Foreclosure Buyers: Sales & Marketing: REALTOR� Magazine

Foreclosure Buyers: Sales & Marketing: REALTOR� Magazine.

Mortgage Rates….Staying Low or Rising???

I wanted to ask people out there whether they feel interest rates are going to stay around 5% or rise?  I have had so many of my buyers get great interest rates with FHA loans.  It just amazes me how long they have stayed low.  If you listen to all the lenders ho are advertising they are saying to take adavantage of these “All Time Low Rates”, because they will not be here long.  When I heard this again today on the radio, I thought to myself, who knows?  I think you have to listen to the economists to understand. 

I think for the rates to rise the Obama adminstration needs to be worried about inflation.  However some economist, “moringstar analyist” are saying we are looking at a Double Dip.  This means that we are going to see home prices fall again, because the current adminstration has not been able to create enough jobs to prevent the double dip.  There is not enough income to support any price increases.

Anybody have any comments on what you think the interest rates will do?  Just a real estate agent trying to better prepare my clients for the future.

5 Tips for Buying a Foreclosure

Article From BuyAndSell.HouseLogic.com

By: G. M. Filisko
Published: March 29, 2010

Get prequalified for a loan and set aside funds, and you’ll be ready to purchase a foreclosed home.

When lenders take over a home through foreclosure, they want to sell it as quickly as possible. Since lenders aren’t in the real estate business, they turn to real estate brokers for help marketing their properties. Buying a foreclosed home through the multiple listing service can be a bargain, but it can also be a problem-filled process. Here are five tips to help you buy smart.

1. Choose a foreclosure sale expert. Lenders rarely sell their own foreclosures directly to consumers. They list them with real estate brokers. You can work with a real estate agent who sells foreclosed homes for lenders, or have a buyer’s agent find foreclosure properties for you. To locate a foreclosure sales specialist, call local brokers and ask if they are the listing agent for any banks.

Either way, ask the real estate professional which lenders’ homes they’ve sold, how many buyers they’ve represented in a foreclosed property purchase, how many of those sales they closed last year, and who they legally represent.

If the agent represents the lender, don’t reveal anything to her that you don’t want the lender to know, like whether you’re willing to spend more than you offer for a house.

2. Be ready for complications. In some states, the former owner of a foreclosed home can challenge the foreclosure in court, even after you’ve closed the sale. Ask your agent to recommend a real estate attorney who has negotiated with lenders selling foreclosed homes and has defended legal challenges to foreclosures.

Have your attorney explain your state’s foreclosure process and your risks in purchasing a foreclosed home. Set aside as much as $5,000 to cover potential legal fees.

3. Work with your agent to set a price. Ask your real estate agent to show you closed sales of comparable homes, which you can use to set your price. Start with an amount well under market value because the lender may be in a hurry to get rid of the home.

4. Get your financing in order. Many mortgage market players, such as Fannie Mae, require buyers to submit financing preapproval letters with a purchase offer. They’ll also reject all contingencies. Since most foreclosed homes are vacant, closings can be quick. Make sure you have the cash you’ll need to close your purchase.

5. Expect an as-is sale. Most homeowners stopped maintaining their home long before they could no longer make mortgage payments. Be sure to have enough money left after the sale to make at least minor, and sometimes substantive, repairs.

Although lenders may do minor cosmetic repairs to make foreclosed homes more marketable, they won’t give you credits for repair costs (or make additional repairs) because they’ve already factored the property’s condition into their asking price.

Lenders will also require that you purchase the home “as is,” which means in its current condition. Protect yourself by ordering a home inspection to uncover the true condition of the property, getting a pest inspection, and purchasing a home warranty.

Be sure you also do all the environmental testing that’s common to your region to find hazards such as radon, mold, lead-based paint, or underground storage tanks.

More from HouseLogic

What you need to know about the homebuyer tax credit (http://www.houselogic.com/articles/homebuyer-tax-credit-what-you-need-know/)

How to claim your homebuyer tax credit (http://www.houselogic.com/articles/claim-your-homebuyer-tax-credits/)

 Other web resources

How to buy a foreclosure from Fannie Mae (http://www.fanniemae.com/homepath/homebuyers/buying_fanniemaeowned.jhtml)

What to consider when buying a foreclosure as your first home (http://www.nolo.com/legal-encyclopedia/article-29589.html)

 G.M. Filisko is an attorney and award-winning writer who purchased a foreclosed condominium and found herself in the middle of a months-long dispute between the former homeowner and the bank over whether the foreclosure was conducted properly. Six months after paying the full purchase price, she was finally able to enter the property. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Tax Credit Extended for California

I don’t know if everybody knows that the state of California has extended the first time home buyer and re-beat buyer tax credit.  New applications will be available on May 1st, 2010.  The federal governments tax credit will expire April 30, 2010.    There are a few difference with the State credit and the federal credit.

The state credit will have a budget of $100 million for first time home buyers and $100 million for re-beat buyers. The major difference with a budget, is you can run out of funding and the program ends.  They plan to on the $100 million cap for New Home Credit will be reduced by 70% of tax credit allocated to each buyer.  The $100 million cap First Time Home Buyer credit will be reduced 57% of the tax credit allocated as well.  This is because the state feels that many buyer will not be able to use the whole credit within 3  years.  These credit will be served on a first come basis.  Another difference is this is a credit.  That means it goes against what you owe in your taxes.  You have to use this tax over a three year period ($3,333 per year).  This tax cannot reduce regular tax below your Tax Minimum Credit (TMT).  You cannot get a refund for the amount you do not use.

The taxpayers who are first time home buyers need to purchase (close escrow) on or after May 1, 2010 and before January 1, 2011 in order to get this credit.  Repeat buyers going for the New Home Credit need to purchase on or after December 31, 2010 and before August 1, 2011

There are a few regulations on who will be aledgeable for these two credits.  Please go to the government website and too read all the rules and updates as they become available.   http://www.ftb.ca.gov/individuals/New_home_Credit.shtml

Brokers being Fined for Adding on Fees

I don’t know if any of you read the article in the Union Tribune this Sunday about how the HUD is cracking down on what realtors charge for extra.  The rule behind this is that if you are being paid a commission and that is negotiated with the seller that is all you should be paid.  They (HUD) are finding that a lot of realtor tack on extra fees above and beyond their real estate commission.  If the fees are for services that should be done to close the deal the HUD feels their is no reason the client should be paying more.  So when an agent tacks on a fee for a transaction cordinator or signage or advertising any of these fees the HUD could fine the broker for gauge their client.

They feel that advertising, paperwork, adminstrative, puting the sign on the property, and flyers need to be done in order to sale the home and should be included in the commission or flat rate negotiated at the beginning.  When I first started real estate in the Bay Area I saw a lot of agents charging their clients for things I felt were all part of the transaction.  It will be curious to see if brokers abide by the new law.

Any thoughts…..

Home Prices Up Per Square Foot

The data from February of 2009 to February of 2010 shows the median home price in the North County San Diego area, per square foot, rose 11.5% for single family homes and 20.4% for condos.  The bulk of the sales in our market occured the “Spring Market” which is April through September.  Since September, we have not seen enough data to support an increase in prices.

We are about to hit the Spring Market again, and it will be something to watch.  With the Federal government changing the guidelines for FHA loans, which handle about 40% of our loans, they will not be propping up real estate loans.  Tax credits for homebuyers ($8,000 for first time buers, and $6,500 for return buyers) will disappear if you are not in escrow by the 30th of April.  The tax credits will probably play a small part in boosting the Spring Market. 

With all these variables, it will be intersting to see what the market will do this year…

New Guidelines for FHA Loans

The FHA (Federal Housing Association), who currently does about 30% of the current loans in today’s market, is changing a few of their rules and fees.  Three years ago, FHA loans made  up about 2% of the loan market.  One of the reasons that the FHA makes most of the loans now is that they only require the buyer to put 3.5% down to purchase a home.  With only 3.5% down, the FHA can also ask the seller to pay up to 3% in closing costs.  The catch to these loans is that they are not cheap and they require the buyer to carry PMI (property mortgage insurance) to protect the risk of such a low down payment.

The changes are as follows:

• Increase FHA insurance premiums
• Increase upfront cash by the borrower
• Focus on enforcement and lender accoutability
• Reduce the maximum seller concessions from 6% to 3%
• Raise the minimum FICO score to qualify

I think these could be good changes — the FHA is trying to make sure that the buyer is more strongly qualified so that we don’t end up with people buying homes that they can’t afford.  If a buyer only puts 3% down and gets 6% back in closing costs, they are basically coming up with no cash.  Buying a home takes more than just a down payment; you also need to maintain the home which, overall, is more expensive monthly than renting.

We need to take accoutablility for our expdentures…

A Mixed Bag for the SD Housing Market

Since we are heading into the third month of the year, I thought we should discuss the “Elusive Shadow Inventory” that everybody has been talking about for at least a year.

According to Schiller data, home builders are re-openning or start new projects across the county.  There were eight new projects started in San Diego last month.  The county showed home prices that were 2.7% higher at the end of 2009 than they were in 2008.  That all being said there are not a lot of homes for sale right now.  The overall number of homes sold dropped 28% !  Where’s the inventory??  With 1/3 of San Diego homeowners currently underwater in their mortgages, that’s over 200,000 properties that should be, but are not, on the market!

According to the MLS , there are currently 9,243 homes actively for sale in San Diego County.  But there are also 7,260 homeowners who have recieved at least one default notice, and another 10,221 homes headed for the auction block.  Of these 17,500 homes, none have gone back to the bank as of yet!

What does that mean to San Diego’s housing market? This market could go anywhere in the next quarter.  It’s hard to know for certain what is going to happen.  With such a large inventory that is unknown, it is anybody’s guess as to what we’re heading for!  I think it will depend on how many homeowners will get their loans modified, or just end up with a short sale or foreclosure.  I feel that with so many people having no equity in their homes, these people will lean towards short sale/foreclosure versus modifying a loan and hanging on to something that will take years to get back in the black. This will result in a large number of houses on the market.

As always, I welcome your thoughts on this…

Short Sales or Modifications

I was a little stumped on what to write about today, however, something has been bothering me so I though I would share…  I meet with my tax accountant the other day and we got into the discussion of real estate, which happens a lot to me.  He mentioned that we are going to see more foreclosures and short sales in the next two years than we’ve seen over the past two years.  This was not the first time I’ve heard this!  Why would that be? The problem is that there are a large number of adjustable loans coming in to their adjusment period over the next two years. A lot of these homeowners have already lost a lot of their home’s value, and now have less incentive to modify their loans. The prediction is that a lot of these homeowners will face foreclosure or short sale their properties.

As I sit in my office, I wonder what will happen to the real estate market…  Will we see that “W” that everybody has been talking about?  Or will the market stay flat?

Let me know if you have any thoughts on the next two years in the real estate market.

FDIC and OneWest Bank Loan Modifications

I saw this clip the other day on the internet on how the FDIC is handling the losses on one bank…  According to this clip, the FDIC bailed out IndyMac and shut its doors back in July of 2008.  In March of 2009, the FDIC sold all the bad loans to OneWest Bank for 70% of their value and HELOC’s (helocs are lines of credit) at 50% of their value.

When watching this video, my blood begin to boil! This is the same public rip-off that we have been watching for years.  Whether we have a republican/democrat in office, it’s all the same old story! OneWest Bank is owned by private investors with ties to the US treasury department.  This means they did not have to sign up for the loan modification program that Obama passed a few months back — that program helps consumers in danger of foreclosure by modifying the terms of their loan.  OneWest Bank has no incentive to help homeowners, and in fact, it has a lot of incentive to foreclose on the homeowners. 

Here is a link to the article I am referencing:  http://www.thinkbigworksmall.com/mypage/archive/1/32274.  Please watch the video, read the blogs, and tell me what you think.  I just don’t understand how we can get the housing market back on track if we don’t get the government out of the housing market.