February 24th, 2009
Yes! YEs! YES!
With a 19% reduction in Foreclosure filings in January compared to our peak in August and a 28% increase in foreclosure purchases. The market is indicating the damage for undervalued properties. Through out all of time when land has had potential to turn a profit, nations have gone to war over such matters. We are in a perfect storm to start collecting a commodity that there is not being anymore made of. When real estate is 30-40% below what its comparable are selling for, it is best not to sit on your hands. Because that are large cooperation with Hundreds of millions of dollars collecting these investment because they know the future value. As individual we are more scared than an entity with vast resource. But this is why you hire someone like me. Because I crunch numbers with more levels of scrutiny then the competition. I run a algorithm with 46 point of analytion. Most software and analyst run 7 to 12. Lets not mess around, with would of, could of’s, and should of’s. The time to invest in now.
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February 20th, 2009
This is a bar chart showing the Sold real estate in King County for 2008.
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February 20th, 2009
In the State of Washington in 2008 there were 19,437 foreclosure Filings. Washington is ranked 24th out of 47 states, 3 states do not allow foreclosure. The Average sale price for a foreclosed property in the state of Washington was $248,803.00. The peak filings in the state happened in August, currently we are 27% lower then the peak filings. Who knows what this 75 billion in foreclosure bailout will bring? I doubt it will yield any real support. Since there has been and will continue to be large amounts of layoffs, more and more people will not be able to afford their mortgages they once could support with their income. This stimulous has come to late, the dominoes have already started the chain effects. The compiled data shows another 12% drop in real estate values before, I believe a bottom will be called. Yes, there will be more foreclosures, but they will come at a slower rate and over a longer period of time. Good luck, and remember now is a great time to start investing in distressed real estate.
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February 3rd, 2009
With dividend cutting in the stock market, where does it really pay off to create residual income? The short answer that come jumping out at me is Multifamily real estate; not commercial; not all residential properties; and most definitely not condo’s. Why not commercial? Well as you see all over the news every day, retailers are hurting bad, so unless you can afford to buy a strip center in a great location and sit on it for the next 2-4 years before you start to see a return…Good Luck. Most retail prices for residential real estate here in the Seattle area is valued to high to give you a 1:1 rent to mortgage payment ratio. In most cases my client that purchases distressed properties we can get a 1:1 ratio and more than sometimes a small net income from that property that will only grow with long term ownership. The reason for not purchasing condo’s for investment is very simple; no matter how you cut it you still have a HOA payment; which will put you upside down every month.
People are losing their homes, having to down grade further in their present rental, or they are not in a position to buy a house. So they still need to live somewhere; and living with your parents until your 30 or 40 might be great for some; but not for most of us. Where are these people going to go? Apartments! Duplexes! MIL! Anywhere cheaper than what those people had. So we are seeing an increasing in demand for multifamily housing which will only grow as the economy get worse. What does multifamily give you…Lot’s of rent. Not only lots of rent, but you have other people paying your mortgage. You also get to raise rent which intern increases your capitalization rate; which increases your properties value! So if you have been thinking about a good safe place to put your money, that actual makes you money. Not only does it make you money, but you start a process of creating Generational Wealth by purchasing multifamily real estate.
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November 20th, 2008
Fear is ruling the day. Paranoia is being pumped by every media outlet. With terrifying speak happing at many tables and coffee shops around the world. There is the biggest silver lining if you have the fortitude to step away from the crowd. That silver lining is there is 4+ trillion dollars sitting in bank accounts around the US alone collection dust. WHY IS THIS MONEY COLLECTION DUST? FEAR! Why was that money in the stock market in the beginning? Because stocks make money through dividend payments and inclines in the price of that share. What commodity do we have in real estate that does the same thing? MULTIFAMILY BIULDINGS! People go after that cash! Tell your clients that the cash they have sitting in the bank doing nothing, can be working for them. How is it going to work, by buying multifamily housing? Rent is the Dividend and as that cap rate goes up, so does the property’s value. Here in Seattle we still have a massive Rental deficit. Please save your business by getting out of the fear and adapting to the market.
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September 30th, 2008
I just wanted to give everyone a heads up when dealing with a lien holder when negotiating a short sale. Most of the time we call the lien holder to talk to their Lost Mitigation’s Department and you just get a automated answering service tell you to send communications through fax. It is frustrating and time consuming. Stay on hold with the system and eventually you will get to speak with a person. Have all the property information at your finger tips, tax id number, property address, letter from seller say you can talk on their behalf, outstanding debt, and loan account numbers. When you get to that person ask for an advocate. This is a person that has the job of being the liaison between you and the bank negotiator. This is the person you sent all you contracts to and communication from the buyers agent to the bank. You don’t constantly have to be faxing to negotiate. This saves a lot of time, and makes it easier to solve conflicts.
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September 30th, 2008
Two days ago I spent some time with Danny Westneat a columnist with the Seattle Times. He wanted to find out what kind of properties were in distressed and who the people were associated with the properties. So he and I jumped into my truck and we went on a tour around North Seattle. I explained to him the in and outs of the distressed real estate market and what I have seen go into foreclosure. He wrote a great article and I wanted to share it with everyone.
http://seattletimes.nwsource.com/html/dannywestneat/2008199154_danny24.html
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August 28th, 2008
I am closing a deal today and I received a call from the escrow officer telling me about errors on the sellers side. Then I was asked to give up my commission to pay the sellers outstanding utility bills ($3000). First, I was surprised to receive a call from the Escrow Officer about something the listing agent should of tried to negotiate with me. Next… the listing agent did not get all of the concessions of the primary lien holder in writing. So Escrow in the eleventh hour received calls and data from the primary lien holder with about 600.00 in new charges to the sale of the property. Now the listing agent is calling me asking me to pay out my commission for them not doing the basic of due diligence, GETTING EVERYTHING IN WRITING! What is the lesson in my rant?
1. If you are representing a Short Sale and the clock is ticking to the auction date, and another agent brings you a deal that is acceptable, Do not go asking the buyers agent for insane commission compromise to make up for your clients mistakes. The buyers agent is bringing the money to the table, be thankful. Especially when there are so few qualified buyers.
2. Have a file with all outstanding liens on the property, and a HUD prepared for what the lien holders will recieve at pay out. The house is a foreclosure short sale, the owners aren’t paying the utility bill’s. These bill’s will need to be paid at closing, the bank needs to know those numbers or their payout will be short. Then you have no deal.
3. Over all do not bite the hand that is trying to feed you.
4. Know the listing agent is making 0.00 dollars on this deal, because of them not having their ducks in a row.
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August 13th, 2008
Over the past few months a number of clients started out as leads that were all about “really giving to the Bank” in short sale deals. And every time the bank would send back the offer with a counter offer at Tax Assessment Value. Which I think was just as insulting as our low ball offer. Each time this would happen my clients would get into this huff about why the bank “should of” accepted our offer. These “Should of” statement’s looked like this:
- The Banks are loosing billion’s why aren’t that trying to liquidate this property?
- The Banks have massive inventories and they don’t want to accept this offer?
- We are helping them out of trouble.
- Doesn’t the Bank know the condition of this property?
- Doesn’t the bank know how much it will take to fix up this property?
- This is a down market and we are buying with a risk of the market slipping further.
- Why did it take so long for us to get back such a bad counter offer?
The fact is when humans want something we always think of an excuse to why we should have it. For the most part what I have learned is that the Lien Holders are in terrifying survival mode. Every person your offer goes to at the lender right now is trying to SAVE THEIR JOB. Your client is right; the banks are loosing billions; and people get fired when the company they work for loose money. So each employee that sees your file is trying to keep that dollar return value, as high as possible. The reason for that is when it is quarterly report time don’t you think every person trying to save their job is going to try to show how much money they didn’t loose, because if they don’t your eventually going to be seeing their house in foreclosure. I put food on the table everyday, because of how cheap I buy houses in this market. But when writing an offer remember lenders are fighting tooth and nail to keep their doors open. They are negotiating hard here in the Northwest to not let that house go cheap, be patient the price will come down. But you will need to prove to the lien holder, why it needs to. By you not giving in, and by you inundating them with a paper trail showing them why that price needs to come down, the lien holder then can justify that sale price. It is not easy, it does take time, and you will have head aches over the process. Sometimes people cry.
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June 18th, 2008
1. This is the most problem prone and strenuous type for real estate purchase.
2. You NEVER get a perfect house. You get price per square foot. You must be willing to put in the time and money to create your perfect house.
3. You must have more capitol to purchase a distressed property. On average you need 10% of the market value in cash to reinvest in the property. Turn key distressed properties are extremely rare here in the Seattle area.
4. Most if not all of the time the seller (if it is a bank, trust company, or Relocation company) has no knowledge of the properties previous history. So, the inspection process on the house is more costly, because of all the types of issues that will need to be inspected. It is recommended that the potential buyer do more than a typical inspection. It is recommended that the potential buyer also pay for “Sewer Scope” (about $250.00) and any contractor’s charge “estimate fees” for project estimates.
5. In most if not all distress properties the water and electricity is shut off. The Trust Company and or the seller WILL NOT turn them on, so the buyer might test the plumbing or electrical systems as part of the inspection. In most cases the buyer will have to pay an outstanding bill, to have those systems turned on. If the purchase is continued after inspection the seller will reimburse buyer for paying outstanding bills at escrow. “You have to Pay to Play”.
6. This is a down market you are BUYING Distressed Property; where there is one; there are others. So, if you see market values slipping in the same area as the foreclosure you are purchasing, your purchase is also will be a part of that slipping market.
7. The house has to be livable in order to get financing.
8. Banks have a bottom line too. They will only go so low no matter what the issue is with the property. Lending institutions are losing billions of dollars, a few hundred dollars matters to them. You have to be willing to take on the issue for the price or walk away.
9. You will be scared. You will be nervous. You will have Doubt. Your Realtors job is to negotiate that price to a large enough margin; so if you screw up; you will not be upside down in your purchase.
10. If there is not commission built into the purchase price, you will have to add it to the purchase price. You are making money, and so should your Realtor.
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