Madison, WI

A total of 154 Dane County foreclosures were filed in October, up 1.3% from the 152 foreclosures filed in October of 2008. Although only up slightly from last year's total, this October's number represents the third highest monthly total dating back to October of 2008.

For our full foreclosure report, you can check out the economic trends page at DaneCountyMarket.com .

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Obama signed an Unemployment Insurance bill today, which included provisions to extend the first-time homebuyer credit of $8,000 and create a new homebuyer credit of $6,500 for repeat buyers. News article

This will almost certainly give a boost to the real estate market, as now many current homeowners have incentive to move to a new home. Many homeowners have been hesitant to move, because they aren't comfortable with selling in this market which has depreciated the past couple of years. But the incentive of a free $6,500 should change some minds. Especially considering the house they will be buying should also have a depreciated price, and interest rates are near all-time lows.

The basic details of the New Homebuyer Tax Credit:

• First-time buyer is defined as someone who has not owned a home for the past 3 years.
• First-time buyers receive $8,000 tax credit.
• To qualify for the $6,500 tax credit, you must have owned a primary residence for at least 5 of the previous 8 years.
• You do not qualify if your income is $125,000 or more ($225,000 for married couple)
• You must have an accepted offer by April 30, 2010, and closing must be no later than June 30th, 2010.
  
• Both of these tax credits are such that you actually get cash from the government (unless you owe money after doing your tax returns, in which case you would owe less money thanks to the $8,000 or $6,5000 credit)

For a couple of great resources about the new homebuyer credit, go to www.searchmadisonmls.com and click on the "Homebuyer Tax Credit" tab.

Here is a simple explanation of Mortgage Backed Securities, so you can understand the concept. Mortgage Backed Securities can certainly vary from and be more complex than this...

1) Someone buys a house, and to obtain the money to purchase the house, they get a mortgage loan from a bank. So over the next 30 or so years, they will owe the bank the total loan amount (principle) PLUS interest payments.

2) This bank gives out a lot of mortgage loans to different people. Let's say 1,000 mortgage loans.

3) The bank then sells these 1,000 loans to an Investment Bank. So now all the interest and principle payments will go to the Investment Bank.

4) The Investment Bank creates a separate company, specifically a corporation. They transfer the 1000 loans to this new corporation. So now all the interest and principle payments will go to this new corporation.

5) The Investment Bank issues shares of ownership in the corporation (which are called securities…i.e. stocks). These securities are then sold in the free market.

6) Each owner of one of these securities will get a part of the cash flow from the loan payments that are now being paid to this corporation.

7) These securities are called Mortgage Backed Securities. They are securities which are backed by mortgage payments. Hence the wikipedia definition: "A mortgage-backed security (MBS) is an asset-backed security or debt obligation that represents a claim on the cash flows from mortgage loans, most commonly on residential property."

The SEC's explanation of Mortgage Backed Securities

We recently showed in this post why working with a good buyer agent can be a huge benefit to a home buyer. A listing agent can't provide you with the level of service and advocacy that you should expect from an agent in today's market. Remember, the listing agent works for her client, the seller. So when it comes to choosing between working with the listing agent and a good buyer agent, a good buyer agent is the clear choice.

But what about an attorney? We fully support any buyer who wishes to hire an attorney. An attorney provides peace of mind. She brings a different skill set to the table and helps to make sure that you, the buyer, are protected from all angles. A good attorney can be tremendously helpful during the home buying process.

Should working with an attorney preclude you from working with a buyer agent as well? We don't think so. But that is the perception held by more than a few people. Some folks believe the buyer agent and the listing agent will always be in cahoots, that both agents will conspire to ensure "the deal goes through". That's not part of our game.

Our firm belief is that if you decide to hire an attorney, you should have a good buyer agent assist you as well. It should be a team effort. And here are 3 big reasons why.

1) A good buyer agent brings market expertise to the table. The market is changing every day, and the market is not an attorney's focus. I go back to this post. Could most attorneys deliver the level of market expertise that this buyer received from his agent? I don't think so.

2) A good buyer agent is available to assist his client throughout the entire transaction, including the home inspection and final walk through. As a consumer making the biggest purchase of your life, don't you want someone to be by your side when your inspection takes place? You should. If issues arise during your inspection (as they often do), your buyer agent is a great resource to help you strategize your next steps - because your agent was at your side during the inspection and saw the same things you did. And what about the final walk through just prior to closing? Would you rather be joined by the listing agent (who represents the seller) or a buyer agent (who represents you)?

3) A buyer agent costs you nothing. And a good buyer agent is with you for the long haul. These days our buyer clients average about 2.5 offers per closing. That means our typical buyer is making 2 or 3 offers before he successfully closes on his home. Every time we go to bat for our clients, the cost is the same - nothing.

We think working with a good buyer agent is a no-brainer, but it's important to find someone you can trust. We'll provide some tips for finding a good buyer agent in a future post.

For more information on buyer representation and how the buyer agency agreement works, you can check out this link at DaneCountyMarket.com .

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com

Home inspector Brian Paull from Premier Inspection & Consulting has a very useful web site for anyone who is interested in learning more about home maintenance and the home inspection process. Brian's site includes a description of the home inspection standards of practice and a section on frequently asked questions, as well as information on radon, mold, and many other topics such as energy efficiency, electrical safety, asbestos, child safety, elderly safety and more.

For more useful inspection and testing information, you can check out the inspection and testing resource page under buying real estate at DaneCountyMarket.com.

Have a good day,

Dan Miller, Realtor, Certified Distressed Property Expert, Keller Williams Realty and DaneCountyMarket.com