It makes sense. The appraisal is for the bank. And who likes the bank? Still, the appraisal is very important and has the potential to derail or delay closing. Here’s a few notes about it.

When Is It Done?

A home appraisal is usually done toward the end of the transaction. The price has been set, terms accepted, home inspection completed, and then some appraiser guy or gal pulls up to the house, walks around carefully studying the house for awhile, scribbles notes for their report, and then leaves.

If you’re fortunate, a few days (or weeks) later, you hear that the appraisal came back “at value” and with “no conditions”.

OK, great, what was that all about?

What Does It Do?

The bank is lending you an awful lot of money to buy a house. They want to make sure the house is worth all that money and that it’s a good investment for them too. I’m sure appraisers don’t appreciate me oversimplifying their job so much, but essentially the appraiser gives the bank a 3rd party answer to these questions:

• is the house worth the purchase price?

• are there any obvious safety or other concerns with the home? (not a full home inspection)

How Do They Determine The Home’s Value?

Some appraisers consult mystics and oracles. Others prefer to closely study animal entrails, the clouds or even horoscopes to determine home value. (I kid appraisers!)

Licensed, reputable appraisers use comparable home sales and a lot of complex math to determine the value of the home. Figuring out just how much a home is worth is more art than science in that there is rarely an exact, to the dollar value for a home - differing approaches, comparables and opinions could produce slightly different values. When you get an appraisal report back and it’s “at value”, what they’re really saying is “yes, based on comparable home sales and market conditions, this is a reasonable price for this home”.

And that’s usually good enough for the bank.

What’s The Appraiser’s Relationship to The Bank and The Agents?

Prior to the housing crash of 2008, there were some shady banks, agents and appraisers who were doing things they shouldn’t do, working together to produce unreasonable home values.

But in 2025, there are many more protections in place for homeowners and home buyers. Now, appraisers and appraisal companies are a true 3rd party to the transaction - banks and lenders are not typically allowed direct contact with the appraiser. Appraisal reports have to meet strict guidelines from the state. You can be confident that when you get an appraisal, you’re getting a true, professional and disinterested opinion on the value of the home.

Sometimes that means the home doesn’t come in at value and the price must be re-negotiated. Sometimes substaintially. I’ve seen appraisal gaps in the low six figures.

In the end, what does an appraisal tell you? Whether or not you can buy this house!

BONUS: What’s the Most Common Thing I See On An Appraiser Report?

In my experience, the number one issue, by far, that arises out of appraiser reports is not the price but the lack of smoke and/or carbon monoxide detectors and that they need to be installed before closing. Which appraisal or no, is a good idea to do anyway.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

When I bought my first home I treated the home inspection with reverence. Really, I didn’t consider that we would actually buy the home until after I saw the inspection report. The whole process seemed unreal, tentative until I discovered that the house was not about to fall apart. Then it was real.

Now that I’ve seen about 100,000,0001 inspection reports and done a lot of home construction projects myself, the reverence is certainly gone. The inspection report is just a data-point now for me now.

This is the natural arc of “home inspection importance”. For first time home owners, or for people who are not comfortable with home repairs, the inspection could rightly be the most important part of buying a house.

• What imperfections are you signing up to live with?

• What unknowns can be discovered?

• What problems do you have to deal with now?

• What problems will you have to deal with soon?

And these are critical to know, especially if you’re spending hundreds of thousands of dollars to buy a home. And in this market, you are definitely doing that!

But for some grizzled veterans and DIY’s, the thought of paying someone else to tell them what they already know is waste of money

• “I can tell the roof is old and the vents need repair.”

• “I know the water pressure is low and the water heater needs to be replaced.”

• “Yes, the upstairs bathroom vent is broken and I know there’s a model at Lowes, Aisle 15, Bay 12 that I really like.”

Me personally, I can now walk around a house and identify most of the potential issues myself. But not all of them! And I value a home inspector if for no other reason than I don’t enjoy going into strange attics or crawlspaces or looking at sewer lines to “discover” what’s going on there. I’m perfectly willing to pay a man to do this for me2. No matter how savvy you are with your DIY skills, the opinion, tools and eyes of a professional inspector is always a bonus.

Overcautious

Inspectors tend to be overcautious in their reports, recommending actions that no one will ever take or pointing out issues that no one will ever fix. They do this because they’re required to. Their job is to tell you everything they see, even if it doesn’t matter that much. You have a right to know. However, one of the silliest things I’ve ever seen on an inspection report was the inspector recommended that an entire, brand new custom-crafted wrap-around porch be replaced because over the next 20 years it’s possible that moisture flow might warp the wood. No one is going to do that. And indeed, the buyers ignored it on their own.

Inspection Contingency

Washington State Law allows for buyers to conduct a home inspection and then back out for any reason if they don’t like what they find. They can also request the seller make repairs or re-negotiate the deal based on what they find. This process is called the “Inspection Contingency”. The home sale is contingent upon the inspection results.

But in a competitive market, not all transactions work out this way.

• Sellers are increasingly conducting their own inspections and offering the report to all potential buyers. Sellers do this to help with transparency and to lessen the likelihood of a buyer inspection surprise derailing any deals.

• Buyers are conducting inspections before they go get under contract so their offer is more attractive with no inspection contingency

• Buyers are foregoing the inspection altogether and rolling the dice with whatever the house has in store for them. I don’t ever recommend this, but some of my buyers have chosen to do this to win a house they felt good about.

Bottom line is that every home owner deserves a chance to know what they’re buying. For many that includes a professional home inspection. For others it’s walking around and peaking your head in the attic. Regardless, the last thing you want is a surprise after you move in.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

In 2024, we had the fewest homes sold in the US in over 30 years. And home prices still went up in our region as much as 10% year over year. Considering inflation, millions of homeowners locked into a low interest mortgage, and the overall trend with interest rates, it’s difficult to see how that would reverse any time soon.

Sure individual areas or homes may decrease in value, but the overall Puget Sound Market is up, up, up. It would take a flood of inventory to stabilize or drop prices significantly for single family homes.

In 2020, local buyers were (rightly) complaining about how all the houses in my own town were “unreasonably priced” at $450k or $500k. All those same houses today are worth $200,000 more.

Whether due to inflation or housing market forces or both, it’s wild to think that in just a few short years, say in 2030, we’ll probably look at 2025 prices as a screaming deal.

This does not necessarily mean that “it’s a good time to buy”… it means that buying a house and homeownership are changing. A couple of stats that I saw this week.

In 2024:

• the average age of a first time homebuyer was 38 years old. In 1984, it was 29.

• the average age of all 2024 homebuyers was 56. In 1984, it was 36.

It used to be the average homeowner moved every 7 years. I expect that stat to increase dramatically before the decade is out. I’ve always believed homeownership was best played as a long game and it’s even more true now.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

One of the more common questions I get asked is “how accurate is Zillow/Redfin/Homebot/Etc. in estimating the value of my home”?

Accuracy depends on a few factors. These online estimators are not that smart, they just work with publicly available data like:

• the last known size, location and condition of your home

• recent sales of any house/condo/townhome the computer thinks is like your house

And based on that, it offers you a wide range. For example, one recent house I sold was estimated, by Zillow, to be worth between $550-$650k before it was listed, with the official “Zestimate” on the low end: $575,000.

The house ended up selling for a little over $600,000. Not too bad Zillow!

Your House

The online tool’s applicability to your house will depend on the following mixture of factors:

• Suburban or urban home with lots of similar homes nearby (more accurate)

• Rural or custom home with few homes like it (less accurate)

• Standard lot size (more accurate)

• But the lot or portions of it aren’t useable (less accurate)

• Made lots of improvements since the last sale? Upgrades? A new shop in the back? (less accurate)

• Kept the home the same but well-maintained (more accurate)

• Lots of home sales nearby (more accurate)

• Slow market, few sales (less accurate)

• Something happen to the house the computers don’t know about (less accurate)

• Custom updates that match your unique tastes (less accurate)

But computers are only so helpful. They can only tell you what has happened in the recent past. The market is a living thing.. always changing, always moving. After the computers have had their say, it’s still my job as your broker to read the room, understand the market and give you a real estimate based on the reality of standing in your home and hearing feedback from actual buyers.

What About Those Falling Interest Rates?

Gravity stopped working guys… interest rates have gotten stuck mid fall. Fed rate cuts aren’t enough to bring them down significantly yet. Like I mentioned last time, no one knows when or by how much they’ll come down. But check in on them in the early spring. Maybe the sky will finally fall.

How Much is My House Worth?

If you’d like a computer to give you it’s best guess, here’s the online tool I recommend.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

www.theperronegroup.com

Ever since the summer of 2022, over two years ago now, everyone connected to the real estate industry has been waiting for interest rates to fall. At first the experts believed they’d start to fall in early 2023, then mid 2023, and then later 2023, and then early 2024 and then mid 2024 and lastly Fall 2024.

Six guesses to get it right isn’t that bad!

Just this week, the Fed has finally done it. For the first time in 4 years, since the start of the COVID pandemic, they lowered interest rates, by 0.5%.

So what does this mean? For interest rates today, almost nothing. Mortgage companies knew a rate cut was likely and so mortgage rates fell earlier this month already to just a bit over 6%. This Fed cut was already priced in. Still, compared to highs earlier this year in around 8%, 6% isn’t that bad.

It’s expected that the Fed will continue to cut rates slowly over the next few months. If this happens it’s possible that by the Spring 2025 market, interest rates will be in the low to mid 5s.

My personal opinion is that little will change about the stagnant market we have today until we get interest rates AT LEAST back into that range. Part of my reasoning is just simple math. Despite high rates over the last two years, housing prices continued to climb overall. PNW housing prices grew about 4% YoY and lower interest rates will probably make prices go up more.

Let me show you what I mean.

Let’s say you’re buying an average PNW house for $800,000 (wow) and let’s say you can get a 6% interest rate, with a 10% downpayment. Your principle & interest mortgage is $4,320 a month.

Let’s say you wait until next spring/summer when rates are at 5.5%. But prices, spurred by lower rates, have gone up another 4%. That house now costs $832,000. Same 10% downpayment gets you a principle & interest mortgage of $4,252.

$68 difference. Not much relief.

What About Current Homeowners?

There are still millions of homeowners who would like to sell and buy something else but they feel “stuck” in the 2.15% mortgage. And with good reason! Trading a mortgage made with pre-2022 housing prices for an interest rate, even at hypothetical 5.5% at 2024 prices is painful.

Perhaps the defining question for the 2025 housing market is how many current homeowners are going to accept that pain about selling and losing their mega-low, once in a lifetime interest rate? In a sort of prisoner’s dilemma, the more of them that decide to do this together, the cheaper their next house will be.

As always, it’s only a great time to buy or sell if it’s a great time to buy or sell for you.

How Much is My House Worth?

Here’s a quick online tool to help you.

What Would My Mortgage Payment Be?

An online calculator to help you.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

www.theperronegroup.com

I’ve been working with a lot of buyers this year but not many have actually bought.

And I, as their professional real estate broker, completely supported their decision every single time.

Realtors are notorious for saying “it’s a good time to buy” even when it’s absolutely not a good time to buy. There was probably a Realtor saying “it’s a great time to buy the day before the housing market started to crash during the “Great Recession”. If they had realtors in Ancient Rome, one of them was likely saying “It’s a great time to buy just as the barbarians rolled in.”

Sometimes the right answer is to wait and when the choice is between a bad deal and no deal, it’s better to say “No Deal.”

To give you an example of what I mean, I was recently working with a buyer looking for a single family home to fix up and flip. We found one and boy did it need fixing up. Fire damage, mold damage, missing walls, missing floors: it was a project. My buyer did the prudent thing and determined how much the home would be worth after fixing it up and the cost of the repairs and we put in an offer with those numbers in mind.

But someone else “wanted it more”, which is generally not a good thing in residential real estate investments, and they paid MORE than asking for this project house. We had a chance to match or surpass, but when we did the math, we figured we’d have to sell it for $100k MORE than the market could reasonably bear after repairs. And so my buyer walked away from what would’ve been a very bad deal.

Within a couple of months, that house was fixed up by its new owner and they listed it for sale…. about $100,000 above market value. They were working with the same numbers we had.

Fast forward to present day, they’ve come down about $30,000 in price, but the house still sits. And sits. And sits.

Don’t buy a house if it’s a bad deal. Don’t be the most desperate buyer on the market. You’ll end up losing a lot of money. There are deals for you in every market, but it doesn’t mean it’s always a great time to buy.

Market Update

Nothing changes substantially in the market until the Fed cuts rates. Maybe this fall or winter. The summer market has been slower than normal.

How Much is My House Worth?

Here’s a quick online tool to help you.

What Would My Mortgage Payment Be?

An online calculator to help you.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

www.theperronegroup.com

But many potential buyers still read the description and will do searches based on keywords. So it’s gotta be good. There is also a word count that you have to meet and dutiful agents trying to sell a home need to be creative.

Descriptions, like anything else in real estate, can be prone to fads and a lot of strange adjectives describing homes have exploded in popularity. I’m here to translate them for you, (for entertainment purposes only), so that the next time you look at a home for sale and see one of these words, you know what they mean:

• Cozy: “Just a heads up, the space is very small, please be open-minded. Maybe this is a good chance to grow closer together to loved ones.”

• Charm/Character: “This home is either old-fashioned or quirky. The kitchen may be the size of a closet. There’s a lot of walls. There’s probably not enough bathrooms.”

• Opportunity: “The current owner didn’t have enough money to fix this place up, would you like to take a shot?”

• Modern Updates: “It looks like a cross between an IKEA and a hotel inside. The opposite of charm.”

• Recently Updated: “The homeowner can’t remember when, probably after 1995.”

• Boasts: “It’s boring to say a house ‘has’ a feature, so we use the word ‘boasts’. This house boasts 3 bedrooms.”

• Open Concept: “Somehow, the kitchen island is the only thing in this house.”

• Well-establish Neighborhood: “Everyone’s old and the sidewalks are cracking, but it’s quiet!”

• Laid-back HOA: “We know people hate HOA’s, we swear this one is different, totally a cool HOA that won’t complain about how many Amazon deliveries you’re getting.”

• Good Bones: “There’s not anything truly wrong with this house but it’s old and ugly. Please buy.”

• Brand New Construction: “Everything is new, including the problems.”

• Nestled: (one of my favorites) “This home has a small yard and/or close neighbors.”

• Move In Ready: “Nothing is new. Sure you COULD update everything, but the house is in great shape, why fix what ain’t broke?”

What are your favorites? Let me know and I’d be happy to translate them too.

Market Update

Because rates have remained where they are, I expect to see a slower summer season that we’re used to. With more inventory but also more price cuts and more homes sitting.

How Much is My House Worth?

Here’s a quick online tool to help you.

What Would My Mortgage Payment Be?

An online calculator to help you.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

www.theperronegroup.com

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Surprisingly, a lot of people don’t want to buy a lot to build a house. Many want to buy a lot just to have it, to be able to camp on it, put an RV or to shoot guns in peace on their own property.

A quick disclaimer. These rules were developed in the Pacific Northwest and work best here. They probably don’t mean a lot if you’re in Kansas or Texas or Florida or Afghanistan.

On to the rules:

1. The lot is the only undeveloped land left in a neighborhood.

   Almost certainly unbuildable. It doesn’t make sense, it seems like it would be impossible, there’s houses everywhere! But if a lot is all by itself, in rural suburbia, there is almost certainly a reason why it hasn’t been developed before. The smaller the lot, especially less than an acre, the more likely this is true. Either the land doesn’t perc (can’t hold a septic), it has wetlands on the property, or there’s some other issue that the previous owner was unable to resolve. My favorite listing in this type of lot was a half acre lot that was almost a sheer cliff.

2. The lot is huge, enough for multiple homes, and is priced to the moon.

   A seller wants to fleece a developer. For some reason, we instinctually think that a company has more money than individuals and will be willing to pay more for it. Sometimes this is true, but home builders have budgets and trying to make a profit. Nevertheless, that’s the market for those kinds of lot listings.

3. The lot has been listed or gone pending multiple times before.

   No matter the size, no matter the price, 99/100, you see this and know that any time or money you spend on it is just for fun or for curiosity’s sake. The very first lot I ever got calls on was a lot that had been on the market almost continuously for 18 years. It turns out this one was zoned commercial/airport (and it was inexplicably, the last lot for sale on a residential street. But the seller, and their agent, were doing a poor job of making the full situation clear to potential buyers. It had gone pending numerous times over the years but never closed.

4. The lot is on the market for the first time.

   Make an offer with a feasibility period right now. Run don’t walk. This could be a winner! These are gold rush type listings where there can be an immense amount of interest, as if it was a beautifully staged house. They’re popular if they don’t obviously fall into one of the 3 categories above. They could be unbuildable, they could have protected species on it, or be full of wetlands, but since it’s the first time on the market, no one knows yet. The rare lot in this category already has surveys or perc. tests done for you. Some even have house building plans developed or utility access on the property. These lots go pending within days. Blink and you miss them altogether.

5. A rural lot not big enough for a big house.

   When you see this kind of lot, there’s only one question you should ask yourself… do you want to own your own campground?

When you make an offer on a lot, you rarely have all the answers. The seller often times knows nothing about the property and can’t offer you very many warranties or answers of any kind beyond the legal description of the lot. This is why a feasibility period is key. A feasibility period allows a buyer to get under contract, test the lot, get answers from local specialists or the county and then back out if they don’t like what they find out.

How Much is My House Worth?

Here’s a quick online tool to help you.

What Would My Mortgage Payment Be?

An online calculator to help you.

Here’s a quick online tool to help you.

What Would My Mortgage Payment Be?

An online calculator to help you.

In the wake of the 2008 Housing/Financial crisis, we got used to low interest rates and before 2022, they just kept getting lower. How low could they go? Maybe the bank would pay us interest if it got any lower (yeah right).

Of course they’ve almost tripled since and the music of the housing market has died down considerably.

As I’ve said before, it’s helpful to see ourselves in a crash now; not one of prices but of inventory.

Houses are still selling. Closings happen everyday. Bidding wars flare up here and there.

But many would be buyers and sellers are continuing to sit this market out.

If you’re wondering if you should do the same, or if it’s a good time for you to enter the market, I’d be happy to help you run the scenarios,

When To Walk Away

Sometimes one of the smartest reasons to hire a real estate broker is to make sure you don’t accidentally walk away from a deal you really want to have happen.

My philosophy is simple quite simple… buyers and sellers actually want to buy or sell and my job is to help my client buy or sell. But sometimes anger, pride, fear, the ambiguity of a house inspection, the emotion of the deal, the stubbornness of the other side can get in the way of the larger goal of buying or selling. And if we’re not careful, we lose out on something that would’ve been actually really, really good.

That being said, there are times when my clients have decided, or I’ve advised them, to walk away from a deal. Not everything works out.

However, most of the time, most people want the deal to happen and a good broker’s job is to not be angry, prideful, fearful or emotional, but to be calm, informative and to see it all through to the end.

Of course, when you’re talking about a house with hundreds of thousands or millions of dollars on the line, t’s perfectly reasonably to be emotional about even minor details. When it’s my money or my house, trust me, I’m there too!

This isn’t rocket science, but the emotional element can cloud the judgment. I advise my clients to walk away only if I’m fairly certain they can get a better deal from someone else within the timeframe that fits their goal of buying or selling. Otherwise, it’s usually worth it to stay in and find a solution.

Walking away for other reasons, because the other party is a jerk or because of a lowball offer for example, can feel good in the moment but could lead to regret, which is not the emotion you want to feel when doing real estate deals.

I’m here to not only help you avoid regret but to feel excitement for the process as you realize your housing goals.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

www.theperronegroup.com

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When you see it online, it greets you with the house’s two most stunning features. A private beach and a front row seat to Mt. Rainer. Even if you don’t have these on your home buying checklist, you gladly take them.

Often, when you don’t see a photo of the house as the first image it’s because the house isn’t that nice and the seller would like to avoid that fact as long as possible. But that wasn’t the case here. The home was lovely.

All those windows face toward the beach and Mt. Rainer beyond. and the owners had a total of 5 doors (2 in the basement, 2 on the main floor and 1 on the top floor) to go out there whenever the need struck them.

The inside of the house was elegantly decorated, a little old fashioned but well maintained. Here are a few photos to give you a sense of it:

We toured the main & upper floors first and then descended into the basement where I felt like I had left the house I was in and was somehow transported to a Corporate Office somewhere.

No one lives here. People work here.

The ceiling, the carpet, the gray doors, the furniture staging choices, all of it together speaks to me: “Thank you for coming by our art gallery today. We hope you had a lovely visit.”

And truly, we did.

To top it all off, as I stood in the driveway discussing the home with my clients, a large bald eagle flew by us and proudly perched itself atop a nearby tree. No way in a million years could the sellers have planned such a majestic sight near sunset if they tried.

But ultimately my clients didn’t buy the house.

How Much is My House Worth?

Here’s a quick online tool to help you.

What Would My Mortgage Payment Be?

An online calculator to help you.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

www.theperronegroup.com

• Green light: Is the seller’s agent warm and friendly, answering all your questions? They got no offers and no interest. Time to lowball!

• Yellow Light: Is the seller’s agent tired, grumpy and interrupts you? They already got a good offer in the bag or at least a ton of interest. They don’t need me or my client. Better bring the A-game.

• Red Light: And then the death knell: the seller’s agent will only respond to text messages. It’s all over. Time to show my client another house.

This week a friend of mine sent me a house he was interested. He’s not a very serious buyer but this one house piqued his interest. Anyway, I called the listing agent, no answer. Called again, no answer. Texted and got a short response. Texted again asking a question about coming by to see it that day.

The response: “We already have 17 offers. I wouldn’t bother.”

The silly season of real estate is back folks! It went away from Summer 2022-Fall/Winter 2023, but it’s returned with a vengeance.

If you’re wanting to buy a normal-ish, well-maintained house under $900,000, there is no delaying or hemming and hawing. It’s time to go warp speed. And go out and win. Fortunately, I have a lot of experience with winning multiple offer battles.

If you’re selling a house in this price range, then I can help you maximize your gains.

When Will Inventory Come Back?

The Fed doesn’t seem to be wanting to lower interest rates anytime soon. So it might be a bit yet but I’ll hold to my prediction that inventory will come back when we get to the lower 6s or high 5s in interest rates.

How Much is My House Worth?

Here’s a quick online tool to help you.

How Much House Can I Afford?

An online calculator to help you.

Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

www.theperronegroup.com

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Of course, the vast majority of those listings my clients never bought. Most of them were just houses and have quickly faded from my memory.

But some of them will stay with me forever. Either because they were beautiful, unique, charming, peaceful, stunning or in the case of this home, the most fixer upper of fixer uppers I’ve ever been in.

Fixer uppers all have their own stories. Some of had bad tenants, inattentive owners, or were the victim of natural disasters or deferred maintenance issues. Sometimes families hold onto old homes, unsure of what to do with them, and they sit empty for years and years.

While it was obvious this particular home had been unlivable for quite some time, it still sold fast and over list price because for a certain kind of person, a picture like this is gold.

In addition to a general state of dirt and disrepair, there were vines growing into nearly every rooms. And even in the rooms that didn’t have vines, namely the kitchen, had vines painted on the wall.

The nicest looking area of the entire house was the garage.

Like I said, this home was popular and there was a line of people wanting to see it when I pulled up. My clients decided it was just too big a project for them at that time and didn’t make an offer. But someone else did. They put in the work and now it looks like a clean modern home again.

Fixers have an important place in the market. I’ve sold a few myself but this is the only one I’ve seen nature try to reclaim so aggressively.

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Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

Congratulations, We Survived The 2023 Market

It has to be one of the strangest years in real estate ever.

Are prices up or down? Yes!

Is it a seller’s market or a buyer’s market? Yes!

Is it a terrible time to buy a house or a horrible time to buy a house? It depends!

When will rates come down? Someday!

I’ve joked that every year previous to 2023, the majority of my clients were happy to be buying or selling; it meant moving on to bigger and better things. But in 2023, most of my clients were only moving because they had to.

Perhaps the best way to view 2023 is as a housing crash. Not a crash in prices (which didn’t change that much overall by the end of 2023) but rather a crash in inventory. The nation saw about as many home sales in 2023 as it did in 2008.

The elevated interest rate environment:

• priced many buyers out of the market

• trapped many sellers in a home with a 3% or less mortgage

• depressed inventory enough to keep prices high for those who did buy

So, What About 2024?

In my mind, the central question of the 2024 housing market is this: at what point will rates come down far enough to bring back enough buyers and sellers to the table? Is it 6.75% which is about where it is now? Is it 6.5%? Is it lower? I don’t think anyone knows the answer to that question yet.

But my guess by the end of Q1 in 2024, we will hit that mark where it will feel psychologically safe for buyers to go shopping again and for sellers to start selling again.

In this scenario, rates will drop and prices will go up. If it’s a small price bump then houses will be more affordable. If it’s a big price jump, then homes will be less affordable than today even if rates creep into the high 5’s.

In A World Where Buyers Pay Their Brokers

As you might recall, recent legal challenges and changes within the NWMLS have made it possible that in the coming years more buyers, maybe even all buyers, will be paying their own broker directly.

But, one big obstacle for this is that it’s difficult for many buyers to afford representation. Between the downpayment, and the closing costs and moving costs, etc, buying a home isn’t cheap. The current model is flawed but at least buyer representation is baked into the cake of the market price.

It’s my conviction that most buyers, especially first-time homebuyers should have representation. After all, buying a house is not like buying a toaster from Amazon or even a car from a dealership. It’s the most expensive and perhaps most important thing a person buys in their entire life. It makes sense that they might want or need someone to look out for their best interests.

But assuming the current legal challenges break up that model, there are a few ways this will play out:

1. Flat Fee/Facilitated Sale: I’ve done this a few times already and maybe it will become the norm. After finding the house and deciding to offer on it, a buyer hires an agent to help facilitate the sale and do so on a flat fee basis or at an hourly rate rather than a commission. If this became the norm, agents would compete and position themselves based off of what the client gets for that flat fee. Anywhere from just 1 hour’s worth of contract checking to something like full on negotiation and representation every step of the way.

2. Commission is financed into the Loan: I think this would require changes to federal law and I’m not sure it’s a good idea, but just as buyers finance other aspects of the home sale into their loan, they could finance some or all of their broker’s compensation into their loan. This would eat into a buyer’s loan approval amount and could mean sellers would have to lower prices to accommodate.

3. The seller continues to offer some compensation to the buyer broker: The cases now making their way through the court assert that sellers shouldn’t be forced to compensate the buyer broker. (They’re right). But that doesn’t mean they won’t still choose to do so. As I mentioned last time, there are real advantages to the seller when offering a commission to a buyer broker. It’s an incentive to someone else to help you sell your house. It’s possible, probable even, that when the dust settles in the future buyer brokers will still be offered some amount of commission.

No matter what lies ahead for rates, prices and commissions, 2024 will be an exciting and event filled year for residential real estate.

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Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.

Many years ago, this practice started out of a desire for sellers to get the most money for their house.

In the early days of selling homes, there were brokers who helped facilitate home sales but they generally only worked with the people they knew and had a limited ability to attract all possible buyers. But if the broker and their seller client could incentivize other brokers to bring other people they know to come look at the house, the pool of buyers is bigger and the seller can likely get more money for the home than they otherwise could.

The seller incentivizes other brokers to bring a larger pool of buyers by paying them, or by allowing their broker to split their own commission with them.

While we are far removed from that world in many ways, this basic incentive is at the heart of why this practice continues: sellers want to incentivize buyer’s agents to help sell their home for the most money possible and as quickly as possible.

How This (Should) Work Today

Incentivizing a buyer’s agent to show and sell your home still serves several important purposes for the seller:

1. Casting A Wider Buyer Net: The internet is a game changer here, but it’s a two edged sword. While it allows all buyers to see your house, it also allows everyone to see everyone else’s house too. And in active markets, new homes come online all the time. This can be overwhelming and even many of my younger, internet-savvy buyer clients in recent years rely on me to pre-filter homes based on the information I can find out from the listing and from the seller’s agent. Otherwise, they’ll never get out the door and go see it.

2. Motivation & Facilitation: Relatedly, not all buyers use the internet in a way that will lead them to a seller’s home independent of an agent. They don’t use the search functions adequately or they don’t have the time to look on their own. Some will simply talk about buying a house but never do so. I need only think of the first house I bought. My wife and I had discussed buying for several years but took no action. Then we met a real estate agent at church and I told him I wanted to buy a house. Two weeks later, we were under contract. I can think of many such examples from homes I’ve sold since. A buyer is much more likely to buy if they know a buyer’s agent.

3. Helping To Close the Deal: It’s very easy for a buyer to walk away from a contract with their earnest money intact and nothing lost. In probably 20% of deals I’ve closed, the buyer was ready to walk away from it all and it took a good buyer’s agent (sometimes me) to mediate and keep them at the table. While the buyer walks away having lost nothing, a seller on the other hand still has the house and has lost time. Sellers want to sell, they want to move on. In general, they should want the buyer, especially inexperienced, unreasonable ones, to have a professional nearby who has done this dozens of even hundreds of times. More often than not, it helps make the sale process go much more smoothly.

4. Accountability & Protection: Buyer brokers let people into your home when you aren’t there. It’s a strong expression of trust on the seller’s part1. In Washington State, that trust is based on all licensed brokers submitting to extensive background and fingerprinting checks; making them a bit of a safe quantity. If the seller works with licensed buyer brokers, Washington State has easy ways to protect the seller and can hold that buyer broker accountable should they breach that trust. It’s the thought process behind licensing any profession: protecting consumers from bad actors.

These are among the reasons why sellers should think about incentivizing buyer brokers to bring their own buyers. Is it guaranteed to make every seller more money in every transaction? No, I don’t think so. But overall, it’s a service to the seller that is worth something. It’s worth incentivizing.

Fortunately, Washington State is at the cutting edge in terms of allowing sellers to determine just how much it’s worth to them and how much they want to incentivize buyer brokers. It will depend on market conditions. It will depend on the seller’s individual home. It will depend on their needs and timeline.

For example, in an extreme seller’s market, in a hot neighborhood where a home is almost guaranteed to sell quickly, at a price the seller likes, it probably doesn’t make much sense to offer the buyer broker a big commission. The buyer broker is not providing as much value to the seller.

On the other hand, in a buyer’s market, with a unique home, in a neighborhood where houses are sitting, it may make more sense to offer a higher commission to a broker who can in turn provide value to the seller and help get the house sold!

Still, can buyers pay their own brokers? Should they? And what would that look like? Would sellers be better off? I’ll address that next time.

This naturally leads consumers in Washington State to ask some questions and wonder if this will have any impact on the way real estate is bought and sold in the Pacific Northwest.

The answer is yes and no. In truth, Washington State residents already have much more freedom and power to negotiate commissions than Americans in other states.

(But before I elaborate, I want to disclose that while I own and operate a Real Estate Brokerage, and carry a Designated Real Estate Broker license, I’m not a member of NAR and so am technically not a “realtor”. Realtor, broker and agent are often used interchangeably by the public, but they in fact represent different organizations.)

NAR owns many of the local Multiple Listing Services (MLS) around the nation and, for better or worse, (worse in the minds of the jury), it can influence what Realtors do and what they charge all across the country.

Every state has different laws and regulations governing real estate, agency and commissions. Fortunately, in Washington State, the largest MLS (NWMLS) is independently owned and not affiliated with NAR so it doesn’t have to play by NAR rules. It’s primarily responsible to its own clients and consumers. In Washington State, compared to most other states, real estate commissions for both the buyer and seller sides of the transactions are completely negotiable and much more transparent than in other parts of the country. For example:

-A seller may choose to offer the buyer broker any sort of commission or no commission at all. The seller’s agent doesn’t get to set that amount as is common in other states.

-Both seller and buyer are required to sign and approve the commission given, if any, to the buyer broker as part of the real estate contract.

-The buyer and their broker have the opportunity to negotiate commissions as part of the real estate contract.

-The buyer and their broker can negotiate their own arrangement for commission between the two of them and either choose to involve or not involve the seller.

Despite all these options, the most common arrangement seems to still be the seller offering a commission if a buyer broker gets the house under contract. But it’s not set in stone that it must be this way.

I can’t speak for the NWMLS, but to me the goal seems to be to ensure that the antiquated 6% system gets an update in the 21st century. Home prices are high, interest rates are high. Listings are online. Competition, even in the current market, is fierce. Homeownership is different now. What a real estate agent does is different too.

Given all that, it only makes sense that the way brokers get paid also change.

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Michael Perrone is a licensed real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.