The Short Sale Firm interviewed for The News Tribune
Short sales of homes soar in Pierce County
 PHOTOS BY DEAN J. KOEPFLER / THE NEWS TRIBUNE
Kori Hinkle, 16,
stands in the empty bedroom of her family’s Graham home before a short
sale closed recently. “I could cry right now if I let myself,” she said
as she texted a friend. Her mother, Renee, holding Elway the poodle,
and husband Clint bought the home in 2006 for $219,000 and recently
sold it for $178,000.
 PHOTOS BY DEAN J. KOEPFLER / THE NEWS TRIBUNE
Selling their first
home in a short sale was bad enough, but Renee Hinkle and husband Clint
were also frustrated after losing three offers because buyers tired of
waiting for banks to approve the terms. Clint Hinkle, a sergeant at
McChord Air Force Base, said an anticipated job transfer and an illness
in his family forced them to sell in the depths of the housing crisis.
Real estate short sales are complicated for both buyers and sellers. Here are a few tips that real estate industry experts say might lessen the stress involved with such transactions.
FOR HOMEOWNERS First, consider whether a short sale is the best option. If you want to stay in your home, your bank might consider a loan modification to reduce your monthly payments. Foreclosure is another option, and in some cases makes sense, said Ed McFerran, a Tacoma real estate attorney. Talk with your lender. “Before you put your house on market, talk with your lender first,” said John Mechem, spokesman for the Mortgage Bankers Association. Your bank must agree to take less than you owe on the mortgage. However, some say they’ve had more success contacting lenders with an offer.Theresa Bastian, a real estate agent with Keller Williams in Tacoma, said that in her experience banks have been less likely to discuss short sales as an option unless the homeowner already has an offer. Document your hardship. Be prepared to provide proof to the bank that your financial situation makes a short sale necessary. “Make sure you have your financial documents,” Bastian said. “Anyone who tells them that they can get their short sale approved without that is lying.” Hire people with short-sale experience. Short sales are complicated transactions. Fumbles and missteps in the negotiations can draw out the process – and might result in an unwanted foreclosure. Be wary of third parties promising you a profit off the sale. McFerran’s office warns that “side agreements” offered by “consultants” that promise homeowners money might be fraudulent.
FOR BUYERS Don’t fall in love with one house. Glenn Kelman, CEO of Redfin, an online real estate brokerage in Seattle, said that buyers looking for short sales need to consider several properties. Be prepared for deals to fall through. There’s a lot of uncertainty with short sales, and real estate experts say don’t consider the house yours until you have the keys. Do your research. Finding out whether the property is headed for foreclosure and how much is owed can help strengthen your offer. Remember that the bank, not the seller, has the final say. The seller might accept an offer, but that doesn’t mean the bank will. The banks want to know that the selling price is in line with the current market. They determine this by commissioning a quick appraisal – called a bank’s price opinion. Be wary of sellers’ with two mortgages. If that’s the case, then both lenders need to cooperate and approve the sale. If you have an agreement from the first lender, but not the second, then you don’t have a deal, Bastian said. Kelly Kearsley, The News Tribune • Short sales damage credit scores, are more complicated The transactions, called short sales, allow homeowners to get out of loans they can’t afford. The properties range from a million-dollar Gig Harbor mansion to an 800-square-foot South Tacoma house priced at less than $100,000. Most short sellers bought property in the real estate frenzy a few years back when mortgages came easy, down payments were optional and home values climbed by double-digit percentages. Then the bubble burst. The median home price began falling more than a year ago. At $239,950 in February, it’s 16 percent below its peak of $285,000 in fall 2007. The number of short sales has ballooned in the past year. About 14 percent of homes for sale in Pierce County are advertised as short sales on the Northwest Multiple Listings Service. That number jumps to 30 percent of homes with sales waiting to close. Short sales have their perks: Homeowners might salvage some of their credit and fend off foreclosure. Banks can save time and money by not having to foreclose and sell the home themselves. And buyers can often find bargains. But the deals are far from easy. Real estate experts warn that short sales are rarely a sure thing. The process can take months, offers must be approved by the seller’s bank and deals can fall through at the last minute. A NOTICEABLE INCREASE There are almost 900 short sale listings – from among a total list of 6,400 homes for sale – on the market in Pierce County, according to Northwest Multiple Listing Service data provided by Dick Beeson, broker/owner of Windermere/Commencement Associates. The number of homes sold as short sales marched upward each month last year from a scant 16 in January to 63 in December, for a total of 541 short sales completed in 2008. Expect far more this year. As of last week there were already 425 pending short sales – meaning an offer has been made on the home, but the sale hasn’t been completed. It’s no surprise, of course, that Pierce County should have so many short sales, since it leads all other counties in the state in the rate of home foreclosures. In King County about 1,000 homes are advertised as short sales from more than almost 13,000 active listings. Real estate agents in Pierce County have noticed the increase. Theresa Bastian, an operating partner with Keller Williams in Tacoma, estimated that nearly 20 percent of her office’s business is short sales. The office just started offering short sale support groups for real estate agents working with the deals to brainstorm problems and ask questions. Jerry Filoteo and Rizwan Awan, two agents with Windermere/Commencement Associates, were seeing so many short sales that they formed The Short Sale Firm. They handle about 10 short sales each month. “Everything right now is short sale, short sale, short sale,” Awan said. “For our business to survive and to keep food on the table, we had to change and adapt our business to market conditions.” EVERYONE’S AFFECTED The sellers are a mixed bag of unlucky investors and homeowners, some of whom can afford their mortgages but need to move and others who are hoping to sell their homes before the bank forecloses. The Short Sale Firm’s clients include military colonels and Microsoft workers. “We have all types of people,” Filoteo said. “There are people who didn’t know what they were doing, first-time home buyers, people who were victims of predatory lending. …” The properties are equally diverse. One listed last month, according to the Multiple Listing Service, was a four-bedroom, 31/2-bath, 4,800-square-foot Northeast Tacoma home with views of Commencement Bay selling for $900,000. Also for sale: A 1,900-square-foot four-bedroom, two-and-a-half bathroom home in a Spanaway subdivision for $253,000. Though you can find short sales in all price ranges, the majority of properties advertised are listed for less than $250,000, according to data from Beeson. Spanaway boasts the most number of homes for sale as short sales, though parts of Bonney Lake, Puyallup and East Side Tacoma aren’t far behind. In a recent search for Spanaway homes with three or more bedrooms priced under $200,000, real estate agent Bastian turned up 42 listings. Of those, only 10 weren’t short sales or foreclosed homes. LOSING OFFERS The lengthy process frustrates sellers. Renee Hinkle and her husband lost three offers on their Graham-area home because the buyers tired of waiting for the bank to approve the short sale terms. The couple bought their home in 2006 for $219,000. Hinkle’s husband is in the Air Force and the family of three had always lived in base housing. “We really wanted a home of our own,” Hinkle said. “We thought it was a good investment at the time.” The family put a couple of hundred dollars down on the house and that same year borrowed against its rising value to pay some bills. They had planned to stay in the home for a while. But last year, the Hinkles found themselves needing to move. Hinkle’s husband anticipated a job transfer, Hinkle lost her job and the family wanted to be closer to Hinkle’s mother-in-law, who was sick at the time, in Colorado. They put their house on the market in February 2008. “We just wanted to break even and be accountable for the debt,” Hinkle said. “But even that didn’t happen.” The house sat unsold for months. Buyers would make offers. The family would submit them to their bank, and then wait. The bank “just wouldn’t respond,” Hinkle said. In late February, they sold the home for $178,000. Their bank said it will forgive their debt, a difference of about $56,000 from what they owe on their loans and the final sale price. “It was necessary,” Hinkle said. “But I would hope not to have to go through it again. I think we had bad luck.” DIFFICULT DEALS For home buyers, short sales can offer amazing deals – if they can stomach the process. A recent steal: A new, 3,300-square-foot home in University Place sold last fall for $379,000 – down from its original listed price of $649,950. An investor bought the lot in 2005 for $180,000 with plans to build a house and sell. He said that real estate agents thought he’d have a buyer before the home was even built. Instead the house sat on the market for three years. The short sale saved the investor from foreclosure. But buyers looking for bargains need to be prepared for as much disappointment. In your standard home sale, the seller accepts an offer and then usually agrees not to entertain any others until the sale closes or falls through. With short sale listings, the sellers seek multiple offers and continue to solicit them even after they’ve accepted one. “We don’t want to rely on one offer because the buyer might not go all the way,” said Filoteo, of The Short Sale Firm. That uncertainty was why Michelle McCord decided to stay away from short sales as she shopped for a new home last summer. But the family – the McCords have three daughters – wanted to be in Spanaway, near McCord’s sister and her parents. She found short sales unavoidable. “It seemed like 90 percent of what we looked at was a short sale, especially if it was built in the last nine or 10 years,” McCord said. The McCords found the house they wanted and made an offer in November. The sellers accepted it, but the deal requires approval from the sellers’ bank. That still hasn’t happened. They have since looked at 10 more houses and made an offer on another home. “At this point, if the home we are trying to purchase now doesn’t go through, I really think I’m going to give up on trying to buy a house,” McCord said. “I’m so tired. It’s like a full-time job.” Kelly Kearsley: 253-597-8573 blogs.thenewstribune.com/business |
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