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

Negotiating the Buyer Agent Fee

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[photopress:swan.gif,thumb,alignright] Greg Swann over at Bloodhoundblog wrote a lengthy piece on his feelings with regard to changes that are needed in the real estate industry.

I happen to be writing an offer as I write this, actually waiting for a buyer client to come over and sign it, who was the first client with whom I negotiated the fee at first contact over coffee. That is not my normal scenario of negotiating the buyer agent fee, as I generally like to see at least three homes, of my choice, with the buyer before having the discussion regarding commissions.

I like to see how they look at property, what types of things bother them, how many and what kinds of questions they ask, etc… Just as I need to see a house before I know what I would charge the seller, I have to have some idea of the level of difficulty involved with the buyer attaining his objectives, before I can establish a reliable fee base.

So while I do not totally agree with Greg that a buyer should, or even can, negotiate a fee before seeing any homes, his article is well worth reading. I plan to read it again more thoroughly after this contract is signed 🙂

I will mention, that this particular client and I renogotiated the intital fee we came up with over coffee. So breaking my rule of not looking at houses first, was not a good thing. Having some experience with the agent and vice versa, is the best way to establish a fee that will work for all involved.

EAL vs. ESL

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[photopress:it.jpg,thumb,alignright] This comes under the category of “You learn something new every day.” Over the years I have found that I generally have a much higher percentage of clients who moved here from other countries, or whose parents moved here from other countries, than some of my peers. I was at a client’s house over the weekend (helping to strip wallpaper, which I am very good at doing) and everyone at the house was speaking both English and Romanian, except me of course 🙂

One of the guests taught me a new term, that was more politically correct, and I was at once converted! I asked if ESL, English Second Language, was an appropriate term or offensive in any way. My sister had taught me ESL, since she has a fairly high percentage of students that are ESL the same as I have a fairly high percentage in my field. Prior to that I was using “The English is not my first language crowd”, so ESL was definitely an upgrade.

A lovely young lady advised that her husband preferred EAL, and that it was more politically correct. Of course! How American of me to suggest that English was someone’s SECOND language, when in fact, it could be their FIFTH language. My friends from Bulgaria speak at least six languages. So EAL, English ADDITIONAL Language, is clearly more appropriate for most people from other countries.

I am a 2nd generation American, which may be the reason why I have a high percentage of clients that are Indian, Filipino, Romanian, Italian, Korean, Chinese, and others over the years. Not because I speak their language, which I do not, but because I understand that different cultures have different ideas with regard to home ownership.

I remember back to 1990, my very first year in the business. I had a client who was a young man from Russia. It was apparent to me, though he did not come right out and say it, that he didn’t have an accurate perception of what was included in the sale, and what was not included. Now many of my clients have some questions in that regard, but for this client the entire idea of owning a property was somewhat “foreign” to him.

I literally walked around and touched practically every item. He was in fact quite pleased to learn that the kitchen cabinets would be staying as well as the stove. He was a little confused about why the wall to wall carpeting was going to stay, but the area rug would not be there after the owner moved out. And when it came down to the mirror in the living room leaving because it was hanging like a picture, but the “mirror” in the bathroom WAS staying because it was a recessed, built-in, medicine cabinet, he just shook his head and took my word for it 🙂

This brings up a point that a recent commenter raised. He said he sometimes has to read my writings twice to “get” what I am talking about. In almost every real estate transaction a client has to trust that the agent is correct, rather than totally understand everything involved in the transaction. For persons who speak English as an additional language, who have not been involved in home ownership issues for most of their lives, being able to trust the judgment of the agent is even more important than almost anything else. Trust becomes the all important factor in the relationship.

Even if they do not understand all of the details and the “whys”, if they trust the person at the helm, life becomes a whole lot easier for them. Being able to focus primarily on which home they want, as opposed to each and every detail of the process, can be quite a relief for anyone, but especially for EAL clients.

Labor Day – The "fruits" of our labor

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[photopress:labor.jpg,full,alignright] One of my most memorable transactions here in the Seattle Area was assisting a “homeless woman” with the sale of her house. Seems like a contradiciton in terms, I know. There was a woman who walked the streets wheeling a child’s suitcase behind her who “owned” a gutted, burned out house. She had put a For Sale By Owner type sign on it with a phone number, and a local agent had brought her an offer on it by the time I received a call from her asking for assistance. In fact she was seeking the assistance of another agent in the office, who had already asked for my assistance on handling this when the call came in, and it was pure coincidence that I happened to answer the phone when she called.

I cannot go into any more detail because this was a very unique transaction, to say the least. Besides throwing legal papers in sealed envelopes over a chain link fence onto the porch, which at times was my only means of conveying information, there were several meetings in the hot sun on the front steps with those big black carpenter ants crawling all over me. Since the ants crawling on her did not make her flinch, I persevered and mirrored her behavior…no small feat.

Point is, the “fruit of my labor” was my effort, and not “the satisfaction of my ‘client’.” In the end the woman was very unhappy to find that the proceeds belonged to all of the heirs, even though I had told her that at the onset. In the end the woman was very unhappy that an attorney needed to be involved in the distribution of the net proceeds. I charged a nominal fee, and in fact offered to handle it for free initially, but she would take no charity and griped about the nominal fee, both at the same time, which made not much sense. But then not much in this transaction made much sense.

Someone recently asked here what my highest achievements have been. I’d clearly have to put “selling the house of a homeless woman” on that list. I don’t know what she is doing now, but I am hoping she is doing what she said she would do, take the money and buy a little place in Virginia near her son, who was being raised by a relative and going to college there. I picture her there, being cared for by her son and relatives in a little house by a creek with a weeping willow tree. Clearly she was one of my most unhappy clients…and yet somehow, at the same time, one of my “highest achievements”.

Be proud of the fruits of your labor…be proud of your efforts to achieve those fruits, on this Labor Day 2006.

Everyone Run to Redfin!

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[photopress:run.jpg,thumb,alignright]I just got back from 200 1st Street in Kirkland and these are definitely all that I hoped they would be.  Of course, I already know them fairly well and have been in there many times.  But they were not available for sale.

Now here’s the VERY BEST USE OF REDFIN!  In fact, I love these so much, I’ll make you the same Redfin deal.  And you make out much better signing in as WITH AGENT than sans agent, as there is no benefit best I can tell, for those without.  So you might as well get the 2% cashback. 

For those who don’t know what the “Redfin Deal” is, you go over and sign in showing Agent as “Redfin, or assigns” or put my name, or any agent willing to give you the Redfin deal.  But do NOT put “no agent” on that line.  The field is wide open over there with only one sold.  You get your pick of the litter, plus 2% back.  DO NOT listen to the sales people, they are…and be careful on selection.  Don’t restrict yourself to the ones they will let you see.  Figure out the floor plan, as the very best deals are available to be bought, but not to be seen.

The price differential for positioning is off, so about 20% are real bargains and about 40% are overpriced.  Get over there before they figure that out.  When you write in your agent, or meet your agent there, the agent gets 3%, but according to the sales office, and I do not know why not, they are not allowing the buyer to take the 3%.  So sign in your mother, brother or sister with a license…or me or Redfin, to take advantage of the cashback feature.  Hopefully they will permit the buyer to take the 3% at some point without doing it this way.  But in the meantime, don’t lose out on the benefit.

Yes, sometimes Redfin works.  New construction or condo conversions, as long as you know how to factor in the location differential properly, is clearly the best use of Redfin.  If you want an agent who knows how to factor in the price differential per location in the building…just throw my name on there and I’ll throw back the same 2% as Redfin (ONLY on these at 200 1st ST guys, not an open offer) since I live right up the street.

You know I don’t push everything, even my own stuff.  And I clearly don’t like every unit in there.  But with the field wide open through this weekend and only one sold…RUN!

The last seven days in Real Estate

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Last week of August. Who bought what, where and for how much? Typically a slow week with agents and clients taking some time away with their families before school starts.

[photopress:v.jpg,full,alignright]This is my absolute favorite property that sold this week, in Sammamish for almost $4,000,000. Going home there is like going on vacation every day after work. My definition of “sold” in the last seven days, for this article, is STI or PENDING…people “making decisions” to purchase.

Seattle under $300,000 – 38 people, between $300,000 and $400,000 – 66 people

70 people in each for the $400,000 to $500,000 range AND the $500,000 – $600,000

Then we really drop off to only 20 from $600,000 to $700,000, and then half of that at 10 from $700,000 to $800,000, half that again to 5 at $800,000 to $900,000, and 3 in the $900,000 to a million.

15 from $1 million to $2 million and two just over $2 million, one in Broadmoor and the other a tudor in Denny Blaine.

On the Eastside I used, Bellevue, Bothell (King County), Kenmore, Kirkland and Redmond.

Only 5 under $300,000 this week. 75 between $400,000 to $600,000. 4 between $2 million and $3 million vs. only 2 in Seattle, and about 10 in most other categories.

So all tolled on both sides of the Lake, most homes this week were sold between $300,000 and $600,000. That includes condos, townhomes and single family homes.

Fits into the theory that the average buyer is at $450,000 give or take.

Russ, NO! Please Say It Ain't SO!

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[photopress:joe.jpg,full,alignright] One of the FEW rights of a buyer these days, is that they have 3 days to review the “Form 17” Seller Disclosure Form.

These forms are often sitting out at the homes when buyers view property, and often buyers pick them up at every single house. Recently the mls system has made these available online, so we can send them to our buyer clients, before they even see the property. A buyer could conceivably recieve 20 or more Seller Disclosure Forms, before even deciding on a property.

The first page of the Seller Disclosure Statement says in all caps: “You (buyer) have 3 days from the day seller or seller’s agent delivers this disclosure statement to you, to rescind the agreement.”

Some agents are suggesting, that every single buyer who has picked up a Seller Disclosure Form in a house, and now possibly weeks later makes an offer on that same property, has given away their 3 day right to review it! They had it in their hand weeks before they were even interested in making an offer, but the clock started ticking the day they picked one of these forms up while looking at property? Is that even remotely possible?

Please say it ain’t so! Otherwise get those darned things out of those houses and off the online access! What a TRAP! Please say it ain’t so…please. Russ, your thoughts MUCH appreciated. Seems to me that if a buyer has “3 days to rescind the agreement” that there has to in fact BE an agreement at the time of delivery!

Really BIG News!!

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[photopress:85936861.jpg,full,alignright] I just got this invite via email. These have been short term rentals until now. I LOVE this location and have placed people relocating in them while they look for a house. There are two buildings on either side of first street that were part of the same short term rental…near Sur le Tab and the Greek Restaurant, for those who know Kirkland. Fabulous LOCATION!!

They will start at $350,000 and go to $1,200,000. Will give another report after the agent preview on the 7th, but email me if you want to get your dibs in on the best of the best. This is really big news for Kirkland. Yes, there are other new condos and conversions…but not with a location like this one!! Excellent traffic patterns as you can go up to 7th and all the way across and out, without getting stuck in “the Kirkland Crawl”. Oops…don’t tell the people on 7th I said that…it’s supposed to be a local secret.

Maybe I’m overly excited because I just love this location better than any other. A local perspective, I guess.

Microsoft vs. Google a real estate perspective

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[photopress:mac.jpg,full,alignright]On a side note, nothing to do with the topic, isn’t that MAC advertising campaign fabulous! Doesn’t everyone want to run out and get a MAC when they see that commerical? Of course I can’t get the mls on it, or at least not easily, so I hate them. But that has got to be the best advertising campaign I’ve seen in a long time. Doesn’t everyone want to be that guy on the right? Heck, I’m a woman and even I want to be that guy on the right.

On to Microsoft vs. Google. So far my Google clients have been able to negotiate significantly higher savings in real estate transactions than my Microsoft clients. Of course I’m dealing with a very small portion of the Microsoft poplulation, even though I have more Microsoft clients than Google clients.

Microsoft has a contract that kicks back 35% of the real estate commission when a new employee is hired, even if they don’t buy a house for a year to 18 months after they are hired. Perhaps Microsoft doesn’t get all of that 35%, but the agent who has to pay it is still unable to negotiate with the buyer, nor are they as able, at 65%, to resolve issues in the transaction using commission dollars. This agreement that the agent pay 35% to Microsoft also limits the employee with regard to agent selection.

I recently had a call from a Microsoft employee’s wife who is being transferred. She was checking online and trying to pick an agent she felt comfortable with and happened upon me. I told her that she really needed to check with her husband and his employer, as I didn’t think she was totally free to pick an agent of her choice. I told her I might be willing to match the 35%, but she would likely need to try the assigned agent first, before suggesting she wanted someone other than the assigned agent.

Now these programs where an agent is assigned to an employee are, of course, beneficial. These programs have been around for a very, very long time. I myself did tons of relocations with Siemens and other companies around the Country, utilizing this very same program. The 35% of the commission paid by the agent to the relocation company, helps pay for a portion of the relocation benefits such as movers, temporary housing, and other benefits.

In my experiments over the past few months with negotiating buyer agent fees, and a few other out of the box negotiations, I have been able to transfer $20,000 of pure cash advantages plus an additional $10,000, into transactions, with Google clients. More importantly, I have been able to treat the Google clients in these negotiations, identically to the way that I treat seller clients…which is my goal.

If Google does hire 1,000 new people, as Dustin suggests they might, I hope that they will not lock the employees into a program that skims off the employee’s ability to negotiate and ties their hands with regard to agent selection. Relocating is a very stressful and emotional process. Feeling hogtied at the same time, only adds to the stress. While many are happy to have someone ready, willing and able to assist, this benefit should be optional at best and should allow the employee more freedom of choice and no restriction with regard to fee negotiations.

Not trying to change Microsoft here…just trying to encourage Google not to follow suit. Once released from the 18 month requirement, I have been able to assist Microsoft employees and negotiate fees, but the Google guys are still way ahead for some reason in total dollars. Not sure why that is, I’ll have to ponder it when I do my year end round up of “the experiment”.

Since we are entering the Age of Transparency in the real estate transaction, kind of like The Age of Aquarius in my day when everone was stripping off their clothes, I do think that it should not be a surprise to anyone that there is an exchange of monies between the agent and a third party. That goes for any “purchase of a person”, see Zapped, that does not disclose to the person that they have been bought and sold.

No Credits "For Repairs" Allowed

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This excerpt from a recent comment to an old article of mine, deserves more than “comment back” attention.

“we said we would take $5,000 for…repairs…The addendum was signed by both seller and buyer….Our lender wanted us to take the word repairs out of the contact, but we wouldn’t do it, so our loan fell through…’

Lenders do not want to lend out money for future repairs to a home, nor do they want to finance properties that need repairs. Let’s say a house needs a new roof and the cost of that roof is $7,500. Agents cannot write a contract with an addendum that says “Seller to credit Buyer $7,500 for a new roof” and expect the sale to close. Nor can the lender simply say “remove that addendum”, as if the buyer is supposed to pay the same price without a new roof or the money to buy a new roof.

Clearly this situation has come up several times in my career. Most recently, the roof was OK, but was two layers of composite over a wood shake roof, meaning at time of replacement all three layers would have to come off. Also, since wood shake roofs do not have sheathing, the new roof would have to include all new components and not just new shingles. The owner agreed to “pay” for most of the new roof and the buyer “agreed to pay” for a portion of the new roof. The new roof was installed by the seller prior to closing, and the sale price was increased to include the buyer’s share of the roof cost. Excellent resolution as the lender financed a house with a brand new roof. Everyone is happy.

Another good and often used solution, if the buyer wants to take a credit and pick and install their own roof, is for the buyer to take a credit “toward closing costs”, They simply use the money they were going to use to pay closing costs, to put on a new roof. It’s just a replacement of these monies for those monies. It satisfies the lender, as they will usually allow a credit toward closing costs, but not for repairs. As long as the appraiser doesn’t “call” the roof and require it to be done before closing, the buyer can get the monies this way.

So is Denise “bad” to refuse to take the word “repairs” out of the addendum? Or are the agents (if there were in fact agents involved) “bad” for writing and accepting an addendum in the first place, that they should have known would cause the loan to fail?

It is no surprise to me that a lender would not fund a loan that included a $5,000 credit “for repairs”. It is worth noting here, so that others do not write or accept addendums that offer credits for repairs, that send up red flags to the lender that the house is not in good condition. Perhaps it was a For Sale By Owner that Denise purchased without the assistance of agents. So to For Sale by Owners and private individuals buying from For Sale by Owners. and attorneys who assist in transactions without agent involvement, please note that generally speaking, a lender will not fund a loan with a repair credit, especially if there is little or no downpayment.

"Carpet" Credits, et al

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[photopress:w.jpg,thumb,alignright]We are at that time of year when houses are not selling like hotcakes. So we are back to that age old question, “Can’t I just offer a credit?”

Often agents will tell sellers that they need to remove wallpaper, paint rooms or put in new carpet. A common response from a seller is “Can’t I just offer the buyer a credit?” The short answer is NO. The long answer is, if you offer $2,000 as a credit to the buyer to remove that ugly wallpaper, the buyer will offer you less after having seen the wallpaper AND they will take your $2,000 on top of that as well.

So yes, you can offer the buyer $2,000 and he will happily take it. But he will still take $10,000 off the price of the house, because he hates the wallpaper.