Buy Home Via Listing Agent?

When buying a home, some folks are tempted to go straight to the Listing Agent, i.e. the Agent whose name is listed on the sign post, and forgo representation by their own Buyer’s Agent. They hope to get an edge on offer acceptance, or save money by negotiating commission.

While these good intentions often lead to a perception of value, they virtually never result in actual value. Moreover, the unintended consequences can be huge… and the result could offset any perceived discount by many multiples.

While general market conditions can arguably be called “distressed”, anyone who has spent even a bit of time searching homes recently knows that good deals and/or good market segments are pretty competitive. The better opportunities often come with multiple offers.

“Pushing offers through” is a function of many variables, including price, motivation, down payment, credit worthiness, payment capacity, organization, technology, Buyer attitude, Seller scenario, Agent experience, and Agent incentive… just to name a few.

The idea of “pushing offers through” itself is largely subject to marketing spin. The main thing to realize is this: if you were selling a home, wouldn’t your main concern be to identify and accept the highest and best offer received? … regardless of who brings the offer?

Since a home purchase is typically one of your largest investments, it is likely your senses will be heightened to perceive any sign of advantage, social proof, or sense of validation. While these same deep-seated human survival instincts have been instrumental in propagating our human species… they also unfortunately tend to make folks vulnerable to compliance professionals who lever emotions. This is where it helps to trust in self-reliance and see outside influences for what they are.

In California, Agent commission is negotiated between the Seller and their Listing Agent. If for example, the total commission is 6%, the Seller usually authorizes the Listing Agent to pay 3% (or half) to the Agent who brings the home Buyer.

It is pretty easy for Listing Agents to plant a seed about “knocking off some commission” since they will “earn both sides” by representing you in addition to the Seller to create a “win-win” deal. But think about it… the commission is already pre-negotiated, and since the Seller pays for all of it… where in the process do you actually even see how much commission gets paid? The fact is you don’t. The total commission and subsequent breakdown do not get disclosed to the Buyer.

The Listing Agent usually has a good idea about what bottom line the Seller will likely accept. Ask yourself how hard it would be to inflate this number by an extra couple of thousand and then say they could take off the adjusted amount “just for you”. Since the commission is pre-negotiated, what incentive would the Agent have to give this money to you?

And if the Seller and their Listing Agent happened to agree in advance to reduce the commission payable by the Seller, then still… what incentive would the Seller have to pass this through to you? No Seller I know likes to give money away even in a good market.

Even in the extremely unlikely event whereby a Seller receives two remarkably similar offers simultaneously, I guaranty you one thing… the order of savings goes like this: first the Seller, then the Agent, then you.

And think about this. The type of property, which fetches competition, is priced low enough that only the highest and best offer wins anyway, and the Seller has ample opportunity to cherry pick everything from inflated offer prices, to all-cash quick-close deals. If a Seller is struggling to get top dollar, then they are unlikely to fetch multiple offers in the first place… and the odds of receiving multiple identical offers are staggering.

Either way, by law, and by every ethical standard we Agents are conditioned to uphold, every offer must be presented to the Seller in a timely fashion. Not doing so could result in license revocation.

At the end of the day, Listing Agents seek first to lock in a typical commission, before risking a sale, or client satisfaction by holding out for “both sides” of the commission.

Now, while the idea of pushing offers through is mostly myth, there are quite a few things we can do to strengthen our offer in its own right, aside from increasing offer price. This skill-set is more art than science, and you should seek a Buyer Advocate who can succinctly quantify their strategy in laymen’s terms.

There are many factors to consider when buying a home that far exceed the prospect of saving a few thousand bucks, and frankly too, whether or not we can beat the competition on securing the first listing we like enough to buy.

Meantime, out of all the variables that make up our home purchase, asking how to “push offers through” or how to “save a few bucks” are not the biggest of our concerns.

The aspect to really focus on is how many tens of thousands can be gained from buying the right property, with the right positioning for long term appreciation, and how to avoid the not so intuitive pitfalls that could bring tens of thousands in liability.

Bottom Line: using a Listing Agent to represent you when buying that same home is kind of like going to court with the same lawyer who represents your opponent. The Listing Agent gets paid by the Seller. Even with the best intentions, there is a conflict of interests. Meantime, since the cost of receiving your own independent advocacy is paid by the Seller, then you may as well enjoy it.

Further, since Buyer Agents are not limited to selling you just their own listing, they are better positioned than a Listing Agent to separate their advice from commission. And if an opportunity does present, to negotiate authentic value on your behalf, rest assured it will be the Buyer Agent, and not the Listing agent, who is better positioned to do so, since they are solely dedicated to fighting on your behalf, to further your interests at every turn.

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Hot Listing Alert: Duplex < $1m in Cardiff

Asyou know, 2-4 units rarely pop up west of I5, and when they do, they areusually priced above $1m.
This457-459 Brighton Avenue DUPLEX listing just went livetoday, and is located in the heart of our coveted Composer District,with an asking price $825,000-$875,000.
Hereis the mapped location for easy reference:,+92007&ie=UTF8&hq=&hnear=457+Brighton+Ave,+San+Diego,+California+92007&gl=us&sqi=2&t=m&z=14&vpsrc=0&ll=33.026331,-117.27917&output=embed
View Larger Map

Hitme back if you would like to schedule a viewing or be notified again if imagesget added to the online MLS report.

Wishing you a wildly successful 2012.

Posted in cardiff real estate, seths picks | Leave a comment

Market Outlook, December 2011

Between raising a young family and operating at capacityon purchase, listing, and refi transactions, it comes to mind I have not loggeda market update in a while.  Then again,not much has changed since I really had something important to say.  The political and banking sound bites dujour have changed with the wind, but the basic kick-the-can-down-the-roadstrategy seems to have put us all in the same boat… whether we were draggedinto it kicking and screaming… or have begged, borrowed, 
bribed, or stolen a seat aboard.

What is also becoming increasingly apparent if notsomewhat humbling, is that when asked for my take on the market, most folks arereally just seeking the parts of my outlook that validates what they werethinking anyway.

But every now and again, I get challenged and inspired todistill my outlook into conscious thought, and with a green light from a valuedclient, Dennis, I am pleased to post for your review an exchange of thisnature.  Following is a snapshot of thepart of my day shared in conversation with a sophisticated investor, who kicksthe tires of a vehicle he plans to use to get a job done:

[read bottom up]

From: Seth Chalnick
Sent: Thursday, December 01, 2011 5:17 PM
To: ‘DEck43’
Subject: RE: reply from seth

Thanks Dennis, for thethoughtful validation.  Me too (lunch)… and it seems I’ll need to stickwith water if I’m going to keep up with you 🙂

I look forward to helpingKeith find a killer location that blows the doors off similar but inferiorproperties, when it comes to long-term appreciation, by focusing on thefactors, which may seem today like nuances or subtleties, but will compoundover the 20-year resale trajectory.


From: ‘DEck43’
Sent: Thursday, December 01, 2011 4:52 PM
Subject: Re: reply from seth

Thanksfor the response. 
It seemslikely we will see some band aids as the banks fight for time. 

Thepeople I speak with in big and small banks are shitting bricks.  I am notsure the end game might be quicker than you think.  We both know the inevitabilityof mark to market.  I am therefore as worried about commercial and retailcenters.

Regardingthe use of funds, this is less than 1% of funds I am personallyinvesting.  As the father I am not typical. I am locking in theridiculously low rate I can make on a mortgage to my kids.  I gift themthe payment plus the balance of the 26,000.  Therefore price is importantbut location and a 20 year horizon are my objectives. 
I have asimilar investment with my daughter in Chicago: 750 to 1 mil keeps it even. She has three kids on 529 funds Keith 1.

Post thisemail exchange it will be good to work through Keith with a CC to me.  Iwill definitely enjoy having lunch with you one of these first days. Thanks Dennis

In amessage dated 12/1/2011 4:22:06 P.M. Pacific Standard Time, writes:

re: Appreciation/value…historically speaking, homes located west of I5 location have commanded thegreatest premium, have been the last to suffer downturns, and the first torebound.  This trend was amplified in the following areas (listed fromhighest to lowest):  Rancho Santa Fe, Del Mar, Solana Beach, Cardiff,Encinitas, Carlsbad.  Add a 10%-15% premium for homes with a view of theOcean or Lagoon or location within a block or two of the beach.

I look forward to helpingKeith and you identify this level of value on a micro level when you activelybegin searching with me.

re: Banking… foreclosureswill pick up the moment the influence of all of this intervention let’s up…unless and until we inflate our way out our debt problems first… which willtake a decade or so.  The fed and the government and the banks haveconspired to plug up a cracking dam for four years now, and I am frankly amazedthey have been able to kick the can down the road this far. You are quite rightabout the supply and demand of liquidity.  But the banks were basicallyinsolvent after the subprime fiasco… and then they scratched “mark-to-market”accounting principles and boom- they were back in action.

I am convinced there will beno end to the magical things the fed, banks, and government will do to kick thecan down the curb.  I don’t know if any other real estate professionalwill admit this, and I don’t even know if I should give many of them credit forknowing this in the first place… but I have consistently gone on record inpublic forums stating that real estate prices should continue to go down untilfolks can afford the payments with rates that are normalized (i.e. withoutintervention)… and until there is an answer to all the homes that make up theshadow inventory… and until there is an answer for what will happen when allthe 5 yr I/o loans currently in existence re-set back to principal andinterest. 

So should the systemself-destruct?  From a fundamental standpoint, probably… yeah.  Butit is impossible to make rational predictions while the market is being manipulated. In other words, the hypothetical outcome of life without intervention is notthe question.  The question we should be asking is this:  what willhappen with continued intervention?  Because this is our new normal. I don’t know the answer to this question, but if I had to guess, I suppose theultimate result will look like one of two things:  We will either haverampant inflation and dilution of capital… in which case it will circle backaround to real estate valuations on steroids… and the 4% rates we see todaywill seem like free money in a few years.  Or it will all go to shit… inwhich case I suppose I would rather own property than anything else because itis a tangible asset that will at least retain inherent value even in the worstcase scenario.

I see the opportunity ofbuying today as an opportunity to leverage cheap money.  I don’t want totalk myself out of a commission or anything, but if it were me, I’m not sure Iwould put all cash down on a home in coastal North County today with all thispotential downward pricing pressure… unless it wasn’t for purely investmentpurposes… or unless I could afford to allocate long-term resources withoutdisrupting the balance of the rest of my portfolio.  I see the opp toleverage cash right now as buying $325k homes in inland Carlsbad, Oceanside,and San Marcos.  These homes are much closer to their empiricalbottom.  ROI is pretty turnkey for renting them.  The replacementcost is not much less than the purchase cost.  People could afford thesehomes with 20% down.  They are the types of homes that people will need tomove to if they get displaced from higher-end homes.  But then you missthe longer term appreciation… which I don’t see happening within the next 3-5years.  So therein lies the tradeoff.

From: ‘DEck43’
Sent: Thursday, December 01, 2011 3:16 PM
Subject: Re: reply from seth

You knowwhat historically causes properties to hold or build value in this area whatare those attributes? 
Tosimplify banking my question.  It is simply a money supply and allocationquestion. If bank balance sheets weaken and reserve requirementsincrease will foreclosures pick up or lending criteria change. If soanyone dealing with the banks should find borrowing or refinancing moredifficult.  That should weaken the market. 
We arenot trying to market time the exact bottom.

In amessage dated 12/1/2011 2:35:38 P.M. Pacific Standard Time, writes:

Hi Dennis,

re: Downgrades… thefundamentals should continue to drive prices lower, but with all theintervention, who knows if this will happen and when?  I resist thetemptation of timing markets, and simply focus on whether or not it is theright time to buy/sell for each client’s unique scenario.   We may,in fact, be far from an empirical bottom, but then again it could be the besttime ever to leverage other people’s money if you buy right.  Or it couldbe a bad time to buy from a pure cost basis perspective.  The downgradeshave little impact in my book, because the ratings firms lost credibility whenthey failed to see what a lowly agent like me saw five years ago.  True,lots of folks care what the media says, but the media is constantly offsettingitself with conflicting reports, such that only hindsight will be the judge.

re: Your question aboutincluding the “used to be price”… sorry if my response last time you asked wasnot clear.  For easy reference, here is a more direct answer:

The alerts do not come from“my” system… they come directly from the MLS.  It would be helpful if theMLS system automatically displayed the price reduction amount within the emailalerts, but they do not.  However, if you click the link provided in thealert to view more info… then find that property in the list… and then clickfor details… you will find a field called “Orig.Price”.  This shows wherethe list price started.  It does not break down the increments of multiplereductions, but it does at least show how much they dropped the priceoverall. 

To get the actual historyand increments of multiple price drops, you can visit “my” website here and then enter the propertyaddress in the ‘keyword’ search box… then on the profile page that displaysnext… locate the “price changes” link, where I intentionally had my guys codethis from scratch to fill in the gap of what I would agree is an MLSshortcoming.

Or you can simply shoot methe MLS number of listings you like and I will give you the history.

As far as my “favorites” go,I take a hands on approach to providing uncensored opinion about each home Ivisit in person with each valued client.  I avoid sharing subjective viewsbeforehand, because anyway I slice it… it comes across as “selling”something.  I have a large book of business and the criteria important toeach respective client varies greatly.  Rather than dissipate focusattempting to be everything to everyone, I mindfully help folks when they aremost receptive.  When Keith and I start physically looking at homes, heand you will very quickly see how I help laser onto what you like and avoidwhat you don’t.  That said, if you share your short-list of potentialcandidates, it will be a pleasure to review each one and reply back with thepro’s, con’s, and ranking of each one.

I do not specialize inmanaging rentals, but the broker of my firm does.  He has successfullymanaged a large stable of properties for over 20 years.  I look forward tomaking an introduction as the need arises.

I look forward to helpingKeith find a great home.


From: ‘DEck43’
Sent: Thursday, December 01, 2011 8:43 AM
To:; ‘keitheck2’
Subject: Re: “encinitas” listings from seth for Dennis foundon Thursday, December 01, 2011 3:04 AM

How willthe bank downgrade play in to this? 
From herecould you include the used to be price when we get a price reduction. 
We wouldbe curious as a professional at this how do you rate the properties.  Youcould put that under the tab on your site called favorites.  Value,location, move in quality and rental would be a few of our criteria.  Wehave stated before a desire to be within walking of school and the beach.
I spokewith Keith and he will flesh out his wish list a bit more. 
Wediscussed this again and are serious at near the bottom. 
Torestate it would be  cash with a quick close. 
Finally,does your firm manage rental situations for clients? 

From: Seth Chalnick <>
To: deck43, keitheck2
Sent: Thu, Dec 1, 2011 3:57 am
Subject: “encinitas” listings from Seth for Dennis found on Thursday,December 01, 2011 3:04 AM

Here is a link to new listings and/or status changes that match our”Encrinites” search criteria.

New Listing $775,000 240 Cereus St
4 Bedrooms, Status: Active. Residential
New Listing $629,000 1751 Whitehall Rd
3 Bedrooms, Status: Active. Residential
If youwish to unsubscribe from this property update, unsubscribe here.
SearchName: encinitas.

As always, please call anytime with any questions.

Speak soon,
Seth Chalnick
Broker, Realtor, Buyer’s Advocate, Registered Mortgage Advisor
Pacific Coast Homes
2093 San Eliot Avenue
Cardiff by the Sea, CA 92007
m: 619.251.8803
f: 858.630.4086

Posted in advice, cardiff real estate, market outlook, observations and opinion, property management, seths picks | Leave a comment

9-11 Memorial Surfboard

Here is a excerpt from this inspiring post: <br
Jerry Anderson, owner of Headline Graphics… creates custom surfboard graphics on Photocloth, producing photo-realistic images. “I envisioned it immediately,” said Anderson, “I thought of creating a flag that ran the length of the board with the faces of the 343 fallen firefighters set in the white stripes.”

According to Jeff Grygera, “I have built thousands of surfboards, but none of them ever affected me like this. Working on that board, I would stare at those faces for hours, realizing these guys would never return to their families again. As a family man, that was really emotional for me.”

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Cardiff Kook Ripped from Lineup!

Click for News8 story.

This great shot by transworldSURF captures the scene of a prehistoric surf snatching. Our infamous Cardiff Kook has been upstaged yet again! Dude need some lessons or what?

Update 8/25/11… was just emailed this video:

Cardiff Kook Dinosaur Attack – Behind the Scenes from on Vimeo.

Posted in cardiff real estate, observations and opinion, town-by-town descriptions | Leave a comment

10-Year Bond-Yield Hits Record Low Today

For better or worse the yield today on 10-Year U.S. Treasury Bonds dipped below the all-time record low.

English translation: the leading benchmark, used by the lending world to price rates like mortgage interest (among other things) briefly broke the historic record low, and as I write this post, is only trading a hair’s breath higher.

For better… because it will keep pressure off those making payments on existing adjustable rate mortgages, especially those who are underwater. And it means home cost-per-month for new Buyers will likely get a bit more affordable, thereby buoying the housing market, which in turn, lends a ray of hope to underwater homeowners looking to break even.

Gas prices and credit card rates could also come down a bit.

For worse… because it means key economic players are signaling that the “economic recovery” is moving slower than expected. Followers of this blog may wonder how it is possible that key economic players can be surprised, when modest real estate professionals saw this writing on the wall as early as December 2008.

Also for worse… because this situation, while potentially long-lasting, is completely unsustainable and only presses snooze on the eventual day of reckoning. The day may come all at once, or it may come over a decade, but make no mistake, until asset prices are allowed to de-leverage the unfounded run up we had, well… what comes up, must come down.

To make this inevitable reckoning more palatable, okay less horrendous, the Federal Reserve, politicians, institutional traders, big banks, and at this point, pretty much everyone on Main Street too… have all, one way or other, gotten with the program of kicking the can down the curb to avoid the pain.

The idea is to dilute our economic problems over time, tax payers, and as many countries as possible, so that we inflate our way out of an unprecedented mess.

That’s okay, but it would be short-sighted at best, and downright irresponsible at worst, not to make the realization here that even well-intended solutions to crisis often lead to unintended consequences. This is all pretty much a big experiment at this point, so buckle up folks, as we travel hereafter to parts unknown.

Bottom line: this is sort of short-term good news… and really bad news for the long-term hope that we are not in fact living out a “new normal”.

Posted in advice, cardiff real estate, data, market outlook, observations and opinion, seeking alpha | Leave a comment

341 Chestnut Avenue

3bd/3ba/2car townhome two blocks from classic Carlsbad Beach.

Check out this new listing… a beautiful turnkey end-unit 3b/3b/2car townhome with open floor plan, flooded with natural light, and loaded with pride-of-ownership upgrades. One of only six charming well-run condo units, perfectly located away from congestion and only two blocks from classic Carlsbad Beach. Great opportunity to live or vacay at the beach and walk to shops and restaurants in Carlsbad Village. Asking price aggressively listed $5,000 below last sale in complex, which was comparable in quality and size.

Posted in cardiff real estate, carlsbad real estate, listing, seths picks | Leave a comment