Short Sales Equal Great Deals?

Below is a great article that will answer many of your questions regarding short sales from Inman News:

Today's buyers seem to have one thing in common: Everyone wants a great deal. So the real issue is whether the foreclosure, REO or short-sale property you're eyeing is a bargain or a money pit.
The buying public seems to think that "great deal" equals foreclosure, short sale or bank-owned property. The truth is that these properties may appear to be bargains, but in many cases you could be buying someone else's problems. If you're looking for a bargain property, here are some key issues to consider:

1. What is your time line for purchasing?
You may find the perfect short-sale property, and the seller may accept your offer. The challenge is that you don't have a deal until the bank approves the short sale. At many large lenders a single processor may have up to 500 files on his or her desk at one time. Realtors are reporting that it can take six or more months to get an offer approved. The wait can be extremely frustrating. It can also be costly.

For example, if prices are still declining in your area and price range, the offer you made six months ago may be too high. Also, if you qualify for a loan now, will you still qualify six to eight months from now if mortgage interest rates have increased? More importantly, can you afford to make a higher monthly payment? If possible, search for a short sale or an REO where the bank has preapproved the sales price. It still may take a long time to close, but not as long as it would if the price was not preapproved.

2. Are you prepared to be in a multiple-offer situation?
Since so many buyers are searching for distressed properties and the approval process takes so long, multiple offers are common. The lender will not tell you about other offers. They may, in fact, tell you that your offer will "probably" be approved -- but you cannot rely on this representation.

If another offer comes in at a higher price and at better terms, the bank is obligated to take the best offer. If the property is a short sale, the seller's signature on the document merely opens the negotiation -- it does not finalize it. Furthermore, the seller/lender may continue to market the property even after they have signed a contract with you. This is simply smart business, as so many borrowers are having trouble closing transactions due to appraisal issues.

3. Ask the agent if the seller participated in the "Cash for Keys" program
The best candidates for good bargains are those properties where the sellers are still occupying them. Many banks have a program called "Cash for Keys." This program pays the owners of foreclosure and short-sale properties money to keep the owner from trashing the property when they move out. I have seen copper piping ripped out of properties, concrete poured down the plumbing, and appliances stolen or destroyed. Cash for Keys is designed to minimize these behaviors.

4. Beware of vacant properties
Never purchase any property without doing a physical inspection. Also, if it takes more than 90 days to negotiate the transaction or if the house has been vacant, have the property re-inspected prior to signing off on the final deal. The reason for this is that the longer a house stays vacant, the more likely it is to have problems.

For example, pack rats and mice are more likely to move into vacant properties. They can chew through the wiring and generally wreak havoc with the home's electrical systems. Also, if the dishwasher is not run at least once a week, the seals can dry out. If you live in an area where the pipes are not winterized and there are freezing temperatures, a pipe may burst. You may not discover the problem until you turn the water back on after closing.

5. Is the deal more important than your lifestyle?
A property can be a great deal in terms of the price, but is it worth it if it's in a poorly rated school district or if the commute is an hour from your workplace? What if the property has a terrible floor plan, is in the flight path for a major airport, or occasionally gets a whiff of the sewage treatment plant? When you purchase, it's important that you take all of these issues into consideration rather than focusing exclusively on the price. A property with any of these types of problems will be harder to sell in the future.

It's important to consider the price in conjunction with the quality and the convenience of your lifestyle once you move in. For example, an extra 30-minute commute over a number of years can easily chew through thousands of dollars in terms of your vehicle costs, not to mention the wear and tear from the additional stress of commuting.

There are good distressed property deals out there. Nevertheless, don't limit your search. Have your agent show you seller-occupied homes that are not distressed properties. Thirty-five percent of all properties are owned free and clear. These properties are often lovingly maintained, in top-notch condition, and in more desirable locations. In the long run, they may be a much better bargain.
Source: Inman News, B. Ross

* I understand that there will be new laws enacted in early April 2010 that should help the process and will post the information in the near future.

TAX CREDIT, It's Official!

TAX CREDIT OVERVIEW

Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible

Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.

As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500.

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

· They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”) !

· They do not use the home as your principal residence.

· They sell their home before the end of the year.

· They are a nonresident alien.

· They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)

· Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)

· They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.



Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

If a Parent (Who Will Not Live In the Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit.


As Always – This is a Tax Ruling –

Please consult a Tax Accountant for your scenario -

Tax Credit Extension? Not Yet

RISMEDIA, November 4, 2009—(MCT)—Congress is a step closer to extending the $8,000 first-time homebuyer tax credit and offering a new credit to other types of buyers.

Tax Credit Deadline Quickly Approaching

First-Time Homebuyer Credit Provides Tax Benefits to 1.4 Million Families to Date, More Claims Expected

With the deadline quickly approaching, the Internal Revenue Service today reminded potential homebuyers they must complete their first-time home purchases before Dec. 1 to qualify for the special first-time homebuyer credit. The American Recovery and Reinvestment Act extended the tax credit, which has provided a tax benefit to more than 1.4 million taxpayers so far.

The credit of up to $8,000 is generally available to homebuyers with qualifying income levels who have never owned a home or have not owned one in the past three years. The IRS has a new YouTube video and other resources that explain the credit in detail.

The IRS encouraged all eligible homebuyers to take advantage of the first-time homebuyer credit but at the same time cautioned taxpayers to avoid schemes that help ineligible people file false claims for the credit. Currently, the agency is investigating a number of cases of potential fraud and is using computer screening tools to identify questionable claims for the credit.

Because the credit is only in effect for a limited time, those considering buying a home must act soon to qualify for the credit. Under the Recovery Act, an eligible home purchase must be completed before Dec. 1, 2009. This means that the last day to close on a home is Nov. 30.

The credit cannot be claimed until after the purchase is completed. For purchases made this year before Dec. 1, taxpayers have the option of claiming the credit on their 2008 returns or waiting until next year and claiming it on their 2009 returns.

For those considering a home purchase this fall, here are some other details about the first-time homebuyer credit:

*The credit is 10 percent of the purchase price of the home, with a maximum available credit of $8,000 for either a single taxpayer or a married couple filing jointly. The limit is $4,000 for a married person filing a separate return. In most cases, the full credit will be available for homes costing $80,000 or more.

*The credit reduces the taxpayer’s tax bill or increases his or her refund, dollar for dollar. Unlike most tax credits, the first-time homebuyer credit is fully refundable. This means that the credit will be paid to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.

*Only the purchase of a main home located in the United States qualifies. Vacation homes and rental properties are not eligible.

*A home constructed by the taxpayer only qualifies for the credit if the taxpayer occupies it before Dec. 1, 2009.

*The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on the taxpayer’s modified adjusted gross income (MAGI). MAGI is adjusted gross income plus various amounts excluded from income—for example, certain foreign income. For a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the range is $75,000 to $95,000. This means the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less.

*The credit must be repaid if, within three years of purchase, the home ceases to be the taxpayer’s main home. For example, a taxpayer who claims the credit based on a qualifying purchase on Sept. 1, 2009, must repay the full credit if he or she sells the home or converts it to business or rental use at any time before Sept. 1, 2012.

Taxpayers cannot take the credit even if they buy a main home before Dec. 1 if:

*The taxpayer’s income is too large. This means joint filers with MAGI of $170,000 and above and other taxpayers with MAGI of $95,000 and above.

*The taxpayer buys a home from a close relative. This includes a home purchased from the taxpayer’s spouse, parent, grandparent, child or grandchild.

*The taxpayer owned another main home at any time during the three years prior to the date of purchase. For a married couple filing a joint return, this requirement applies to both spouses. For example, if the taxpayer bought a home on Sept. 1, 2009, the taxpayer cannot take the credit for that home if he or she owned, or had an ownership interest in, another main home at any time from Sept. 2, 2006, through Sept. 1, 2009.

*The taxpayer is a nonresident alien.

For details on claiming the credit, see Form 5405, First-Time Homebuyer Credit.

Check with your tax expert for advice on the tax credit.

For Sale: 4BR/2BA Single Family House in Toledo, OH, $149,000

For Sale: 4BR/2BA Single Family House in Toledo, OH, $149,000

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Five Tips When Selling a Vacant Home

Scott reveals five tips for selling a vacant home:

1. Curb Appeal - the better the curb appeal of your home is, the more attractive it is to prospective buyers.
- Trim overgrown bushes, weed beds and add a fresh layer of mulch- Clean your front door and repaint if needed- Add a fresh doormat- Keep grass cut, edged and blown- Plant some color in the beds to add contrast.

2. Cleaning - for most buyers, dirt equals stress and the last thing most buyers want is more stress in their lives.
- Pressure-wash the driveway and sidewalks.- Clean windows inside and out- Pressure wash decks and patios.

3. Paint - the condition and color of the paint can make a huge difference in how buyers react to your home. Select light neutrals - creamy kakis, pearly grays or soft greens.

4. Replace Worn Carpet - Dirty carpet is unsanitary and nobody will be able to overlook your worn carpet. Replace the top layer with inexpensive neutral colored carpet and you will always recoup the investment.

5. Stage your home - Buyers who look at vacant homes only see floors, walls and ceilings. With nothing else to look at, they focus on flaws. Because of this, vacant houses are very vulnerable to low-ball offers and often sell for 15-20 percent below list price.

For more information, visit www.showhomes.com

Source: Rismedia

BEWARE: Many Brokerages Charge Extra Fees

In what's become standard practice at a growing number of real estate brokerages, homebuyers and sellers are being asked to pay flat fees of several hundred dollars per transaction on top of the percentage-based commissions they've traditionally been assessed.

The fees can come as an unpleasant surprise to consumers.

Some who defend the fees say real estate brokerages need to recoup rising overhead expenses and investments in technology. Collecting a flat fee that's paid directly to the brokerage is less onerous to consumers than boosting percentage-based commissions, they say.
The flat fees have become "very widespread," with many brokerages concluding that "if they are going to continue to invest in technology, they need to increase the price" they charge for their services.

The extra charges have been labeled administrative fees, technology fees, transaction fees, web servicing fees, flat fees, and administrative brokerage commission fees.

On a transaction involving hundreds of thousands of dollars, a fee of a few hundred dollars is easily lost on clients. They are just happy to be done with the transaction, they say, 'Don't confuse me with the details.'

By Matt Carter
Source Inman News
Edited by Blogger

These fees can cost between $175-$695. My brokerage nor myself charge any extra fees. We charge a percentage of the final sale price. If I don't sell your home, you pay nothing.


--Scott Snyder 419-320-3882

Innovative, affordable housing initiatives approved by OHFA board

The Ohio Housing Finance Agency (OHFA) Board recently approved eight initiatives to be financed through the Housing Investment Fund. Last September the Board approved the Housing Investment Fund to support affordable housing initiatives in Ohio that could not be currently funded through OHFA's standard programs. The Fund provides an opportunity for developers and housing organizations to receive grants or loans to respond to changing housing needs around the state.

There is downpayment assistance available for homebuyers. Contact your loan officer for more information regarding OHFA.

source: OAR

Home Appraisals-Federal Housing Finance Agency Code of Conduct as of May 1, 2009

On all Fannie Mae and Freddie Mac mortgages, the loan officer will no longer pick the appraiser. The lender will order the appraisal through an appraisal management company and they will order the appraisal from an appraiser in their system on a rotation basis.
While the goal is to avoid improprieties in appraisals, it seems to penalize those that have gone above and beyond to be sure that they use honest and fair appraisers. Appraisals will cost more (since the appraisal management company wants a profit) and the appraisal management companies are paying the appraisers less per appraisal.
* However, so far, FHA is not involved in the Federal Housing Agency's Code of Conduct.

With all the changes in conventional financing, unless the borrower has a score over 700 and 10% to 20% downpayment… FHA is looking like the best way to go anyway.

Remember the Federal Housing Tax Credit: First time buyers (and buyers who have not owned a home in 3 years) are eligible for up to $8000 in tax credits for purchasing a home in 2009.

Five Tips to De-Stress Your Move

Below are some tips to cut down the cost of your move and at the same time get the service you need:

De-Clutter - Now is the time to clean out your closet and get rid of anything that you don’t need. That old heavy desk in the corner that is not being used and the treadmill that doubles as a clothes hanger. Having a garage sale or giving things to charity will help reduce the weight and cost of a move.

Get a ‘Binding Not-to-exceed’ estimate - One of the costs contributing to a move is the weight of the shipment. With this estimate, if your actual weight is more than the written estimate, you still pay for only the amount of the estimate. But if your actual weight is less than the estimate, then your costs can go down.

Get full replacement ‘valuation’ coverage- When you move, things can get damaged. This coverage is what will protect your goods in the event of any damage.

Furniture assembly & reassembly - If you have a large desk, entertainment center, or table that has to be taken apart and put back together, do it yourself to cut down on costs. If that is not possible, make sure the company you use has these services so you can take advantage of them.

Get a reputable mover - It is important to use a mover that is going to provide the level of service promised to you. Check out the better business bureau website to make sure they are what they say they are.

Source: Rismedia, Mickey Matteson

Tips for Pet-Owning Sellers

Pet-owning sellers may turn off potential buyers if they don’t keep their pets out-of-sight during showings.

If a dog or cat is around during a showing the buyer maybe afraid of or is allergic to animals. Sometimes they fall in love with the pet and don't pay attention to the house.

Here is a list of advice for sellers when showing a house that has a pet:

1. Remove photos of pets from the walls, shelves, or refrigerators.

2. Clean food and water bowls regularly, and hide them when not in use.

3. Stash away pet toys, crates, carriers, and leashes.

4. Vacuum carpets, upholstery, and wood floors.

5. Keep litter boxes clean and out of sight, and remove signs of doggy potty pads.

6. Open windows to let in fresh air.

7. Neutralize odors with fresh-smelling candles and air sanitizers.

8. Hire professionals to remove unsightly pet stains.

9. Board or crate animals during open houses.

10. Repair visible signs of pet damage, such as scratched walls or floors.

Home Buyer Tax Credit UPDATE

With the passing of the new stimulus plan, the home buyer tax credit was modified and increased.

First, the credit is for up to $8000.

Second, it does not have to be paid back unless the buyer sells the property within the first 3 years after the purchase.

The credit is for first time home buyers only (but a first time home buyer is someone who hasn't owned a home in the last 3 years). There are some income restrictions, too.

The best part is the buyer can actually get the money! Here's a quick example: Let's say someone buys a home today and qualifies for the full $8000 tax credit. If their tax return for 2009 says they will be receiving a $1000 income tax refund, they will also get an additional $8000 included in their refund for this tax credit!

If you have additional questions, please contact me or your loan officer.

Disclosing existing offers may help sellers

When sellers are entertaining more than one offer, it might be in their best interest to have these offers disclosed to prospective buyers.

In some cases, disclosing existing bids prompts other buyers to up their bids or even ignites bidding wars. These days such competition is more likely to occur in the sale of distressed properties.

Under NAR's Code of Ethics, practitioners should discuss disclosure of existing offers with sellers from the start and ask for permission to make such disclosures. If the seller agrees to have existing offers disclosed, they should be disclosed only if buyers request such information.

Source: Realty Times

Tips For Homebuyers in 2009

Tips for homebuyers in 2009:

1. Cash is the new king:
If you can spare the cash, it has a heck of a lot more buying clout now. In the past, people were asked to seek out more liquid investments, for their cash on hand and grab an easy-to-get low-interest mortgage. Now, with the equity markets depressed at the same time that mortgage loans are hard to find, the tables have turned. Those wielding ready cash in a recession are always ahead of the game.

2. Negotiate extras ... and more extras:
While sellers continue to offer throw-ins such as built-in appliances, flat-screen TVs and even cars, the best throw-ins are always the ones that take monetary form. Think of having seller paid closing costs, a year's worth of paid property taxes, repair credits and paid homeowners association dues, to name only a few.

3. Start a down payment fund The goal should be 20 percent:
Set monthly saving goals. Shore up the family budget. Work an extra job if you must. The pain will precede a gain: lower house payments and higher equity in the future.

4. Determine your own home buying budget:
Do this before you start talking with lenders. They will tell you what you qualify for, but only you can determine what you can really afford. Be realistic and work in a buffer for contingencies and negative life events.

5. Clean up your credit score:
You've heard this one before. But now it's more important than ever if you hope to get home financing in '09. Correct reporting-agency errors that may be dragging down your score. Pay your bills on time. Pay down active credit cards, but don't close out paid-off accounts.

6. Research equals savings:
Don't hesitate to do your own research. Go online and scour newspapers and other local sources looking for housing inventory backlogs, the average for-sale time that homes are on the market and average selling prices. Also, be wary of the number of area foreclosures and major-employer layoffs. You'll get a better sense of how much negotiating clout you'll really have and which way the market is moving. Information is power -- in your case, purchasing power.

7. Don't overlook neighborhood issues:
If and when you do qualify for a mortgage, don't overlook these important issues in your exuberance: quality of schools, traffic noise, upcoming zoning issues, neighborhood stability, home turnover, crime levels and the presence of any sex offenders.

8. Watch for foreclosed-property inventory to loosen:
Banks soon will be under greater pressure to cut their losses on property they own through foreclosure and to increase revenues. With a smaller percentage of distressed homes selling at auction, banks are loaded up with more of these nonperforming assets. In major markets, more agents are specializing in prying loose REOs -- real estate owned by banks. Again, cash on hand talks loudest.

9. Look for other looming opportunities:
Can't get a loan? The financial markets should begin to untangle at least a little bit in 2009. The newly Fed-fortified banks will, or at least should, start moving that money. They are banks, after all. But don't expect a return to zero down payments.

Source: Bankrate.com

Mortgage rates take historic plunge

Federal action forces average below 5

The average U.S. rate on a 30-year fixed mortgage fell below 5 percent this week for the first time on record as a government program to buy mortgage-backed bonds lowered borrowing costs.

The fixed rate dropped to 4.96 percent from 5.01 percent a week earlier, Freddie Mac said in a report yesterday. That's the lowest in data that go back to 1971, according to the McLean, Va.-based mortgage buyer.

The 15-year fixed-rate mortgage averaged 4.65 percent, up from 4.62 percent, Freddie Mac said. One-year adjustable rate mortgages, or ARMs, fell slightly in the week to an average of 4.89 percent from 4.95 percent last week.

The Federal Reserve last week started buying $500 billion of mortgage-backed securities to boost prices for mortgage bonds in the hopes that lenders will reduce the interest rates they charge.

No matter how low the rates go, it won't help homeowners who have lost their jobs or seen the value of their property tumble, said Brian Bethune, chief U.S. financial economist at IHS Global Insight Inc. in Lexington, Mass. "The Fed is arm-twisting to get rates lower, but we're 2 million jobs fewer than we were in July and we've seen home prices continue to fall, so we're in a bigger hole," Mr. Bethune said.

Mortgage applications in the United States rose last week to the highest level in more than five years, led by a surge in refinancing as interest rates fell to a record low.
The Mortgage Bankers Association's index gained 16 percent to 1,324.8 for the week ended Jan. 9, the highest level since July, 2003. The group's refinancing gauge jumped 26 percent, and the purchase measure fell 14 percent.

Source: BLOOMBERG