Housing: Best Recovery Bets
October 23, 2009
SEATTLE
Median home price: $371,000
Value lost since 2006: 15.2%
Forecast gain by 2011: 3.8%
Seattle has become a world-class city with a diverse, vibrant economy. As a home to manufacturers such as Boeing and software providers such as Microsoft, the job market has held up better than average, with a current unemployment rate of 8.8%.
Home prices had a softer landing as well, dropping just 15.2% over the past three years, about half the national average. However, prices do tend to be volatile, according to Mark Fleming, chief economist for First American CoreLogic. The lack of available land for development is one reason for that volatility, as are political restrictions on growth.
After another modest price decline of 2.3% in the next eight months, the market should begin to turn up. Between June 2010 and June 2011, the city should see a gain of 6.2%. Averaged out, that means a 3.8% gain over the next two years*.
And while that may not sound all that robust for those jaded by the annual double-digit returns recorded during the boom, that performance will be one of the best of any large city during that period.
Read the full story at: http://money.cnn.com/galleries/2009/real_estate/0910/gallery.housing_price_forecast/2.html
Which Cities Will See Biggest Rebound? (Seattle is #1)
October 9, 2009
Daily Real Estate News | October 2, 2009 |
Which cities are likely to be the hottest post-economic downturn destinations for young, brilliant, and highly mobile workers?
The Wall Street Journal surveyed six trend-spotting experts and they chose cities based on economic diversity, lifestyle and their own personal prejudices.
Here’s the top-10 list:
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Purchasing a Foreclosed Home
September 22, 2009
A home in foreclosure may offer a great deal, but buying one isn’t easy, and there are many risks involved. The key is to do your research, and find the foreclosure purchase option that works best for you.
Auctions: When you think of an auction, imagine standing at the steps of the county courthouse or in front of the foreclosed property. This is how most foreclosures go down. Transactions are cash only, and paid on the spot. Unfortunately for the buyer, they are unable to inspect the property prior to the auction. In very few cases, it’s possible that the homeowners have not vacated the property.
Real Estate Owned (REO): If a foreclosed home isn’t sold at auction, the bank can repossess it. This would happen if the highest bid at auction is less than what the homeowner owes the bank. There’s no guarantee at this point that the bank will offer a rock-bottom price to unload the property. It can also be a lengthy process.
Pre-foreclosure: For a fee, you can access websites that have homes listed that are in foreclosure. In this case, you would need to offer the bank more than what is owed, but less than market value. This would be the best option for most people.
Disputing Your Property Tax Assesment
September 22, 2009
It won’t be easy, but you CAN dispute the assessed value of your home. But you’ll need to do your homework first.
Meet the Deadline: An appeal needs to be filed by certain deadlines. Washington state, for example, has a deadline of July 1st of the assessment year, or within 60 days after the date listed on the Assessor’s value change notice – whichever is later. Make sure all appeal forms are completed by downloading and printing out all necessary forms from your county assessor’s website.
Get the Facts: Gather information on comparable homes in your area. Use real estate websites, such as Zillow, to research homes values within a mile of your home. With the help of a realtor, you can view the last few months of home sales in your area to help establish your own home value. Five “comps” should help support your case.
Present your case: Review your case with assessor staff at the county level. Remember, your county assessor’s office has been inundated with appeals from disgruntled homeowners. Be pleasant. Provide your research to further support your request. Meeting goes nowhere? Apply for a formal appeal at the state level.
Home Warranties: Peace of Mind for Sellers & Buyers
September 22, 2009
What is a Home Warranty, and who would benefit from having one? A Home Warranty provides coverage, ranging from 6 months to several years, for repair or replacement of a home’s major appliances or systems. Costs for this service? Typically, costs run $200-$400 a year, with service-call fees of $50-$100, though these amounts can vary by state.
A warranty can protect homeowners from unexpected costs and breakdowns that occur in a home. The types of repairs warranties cover often are not covered under a homeowners insurance policy. It is often possible for existing homeowners to obtain a warranty, but most likely, there will be a waiting period, depending on providers and the type of plan. So, who benefits most by purchasing a warranty? Sellers and buyers. The seller can use a warranty as a selling tool, and provide peace of mind for a potential buyer. The buyer can rest easy knowing that a seller has secured a warranty, and that it is in place should something unexpected happen after they move in.
Many home-warranty companies prefer to repair broken appliances, rather than replace, so always make sure you read the fine print.
Avoiding Foreclosure
November 12, 2008
There are options to a foreclosure other than just walking away like Forbearance, Loan Modification, Short Sale, etc.
Click on the following to read more…Avoiding Foreclosure
Tax Credit Unveiled – or is it really just a loan to the consumer?
November 12, 2008
I’m sure you’ve heard about it by now, but do you really understand the new $7,500 first-time homebuyer income tax credit and how it works? I mean in-depth and practically? And do you also know how to make this new piece of legislation work for you? As long as your clients legitimately understand what they are getting themselves into, you can use this “credit” as a powerful tool to increase your business.
Before proceeding, I must clarify a few things. It makes me a little crazy every time I hear or use the term “credit.” You see, the entire initiative is administered by the IRS code, and “credit” is IRS terminology. It means that when qualifying individuals file their federal income tax returns, they get an actual income tax “credit” for 10% of the price of the home up to a maximum of $7,500. It’s only $7,500 when the home’s price is $75,000 or higher.
Let’s assume a qualifying couple purchase a $100,000 home between April 9, 2008 and June 30, 2009, and upon filing their federal tax returns are due for a small refund, say $300. Their $7,500 “credit” is tacked right onto the $300, and they end up with a pretty nice $7,800 income tax refund check.
Recapture
But that’s not the end of the story. This “credit” from the IRS must be “recaptured” over 15 years. Recapture doesn’t start until two years later, with payback at 1/15th of the full amount per year. Starting two years after their very nice check, Mr. and Mrs. Couple’s income tax burden is increased by 1/15th of $7,500, or $500 per year until such time that the IRS is paid back.
Now, doesn’t that sound like a loan to you? Agreed, the terms of the loan are fantabulous, with no interest due and a full 15 years and an additional two-year grace period to pay back. But in my book, a loan is a loan is a loan, which isn’t the same thing as a “credit.” And it’s a loan from the IRS, to boot!
Moreover, the (loan) recapture is accelerated if the home ceases to become the taxpayers’ primary residence or if the home is sold. The entire balance is due in the tax year of these occurrences. If the home is sold to a non-relative, however, the maximum recapture is limited to the gain on the home.
It is nice to know that the credit is forgiven for those homes sold at a loss. But as with everything that I cover here, always consult a tax accountant.
Who Qualifies and Other Facts
Other aspects of the income tax credit that I did not yet mention include that it applies to first-time homebuyers only. Under the law it is defined as having no ownership interest in a principal residence in the three years prior to the acquisition date of new home. If the borrower constructs their own home, count back from closing date or date of occupancy.
Ineligible borrowers include non-resident aliens; buyers who finance their home with tax-exempt mortgage revenue bond programs, where the home is purchased from a person who is related to the homebuyer, and a married person purchasing as an individual if the spouse is ineligible due to prior homeownership.
The credit is phased out for individuals with a modified adjusted gross income of $75,000 to $95,000, or joint filers with a modified AGI of $150,000 to $170,000.
If home is purchased in 2009 (prior to June 1, 2009), the borrower may elect to claim the credit on their 2008 tax return, and may amend 2008 returns if already filed.
Before I move on, I have barely scraped the surface of what you need to know, and believe it’s wise to read up further before you hit the streets. A couple of excellent resources are the National Homebuilder’s Association at www.federalhousingtaxcredit.com/faq.php or the August issue of my own e-zine, www.MortgageCurrentcy.com. Be wary of your sources, there’s a lot of misinformation out there. And above all else, remember that this is IRS tax code. Always defer to a tax accountant and do not offer tax advice.
Borrowers Short Funds
It’s time to make this credit/loan work for you. Think about using one of the following to get those difficult-to-come-up-with assets for those clients who are short funds:
* Scenario No. 1: the homebuyer borrows from their parents for downpayment, repays them with tax refund. With the Federal Housing Administration program, a loan from one’s parents is fully acceptable.
* Scenario No. 2: The homebuyer borrows from a 401(k) or other retirement plan. They repay in full with the tax refund. Neither Freddie (SS Guide Ch 37.16), nor Fannie (Selling Guide X. 603.15), nor FHA (4155.1 REV 5, 2-10, D.) require the monthly payment to be included in the debt ratio.
* Scenario No. 3: After closing, the borrower changes his/her W-4 withholding to recoup the credit immediately by decreasing the federal tax amount deducted from their paycheck. This can be very helpful to those who know they’ll be squeezed for money after closing.
* Scenario No. 4: Think ahead a few months to 2009. Immediately after the qualified homebuyer purchases, he or she goes to their tax preparer, files 2008 tax returns, and the credit is in his or her hands within minutes.
Realtor/Builder Business
This can absolutely help your Realtors and homebuilders increase their business. Create a handout with information that they need to know. (For a pre-prepared handout that you can personalize, visit Mortgage Talking Points at www.mortgagecurrentcy.com.) You’ll be surprised by how little most real estate agents and builders know about the credit.
Take it to the next level and bring the informational flyer with you to open houses. Take the time to put the property address of the listed house along with the Realtor information on the handout. Not only do you look good when the Realtor looks good, the flyer can be left at the home for future walkthroughs. It’s a great sales tool for the Realtor and the seller, so it’s likely to be left in the home. And it’s got your name and number on it when someone needs a question answered.
Mine Your Past Clients
This income tax credit is retroactive to April 9, 2008, including homebuyers who have already closed. It’s a great reason to stay in contact with prior clients and let them know that the credit exists, that they may qualify, and to talk to their accountant. And by the way, do they know a friend or family member who might benefit from the tax credit that you can help?
First-Time Homebuyer Classes
Create yourself a simple PowerPoint presentation for new homebuyers. Team up with an accountant, if possible, and market the class based on the tax credit. I’m sure the many accountants know clientele who may be very interested. Heck, team up with a Realtor and further increase your audience.
Don’t make it complicated, and please, again, put disclaimers on everything.
Leslie Petersen’s Disclaimer
I am not a tax accountant. I am not an attorney. I cannot offer legal or tax advice. I did spend an enormous amount of time researching and investigating the tax credit/loan that I’m covering today, but I do not represent the IRS. I cannot offer guarantees as to the accuracy of anything represented here.
To Your Success
Having said that, I legitimately want to see you succeed at what you are doing. I’ve barely scratched the surface. As mortgage brokers, you must be educated, and to thrive in this business, you must also be educators. The public knows little to nothing about the first-time homebuyer income tax credit. It’s new and thrilling information, and you can be their resource.
The first-time homebuyer income tax credit/loan is a powerful marketing tool and the window of opportunity is narrow. Use your expertise to attract new clients. Whether or not the credit/loan is right for them, you’ve still established new relationships and future business.
Leslie Petersen is a mortgage guideline expert. With over 30 years experience in mortgage lending, she writes an online newsletter, www.mortgagecurrentcy.com, on the changes in Fannie/Freddie, FHA, VA and other regulatory agencies, but with a twist. For originators, underwriters and managers, she also interprets them in plain English and shows them how to make the rules and changes work for them and get more of their loans approved. She can be contacted at leslie@MortgageCurrentcy.com.
Housing Real Estate Markets Most Likely To Rebound – Seattle is #1
November 6, 2008
If you’re a homeowner seeing property values plummet, look to the commercial real estate market for solace. It might tell you which areas will recover fastest–and which will likely remain weak. The Urban Land Institute recently asked 700 real estate professionals to name the best (and worst) places to invest in commercial real estate in the coming year. Those surveyed included private developers, Realtors and Real Estate Investment Trust executives. Their answers also apply to the residential market, since the single-family-home sector typically follows the economy. As wages go up and there are more jobs, more people can buy homes, pushing prices up.
The best cities in which to invest are those that are considered gateways to international investment, have vital downtowns where people can forgo cars, and don’t have a glut of condos or office space.These traits landed
Although the city is suffering from the loss of Washington Mutual and the downsizing of Starbucks, Boeing and Microsoft are still relatively strong. Apartment vacancies are low and there aren’t too many new buildings going up, meaning the market won’t be oversupplied. The same is true in the retail space.
Of course, there’s no guarantee that an improved commercial market will lead to an improved home market. However, investors have a better chance of seeing home prices rise in fundamentally strong markets like
It landed at the bottom of the list, scoring a 2.24.
What’s happening to housing in your area? Weigh in. Post your thoughts in the Reader Comments section below.
The other cities at the bottom of the list–
Recent attempts to turn downtown
Dorothy Pomerantz 10.29.08, 4:00 PM ET Forbes Magazine
Get Rid of “Buyer’s Block”
October 18, 2008
REThink Real Estate
- Decide to make your decision whether to buy or sell based on your lifestyle and life plans. If you want to buy and are qualified to do so, don’t cheat yourself out of moving forward and obtaining the professional advice you deserve because of what you see on the news. However, you should get educated about your local market and make decisions about how to best execute your plan of buying in a way that takes advantage of current conditions.
- Get your own team of professional advisors, by referral. At the very least, talk with a CPA about the tax implications of home ownership; a mortgage broker regarding the mortgage rates, terms and price you can qualify for; and a Realtor about current, local market conditions and what sort of home you can expect to find at your price range.
- Go on a selective information diet. The recent book, “The Four Hour Work-Week,” sets out a very extreme version, but try to at least limit your intake of real estate information — which can be habit-forming! — to questions you need answered about your home-buying project.
- Ask your professionals where they get their real estate news/information.
- Build a repertoire of reliable sources of unbiased real estate information, rather than opinion. Then, stay very answer-oriented when you consult these sources. Don’t look for news articles to tell you whether to buy or when — look for answers to concrete questions, like how long the average home in your area is staying on the market, common concessions currently being offered by sellers, etc.
As you go through this process of preparing to buy a home, use the real estate news to find strategies and solutions to questions and obstacles that come up, rather than allowing fear to shatter your life goal of home ownership.
Tara-Nicholle Nelson is author of “The Savvy Woman’s Homebuying
Best Places to Retire…in our own backyard…Sequim, WA
September 26, 2008
Check out Money magazines “Best Places to Retire!.” Sequim, Wa made the top 6 amount St. Joseph, MI – Durango, CO – Marble Falls, TX – Beaufort, S.C. – Dundein, FL.
http://money.cnn.com/galleries/2008/moneymag/0809/gallery.bestplaces_retire.moneymag/index.html