The Future of the Seattle Housing Market: As Gray and Dreary as a Late March Day

March 30th, 2011 by Marc

I’d love to think otherwise — indeed my business benefits from market activity, just like the business of every other real estate broker.  But my wishes are irrelevant — its the data that tells the story.  And right now, that story is looking like a real tear-jerker.  (more…)

REO or Bank Owned Homes Explained: Buying an REO Property Presents an Opportunity and a Challenge

March 22nd, 2011 by Marc

There are many “REO” properties on the market these days. For those who understand the process, an “REO” home may present an excellent buying opportunity. But understanding the process is essential because these properties also present unique challenges.

First, an explanation of the term “REO”: it stands for “Real Estate Owned.” This term is used in a bank’s balance sheet to identify properties owned by the bank other than properties it actually uses (like a branch office). Typically, the bank becomes the owner of such a property when the bank forecloses after an owner/borrower stopped paying the mortgage. At the foreclosure auction, the bank usually bids the amount owed. If somebody bids higher, then that bidder buys the property and the bank is repaid in full. If nobody bids higher, then the bank is the winning bidder and becomes the owner. (more…)

What is a Short Sale? The Short Sale Process In WA Explained

March 18th, 2011 by Marc

The term “short sale” is getting a lot of use these days, in Washington State and around the nation. Many people know that short sales offer the opportunity to get a good price on real estate. But what, exactly, is a “short sale”?

A short sale is the sale of a home for a price less than what the owner owes on the mortgage, AND the lender agrees to a “short” payoff in exchange for release of the bank’s lien on the property — hence the term. But that definition requires a little more explanation, because some readers might be thinking, “Release the lien? What does THAT mean?” (more…)

Buying or Selling a Home with a Real Estate Agent: How They “Earn” Their Commission

February 22nd, 2011 by Marc

I came across an interesting tidbit in the Realty Times, a web site devoted to providing “consumers and industry professionals with helpful, informative news and advice.” The article educates agents on how they can “push back” against downward pressure on their commission, whether buying or selling. Apparently, “prospects” (the industry term for somebody thinking of hiring an agent) try to negotiate a lower commission because of “fear.” If the agent can address that fear — which may have one or more causes — then the agent will more likely get the “full” commission. (more…)

Seattle Housing Market Bottom? Not Here Yet…

February 14th, 2011 by Marc

When the “paper of record” says so, it must be true: “Seattle is down about 31 percent from its mid-2007 peak and . . . still has as much as 10 percent to fall.” The article also calls out the Seattle Times for its rank boosterism– er, I mean inaccurate news reporting, back in September of 2006. And rightfully so (the true beauty of the internet — the public record is exceptionally accessible): According to the Seattle Times in 2006 based on its own analysis, “If history is any indication, King County may escape [the housing bust].” Local economists Matthew Gardner (Matt, was that really the best head shot you had on hand?) and Dirk Conway chimed in as well in favor of the “no declines here!” position. Ah, 2006, when there was no shortage of optimism…. (more…)

The Burst Housing Bubble: Is the Media Overplaying the Crash?

February 4th, 2011 by Marc

First and foremost, I gotta give a big “shout out” to my friend and fellow Rain City Guide contributor, Ardell DellaLoggia, who actually made this very point in response to a prior post of mine. And instead of thanking her, I gave her a hard time. Sometimes bloggers can be real jerks… :-(

On January 21, the Seattle Times published an article with this headline:
Back to 2005 for King County Real Estate Prices
The article noted that, year over year, the 2010 King County median home value ($375k) had slipped nearly all the way back to the 2005 median price ($374k). OK, sounds significant. (more…)

Strategic Default: Is It Immoral?

January 31st, 2011 by Marc

There was a very interesting piece in Sunday’s Seattle Times regarding “strategic defaults” (intentional abandonment of the debt, and eventually of the property, by the debtor/owner).  The article was authored by Brent White, a law professor. I agree with the opinons of Mr. White: Any decision regarding such a default should be based only on the legal consequences of the action. (more…)

Puget Sound Housing Market: Good News is Just Around the Corner!

October 26th, 2010 by Marc

Post authored by Craig Blackmon, with assistance from Robyn Armani, our assistant/bookkeeper/paralegal/office manager!

Well, and maybe down the street too.  And on the far side of the river.  But its coming!!  And perhaps sooner here than elsewhere…

According to a forecast compiled for by Fiserv and Moody’s, U.S. home prices will be 7.2 percent above 2010 levels by 2014, with the strongest growth right here in the Pacific Northwest. Of 384 places surveyed, the Bremerton-Silverdale area had the highest four-year growth forecast, with prices expected to increase 44.7 percent from 2010 to 2014. Meanwhile, Tacoma prices are predicted to appreciate 33.1% over the same period, while Seattle should see growth of 25.5%. (more…)

Getting a Mortgage to Buy a Home: Bank of America & the Dance of Death

October 7th, 2010 by Marc Holmes


Take our advice and avoid Bank of America like the plague.

BofA is one of the largest mortgage lenders in the United States today and, until not too long ago, one of the most prestigious as well.  It used to be that a pre-approval from BofA meant a lot because of their relatively high credit standards (admittedly, the bar set by the mortgage industry was extremely low).  I’ve had many clients use BofA over the years and seldom had any problems.  That all changed in August as we were preparing to close a client’s purchase of a FSBO house in Seattle.

The first foreshadowing of the problems to come was BofA’s discovery that an FHA rule required postponing the closing date.  Turns out the seller hadn’t held title long enough (90 days) due to a transfer out of her LLC into her personal name.  Ok, that’s not BofA’s fault or our client’s fault so no big deal.  BofA assured us that they had everything they’d need and they’d close this puppy lickety-split so all we had to do is wait out the rest of the 90 days. 

So, we extended the closing date, jumped through a hoop or two, and waited for the FHA-required time period to pass.  Unfortunately, lickety-split turned into a whole month of foot dragging and excuses for why the deal wasn’t closing.  Repeatedly we were told that “we’re in underwriting” but now they need this, that or the other thing.  Or they’re waiting for a response from somebody about something.  Or something got lost or misplaced.  Or forgotten.  Or they need something they didn’t anticipate.  Then they need a new appraisal.  It was non-stop.  I was told “I’ve got a call into so and so but haven’t heard back” or “I sent so and so an email and am waiting for a reply” so many times it was ridiculous.  Apparently, returning internal calls or emails is optional at BofA.  It got so bad, the apologies so numerous, and the incompetence so great that we were kicking ourselves for not going to a new lender.  And BofA wasn’t denying it.  They ended up comping our client several nights in a hotel and a birthday dinner at one of the most expensive restaurants in town.

Now I’ll be the first to concede that hiccups and delays before closing are common and practically par for the course these days.  But they seldom merit starting over with a new lender only days before closing.  In this case everyone at BofA assured us that the file was fine and they just needed a little more time.  So we hung tight.  In hind sight it might have been worth the effort to look elsewhere.

Our client really wanted the home and was understandably concerned that the seller would back out.  The concern was valid because the seller could have reasonably decided to walk away.  Fortunately, the contract we drafted protected our client’s earnest money so the seller had a big disincentive to bailing out.  Our client’s desire for the home also made sense because it’s a great house and he was getting a great price: two separate appraisers both appraised it for more than the agreed upon sales price.  That’s pretty impressive in this day and age when appraisals come in low much more often than high. 

Fortunately, we had a very understanding seller and an open line of communication gave her some idea of why we were being delayed.  Ultimately, BofA got their act together and the deal closed but the process taught us a real lesson about how far BofA has fallen.

It’s clear that BofA didn’t use the billions of dollars in bailout money it received to hire enough staff or to train and motivate their staff to do quality work.  

Well, we’ve learned our lesson and we’ll politely decline the next time somebody asks us to do the Dance of Death with Bank of America.

Real Estate Brokers Do Not Want to Hear This…

August 24th, 2010 by Marc

Per a recent article in the New York Times, popular wisdom may now be off the mark in thinking that housing is a “good investment.” Most people have believed for their entire lives that buying a house made good financial sense. You need a place to live anyway, you get a tax break on the interest, and most importantly houses appreciate in value over the long term, like stocks (but unlike virtually every other “consumer” good, which of course depreciates in value).

But apparently there is a new reality: Given the hangover from the housing bubble, evidence now suggests that housing prices will not significantly appreciate for a very long time, particularly in those areas that were most susceptible to the bubble.

Why is this important? Well, many buyers of real estate do so for the investment. If housing is no longer considered to be a good investment, then many of those potential buyers will seek to invest their money elsewhere. And fewer buyers will translate into continuing downward pressure on buyers. Which in turn will make housing a less profitable investment. In other words, this cycle will feed on itself, depressing home values further in the process.