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Short Sale Questions May 26, 2009

Posted by W. Keoki McCarthy in Bank owned home, Foreclosure, houses, Invest, investing, Investor, real estate, real estate investing, REO, Seattle Real Estate.
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A client asked me some questions about short sales.  I thought the answers I gave them may interest you.  The red writing below is from my client and my answers are in black.

What happens to this home if the bank (underlying lienholder) makes  a move? 

If the bank takes it’s next step it will give them a notice of default for which they will need to cure their arrears or go to auction.  This could take another 3 months to over a year depending on how aggressive the lienholder is and how well the seller works with the bank.  If it gets all the way to auction the bank may set the minimum bid to the amount owed.  However, they may also set it at a value that they think it is worth to try to unload it at auction.  Most of the time the bank sets it pretty near what is owed as they don’t want to leave money on the table.  Once it is an REO (real estate owned in bank lingo) they will hire an agent to list the property for a price they determine through some internal metric.  They will have an appraisal and a couple of broker price opinions to help with that process.  It will probably be listed near market value but they tend to start on the higher side in the beginning. 

 When would they agree to best price??  Before or after foreclosure sale? 

Almost certainly before auction as a short sale or after auction as an REO.  It is doubtful it will be priced well at auction.  Right now it is a short sale.  As I mentioned before we can negotiate pretty aggressively as a short sale because there is less competition.  At this point we would send in an offer and paint a bleak picture.  If we can scare the bank into not wanting to get it as an REO and give the VP of loss mitigation enough to cover his butt when his/her boss asks why they lost so much we can probably get a pretty good deal. 

If we don’t get them to give us a reasonable deal at short sale we can wait until it becomes an REO.  At that time they will slowly lower the price until it sells.  The one downside is that we would have more competition at that point because there are more buyers for non-shortsale properties as they are more of a sure thing.  75% of buyers do not make offers on short sales because they don’t have the luxury of waiting months to know if they win or not. 

We could write up an offer, take it to the current sellers and have them agree to the terms subject to the approval of the underlying lienholders.  Once the offer is accepted, we put a package together to send to the bank explaining the pitfalls of the property and why they should just unload it to us (help the VP justify our offer to the higher ups). 

Remember I wrote this about a specific property so it is not always like this.  However, this is a pretty good explanation of what we do when trying to help people buy shortsales.

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Ahead of the Curve – Renton July 1, 2008

Posted by Trish Johanson in houses, Invest, Northwest, real estate.
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Get Ahead of the Curve

Just add a little rain water and watch it grow! For the past few years Renton has taken a 360 turn and reshaped what it has to offer. Yes, it still houses Boeing and Kenworth (which are on the leading edge for Hybrid trucks). Many new residences are finding this town has everything they need.

 

You can live in downtown without a vehicle. Everything is within walking distance: grocery stores, electronics, commute systems, restaurants, apparel, home and garden, athletic club, cinemas, beaches, water slide parks, fitness center. Whatever you need, it’s there or will soon be there.

 

The new Seattle Seahawks Headquarters and Training is in construction with a completion date of summer 2008. Located along the shores of Lake Washington makes it a great place to watch training while spending a day at the lake. Here are a few pictures of the many great things to happen to Renton.

Seahawks HQ

Seahawks HQ

The Landing – 68 acres of shops, cinemas, restaurants

The Landing

Barbee Mill – New homes and Townhomes along the shores of Lake Washington

Barbee Mill

One of several styles at Barbee Mill

Barbee Mill

 

 

 

Foreclosure Opportunities May 10, 2007

Posted by W. Keoki McCarthy in houses, Invest, Investor, market conditions, real estate, real estate investing, REO, Seattle Real Estate, short sales.
4 comments

Foreclosures are up 27% in the greater Seattle area according to defaultresearch.com.  That sounds like a great opportunity to invest in real estate.  An investor could call on people in preforeclosure and try and work out a way to help them sell their house to that investor.  I would guess that banks are going to be a lot more willing to do short sales knowing that if they don’t their REO inventory will go up.

There is a lot to know about short sales and getting them to come to fruition.  However, if done right it can be a win/win/win situation.  The bank wins because they don’t have the costs to foreclose on a property and then the costs to sell it later.  The homeowner wins because they can sell a house for less than they owe on it allowing them to get out of an upside down situation and avoid a foreclosure on their credit report.  And, the investor wins because he/she gets a home for a better price than maybe they would have if it were listed.