David Jordan

A Realty Times Feature Article by Kenneth R. Harney

Quick passage by the House last week of a bill extending the $8,000 home buyer tax credit next year for military, diplomatic and intelligence personnel serving overseas increases the odds that Congress will agree to an extension, maybe even an expansion, of the entire credit program well into 2010.

The White House is also signaling that it sees the overall tax credit program -- currently set to expire November 30 -- as an important element in cutting the unemployment rolls and stimulating new jobs next year.

After an economic policy strategy meeting last week in the Oval Office involving President Obama, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, congressional aides said Democrats generally support an extension of the housing credit.

Reid already has made clear he wants an extension. He is co-sponsoring a Senate bill that would do so for six months.

Congressman Charles Rangel, chairman of the tax-writing House Ways and Means Committee, sponsored the one-year extension of the credit for military and other personnel serving overseas, and is reported by aides as favoring an extension for the entire program.

The White House has not publicly committed to an extension, but has confirmed that the President is seriously examining that option.

An unexpected development that emerged following last week's White House meeting was the possibility of opening up the credit to a broader group of buyers next year - people who sell their current homes and buy a replacement home.

Though details were scanty, Capitol Hill sources said one option on the table would be to provide a tax credit -- most likely at the $8,000 level -- to replacement home buyers whose incomes do not exceed some limit.

The current credit phases out for single taxpayers with incomes above $75,000, and married purchasers earning $150,000.

A politically sensitive issue hovering over the entire debate on extending the housing tax credit is its cost - what it would add to the federal budgetary deficit. Mark Zandi, chief economist of Moody's Economy.com, estimates that widening the credit to all buyers through next August could cost the government upwards of $30 billion.

Rangel's 12-month extension of the credit for service personnel is estimated to cost more than $300 million, but it's mainly being paid for through an increase in penalties levied by the IRS on taxpayers who fail to file corporate or partnership returns.

The New York Times reported that one possible solution to the cost problem would be to divert money not yet spent out of 2009's $800 billion stimulus legislation.

A short sale can be an excellent solution for homeowners who must sell and owe more on their homes than they are worth. Unfortunately, a number of myths about short sales have developed, and it is important to understand the reality of this process should you find it meets your current needs.

Myth #1 - The Bank Would Rather Foreclose than Bother with a Short Sale

This is one of the most common misconceptions. The reality is that banks do not want to foreclose on your property because the foreclosure process is incredibly costly. Banks, investors, and even the federal government have all publicly stated that if a person is qualified for a short sale, the deal needs to be considered. Overwhelmingly, banks receive more on their investment through a short sale than a foreclosure.

The qualifications for a short sale include:

1. Financial Hardship - There is a situation causing you to have trouble affording your mortgage.
2. Monthly Income Shortfall - "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
3. Insolvency - The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

Myth #2 - You Must Be Behind on Your Mortgage to Negotiate a Short Sale

While this may have previously been the case, today lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.

If you meet these three requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left.

Myth #3 - There is Not Enough Time to Negotiate a Short Sale Before My Foreclosure

This is a myth that probably hurts homeowners the most. Many do not realize that foreclosure is a process, and that there is time to make decisions that may result in better outcomes.

The foreclosing party-in most cases a lender-can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.

Myth #4 - Listing My Home as a Short Sale is an Embarrassment

It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, more than one out of eight homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution.

With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.

Myth #5 - Short Sales are Impossible and Never Get Approved

This is a complete falsehood. Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.

For example, agents with the Certified Distressed Property Expert® (CDPE) Designation receive thousands of short sale approvals on a monthly basis. These professionals have undergone extensive training in methods to help homeowners in distress and process short sales. While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process.

Myth #6 - Banks are Waiting on a Bailout and Not Accepting Short Sales

You may have heard this, but the reality is that banks (and the U.S. government) are trying to do anything they can, within reason, to avoid foreclosing on properties. It is preposterous to believe they would deny a short sale in hopes that some future legislation would pass and pay them for losses.

Today, more banks are aggressively pursuing short sales and working with agents who understand how to process them. Freddie Mac recently hosted a national training Webinar for real estate agents where they expressly stated the organizational goal of "eliminating distressed assets through modification or short sale."

Myth #7 - Buyers are Not Interested in Short Sale Properties

This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales.

For buyers, short sales and foreclosures have become synonymous with "good deals." More specifically, international buyers are targeting these properties. Listing with an experienced agent who is educated in the short sale process will provide you with a great chance of quickly seeing a contract on your property.

In conclusion, our team are trained in all aspects of the short sale process, and know how to deal with the parties involved in foreclosures. Please call us to find out if you qualify for a Short sale

There were 12 homes SOLD in Bridgeland for the month of September. Price per square foot ranged anywhere from $83.94 barely lived in two story built in 2007 all the way up to $113.95 per square foot for new David weekley.

These homes were on the market an average of 63 days. Most of these homes had at least one price reduction from the original list price showing the necessity of PRICING RIGHT THE FIRST TIME TO BRING AN OFFER MORE QUICKLY!!

There were 41 homes SOLD in Fairfield for the month of September. Price per square foot ranged anywhere from $55.97 for a foreclosure built in 1996 all the way up to $96.35 per square foot for new Perry Home.

These homes were on the market an average of 63 days. Most of these homes had at least one price reduction from the original list price showing the necessity of PRICING RIGHT THE FIRST TIME TO BRING AN OFFER MORE QUICKLY!!

For a struggling house market, the $8,000 tax credit has been an invaluable step toward recovery. But many potential first-time homebuyers are uniformed or confused about the specifics of this government initiative. Lack of awareness about these finer details can prevent new clients from recognizing the great opportunity of homeownership. It's now up to real estate professionals to keep consumers fully informed. So what are some of the first things Realtors need to explain to the consumer?

1.)What is a first-time homebuyer? A first-time homebuyer can be anyone who hasn't owned a principle residence in the last three years. If your client is married, this means your client OR their spouse. Clients need to know if they qualify. If they think the credit doesn't apply to them at the get-go, they won't bother asking about it.

2.) Is the credit really $8,000 and will it need to be repaid?
The credit is 10 percent of the home's purchase price up to $8,000. It is a true credit and the only repayment requirement is if the home owner sells the home within three years of purchase. Remember, many of the new first-time homebuyers are from the Millennial Generation. They are marked by their skepticism and sometimes even cynicism. They are always looking for the catch. Be sure to communicate that the tax credit is, indeed, free money.

3.)Are there are income restrictions? The limit on income is $75,000 for a single person or $150,000 for a couple to receive the full $8,000 credit. Credit doesn't phase out completely until income reaches $95,000 for singles or $170,000 for couples. By the time you've answered this question, you've probably got a qualified and interest buyer on your hands. Be forthcoming about exactly what the buyer will be entitled to from the tax credit.