Foreclosures, considered a last resort for homeowners and banks, are now a routine part of doing business for real estate agents.

The ongoing housing slump and mortgage crisis has rippled across the nation. According to real estate Web site Zillow.com, just under 30 percent of homes in the Seattle-Tacoma-Bellevue area sold at a loss during the last quarter of 2008. Zillow also reported that nearly 11.5 percent of transactions in 2008 involved foreclosures.

Foreclosures include every home price, but are more prevalent in homes valued under $300,000, said Jennifer Dovey of Windermere Real Estate in Federal Way. Homes in that price bracket are considered entry-level houses, where buyers typically received two loans for 80 percent and 20 percent of the cost, respectively.

High interest rates have led to increased house payments for some buyers, who cannot refinance to a more stable loan because property values have decreased. Foreclosures start when owners miss three mortgage payments, Dovey said.

Properties often sit vacant for months during the foreclosure process. Dovey recently accompanied one woman who sought a house for $100,000. They looked at about 50 properties in Pierce County — all foreclosed.

“It’s a great time to be a buyer,” said Dovey, whose territory covers South King County and North Pierce County, where foreclosures are higher.

Before the housing market crashed, sellers took much more pride in ownership, Dovey said.

“A lot of people have given up hope,” she said. “It’s like they don’t care anymore.”

Short sales

Many real estate agents entered the industry during the housing boom, but left after it crashed. The more experienced agents stay busy to weather the tougher economy, said Tricia Ackerman, an agent in Federal Way.

“I’ve been in it 20 years,” said Ackerman, with Prudential Northwest. “You go through buyer’s markets, seller’s markets and balance markets.”

At its peak, the housing market resembled an auction, Ackerman said. She added that investors are the ones now cashing in on the slumping real estate market.

Ackerman primarily deals with short sales rather than foreclosures. In a short sale, the home is still owned by the owner, who can’t sell it for enough money to pay off bank. The owner then must see whether the bank will pay the difference if the home sells for less.

Short sales allow a seller to negotiate his way out of that home so a bank can avoid foreclosing, said Susie Horan, manager of Prudential Northwest in Federal Way.

Short sales are a staple in today’s housing market, said Horan, adding that the practice was uncommon just three years ago.

“It’s still less money lost than a foreclosure,” she said. “You have lenders being open-minded because they don’t want to take the house back. They want to work with the seller.”

Junk removal: Shifting focus

Foreclosures also changed the landscape for businesses such as Busby Junk Removal, which clears properties in Pierce, King and Snohomish counties.

Busby co-owner Craig Noreen said his company’s focus changed following the rise in foreclosures and the Wall Street meltdown in September. Nowadays, banks and commercial property owners seek Issaquah-based Busby’s services rather than residential customers, he said. Projects include cleaning buildings where people stopped in mid-renovation, or clearing houses once occupied by hoarders.

“We take out the junk and sweep. It’s not a deep clean,” Noreen said. “We basically take everything out, then we try to get it recycled.”

Noreen hasn’t seen more recent business opportunities in Federal Way when compared to surrounding areas such as the Eastside.

“Out in Federal Way, people are kind of hanging on to what they got and are probably doing a better job of it,” Noreen said. “We’re not doing as many out in Federal Way, but it’s increased out here on the Eastside. People just bought way too much house out here. They’re probably more down-to-earth in Federal Way.”

Fast facts

• Foreclosure is the legal and professional proceeding in which a mortgagee, or other lienholder, usually a lender, obtains a court-ordered termination of a mortgagor’s equitable right of redemption. In other words, the property and any rights associated with it now belong to the lender.

• Depending on the timing of the various required notices, it usually takes about 120 days to complete an uncontested foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sales, or files for bankruptcy. Much of the ongoing delays in foreclosure sales relate to the proper service of parties in interest, governmental agencies and junior lienholders.

• Short sales: The home is still owned by the owner, who can’t sell it for enough money to pay off the bank. The owner then must see whether the bank will pay the difference if the home sells for less. It’s a way for a seller to negotiate his way out of that home and for a bank having to avoid foreclosing, said Susie Horan, manager of Prudential Northwest in Federal Way.

• Seller finance: Seller financing is a loan provided by the seller of a property to the buyer, to cover part or all of the sale price. This process, also known as owner carry back or owner financing, is used in a variety of situations as a creative financing option.

Sources include foreclosure.com and wikipedia.com