Last week I was contacted by a reporter from KPLU, the Seattle affiliate for National Public Radio, wondering if I would sit down with her and talk about how many banks have elected to temporarily suspend their foreclosure process. So last Thursday she showed up at our offices, microphone in hand, and we spent the next 90 minutes discussing this brave new world of real estate.
90 minutes of conversation with three different agents (Dennis Pearce, John McCants and myself) was edited down to 4 minutes, and a good share of that was split with Jillayne Schlicke – real estate and mortgage educator extraordinaire, and Richard Hagar – a Seattle real estate appraiser. The piece aired nationally on the “Weekend Edition” on NPR this past Sunday.
I think that the initial pitch for the story was an investigative report as to how the suspension of foreclosures from big banks like Bank of America, JP Morgan Chase, and GMAC was effecting the day-to-day operation of real estate businesses like ours. As a real estate team that services short sale, bank-owned, resale, new construction, and auction properties, the suspensions most greatly affected our auction business. John is quoted in the report discussing this – saying that on average we’ve been seeing about 150 homes going to trustee’s sale every Friday in Snohomish County. There was about 75 scheduled for auction last week, and most of these were postponed. In King County we’ve been seeing about 300 properties going to auction every Friday, and their numbers were halved as well.
We also noticed a void in our bank-owned business, as we didn’t receive any listing assignments (which are usually awarded the week after foreclosure) and our BPO (broker price opinions – much like an appraisal or CMA – used to establish market value for the banks as they decide what to do with a property in the foreclosure process) orders were down about 95%.
There is already news of these foreclosure suspensions lifting, which – as oddly as it sounds – is good news. Foreclosure is a natural way of the market correcting itself, and if we suspend foreclosures, then we suspend the market’s ability to recover. The foreclosure industry is now an essential part of real estate, and it’s helping to stabilize a sputtering economy. Banks hire companies to manage these properties, who hire contractors and landscapers to service the properties and real estate agents to sell them. On the auction side there are trustees to handle the foreclosure process, investors purchasing the properties at auction and hiring contractors and real estate agents to ready the properties for a quick sale. All of these properties end up contributing to the title, escrow, mortgage and homeowner’s insurance businesses.
In preparation for the interview I pulled some statistics, just for a better understanding of how much market share bank-involved properties were taking up in our current market (NOTE: by bank-involved I mean short sale or bank-owned listings – that the property can’t be sold without a strong level of involvement from the bank). What I found is that in the 30 days prior to October 8th (when many banks announced that they were suspending foreclosures), bank-involved properties made up 33% of the sold inventory in Snohomish County and 22% in King County. My stat didn’t make the radio piece, but you can see how even a 30 day foreclosure suspension could affect our market.
I wish that they could have devoted more time to discussing the issue at length, but I’m happy that Pickett Street got it’s share of four minutes of fame. You can listen to the piece or read the transcript at NPR.org, or you can use the player below.