By Bob Huntfor Realty Times:
The clock is ticking. Time is running out. To be exact, time runs out midnight, November 30, 2009. Many readers will know what I am referring to. Under the American Recovery and Reinvestment Act of 2009, November 30 is the last day for a home purchased by a first-time home buyer to qualify for the $8,000 tax credit. The purchase must be closed and title transferred by that date. It will not be sufficient simply to be under contract or in escrow.
By way of a brief refresher:
1.The tax credit is for first-time home buyers only. For the program, the IRS defines a first-time home buyer as someone who has not owned a principal residence for the past three years.
2.The credit does not have to be repaid.
3.The tax credit is equal to 10% of the home’s purchase price, up to a maximum of $8,000.
4.The credit is available for homes purchased (closed) on or after January 1, 2009 and before December 1, 2009.
5.Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.
6.The credit can be taken for either 2008 or 2009 taxes. In the former case, an amended return can be filed.
By all accounts the program has been extremely popular – which is to say, successful. The National Association of Realtors® (NAR) estimated that, by September, about 1.1 million first time home buyers had used the program; and another 700,000 are expected to do so. Already, the Treasury Department has reported nearly 315,000 people have claimed the tax credit after filing an amended 2008 return.
As enacted, the program is set to expire at the end of November. A number of bills have been introduced to extend and/or expand it. Representative Eddie Johnson (D-Texas) introduced a bill to extend the program through 2010. Another would also expand it to all home buyers. In the Senate, a bill co-sponsored by Johnny Isakson (R-Georgia) and Chris Dodd (D-Conn.) would expand the tax credit to $15,000 and make it available to any buyer regardless of income.
One would think that at least the modest proposal for an extension would be a no-brainer. It is a government program that is working, for goodness sakes. But even that legislation is in doubt. Two obstacles are cited. One is the cost. Extending this program would result in reduced future revenues. The second problem is that such a bill will have a hard time receiving any attention while the Congress is – for the next foreseeable months – focused on considerably higher profile items such as health-care and Afghanistan.
The first so-called problem seems just crazy. Suppose an extension generated an extra 1 million sales. That would result in $8 billion in unrealized tax revenues. Now that is a lot of money; but it is chump change compared to the amounts that have been lavished on financial firms and auto makers, with yet to be determined beneficial effects. The tax credit program only costs money if it works. Its cost is proportional to its success. If it didn’t work at all, it wouldn’t cost a dime. Imagine that for a government program.
The second problem is realistic. There’s a lot of heavy-duty stuff going on. But, it would seem a simple extension of the program could be achieved with very little ado and virtually no distractions from the “big issues.”
Meanwhile, what should interested parties do?
1.If you are a first-time home buyer, you had better get off the dime. There’s certainly no guarantee the program will be extended.
2.If you are a real estate agent, pass #1 along to every potential first-time buyer that you know.
3.Whether you are a Realtor® or not, if you believe in extending the program, let your representatives know.
4.If you are a member of the Realtor® organization, respond to NAR’s call for action, supporting its lobbying efforts.
Published: October 27, 2009
Tuesday, October 27, 2009
Monday, October 19, 2009
Home Foreclosures: When the Right Price is NOT Correct!!!
by Bob Schwartz/Realty Times
The San Diego housing market is once again hot! (Then again...so is So Florida)!!!! Selling quickly and at above listed prices are the bank-owned foreclosure properties, both detached homes and condominiums. Alan Greenspan's term "irrational exuberance" is once again characteristic of the San Diego home buyer's behavior. Any property description using "bank-owned," "lender repossession," "foreclosure sale," etc., is drawing a crowd to see the property. If the property is in decent condition, there will be offers and multiple offers, at that.
Sounds like déjà-vu? Not quite. Adding my observation to the above facts, a number of lenders have hit on a marketing ploy to create a buying frenzy which guarantees an almost instant sale. In the majority of cases the offer(s) exceed what may have been realistically expected if the property was marketed the traditional way.
Here are some actual examples of this technique for San Diego home sales. (This rings true in So Florida also)!!!
Example 1: On 4-8-09, a bank owned home in east Carlsbad was listed at $499,900. Based on the location, age and size of the home, I estimated the current value at $575,000 to just over $600,000. Within one day of the listing, the listing agent had multiple offers. According to the agent, the lender required it to be on the market one week before they would look at any offers. The agent speculated that based on the number of inquires, she would have 40 to 50 offers in the one week period. This home sold for $597,000. The sales price was almost 20% over the listed price. Doesn't a sale of $97,100 over the listed price suggest that it was listed way under the market?
Example 2: A bank-owned Little Italy one bedroom condominium was listed in March for $234,900. The estimated fair current value for this condo was approximately $275,000 to $280,000. The listing agent stated that within 3 hours of the MLS listing being submitted, he had an offer. Again, the lender would not look at any offer until the condo was on the market one week. This San Diego property generated 21 offers within the 1st. week, of these, 11 were at or above the $234,900, listed price. This Little Italy condo sold at $295,600, or $60,700, approximately 26% above the listed price! I was told the accepted price was $15,000 above the next highest offer.
Example 3: A San Carlos planned-unit-development, bank-owned 4 bedroom was listed at $344,900. The estimated fair value for this condo was approximately $410,000 to $425,000. Inside of one week, this San Carlos property had an accepted offer at $410,000. This was approximately 19%, or $65,100, above the listed price! Banks are purposely under listing property with the strategy of creating a buying frenzy to result not only in a very quick sale, but, a sale at or above the fair market value. Is this practice fair or even legal? It is on both counts. If the bank does not list it properly, they could end up with a sale way below the current fair market value.
On the other hand, it isn't fair to neophyte buyers/agents. Buyers and/or their agent who do not recognize the ploy, may be wasting quite a bit of time writing offers that in some cases, will not even be considered or countered. Also, what about shattered expectations? A number of buyers/agents may honestly believe that their full price offer has a chance of being accepted. In reality, they not only have zero chance of getting their offer accepted, but in the majority of cases, they will not even get a counter-offer.
This is not the time for buyers to be represented by neophyte agents. Bargains are available and buyers can position themselves to be one of the lucky ones by selecting an experienced agent familiar with the areas in which they are interested. A good agent will have reasonable advice about structuring offers and which properties are worth the work and wait. Follow that advice!
Published: October 19, 2009
The San Diego housing market is once again hot! (Then again...so is So Florida)!!!! Selling quickly and at above listed prices are the bank-owned foreclosure properties, both detached homes and condominiums. Alan Greenspan's term "irrational exuberance" is once again characteristic of the San Diego home buyer's behavior. Any property description using "bank-owned," "lender repossession," "foreclosure sale," etc., is drawing a crowd to see the property. If the property is in decent condition, there will be offers and multiple offers, at that.
Sounds like déjà-vu? Not quite. Adding my observation to the above facts, a number of lenders have hit on a marketing ploy to create a buying frenzy which guarantees an almost instant sale. In the majority of cases the offer(s) exceed what may have been realistically expected if the property was marketed the traditional way.
Here are some actual examples of this technique for San Diego home sales. (This rings true in So Florida also)!!!
Example 1: On 4-8-09, a bank owned home in east Carlsbad was listed at $499,900. Based on the location, age and size of the home, I estimated the current value at $575,000 to just over $600,000. Within one day of the listing, the listing agent had multiple offers. According to the agent, the lender required it to be on the market one week before they would look at any offers. The agent speculated that based on the number of inquires, she would have 40 to 50 offers in the one week period. This home sold for $597,000. The sales price was almost 20% over the listed price. Doesn't a sale of $97,100 over the listed price suggest that it was listed way under the market?
Example 2: A bank-owned Little Italy one bedroom condominium was listed in March for $234,900. The estimated fair current value for this condo was approximately $275,000 to $280,000. The listing agent stated that within 3 hours of the MLS listing being submitted, he had an offer. Again, the lender would not look at any offer until the condo was on the market one week. This San Diego property generated 21 offers within the 1st. week, of these, 11 were at or above the $234,900, listed price. This Little Italy condo sold at $295,600, or $60,700, approximately 26% above the listed price! I was told the accepted price was $15,000 above the next highest offer.
Example 3: A San Carlos planned-unit-development, bank-owned 4 bedroom was listed at $344,900. The estimated fair value for this condo was approximately $410,000 to $425,000. Inside of one week, this San Carlos property had an accepted offer at $410,000. This was approximately 19%, or $65,100, above the listed price! Banks are purposely under listing property with the strategy of creating a buying frenzy to result not only in a very quick sale, but, a sale at or above the fair market value. Is this practice fair or even legal? It is on both counts. If the bank does not list it properly, they could end up with a sale way below the current fair market value.
On the other hand, it isn't fair to neophyte buyers/agents. Buyers and/or their agent who do not recognize the ploy, may be wasting quite a bit of time writing offers that in some cases, will not even be considered or countered. Also, what about shattered expectations? A number of buyers/agents may honestly believe that their full price offer has a chance of being accepted. In reality, they not only have zero chance of getting their offer accepted, but in the majority of cases, they will not even get a counter-offer.
This is not the time for buyers to be represented by neophyte agents. Bargains are available and buyers can position themselves to be one of the lucky ones by selecting an experienced agent familiar with the areas in which they are interested. A good agent will have reasonable advice about structuring offers and which properties are worth the work and wait. Follow that advice!
Published: October 19, 2009
Washington Report: $8000 Tax Credit Extension???
by Kenneth R. Harney/Realty Times
Realtors, home builders and consumers hoping not just for an extension of the $8,000 tax credit, but an expansion to all buyers in 2010, shouldn't hold their breath.
That's because it's looking more likely that Congress will only agree to a continuation of the current credit beyond its scheduled November 30 termination date.
But that's not bad news. Just a few weeks back the key question was: will Congress extend the credit at all? Now that looks like a pretty safe bet.
When it comes to tax issues, you've got to follow what New York Congressman Charlie Rangel is saying. He's the chairman of the Ways and Means committee, and no tax legislation has a even a chance of getting anywhere without his say-so.
On the other hand, bills he supports, they just about always make it at least to the House floor, and usually beyond.
Here's what Rangel told reporters last week about the housing tax credit: "There's no question I think it should be extended," he said. How long, I haven't discussed." Rangel also said he doesn't thing that "eligibility should be expanded beyond the first-time home buyers," according to Dow Jones Newswires.
That's probably the kiss of death for lobbyists pushing for an increase in the maximum credit to $15,000, and expansion of coverage to nearly all buyers of homes in 2010, and an increase in the income limits for eligible purchasers.
The National Association of Realtors and the National Association of Home Builders have been the most outspoken advocates of a year long extension and expansion of the credit, up to a maximum $15,000.
Informed of Rangel's comments, home builders president Jerry Howard said he's no longer as "optimistic about expansion" as he once was.
But, on the other hand, chairman Rangel's endorsement of an extension of the credit -- for a yet-to-be specified period of months -- has got be a lifesaver for thousands of buyers who've been worried they'd miss out on this year's credit because they can't close their transactions by November 30.
The politics of the tax credit, and the likely rejection of a bigger credit, are all about the budget deficit. Lawmakers on both sides of the aisle are looking for ways to cover the multi-billion-dollar revenue costs of an extension of the credit. Some estimates go as high as $15 billion.
One idea advanced by Georgia Republican Sen. Johnny Isakson: tap into some of the unspent economic stimulus bill money still sitting in the $800 billion economic stimulus bill.
Published: October 19, 2009
Realtors, home builders and consumers hoping not just for an extension of the $8,000 tax credit, but an expansion to all buyers in 2010, shouldn't hold their breath.
That's because it's looking more likely that Congress will only agree to a continuation of the current credit beyond its scheduled November 30 termination date.
But that's not bad news. Just a few weeks back the key question was: will Congress extend the credit at all? Now that looks like a pretty safe bet.
When it comes to tax issues, you've got to follow what New York Congressman Charlie Rangel is saying. He's the chairman of the Ways and Means committee, and no tax legislation has a even a chance of getting anywhere without his say-so.
On the other hand, bills he supports, they just about always make it at least to the House floor, and usually beyond.
Here's what Rangel told reporters last week about the housing tax credit: "There's no question I think it should be extended," he said. How long, I haven't discussed." Rangel also said he doesn't thing that "eligibility should be expanded beyond the first-time home buyers," according to Dow Jones Newswires.
That's probably the kiss of death for lobbyists pushing for an increase in the maximum credit to $15,000, and expansion of coverage to nearly all buyers of homes in 2010, and an increase in the income limits for eligible purchasers.
The National Association of Realtors and the National Association of Home Builders have been the most outspoken advocates of a year long extension and expansion of the credit, up to a maximum $15,000.
Informed of Rangel's comments, home builders president Jerry Howard said he's no longer as "optimistic about expansion" as he once was.
But, on the other hand, chairman Rangel's endorsement of an extension of the credit -- for a yet-to-be specified period of months -- has got be a lifesaver for thousands of buyers who've been worried they'd miss out on this year's credit because they can't close their transactions by November 30.
The politics of the tax credit, and the likely rejection of a bigger credit, are all about the budget deficit. Lawmakers on both sides of the aisle are looking for ways to cover the multi-billion-dollar revenue costs of an extension of the credit. Some estimates go as high as $15 billion.
One idea advanced by Georgia Republican Sen. Johnny Isakson: tap into some of the unspent economic stimulus bill money still sitting in the $800 billion economic stimulus bill.
Published: October 19, 2009
Monday, October 5, 2009
Where Are All the REO's???
Foreclosure Fundamentals by Rick Sharga Print Article
RISMEDIA, October 5, 2009—
Certain things in life are simply meant to be mysteries. There are ages-old philosophical questions that have kept philosophers busy for millennia: What is the sound of one hand clapping? If a tree falls in the forest and no one is there, does it still make a sound? Other mysteries hang heavy with intrigue: What really happened to Amelia Earhart? And who really kidnapped the Lindbergh baby? And still others simply defy logic: If Denny’s is open 24 hours a day, 365 days a year, why are there locks on the doors?
Now we can add another question to the list of ongoing mysteries: With foreclosure activity breaking records nearly every month, where are all the REOs?
It’s a fair question. In normal market situations, a bank will repossess a home and usually process it through to a listing agent to put on the MLS within 30 days. In a relatively short period of time, virtually every marketable REO property finds itself listed for sale on the local MLS. Today, that’s simply not the case; it’s likely that between 450,000 and 500,000 properties repossessed over the past year are still not on the market. And with buyers hungry for housing bargains, and agents and brokers chomping at the bit ready to sell the properties, it begs for a reasonable answer.
Lenders and servicers admit that it’s taking longer to process REOs than it has in the past, and they offer a number of legitimate reasons:
-Many of the properties have title issues that need to be resolved.
-Many of the properties are in states of utter disrepair.
-A number of states have strict redemption-rights periods, which prevents the lender from reselling the property.
-A few states have extended the length of eviction proceedings.
-The sheer volume of REO activity has created a “pig in the python” phenomena, (to put this in perspective, there will be roughly 10 times the number of REOs this year as in the last “normal” year, 2005).
What else could be slowing things down? A popular theory is that many banks are holding the properties off the market in order to defer losses. There is some accounting logic to this theory, as in most cases, banks aren’t required to adjust asset prices until the actual resale of the property. Another idea is that the industry is holding back the inventory to create leverage with the government in order to force the creation of a “toxic bank” or RTC-like entity that would buy the distressed assets at 50 to 60 cents on the dollar rather than the 30 to 35 cents available on the market today. This theory suggests that, seeing the threat of a massive inventory of distressed homes being released all at once, the government would “blink” rather than risk another housing market meltdown.
Whatever the reason—process issues or conspiracies—we’re going to continue to see record-breaking numbers of REOs for at least the next year, and we’ll all be watching to see when these sought-after homes finally make their way to the market.
Rick Sharga is senior vice president at RealtyTrac. For more information, please visit www.realtytrac.com.
Read more: http://rismedia.com/2009-10-04/where-are-all-the-reos/#ixzz0T3kmYjGF
RISMEDIA, October 5, 2009—
Certain things in life are simply meant to be mysteries. There are ages-old philosophical questions that have kept philosophers busy for millennia: What is the sound of one hand clapping? If a tree falls in the forest and no one is there, does it still make a sound? Other mysteries hang heavy with intrigue: What really happened to Amelia Earhart? And who really kidnapped the Lindbergh baby? And still others simply defy logic: If Denny’s is open 24 hours a day, 365 days a year, why are there locks on the doors?
Now we can add another question to the list of ongoing mysteries: With foreclosure activity breaking records nearly every month, where are all the REOs?
It’s a fair question. In normal market situations, a bank will repossess a home and usually process it through to a listing agent to put on the MLS within 30 days. In a relatively short period of time, virtually every marketable REO property finds itself listed for sale on the local MLS. Today, that’s simply not the case; it’s likely that between 450,000 and 500,000 properties repossessed over the past year are still not on the market. And with buyers hungry for housing bargains, and agents and brokers chomping at the bit ready to sell the properties, it begs for a reasonable answer.
Lenders and servicers admit that it’s taking longer to process REOs than it has in the past, and they offer a number of legitimate reasons:
-Many of the properties have title issues that need to be resolved.
-Many of the properties are in states of utter disrepair.
-A number of states have strict redemption-rights periods, which prevents the lender from reselling the property.
-A few states have extended the length of eviction proceedings.
-The sheer volume of REO activity has created a “pig in the python” phenomena, (to put this in perspective, there will be roughly 10 times the number of REOs this year as in the last “normal” year, 2005).
What else could be slowing things down? A popular theory is that many banks are holding the properties off the market in order to defer losses. There is some accounting logic to this theory, as in most cases, banks aren’t required to adjust asset prices until the actual resale of the property. Another idea is that the industry is holding back the inventory to create leverage with the government in order to force the creation of a “toxic bank” or RTC-like entity that would buy the distressed assets at 50 to 60 cents on the dollar rather than the 30 to 35 cents available on the market today. This theory suggests that, seeing the threat of a massive inventory of distressed homes being released all at once, the government would “blink” rather than risk another housing market meltdown.
Whatever the reason—process issues or conspiracies—we’re going to continue to see record-breaking numbers of REOs for at least the next year, and we’ll all be watching to see when these sought-after homes finally make their way to the market.
Rick Sharga is senior vice president at RealtyTrac. For more information, please visit www.realtytrac.com.
Read more: http://rismedia.com/2009-10-04/where-are-all-the-reos/#ixzz0T3kmYjGF
Subscribe to:
Posts (Atom)