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Tuesday, August 01, 2006

Condo Sales Sleaze Tactics

Apparently it's Condo Tuesday on Seattle Bubble... A few days ago, Susan Ryan posted an interesting warning over at Seattle Real Estate Professionals about a number of sleazy tactics being used to push condos:

I have two clients looking for new condos, studios or one bedrooms in downtown Seattle, and there is something I've come across so frequently when showing these, it's clearly not just a couple of isolated incidents.

The listing agent for the project will post only one or two units, out of perhaps dozens, on the multiple listing service, each with reasonable prices—usually under $200k. If you've been following the market, you know that's pretty cheap these days.

So I take a client to the project to look at those listed units, only to be told, inevitably, that they are all "sold." The onsite agent, who is described in their marketing materials as a "buyers agent," (but has been hired by the seller to sit there, so who do you think she really represents?) says she can offer my client this "nicer unit, better spot in the complex" – for considerably more money. Once even in the three hundred thousands — as is, they advertised prices "starting in the $100s, but the only thing they have for sale is upwards of $325,000. I'll then point to their map of "sold" units and ask how much each one sold for, and it turns out that they literally only priced one unit under $250,000. If my client makes a less-than-full-price offer, the builder/seller won't even bother to respond.

The listing on the MLS never goes "STI" or "Pending" (so it is still listed as "Active"), but it's always "sold" when you want to see it. This is a blatant violation of MLS rules and clearly meant to suck buyers in with a low listing price that isn't actually available to purchase. Can you say "Bait and Switch?"
Also worth pointing out is Susan's comment below the article, explaining her motivation for making the post:
I hope to prevent more buyers from being taken in by posting here and think that is more likely to be effective than by anything else I can do. I quite agree that these salespeople should be drummed out of the biz, and I applaud my blogmates for their posts calling for more stringent education and other requirements to be a real estate agent. I also would like to point out that I have no confidence that the builders have done good work on the construction, so recommend against buying these condos at any price. Given the marketing method they use, I can easily imagine that corners were cut in the building process. There are other projects in town that are selling like mad, without the need to trick, trap, or pressure buyers. And, to beat the drum once more, your best protection is to have a Realtor you trust at your side.
I have to wonder... if the market for condos is as hot as Ms. Rhodes would have us believe, why would anyone feel that they need to resort to these type of tactics? And what's going to happen to that "handsome" appreciation if some non-negligable percentage of condos in town start suffering the ill effects of poor construction? Furthermore, since many condo projects only list one unit in the MLS, wouldn't that mean that the MLS statistic of "total active listings" for condos is significantly lower than the real number of condos available?

If anything, it would seem to me that the future of Seattle's condo market is even more murky than the market for residential homes.

(Susan Ryan, Seattle Real Estate Professionals, 07.28.2006)
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11 comments:

Anonymous said...

Furthermore, since many condo projects only list one unit in the MLS, wouldn't that mean that the MLS statistic of "total active listings" for condos is significantly lower than the real number of condos available?

You would have to be delusional and blind to think that this isn't the case. Just walking around Ballard, I see new condo projects hawking their units left and right. Signs everywhere. Yet, when I do an MLS search, I see only one or two listings from these same places.

These people are either ridiculously devoted to marketing their last two condominiums into a "hot" market, or they're holding back listings. It doesn't take a genius to see through the ruse.

richard said...

The impression I get of the MLS is that it's still aimed 90+% at other agents.

I haven't seen any real stats on what % of total sales are listed in the MLS pre-sale, but examples like this make me very curious.

All of the investor types I've talked to that have been in the business for a few years tell me most of the properties they buy and sell never see the MLS.

Anonymous said...

....which is why the NWMLS summary statistics are absurd. They're unregulated, unofficial, and easily manipulated.

It says a lot about real estate reporters that they publish the NWMLS data without even bothering to validate with county sales databases. I've found enough discrepancies between the two that I no longer believe anything that the NWMLS says.

SeattleMoose said...

"So I take a client to the project to look at those listed units, only to be told, inevitably, that they are all "sold." "

Sounds like a lot of car dealers became RE agents. This is a classic used car sales tactic.

Advertise that lowball car (that doesn't exist) and when people show up to buy it....well, sir that car just sold, however can I interest you in a HUMMER?

Believe me, the sleaze is just gonna get worse as desperation mounts......

richard said...

Sounds like a lot of car dealers became RE agents. This is a classic used car sales tactic.

I'll say. A few years ago I was looking to buy a used IS300 with a manual transmission - very hard to find.


A large number of the cars listed in autotrader didn't exist. I'd get "how about an Audi A4?"...

synthetik said...

>Sounds like a lot of car dealers became RE agents. This is a classic used car sales tactic.

This doesn't surprise me at all. In general, real estate agents will do whatever they have to do to sell a house. They do not represent the buyer nor the seller, they simply represent themselves.

They manipulate the buyer and seller so a sale can occur as quickly as possible.

Statistics show that realtors wait, on average, an additional 10 days before selling their own homes. Why aren't they doing that for their "clients"? Obviously, if they hold up the sale they only stand to gain hundreds of dollars, versus a quick sale allows them to focus on the next deal.

Welcome to the world of commission only sales.

christiangustafson said...

I don't believe this for a second. REALTORs® are extremely ethical. A commercial told me so.

When faced with a stern moral dilemma, you might just as well consult a REALTOR® than a priest or rabbi.

Anonymous said...

The most rediculous thing someone could do right now is buy a house. There is no doubt that they would be buying at the absolute high point in the history of the Seattle market.

We now head into fall and winter, and a deteriorating global house market. The seasonal change alone knocks off 5-10% annually, coupled with the housing bubble popping, someone would be foolish to buy today.

Dukes said...

The most rediculous thing someone could do right now is buy a house. There is no doubt that they would be buying at the absolute high point in the history of the Seattle market.

I 100% agree with this statement. People must truly have their head up their (you know what's - no curses allowed here) to be buying right now. It boggles the mind that some people could be so uninformed.

My gut feeling which has never let me down is that many of these condos will be sold in the coming years at fire-sale prices.

seattle price drop said...

I just knew crap like this was happening! Hiding inventory to make numbers look tighter, scamming, etc.

Anon 2:27 is right, as far as inventory, you can tell just by hanging out in those neighborhoods or even a glance at the MLS.

About a month ago, Coldwell Banker changed it's site banner from "Seattle Homes" to "Seattle Homes and Condos". The push was on.

The condo market is in jeopardy all over the US and Seattle just came a little late to this game.

So everybody is nervous.

Antway, kudos to that realtor for blowing the whistle on this one.

cosmos said...

The tactic, called "bait and switch" is illegal. I wouldn't count on the Real Estate Board to do anything about it, but the WA State Attorney General's Office would likely take an interest if it was reported to them. They have investigators, as well as lawyers, on the payroll.

Someone who has experienced this needs to report it.

By the way, as Synthetik noted, always assume a RE professional looks after their own interests first, despite that brokers and agents are suppose to have a fiduciary responsibility to their clients - very few take that seriously. (I venture to guess, most don't know what the word even means.)