New to seattle area...whats the best way to get a great deal on homes in this mkt? builder auctions, short s?

Asked by Brian Miles, Colorado Springs, CO Sun Nov 30, 2008

who has access to the bank properties they want to unload...can't it be a simple process?

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Mary Sunde, Agent, Bellevue, WA
Sun Nov 30, 2008
BEST ANSWER
Brian
I think everyone is looking for a good buy in this marketplace. I would consider these questions. Are you
looking to keep the home for a few years while living in it and maximize your resale potential? Are you
able/willing to fix up a home. If the answer to both of these questions is yes then you may want to pick the
best resale area in Seattle or the Eastside and pick the lowest priced home with the most potential.

If you are looking for a home to live in for more than a few years and also get a good buy then I would choose
a few areas that most appeal to you and find a home in one of those areas that best meets your needs,
combined with size, location, condition and price.

Builders are ready to deal on their prices in most areas, especially for a late December close. Rates are fantastic now but loan limits will be decreasing at the end of the year. As Ardella stated short sales are not necessary priced below market and can take a long time to close in which time your interest rate may increase. Bank owned properties are most often listed through the multiple.

I would choose a buyer's agent that you trust and have confidence in and go over your needs/desires with them.
Mary
0 votes
Ardell Della…, Agent, Kirkland, WA
Sun Nov 30, 2008
Good morning, Brian

"bank properties" as in bank-owned properties, are the same as any other sale. Only difference is the seller is a bank. Short Sales don't have as high a success rate, but the discount can be larger and a large % of home buyers are choosing short sales and bank owned property somewhat equally.

Best deals are where there is a glut of what you want in your price range. While I almost never suggest a buyer agency agreement, many short sales are only noted as such in the agent remarks of the mls. Unfortunately that makes them harder for the general public to identify them. Sometimes a different property is a better buy than the short sale.

If you want a cheap trashy house that needs work, you can find them pretty far North and South of Seattle. If you want a nice house to live in that is closer to everything and also a short sale, there are some, but even at discount they can be $700,000 to $800,000.

Pierce County has the most newer home short sales at affordable prices. Builders everywhere are bargaining, but 85% to 90% of value is often "a great deal" here in the Seattle area in the prime living areas. 30% under peak and 10% to 15% below recent comps.

Depends on the strength of your cash position also. Hard to find a buyer who qualifies to the extent needed to get a really great deal. I'll be listing one next week in the $350,000 range, townhome in Green Lake, that my client bought in foreclosure for $260,000. He paid cash which made it very simple.

Sometimes it's hard for the buyer of your property, if you are going to turn around and sell it quickly, to get financing on a short flip like that. So it depends what you are going to do with it after you purchase it.

I woke up today at 5:30 a.m. with a splitting headache. I'll come back later with my glasses on and check the spelling :) If you have any other questions, ask them in the comments here or shoot me an email.

Here's a peice I wrote on the short sale process from the buyer's perspective. I wrote it for a client who was in escrow on a short sale last year. It closed and it took 90 days. That's is still the expectation. for the most part. There's another under it that you may find of interest written by Jillayne.

http://www.raincityguide.com/2007/12/13/should-you-buy-a-sho…

http://www.raincityguide.com/2008/08/04/why-do-banks-take-so…

There are many other posts over at RainCityGuide that you may find helpful.
1 vote
Kevin, , Seattle, WA
Mon Dec 1, 2008
It is simple. Buy a short sale property at 80% of the lowest comparable sale. That's what actual RE investors are doing. REO's are decent but the likelihood of being outbid by retail buyers is great. Same for builder auctions. Those prices you see on websites are starting bids my friend. This doesn't mean you won't get a deal, in fact, I'll probably be at one here in Seattle on the 7th. It'll just be a bit harder.

As far as courthouse auctions, you need to find a specialist, although most of the specialists I know aren't buying so many properties these days.
0 votes
Don Dutton, Agent, Puyallup, WA
Sun Nov 30, 2008
Brian

How about some into that you can use, right now. D R Horton, a national homebuilder, is getting out of the NW market. They are doing an auction next Sunday at a variety of communites in the Puget Sound area. Prices start about $150,000 under currently offered pricing. You've got to get you act together quick though. Get all the details at http://www.redchomesale.com/ . If you can't pull it together soon enough follow the advice of hooking up with a good local Realtor. Enough said.
0 votes
Kary Krismer, Agent, Renton, WA
Sun Nov 30, 2008
A piece of mine on buying at foreclosure.

http://blog.seattlepi.nwsource.com/realestate/archives/149637.asp

The link I wanted was in the first comment, due to technical difficulties.
0 votes
Ardell Della…, Agent, Kirkland, WA
Sun Nov 30, 2008
I agree with Gene as to Auctions and Foreclosures bought at the Courthouse steps. Rarely does an agent handle those. Don't assume that if you hire an agent that they are a "one stop shop" for all of the types of properties you mentioned.
0 votes
Vicky Chrisn…, Agent, Purcellvile, VA
Sun Nov 30, 2008
I don't know your market. I do know types of transactions. Some of these posts will help you understand the processes involved (there will be some regional differences, so you'll need your own real estate agent - but this will give you good talking points for the first discussions):
http://therealestatewhisperer.blogspot.com/2008/08/reos-ever…
http://therealestatewhisperer.blogspot.com/2008/11/buying-at…
0 votes
Robert Luecke, , Laguna Beach, CA
Sun Nov 30, 2008
The best way to get a great deal is to know your market or have an agent that does. Once you know what market you are in and what pirce range you are looking for search out short-sales, foreclosure and properties listed in the MLS. When you see a property you like set your price and make the offer. You may have to make several offers until you get the property you want at the price you want. Getting a good deal on a peice of property even in this market takes work but is rewarding.
Web Reference:  http://www.shopprop.com
0 votes
Kary Krismer, Agent, Renton, WA
Sun Nov 30, 2008
Has anyone seen builder auctions in the non-condo market? I don't recall any.

But you don't necessarily need an auction to get a good deal. If your price range is high enough, I suspect you could get a pretty good deal from a smaller builder of upper end houses. I'd probably stay away from the lower end new stuff (and even the lower end newer stuff in a development setting).
0 votes
Steve McDona…, Agent, Seattle, WA
Sun Nov 30, 2008
Brian,
Welcome to the Emerald City. Looks like your timing couldn't have been better given trends in our housng price. As far as the best deal, you can't forget the first rule of real estate - LOCATION. Once you know where you want to look (and afford) then the available avenues for getting the best deal will show themselves. Not every neighborhood is going to have a builder's auction or even a foreclosure. At least that's the case for now. Seattle was fortunate not to suffer the pains of many other US cities. And it's a far cry from CS, CO where the Group dominates the market. Of course this all might seem like hogwash if you're only looking to invest and not seeking a 'dream' home. Still a sound (no pun intended) approach is shopping relative to a location and not let a cheap deal dictate where you shop. We're not talking socks and undies here. Homes are like luxury items and should be treated as such. So get your pre-approval ready and prepare to negotiate.
Steve
0 votes
Kary Krismer, Agent, Renton, WA
Sun Nov 30, 2008
Short sales and bank owned properties can be good options, but there are each problematic because the bank is involved, and also the properties might not be in the best of condition. For example, a short sale might take months to close, or the bank might accept another offer after you've waited for months. Given that delay, a closing date might very well be within 20 days of a foreclosure sale, which is a huge negative for a buyer under Washington's distressed property law. Washington Realtors advice attorney recommends that every offer have a clause allowing the buyer to back out if there is such a sale within 20 days. I use a form that goes further, voiding the sale outright. There are plenty of properties out there and no reason at all for a buyer to get caught up in the distressed property mess.

Personally in this market I look for a combination of five things:

1. Vacant property. It's just sitting, meaning the owner is under more pressure. Also you can close very quickly on such properties.
2. Property that has been on the market a long time. Where the property is also vacant, that will make the owner even more desperate.
3. Prior price cuts. This shows that the owner isn't too stubborn, unreasonable.
4. The owner has owned a long time. If they've owned for over 10 years, then any price cut is going to simply come from their profits and be easier for them to accept than an actual loss.
5. Low debt against the property. Again, if your $30,000 price cut means them receiving $70,000 rather than $100,000, that will be easier for them to accept than if the difference is $35,000 and $5,000.

There are actually a lot of properties out there that fit all of these criteria, especially if you don't mind cosmetic fixers. Some of them might have been on the market a long time due to bad carpet or paint colors.

They call this a buyer's market for a reason. It's a difficult time for some sellers. You can take advantage of that without running afoul of the distressed property laws.
0 votes
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