Happy Tax Day! I never feel like the prior year is over until today, which can make the first three and a half months a little like purgatory. Now that we’ve graduated fully into 2013, I feel like it’s a good time to give you an update on how the real estate market is moving, and how our team, Pickett Street Properties, is changing with the market.

It shouldn’t be news that the real estate market has changed. After 5 years of depreciation, after 5 years of foreclosures and short sales, our local real estate market is rebounding, and in an aggressive way. Buyers shopping now are paying 15% more than last year in King and Snohomish Counties (year-over-year), and this upward trend in appreciation appears to have some legs. Simply put, demand is up and supply is down.

The data can be confusing though. At first glance, housing sales are actually lower in both counties. Knowing that fewer homes are selling should usually worry sellers, but a closer look at the stats shows a different story. There are fewer homes available this year over last year (down over 4% in Snohomish County), fewer homes going under contract compared to last year (over 3% lower than last year ), and yet prices are still going up. Inventory is actually so low that there isn’t enough available inventory to accurately reflect the demand in the marketplace. Most new listings are selling within the first weekend on the market, usually with multiple offers. We’ve had listings that sold for over 10% above the list price, with buyers waiving their inspection contingency and even offering to pay some of the seller’s closing costs!

Another interesting trend is the financial strength of the buyer pool. Buyers that have the minimum requirement for down payment are finding it especially hard to secure a home because of two primary reasons (1) investors – including national hedge funds that are buying up available inventory as the market appreciates, and (2) owner-occupied buyers that have been saving for years, waiting for a clear indication that the housing recession was over. With clear indications that the market has bottomed out and is on it’s way back up, investors with cash and buyers with a significant down payment are making it harder for first-time homebuyers with minimum down-payments to compete.

At Pickett Street we’re seeing all of this reflected in our sales volume. We’ve closed over 63 homes so far in 2013 – if that trend continues we’ll sell well over 200 homes for the year (well above the 143 in 2012). Our listing inventory has also dropped, as everything that we’ve put on this year has either sold or has an offer on it. We’re adding agents to our buyers team, as the buyer’s demand on Matt, our showing specialist, is becoming overwhelming.

So we’re staffing up. In February we added Katie Silver as our new Listing Coordinator, and in April we’ll be hiring another showing specialist and interviewing for a third. Many of the top real estate teams in King and Snohomish are hiring, so if you know someone looking for a change, please let someone on our team know and we’ll meet with them to see if there might be an opportunity with our team or another team in the area.

Additionally, we have many buyers looking for listings in every price range, in every condition, in just about any location in Snohomish and North King Counties. If you or someone you know is entertaining the prospect of selling a home, let us know how we can help.

If you’ve been thinking about investing in real estate, it’s a great time to start. My wife and I recently partnered on a condo purchase in Bothell that will cash-flow around $1,000/month from the very first month. We are going on our fourth year helping clients buy flip and rental properties at trustee’s sale, and because of the time-frame of the foreclosure process in Washington State, foreclosure volume has remained stable even as home prices appreciate.

Thanks for taking the time to read through this update, and please feel free to forward it on to anyone else that you think might benefit from it. For everything there is a season, and today marks the end of the tax season – let’s hope you weathered it well.

Tags: 2013, appreciation, buyers, County, King, listings, Puget Sound, Real Estate, sellers, Snohomish, update

Nestled at the Northern shore of a private lake in the Mat-Su Recreational area south of Talkeetna, this 3 bedroom, 1-3/4 bath, 2,472sf ranch-style home offers everything for the sporting lifestyle. Strap on the skis or pull the sleds out of the 1200sf (30′ x 40′) heated 2-bay shop and head for the hills! Fish the lake for trout, and go for Kings, Silvers and pinks in the nearby Kashwentna River, Montana Creek, or Sheep Creek. Boating, fishing, water skiing, and float plane access from the larger Caswell lakes (this home is situated on the smallest of the Caswell lakes). After a day of exploring, relax on the deck in the lake view hot tub. The great-room concept living/dining/kitchen area is ideally suited to facilitate entertaining, and new cherry cabinets and stainless appliances have been installed in the kitchen to create a haven for the cook. Multiple bay windows flood the home with southern exposure light in all seasons. Thoughtful amenities and features include: duplicate heating sources, built-in internet-accessed video security system, a metal roof, hardi-plank siding, custom spalted-birch interior trim, weather-resistant trex-planked deck, generator-ready, and wheel-chair accessible throughout. The on-site gravel pit is a perfect location to set up targets for your at-home firing range. 4 total lots, 10 acres, potentially subdividable. See the full  listing HERE.

List Price: $325,000
MLS#:11-12996 (Alaska MLS)
Address: 50147 S Caswell Cr. Dr Wasilla, AK
Bedrooms: 3
Bathrooms: 1.75
Square Feet: 2,472
Lot Size: 9.9 Ac

Call Dennis Pearce at 206.931.9945 for more information.

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Two articles published this week indicate that after four years of a struggling real estate market, perhaps things are on the rebound in the Puget Sound.

An article entitled “Expect ‘new highs’ for Seattle apartment rents” published in the Puget Sound Business Journal on May 13th states that the generation of new jobs, slow new construction starts, and low vacancy rates could push rental rates up almost 4% this year.

This sentiment is echoed a similar article entitled “Renters finding landlords have upper hand in this market” published by The Seattle Times on the same day. The Times story is a little more allegorical, detailing the struggles of local residents as they adjust to a stronger rental market.

A strengthening rental market is a good indication of a coming housing recovery, as higher rents will prompt more buyers to look to the affordability of home ownership. The largest growing segment of our clientele are investors buying homes to either hold or rehab – yet another indicator that our market is on a path toward recovery.

Tags: articles, investment, investor, Real Estate, rent, Seattle

For the third year in a row, Jesse D. Moore and Andy O’Shea were selected by Seattle Magazine as 5-Star Real Estate Agents, Best in Overall Satisfaction. The designation is given to less than 7% of the agents in the Puget Sound market, and even fewer have won it for 3 consecutive years in a row.

In addition to this, Andy and Jesse finished the year off as the #1 and #3 agents in their office of 142 agents in 2010 (Keller Williams Realty Bothell). Andy ended up as the tops agent overall, and Jesse as the top resale listing agent overall. Pickett Street Properties was the top team for the largest office in Snohomish County, closing 80 real estate transactions in 2010, and we expect to do even greater things in 2011!

Trevor is my brother-in-law. I’ve been helping him and his wife to find their first home over the last couple of months. We made an offer on a bank-owned home in Edmonds that was accepted, but in a long and twisted tale of banking regulation gone wrong, they had to give up that home and start their search over again. They also had to move – they had given notice at their apartment complex and their unit had already been rented out. So that’s how I gained two roommates

Trevor and Liz were originally hesitant to consider properties sold at trustee’s sale, but being forced to live with me encouraged them to look at all options. After watching a few properties that would normally be outside of their price range sell well within their range, Trevor and Liz threw themselves into the process. They were pre-approved to borrow funds at auction, received a username and password to search our trustee sale database, and started driving properties that they were interested in.

Trevor bid on a home at auction every week for three weeks prior to Thanksgiving, barely losing out on all three. He was being conservative at my insistance – I wanted to make sure that they not only got a good value – but a good home as well.

On Thanksgiving morning we drove two properties in Lynnwood, including the one you see pictured above. We couldn’t get inside, but it was obvious that the home was vacant. We used recent MLS photos to determine the layout and condition of the interior. I called the previous listing agent to get her assessment of the home, and we pulled title to see what liens would survive the foreclosure.

Trustee’s sales usually happen on Friday mornings, but because of Thanksgiving, the sale was postponed until the following Monday. Perhaps because of this, and perhaps because people might have been gone for the holiday, there was a thinner crowd than usual at the auction. The property above was called, and Trevor qualified for bidding, as did three other people. The opening bid for the property was $170,695. I had the current market value at $255,000 – $260,000, and Trevor ended up with the winning bid at $195,500.

Keep in mind that Trevor still hadn’t been inside the home. I met Trevor at his new house and we drilled out the lock on the front door. I gave him a little pep talk ahead of time, saying that it would be ok, and that if need be, they got the property at large enough of a value that it could be rented or sold on the market.

Trevor and Liz moved into their new home this weekend. Trevor and I had walked in to find that not only was the home in good condition, but that the previous homeowner had left all the appliances, including the fridge, washer and dryer. Trevor is over the moon, and not just because the home is in good condition. We’ve already started their refinance, and before Christmas they will be able to cash out the 10% that they put down. They will have paid about $12,000 in commissions and lending fees, will have a 30-year loan at 4.75%, and their mortgage payment will be lower than what they would have paid in rent for the same home.

That’s how I lost my roommates. There is another auction this Friday, and the Friday after that, etc. We have an introduction to auction class every Thursday at 6pm, and we go over the hot properties immediately after that at 7pm. Whether it’s for your primary residence or for your investment portfolio, the best buying opportunities in real estate are at Pickett Street!

Tags: auction, bank-owned, Lynnwood, Snohomish County, trustee's sale

Remember 2006? When there were basically only two types of real estate to buy – resale or new construction? Most people, including real estate agents, hadn’t even heard of short sales, and bank-owned properties made up such a small percentage of the market that finding one was a little like hunting a rainbow.

It’s a different time, and our team has done our best to diversify. It started by educating ourselves on the short sale process, extended into representing local and national banks on marketing their foreclosures, and in the last six months we’ve developing an effective system of representing buyers purchasing properties at  trustee’s sale in King and Snohomish Counties.

What is a Trustee’s Sale?

Sometimes generically referred to as auction, county auction, sheriff’s sale, or foreclosure auction, trustee’s sales are the natural process in our state for foreclosing on a home. There are two types of foreclosures in our country, either judicial or non-judicial. Judicial foreclosures require banks to go through the court system to foreclose on a property – non-judicial foreclosures, like those in Washington State – don’t go through the court system, but instead follow a set of established laws and notices that eventually lead to a public auction, usually on the courthouse steps of the county seat.

To understand the trustee’s sale, you need to understand the process that leads a home there. It starts with a missed payment by the homeowner. If the homeowner doesn’t cure even one missed payment than the bank can start the foreclosure process. That process starts by posting a notice of default on the home, alerting the homeowner that monies are owed, and if they aren’t paid then the bank will move forward with foreclosure. If the default on the loan isn’t paid, than no less than 30 days after the notice of default is posted the bank will post a Notice of Trustee’s Sale. This notice again states the amount of the default, and explains that if the default isn’t cured, that the home will sell at a trustee’s sale no less than 90 days from when the notice of trustee’s sale was posted.

Which brings us to the trustee’s sale. When the foreclosure process is started, the bank hires a trustee. The trustee is local to the area and is familiar with local laws and notices. The trustee is responsible for posting the notices and for managing the process that leads to the trustee’s sale. It’s called a trustee’s sale because the bank transfers the deed to the property to the trustee for the purposes of auctioning the property and handling the transfer of the deed – either to a purchaser at auction or, if there are no winning bids on the property, in the name of the bank. In either case the trustee’s sale effectively removes the homeowner’s name from the property and releases the property from many (but not necessarily all) liens that were encumbered on the property by the homeowner.

Why purchase a home at Trustee’s Sale?

Simply said – value. Let’s imagine that a home has two liens on the property, one for $300,000 and another for $150,000. In a typical real estate transaction this home would have to sell for about $495,000 in order to cover the closing costs and the liens on the property. In a short sale transaction the home will sell for less, but both lien holders have to agree to the terms of the sale – so let’s say that the property sells for $400,000, which would leave the second lienholder with $60,000 of their original loan of $150,000 (after closing costs). Usually it’s the senior lien holder that initiates foreclosure (our $300,000 loan). Because most subordinate liens are wiped out with foreclosure, a buyer could purchase this same home at trustee’s sale for as little as $300,000. After tracking properties purchased at auction purchased over the last six months, we’ve found that most properties purchased at auction sell for about 70-80% of market value.

The primary limitation to buying at auction is money. All properties at auction have to be purchased using cash (typically cashier’s checks), and most people don’t have the cash reserves to purchase a home worth several hundred thousand dollars. Traditional lending institutions don’t help because they don’t lend money without appraisals, credit checks, and a couple of weeks of review going over any potential risks to the bank. Still, trustee’s sales represent the next emerging market within the real estate industry, and there are people and companies looking to take the opportunity this market provides. The people and/or companies that realize this and are lending money to purchasers at auction are offering auction financing, otherwise known as hard-money lending. This type of financing is higher in fees and rate then conventional lending, but it allows people the opportunity to buy homes at a discount that they otherwise wouldn’t be able to consider.

How do I purchase a home at Trustee’s Sale?

While the reward is high with purchasing a home at trustee’s sale, so is the risk. While anyone with the cash and a little bit of knowledge can buy at trustee’s sale, a majority of investors and home-buyers use representatives to help them navigate the pitfalls and obstacles. The New York Times recently ran a piece about a couple that bought a home at auction in California for $137,000. What they didn’t know was that what they bought was a second note on the property, and that all they had purchased with their $137,000 was the obligation to service a much bigger, unpaid primary lien on the property. A representative helps buyers find out what liens survive the trustee’s sale and make sure that they are bidding on the primary lien, not on a subordinate lien. A representative should also be able to find out about the balance of tax, utility and HOA liens that may survive the trustee’s sale.

Even if a property is determined to be a good buy once the lien position is explored, there is a good chance you might not see the interior of the home that you’re purchasing at auction. Many of the homes are still occupied, which means that not only could you not get access, but you have to deal with evicting or negotiating with the homeowner to vacate the property. If you’re unable to get access and the home is vacant, there is a greater chance of deferred maintenance – mold from an unattended water leak, possible vandalism by the homeowner as they moved out, etc.

Most representatives have systems and experience that give their buyers the information necessary to calculate the risk before they bid on a property at trustee’s sale. This level of service isn’t free though. Fees for representation vary, but most groups charge 3% of the county assessed value, and it’s due on the same day of the purchase at auction. Again, because of the number of properties going to trustee’s sale, and because of the rising amount of people looking to buy at auction, there are many groups emerging to represent buyers at auction. It’s important to research each group, the level of experience of their representation, and to find examples of their purchasing history. Each group should offer a web-based resource for researching properties by their auction date and location, and depending on their level of service they should be providing the opening bid (as it becomes available), recent pictures of the properties, an occupancy status and title information.

Where do I go to learn more about buying at Trustee’s Sale?

In King and Snohomish Counties, trustee’s sale occur every Friday at 10am (excluding legal holidays). The Snohomish County trustee’s sale is in Everett on the courthouse steps at 3000 Rockefeller. In King County there are two sites for the trustee’s sales – one in Bellevue and one in Seattle. Most of the activity occurs in the first two hours, but it can go as long as 4pm. You can attend the sale at your leisure, but it’s best to have a guide that can explain what’s going on. Trustee’s sales are surprisingly low-tech, and feels a little bit like a poetry slam at a farmer’s market, with unassuming people standing in the rain reading without much consideration for their audience.

Our team has an “Introduction to Buying at Auction” class every Thursday night at 6pm. It’s taught by John McCants, a Pickett Street team member and Keller Williams REALTOR that has been a full-time real estate investor and purchaser at auction for the past 19 years. During the introductory class John goes over the foreclosure process, how to secure auction financing, and how his representation can help you avoid costly mistakes and build your wealth. Immediately following at 7pm, we go over what we consider to be the “hot” properties going to auction the next day. This meeting is primarily for our dedicated investors pre-approved for purchasing the next day, but it doesn’t hurt to sit in and see how it works. Then on Friday we usually have reps in Bellevue, Seattle and Everett that can guide you through the trustee sale process. Once class members are comfortable with our system and services they’ll be given a username and password to a website that allows them to research upcoming trustee’s sales.

If you are interested in learning more about buying real estate at wholesale prices at auction, please complete the form below and we’ll contact you within 24 hours to register you for one of our classes.

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Tags: auction, bid, buying, foreclosure, John McCants, Real Estate, sale, trustee, trustee's sale