It’s Hard Out There for Buyers, Lesson 2: Make Sure You’re Dealing with the “Agent-in-Charge” (It May Not Be Who You Think)

Here’s another quick tale from the trenches as I continue to work with clients at my new real estate firm, this time from the rough-and-tumble market of South King County.  Yup, it’s tough everywhere…

My client identified a home in Kent for purchase.  It had been on the market for 200 days, with a couple of failed contracts in the meantime (one due to “buyer remorse” and one to failed financing) and nary a price drop. The listing showed an Agent and a Co-agent (both from the same office). I promptly reached out to the Agent, who told me they had no offers and none expected.  Within a day or two we submitted our offer at $10k off list.  Having heard nothing in response, I followed up with a  call two days later.  Her voicemail told me she was the managing broker for the office.  Good, I’m dealing with the boss…

The Agent called back and explained that the sellers were having health issues and thus the delay in responding.  I asked about other offers and was assured there were none.  I noted that our offer amount was predicated on us being the only offer, and if another offer appeared to please let us know.  In that event, obviously we would take a different tack in the negotiations.  I also said that we had no problem at all being patient with the sellers given their health issues, assuming they were indeed acting in good faith and negotiating only with us.  The Agent assured me that was the case. Yeah.  She said that the Co-agent was trying to meet with the sellers and they would get back to us in a day or two.  She said the sellers were likely to counter at $4k off list.  Riiiiiight.

The next day, I got a call from the Co-agent.  With “the bad news.” Sellers had received a full-priced offer, so they accepted it. Another “WTF?!?” moment.  Although signed, it had yet to be returned to the buyers, leaving me a tiny bit of room to maneuver.  So I tried to salvage the situation, and the Co-agent at least pretended to be sympathetic.  I called the client and got authority to draft a new offer at $1k OVER list – thus beating the offer in hand – but the sellers had made their decision and had no interest in giving me or my clients the time of day.

When the smoke cleared, and the rage had subsided, I though about the lesson to be learned.  Always go with full list in this market if it’s within shouting distance of fair?  That seems extreme and not consistent with my professional obligations to my client. Recognize that assurances of “good faith” are rendered meaningless the moment a new offer comes in?  Yeah, but that’s a little obvious, this is after all real estate.  🙂  Then it hit me: Know who is really “the agent.”  You know, the person with the seller’s ear who is actually driving the ship. It may be the “Agent” or it may be the “Co-agent,” assume nothing based on title (even if the “Agent” is also the managing broker!).  Listen for clues.  When the Agent says, “Oh, the Co-agent will be meeting with the sellers tomorrow,” immediately hang up and call the Co-agent.  Don’t waste your breath talking to anyone else.  It is a waste of time that will not be helpful going forward.

Another lesson learned. And confirmation that the Quill model strikes the right balance between protecting the client (by keeping an attorney on board and behind the scenes) and getting a deal done (by allowing the Quill agent to take the lead when negotiating a contract).

“Offers to Be Considered on a Future Date”: Is This Really Fair to Buyers?

As I work my way back into the market following the launch of my real estate firm, I am learning just how difficult it is from a buyer’s perspective.  Specifically, I am trying to get a client into a $400-500k home in West Seattle.  It turns out there are only a few thousand other people looking for the exact same thing, and a few dozen homes that fit the description.  OK, I’m making these numbers up, but you get the drift.  It’s tough out there.

Until this week, I had a high degree of respect for sellers and their agents who noted in the listing that the seller would consider all offers on a particular date in the future.  This allows all interested buyers to really put their best foot forward, particularly by pre-inspecting so that the offer is not contingent on the inspection.  Particularly in older neighborhoods like West Seattle, where homes routinely approach or exceed the century mark in age, sellers appreciate knowing that there will be no renegotiation based on the condition of the home.

So on Wednesday afternoon, I met my client at the “target” home where we were awaiting the arrival of our inspector for a pre-inspection.  The seller was to consider offers on Friday morning.  Buyers and an agent were inside, I assumed simply touring the home.  Suddenly, the owner emerged from the house and announced she had just sold the house to the folks who were inside with her.  As the kids say, WTF???

It turns out that the seller had every right to accept this offer, notwithstanding the “offers to be considered” date as stated in the listing.  NWMLS rules specifically allow a selling agent to present an offer directly to the seller long before the stated “deadline.”  So it turns out my anger and frustration at the seller, the listing agent, and the selling agent who pulled the coup were all misplaced.  (I wouldn’t even rule out an apology, now that I know the rules.)

But it begs the question: Is that fair to buyers?  What if my client had completed the pre-inspection?  He would have been out-of-pocket money specifically in reliance on the seller’s and listing agent’s representation in the listing.  And even without that expense, it seems unfair that a stated “deadline” can be wholly circumscribed by one buyer at the expense of all others.  If it were up to me, the rules would be changed. But all I can do is continue working towards providing buyers with an improved home buying process.

The Death of Mortgage Blogs

iStock_000017972256XSmallThere is a buzz going on among fellow mortgage bloggers about how days may be numbered for mortgage blogs. This is as a largely the result of guidance issued by federal regulators late last year specifically on social media. When I first read this guidance, my initial response was “so what? This is pretty much what lenders are supposed to be doing anyhow”… stuff like properly quoting rates, not being misleading to consumers, etc.  It’s also my opinion that this seems to be written in favor of mortgage banks and not mortgage companies. The big banks seem to not want loan originators who have or express their own opinions.

After more thought and discussion with other mortgage bloggers, I can see the real issue is the compliance factor. Many mortgage companies are already stretched with the cost of compliance with just the day to day operations of originating mortgage loans. It’s my understanding that some lenders have made the decision to just not allow their loan officers to have any independent sights or social media sights (like Facebook or Twitter) as this is the easiest route…no extra compliance cost (additional personal hours) and less risk.

Blogs typically have information released freely and quickly. There are times that I have done “live post” when I’m covering an event, such as the Fed testifying before Congress or to illustrate how something like that may impact mortgage rates. I’m not sure it’s feasible for a compliance officer to be able to regulate and approve everything that a loan officer says or does with social media – imagine a person having to approve any comment or update you put on Facebook or Twitter… it’s simply not realistic and it’s no longer “you” being social or in the moment – it’s you-approved by your employer.

The thought of me no longer being able to blog or to no longer have my  blog, The Mortgage Porter, which I began back in 2006 is absolutely depressing. I really enjoy writing and sharing information with my readers about mortgages, including the process of financing a home and various mortgage programs. At times, it’s even been therapeutic by allowing me to vent or “rant”.  Blogging and social media has brought me so many wonderful opportunities and experiences that I would not have had as a non-blogging mortgage originator.

When I began my blog, it was because of a lack of information, or actually because the wrong information was being shared by the media about loan officer licensing. I never dreamed anyone would read it or that people would actually decide they want me to be their loan officer because of the information I freely shared with them – information that they could not find anywhere else!  I use my blog to share information with potential clients – like “what is a letter of explanation” and sometimes, I’ll write a post just to address an answer to a clients question… if they’re asking it, odds are somebody else is searching for that answer too.

I fully agree that content on mortgage blogs must be compliant – however doing away with mortgage blogs is a travesty.

Less information and less transparency is never good for the consumer.

Good thing I have a back up career! 

Stay tuned.

Seattle RE BarCamp will be here soon!

seattle

This year Seattle RE BarCamp is actually going to be south of Seattle at the Center Point Conference Center in Kent (south of Southcenter Mall and north of the Showare Stadium)… so technically, we’re calling this “Greater Seattle reBarCamp”.  Regardless, this event will be taking place on March 13, 2014.

This event is an “un-conference” where topics (which tend to be about social media or related to real estate) are decided by the attendees the morning of the event. You literally submit topics on subjects you would like to learn more about (such as word press, for example) or perhaps you have a great idea that you would like to brain storm with a group of like minded people… the possibilities are endless. The only thing really not allowed are presentations or sales pitches.

This years event is going to be cozier than our last Seattle RE BarCamp (which was humongous)… so we are charging $10 for tickets in advance – which will include a boxed lunch from Alki Bakery.  If you decide that you’d rather show up the day of, without a ticket, the cost will be $20 assuming we’re not sold out (as I mentioned, space is limited).

Jay Thompson will be kicking off the event with a quick “rules of the road” to refresh attendees on how to get the most of your REBC experience. Drip coffee and some pastries are being provided by Alki Bakery (first come/first serve).

Want to join us?  Learn more here… and buy your tickets!! 🙂

An Open Letter to Glenn Kelman, Redfin CEO, on the “Discount Real Estate Broker” Model

Post Updated 5/20/15:

P.S. Glenn, more than a year has gone by. I’ve busted my you-know-what trying to build a better Redfin-style mousetrap. And a couple of months ago, I said to myself: Wait a sec. I don’t think that sort of mousetrap is EVER going to work. I think technology and modern business practices have rendered that old type of mousetrap obsolete. The world is just waiting for somebody to invent something different entirely. Real estate isn’t immune to evolution. It just takes real change and a new way of doing things before it evolves.

So yesterday, I announced my imminent withdrawal from the NWMLS. A move made possible, in part Glenn, by Redfin’s devotion to solid data quality. Via FSBO platforms, I will be able to list homes for sale on Redfin – exactly where most buyers are looking in Seattle – without having to list on the NWMLS. And thus without having to pay a cooperating broker commission in the first place. But unlike Redfin and every other real estate firm – whether traditional or alternative – I won’t be on the NWMLS.

So this is where we part company – for now! 🙂  I suspect Redfin still has room to evolve…

-CB

The original letter to Glenn dated February 18, 2014:

Continue reading

How much for stainless appliances?

Stainless has become a preferred color option. Most people who say “stainless” are not always talking about expensive Stainless STEEL. As long as the color is the same, most people don’t care. Easy way to tell if it is Stainless “Look” is to carry a fridge magnet when you are shopping for appliances or houses and if the magnet doesn’t stick to the front door then stainless is the color and not the material used.

For this post I am pricing out some basic upgrades for a client. Earlier today I did the carpet cost and now am moving to the appliances. We’re looking for relatively low prices for standard sized everyday appliances. The type you might use if you were selling a property or upgrading a modestly priced home. A quick change in the look from white or black and basic clean and new appliances. Nothing too fancy.

REFRIGERATOR

I would say $1,000 or less including tax and delivery. I found a few good ones for about $750 which are sometimes $685 or so on sale. There are many in the $800 to $900 range. The property has a standard opening from the 1970s, so 18 cubic feet or so at 65″ high and 30″ wide will probably fit better than a 21 or 22 cubic foot fridge that requires more height between the floor and the upper cabinet of about 70″. For the family I’m doing this for, the $750 fridge on sale for $685 shown in the picture below should be fine. This would work for any full sized 30″ wide opening. The opening is usually 32″ to 34″ and the 30″ has a little room on both sides.

RANGE

In this case we will be using a standard 30″ wide electric range in mostly stainless and partly black. I will post all the photos together at the bottom so the client can see how they look side by side. For some reason the power cord is often sold separately and the total cost should come in at around $650. The lower priced ones are black or white and we want to stay with a full stainless steel or stainless look result in the kitchen.

DISHWASHER

All of the appliances are white and we are replacing with stainless, but worth mentioning that the current appliances are all in working order and can probably be sold on Craigslist for a few hundred dollars for all of them or donated to charity for a write off. Most people just let the company bringing the new appliances haul them away. But I do have a few resourceful clients that sell everything, like the young man who actually sold his old carpet that he tore out. 🙂 I haven’t had to replace a dishwasher when selling a home…well pretty much ever. So I’m pricing these off of Home Depot. In this case I used a $600 Dishwasher in the photo. You can get a cheaper one in the same black and silver version as the range…but this all stainless dishwasher is so much better looking and impressive in person for a little more cost. I recommend you not skimp on this appliance and not get the one with some black plastic on it. You need some black on the range for the knobs and digital display. But not on the dishwasher. Speaking of which the fridge can have black sides and sometimes better to have that as fridge magnets will adhere to the sides usually if they are black. Since the range is mixed silver and black, that usually makes a lot of sense.

MICROWAVE

I’m showing a picture of a $260 over the range microwave. You can find them a little cheaper or pricier, but we’re just trying to get a total price to move out the white appliances and bring in Stainless Steel or Stainless Look appliances. I thought this one was as showy as the dishwasher, and when the nicer looking one is only $60 more…why skimp? USED TO BE you would just put a range hood there, and nothing wrong with that. BUT the last time I tried to do that with stainless vs white or black…it cost an arm and a leg! Might as well go with a Microwave that has a vent fan. You can look at both, but I wouldn’t pay the same for a plain vent as I would for a Microwave. YMMV

So we’re looking at $700 to $800 for the Fridge. $650 or so for the Range including tax and power cord, $600 or so for the dishwasher and another $250 for a microwave or $2,200 to $2,500 total. Roughly the same price as the carpet in the other post. So let’s say we are at $5,000 for all new appliances in the kitchen and all new carpet in the house. Not bad.

First pictures of the kitchen appliances, then I’ll move to washer and dryer which can be simple full sized white top load washer and front load dryer. Note that I just cut and paste these pictures together. I didn’t put model numbers or brand names as you want to be sure they are matching color. Usually best to stick to one brand name for that reason or at least see them together in a store. If you buy the full 4 piece appliance package in the same store you can usually get a better deal of about 20% off.

appliances

I’m just going to throw in the washer and dryer at $1,000 for both. People have been getting carried away with washers and dryers costing $3,000 or more for both. But for the purpose of this modestly priced home and knowing the clients as I do, they actually can probably do all of this including the washer and dryer, kitchen appliances and all new carpet for $5,000…$6,000 tops.

Carpet Credits do not help sell your home

I think most people know that offering a carpet credit does not work…except that many sellers and real estate agents still fall back on the language “$5,000 allowance for carpet” as a lazy way out.

1) It doesn’t work because once people see filthy, pet stained carpet, they don’t buy the house period unless it is a super discount of well over the cost of replacing carpet.

2) It doesn’t work because the seller’s idea of what carpet will cost and the buyer’s idea of what carpet will cost is not nearly the same.

3) It doesn’t work because many areas where there is carpet in the home will not be replaced with carpet by the new owner. If there is nice fresh clean carpet there, they will buy the house and change some areas to wood later. But if there is dirty filthy carpet there then they have to come up with the money right away to put wood, and that is usually not practical for many people buying a home.

Back in the 90’s through 2004 or so the answer was easy. You went to Home Depot and said “Realtor Beige” and you were done. But Realtor beige went out of style. Realtor Beige was replaced with caramel colored or sage frieze, but that fad only lasted about 18 months on the sage and never worked for higher end homes.

If you have filthy carpet then you have to replace it with clean carpet. You don’t want to spend a ton of money on that carpet for a lot of reasons, not the least of which is that the buyer may cut it out and throw it away in short order in some, but not all, of the places where you put it. You need a nice clean blank canvass that someone can live with for two to five years. If you have a higher end home costing $700,000 or more…stop reading now. This is more for the standard $450,000 or less townhome or split-entry or tri-level. Once you get to a full and newer two story home costing $650,000 plus…different answer. This answer is also good for condos, apartments and rental properties.

Below is a picture of the carpet. I might not choose this color, which is a fleck blend, but this carpet is so low in cost that it only comes in one color. 🙂 You want to minimize cost and maximize clean and odor free and utilitarian type serviceable for most people…i.e. neutral as to color but not too white-light.

carpet

Let’s jump straight to cost since cost is the reason why I use this carpet over and over again. It is a Home Depot product called…uh oh. They don’t have it anymore. 🙂 I am writing this post for a client so I will proceed with a suitable replacement carpet and update the costing. The carpet I was using was only 55 cents per square foot and then it went up to 62 cents a square foot. But the option is not currently available and the lowest priced replacement is 90 cents a square foot. Let’s allow $1.00 a square foot for a “twist” carpet. There are several options at Home Depot between $.90 and $.98 cents a sf. The benefit of a twist carpet is it has a thicker look without added cost and the padding is not meant to be bouncy thick. So you can use cheap padding at about $4.50 a square yard.

Rough cost for a whole house of 1,200 to 1,500 sf is $2,500 all things included IF you do it the way I am suggesting below. Of course not all of the floors in the house are carpet. The bathrooms and kitchens are not carpet. The last 1,750 sf house had 1,460 sf of carpet. That is the one in the picture. The one I’m working numbers for up right now is a 1,500 sf house so I’m estimating 1,200 sf of carpet. The total price should come out the same at $2,000 to $2,500 as the carpet price went up but the house is smaller.

I haven’t found anyone that can beat Home Depot prices and I’ve shopped around. Once I found someone who could match the price with a higher quality carpet, but higher quality is not always better as many of those colors have gone out of style…as in too light or too white. You are better off with current color cheaper carpet.

Get new padding!!! Often we are trying to freshen up not only look but smell. Even without pets you have “dusty old house smell” or cooking odors stuck in the carpet and padding. Not worth the savings usually to not get new padding.

TO GET LOWEST COST pull the old carpet and padding out yourself. Leave the tack boards (wood strips around the room edge with nails sticking up.

1,200 sf of carpet at 90 cents to a dollar a sf is $1,200. Padding should be about half that cost, so $1,800 for carpet and padding. Usually Home Depot has a whole house installation special for about $100. I don’t know how they do it, but they do. That special may not always be running, but let’s assume you have some flexibility in timing. STEPS are additional! so if it is a one level condo or apartment or a 1 story home you can still bring it in for $2,000 including installation and tax. Steps cost about $8 each for a simple box step. The properties I have done are either a 14 step tri-level or a one flight up 2 story. But a lot of steps like an extra full flight up or down you have to add $8 per step or thereabouts.

In the job I am costing and the one in the picture there are about 14 steps for a total extra cost of $110.

So “Hall Up, Master bedroom and closet, 2 additional bedrooms and closets, additional up hall closet, family room, and stairs”. $1,200 carpet, $600 padding, $110 for steps, $100 for installation is $2,010 which is exactly what it cost for the house in the picture including the tax with the cheaper carpet. So plan on $2,500 for a little wiggle room.

If you are a seller, spending $2,500 for new carpet is MORE EFFECTIVE than giving a “$5,000 carpet allowance”. Your home will sell faster and for more money and cost you half as much or less. A buyer thinks carpet will cost at least $10,000, so they won’t like your $5,000 offer for new carpet. Don’t be lazy. Spend the $2,500 on new carpet vs a “sorry my carpet is dirty credit”.

Selling a Kirkland Condo – Staging and Photos

condo windows

Whether I am helping a client sell a house or a condo, my thought process is generally the same.

Start at “buyer profiling”. Who is likely to buy this property? Then make a list of the top 3 to 5 reasons why THAT person, whom you have targeted as the likely buyer, will choose THIS property over others that are for sale.

The first part, “buyer profiling” is an old method I learned when I was a Certified Corporate Property Specialist for Coldwell Banker back in the 90s selling vacant properties where the owner was relocated for job reasons. There is less of an emotional pull from the owner, and the process is more of a business effort to sell, with little to no accommodations for the seller’s emotional “triggers”.

For this condo, which was sold about a month ago, I determined the individual would likely be a single professional person…or at least that would be the person who might pay the highest price for it. I also determined that the person (or possibly couple) would likely be younger vs older because there were a lot of steps up to the front door. Not likely an “empty nester”, as might be the case for a ground floor unit with no steps.

Next I listed the reasons why someone would choose THIS condo over the other 65 or so condos for sale in Kirkland at the time priced at $250,000 or less.

1) View of Lake Washington (only 6 of 65 have a view of Lake Washington)
2) 1,000+ square feet (only 11 of 65 are over 1,000 sf)
3) Super high ceilings on the inside interior walls of the main living space
4) Clerestory Windows at the top of the high ceilings
5) Travertine and “wood” floors vs carpet

It is very important that you match your staging and photos to the main selling features of the property. NICE is not good enough. This particular condo is a great example of that because the owner hired a professional stager and I had the photographer take photos…but…

I just wasn’t happy. I didn’t feel the property would sell at its highest possible price based on that in person and online presentation. It was nice, the photos were “good” and better than most if not ALL other properties for sale. But they just didn’t tell the STORY of THIS condo well.

condo before after 1

condo before after table

condo view from sink

Kirkland Condofull set of before photos and the full set of after photos click on those links from the photographers site at HD Estates.

I use Brooke at HD Estates for my listing photos, and it was funny that when she first came she knew immediately that I had not staged the condo. She had done several of my properties this year, all of which I had staged myself, and she just knew. The tired old floor lamp with the fern…the granny orange shaw vs the red throw…the weeds on the table vs the art deco glass bowl…even in the bedrooms and bathrooms she just knew something wasn’t quite right. 🙂

I’m glad I went to the extra time, trouble and cost. The owner paid $92,700 for this condo just two years ago and we were able to sell it in less than a week with five offers at $233,000 with no home inspection contingency and no must appraise clause.

Might that same result have happened if I did not re-stage it myself and have the photos redone? I don’t really know for sure. What do you think?

Lower Conforming Loan Limits

Publication2 (1)

Back on December 12th, Rhonda posted that FHA etc Loan Limits would be coming down to the same level as previously lowered conventional rates. This came up in a recent discussion I was having with a client and thought the news, which I believe became effective 1/1/2014, should be highlighted a little better, as this is very important news for some people.

Not surprising to us inside the industry. But definitely important to anyone thinking about buying with minimum down and even for those who were not aware of the previously lowered limit for conventional financing.

Disclosure: I am not a lender. Just bringing this news to the forefront now that these limits have become effective so that more people heading out to buy a house in 2014 are aware of the changes.

I also think it is interesting to compare our loan limits to the much lower limits around the State of Washington.

Seattle listed as 2nd hottest housing market for 2014

The new Zillow predictions for the 2014 housing market show Seattle as the second hottest market in 2014.

They also predict only 3% increase in prices overall, so “hottest” could be kind of cool. 🙂

Personally I think it all depends on how many sellers come out to play this year. You will have your same average turnover for must sell reasons. Relocations as example. But with most sources predicting a slower increase in home prices and possibly a slight turn down, perhaps those sellers waiting for a better housing market will succumb to the fear that it might not get any better than this.

No one knows how “hot” the market will be, but the more sellers there are the “better” it will be whether there is growth or not. Zillow is also predicting rates will get to 5% by year end, but that looks more like someone trying to create a sense of urgency whereZC there really isn’t one.