HUD homes are foreclosures that are now owned by HUD (Housing and Urban Development) and listed for sale by HUD.  Chuck Marunde, Managing Broker of Adamas Realty in Sequim is now Registered with HUD to represent buyers of HUD homes. This gives buyers the ability to make offers online through a Registered HUD Homes broker.

HUD Homes and Foreclosures

The foreclosure market can be divided into to main categories.  There are HUD Homes, which were homes with FHA loans that were foreclosed by the banks who made those loans.  Those banks get reimbursed by HUD for their losses and transfer ownership of the homes to HUD.  HUD insured these loans and the banks collected a mortgage insurance premium from the borrowers to pay for that insurance.  These become HUD Homes now listed for sale.

The other type of foreclosures are those that were made with conventional loans (and all non-HUD insured loans).  The banks that made these loans foreclosed and now are selling the homes.  It gets a little more complicated than that, because many of these loans were packaged and sold and resold, so the owners now may be far removed from the originating bank.  These foreclosures are not in the HUD Homes database, but are listed for sale in the MLS.

HUD Homes and a Registered Broker

If you would like to make an offer on a HUD Home or a Foreclosed Home now in the MLS, contact Chuck Marunde at 360-775-5425.

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• Clallam County Foreclosures
• Why You Won’t Find Your Home in Sequim Foreclosures
• How to Buy a Foreclosure

Sequim investors cannot find great deals on homes in Sequim.  They are literally unable to find good investment properties to buy with cash.  You would think that in this recession that there would be many homes at incredible bargain prices, and that Sequim investors would be swooping in to snap them up, but such deals do not seem to exist in our market.  Why is that?

Sequim Investors Get Skunked

The headlines around the country for quite a while have been all about the large numbers of foreclosures flooding the market, the crashing housing prices, the home builders going bankrupt, and the mortgage debacle.  Stories are told again and again about the guy who bought a three bedroom home in Vegas for $75,000, or the couple who bought a four bedroom mountain view home on 20 acres in Arizona for $225,000.  Stories abound.

So why can’t Sequim investors find these extraordinary deals?  They don’t exist in Sequim.  Nor do they exist in Port Angeles.  It sure seems like they should, but they don’t.  I have cash buyers waiting for me to find an extraordinary deal.  Try as I might, and I look at a lot of homes in the area, I have not found a home that a Sequim investor could buy, put $20,000 into it with their own labor, and re-sell for a profit.

Sequim Investors Say Where Are The Deals?

Some might think there are many homes for sale, and there are, but not the kind that can be resold within six months for a profit.  Sequim buyers, and this means retirees from outside the area, are not interested in 1970′s style homes with a split level floor plan, or an unusual floor plan, or a home in an unfavorable area.  Investors won’t touch these kinds of homes, because they cannot sell them.

If I could find a post-1990 three bedroom, two bath home with a normal floor plan, a roomy kitchen with plenty of cabinet and countertop space and about 2,400 square feet on a nice one acre lot with a mountain view of some kind, one that needed some remodeling and cosmetic work and could be purchased for about $185,000, I could sell that to an investor in a heartbeat.  He would put about $20,000 to $30,000 into it, lots of labor, and resell it for $240,000.  That would work, but believe it or not, this kind of investment does not exist.  There are homes like this, but the owners want $240,000 for them now, and that leaves no room for investors to profit.  Unlike many areas in the country, the bottom of the Sequim real estate market never fell dramatically.

Sequim Investors Disappointed

While this news has been disappointing to Sequim Investors, it is actually a sign of stability and strength in the Sequim housing market, and this bodes well for sellers as well as buyers.  Buyers won’t find the steal of the century here, but they will buy a home in a stable market and that is a good thing.  Sequim investors may have to look to Vegas or Phoenix to investor their money, and even that will be fraught with significant risk.

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The Sequim real estate market is a tough real estate market, but I have been observing a consistent pattern for three decades now. I periodically get questions from homeowners who want to sell their homes, or from FSBOs (For-Sale-By-Owners) who are trying to sell their own homes.  I have learned so much about the mindset of homeowners in this market, and  I’m surprised at some of the misconceptions owners have about selling homes.  I fully realize that some homeowners will not necessarily believe what I will share, but I swear everything I have experienced on this subject for three decades has been consistently true about FSBOs.  I did not write this article just to get FSBOs to list with me.  Anyone who reads my blog knows that I share everything I know, and I always tell the truth even if it is uncomfortable.  Let me share more about seller misconceptions beginning with an analogy.

Sequim Real Estate Market

Imagine a gentleman who had a successful career as a biology teacher, and his primary hobby is bird watching and photography.  He is passionate about his work and his hobby, and he’s good at what he does.  He married the love of his life, who also had a successful career as a dental assistant.  They retire and live happily ever after.  Well, almost.  They decide to sell their home.  They’re intelligent and mature people, and people of good honest character.  Now they have decided to sell their home, and here’s where the misconceptions start.  I mean no disrespect at all when I suggest that there is a lot more to selling a home than they think they know.  Selling a half million dollar home is not like having a garage sale, putting some plywood on some saw horses, laying out books and jeans and dishes neatly on the tables, and making some price tags.  As comedian Dennis Miller often says in his act, “I don’t want to get on a rant here,” but I see homeowners and FSBOs make many mistakes.  It’s unfortunate, because they cost themselves a lot of money and time and stress . . . unnecessarily.

Here are a few articles I’ve written about these very issues in this Sequim real estate market.  I can almost guarantee that a good, honest homeowner who wants to sell his own home will not have a lifetime of experience to do that job as he needs it done.   Many think they do, but I’m not entirely sure why they think they can do something so important without the education and experience.  I don’t work on my own car’s electronic ignition system.  I don’t try to do my own electrical work.  I’d probably get electrocuted. 

There is too much to know and too much at risk when it comes to selling a home.  My point is best made by reading all of the following articles.  If you’re a FSBO or thinking about selling your home, I strongly urge you to take all these articles seriously, because I promise what I have written is true and accurate.  I don’t care if you list your property with me, but ignore three decades in real estate and 20 as a real estate lawyer if you want to.  I have no dog in this fight when it comes to your decision to sell your own home and how much you make or loose on the sale.  I am honest and sometimes blunt when it comes to the truth.  If you find what I write helpful to you, then great.  If you’re offended by the truths I share here, I make no apology.

Sequim FSBO and What it Takes to Sell a Home Part 1

Sequim For Sale by Owner Part 2

Why the FSBO is so Hard to Sell

Why Can’t I Just Sell My Own Home?

Sequim Real Estate Market Due Diligence

I find it fascinating that buyers are the ones doing so much research on the Internet and doing their due diligence on areas, houses, and agents. Sellers generally are not. Buyers not only do extensive online research before they arrive to look at homes, but then they look at many homes in person to complete their knowledge of home values and features. Sellers neither do online research to find comparables, nor do sellers spend time viewing dozens of home currently on the market. Instead, sellers simply call an agent and rely on the agent to tell them what their home is worth and trust that their agent has a great marketing system. Sellers do not do their due diligence on their agents either. Buyers do extensive research on their buyer’s agent in the Sequim real estate market.

From 85% to 95% of FSBOs never get their homes sold themselves, but end up listing with an agent after many months of lost market time and a lot of frustration.  Of the remaining 5% to 15%, only one or two actually get their homes sold.  That’s one or two homes out of a hundred, and that may after be one or two years on the market.  And the price they end up selling for is typically far less than they would have gotten with a professional, even with the commission.  These numbers come from extensive national statistics and 37 years in the business.  [The one success story of someone who got lucky and sold their own home in two weeks circulates for years, but someone also won the lottery last month.]  The Sequim real estate market is not different than other markets in this respect.

One very important reality for FSBOs to realize is that qualified buyers are not looking for FSBOs.  They just aren’t.  I ask all my clients how they search for homes, and they:

1. Do not search FSBO sites,
2. Do not find FSBO’s turning up in the search engines,
3. Have often had bad experiences dealing with a FSBO in the past who did not know how to handle paperwork and transaction details,
4. Have told me that in their experience FSBOs want too much for their homes (statistically this is true), and
5. Qualified intelligent buyers are hiring a buyer’s agent who knows the local market and the local real estate issues of concern, knows prices, and know how to negotiate and handle the transaction details professionally.

This means FSBOs are off the radar screen for 99% of the buyers.  Like it or not, this is true.  If you’re expecting a buyer will see your For Sale sign, good luck, because the odds of that happening are extremely small, and the best most qualified buyer for your home at your price is most likely searching the Internet.

This Sequim real estate market is not the time or place for a homeowner to learn by trial and error how to sell a home.

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Clallam County Foreclosures are small in number, among the lowest foreclosure rates in the United States.  RealtyTrac just came out with an interactive map to view the number of foreclosures in every state and every county.  Click on this map below, and when you have the map loaded on your browser, zoom in on Washington state and then drag your mouse over the counties and a small window will show the number of foreclosures.

Clallam County Foreclosures

Click on Map to Enlarge

Clallam County Foreclosures

In King County 1 in 603 homes are in foreclosure.  In Pierce County 1 in 529 homes are in foreclosure.  Skagit County, Snohomish County, Kitsap County, and Thurston County all have similar foreclosure rates.  Put this in perspective with Las Vegas (Clark County) which has 1 in 77 homes in foreclosure.

Now compare these rates to Clallam County foreclosures with 1 in 1,560 homes in foreclosure, and Jefferson County with 1 in 3,288 homes in foreclosure.

I wrote in an earlier article about Clallam County foreclosures that, “There are only 6  Sequim foreclosures listed for sale in the MLS today.  We have 835 homes listed in the MLS for sale today.  The Sequim foreclosures represent about 1/2 of 1% of the inventory.”  My argument in that article is that if you are a buyer, it is highly unlikely that you will find your retirement dream home in the foreclosure database.  There just are not very many Clallam County foreclosures.

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Sequim foreclosures make up a very small part of the market.  We all hear about the massive number of foreclosures in Las Vegas and Phoenix and several other cities around the county, and people talk about stealing houses for incredibly low prices, but that market does not exist in Sequim.  That’s actually good for local homeowners who hope to sell their homes.  The last thing they need is a glut of foreclosures on the market that would make selling their homes so much harder than it already is.  But it’s also good for retirees who are planning to buy a home in Sequim now.  The last thing a buyer wants is an unstable market with lots of foreclosures.  Buyers want to know they are buying in a stable market so their own investment will be sound in the years ahead.  There just are not very many Sequim foreclosures.

To make the point objectively, here is the entire list of all foreclosures listed for sale right now in Sequim and Port Angeles combined.  Actually, these are all the foreclosures in all of Clallam County.  In our MLS these are called “bank owned” because they have been foreclosed and are now owned by the banks.  As you can see there are only 33 foreclosures for sale in Clallam County, and there are only 6 Sequim bank owned foreclosures in all of Sequim as of today (6/24/2011).  There are only 27 foreclosures in all of Port Angeles.  The first column shows the MLS numbers, and the last column shows the total Days on Market (DOM).

Sequim Foreclosures

Sequim Foreclosures Few and Far Between

Clients ask me regularly, “Can I find a nice 3 bedroom, 2 bath ranch style home on one level on a great lot in a nice area at a fraction of the cost of other homes?”  The answer with respect to Sequim foreclosures is, “No.”  Why do I say no?  First, there are not very many Sequim foreclosures.  There are only 6  Sequim foreclosures listed for sale in the MLS today.  We have 835 homes listed in the MLS for sale today.  The Sequim foreclosures represent about 1/2 of 1% of the inventory.  Compare this to Las Vegas.  Foreclosure filings were reported on 14,940 properties in Las Vegas in August, one in every 53 housing units, which is more than 6.7 times the national average.  With only 6 foreclosures in Sequim, it is highly unlikely you will find your dream home in that short list.

Second, most of these foreclosures are not what retirees are looking for.  Most of them are not the ideal floor plan, or they are not in an attractive area, or they are in such disrepair, retirees don’t want them.  Even millionaire investors are not buying these homes.  That ought to tell you something.

Sequim Foreclosures and the MLS

If you would like to look at any of these foreclosures, simply use the MLS number or the address to look them up on this Sequim MLS site.  You’ll see full photographs and details about the property.  And if you want to view any of these Sequim foreclosures, just email me or give me a call at 360-775-5424.

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How to Buy a Foreclosure is a subject I’ve written about many times on this real estate blog, but today I want to focus in on a very important part of the process that very few people know about, including Realtors.  Banks that foreclose on homes hire outside companies to list and market their foreclosed properties.  Those companies hire contractors who clean up and maintain the homes, and they also hire Realtors to list the property.  Just in this little chain of people and companies, you can get the idea that there are many intermediaries.  But it gets better, or should I say it gets worse.

These companies hire asset managers, who coordinates many of the details necessary to manage the home and get it sold via all these other parties.  This makes the asset manager the primary point of contact and decision maker for the banks, and it is the asset manager who the listing Realtor communicates with when an offer is presented by a selling Realtor.  Get ready for the nightmare.

Asset managers typically only need a high school education, and many of the job applications on the Internet for asset managers indicate they only need two years of related real estate experience, which could have been working for a mortgage company during the mortgage fraud and real estate market crash.

No wonder they don’t understand the process of negotiating and documentation.  Without going into great detail, let me tell you that asset managers never put a counteroffer in writing.  Normally, of course, a buyer makes an offer and a seller will often counteroffer, which they do in writing.  Not the foreclosing banks.  Their asset managers do not understand basic contract law and real estate practice, and . . . they definitely do not understand the negotiating process.  Instead, the asset managers give their listing agent some vague notion of what they would like, which often is impossible.  (For example, it is impossible to get a lender’s letter requiring repairs before there is mutual acceptance on all terms and before an appraiser has even been appointed by a bank which hasn’t even been hired to process a loan yet.) There are many examples of ridiculous and foolish responses by asset managers.

Asset managers not only require the selling Realtor to draft the bank’s counteroffer for them when the Realtor represents the buyer, but . . . and I’m not kidding or exaggerating here . . .  the asset managers also want the selling Realtor to literally guess what the banks’ counteroffer should be.  I kid you not, the listing agents are typically unable to articulate their own client’s position.  Their own clients (the asset managers) refuse to put any counteroffer in writing or articulate what they want in writing!

This can put a buyer in a twilight zone of trying to buy a home, having agreed upon a price, but unable to get the bank’s representative to cooperate using standard Washington state real estate documents and processes.

No wonder our foreclosure market is such a disaster!  There’s no adult supervision at these institutions.  If you do want to buy a foreclosure, I understand the process, as frustrating and time consuming as it can be.  I’d be glad to help you walk through this labyrinthian process, if you have a lot of stamina.  If necessary, I’ll bring some adult supervision to the process on your behalf.

Fore more about the foreclosure process, the documents and timelines, and the processes involved in buying a foreclosure, simply do a search on this blog for “foreclosures” (without the quotes).  There are dozens of articles.

See Foreclosures here.

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