patrick.net

klarek says

Keep in mind though that you still probably would have had to spend 3% on the buyer’s agent. In my RE license course, our instructor (a broker) had no qualms in telling us she would not show a listing where the buyer agent’s commission was not paid by the seller. When I pressed her over the ethical implications of her position, she immediately backpedaled and said “well um I mean I would let the buyers know that they had to pay for it”. Such bullshit… they totally steer and manipulate their clients like they are putty in their hands

This actually gets interesting and I speak from experience from an FSBO perspective. Was I willing to sell to someone that had a buyer's agent? Yes. But, I also let them know that the price would be 3% higher. :) An agent's commision should not factor into the valuation of a house and if the buyer felt the need to have an agent, they can damn well pay for it.

And since the agents can be crafty, so was I. I let the buyers know "confidentially" that if they fired their agent, and came back to buy the house, the price would not include the commission, and I'd offer an incentive of $1500 for moving expenses. :) 3 of my potential buyers fired their agents before they made an offer. One of them finally got the house.

Between me and the buyer, we paid a grand, princely sum of $600 for lawyer fees at settlment (not including the state/county recordation fees etc).

kapone says

This actually gets interesting and I speak from experience from an FSBO perspective. Was I willing to sell to someone that had a buyer’s agent? Yes. But, I also let them know that the price would be 3% higher. :) An agent’s commision should not factor into the valuation of a house and if the buyer felt the need to have an agent, they can damn well pay for it.

I have a family friend who just did this. He was a buyer and found an FSBO. The lady lived in the house for a long time, knew that the realtor deal was a ripoff, and was going on a limb to find a buyer who would also have the same sense to avoid the cartel's greedy clutches. I advised him to get a RE attorney and go for it. His only concern was that as a first time buyer he would not have a hand to hold at the closing table. Someone that could help if there's something awry with the transaction which would screw him over. I told him that the only thing they're attending the closing for is to collect their big paycheck and that they would do anything to keep the transaction from failing, including letting him get screwed. He bought the house for a really good price, and hopefully will spread the word to his peers.

It's actually a lot worse when you're buying without a buyer's agent and the house is listed with a broker/agent. The commission - say 6% - will be paid out entirely to the listing agent and their broker if you show up unrepresented. I took the RE license instructor to town on this, asking her how it's justified to double-dip on the already-overpriced commission. Her response was that because it was in the contract that the seller signed, that makes it right.

kapone says

And since the agents can be crafty, so was I. I let the buyers know “confidentially” that if they fired their agent, and came back to buy the house, the price would not include the commission, and I’d offer an incentive of $1500 for moving expenses. :) 3 of my potential buyers fired their agents before they made an offer. One of them finally got the house.

Depending on whether they had an agency exclusivity contract with the buyer, they can come back and collect their commission from the transaction. I actually somewhat empathize with agents on this issue since they're doing their job (as bullshit as it is) and getting shafted. Opening a door is a bullshit reason to get paid $12,000, but they might be contractually guaranteed that amount if their prey (client) signed the contract and the agent opened the door to the house they ultimately bought.

klarek says

It’s actually a lot worse when you’re buying without a buyer’s agent and the house is listed with a broker/agent. The commission - say 6% - will be paid out entirely to the listing agent and their broker if you show up unrepresented. I took the RE license instructor to town on this, asking her how it’s justified to double-dip on the already-overpriced commission. Her response was that because it was in the contract that the seller signed, that makes it right.

Well......not always. That may have been true during the yester years, but people HAVE wizened up...to a degree. For e.g. I'm in the "buyer" mode now. I approached one of my friends who is a realtor and offered her this.

I'd pay her 1% of the sale amount up to $3K for her "representation". She doesn't have to do ANYTHING. I'll look for the house, I'll do the negotiations (with her present, if needed) yadda yadda. The purpose of her representing me is that she agrees to give me back the final buyer's agent commission minus her representation fee ($3K or 1%). That way the seller's agent doesn't get to double dip. They are dipping regardless....screw them. I have no empathy for them. I think of it as a 1.5-2% cash back on the house I'm gonna buy. Might as well get some furniture....:)

klarek says

Depending on whether they had an agency exclusivity contract with the buyer, they can come back and collect their commission from the transaction. I actually somewhat empathize with agents on this issue since they’re doing their job (as bullshit as it is) and getting shafted. Opening a door is a bullshit reason to get paid $12,000, but they might be contractually guaranteed that amount if their prey (client) signed the contract and the agent opened the door to the house they ultimately bought.

That may have been true historically, it's a grey area now. What happens if the buyer sees the house on realtor.com or homedatabase.com or any such place, after they fire their agent? (and they will since these places pull their listings from the MLS systems). That information is in the public domain now, with no recourse from the agent's perspective.

That rule was designed when the agents controlled the information, and/or the listing was not publicly available. The realtor will have a real hard time in court.

kapone says

Well……not always. That may have been true during the yester years, but people HAVE wizened up…to a degree.

They still write up the same seller agency contracts that they did in years' past. Seller agrees to pay 6% commission which typically gets split. I presented an argument to my instructor that as a buyer, I could make an offer sans agent with the stipulation that the seller not pay the 6% (the argument being that there is only one agent). The savings passed to the seller will be seen by the buyer in terms of a lower sales price while the agent still gets their fat cut (say 3%). This enraged her, and she assured me that because of the contract with the seller that it would never occur (I guess in her world contracts cannot be altered or amended). I even went so far as to suggest that the buyer's offer be contingent upon a re-written agreement between the seller and his agent (thus undermining her bogus premise that it can't be done). She said she would never present such an offer to her client. I pointed out that by withholding the offer she would be in violation of the state's REB rules and potentially lose her license, and she immediately changed the subject.

So maybe you're right that people are getting wise to realtor scams, I really hope so. I doubt it though. These people run an ironfisted cartel and are hostile to even the suggestion of changing the game. I'm pretty sure the game remains unchanged.

I’d pay her 1% of the sale amount up to $3K for her “representation”. She doesn’t have to do ANYTHING. I’ll look for the house, I’ll do the negotiations (with her present, if needed) yadda yadda. The purpose of her representing me is that she agrees to give me back the final buyer’s agent commission minus her representation fee ($3K or 1%). That way the seller’s agent doesn’t get to double dip. They are dipping regardless….screw them. I have no empathy for them. I think of it as a 1.5-2% cash back on the house I’m gonna buy. Might as well get some furniture….:)

I'm doing roughly the same thing with my current agent since it's the only way to not let the seller's agent double-dip or risk them taking my offer from the fax and putting it in the trash . But they absolutely do get to double-dip otherwise. The conversation I had with the broker in my class was kind of intense. Her reaction when I mentioned re-writing the agreement with the seller told me everything about the con game she knows she is part of. I challenged her "secret" to earning double commissions on both an ethical front and a contractual one and she was not happy. The conversation leading into this was about how it's really good for sellers agents to have open houses and lure in unrepresented buyers so you can double-dip. That these people can say this with such a straight face and sleep at night is unfathomable to me.

kapone says

That may have been true historically, it’s a grey area now. What happens if the buyer sees the house on realtor.com or homedatabase.com or any such place, after they fire their agent? (and they will since these places pull their listings from the MLS systems). That information is in the public domain now, with no recourse from the agent’s perspective.

It depends on the contract. Just firing the agent isn't always good enough. You have to terminate the contract with the broker. They will try to talk you out of that (of course) and since your beef was with the agent, they'll either assign you another agent or represent you directly themselves. The commission they make from every warm body that walks through the door is always worth chasing. If you effectively terminate an agreement with a broker and go to a house they never showed you, you should be fine.

Again, we're talking about some really greedy and unethical fuckers here, so don't be surprised when they try shaking you down at the closing table months down the road while threatening you with the "procuring clause", even if they're not legally entitled to anything.

kapone says

That rule was designed when the agents controlled the information, and/or the listing was not publicly available. The realtor will have a real hard time in court.

They still control everything. Those listing agreements and agency contracts are all written from the broker's house. NAr has its recommended guidelines and such, and the firms' attorneys draft them up accordingly. Your typical buyer and seller doesn't realize that they are agreeing to a contract that is solely designed to protect and promote the interests of the broker. That is because your typical buyer and seller would have no reason to suspect such a thing since no other business model in existence comes close to that level of treachery and thievery going on in real estate.

klarek, a question for you.

Just set those realtor BS and the lies from them aside for a moment... what price level do you think we're in now and what price level it should be for homebuyer-wannabes to pull the trigger? What level do you think we'll see in, say by next year? Tell your opinion on that, if possible.

Here's what I am thinking. I think it's in 2006 level (I think the peak was 2007 summer in DC market) or 90% of the peak, and it should be somewhere arround 2002 level to be sustainable. And the last one... that I am not sure. Maybe 10% from now, which still be 2005 level.

i am in the DC market and I also believe the market is wildly overpriced.

Give it some time...

If DC prces followed the Bubble up, then it will follow the bubble down.

Supply and demand. The DC area has controlled growth policies coupled with the explosion of the federal government over the past 20 years has produced limited housing supply especially within the Beltway. The median family income in my area (halfway between DC and Baltimore) is over $80k a year. The value of the land (building site) is what is driving prices.

Bayview.

it's a bubble thats all. PG has gone nowhere for a decade.

This is what redfin says.

http://blog.redfin.com/washingtondc/2011/04/buds_on_the_trees_the_spring_market_has_officially_started_march_insider.html

In short...

DC area price went up 14%
Inventory went down
Seller's market rather than the other way
Whatever happens in the other part of country, it's not the case here in DC.

That's WTH. :)

I just moved here 6 months ago and am mortified by what you get for $800k inside the beltway. I would like to live in northern va and am making myself crazy trying to figure out when/if to buy here.

Saw this today. What does everyone make of it?

http://www.washingtonpost.com/wp-dyn/content/article/2009/09/08/AR2009090804053.html

Well. good to have another alexandrian, Montacute. How you feel about the area so far?

In these days people in descent part of DC metro wants 2006 price.

For instance,
http://www.redfin.com/VA/Arlington/3402-8th-St-S-22204/home/11261222
http://www.redfin.com/VA/Alexandria/6454-Waterfield-Rd-22315/home/9754794

Or even a long time shortsales jacked the asking price ove 10% in last month.
http://www.redfin.com/VA/Alexandria/6005-Keble-Dr-22315/home/9783374

So, are these guys really tring to sell or what?

Are they that delusional?
Maybe, or not. You being a 100K'er or your HH income being 200K does not mean a shit in nova area, Many people can affort to make home price afloat, and keep doing it till a fool knocks the door.

When it comes to DC, commuting is one of the most important thing they're looking for. We hate noise from highway, raildroads etc though, some people are willing to pay 600K for the railroad in the backyard, and Beltway right in front of the door.

So, what do you think? It's seller's market, pretty much is. Even if it looks like the other way.

Thanks Seaside. So far, I think the area is a mixed bag. There is lots to do, and some lovely areas, but the congestion is awful and the house prices leave me depressed. I got a big increase in salary moving up here, but if I bought a house, I think my standard of living would be lower. I have to commute to DC, like everyone else, so I need to live inside the beltway.

Has it ever been a buyer's market here? I just don't know how to judge buying here and am trying to educate myself.

Kapone -

I found your post interesting. I live in the NoVA area and have been actively looking for probably the past 3-4 years now. We sold our home in NoVA when I perceived the housing market was going to fall. We were not in the McLean/Great Falls area. We have been renting the same home since then (current landlord got caught - bought a new home; but, prices fell and became an involuntarily landlord). It is approximately 2400 sq. feet on a 1/3 of an acre with a fenced yard. We are actively-looking because of our young kids.

We are also not finding what we are looking for. My position has been - I need to find something that meets 95% of my criteria. I do not believe housing prices will fall 'that' much in the NoVA area. I have no crystal ball; but, I am looking at the Silver Line and believe that will actually help set a bottom on housing where I am looking at. The Silver Line may or may not help; but, at least by trying to find a place close to those stops, I've maximized my ability to stop the depreciation. My belief is that eventually, gas prices will start forcing people to look for public transportation options (if they cannot or are willing to not live downtown). If housing corrects here in the NoVA region - I would expect another 3-5% drop on average, with 10% being the maximum (and the upper range indicates to me SHTF in the U.S.). To me, if housing in NoVA depreciates significantly - there are much BIGGER problems. I've always viewed a home as a place to 'live' - not necessarily an investment. It is true, I can get 2-4% return on my cash investment - conservatively; but, at the end of the day - renting does suck (to me).

My personal belief is that in the FFX region - you have 3 separate classes. You have people buying around the $600K and lower range; 600K-900K, and those above (I acknowledge - arbitrary figures). The people at $600K and below WILL be affected by higher interest rates - that's where much of the foreclosure activity will be centered around since they are more prone to have taken exotic loans. The 600K-900K people will also be affected; but, are in a better place to weather and stay put (I would say around 10-20% of those owners have exotic loans vs. 50% of lower-priced). So, you will have homes that do come up for sale; but, are quickly snatched up if they are in good condition. Those above that price seem to be even more immune (maybe only around 10% undertook exotic loans). Loudoun county is where many people were pushed out and I think will see a more significant correction in terms of foreclosures because of higher interest rates. That is how I see it playing out .... housing will slow down in the upper 2 tiers - but, will not collapse because of the stronger economy here (government, defense, lobbying, tech corridor (bio-tech for you in Md, etc.).

This area is probably one of the best to weather the storms that may come ... and, it is always a calculated risk buying something. If we buy - we want something that we know we can live in for at least the next 15 years. Our house price may be cut in half - but, to be honest, its paper money and always has been. All of this 'theoretical' value of housing is meritless to me. It is 'paper value'. It may make one 'feel' wealthier by having a higher number; but, it is not a liquid asset. I would rather purchase a home well within our price range that still allows me significant liquidity.

seaside

http://www.rbintel.com/statistics/northern-virginia

Total Sold Dollar Volume $1,022,418,134 -20.94% +9.66%
Closed Sales 2,448 -25.3% +2.68%
Median Sold Price $360,000 +6.67% +8.93%
Avg Sold Price $417,654 +5.84% +6.8%
Avg Days on Market 63 days +40% -8.7%
Avg Sold to Orig List Ratio 96.27% -1.62% +0.41%

not exactly healthy

Montacute says

Saw this today. What does everyone make of it?

A bunch of nova scumbag realtors puffing up the market. Same thing I've been hearing for years now.

btw, the prices Do seem to be on the downward slope. :) Even in places like Potomac, Great falls, MClean Vienna etc.

I have full access to MRIS, and I'm starting to see the asking prices coming down to the 2000 level or so for quite a few properties. Sure, there's way more properties where the sellers still want 2005 pricing, but they are not selling. Especially on the upper end. On $1M+ homes, the prices are almost coming back to the 99-00 levels.

I don't know, but I'm happy that the house across the back alley from mine was vacant all winter so that I could dump my snow there. It's been listed at 100K for about 6 months now, and the moron who owns it hasn't repriced it even once. Other people in my neighborhood are asking 60K-85K for their house.

Just checked prices in another area I know well, Severn, MD. Prices there are still quite high compared to what they should be. Like double, and with outrageout property taxes compared to what they used to be. I actually pay less in Baltimore City.

I see the same thing Kapone when we were looking at Potomac, McLean, and Great Falls. Prices are coming down - and, the thing is -one can never predict a full bottom. The calculations that I am starting to wonder about is the higher interest rates that many of us believe will come. People are making an assumption that house prices will need to fall in proportion to the increase in interest rates.

I just do not see that happening at least here in NoVA. A rough estimate is every 1% rise in interest rates requires home prices to fall by about 10%. So, if rates went to 5.5% (1% more than today's rates) - that same home would need to fall about 10% to have the same payment. If rates go to 6.5% - then, we are talking 20% drop, etc. It could happen; but, I just do not see it happening lock-step in that fashion.

Back when interest rates were around 10-15% for home loans - you just did not have the volume of sales that we've seen in the past 5 years. I think that will become the norm rather than home prices necessarily approaching fire sale levels if the home is in the right location. I would think people in Loudoun county/Prince George's, etc., would be more susceptible to the higher interest rates than those that reside in Montgomery/Fairfax/Arlington/Alexandria counties.

kekua says

I just do not see that happening at least here in NoVA.

It'll happen. :) money is money. The average American homeowner is only now waking up to the fact that a house is a fairly illiquid, money eating asset and that the local governments will keep squeezing and raising taxes on homes. They don't have a choice.

Unless we amend the constitution and dissolve state and local govts, a home will always be at the mercy of the political morons. Hell, owning a home is worse than holding credit default swaps, where you also have an ongoing "maintenance fee", but atleast they are not illiquid. You can get out in a heartbeat and without a 6% extortion from the "broker".

The reason I still want to "buy"? We want a slightly bigger home and there's very few decent rentals that we actually like. I have no qualms in paying $4,000 a month in rent, but the property has to be "nice". We'll be living in it after all.

APOCALYPSEFUCK says

RE brokers should be outlawed as well as mortgages. If you have the money, you buy a house. If not, you camp out in your car or rent.

Has it ever been a buyer’s market here?

Yes. From about 1994-1997 there was one.

I live in Baltimore. Federal salaries are increasing. The size of the federal bureaucracy is increasing. These are the simple main reasons why DC home prices continue to inflate. If we ever had leaders who cut federal spending and the number of federal jobs then LOOK OUT!. Major crash in DC housing. Sadly, I do not expect that to happen soon.

Did you forget what Obama did to federal workers last year?

DC got whole lot of federal workers, but that has nothing to do with recent home price inflation for they're the people that got salaries frozen, in other words, got squeezed. With that level of salaries, they're are pretty much destined to be middle class at best in DC metro area, and all that they can afford is condo or small town house. Pension? Benefits? forget about it if you're just so so fed guy.

I was wondering what would happen in DC housing market if federal government shutdown had happened and lasted for two months. Those people in paycheck to paycheck may miss one or two payments, and that's about it. Those people who earns outrageous salaries by doing shit job won't be affected much by that. So who in washington earns outrageous salary? Not your ordinary fed worker neighbor. They are the very people we elected to serve us, those people in outskirts of DC who can talk to them, which is the same people who forced obama froze fed salaries while the freeze has nothing to do with their own salaries.

The federal pay freeze is on paper only. Federal workers still get step increases and of course they still get pay raises when they get promoted despite the pay freeze.

No offense, but how does one live in Baltimore? I took Amtrak down to DC last summer from NYC and when the train went through Baltimore, I thoguht I was in Detroit. I saw entire blocks of boarded up row houses, many of which only had 3 walls. I'm sure you know which neighborhood I am talking about, since it was right by the train station.

HousingWatcher says

No offense, but how does one live in Baltimore?

With kevlar vests and lots of ammo. Potatoes and sharp objects will do nothing to save you in that town.

I think you will also need an armored car... something like this:

http://conquestvehicles.com/index.html

All I know is that after driving through DC a few years ago I'm probably not ever going to move there. The traffic was awful! That's coming from someone who lives in California.

edvard2 says

All I know is that after driving through DC a few years ago I’m probably not ever going to move there. The traffic was awful! That’s coming from someone who lives in California.

Agreed. The traffic does suck. However, DC is among the topmost in job opportunities and high income, which is reflected in the RE prices.

Think out of the box. :) My office is downtown DC and I live out in MD. Door to door it's about 35 miles one way. That's a 70 mile roundtrip if driving. That's ~4 gallons of gas (remember, bumper to bumper traffic...mpg sucks) and parking in DC. That's roughly $25-30 everyday depending on where you park.

Now....park around a metro station and take the train! The maximum fare roundtrip is $10.50. Even if you park at the station it's $4 a day. Almost half the cost of driving with no bumper to bumper. :)

Hence why all RE around metro stations is way overpriced... :(

edvard2 says

All I know is that after driving through DC a few years ago I’m probably not ever going to move there. The traffic was awful! That’s coming from someone who lives in California.

I feel the same everyday. DC traffic is a b**ch, isn't it? We, washingtonians need two more lanes in every roads in and along the DC at both directions. Well, that's not gonna happen soon. DC government is always broken, can't pay their phone bill. Federal government is sort of messed up too, and can't imagine arlington and fairfax county do anything about it.

Me and the wife used to take metro train for years. Now that "kiss and ride" days are gone due to her medical condition. I have to give her ride to her office in downtown DC thru I395 and drive back to where I work. Then go back to DC, pick her up, hit the road again all the way down to where we live, every 6 in the morning and 4 in the afternoon. It's freakin tired but I am kinda doing ok since I get on the road early. Others who get on the road later than 7 in the morning will burn more gas idling on the road. No wonder washingtonians look tired and defensive.

Recent C-S report come out, and this is what CNN said.

***
Of the 20 cities, only Washington has posted a home-price gain: 4.3% over the past 12 months.

Minneapolis homes lost the most value over that period, with prices falling 10%.

Other big losers include Phoenix (- 8.4%), Chicago (- 7.6%) and Portland, Ore. (- 7.6%)
***

4.3% gain... WTF is so special about DC?

PersainCAT. Yeah, as a fairfax resident and DC commuter I am, I do know that.
But still, that does not explain one thing. Why is DC the only city that gains while others don't? You know NYC and SF is doing quite well, and government money is going there too.

seaside says

4.3% gain… WTF is so special about DC?

People believe this area is special, so they buy without doing their homework. It will unwind one way or another. Just a lot of stupid, quasi-wealthy retards.

Lots of people are moving to DC for jobs at the moment. Also, housing is overpriced a bit relative to rent in the nicer areas, but not as much as some other areas like California were.
I think when the economy starts recovering elsewhere, less people will be migrating here to escape lack of jobs elsewhere. The gov't spending will decrease & things will return to balance.
The traffic is horrible here. Thankfully, I don't commute in it. It is just a side-effect of lots of growth & certainly is an inhibitor to increased growth.

klarek says

seaside says

4.3% gain… WTF is so special about DC?

People believe this area is special, so they buy without doing their homework. It will unwind one way or another. Just a lot of stupid, quasi-wealthy retards.

Will it actually unwind in the next decade? Depressing to think I will be eligible to join AARP before prices fall here.

Montacute says

Will it actually unwind in the next decade?

I wouldn't say unwind, but since incomes here outperformed the rest of the nation over the past decade and govt spending is on overdrive, there could be a reversion over the next ten years. That is, incomes won't go up a whole lot, maybe even below the rate of inflation.

don't get too enthralled, lots of DC is working poor and much of PG is working poor.

http://www.washingtoncitypaper.com/blogs/housingcomplex/2011/06/09/the-price-isnt-right/

look at the difference, almost 10X between Georgetown and Deanwood.

Deanwood is full of the underclass, or Hyattsville.

HousingWatcher says

No offense, but how does one live in Baltimore? I took Amtrak down to DC last summer from NYC and when the train went through Baltimore, I thoguht I was in Detroit. I saw entire blocks of boarded up row houses, many of which only had 3 walls. I'm sure you know which neighborhood I am talking about, since it was right by the train station.

There are parts of Baltimore that do look like that. But Baltimore is one of those places where you can go a block and it's as if it's a another planet.

As to how one can live here, for what I paid for my house (32K) I can live here just fine and ride out the housing bubble and still sell my house for way more than I paid for it in 2003. Rents around here are outrageous and I paid less for my house (cash, no mortgage) than I would have paid in rents.