patrick.net

robertoaribas says

actually have real facts as your basis.

You're quoting a calculation chart for Social Security that shows a $10K wage increase in a ten year period. That would be less than $100 per month.

Here in Seattle we have had much higher wage increases at Amazon, Microsoft, and Boeing, but not so much in other areas. So this is another one size fits all situation.

As a matter of fact in that ten year period we had massive job losses. I don't see the reconciling for that. So, could that mean we had massive wage increases in technology, but the working guy didn't get counted in the mix?

What kind of reality is that?

I always find it funy when some one tries to dazzle me with data. There's a book called Lying with Statistics that outlines most arguments people try to make with charts, and graphs.

I Google, and can win all arguments with Google, but I prefer to read for an hour or so a day about what's going on in the world of business.

You make stuff up about what I say.

Look at the job loss of 2008, to 2010. I asked where that was in the calculation of wage increases. Rather than address that you pull out another graph to show me the job losses, and that employment is at about evens.

Well if employment is at about evens then the Fed has nothing more to do about employment, it's a job well done, the Fed can move on with more important stuff.

This chart however doesn't show me wage increases. It doesn't show me anything about wages.

You used the Social Security calculation chart which show one picture, but the Census data shows the stagflation of wages: http://www.census.gov/hhes/www/income/data/historical/people/

You used the first reference you found in your Google search to dig yourself a hole. Now you really have nowhere to go with this.

robertoaribas says

And to repeat: you predicted prices would drop 2 years ago, and you sold.... 2 years of being wrong, and you haven't learned a thing yet

I'm still predicting prices will fall, and I am continueing to sell.

donjumpsuit says

FEENIX.

http://www.youtube.com/embed/Y2kIPN1SQe4

robertoaribas says

yeah, well, you might as well be consistently wrong

This is by far your most childish comment.

You have nothing to say, but pull out charts, and graphs to prove my points that wages aren't increasing. The Census data shows that, but hey let's live your reality.

Job losses are significant in that the chart you provided doesn't account for those job losses, it's like it never happened, but it did.

I might as well include my favorite graph, the one I've used, and shown you a few times now, because it shows the consumer debt:

but you still come back at me with some childish game about what I have said.

I've said prices will decline, I sold accordingly, and chose not to buy back in. I will sell again while prices are high.

BTW my personal residence never lost value, but I will sell in a heart beat as soon as the kids finish high school.

Hey, why don't we let wikipedia settle it: http://en.wikipedia.org/wiki/Household_income_in_the_United_States

robertoaribas says

YOU sir said: Seattle has less jobs than 10 years ago.

We were talking about wages. We have high paying tech jobs, but that doesn't translate into higher paying jobs across the board.

robertoaribas says

That in 2009 you sold your home in Atlanta.

That was a part of a trust. The price of the property had declined in price until the day it sold. What has happened since? I don't really care. It sold for $30K which was spent, and enjoyed. So what?

robertoaribas says

I have honestly never had a conversation with anyone as mentally slow as this in my life.

You see, while I was addressing your childish outburst Cyprus is now threatening the Euro. Cyprus? who would have thunk that.

http://www.cnbc.com/id/100560852

You made a million dollars, whoopee, who hasn't. As a college professor you're thinking you got some game going on, but to some you look baffoonish.

You should be grateful for your wind fall, but I have other things to do. Real Estate isn't going to be one of them. As a matter of fact we are preparing to sell another property, hopefully by May 1st, or June. I don't see any reason to hold onto it.

There is always more money to be made.

robertoaribas says

These are facts.

You don't have any facts. You are making arguments.

The fact is Real Estate is supposed to be the stable investment, the safe haven. When it becomes a roller coaster, when it crashes, then re-inflates based on massive government incentive, that's volitility.

We provide jobs. I would prefer to provide jobs, because I think housing is going the way of lumber jacking, or salmon fishing. The big players are coming in to squeeze out the little guy.

Now if you wanted to make a case against me by saying I should have continued to flip properties, you might have a point. My buddies, who make fun of me also, are making big dollars flipping properties. My ultimate argument is that we make more by cleaning toilets.

Last, but not least, this is the Internet.

As you say, I'm everywhere on the Internet. Patrick, at Patrick.net is looking to monetize his website. Most web developers want to monetize.

My time on the internet, with my wide variety of web sites, and domain names, is monetized by the fact we have a service to sell. We have a high quality service that is priced to compete with National Franchises.

I'm currently working on a new web site for our cleaning business, at www.SeattleHouseCleaning.com that will be mobile device compatable. Sorry Patrick to use your site in this shameless manner.

Bottom line is that I get paid to be here with you. Commenting on blogs is one of the ways to introduce myself to a broader audience. I have services to sell, and so far this is the only advertising I do.

As far as Real Estate, for the consumer, I would recommend they wait. I have always thought it is foolish to buy into a hot market.

Many people haven't listened to that as buyers, but sellers have enjoyed huge profits this year by selling. I recommend selling in a hot market. I don't see how you can argue with that.

The Professor says

Buffoonish

I'm sure you're right. It's not a term I would normally use, but seems appropriate in this case.

This argument is a good illustration of the market we have versus perhaps the market we want.

We can probably all agree that during the bubble, home prices were too high and debts were far greater than what people could afford. Not just mortgage debt, but also student loan debt, federal debt, municipal debt, etc.

There are only two ways out: to destroy that excessive debt through bankruptcy and foreclosure, or to inflate incomes and asset prices do where the debt is affordable again.

For those of us who wanted less debt, foreclosures and bankruptcies and falling home prices were solutions. The sickness is debt. The cure is destroying it. Philosophically, this is where I sit. I would have loved to face our economic problems head on, take our lumps, and then slowly rebuild on a solid foundation. I think that most of the doom-and-gloomers on this site are also in this camp.

The problem is that Uncle Sam has taken us in the other direction. Instead of debt destruction and more affordable homes, we have ballooning debts and re-exploding home prices. The FHA has taken the place of the old subprime lenders, and the housing bubble is coming back. To Uncle Sam, the bubble isn't the problem, it's the fact that the bubble ever popped.

robertoaribas is right that the market is rising quickly and will continue to do so for the foreseeable future. David Losh is correct in suggesting that so much of our housing economy is beyond fundamentals.

Regarding those fundamentals, it IS fundamentally true that Demand is outstripping Supply and that with today's low rates, buying makes sense for a lot of people. However, it's also true that Supply, Demand, and interest rates are all being manipulated. Even if home prices rally up another 20%, foreclosures and short sales are effectively over, and negative equity is a thing of the past, what have we actually accomplished? All we'll have done is gone back in time to 2006 and set ourselves up for another crash.

I'm not happy about any of this. I wish we had much more affordable and stable home prices, not going up or down much through the years. I want a boring, but liquid market, but that's not going to happen any time soon.

Let's not let what we want blind us to what's actually happening. At the same time, let's not let what's happening blind us to all of the bigger-picture concerns that suggest we are setting ourselves up for disaster once again.

robertoaribas says

you sold in Atlanta in 2009, and Seattle 2010.

What did I sell in 2010?

Let's go over this again for you, we sold in 2005, 2006, and last in 2007 in Seattle. We sold the place in Atlanta in 2011, I don't really recall because it was dropping in price, and a part of a trust.

Now we will sell another place in Seattle this year.

Your problem with me is that I didn't buy back into the Real Estate market. I don't think Real Estate is the investment it used to be.

gregpfielding says

set ourselves up for another crash.

I don't see a crash. I see equilibrium coming in home prices.

The government has spent trillions of dollars that banks used to recapitalize, and corporations have made massive profits, in cash, on that government investment.

I don't see a crash. I see that we can now go back to business as usual.

Debts will need to be paid, businesses can move on to making products, and trade will need to be on a more even footing.

I see all of that with a gradual rise in interest rates.

Cheap money created debt for those who bought into it. Those who moved out of debt, and into cash are in a much better position. This was the time to reconcile accounts.

bubblesitter says

gregpfielding says

E-man says

The inventory WILL HAVE TO come from regular sellers from now on.

Agreed. Unless prices collapse again, the reo and short sale inventory will continue to quickly shrink to zero.

Really? Are we heading toward golden ages or what?

Alright! We all made it out alive. Great to hear, these are great times we live in. Prosperity all around, all you have to do is work hard and the American Dream is back alive. Yippee! It was a long wait, but I can feel the energy now. So good...

robertoaribas says

So, I'll keep my belief, that no way in hell the hedge funds sell into a collapsing market.

Not sure I would bet on the actions of hedge funds. Many have imploded and it could happen again, this time in real estate hedge funds. I agree that they can suspend redemptions, but all in all, the manager is only successful if he/she keeps attracting new money. Things go sour really quick.

http://hf-implode.com/

robertoaribas says

OR they try to wrap the existing loan.

This is something else we agree on.

The Real Estate attorney I used since the 1980s as my escrow agent specialized in wraps, and phantom holding accounts. When rates went to 16% wraps were the best thing going.

My guy retired a few years ago after the crash, but there is another guy here in Seattle that does that kind of work.

If I were in that business of brokering wraps I would also encourage a buyer to take over an underwater loan that was seasoned for five years or more.

robertoaribas says

you seem to be really grasping for straws to predict a crash... Kinda like david9 with his "cyprus is going to cause US real estate crash" theory...

I benefit from things not crashing. I hope it keeps rolling along, however, I just have a lot of fear that things are not as they appear. Hard to see the reasons for being optimistic besides counting on the same folks that created the problem.

robertoaribas says

Even if price/rent makes sense, I'd say there are more risks in a very expensive city.

That's where the Bay Area and Phoenix really are two different animals. I live in Danville, for example. A good 2,500 ft home in a family neighborhood maybe be around $900,000 to $1M. Rent could be $3,500-$4,000.

In 2006 that house would have been $1.1M to $1.2M. In 2009 it would have been $750,000.

And in 1998 it would have been $450,000.

Much higher stakes.

gregpfielding says

That's where the Bay Area and Phoenix really are two different animals.

That is a really good point Greg. I think roberto made really smart investments for were he lives but has a tendency to get in arguments with people from the bay area about the future of housing. The two markets are Apples and Oranges.

I personally don't know if I can hang on here in the Bay Area much longer, I would like to stay and buy a house but I don't think I can wait until the market crashes again. I could live like a king in about any other part of the country (discluding Hawaii and New York).

gregpfielding says

robertoaribas says

Even if price/rent makes sense, I'd say there are more risks in a very expensive city.

That's where the Bay Area and Phoenix really are two different animals. I live in Danville, for example. A good 2,500 ft home in a family neighborhood maybe be around $900,000 to $1M. Rent could be $3,500-$4,000.

In 2006 that house would have been $1.1M to $1.2M. In 2009 it would have been $750,000.

And in 1998 it would have been $450,000.

Much higher stakes.

The swings are very dramatic. If you are riding a wave up it can be great, but getting curled up in the crash can really suck. I really wish I could convince myself that things are stable at this point. Not a dinner party goes by without someone telling me that I need to buy now, cause prices are going crazy. That talk really worries me. I've seen it before.

RentingForHalfTheCost says

Not a dinner party goes by without someone telling me that I need to buy now, cause prices are going crazy. That talk really worries me. I've seen it before.

Agreed.

Frustrating example of what this market is like right now...

There's a 1,600 ft house in Danville that would have probably been worth $650,000 last Fall. It came up for $750,000 this last week.

10 offers later, it's going to end up over $800,000 with no appraisal contingency. My buyers couldn't justify going that high.

At this pace, it'll be $900,000 by the Summer. And that's probably right about where it would have been at the peak in 2006.

Rent, roberto, is probably around $3,200/mo.

well you if compare the monthly payment on the 2006 home priced at 900k at 6% rate to todays 3.5% rates at 900k then house payments are still way cheap compared to 06.

The whole RE sector is a 'howmuchamonth' model. except for cash investors and they are buying like never before. ZIRP is crazy making.

gregpfielding says

no appraisal contingency.

I was just talking about that with another agent about how some one could waive the must appraise clause. That is something beteeen the buyer, and the lender.

So the buyer, in theory would be bringing the difference in loan amount, and purchase price to the table.

So far, neither she, or I have heard of a property not appraising, but if it didn't I don't see where the buyer would be obligated to perform.

I'm not an attorney, but it seems to me if a property is listed for sale at a certain price, that is the price the seller is expected to pay a commission on. That is the asking price. The bid price above that would be a gift, an inducement.

In other words, if the buyer is still willing to perform at the appraised price, and that price is above asking price, I don't see who would fight it. The buyer could stick with the appraised price, and say take it or leave it.

You can't sign a document to hold up in court over an unkown quantity. No one would know what the appraisal will come in at.

The agents who drafted the documents would be pretty much stuck. Who will fight the battle if the buyer is agreeing to a price above the list price?

BTW this is getting to be common in Seattle, and comps are getting harder to find due to low sales volume.

David Losh says

In other words, if the buyer is still willing to perform at the appraised price, and that price is above asking price, I don't see who would fight it. The buyer could stick with the appraised price, and say take it or leave it.

Wrong.

The asking price means nothing. It could be much higher or lower than the contract price.

If the buyer has not waived the appraisal contingency, then, yes, they could request that the purchase price be lowered accordingly. The Seller could then agree or move to cancel the contract and find a new Buyer.

Remember that this scenario really only comes into play in multiple offer situations. Buyers are choosing to remove their contingencies during bidding to make their offers more appealing. And, realistically, they have to if they want a chance at the house.

If a Buyer had no contingency and the appraisal came in low and the buyer refused to pay the agreed upon contract price, that buyer would be at risk of losing their earnest money deposit.

SFace says

The buyer can stick with the appraised price based on what?

I'll take this one.

Number one Real Estate agents don't write contracts, they write agreements. A Real Estate agent isn't an attorney, and an attorney would recommend not signing a waiver, in writing, that the buyer would also have to acknowledge.

The buyer, and seller are kind of stuck with arbitration. The seller can sue for specific performance, but really, who would want to?

All the waiver does is open up a future negotiation.

The buyer, and seller are only obligated to the list price. We might change the terms, and inducements, but the bottom line is that the seller has offered to sell at that price, and as long as the buyer is willing to pay above that price the commission portion is set in stone.

I love it when Real Estate agents start jumping around like they have some magic powers. In court anything can happen, so you don't want to go there. Everyone is expecting the Real Estate agent to get the deal closed without a bunch of fuss.

Sorry guys, you can throw in all the language you want, but when it comes to push versus shove courts decide usually for the buyer.

Have either of you ever been to court over a commission?

We are in a weird time, a new market place, so to say this is the way things should be doesn't cut it.

gregpfielding says

Buyers are choosing to remove their contingencies during bidding to make their offers more appealing.

Unfortunately the buyer at the point of paying for an appraisal has monetary consideration. It isn't just pulling the offer and going onto the next one.

The appraisal is now done, and goes onto the table. Does the appraisal amount get disclosed?

Does the buyer's agent, or the listing agent ask for proof of funds to close if the property doesn't appraise for enough?

How would any one know at the time of the offer what the appraisal will come in at, or how much money a buyer may have to bring to the table?

Like I said, it's weird times, but I have seen it before.

It's a mess when agents start talking like lawyers.

David Losh, please stop giving poor advice based on nothing more than the theories you pull out of your ass. The inexperienced may not understand enough to dismiss your ridiculous statements and you are doing them a disservice.

David Losh says

Unfortunately the buyer at the point of paying for an appraisal has monetary consideration. It isn't just pulling the offer and going onto the next one.

The process in California is this: If a Buyer is failing to perform as the contract requires, then the Seller can give the Buyer a 48-hour notice to Perform or Quit. If the Buyer then still does not perform, the Seller may unilaterally cancel the contract and move on to the next Buyer or put the home back on the market. Whether or not the Buyer has spent any money on appraisals or inspections has NOTHING to do with it.

David Losh says

The appraisal is now done, and goes onto the table. Does the appraisal amount get disclosed?

If the Buyer had to appraisal contingency, the amount is irrelevant. The Seller doesn't care what it is.

David Losh says

How would any one know at the time of the offer what the appraisal will come in at, or how much money a buyer may have to bring to the table?

It's something all Buyers have to carefully weigh. With my clients, we look at all of the comps and try to best guess what the house will appraise for, and we also imagine a worst-case scenario. If the Buyer doesn't have the cash or isn't willing to spend it, then we don't make the offer.

David Losh says

It's a mess when agents start talking like lawyers.

No. Real estate agents are acting like real estate agents. And this is a time when the great ones can really help their clients be successful. Our California Association or Realtors contracts are crystal clear when it comes to contingencies and risks.

David Losh says

A Real Estate agent isn't an attorney, and an attorney would recommend not signing a waiver, in writing, that the buyer would also have to acknowledge.

Fine. A lawyer might recommend not waiving the appraisal contingency. And that buyer will probably not get their offer accepted.

I would never recommend that a Buyer remove the contingency unless it was absolutely necessary, they had the cash, and they clearly understood the consequences. David Losh says

The buyer, and seller are only obligated to the list price.

This could not be more wrong.

David Losh says

I love it when Real Estate agents start jumping around like they have some magic powers. In court anything can happen, so you don't want to go there.

No, you don't want to go there. Which is why you follow through with the agreed upon price in the purchase contract rather than play bs games regarding the list price or appraisal value.

SFace says

Bottom line is you don't have to waive your loan contingenecy caveat.

No one should sign a waiver of appraised value.

Real Estate agency has gotten to be a ridiculous joke. How would a buyer's agent ever advise signing such a thing?

That's the point.

Real Estate agents aren't lawyers, and make obscene promises all the time.

The buers agent could make a statement like don't worry about it, I've never seen a property not appraise at purchase price.

That was the statement the other agent here in Seattle made that started this discussion.

SFace says

You will LOSE.

Statements like this make the situation even more ridiculous.

Real Estate is a negotiation. Good agents close deals. They aren't there for Earnest Moneys, and a deal on the table is worth more than a promise, especially when an appraisal is on the table along with the offer.

Suppose I'm the buyer? Are you really going to razzle dazzle me with You LOSE. No. I'm going to negotiate, no matter what.

David Losh says

No one should sign a waiver of appraised value.

Real Estate agency has gotten to be a ridiculous joke. How would a buyer's agent ever advise signing such a thing?

That's the point.

Buyers truly terrified about this have every right not to make an offer.

gregpfielding says

Our California Association or Realtors contracts are crystal clear when it comes to contingencies and risks.

Our Washington State contracts aren't crystal clear. If they were they would put an upper limit on what the buyer may bring out of pocket, say like $50K, because you don't know what the appraisal will be.

The second part would be that the buyer would also need to show proof of funds at the time of the offer. Why would an agent waste the time otherwise? So how much proof should a buyer show?

A better question is if this is really a game any buyer should be playing.

David Losh says

Our Washington State contracts aren't crystal clear. If they were they would put an upper limit on what the buyer may bring out of pocket, say like $50K, because you don't know what the appraisal will be.

Buyers can certainly propose this with their offer. There is nothing wrong with a proposed cap beyond appraisal. It just makes your offer look worse compared to other offers with no cap.

David Losh says

The second part would be that the buyer would also need to show proof of funds at the time of the offer. Why would an agent waste the time otherwise? So how much proof should a buyer show?

Per the default language in the CAR contract, yes, the buyer is required to show proof of funds to close within 7 days of the contract being accepted. If I'm representing an buyer, I would always submit this with the offer. And if I'm representing a seller, I would require it from all bidders.

David Losh says

A better question is if this is really a game any buyer should be playing.

If you want to buy a house, yes.

robertoaribas says

you'd write a clause like:

A Real estate agent isn't an attorney, and can't insert language, at least not here in Washington State, and that is why we have boiler plate forms.

I know exactly what I'm doing, and saying.

OK, gentleman, as fun as this is, the fact remains you are argueing that a buyer should take money out pocket to be further underwater on a mortgage.

Let that sink in for a minute.

To buy a crap shack some place in a hot market, the Real Estate industry decided they were going to ask for monies over the appraisal, because that would close more deals.

Brilliant.

David Losh says

To buy a crap shack some place in a hot market, the Real Estate industry decided they were going to ask for monies over the appraisal, because that would close more deals.

You sir, are beyond fixing.

San Francisco is a scary place. Huge fees and taxes everywhere, cost of living through the roof.

Just experience tells me that is not a place to buy for anyone, too much risk for too little reward. Greg, I don't know if you make money in SF, but I think you need to find a better place where you can find houses to sell.

Low inventory and high prices are bad for everyone.

gregpfielding says

You sir, are beyond fixing.

That is true.

I remember I drove through San Francisco a while back. And I had to pay a fee to cross a public bridge. That is a highway robbery, literally! I paid taxes to build that bridge, and now they are charging me money to cross it!

Never going near that city again!

robertoaribas says

as usual, your stupidity is stunning. the more money the buyer puts down, the LESS likely they are to be underwater in the future.

You stun me repeatedly with your lack of understanding of the Real Estate market place. You come here all day every day packed with insults when you should be listening a lot more.

I just got off the phone with a Real estate Investor who just sold another rental while the getting was good. This is like a dream come true where buyers will pay for the priveldge of being under water on a property.

Hey, maybe that will be the next bragging rights at the cocktail parties. I paid $900K for my house, but it's only worth $800K according to the appraisal.

You're just to easy to get excited about nothing.

SFace says

Anyone can write a contract including agents.

I let this pass before, but as long as you aren't an agent I'll explain that better. I have written contracts on napkins, you're right, any one can write a contract.

Real Estate agents today however are stuck with boiler plate forms, mostly provided by the Broker. The Broker is ultimately responsible for the agent's actions.

Most Purchase, and Sale Agreements have a clause for Member Broker arbitration.

What I'm saying is that this is a new wrinkle in the already complicated Real Estate enviorment.

The Greg guy is the only one who seems to have gotten the point of adding the prooof of funds clause, which again is another boiler plate form.

We have the waiver of appraised value forms in Washington State, but no one, so far as I've heard, has had them disputed.

In San Francisco though I would think it could be a huge deal if Properties sell for $100K over apparaisal.

David Losh says

I paid $900K for my house, but it's only worth $800K according to the appraisal.

Couple of points on appraisals...

First, a property is worth what people are willing to pay. If multiple people are willing to pay $900,000 then, guess what, it's worth $900,000.

Second, an appraisal is just one person't opinion. Five appraisers on the same house will come up with five different numbers.

Third, appraisals are behind the market. They look at sold comps, which are often 3-6 months old. In a market like mine, that could easily be a $100,000 difference.

Appraised value is simply the value a bank will lend on. It's not necessarily the same number as the value of the house on the open market.

Appraisals are not a perfect system, and, in a Sellers' market, they are not the Seller's problem.