Short Sales Talk by Presson

IRS Auditing $8,000 Tax Credit Recipients

2009-10-26T17:41:00.000-07:00

If you are looking to take the $8,000 Home-Buyers Credit you better have you ducks in a row according to reports coming out of Washington. The IRS is going to be paying special attention to those taking the credit on their taxes.

The Internal Revenue Service is examining more than 100,000 suspicious claims for the first-time home-buyer tax break, another sign of potential trouble for the soon-to-expire program.
The measure, adopted in February as part of the economic-stimulus bill, gives first-time buyers an $8,000 tax credit in an effort to boost sales and stimulate the moribund housing market. The program is set to end Nov. 30, but housing-industry leaders are lobbying Congress to extend it.

More than a million claims for the credit have been received so far, and housing-industry experts estimated that the credit has helped generate about 350,000 home sales that wouldn’t otherwise have occurred. But some lawmakers and tax experts now say there is evidence that a significant number of the claims might prove to be unjustified, or even fraudulent. via WSJ.com. Out, Presson

WILL THEY EXTEND THE $8,000 TAX CREDIT???

2009-09-22T17:42:00.000-07:00

The White House is considering extending an $8,000 tax credit for first-time home buyers, which has helped to boost sales by more than 1 million this year.
Spokesman Robert Gibbs said the administration’s economic team is evaluating the tax credit’s effect on new home sales and will soon make a recommendation to the president.
The credit covers up to 10 percent of a home’s price – as much as $8,000 – for first-time buyers, but sales must be finalized by the end of November. If the credit is not extended past that date, the upward trend in housing sales could be reversed.

I think we will see an extension annouced shortly. It is one of the few programs coming out of Washington that has worked right out of the box. The politicians need something to hang their hat on and the new homeowner tax credit is a success.

NEW APPRAISAL STANDARDS YOU NEED TO KNOW ABOUT

2009-08-20T12:27:00.000-07:00

I thought I'd talk a little bit today about the biggest "deal killer" in the real estate market today, appraisals. Most agents can now talk personally about a slam dunk deal recently lost due to the appraisal process.

Appraisals have been a sore spot in the real estate market in the past decade. When things were booming, pressure was placed on appraisers to make the value hit the loan amount. This caused prices and values of properties to skyrocket. Everybody loved 'em in the day.

Then when the downturn hit, appraisers realized their culpability in the boom and tightened their standards. Real estate agents were bamboozled as property sales were constantly getting stuck at the appraisal stage as the values were regularly coming in under the loan amount.
Now let me take a minute to explain I am not blasting appraisers. They are the middle man in the home sales equation and are always in a tough place. If they are too tough they do not get work later on so their is a self interest at stake. I get this.

But now new Fannie Mae and Freddie Mac regulations have put the appraisers in a bigger bind. They demand that lenders control the choice in appraiser, not mortgage brokers or real estate agents.

The cost cutting mentality of the appraisal management companies is lowering the standard on the quality of appraisals. What is ironic is that they are paying the appraisers less but charging the customers more at the same time.

So now the top quality appraisers are being squeezed economically while they also are under the whim of the management company to get work. This is not the recipe for an effective market.

THE MIAMI HEAT DIDN'T GET LAMAR ODOM BUT THE CONDO MARKET IS TURNING

2009-08-20T12:23:00.000-07:00

We have all heard since the market began turning for the worse the glut of unsold condominiums down in the Miami area. After a long rough ride, the Miami Condo market is finally getting back to business. The combination of overbuilding and top of the market prices stalled the market. Now investors are coming back as prices are being dropped to the $200 per square foot level and people feel like they are getting a deal.

Did you notice I did not mention any government programs or incentives in this? I did not think so. Just the combination of the right product at the right price bringing out buyers.

What a surprise.

FINALLY SOME GOOD NEWS FOR A CHANGE

2009-07-30T18:18:00.000-07:00

The anecdotal evidence I have hearing from other real estate agents in South Florida is also playing out across the country as real estate values have gone up in the May, 2009 Case Shiller report. Numbers were up across the board and into positive or break even territory in all but 5 of the 20 cities.

This is good news. The markets and our buyers have been waiting for consumer confidence in real estate to return for 3 years. Once we have the critical mass of buyers who are ready to buy and feel that their investment is safe the market will have it’s base.

And right now that is us all real estate professionals are looking for. It has been a wild ride for all involved and I know I can say that a little normalcy would be appreciated for all concerned.

Over and Out, Presson

President Obama’s Short Sale Solution to the Real Estate Crisis

2009-06-28T17:34:00.000-07:00

Just as many homeowners are working to solve their current financial problems, so too are the FDIC and US Treasury. No one, private citizen or federal agency is well served by a prolonged economic crisis. President Obama has announced a new program to help people paying of distressed mortgages called the “Foreclosure Alternative Program”. The details are available at the US Treasury’s website. But the essence of this program is that the President would prefer to see lenders offer loan modifications or failing that, direct homeowners to reputable, reliable short sale real estate specialists. As always, rely upon professionals. Involve an attorney and possibly even your tax professional to fully understand the personal ramifications of a short sale. If you can find a short sale team that offers all of those services as part of their sales process, all the better. Presson

Beware of offers too good to be true

2009-06-28T17:29:00.000-07:00

In troubled times, some amazing new businesses are starting to “pop up.” One recent business, in these times of stressed real estate, is the bulk consolidator of short sales. These Internet based firms offer short sale listings to local realtors to act as the selling agent for a commission. One problem with this approach is the selling realtor has no idea what was promised to the owner selling the property. The bottom line is, deal with a local full service realtor who can help you from start to finish. If you find an Internet site that is making claims to good to be true, beware. When looking for a Realtor, contact several. Trust your instincts when talking to people who want to handle your short sale. You’ll know within a few minutes if you have the right person there to help you. Out, Presson.

TOP 10 RECESSION PROOF CITIES TO MOVE TO.

2009-06-16T19:19:00.000-07:00

Are you looking for a city to relocate to that will protect you from the ill effects of a recession? Well check out these cities. According to Forbes they stand the best chance of weathering the recession. Maybe I should have listened to my brother 15 year ago and moved to Austin, Texas as it heads the list. A hot spot for successful Californians fleeing the high cost, high tax state, Austin is benefiting from the high talent heading to the city. The Fayetteville, Arkansas region is second on the list. Having WalMart in your backyard in nearby Bentonville is probably the greatest hedge you can have against a recession. Here is the complete list via Forbes;

1-Austin-Roundrock, Texas
2-Fayetteville-Springdale-Rogers, Arkansas.
3-Boulder, Colorado
4-Huntsville, Alabama
5-San Antonio, Texas
6-Mobile, Alabama
7-Dallas-Fort Worth-Arlington, Texas
8-Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.
9-McAllen-Edinburg-Mission, Texas
10-Seattle-Tacoma-Bellevue, Washington

Out, Presson

GET ME OUT OF HERE!

2009-06-15T19:17:00.000-07:00

The indignity of being foreclosed upon is hard enough, the City of Minneapolis magnified the problem by boarding the man up in his house. Ted Poetsch lived in this house his whole life. He made a few mistakes and lost his home, an issue that has affected millions of other households. But for the city of Minneapolis to board him up in his own home is an indignity that should not be suffered by anyone. Cane in hand, he lurched around, throwing a few things in bags, putting Kitty in the carrier. He heard the contractor outside starting to drill into the door frame. Poetsch made his way down his narrow stairway, resigned to the end he had resisted for three years, through personal financial missteps, the false promise of a foreclosure "rescue" and a court victory that gave him short-lived hope. He came to the door and realized that he was too late. A truck had driven away from the house, prompting those outside to think the tenants were gone. Poetsch had been boarded up inside his house. City officials say Poetsch had ample warning that they were coming that day, but they say his brief incarceration was an unprecedented mistake. In many ways, Poetsch's experience is emblematic of the forces that have fastened plywood over so much of the North Side and urban neighborhoods across America. via the Star Tribune. Thanks for reading this and good evening to all. Presson

MORTGAGE BAILOUT OFF TO SLOW START

2009-05-31T17:53:00.000-07:00

The Federal Government’s foreclosure bailout plan is struggling to get out of the gate. For a time sensitive project, the inability to get the bureaucracy moving is not surprising, but still disheartening. What will probably be worse is once the mortgage forgiveness plan gets moving though, it will far outlast the housing crisis and distort the marketplace for years to come as foreclosure bailouts will continue far beyond their useful purpose.
So far, two months after the program went into effect, about 55,000 homeowners have been extended loan modification offers, according to a senior administration official in a recent NY Times article. Because of the size and complexity of the modification program, the administration has only recently assembled most of the pieces. In late April, officials fleshed out their plan to modify or forgive second mortgages — one of the big stumbling blocks in modifying primary mortgages — and provided more details on the Hope for Homeowners program, for borrowers who owe more than their homes are worth. Congress is close to acting on legislation to protect mortgage servicers from potential lawsuits from investors, while also expanding the Federal Housing Administration’s ability to modify loans. Let's hope this can pick up a little steam as we head into June. Out for now, Presson.

SHORT SALES AREN'T GOING ANYWHERE

2009-05-13T10:59:00.000-07:00

I get asked all the time w/ various loan modification programs available- are short sales going away? NO WAY JOSE!. Here's David Letterman's Top 3 Reasons Why Short Sales are going to be with us for some time.
Number 3 Answer. Option Arms- Many people have option arm loans where they were only paying 1% interest rate. These loans have negative am and the loan balance has risen since the borrowers close date, putting the balance quite a bit higher than it was originally. The Gov. is talking lowering rates to 3% or higher and trust me many of these option arm holders wont be able to qualify at even 3%. Ratios need to be around 38% and many folks wont be able to manage that. Short sales are the best alternative.
Number 2 Answer. Second Homes- Many people played investor during the boom and are stuck with homes that are not owner occupied. These homes will either foreclose or be sold short. The gov. will not force or even suggest lenders to work on these homes. Most investors used stated income to qualify back then and don't have the full doc ratios required to keep these homes. Even with renters in the homes.
And the Number 1 Answer is. Job loss- Unfortunately this meltdown is tricking down to main street big time and I speak with clients whose spouses were either laid-off or their hours were cut back. In this case, there is a good chance these people won't be at the needed ratio for debt to income and will be forced to sell their home.
Government intervention will help but I assure you this shake out will take time and if we see auto makers and other large industries with horizontal industries dependent on them we'll see many more defaults. I think we have another few years before we exhaust this market. Out, Presson.

THE PRICE HAS TO BE RIGHT

2009-05-05T05:21:00.000-07:00

The best advice I can offer a seller for any home in today's market is to price it right and it's even more important with Short Sales. Pricing a short sale correctly involves choreographing a delicate dance between bringing in an offer and getting the bank to buy into that offer. Price it wrong, and the home goes to the bank. After getting the buyer to "buy" in on a property now we also need the price to be attractive to the Short Sale Bank, the Buyer's Lender & the Seller. Because short sales can take a minimum of 3 months to close from listing inception, the price should be based on pending sales, which will become the comparable sales at closing. Banks will generally accept an offer priced within reason of comparable sales. A buyer and seller can arrive at a mutually agreed price, but the buyer's lender will hire its own appraiser to determine market value. This means the home will need to appraise in line with the comparable sales. Pricing too low is rarely a problem. But if it's priced too high, it won't appraise, and either the buyer will need to foot the difference in cash or the pending sale will blow up. Some types of short sales are subject to deficiency judgements and Mortgage Debt Forgiveness Act, which means sellers need to get the highest possible price. Attractive pricing will encourage multiple offers, and multiple offers tend to bid up the price. Pricing it right is a little bit of an art but it's getting done everyday. Off to my real job, Presson.

WHAT'S BETTER TO BUY; SHORT SALE OR REO?

2009-05-04T20:01:00.000-07:00

Some of the benefits of buying a short sale home over an REO (Real Estate Owned Property) are that in many cases because the homeowner still owns the home the properties are in better condition. The seller wants their home sold before the bank forecloses on it and in most cases will have it well kept during the short sale process while still living in it. This is not always the case but it is more likely that a South Florida Short Sale is in better condition than a South Florida REO. It's not unusual for me to preview a REO for a buyer and see every appliance yanked out, a green pool, dried out landscaping, etc. The process for buying a short sale is usually much longer than buying a foreclosure. We will often see much more negotiation and bank processing time when purchasing a short sale. Off to watch some play-off Basketball, Presson.

LOAN MODIFICATION SCAMS

2009-05-04T19:06:00.000-07:00

Just a quick note here as today I met with another homeowner who had been speaking to a LOAN MOD Company out of state asking for $2,500 up front. Sellers beware of any loan modification program that is asking for upfront fees as many of these are scams designed to further prey on distressed homeowners. Often the story goes the homeowner pays thousands of dollars upfront for some false hope and typically gets nothing in return. The old saying applies here more than ever, "If it sounds too good to be true, it probably is." Presson.