Pierce County and South King County both are ahead of the curve when compared to the rest of the nation in terms of foreclosure properties or REOs(bank owned). However, there are literally thousands of distressed properties out there and for the knowledgeable buyer, some truly remarkable deals. The trick is knowing how to locate the properties and then successfully negotiate with the banks. The following is intended not for investors, but individuals wanting a home and interested in cashing in on the down market.

Finding the properties

So, where are these bank-owned, pre-foreclosure gems you've heard others talk about? Truth is, most people just stumbled across the opportunities and only a handful actually seek them out. Investment companies are buying like crazy and snapping up a lot of the really great buys, but individuals can take their turn as well. Good or bad, you'll have to find a real estate agent to help you locate the properties. A smart agent will understand how to search for these properties and will have connections with the local banks. Troy Toulou, an agent who specializes in finding these sort of properties recommends, "Work with an agent that you trust. Don't just pick the first one you find...ask questions. See if they know how to produce the properties for you to consider. Make sure they can help you negotiate aggressively and navigate the political web of the banks."

Tacoma Bank-Owned Properties (searchable by city & county)
http://www.remax-prop-puy-wa.com/index.php?mainsection=TopPicks&cat=bankowned&city=Tacoma&county=Pierce

Once you have your list, make sure you understand the value of properties in the area. Comp reports can detail sold properties, as well as, what's currently on the market. Rely most heavily on the sold values. This research helps you to develop a baseline value for your intended property. Now, you need to establish a margin. A margin is how far below the asking price your offer will be. There are a lot of fly-by-night investment clubs out there that pound 30% into the heads of their would-be investors. In western-washington this isn't your best strategy.

You see, in markets like California and New England the price of homes can move drastically up and down over the years. You need a really high margin to buy in those markets. In our area, home prices rarely swing high then low...we're much more predictable compared to those other markets. The smart buyer will look more to 10-20% depending on how much they want the property. Your agent will likely advise less than 10%, but that's because they want to help you maximize your chances for getting the property...not necessarily your chances of getting a great (rather than good) deal.

Negotiating with banks

This is no laughing matter and Washington state is very serious about protecting sellers from being taken advantage of. That being said, you'll face three different types of situations when buying homes of this type.

• Pre-Foreclosure: These sellers still own their home, but are not making the payments. The price they have set is for more than what they owe and they typically have the home priced right at what they need to payoff everyone involved.
• Short-Sale Properties: These could also be in pre-foreclosure, but the asking price is already below what is owed on the home. The seller must get all offers 'approved' by their bank before a deal can be accepted. Normally, buying these sort of homes will take two or three times longer than normal but some tremendous opportunities exist here because banks don't want to foreclose and are willing to make near-ridiculous deals to get rid of the house.
• Bank Owned: Or REO (Real Estate Owned) properties no longer involve an individual seller. The bank owns the home and has put the pricing through a committee to determine its value. The price they have the home listed for is fairly firm, but a good agent will know how far they're willing to negotiate.

Pierce County and King County differ very little in terms of negotiating with banks. Obviously, must people got their loans outside of local channels, but a percentage will have used the local banking system. Establishing a relationship with banks is how investors and mortgage brokers mitigate good deals. As an individual, likely only doing this for your own home you will need to pick representatives to act on your behalf. A good real estate agent and a good lender are the best way to ensure success. Let them know what you want to achieve and then hold them accountable as the process moves along.

This isn't rocket science, but it will require some fortitude on your part. The process takes a lot longer and is much more complicated than a typical home purchase, but if you're willing to endure a few headaches then you just might find a bank willing to sign over 30-50k in equity...just so they don't have to carry the loss on their books.