Jules Yates

While the deadline for the First Time Home Buyers Tax Credit is November 30, 2009, you may need to act now in order to take advantage of it. Why you may ask? If you are in need of any type of government financing (Rural Development, FHA, VA, etc.) you may find longer than expected delays in getting financing approved due to a last minute rush to close.

For those of you hoping to build or in the process of building, keep in mind that you will need to get your certificate of Occupancy (COO) no later than November 30 as well. With even entry level homes taking 90 days average to complete, there is little or no time for delays if you need to take advantage of this government program. As an industry, we are seeing a lot of buyers looking to cash in on this tax credit.

I have to imagine that there is going to be a lot of people rushing to get deals closed as early as possible so if you have not found that perfect home yet, it may be in your best interest to find something soon. If you are going to use some sort of conventional financing then you can basically buy yourself a few more weeks.

I am currently working on 3 short sales with Bank of America. Over the past 2 years I have been involved with many short sales and finally the banks (at least Bank of America) is hiring appraisers rather than ordering B.P.O's. While I think this is a good idea, I am also seeing it kill a lot of short sale deals.

Let's face it... even very recently the B.P.O's that were being done were ... well let's say ... less than accurate in many cases. As the saying goes, you get what you pay for. Here in Michigan (where it is illegal for anyone other than a broker to charge for a B.P.O.) we were seeing agents out doing B.P.O's.

It had always amazed me that a lender would require an appraisal for a mortgage but allow a B.P.O. for a short sale. In the long run I think it is a great thing but short term it is dragging out the short sale process. What used to take only 4-6 weeks now takes 3-4 months to complete. I have to assume it is the same all over the country.

It will be interesting to see how things shake out here in the near future. I am sure we will be seeing a lot more changes in the months to come.

I am constantly reading posts about short sales and bank owned properties (referred to as REO's in the biz). Often there is a big misconception that the two are similar. This is not really the case.

Briefly a short sale occurs when a property is valued less than the balance owing and the Seller requests that the mortgage holder accepts less than the full balance owing. In that case you purchase from the current owner. In a REO you are buying from a seller (the Bank) who generally just got title tot eh home via the foreclosure process.

Here are the key similarities and differences:

1. TIME - Short Sales can take a lot of time simply because a great deal of care is put into determining the value of a home before a lender will agree to release an existing mortgage. You can plan on 3-12 weeks for an answer. With an REO property it is generally no different than submitting an offer to any other buyer. Expect about 1-7 days for an answer.
   
   Keep in mind that a short sale can be done prior to a foreclosure, after the foreclosure process has started or during the redemption period. That said a short sale may not actually be due to a foreclosure. It could simply be a hardship on the part of the Seller as well as a decline in property values in a given area. The further alone it is in the foreclosure process, the quicker the process can take.
   
2. CONDITION OF THE PROPERTY - Generally since a short sale is occupied by the Seller who needs to sell, you can expect the condition of a Short Sale to be much better than an REO. Because REO properties are the result of the foreclosure process, you can expect that the condition of the property will be less than perfect. Rarely are they pristine.
   
3. DISCLOSURES - With a Short Sale you will generally be buying a home that is being sold "as is". Since the home is lived in and the Seller is available to answer questions, a disclosure statement is often times available. Due to the Seller getting no money from the sale, don't expect a Seller to pony up money if you find a problem upon inspection.
   
   With an REO you buy from a lender who knows nothing about a property and will not provide a disclosure. Many times these homes were taken back during the winter months and despite winterization, you an expect frozen or broken pipes. This is due to the gap between the power being shut off and the winterization which is generally 30-60 days after the end of the redemption period.
   
4. PURCHASE PRICE - In either case you can expect to save anywhere from 10% - 30% off the retail value of a property. Short sales are generally not quite as good a deal due to the lender's loss but if values have dropped in an area you can get some great values. With REO's the lender generally wants the property sold immediately and will be willing to offer a discount based on the property conditions.
   
5. DETERMINING VALUE - In both cases a BPO (Broker Price Opinion) is generally ordered to determine the current market value of a property. BPO's differ from a full blown appraisal in that an appraisal is done by a licensed appraiser whereas a BPO is done by a real estate agent who is not a licensed appraiser.

Feel free to contact me if you have any questions regarding short sales or foreclosures.

It's Simple... You Can't so don't even try! I hear so many agents say that their buyer is "waiting until we hit bottom" and I want to scream. On the grand scheme we are as close to bottom as any of us will ever see (at least in the Grand Traverse Region). So what if prices drop a little bit more, you'll be able to say you got in near the bottom.

If you think about it interest rates are as low as we have seen in decades, prices are as low as I can remember and sellers are motivated. Financing is readily available though Rural Development, FHA, VA and other government programs. Income is not an issue if you had pretty good credit.

On top of that you may qualify for a "First Time Buyers" Tax credit of up to $8,000.00. I was at Huntington Bank this week and saw a poster telling customers about the tax credit. Funny thing is it never mentioned you didn't have to be a first time home buyer. As long as you haven't owned a home in the past 36 months you may qualify.

That money can be refunded this year simply by amending your 2008 tax return and you will get your check shortly there after. It is a great way to get into a home now. Visit www.FederalHousingTaxCredit.com for details.

To get started you must educate yourself on the market. Ask your REALTOR to set you up on automated emails so you are aware of properties that meet your needs as soon as they hit the market. Automated emails are a great way to know what new properties are available before most of the general pubic is aware of them.

Also be sure you have been pre-approved for a home loan or have proof of funds if you plan to pay cash. This is vital if you buy a Bank Owned home or REO as they are referred to in the business. Banks will not look at offers with out a pre-approval letter. Talk to and work with a professional and your transaction will go much smoother and take a lot less time. AS usual I am available to assist you so feel free to call me at 231-218-5199.

As I celebrate my 21^st year in business I look back and think...Wow it has been a long time. I also can't help but notice a lot of changes in the past year. Despite the economic downturn I have seen a huge increase in my business. A large portion of those are foreclosure related (Bank owned, pre-foreclosures, short sales, etc). Any while the almost "Seller's Market" feel of those sales, I am seeing a backlash.

That backlash is appraiser's inability to find suitable comparable sales to justify a ready willing and able buyers offer to purchase. In the past 3 weeks alone I know of 1 buyer who wrote 3 bottom lined offers, had financing approved thought he VA and all 3 were rejected due to the inability to get a suitable appraisal. I know of 2 others this past week.

Even when we have what appears to be a "done deal" with a strong buyer, willing seller and executed purchase agreement...don't couldn't it done until you cash the check.