Seattle foreclosures are out there and there are certain issues associated with buying REO properties that need to be addressed from time to time.  Make sure to hire a Seattle REALTOR who knows REO - it is NOT a "do it yourself" process!  A few years ago, I brought my client by a Mountlake Terrace foreclosure property which was listed on the NWMLS.  My client decided that they loved it and we put in an offer.  After a lot of negotiating back and forth, our offer got accepted and my client got a great deal!

Happy ending? No!

One week before closing we were notified of a problem.  Even though the property seemed to have a clean title, when the lien holder had foreclosed on the property originally, they had not foreclosed on it properly and inadvertently left a junior lien holder out there attached to the property.  This little cloud on title that popped up was a third mortgage from a private party.  The only way the bank could sell us the house was to pay this particular lien holder off.  They decided instead to go back and foreclose all over again and knock this little lien holder out.  In the process, they also knocked us out.  Even though my buyer loved the house, the bank said it could take many months to go through this process, so we found another house. 

The lesson...

This little hidden "cloud on title" cost us a lot of time and effort and I ended up helping my buyer with some temporary housing at the local Extended Stay.  Don't assume that a normal title insurance policy will uncover some of these hidden junior loans.   They should, but in hind site I wish the listing agent had ordered a more thorough policy up front so that we had not gone through the roller coaster of this particular house. With REO properties, the bank directs title and escrow so the ball is in their court unfortunately. 

Catching up...

As a side note I will add that it took a year before that house came back on the market and it suffered a lot of deferred maintenance while it was off the market.   I think that the bank looking back at the numbers might have done better to have paid off the junior lien holder and sell the poor house when they had the offer.

Courtney Cooper ....For all your Seattle Washington Real Estate Needs! Seattle Area Real Estate Agent: Broker and Realtor serving North King & South Snohomish County.  Seattle Real Estate and Seattle Suburbs!  Cooper Jacobs Real Estate Services:   Experienced REALTOR with a background in accounting - I love my clients and work hard for them! Please call me if you are looking for a home or investment property (including short sales, preforeclosures, foreclosures, and REO properties) in Seattle (Ballard, Crown Hill, Phinney, Ravenna, Maple Leaf, Greenlake, Greenwood, Northgate, Lake City,University, Sand Point, Laurelhurst, Windermere, Fremont, Wallingford, Queen Anne, Westlake, Eastlake, Lake Union, Downtown, Madison Park), Shoreline, Edmonds, Brier, Lynnwood, Mountlake Terrace, Lake Forest Park, Bothell, Mill Creek, Everett, or other Seattle Suburbs!

 If you are thinking of relocating to Seattle, I am an expert at Seattle Relocation services and can help you find the perfect home while making sure it is a solid financial investment!