Buyers Wonder, Are Short Sales Worth It?

You're all ready to househunt, and of course everyone is talking foreclosures being the way to go. Hard to avoid them really! But what about short sales. Are they worth the trouble? And what IS a short sale anyway?

Short sales - a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth.

These sales dominate the housing market. But they aren't for everyone. What you should know:

1. Typically the homeowner is underwater and has experienced a financial hardship such as a job loss. In order to limit the damage to his credit rating, the homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.

2. Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant - and sometimes vandalized - property, a short sale isn't a distressed home that will sell it at an extremely low price. According to the data from RealtyTrac, short sales typically sold for nearly 10% less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35%.

3. Home buyers wanting to purchase a short sale must have patience! In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.

4. Even with the challenges associated with short sales, buyers should not avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR can help buyers avoid frustration and surprises down the line.

I have been trained as a Certified Distressed Property Expert and have experience in both short sales and foreclosures. Let me know if you have any questions about purchasing short sales or foreclosures!

To read more about short sales:

http://realestate.aol.com/blog/2011/08/11/short-sales-are-they-worth-the-trouble/

Selling Your Home? The IRS Wants (to help) YOU!

The friendly IRS has come out with their Summertime Tax Tip for 2011! Read and learn...

"Ten Tax Tips for Individuals Selling Their Home"

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of this sale.

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

4. If you can exclude all of the gain, you do not need to report the sale on your tax return.

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

6. You cannot deduct a loss from the sale of your main home.

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

9. If you received the first-time homebuyer credit and within 36 months of the date of purchase the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home cased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year's tax return.

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

Whew! Did you get all of that? No sweat ... Well, for more information about selling your home, see IRS Publication 523, Selling Your Home. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Would YOU Sell By Owner? You Gotta Read THIS!

When we first got into the real estate business, For Sale By Owner was really popular. There were several competing For Sale By Owner type brokers, and it seemed that a new one was popping up every week or so! Where have they gone? I was thinking about that the other day ... You just don't see much of those professional For Sale By Owner companies around anymore.

I just read an article that I have to share with you. The founder of ForSaleByOwner.com used a real estate agent to sell his New York apartment after he was unable to sell it by owner for six months. The agent came in, raised the price, and got multiple offers!

This is such an unusual story. For one thing, when owners put their homes up for sale themselves they typicall ask too MUCH, not too little! Even at the height of the home sales frenzy, many, many For-Sale-By-Owner sellers priced themselves out of the market. But that is not the point of this story.

The point of this story is that a good real estate agent knows the market! I have always loved real estate and I thought I kept a good eye on home prices when I wasn't selling real estate full time. I really figured I knew pretty well what was going on. Since being in real estate full time for nearly 10 years, I have learned just how wrong I was! The actual value of a home has so many variables that it was next to impossible for a lay person - even a lay person as crazy about real estate as I was, to have a pulse on the home market!

Only a full time professional has the "luxury" of spending hour upon hour, day after day, month after month and year after year studying and searching the multiple listings (which change daily) and reading every article about real estate, construction and lending that hits his inbox. I do it because it's my job, and because I LOVE IT!

So I say, "Good for you, Mr. inventor of forsalebyowner.com!" I am truly glad you sold your apartment and got a fair market price for it as well. That is what us professional REALTORs wake up to do each day!

To read the entire article, click here

http://realtormag.realtor.org/daily-news/2011/08/09/forsalebyownercom-founder-uses-agent-sell-home?cid=WR08092011:26043&ed_rid=230212

Thinking About Remodeling? Some Contractor Tips!

Ah, yes! Us die-hard do-it-yourselfers!

If you have decided to hire a contractor for the job this time around - or if you have never swung a hammer, here are a few tips on choosing the right contractor I found in an article in Business Weekly by Alina Tugend.



1. "Check the number of projects the contractor has going at the same time. Too many at once can add a considerable amount of time to your own."

We ran into this when we were building our house and acting as our own general contractor. Some of this just can't be helped, but ask around before hiring the contractor or general contractor. If they would consistently not show up when planned, they might not have very good delegation or organization skills - or perhaps they are trying to make do with a skeleton crew and are spread too thin.

2. "What margin does your contractor take to provide materials. Perhaps you can save by buying materials yourself. A friend saved about 20% doing that for a remodeling project. Contractors aren't always keen on it, though. If you get your own windows, for example, and they're the wrong size or cracked, the problem is yours to deal with, not his."

This is something we did do when building our home. Of course, it took a lot of time, which is why contractors have to add that 20% you are saving if you do it yourself! So be prepared for the time outlay shopping around and ordering materials. And I would suggest you know a little bit about what you're doing before you try. This wasn't our first building project. Get advise before you buy!

3. "Never go on a vacation and leave contractors to work on their own. Even with builders you can trust, it's better to be available. And at worst, it can mean little or no work gets done while you're relaxing on the beach."

4. "Listen to the ways the contractor and the subcontractors, like the plumbers and electricians, interact. A friend had four different contractors come with their subcontractors to bid on a major renovation. Listening to them talk together gave her a sense of how they respected each other and worked together. In the end, they didn't hire the cheapest guy, but the one they thought was the smartest and most creative and got along best with his subcontractors."

It goes without saying that you want a contractor who respects those he works with - his crew and his subcontractors. Good luck getting an interview with a contractor and his subcontractors all at once! Subcontractors are their own bosses and to have their schedules all align for an interview is not likely. Afterall, they will not have to all be there at the same time working anyway. Better to get a good referral on the contractor's character as well as his ability as a builder. It does matter!

5. "Finally, everyone said to hold some money back until the project was completed. And that means no small unpainted areas or loose tiles or bad grouting. Too often, builders, even good ones, leave small details unfinished once they've moved on to their next project. In fact, after you've unsuccessfully hounded the contractor for weeks to do the last bits and pieces, try this: take that money and hire a handyman!"

Completely agreed! Never pay contractors or even handymen all the money up front until the job is completed. Everyone only hopefully makes this mistake once! It's usual to pay at least half up front so materials can be purchased for your project, and perhaps add more to that as the project progresses, depending on the size. But keep some back in order to give the workers some accountability.

If you need a referral for a contractor, subcontractor, landscaper or handyman, give me a call or shoot me a text or an email. Being active in the housing community, I come across people I would refer quite often and I may be able to help you out!

New Loan Limit Would Hurt Home Sales

Unless Congress takes action, the current loan limits will expire on Sept. 30 and the cost of a mortgage could rise significantly, especially in high-cost areas such as California.

More than 30,000 California families could face higher down payments, higher mortgage rates, and stricter loan qualification requirements if conforming loan limits on mortgages backed by the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac are reduced beginning October 1, 2011, according to analysis by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee.

Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.

C.A.R. and the NATIONAL ASSOCIATION OF REALTORS® (NAR) have long advocated making permanent higher conforming loan limits. As a result of C.A.R.’s and NAR’s efforts, in 2008, Congress temporarily raised the conforming loan limits from $417,000 to $729,750 and has extended them annually through fiscal year 2011.

Regionally,
Marin County would be impacted the most, with more than 12 percent of home sales rendered ineligible under the lower GSE loan limit, followed by Contra Costa (11.5%), San Mateo (10.7%), San Francisco (9.9%), Monterey (8.8%), San Diego (8.2%), Sonoma (7.9%), and Santa Clara (7.8%) counties.

Under the lower FHA loan limit, San Francisco County would be impacted the most, with
more than 14 percent of home sales rendered ineligible, followed by Santa Cruz (13.9%), Orange County (13.3%), Marin (13.2%), San Mateo and Ventura (both at 12.7%), Santa Clara (12.2%), San Diego (11.9%), Alameda (11.8%), Riverside (11.5%), and Contra Costa (11%) counties.

Read the full story http://mortgage.ocregister.com/2011/06/23/realtors-new-loan-limit-would-hurt-homesales/45927/

FORECLOSURE MYTHS: WHAT'S TRUTH?

Although there are a number of programs available to help homeowners who have defaulted on their mortgages keep their home, the large amount of misinformation tends to result in troubled homeowners failing to contact their lender until it is too late.

• Some homeowners believe, incorrectly, that contacting their lender early in the process will draw attention to their situation and result in a quicker foreclosure. In reality, contacting the lender or servicer is an important first step, and the sooner, the better. Contacting the lender provides the homeowner with an opportunity to explain their situation and the steps necessary to deal with it.


• It is a common misconception that missing one mortgage payment will lead to foreclosure. However, the foreclosure process doesn't begin until payments are 90 days delinquent. Lenders generally have a financial interest in keeping homeowners in their homes, so making contact as early as possible could help lenders modify terms of the mortgage or devise a repayment plan.


• Once homeowners are behind on their mortgage payments, it becomes challenging to dig out of the hole. Some homeowners try to solve this by depeleting their savings or dipping into their retirement accounts to become current on the loan. Most financial experts advise against this.


• Delinquent homeowners may think they should stop making mortgage payments to get their lender's attention, which often isn't the case. When possible, homeowners should stay current on their mortgage payments and continue to contact their lender on a regular basis.


• Homeowners who have applied for assistance or loan modification programs in the past and were turned down are advised to reapply. Program parameters are constantly changing, so the rules might have been liberalized since the last time the borrower sought help.


• A number of free, government-sponsored housing services are available through the Dept. of Housing and Urban Development (HUD). A list of HUD-approved agencies can be found at http://www.hud.gov (Read the full story http://lat.ms/ihLJTs

Don't hesitate to contact me if you have questions about foreclosure and whether or not a short sale could help your situation. I am a Certified Distressed Property Expert and have had a lot of experience helping homeowners in these situations!

Americans Say Home Ownership Still a Great Investment!

Seventy-five percent of Americans say that “owning a home is the best long-term investment they can make and is worth the risk of ups and downs in the housing market,” according to a new survey of 2,000 bipartisan voters by the National Association of Home Builders. And I concur!

Despite their situation — whether underwater on their home or even renters — the survey found Americans to be optimistic about home ownership. Eighty-one percent of those who own their homes outright, 76 percent with mortgages, 67 percent of renters, and 65 percent who have underwater mortgages cited home ownership as the “best long-term investment.”

When survey respondents were asked whether they’d recommend buying a home to a friend or family member just starting out, 80 percent of Americans said “yes.” Even home owners currently underwater — those who owe more on their mortgage than their home is currently worth — overwhelmingly (78 percent) said they would recommend home ownership to family or friends starting out.

More buyers are coming up through the pipeline too. The survey found that 73 percent of those surveyed who do not own a home said their goal is eventually to buy one.

The NAHB survey also found:

▪ 58 percent of Americans oppose eliminating the mortgage-interest deduction and 63 percent oppose lowering it. What’s more, 57 percent of those surveyed say they are less likely to support a candidate for Congress who wanted to eliminate the mortgage-interest deduction.

▪ Respondents were split on about requiring a 20 percent down payment to purchase a home: 49 percent were in favor and 49 percent opposed it. However, mortgage holders and renters aged 18 to 54 were more opposed to it: 58 percent of younger mortgage holders and 59 percent of younger renters opposed adding a 20 percent down payment requirement.

Source: “The Cook Report: The Home Front,” National Journal (June 2, 2011)