The Short Sale Process Defined in the Seattle Market
What Is A Short Sale?
A short sale is a work out program that allows the customer to sell the home for less than total amount owed. Upon final approval, a short sale can help Seattle homeowners avoid further collection activity or foreclosure action.
Documents Required To Begin An Application
From the REALTOR
• Fully executed listing agreement
From the Homeowner
• Signed and dated financial worksheet listing all monthly expenses.
• Signed and dated hardship letter (why they are unable to pay the mortgage).
• Letter authorizing the REALTOR access to information on the account. It must be dated and include the last 4 digits of the borrower’s Social Security Number, their signature, the full account number and the property address.
Additional Information
• Short sale approval is good for 30 days. If closing does not occur within 30 days, the entire short sale package may need to be resubmitted with updated information, or the approval process may need to start over.
• REALTOR or homeowner inquiries should be directed to the negotiator assigned to the file, whose information will be communicated during the introduction call.
• REALTORS are generally allowed 5% to 6% commission based on investor rules. If dual agency applies, maximum commission is 5%. Some investors operate on a reduced commission structure and the actual commission schedule can be confirmed during the introduction call.
• This must be an “arms-length” transaction. The property may not be sold to anyone the seller has a close personal or business relationship with including family, friends or neighbors.
• During the introduction call the following will be addressed:
- Commissions
- Fees and costs
- Pricing of the property
- Timeline
• In order to reduce the 37 day response time the liquidation team is strongly recommending that the homeowner and/or REALTOR notify their Home Mortgage of their intention to sell their property as soon as the listing contract is signed. This will allow us to complete the property valuation and borrower financial evaluation prior to receiving an offer. This significantly reduces the short sale decision time on a submitted offer.
• In some cases investors and/or PMI companies require the mortgag
ors to sign an unsecured note for some or all of the difference between the net proceeds from the sale and the total amount due. This is communicated as part of the response on a short sale offer.
This is our estimated timeline based on business days and assuming all documents are submitted in completed form and timely.
• Complete short sale application received
• Short sale application activated
• Complete application assigned to negotiator
• Incomplete application will delay process
Event Timeline
(Business Days)
Total Process
(Business Days)
• Complete short sale application received
• Short sale application activated
• Complete application assigned to negotiator
• Incomplete application will delay process
Event Timeline
Total Process
(Business Days) 37
• Complete short sale application received
• Short sale application activated
• Complete application assigned to negotiator
• Incomplete application will delay process
• Negotiator initial review
• Introduction call to REALTOR and homeowner
• Property evaluation completed (appraisal or interior BPO per investor requirement)
Additional Steps:
• Mortgage insurer approval
• Investor approval
• Additional liens negotiated by REALTOR
• A completed net sheet/HUD (our payoff is not necessary)
• Fully executed purchase contract with all pages initiated by buyers(s) and seller(s).
• Buyer pre-qualification letter or proof of funds if cash offer.
All items above complete
• Application decision
• Decision letters issued
Property Tax Assessments in the Seattle-Metro Area
Did You Know?
In Seattle, Washington, property taxes account for 30 percent of tax revenues for the entire state. A large percentage of these tax revenues go toward educating our community’s young people. In addition, our police, fire, libraries, and parks and recreation are funded with this money. Each year at this time, Seattle, Washington homeowners receive their annual property tax assessment. Though many of us greet these statements with some trepidation, the assessment presents a perfect opportunity to think about your home’s value, and the value it brings to the community.
By keeping school levies, community improvements, and public services in mind, you’ll have a greater sense of where your hard-earned money is going.
How Do They Determine Values?
Disputing Your Assessment
Your Tax Assessment
Five Rights to Selling Your Property in Seattle
What Are Your Rights?
In order to sell your property in Seattle in the smallest amount of time and for the greatest return, you need to make sure that it gets maximum buyer exposure by following the five rights: house right, yard right, price right, marketing right, and using the right REALTOR®.
House Right
It’s important to make sure your house is in ideal condition for prospective buyers and other agents. Clean everything thoroughly, including walls, closets, and appliances. Eliminate clutter and excess furniture. Open window coverings and turn on lights for showings.
Yard Right
Curb appeal is everything. Keep flowerbeds neat and weed-free. Walkways should be swept clean. Lawns need to be mowed and regularly watered in the summer.
Price Right
Marketing
The SONNY KWAN Group
The Right REALTOR
I’d be delighted to talk with you about how we can work together to get the best price in the shortest time for your home.
Sonny Kwan - VP of International Marketing -John L Scott 206-819-8228
Fighting Mold and Mildew - What Seattle residence are accustomed to
Did you know?
There are over 100,000 known species of mold, a.k.a. mildew, and it can grow in almost every environment. Since it rains in Seattle, mold can be found throughout the house, it is most likely in your bathroom, kitchen, basement or any place there is excess moisture. Mold and mildew are not only unsightly, left untreated they can create or exacerbate health problems like asthma, headaches, sinus problems, and even depression. While it’s impossible to rid your home of mold completely, there are preventive and treatment methods to keep your home as safe and mold-free as possible. Properties in Seattle are not the only place where mold and mildew pop up. Any homes with moisture that gets trapped are prone.
Testing for Mold
If you suspect you have a mold problem, you can hire a professional to come run tests or you can rely on a do-it-yourself test that can be purchased online. Most “at-home” tests require you to send your sample to an outside lab for results, but it will likely still be less expensive than hiring a professional. For more information on mold testing, contact your Realtor or the City of Seattle health department.
Stop It Before It Starts
Most mold feeds on moisture. In order to keep it at bay, you need to keep your home as dry as you can. Clean rain gutters to prevent flooded basements and rotted roofs. Repair leaks and cracks in the floor, foundation, or walls. Apply a waterproofing compound to basement floor, walls, and any cracks you find. Keep a dehumidifier in rooms that tend to be damp and keep them as warm as possible during winter.
Getting Rid of Mold
Cleaning an area of mold that is only a few square feet can be done yourself with disinfectants and scrubbing. Areas larger than 30 square feet will most likely require the help of a professional. Since Seattle is such an eco-friendly city, for a green approach, tea tree oil, a powerful antibacterial and antifungal agent, will kill mold when mixed with warm water. No matter how you choose to get rid of mold, you must be vigilant about keeping the area dry and clean, or the mold will come back. Summer months in Seattle are not to be taken for granted, mold still exists in these temperate climates.
Let Me Help
Top Tips for Home Sellers
Use a Realtor®A Realtor® is an agent or broker who belongs to the National Association of Realtors and subscribes to its strict Code of Ethics. Along with maintaining a high level of knowledge about real estate and marketing your home to potential buyers, a Realtor can help you evaluate and negotiate offers, remove contingencies, and assist in the escrow process. Assemble a Trusted TeamIn addition to choosing the right Realtor, you should also enlist the services of a title insurance representative, a homeowner’s insurance agent, and an escrow representative. Make Your House Sparkle!
New listings often get a lot of attention. So make sure your house is “show ready” before the keybox is on the door or the sign is in the yard. Ask your Realtor to advise you on which inexpensive touch-ups can reap the greatest reward. Also, get his or her opinion on more extensive cleaning, repairs, or renovations before you arrange for them.
Home Values in Your Seattle Community
Wondering about
HOME VALUES in Your
Community? (Seattle)
WHO SHOULD YOU BELIEVE?
WHO SHOULD YOU BELIEVE?
WHO SHOULD YOU BELIEVE?
Are you trying to time the market in order to make the smartest real estate move?
We all wish we had a ringing bell to alert us of the perfect time to buy or sell a
home, but even industry experts disagree about the condition of the current market
and when a given real estate cycle begins or ends.
For instance, during the first quarter of 2008, the S&P/Case-Shiller Index
reported that their 20-city composite saw a 12.7 percent year-over-year decline,
while the OFHEO (Office of Federal Housing Enterprise Oversight) reported
that national prices were up 0.6 percent. Meanwhile, NAR (National Association of Realtors®)
marked an annual decline of less than1 percent.
Why the discrepancies? First, how each of these bodies evaluates numbers is vastly
different. The Case-Shiller Index only accounts for numbers in 20 metropolitan
service areas, excluding many markets that consistently show home appreciation.
In addition, Case-Shiller only counts repeat sales of the same house and
doesn’t include condominium and new construction sales, which can drastically
affect home appreciation in a specific community. In contrast to national numbers
quoted by the Case-Shiller Index, Oregon, Washington, and Idaho multiple listing
services look at all home sales, including condominiums and new construction, for
its reports. In the meantime, none of these national experts can tell you exactly what’s
happening in your local community. A report on the Seattle housing
market by OFHEO found that homes in Seattle appreciated over 64
percent the past five years. And, as you can see , home values here in King County remained
even with last year’s numbers while the national data aggregators showed decreases
from 3-14 percent year over year. The statistics quoted in the media don’t
offer much help in terms of understanding the current value of a single home. When
the median price increases, this can reflect higher overall home values. Or,
it can simply mean that more expensive than inexpensive homes sold during a period.
A decrease in the median price usually indicates that more inexpensive
than expensive homes sold during that period. Many foreclosure properties
are in the lower price ranges. In areas where the median sales price is declining
dramatically, a higher volume of lowerprice foreclosure sales could be a
contributing factor. When it comes to timing the market,
make sure you have all of the facts before making a guess. There is no ringing bell,
but there is plenty of accurate information to be had…if you know where to look.
Your First Home, Buy in Seattle
y o u r f i r s t h o m e
Congratulations! You are thinking of buying your first home in Seattle. You are about to enter a wonderful new chapter in your life that we know can be both exciting and scary. Many first-time home buyers will contemplate the decision for years before taking any action, even a first step. This brochure helps you to take that first step.
Once you purchase a home, you will soon reap the tax advantages of home ownership and the opportunity to build equity (or wealth) over time. According to the Federal Reserve, the median household wealth accumulation for a homeowner was $184,000; in comparison, the median net worth of a renter was $4,000. It’s time to start taking those steps!
Step 1
Find the right help to find the right home
You’ve probably already been using the Internet to search for homes in Seattle, financing options, and homebuying information. You will find many of those resource links included in this brochure. We also encourage you to contact a John L. Scott Residential Specialist at the very beginning of your quest and put the Sonny Kwan Group to work for you. John L. Scott Residential Specialists are Realtors® and subscribe to the Realtor® code of ethics. He or she will help you find what you are looking for in a home, in the area you want, and at a price you can afford. When you find a home that you want to make an offer on, your Real Estate Team will research the market and let you know if the price is fair. He or she can help you negotiate an offer and advocate on your behalf throughout the process.
The team at the Sonny Kwan Group can help take the mystery out of the purchase of your new home and show you the ropes. There are hundreds of little details in buying a home, and some details that are not so little—like property lines, easements, earnest money, and the time allowed for home inspections (to name a few). Don’t worry, you will be involved throughout the process and if you have any questions along the way, do not hesitate to ask Sonny Kwan or his associates.
F i n d t h e r i g h t R e a l t o r ®
You may already be working with a trusted real estate agent/broker.
If you aren’t, take the time to find the right Realtor® to meet your needs. Ask family, trusted friends and coworkers for Realtors® with whom they have worked and would recommend.
L e a r n a b o u t t h e m a r k e t
Every market in the Northwest is a little different but, in general, now is an excellent time to purchase your first home in Seattle if you find the right home at a fair price. At the time of this printing, interest rates on fixed-rate mortgages are near historic lows. If you want to know what a percentage rate can do to a monthly payment, go to johnlscott.com and follow the mortgage links to the mortgage calculator and plug in some numbers. You will be amazed. The Seattle real estate market is a much more balanced market today with buyers finding many more properties from which to choose. That wasn’t the case over the past few years. Greater selection means the chances are better you will find the right home for you with the amenities you are looking for.
W h e r e Seattle i n t h e r e a l
estate c y c l e ?
That is the big question isn’t it? We are at the beginning phase of the next real estate cycle. Some people are getting good deals out there right now because some sellers are motivated and need to sell today. However, in general we do not think we will see across-the-board dips in prices. Here is why:
• In general, Seattle and the Pacific Northwest has an extremely strong economy: unemployment is under five percent (according to the U.S. Department of Labor) and we are projected to add more than two million residents in the next 12 years.
• Seattle and the Pacific Northwest has fewer subprime loans in danger of foreclosure so, unlike what is happening in some states, we have many fewer “distress sales” or foreclosures.
• The historic low mortgage rates are turning the market around. If you are renting, you are not alone. There are thousands of people just like you who want to buy a home and are just waiting to see what the Seattle market is going to do. As these people enter the market, supply will go down and the market will heat up, especially in the more affordable price ranges (under the median/midpoint).
Step 2
Get Qualified for a Loan and Find Out How Much Home You Can Afford
This is another one of those “first steps” you need to take. It costs little or nothing to determine if you can buy a home right now and the price range in which you should be looking. Most first-time home buyers are surprised at what they learn and wish they had started the process a long time ago. Your John L. Scott Residential Specialist will help you find a reliable loan officer.
D o y o u h a v e e n o u g h m o n e y
t o b u y a h o m e ?
If you have saved some money for a down payment and you anticipate living in that home or condominium for three to five years, the answer is almost always yes. It is time for you to start building your own wealth instead of contributing to somebody else’s with your rent payments. In most cases, the interest portion of your mortgage payment and your property tax payments are tax deductible. There are also valuable financial assistance programs for first-time home buyers.
F i n a n c i a l a s s i s t a n c e p r o g r a m s
There are many federal programs and dollars available to assist first-time home buyers. Get on the computer and start with the HUD site www.hud.gov. Basically, Down Payment Assistance Providers (DAP) are government agencies that are developed to help you—the first-time home buyer. Otherwise call Sonny Kwan.
The most common and available DAP is an FHA (Federal Housing Authority) loan. FHA loans are becoming more popular and recent changes in FHA loan limits have expanded the number of people and properties that qualify. In some cases, you can get an FHA loan for as little as 3.5% down.
Many first-time home buyers don’t realize you can also use up to $10,000 from your IRA to purchase your first home. In many cases, you can use gifts or loans from family members as long as you disclose this information to the lender. The federal government knows that first-time home buyers are good for the local and national economy.
Lenders look at three things when you apply for a mortgage: your debt-to-income ratio, your down payment, and your credit score. If you pay your bills on time, do not carry a lot of debt, and have a down payment needed for the loan program, you will be fine. Getting prequalified by your lender is an important first step in actually starting to look for your first home, and you will have real negotiating power when you do find the right home. If you don’t quite qualify, your mortgage expert should be able to suggest a plan with steps that will lead to qualification over a period of months.
The Sonny Kwan Group will help you to find a qualified mortgage consultant who can discuss your loan options with you.
Well, this is a giant step isn’t it? By now, you know how much you should spend on a home. The Sonny Kwan Group at John L. Scott will help you to find the best home that is within your budget and meets your needs. Using your Residential Specialist’s market knowledge and negotiating skills, together you will craft a written offer that details the amount of the offer and the conditions of the sale. If the seller “counters” your offer, your Residential Specialist may need to negotiate until you both agree to the terms of the sale. Your John L. Scott Residential Specialist can advocate on your behalf at your direction during these negotiations. You will be very much a part of all the decisions, and your questions will be welcomed.
Step 4
What to Do Next – A Checklist
There is still a lot of work to do after your offer is accepted. Sonny Kwan guide you through the process. Among the next steps:
G e t a h o m e i n s p e c t i o n
Many offers are made contingent on a home inspection. You and your Residential Specialist should have agreed on a reasonable length of time for the inspection and include it into the offer.
An inspection will tell you about the condition of the home and can help you avoid buying a home that needs major repairs, or help you negotiate with the seller to have the repairs made before you buy the home.
S h o p f o r h o m e o w n e r ’ s i n s u r a n c e
Lenders require homeowner’s insurance to cover the collateral for the loan (the home). Consult with Sonny Kwan if you have questions.
C o m p l e t e t h e p a p e r w o r k n e c e s s a r y t o c l o s e y o u r l o a n
Your loan officer can advise you as to exactly what is needed.
D o n ’ t f o r g e t t o s i g n u p
f o r u t i l i t i e s !
You want to be sure that the lights come on and water flows from the faucets when you move into your new home. Go to the Our Services tab on johnlscott.com, then click on Home Services.
You can connect essential home services online for no additional fee as well as compare service providers for telephones and high-speed internet connections.
C o m p l e t e t h e t r a n s a c t i o n
You are now ready to complete the transaction. This is also called “settlement” or “closing.”
Closing is where you need to read and understand the documents you are signing. Ask if you don’t understand any part of the document. There are no dumb questions when it comes to a purchase of this size.
Resources
The following resources are more than links to information, they are sources for down payment assistance and low interest loans for many household incomes.
F e d e r a l H o u s i n g
A d m i n i s t r a t i o n ( F H A )
FHA operates within HUD and has the primary responsibility for administering the government home loan insurance program. This program allows a first time home buyer, who might otherwise not qualify for a home loan, to obtain one because the risk is removed from the lender from FHA who insures the loan for the lender. The most common loan offered by FHA only requires a 3.5 percent down payment and that down payment can be a gift from a relative, non-profit organization or government agency.
U S D e p a r t m e n t o f H o u s i n g
a n d U r b a n D e v e l o p m e n t
( H U D )
This is where you will find valuable leads and information about all federal programs that assist first time home buyers, including FHA, Fannie Mae or Freddie Mac.
A m e r i c a n D r e a m D o w n
P a y m e n t I n i t i a t i v e ( A D D I )
www.hud.gov/local/wa/community/home/
Many local agencies that assist with firsttime home buyers.
U S D e p a r t m e n t o f
A g r i c u l t u r e R u r a l
D e v e l o p m e n t l o a n
p r o g r a m s
www.rurdev.usda.gov/wa/housing.htm
These programs are for rural development and you may qualify.
H a b i t a t f o r H u m a n i t y
Not all real estate practitioners are Realtors®. The term Realtor® is a registered trademark that identifies a real estate professional who is a member of the National Association of Realtors® and subscribes to its strict Code of Ethics. Here are nine reasons why it pays to work with a Realtor®.
1. You’ll have an expert to guide you through the process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert like Sonny Kwan will help you prepare the best deal, and avoid delays or costly mistakes.
2. Get objective information and opinions. Realtors® can provide local community information on utilities, zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
3. Find the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your Realtor® to find all available properties.
4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Sonny can advise you as to which investigations and inspections are recommended or required.
5. Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family.
When a property is marketed with the help of a Realtor®, you do not have to allow strangers into your home. Your Realtor® will generally prescreen and accompany qualified prospects through your property.
6. Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with a professional who is immersed in the industry and knows the real estate language.
7. Realtors® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. Realtors®, on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.
8. Ethical treatment. Every member of the National Association of Realtors® makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. As a customer of a Realtor®, you can expect honest and ethical treatment in all transaction-related matters. It is mandatory for Realtors® to take the Code of Ethics orientation and they are also required to complete a refresher course every four years.
