I actually don't have a hidden agenda as you say. My overt agenda is to show that these markets are clearly overvalued.
Woodside is no exception. It is similar to palo alto in that is slowly deflating, and is not expected to stop for the next 5 years given the slowness of the correction.
Take for example the following properties for sale currently:
6 BRET HARTE Dr: Sale price $624,800, purchased in '05 for $740,000.
170 SUNRISE Dr: Short Sale offered at $1,399,000. Originally offered for $2,000,000 and still no takers. The property has been in and out of contract at least 3 times.
3 BARRETT Dr: Sale price $1,799,000, purchased in '06 for $1,900,000
475 WOODSIDE Dr Sale price $1.895,000 purchased in '06 for $1,975,000
7 OAK HAVEN Way Sale price $3,295,000 purchased in 2000 for $4,350,000
This last property is pretty telling. It represents a loss of ~$3,000,000 over 10 years. And the property hasn't even sold yet.
What is your agenda?
Why did you change your alias here on trulia? It is unethical of you to post here being a realtor and not disclosing your professional interest. You also confirm my original impression of you. I would never do business with you and have recommended everyone I know to avoid you.
Here is a direct quote from you earlier in the thread...
"Mr Pa_Home Buyer, I do not hide behind an alias. I am an agent, in Woodside California, serving my clients and my community day in and day out. I grew up in Palo Alto. "
Unless I am missing something, you are now hiding under an alias. I hope for your sake you don't live in a glass house....
It is a fallacy that you need agents and the mls to verify home sales. Check out http://www.propertyshark.com as one of the many venues available if you are interested.
Your last response basically acknowledges your only 'value' is to provide a repository of info, which the NAR is trying to limit access for dear life. You are pretty naive to think your compensation structure will continue indefinitely given this is all you bring to the table. I will be happy to continue to enlighten you.
After reading your response I can only infer you must feel a high degree of frustration at the fact your profession is disappearing.
I realize it must be difficult to accept anyone without training can do your job more efficiently than you can. I adive you to be proactive and seek employment in a venue that actually adds value to society.
You basically admit that all your clients have overpaid and that they should not worry about your commission because they lost more money in the transaction.
Do you realize how untrustworthy this makes you appear?
You clearly bring no value to your customers and are no better than a used car salesman attemping to defraud anyone doing business with you.
By the way, attorneys make the worst agents. They wreck deals 75% by dividing buyers and sellers with over zealous legal maneuvering, egotistical posturing, addendum re-writes to a boiler plate contract and, in the end make extra work for everyone to prove their own value and justify their retainer.
Does your wife pretend to think that she knows what we know about the market because she took a Brokers test? That's funny! None of those questions will help you list or sell a property, I guarantee you that! Does she tour every Monday, Tuesday and Friday? Does she hold Open House? Does she have a lock box key to preview properties? Does she have access to sale price data and recent comps? Does she have relationships with lenders, Title Companies, Stager's, Marketing Specialists, a Broker, Home Inspectors, Termite Companies and Handy Men? Does she know Real Estate disclosure law, and has she studied the PRDS and CAR contracts?
Here is what I think. Someone who paid their dues and educated you and your wife found the home you are in today. Your wife may have a brokers license, but I guarantee you that it was an agent that did all of the hard work to find your property and educate you about the market.
Just because you have access to MLS, read Trulia articles and tour open houses on the weekend, does not an agent make? If I subscribe to the Journal of American Medicine, will you let me operate on your heart, your brain or remove that chip on your shoulder? Hardly.
I am glad you found a home that you love. I bet a Realtor found it. I bet a Realtor wrote the contract. And, it sounds to me like you bullied that hard working professional into giving up a referral fee because you were so concerned about that little number? Am I right? Or, did you and the "Broker Mrs.". do it yourself? This would explain the reason you are so adamant about twisting words into pretzels and focusing on your scrabble vocabulary to display your syllabic prowess in this forum. It's all because you overpaid for the property. You are still fixated on the 5% - 6% instead of the 94% - 95%.
PS> Lawrence Yun - I heard him talk (stutter) for an hour (butchered the English language) and throw a bunch of 'statistics' about commissions and the dynamics of the Real Estate industry and why agents will make less comission over time. I heard him speak 5 years ago at a lender sponsored luncheon in Palo Alto. Guess what? He was wrong. Agents made more money and averaged higher commission percentages over the last five years than during any time in the history of California Real Estate. So much for Mr. Yun's statistical analysis.
I felt I should add a little clarification to the argument: "regional" vs. everyone else. No one knows whether you left 6-10% on the table - real estate markets don't operate like that. Homes aren't like cars, where you can easily get the same exact car at another dealer. The market (the buyer or collection of buyers) sets the price - no matter what any agent says they can get you. If an agent says "your home is worth X" or they "can get you X for your home", run. They are blowing smoke and you are more likely to leave 6-10% on the table if you list with them than if you sold it yourself.
Any good agent will tell you a general estimate of where the market is for homes similar to yours, but explain that regardless of the estimate, the market is the one who sets the value - no agent has control over the market.
There are ways agents can add value if the owners aren't aware that fixing minor problems in the home, disclosing all defects up front, giving it a fresh coat of paint, and doing a little staging will add value/saleability to their home. If you are an owner that can do those effectively, then the agent can only lend transactional expertise to the situation to help the owner avoid common pitfalls.
It is obvious that homes just aren't selling for what they used to. Although Woodside is a very strong market, it is also full of well informed and well educated buyers that know value. Homes in the best markets have held off complete collapse to 1998 values, but not without significant loss from their 2007 highs.
It is also clear that am vast majority of agents (with an average age of 55+) are simply out of touch. The industry is changing around them and they don't see it.
Check out http://www.atlistings.com - its an online broker similar to others, yet doesn't skimp on service to achieve similar savings. The agents are local, highly experienced, and offer the same services you would get with any other high-end agent around here. The only difference is that they do it all for 50% less.
The loss is about the same regardless whether the property was financed. The seller was deprived of interest income of ~5.5% of $4,500,000 for 8 years.
I do agree that properties above 2M are simply not selling. Whether there is some level of activity off-MLS is simply besides the point as the volume as sales has simply evaporated compared to the peak of the market where 60+ homes would sell for more than 3M.
The million dollar question, (or rather 2M+ question) is when will sellers ultimately capitulate.
I get the sense sales in saratoga, hillsborough, and other neighboring areas are higher than palo alto and for bigger properties. This will continue to place downward pressure in this segment. - Tue Oct 13 2009, 19:26
The following are the corrected numbers
Purchased in 2001: $4,500,000
final sale price: $3,500,000
total loss after property taxes and 30yr 5% mortgage, 20% down, sales commission: $3,090,649
Hopefully the new buyer might fare better. Although on a $/sqft this property is still overpriced by historical standards. According to propertyshark.com the expected $/sqft is ~$600, valuing this property at ~2,600,000 - Tue Oct 13 2009, 13:45
2061 was listed on redfin as having a pending contingency offer for that sale amount, but is now no longer available.
It is not clear whether the sale actually transacted or fell through.
If the home hasn't sold, its losses simply continue to accumulate.
Can any realtors comment on the final outcome? - Tue Oct 13 2009, 10:38
Wanted to follow up with a previous example here that has a contingency offer.
Purchased in 2001: $4,500,000
Contingency offer: $3,695,000
total loss after property taxes and 30yr 5% mortgage, 20% down, sales commission: $2,940,649
The owner purchased the property in '01 and took a sizable loss after 8 years of home ownership. This is a good example of what to expect if you buy a property during frothy times. As 828 pointed out, many sellers are starting to understand the reality of the present and future worth of their properties and acting accordingly. - Mon Oct 12 2009, 16:26
Looking at sales over the past three months, a couple of property were surprising:
791 cereza dr and 807 matadero avenue
I can tell you that similar to mr pa_buyer, I have never used an agent to sell a property. I've sold 6 properties at values actually higher than prices quoted to my by brokers trying to win my business.
This was prior to the vast repositories of info now available online. Now with competing services such as redfin, you will continue to see pressure on realtors commission schedule.
This debate is not that different than what stockbrockers used to say prior to their fee schedule be forever changed by a more free exchange of information.
there are many studies which have shown selling or buying a home with a realtor does not add value to the customer. Here is a link for you to read...
I was curious and performed a search the NAR has no study to the contrary that I could find.
You be the judge.
Please post a link here if you do find any research on the incremental value provide when transacting a home through a real estate service.
My question is whether there is any data to show that the 5-6% commission schedule results in a final sale price higher by a commesurate amount. That is, is there any data to show that real estate commissions are value added, or are they an expense on average. In my experience, it does not.
As information fluidity continues to come about in the market place, I find it difficult to imagine such commission levels will survive in the future. As a point of reference, the commission of our last home broke 6 figures. It was so high my wife took the initiative to take the broker's exam (she is a licenced attorney) and recapture some of that expense. Even factoring her test preparation time, it was well worth her effort.
I'm not disagreeing with your comment on the NAR either. They have some issues that sure need to be addressed.
The commission comes out of the seller's funds; the buyer pays the selling price for the house. "
Here is a simple question, where does the money come from that the seller pays you with?
From the buyer right?
Hence, the buyer pays the 6% (or 4.5 or 8%) through the purchase price.
Without real estate commissions people would pay less in theory when buying. That is not saying that realtors are not needed or worth their commission. Just to say yes, the buyer does pay the commission costs.
As far as NAR is concerned, they should stick to the basics and forget doing any kind of forecasts. At best it makes them look silly. At worst, they look downright crooked. They definitely look dishonest when you look back in time at their forecasts of prices going up always, even when they were definitely headed down.
I'm not familiar with that particular presentation. I don't know where the rest of the presentation is or when it was presented. Having said all that, the NAR is in the hot seat with Realtors and has been for quite sometime for what many feel is misrepresenting us - (we're all the same and there's over a million of us; oh yeah!) and the market.
The market has to be addressed in extremely small increments; by neighborhood, not by city. Just in the city of San Mateo there are many markets. They have to be analyzed as such.
I am not an economist and don't feel comfortable speaking in terms of the future, especially five years out. I look back at the historical data; however, I believe there will be some gains in some markets - I can't get much more general than that but that's the point. Whether or not any market will see the kind of gains in that slide, in my mind there are too many variables to make that determination.
Hiring a lawyer is certainly anyone's option. I think there's a mistake in ordering real estate services in that way unless you completely understand the process and know what services you should be and could be ordering. I am not familiar with any attorney who will attend inspections to explain what collateral damage means in that context, market a home on the internet - even one who will understand what the heck marketing a property is about... but again, everyone has that option.
Buyers don't pay 6% in a transaction. If they pay anything it's 3%. Although I don't have the data to back this up I'm going out on a limb to say that most of the commissions in our area are 2.5%. Whether the buyer actually pays that commission is also a matter of opinion: The commission comes out of the seller's funds; the buyer pays the selling price for the house.
I'd have to do research to determine whether or not there is statistical data on whether or not there's a net gain for buyer/seller on the commission paid. I may do that research in the future.
Contributing to the economy? I may be missing your point on that one, but of course we do. Maybe you can clarify your question.
We're definitely seeing pressure on commission. That's part of the state of the current economy. With layoffs and cutbacks, everyone is seeing pressure on their paycheck. As far as Redfin or discount companies, it's my position that you get what you pay for. You want a discount on the price, you're going to get a discount on the services received. As a buyer/seller you feel comfortable and have experience in a real estate transaction that may be the right decision.
I hope that agent had the seller's permission to discuss that offer. Many sellers are having difficulty believing the current value of their properties; it's a tough reality to accept. But that's definitely not an appropriate conversation to have with anyone!
Oh, I absolutely realize that public perception isn't in a vacuum. That's why the rant about how easy it is to get a real estate license. There has been a lot of pressure for that to change and some changes have been made but quality of service is subjective. I hope we continue to work to elevate the knowledge, education and public perception of our profession.
I thank you for taking the time to reply to my post with a well redacted answer. I would be willing to have a discussion on the points you raised.
First of all, I think we are in agreement that historical pricing does provide an unbiased metric to assess whether a particular home. neighborhood, or city is fairly priced. I take the position that the National Association of Realtors does everything possible to ignore and obfuscate this very point. Take for example slides presented by Lawrence Yun, the chief economist of the very group that represents you professionally.
Do you think we will gains your profession predicts over then next five years? More importantly, do you think there is any rational basis for your professional society to even make such a prediction?
Regarding your comments concerning the services provided by realtors, you list many services that can be hired on a fixed dollar basis from a lawyer. The frame the question more concretely, can you point to market data that the average 6% commision paid by buyers results in a net gain in equity greater than 6%? If you can you have a case that you are contributing to the economy. I think you are already seeing competitive pressure from companies such as redfin, which split the commission with the buyer and yield better prices than full commission agents.
Finally, I agree with your complaint that there are many many realtors who provide a diservice your profession. Here is a little anecdote you might find amusing. I recently attended an open house where the host made it a point for people to hear that his seller had rejected an offer just under his asking price. The price of the home was based on peak bubble pricing for a couple of years ago, and the seller would have to be insane to have rejected anything that came close. Out of curiousity, after walking through the house, I picked up the same phone the realtor had used... and there was no dial tone.
It appears you have a general complaint on overall perception of realtors from the public. I hope you realize most of the negative views do not arise in a vacuum.
I believe that everyone here is doing their best to answer all the questions in the most informative way. The most unfortunate thing is that when we do go out on a limb with an opinion, we often get lambasted. And because we don't want to be thought of in poor light we don't want to engage in what can be a heated discussion.
My advice is based on the client's situation, based on what they've told me. 2006/07 may not have been a great time for you to purchase a home; that's perfectly understandable. But the most important factor in purchasing a home is not necessarily the price - it's the percentage rate of the loan, among other considerations. Many of those who purchased a home during that time would not be able to purchase a home under the current lending conditions - which would not necessarily be acceptable to them.
I specifically addressed historical norms by saying that's the only way we can determine an accurate price. I obviously didn't state my position clearly.
As a Realtor my function goes far beyond determining what price to offer/accept. I am responsible for collecting and deciphering data; comparing many properties to the subject; conveying the inspector, lender, title and escrow speak to the client; determining the best marketing approach, communicating with the agent on the other side - and in my practice there always is an agent on the other side - without giving away information about my client that would be detrimental to their position; maintaining a current understanding of the rapidly changing laws; showing my clients how to take advantage of the current programs available to them - I'll stop now. But it leads me right to my next beef.
As agents our associations have thrown us under the bus. They have created a climate where the consumer believes we're all the same, with the same opinions and knowledge. They have made the barrier to getting a real estate license so low that all is required is passing a remedial test. That tactic has put us in the position of having to compete against some of the most underskilled in the field because the consumer is left with no way to differentiate between the worst and the best.
I enjoy a good debate. Thank you for being willing to engage. Hopefully I was able to clarify my position.
I find your post disingenuos. You are claiming that in '06 and '07 at the height of the bubble, you had no indication that a bubble existed?
I take it you advised your buying clients to jump in with both feet even though there is ample historical data for woodside and throughout the bay area that such prices were unsustainable.
If you have no idea whatsoever whether a home is priced high or low compared to historical norms, what value does your function bring to buyers?
I don't see anyone denying anything here. Everybody - agents or not - has an opinion - right or wrong. You have to find someone who speaks your language. Agents don't always say what you want to hear. It doesn't mean the information/advice is wrong.
I have written up beat posts in the past for the Board Of Realtors, so as professional sales people we are guilty of painting a glass half full vision. I will not deny that, whatsoever. Of course, I remember when interest rates were at 18% - think that times are tough now? History puts all of this into perspective, so try and average your numbers over an 8 to 10 year period and you can see that we are back to basics in real estate values, once again.
At the moment I would say that if you are a seller, unless your property is affordable (under a million to $1.5 range), do not sell in this market. Wait. As for buying, that is another story. The numbers only tell part of the story here in Woodside. I work out of the Coldwell Banker "Village Pub" office, and I live in the community of Woodside. If history repeats itself, this trend will correct itself in the coming year to year and a half and we will begin to see an upswing in sales prices, higher average sale prices and shorter Days On Market numbers and the Woodside market will bounce back with a vengeance.
Be patient. Have faith and above all else, don't panic. Talk to a local real estate professional and get all of the facts, not just the statistics as they show only a piece of the puzzle that is the Woodside Real estate market.
If three things sold, one for $1, one for $10 and one for $1,000. Then the median is $10. That doesn't really tell you anything.
I think the reason for the discrepancy is that I am looking at a year to year comparison, and the data in the link you posted is looking at the numbers from a monthly perspective (so it appears). Without knowing their methodology its hard to tell. If that is what they are doing, and there is only one house sold in a given month, that's the median. This is the reason I was using the 3 month example in my previous post. In the last three months there were only 3 places sold, all below 2m so thats how you get your monthly median that is low.
I am not sure how they ran their analysis, but I can tell you the way I did mine. I am looking at sales for the entire year, then coming up with a median price from that number. I am also only looking at homes, not vacant lots. Then I compare those to prior years. If you want the raw numbers, I would be more than happy to send those to you, or you an give me a call.
The data I quoted from altos research is actually year over year comparing jan 08 through jan 09, not over the past 3 months. It is troubling that it is diametrically opposite to the data you quoted. Given that you are both comparing sales over the same time period, what would be the reason for such a large spread in the conclusions from the data?
First, Woodside should really be divided into upper (being the Skyline area) and lower (being central Woodside etc) even then the area should be broken up a bit more (Woodside Glens etc.). They are really different markets.
Second, there were 32 homes sold in lower Woodside last year, down from 48 last year. In the last 3 months only 3 places sold in lower Woodside, the least expensive being $1m, the most being $1.89M. Those were among the least expensive homes sold in Woodside this year, so it threw the median down. The median for the year is almost the exact same as last year, just below $3m.
When you look at the numbers on a monthly basis they can be all over the place. Prices in Woodside this year varied from 9.5m down to 1m. It is very difficult to get meaningful data from median number in Woodside unless you look at it from 6 month or better yet, 12 month period simply because the number of transactions is not that large, and the price varies so much from property to property. I like to look at the available inventory vs. what sold and days on market to get an idea. (I have put together an analysis of this that can be found here: http://activerain.com/blogs/mortimer99 )
Basically the volume is down but ,from a year to year basis the prices are about the same.
Hope that helped
The big problem as I see it right now is that jumbo loans remain ridiculously expensive compared to standard conforming and the newer high balance conforming loans. Whereas the latter are currently priced in the 5% range, jumbo loans (625K and up) are priced in the high 7% range - and to get such a special rate you also may need to put in excess of 20% down. Of course, consult your mortgage broker for current data.
This is a problem all over the mid-Peninsula. Menlo Park, Portola Valley, Woodside, Palo Alto, etc. all face the same issue. The buyers are out there, but lenders are making it difficult for anyone to buy.
This is compounded by newer, more strict guidelines for appraisers that frown upon going back more than 3 months when looking at comps (comparable sales). As you my recall, the credit market froze back in early October, which is now more than 3 months ago.
The end result - very few homes sold in the last 3 months, so the comps are very limited. Appraisers may have holes in the price range they are trying to comp (just had that experience), and they certainly are not going to err on the high side. Loan rates suck for jumbo loans, so many buyers are waiting (and justifiably so).
Is the higher end in for a downturn? Maybe so, but it is not simply because the capable buyers have all gone broke. There are a host of factors in play. Since the new year though, there has been an uptick in properties in the jumbo loan category that have gone pending.
That's my 2 cents.