Seattle Real Estate Blog by David Monroe: David Monroe - Short Sale Real Estate Agent (Keller Williams Western Realty)

The Stats Are Out--The Market Is Dead.  Or is it?

Yesterday, everywhere I turned, I was either looking at or hearing a news story about how homes sales plunged 27% nationwide to the lowest number on record.  Wait, weren’t we in a housing recovery just a couple months ago?  Weren’t we officially out of the recession?  Is the media not telling the whole story?

Well, before you go jump off a cliff, let’s see what that really means:

Homes sales fell 27% nationwide… From June to July.  There are three problems here:

1. Because real estate is seasonal, comparing sales levels with the previous month is statistically unreliable.  The proper comparison should between July 2010 and July 2009.
   • In King County, closed sales fell 15% compared to July 2009.  However, the median home price is up 4% from last July.
   • In Snohomish County, closed sales fell 11% compared to July 2009.  The median home price fell 5% since last July.
2. Real estate is local.  When have national real estate trends reflected the Seattle market?  While the Seattle area isn’t immune to economic challenges experienced by the rest of the nation, national statistics have never been a reliable indicator of the Seattle real estate market.
3. Sales fell to the lowest number on record?  What exactly does this mean?  How far do the records go back—To the Great Depression?  Farther?  Nope.  The records they’re referring to are from the National Association of Realtors, tracking market activity since waaaaay back in 1999.  Yes, that’s just over 10 years.  Also, they’re comparing the month of July to July of previous years, so it’s really the lowest July sales level since they began tracking in 1999.  July sales were actually higher than sales from January and February of this year, and several months last year.

So why the big real estate market “crash” last month?  IT’S THE TAX CREDIT, pure and simple.  Take large numbers of buyers who would have purchased in July and August, and convince them to purchase a couple months earlier to benefit from the $8,000 tax credit.  This causes May and June sales to spike.  What would you expect for July?

Now cheer up and go buy a house before everyone figures out that the market isn’t dead.


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Authored by David Monroe, Real Estate Agent and Short Sale Specialist
The Home4Investment Team at Keller Williams Seattle Metro West
Phone:  (206) 905-8590

At this time last year, Bank of America was on my black list for short sales.  I would still work with short sale clients that had Bank of America loans, but I had to make an extra effort to mentally and emotionally prepare sellers for a process that could take six months to a year from signing the listing to signing closing papers.

Several months ago, Bank of America started using the Equator system (formerly REOTrans).  Equator is the technology platform used by many of the top lenders nationwide for handling bank-owned property transactions.  Equator built a short sale portal to be used by Bank of America (and eventually other lenders) to help streamline the short sale process.

While the transition to the Equator system had its challenges, Bank of America’s implementation of this online system for processing short sales has been one of the biggest steps in the right direction that I’ve seen from a large bank in the short sale industry.  That doesn’t mean there aren’t still a lot of problems with Bank of America short sales, but it is a massive improvement from where they were a year ago. 

Short sales that would have previously taken 6-8 months to negotiate with Bank of America can usually be completed within 60-90 days now when processed through the Equator system.  It can still be a painful experience at times, but it’s kind of like pulling a bandage off your arm:  It’s going to hurt whether you pull it off slowly or quickly, but isn’t it better to get the pain over with quicker?


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Authored by David Monroe, Real Estate Agent and Short Sale Specialist
Access Seattle area short sale help and foreclosure resources including selling in foreclosure, and 8 Ways to Avoid or Stop Foreclosure.
Considering a short sale?  Check out this Short Sale FAQ first.

Copyright (c) 2010 by David Monroe (Keller Williams Seattle Metro West)

Have you stopped making your mortgage payments?  Are you considering it?  If you’re just considering it and haven’t already stopped, read the post, Should You Stop Making Your Mortgage Payments?

If you have stopped making your mortgage payments, either because you can no longer afford to pay or for some other reason, here’s what you can expect:

First Mortgage
First mortgage lenders are typically much easier to deal with if you fall behind on your payments.  They typically won’t harass you by phone, but they’re likely to fill up your mailbox with letters reminding you that have haven’t made your payment. 

If you speak to your first mortgage lender on the phone, they usually won’t use high-pressure collection tactics.  That doesn’t mean they won’t ask for a payment, but the collection effort over the phone is not likely to go past that level.  They will make a lot of effort to determine if there’s a way to bring the loan out of default status by offering a loan modification, payment moratorium, or some other workout solution.  However, these workout solutions are rarely successful, since most borrowers just get lost in the system.

This low-pressure collection strategy may not apply if your loan was sold off to someone that specializes in purchasing loans that are in default for pennies on the dollar.

Second Mortgage
If you stop making payments on your second mortgage, this can create a bit more of a challenge.  Not only will the second mortgage lender fill up your mailbox with threatening letters, your phone is likely to ring off the hook as well. 

I put second mortgage lenders in the same collection category as credit card collectors.  Second mortgage lenders have a lot more to lose, especially if the first mortgage lender forecloses.  Therefore, they tend to use high-pressure, threatening, and sometimes unethical collection practices.  They may try to contact you at work or they may try to contact your relatives, although you can request in writing that they not do this. 

They may lie to you.  They may tell you that they won’t approve a short sale or loan modification if you’re behind on your payments.  This is not true.  If you challenge something that they tell you and they offer to have you talk to their supervisor to confirm, don’t take the bait.  Their “supervisor” is most likely just the collector in the cubicle next to them.

Letters In The Mail
During the first 90 days or so, your mailbox is going to fill up with letters from your lender.  They may start out friendly, offering lots of options and telling you how much they want to help you, then they will start getting more threatening.  Usually around the 60 day mark, they’ll send letters by certified mail as well.  They’ll use terms like “Acceleration Warning”, “Notice of Intent to Foreclose”, “accelerate the maturity of the loan”, “declare all sums immediately due and payable”, “commence foreclosure proceedings”, “take legal action”, etc.  They're trying to get your attention.  Just remember that no matter what they say, there are specific procedures and timelines that they must follow (see Foreclosure Process and Timelines in Washington State).

Two Notices To Take Seriously
If you’re receiving so much correspondence from your lender that you’ve given up even opening your mail, there are two letters (or notices) that you should pay particular attention to.  The first one is the “Notice of Default”.  This will usually be sent by regular mail, certified mail, as well as a hand-delivered copy (usually taped to your front door if you’re not home).  This notice warns you that the bank may start the foreclosure process if you don’t cure the default within 30 days.

The second notice is the “Notice of Trustee's Sale”, which is sent 30 days or more after the Notice of Default.  Like the Notice of Default, this notice is also sent by regular mail, certified mail, and hand-delivered.  This notice means the bank has scheduled the foreclosure auction for your property.  The foreclosure auction will be at least 90 days from the date of the notice.  The bank has the ability to postpone the auction at their discretion if you’re in the process of a short sale, loan modification, or some other workout option.

As always, if you’re concerned about your legal rights or legal implications, you should consult with an attorney. 

This is just a brief overview of what to expect, and it may differ slightly from lender to lender.  Feel free to share your experiences.


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Authored by David Monroe, Real Estate Agent and Short Sale Specialist
Access Seattle area short sale help and foreclosure resources including selling in foreclosure, and 8 Ways to Avoid or Stop Foreclosure.
Considering a short sale?  Check out this Short Sale FAQ first.

Copyright (c) 2010 by David Monroe (Keller Williams Seattle Metro West)

Home for Sale with Shop and Acreage in Auburn, Washington - Horse Property Potential!

31516 176th Ave SE, Auburn, WA 98092     MLS # 87687  $515,000
Pre-Approved Short Sale!

For more information, contact me at 206-905-8590, or visit my website at www.sellnorthwesthomes.com.

(More photos below.)

Home for Sale in Auburn, Washington on 4.8 Acres with a Large Shop - 4 Bedrooms, 3.25 Baths, 3,250 Square Feet

Pre-Approved short sale!  Looking for a home with flat, usable acreage with a large shop?  This quality-built home for sale sits on a private 4.8 acre lot.  Approximately two acres are enclosed by wrought iron fencing and an automatic gate.  The huge 40x48 shop can hold your RV, boat, or other large toys, plus there's plenty of additional parking outside.  This home for sale features 4 bedrooms (one is large enough to be a bonus room), a 5-piece master bath with jetted tub, formal living & dining rooms with extensive millwork, security system, and central vacuum.  This home is located on a dead-end street, close to Black Diamond, Covington, and Highway 18.

Do you have horses?  How about turning this into a horse property?  The seller also owns the adjacent five acre parcel which can be purchased separately and combined with this one for a total of 10 acres.

PROPERTY FEATURES:

Interior Features:  Alarm System, Carpeted Floors, Fireplace, Hardwood Floors, Laundry Room, Vaulted Ceiling, Skylights
Heating:  Forced Air Gas
Exterior Finish:  Brick, Wood
Sewer/Water Systems:  Septic, Well
Roof:  Cedar Shake
Lot Features:  Acreage, Dead End Street, Fenced Yard, Landscaped, Lawn, Garden Area, Trees / Shrubs, Shop, Patio, RV Parking
Appliances:  Dishwasher, Microwave, Oven Range, Refrigerator, Stove, Washer/Dryer Hookup
Extra Features:  Cable Available, High Speed Internet Available
View:  Woods

Additional information on this home for sale can be found at:  31516 176th Ave SE.

Did you find this property using a search engine or a link from another website?

If so, consider this:

• In addition to you, many other buyers are also seeing this property online.
• If you have a home to sell, I will use the same marketing strategies to give your home the best exposure to potential buyers, helping your home sell quickly at the highest possible price.

David Monroe
The Home4Investment Team at Keller Williams Seattle Metro West
Website:  www.sellnorthwesthomes.com
Phone:  (206) 905-8590

Will Google’s Marketing Blunder Cause Them To Lose Market Share?

Google just made a huge marketing blunder today, in my opinion.  In celebration of the 30th anniversary of Pac-Man’s release, Google replaced the “doodle” on its search page with an interactive, playable Pac-Man game.  I think the general idea was very creative and a good move overall.

Where they dropped the ball was by adding the Pac Man theme music and sound effects to their search page.  The sound effects also run continuously as long as you’re on Google’s homepage.  While this may seem fun to many, it was such an annoyance to me that I removed Google as my default home page and started using Bing as my primary search engine for the day.  I had never really used Bing for searches before, but I’m pretty impressed so far.  Maybe I should allocate some of my pay-per-click marketing budget to Bing as well.

My primary browser is Firefox, and for some reason the Pac-Man theme now plays on my laptop every time I open my browser, even when none of my browser tabs are on Google’s homepage.  I even removed the Google search box from my browser toolbar and turned off Google Desktop to see if that would get rid of the sound effects.  It still won’t go away.  I must have some Firefox plug-in that’s accessing Google’s homepage in the background.

Some people may say that this annoyance was a great marketing strategy by Google, because everyone is talking about it.  However, that really is only a benefit if you don’t already have most of the market share.  For example, if Microsoft did something like this on their Bing search homepage, I think the strategy would have worked for them, because all the talk from the press and social networks would have driven more people to Bing who had never tried it before.  I think it will have the opposite effect for Google.

So, what does all of this have to do with real estate?  A while back, my real estate team did a marketing test with virtual home tours and found that visitors stayed on the virtual tour page significantly longer on average when there was no background music.  A lot of people surf the web at work, and the quickest way to get them to leave a web page is to have music or other sound effects playing.  Of course, this doesn't apply to media like videos, since website visitors expect sound on videos.

I suppose with the marketing expertise and resources that Google has, there may have been some incredibly sophisticated marketing strategy behind this.  However, if there is, I must be missing it.


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Authored by David Monroe, Real Estate Associate and Short Sale Specialist
The Home4Investment Team at Keller Williams Seattle Metro West
Phone:  (206) 905-8590

Will HAFA Improve The Short Sale Process?

On April 5th, the government implemented the Home Affordable Foreclosure Alternatives (HAFA) program, designed to standardize and streamline the short sale process.  I'll give a brief overview of the program, along with some additional comments (and opinions).  The information here includes revisions to the program that were released on March 26th.

HAFA is an extension of HAMP (Home Affordable Modification Program).  The HAMP program was a major failure, helping only a very small percentage of eligible borrowers.  Out of 4 million eligible borrowers, the HAMP program has produced less than 70,000 permanent loan modifications to date.  The problem with HAMP is that it was loosely written, so many banks made little effort to implement the program as it was designed.  After reading and studying the 45-page HAFA Supplemental Directive, I think we're likely to see many of the same problems that people experienced with the HAMP program.

The HAFA program provides voluntary guidelines for lenders to streamline the short sale and deed-in-lieu of foreclosure process by offering financial incentives to loan servicers, investors, and borrowers.  It establishes an acceptable sale price for the property prior to listing it for sale, allows up to 120 days to sell the property, sends the borrower off with $3,000 at closing, and pays the loan servicer $1,500 for processing the short sale.  Sounds like a great deal, right?  Well, don't get too excited yet.

To qualify, the loan must be a first lien mortgage originated before January 1, 2009 from a participating lender NOT owned or guaranteed by Fannie Mae or Freddie Mac.  VA and FHA loans are also excluded.  It is estimated that well over 50% of loans will not qualify for the HAFA program.

The HAFA program is effective from April 5, 2010 through December 31, 2012.

The borrower must meet the following eligibility requirements:

• The property is the borrower's principal residence;
• The mortgage is delinquent or default is reasonably foreseeable;
• The current unpaid principal balance is equal to or less than $729,750;
• The borrower's total monthly payment exceeds 31% of the borrower's gross income;
• If there is mortgage insurance on the loan, the mortgage insurer must approve;
• The borrower must be evaluated for a HAMP modification prior to being considered for HAFA.  (In other words, you'll have to spend several months running in circles trying to get the bank to respond to a loan modification request, even if you know you'll be turned down.)
  
  

Prior to approving a borrower to participate in a HAFA short sale, the loan servicer will determine the minimum net sale proceeds that they'll accept.  What's interesting is that there is nothing in the 45-page document that would prevent a loan servicer from establishing an unreasonable amount for the minimum sale proceeds.  For example, the loan servicer can require the property to sell for 10% more than the estimated value and the borrower can't dispute it.  While that is a bit extreme, the minimum sale proceeds through the HAFA program could be higher than what they would accept on a traditional non-HAFA short sale.

Once a minimum amount is set by the loan servicer, the borrower signs a Short Sale Agreement (SSA), and a real estate agent markets the property and procures a buyer.

A Request for Approval of a Short Sale (RASS) is submitted with the buyer's offer, and within 10 days, the loan servicer must approve or reject the proposed sale.  However, while 10 days may seem like a great timeframe for short sale approval, it could take up to three or four months to get to this point.  Also, if the loan servicer is unable to comply with the 10 day timeline, they can just reject the offer and make up a reason like "insufficient information available".  They're supposed to approve the sale if it meets the minimum net sale proceeds that they had previously set, but they'll find loopholes to get around it.  Trust me, they will.

During the term of the SSA, the borrower may be required to make monthly payments of up to 31% of their gross monthly income.  Since this would be less than the full payment amount, the loan servicer can still report the payments as late on your credit report.

Deed-In-Lieu Of Foreclosure

If a short sale cannot be completed within 120 days, the borrower will be required to transfer the property to the bank via a deed-in-lieu of foreclosure (DIL).  So if the buyer's financing falls through at the last minute and there's not enough time to procure a new buyer, the bank could require the borrower to sign the property over to them without the additional time and legal fees necessary for the standard foreclosure process.  Sounds like a great deal for the bank.

Things start to get complicated is when there is more lienholder involved.  For a short sale to be approved, any subordinate lienholders (like a second mortgage) must agree to a payoff of no more than 6% of the unpaid principal balance (up to an aggregate of $6,000 for all subordinate lienholders) in exchange for a lien release and full release of borrower liability.  In other words, if there's a $30,000 second mortgage, the second lienholder will have to agree to a payoff of $1800 and forgive the borrower of the remaining deficiency according to HAFA.  This could kill a lot of HAFA short sales with second mortgages, as many second lienholders won't agree to those terms.  The HAFA program only applies to first mortgages, so second mortgage lenders are not required to comply with the HAFA guidelines.

While some of the intentions behind the HAFA program may be good, the program is not likely to see much success.  Some borrowers may benefit from doing a short sale through the HAFA program, but most borrowers are likely to see better results through a traditional (non-HAFA) short sale.  The HAFA program doesn't necessarily change the way short sales are done--It just offers another option for those who may qualify.



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Authored by David Monroe, Realtor and Pre-Foreclosure and Short Sale Specialist.
Access Seattle area short sale help and foreclosure resources including selling in foreclosure, and 8 Ways to Avoid or Stop Foreclosure.
Considering a short sale?  Check out this Short Sale FAQ first.

Copyright (c) 2010 by David Monroe (Home4Investment Team at Keller Williams Seattle Metro West).

The Highlands - Quality Suburban Living In Snohomish, Washington

Just 10 minutes northeast of downtown Mill Creek is a master planned community called The Highlands, with nearly 400 homes spread throughout rolling hills--many with views of the North Cascades.  Seven community parks, a soccer field, and walking trails are scattered throughout The Highlands, creating an exceptional suburban living experience.

The Highlands went from concept to construction in 1998, with the final homes completed in 2001.  House sizes range from approximately 1,300 square feet to over 3,100 square feet, and most of the lots range from around 3,500 square feet to over 10,000 square feet.  Over the last year, selling prices for houses in The Highlands have ranged from the mid $200's to the upper $400's, although short sales in the neighborhood have been putting some slight downward pressure on prices.

A half mile south of The Highlands is Willis Tucker Park, an 84-acre park with an activity center, basketball court, baseball fields, amphitheater, 4.5 acre off-leash dog area, picnic shelters, playground, water park, and walking trails.  During the summer, local residents gather at the amphitheater on Thursday nights for a park-hosted movie night, and on sunny summer days, the water park is buzzing with activity as children experience the cooling effects of the Tricky Soaker, Silverflow Cannon, Aqua Dome, Water Jelly, Aqua Jumper, Power Spinner, Power Volcano, Water Domes, and Splash Palace.  If you have a dog, the off-leash dog park is a great place to exercise your dog, and there's even a separate "shy dog" area for dogs that are bit more timid.

A half mile from The Highlands is the newly renovated Mill Creek Family YMCA.  With over 39,000 square feet of state-of-the-art facility space and all new equipment, this YMCA branch is one of the nicest in the area.

The Highlands is also within a mile of the new Glacier Peak High School, Valley View Middle School, and Little Cedars Elementary School.


View Larger Map


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Authored by David Monroe, Realtor and Pre-Foreclosure and Short Sale Specialist.
Considering a short sale?  Check out this Short Sale FAQ first.

Copyright (c) 2010 by David Monroe (Home4Investment Team at Keller Williams Seattle Metro West).