Posted by: Timothy Ellis (The Tim)

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

73 responses to “Weekly Twitter Digest (Link Roundup) for 2012-02-18”

  1. wreckingbull

    I found the FIRPTA article quite interesting. This is an example of how real estate blogging should work – offering useful information for discussion, rather than cheerleading. Thanks Craig.

    I wonder how many Realtors are familiar with this. Yes, Kary, I’m sure you are. I mean those who are not attorneys, but are constantly reminding me I need them to help guide me through the process.

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  2. Kary L. Krismer

    RE: wreckingbull @ 1 – What’s interesting about that issue is that it places the burden on the buyer. How is the buyer supposed to know? In Washington it’s typical that the buyer and seller never meet. Sort of hypocritical for the federal government to say that a lay buyer is more responsible for determining such things with someone they’ve never seen than say a trained police officer is in Arizona where they see the person. Absent some sort of stereotyping based on name, which would be completely ineffective for John Smith from England, what’s a buyer to do?

    Craig is right about not being able to rely on the closing agent. I recently had a closing agent directing my client to sign the paperwork regarding residency in the property with an incorrect response. It’s one of the reasons I like to attend escrow signings–something most agents don’t do.

    BTW, when I read Craig’s piece earlier, I loved this, and on re-reading it still strikes me as funny: “(or FIRPTA, pronounced just like its spelled).”

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  3. ray pepper

    idiotic statement:

    “Real-estate agents say banks are pushing home values down and increasing the risk of more defaults by selling foreclosed properties at big discounts”

    The fact is there are still so many STUPID agents/people out there that believe this it sickens me..

    The FACT is banks are selling their properties at their CURRENT VALUE. When the property is listed too high it will not sell. When listed to low they get multiple offers until they reach their current market value. As illustrated at the Trustee Sales week after week. Minimum bid too high no interest. Too low (like BECU’s) get in line and start bidding.

    WAKE UP PEOPLE more defaults are coming irreguardless of banks selling at “deep discounts” because in the end they will ALL be priced at current market value and the uneducated bagholders will continue to cry for a decade+.

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  4. Kary L. Krismer

    By ray pepper @ 3:

    iThe FACT is banks are selling their properties at their CURRENT VALUE. When the property is listed too high it will not sell. When listed to low they get multiple offers until they reach their current market value.

    It’s amazing to me that you claim to be a professional real estate agent, but don’t understand the differences in terms of sale for an REO and a normal listing. REOs sell for less because of the way banks sell properties, not because of something inherent in the properties themselves.

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  5. Pegasus

    RE: Kary L. Krismer @ 2 – Worrying about FIRPTA problems is akin to worrying about tsunamis. Another molehill made into a mountain by an attorney. Easily solved, just more license for pulp fiction writers and shamans to save us from.

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  6. ray pepper

    RE: Pegasus @ 5

    thats funny and 100% correct..surprised Tim gave him the “air time” for that nugget…Thousands of things to worry far more about then FIRPTA..

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  7. ray pepper

    RE: Kary L. Krismer @ 4

    did I claim to be a “professional”? probably did somewhere so I will give you that..I use the term very sparingly in life with Doctors and very few others.

    Kary, there is so many things wrong with your statement I will just say this…You simply don’t know whats happening around you in the investment arena with REO’s and Trustee Sales. I offered many opportunites for you to attend so you can assist future clients by broadening your knowldege base of the foreclosure process and investment arena.. You chose not to…..

    There is risk in every real estate purchase including FIRPTA but I for one focus heavily on the biggest risk of all going forward in a depreciating asset environment. We all know what that is so I will not pound all your heads with it again……

    Just got this lil nuggett…Appears Suzy Orman is now in the camp of “People will only remain Stupid for so long”…She finally sees the light. Took her 5 years and what a 360 from what she preached owners SHOULD DO just last year…What a buffoon http://www.gobankingrates.com/mortgage-rates/foreclosure/underwater-mortgage-why-suze-orman-recommends-quit-paying/

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  8. wreckingbull

    RE: Pegasus @ 5 – Do either of you make a distinction between ‘worry’ and ‘make provisions for’? I’m glad you trust the IRS. I don’t

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  9. wreckingbull

    RE: ray pepper @ 7 – Suzy-Q also told me to get low interest financing on a GM vehicle. She told me to “lock ‘n’ roll”. It was underwater by 25% the second I drove it off the lot. I guess I should have pulled it into the garage and called the repo-man.

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  10. Kary L. Krismer

    By Pegasus @ 5:

    RE: Kary L. Krismer @ 2 – Worrying about FIRPTA problems is akin to worrying about tsunamis. Another molehill made into a mountain by an attorney. Easily solved, just more license for pulp fiction writers and shamans to save us from.

    It’s not one of my big worries. I was just pointing out how hypocritical it is of the government to want buyers to profile people to determine their national origin.

    Curious though what your solution is.

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  11. Kary L. Krismer

    By ray pepper @ 7:

    Kary, there is so many things wrong with your statement I will just say this…You simply don’t know whats happening around you in the investment arena with REO’s and Trustee Sales. I offered many opportunites for you to attend so you can assist future clients by broadening your knowldege base of the foreclosure process and investment arena.. You chose not to…..

    I know that there’s more risk and that the prices are lower to account for that. Are you saying you invest in things without understanding the risk?

    I’ve already explained why I don’t want to attend your meetings. I get enough bad advice attending clock hour courses.

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  12. Kary L. Krismer

    By wreckingbull @ 8:

    RE: Pegasus @ 5 – Do either of you make a distinction between ‘worry’ and ‘make provisions for’? I’m glad you trust the IRS. I don’t

    For some ignorance is bliss.

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  13. ray pepper

    RE: Kary L. Krismer @ 11

    They are NOT MY meetings, in fact I never attend myself nor do I have any affiliation with Vestus or Data Snap. I did 2 years ago but like I said its kind of a dog and pony show. I receive my direct feed every Thursday and Friday of ALL the homes receiving “opportunistic” bids and this data should be common knowledge for EVERY real estate professional.

    You cannot represent clients in full professional capacity this decade without knowing what properties are actually selling for each and every Friday at the Courthouse and educating your clients as to these VERY REAL prices homes are being purchased for. Your ignorance of this and having no interest should be of grave concern to ANY potential client.

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  14. ray pepper

    RE: wreckingbull @ 9

    Wreckingbull this post puts you in the running for MOST IGNORANT POST of SeattleBubble 2012. You have heated competiton with Millionnaire Mike, Scotsman, and Kary is always lurking on the verge of taking the lead…

    Let me just say this…It is pretty common knowledge that BUYING ANY new car puts the owner under water 25-50% within 2 years. For this horrible investment a buyer gets generally a 3 year warranty bumper to bumper.

    Buyers who bought in 2005-2007 did not have this “common knowledge” that a property would drop 25-80% within the same 2 years. If they did, as they would know with a car, I believe its safe to assume many millions would NOT have bought. Furthermore, this unprecedented DROP has been VERY WELL documented as being FRAUDULENT and CORRUPTED by Wall Street and passed onto the WORLD! Does this SAME corruption happen at the dealerships? I think not..

    You see wrecking bull idiots come in many forms and those who continue to point fingers at the homeowners and EXPECT them to fulfill their obligations for 25 more years should be exposed for the fools they are. The homeowners who bought were NEVER the fools. The Fed apparently agrees with this and so do Banks all around this country because Mortgage Cramdown/Principle Reduction will continue to happen for many many years. Remember Kary? Still feel its NOT HAPPENING when it has been for nearly 5 years now? Care to still argue about this and be in DENIAL that it will NOT happen?

    The real FOOLS continue to expose themselves each and everyday here and so many other places when they talk and cry about what is happening around them. They continue to cry and complain on how unfair things are and what people SHOULD DO based on their own life……But, as everyone is starting to realize…………people will only remain stupid for so long…When its all said and done they will ALL be priced at their current market value and through short sale, trustee sale, deed in lieu, and conventional sales their REAL VALUE will become very apparent in the decade ahead.

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  15. wreckingbull

    RE: ray pepper @ 14 – Wow, if you really place the blame 100% on Wall Street/Fed and 0% on buyers, I won’t even try to refute your post.

    It speaks for itself.

    The point I was making, which apparently went completely over your head, was how ridiculous your and Suzie’s one-size-fits-all walk away advice is. It is misguided at best.

    By the way, it was pretty obvious to many of us where things were going. This ‘nobody knew’ BS is just that. If you don’t believe me, feel free to browse the archives. I have been posting here since 2006.

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  16. ray pepper

    RE: wreckingbull @ 15

    im just referring to your post and nothing else…You compared it to a car purchase and I strongly disagree it has ZERO correlation. There is NEVER a 1 size fits all in/re to this. Thats obvious..

    “By the way, it was pretty obvious to many of us where things were going”….again it was to you and people who buy new cars…It wasn’t to MILLIONS OF OTHERS who bought homes!

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  17. Kary L. Krismer

    By ray pepper @ 13:

    You cannot represent clients in full professional capacity this decade without knowing what properties are actually selling for each and every Friday at the Courthouse and educating your clients as to these VERY REAL prices homes are being purchased for. Your ignorance of this and having no interest should be of grave concern to ANY potential client.

    I have no need to know what those prices are. There is too much risk buying in such a manner for me to ever recommend it to anyone, or to assist them doing it.

    Pushing most owner occupied buyers to such risky sources should be the concern of the Department of Licensing. It’s a suitability thing.

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  18. Kary L. Krismer

    By ray pepper @ 14:

    Does this SAME corruption happen at the [auto] dealerships? I think not..

    Wow. Not your best argument. Maybe though your funniest argument.

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  19. Kary L. Krismer

    By ray pepper @ 14:

    <The Fed apparently agrees with this and so do Banks all around this country because Mortgage Cramdown/Principle Reduction will continue to happen for many many years. Remember Kary? Still feel its NOT HAPPENING when it has been for nearly 5 years now? Care to still argue about this and be in DENIAL that it will NOT happen?

    Huh? I’ve been arguing that this so called “cramdown” should be legal in Chapter 13 bankruptcy. When have I ever argued that’s not a good solution?

    What I have said is that mortgage modifications are not being done well, and that even if they were, there are probably other debts in most situations which would make the modification fail in the end. That’s why I think Chapter 13 is the solution. It takes care of all the debts. But in the unusual case where there is not a lot of other debt, a mortgage modification could be a very good solution–if you could get good terms.

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  20. Kary L. Krismer

    By wreckingbull @ 15:

    The point I was making, which apparently went completely over your head, was how ridiculous your and Suzie’s one-size-fits-all walk away advice is. It is misguided at best.

    Almost all of Ray’s advice is one size fits all. He thinks everyone should quit paying their mortgage. He thinks everyone should buy at a foreclosure sale. He thinks everyone should use the cheapest agent they can find. He thinks the wealthy person who wants to buy a lot overlooking Puget Sound and remodel a house into a house of his dreams should not do that.

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  21. David Losh

    RE: Kary L. Krismer @ 17

    You do need to know what these prices are, the same as you need to know the broad, very broad, swath of short sales, and REOs.

    We are in a very decimated market place. You should be aware of that.

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  22. David Losh

    RE: Kary L. Krismer @ 19

    I’m going to also say that if Ray can preach walking away from a mortgage that people should investigate a Chaper 13 as an alternative.

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  23. Pegasus

    RE: Kary L. Krismer @ 12 – And for some twisting one’s comments to fit their agenda is their MO. I made no comment about trusting or not trusting the IRS. I made no comment at all about the IRS. It was a fantasy creation of another and now seized upon by another twister. It appears that many got, understood and agreed with my point except for you two clowns.

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  24. Kary L. Krismer

    By David Losh @ 21:

    RE: Kary L. Krismer @ 17

    You do need to know what these prices are, the same as you need to know the broad, very broad, swath of short sales, and REOs.

    We are in a very decimated market place. You should be aware of that.

    I would agree with you on short sales and REOs, but not foreclosures. They are a completely different market, with unknown risks which would require a ton of research just to find out what each sale price meant. At foreclosures you are not dealing with “marketable title” transactions.

    What you’re saying is you’d need to go to auto auctions before buying a car. You don’t.

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  25. Kary L. Krismer

    By David Losh @ 22:

    RE: Kary L. Krismer @ 19

    I’m going to also say that if Ray can preach walking away from a mortgage that people should investigate a Chaper 13 as an alternative.

    Unfortunately due to the banks paying politicians bribes in the form of campaign contributions, cram down is very limited in Chapter 13. For owner occupied properties, you can only cram down junior mortgages, and then only in limited circumstances.

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  26. Kary L. Krismer

    By Pegasus @ 23:

    RE: Kary L. Krismer @ 12 – And for some twisting one’s comments to fit their agenda is their MO. I made no comment about trusting or not trusting the IRS. I made not comment at all about the IRS. It was a fantasy creation of another and now seized upon by another twister. It appears that many got, understood and agreed with my point except for you two clowns.

    I wasn’t commenting on the trusting the IRS, only that your position seems to be that FIRPTA is not something worth knowing that it exists.

    Also, I asked what your solution was, since you indicated it was a problem easily solved.

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  27. David Losh

    RE: Kary L. Krismer @ 24

    You need to know the source pricing for your REOs, and short sales. These are also the cash prices that in my opinion will be the pricing we have in the near future.

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  28. David Losh

    RE: Kary L. Krismer @ 25

    If you have a second mortgage it can be stripped out in a Chapter 13. It may be a little, but it helps. Also getting rid of debt is the best thing you can do right now.

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  29. ray pepper

    RE: David Losh @ 22RE: Kary L. Krismer @ 20

    I never preach walking away…That would be the WORST thing a homeowner could do. You stay in your home to the bitter end while you SAVE and SAVE each and every month like you never have before when faced with losing your property. Suzi Orman FINALLY caught on as well but unfortunately it took her 4 years to see the light.

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  30. ray pepper

    RE: Kary L. Krismer @ 24

    simply horrible Kary…I would expect more from you but have learned to expect far less as of late…Only knowing short sales and REO’s is half the story.

    How can you NOT educate your clients about homes that are in foreclosure/pending Trustee Sale that are adjacent to properties they maybe purchasing. For the last 20 years we always get asked “Are we getting a good deal.?” You can NEVER EVER give a client an honest answer without knowing all the facts about the homes around them irregardless of losing your commission.

    Even if we take the question out of the mix “am I getting a good deal?” Every Agent owes it to their client in this decade to give ALL the information about homes adjacent to their potential purchase or sale. Ignorance of this Arena will lead clients to potentially have HUGE losses or at least VERY limited gains..

    Kary, please tell me how First American issues Title Policies at The Trustee Sales each and every week and how they are insuring unmarketable titles…? Do you even know what you are talking about?

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  31. Kary L. Krismer

    By David Losh @ 28:

    RE: Kary L. Krismer @ 25

    If you have a second mortgage it can be stripped out in a Chapter 13. It may be a little, but it helps. Also getting rid of debt is the best thing you can do right now.

    Sometimes be stripped. It depends in part on the value of the property and the amount of the prior liens. But yes, if you can do it, I’d agree it would be a good thing to do, at least if you have a lot of other debt issues.

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  32. Kary L. Krismer

    By ray pepper @ 30:

    How can you not educate your clients about homes that are in foreclosure that are adjacent to properties they maybe purchasing. . . .

    Kary, please tell me how First American issues Title Policies at The Trustee Sales each and every week and how they are insuring unmarketable titles…? Do you even know what you are talking about?

    You mean like the one my client bought last year that foreclosed the same week he closed, and my client paid about 20% less? I don’t know whether the other buyer got title insurance or not, but if he didn’t he was even more screwed than he was by paying too much.

    And did I say it was impossible to get title insurance at a trustee’s sale? Check what they cover. You aren’t getting a homeowner’s policy.

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  33. ray pepper

    RE: Kary L. Krismer @ 32

    Kary, what are you getting then?…be specific….Enlighten me….Please…No more broad strokes…be specific….Would you like me to get a First American Title Rep on here to dispel your statement about “unmarketable title.”

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  34. Kary L. Krismer

    RE: ray pepper @ 33 – Well first, I hope you’re not assuming that just because a trustee sale guarantee has been issued, that you have coverage for your buyer.

    Second, to answer your question–mechanics liens, which btw you also are not protected against if your agent checks the wrong box on 22d.

    http://www.oahure.com/pdf/TheEaglePolicy.pdf

    Bankruptcy issues would probably be a second concern.

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  35. David Losh

    RE: ray pepper @ 33RE: Kary L. Krismer @ 32

    Title issues aside, because Ray, Title issues are a very big deal when you buy at foreclosure, the fact remains that this is the mill that is generating the short sale, REO market.

    If you know the bank is only getting X at auction then you have a better understanding how much to pay for an REO. I’m going to say again that the Real Estate market is massively screwed up. You can not ignore foreclosures, and adequately represent a client.

    The foreclosure process isn’t getting better, and that is what Ray has been saying the past two years. You have to be familiar with it in order to understand the market place.

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  36. Kary L. Krismer

    By David Losh @ 35:

    If you know the bank is only getting X at auction then you have a better understanding how much to pay for an REO.

    That’s backward, both as to time (the auctions occur before the REO), and results. What you can get a property for at auction is dependent on what the bank thinks it will be able get at REO, not the other way around. They will also be pricing in some uncertainty as to condition, costs to clean up, and time to sell, so you should be able to pick it up cheaper at auction. But they very well could be working off an incorrect base number, and thinking they’ll get more at REO than is possible.

    To price an REO you can look exclusively at the NWMLS.

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  37. Kary L. Krismer

    One more thing on title–if you do have an issue, outside the homeowner’s policy the most they’ll pay is what you paid. So anything to fix up the property and you’re out that amount (and time.

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  38. David Losh

    RE: Kary L. Krismer @ 36

    I now see the problem: “To price an REO you can look exclusively at the NWMLS.”

    That is like you saying that to get to a house value you only need to look at non distressed properties.

    You got it right the first time then waffled. The bank is asking for what they think they can get. In this market place you have to know what is going on at the foreclosure auctions. Even if it’s just a talking point, you should be aware of that part of the market.

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  39. wreckingbull

    RE: ray pepper @ 33 – Actually, Ray, I’d like to be educated on this a bit more. My neighbor is in an expensive, nasty legal battle right now. He got a decent deal on a foreclosure, but the original owner has filed suit, and this thing has been tied up in the courts for 18 months now. He is still not the legal owner, as far as the county is concerned.

    My first question was: “What about title insurance?” Well, what about title insurance?

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  40. Pegasus

    RE: Kary L. Krismer @ 32RE: Kary L. Krismer @ 37 – Interesting for a guy that swore up and down that fraudclosures were not a problem about 18 months ago you now seem to understand at least a minute part of the problem. Hopefully your comprehension grows and you soon recognize the rest of the gravity of the situation.

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  41. ray pepper

    RE: wreckingbull @ 39

    Please be very specific on the facts and I will try to help. Did he have represenation when he bought? With who? How did he buy this property? REO? Trustee Sale? What do you mean the county does not recognize him as owner? Your question is filled with GAPING missing information.

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  42. David Losh

    RE: ray pepper @ 41

    No one has to be specific, no one “represented” the buyer, they made a choice.

    Banks routinely sell off property that is not marketable at auction.

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  43. wreckingbull

    RE: ray pepper @ 41 – I don’t have much else, as this is all he has volunteered. He is clearly distressed about the situation.

    That being said, perhaps you could do a guest post on purchasing foreclosed properties how it differs from traditional sales, from a title policy perspective. As I indicated in comment #1 of this post, these are the types of things I find interesting, not endless repeats of ‘keep your eye out for the gems’ and ‘they are all coming back’.

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  44. ray pepper

    RE: wreckingbull @ 43RE: wreckingbull @ 43

    I could do a guest post on title policy but its far more simple for anyone interested to just call First American. They are peddling their policies every week at Vestus meetings and a simple call to them will answer all your questions.

    I’ll stick with the “they are all coming back” and “find gems” until I see something far more lucrative on the horizon..

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  45. Kary L. Krismer

    RE: David Losh @ 38 – This is just wrong. Clearly you don’t understand real estate.

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  46. Kary L. Krismer

    By Pegasus @ 40:

    RE: Kary L. Krismer @ 32RE: Kary L. Krismer @ 37 – Interesting for a guy that swore up and down that fraudclosures were not a problem about 18 months ago you now seem to understand at least a minute part of the problem. Hopefully your comprehension grows and you soon recognize the rest of the gravity of the situation.

    Your comprehension could use some work. The issues I’ve been addressing have zilch to do with your robosigning nonsense, or the volume of foreclosure sales. These are issues I would have raised 5, 10 or 20 years ago. These are problems just inherent in buying at foreclosure, and the reason that properties bought at foreclosure auctions have always sold for less than normal transactions.

    Do you think that 20 years ago the ability to inspect a house in a foreclosure auction was more possible?

    Do you think that 20 years ago mechanics lien law was significantly different?

    Do you think that 20 years ago bankruptcy law (avoidance) was significantly different?

    To time this, I once had a client go and watch the foreclosure of his property, and the buyer clearly didn’t know what they were buying because they didn’t understand the liens against the property. They bid way too much. That was about 2-3 months before the law went into effect allowing the 250/500k exception on the sale of residence. That was at least 10 years ago.

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  47. Kary L. Krismer

    RE: ray pepper @ 41 – Check out the facts of Albice v. Dickinson. The trustee’s sale was conducted in 2007 and the case is now just pending before the Supreme Court, and presumably will be decided this year. The original owner won at the Court of Appeals level, but lost at the Superior Court level. So five years to determine ownership, assuming the Supreme Court doesn’t send it down again for some fact finding at the lower court level.

    http://o.blog.seattlepi.com/realestate/archives/226042.asp

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  48. Kary L. Krismer

    By ray pepper @ 44:

    RE: wreckingbull @ 43RE: wreckingbull @ 43

    I could do a guest post on title policy but its far more simple for anyone interested to just call First American. They are peddling their policies every week at Vestus meetings and a simple call to them will answer all your questions.

    I’ll stick with the “they are all coming back” and “find gems” until I see something far more lucrative on the horizon..

    You haven’t even attempted to address the fact I noted above–that there are different levels of title coverage, and that you’re not going to get a homeowner’s policy at a foreclosure sale.

    Also, I mentioned bankruptcy above. This type of exception to a title policy is very common in REO transactions:

    Any claim or allegation to set aside the trustee’s deed dated May XX from Northwest Trustee Services, Inc. to Federal National Mortgage Association, recorded May XX in Official Records under Recording Number XXX, in bankruptcy proceedings filed by or on behalf of XXX within two years from the foreclosure sale date of XXX.

    Note: We may be willing to remove this exception upon a conveyance to a bona fide purchaser for fair market value. Please contact your Title Officer for further information.

    I’m pretty sure they won’t remove that exception on the original sale at foreclosure. Note the two year time period. Also not that’s the date of the bankruptcy filing, not the later date of the trustee suing to avoid the transaction.

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  49. Kary L. Krismer

    Listening to Ray talk about foreclosures somehow reminds me of Swap Meet Louie.

    Start buying all your Louie in the hood
    And your sprung, on the two for one
    Fake Louie at the swap meet, son
    Now you know brown Louie is played
    But you’re drunk and you just got paid
    So you bought the gear, little Mary says “See ya”
    Little did you know it was “Made in Korea?”

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  50. wreckingbull

    RE: Kary L. Krismer @ 47 – This sounds quite similar to what the guy down the road is going through. I don’t want to expose his address, but I will try to get some more information on what is going down and report back.

    Thanks for the information, much more useful than “call the title company”.

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  51. Kary L. Krismer

    RE: wreckingbull @ 50 – I think the facts of Albice are somewhat unusual. More typical for prior owner suits would be some type of avoidance claim based on a low sales price, and/or a bankruptcy filing very close to the time of the foreclosure, etc.

    Then there are also the third party claims, like mechanic’s liens, IRS liens, etc.

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  52. David Losh

    RE: Kary L. Krismer @ 45

    I really thought you would have something to say here.

    A foreclosure auction can sell off properties that may not be suitable as REOs. Confused bounder issues, wet lands, critical slope, disrepair, gutted houses, or houses that need to be gutted. Some houses have insurance claims for fire, or the one thing you brought up, mechanic’s liens, and I thought you would have more to say about bankruptcy.

    None of that changes the fact about the volume of foreclosures. On a per cent basis the Title concerns are less. There are just so many foreclosures that it is a market segment.

    The market is so screwed up, buyers are so turned around, that an agent needs to be aware of the entire market place before they start talking about a bottom, or when it’s a good time to buy.

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  53. Kary L. Krismer

    By David Losh @ 52:

    <None of that changes the fact about the volume of foreclosures. On a per cent basis the Title concerns are less. There are just so many foreclosures that it is a market segment.

    I would agree with that, but those are two different things. That there might be title issues on less than 1% of the sales doesn’t mean much in the overall scheme of things, but if you happen to be one of those transactions, it can mean financial ruin for the buyer. The overall volume of foreclosure sales does affect the markets, but note that foreclosures have been declining for about a year now.

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  54. Kary L. Krismer

    By David Losh @ 52:

    RE: I thought you would have more to say about bankruptcy.

    Not a heck of a lot to say, and post 51 touched on it without mentioning the word bankruptcy.

    If there are procedural irregularities and/or a low price at the sale, the trustee might claim the sale was a fraudulent conveyance (implied not actual fraud).

    If the bankruptcy was filed shortly prior to the foreclosure sale (e.g. bankruptcy at 7:55 and sale at 9:00), in certain situations the creditor might ask for a relief from stay nunc pro tunc so that they can complete the transaction. The debtor or trustee might appeal that, tying up the property. Those are the main two concerns.

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  55. ray pepper

    RE: Kary L. Krismer @ 48

    Kary, I have calls out to the 3 reps I use at 1st Am and Chicago. I will report back on ANY limiting factors of a title policy received from a Trustee Sale. I dislike individual cases “Albice” because for every one case that is illustrated many more can be illustrated via a conventional sale flaw in Title that also had litigation and quite possibly set precedent.

    Stay Tuned.

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  56. Kary L. Krismer

    RE: ray pepper @ 55 – If you’ve been involved in so many of these things, you should have a title policy in one of your files. It would be something they would send you a few weeks after the sale. And it would indicate the type of policy, and any exceptions.

    Just as an example, if it says “ALTA Owner’s Policy – 2006″ that would be the lesser coverage. If it says “Homeowner’s Policy of Title Insurance – 2008″ that would be the type which would cover mechanics liens, assuming no other exception is mentioned in the body of the document.

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  57. David Losh

    RE: Kary L. Krismer @ 56

    These were pretty constructive comments. What Ray points out is also correct, there can be Title issues with any transaction.

    I’m now fascinated by bankruptcy. It surprises me more people don’t do it. People are walking away from homes without ever addressing the liabilities.

    If properties are decling 30% from peak, and you have a 20% second, why wouldn’t you attempt to strip that out before you “walk away.” It also makes sense that people would have other debts accumulated. I mean it will all come back to haunt you.

    The other thing that is fascinating is that George Bush introduced these sweeping changes to the bankruptcy laws just before a global economic collapse. That seems fishy to me.

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  58. Kary L. Krismer

    By David Losh @ 57:

    I’m now fascinated by bankruptcy. It surprises me more people don’t do it. People are walking away from homes without ever addressing the liabilities.

    Some of it is ignorance, but sometimes they don’t fit the program or don’t want to go through the program.

    The other thing that is fascinating is that George Bush introduced these sweeping changes to the bankruptcy laws just before a global economic collapse. That seems fishy to me.

    That legislation had been pending in Congress for some time. Clinton actually vetoed it while Congress was out of session and couldn’t override the veto. They had more than enough votes, because it was a non-partisan screwing of the American people and gift to campaign donating banks. But tnen it got tied up in some sort of abortion dispute, (possibly to continue to receive campaign donations) and then one of the main opponents died in an airplane crash. Finally, I believe it was signed fairly early in Bush’s second term, so it wasn’t quite “just before” the collapse.

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  59. Kary L. Krismer

    By David Losh @ 57:

    These were pretty constructive comments. What Ray points out is also correct, there can be Title issues with any transaction.

    That’s why you get title insurance, and why if you represent a buyer on an REO or new construction the agent should upgrade the policy even if they have to pay for it (let your lender know). It’s also why neither box should ever be checked on Form 22D, paragraph 2. Lots of agents do that though.

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  60. ray pepper

    RE: Kary L. Krismer @ 56

    Kary. if I had the time to dig through the files I would but between my 10 year old daughters dance party rave on Saturday, my 3 basketball teams, and soccer committments I’m happy I even made the calls to my Reps. For the price of Title premiums anyway they deserve to give me as much air time as I desire.

    Stay tuned. Everyone appears to be closed today..

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  61. Ira Sacharoff

    RE: Kary L. Krismer @ 49
    Every once in a while, surprises happen. Kary Krismer quotes Sir Mix A Lot, a well known local lad. And I quote Gilbert and Sullivan..” Things are seldom what they seem, skim milk masquerades as cream.”

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  62. Kary L. Krismer

    RE: Ira Sacharoff @ 61 – Seattle rap is special.

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  63. deejayoh

    By Kary L. Krismer @ 62:

    RE: Ira Sacharoff @ 61 – Seattle rap is special.

    Funny. My daughter spotted Macklemore at the Nordstrom Rack last weekend and was ecstatic to get her picture snapped with him. I didn’t even know who he was!

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  64. Kary L. Krismer

    RE: deejayoh @ 63 – I’m was not familiar with him either, but listening to him it reminds me of a cross between the Flowbots and Eminem.

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  65. Marc

    RE: ray pepper @ 60 – I would love to see a copy of the actual title policy that was issued to the purchaser at a trustee’s sale so I can see what is and isn’t covered. Many of the title officers I’ve spoken with have told me their firms won’t offer any title insurance to purchaser’s at a trustee sale. Perhaps what they meant was they’ll issue a policy but will specifically exclude coverage that will protect the purchaser against the claims by the foreclosed home owner coming back around (for example) thus the utility of the policy is eviscerated. I also want to know if they’ll insure against junior lien claimants who claim to not have received notice of the sale (which would mean their liens are not extinguished).

    In any event, Dwight Bickel, general counsel at Rainier Title, had this to say on the subject back in 2010: http://activerain.com/blogs/titleadvisor (see, in particular, the second to last paragraph regarding purchaser’s at auction versus buyers of REOs). I wonder if he still stands by this post or if his optimism has waned (i.e., I have yet to see any lender selling an REO do anything other than disclaim any and all liability regarding the foreclosure sale).

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  66. Kary L. Krismer

    By Marc @ 65:

    In any event, Dwight Bickel, general counsel at Rainier Title, had this to say on the subject back in 2010: http://activerain.com/blogs/titleadvisor (see, in particular, the second to last paragraph regarding purchaser’s at auction versus buyers of REOs). I wonder if he still stands by this post or if his optimism has waned (i.e., I have yet to see any lender selling an REO do anything other than disclaim any and all liability regarding the foreclosure sale).

    I assume you mean this language:

    A proposed purchaser might ask for a title report (aka “preliminary” or “commitment”) proposing to insure the purchase at the Trustee’s sale. However, you should expect one or more Special Exceptions to coverage will remain in any policy following a foreclosure sale. The language will vary, but in substance the title company will remove coverage against loss due to an attack by the former owner/borrower on the validity of the prior Trustee’s sale. The limitation on insurance will apply to the lender (or its successor entity) acquiring at its own sale, AND apply to a third-party purchaser acquiring by a bid at the Trustee sale.

    I would suspect it’s broader than that, and also goes to the bankruptcy concerns I addressed earlier.

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  67. Kary L. Krismer

    One other thing that might apply to Ray. I don’t think LLCs can get the homeowner title coverage, but only the owner title coverage. So even if they issue policies in foreclosure, with Ray’s entities it most likely wouldn’t cover mechanic’s liens.

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  68. Sweet Pea

    RE: deejayoh @ 63

    I wouldn’t recognize him on the street most likely, but I dare anyone who grew up in the Seattle area during the last 30 years to listen to My Oh My and not shed a tear. So good.

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  69. ray pepper

    RE: Marc @ 65

    For Kary and Marc per First Am Puyallup and Seattle..

    Every Title is different however ” a policy is a policy” they want everyone to know. The Foreclosure companies receive a Pre Lim from First Am on properties requested. Based on that information a Title Policy is offered with exclusions that are pertinent to that particular title. Homeowners Policies will be offered irregardless of the way the property was purchased. What matters is what they analyze on Title.

    There is an exclusion for “party in posession” but this is the same exclusion found in a REO as well. They will not insure against claims by the prior homeowner or junior lien claimants who claim they have not received notice of sale unless you are offered a Homeowners Policy. This also applies to REO as well. Mechanics liens, the concern would be the same as on ANY purchase which is 90 days from which work was completed and the contractor did not file it.

    In re to Home Owners Policy First American and some other Title companies WILL provide a Homeowner policy based on review of the title and they would issue title to Buyer “Eagle Protection Policy aka Homeowners Policy.” This would cover non recorded liens and coverage for homeowner and junior lien claimants who have “not received noticed of sale.”

    First Am also points out purchasing an REO or ANY property has RISK but the risk can be greatly limited by receiving their Title Insurance and limiting risk even further by getting a Homeowners Policy on ANY property being purchased in ANY fashion.

    So there you have it Kary and Marc. Be careful out there on EVERYTHING and get your Buyers their Homeowners Policys on ANYTHING you represent your client with going forward.

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  70. Kary L. Krismer

    RE: ray pepper @ 69 – The first paragraph seems to just be addressing litigation guarantee type coverage. There wasn’t any doubt about that, but it is good to note that they will offer insurance on auction properties (at least that one company).

    I already do get Homeowner’s policies, and consider that especially on REO transactions. But note you didn’t address the thing I mentioned, that LLCs cannot get such coverage. Note though that would be the same with buying at an REO. Neither type of transaction involves a warranty deed, so LLCs, corporations, etc., are more at risk in that regard if they cannot get homeowner’s coverage.

    Also note–homeowner’s coverage doesn’t terminate when you sell. Since you’ll almost certainly sell using a warranty deed, that’s another reason to always get homeowner’s overage for your buyers, if you can.

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  71. ray pepper

    RE: Kary L. Krismer @ 70

    # 1 Kary, I was just referring to your post on # 32…”You aren’t getting a homeowner’s policy. ”
    Well, you must stand corrected. You very WELL can get a homeowners policy at Trustee Sale.

    #2 post # 70 You must ALSO stand corrected on this: An LLC can receive a Home Owners Policy at Trustee Sale. First American deletes the language in the Title Policy that it must be held by a natural person and will allow an LLC to get a homeowners policy.

    See Kary, this is why I contend PROFESSIONALS** MUST ** know what they are talking about before passing erroneous information onto others. You can call to confirm First American Title Dept in Seattle/ Puyallup to verify any of the information I’m passing on to others. Your practice of real estate is very erroneous and the information you provide is DANGEROUSLY WRONG to the consumer or at best ill-informed.

    Please STOP and do your DD before giving ANY further real estate advice..

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  72. Kary L. Krismer

    By ray pepper @ 71:

    RE: Kary L. Krismer @ 70

    # 1 Kary, I was just referring to your post on # 32…”You arenâ��t getting a homeownerâ��s policy. ”
    Well, you must stand corrected. You very WELL can get a homeowners policy at Trustee Sale.

    #2 post # 70 You must ALSO stand corrected on this: An LLC can receive a Home Owners Policy at Trustee Sale. First American deletes the language in the Title Policy that it must be held by a natural person and will allow an LLC to get a homeowners policy..

    I agree on the first part. I find that surprising, but I agree.

    I disagree on the second part. The language of the First American Homeowner policy provides: “Natural Person–a human being, not a commercial or legal organization or entity. Natural Person includes a trustee of a Trust even if the trustee is not a human being.” That is not an exception to the policy that can be deleted. It would need to be done, if at all, by a special endorsement of the policy, and that would require specifically asking for it. There are actually a lot of special endorsements they will do on policies.

    I would also note that unless you’ve actually done that, just the word of your title officer isn’t that great because they don’t have the final say. I’ve had title officers say things can be done, and then get overruled by the powers above them.

    But it did occur to me that you shouldn’t have to dig through boxes to find the title policies that you have. I don’t think I’ve seen a paper title policy for over 5 years. You should be able to find one on your computer and find out whether you’ve been getting an owner’s policy or a homeowner’s policy.

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  73. Kary L. Krismer

    RE: ray pepper @ 71 – BTW, I will note you haven’t addressed the issue of inspection of foreclosures, or the fact that the title company will only pay you at most what you paid for the property (plus 10% a year for 5 years on HO policies–a holdover clause from pre-peak years). So if you buy a dump, fix it up, and then the claim arises, your time, money and effort fixing up the property might disappear.

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