1947: "The prices of houses seems to have reached a plateau, and there is a reasonable expectancy that prices will decline." Time Magazine, 1947
1948: "Houses cost too much for the mass market. Today's average price is around $8000... out of reach for 2/3 of all buyers." Science Digest, 1948
1969: "The goal of owning a home seems to be getting beyond the reach of more and more Americans. The typical new house costs about $28,000." Business Week, 1969
1970: "You might well be suspicious of ‘common wisdom' that tells you, ‘don't wait, buy now.'" NEA Journal, 1970
1977: "The median price of a home is approaching $50,000. Housing experts predict price rises in the future won't be that great." Nations Business, 1977
Kinda makes me want to hop in a time machine and buy a few of those "out of reach" $8000 houses in 1948! Despite what the "experts" might say - it's always the right time to buy the right piece of real estate!
The S&B Real Estate Team assists people in buying and selling real estate throughout Southwest Washington. We are proud members of Keller Williams Realty - Premier Partners in downtown Vancouver. Our local expertise covers: Vancouver, Battle Ground, Camas, Washougal, Brush Prairie, Hockinson, Ridgefield, Woodland and La Center. If you or someone you know is considering living or investing in Clark County, please contact us. Jamie Carroll can be reached at 360-609-6775 or via the "Contact Us" page at www.MyRealtorIsJamie.com. Steve Borwieck can be reached at 360-241-7305 or via the "Contact Us" page at www.SteveBSellsHomes.net. We are here to help!
There is one major draw to Short Sales in today's market. Price. If you look at the current inventory of homes that are available, the Short Sales typically stand out as the best value to be had! When a buyer sees this disparity in price, it can sometimes be very hard to correct their "tunnel vision" regarding these seemingly amazing buys. The following is a list of challenges that I have seen that the Buyer typically wasn't bargaining for:
•· Pricing strategy: Agents will use a variety of pricing and marketing strategies in order to get an offer from the "collection desk" to the "negotiator's desk". The more successful agents will attempt to create a history that will show the bank that they have attempted to get the highest price possible, which will typically move the transaction along much smoother when an offer is finally submitted on the property. Other agents will simply go from "market value" straight to "fire sale" without trying any prices in between - some have even been known to start with the Fire Sale approach. This can make the negotiation process very tedious if even at all successful. Have your Buyer's Representative check the history of the home to see what kind of price reduction history there is on the property. If you submit an offer on a "Fire Sale" priced home, chances are you'll be in for an incredibly long wait fraught with aggressive negotiations!
•· Agent communication: Nothing is more key throughout the short sale process than communications, however there needs to be an understanding of how often these communications really need to take place. On the Listing Agent's end, it would appear to be an endless game of phone tag and being placed on hold with the Collections Department and the Negotiations Department, in an attempt to get that answer we're all just dying to hear - "Your offer has been accepted" (or more realistically, countered)! This is not the case with the Buyer and their agent. Even though the Listing Agent may be on the phone daily, they're not getting new information that often. Realistically, a weekly update is typically all that is going to be available to the Buyer's Agent and even then it will frequently be "nothing new to report". For the Buyer that has been involved or at least heard of what's involved in a normal real estate transaction, this can be quite disheartening and upsetting. Unfortunately, if there is any one reality of Short Sales it is lack of communication from the one source that can make all of the difference in the world - the negotiator. Patience needs to be stressed from the beginning. This process is going to be painfully slow and agonizing for the Buyer that expects things to move along "as normal".
•· Bad or Inaccurate Communication: Lack of communication is one thing - bad communication is enough to drive some folks over the edge! Bad or inaccurate communication can result in the Buyer paying for inspections and appraisals before it is appropriate to do so. Buyers then often lose all that is invested only to find out that the negotiations that they were lead to believe (verbally) were unsuccessful and their home just sold or went back to the bank in a foreclosure. There are a few listing agents out there that have taken the approach of trying to negotiate "verbally" with the negotiators. While there is nothing necessarily wrong with this approach, it does need to be understood, particularly to the Buyer, that none of these verbal negotiations are binding in any way, shape or form. Unfortunately I've heard that a few of these listing agents have represented these communications as being more than what they really were and Buyers have lost the money spent on inspections and appraisals that they have been encouraged to pay for in order to expedite the process. The thing to remember when in negotiations on a short sale transaction is that you have NOTHING, unless you have it in writing! These agents can be quite convincing and tell you things like "I do it this way all the time!" Your contract should state that all contingency timeframes begin upon receiving "written verification" from the seller's lender. We encourage our buyers not to spend ANY MONEY towards this process until we have something in writing!
•· Inexperienced Agents, both New and Old can not only be problematic, but very frustrating for all involved with the process. Any licensed real estate agent can legally list a short sale property and facilitate the negotiations, however many agents have virtually no training or experience in this specific part of the market. This is probably the number one cause of frustration that we deal with on a regular basis. In my opinion, negotiating short sales is a specialty that should require a designation that can only be acquired through proper training. Unfortunately, even though the training is available, the designation and requirement to achieve as much is not. As previously mentioned above, any agent, whether licensed for 20 minutes or 20 years can legally list and sell short sale properties. However, even those that have been licensed for 20 years can pose challenges to the process if they haven't had the proper training. Seasoned agents are often victims of their ego and may not obtain or even admit that they may need the specialized training that these complicated transactions require (on the listing side), so don't be fooled into thinking that this is a problem that is limited to "rookie" agents. Many of our less experienced, but well trained agents have endured a considerable amount of frustration when dealing with a seasoned agent that is preoccupied with making sure that their "status" is known throughout the transaction - meanwhile making a total mess of the negotiations necessary to get the transaction approved. What's worse is that there is absolutely no way for a buyer's representative to tell whether or not an agent truly does posses the experience and/or training necessary to negotiate one of these transactions. It can be quite a gamble and all parties involved stand to lose a considerable amount of time, effort and possibly even money!
•· AS IS: If your financing is something other than conventional, these two words can be the kiss of death to your transaction. FHA and VA transactions have certain requirements of the subject property and if the home doesn't qualify and the seller cannot make the necessary repairs themselves, then it could be "game over!" Try your best to make sure that the property, at least from a visual standpoint, appears to be compatible with the financing. FHA or VA are not unusually restrictive, but are not the kind of programs that "fixer upper" properties should be purchased with. In fact, even minimum-down conventional programs are becoming increasingly more strict. It's can be very costly to the Buyer to pay for both an inspection and an appraisal only to find out that the home is not able to be financed with the type of loan that the Buyer is qualified for. It is recommended that your lender approve of your viewing an "as is" home before you go look at it with your agent.
•· Nature of the Beast: Even with the best of intentions, training and efforts, short sales can and do fail to come together much of the time. What's worse is that you likely won't find this out until you've waited for some 2 - 5 months. It's hard to tell what kinds changes may have taken place with mortgage rates or the real estate market in that amount of time. An increase in rates by even .5% can make a HUGE difference in the Buyer's payment, depending on the price point. So please, enter these transactions educated.
•· Illegal Practices: It is an unfortunate reality of the world we live in that whenever there are people falling on hard times, there are also people ready to take unfair, unethical and sometimes illegal advantage. They look upon these circumstances as opportunities for profit with their only focus being on their own bottom line. When dealing with short sales, there are certain key features to look for when the negotiations begin. Probably the most significant is that all portions of the purchase agreement should be allowed to run through the escrow officer. When an agent begins to draft instructions that are specifically noted to happen "outside of escrow or closing", this is what we refer to as a "Red Flag". Another potential issue can arise if the listing agent is trying to make arrangements for the seller to receive funds in connection with the Purchase and Sales Agreement. This is completely illegal as the seller will be asked to sign documentation stating that they will be receiving no monetary consideration in connection with the Purchase Agreement. "Double escrows" or more than one Seller involved in the purchase of a single property with a simultaneous closing may or may not be considered actual fraud and should also be avoided. Be particularly cautious if the other agent offers that they have "already cleared everything through their attorney". Typically, when we keep within the scope of our normal duties there is no reason to "clear things with an attorney". If the other agent feels the need to do so, there's usually a reason for this.
As buyer's agents, it is our job to insure that you have the best home buying experience possible. Therefore, if entering into a short sale transaction makes your purchase an even greater deal, all the better. But, it is important to understand that even under ideal circumstances, short sales require an incredible amount of patience and may not close - even with the best efforts from everyone involved.
The S&B Real Estate Team assists people in buying and selling real estate throughout Southwest Washington. We are proud members of Keller Williams Realty - Premier Partners in downtown Vancouver. Our local expertise covers: Vancouver, Battle Ground, Camas, Washougal, Brush Prairie, Hockinson, Ridgefield, Woodland and La Center. If you or someone you know is considering living or investing in Clark County, please contact us. Jamie Carroll can be reached at 360-609-6775 or via the "Contact Us" page at www.MyRealtorIsJamie.com. Steve Borwieck can be reached at 360-241-7305 or via the "Contact Us" page at www.SteveBSellsHomes.net. We are here to help!
A few months back the government made first-time home buyers eligible for a tax credit of up to $8000. I get questions about this almost daily and have covered some standard queestions in previous blogs. Here are some more "obscure" questions and answers:
Q. I purchased a home that qualifies for the first-time homebuyer credit. I will be renting two of the bedrooms and reporting the rental income on Schedule E. Will I still qualify for the credit if I use the home as my principal residence?
A: Yes, if you meet all first-time homebuyer eligibility requirements. See Form 5405, First-Time Homebuyer Credit, for more details.
Q: If two unmarried people buy a house together, how do they determine how much each may take of the credit?
A: IRS Notice 2009-12 provides guidance for allocating the first-time homebuyer credit between taxpayers who are not married.
Q. I am a single co-owner of a home. How do I get this credit?
A. Depending on the year of purchase, you will claim the credit on either your 2008 or 2009 federal income tax return.
Q. I don't owe taxes and/or my income is exempt from tax and I do not have a filing requirement. Do I qualify for the credit?
A. The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund.
Q. Does the first-time homebuyer credit apply to homes located in the U.S. Territories?
A. No.
Q. Would I be considered a first time homebuyer if I owned a principle residence outside of the United States within the previous three years?
A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States.
Q. If qualified, are homebuyers required to claim the first-time homebuyer credit?
A. No.
Q. Who cannot take the credit?
A. If any of the following describe you, you cannot take the credit, even if you buy a new home:
The S&B Real Estate Team assists people in buying and selling real estate throughout Southwest Washington. We are proud members of Keller Williams Realty - Premier Partners in downtown Vancouver. Our local expertise covers: Vancouver, Battle Ground, Camas, Washougal, Brush Prairie, Hockinson, Ridgefield, Woodland and La Center. If you or someone you know is considering living or investing in Clark County, please contact us. Jamie Carroll can be reached at 360-609-6775 or via the "Contact Us" page at www.MyRealtorIsJamie.com. Steve Borwieck can be reached at 360-241-7305 or via the "Contact Us" page at www.SteveBSellsHomes.net. We are here to help!
(Information from www.irs.gov)
Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?
If you are unable to make your mortgage payment:
1. Don't ignore the problem.
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
2. Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times.
3. Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.
4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.
5. Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL .
6. Contact a HUD-approved housing counselor.
The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.
7. Prioritize your spending.
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
8. Use your assets.
Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
9. Avoid foreclosure prevention companies.
You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.
10. Don't lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.
Depending on the circumstances, you may be able to sell your house and avoid foreclosure. We can help you determine if this could be an option for you. Consultations are free of charge and completely confidential.
The S&B Real Estate Team assists people in buying and selling real estate throughout Southwest Washington. We are proud members of Keller Williams Realty - Premier Partners in downtown Vancouver. Our local expertise covers: Vancouver, Battle Ground, Camas, Washougal, Brush Prairie, Hockinson, Ridgefield, Woodland and La Center. If you or someone you know is considering living or investing in Clark County, please contact us. Jamie Carroll can be reached at 360-609-6775 or via the "Contact Us" page at www.MyRealtorIsJamie.com. Steve Borwieck can be reached at 360-241-7305 or via the "Contact Us" page at www.SteveBSellsHomes.net. We are here to help!
(Information from U.S. Department of Housing and Urban Development)
With the lowest home prices in years, record low mortgage rates and an $8000 tax credit from Uncle Sam NOW really is the perfect time to buy a home! In fact, 50% of today's home buyers are first-time home buyers! As a first-time buyer it's important to understand a few truths about buying, and owning, a home. Here are 10 common pitfalls to avoid:
1. Not knowing how much house you can afford.
Many novice homebuyers spend a lot of time researching homes - comparing kitchen layouts and backyard square footage - but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage, says Claire Clark, senior vice president of business development at Prudential California Realty. Without first figuring out how much house you can afford, you risk falling in love with one you can't.
2. Assuming foreclosures are great deals.
Just because the previous owner owed $450,000 on a house before the bank took it over doesn't mean it's worth that much now. Values have slipped significantly, says Jay Michael, partner at Estate Property Group, a Chicago real-estate brokerage, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the savings you'll likely reap by buying a lower-priced foreclosed home.
3. Letting your true feelings show.
No matter how much you've fallen in love with a house, don't let the seller's agent in on it. Otherwise, he will gain the upper hand in negotiations.
4. Failing to find a good buyer's agent.
Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order, says Michael. After all, buyer's agents have a fiduciary responsibility to the buyer exclusively - and should be looking out for his best interests. Start your search at the National Association of Exclusive Buyer Agents, a nonprofit representing buyers. Or consider using an agent recommended by a relative or friend. Interview the candidates about their experience; ask if they've worked with first-time buyers before and what kind of service you'll get from them.
5. Underestimating the costs of owning a home.
Whether it's a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many homebuyers don't anticipate the additional costs for repair and maintenance, or for an increase in utility costs, says Erin Baehr, a certified financial planner and president of Baehr Family Financial. Consider the age of your new home and how well it's been treated by the previous owners in your budget. Be prepared to set aside a small percentage (1% at most) of the home's purchase price annually for repairs and upkeep.
6. Failing to budget for property taxes.
Property taxes - and the likelihood that they'll climb over the course of your time in the house - should be factored into any homebuying budget, says Baehr. To get an idea of how much you'll be paying, call the local assessor's office or talk to people in the neighborhood.
7. Assuming your first offer will get accepted.
As home prices get even more affordable, competition is bound to heat up. "You can't assume you'll walk in there, make the offer and get it," says Clark . Try not to get discouraged if you lose out on the first - or second - house you make an offer on.
8. Skipping the inspection.
Before signing anything, hire a professional inspector, says Justin Lopatin, a mortgage planner with American Street Mortgage Co. The seller isn't likely to tell you there's mold in the basement or the walls are poorly insulated. Lopatin advises buyers to find and hire their own inspector - independently of the real-estate agent - to ensure there's no conflict of interest. (You can find inspection companies in the phone book, or by doing a simple Web search with your ZIP code.)
9. Doing too much too fast.
Some buyers want to make the house their own right away, says Baehr. They overextend themselves on credit to do so, and assume the improvement will pay for itself by increasing the home's value. But that's not always the case - especially in today's market. Instead, buyers need to exhibit patience and make changes over time.
10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal price comes in over the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property. Without the clause, he can lose that money and still be obligated to buy the house, says Lopatin.
The best way to avoid these problems and more is to have an experienced real estate agent on your side. It costs you nothing (sellers usually pay the Realtor's commission) and can save you money and heartbreak! If you or someone you know is thinking a home, whether it's the first or fortieth, call Jamie at 360-609-6775. Or visit the "Contact Us" page at www.MyRealtorIsJamie.com. We are here to help!
(Information from SmartMoney)
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