Clark County WA Real Estate Blog

A few weeks ago I spent a few hours at a Trustee’s Sale, near the Clark County Courthouse gazebo. I was curious how the final step of the foreclosure process works. 

A few weeks earlier, I read the Notice of Trustee’s Sale in the local paper, and wrote down the addresses. I then went and researched all of the homes listed, noting loan balances,  late payments and fees, as well as what I thought market value was on the homes.

 How the Auction works.
The trustee goes through the list of foreclosed properties, what the opening bid is from the lender, and asks whether there will be any bidders on each property.  If anyone is interested in bidding, they must register with the Trustee, and show Cashiers Checks  greater than the opening bid. If they are the winning bidder, they will have to sign over the checks to the trustee.

 In most cases there were no bidders, as the opening bid was greater than the value of the property and the bank or lender takes possession of the property and it turns into REO, or Real Estate Owned by the bank.

About 10% of the properties at the auction actually had some equity, and there were multiple bidders for them. Although there are some good deals out there, you must be very thorough in your research.  Properties sold through auction might have underlying liens on them, so buyer beware. It is a good idea, before making any bid, to thoroughly research the property and even pay for a title search, to identify possible problems.

My conclusion:
Foreclosures are way overhyped. I think that better deals can be had by buying properties that are in short sale. At least that way you have the protections afforded by a real estate contract.

You open your mail. It looks official, and it’s from your mortgage company.  Accross the top it reads ” Notice of Default”.  Homeowners accross the country are getting these every day, and although it’s scary, there are things that you can do to avoid foreclosure.  Here in Washington, it’s not as commonplace, but it still happens.  Here’s a timeline for the Washington State foreclosure process:

1. 11/01/2007  Homeowner stops making payments, and loan is deliquent.
2. 2/15/2008 Notice of Default letter is sent by lender.
3. 4/05/2008 Lender files Notice of Trustees Sale with Clark County
4. 7/09/2008 Property is auctioned off at Trustee Sale at Court House

So, as you can see, from the time you stop making payments, it will take approximately 8 months until your home is officially foreclosed on.  During this time you have the following options:

• Cure the default by making payments covering missed payments, fees, and penalties.
• Work with a Short Sale Specialist to list your home as a short sale.
• Do nothing and wait for the foreclosure auction at the Court House.

If you decide to sell your home, the first contact with your agent will be very important. Your agent will need to know who your mortgage company is, the loan#,  contact name, authorzation form (to talk to your mortgage company),  loan statements, tax returns, bank statements, pay stubs,  as well as Profit/Loss statement if you have a business.  Your agent will also help you to draft a Hardship letter to the lender,  making your case for a short sale.   Banks are willing to work with homeowners who owe more than the house is worth, but they will require a lot of documentation.  You must be able to prove financial hardship and that your home is worth less than the loan.

If you have the potential of foreclosure in your future, I suggest you be proactive.  Contact a Realtor and discuss how a short sale might work for you. It will cost you nothing to find out your options, and it certainly will reduce the stress level.

In today’s market, it seems everyone needs a bit of a reality check.  

For Sellers

• In a good market, where there is 6 months inventory, 2 in 12 homes are selling every month.In today’s market, it’s 2 in 19 homes selling every month.

• Only motivated sellers are selling their homes.

• If a sellers home is not priced right and in excellent condition- it will have trouble selling.

• Sellers should see their home’s competition before putting their home on the market.

• Home staging  adds  $10,000 to the value of a home

• Yard staging adds $10,000 to the value of a home

• Professional photography adds $10,000 to the value of a home (only cost $150.00)

 For Buyers

• 80% of the SW WA homes on market are covered by the FHA/Conventional loan limits of $418,500

• Interest rates are near historic lows

• There is a great selection of homes on the market and sellers are very motivated

• We are at the beginning of the next 10 year market cycle and historically, prices have always gone up from there. 

• The increase in population and other demographics point to a shortage of housing in the next 20 years, which means that price appreciation is almost a certainty.

• The upswing in the Real Estate market will start with the most affordable homes. 

• The spread between the more affordable and higher end homes will shrink, making higher end homes available to step up buyers.

 So that’s my reality for Clark County.

If you have already filed your taxes before today, congratulations. If not, you’ll be burning the midnight oil tonight, and wondering why you waited so long. There is however, one silver lining in filing your taxes this year. Beginning in May, the IRS will begin issuing Tax Rebate Checks.

Specifically, the IRS will use your 2007 tax return to determine eligibility and calculate the basic amount of the payment. In most cases, the payment will be $600 for individuals  and $1,200 for taxpayers who file a joint return.  So go out and spend that Rebate Check. But make sure you get the most bang for the buck…
Of course, I have some suggestions:

• Pay off credit card debt and improve your credit score
• Go to your local bank and purchase a $1000 CD and spend the rest on something fun
• Buy some energy saving compact fluorescent lights and add insulation to your homes attic and crawl space.
• Replace some of your homes drafty single pane windows with energy efficient ones
• Replace your old wooden front door with an energy efficient foam core door

When I first sit down with Buyers, I always have the same questions. It really makes the whole process quicker and easier, when I know exactly what you need and want in your home.  Here’s my list of first time questions:

• Have you been working with another Real Estate Agent?
• How long have you been looking?
• Do you have a home to sell?
• What is your timeframe?
• Any special needs?
• What price range are you looking in?
• What areas have you been looking in?
• What style of home are you interested in?
• Do you want an older, classic home, or newer?
• How many bedrooms and bathrooms do you need?
• How many square feet would you like?
• How big should the lot be?
• Do you want it fenced?
• What features are most important to you?

It sounds like a whole lot of questions, but once I know the answers to these questions, I can usually find 8 or 10 candidates quickly.  And I don’t waste your time showing you homes that you don’t like or that wouldn’t work for you.

Before starting your home search, it’s a good idea to sit down with a Mortgage Officer and find out how much home you can really afford. When you meet with them, you will need:

• Home addresses for the past two years
• Your social security card
• Employment history for the last two years, including pay stubs
• If self employed, two years of tax returns
• List of all assets, including checking accounts, savings, investments
• List of other assets, including bonds, stocks, life insurance, retirement funds, jewelry, and automobiles
• List of all your debts, credit card balances, auto loans, child care, and a list of your monthly payments
• List of what real estate you own, including address, market value, outstanding balances, mortgage payments, taxes, insurance, and any rental income.

With all this information, your Mortgage Broker will determine how much home you can afford and generate a pre approval letter for your Real Estate Agent. With that in hand, when you do make an offer, it’s much stronger with a Pre Approval letter from your lender. It also reduces a lot of the stress involved in the financing of your new home. Now that you have a financial starting point, you are ready to call me and begin the search for your dream home.

April 15th is fast approaching, and with it comes confusion for many homeowners. For example:

• Is mortgage interest and property taxes deductible on your personal taxes? Yes, the mortgage interest on a second home which you use as a residence for some portion of the taxable year, is generally deductible, as are Real Estate taxes. Deductible real estate taxes include any state and local taxes you paid.
• Is interest on a Home Equity Line of Credit Loan tax deductible? Yes, you may deduct home equity debt interest if you secure the debt with your home, and pay the interest in that tax year.
• Can I deduct points paid on a mortgage? Yes, you will need to divide the points by the number of payments over the term of the loan and deduct points for a year according to the number of payments made in the year.
• If you sell your primary residence, are you responsible for capital gains? Yes, when you sell your primary residence, you can make up to $250,000 in profit if you’re a single owner, or $500,000 if you’re married, and not owe any capital gains taxes. If the home you sold is a second residence, however, you may be responsible for capital gains.
• Can I deduct energy efficient home improvements I made during the year? Yes, you can, if the improvements improve energy efficiency, and you use products and improvements that follow International Energy Conservation Code, or IECC, standards. Typical improvements that qualify are attic fans, insulation, new windows, window film, exterior doors, energy efficient hot water heaters, and high efficiency airconditioners, heating systems, and heat pumps.

As you can see, there are many real estate related deductions you may use to reduce your overall tax rate. That should take the sting out of tax day, April 15th.

When you list or sell a home with me, I make a donation to the John L Scott Foundation. The foundation was named after the founder of the company, and is dedicated to helping support children’s healthcare needs. In 2006 the foundation donated over $10,000,000 for more that 22 children’s healthcare facilities. These donations support uncompensated care, medical equipment, and family housing during medical treatment.

Some of the Washington hospitals who have benefited from the John L Scott Foundation include Central Washington Hospital, Children’s Hospital and Regional Medical Center-Seattle, Children’s Village-Yakima, Deaconess Medical Center-Spokane, Harrrison Hospital-Silverdale, Mary Bridge Children’s Hospital-Tacoma, and others.

In commemoration of John L Scott’s 75th anniversary, the Foundation also committed to several special projects, the Ronald McDonald House Teen Room, and Seattle Children’s Hospital and Regional Medical Center Play Yard.

The Ronald McDonald House was in need of a space for teens to hang out. As you can imagine, battling a serious illness is difficult on the entire family, but especially so for teens.  Thanks to the Foundation, there is now a game room complete with furniture, pool tables, video games, and more.

Seattle Children’s Hospital was considering a play area for children, and everyone worked together to develop a ‘vacation play yard’, with faux sandy beach, sandcastles, boats, basketball court, park benches, and more. This ‘vacation’ helps children feel as if they are on holiday, rather than focusing on their illness. Thanks to John L Scott agents and other donors, this project was a great success.

When you purchase a home using a John L Scott agent,  you also help comfort and support children in area hospitals and health care facilities. What a great feeling!