Not Using A Local Agent May be Costly

Hey Bob,
How about a little game on your blogsite? Post a listing you think has an “interesting” price and see what your readers think the sale price will be. We can check at close of escrow.
With any luck, we can be market makers…
Risk of complaints or lawsuit?

Dear Visitor to the Area,
Ha! I like it, but when I put my lawyering hat back on I worry about the possible effects.
This site is growing every week, currently getting between 300-500 hits a day, including a group of a few hundred that read the site at least once a week. If I were to post a listing that was “interesting” the argument could be made that I cast a large enough shadow over a property to perhaps cause a buyer not to make an offer, and thus harm the seller and listing agent….but I do agree that it would be a great feature on the blog!
Visitor to the Area, my guess is that you already know the property in question. Your knowledge of the SC market is tremendous. I will look forward to the day that we meet in person. I have a new listing coming up on Edgehill in San Carlos. You should stop by the open house.
Thanks for the post.
Bob Bredel
Realtor
REMAX Today

Hi Bob,
I like Visitor’s game idea too!
I think I know the house in question, but will you let us know for sure after the sale? Thanks for your insightful blog.

Dear Observer,
Thanks for your kind words about the blog.
I might mention the home inconspicuously in an upcoming post…however, you will really need to read between the lines to figure it out. If you want confirmation of the house in question, feel free to send me an email directly.
Thanks for your post.
Bob Bredel
Realtor
REMAX Today

Any thoughts about that house on Acacia?
Seems to me a good value with 4 bedrooms, close enough to Laurel St, a smattering of a view, decent condition, cul-de-sac location.
Why would someone pay $250K more for that house on Arroyo when they could use half that money to really doll up this place?
I haven’t visited the place so maybe it has no backyard at all.
Your comments about certain houses have been very frank and on the money. Have you gotten disapproving glances from your fellow agents?

Dear Visitor to the Area,
Let me handle the Acacia property first. I do believe that Acacia is priced about right and that it is a solid home for someone at the one million dollar mark. However, if you are looking for a reason as to the disparity in price between the Arroyo property and Acacia you should keep these factors in mind:
(1) Whether anyone wants to admit it or not, north of San Carlos Avenue is not as desirable as south of San Carlos Avenue for the most buyers looking in San Carlos. There are exceptions to this, such as some of the areas surrounding Arguello Park.
(2) Acacia is located on a hillside, which comes with the possibility of additional costs such as retaining walls and drainage issues.
(3) You pick up background noise at Acacia from El Camino Real.
(4) While Arroyo backed up to Central Middle School, it was right in the heart of the flatlands of San Carlos which is turning out to be the most desirable part of the city. For those folks that want to be close to Burton Park and walk to downtown Laurel Street, Arroyo represented a very nice location.
(5) The Howard Park and White Oaks areas are red hot right now. Arroyo timed their market debut perfectly, which in turn saw competition escalate their purchase price.
Finally, as to your last question, I have gotten one or two disapproving glances from other agents. However, I couldn’t care less about their gripe with the blog. The best I can do is call it as I see it. Most of the comments I get from other agents are very positive and some ask me if their listing is going to appear on the blog. About 95% of listings in San Carlos do not make the blog. There has to be something noteworthy for a listing to make it.
I hope this answers your questions.
Thanks,
Bob Bredel
Realtor
REMAX Today

I recently saw a lender, Wells Fargo actually. And they qualified me for way under the median price in San Carlos. And I am a stellar candidate dual income over $200K and above stellar credit and lots of down payment. The largest purchase price they would qualify me for is $850K.
So, my question is how are people affording the current prices in San Carlos? It’s a great area, which me as a 1st time home buyer would like to live in…but how? care to elaborate thanks!

Hi Rick,
I would first encourage you to shop that interest rate and purchase price. Just by the numbers you gave me, something is not right with the results from Wells Fargo. There is a ton of volatility in the mortgage banking industry right now and guidelines within banks are literally changing daily. I know for the last two weeks Bank of America has had some of the best rates and programs. If you would like my contact at BofA I am happy to forward that to you. Additionally, I would encourage you to run the numbers through a qualified mortgage broker. I have an excellent one here in San Carlos. I am happy to forward that name and number to you as well.
Your last question regarding how people are affording property in San Carlos is probably the most asked question in San Carlos real estate. Most of the first time buyers in San Carlos are falling into the $900,000-$1,250,000 range. Many are making combined incomes in excess of $150,000 a year and have excellent credit. However, almost all of them are falling into one or more of the categories listed below:
(1) Owned a condo or townhouse prior to moving to San Carlos and have approximately 200K in equity that they can move over to fulfill their 20% down payment requirement.
(2) Have had significant help from family, or a family member co-signs on the loan.
(3) Have borrowed against a 401K.
(4) Work at Google or Apple (don’t laugh there are many San Carlans that have cashed in Google or Apple stock for a down payment).
(5) Relocation buyers. In my opinion this is the most under-recognized group moving into San Carlos. With the massive relocation effort to the Bay Area by the Biotech companies in South San Francisco, many of the relocation companies have incentivized would-be employees with mortgage assistance programs. In the last 5 months I have placed 3 sets of buyers in San Carlos directly under a relocation/mortgage assistance program.
The San Carlos market can be very frustrating, especially if the prospective financing is not adding up. I think you would be pleasantly surprised if you shopped your prospective mortgage to a few different banks and brokerages. Again, please feel free to email me directly and I will put you in touch with the BofA rep and my San Carlos mortgage broker.
Thanks for the post.
Bob Bredel
Realtor
REMAX Today

Dear Bob –
I stumbled upon your website and LOVE IT….While I don’t work in real estate, I track the market here in San Carlos for personal reasons. Namely to ensure my own real estate value remains steady or continues to go up. We bought in 2004 and have seen a nice increase in our own market value.
Am now thinking of buying rental properties in San Carlos…Do you have any thoughts on 360 Ridge Road. I like the neighborhood a good amount and I am willing to make some major improvements to the home. Do you think the house is worth the asking of $699K – as I believe it is a short sale situation. My guess, the value is a bit less due to level of improvements needed in the home (interior and exterior) and other short sales in Belmont, etc have been going for less than asking. Thought I would seek your professional judgement….
Cheers-
Anonymous in San Carlos

Dear Anonymous in San Carlos:
360 Ridge Road is listed by Coldwell Banker-San Carlos. Any property west of El Camino in San Carlos listed at or below 700K deserves a closer look. There are three factors driving the price toward 700K: (1) only 850 square feet (2) home does not have San Carlos schools (3) home needs work. All of that being said, 700K is probably pretty close to the true value.
The key word in your post was “rental”. Whether this property makes sense as a rental for you is obviously going to depend on your down payment. Additionally, I think you need to figure on spending at least 20K to get it up to rental condition. Not having San Carlos schools is concerning for a home that does not have a much else going for it in terms of condition, square footage, etc. That being said, I think you will find a fairly healthy rental market in San Carlos. You may also be able to avoid the San Carlos schools issue by renting to families doing remodels in San Carlos (there are many). Those kids will already be admitted into San Carlos schools based on the remodeled home address. An expected rental value is somewhere between 1,700-2,200 per month. Prior to completing a purchase on this property you should do a very thorough investigation of the property with a qualified property inspector.
You may also want to consider the two 2/1 homes for sale on Walnut Street. For about 130K more you get homes in better condition, San Carlos Schools and closer to Laurel. The resale should ultimately be far better.
Thanks for your post!
Bob Bredel
Realtor
REMAX Today

Bob, you seem to have removed your previous article about Redfin. It was an interesting topic similar to this one. I wanted to reply to that posting since the remax owner seemed to have an interesting take. Please add my post when you bring the RedFin article back online.
My response: I appreciate the lengthy treatises, you obviously feel strongly about your livelihood. My point has not been to criticize the value you provide to your clients, it is only to point out the bias in the post.
Discount brokers do not single out ReMax because your model is different. Why is it necessary to pick on this one? They must be more prevalent in the market than most discount brokers.
Ok, this is your website, so why not get what you paid for. I actually like your entire website, sans this post. The other parts of the site is helpful, factual. Your reply was even very thoughtful. The last reply to the post however sounds more like a ReMax advertorial. So lets focus on that.
Regarding the success of Redfin:
Read some of the other real estate blogs about discount brokers and you will see, their biggest problem is that other licensed agents from “brick and mortar” agencies do everything they can to block their business. Vested interests are tough to break. The incumbents use everything at their disposal to stop change . Do a google search to fine the article and website” DOJ ANTITRUST DIVISION LAUNCHES WEB SITE ON COMPETITION IN THE REAL ESTATE BROKERAGE INDUSTRY”. The DOJ website was launch Oct 2007. Great information for consumers. Why do we have to wait another 18 years to fix the old model? Im not a fan of govt fixing the problem, industry should self police.
Discount brokers provide a necessary service, an a la carte menu that can satisfy different needs. Don’t we all wish we could get the same from Comcast, PG&E, our govt. A newbie can not rely on a discount broker. A single parent probably can not list and show a property alone. However, the neighborhood you serve, San Carlos, is well educated, dual income, middle-upper class. I must assume many of them understand that market, they can read the comps, they can stage their property, they can tour a house, they can get by without the “full service” some agents provide. Why charge them the same price as “your elderly parents”? (Actually my elderly parents are very smart, capable folks. I would not underestimate them. Are they as physically strong as Jim, probably not.)
I have a soft spot for the underdog. The discount brokers are made up of people who have disagreed with some of the traditional model, think pilgrims. Don’t underestimate stock options. They fueled the latest real estate boom and have created more wealth in Northern CA than any other form of compensation.
MLS is the information backbone, not “brick and mortar” agents. Discount or yours, both post your data to the same place. Discount agents represent buyers and sellers. Bob’s listing is the same as any other.
To answer your 3 questions:
1) why pay for a service you dont need
2) yes. why not? it will some day be the norm
3) yes, as i mentioned earlier, my parents are old, they are not handicapped. they will appreciate the transparency of services and the extra money they could use for their more important needs.
To follow some of the same use of generalizations, but with a twist on them from a different lens: Bob/Jim may be decent agents, upstanding citizens, good fathers/grandfathers/husbands/partners, etc,…however not all “full service” agents come with the same credentials. Without clearer pay for performance transparency, the little guy loses. The question is: how do you know who to believe?

Hi Todd,
Unfortunately, I finally had to remove the Redfin/Discount Brokerage category. I was receiving too many posts which were way off point and not…”family friendly”…I suppose would be the best way to say it.
However, I wanted to publish your post because (1) it actually had some valid points; and (2) I thought it was only fair to give you an opportunity to respond to my previous post, as well as Jim’s.
Again, I think you make some fair points in your post. Let me respond in the order you presented them.
First, my intent was not to pick on Redfin. I think you hinted at it in your post, but Redfin seems to be the most visible of the discount brokers, especially here in the Bay Area where tech is king.
Second, I think you are 100% correct when you alluded to the idea that some licensed agents at “brick and mortar” brokerages will do everything to block some discount brokerages, such as Redfin, from entering the marketplace. I think it is okay to feel the pinch of competition, however, if these same agents are putting their refusal to deal with discount brokerages over the best interests of their clients, they should immediately lose their license. End of story.
In terms of the model being broken, I am not sure that it is broken. I think it is on a much bigger stage here in the Bay Area because of our property values, which in turn creates much higher commissions, and in turn, more scrutiny. I think you described it perfectly in your post: Some people do not need the full service agent and are capable of completing the transaction with a discount broker….others are not. I think if people who wanted to use full service agents actually screened them and demanded a value-added service, many full service agents would be out of business.
I understand wanting to pull for the underdog in a marketplace that has been dominated forever by the more traditional brokerages. However, I believe there is a reason why the traditional brokerages have survived for so long without any real threat from discount brokerages. This is where my philosophy differs from discount brokerages. I think real estate always has been and always will be, personal. The buying and selling of property on the peninsula is usually a million dollar transaction and not something that should be pieced together by call centers, field agents, etc. Perhaps I am somewhat tainted by what I saw in my previous profession as an attorney, but you would be amazed at how fast some of these transactions spiral out of control. I am not saying that discount brokerages are not capable of correctly managing the transaction, but I think it is logical to assume that there are more opportunities for things to slide off course in deals where the responsibilities are pieced together among different parties. At the end of the day, I think there is something to be said, not for the traditional agent and brokerage, but for the traditional agent and brokerage which can offer a service that justifies their commission. This is usually done through experienced, competent, value-based, agents. In other words, I sincerely feel that I am worth the small percentage difference in fees between the discount agent and traditional agent.
Stock options: good point.
Regarding paying for a service that you don’t need…this is tough. Solid transactions are those that are fluid, efficient and negotiated and managed under a value-added, experienced agent. The more a deal is pieced together, the greater the chance of issues arising which could compromise the interested parties.
Finally, I wanted to give you credit for, what may be, the best question asked on this blog “How do you know who to believe?” The best explanation that I could give you would be to interview experienced agents from different brokerages, traditional and discount, and go with the agent that you believe will earn the commission they are proposing.
Thanks again for your post. I appreciate it.
Bob

Excellent response Bob!
Thanks!

Todd,
Without belaboring the Redfin point, it’s important to remember one thing: Redfin fired the first salvo in this “spat” between Redfin and the brick-and-mortar brokerages. They came into this market with both guns blazing with their “what your full-service agent doesn’t want you to know” mantra, and other pretty negative advertising directly aimed at full-service brokerages. Hard to blame anyone in the business for getting a little testy when someone is taking a misguided potshot at your paycheck.
I have no problem with discount brokers, or any other brokerage for that matter. GOOD competition is healthy for all — it gives consumers better options, and it pushes me to be a better agent. As Bob alluded to above, good competition will weed out the weak agents over time, regardless of what model they work for.
I also root for the underdog, and believe in the do-it-yourself approach when it makes sense. I’m a Charles Schwab customer; however, if you saw my investment track record, you’d probably wonder why 🙂 However, I personally would never buy a home this way. Just my personal opinion.
Redfin has no grounds to be crying foul — nobody in this industry is any more concerned with them than they are Zip Realty, or any of the other countless discount brokerages. There’s room for all. The difference is that they willing chose to pick a fight with the 800-pound gorilla, but somehow they seem surprised that the gorilla might actually strike back.

Bob
do you think the house on 1309 Elm is underpriced ? Its gorgious, but they are using an out of the area realtor.
Your thoughts ?

Dear cfd,
Its funny that you posted about this property. I have had two people call me today with very similar questions about the exact same house.
Start with the basics. This house was purchased for $1,000,000 in September of 2007. Currently, they are asking $1,295,000. So really, the question is whether there have been $295,000 worth of improvements made to the property over the past five or six months. I believe they did do a decent job on the remodel. However, I would want to see the permits and reports before writing an offer. The other item to take into consideration is the fact that the property sits at the corner of a four-way stop. That intersection of Howard and Elm does receive a fair amount of traffic. Additionally, I know that some local realtors have expressed some confusion over the fact that the “For Sale” sign was up, then gone, then up again. All of this being said, I think they are close to the fair market value. I probably would have listed it closer to $1,249,000. I don’t think they would have had any issues gaining multiple offers and most likely an increase in the purchase price.
Thank you for your post.
Bob Bredel
Realtor
REMAX Today