Billy,

My first time reading you here.  Hope you are well, not sure if you remember me.

You should send this story to your colleague Liz Smith, who has a Hamptons item up now that needs a little fact checking.

I’m surprised I didn’t see this when it was posted - my husband and I are real estate brokers in the Portland, Oregon area, and I must agree, there have always been and will always be predatory buyers. I disagree with Ms. Slattery on one item, however - if I am not the listing agent for a property, I will refuse to write a predatory offer on the property. If the buyer is determined to write an outrageous offer, they may write it with the listing agent. I had a buyer who placed a ridiculous offer on a house a few years back, and the buyer was insulted when the seller declined to respond (allowing the offer to expire - this is rejection by expiration). He cheerfully told me I could write all his offers (he had taken one of the classes from a TV infomercial "real estate specialist", obviously). I told him he could write them with another agent. I don’t have the stomach for that kind of conduct. It is an enormous waste of my time, and the other agent’s and seller’s time as well.

The selling agent may place a quick phone call, and ask the listing agent, "if a buyer places an offer of $XYZ,000 on your listing, will the seller be willing to entertain it?". This will dispose of the need to write the many pages of paperwork necessary to complete even a simple offer. Verbal offers are never binding, but the offer will be written, if the seller is willing to consider it.

I so agree, much of what is perceived to be depreciation in the market is from the perception of a rise in values in 2007, and many sellers were unrealistic following that rise, about the values of their homes. In our market, there was so little inventory available in 2005, 2006, and part of 2007, that when Intel or Nike transferred employees into the area, if they wanted to purchase a home, they were forced into bidding wars. Many home prices were temporarily inflated to prices which could not remain tenable for very long. Unfortunately, this coincided with a time of easy mortgages, with little documentation. At the time, my husband and I did not consider those few sales which did take place to be indicative of market values. Some homes went up 20% within a one to two year time frame! Clearly that sort of growth cannot be sustained by even the healthiest market (and, who would want it to?). Housing was removed from the cost of living index during the Reagan administration, but is an enormous part of the cost of living.

So, if the prices for which a few homes sold in a period of scarcity were apocryphal, and not a true indication of value, should all other homes in the area have their values adjusted upward, following that spurious key? It was my opinion at the time that some homes should not have appraised for the sale prices they received, yet they did. I remember, it was nearly impossible to find comparable sales to key the prices to at the time.

So, a large part of what is considered to be a reduction in values may be seen as a reset to 2004 prices, prior to an anomalous  and misleading temporary run up in prices. 

Fortunately for my husband and me, we sold very few residential homes during that period. We sold a couple of farm properties which sold in the million $ range and above, a five acre piece of development property which has since been developed into fifty residential building lots, and a handful of average residential homes. Those larger transactions were complex enough that they took up much of our time, and prevented us from experiencing that frenzied market to the degree that many of our colleagues did.

We told our few residential buyers at the time, that some of the talk in the media about the "housing bubble" (how I hated those words!) may have some truth - they would need to be sure they were in their homes for the long run, and that they were happy with the home, and felt it was a good home for their needs. There may, after their purchase, be some market adjustment. Eventually, markets recover from these things, but it takes time and patience.

Our market has been very slow for a couple of years. It seems in the past month that buyers have gotten tired of waiting, and are finally finding loans, and placing offers, or planning to buy. Market activity is picking up, and there is cause for optimism.

Please wish our beleagured sector of this economy the best, I have heard the rest of the economy will follow us as we recover. -

Vicki Carroll