CFAH

From a plugged-in tipster living at 74 New Montgomery:

[I] attended an HOA meeting [at The Montgomery] last night and the developers announced they had sold 55 units (out of 107) and that 13 have gone into escrow since the recent price decrease…so the price drops did a pretty good job stimulating interest, nearly 20% bump in sales in a very short time.

From the sales office via another:

As you know, The Montgomery is the only development in San Francisco to offer all brokers a generous 4.5% commission. To further show our appreciation, we are pleased to announce the extension of this unsurpassed offer. The Montgomery’s 4.5% broker commission now expires on May 31, 2009*.

And an editorial comment from said another as well:

This demonstrates one of the continuing pervasive problems that contributes to the real estate problem…Instead of decreasing prices, some developers think they can drive traffic by raising broker fees, but this just wastes more cash by diverting it to unproductive hands.

The recent sales results are likely a combination of the two (price cuts and commission). And perhaps some hands do become more productive when “generously” motivated than one might think (or hope).
A Plugged-In Reader’s Perspective On The Montgomery And Its Cuts [SocketSite]

Comments from Plugged-In Readers

  1. Posted by eddy

    Any reasonably intelligent, or “plugged in” buyer should be able to knock 5% of the asking price if not using an agent.

  2. Posted by tipster

    They wouldn’t have to offer that commission to an attractivly priced property. When I was looking, it was always painfully obvious when my agent reccomended one of these. Total waste of time. As a result, I simply informed him not to discuss anything with me in which the commission was increased. He stopped.

  3. Posted by irked

    As a potential buyer, I am thrilled by the generous commissions. There’s no quicker and easier to determine that a property is overpriced, as tipster points out. We should all be saying, “thanks for the heads up, you clueless marketing d-bags!”

  4. Posted by agenthater

    this just goes to show what contempt the real estate industry, particularly agents, have for buyers. leeches. 75% of them. it’s an archaic “profession” that offers little in the way of added value to the consumer and tries to maintain a bad system with them as the middlemen, skimming unearned profits off the top. it’s little different than an organized crime syndicate.
    I can’t tell you how many friends I have whose agents would rather collude and cover each others’ asses than actually represent and fight for the best interests of their clients.

  5. Posted by jessep

    agenthater,
    Great post.

  6. Posted by hangemhi

    This is basic marketing strategy. Should they spend it on a billboard on 101? Or magazine ads? Those things cost money, offering a commission costs nothing unless a sale is closed.
    This kind of marketing is designed to get agents to take a look at the building, including many who never even heard of it, let alone gone inside. Then if it strikes them as something a Buyer they know would be interested in they’ll reach out to them.
    But Buyers are dumb. There is either value for them or there isn’t. If prices are much higher than comparables they’ll move on. No buyer in today’s market looks at one building and jumps. They look at a ton of buildings, and in SOMA there is a ton to look at. So 74 New Montgomery is just trying to get some air time, and thanks to their offer they even got more socketsite love.
    By the way, in the biggest bubble years all the new buildings did everything they could to cut agents out. And buyers walked into places like the Beacon and the Palms and paid Pac Heights prices.
    More mistakes are made when buyers try to buy something without their own representative when the Seller clearly has theirs. If you happen to be a sophisticated real estate buyer with negotiation experience, go get ’em. Chances are you’ll make mistakes too, but far less than the majority of buyers. Meanwhile most buyers should hire a Buyers agent, and they ought to interview several before settling on one.

  7. Posted by tony

    hmm, i see i can save my vile for another thread, as agenthater already has it covered. 😉

  8. Posted by eddy

    I’m certainly no defender of RE Agents, but I’d say even your above average home buyer is going to benefit form using an agent. There is an 90/10 rule in this profession — and you want one of the 10 representing you. And if you are a serious buyer with realistic buying interests you should be able to work with one of these 10% leaders. There are a bunch of clueless folks in any profession and RE is certainly no exception. I’ve always felt the incentive system was bad for the overall RE ‘system’ and needed to be retooled. Buyer Agent incentives should simply be not allowed. It certainly isn’t in the Buyers best interest. The problem is that no one regulates the Realtors so they are left to devise systems and incentives that are self-interested. I have a whole theory on using a buyers agent but I’m too lazy to post it now.

  9. Posted by LMRiM

    Always beware of advice from a realtor on commission:
    The legal niceties of the agency/fiduciary duties and responsibilities are poorly understood by the average sales agent, in my experience. It is also a thicket even for attorneys, b/c of the complex legal relationship among agents (who are not technically agents of anyone except their employing broker), listing brokers, selling brokers and buyer’s agents (who are typically agents of their employer, who is the buyer’s broker). Disclosure requirements are all over the place as regards any of thses individual actors, depending on who is asking the question, and all sorts of conflicts and “dual agency” issues arise. Add to this stew the high stakes of a high $$ purchase (and high $$ commission), and the general lack of experience of the buying public, and you have a recipe for abuse.
    All that being said, hangemhi’s advice seems the safest from a legal point of view. Only a buyer’s agent has a relatively clear fiduciary duty to a potential buyer, but of course that fiduciary duty is precisely what the outsize 4.5% commission at the Montgomery is trying to target and weaken.

  10. Posted by Anon

    Wow. Why is this building selling so slowly?

  11. Posted by ex SF-er

    not sure that the agents always deserve such vitriolic attacks. they’re trying to make a buck, like everybody else.
    the essential problem is that a buyer’s agent does not have full fiduciary responsibility to the buyer. So they’re technically not really a buyer’s “agent”.
    even when they do act as a true buyer’s agent, there is still the problem of conflict of interest. The buyer wants the lowest price but the buyer’s agent makes more money with higher sales price. (however, referrals are big in buyers agent land, so there is some aligning of interests)
    my thought would be that a better way of doing this would be to have buyers pay their agents a flat fee so that the buyer’s agent isn’t compensated for higher prices, but is compensated for their work.
    another way to get around this is to go to open houses oneself and then when you close use a RE attorney, who does have fiduciary responsibility to the buyer.
    disclosure: I have a phenomenal buyer’s agent, and I’d use him again. I use a flat fee though, and I don’t have him drive me around to look at homes. If I need him to do that, I’ll pay him hourly. if I move cities though I would use a RE lawyer instead.
    ========
    I believe much of the anger comes from the misnaming of RE professionals.
    we really should call these “RE salespeople”.
    nobody gets mad when the Best Buy salesperson tries to get you to buy the nicest flat panel TV, or when the Siemens salesperson tries to get your company to buy the nicest supercomputer. they’re sales people!
    salesperson also doesn’t mean that you’re stupid. I’m sure the top salesperson for IBM international is not dumb.
    Also doesn’t indicate “skeeziness”. I’m sure the top salesperson for Catholic Charities is a pretty decent person.
    the anger comes because RE salespeople have been mislabeled “agents” and thus buyers feel cheated when the truth is known.
    Or they are touted as RE (and even financial) experts when really they tend to be sales experts for their particular market.
    but the worst is that they are mislabelled as your agent, which seems on the surface that they have responsibility for you when in fact that may not be the case.
    when I want to find out the trends of the SF market in terms of sales and $/sq ft, then I talk to a RE salesperson.
    but I shouldn’t rely on them to give me adequate information about buy/rent costs, tax situations, projected RE valuations, macroeconomic issues, etc. and I shouldn’t rely on them to look out for my best interest either.

  12. Posted by Unwarrantedinlaw

    Yes indeed, go in there without an agent and the 4.5% comes right off the price. Not maybe, certainly, and it makes it wide open for further negotiation and better price.

  13. Posted by Mole Man

    This conversation reminds me of dot com radicals declaring retail dead. It turns out there is huge value in being able to bring sales to closure. Those closest to the deal always soak up a disproportionate share of the money involved. It is true that the real estate industry needs an enema, but it is also unlikely that agents and their fees will ever just go away.
    As far as the specifics go, if your agent isn’t telling you everything about the price and how they would make money off the deal then you have a bad agent and need to find another. There are plenty of good agents around. They make their money from referrals which as a rule are not available to bad players who risk buyer regret with every transaction.

  14. Posted by Miles

    Here’s the deal – if you are a buyer and can live without parking and like this project, just negotiate that broker premium as a credit back to you. A 2.5% commission is pretty standard at this price level, so just write the contract so that the excess 2% commission gets credited back to you so you can do some updates or for a reserve account.

  15. Posted by jj

    “I’m certainly no defender of RE Agents, but I’d say even your above average home buyer is going to benefit form using an agent.”
    The question is, is that benefit worth 4.5% if you have to pay for it? Nothing is free, regardless who pays for it. But the system is set up so that agents can be incentivized to steer buyers who are mislead to think they are getting the service for free. And it obviously works. If it didn’t, developers wouldn’t offer them.

  16. Posted by anon

    ahh, no wonder my agent showed me that building.

  17. Posted by Unwarrantedinlaw

    Socketsite is not an anti-agent site, but its very existence is anti-agent – anyone who is reading Socketsite doesn’t need an agent.

  18. Posted by San FronziScheme

    Miles,
    Even if you manage to get the 2% back, the salesguy will still get his 4.5% back, right? Whatever the outcome, the buyer still gives 2% for no extra work. Sure you can mitigate with some little incentive, but they’re obviously taken from the concessions the seller is ready to make before negotiations.

  19. Posted by chuckie

    “it’s an archaic “profession” that offers little in the way of added value to the consumer”
    I hate to pile on but this really is the crux of the matter. Most agents not only not add any value, but also detract from what a careful buyer may be able to do for himself/herself.
    Now this may sound as extremely cynical and/or paranoid but I have come to believe that a buyer’s agent’s job is to gain his clients’ inside information and then collude with the seller’s agent and the seller to make sure a transaction happens.
    It really is buyer beware. Whether represented or not, a buyer really has to do all the work, understand all the ins and outs of the property, location, pricing etc.
    Why do people value an independent source like Socketsite? Why is it always a good time to buy (I never heard it otherwise from an agent) or always a buyers’ market?

  20. Posted by vox

    Wow. Does all the agent hate here mean you people are or are not clicking through all the ads on SS?

  21. Posted by newbie

    What do you guys think about the new redfin model?

  22. Posted by ex SF-er

    Most agents not only not add any value, but also detract from what a careful buyer may be able to do for himself/herself.
    I disagree. For the experienced homebuyer this may be true.
    but for a first time homebuyer, the agent is a key source of handholding and helping them think things through. when I think back to my first purchase I realize how much help my RE agent was. they got me to think about things I otherwise would not have thought about. (how old is the roof, what type of heat does it have, what comps were and why comps are important, what the neighborhood feel is, impending construction/projects nearby, airplane noise, that sort of thing)
    again, I really liken it to when I bought a flat panel TV or my latest camera. There were so many different types and technologies. the TV (and camera) salesperson helped me through it… then I read on the internet… and then I bought one.
    a better example may be my hardware store. I used to go to Lowe’s and Home Depot, but the salespeople are often idiots. I’m buying an exterior door, so I went to Menards (local place, huge) and also a local millwork store and they helped me with the technical aspects of buying exterior doors (there’s more to it than you may think). I now feel very confident that I bought the right doors for the right price that will fit my 100 year old house.
    the key difference is that the RE salespeople charge so much. (sometimes 5 and even 6 figures on a property). I don’t think that in general they add THAT much value, but some might.
    again, sales people are of value. the problem is that the RE game has been corrupted due partly by a pseudo-cartel, and we have mislabelled what they do, and the stakes are high (often 10s to 100’s of thousands)

  23. Posted by San FronziScheme

    I disagree with anti-RE salesmen posts, they can add real value. They can save you time and also money, lots of it. All you need is find one you trust. Referrals and repeat business are usually the way to do it.
    1/2 of the great deals I did on the buy side were with salesmen. On the sale side, I did the stuff myself because I wanted real face time with buyers. The 1 sale I did with an salesman was pretty OK.

  24. Posted by San FronziScheme

    The last post didn’t turn out as I thought.
    I meant “They can save you lots of time and sometimes money”.

  25. Posted by sunnyvalesteve

    As I said in another thread, 74 New Montgomery is one of the most ineptly marketed properties on the current SF condo scene. As someone suggests above, if the inflated agent commission approach is effective marketing then why are only half the units sold?? It’s just a way to scratch the back of others in the industry while they try to find unsophisticated buyers who can’t see through the blatant collusion.

  26. Posted by condoshopper

    how do people justify buying these kinds of properties as “pied-a-terre”s or second homes (as they are sometimes marketed) when property taxes and HOA fees add up to such a high amount. I don’t know the tax situation in most areas of the world, but in hong kong even though flats are also expensive, you don’t pay a tax just for owning your property unless you’re collecting rent from it, and HOA fees are a fraction of here.

  27. Posted by Trip

    According to the BLS, the median hourly wage for a real estate agent in the SF-San Mateo-Redwood City MSA is $22.63/hr and for real estate brokers it’s $65.20/hr (most recent data is May ’07 — coincidentally the peak of the SF market so it is likely lower now).
    http://www.bls.gov/oes/2007/may/oes_41884.htm#b41-0000
    If you really think you need an agent to help you assess listings and negotiate, offer to pay him/her hourly — say $100 (and refund 100% of the buyer comm’n). You’ll come out way ahead, they will come out way ahead, and you’ll eliminate the incentive to act contrary to your interests (although you will need to monitor time spent). Given the dearth of transactions these days, I suspect you will find very good agents jumping at this offer.

  28. Posted by flaneur

    I am not so sure it is inept. Any agent will tell you it is a good building.

  29. Posted by Brahma (incensed renter)

    Instead of decreasing prices, some developers think they can drive traffic by raising broker fees, but this just wastes more cash by diverting it to unproductive hands.

    Not to defend Real Estate agents, but can’t one say that this objection applies to anyone working on commissions? Appliance salesmen at K-Mart, stock brokers, bond saleswomen, contingency lawyers, in short, anyone working for ‘rips’?
    If the Real Estate agent takes that 4.5 percent commission money and deposits it into a money market account and the accepting bank makes a loan to a local firm that needs the funds to expand their silicon wafer polishing machine business, then that’s a productive use, no? If the agent takes the money to use in a quick flip of some more already overpriced real estate, then that’d be a less productive use.
    I’d genuinely be interested in hearing a more fleshed out argument describing how there’s something more inherently “unproductive” about the skimming of fees by Real Estate agents than, say, traders at AIG Financial Products selling credit default swaps and collecting premiums, etc.
    If I recall correctly, every few years someone in the State Legislature gets the bright idea to put a special tax rate in place for people who work for rips, which I assume was motivated by the implicit value judgment that people working for rips are making an inherently less valuable contribution to the economy, but it never seems to get anywhere.

  30. Posted by San FronziScheme

    in hong kong even though flats are also expensive, you don’t pay a tax just for owning your property
    Agreed. Property taxes are a confiscation in my book. Many western countries have it though and a major source of income for the local gov’ts. In Paris for instance a 2BR worth 300K will be taxed about $700/year. In CA at this price point this will be close to 4K which is just ridiculous.

  31. Posted by chuckie

    “how do people justify buying these kinds of properties as “pied-a-terre”s or second homes ”
    During this credit/housing bubble, all housing was a cash machine. Every so often, you could re-fi, pay off all costs (taxes, insurance, HOA) and still have money left for that nice vacation to Europe. Going forward, it’s cheaper just to stay at the Ritz.
    🙂

  32. Posted by BuyerLove

    If the realtor is honest, they’ll pass on the extra commission bump onto their buyer. Sure it’s great to get an extra 2% but you won’t get ANY commission if you don’t sell it! Pass on the love.

  33. Posted by rr

    ex SF-er:
    Where your analogy breaks down is the fact that you don’t have a salesperson come with you to Best Buy and argue with the salesperson already there about the best price, when, underneath it all, both people have in-line interests that are contradictory to yours.
    I mean, basically, with your analogy, you have no buyer’s agent and are dealing directly with the seller’s agent. No one complains about seller’s agents, because everyone expects him/her to negotiate the highest price possible.
    However, RE agents can be compared more directly to full-service stockbrokers, who, while calling you ostensibly in your interest, really have their own interests in mind, which may not line up with yours. The solution is a flat-fee financial advisor, if you need financial advice. I agree with the above posters– the best solution is flat-rate buyer’s broker.

  34. Posted by ex SF-er

    rr:
    agreed. I said so above, that buyer’s agents in general tend not to have fiduciary responsibility to the buyer, and even when they do they have huge conflicts of interest due to the compensation structure (commission)
    some buyer’s agents are NOT really buyer’s agents… you have to ask an agent to specifically be a buyer’s agent AND draw up a special contract for that. most people just assume that the agent that’s working for them is a buyer’s agent, when that is not true.
    regardless, I agree that when you have a buyer’s and seller’s agent, you really have 2 separate salespeople selling you properties, both with an interest in selling for the highest price which aligns them with the seller’s interests and not the buyer’s interests.
    The solution is a flat-fee financial advisor, if you need financial advice. I agree with the above posters– the best solution is flat-rate buyer’s broker.
    agreed. which is why I said above at 10:27am:
    my thought would be that a better way of doing this would be to have buyers pay their agents a flat fee so that the buyer’s agent isn’t compensated for higher prices, but is compensated for their work.
    another way to get around this is to go to open houses oneself and then when you close use a RE attorney, who does have fiduciary responsibility to the buyer.

  35. Posted by Snowball

    Re: “I’m certainly no defender of RE Agents, but I’d say even your above average home buyer is going to benefit form using an agent. There is an 90/10 rule in this profession — and you want one of the 10 representing you. And if you are a serious buyer with realistic buying interests you should be able to work with one of these 10% leaders. There are a bunch of clueless folks in any profession and RE is certainly no exception. I’ve always felt the incentive system was bad for the overall RE ‘system’ and needed to be retooled. Buyer Agent incentives should simply be not allowed. It certainly isn’t in the Buyers best interest. The problem is that no one regulates the Realtors so they are left to devise systems and incentives that are self-interested. I have a whole theory on using a buyers agent but I’m too lazy to post it now.”
    Freakonomics author, Steven Levitt has argued Realtor incentives are not aligned with their clients and I would agree. That said, properly “motivated” an agent is a valuable resource. My own “system” would pay Realtors an hourly wage but most buyers and sellers prefer the cost to be hidden within the pricing of the proerty.
    Snowball

  36. Posted by tipster

    “Where your analogy breaks down is the fact that you don’t have a salesperson come with you to Best Buy and argue with the salesperson already there about the best price”
    When has a real estate salesperson ostensibly representing the buyer EVER done this? Both agents just manage their respective clients’ towards the middle.
    The buyers agent tells the buyer that he hears there are 42 offers coming and, in spite of the fact that the identical home on the left just sold for half the price two days ago, the neighborhood is “up and coming”; while the seller’s agent tells the seller that his property is the biggest piece of crap on the market, and sure, an identical house next door on the right sold yesterday for twice the price but that buyer overpaid and no one will ever pay that price again.
    The buyer’s agent tells the buyer that, sure the place has no bathrooms or running water, but he knows “some guy” who can have 3 full baths suitable for Architectural Digest installed by illegal aliens for 50 cents in an afternoon, thereby increasing the value of the home by $1Mil, so the buyer may as well offer the entire $1Mil over current comps, while the seller’s agent tells the seller that even replacing that faulty light switch will require a near teardown of the home and a complete foundation replacement, so they should consider themselves lucky to even have an offer, and should accept it quickly.
    My experience is that the agents all do such a great job in their respective roles, that neither of them EVER communicates anything to the other agent, other than the offer price and whether they think the buyer can go higher.

  37. Posted by steve

    “but in hong kong even though flats are also expensive, you don’t pay a tax just for owning your property unless you’re collecting rent from it, and HOA fees are a fraction of here”
    The response to this comment is that Hong Kong is a true capitalistic economy, whereas the California is bordering on socialism/communism. With so many social and wealth redistribution programs and policies, no wonder taxes and fees are high.

  38. Posted by The Milkshake of Despair

    tipster, you just raised the bar for socketsite hyperbole. But I do agree with your “manage towards the middie” assertion.

  39. Posted by Delancey

    Actually, the buyer and seller agents are more motivated to get a fast close (or in this market, get to any close), than they are to maximize the closing price. Think about it–delaying the close for a marginal improvement in price (of which the agent sees at best 1.5%) is not worth the investment of time, if that time could be spent working towards the next property’s close. Or, in this down market, jeapordizing the deal for the marginal increase in commission is foolish.

  40. Posted by D

    the essential problem is that a buyer’s agent does not have full fiduciary responsibility to the buyer.
    Ex-SFer: This is very different from my understanding. An agent is an agent. A fiduciary duty is an aspect of agency. How does a buyer’s agent not have a fiduciary duty to the buyer?
    I say this is all earnesty. My problem with real estate agents is deeply rooted in what I perceive to be their disregard of their fiduciary duties. Perhaps I’ve been giving them a bum rap for a while.

  41. Posted by vox

    “but in hong kong even though flats are also expensive, you don’t pay a tax just for owning your property unless you’re collecting rent from it, and HOA fees are a fraction of here”
    “The response to this comment is that Hong Kong is a true capitalistic economy, whereas the California is bordering on socialism/communism. With so many social and wealth redistribution programs and policies, no wonder taxes and fees are high.”
    The response to this is that they’re not. Overall, California’s taxes are a little above average. California effective property tax rate is way below average. Last I checked, only five states have lower effective property tax rates.
    Henry George hangs his head.

  42. Posted by rr

    tipster-
    your post is so hyperbolic it’s hard to know whether you mean it in irony or in exaggerated seriousness.
    Assuming the latter, though, I can say my experience (n=1) wasn’t quite like that. The number of communiques I had to sign before our agent sent them was fairly tiresome.
    Our broker was great actually (working on a flat fee). The seller’s broker was the most irritating woman I’ve ever had to deal with. I’ve never seen someone so willing to lie to make a few dollars. It didn’t matter whether the lies were obvious. They just kept spewing until something stuck. Just thinking about her makes me angry again.

  43. Posted by Paul Hwang

    A good agent is invaluable, a bad one is the most unfortunate thing that could happen to you.
    You could say the same thing about the police, teachers, doctors, anybody or anything.
    It’s a bit naive to blanket label any group.

  44. Posted by Eric in SF

    I thought Paris had a very high pied-a-terre tax for apartments not occupied full-time?

  45. Posted by San FronziScheme

    Paul, I agree on the good/bad comment.
    But police, teachers, doctors all require extensive training. We’re talking apples and oranges here. Re is a business you build with happy customers and their friends, but unfortunately a few ones still make a living with shady practices and this taints the whole bunch in the eyes of many.

  46. Posted by ex SF-er

    Ex-SFer: This is very different from my understanding. An agent is an agent. A fiduciary duty is an aspect of agency.
    not when it comes to real estate. this comes back to the problem with mislabeling roles. We mislable RE salespeople as “agents” when they may or may not be an agent.
    How does a buyer’s agent not have a fiduciary duty to the buyer?
    There are “buyer’s agents” and “buyer’s agents”. and they are very different.
    lets go through them both.
    “buyer’s agent”
    You go to an open house and have no agent. The agent there says “do you have an agent?” you say no. the agent says, “hey, maybe I can show you some properties”
    after this, they show you 5-10 properties. you find one you like and close.
    You may have thought that this agent was a BUYER’S agent but that is not true. They are simply a RE agent selling you RE. they may be acting as a buyers agent, but they have no fiduciary responbilibity to YOU the buyer. On the contrary, they may have a fiduciary responsibility to the SELLER. (didn’t know that, did you?)
    exclusive buyer’s agent
    Now let’s take the other type. You want to buy a house. you interview several agents and find one you like. You SIGN a BINDING Buyer’s Agent contract with Said buyer’s agent, that expressly states that the buyer’s agent has a fiduciary responsibility to you.
    now they have fiduciary responsibility and are your agent.
    however, we still have the conflict of interest issue due to compensation status (commission based).
    so there are “buyer’s agents” and “buyer’s agents”. many buyer’s agents are really RE Salespeople showing a buyer houses. Contrast this with an exclusive buyer’s agent who has a contract elucidating their responsibilities.
    Don’t even get me started on “dual agents” (representing the seller and the buyer). as if that’s possible. ROFL.
    (FWIW: my last house I had an exclusive buyer’s agent who also ended up being the listing agent as well. so a dual agent. It worked out fine because I knew what I was doing).
    lastly: in the past there really were few buyer’s agents. they became much more popular in the late 1990’s-2000’s… even so, there are different types of buyer’s agents… it is far from standard.
    http://homebuying.about.com/od/buyingahome/qt/BuyersBroker.htm
    http://www.exclusivebuyersagents.com/duties.htm

  47. Posted by San FronziScheme

    Eric_in_SF,
    Not very high. There are 2 taxes in Paris: Property tax (again $700 for a 2BR I own) and residency tax ($400 tops). The renter pays the latter. Prices depend on the area. If the property is empty then the landlord will pay a penalty that amounts to what a renter would pay except if the property is being renovated.
    I dealt only with rentals and corporate rentals filled at 90+%. I never paid any penalty.

  48. Posted by D

    I think we’re on the same page regarding buyer’s agents. Using an agent from an open house is a recipe for disaster. Every time I’ve tried to explain fiduciary duties to a real estate agent, I get an incredulous response. “What?!? How in the world can I put one of my buyer’s interests ahead of mine?”
    I’m completely against dual agency. I’m against having both buyer’s and listing agents being from the same agency.

  49. Posted by Outsider

    Regarding Hong Kong – There is definitely a property tax albeit substantially lower than in California. An example: A $1.3M unit carries an annual tax of around $5K. Amusingly, they are fondly known locally as “salary for the officials.” Income tax is flat 18% and obviously no interest deduction. HOA dues are lower because the doorman doesn’t get paid much and there is generally no benefits to go along. Hong Kong, by the way, has socialized healthcare. There is also cheaper insurance and minimal reserve. Every home owner gets a bill on a major repair project.

  50. Posted by jessep

    in hk, are there also insane trial lawyers biting at your ankles? Probably a more understanding and reasonable legal system too.

  51. Posted by Yikes!

    “A good agent is invaluable, a bad one is the most unfortunate thing that could happen to you.” – Paul Hwang
    Agreed.
    “#1 in Closed Sales at One Rincon Hill” – Paul Hwang
    “#1 in Closed Sales at The Infinity” – Paul Hwang

  52. Posted by anon

    To be truthful, any buyer’s agent who advised me to buy a 1000+/sq ft condo out by the freeway, I’d consider “suboptimal”.

  53. Posted by chuckie

    “Many experts have predicted a flat to slightly downward trend for prices in 2009.” – Paul Hwang when talking about South Beach/Soma
    Need I say more?

  54. Posted by Paul Hwang

    Yikes!,
    There is only one way to close so many deals on the buy side in a down market.
    The world is a much smaller place then yesterday, information is had much more readilly and everybody double checks what you tell them. People that can throw down millions of dollars in cash are not stupid, and guess what; they like money.
    Thanks for the plug and making my point.
    chuckie,
    Yes, you will have to say more because you make no sense.

  55. Posted by Paul Hwang

    anon,
    If you told the agent “I don’t want to be by the freeway, I have bionic ears.” then I would agree with you.
    If you told the agent “I need to be by the freeway (work, love of cars, whatever).” then I would disagree with you.
    Paul

  56. Posted by Paul Hwang

    San FronziScheme,
    I think you have it exactly right.
    I am amazed that a couple of acerbic fraudsters still do business in South Beach. Eventually I think they will self destruct. Until then, it’s unfortunate that the public must deal with them.
    Paul

  57. Posted by jessep

    “out by the freeway”
    Is this our new name for ORH?

  58. Posted by chuckie

    “I am amazed that a couple of acerbic fraudsters still do business in South Beach. Eventually I think they will self destruct. Until then, it’s unfortunate that the public must deal with them.”
    Because you are bound by the code of ethics of your profession to name names.
    Or are you just spreading vicious rumors about your colleagues in South Beach.
    🙂

  59. Posted by chuckie

    And Paul, on the original thread where you dropped that pearl of wisdom, I wrote:
    Let me see if I can bring it back on-topic. While commenting on ORH/Soma/South Beach, you wrote, “Many experts have predicted a flat to slightly downward trend for prices in 2009.”
    I already know you don’t make predictions. How about providing your sources? Do you agree or disagree with these experts? Or do you just quote these experts when “asking for business”?
    Does this make more sense.

  60. Posted by Paul Hwang

    chuckie,
    I was agreeing with San FronziScheme and citing an example. If you are so inclined, Fraud complaints / verdicts are public knowledge in the San Francisco courts. You are presumed innocent until prooven guilty, despite the number of complaints that may be against you.
    You are right; I don’t make predictions, I provide information to my clients from “experts”, and I do ask for business.
    Yes, you do make more sense now.
    Paul

  61. Posted by chuckie

    Ok, Paul, for the third time, how about providing links? Who are the “many experts” that you cite?
    I noticed you chased the market down with your “short sale” at the Met. Exploded $120K (17%) in about a month. Is this an example of “flat to slightly down” that your “many experts” predict from 2009?
    http://www.redfin.com/CA/San-Francisco/199-New-Montgomery-St-94105/unit-1105/home/12401760

  62. Posted by tipster

    Paul,
    Those are great photos from the redfin listing above. Really top notch. Did you do those yourself or did you hire them out. If you did them yourself, you’ve gotten much better.

  63. Posted by Paul Hwang

    chuckie,
    If u r really interested in it just google it. I’m not going to take part in ridiculing people in public, just like I’m not going to name every agent who is getting sued for fraud in this forum. That’s just bad form, bad business and bad karma.
    The short sale at the Met is a great deal, unfortunately the owner must sell immediately, because she has no assests and no income. By the way, $599K is the price she paid when I represented her in the original purchase of the property in 2004.
    tipster,
    I usually hire out the photos, but the link is not to my listing.
    Paul

  64. Posted by San FronziScheme

    Paul,
    I remember in 2006 when I scouted Florida (I came back running) I read in a paper that a huge proportion of South Beach dwellers had a Real Estate license. I remember 25% or so and this number freaked me out so much I decided to sit this one out… There’s nothing that says Ponzi like these figures. I can’t find any link though, therefore just take this number for what it is. SoBe was the Wild West of bubble territory.

  65. Posted by Miles

    San FronziScheme (sorry for the late reply) – as I understand it, your broker’s commission is completely negotiable. In fact, during the last major downturn (90-94) it was not uncommon for a buyer’s agent to refund some of their commission to the buyers in order to make a sale. So that 2% less would come off the price and comes out of your agent’s pocket if you structure the contract as such.

  66. Posted by San FronziScheme

    Miles,
    OK, I hadn’t understood your original post. If the 2% come straight from the commission and not from the negotiating with the seller then I agree this would be fair practice. Everyone loves a discount!
    On a side note, repricing is making this development much more attractive from what I heard from a friend today…

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