This is a buyer’s market, but that doesn’t mean sellers are always going to cooperate.  More often than not in this market sellers are not wanting to cooperate.  It may be a buyer’s market, but some sellers are fighting that reality and behaving as though it is a seller’s market.  You would think all sellers would realize what a buyer’s market means, but I can tell you that some sellers are behaving as though buyers are a dime a dozen and that they can demand a higher than FMV price or any terms they want, even if it is unreasonable in this real estate market.  This article is the fourth in a series entitled Buyer Tips in a Buyer’s Market.

Buyer’s Market Reality

Buyer’s Market Not Seller’s Market

I sat with clients today talking about the value of their home and what they might be able to net if they sold it.  We looked at comparables that have sold, and we looked at active listings that are comparable.  We discussed how many days these homes have been on the market (DOM), first for the ones that have sold and then for the active listings still on the market. For the homes that sold I brought out the data sheets showing what the original listing prices were and what the final selling prices were.  All of this information is invaluable in understanding this buyer’s market, and it is important in determining a reasonable listing price in the very beginning.

Buyer’s Market – Pricing

We discussed a home just coming on the market that is comparable and the listing price.  It is listed at what I believe is several hundred thousand above fair market value (FMV).  This is a disastrous seller mistake, and it is a disastrous listing agent’s mistake.  Here’s why.

A home that is grossly overpriced when it first comes on the market will lose some buyers right in the beginning for all the months it is overpriced.  Those buyers search the MLS online based on their maximum price.  A home that is priced substantially over FMV will never capture the eyes of qualified buyers who would look at it if it were priced at or closer to FMV.  Since buyers are few and far between, loosing a single buyer could mean not selling the house for a year or longer in the higher price ranges.  Those buyers will buy other homes, so they are lost to an overpriced seller forever.

There’s another disastrous result in a buyer’s market for a home that is substantially overpriced.  It disappears from the radar for other real estate agents.  Agents who walk through a home that is clearly overpriced will mentally remove that home from their radar entirely.  They know their buyers will not pay that ridiculous price, and so they won’t waste their client’s time or their time.  If agents show an overpriced home, it is to persuade their buyer to buy the other home they are about to view with a substantially lower price.  The longer a home is on the market at a grossly overpriced home in this buyer’s market, the more stale it will be.  Like stale bread, no one wants it anymore, and no one even wants to look at it.

Here are two bits of trivia for you.  Many sellers who are getting advice from agents who overprice their listings do not understand any of these issues and have no idea that their home will suffer these disastrous consequences and grow stale on the market.  This comes from 37 years in the business and talking to hundreds of sellers over the years.  The other fascinating aspect of an overpriced listing is that the listing agent never gets paid.  Isn’t that interesting!  He or she wastes time (maybe several years) and money listing and advertising a property without ever selling it and earning a commission.  That’s just plain crazy.

My buyer tip in this buyer’s market is don’t waste your time looking at homes that are way over priced.  The sellers are not in touch with reality, and they rarely are willing to negotiate reasonably with a buyer who is in touch with reality.  This is a buyer’s market–not a seller’s market.

Possibly Related Posts:

• Port Ludlow Real Estate
• How Listing Prices Affect Offers
• Real Estate Without Offices
• Sequim Real Estate Broker – Attorney Still Giving It All Away for Buyers
• Sequim Buyer’s Agent – On a Mission for Clients

Why would a buyer want a Buyer’s Agent? You probably know about the danger of dual agency and how your agent can actually end up negotiating against you in favor of his listing client.  Read my earlier article about The Danger of Dual Agency.  BUT did you know that agents can collect a tremendous amount of personal and financial information about you without your permission?  It’s true.  There are several services online that can be used to collect your personal data, data most people think is absolutely confidential.  These services are available to Realtors who pay a small subscription fee.  Realtors, including dual agents, will then have access to valuable information they can use to negotiate against you!  The data on you is extensive, and one service advertises that agents will get over 200 pieces of data on you.

Buyer’s Agent – Why Hire One?

Buyer’s Agent – Due Diligence

My argument, and this is totally in your best interest (even if you never ever hire me as your Buyer’s Agent), is that you should do your due diligence, and you should select your real estate agent (your Buyer’s Agent).  Do not wait for some aggressive agent to mine your personal data and contact you or talk you into a relationship (at an open house or a cold call) that may actually be contrary to your best interests.

Buyer’s Agent – No Conflict

Find a Buyer’s Agent who will represent you without any conflict of interest, and who does NOT mine your personal data.  While many in the real estate industry would vociferously disagree with me, I believe the agent you hire should be a Buyer’s Agent you find on the Internet and who you know already because you’ve read all about him or her.  Be proactive, not reactive.  This goes against the grain, too, but avoid agents who aggressively try to collect your name, your address, your phone number, and your email so they can pursue you relentlessly until you give in and hire them.  Don’t do that.  Do your own research, interview a Buyer’s Agent of your choice, and make your own proactive decision.

Does your Buyer’s Agent offer you hundreds of local and personally written articles, personal videos, and numerous online MLS and search tools – all absolutely free and without any obligation to register or reveal personal information.  I am the only Buyer’s Agent that I know of who has this philosophy and and these free tools for buyers.

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Conflicts of interest in this world are very real, and some conflicts–the kind that can cost you so much money and stress–are often hidden beneath slick advertising campaigns and clever slogans.  I’m going to focus in on conflicts in the real estate business, but let’s acknowledge deceptive conflicts effect you regularly in nearly every industry.

For example, buy anything from any salesman, and inherent in his best sales pitch is his desire that you buy from him.  That’s a practical conflict we experience almost daily.  Let me add right here that conflicts of interest are only a problem if there is dishonesty (exaggeration, misrepresentation, or outright fraud) AND the salesman does not put your interests above all else. If a salesman has integrity and is absolutely honest and will put his clients’ interest above his own, an apparent conflict of interest will not harm you.  It’s the other kind of salesmen that can turn a conflict of interest into a trap for the unwary that will cost you.

If you have a retirement fund in the form of a mutual fund or other stocks and bonds, you are involved in a huge conflict of interest right now.  Did you know that fund managers get paid 1% to 1.25% of the total funds under management on an annual basis.  So if your investment adviser (or his company or affiliated companies) are managing $30 million, that is a $300,000 annual income.  So when your investment adviser gives you advice to keep your stock rather than sell, do you think that is a gigantic conflict of interest?  Of course it is.  And if he suggests you sell and buy something else, is that a conflict of interest?  Of course, he will still get the management fee plus a transaction fee for selling and buying.  Can you say, “CONFLICT OF INTEREST WITH MY RETIREMENT FUND?”  [He might argue he doesn't get the fee, but if his company receives the income, it distributes it to him in various ways.  I know these things because I was a registered financial adviser and worked as a financial adviser for American Express Financial Advisers, later Ameriprise.]

Lawyers and law firms are full of conflicts of interest.  They charge you by the hour for work they do when no one is watching how they bill and you have no way to verify their hours.  The more hours they bill, the more they make from you.  The more legal issues and disputes they can create, the more they can bill.  I practiced real estate law for 20 years, so I know, but who doesn’t know about these conflicts?

In real estate buyers often assume they can just buy a property from the listing agent.  The extent of the conflicts are much greater than most buyers realize.  A listing agent has a fiduciary responsibility to get his client (the seller) the highest possible price for the property.  Even though dual agency is legal in the state of Washington (because John L. Scott’s real estate attorney Doug Tingvall wrote the statute and the state Association of Realtors lobbied hard), do you really think the listing agent is also going to get you the lowest possible price on the same house?

The conflict goes way beyond just the price, although that alone would justify hiring a buyer’s agent.  Disclosures to the buyer and handling the home inspection, the septic inspection, the well inspection, and other neighborhood issues all create the same kind of conflict where the listing agent is working for the seller.  Do you think the selling agent, who earns a commission if he gets the property sold to you has a conflict in what he tells you and how he advises you for his own listing?  Absolutely!

If you are buying real estate in Sequim or Port Angeles, I would strongly urge you to hire your own buyer’s agent who can exclusively represent your interests.  As a buyer’s agent, I cost my clients absolutely nothing, because the sellers pay the commission to both listing and selling agent.  I love the idea that I can represent my clients against the seller’s interests, and yet the seller pays my fee while I work for my buyer.  Isn’t that great?  Protect yourself and hire a buyer’s agent.

Possibly Related Posts:

• Sequim Buyer’s Agent – On a Mission for Clients
• Do You Know About Buyer’s Agency?
• Character is Everything
• Sequim Buyers Agent Sells The Most Homes in 2011
• Sequim Real Estate Broker Writes Book to Help Realtors

I have many wonderful California clients who retire in Sequim, so I couldn’t resist echoing some of their thoughts about why they move from California to Sequim.

I live in California where the sun is bright and the flowers bloom,
Where highways are byways, and mudslides and fires consume.
I live in the masses and the overpasses and I promise it’s full to the brim,
Oh, can you imagine how I long for the paradise known as Sequim?

I seek and I search for that perfect little perch,
And I know in my heart, satisfied will be my thirst,
When at last I find my dream home in that one place never grim,
My home, my destiny, my retirement dream, yes it’s Sequim.

Night and day I travel the Internet superhighway,
I look, I long, I sing a song, but where oh where will I stay?
I love the trees, the mountains and the sea, and I love to swim,
So why am I here in California and not in Sequim?

I know that I know that I need a Sequim Buyer’s Agent,
But I wait and I wait, did I say I procrastinate?
Where oh where will I find that ideal buyer’s agent, I’m stuck.
Alas, a Google search of “Sequim Buyer’s Agent” answered–it’s Chuck.

Chuck Marunde, J.D.
Sequim Buyer’s Agent
Sequim-Real-Estate-Blog.com
chuckmarunde@gmail.com
360-775-5424

An early photograph, much earlier.

Call or email me today.

Possibly Related Posts:

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• Do You Know About Buyer’s Agency?
• Character is Everything
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• Sequim Real Estate Broker Writes Book to Help Realtors

Yesterday I showed houses to a client from California.   We had a great day.   The sun was shining brightly without a cloud in the sky in Sequim and Port Angeles, and I always have fun looking at houses with my clients.   We toured eight houses.   For those hunting for a home here, this might be especially entertaining.

Of course my client had been using my online MLS search, and he had narrowed his search from 800 homes to less than a dozen with specific parameters, such as three bedrooms, his geographic preference, 1,800 square feet or more, and the price not to exceed $270,000, but the age of the house and the condition of the house were not limited in our MLS search by my client’s choice.

We started with the older homes as a matter of convenience in mapping out our driving route.   The first home was built in the 1920′s, and just trying to figure out where the original kitchen was located and how many additions there had been in the past 80 years was itself quite entertaining.   Once we got through the spider webs in the old slab garage, we played the game of guessing when concrete floors were added and how old the decomposing wiring actually was.   Price:   North of $230,000

The second house was built in 1913.   Touring this house was like going back in time before WWI.   Walking across the floors was an exercise in maintaining balance, since one side of the living room must have been two or three inches higher than the opposite corner.   The windows of that era were small, which meant the house did not get a lot of natural sunlight.   Staircases were narrow and steep.   I cautioned my 12-year old daughter, who came along for the fun, against bumping her head on the way down the basement stairs (and she’s only 4’9″).   Closets and the crawl space “were scary” according to my daughter.   Price:   Above $170,000

The third house was built in 1964, and like the others, was vacant.   The 1960′s were an interesting time in architecture:   dark brown panelling, small kitchens, cheap fixtures, square rooms and narrow hallways.   On top of that, the driveway was so steep, it made me nervous thinking about my car rolling down and into the living room of the house across the street.   According to my daughter, “the bathroom sinks were gross.”   Price:   Over $200,000

The fourth house was tucked in the trees and we almost didn’t see the sign.   We felt a bit uneasy walking down the walkway, which obviously had not been maintained since 1942.   But that wasn’t our greatest excitement with this house.   As soon as we entered, we immediately began to feel nauseous.   Have you ever walked into a home with the strong pungent odor of cat urine?   No sale.   Price:   Over $160,000   (Good luck selling this one!)

The fifth, sixth, and seventh houses are too boring to write about here.

The eighth house was a 1970′s style with add-ons and a makeshift apartment.   There were rooms and doors in odd places.   Apparently for someone this was the ideal home.   That someone would not be my client.   My daughter had no opinion at all on this home.   That concerned me.

At long last we arrived at a brand new home.   It was a spec home built by a builder who had kept building long after the recession started.   Everyone wondered what he was doing, building houses like it was 2005, but he had a line of credit at his bank, so he kept building.

It was a relief to walk through a home with a modern floor plan with the fresh smell of new wood and carpet.   While this home was what I would call “mid-level” quality in materials and construction, it was definitely much easier to imagine this one as home, rolling on the floors with the kids and dog, or relaxing in the bath tub off the master bedroom.   Finally, my daughter gave her nod of approaval.   How did my client feel?   This could be home.   Price:   South of $270,000.

Have you had any good entertainment lately?   Tour anyone?

Possibly Related Posts:

• Sequim Buyer’s Agent – On a Mission for Clients
• Do You Know About Buyer’s Agency?
• Character is Everything
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I recently read a blog by another real estate agent somewhere in the U.S. who wrote that if you are a buyer you can get good professional help in any real estate office by any agent, or words to that effect.   I disagree with that statement.

Does anyone think all lawyers are the same?   Or how about all school teachers, or football coaches, or dentists, or auto mechanics?   Of course they are not the same.   Neither are all real estate agents equal.   I recently received a very insightful question from a prospective client.   I love his question, because it shows me he really is thinking about who he retains as a Realtor, and he knows it makes a difference.   Here is his question and my answer.

Hi Chuck:

I have been corresponding via email with a couple of agents in your neck of the woods.   All are very helpful. I have read some of your articles and a question came to mind:   why should a potential buyer pick you over   other agents working diligently in the market? We haven’t visited Sequim as yet, but will in June ’09, and we will at that time decide if this is the place to buy a home.

Thanks, [name withheld in this article]

My response follows:

I love your question.   I wish every buyer asked that same question.   One of my pet peeves is that I compete with every Tom, Dick, and Jane who got a real estate license, but if clients don’t do some due diligence, how will they ever differentiate us?   I’m not able to talk too much about my own resume on my blogs, because that would be arrogant and turn people off, including me.   [Remember reader, I'm   breaking my rule here and answering a question about myself.]   My business is client-centric, so I try to write about subjects that clients are actually interested in.   BUT since you asked a direct question, “Why should a potential buyer pick you over other agents working diligently in the market?,” I will answer it directly.

1.   My education includes a B.A. in economics, a law degree with a focus on real estate, and three decades of real estate seminars on legal issues, sales and marketing, and negotiating.   But education without more is meaningless.

2.   My experience in detail would bore you here, because it includes 30 years in real estate, but suffice it to say that I’ve handled thousands of transactions as a Realtor in Alaska, Nevada, and Washington, and as a real estate attorney of 20 years.   (See my detailed resume.)   I just sold a $475,000 house to a buyer from California, and his testimony is probably the best reality check you could possibly get on me.   I called him and asked if he would mind if you called him and asked him how it was working with me, and he said he would be delighted to talk with you.   He’s worked with other agents, too, so he can give you a real comparison.   [Client's name and number withheld]

3.   As your buyer’s agent, I cost you nothing.   The seller pays my fee.   I love that.   I enjoy negotiating for my clients to get the best possible price and terms.   In once case I saved a client $80,000.   In another recent case, I helped a client as a buyer’s agent buy a house for$251,000 in a very intense negotiation that saved him about $38,000.   As a buyer’s agent, I’m selling a house every other month.   There are agents here who haven’t sold a house in over a year.   By the way, I do no print advertising.

Here are more detailed articles that I’ve written for your benefit on these subjects:

How to Research Your Next Realtor
Dual Agency Can Cost You
Dual Agency and the Exclusive Buyer’s Agent
Chuck Marunde’s Detailed Resume

You may have seen my sites, but here are the links:

SequimRealEstateNews.com
SequimPortAngeles.com
Search the Entire Sequim & Port Angeles MLS

[name withheld], I’d love to work with you, and I honestly believe you will get more from me than any other agent.   I would recommend you meet with me when you get here, and see if you are convinced I’m competent and trustworthy.   I’m looking forward to meeting you and working with you.

Chuck E. Marunde, J.D.
Broker/Realtor
Sequim & Port Angeles Real Estate, LLC
618 South Peabody St., Suite I
Port Angeles, WA  98362
360-775-5424

Possibly Related Posts:

• Sequim Buyer’s Agent – On a Mission for Clients
• Do You Know About Buyer’s Agency?
• Character is Everything
• Sequim Buyers Agent Sells The Most Homes in 2011
• Sequim Real Estate Broker Writes Book to Help Realtors