Fran Gatti - Realtor®, RDCPro®, Crescent City CA Real Estate

I wouldn't say I have been avoiding short sale listings, but thankfully, most of my clients do not have to go this route at this time.

Why am I thankful? Because statistics show that the majority of short sales never culminate in the sale of the owners home. This short sale is another one of those statistics.

Seller purchased home in 2005 at height of market and shortly thereafter had a life change and had to move to another home.

Market dropped and home is upside down (seller owes more than the home is worth).

Seller remodels home in hopes of attracting a buyer and lists home at a price that will get seller out of home just breaking even.

Market drops more, homeowner lists home as short sale, receives offers and submits to bank.

Here's where it gets interesting.

Chase asks for way more documentation for sellers hardship than previously seen before. A standard hardship letter is not sufficient anymore. Two letters along with a time line of ALL THE EVENTS leading up to the short sale, in chronological order from date seller purchased to now are required. These events clearly showed the seller has a hardship and in my experience, would have been approved if these offers had been submitted just a few months ago, but Chase told seller that under President Obama's current guidelines for short sales, seller does not fit the criteria BECAUSE HE MOVED OUT OF THE HOME more than a year ago.

I talked with a colleague yesterday who said the bank approved the short sale for one of her listings and the owner is an investor who has tenants in the home.

I'm not sure if Chase is misinterpreting the new regs, or if the other agent is working with someone who isn't aware that the rules have changed.

The seller loses, but the bank loses as well. The offers on the home were far more than the bank will receive if the home becomes an REO. If that happens, the neighborhood loses as well with a further decline in home values. There are no winners when it comes to foreclosure.

Times are a-changing. More documentation is being required than ever before for any type of transaction from a short sale to a conventional mortgage, where underwriters and account executives are running scared that funding a bad loan may cost them their job. Let's hope we soon find a middle ground where the banks are protected, but consumers are as well.

Tax Credit for New Home Purchase in California-

The information below is from the State of California's website and pertains to the $10,000 tax credit for home buyers who purchase a NEW HOME in California. This credit, combined with the $8,000 federal tax creditfor first time buyers, low prices and fabulous interest rates make this the "Perfect Storm" for first time home buyers. The fed tax credit is available to a first time home buyer who qualifies for new or resale homes. Consult your tax professional regarding these credits.

This tax credit is available for qualified buyers who on or after March 1, 2009, and before March 1, 2010, purchase a qualified principal residence that has never been occupied. The buyer must reside in the new home for a minimum of two years immediately following the purchase date.

The State of California will accept applications for allocation of credit by fax only (916.845.9754), starting March 1, 2009; however, they will not send notifications of credit allocation until they have developed procedures. Once they begin processing allocation applications, credits will be allocated on a first-come, first-served basis. The state will update their information page as soon as they begin mailing credit allocation letters. The state plans to begin mailing credit allocation letters no later than May 1, 2009. This delay is necessary to allow time to develop a system to capture and verify the application information, allocate the credits, and send the credit allocation letters. Please be patient with them and do not send applications more than one time.

Tax credit amounts

California allocated $100,000,000 for this tax credit. Buyers must apply for credit allocation from the state. Applications will be reviewed and credit allocations will be made on a first-come, first-served basis. Once $100,000,000 has been allocated, the tax credit will no longer be available. Please check this page for updates on the allocated and remaining credits available.

Note: The remaining credit amount displayed above only reflects allocations processed. This amount will be updated here once they begin mailing credit allocation letters, which is expected to commence by May 1, 2009. This amount does not include applications that have been received, but not yet processed.

Applications for New Home Credit received, but not yet processed through 4/15/09

This reflects the total amount of credit reported on applications received as of the date indicated. This amount has not yet been verified and may include duplicate, incomplete, and invalid applications. This amount is provided for informational purposes and does not reflect the actual amount to be allocated. The State of California will update the amount received, but not yet processed, on this webpage each Friday. As they approach the $100,000,000 limitation, they will update the reported amounts on a daily basis. Keep in mind, that all applications will be processed on a first-come, first-served basis, based on the date received by fax only.

California allows qualified new home buyers a total tax credit amount equal to either five percent of the purchase price or $10,000, whichever is less. Taxpayers must apply the total tax credit in equal amounts over three successive taxable years (maximum of $3,333 per year) beginning with the taxable year (2009 or 2010) in which the new home is purchased.

How to apply

• Within one week (seven calendar days) after the close of escrow:
  • The seller must complete Part I of Form 3528-A, Application for New Home Credit, certifying that the home has never been occupied, and provide a copy to the buyer or escrow person.
  • The buyer will complete Parts II & III of Form 3528-A.
  • The escrow person on behalf of the seller and buyer will fax the completed Form 3528-A to FTB at 916.845.9754, and provide a copy to the buyer.
• Fax is the only delivery method that will be accepted and considered for credit allocation by FTB, as the date and time stamp on the fax will determine the order in which credits are allocated.
• Fax only one completed application per residence with all qualified buyers listed. Do not include information on non-qualified buyers. An incomplete application may delay or prevent credit allocation.
• Do not fax the application to FTB before escrow closes.
• Do not fax the application to FTB more than once. We will process the applications in the order received as quickly as possible.
• Escrow companies should only send one application per fax transmission.
• The buyer keeps a copy of the completed Form 3528-A for their records.
• The Form 3528-A is now available online as a fileable form. Simply fill in all required information, print the form, and sign. If you fill out the form by hand, please print numbers as clearly and neatly as possible using CAPITAL LETTERS and staying between the lines. The faxes can be very hard to read.

Application processing

• The buyer will receive notification of credit allocation from the State of California.
• An allocation of credit will not be issued if:
  • The home has been previously occupied.
  • The application is not received within one week after the close of escrow.
  • The application is received after the total credits available ($100,000,000) have been allocated.

Requirements of the credit

• The home must be a "qualified principal residence" as defined under California Revenue and Taxation Code Section 17059(b)(1). The home must:
  • Be a single-family residence, whether detached or attached.
  • Never have been previously occupied.
  • Be occupied by the taxpayer for a minimum of two years.
  • Be eligible for the property tax homeowners exemption under California Revenue and Taxation Code Section 218.
• For over three successive taxable years, the total credit allocated among owners that occupy the home must not exceed $10,000. (Multiple qualified buyers that occupy the home will be allocated credit based on the amount paid and their percentage of ownership.)
• Any credit that reduced tax on a tax return must be repaid if the buyer does not occupy the home for at least two years immediately following the purchase date.
• FTB may request documentation to ensure buyers have complied with the requirements of the credit.

Claiming the credit

• The buyer must receive an allocation of credit from the State of California to claim the credit. The credit allocation letter will state the amount they can claim listed by tax year.
• The buyer should refer to Publication 3528 (available by 12/2009) for instructions on claiming the credit.
• The buyer must claim the credit on an original timely filed return, including returns filed on an extension.
• Special rules apply to married/RDP (Registered Domestic Partners) taxpayers filing separately, in which case each spouse is entitled to one-half of the credit, even if their ownership percentages are not equal. For two or more taxpayers who are not married/RDP, the credit amount will have already been allocated to each taxpayer occupying the residence on their respective credit allocation letter.
• If the available credit exceeds the current year net tax, the unused credit may not be carried over to the following year.
• The credit is not refundable.

Definitions

Purchase date:
The date escrow closes.

Qualified buyer:
A taxpayer who purchases a single-family residence, whether detached or attached, that has never been occupied, that is purchased to be the principal residence of the taxpayer for a minimum of two years, and that is eligible for the homeowners exemption under California Revenue and Taxation Code Section 218.

Qualified Principal Residence/New Home:
A qualified principal residence means a single-family residence, whether detached or attached, that has never been occupied and is purchased to be the principal residence of the taxpayer for a minimum of two years and is eligible for the property tax homeowners exemption.

• Types of residence: Any of the following can qualify if it is your principal residence and is subject to property tax, whether real or personal property: a single family residence, a condominium, a unit in a cooperative project, a houseboat, a manufactured home, or a mobile home.
• Owner-built property: A home constructed by an owner -taxpayer is not eligible for the New Home Credit because the home has not been "purchased."

Contact us

Phone:

• 888.792.4900 (press 5)
• 916.845.4900 (not toll-free)

Email: wscs.gen@ftb.ca.gov
This is not a secure email address. Please do not send confidential information.

Yes, encouragement for sellers - It makes me very happy to be able to be able to write some encouraging words for sellers, something I haven't done for quite awhile.

Those of you who read my blog on a regular basis know I follow my market stats closely and do not paint a rosey picture unless it's warranted.

Sales are picking up all over the U.S., not just in Del Norte Country. In most of the hot markets in California, housing sales are strong because of foreclosures. It has been that way in Del Norte County as well for the last 4-5 months, but in the last 4-6 weeks, there has been increased activity in homes over $250,000, the majority of which are not foreclosures. This is welcome news for sellers.

Here are my stats (I love stats):

• Homes $200,000 and under comprise 43% of active listings and 50% of pending/contingency sales
• Homes $201,000-$300,000 comprise 23% of active listings and 27% of pending/contingency sales
• Homes $301,000-$400,000 comprise 14% of active listings and 13% of pending/contingency sales
• Homes $401,000-$500,000 comprise 8% of active listings and 7% of pending/contingency sales
• Homes $501,000 and up comprise 13% of active listings and 3% of pending/contingency sales

40% of sales are between $201,000 and $400,000. That is a big increase over previous reports.

There is a caveat to this optimism--you knew there would be--home prices continue to decline. The increase in activity in the upper end home market is coming from buyers who are taking advantage of low interest rates. Foreclosures have not gone away, quite the contrary, they are still with us and the banks are more aggressive than ever in pricing well below market value, driving down prices for surrounding sellers.

If you are selling your home, talk to your real estate agent and find out what CURRENT comps have to say about the list price of your home. Make sure your are competitively priced to take advantage of this flurry of selling.

Good news for the Del Norte County real estate Market!

My observations would show the market is picking-up in Del Norte County and statistics prove this out.

Homes priced over $400,000 have comprised only 10% of residential sales so far this year (1 sale) and only 5% for all of 2008 (9 sold). In other words, this segment of the market has been stalled.

As of this writing, 19% of residential listings that are in contingency or pending status are priced above $400,000.

What does that mean for buyers and sellers in my market?

In my opinion, confidence is coming back to the market for whatever reason, pick one, there are many...a new president, unbridled government spending (which scares me, but obviously not everyone), LOW interest rates--I have a client who just locked at 4.875--pent up demand, LOW prices, spring fever, relocation, and more.

Consumer confidence is a reliable meter as to how the market will perform. When it is low, as it was last year (election years bring traditionally lower performing markets), we saw a slump. When confidence is restored, consumers spend. I am optimistic in stating the market is picking up, while at the same time I realize that this could just be a blip on the real estate radar. Since the Del Norte County real estate market is so small, it is greatly affected by just a few homes being sold.

However, another, very strong indicator is showings are way up with all the agents I've talked with and they seem upbeat about our market as well. With only 6-9 homes selling a month for the last 6 months, it is exciting to see 27 homes in contingency and pending status.

Of course I will keep you abreast of how many actually close and if this is a blip or if the optimism is warranted.

First time home buyers are jumping into the market and there are some great programs to help them take advantage of these low prices. The GRH, VA and FHA programs are all worth looking into. Give me a call if you would like the name of a lender who can get you started on your home purchase.

Make sure you bookmark my blog to keep abreast of all the Del Norte County real estate market news.

Brought to you by Fran Gatti at THE REDWOOD COAST REAL ESTATE CONNECTION Bus: 707-464-5400, Cell: 707-218-8162 Email: fgatti@charter.net Website: FranGattiHomes.com My Blog: Fran's Blog Put Fran to work for you.

The house of cards built over the preceding years of unprecedented home appreciation has crumbled. It's demise has created some incredible deals in my market.

The run away spending that got so many of us caught up in thinking we can "have it all." has landed countless homeowners in a compromised position leaving no way out, but to walk away from the mortgage*.

Banks are overwhelmed with this new way of thinking and are dumping their REO (bank owned/foreclosed) inventory on the market at way below market value, giving buyers who are ready, to get some awesome deals.

Homes that just one year ago were selling above 300,000 are now below $200,000 as prices continue to decline.

Have we hit bottom? I get tired of this question. If I knew the answer to that one, I'd be rich and retired. Unfortunately, I have my best guess and that would be not yet, but there are great values and low interest rates NOW. Who knows what the future will bring?

I have a closing next week and my buyer locked his interest rate at 4.875!!! Yippee, skippee. That makes my previously thought of, screaming-deal interest rate of 5.5 pale in comparison.

If you are thinking of getting in on some of the great deals in my market, then you better come to the table with a pre-approval or proof of funds letter in hand, because the really great deals are getting swept up quickly.

If you are a first time home buyer and are not sure where to start, call me and I'll get you going in the right direction.

What are you waiting for...interest rates to drop to 1%?

* If you find yourself unable to make your house payment, contact your lender and seek a loan modification. Your lender should be able to handle this for you. Statistics show that the majority of homeowners who lose their home to foreclosure never contact their bank. Don't let this happen to you.

Brought to you by Fran Gatti at THE REDWOOD COAST REAL ESTATE CONNECTION Bus: 707-464-5400, Cell: 707-218-8162 Email: fgatti@charter.net Website: FranGattiHomes.com My Blog: Fran's Blog Put Fran to work for you.