. Even though they doubled from May 2010 to May 2011, they only went up from 3 of them to 6 of them.

Of MORE relevance is the New House/Old House mix than even overall volume changes.

Also, it’s my recollection that the big jump in 2005 may have had more to do with Microsoft hiring a lot of people all at once, vs the influence of the Credit Bubble.

That supports the flat pricing from May 2003 to May 2004 and the huge upswing in 2005. The upswing in the Green vs Blue line is about New Construction, mostly up on Education Hill,  which continued to pull the blue line away from the green line for years thereafter, until 2010 when more people bought older homes than new ones.  But NOT in 2005, as the older homes appreciated to the same degree as the new home premium. Same in 2006. Both older and new homes showed a price increase of 20% in 2005 and 25% in 2006. So the upswing was fairly uniform in those two years due to local hirings more than loose lending issues.

The swing in the peak on the Green Line in 2009 was because new(er) homes represented a full 63% of all homes sold that month. Likewise the dip in the Green Line in 2010 was the contrast of only 32% being new(er) homes in the sale mix. In 2011, new(er) homes were 28% of all sales, even less than 2010. So of no influence on the upswing reported.

Since homes built before 1999 did not change YOY as to type and size over the period from 2003 to 2011, the change in price is less influenced by things other than Supply and Demand.

I think the 12% increase is a bit insane and likely not sustainable, and may be a FLUKE of May 2011. BUT it does support my previous post that 6% UP for King County matches the story that decent homes in good places are hard to come by AND on the upswing price-wise.

Common sense tells us that the media reports that Supply is higher than Demand, creating bidding wars, BUT “prices are down”, makes no sense whatsoever. Much more credible that where these multiple offer situations are actually happening, prices are indeed up, and to a large degree.


Required Disclosure: Stats in the graph and post are not published, verified or compiled by The Northwest Multiple Listing Service.

Why are so many Pending Sales failing?

There is a rumor that they are all failing because the buyer cannot finance the purchase. The reality is that is RARELY the actual reason, but sellers and seller’s agents DO like to blame the buyer’s ability to finance, even when that is not the case. Always better for it to be “the other guy’s fault” when asked:

“Why did the sale fail?”

The reality is it may have been the way the OFFER was structured, that caused it to fail.

Some offers are doomed to fail from the getgo.

Relying entirely on the Home Inspection, without adequately addressing the likely outcome in advance at time of offer, often causes a sale to fail. Some like to think “writing an offer” is only about “filling in the blanks”. HOW you fill in those blanks requires some skills of prediction and anticipation of outcome.

It’s important to make your offer with a rough expectation as to major repairs needed, as rarely can a home inspection resolve items costing in excess of 1% to 2% of the value of the home.

IF you have already taken the max credit toward your closings costs in your offer…

the Home Inspection negotiation becomes near impossible.

The Roof is often the “deal breaker” in many home inspection negotiations, because it has a known life expectancy and is one of the most expensive “fixes” that might be needed at time of sale.

Notice I did not say “one of the most expensive fixes that might be needed” 

A “good” offer anticipates outcome. RARELY is the fact that the home needs a new roof something that can’t be anticipated at time of offer. Whether or not you allow for a new roof to be part of the asking price, depends on a few things.

It’s pretty darned obvious that the house in the photo above needs a new roof. You shouldn’t need a Home Inspector to tell you that.

BEFORE making an offer on this house, you need to anticipate the cost of a new roof,

so you can prepare your offer with a known and reasonable outcome in mind.


As you can see from the Zoomed In photo above, the cost of the new roof needs to include some pretty hefty repairs. The support for the roof is splitting and the roof is sagging.

Just sticking on some new shingles is NOT the only remedy for this roof.

You can guesstimate the cost of the shingle job by knowing the largest floor footprint from the County Records. It may be a 2,500 sf house in the mls. But the main floor footprint usually determines the outer corners of the roof. Is it 980 or 1,200 or 1,750? Once you have the main floor footprint (unless you can see that there is a larger 2nd floor foot print, in which case you would use that) you can show these two photos along with the sf coverage area to most any roofer and get a rough bid. You can email that info to three roofers and ask for a “ballpark” cost. The roofer needs to see the “the pitch” of the roof to determine cost. A higher pitch will need more shingles. Almost NO pitch may mean a shingle roof replacement is not the recommended “fix”.

Before addressing how the offer may be structured,

let’s look at a 2nd example that might have the same cost,

but a completely different remedy and offer process.


Unless you have the hope of turning your home into A Redroof Inn

a buyer of the home above MAY want to put on a shingle roof,

even though the roof may NEVER need to be replaced.

That roof will probably last longer than the house!

BUT…is that a positive?

Given where this house sits, on a quaint tree-lined street In-City where NO other roofs look like this, it’s possible that this “upgrade” may be seen as a “sore-thumb” and a negative…vs a positive.

For House #1 above, let’s say the roof will cost $20,000 to repair and replace. That’s a bit on the high side, but we have to go with the high estimate because of the deferred maintenance issues and things we can’t see, but can reasonably predict with regard to repairs needed beyond the actual roof shingles.

Now let’s talk about SALE FAIL due to BAD OFFER STRATEGY.

IF the buyer has an extra $20,000 to put on a new roof after purchase, AND deducts that amount from the offer price with the intention of putting on a new roof after purchase, the sale can “Fail Due To Financing”. The buyer MAY in fact be willing to buy the house for $20,000 less, and put a 20% downpayment still having the $20,000 needed for the repairs. BUT how likely is it that the Buyer’s LENDER will lend 80% of the cost to purchase after seeing that roof?

So…back to “Sale Failed Due To Buyer Financing Problems”. Was the cause really the fact that the buyer’s lending failed? Or the roof failed to meet the lender’s standard? Was it the buyer…or the house?

The sale failed because the agents failed to anticipate the lender’s response. There are many ways to resolve this type of issue in a real estate transaction. But ignoring the problem or thinking the seller is going to cough up $20,000 to fix the roof at time of inspection, is not realistic.

If the seller HAD $20,000, he likely would have fixed the roof before it got that bad.

The lender usually won’t let you escrow money for repairs to be done after closing. Sometimes, but not often. The best known remedy is to leave the cost of the roof fix in the price at time of offer and calling for a new roof to be put on prior to closing. Usually you can get a roofer to agree to do that and get paid at closing. BUT if it is a bank-owned property or a short sale, it gets a little tricker. Not impossible. But trickier.

In the 2nd example, the roof is perfectly fine. But you would be surprised how many buyers want to discount for what they don’t like or what they want to change, whether there is something wrong with it or not. Leaving THAT to time of inspection is a SALE FAIL. Sometimes the buyer wants the house because of many things and wants the seller to resolve “the roof issue”. Of course the seller paid a pretty penny for that roof and would be furious. So you have to build the offer around the buyer’s desires without involving the seller in the reasoning.

Buyers and sellers do not always agree on what IS a “defect” or what the seller should be expected to do about it.

Setting up a good “end strategy” at the time the offer is written,

is often the best remedy,

and one that will result in a closed transaction vs a Pending Sale failing.

Buying New Construction

One of the most notable minor difficulties when buying new construction, that is a piece of dirt at time of contract, is staying on top of when it will close.

Often the builder requires that the buyer close within X days of “CO”, Certificate of Occupancy. Basically 5 to 10 days from the house being completed is the norm.

BUT often it is hard to pinpoint that in advance without going over and checking where they are every few days. Can the appraiser and lender get their work done in a short time, if they are not notified that the house is almost done?

new construction

Working on one now where the lender scheduled the appraiser to go out yesterday. I just got back and the floorings aren’t done, the toilet’s not in on the main floor, can’t get up the steps as they are carpeting upstairs and have rolls of padding on the steps. The cement truck was ready to pour the driveway, but it looks like rain is coming any second. So not sure how they are going to call that in the next 30 minutes.

If you are a cash buyer…no problem. But when the buyer is financing the home, it’s a tight squeeze to meet the builder’s deadline when the house isn’t ready for the appraiser at the scheduled time.

A common rule of thumb is to start timing from “drywall” to close, as many of the local government inspections have to be done before the drywall covers the plumbing and electrical components.

The house doesn’t look ready for the appraiser and clearly not for the CO. The original completion estimate was “mid June” and we are still hoping to close by June 24.

Amazing how fast the project usually moves at the end. There were three different teams of workers there today.

The cement guys were there.
The “hard surfaces” team was there doing the wood floors with the tile work complete.
The carpet guys…a different team, were there.

When you see 8 to 10 guys all working on different things at the same time…you will be amazed at how much can be done in a day…if it doesn’t rain. That’s a big IF around here. Looking pretty just about to rain at the moment. But…that’s Seattle for you.

I still think the house will be done by the 24th…done in time for the appraisal to be done and the loan docs to be in escrow so as to close on the 24th? Still anybody’s guess. I’ll take a peek on Saturday to see if closing by the end of next week is looking possible. If the DID pour that driveway after I left today, even though it looks like rain, then there’s a strong chance it will close on time for the furniture deliveries. 🙂

New Construction Tip