Every week over 150 properties are scheduled to go to auction (trustee’s sale) in Snohomish County. On Friday, March 25th, a property in rural Snohomish is scheduled to sell on the courthouse steps, and it represents a great opportunity for anyone wanting acreage or equestrian property for under $275,000.

The structure is a daylight rambler with over 3,400 square feet of living space, with 4 bedrooms and 2.5 bathrooms. The home needs a little TLC, but the real appeal of the property is the 15 acre lot. For those looking for equestrian or even small ranch potential, this is a unique opportunity to buy horse property wholesale. We have investors that will loan cash to qualified buyers on the day of the auction, and even a resource to start an automatic refinance into a contemporary home loan after you purchase the property.

The property is occupied, and we want to be sensitive to the situation that the owner is facing, so we’re only making further information available to those that schedule a personal consultation to go over the details. If you’re interested in learning more about this property or taking advantage of opportunities similar to this, please fill out the form below and we’ll contact you directly to tell you how.

  1. (required)
  2. (required)
  3. (valid email required)

cforms contact form by delicious:days

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!

Last Friday, new investor Ron Wong purchased his first investment property at a steep discount (67%) in South Everett. The home was a very well cared for 1955 built rambler on a great street and large lot with a detached garage. Ron met the owner earlier in the week with me (John McCants) and toured the house. The owner had been trying to work with one of the largest banks in America on a modified payment plan for over two years with no success. He was unable to afford the repairs the house and the house ultimately went to trustee sale (auction) and sold to our investor. The property needed a new roof, some landscaping,  and touch-up on the inside to hardwood floors and paint. The home has two remodeled bathrooms and a new kitchen. It is very unfortunate for the previous homeowner that he could not keep his home, but to Ron, it was a opportunity to do what he has dreamed about for years: build his wealth by buying real estate at wholesale.

Ron plans to complete the work in the next few weeks as the previous homeowner moves out and re-list the property with the Pickett Street Team making a handsome profit for his efforts.

I was in the field yesterday driving a few “Hot Properties” with a investor client.  We were driving the list of properties with bids we had and few that looked hot based on their location and debt amount that did not have specific opening bids. We found a couple homes that were not so hot and marked them accordingly to update our website, but we found a couple properties with valley views of the Snohomish River and one overlooking Puget Sound and views of the Olympic Mountains that were wholesale values prime for auction purchasing.

At one property in a really good neighborhood of Everett we found a nice home occupied by the owner. The homeowner toured the house for us and explained in detail all he had done to update the property and what was wrong  still needed updating. We asked why he hadn’t worked out the situation with the Bank and he said he had been trying for over 2 years with no success. We discussed that issue for a few minutes and left the home with the owners contact info for use later. After leaving the home my investor stated “that was a great house and great opportunity” based on the current opening bid price combined with property condition, location and the updates the owner had done.

The sad part was it was a disaster for the current (soon to be past homeowner). He had recently lost his wife due to all the stress of their financial situation and now he was losing his home to a bank that would not work out a plan for him. His anger was directed at the banks – not at us, as he was obviously more than willing to help us.

All this reminds me why I have been investing at the auctions,  buying wholesale what most people only dream about. Some people  have told me, “John, you’re looking for a needle in a haystack,” and I have agreed that if a needle in a haystack was worth $30-$100k in value I would be tearing apart haystacks on a weekly basis. There is an obvious tidal wave of foreclosures today, and it’s like nothing I have seen over the past 19 years.  Opportunity is knocking for investors and homeowners wanting to acquire a home at a steep discount in great areas of town in all prices. This is a great time to be actively out there looking for wholesale purchases in our market. I am excited to be in the game myself and to be helping investors and future home-owners at Pickett Street.

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.

  1. (required)
  2. (required)
  3. (valid email required)

cforms contact form by delicious:days

DISCLAIMER: This was initially published as part of an email newsletter to my clients. It made the rounds, and I was asked to post it on the blog to make it more accessible.

I wish that there were more short sale jokes – in the same way that there are lawyer jokes, blonde jokes, or jokes about North Dakota. This would mean that there was at least a level of understanding about short sales that was shared among a large group of people. And it would mean that there was something humorous about the process…

I’ve had a couple of painful weeks with short sales. Most real estate agents don’t handle short sale transactions because they (1) take a long time (2) pay less money and (3) are frustrating beyond measure. When some of my own clients were faced with the possibility of having to short sale, I decided to educate myself on short sales to ensure that they received the same measure of customer service as my other clients. Negotiating short sales is a lot like navigating a minefield…only it’s on a giant treadmill where the environment is constantly changing, and the threat of danger has to be reassessed and evaluated on a constant basis.

Having a good real estate agent that is familiar with the short sale process is important, but sometimes that’s not enough. Banks have policies and procedure, and no amount of reality will get them to change these. Because many real estate agents list short sale properties too low, banks have been forced to have values confirmed by at least two other real estate agents, sometimes even an appraiser or two. If even one of these evaluations comes in unrealistically high, there is nothing that can be done to convince the bank that the home you have listed for $230,000 is not worth $260,000, nor has it been worth that much since 2008.

I spoke to a real estate agent recently that was doing an evaluation on one of my short sale listings. He told me that he did over 2,000 of these evaulations in the past year. I did some research and found that this agent hadn’t sold a single home in 12 months. As far as I’m concerned, he doesn’t really know what it takes to sell a home in our current market, yet the bank is going to give his evaluation more weight than anything I have to say, even though our team has sold 40 homes in the last six months.

Point is – short sales aren’t funny. Or logical. In most cases they are a better option than foreclosure, and even though I’ve never had any of my short sale not sell before foreclosure, the bank’s unmoving resistance to reason is going to result in more foreclosures and fewer successful short sale closings.

So how does a real estate team embrace this certain change? By adding an auction service to their repertoire. Acknowledging that more and more properties will be going to auction, we have added a member to our team that will allow our buyers and investors to buy homes at the county auction. Because homes at auction have to be purchased with cash, most people are restricted from taking advantage of the opportunities that can be found on the courthouse steps. John McCants is the newest member of Pickett Street Properties, and he’s been helping people grow their wealth for years by purchasing properties at auction. With his addition to our team, and the partnerships that he brings with him, our clients too will be able to buy properties at auction with John’s expertise and experience behind them. If this is something that you’d be interested in learning more about, or if you know someone that would be interested, drop me an email or give me a call to set up a meeting with myself and John.