Author Archives: ARDELL

About ARDELL

ARDELL is a Managing Broker with Better Properties METRO King County. ARDELL was named one of the Most Influential Real Estate Bloggers in the U.S. by Inman News and has 34+ years experience in Real Estate up and down both Coasts, representing both buyers and sellers of homes in Seattle and on The Eastside. email: ardelld@gmail.com cell: 206-910-1000

The "Goldilocks" Principle

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[photopress:images_1.jpg,full,alignright] I know that applying the “Goldilocks Principle” puts me in the category of “hopeless utopian”, but hey, for one solid year, until December 31, 2006, I am going to stay in this thought mode.

I’ve tried various commissions with various people, and for the most part disregarded anything I’ve ever known, and everything that anyone has to say on the subject. I say “for the most part” because you really can’t erase your brain. But you can test and try varied options, just like Goldilocks rested herself on the three beds before deciding which one was “just right”.

I find that all of the rhetoric available on the topic is pretty much bunk. Reality is, it depends on the sale price/purchase price. I plan to do a “year in review” on 1/1/07, my blogging anniversary, to post my experiences and conclusions. But since this topic keeps coming up in the comments of various articles with everyone spouting out percentages, or flat fees, or hourly fees, etc., I thought I’d at least post that the results of my experiments are absolutely hinged to price of property.

The other reality is that my “awakening” with regard to commission issues started three months BEFORE I started blogging, and being in the Blogosphere really isn’t what turned my head with regard to commission issues. What turned my head was when I, myself, purchased a house for $850,000 with $59,500 of commission issues plus $22,000 of other credit issues thrown into the mix. Trust me. There is no question in my mind that I, the buyer, am the one paying for that whole $81,500 in my mortgage payment. I’m not complaining. I structured everything that way for a reason. But overnight I realized that the buyer pays the commission…no question.

I also realized that it didn’t bother me on the 10-12 properties I purchased before this one. So price of house does matter. The experience revolutionized my whole thought process with regard to real estate commissions. Nothing causes you to “get real” more than putting yourself into the equation, and experiencing it personally, from the inside out. So for now, I’m trusting my own judgment and using “The Goldilocks Principle” when determining the fairness of commissions. A full year of experiments, and then I’ll come out the other side and see where I’ve been and which feel “just right”, which were too high and which were just not enough.

For now…price matters is the key, and almost none of the discussions anywhere, focus on different fees for different home prices. So basically, they are ALL wrong.

DOJ vs. NAR

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[photopress:images.jpg,full,alignright] The big news today, according to Inman, is that the Judge has ruled against the National Association of Realtor’s motion to dismiss the suit against them by the Department of Justice.

I don’t think this is a surprise. In fact, had the Judge ruled otherwise, it would have been a great disappointment. A lot of time and money has already been spent by both sides, and much more money will be spent before all is said and done. Had the motion been dismissed, all of those public funds spent, would have been for naught. And that can’t be a good thing.

My only concern about the whole thing, is that the DOJ doesn’t know enough about what they don’t know, to achieve the best results for the public at large. Lots of fishing expeditions, but what will they achieve, when all is said and done. It clearly would be best for all concerned if NAR would just “get real”. But that is not likely to happen. So the chips will fall where they may, in the end. My worst fear is that it will end up like the AT&T breakup. My worst fear will likely be the end result, the way things are going so far.

Green Lake = Cheap Date

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[photopress:date.jpg,thumb,alignright]A young couple on a “cheap date” wandered into my Open House yesterday. I can certainly empathize with guys who need to find a way to entertain women on a date, without spending a lot of money. But when the cheap date escalates to cheap ways to look like a bigger man by trying to cut someone else down to size, I have to draw the line.

Any woman who has ever been on a “first date”, knows when a guy is sending back the wine just to look important. I liked the time the waiter said, “You are quite right sir, that is a bad wine. Maybe if you tried one that costs more than $5.99 a bottle, you would find one more to your liking.” Some guys aren’t satisfied with the cheap date scenario, unless they can find a way to go on a cheap date, and look like a big important guy, all at the same time. So what does sending back the wine, and an Open House “date”, have to do with one another?

It starts out innocently enough. The guy follows one of the suggestions for a cheap date noted in the links above, and ends up “walking around Green Lake”. It’s a great first date scenario. It’s free. You can test out if the girl has the stamina to make it around the 2.8 miles a few times, without huffing and puffing or whining that her feet hurt. But after three times around the lake, it gets a little boring. He’s out of ideas on what to talk about. He’s decided he likes this girl, and wants to impress her, but how do you impress a girl when you have no money to stop for dinner at Duke’s?

More than once, both he and she have small talked about how much they like Green Lake, to fill the dead spaces in conversation. So he gets this brilliant idea to pretend he can afford to buy a house nearby. What better way to “pretend” to spend a lot of money, without having to spend a dime? He passes that OPEN SUNDAY sandwich board on the third time around and says, “Do you mind checking out this house with me? I’ve been thinking about buying a house here. Oh, she’s impressed! Mr. couldn’t buy her a snack at World Wraps, is all of a sudden thinking about buying a house, within walking distance to Green Lake. She doesn’t believe a word of it, but she’s bored by this time too, and says sure, let’s go to ALL of the Open Houses.

The big sign out front says, “Open 1-4” and it is only 12:15. They see the door open, as I’m busily doing some last minute sprucing up. Opening the windows and doors to air out the vacant house, making sure there are no dead spiders on the carpet, etc… He pops his head in and says, “I know we are early, but do you mind if we take a peek around?” I can pretty much tell this is a cheap date scenario, and have no trouble playing along, until the guy starts his I’m smarter than you routine, to impress the girl.

I go through the house to turn all of the lights on, and check out the areas I haven’t been to yet. I’m listening to their conversation, and can tell they are not really people looking to buy a house, and in fact hardly know each other. But like I said, that’s fine with me, I have lots to do before one o’clock. They have no “real” questions about square footage of lot or house. No questions about how old the roof or hot water tank are. None of the obvious, we are checking out this house to maybe buy it questions. Everything’s going fine and I’m even playing along with him by answering a few of his questions. I tell him he’s right about a few things, to help him impress the girl. Until he starts hitting me with off the wall questions, one after the other in a non ending stream, to make sure he can impress his girlfriend without being “found out”.

Where does this wire go? I tried to head him off at the pass and show him the brand new electrical box showing that all of the wiring had been up dated, yada yada yada. But he was on a roll of obscure nonsensical questions. “Is this a hot water pipe or a cold water pipe?” Where does this vent go? Why does this pipe turn left instead of right? What year did they install this door? It looks newer. Since the house was built in 1905, and everything was changed at some time or another, I’m quickly figuring out this this could go on all day.

In between his onslaught of off the wall questions, he is turning to the girl and saying, “Now this pipe is a really good pipe, see you can tell by this blah, blah. She’s impressed. She’s so impressed her eyes are glazing over, and she wants to get out of that basement so badly, she’s almost ready to cough up the thirty bucks to go to Duke’s. When the questions just would not stop and I had to get back to the business at hand, I tried to gracefully break away, but no, he had to play the “send back the wine” game with me.

I almost feel badly about spinning him around three times, and making him look like the fool that he was, by the end of “the show”. But some guys just don’t know when to quit while they’re ahead 🙂

Where are those bargains?

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[photopress:kit.jpg,thumb,alignright]In the last six months, two of my clients purchased homes that were real bargains in a hot market.  That was earlier in the year of course, when the market was stronger than it is now in the last quarter.

To me a bargain is a house where I can be confident that if the new owner calls me to sell the place in a short period of time, I can resell it at a higher price, regardless of market conditions.

I find that my definition of bargain is not a one size fits all definition.  Often when someone tells me they got a real bargain on a house, I have to zip my lip (no easy feat for me).  Their definition of a bargain is something that sold for way less than other homes in the neighborhood, you know, the bargain that will always be a bargain, both when they buy it AND when they sell it.  That’s not a bargain to me, that’s the bottom of the barrel choice that will always be cheaper in any market, and will go down the furthest in a tough market and up the smallest percentage in a good market.

While everyone wants a real bargain and everyone wants some assurances that if the bubble bursts they won’t lose money, I find that most people will not buy a true bargain.  Wanting anything you buy to go up in value always and indefinitely, is not realistic.  Often agents and flippers end up with the houses with the most profit potential, because people who are buying homes to live in them take a pass on the best values.  That’s what makes them bargains, most people won’t buy them.

Take a good hard look at the photo above.  Now that’s a real bargain!  I look at that and foam at the mouth.  A 72 hour do it yourself (mostly) makeover would improve the price overnight!…well, over two nights to be more accurate.  A weekend project.  Let’s remake just what we can see in that photo together.  Let’s make this a real “how to” demonstration.

There are three things there that I would need to hire someone to do.  By quickly defining which things I need someone to come and do, and scheduling that work before I begin, they can be finished by the time I am finished the do it yourself part.  It needs new flooring (whether it is in good shape or not…it has to go!)  It needs a six panel white door over on the right there and it needs a new light fixture.  I can’t lay a floor or hang a door or switch out a light fixture.  Maybe I could do that last one, but I prefer that owners not touch wiring if they don’t really know how to do that well.

1)  The first job is simply going out to buy the new floor, purchase it at the installed price and schedule a date and time for the install.  In this place the floor is so busy and awful, just a new one piece floor or lowest cost more neutral alternative is sufficent.  The change in appearance will be dramtic at a low cost.  Instant increase in potential sale price of home.

2) YOU go out and buy a light fixture and six panel door.  This is where people make their biggest mistake.  They hire a handyman at the lowest possible price, and then pay him to go to the store!  $25.00 an hour is a great price to get someone to change out a light fixture or hang a door.  But it is too high a price to pay someone to get stuck in traffic on the way to Home Depot, Lowes or Fred Mayer, or all three looking for just the right light fixture.  Buy the two items and anything needed to install them, like new hinges and door knob, and have them ready and waiting for the handyman you hire for the switchout of the two items.

3) Now for your part, which you can do while you are waiting for the floor install appointment and while the handyman is doing his two jobs.  Always work with the handyman, doing other things.  He’ll be more productive if you are taking down that wall paper while he is changing out the light fixture and hanging the door.  Just is…don’t ask why 🙂

Your part is to wet down that wall paper really well with wall paper stripping solution BEFORE you start peeling it, so you don’t damage the drywall.  A lot of people start gouging with scrapers and ripping dry strips that pull at the drywall, without wetting it down well.  Stripping rule is the same as hanging rule.  Wet three strips well, one at a time.  When you are done the third, go back to the first and take it off, wet the fourth then go back to the second, etc…  (My next door neighbor when I was a kid was Mr. Vitale…the wallpaper hanger.)  If you are lucky, that is “strippable paper” and the wall behind it was painted several times with semi gloss or “sized” before the paper was hung, and the wall will be ready to paint when you are done.  Wash off all of that glue before you start painting!  You don’t want a muddy paint job because some of the paint is mixed with old wallpaper glue.

Now let’s look hard at that photo one more time.  Doorway on left has no wood, just wall paper, so we’re done with that.  Back door is already white, but with a thin dark wood trim like the baseboard.  OK, let’s paint the back door trim only (not door), the base trim around the room and the door trim around the brown door on the right.  What color?  The same color as the back door and new interior six panel door, which is white. The new light fixture is hung and it’s tight to the ceiling now, so you don’t HAVE TO put your table exactly under it like you do with a hanging light.

[photopress:new.jpg,thumb,alignright]You have now transformed the 80s look into a “bright, light and airy” updated and clean look…all in 72 hours!  And if you call me and say, we want to move, I can sell the house for more than you just paid for it. 

Don’t walk away from the house that looks like the photo at the top.  You’ll pay at least $10,000 more for a house where the owner put in 72 hours worth of work and a few quick work projects.  Buy the true bargain.  Good location.  Good floorplan.  Ugly floor, ugly wallpaper and dark brown trim.

Buy the really good, well maintained, but really UGLY house.  It’s the bargain of the marketplace in any market.  Simple definition of this type of house is a “cosmetic” fixer. 

Buyer Agent Commission

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[photopress:int_auction.jpg,thumb,alignright]I was reading Greg’s newest article on Buyer Agent Commissions and thought it might add more information to both his readers and ours, to run a “Point Counter Point” kind of discussion. So I have his article up side by side and will touch on some of the points where I either disagree with Greg, or have something to add.

Greg: “Want to foment a revolution in residential real estate?…(buyers just say) these five simple words: ‘How much do you charge?’…Historically, buyers have not understood that they, too, pay for representation”.

Greg, while the concept is indeed “revolutionary” in one sense, I find that most consumers would like we in the industry, to lead the revolution and win that battle for them, rather than being involved in the process of that change in the industry. Of course here in the Seattle area we have Redfin leading the charge, by revealing that there is a Buyer Agent Fee.

Sometimes Greg and I shake our heads at the shenanigans of the industry that pretend there really is no Buyer Agent Fee. Buy how can Greg expect the buyer consumers to lead this needed change in the industry, when most buyers NEVER even see the fee? Does anyone know a public search site that shows the Buyer Agent fee to the consumer? Does anyone’s mls system print the Buyer Agent Fee on the client version of the property printout? Has anyone seen the Buyer Agent fee show on the Buyer’s Closing Statement when the transaction closes?

How is a buyer supposed to even verify that the agreed upon amount, is what the buyer agent in the end collected? The commission paid to both the Seller’s Agent AND the Buyer’s Agent, only shows on the seller’s closing statement and NOT on the buyer’s closing statement. “Oh, yeah…I charged you ten bucks . You want to SEE it? Oh, sorry, that’s a seller privacy issue. You can’t see the actual fee charged. Just trust me on that ”

I’m not going to go into the “chicken or the egg” debate agents like to play with regard to who “actually” pays the commission, because it truely is purely subtrefuge. I often wonder how they’ve gotten away with it for all of these years, but then we really do know how they’ve gotten away with it for all of these years, don’t we? Because buyers really like the idea that it’s free and don’t want to sign an agreement to the lower amount, because they really don’t want to sign an agreement with an agent at all…even if it does save them money. They want the lower amount with no strings attached. Not saying they are wrong, and I actually honor that. But let’s not pretend this isn’t a two way street.

I don’t like Greg’s answer either, because he makes it looks like the buyer pays the seller’s agent fee too, and that’s just a pendulum swing to the subtrefuge, which doesn’t work either. Seller pays his agent and buyer pays his agent, is the only rational answer, regardless, so each knows the cost for their side and negotiates their side and sees their side at the end.

Greg says: “We baby buyers, (by) telling them tender, loving lies: ‘Buyer representations is free.’ ‘I’m paid by the seller.’ ‘My services cost you nothing.'” Truth is, buyers really do like these lies up to a point. They really do like to believe that is is free and the seller is paying it. Buyers like to “receive money from the agent” like the Redfin cashback. It’s a whole lot more fun to believe that they are “getting back” $20,000 than to understand that they are paying $10,000. They are not really getting back anything, they are financing their cash credit, if they take it in cash or cash credits. To truly save something, they have to negotiate a sale price with the seller and AFTER the fact, reduce the purchase price by the negotiated buyer agent fee difference. Otherwise they are including the full fee and they are paying it with interest for 30 years! They are borrowing it from the lender, not “saving” it.

Greg says: “If you’re buying a new build, the builder may be paying “your” agent a huge commission. You should negotiate to make sure that you receive any funds over a reasonable rate”.

Well, of course, it does NOT only apply to new build. Here’s my comment on new build though. I just got an email while I was writing this that said “$5,000 bonus on last 5 units!” I deleted the email after mentally translating it to say, “We’ll pay you an extra $5,000 if you will help us get rid of the five last dogs that no one seems to want.”

And last but not least, Greg says: “…you will not get to a more reasonable buyer’s agent commission without mastring those five little words: “How much do you charge?” (That question seller’s have known to ask forever because sellers understand that they are hiring a Realtor and it isn’t free – paraphrased).

But Greg does not give any advice regarding what to respond when the agent replies: “What do I charge? Why nothing! It’s Free! The Seller pays it! Greg, if you want them to ask the question, you have have to give them a little more advice than simply asking the question that will initiate the response of free, that we both know many will get. Let’s have a follow up piece titled, “What do you say to a buyer agent who tells you his services are FREE?”

A tribute to one who tried

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[photopress:forlorn.jpg,thumb,alignright]I happened upon this story by accident.  It is one of the very best stories I have ever seen about a “former realtor” and his experience.  We hear from agents all the time…the ones who stayed in the business.  We hear that 80% leave and it’s a revolving door of new agents year after year. 

But we rarely hear from those who left the business.

Here is a heart wrenching, well written, slice of life piece that will tear you up.  It touched me deeply.  Hope you enjoy reading it.

The Day After

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[photopress:Ardell_attica.jpg,thumb,alignright]Choosing some lofty goals. You don’t climb a mountain, simply because “it is there”. You climb a mountain to get the strength of conviction needed to move mountains “The Day After”.

Taking the necessary steps to make changes that benefit both consumers and the industry at large, so others have a working model to follow, is my lofty goal. Telling everyone how I really feel is not about telling everyone how I feel. It’s about targeting some of the ways I can improve the system, one step at a time.

Climbing a mountain (See Quote #19) is of no use whatsoever, if you don’t do something differently the day after, and the day after that, and the day after that. When you run out of steam, or feel like you’ve hit a brick wall, or simply lose the courage to proceed…you find another mountain to climb and start the process again and again. C’est la vie for those who choose for it to be so…or not.

1) Every buyer should know the cash amount they need to bring to closing before they make an offer to purchase and not “after the loan docs come in”. We can change that in 5 seconds. I am changing that today.

2) There should be a training class for agents, that is actually a training class for agents. I need 10 agents to volunteer as guinea pigs for the class, so I can structure the curriculum. I’m hoping Seattle Eric will be one of the ten to volunteer, but he is the only “new agent, used to be investor”, that will be permitted in the class of 10, for “balance” purposes. Eric, agents should never be caricatures…too many are.

3) I decided to run for Club President of my Toastmaster’s International Club at next election in 8-10 weeks.

4) I’m giving my second speech on “Three Simple Steps to Effectively Managing Your Life” tomorrow night, and will continue to give that same speech, until I perfect the handouts to the point where everyone in the room “gets it”.

I’d like to have eight “lofty” goals, and add one every time I accomplish one. So if anyone out there has any suggestions for Changing the World one step at a time, I’ll consider picking the next 4 from your suggestions.

I need 4 more by Monday, so your thoughts appreciated.

The 2006 101 Blog Post Challenge Match

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[photopress:boxer.jpg,full,alignright]Gentlemen, Place Your Bets!

Responding to the Sellsius Challenge, at 12:01 a.m Tuesday 9/26/2006, Greg Swann and I will commence the Cool Hand Luke Style test of completeing 101 Blog Posts in a 24 hour period. Kevin over at In the Trenches is monitoring the betting odds via bets placed via Inkling.

The Challenge Match emanated from Sellsius’ attempt to post 100 Blog Posts in one day, with two writers. Their efforts produced 50 great Blog Posts, and the resultant challenge taken up by Greg and I, will be followed closely by Sellsius and The Property Monger who added fuel to the fire by dubbing the match A Battle of the SEXES

Greg seems undaunted by the task at hand, claiming There is NO WAY he won’t finish. I, on the other hand am wondering if I’ve bit off more than I can chew.

CJ over at NELA and a host of other specators are awaiting the stroke of midnight, for the Blogathon to begin. So grab your popcorn or place your bets or tune in tomorrow morning to see which of us fell asleep! 101 in one day…what the heck were we thinking!?

The Last Word

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[photopress:Sichelman.jpg,full,alignright]”Lew Sichelman reports on the national housing scene from his Washington, D.C. base. A past President and Director of the National Association of Real Estate Editors, he has been the recipient of numerous journalism awards, and his weekly column on housing is syndicated in more than 150 newspapers throughout the U.S.”

Every once in a while, Lew includes some quotes from agents that end up in articles across the nation. I get calls from Seattle or Washington, or L.A. from people I know, thinking I was interviewed by that particular newspaper. So I show an explanation above as to why this article regarding commission issues, might appear in many papers around the Country.

Two paragraphs and the last word…thanks, Lew. Lew’s a good guy. I’ve never had problems with his quoting me in the past. My married name was a lot easier for him to spell. Lew, you shouldn’t separate the Della from the Loggia, or people may think I’m the illigitimate daughter of Robert 🙂

This was the last line of the quote before it was cut to fit the article: “It’s a business, look at the money and stop crying about percentages is what I say.”