Sensible Words From Sam Wyatt, Westside Realtor – “This is a very serious situation. If you plan to sell, you will need to price BELOW the most recent comparable sales prices. If you don’t do this, your listing will stagnate.”

“Last month I pointed out that the active listing volumes for detached Westside houses actually exceeded the highest volume during the credit crisis. In June the number of houses actively listed was even higher at 1078. During the credit crisis, the active listings of detached homes on the Westside never exceeded 1053 houses. Keep in mind also that the three year average number of active detached homes listed on the Westside between January 2009 and December 2011 was only 589. This is a very serious situation.” …
“Vancouver’s real estate market is getting and is going to get hit from both ends. So, now that you are thoroughly depressed, here is the bright light: IF YOU SELL NOW, YOU WILL STILL BE SELLING NEAR THE TOP OF THE MARKET. If you plan to sell, you will need to price BELOW the most recent comparable sales prices. If you don’t do this, your listing will stagnate.”

– Images, and text excerpts, from ‘July Market Update: Am I Too Late to Sell?’, by Sam Wyatt, Vancouver Westside realtor, at samwyatt.com 5 July 2012

Sensible stuff.
Sure, Sam Wyatt stands to gain if his sellers price sharply, but we happen to agree with his take on the market.
Prices are headed down, and the only way for sellers to get to the front of the queue is to lower their prices.
This is the process by which price drops progress.
This also demonstrates why it’s impossible for anything more than a relatively small number of sellers to get out near a top.
Those who do so will look very fortunate in coming years.
– vreaa

56 responses to “Sensible Words From Sam Wyatt, Westside Realtor – “This is a very serious situation. If you plan to sell, you will need to price BELOW the most recent comparable sales prices. If you don’t do this, your listing will stagnate.”

  1. weeeeee!

    it’s a hell of a toboggan ride

  2. 2 realtors have now admit that we are in a bubble. This is also a marketing strategy for the realtor to find listings. Sam mentions pricing your property carefully so that it doesn’t go stale. This is also a strategy so the home will sell faster and he can collect his commissions.

    Why are these 2 realtors coming forward with their prediction? Because they need listings.

    Remember, after the market tanks, the commission does too!

  3. too much debt

    Real Estate agents have been using fear and greed tor drive this market for years, “you better buy now or you will be priced out of the market” was their sales pitch for years. It worked well, people panicked and mortgaged their financial future for up to 40 years just to own a house. Now that the market has peaked agents are starting to flip, “you better sell now to lock in your gains, price it below recent sales to get a quick sale”, That way I can make my quick commission. They don’t care if you sell your house for $200k less the difference in their commission is minimal, they just want to get the sale. Once again they will use fear and greed on the way down and make a killing in the process. They have to keep the gravy train going, where else are they going to find a job that pays them this well after taking an on line course that costs $875 , oh but wait you have to buy a financial calculator for $75 bucks, my bad.

    http://www.recbc.ca/licensing/trading.html

    • A business model that has always been more reliant on total transaction volume than absolute dollars… The worst case scenario from an agency POV would be stasis.

      • It’s always a great time to buy or sell.

        In my early days I was recommended a financial advisor who was paid via transaction commissions. That experiment lasted about a month.

    • Ralph Cramdown

      “Make a killing on the way down”? Remember, total realtor commissions in a market is just volume x average price x average commission. With the product of the first two terms down, what, 40% in Vancouver, they’re not making a killing, they’re dying (at least compared to last year).

  4. We’ve stated our opinion before: Wise realtors present themselves as salespeople who are expert at executing a deal in the best possible way for their client, not as market direction analysts.
    In this respect Sam isn’t being wise (he’s predicting a downward trajectory; he’s stepping into the shoes of an analyst; what if clients sell based on this and then he’s wrong?) BUT, as we said, in this case we think his call is going to prove to be correct.

    Most realtors want it both ways.. they can’t resist becoming analysts and predicting market direction, they want credit for this when they’re right and clients are making money on their recommendations, BUT, when they’re wrong, they want to step back and say “hey, I only work here!”.

    • This sort of advice is what I would pay a Realtor for; ultimately a seller needs to know what places are moving, at what price, how long they take to sell, and what it will take to elicit a probable sale. If Wyatt is presenting these data to prospective clients along with direct comparables (likely more sparse than in years past, and hopefully including examples of properties that aren’t selling), he can allow these clients to decide for themselves the reality of the situation.

      Most Realtors have had a taste of what bear markets look like. Hopefully they haven’t forgotten.

      • OK, but he does say “Vancouver’s market is going to get hit from both ends” and, “IF YOU SELL NOW, YOU WILL STILL BE SELLING NEAR THE TOP OF THE MARKET”. Both statements appear to be a prediction of coming price drops, don’t you think?

        I’d add “specific property sales and price history” to your list of things for which one would pay a realtor. The kind of information that is available free on the web from Zillow in the US is held privately by realtors in Canada. It’d be worth knowing a property’s price history before making an offer.

      • I agree calling the top is presumptuous and makes a few assumptions. As I mentions I would need to know what places are moving (and aren’t) and at what price. That requires specific examples, though specific examples are more anecdotes given the level of for-sale inventory 🙂

      • Nom Nom Nom

        How can a realtor in this situation not leave them selves vulnerable to legal action should their predictions lead to financial loss for a client. As far as I know, being a realtor does not afford you the rank of financial adviser.

  5. Went over to Sam Wyatt’s page and had a read. Given the Jupiter in Gemini energy, the Mind is most stimulated at this time (Air sign ruler Mercury). Wyatt’s RE analysis versus appeal to emotions (like that of a used car salesman manipulating your Water energy) is EXACTLY the correct approach to take, at this Point, in a rapidly consolidating RE market. Sorry Vreaa, but the astrology doesn’t suggests Wyatt’s appeal to the intellect (through analysis), is unwise.

    • We agree with his analysis (as stated).
      We disagree that a realtor should play the role of RE market analyst.
      They are not trained to do so, nor are they equipped to deal with the responsibility that some clients may place on them based on acting on these calls.
      Just our opinion.

      And, again, with respect Paul, we’d ask you to leave references to astrology off these threads. We would ask the same of others sharing a broad variety of belief systems that we don’t see as relevant to the Vancouver RE market.

      • http://www.elliottwavemarketservice.com/2012/07/astro-technical-update-the-mars-uranus-crash-cycle/

        Vreaa, this is a link to an article relevant to the ‘now’. It’s technical in the sense of Cartesian perspective, x-y graphs plotting time and price. From what i understand, graphs like these are fine for this site. No zodiac charts. This article seeks to invigorate the skeptic, or challenge the astro-illiterate for what lies in front of us Now. I hope you allow this post to stand.

      • Paul -> Sure, I’ll let this post stand (as, I believe, I have done with all your posts).
        But if you think that link will “invigorate the skeptic, or challenge the astro-illiterate”, I’d say you were sorely mistaken. It describes an astrological indicator (‘The Mars-Uranus Crash Cycle’) that has failed spectacularly at predicting anything about even the very market instruments and periods cited in the article itself. If anything, this link will affirm to skeptics that it is wise for them not to waste time with astrology.

        Please do not mistaken this as an invitation to start discussing the intricacies of astrology. As we’ve said before, respectfully, we do not subscribe to astrology. You yourself have already posted links to sites where interested readers can take such discussion.

      • wooooOOo voodoo magic! voodoo magic!

        what’s that? a lunar eclipse?? NO! it’s the SNAKE GOD EATING THE MOON!

      • Thanks, Vreaa, for keeping the conversation focused.

      • These pretzels are making me thirsty

        rusty
        Posting asinine comments reveals more about you than astrology or Paul.

  6. and are we really valuing this realtors opinion???

    Keith Roy:
    “As for buying back in, I am less worried about the price of the home I purchase, as I am about whether or not I can afford it on a monthly basis – which is how most people buy homes. Once the price of the home I want gets to a point where I can afford it on a monthly basis, I I will likely buy back in. If the prices go down further, but interest rates go up, my monthly payment will remain the same. Monthly payments are the primary metric by which I will be purchasing a home. In my case.”

    http://thethirtiesgrind.com/2012/07/10/is-keith-roy-the-jerry-mcguire-of-vancouver-real-estate/#comments

    • Ralph Cramdown

      Yes, and here’s why.

      Most of us, whether we realize it or not, don’t have to worry about being “priced” out in normal market conditions. If you’re in the 50th percentile of home purchasers for both downpayment and income after consumer debt servicing, you’re going to be able to afford a 50th percentile home in all normal markets. If you CAN’T afford it, it’s the market that’s temporarily broken, not you.

      BUT, if you’re a realtor facing an imminent decline in income of, say, 40%, you’re slipping down the percentiles and really do have to worry about the monthly nut’s affordability getting away from you.

  7. Perhaps realtors are finally realizing how credible they will look when prices decline after telling clients over the past few years how their purchase was a safe investment with promising returns. I won’t be surprised if more realtors go bearish, just to look like they called the top of the market.

  8. Some realtors who are calling themselves bearish aren’t really bears:
    Keith Roy is trading a bump: he reports he plans to buy back in Sept/Oct 2012, hoping to have profited from the quick trade (we imagine that, as a realtor, his trading costs are lower than most).
    Larry Yatkowsky makes bearish noises at times, but no more frequently than he makes bullish noises, and he is on record making very bullish noises at times:

    “Larry Yatkowsky says he doesn’t believe anyone who predicts it’s got to end soon with a double-digit crash. “It’s not going to go there.. I have no reason to believe it would drop anywhere near that.” Higher interest rates may cool things off a bit, but he says don’t expect too much of a fall back from that million dollar milestone.”
    CBC News 9 Apr 2010

    And here’s another relevant quote:

    “You have to take a deep breath and realize that the world you thought you knew is not as it appears. You must understand and accept that there is untold wealth that exists within our city. A paltry $2.5 mil is chump change. What we are experiencing now is only a beginning.”
    Larry Yatkowsky, Nov 2010

    • Ralph Cramdown

      Unimaginable untold wealth! Did you know that the land under the Imperial Palace in Tokyo, all 3.4 square kilometers of it, is worth more than that in all of California? Oops, wrong decade.

    • Well, by those quotes I can tell they’re clueless as to what major factor drives sales, that is, lending conditions. http://postimage.org/image/nrlu83knb/

      If lenders can’t insure as many high LTVs or offload risk by securitization, they are not going to lend in a declining market. Simply said, they don’t want uninsured (no CMHC or CDS coverage) depreciating assets on their books.

      In contrary, less lending becomes a catch-22 as less sales will eventually lead to falling home prices, depreciating lenders assets even more. This is one of many ramifications when credit contracts in an economy that was driven by constant credit expansion.

      This will soon spill over into the economy, banks and CMHC as we know it.

    • Larry may lack formal training in international political economy, but he certainly understands the concept of “chump change”. What he has failed to grasp is that, rather like the tides, capital flows are highly ‘seasonal’ in character and predominantly determined by ‘distant forces’… As for Larry’s prior prognostications… For some reason, I am minded to recall Cnut The Great’s apocryphal command..

  9. Dimitri Tishchenko

    “We are going to have a soft landing in Canada” -Patti Croft

    http://www.cbc.ca/thehouse/2012/07/14/mortgage/

    • Ralph Cramdown

      That’s not the first time this year I’ve heard Patti muse about cashing out on her Oakville house. I’d say she knows it’s the prudent course, but thinks moving too much of a PITA.

    • pricedoutfornow

      Hasn’t anyone told her there’s no such thing as a soft landing after a boom? Someone….refer me to ONE example in the history of humankind where there was a boom and subsequent “soft landing.” Just one example please! If soft landings DO exist there should be plenty of cases. I’m waiting.

  10. Realtor = glorified used car salesman.

  11. Suggestion: Create a list of realtors that have recently “come out”, i.e. publicly display the bearish stance. I can think of Sam Wyatt, Keith Roy, and the richmond chinese realtor (Wong?).

  12. For sh!ts and giggles (and because of the rain) we went to a couple of open’s in our west van hood, 3M, 4M and 1.9M each.

    The 1.9M is a lovely Ron Thom westcoast mid century piece, the realtor was awesome. She said the market has completely flipped 180 degrees. Things have changed compared to a year ago. The days of bidding wars are done. Good to hear frank, honest insight instead of fluff.

    The 3M and 4M places were a reno and rebuild respectively. Both pretty hideous quality for the price. Outrageous.

  13. Just returned from Vancouver and saw houses that were on MLS but then walking down the street there was no sign out front. Could be lots of this as people start getting anxious. Seemed like lots of signs all around compared to other times. I did not attend any open houses but saw homes with for sale signs in Mackenzie Heights that were for sale last year! I also have never seen so many luxury cars in all my life and I am a born and raised vancouverite. I am saddened by some of the things going on.

    • True about the cars, Vancouver needs an enema.

      • The amount of luxury cars here is absolutely nuts…

        BMW, Mercedes and Audis don’t even register with the eyes, more of those than Civics.

        Driving over Lions Gate you’re more than likely to see half a dozen 911’s and 2 or more Ferraris and Lamborghini’s. All this in under 2 minutes and 2 kilometres.

        Never seen anything like it, not in London, LA, or any other city I can think of.

    • “…saw houses that were on MLS but then walking down the street there was no sign out front.”

      Hah. There are so many listings they’ve run out of signs!

  14. Last Year: Buy now or be priced out forever….
    This Year: Sell now or be priced in forever…

  15. I watched this same thing unfold verbatim in Los Angeles. I got my home on the market a bit after the peak there. My agent had priced it aggressively and it languished. We cut the price 5k every couple weeks and it was going nowhere fast. My instinct was to do just what this realtor advised and i told my agent to slash it 50k below the most recent comparable and then it sold. I took about 190k less than what it would have gone for at the peak which would have been about 800k. Some people felt i had taken a loss, but i was releived to be out ahead of the game. I had bought for 225k in 99, so i was still way ahead. I felt awful for people who had just.bought though, and frankly thought the people who bought from me were nuts. Anyway last year i noticed my same old place was in foreclosure and sold for nearly 200k below what they paid for it. In my eyes it is still overvalued at 400k. If you sell now you will look like a genius, believe me. It isnt different here, its even worse.

  16. Unrelated to todays article but worth the read anyway (if you are curious about real estate bubbles in other countries). Some of you may recall that I wrote about a housing bubble in Ethiopia. The worst of it afflicts the capital city of Addis Abbaba.

    Now of course it is common knowledge that Ethiopia is poor. Incomes average just a dollar a day. In terms of Purchasing Power Parity the country ranks at a dismal #169 which is in the bottom 15 of the planet. Only places like Zimbabwe, Mali and Afghanistan rank lower. Canada is at a very lofty #10 by comparison and is amongst the wealthiest of nations.

    See, we had something to feel good about today after all.

    Anyway, the article is about the troubles with presales of unbuilt condos and homes. Seems it is as bad there as anywhere if not a great deal worse. Home prices are ranging into the millions of Birr (one Canadian dollar is roughly 18 Ethiopian Birr) so obviously the prices of homes are well beyond the incomes of more than 95% of the population.

    The comments section tells the story better than the article. What will strike a nerve is how much people there dislike realtors and all the the gimmicks, come-ons and lies. It really is the same all over the planet…..I wonder if there is maybe a genetic component to sales people?

    http://nazret.com/blog/index.php/2012/07/14/ethiopia-how-buying-a-real-estate-in-addis-can-be-a-nightmare-you-could-do-without?blog=15#comments

    • For some odd reason the link starts at the comments page. Click page-up to see the article..

      • If you want to post some of the longer links, it is better to use the tinyurl service, makes it more readable.

      • Thanks Olga, will do next time.

      • joe_blown_away_by_high_housing_costs

        Personally, I prefer to see the full link that I am clicking on. I am far less likely to click on a link that is tiny url because I like to see the domain name I am going to. With tiny url, you have no idea where I go when you click on one of those. I like to see there is a legitimate domain name to what I am clicking on in order to avoid going to a hostil website that will give my computer a virus. Just my personal preference.

    • Yellow Helicopter

      Agreed with Joe; I also prefer to see the whole link. I am much less likely to visit a tinyurl site for similar reasons.

      • Actually I am in the same camp as both you guys. You just never know what strangers will offer up as a link and there have been a few times I opened one only to discover later my computer was infected. The TinyURL system masks the sites identity so that one-click can sometimes be a gamble. My own tendency is to not open unknown files or sites no matter how interesting they might sound.

      • You can still bypass all of that unless you pay close attention to where the link actually takes you, like this:

        http://www.google.com

      • subterranian

        TinyURL is much safer if you go to tinyurl.com and enable their “preview feature”. You need to do this for each browser you use, though…

  17. I agree with goukoo3 – maybe a new category for bearish comments from realtors?

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