Chris Sloan Tooele Real Estate

This weeks column was about tips on Utah short sales. Not just being for Tooele Home Buyers is an understatement. Actually not even just for those families looking for a good buy on a home in Utah.

Short Sales are a national phenomenon that have had an impact on the Real Estate market like nothing else except maybe foreclosures and interest rates. I hope this article is helpful

President's Message

Chris Sloan

During these tough economic times, a once uncommon real estate transaction is becoming more and more prevalent. In fact, if you've been watching the marketplace, you've probably already run into a few homeowners who are looking to sell using this type of deal.

It's called a short sale, and it's a situation that occurs when homeowners are unable to sell their property for the amount they owe on their mortgage. In other words, the owner can't sell their home unless a third-party creditor, usually a mortgage lender, approves the deal. The situation usually occurs when home prices fall and the owner has little or no equity in the property. The seller seeks to do a short sale rather than face foreclosure.

While these situations are difficult for each of the involved parties, they can also be a win-win: Sellers receive a less severe mark on their credit reports, which can help them purchase another home in a quicker timeframe than if they had a foreclosure on their record; banks can often reduce their losses by avoiding the costly foreclosure process; and buyers can purchase competitively priced real estate. Nevertheless, they are complicated and often frustrating transactions, especially for buyers who are unfamiliar with the process.

Below is information that can help you decide if a short sale purchase is right for you and, if so, what to keep in mind as you go through the transaction.

Hire an Experienced Realtor

By their nature, short sales are complicated transactions. One figure from the California Association of Realtors estimated a short sale success rate of only 50 percent. That's why if you decide to buy one of these properties, you should work with a Realtor who is experienced in short sales. A Realtor can protect your interests, guide you through the process and provide advice when things don't go as planned.

Get Information about the Asking Price

Buyers typically see short sales as a way to get bargain-priced real estate. While it's true that short sales can be a way to get good deals, don't expect huge discounts. Lenders are trying to minimize their losses, and while they will sell competitively priced real estate, they require purchase prices to be in line with current market values.

Also keep in mind that the asking price for a short sale is usually only a baseline figure because the seller doesn't know how much the bank will accept. That's why it's a good idea to initially find out whether the lender has approved the listing price. If not, know that the final price could be higher.

In deciding how much to offer on a property, your Realtor will be a great resource. A Realtor experienced in short sales will be able to determine a price that the lender will likely accept.

Be Patient

Once you've been pre-approved for a mortgage and find a property you're ready to purchase, you'll submit an offer to the seller who, upon acceptance, will then submit your offer to the lender for approval. Once the offer is submitted to the lender, be prepared to wait. Getting an answer from a bank can take at least 60 days, and the entire process from start to finish can take about three to four months.

One tip for possibly reducing the response time is including in your offer a deadline by which the lender must act. When banks have stacks of pre-foreclosures to review, your offer can end up near the bottom of the pile if the lender has no reason to look at it sooner. Nevertheless, keep in mind that significant delays do occur even when deadlines are included.

Because of these delays, buyers looking to act quickly may be better off making an offer on another property that is not subject to third party approval.

Be Careful about the Contract

In most short sale transactions in Utah, buyers will include in their offers a provision that states there is no legally binding contract until the lender accepts the offer. That allows the seller to continue to accept other offers, but it also allows you to walk away from the deal for any reason. So if you find another house in the meantime, you're not obligated to buy the short sale if the bank has not yet approved your offer. But that's not always the case, so make sure you know and understand what you are agreeing to when you submit an offer.

Short sales are complex transactions, but they can also be great opportunities. For the best chance at success, make sure to work with an experienced real estate professional.

Published Tuesday, February 17, 2009 12:19 PM by Chris & Berna Sloan

I finally get to post some good news for a change. Or at least I get to pass on some positive thoughts about our Industry, and share with you a Recovery timetable that is based on analysis of local trends compared to historical data that I find very compelling. I'm a sucker for the scientific approach.

President's Message

Chris Sloan

Home sales and prices in Salt Lake County should see some stabilization by the end of the year and into next year, a local housing economic expert reported on Monday.

James Wood, director of the University of Utah's Bureau of Economic and Business Research, said during an economic forecast presentation on Monday that he expects real estate sales and new housing construction starts to find a bottom in 2009 with a trough in prices following.

"I think we will probably see a little bit more weakness this year in the median price of homes sold, but by the end of the year and into next year, we will begin to see some stabilization in this market," Wood said.

The forecast was particularly interesting because it focused on local data and trends from Salt Lake County. Oftentimes national numbers don't give a clear picture of local conditions, which can greatly vary from those reported for the U.S. as a whole.

To help us predict what to expect for the future, Wood compared today's real estate market to the situation Salt Lake faced in the 1970s. During the '70s, home sales climbed for several years before hitting a peak of 10,000 homes sold. After reaching that peak, it took four years before home sales established a bottom. During that cycle, home sales dropped a total of 55 percent from peak to trough.

Wood compared that housing cycle to the one we're in today, which saw its peak in 2005. With three years of declines behind us, Wood is predicting just one more year of sales decreases.

"I expect it's going to be similar to what we had in the previous cycle, where it was a four-year down," Wood said. "So we're probably in for another weak year, but I don't think it's going to drop like this last year."

So far, sales have already dropped 44 percent compared to the total 55 percent decline seen in the 1970s cycle, he said. That means the market could be approaching a bottom in sales.

On the price side, Wood said home prices along the Wasatch Front are probably down about 5 percent from last year, but he concedes that home price measurements are controversial. Not only do the different organizations that track prices use varying methodologies, but the data only track homes that were actually sold - not those that would have sold a year ago had they been on the market. The types of homes being sold (i.e., lower- or higher-priced properties) also changes over time, which can skew the data as well.

That's why it's more important than ever for consumers to use a Realtor in their real estate transactions. A Realtor can help you know how much to sell your home for, as well as how much to pay for a property. Realtors also have the advantage of being able to monitor inventory levels, which can signal where the market is headed.

"It's important if prices are leveling off, for the consumer - the seller and the buyer - to have an understanding of that," Wood said. "It really does help the market."

Also influencing the housing market in the coming months will be the government's economic stimulus package. In the stimulus bill passed by the U.S. House of Representatives, lawmakers included several measures that would directly benefit purchasers of real estate, such as the elimination of the repayment provision of the $7,500 tax credit and greater access to mortgages through higher limits for FHA and conventional loans.

Other House legislation includes efforts to step up foreclosure prevention and a buy-down program that would further reduce mortgage rates. While these provisions are not yet final, it is likely both pieces of legislation will end up including significant incentives for home buyers.

For more real estate information and updates on market conditions in your area, contact your local Realtor.

As this years president of the Utah Association of Realtors, I have a great opportunity each week to publish a message concerning our Industry for the benefit of the thousands of Utah Realtors and their clients.

Each week, and with each article, I will try to be upbeat without being a cheerleader, realistic without being pessimistic, and make every attemp to be sure that the articles are helpful, meaningful, and accurate.

If I fall short of that, let me hear about it. If there are topics you would like to see let us know.

Whether you are a Realtor or a potential buyer, seller or Real Estate investor were here to serve.

The following article appeared in The Salt Lake Tribune last Saturday. If you missed it and you are one of the thousands of Utahan's having difficulty making your house payment, or just know someone who is struggling; here it is again

If you're having trouble paying your mortgage, you're not alone. Risky loans, home price corrections and a struggling economy have made it harder for families all across the country to keep up on their mortgage payments. In 2008, more than 3 million U.S. homeowners received some sort of foreclosure filing on their home, according to RealtyTrac data.

As a result of the increased foreclosures, the National Association of Realtors has created a consumer education brochure, "Are You Having Problems Paying Your Mortgage? Learn How to Avoid Foreclosure and Keep Your Home," that provides homeowners with information about how they can possibly save their homes from foreclosure. In this column, I will highlight the information contained in that brochure.

One set of loans that has a particularly high foreclosure risk is sub prime mortgages. Because subprime loans were often purchased by those with weak or blemished credit, they had higher interest rates and higher costs. One product that was particularly popular is called a hybrid adjustable-rate mortgage. This type of loan starts out with a low, teaser rate that lasts for a couple years. This lower rate is then followed by significant payment increases over the life of the loan.

This interest rate increase is often referred to as "payment shock" because the borrower is surprised by the size of the larger payments. When homeowners are unable to refinance these types of loans, foreclosure often results because the borrower cannot afford to continuously make the higher payments.

If you find yourself in a similar situation where you cannot afford to make your mortgage payments, don't avoid the problem. The sooner you act, the more likely you'll be able to save your home from foreclosure. And help is not limited to those with subprime loans; people who have lost their jobs or face other financial difficulties should also seek out help. The NAR brochure suggests the following options:

First, the best and least expensive way to save your loan will be to work directly with your lender or the loan servicer who collects the payments. Your lender may allow you to make a partial payment or skip payments if you have a reasonable plan to catch up. Or you may be able to arrange a repayment plan where you pay an additional amount each month until you are caught up. Your lender may also agree to amend your loan terms to help you avoid foreclosure (e.g. switching from an adjustable-rate mortgage to a fixed-rate mortgage or giving you more years to pay off the loan).

Second, if your current lender is unable or unwilling to help, you may be able to refinance your loan with another lender. If you are able to refinance, remember that you should shop carefully for a loan. Getting a loan with a low interest rate and low fees can save you thousands of dollars in the long run.

Third, try contacting a counseling agency. The Home ownership Preservation Foundation provides a nationwide assistance number, (888) 995-HOPE, that allows you to speak with a foreclosure counselor day or night. More information about the hot line is available at www.995hope.org. Reputable counseling agencies can also be found on the U.S. Department of Housing and Urban Development's Web site, www.hud.gov/counseling.

Fourth, consider selling the home. It is better to sell than to have a foreclosure on your credit report that could prevent you from buying another home in the future. If you are having trouble selling your home because you owe more on your mortgage than the property is worth, a short sale may be the solution. In this situation, a bank will allow you to sell the home for less than the mortgage amount by forgiving a portion of your debt. These transactions can be very complex, so make sure to work with a Realtor who has experience working with short sales.

Finally, be wary of any advertisements like "We Buy Houses for Cash" or any other claim that sounds too good to be true. Foreclosure rescue companies will pocket fees from homeowners and the foreclosure often takes place anyway.

Remember, you are more likely to get help if you seek out assistance early. For more foreclosure prevention tips as well as a copy of The National Association of Realtors brochure, visit www.Realtor.org/subprime.

Help is available to prevent foreclosure !!!

This week the Presidents message points out the various Mortgage options available in Utah.

In spite of all the negative talk we hear about lenders tightening their belt, and instituting a credit freeze, the message this week to our home buyers is, there is money for mortgages.

If you've thought about buying a home but have changed your mind because you believed you would be unable to get a mortgage, you may want to reconsider your decision. Despite what you may have heard, there are mortgages available, even if you have less-than-perfect credit or a small down payment.

Of course, credit standards are tighter than they were during the real estate boom, but the situation is not nearly as bad as the rumors suggest. In fact, reports that say loans are only being made to those with credit scores above 720 who have down payments of 20 percent or more are simply inaccurate.

There are a number of resources and loans available to today's buyers, most of which have very competitive interest rates. Below is a discussion of some of the mortgages and home-buying programs that deserve a closer look.

Conventional Loans

In today's market, the two types of loans generally available are conventional loans (those under $417,000 that can be sold to Fannie Mae and Freddie Mac in the secondary market) and FHA loans, which are insured by the government.

Conventional loans are best suited for someone with good credit and money saved for a down payment. Generally speaking, the best rates are available to those with 700 credit scores and above and have at least 5 percent down. For Salt Lake, Summit and Tooele counties, loan amounts can go up to $600,300, although there might be additional fees for anyone who takes out a loan for more than $417,000.

FHA Loans

For anyone who has less-than-perfect credit, a small down payment or lacks a traditional credit history, FHA may be the way to go. Down payments are only 3.5 percent, closing costs can be financed, and borrowers get to take advantage of competitive interest rates. At the time this article was written, rates for a 30-year fixed FHA loan were hovering around 5 percent.

Although good credit is required, perfect credit is not a prerequisite. In fact, the National Association of Realtors reports that someone with a credit score under 620 may be able to qualify.

For 2009, FHA loan limits in Utah range from a low of $271,050 to a high of $600,300 depending on the county. Buyers can find FHA-approved lenders in their area by using the FHA Lender Search Engine at www.fha.gov.

USDA Loans

Another program that can benefit borrowers who have less-than-perfect credit is a U.S. Department of Agriculture rural housing loan. The program offers competitive interest rates (currently around 5 percent), allows seller concessions to be used for closing costs and qualifies borrowers without requiring monthly insurance premiums like the FHA program. Plus, the program will provide 100 percent financing.

Although many homes will not fall in the target areas required for qualification, there are some unexpected locations that are considered rural areas. For example, along with the more traditional rural areas in Utah, all of Tooele County, some parts of Salt Lake, Utah, Weber and Washington counties will qualify. To learn more about the program, talk to a lender who specializes in USDA loans.

Down Payment/Closing Cost Assistance

Even though FHA can fill the lending void for those with less-than-perfect credit, those who need 100 percent financing (and don't qualify for the USDA program) could still face hurdles. That's where programs from Utah Housing Corporation and other government entities can fill the gap. Utah Housing works by providing an FHA-insured mortgage as the first loan, and offering a second loan (up 6 percent of the first mortgage) for down payment and closing costs.

Similar types of assistance programs are also available from local government entities throughout Utah. To help buyers find these programs, the Utah Bankers Association has released a consumer guide, "Home Sweet Affordable Home," which details all of the state's affordable housing resources. Hard copies are available at most Utah bank branches, and all the information can be found online at www.HomeSweetHomeUtah.org.

While the programs discussed above have certain requirements, the lenders originating the mortgages also have their own standards, which means qualification can vary. That's why it's important for you to shop around, do your research and work with a lender who knows the business well. If you don't have a relationship with a lender, your Realtor may be able to give you the names of several individuals he or she has worked with in the past.

Utah Home Owners have new tax breaks to help offset some of the dissapointment of the sluggish Real Estate Market.

As you all begin to search through the shoe boxes and envelopes for receipts and reminders of deductions and offsets, keep in mind that owning your own home has many more benefits than just appreciation.

With that in mind I thought it appropriate to include in this weeks "Presidents Message" some tips on the benefits of home ownership.

Copy and take to your accountant.

Here's this weeks message.

The tax benefits of homeownership have always been incredible, but for 2008 filers there are even more homeownership-related tax breaks to choose from thanks to the federal government's economic stimulus package.

With the start of tax season, here's a review of both the new and existing tax breaks from which homeowners can benefit. And if you're not a homeowner yet, here are some great reasons to think about becoming one.

Newly Expanded Property Tax Deduction

Homeowners who itemize their deductions have traditionally been able to deduct all of their state and local property taxes from their federal income taxes, one of the major financial benefits of homeownership.

While this favored tax break will continue in its customary form for 2008 filers, it has also been expanded to benefit taxpayers who use the standard deduction. With the passage of the Housing and Economic Recovery Act of 2008, homeowners who don't itemize can deduct property taxes from their federal income taxes, up to $500 for single filers and $1,000 for joint filers.

First-Time Home Buyer Tax Credit

One new tax break we've heard a lot about in the past few months is the $7,500 tax credit for first-time home buyers who purchase a home between April 9, 2008, and July 1, 2009. Even though it's referred to as a credit for first-time buyers, it can also be taken by any home buyer who has not owned (nor has their spouse) a principal residence in the past three years.

What's great about this tax benefit is that it's a credit, meaning it will reduce the amount of taxes you owe dollar for dollar. That means if you owe $5,000 in taxes, you'll receive a check for $2,500. Another plus is that even if you haven't bought a home yet, if you're planning on doing so in 2009 before you file your taxes, you can choose to take the credit on your 2008 return.

Taxpayers should note the credit has to be paid back over 15 years, essentially making it an interest-free loan. There are also income restrictions, and because the amount of the credit is determined by the property's purchase price, not all homes will qualify for the full $7,500, although most will. More information about this tax credit can be found at UtahHousingFacts.com.

Private Mortgage Insurance Deduction

Another relatively new deduction, which was used for the first time last year, is for those who pay private mortgage insurance. Private mortgage insurance, which is designed to protect the lender if the buyer can't repay the loan, is typically required for mortgage-holders who have less than 20 percent equity in their homes.

With the PMI deduction, taxpayers can deduct their premiums, including those for FHA and VA loans, as mortgage interest. The Mortgage Insurance Companies of America estimates this deduction is worth $350 per taxpayer.

The deduction is only available if you got your home loan after 2006, and will only be available through 2010, unless Congress extends the deduction. Eligible taxpayers must have adjusted gross incomes of less than $100,000 ($50,000 if married filing separately) to qualify for the full deduction, and a partial deduction may be available for those earning up to $109,000.

Mortgage Interest Deduction

This deduction is the granddaddy of them all. It has been around for years and offers a great incentive for buying a home. Here's how it works: The IRS allows you to deduct all the interest you pay on your mortgage in the year it is paid. That includes interest on any loan taken out to buy, build or substantially improve a home. Because your payment is mostly interest in the early years of your mortgage, this can add up to thousands of dollars in tax savings. Interest paid on second home, home equity and piggyback loans can also be deductible.

Other Tax Breaks

The tax breaks listed above are just a few of the homeownership-related benefits from the IRS. Home buyers can also deduct the points, or loan origination fees, associated with getting a home purchase mortgage. And there are tax benefits for moving, selling or installing energy-efficient features in your home.

For specific tax advice or questions about any of the information presented in this article, consult your tax advisor. To learn more about buying or selling a home, contact your local Realtor or visit UtahRealtors.com.