Weekend Open Thread (2009-05-01)

Here is your open thread for the weekend beginning Friday May 1st, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.

Be sure to also check out the forums, and get your word in the user-driven discussions there!

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About 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. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 1
    Eastside Westside its all good says:

    Was wondering if someone could help me understand what happened with this property. It’s listed as a sale to a bank less than a month ago and is now on the market. I’m assuming it’s a REO and this is how the transaction is entered in the county records since I’ve never heard of a bank actually buying back a house and I see this kind of transaction on a regular basis. I was also curious about the sale price – is that what the homeowner owed to the bank at the time of repossession?

    If my assumptions are all wrong, please let me know.

    The listing is here.

    5579 152nd PL SE Bellevue

    King County Parcel Viewer is not responding right now or I would have attached the link directly.

    King County Parcel Viewer

  2. 2
    The Tim says:

    RE: Eastside Westside its all good @ 1 – So here’s the story on that particular house:

    • August 2007: Purchased for $1,450,000 (King Co. Parcel)
    • November 2008: Notice of Trustee sale received, $1,016,257 owed to the bank. (King Co. Records)
    • March 2009: Repossessed by bank at foreclosure auction for $774,400 (King Co. Records)
    • April 2009: Listed by bank with asking price of $820,000.

    It’s interesting to note that the bank here bid over 20% less than it was owed on the mortgage to buy the house back at the courthouse foreclosure auction. Jillayne has pointed out that this has been happening more and more frequently around here.

    Previously this was unheard of. The bank (or someone like Northwest Trustee Service, representing the bank) would show up at the auction and place a bid for whatever was owed on the mortgage. Now, as you can see, banks are willing to take 20% or more of a hit right up front, before even bothering trying to put it on the MLS.

    Interesting stuff.

  3. 3
    Kary L. Krismer says:

    RE: Eastside Westside its all good @ 1 – That property did sell at foreclosure, and now a bank type entity owns it.

    Interestingly it sold two times in 2007, four months apart, for over $200,000 more the second time. There are no interior pictures available for either of those 2007 listings, so I can’t determine whether any improvements were made between the two listings. And during the prior year it sold for $150,000 less than the lower priced 2007 sale. The two 2007 sales found their buyers very quickly–less than one week and two weeks respectively.

  4. 4
    Kary L. Krismer says:

    RE: The Tim @ 2 – I’m not sure that it matters what the bank bids when they end up buying. The lower bids are probably just an indication that they’re willing to let someone out bid them for less than what is owed. They could always list it for more than what they paid.

  5. 5
    The Tim says:

    By Kary L. Krismer @ 4:

    The lower bids are probably just an indication that they’re willing to let someone out bid them for less than what is owed.

    I know, that’s kindof my whole point. This is something new. Previously, they would just come in and bid whatever they were owed because they assumed they could get at least that on the open market.

  6. 6
    Racket says:

    What happened today ??? There are only 3 new listings in the whole Puget sound region?.?.?

    Are all the REs out golfing today?

  7. 7
    JJL says:

    RE: Racket @ 6

    Not sure where you get your info, but there are 17 new lisings this morning in King Co., and it’s only 9:00 am. – okay, checking out now – tee time at 10 ;)

  8. 8
    The Tim says:

    RE: Racket @ 6 – If you’re referring to the sidebar tracker, there’s a regular pattern of a few hundred listings being purged on the 1st of every month.

  9. 9
    Kary L. Krismer says:

    Systemwide I’m showing 1297 expireds in the last 24 hours, most likely the result of picking the end of the month as referenced by Tim. I’m showing 687 new listings.

  10. 10
    Kary L. Krismer says:

    As long as I’m looking at such things, agents still have 3 days to report yesterday’s sales, but it appears there will be a significant jump in both mean and median for April (King Cty SFR). The pendings continue to rise in volume, but not price. Something’s got to give there. The two are inconsistent.

  11. 11
    Joel says:

    By Kary L. Krismer @ 10:

    Something’s got to give there. The two are inconsistent.

    Not really. We already know that around 1/3rd of pendings don’t close. That could account for the difference (assuming you’re talking about closed sales when you referenced the “mean and median”)..

  12. 12
    Racket says:

    I’m just referring to what I can find in search tools available to schmucks like me

  13. 13
    Jillayne says:

    Hi Tim,

    I have a new post in draft mode over at RCG on low bids at foreclosure auctions, but I’m having trouble figuring out how to upload my foreclosure auction video to You Tube.

    I have about 20 minutes of film footage and I’ve tried breaking it down into two 10 minute videos but it’s taking forever to upload them to YouTube. By this I mean 4 hours later, it was still uploading. Maybe it’s the file size or type.

    Maybe I used the wrong settings. When I save and publish (Windows Movie Maker) what “windows media settings” should I use? DVD, HD, AVI, VHS??

    Any advice is so very much appreciated. The file I’m trying to upload is a .wmv file and it’s 930 MB.

  14. 14
    The Tim says:

    RE: Jillayne @ 13 – Wow, 930MB would take a long time to upload. I’d try maybe publishing it in avi format from Windows Movie Maker to see if that results in a smaller file size…

  15. 15
    Kary L. Krismer says:

    RE: Joel @ 11 – Falling out is one thing that could give.

    BTW, when I refer to mean and median it’s both closed and pendings, but with pendings it’s mean and median list because we don’t know the sale price until closing.

  16. 16
    Jillayne says:

    Thanks so much, Tim. That’s probably what’s happening. I like to have a good quality video to play during classes. I will try AVI.

  17. 17
    Walter Dunning says:

    What is the opinion on using historical prices to value homes here in Seattle?

    For example, this house: http://www.redfin.com/WA/Seattle/2426-1st-Ave-W-98119/home/131237

    It sold in 1991 for $230K. Adjusting that for inflation would be approximately $360K in 2009 dollars.

    You can’t see remodels in the history. But assuming a remodel and then the growth of Seattle, is there any way $800K could be considered reasonable for this home?

  18. 18
    One Eyed Man says:

    RE: The Tim @ 5RE: Kary L. Krismer @ 4

    I haven’t gone to the deed of trust act to check but my recollection is that when the trust deed act was amended 10 years ago, the lenders lobby got the right to pursue borrowers after a trustee’s sale for waste and some other similar item. If I recall correctly this included trustee’s sales of residential property. I believe waste would include damage to the property caused by tearing out fixtures, cabinets, counter tops etc. which seems to be happening with some regularity these days.I haven’t gone back to check the exact procedure for pursuing a Borrower who commits waste, but it may be that the lender has to bid below the balance owed in order to preserve the right to potentially pursue a deficiency claim for waste. As I recall the lender has to prove that the price at the trustee’s sale was fair value (or something like that) to pursue the deficiency. I think probably if the lender pays the full amount of the balance at the trustee’s sale it’s evidence that the balance was the fair value and there was no deficiency to the lender. Like I mentioned above, I haven’t gone back to check the statutes on the procedure and may be wrong.

  19. 19
    dancingeek says:

    RE: Jillayne @ 16 – AVI is likely a container for an uncompressed format in this instance. You will likely see the smallest file by choosing “VHS”.

  20. 20
    Jillayne says:

    dancinggeek and Tim, The AVI format was still too large. I will now try VHS. If I still can’t get it to work, I will just upload each scene as a separate video. Thanks!!

  21. 21
    Kary L. Krismer says:

    RE: One Eyed Man @ 18 – I think those recoveries might be only on non-residential. We had a listing in our office the broker mentioned where virtually everything was removed from the house, right down to the baseboard. I looked at the statute, but didn’t see that the owners would be liable. IMHO that should change.

  22. 22
    One Eyed Man says:

    RE: Kary L. Krismer @ 21

    I checked also and you’re right, the waste exception for deficiencies is limited to commercial properties.

  23. 23
    Jillayne says:

    Thanks everyone. The VHS format worked but the file is too large: 11.15 min. YouTube will only allow 10 minute videos. I’m going to just upload each scene as a separate clip.

  24. 24
    cheepseats says:

    Anybody else see these WAMU happenings? Stock that was at $0.06 last fall hit $0.95 this week?

    Lawyers for Washington Mutual Inc. have filed a bankruptcy court complaint against JPMorgan Chase & Co. over some $4 billion in disputed assets



    and this http://www.google.com/finance?q=WAMpQ
    $.01 to $27.00

  25. 25
    Jillayne says:

    If anyone is interested, I’m slowly uploading all the foreclosure auction videos to youtube one at a time. I have three parts uploaded and there are a total of nine scenes. When I’m near the end, I’ll upload a new blog post on RCG regarding the banks undercutting their own payoff. I think I have figured out why they’re doing it.


  26. 26
    fwiw says:

    Whoo Hoo!!
    Jillayne with her videos on CR!

    ‘grats Jillayne,
    tim hope you don’t mind the link to CR!

  27. 27
    Jillayne says:

    CR must read SB because I didn’t send him the link any other way. Nobody knew that I was uploading all day except SB readers.

  28. 28
    fwiw says:


    Could be. A sad night over here in WS as there was a shooting down on Alki, the things I moved here for many years ago become less and less usable every year :-(

  29. 29
    Jillayne says:


    I’m sorry to hear about that. What happened?

  30. 30
    Angie says:

    Jillayne, the Times covered it–an apparent drive-by.

    In happier news, and pursuant to the discussion of rent levels from earlier in the week, we just got some new tenants into our rental house at the same rent level as the prior tenants paid. We took a month to do some improvements on the place and buff it up to a high shine and it looks fabulous (even without granite and stainless, can you believe it??) The new tenants are wonderful and they are totally in love with the place. And, happily, they were able to pay first/last/deposit in one fell swoop… I think we’re off to a good start!

  31. 31

    […] weekend’s open thread touched on one example of a bank bidding nearly 25% less than what it was owed for a foreclosed home at the courthouse […]

  32. 32
    Everett_Tom says:

    Seattle couple stretched to buy house just before downturn – Seattle Times.

    Or Sorta, they bough in April 2008.

    This article makes me grind my teeth.

  33. 33
    Kary L. Krismer says:

    RE: Everett_Tom @ 32 – Really. I don’t understand why people agree to be the subjects of these type of stories.

  34. 34
    The Tim says:

    RE: Everett_Tom @ 32

    After a stressful nine-month search that began in 2007, John Bowers and Monica Jackson bought a $448,000 home in Seattle that was far from their ideal.

    On the plus side, it was in a neighborhood they loved, close to friends and good public schools.

    If they didn’t jump on it, they feared being priced out for good.

    Let me Google that for you.

  35. 35
    Kary L. Krismer says:

    How could they have been searching during that period without realizing prices were declining? Now it wasn’t clear where they were headed after that, but at the very least they should have known that further declines were a possibility.

  36. 36
    The Tim says:

    RE: Kary L. Krismer @ 35 – No doubt. Even the lagging Case-Shiller data that was posted at the end of March ’08 was showing price drops.

  37. 37
    D. says:

    I just think most people don’t immerse themselves into analyzing real estate. Maybe they don’t read the newspaper at all so they aren’t aware of how buying more house than you can chew is resulting in foreclosures all over. They take their realtors and the newspapers at their word. We’ve been looking since January 2008 and while I really like my realtor, I don’t trust her to make market predictions because you just don’t know. I’ve heard her many a time say that interest rates are down and that makes this a great time to buy. If I weren’t reading everything real estate and if I didn’t have a naturally suspicious nature I may have fallen into that. Luckily we’re so dang picky that as we’ve continued to sit on the fence prices fall.

  38. 38
    D. says:

    This couple probably was hearing about how special this market was too.

  39. 39
    Boyflux says:

    Apart from not doing their due diligance on housing prices, it sounds like the couple have good heads on their shoulders. They pushed their mortgage cost up since they have so few other expenses. Still, I’m guessing that it’s at 50% of their gross combined income, which is really inexcusible for a mortgage broker to have allowed, in my opinion.

    It sounds like these folks put some trust and faith into the wrong people and unfortunately got the rub. It’s good to see that they’re willing to take it on the chin and accept that they were complicit in causing the situation that they’re in. I think that it’s a hard lesson to learn, but once you take control of your finances and respect them, they become less of a stress point. In my experience, when you’re not thinking about money all of the time because you know where it is and where it’s going, you get the chance to actually enjoy the fruits of your labor, both monetary and not.

  40. 40
    Everett_Tom says:

    RE: Kary L. Krismer @ 33 – Yea, me neither. Though occasionally it works out.. maybe some nice rich person will pay off their mortgage now, or something like that…

    RE: The Tim @ 34 – Exactly. My wife and I arrived in the middle of 2007, and started looking homes, having just sold our place in CA. By winter we were starting to feel nervous about the process based on what we saw in the news (this blog included), and by early to mid 2008 we stopped looking.

    That and any plan that includes pulling out of your savings most months to pay your mortgage is a loser in my book. Not only that, by their own admission, they move a lot. The folks I know who live like that (typically military, I grew up in a town near a base) bough a place in the town they wanted to retire in, and then rented for the rest of their moves.

    I’d be curious to hear what the rest of you think of the financial advice they’re currently getting (e.g. “just wait it out”). I was quite surprised they weren’t told to sell and rent, as it seems like they are headed for imminent financial disaster in the next 6 – 18 months based on the data in the story.

  41. 41
    fwiw says:

    I was particularly fond of this quote out of the Seattle Times article:

    ‘Jones applauded the couple for trimming expenses where possible and for not spending beyond their means, with the exception of the house.’

    Yeah, they didn’t spend beyond their means except for this one giant expense that is eating a grand+ a month out of their savings …. sheesh!

    These look like a potential prototype for Ray Pepper’s walk away situation …

  42. 42
    Scotsman says:

    Here’s a facinating read on California as an indication of what’s to come nationally. While Californians have continued to move out, fewer seem to be coming here:

    “For four consecutive years, more Americans have moved out of California than have moved in. California’s business costs are more than 20 percent higher than the average state’s. In the last decade, net out-migration of Americans has been 1.4 million. ”


    “If, since 1990, state spending increases had been held to the inflation rate plus population growth, the state would have a $15 billion surplus instead of a $42 billion budget deficit, which is larger than the budgets of all but 10 states. Since 1990, the number of state employees has increased by more than a third. In Schwarzenegger’s less than six years as governor, per capita government spending, adjusted for inflation, has increased nearly 20 percent.”

    Obviously, this can’t continue, either in CA or on a national level. And unfortunately, the corrective re-balancing of the economy is going to hurt, both through reduced expenditures and lost personal income.

  43. 43
    b says:

    I am glad the Times decided to focus on these geniuses. They bought a home with a $3k/month mortgage and admit their takehome pay is $4600 a month. They apparently were banking on the husband getting a raise or promotion in the next few years, at least that is their claim. How on earth they amassed $30k in savings with such brilliant skills baffles me, probably an inheritance or other one time windfall is my guess. You can rent upgraded versions of those crummy 2/1’s in Seattle any day of the week for $1500-1800.

  44. 44
    Scotsman says:

    RE: b @ 43

    Saw that- unbelievable. The best part is that even though their situation isn’t working, they plan to stay the course until the savings are gone.

    But hey, at least they aren’t…. RENTERS! They OWN their home. Or it owns them. Or something.

  45. 45
    Boyflux says:

    RE: b @ 43
    I think the article says that some of the savings came from the sale of their previous Seattle home in 05 (which they probably took quite a profit off of).

  46. 46
    Civil Servant says:

    I opened up Karl’s Mortgage Calculator. Assuming an interest rate of 6% — isn’t that about right for April 2008? — they would have to have borrowed $500K to get up to a monthly payment of $3000.

    The greed hypothesis does seem the most valid one. Unless you are a wannabe speculator, what is the rationale for financing more than the value of your house when you’re sitting on a pile ($30K) of cash? The Seattle Times does a disservice to all thinking people by continuing to print this rot.

    Boyflux @ 39: “Apart from not doing their due diligance on housing prices”: aside from that, Mrs. Lincoln, how did you like the play?

    Everett Tom @ 40, since you ask, I think they are getting lousy, biased, and potentially ruinous advice. A Ph.D. in education — what could possibly go wrong?

  47. 47
    Civil Servant says:

    Oh sorry, my error — article confirms the 6% rate and notes that the $3000 includes insurance and taxes. So it looks like they only borrowed around 100% of the house price, not more than that. But I was also wrong about the $30K in savings — apparently it used to be more, since they’ve been spending it down. So I’m still going to go with greed.

  48. 48
    b says:

    RE: Boyflux @ 45

    That makes sense as to why they would take on such a ridiculous mortgage with their income and letting it bleed their savings for the foreseeable future. They probably were banking on selling that POS in two years for a cool hundred grand profit, like they probably made in 05, and they just didn’t realize the bubble was over. Greed ruined them, like many others. Pigs get fat, hogs get slaughtered.

  49. 49
    BillE says:

    Wow, a couple buys a home for more than 8x their income and it doesn’t go well. And in other news…man touches hot stove, burns hand.

  50. 50
    Kary L. Krismer says:

    RE: BillE @ 49 – Well it’s like that Elizabeth Rhodes story from a few years ago, where man buys condo and 4 months later can’t sell it asking 9% more than what he paid four months earlier, without any apparent changes to the unit. That might have even been front page news.

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