In the News…

February 4th, 2010

http://www.foreclosurepulse.com/blogs/mainblog/archive/2008/05/27/Local-Market-Perspective-Seattle-Wash.aspx#948702

New Article from Foreclosure Pulse about my prospective on the foreclosure market here in the Seattle Area.

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Short Sale Short Cut Advice

October 28th, 2009

Recently I put in an offer on a property in the Seattle area, and the listing agent called me with the most unusual story. It was a methodology is how get the first lien hold to take less, and pay the second more, so the second lien would not follow the seller if it came up short. So i know what everyone is thinking By law the primary Lien Holder has the first rights to any fund to dissolve its debt. The issue is the home owner went and got a commercial loan backed by his house, and since that loan had a personal guarantee it could not be dissolved in Bankruptcy court.

The listing agent had this method to get around the investor rights. Which I still think is illegal. But I would to have some people let me know their thoughts.

1. To write the PSA with the purchase value as much as you are willing to pay the First.

2.Next write a separate addendum were you bring more cash to pay more of the second lien holder.

3. Then create a HUD where the payoff’s are disclosed. And tell the bank to take it or leave it.

Does this raise any red flags for anyone like it has for me?

PS…Hands down this is Illegal. Just got off the Phone with my Real Estate Attorney! Do not participate in anything deal that the listing agent is trying to involve you something like this. This is Mortgage fraud.

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Seattle Foreclosure Trends For June

July 28th, 2009

Average of 24.58% saving when purchasing a foreclosure over a retail property in June. Also to date June was the highest months of foreclosure filing in King County Since the beginning of the fallout. 1490 filling for King County in June Vs 1002 in May. That is up 33%. Wiht the large Majority happening the Southern Part of the County. Also there were far less purchses in June at Auction. So those properties will go back into REO recievership so look for those properties on the market within the next 60 days. I wonder if the reason for that is the foreclosure price was higher than the market value. So the Consumer damand tat the property goes back into recievership, so the bank has to sell it for even less?

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Washington State Foreclosure Trends

July 28th, 2009

Washington Trends	JUN.	YTD.
New Foreclosure Filings	4,689	22,333
Foreclosure Sales	58	4,844
Avg Sales Price	$ 348,857	$ 330,796
Total Savings	22 %	29 %
Fair 0% – 10% Good 11% – 30% Excellent 31% +

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Realtors Remorse

May 15th, 2009

I love getting calls from other Realtors clients, and they are just calling to check on things that quite don’t make since. Before i ever know if they are working with anyone else, they ask me questions about what they are going through. Of course it makes no sense, then I give them about 20 minutes of coaching. Then inevitably they go “Why didn’t my Realtor tell me that?” My only advise is…Please if you call yourself a distressed property specialist, please be one. And not just someone that took a 2 day course that you paid way to much money for. Actually read the laws in your state that govern the distress property process; and know how to apply them to your clients circumstances.

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Champaign Taste and Beer Money

May 12th, 2009

For the Past Month I have had this man calling every week to ask me about prospective foreclosure properties, and at the end of every conversation I get off the phone wondering if the man heard anything I said. This person came to me with a pre approval letter from a National Lending institution last month for a loan up to $300,000.00. Here in Seattle that is the average price for a foreclosed home roughly. That home is 1300ish sqft; with 3 bedrooms and 1 bath; built between 1910 and 1930. And for your 300k you get all the great things a 80-100 year old house has to offer you. Ancient everything, asbestos, mold, knob and tube wiring, galvanized to cast iron plumbing, got to love it. So not only do you get to buy this foreclosed property, but it also will be a series of piece mill work done by previous owners. This is the average. Sometimes I get excited when I see wiring and plumbing at least updated in the fifties or sixties. I get even more excited when it was done in the eighties. And if that foreclosed home has been remodeled in the nineties or later, have no doubt you will be paying the 500’s or more for it, because resale will be in the sixes and above in some neighborhoods. Welcome to Seattle. That’s my rant.

SO back to the prospect he came to me first wanting a house with good upside for his budget, then he came to me with a need for e house with 4 bedrooms for 300k. This is a little harder but it happens, you will need to put some elbow grease into the property but they are out there in some form. I found Six in the areas he wanted to live, and lucky enough they all were livable. These properties all needed more work than he was comfortable doing. So i didn’t hear form him for a while. Mind you I explained what he was going to get for his money, I am to blunt for another interpretation to of been had.

Last Sunday I am driving back from a hike at Rattle Snake Lake, and i get a phone call from him and he is all excited. HE says he found a 7 bedroom 6 bathroom 5000sqft house that went to auction last Friday for an opening bid price of $256,000.00. Then he says a website told him the home was worth 2.2 million dollars. Could I call the lien holder and see if it sold, so he could buy it. I calmly asked him many questions and informed him that; the opening bid price is so low that the house will end up selling for close to 1.4 million. And even in some crazy long shot there was a way for you to buy such a house for that amount of money not have a time machine; how was he even going to pay the property taxes, which are about 25k a year on the property. He said “I didn’t think of that.” Then I said, if you did not think about how much the taxes were, did you think of how much it would cost just to turn the lights on in that place every month? (About 800 bucks), and you haven’t even flushed a toilet yet. I again ask him if I can send him a list of distressed home that he can afford. He said yes, and asked if we could have a showing on Tuesday. So I sent him 3 homes that meet his needs, yet all need some elbow grease because of this budget. HE asked again if there are any new homes in Seattle (in the city not the burbs) that are 4 bedroom 2 bath for 300k. Then I fired him.

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Hard Economic Times

May 12th, 2009

I had a closing next week for a great deal on a property in Ballard. Inspection went great; appraisal came back spectacular, and two weeks have gone by since. So we are in that coasting period were you are doing little things like going to home depot to price out what you want to do with your new house. You know always in the 11th hour something will pop up, and it usual has to do with the lender needing more docs do to a sudden rule change, right? But no, this time the 11th hour problem was much much worse. My client (the Buyer) got laid off from his job. Thank God for Financing Addendums, because my client needs that earnest money now far more than the seller did. When they talk about the 88 things that go wrong in the Real Estate Transaction, Welcome to Rule Number 4.

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Psychology of the Distressed Seller

May 6th, 2009

As a person that spent 10 years on his Psych education. I have had the pleasure over the past few weeks of gaining some interesting stories. So i have written 2 contract over the past 2 weeks that have fallen through due to sellers not wanting to sign the PSA. Normal right? of course. But these are PRe Foreclosure Short Sales. So in the State of Washington if your property is a Short Sale and subject to lender approval, and it is being advertised as such, the seller legally has no negotiating power in this situation. The reason for that is, the Seller actually can not guarantee the sale price of their home if the contracts needs lender approval. As we all now in a normal transaction the seller and the buyer negotiate, and we settle on a price, and that is what we close at minus any credits or debts. But if your property needs lender approval; the seller in not actually the seller; the lender is.

Recently I put an offer in on a property in a great neighborhood but the house was a dump. The owner wanted a certain price for his house even though that settling price was less than the outstanding debt, and the owner had yet to get that number approved. But the owner being a person of faith, argued that God told him through prey that this was the price his house was to sell for. And he had a social responsibility to not hurt that lender with our offering price. I explained that our offering price; one was logical due to the comps in the area; and do the the condition of his house it wasn’t worth what he thought. Of which I showed this with a packed of information about 50 pages deep. Then I told him that he can not negotiate on behalf of his lender, because he had no right too. But there was no getting him to follow the law much less the logic of the process. So we had to walk.

Next I put a contract in on a distressed property on the East side for another client, and we were getting the run around form the agent that the seller had signed it and it was off to the bank. I said if it is signed why don’t I have a copy? Then she said she would send it right over. A few minutes later I got a call from her saying the contract was not signed and the sellers would not sign it. I asked why, and she said the sellers wanted 15k more than we offered. Again I told her that since the deal is a short sale and it needs lender approval the sellers can’t guarantee that the bank will even settle at our agreed upon price. And further more if the bank ends up countering (which they will) this offer my clients and the sellers negotiated, the sellers have now committed fraud. Because, why? When you are in Default on your loan, you basically give up all rights to negotiate the sell price. Because the bank is now the bottom line, not the seller.

What this says to me is that; one their listing agent had not fully informed their client on what it means when they choose to sell their property as a ”Subject to lender approval” Short sale. Two, when you are going through mostly like one of the most difficult periods in your life, you still reach for anything that will let you feel like you are in control. Unfortunately the grief minds logic most of the time does not let you move forward, but it will keep you in your distressed and stressed partern. So listing agent please coach your clients on the reality of the situation. Instead of being tunneled visioned on just getting the listing. Not only does it put your client at more risk for trying to negotiate in a situation that they can’t, but it puts you at risk to.

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King County Foreclosure data

March 9th, 2009

So I was running correlates with the MLS sales stats in comparison of the Realtytrac.com’s foreclosure trends and data. As of January King county is down 35% YTD. In January 2008 there was 1037 residential sales in King County…January 2009 has had 674 sales. The average price of sale was $453,118 which is down 14% from last year which was $525,948. the thing that surprised me out of the 674 residential sales, 232 of them were distressed. Which says 34% of all residential property sales were distressed. So Realtors and Buyers, brush up on your knowledge of REO and Short Sale procedures.  I believe it is the only way to purchase in this climate, and not be upside down in a market with falling market values.

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Foreclosure prices can’t get cheaper

March 3rd, 2009

Notice how October is the Peak Filing Month for Washington State

I have been hearing from investors that they want to keep their powder dry to see where the market going before they start purchasing distressed property. They have also told me that they think the banks are going to become more negotiable in time. I am going to say in the nicest way possible, that you are wrong. Foreclosure prices are not getting cheaper. That is obviously a statement of ignorance to the foreclosure process. Foreclosure in the state of Washington works by a lien holder notifying the home owner that they have not made their payments by which breaks their contractual obligation to that lien holder. Because of that action, they have the right to auction that property starting at the Default Judgment amount.  That when you go to auction to purchase that property the opening bid will be that default amount, plus any back taxes or public utility lien’s that are on record. That is only the opening bid; you still have to complete with the 12 other bidders you WILL be bidding against most likely.

When we buy in short sale we will be purchasing lower than the mortgage values, then things like back taxes, unpaid utility bill’s get paid at closing and it comes out of the seller’s side. A lot of Realtors will not want to deal with this negotiation with the lenders. The lenders will try to go after the agent’s commission as a way for them to lessen the loss. Agents need to have previous agreements with their clients about just this issue. From a buyer’s agent’s side, my clients make a lot of money in equity upside. It has yet to be an issue. It is easily earned when you purchase your client a house 30-45% below market value, and 30%+ below Mortgage value. Better than that is you as an investor can finance, have an inspection, and the seller pays the commissions. Where if someone purchased at auction that individual does not get the luxuries stated above. Yes, short sales take longer, your agent needs to do a lot of leg work, but you make the most money by doing the work other don’t want to.

Yes, the real estate prices are going down. But foreclosures cannot get cheaper with the way the State laws are set up. Not only that foreclosure filing is down 27%; from Washington States peak filing month in October.     

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