Lots of our clients hold rental properties they obtained decades ago — either their first homes, or a house they inherited from their parents.  And through pure inertia, or apathy, they just continue to rent them out without a real strategy for the investment aspect. 

Sometimes this emotional need to hold the property makes a lot of sense.  When my grandmother died in 1991, she left her home in Maple Leaf to my father and aunt.  My dad bought my aunt out, and he just couldn’t bring himself to sell the house in which my grandmother had spent 40 years tending her gardens and reading books on a chaise lounge that had this great view of the Cascades.  We were all glad he kept it, if for no better reason than it somehow soothed the pain we felt at losing her, to at least still have her house in the family.  After 10 years, six years ago, the pain had eased a bit – he sold it.  It had turned out to be a good investment move as well, as the house had gone up significantly in value during that holding period.

But here’s my case study:

In a similar situation to my father — we were contacted by a friend whose mother had inherited not only her family home, where she had grown up, but her husband’s family home as well.  Both houses were near Greenlake, both homes were more or less in “original” condition.  For nearly 30 years she tended both houses, not so much for an emotional need after that much time, but as investment properties.  She would turn over the tenants, paint the walls, re-rent the mother-in-law unit in the basement, cut the grass, etc.  It was all getting to be a bit much for this woman who really didn’t NEED to be personally handling these rental homes.  So she could have turned them over to our property managers and gotten out of the loop a bit, but owning two highly appreciated houses, one of which had a legal building lot used as a “backyard” and detached garage, wasn’t the highest return she could get for all of that equity.

I estimated that the total value of the three parcels (assuming the yard would be sold separately to a builder) was around $1,125,000.  Houses at $450k and $425k, and the lot at $250k.  Her net income on these houses, after taxes/insurance, was around $30,000 — a dismal 2.6% return on her equity.

My proposal for her was to take that $1,125,000, or around $1,025,000 after sales costs (commission, excise, some preparations for sale on the homes), and roll these properties into a single apartment building using the IRS Section 1031 tax deferred exchange.  By doing this, she would pay no capital gains tax on these sales, saving her over $150,000 in taxes.  The more important issue is that we aimed to double her net cashflow, getting her ROI up to 5-6%, and in doing so, provide professional management and eliminate her need to micromanage these rental homes. 

So all we had to do was sell these three parcels, and find an appropriate “target” or “replacement” property for the exchange properties.  And do it within a few months of each other. 

Here are the properties we sold (this was about three years ago, so the values are different now):

 Cute little bungalow — original sale estimate $450k; final closing price $405k.

Terrific craftsman, a little further away from Greenlake and not in the “prime zone.”
Original sale estimate $425k; final closing price $485k. 

Side lot next to the above.
Original sale estimate $250k; final closing price $272k.

Once we had these in escrow (total sales price of $1,162,000, a little more than I had initially estimated), we went shopping.  I was targeting an apartment building in North Seattle, so it would be in a neighborhood with which the client was familiar and comfortable.  And it didn’t need to be a trophy building — we wanted cashflow, in a solid location.  We ended up in Lake City, bidding against another buyer for this bulletproof 12 unit apartment building:
 

Purchase price was $1,120,000, and the net income in the first year:  Over $63,000, net of costs including property management fees, or 5.6%. 

Our original goal:  Preserve equity by avoiding cap gains tax (check); get the client out of the property management business (check — except she still is involved just to the extent she cares to be); increase net cashflow with a conservative investment property that has good potential for continued appreciation and rent increases (check). 

This went smoothly in large part because the market was so strong to sell out of for our rollover properties – although that hurt us a little on the buy side, too, having to bid for the target site.  But it also helped that the client trusted our recommendations, and that she was savvy enough to understand what we were looking at — she had lots of experience with real estate, not just these houses but other commercial properties as well.  This experience and trust helped us to be able to focus on making the transactions happen.

I’ve been privvy to lots of talk about this new distressed homeowner law in Washington and how it affects our work as real estate agents.   We’ve had a half dozen deals in our office in the past month that are either properties in foreclosure or properties that are being sold as short sales — where the lender is taking a big discount off what they’re owed (”owed” meaning all sums including principal, accrued interest, foreclosure costs to the trustee, etc) in exchange for getting cash now out of a presumably arms’s length sale. 

As agonizing as it is for the sellers, and sometimes for buyers, these situations are always a lot more effort for the agents.  And ironically it’s more effort with less pay — the lender often dictates that the commissions should be “X” which is sometimes far less that what has been contracted for in our listings.  Instead of just communicating with the seller and the buyer’s agent, suddenly we’re in touch with the lender’s “loss mitigation” folks, escrow, maybe a bankruptcy trustee.  You hear no whining here — we can choose not to take this work, as it’s a free market.  But if our seller needs our help, it’s hard to say no. 

And I wonder, from the bank’s position, how bad these “losses” really are?  Sterling Savings, a local bank out of Spokane with which we do a lot of business, has a $2,000,000,000 construction loan portfolio.  They’ve set aside about $150m in “loss reserves,” anticipating that when the dust all clears on this, that they’ll be out that much money in principal.  And their stock has been POUNDED, to just a few dollars a share, with a market cap of $131m, down from $30/share last summer.  They had income of $272m in 2007.  It just doesn’t make sense to me that they’ll be hurt that badly, given their non-exposure to subprime and Alt-A loans, and this construction book — a large percentage of which is in the not-so-sick Puget Sound region. 

As a real life example of a short sale:  We’re working on a deal now where the bank is close to foreclosure, and we’re close to a closing.  Sales price is around $400k (I’m changing the numbers a bit to obfuscate the deal).  Lender’s principal balance is $365,000, but with interest and fees, the “payoff” would normally be $410,000.  In last year’s market, this house sells for $465,000, bank gets all they’re owed, agents get paid, and seller gets a bit of cash at closing.  But at today’s value, and a distressed sale at $400k, and after commissions/excise/escrow/title, there’s only $365,000 left over.  So the bank agrees to a “short” which gets them 100% of their principal back.

I’ll bet they’ve written that loan down by 30%, or taken a loan loss reserve for $90,000 as they are so close to foreclosure on a loan that’s been non-performing for a year.  That’s $90,000 against their current earnings.  So at this closing, they get $365,000, their WHOLE PRINCIPAL.  Do they book the $90k they’ve now “not lost” as income?  I don’t know, but I would think so.

As the market unfreezes, and in one-two-three years, this logjam breaks up, it will be interesting to see if these banks’ loan loss reserves have been wildly conservative, resulting in huge windfalls on the balance sheets…or if they’ve been incredibly underestimated. 

It depends on the bank, of course.  But I think lots of smaller commercial banks, like Sterling, have been the baby thrown out with the bathwater. 

To be continued…

While we hear much about the size of the just-started-to-retire 77.2 million Baby Boomers (1946-1964), the generation beyond mine (I’m an X-er, but barely, born in 1966) is bigger.  The Gen Y cohort (b. 1977-1996) is 84 million strong.  Behind that, the Millennials, are 48 million+ in number.  (All data from U.S. Census Bureau).

While 69% (and dropping) of the US population are homeowners, and 85% of those over 65 own homes, listen to this:  ONLY 49% of those ages 25-34 own homes.  They are renters. 

Eventually, do you think those kids are going to become homeowners?  As much as is said about the value of renting — and to be sure, it makes great sense in many many cases — it would be a scary thing if my 75 year old father was still managing a $2000/month rental payment rather than sitting in his free and clear home.  At some point the mortgage gets paid off; the rental payment never goes away.  I think homeownership makes sense for a huge variety of reasons, even if the house is never worth a penny more than what you pay for it.  But for now, the Y’s and Millennials are renters and will be for quite a while.

Which begs a question in this web 2.0 world — who is providing a Zillow-like experience to all of these renters?   Craigslist, sure…our property managers use this constantly.  But what a terrible user experience…hard to find, hard to sort, you have to re-post regularly to keep up exposure, limited pictures, no mapping.  Sure it’s free…but I’d happily PAY as a rental property owner to have a service that actually maps, shows pictures, and be easily reactivated when vacant.  I’ll bet tenants would pay to use it.  Rent.com is another provider of rental listings, but they mainly service the large, corporately owned apartment complexes.

Where is the national database of rental listings, providing a great consumer experience for both landlord and prospective tenant? 

It’s not too difficult to interpret our MLS’ guidelines for showing Square Footage in our listings.  And for the new townhomes we list and build, it’s especially simple since we have building plans to work with.  I’ve talked about this before, most recently on Rain City Guide.

The way to do it “right” is pretty logical.  List your Finished Square Footage “SFF” (nearly all townhomes are 100% finished), take that total to your Total Square Footage “ASF” field (approximate square footage), and you’re done.  The ASF is the critical field as this is what gets put into the Square Footage line in all listings as they get fed into the online database, and it’s the denominator in the price/psf calculation that all buyers see in the MLS listing. 

The temptation that many agents (and I assume, their builder clients) fall prey to is including the garage square footage in the ASF total as a way to appear larger.  As an example, I have a listing here that is a 2 bedroom townhome, with 1010′.  At our list price of $325,000 that works out to be $321/psf.  If I add in my 215′ garage, that figure drops to $265/psf.  What a better deal!  Except my garage shouldn’t be counted as finished or unfinished “living” space.

Here’s the skinny from the MLS on the topic:

NWMLS Legal Bulletin 15:   

SFF - Finished: Does not include attics and basements unless they are finished living space. For instance, if there is a furnace in the middle of the room or it is suitable only for storage, do not treat the room as finished living space. Let your common sense guide you.

SFU - Unfinished: Unfinished, but potentially livable rooms should be in the “SFU - Unfinished” category. If the attic or basement has a ceiling which is too low for anyone but kids to walk around without bending over, do not include it in the unfinished or any other category. The test is whether it is potentially livable space. Such praises as “nice large storage attic” are common and should not result in any problem. Again, let your common sense guide your conclusions.

Garages: DO NOT INCLUDE THE GARAGE in the total square footage, even if it is in the basement. The same is true of carports. The listing will show whether or not there is a garage. If you feel compelled to say more than “two car garage,” do so in the “Remarks” section.

ASF - Total: Add together the finished and unfinished space to get the “ASF - Total.”

There are about 160 townhome listings in North Seattle right now — about 16% of the residential market.  In reviewing EACH of these, one by one, I’ve found that about 60% of the agents do it the right way.  Here are the five star agents (and the builders they represent) who are giving the public what they want:  Accurate information!

Doug Holman, RPA – Real Property Development Company (this is us…)

Steve Kennedy, Re/Max  – Howland Homes 

Gabe Rosenshine, Alchemy Real Estate — Great Northern Land Co., Creative Builders, Howland Homes (and others).  Greg says he’s a huge proponent of accurately showing the true square footage and not including garages. 

Greg Stamolis — DPA Construction, Noland Homes, and others.  In speaking with Greg he was also vehement about doing it right. 

Michael Chou, Re/Max — Ashworth Homes, RPDC, others

Mike Peters, Re/Max — Ashworth Homes, others

Stuart Vincent, Windermere — Seaquest Homes, Seattle Signature Homes

Bob Bennion, Windermere — Farrow Homes

I’m sure there are other agents that are doing it as prescribed, but these guys jumped out while I was doing the search and talking to them about their processes.

At the other end of the spectrum there are a few agents who should know better, showing garage square footage as part of the total square footage.  And worse, they’re doing it without even disclosing that fact.  Maybe my next post will be to point out these offenders and the builders who are either telling them to do it that way, or not telling them not to. 

A few builders that I spoke with said “I’d do it right if everyone else did, but I don’t want to be at a competitive disadvantage because my square footage looks less than the guy who is including his garage.” 

If everyone did it the same, this wouldn’t be an issue.  I think that consumers are more and more demanding accurate, precise information.  Before they ever visit a townhome they’ve seen it online, and they are entitled to get good, unqualified information that can be relied upon from all sources.

When I go with one of my agents to pitch a listing with a potential seller, I’m always looking for something to differentiate us from the competition.

Everyone is going to come to a presentation like this armed with a “marketing plan,” which is a mostly-boilerplate bunch of glossies that talk about how terrific the company is.  I think this is full of sound and fury, signifying (you guessed it) nothing.  There is almost no work that the typical agent puts into changing the address and a few fields and pressing “print,” although most sellers are overwhelmed with the heft of the folder…or for really high end listings, the three ring binder. 

I’ve never been much for binders. 

And the CMA and its accompanying explantion, while critical, is something that every good agent provides the listing prospect.  Ditto a good, thoughtful listing in the MLS.

So I want to focus our time on something different; on the tangible, real things that we can do to effectively market this unique home, in this specific location.  If this is a two bedroom $1.3m house in Leschi, I know my target market isn’t likely to be a family of five.  If it’s a 2,000′ condo in a 55 and over community, I’m not selling to a 20-something.  Each home needs to be treated differently, and marketed in a different way.  I like to focus on some unique things we can do to reach those prospects.

For the past year or so there’s been another bullet (point) in my holster:  The Zillow EZ ad.  Now be warned, this will come with bias - I was hired to be Zillow’s first advisor, pre-launch, way back in December 2005 and I currently sit on their Board of Directors.  So I’m a Z-believer.  But that’s because I’ve spent three years now pondering how this site can HELP me and my clients, in so many ways.  This little EZ ad is just the start, but amazingly, not many folks are doing it. 

For about $200, or the cost of a really nice Sunday Times ad (which prove nearly completely impotent, drawing few open house visitors and even fewer prospect calls) I can put up an EZ ad, with a color photo, a few lines of copy, and a link back to the listing’s website.  If I don’t have a specific site for that listing, I can link it back to Zillow’s Home Details page for that listing where I can go on and on about the place.  And that $200 buys me 20,000 impressions in Zip Codes that I choose. 

What that means, if I compress the 20,000 into a one week campaign, is that there is a good chance my listing will show up in the margin of a Zillow user’s search, like this:  

(tragic reproduction of a screen shot…sorry for you photoshop experts who just cringed)

Lots of our listings are in Seattle’s north end, where $500-$700k buys you way more house than on Queen Anne, or in Madison Park.  So I like to blast those zip codes…the buyers shopping in those areas often don’t consider Lake Forest Park, but when they see they can buy NEW construction, 4100′, on a quiet street with great public schools?  Well, maybe they can tolerate the eight mile commute.  I can show this ad in San Fransciso for that matter, or in Manhattan (NY or KS, my choice). 

CHEAP.  $200 is a fraction of our marketing budget for the typical listing, and if the ad is well constructed, I’ll get 1% of those viewers, or 200 of them, clicking through to my website for more info.  If I can just get a few of them to call, and one or two a year to convert…well, that’s a good ROI. 

I said I’d never share a trade secret on my blog but only my agents read this stuff anyway. 

Go forth and try it for yourselves.  

It’s a constant refrain from a certain segment of our buyers — “go find me a fixer!”  Maybe there’s some romance to bringing these things back to life, maybe it’s a fun retirement hobby for some people.  Or maybe just too many hours spent watching “This Old House” and those get-rich-quick and flipper shows.

We don’t do many of these anymore, but back when we had the time and inclination, we’d scoop up these hammered fixer homes, restore them, and sell or rent them.  It seemed like a good side job to our main job of brokering real estate.  Here are some of our projects, before pictures only:

Weedin Avenue, near Greenlake — This brick tudor had settled about 8″ due to the weight of the masonry and the fact that Weedin and Oswego at 68th are essentially built on fill (it’s an old bog):

East Hamlin — a few steps from MOHAI.  Todd Turner, the UW Athletic Director, bought this when the remodel was done (yes, it’s on the market.  Sadly, Mr. Turner got fired).  The owner had inherited the house, started letting her kids salvage parts (hardwoods, trim) thinking she’d tear it down and build a new home.  Then she got bids for that from her contractor…

501 NE 65th — This guy had lived in the house for over 70 years, and never discarded a thing.  There was a 24″ aisle from entry, to living room, to bedroom.  The rest of it was stacked high with “stuff.”  You literally couldn’t see the house from the street for the overgrowth.
    

This is on North 50th, across from the Zoo.  You can actually hear the lions roar (or is it Aurora?).  The hardest part of this remodel was that cool window in the dormer over the living room bay was stolen during the project!  We had to have glass custom glazed to replace it. 

Out in Shoreline, this house had been boarded up for years.  Really strange.  We ended up tearing this one down and are doing townhomes out there (eventually):

Great house, adjacent to Matthew’s Beach on Lake Washington.  The architect who designed all of the north Seattle Windermere offices in the 70’s and 80’s custom built this for himself on a 40′ sliver of waterfront.  We dubbed it the “cheese wedge” and it took nearly a year to repair all of the water damage and deferred maintenance:

Triplex on First Hill.  Really rough spot across from a juvenille detention center. 

It’s worth saying that we never made much money doing this, unless we were doing the work during a time when the market appreciated dramatically — and then we didn’t make the money because we we so brilliant at adding value, we made it because the market bailed us out. 

In my mind it’s just too hard to predict what the remodel will cost, how extensive it will need to be, and what the carrying costs (length) are.  I think lots of contractors do this themselves, make $30-$50,000 in the process, and feel good about it.  Most of the time they’ve just made the same wage they could have earned working for someone else, without being compensated for the risk of the project.  

But it can be fun, and that’s worth something.    And it’s nearly always good for the neighborhood to bring something back to life that was neglected for a long time.

Way back in ‘72 I was a first grader at Briarcrest Elementary School — out on NE 157th, in the Shoreline School District — just a few blocks east of Shorecrest High School. 

Between last bell and the yellow buses pulling out to haul me home, I would sprint the couple of hundred yards to the Sunshine Grocery Store, and with my lawn mowing money, I’d buy myself a couple of Zotz for the long ride home.   I have fond memories of those jogs and the sweet taste of nickel candy with fizzy sugar.

Nearly 30 years later, the Sunshine Grocery had disintegrated into a malt-liquor-cigarette-porn selling, teenage-loitering hangout.  And then it was gutted by fire.  I couldn’t help but do something to bring back the Sunshine that I remembered.  This is what it looked like when we bought it in 2001, for $215,000:

Actually, it was way worse, but I didn’t take pictures.  The owner had collected his insurance money, boarded it up, and left all of his smoke damaged inventory in place.  When we closed (sight unseen), the rats had been partying for months.  Every day for two weeks our workmen would spread D-CON.  And every morning, a few more cat-sized rats would be feet up.  One of the all time nasties in a long line of nasty remodels we’ve done.   And those abandoned RV’s, well - those are harder to get rid of than you’d think.

A year and way more cash than we expected later, the place was back to how I remembered it — pristine, all new windows, new systems, new framing, new roof.  Here’s 1952’s photo from the King County Archive, and today:

I thought it would be easy to find a new Sunshine proprietor; except in 2003 there weren’t a lot of businesses that wanted to reopen a neighborhood grocery store just a few blocks from an Albertsons, QFC, and Safeway. 

After some trials, we found a woman who wanted to realize her dream, and she opened Sunshine Coffee, serving espresso to the masses.  She ultimately moved on, and sold to another guy who tried to expand into teriaki and other cafe type food.  Didn’t work.  So the Sunshine building is once again vacant, standing proud, and waiting for another business owner to fill the space with their dreams and wares.  I think a motivated, community minded businessperson could really make the espresso/sandwich shop work.

We’re back on the market, for lease ($1850) — and we’d entertain a sale — $595,000.  If you have a yearning to do something creative in a great neighborhood commercial space, let us know!  Would love to work with the right person in doing something that benefit the very active and supportive Briarcrest community.   If fact, if anyone out there has a great idea about what this space could be, let us hear it!

UPDATE 5/7 — We now have an agreement with a terrific couple for this building.  Their idea and use is extremely cool and I think will be well received by the community!  So stay tuned for Sunshine rising again.

Gordon Stephenson 
Owner and Licensed RE Broker
Real Property Associates, Inc.
206.577.0824
gordon@rpaseattle.com

I love seeing three bits of happiness about Northwest business on the front page of the Wall Street Journal.

Yesterday’s (4/24/0 edition in the “What’s News” column:

• Amazon’s net income climbed 30% on a “healthy jump” in sales.  Shares up $3 today to $81.  Lots of Amazon investors and employees in Seattle who are loving the stock’s jump from $40 a year ago;
• “Boeing posted a 38% gain in profit” on strength in its commercial airline biz
• Liberty Mutual agrees to buy Safeco for $6.2b in CASH.  While this will mean some lost jobs in Seattle, eventually, it means lots of cash for Safeco investors — of which many shareholders in Seattle have been behind the company for decades.  My father worked for Safeco briefly in the 50’s, and my wife’s first job out of Stanford was at Safeco (she got laid off…but managed to bounce back by taking a position at Microsoft).  Fisher Broadcasting (FSCI), whose founding family bought 3m shares in SAFC back in the 30’s, stands to have a huge cash infusion from this sale of their remaining 2.3m shares — over $150m for Fisher to pay down debt or to make other strategic investments.

To be fair, there as also a hit to a Seattle company noted on this same page:

• Starbucks warned of lower earnings…citing weak economy

But I think it’s notable that in one day’s WSJ there were a half dozen mentions of prominent Seattle companies, including the above, and also Costco and Microsoft. 

We have a real economic engines here, which will continue to produce not only jobs, but also gains for a huge group of their shareholders.

Google has just gotten clobbered in the market these past few months — from a high of 747 in November, the stock is down into the mid 400’s.  Well, big news after the market closed today.  Profits up over 30%.  See one article here.  The stock is trading after hours today up 75 points, near 525.  It will be interesting to see what happens tomorrow.

It occurs to me that some of this is obvious.  The dot com boom in 2000 — everyone knew that bust was coming, it was just too “irrationally exuberant.”  A few years ago interest rates were incredibly low; back then we refinanced everything we owned.  We knew those rates wouldn’t last, and it didn’t.  And when housing prices soared, the bubble guys sure called what was coming. 

So now oil’s at 110/barrel…can that last?  Can the bank stocks stay as low as they are now?  It seems like we’re thick headed during both good and bad times and can’t see it coming.  When a situation has deviated so far off the norm…well, swinging back the other way seems nearly always to be a when, not if, question.

There has been much discussion over at Rain City Guide about agents’ commissions (this link is to just one of many posts on that blog). 

Elementary info:  Listing agents generally sign a exclusive listing contract with a seller (the “exclusive” contract is required for participation in the MLS as it binds the seller to pay a fee if the property sells during the contract period.  Standard stuff.)  The fee is negotiated, but is often 6%; however in many cases, if the client is giving him repeat business, the listing agent will suggest or accept a lower fee. 

The listing agent then publishes the listing, offering typically 3% of that total listing commission to a cooperating broker who procures a buyer for the property.  (If the listing fee was 5.5%, for example, we’ll nearly always give the same “full fee” of 3% to the coop broker).  It’s important to keep that “buy side” cooperating broker fee close to whatever the market is paying for the procuring/cooperating buyer’s broker.  To whatever extent, some agents are disincentivized by a “less than market” fee.  It’s easy to see what the market is paying, and it varies based on price range and region.  Your listing agent can easily pull this data and show you.  In Washinton Park, a high priced area in Seattle, the typical “buy side” fee (we use SOC — sales office commission — as an acronym) is 2.5%.  This implies the total commission might be 5% if the listing agent is offering a 50/50 split to the coop broker.  Kary over at Seattle PI’s blog wrote a post on this topic here that was pretty solid, even if the metaphor got a bit mixed up. 

So there is the basic story.  Listing agent (actually, his broker, but as a practical matter the seller works with an indivicual listing agent) has the contract with the seller for a commission.  The contract is not with the buyer.  If the seller’s co-worker, upon learning from the seller that they’re putting the house on the market, says “I’ll buy it!”  then the listing agent should be elated with that.  The contracted commission has already been agreed to, no matter who buys the house or whether or not they have an agent.  Most sellers understand that.  And when that co-worker offers a bit below asking price, the seller should negotiate with the buyer — not with their agent, with whom they ALREADY have a contact.  After all, the listing agent has already put a lot of work into the property — at least according to Ardell here.  The buyer may want the benefit of some savings, by not having their own agent.  Let the buyer and seller negotiate over that sales price, and perhaps the seller and their agent can have the conversation about how much fee might be reasonably reduced to bring the parties together.

As a practical matter in this scenario, will the listing agent “throw in” some of that fee to make it work?  Sure.  Maybe.  Depends.  But it needs to be the agent’s decision, not the buyers.  And not unilaterally the sellers.  It’s a modification of a contract which requires mutual agreement.  Of course, the buyer can certainly go to Redfin, or to his buddy, and get them to write it up and rebate as much of the SOC as they can get.  That’s not the listing agent or the seller’s issue. 

And there are other situations where I have voluntarily given back some of that negotiated fee.  Most recently, we had a buyer balk at the 11th hour on a pending Greenlake listing that had.  Didn’t like the condition of the paint.  Or the hardwoods.  Of course, this was well past the inspection period, but he wanted $5,000 or he was going to default and walk from his $5,000 earnest money.  While my seller was making a nice gain on this from when he bought in ‘01 (selling for $500k, and had paid around $240k), I knew it would give him major gut burn to have to negotiate with this buyer.  And I didn’t want to lose the buyer in this market, at that sales price.  So I reduced my fee by the extortion amount ($5,000) and the thing closed smoothly.  This was a seller I love, with whom we’d done maybe a half dozen deals in the past decade.  So seller’s happy (I didn’t tell him about it for a few months, actually, to avoid any post-traumatic stress); buyer was happy (presumably); and I made a decision that I could live with, that no one asked me to make.  And we have a closed sale.