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First-Time Home Buyers Eager to Reap Tax Credit Benefits, but Unsure of Details
RISMEDIA, July 22, 2009-The federal tax credit for first-time home buyers is now half way to its Dec. 1, 2009, expiration date, and it seems fair to ask just how much it is helping real estate markets. The RE/MAX network in northern Illinois did just that, interviewing 40 RE/MAX agents from across the region about how the tax credit is impacting the first-time buyers with whom they work. “The overall conclusions we draw from the survey are twofold,” said Jim Merrion, regional director of the RE/MAX northern Illinois real estate network. “First, buyers are generally aware of the fact that there is a tax credit available. However, a majority of them understand only a few, if any, of the program’s details.
“Second, the tax credit has a stimulative impact, but the effect is primarily psychological. Buyers want to get the benefit of the tax credit, and that encourages them to act, but the tax credit doesn’t have much impact on how much first-time buyers can afford to pay for a home,” said Merrion.
The tax credit was a key part of the economic stimulus package approved by Congress and signed by President Obama in February. Designed to encourage home purchases, it can be worth as much as $8,000 in reduced taxes or added income.
The 40 RE/MAX agents interviewed for the survey estimate they worked with 390 first-time buyers through the first half of 2009. Seventy-three percent of those buyers were aware of the tax credit even before meeting with the agent. To date, approximately 18% of the 390 buyers have either purchased a home or have had an offer accepted and are preparing to close the transaction. Most of the remaining buyers are still in the market looking for the right home.
“The fact that the tax credit expires at the end of November should begin to get more and more of them off the fence and into a home in the next few months,” said Merrion. “In responding to our survey, the agents we interviewed said a majority of buyers see the tax credit as a major motivation to buy this year even though they can afford to buy a home without it. For others, it merely reinforces their existing decision that this is the time for them to buy,” he said.
During the first-half of 2009 in the metro Chicago real estate market, the average price of a home was $259,354, according to data from the MRED multiple listing service. The $8,000 credit equals 3.1% of that amount. That helps explain why the survey indicated that the tax credit is having a major impact on affordability for only 17% of buyers.
For the majority of qualified buyers, said the RE/MAX agents interviewed, the tax credit provides a financial boost by replenishing the savings they use for a down payment and closing costs or covering some of the incidental expenses that often come with purchasing a first home, whether that involves buying a lawn mower, putting up wallpaper or acquiring new furniture.
The survey also revealed that many first-time buyers don’t have a firm grasp of the details of the tax credit.
-Most buyers knew there was a date by which they had to act in order to qualify for the tax credit, but many are confused about when that was and what they had to do. A home purchase must be closed no later than Nov. 30, 2009 to qualify for the credit.
-Many buyers do not realize that to qualify as a first-time buyer you can have owned a home previously as long as you have not have owned a home for three years before making a home purchase that qualifies for the tax credit.
-A large percentage of buyers also are unclear about the fact that they will receive the full benefit of the tax credit to which they are entitled even if they don’t pay that amount in income taxes for 2009. For example, if an individual or couple qualifies for the full $8,000 credit but owes only $3,000 in income taxes for the year, their entire tax bill would be eliminated, and they would also receive a tax refund check for $5,000.
-Another area of confusion, but one that the RE/MAX agents report as affecting relatively few first-time buyers, involves income limitations. Individuals with an adjusted gross income up to $75,000 can qualify for the full $8,000 credit, as can married couples earning up to $150,000. The available credit amount then declines as income increases and phases out at $95,000 for individuals and $170,000 for couples.
For many buyers, another aspect of the tax credit that is confusing is the possibility of repayment. An earlier version of the first-time buyer tax credit did have to be repaid, meaning that it functioned like an interest-free loan. The updated version of the credit approved this year eliminates the need for repayment unless the home is sold within three years, in which case the credit must be repaid.
“There is talk in Congress about increasing and/or extending the tax credit and making it applicable to all home buyers, not just those purchasing their first home,” reported Merrion. “That would be a great help to the housing market, which continues to face significant headwinds in this soft economy. However, for first-time buyers, we see very limited value in waiting and hoping that Congress will act again. If a home purchase is on their radar today, our advice is to start shopping seriously and close on a great new home before Dec. 1. To do that, they will want to get the house under contract by Sept. 30 so they have ample time to close the transaction.”
For more information, visit www.remax.com.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
Wednesday, July 22, 2009
Tuesday, July 21, 2009
The ride ain't over yet by a long shot but it's gonna be eaier to stay on for the whole 8 seconds...
RISMEDIA, July 21, 2009-The U.S. housing market continues to show signs of stabilization with a drop in the number of Multiple Listing Service (MLS)-listed homes for the twelfth consecutive month. The number of single family homes and condos listed for sale according to MLS data decreased in June 2009 from May by 2.1%, bringing the total number of active listings in 28 major U.S. markets to 696,858, according to national real estate brokerage ZipRealty.
Additionally, ZipRealty tracked an increase in the median list price in the 28 markets to $270,440 in June from $270,027 in May. Despite the sequential increase the median list price still decreased 2.72 percent when compared to June 2008.
Other highlights from ZipRealty’s Housing Inventory Index, compiled from local Multiple Listing Service (MLS) data, for June 2009 include:
-Las Vegas, Los Angeles and Phoenix all recorded a decline in inventory which may have contributed to some homes receiving multiple bids.
-Median list prices have flattened or increased in Las Vegas, Phoenix, San Francisco Bay Area and Los Angeles, pointing toward stabilization in those areas.
-While South Florida has substantially fewer homes for sale than last summer, housing inventory there is plentiful. For example, Miami has 27.1% more homes listed for sale compared to Los Angeles even though Miami has a significantly smaller population than Los Angeles.
-California is seeing the most dramatic inventory declines with massive year-over-year inventory reductions: Los Angeles saw a 53.9% decrease year-over-year while Bakersfield/Fresno tracked a 56.2% decrease.
-Several major metros that have been hit hardest by foreclosures had limited inventory in June 2009, which is at levels not seen or experienced in years.
“‘Affordability’ has been the buzz word in real estate this summer, and with a significant number of listed homes bank-owned, we’re seeing instances in some areas of banks dropping prices to generate more offers from buyers,” said ZipRealty President and CEO Patrick Lashinsky. “If the number of home listings continue declining and buyer interest and activity remains strong, we should see sales prices and home values increase as we head into the fall.”
Additionally, ZipRealty tracked an increase in the median list price in the 28 markets to $270,440 in June from $270,027 in May. Despite the sequential increase the median list price still decreased 2.72 percent when compared to June 2008.
Other highlights from ZipRealty’s Housing Inventory Index, compiled from local Multiple Listing Service (MLS) data, for June 2009 include:
-Las Vegas, Los Angeles and Phoenix all recorded a decline in inventory which may have contributed to some homes receiving multiple bids.
-Median list prices have flattened or increased in Las Vegas, Phoenix, San Francisco Bay Area and Los Angeles, pointing toward stabilization in those areas.
-While South Florida has substantially fewer homes for sale than last summer, housing inventory there is plentiful. For example, Miami has 27.1% more homes listed for sale compared to Los Angeles even though Miami has a significantly smaller population than Los Angeles.
-California is seeing the most dramatic inventory declines with massive year-over-year inventory reductions: Los Angeles saw a 53.9% decrease year-over-year while Bakersfield/Fresno tracked a 56.2% decrease.
-Several major metros that have been hit hardest by foreclosures had limited inventory in June 2009, which is at levels not seen or experienced in years.
“‘Affordability’ has been the buzz word in real estate this summer, and with a significant number of listed homes bank-owned, we’re seeing instances in some areas of banks dropping prices to generate more offers from buyers,” said ZipRealty President and CEO Patrick Lashinsky. “If the number of home listings continue declining and buyer interest and activity remains strong, we should see sales prices and home values increase as we head into the fall.”
Friday, July 17, 2009
What's all this "Short Sale" stuff, anyway?
Hi there,
This whole foreclosure “issue” is going to be with us for a while yet and a subset of the “issue” is what is known as a Short Sale. In laymen’s terms that means that the Seller is trying to avoid foreclosure and because he is over financed (too many ill advised re-refi’s during the last 10 years) and/or because prices have deflated he can’t sell his house for what is owed against it.
Sidebar: There is only one reason a property gets foreclosed on and only one…and that is because it can’t be sold for what is owed against it. It can’t be sold “retail”, i.e. putting it on the market, or “wholesale”, i.e. being purchased by an investor at the actual foreclosure sale on the courthouse steps. So what makes the “GP”, i.e. general public think that by the time a bank gets the property back along with having to pay all the attorneys fees and foreclosure costs that they can buy it for “50¢ on the dollar”?
Anywho, short sales…
The Seller, with hopefully experienced and competent help, contacts the bank who holds the mortgage and tries to negotiate a “deal” whereby the bank will accept less than is what is owed, typically so that the bank can avoid all the hassle and costs involved with a foreclosure where typically they are going to loose money anyway!
Below, hereunder, therefore, where to then and habeas corpus is a pretty good article on Short Sales.
Any further questions or “whatever”, please contact me!
Putting the 'short' back in short sale
Tips on how to make process go smoother
By Steve Bergsman, Friday, July 17, 2009. Inman News
Lately, homebuyers are seeing more and more short-sale opportunities, but it seems as if fewer purchases are actually being completed. The perception in this case is correct. The short-sale process has become a nightmare: it goes on forever, sometimes never coming to a satisfactory conclusion even after months of effort.
All I can say is, "Hang in there, folks, help is on the way."
According to industry sources, the playing field will soon begin to make more sense to buyers as servicers (the folks who actually handle your loan) will either move at-risk loans to special servicers that are experienced in this field and/or set parameters ahead of bids.
"There are going to be a lot more short sales coming into the system," predicts Scott Thompson, a principal in Mortgage Resolution Services Inc. in Rancho Cordova, Calif. "Servicers have done a lousy job. They know it and are now looking to solve the problem."
This is a necessity, Thompson adds, "as right now the queues are long and getting longer day by day."
The short sale seems complicated -- mostly because it takes so darn long to accomplish -- but it's not. The basic short sale happens when the proceeds from the sale of a property are less than the balance owed on the loan (secured by the property being sold). The key in all of this is the lender accepting a price that is less than the amount owed on the property -- and the lender would do that to avoid a foreclosure situation, which can be a lengthy and sometimes costly process.
For buyers, a short sale is the chance to acquire a property at discount.
More often than not, however, the process has been gummed up. The numbers I hear are: just one to three out of 10 applications get accepted; and while the process can take as little as 45 days, it has been taking on average 90 to 120 days with some wayward dealings going on for nine months.
The principal difficulties in the process can be isolated to the agents (especially the listing agents!) and banks. Let's start with the latter first because things on this side of the process are changing.
According to Thompson, a number of major servicers including Fannie Mae, JPMorgan Chase & Co., Citigroup Inc. and OneWest Bank Group (formerly IndyMac Bank) are putting systems in place to more easily identify which borrowers have attempted loan modification programs and failed or are well into the default process. Secondly, and this is a key point, they are going to give price certainty in the case of a short sale; the servicers will give price guidance, telling the agents a price range for the short sales.
Finally, many of at-risk loans will shift over to a special servicer, an asset manager experienced in handling REO situations.
"The special servicers will run a determination on these properties as which should come to market, engage in an outreach effort to the homeowners so as to avoid foreclosure and if all else fails to bring the property to market with pricing guidance where the buyer will know that a deal won't fail because of price," says Thompson. ...The short sale is different from a common house acquisition, and, unfortunately, not enough agents have experience in this type of deal -- and many just don't get it right.
Two things agents often get wrong are buyer education and packaging, says Speare Valasakos, a principal in The Frontline Group in San Diego. "Part of the challenge is, a lot of agents are not educating the buyers upfront as to what the process will be, so they go through it, get the buyer, get an offer, package and submit, and the buyer eventually gets nervous and by the time the sale is accepted they go away."
Secondly, the seller's agent needs to be able to put together a proper package of documents to get the lender to look at the file.
"A loss mitigator is dealing with hundreds of files, so if you don't have a complete package and it is not done professionally, it goes to the bottom of the stack," says Valasakos. "An inexperienced agent doesn't give the lender the tools to get a short sale completed."
All that being said, here are some things that can be done to smooth the process:
1) Prequalify the listing agent. If the listing agent hasn't even started getting from the seller the key documents -- tax returns, bank statements, pay stubs, in short, the completion of the "hardship package" -- then the property should not be listed because the agent is nowhere near ready to close a deal.
2) When a property is found, demand a commitment from the seller. In lots of areas, such as California, there is a provision in regulations that allows the seller to continue marketing the property during the short-sale process. However, your agent should have written into the contract that you are the primary buyer and any other offers that come in are backup offers.
3) Many lenders don't look at a short sale unless there is a viable offer in hand. Every agent should have an arsenal of investor clients. If the agent representing the investors can't bring them to the table, she can then go to her investor base and say, "Would you make a fair offer on this property? That allows us to start the foreclosure process. We will give you a 72-hour clause to perform and then substitute a higher offer in there."
4) Broker price opinions are needed for sales, but since brokers doing the valuations are paid so little, they often do no more than a drive-by. However, if you can give the broker background on the property, list what repairs are needed and offer comparables, the valuation can be more accurate.
"The agent," says Valasakos, "is the gatekeeper to getting the short sale accepted."
Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."
Pete
Peter H. Tippett, e-Pro, S.H.O.P.
"Helping People Live Indoors"
Associate Broker
RE/MAX Advanced, Inc.
1018 Centre Avenue
Fort Collins, CO 80526
Office: (970) 221-5995 FAX: (970) 221-5999
Direct: (970) 530-2428
Cell: (970) 690-4106
Pete@LivingIndoors.com
This whole foreclosure “issue” is going to be with us for a while yet and a subset of the “issue” is what is known as a Short Sale. In laymen’s terms that means that the Seller is trying to avoid foreclosure and because he is over financed (too many ill advised re-refi’s during the last 10 years) and/or because prices have deflated he can’t sell his house for what is owed against it.
Sidebar: There is only one reason a property gets foreclosed on and only one…and that is because it can’t be sold for what is owed against it. It can’t be sold “retail”, i.e. putting it on the market, or “wholesale”, i.e. being purchased by an investor at the actual foreclosure sale on the courthouse steps. So what makes the “GP”, i.e. general public think that by the time a bank gets the property back along with having to pay all the attorneys fees and foreclosure costs that they can buy it for “50¢ on the dollar”?
Anywho, short sales…
The Seller, with hopefully experienced and competent help, contacts the bank who holds the mortgage and tries to negotiate a “deal” whereby the bank will accept less than is what is owed, typically so that the bank can avoid all the hassle and costs involved with a foreclosure where typically they are going to loose money anyway!
Below, hereunder, therefore, where to then and habeas corpus is a pretty good article on Short Sales.
Any further questions or “whatever”, please contact me!
Putting the 'short' back in short sale
Tips on how to make process go smoother
By Steve Bergsman, Friday, July 17, 2009. Inman News
Lately, homebuyers are seeing more and more short-sale opportunities, but it seems as if fewer purchases are actually being completed. The perception in this case is correct. The short-sale process has become a nightmare: it goes on forever, sometimes never coming to a satisfactory conclusion even after months of effort.
All I can say is, "Hang in there, folks, help is on the way."
According to industry sources, the playing field will soon begin to make more sense to buyers as servicers (the folks who actually handle your loan) will either move at-risk loans to special servicers that are experienced in this field and/or set parameters ahead of bids.
"There are going to be a lot more short sales coming into the system," predicts Scott Thompson, a principal in Mortgage Resolution Services Inc. in Rancho Cordova, Calif. "Servicers have done a lousy job. They know it and are now looking to solve the problem."
This is a necessity, Thompson adds, "as right now the queues are long and getting longer day by day."
The short sale seems complicated -- mostly because it takes so darn long to accomplish -- but it's not. The basic short sale happens when the proceeds from the sale of a property are less than the balance owed on the loan (secured by the property being sold). The key in all of this is the lender accepting a price that is less than the amount owed on the property -- and the lender would do that to avoid a foreclosure situation, which can be a lengthy and sometimes costly process.
For buyers, a short sale is the chance to acquire a property at discount.
More often than not, however, the process has been gummed up. The numbers I hear are: just one to three out of 10 applications get accepted; and while the process can take as little as 45 days, it has been taking on average 90 to 120 days with some wayward dealings going on for nine months.
The principal difficulties in the process can be isolated to the agents (especially the listing agents!) and banks. Let's start with the latter first because things on this side of the process are changing.
According to Thompson, a number of major servicers including Fannie Mae, JPMorgan Chase & Co., Citigroup Inc. and OneWest Bank Group (formerly IndyMac Bank) are putting systems in place to more easily identify which borrowers have attempted loan modification programs and failed or are well into the default process. Secondly, and this is a key point, they are going to give price certainty in the case of a short sale; the servicers will give price guidance, telling the agents a price range for the short sales.
Finally, many of at-risk loans will shift over to a special servicer, an asset manager experienced in handling REO situations.
"The special servicers will run a determination on these properties as which should come to market, engage in an outreach effort to the homeowners so as to avoid foreclosure and if all else fails to bring the property to market with pricing guidance where the buyer will know that a deal won't fail because of price," says Thompson. ...The short sale is different from a common house acquisition, and, unfortunately, not enough agents have experience in this type of deal -- and many just don't get it right.
Two things agents often get wrong are buyer education and packaging, says Speare Valasakos, a principal in The Frontline Group in San Diego. "Part of the challenge is, a lot of agents are not educating the buyers upfront as to what the process will be, so they go through it, get the buyer, get an offer, package and submit, and the buyer eventually gets nervous and by the time the sale is accepted they go away."
Secondly, the seller's agent needs to be able to put together a proper package of documents to get the lender to look at the file.
"A loss mitigator is dealing with hundreds of files, so if you don't have a complete package and it is not done professionally, it goes to the bottom of the stack," says Valasakos. "An inexperienced agent doesn't give the lender the tools to get a short sale completed."
All that being said, here are some things that can be done to smooth the process:
1) Prequalify the listing agent. If the listing agent hasn't even started getting from the seller the key documents -- tax returns, bank statements, pay stubs, in short, the completion of the "hardship package" -- then the property should not be listed because the agent is nowhere near ready to close a deal.
2) When a property is found, demand a commitment from the seller. In lots of areas, such as California, there is a provision in regulations that allows the seller to continue marketing the property during the short-sale process. However, your agent should have written into the contract that you are the primary buyer and any other offers that come in are backup offers.
3) Many lenders don't look at a short sale unless there is a viable offer in hand. Every agent should have an arsenal of investor clients. If the agent representing the investors can't bring them to the table, she can then go to her investor base and say, "Would you make a fair offer on this property? That allows us to start the foreclosure process. We will give you a 72-hour clause to perform and then substitute a higher offer in there."
4) Broker price opinions are needed for sales, but since brokers doing the valuations are paid so little, they often do no more than a drive-by. However, if you can give the broker background on the property, list what repairs are needed and offer comparables, the valuation can be more accurate.
"The agent," says Valasakos, "is the gatekeeper to getting the short sale accepted."
Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."
Pete
Peter H. Tippett, e-Pro, S.H.O.P.
"Helping People Live Indoors"
Associate Broker
RE/MAX Advanced, Inc.
1018 Centre Avenue
Fort Collins, CO 80526
Office: (970) 221-5995 FAX: (970) 221-5999
Direct: (970) 530-2428
Cell: (970) 690-4106
Pete@LivingIndoors.com
Wednesday, July 8, 2009
BUSINESS LEADERS LAUNCH WEBSITE TO TRACK STIMULUS SPENDING
The Loop: BUSINESS LEADERS LAUNCH WEBSITE TO TRACK STIMULUS SPENDING
July 7, 2009, vol 2, no. 44
BUSINESS LEADERS LAUNCH WEBSITE TO TRACK STIMULUS SPENDING
Construction associations, Denver biz leaders aim for efficiency when spending taxpayer dough
In an effort to ensure stimulus dollars are utilized to their full potential, representatives from the construction industry and members of the business community say they unveiled a Web site this month to facilitate better communication between the public and private sectors.
StimulusColorado.org went live on July 1, and sponsors of the site say their hopes are that it will improve how the private businesses spend the billions of federal dollars flowing into state under the American Recovery and Reinvestment Act.
In addition to a detailed database of the nearly $2.9 billion slated to be spent on infrastructure in Colorado, the website also includes news updates on federal spending and a message board where organizations can meet and discuss stimulus project opportunities.
"This level of collaboration will certainly position Metro Denver and Colorado favorably," said Michael Gifford, of the Associated General Contractors of Colorado. "We want to show that we can move quickly and efficiently to put stimulus dollars to work to create jobs and help the economy."
AGC Colorado and the Colorado Association of Mechanical & Plumbing Contractors spearheaded the initiative to launch the Web site. The Denver Metro Chamber of Commerce, the Metro Denver Economic Development Corporation and the Colorado Contractors Association were partners in the development of the website.
StimulusColorado.org focuses primarily on ARRA spending in the areas of building, energy, natural resources and transportation infrastructure.
"Developing this Web site has improved the collaboration and communication within our business community and our public sector partners, federal labs, and universities to maximize Colorado's share of ARRA discretionary and competitive grants," said Holli Baumunk of the Metro Denver EDC.
July 7, 2009, vol 2, no. 44
BUSINESS LEADERS LAUNCH WEBSITE TO TRACK STIMULUS SPENDING
Construction associations, Denver biz leaders aim for efficiency when spending taxpayer dough
In an effort to ensure stimulus dollars are utilized to their full potential, representatives from the construction industry and members of the business community say they unveiled a Web site this month to facilitate better communication between the public and private sectors.
StimulusColorado.org went live on July 1, and sponsors of the site say their hopes are that it will improve how the private businesses spend the billions of federal dollars flowing into state under the American Recovery and Reinvestment Act.
In addition to a detailed database of the nearly $2.9 billion slated to be spent on infrastructure in Colorado, the website also includes news updates on federal spending and a message board where organizations can meet and discuss stimulus project opportunities.
"This level of collaboration will certainly position Metro Denver and Colorado favorably," said Michael Gifford, of the Associated General Contractors of Colorado. "We want to show that we can move quickly and efficiently to put stimulus dollars to work to create jobs and help the economy."
AGC Colorado and the Colorado Association of Mechanical & Plumbing Contractors spearheaded the initiative to launch the Web site. The Denver Metro Chamber of Commerce, the Metro Denver Economic Development Corporation and the Colorado Contractors Association were partners in the development of the website.
StimulusColorado.org focuses primarily on ARRA spending in the areas of building, energy, natural resources and transportation infrastructure.
"Developing this Web site has improved the collaboration and communication within our business community and our public sector partners, federal labs, and universities to maximize Colorado's share of ARRA discretionary and competitive grants," said Holli Baumunk of the Metro Denver EDC.
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