Declining value neighborhoods in the Seattle Area?

I met with the Wells Fargo wholesale mortgage rep today and there were a few things that I thought I would (should) share with the real estate community. For those that do not know the Seattle area very well there are three main counties. Pierce County is to the south of Seattle and the big city is Tacoma. King County is where Seattle is located. Then there is Snohomish County to the North and the big city is Everett. Statistics in the Puget Sound region are usually divided up between the three counties.

Pierce county has been classified (for awhile now) as a declining market, so Wells Fargo cuts the ltv of high ltv loans my 5% automatically. So, if your buyer is qualified at 95%, well in Pierce County they are only getting 90% ltv. This is not new news, just FYI.

Now King and Snohomish County are not classified as declining markets, but some neighborhoods are and there is no black and white answer. The rep said if a house has been on the market for more than six months (which the appraiser will note) then you are in a declining market and the ltv will be cut. Or, if the area the house is located has a lot of long listings then the ltv will be cut. It is up to the bank.

What does this mean? You better price the house right the first time, because it gets more difficult to find financing the longer the home is on the market. Are you (or are you working with) the agent that actually tells the seller what the home is worth? Do you walk away from the listing if the sellers want to overprice the home? Does the listing agent carry any judiciary responsibility if he/she prices a home wrong and it gets on the Wells Fargo list and impacts the neighborhood?

I wonder where all this is going....

Boe Lindgren

Broker / Owner Ashlar Realty

Lynnwood, Washington