Will these never before seen interest rates prompt buyers back into buying again or will they sit on the sideline in hopes of obtaining the rumored 4.5% government subsidized rate when the new Obama administration takes office. 

Below is a chart obtained from MSN Money detailing available rates, fees & points available in the greater Seattle-Tacoma area.

Loans shown are 30-yr. fixed conforming loans available in Seattle-Tacoma, Washington.

photo credit: respres

 With rates this low, anyone looking to purchase a primary residence or investment property definitely needs to look to the foreclosure auction and short sales or REO/bank owned properties to get twice the financial benefits.  By buying a distressed property you can pick up a new home at discounts of 20-45% under today’s market value.  Combine that with never before seen low interest rates and you can increase your buying power dramatically.

As of tonight, there are 307 properties scheduled to go to auction next Friday.  Should that number hold out, this upcoming week would turn out to be the largest, in terms of properties taken to sale, that King County has ever seen. 

A lot can happen between now and then and several properties will end up getting postponed or cancelled before going to auction, but with such a high numbers of scheduled sales,the sheer volume of homes this week will definately  present an opportunity for the savvy real estate investor to pick up a property or two at rock bottom bargain prices. 

If you are an investor or perhaps just a homeowner looking to get a great deal on your next property purchase then you owe it to yourself to look closely at buying at the auction.  There is simply no better vehicle today that affords the low prices that we have seen lately on the courthouse steps.

Here are some of the numbers broken down by city for Friday’s King County foreclosure auction.

City	No. of Properties Scheduled	Hot Deal
Seattle	83 properties in Seattle currently scheduled for auction	Large house less than 10 blocks from Green Lake. EMV = $550,000  EOB = $265,000.  That is 48 cents on the dollar
Redmond	7 properties in Redmond scheduled to go to sale	Close to Marymoor Park and Lake Sammamish.  EMV = $475,000  EOB = $236,000.  50 cents on the dollar!
Bellevue	8 Bellevue properties	Factoria 1 bedroom 1 bath condo.  EMV = $200,000  EOB = $120,000.  60 cents on the dollar!
More stats by city:
	Kirkland	14 properties scheduled for auction
	Issaquah	8 properties
	Renton	18 properties
	Kent	29 properties
	Medina	1 property
	Mercer Island	4 properties
	and many, many more….

Every Tuesday at 5:30 p.m., Real Estate Investment Firm, holds a FREE workshop on “How to buy foreclosures” at their downtown Redmond WA office location.  I would encourage anyone who may be interested in capitalizing on current market conditions and wants to buy their next property at a significant discount to attend this Tuesday. 

It’s nice to know that the people at Forbes and the 700+ real estate professionals they surveyed for this piece echo the same sentiments that we at Real Estate Investment Firm have been saying for several months now.  When you look at the fundamentals of the Seattle area real estate market and the local economy, there is no better place to be to position yourself to make large gains when the turn around occurs.

You can read the entire article here.

As reported in a Seattle Weekly article on November 12, 2008, Steel talks about the current foreclosure market and how his company plays a part in it.  Helping thier investors find the “Hot” properties at auction each Friday or helping clients who are behind on their monthly mortgage payments find a buyer, through a short sale, to avoid foreclosure all together.

To see the full article in its entirety, go to http://www.seattleweekly.com/2008-11-12/news/foreclosure-vultures/

 While the current market necessitates more of a buy and hold strategy once in a while, a house ends up at the foreclosure auction and the numbers are so good you still have an opportunity make a decent profit from a fix-and-flip.  That profit can quickly evaporate into thin air however, if you hire the wrong crew to perform the rehab.  One of the keys to successful real estate investing is knowing what projects will bring value to your property and which will only take money from your bottom line.  When rehabbing a property it is crucial that the general contractor and his crew and the various sub-contractors involved understand that the needs of an investor are quite different from the average homeowner.  For the investor, it is always about the bottom line.  What will the job cost, and what will it return in dollars. Speed, quality and skill are what a successful rehab needs from his contractors, especially in this uncertain marketplace.

 One company and owner I have come to know very well in the recent months is Jerzy Radka, owner of Jerzy Radka, owner of Greenwood International.  Greenwood is a family owned business based in the Seattle area.  The founder and owner, Jerzy Radka, is also a real estate investor and he intimately understands what it takes to turn a flop into a successful flip.  After working with Jerzy and his crew on several projects I learned very quickly there isn’t very much this guy can’t get done.  His company is a complete one-stop-shop for all your home remodeling and rehabbing needs.  His crews work quickly and efficiently throughout the project, jumping from one task to the next as they work through the punch list.

To learn more about the type of work and projects that can be completed by Greenwoodii, please visit the following page: Greenwoodii International   

I strongly encourage anyone who is about to tackle a remodeling or rehabbing project to give Jerzy and Greenwood a call.  And if you want to learn how you can Jerzy and Greenwood a call.  And if you want to learn how you can purchase or invest in foreclosures in King, Snohomish or Pierce County, please visit www.realestateinvestmentfirm.com

The roller coaster swings of the stock market, the federal bailout package, the collapse of WAMU, Fannie Mae and Freddie Mac and much, much more have created what I can only call the perfect storm of opportunity to buy these properties at discounts of 30-45%.

With such a small amount of liquidity available these days, the investors of a year or two ago can no longer play in this arena.  Since there are no more stated income loans, little or no down loans, etc. many real estate investors are forced to sit on the sideline and a new breed of investor has emerged to capitalize on this unprescendented opportunity. 

Today’s investor is likely to work at companies like Microsoft, Google, and Boeing, etc.  They do not see real estate investing as the path to overnight riches and a lavish lifestyle.  Rather they see real estate investing for what it should be.  What they do see though is opportunity. 

With the banks taking the radical ^{(Yes that is sarcasm)} position that for a person to qualify for a home loan they need to be able the document the following items:

1.  A steady and verifiable source of income (ie. they need to have a job)

2. Verifiable liquid assets (money in the bank)

3. A history of paying back loans (good credit)

many would be buyers and investors have been frozen out of the market.  This seemed to reach its peak during the beginning of October when you had the Dow Jones dropping like a lead balloon and Congress unable to come together at first regarding the bailout package.  This caused uncertainty and resulted in a 90% drop off of properties that get purchased by 3rd parties at the foreclosure auctions.  When 3rd parties don’t buy, the banks in turn end up with even more REO properties and they quickly realize that unless they act dramatically they will end up taking back even more of the foreclosure properties that go to auction.  When this happens the only real remedy the banks have is to stimulate 3rd party interest in the properties again.  The only way they can do that is to dramatically drop their opening bids down to levels that will assure that the foreclosures end up getting bid on at the auction instead of reverting back to the beneficiary.  THIS IS EXACTLY WHAT THEY HAVE DONE!  Lenders have begun to discount their opening bids by as much as 50%.  This equates to several hundred thousand dollars in some cases.

One example is a West Seattle property one of our clients purchased at the foreclosure auction on October 24th 2008.  The foreclosing lienholder was a first mortgage with a balance owed of $636,000.  Late Thursday the lender posted an opening bid of $311,000.  Our client was able to purchase the property at the King County foreclosure auction for $326,000.  The current market value of this custom built 2003 home is $500-550K.  That represents over $200,000 in instant equity for the buyer. 

This is just one example of many in the month of October.  November is traditionally a very busy month at the foreclosure auctions.  Don’t let this opportunity slip away. 

You can register to attend our free workshop, “Never Pay Retail” held every Tuesday at 5:30 in our Redmond office.  There you will learn how you can participate and profit from buying foreclosures at the foreclosure auction.  Sign up today!

•  Deed of Trust
•  Construction/Mechanics Lien
•  Federal Tax Lien

Another might be subject to:

• 1st Mortgage Deed of Trust
• 2^nd Mortgage Deed of Trust
• HOA lien
• Delinquent property taxes

As a general rule, in Washington State, the priority of liens depends on the order in which they were created.  Lien priority is established by the date the lien documents are recorded with the County Recorder.  The lien that gets recorded first gets first priority for payment.

There are a handful of exceptions to this rule.  Special attention must be paid by anyone buying a foreclosure property as to the status of any property tax liens, condo association liens, mechanics liens and IRS tax liens. 

Property Taxes and Special Assessment Liens from Municipalities - These liens always have the highest lien priority.  Any past due taxes will need to be paid and brought current as will any outstanding special assessment liens (typically for local improvements such as road paving or sewer lines).

Condominium Association Liens - Laws have been enacted in 16 states and the District of Columbia granting community association liens senior lien status under certain conditions.  These liens are referred to as “Super Liens”.  Washington State is one of the 16 states that allow for “Super Liens”.  In Washington State, a lien for unpaid condo dues is granted lien priority over liens that may have been recorded before it.  The statute does cap the amount to be paid to 6 months prior dues.

Mechanics Liens - Mechanic’s Liens, otherwise known as Construction Liens may have a higher lien priority than other liens recorded before it.  The determination of lien priority in the case of a mechanic’s lien is based upon the date the work started on a project or the date materials were first delivered to the job site.  For example, a property that had the following liens:

•  
  • Deed of Trust* (Recorded August 15^th 2006)
    • *Foreclosing Lien Holder
  • Mechanics Lien (Recorded October 12^th 2006)

In this example the mechanics lien would take priority over the Deed of Trust, only if the work began or material was delivered to the job site prior to August 15^th 2006.  If work commenced after that date or material was delivered after that date then the lien would have junior lien priority to the foreclosing deed of trust. 

There is also a secondary exception with mechanic’s liens.  Since Washington State’s statute provides for a time limitation as to the validity of mechanics liens, a mechanic’s lien is only valid for a period of eight months.

“No lien created by this chapter (Washington Revised Code RCW 60.04.061) binds the property subject to the lien for a longer period than eight calendar months after the claim of lien has been recorded unless an action is filed by the lien claimant within that time in the superior court in the county where the subject property is located to enforce the lien.”

Unless the claimant takes the additional step to convert the mechanics lien to a judgment by filing suit in Superior Court in the County of Jurisdiction then the mechanic’s lien will self expire after a period of eight months and one day.

IRS Tax Liens - An lien filed for unpaid income taxes is often mistakenly thought to have a higher lien priority than other liens.  This is not the case.  Lien priority for IRS Tax Liens is based upon the date of recording.  What is granted under federal statutes is a redemption period.  If a property is sold at foreclosure auction and the IRS has filed a tax lien against the property, then the IRS has a 120 day right to redeem the property to satisfy the unpaid debt.  If the IRS exercises their right to redeem, it can only do so by reimbursing the purchaser.

The IRS’ redemption payment to a purchaser of a property at a foreclosure auction would include the following:

The winning bid plus 6% interest from the date of sale,

PLUS

• Expenses incident to the preservation of the property:
• All payments made to senior lien holders,
• Any necessary legal fees (i.e. title defense, etc.),
• A prorated reimbursement for prepaid property taxes and fire insurance premiums.

MINUS

• Any income the new owner received from the property and/or the fair market rental value of the new owner’s occupancy of the premises.

*Any improvements made to the property will not be reimbursed by the IRS.

It is important to note that the IRS has not redeemed a property in King County in over 4 years.  That does not mean that they won’t do it tomorrow, it just means they don’t do it very often.

When it comes to buying properties at a foreclosure auction, having detailed knowledge of the condition of title is important.  What is more important though is understanding lien priority and how the various liens of record may affect you and your investment.

Of the 465 properties scheduled to be sold at auction, 289 sales were cancelled, 140 properties reverted back to the bank or foreclosing lender and 36 were purchased by a 3rd party.  That does not mean their were only 36 good deals to had.  It only means that there were only 36 people or investors willing and able to buy that month.  Many of the 140 properties that reverted to the banks were great deals and represent a tremendous missed opportunity for anyone wanting to capitalize on this market.

To learn more about investing in distressed and foreclosure properties and how you can buy properties at 60-80 cents on the dollar, please sign up to attend our Free weekly workshop called “Never Pay Retail” held at our downtown Redmond, WA office.

We purchased two properties at auction that day and both were exceptional deals. The first property was a beautiful home in the Bridle Ridge neighborhood of Bellevue.  Tne home was last sold in December 2006 for 1.099M.  The prior owner then proceeded to spend an additional $180K in upgrades and remodelling. 

We bought this house at the foreclosure auction for an investor for one dollar over the opening bid of $723,000.  By that afternoon we had all cash offers from potential buyers for $905,000.  We will be re-listing the property on the MLS for $1.1M in the next couple weeks and expect to sell very quickly.

Below are some pictures of the property.

The 2nd property we purchased was a house less than one block from Greenlake.  We purchased the house at auction for $378,600.  According to the tax records the property was only a 2 bedroom 1 bath but the former owner had almost completed finishing out the basement which adds another bedroom and bath and approximately an additional 400 sqft.

The investor will spend about $25,000 fixing up the house and the ARV (after repair value) of the property is between $550,000-$600,000

If you would like to learn more about how you can purchase foreclosure properties like this at signifigant discounts you are invited to attend our weekly investor training class held every Tuesday at 4:30 at our downtown Redmond office. 

When it comes to your property’s appraisal, it’s important to understand the components used by professional appraisers to arrive at their numbers.  As Scott commented, “Comps don’t lie”, which means that comparing other houses in your property’s area of similar size, market value, etc., is a useful tool to finding out what your home is worth.  There are several approaches that can be used for property appraisals.

• Cost Approach–this is what the property would cost if it were totally destroyed, which means an itemized list and cost rundown of what it would cost (with today’s construction prices) to rebuild the structure exactly as it was prior to the hypothetical catastrophic event.  This technique is used primarily for insurance purposes.  Just remember that the insurance is not basing your home’s full appraisal value on its potential or its special features–the home’s value is based on zoning.  Some real estate agents will try to sell you on a property’s potential, so just keep your eyes open.
• Income Approach–the income potential of the property in today’s rental market, multiplied by the Gross Rent Multiplier for that area (Seattle’s rent is higher than Lynnwood’s, so its Gross Rent Multipliers are not the same).  The problem is that it’s difficult to find rental info, because currently, there’s no database of house rents available.
• Sales Comparison Approach–mostly used by real estate agents, this evaluation has the most weight in determining the property’s value when the bank is reviewing your loan.  This is also referred to as the “Sales-Paired Comparison” (or “comp”), where they compare three homes that sold with a certain feature and three homes that sold without that feature.

When your property is being appraised, keep in mind that the appraiser’s scope of work (or job) is to validate the sale price for whoever hired him or her.  If the appraiser is working for the bank, he or she will make it a priority to submit an appraisal that validates the price that the bank wants to see.  However, if the appraiser is working for you and you’re trying to sell a property, your appraiser’s scope of work is to prepare an appraisal that gives you the highest sale price.  Scope of work is influenced by several factors.

• Refinancing–Full Market Value
• Purchases–Purchase Price
• Building Specifications (for future value)
• Fair Market Value (FMV vs. ARV–Full Market Value vs. After-Repair Value)
• Unique Properties (water frontage, land, workshops, barns, etc.)

When doing the comps (again, remember that just means “comparable properties”), a minimum of three different ones are needed, but ideally, you should have 5-7 comparables, in case of possible bank disputes.  Any home worth over $400,000 gets sent to the bank’s own review appraiser, and his/her job is to state that the initial appraisal was incorrect.  However, a good appraiser can appeal the bank’s review appraiser’s decision, which is why those 5-7 comps come in handy.  Criteria for the comps are as follows:

• Radius (distance from subject–another term for your property; radius will depend on the home density in the area)
  • The search can be expanded outside your area to nearby areas as long as properties of lower value are used as comps
• Land Use (must be the same)
• Transfer Date (the date a property was last sold–should be six months to a year)
• Square Footage (needs to be within 20% of the subject property’s square footage)
• Style of Construction (must be comparable)
  • One Story with Basement, Split Entry, and Tri-Level (Tri-Level is worth the most of these 3 because it has more square feet above ground)
  • Ramblers
  • 1.5 to 2 Stories
• Year Built
  • Must be within 10 years and its effective age is half the physical age or the last remodel date, because it’s assumed that you took care of the property during the time you owned it
• Sales-Paired Comparisons (view properties, unique attributes)
• Exceptions (some of the appraisal rules go out the window on these)
  • Homes worth $500,000 or more
  • Sparsely populated areas (the further out you go in location from the subject property, the closer of a match the comp properties should be to the subject property, for other details like Year Built, etc.)

Part of determining the value of your property is based on its additional features and upgrades, as well as extenuating circumstances.  Additionally, another aspect used for evaluating your property involves two types of assessment–potential assessment vs. risk assessment.  Potential assessment refers to the property’s potential to make you money.  Risk assessment means what would happen if you couldn’t sell the property for the amount you were hoping for, or if your repairs ended up costing you too much money.  This is important to keep in mind, because while repairs and remodel are a good thing and can increase your property’s value, just remember that you’ll never get your property counted as if it were a new construction, although you can really impress your appraiser, since appraisals do have a subjective element.  Also, when you have repair and remodel expenses, remember that you can get better deals on your service costs based on the volume of business that you offer the service provider–for example, if you need 10 roofs done, you can get a better deal than if you just needed one done. 

In order for your property to be counted as remodeled, your appraiser needs to see updated tubs, sinks, cabinets, knobs, hinges, and even floors, unless the floors are wood and have been refinished.  You don’t need to change out all the plumbing and electrical, because it’s a subjective call–it’s about visuals for when the appraiser takes pictures.  Most of the focus of your remodel should go to the kitchen and bathroom.  You can even tell your appraiser, “I’m trying to remodel it back to its original glory”, which doesn’t always work, but if you don’t like your appraisal, you can always hire a different appraiser.  It might cost you $400 more, but it can be worth it, and in case you’re wondering, the appraiser doesn’t get paid until the home loan closes.  The final document you receive from the appraiser is about 10-12 pages long, and it will tell you what their numbers were based on.

It can sometimes help to show your own comps or your own before-and-after pictures of improvements you’ve made to your property to the appraiser, but keep in mind that banks will keep an eye out if you’ve made 10% or more on your sale, beyond what you bought the property for, because they call this “equity skimming”.  You can also give your loan officer your own comps and your own pictures, and he/she can use that with the bank to try and get you the appraisal you want.

When you do your comps, you need to factor in adjustments, as well.  If you have a 3 bedroom/1 bathroom home, for example, you can compare it with 2 bedroom/1 bathroom homes, but you can’t compare it with a home with more bedrooms or more bathrooms.  Each bedroom affects the home’s value by $1,000, each bathroom by $2,000, and the square footage price can vary based on neighborhood (also, different professional appraisers will use different prices per square foot).  Square footage prices can be from $20-40 per finished square foot, $10 per finished basement square foot, and $7 per unfinished basement square foot.  Year built/effective age is $1,000 per year, acreage is $20,000 per acre, garage is $2,500 per car, and carport is $1,500 per car.  All of your comps must be adjusted equally.

All CMAs (Competitive Market Analyses) and appraisals are based on the past.  CMAs can be a bit more current than appraisals, because they can compare sales from 3-6 months in the past, but again, that’s still looking at past sales activity. 

There are a few things to keep in mind.  There are two types of CMAs, and both have their drawbacks.  Real estate agent-generated CMAs have some caveats, and so do automated CMAs.  Be careful who you work with, because some realtors are using comps for their CMAs that aren’t actually valid–they use different styles of construction, for example, which is not correct.  The only time that this would be acceptable is if there weren’t enough comparable properties of a similar construction style, but even then, they would need to add on lower value properties instead of higher value properties to the list of comps.  Real estate agents are not typically trained to do CMAs properly, and they will also sometimes mix size (square footage).  Real estate agent-generated CMAs generally use comps up to 5 miles away from the subject property. 

Also, area takes precedence before other property details, but be careful, because automated CMAs like Zillow.com have a few drawbacks–they don’t know which areas are considered more desirable than others, they only base property values on above-ground square footage, and they don’t assess proximity to bodies of water (which matters here in the Pacific Northwest).  Automated tools do work well for places like Arizona, but this is not to say that they don’t have their uses here in the Northwest–just don’t base your property’s market value only on information from Zillow.  As a result, remember that both types of CMA are not the best source of a true evaluation of what your property’s worth, but they are helpful. 

Your goal as a real estate investor is to buy the worst property in the neighborhood, make it the best property, and then sell it.  Remember that when you buy a property, you can do a deferred deposit of interest, where you make sure that the check doesn’t get cashed until after the inspection, and here at Real Estate Investment Firm, we can negotiate with the seller if the property has any problems.  You can get out of the offer at any time–you might lose $400 for the appraisal, but it’s worth it if you would have ended up losing thousands, but REIF works with you to make sure that this won’t happen most of the time.  Don’t be afraid to write offers, because contracts are based on contingencies, so you can get out after making your offer.  The two contingencies on offers are inspection contingencies and financing contingencies. 

A final note on investing–there’s fast, and there’s good, but not both, so you either take your time, or you just run and hope for the best.  We don’t want to do just one deal with you and then you’re gone–we want to do 10 deals a year with you.  We get paid when we provide for you, and while we do charge 3%, we charge less when we provide other services for you. 

We’ll be happy to sit down with you and analyze what you can and can’t afford, and we’ll also tell you what kinds of property you can buy–basically, what’s best for you in your situation, whether it’s foreclosed properties at auction, pre-foreclosure foreclosures, or even MLS properties.  You can always check out or website first, by going to http://realestateinvestmentfirm.com; just sign up and you can look at auction properties available in King, Snohomish, Pierce, and Kitsap counties here in Washington state. 

When you show up for the auctions, if you have cash, bring it, but if not, we have loans you can get, and we always encourage you to research the properties before you buy them (and we’re happy to help with that, too).

Be sure to come back next time, when we’ll talk in detail about how to invest in real estate using your IRA.

• Determine Your Project Budget–remember, do not overbuild the area, because if you have a property that you want to improve in order to increase its market value, you must be careful not to spend too much on upgrades, or else you’ll end up losing money. 
• Know the Immediate Market (what prices does the property’s immediate market support?)
• Foreclosure Auctions

When you start getting emotional, you have a higher chance of losing money.  After all, as an investor, your job is not to make the house perfect, but to just bring it up to a higher level of quality, and get out. 

As far as your project budget, be mindful of two things.

1. What increases your property’s market value.
2. What increases your property’s market appeal.

Obviously, you’d like to increase the home’s value if you’re interested in flipping it.  Once the repairs are complete, the home’s worth is now called “ARV”, which is “After-Repair Value”.  The whole point of flipping is to buy at the fair market value (FMV), and sell at the ARV, because it’s the difference between the two that makes you money.  However, you still must have a balance between your property’s market value (what it’s worth) and its market appeal (how much it appeals to people)–although it’s true that improving the home’s “wow” factor won’t increase its market value, it can actually make the property sell faster.  Just keep in mind the old maxim, “Buy low and sell high”, which still applies today. 

The market will eventually pay you whatever the home is worth.  Up to the first two weeks that the home is listed, you’ll have the most attention from agents and potential home buyers.  Of course, you want to make money, but if your list price is too high, nobody will come–if your list price is lower and you wait a bit longer, you might eventually end up with a bidding war later on.  Keep in mind that you don’t have to sell your property just because it’s listed–it’s only a marketing agreement.  Don’t chase the market, because when you lower the list price of your home, people will wonder what’s wrong with the property.  As far as buying a property, remind yourself that $20K in the bank is still worth more than $30K that you might be able to get from the property you’re buying. 

It’s important for investors to understand the factors that tell us the home’s value.  They are as follows…

• Tax Assessments (from the government)
• Appraisals (from professional appraisers)
• Competitive Market Analyses (”CMA’s”, from real estate agents)

Tax assessments are created by the government.  They are usually about 20% below market value for the suburbs, and 40% for cities like Seattle.  To arrive at the tax assessment, the assessors evaluate the home based on mass appraisal technique (2 years’ of sales data for that area), areas (over 65 areas in King County alone), frequency, weaknesses, and disputes.  There’s actually a 50% “win” rate on property owners’ disputes, but it’s a 6-12 month process.  However, when you buy below the tax-assessed value, you just need to show proof of this to the government, and they will immediately change the tax-assessed value to what you actually paid.  Of course, if you’re able to buy a home for the tax-assessed value or even below (which would be lower than the market value), that’s going to make you some money–the only caveat is that as a result of the market’s “softening” (translation–the market’s still going down), the difference between the asking price and the tax-assessed value is getting closer, which means you might end up making less.  Allegedly, the market will improve in 2010, so there may be some properties in your portfolio, or that you’re considering buying, that you may want to hold until then, just so that they can appreciate in value.  However, don’t bank only on potential appreciation of a property–that’s speculation, and it’s not actually investing. 

In general, Scott recommends October/November/December as the best time to buy property, because you can fix it up and then sell it in March.  Keep your eye out for snowflakes–buy those auction properties when it’s snowing, because that’s when nobody else is bidding on them.  Also, you can call the bank that owns the foreclosed property on December 1st, make them an offer, and you have a very good chance of successfully buying form them.  Scott doesn’t recommend buying property in the summer if you want a quick flip, because you may end up holding it for a longer period of time, from 9-10 months.   

Remember that now is an incredible opportunity to buy, if you know what you’re doing.  You have to know what you want to do, and how you’re going to do it, so you need to educate yourself.  With that in mind, go sign up on our website at http://www.reif-wa.com, where you can view foreclosure properties to be sold at auction, short sale properties, MLS properties, etc.  Using our website, you can view the tax value vs. the list price, and you can also set filters so that you’ll only see details of properties that match your interests.  More importantly, you can analyze the deal for yourself, without any other investors seeing your details.  If you feel like you need some assistance, click “Contact Rep”, and just let us know what type of analysis you’d like for the property you’re interested in.

Here at REIF, we love what we do, and that’s helping you invest in real estate!  Stay tuned for our next blog entry, where we’ll discuss how appraisals work.

His useful and timely advice stems from 10 years experience in marketing/online advertising, 6 years as a licensed agent(currently with Keller Williams in Lynnwood, WA), 5 years in appraising and evaluating properties, and 5 years working with real estate investors.  In addition, his previous work in the IT field (having worked with IBM and Hewlett-Packard) makes his knowledge invaluable to us, which is why we’re pleased to work with him.  In his career, Scott has seen lots of investors’ mistakes, so remember, it’s crucial to become educated about real estate.  Scott has developed his business around investors, which is what we do at Real Estate Investment Firm–working with our clients to help them succeed by providing them with the tools and education to invest in real estate.

When evaluating a property to decide if you want to buy it, you need to recognize a good deal when you see it; basically, as Scott explained, you need to know when to “pull the trigger”, because a good deal today in real estate is gone tomorrow.  Finding those good deals can be a challenge, but Scott reminded us that the MLS is one of the most under-rated tools for investors.  In fact, according to Gary Keller’s “Millionaire Real Estate Investor” book, although 42% of deals made by millionaire investors were made by networking, actually 32% of their deals were through MLS or real estate agents.  Only 10% of deals were from newspaper ads/marketing/etc.

Scott was able to make an investor $300K from a 2004-built home located in Mercer Island, which they found on the MLS–list price as $699K and tax-assessed at $840K, and Scott’s investor was able to purchase it for $675K.  When they ran the numbers and evaluated the property, they found its market value was $975K.  The MLS has a wide range of properties–bank-owned, probates, estate sales, landlords, Seattle Housing Authority, as well.  In fact, the Seattle Housing Authority has some amazing deals on their properties listed on the MLS.

Another excellent source of properties available is found over at REIF’s website, and the link is http://www.reif-wa.com.  Just sign up and we’ll create a user account for you so that you can have access to details on 874 distressed properties at the time of this writing, across 7 different counties in Washington state.  From the comfort of your own home, you can log in, analyze properties, and even place offers. 

We’re going to continue to post some of Scott’s real estate investment advice, so stay tuned!  Be sure to add our blog, http://www.distressedrealestate.org, to your list of favorites so you can keep coming back for more!

The investors learned that higher-priced properties (above $420,000) have less competition for them at auction.  If you have cash, then you’re in an even better position to buy, because most hard money lenders will only finance up to $425,000.  However, keep in mind that here at REIF, our hard money lenders will finance more than that.  And if you want even less competition, check out the higher-end properties in Snohomish County–there aren’t that many people bidding on them at auction.  Let’s take a look at a prime example of an excellent opportunity up there.

In Mukilteo’s Kamiak Pointe subdivision (near Boeing), at tomorrow’s auction, the actual opening bid on a 3 bed/3 bath home is just $334,800!  That’s a $60K drop bid on a property (ID # 11720) worth $489,500!  As Kristian Aasgaarden, one of our senior partners, commented, it’s a “screaming deal” on a nice property, with a pretty decent equity spread of $150K! 

Another example of Snohomish County deals is of the best kind–a deal in disguise.  Keep your eye out for a drop bid on property ID 7697, located in Lynnwood, which is potentially sub-dividable into 3 separate lots!  This lakefront property is a 27,442 square foot lot which currently has a 6 bed/2 bath, 2,411 square foot home on it.   Right now, there’s still not an actual opening bid on the property, but the estimated opening bid is $712,110.24, and the estimated market value is $577K.  Because the estimated opening bid is so much higher than the estimated market value, you can be sure that there will be a drop bid coming up soon on this one.  The last time it was up for auction, it had an opening bid of $585K, but the auction was postponed.  Watch this property closely–don’t miss this great opportunity.

Just remember that no matter what you’ve read or heard, now really is the best time to buy property–you always want to buy when nobody else says it’s a good idea.  Even in King County, where the usual cost of properties is high, at auction tomorrow, there are some great deals to be had. 

Have you ever wanted to own a house in Kirkland, but thought it was beyond your price range?  Take a look at property ID 1304525, in between Rose Hill and Totem Lake.  The actual opening bid on this 2 bed/2 bath, 1,060 square foot home on a 11,556 square foot lot, is just $266,857, and the estimated market value is $425,000!  It’s an excellent bargain with over $150K in equity!  Because the first mortgage is in foreclosure, the 2nd mortgage will fall away when you buy this home at auction tomorrow!

We’ll see you at the auction tomorrow! 

Self-directed IRAs (Individual Retirement Accounts) can be utilized to invest in real estate.  There are multiple strategies for doing this, including forming an LLC (Licensed Limited Corporation) and having checkbook control of these funds. 

To learn how you can invest in real estate using your IRA/401(k)/Roth IRA/SEP, without early-withdrawal penalty, contact our office at 425-968-5462 now!

Check out our “Property of the Week” from last week!  Have you ever dreamed of owning a home on Mercer Island with lake views, but thought the cost was just too high?  Last week, you could have bought property ID # 1138172 (found by going to http://www.freewaforeclosurelist.com and entering property ID # 1138172) for only $1 above the opening bid at auction!  Are you sitting down?  It sold for just $522,001!  The estimated market value on this house is $882,500, and the previous owner had plans and permits to build a 3,400 square foot home (the existing structure is 1,170 square feet on a 7,656 square foot lot). 

Did you ever think that $341,000 couldn’t buy you much of a house on the Eastside?  You could have taken your pick at the King County auction last week, because 2 different homes each sold for that price.  Property ID 8810 in Kirkland, a 3 bedroom/2 bath, 1,550 square foot home on a 7,853 square foot lot, sold for just $341K at auction and it’s worth $420K Located in Des Moines, property ID 333357, a lovely 5 bedroom/3 bath, 2,750 square foot home on a 10,430 square foot lot, also went for just $341K and it’s worth $402,500! 

If you were looking for a condo in Kirkland, it could have been yours for $81,155.93 at auction last Friday (plus you’d need to pay the $212K mortgage, which you could do by refinancing).  Property ID 4880, a 3 bedroom/2 bath, 2-story condo, has an estimated market value of $366K–the buyer got over $70K in instant equity with this one!

Not everyone wants to flip houses, though–some investors prefer to rent them out, because it’s a monthly source of continuing cash flow.  Property 1166529 in Shoreline, a 3 bedroom/1 bath home worth almost $300K, went for just $220K to the lucky bidder last Friday.  This house is a great rental property and will be a nice addition to its new owner’s real estate portfolio. 

Unfortunately, sometimes nobody bids on a house, and when that happens, it reverts to the beneficiary (the bank), who then hires a real estate agent to sell the home.   A prime example of this is a lovely Sammamish Highlands home on almost 1 acre of land, so tranquil that even wild deer graze on the lawn.  Property ID 1177059 is a 5 bedroom/3 bath, 2,980 square foot home on a 40,800 square foot lot, worth $664K, and the actual opening bid was $493,110.08–but nobody placed a bid, so now the bank owns it and will try to sell it.

Matt Steele, founder of Real Estate Investment Firm, advised us that when you see a property up for auction and you don’t have the funds to purchase it, partner with someone else because you can make money on real estate.

Next, Kristian discussed some of the many great deals up for auction tomorrow, May 2, 2008–we covered mostly King County properties, with a few Snohomish County homes toward the end of the meeting, to give our investors a taste of what’s available up there.  Richard Arnett, one of our real estate agents who covers the Snohomish County homes, reminded us that many Snohomish County homes at auction don’t sell because there aren’t many bidders, so consider a trip up to Everett if you’re looking to invest in real estate!

Located in the desirable Phantom Lake neighborhood of Bellevue, property 11748, a 3 bedroom/3 bath, 1,860 square foot home with a deck on an 8,200 square foot lot, has a market value of over $525K, and its actual opening bid is just $368,397.98.  There’s a nice big equity spread on this one, as Kristian told us.  “Someone should buy this…There’s almost $200K [equity] on this one!”, he added.  Jack Neilly, another of our agents, knows the area and he told us that 90% of  other comparable homes in that neighborhood are up to $100K more in price than this one.  Matt told us that with a home like this, if you put just $25K into remodeling it, you can sell it for $499K.  The property is only 5 blocks from Phantom Lake Elementary School, within walking distance of Phantom Lake itself, and is a bike ride away from Microsoft.  The backyard is a good size, and the exterior condition of the home is excellent, but both the roof and the deck need to be pressure-washed. 

Are you looking to add a great rental property to your portfolio?  Then property ID 1177249 in Seattle is for you.  This 4 bedroom/2 bath, 1,720 square foot home on a large 16,500 square foot lot was built in 1940.  Its estimated opening bid is $202,001.67 and it’s worth almost $325K.  Because this land is zoned R8, you could actually put another home on the property.  One option would be to rent out the house while you wait for your subdivision permits to come through. 

One strategy that Kristian and Matt mentioned to us in the meeting is that the higher the estimated (or actual) opening bid on a house, the less amount of bidders there are.  That brings us to the next house, property ID 6512, located in Auburn.  Keep an eye out for a drop bid on this one, because its estimated opening bid is high at $679,784–this is more than its estimated market value of over $650K.  This 6 bd/4 ba, 4,210 square foot home on a 7,863 square foot lot, is beautiful and “like new” (built in 2001), with a deck that gives you a beautiful view of the valley below.  There are some unpaid homeowners’ association dues (over $6K) which will need to be paid after you buy the home at auction, however. 

Seeing such lovely homes prompted one of our investors to ask an important question–what happens if the foreclosed home is occupied, and prior to leaving it, the occupants (or someone else) vandalizes the home?  Matt advised us that we should buy an insurance policy on the home for $100 a month, with a $2,500 deductible, so that we’re covered.  This policy can be converted into a standard home insurance policy after the occupants have vacated the premises.

Can you actually buy a single family home in Seattle for around $200K?  There aren’t too many of them to be found, but property ID 1288971 is up for auction with an estimated opening bid of $212,959.84, and it’s worth $321K.  It’s a nice little 2 bd/1 ba, 1,060 sq ft home with an 860 sq ft basement (200 of which is actually finished–perhaps you could even add on to the finished portion of the basement, which would increase the amount of livable square feet of the home, if you’re willing to remodel).  Everybody should be looking to buy this house! 

Property ID 5520 is a lovely 5 bd/3 ba Seattle home with views of the water!  Its estimated opening bid is just $187,880.96, and it’s worth over $950K!  However, you’d have to pay off the $500K first mortgage after buying the house at auction.  It’s 3,460 sq ft on a 15,053 sq ft lot, and although it was built in 1911, it has obviously been remodeled since then.  It sold for over $770K just 3 years ago.  There’s a 50/50 chance as to whether or not it will actually be sold at auction tomorrow–there was going to be a short sale but the cash buyer wasn’t able to wire the money in time, so now the person is going to try to attend the auction in order to place the winning bid.  This person is one of our investors, and Matt reminded us that our policy here at Real Estate Investment Firm is “first come, first served”.

Property 1119066 is located in Kent’s Panther Lake neighborhood.  It would make a great little rental property, and it’s 1,440 sq ft home with 3 bd/2 ba on a 7,936 sq ft lot.  It’s only a couple of blocks from Panther Lake.

Property 1288972 in Seattle has a 90% chance that it’ll be postponed.  If you want to do a short sale on this house, then let us know.  It’s 1,130 sq ft on a 5,300 sq ft lot, with 2 bd and 1 ba.  The home has lake views and L3 zoning, which means you could build 3 different houses on it!  If you’re a developer, that’s $1 million on the table for you with an opportunity like this, according to Matt.  The estimated opening bid is $530,792.48 and it’s worth $713,500. 

Newcastle, located near Bellevue, has a beautiful home (property ID 230296) which just had an $80K drop bid!  The actual opening bid is just $553,530.26, but this 4 bd/ 3 ba, 2,560 sq ft home on a 10,270 sq ft lot is worth $650K.  One thing to keep in mind is that the previous owner owes $395K to the IRS, but Kristian assured us that they wouldn’t go after this home because they’re owed so much by the previous owner.  Legally, though, they have up to 120 days after the home is sold at auction to “redeem” it, which means they’ll pay you what you paid for it at auction.  You wouldn’t want to spend any on remodeling until the 121st day, though, because the IRS will only reimburse you for the property’s sale price at auction.  One investor asked if you would be able to sell a property like this during those 120 days, and Kristian told us that you could enter into a sale contract, but you wouldn’t be able to close on it until the 121st day.

Property ID 591487 in Kent is a 1,320 sq ft, 3 bd/2 ba home built in 1983, situated on a 9,227 sq ft lot.  Its estimated opening bid is $194,852.32 and it’s worth over $275K.  This is a well-kept, great home with a great price!  It’s got a lot of life left in it.  There is $3,700 in delinquent property taxes on it that will need to be paid after it’s purchased at auction, though.  The house’s auction date has been postponed several times, but it might go tomorrow, so keep your eyes open for it.

Another home in the south end is property ID 1177256 in Auburn.  This 2,180 sq ft, 3 bd/3 ba home, located on a 7,161 sq ft lot, has a 2 car garage.  The actual opening bid is $252K and the market value is $336,500, so because there’s not a lot of equity in it, it would make a good rental or end-user property.

Up on the Eastside in Bellevue, property 2207 is a 5 bd/3 ba, 3,450 sq ft home on a 10,431 sq ft lot.  Its actual opening bid is $474,221.97 with a market value of $600K.  It needs a new roof, but once you’ve done that, you could rent out this house by the room, since it’s near Bellevue Community College and Microsoft.  There are 2 judgments against it, adding up to a grand total of $21,135, which may or may not have already been paid.  The judgments will continue to accumulate interest, but you don’t need to pay them at the auction–you can pay them afterward.  There are also delinquent property taxes owed ($3,940.76), which can be dealt with after buying the house at auction.  The home is occupied, but the tenant is legally required to leave after being served with eviction papers–we can help you with this process.

Property ID 1288958 in Redmond is a definite end-user property.  The actual opening bid is $917,926.98, and the market value is almost $1 million.  It’s a 4 bd/3 ba, 4,470 sq ft home on a 2 acre property, where you’re far enough away from your neighbors that you’d have your privacy.  The garage itself is 930 square feet, so it can probably hold 4-5 cars in it.  This lovely home is only 5 minutes away from the Newcastle golf course, and when the real estate market goes back up again, you’ll be glad you bought this when you did–and at a discount, too, no less, due to purchasing it at auction–because this home’s value will definitely increase.

In Issaquah, property 1177273 is a 2,310 sq ft home on a 1,560 sq ft lot with 4 bd/3 ba.  It was built in 2006, and it sold for $480K in 2007.  The actual opening bid is $408K, and this would be a good end-user property because the market value is $525K plus.  It’s not a “flip” property, but it’s a great deal for an end-user who wants 20% off on a nice house.

Our “Cheapest Home of the Week” is located in south Renton, near Shadow Lake (which is south of Petrovitsky Road), and it’s property ID 124646.  You would want to tear it down, but it’s actual opening bid is only $99,381.37 and its market value is over $275K!  The 2 bd/1 ba, 830 sq ft home, located on a 15,875 sq ft lot, is occupied.

In Covington, property ID 644942 in the Timberline Estates (one of the most affordable areas in King County) would make a great rental house.  It’s got an actual opening bid of $164,599.18 and it’s worth almost $225K.  It’s an 840 sq ft, 3 bd/1 ba home on a 5,132 sq ft lot, with $3,700 in property taxes that are owed, but it’s a really good buy to keep as a rental and hold. 

In Seattle, near Skyway, property 1288961 has an actual opening bid of $344,845.12. This 4 bd/2 ba, 2,600 sq ft duplex on a 12,420 sq ft lot, is a moneymaker–as Kristian said, it’s an “absolute screaming deal”.  It sold for $300K in 2003.  Although its market value didn’t appear on its listing in ForeclosurePoint, Kristian told us that no duplex in Seattle has a value under $400K.  This property would make for a very easy rental.

Located in Pacific (which is south of Auburn), property 1288960 is vacant and relatively new at just 3 years old.  The actual opening bid is $284,750, which is a good price, since it sold for $288K back in 2005 when it was new.  Its estimated market value is over $340K. It would make for a great rental and it’s a in good condition–this 3 bd/3 ba, 2,046 sq ft home, on an 8,060 sq ft lot, won’t need maintenance for a long time. 

In Bellevue, property 1244224 is a 3 bd/2 ba, 1,052 sq ft condo in the Oasis complex.  It’s a nice unit that has been nicely remodeled with some views.  The neighbor paid $440K for his unit just 2 months ago, and property ID 1244224 has an actual opening bid of just $321,958.  This is a ground floor unit, but keep in mind that the builder didn’t put hard floors in the top units, which means you won’t hear a lot of noise from the units above you.

Located in the coveted Clyde Hill area of Bellevue, property ID 1288956 prompted our agents to comment just 3 words–”Neighborhood, neighborhood, neighborhood!”  This 4 bd/2 ba, 1,670 sq ft home on a 8,152 sq ft lot is just 2 blocks off of Bellevue Way.  You could tear it down and build a big mansion like your neighbors.  The market value is over $725K, and the actual opening bid is $666,147.86. 

You can’t go wrong with property 11881 in Seattle!  It just had a $300K drop bid!  This 4 bd/1 ba, 1,280 sq ft home on a 4,000 sq ft lot, has an estimated market value of $463K, and its actual opening bid is just $340K.  It would make a great rental.  You would want to repaint the home, and you might want to consider doing some work on the unfinished basement so that you could add 2 bedrooms down there.  You could rent out the house