President Obama on Friday, Nov. 6 signed a bill extending and expanding the Federal Tax Credit for Home Buyers. The bill passed the U.S. House of Representatives yesterday and the U.S. Senate late Wednesday.The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
What does this mean? Well, First Time Buyers will get up to an $8000 tax credit to buy their first home and move up buyers will qualify for a $6,500 credit. I think that this will spur Market Activity for the first half of 2010 and afterwards, we may see a slight drop in activity. Time will tell, but if you're thinking of moving up to a larger house, 2010 is your year to do it!
Thursday, December 10, 2009
Wednesday, December 2, 2009
Seller Pays for Buyer's Closing Costs
Welcome again to my Real Estate blog. I recently had an issue come up in a transaction that left my buyers a bit confused, and could potentially be a problem for Buyers in the future, so I thought that I'd address this: Closing costs.
These days, many buyers are asking sellers to pay for their closing costs or a portion of the closing costs. This is the money that is required to close a transaction. This includes loan fees/expenses, the down payment, buyer's title insurance(ALTA), seller's title insurance(CLTA), escrow fee and associated tranfer fees (private, city or county).
There are only a fee of these expressly referenced in the CAR purchase agreement:
1. CLTA (Owner's Title Insurance).
2. Escrow Fee
3. Tranfer Tax (Humboldt County)
Typically, these are split between Buyer and Seller - 50/50, and are only a small portion of these expenses. On a $300,000 home the escrow fee is: $621.00, the CLTA is $1184.00 and the transfer tax is $1.10 per 1000 or $330.00. The total is: $2135.00
The problem arose because of the number of offers I'd written for these particular buyers. I have written 5 offers for them The buyers didn't want to hear the full explaination each time, so when it came to the "allocated costs"I said, "The costs are split." This meant that the costs discussed in the contract were split: escrow, title insurance, and transfer tax. The buyers thought we were splitting the closing costs. They thought that is was ALL of the closing costs.
Quite a big misunderstanding if I do say so myself.
As a buyer, you have the right to ask a seller to pay for some of the closing costs, but it has to be specifically asked for. A dollar figure needs to be provided to the seller so they know what their bottom line is. This is only fair.
Ideally, you have met with a lender and received a "Good Faith Estimate". This is a document that out lines the closing cost and all of the fees for any given loan amount. By law it has to be provided to a borrower prior to closing, but the lenders that I use provide them up front. This way you will know what you can ask for.
The bottom line is that if you pay them now or have the seller pay them, they will be paid. If you have them paid upfront, it's done. If they are paid for by the seller, they are financed over 30 years. This is because the seller would have taken less for an offer that didn't include closing costs. So keep that in mind: there are no freeies in real estate: you always pay.
Negotiations can be tricky, but keep a realistic outlook and try not to be attached to the outcome. Happy Home shopping!
These days, many buyers are asking sellers to pay for their closing costs or a portion of the closing costs. This is the money that is required to close a transaction. This includes loan fees/expenses, the down payment, buyer's title insurance(ALTA), seller's title insurance(CLTA), escrow fee and associated tranfer fees (private, city or county).
There are only a fee of these expressly referenced in the CAR purchase agreement:
1. CLTA (Owner's Title Insurance).
2. Escrow Fee
3. Tranfer Tax (Humboldt County)
Typically, these are split between Buyer and Seller - 50/50, and are only a small portion of these expenses. On a $300,000 home the escrow fee is: $621.00, the CLTA is $1184.00 and the transfer tax is $1.10 per 1000 or $330.00. The total is: $2135.00
The problem arose because of the number of offers I'd written for these particular buyers. I have written 5 offers for them The buyers didn't want to hear the full explaination each time, so when it came to the "allocated costs"I said, "The costs are split." This meant that the costs discussed in the contract were split: escrow, title insurance, and transfer tax. The buyers thought we were splitting the closing costs. They thought that is was ALL of the closing costs.
Quite a big misunderstanding if I do say so myself.
As a buyer, you have the right to ask a seller to pay for some of the closing costs, but it has to be specifically asked for. A dollar figure needs to be provided to the seller so they know what their bottom line is. This is only fair.
Ideally, you have met with a lender and received a "Good Faith Estimate". This is a document that out lines the closing cost and all of the fees for any given loan amount. By law it has to be provided to a borrower prior to closing, but the lenders that I use provide them up front. This way you will know what you can ask for.
The bottom line is that if you pay them now or have the seller pay them, they will be paid. If you have them paid upfront, it's done. If they are paid for by the seller, they are financed over 30 years. This is because the seller would have taken less for an offer that didn't include closing costs. So keep that in mind: there are no freeies in real estate: you always pay.
Negotiations can be tricky, but keep a realistic outlook and try not to be attached to the outcome. Happy Home shopping!
Friday, September 4, 2009
Humboldt County Real Estate Sales - Behind the numbers and where we are headed...
Unlike many areas of California, Humboldt County has not seen a significant drop in median home prices. What we have seen is a drop in sales. Just compare the Summer of 2008 (pre financial meltdown) to the Summer of 2009 and you'll see that the sales have picked up seasonally, but remain below the sales from last year.
However, take a look at the sales from August 2008 (114) and compare them to August 2009 (113) : nearly identical. All this with less inventory in 2009 (1588 to 1460).
Why is the market gaining steam? I believe that it is the pressure that first time buyers are feeling to close by November 30th, 2009. If they miss out on this date, they miss out on $8000 in tax credits.
This is a real motivator for many first time buyers and I believe that it has led to the pick up in sales activity. I feel that we will see that homes priced under 200,000 in Humboldt County are going to become more of a hot commodity. So if you are looking in that range here are a few homes to look at:
0-150K - http://link.flexmls.com/j6etcf8w2ls,3
150-250 - http://link.flexmls.com/j6etcggy119,3
Here's a bit higher range too...
250-350 - http://link.flexmls.com/j6etcgseuem,3
350-500 - http://link.flexmls.com/j6etch5hxg8,3
Where is the Humboldt County Market Headed?
If I could predict the future, I probably wouldn't be selling real estate, but if I had to guess, I'd say that the November 30th deadline to close a transaction will be extended, giving first time buyers a reprive. This won't be done until the 11th hour, why? Because buyers would procrastinate on the purchase of a house.
I believe that first time buyers should be looking to purchase now. This is because I feel that the market has hit bottom and although the prices won't shoot through the roof again, they will be headed up, and so will interest rates. The take home is this: don't kick yourself down the road, buy at the right time and you'll pat yourself on the back for years to come.
Andy Parker, Broker Associate
Azalea Realty
http://www.azalearealty.com/
Friday, March 6, 2009
Friday, February 27, 2009
Short Sales: A Buyer's Guide
As the Housing Bubble continues to let out air and drags down the Economy, many Sellers find that the value of their home has decreased BELOW the amount they owe to their lender (the BANK). I actually have a client that owes $420,000 on a home that is now worth $200,000! How can a Seller avoid foreclosure and limit the damage to their credit? The answer is Short Sale!
For a Buyer, this can present a terrific opportunity to purchase a home at an outstanding value, while still retaining the ability to perform inspections and get a home that has not been "trashed" by a angry homeowner. There are some considerations for Buyers and what follows is a list of things every Buyer of Short Sales should know.
1. Short Sales are not Short! The term Short Sale refers to a Seller "shorting" the amount owed to the Lender. It is not uncommon for a short sale to take as long as 6 months or more.
2. Buyers need to be pre-qualified or pre-approved by a lender and present a letter to the seller with the offer. This is a terrific idea with any sale ( I always do it) but the seller's agent has to put together a packet to send to the Lender, and part of this packet is proof that the buyer can perform.
3. Buyers need to find out who the seller's lender is. This can be helpful because a savvy buyer's agent can know approximately how long a transaction could take.
4. As crazy as this may sound: Each lender deals with Short Sales differently. Countrywide originated many of the loans in the last 3 years, so understandably, they get the most requests of short sales. As a result, they probably take the longest to approve.
5. Only 20% of short sales close. Why? Buyer's get cold feet or find something else, Lenders reject offers and in rare cases, Sellers get loan modifications.
6. The Lender is actually not the owner of the loan, they are a company that services the debt. What does this mean? They collect and distribute the money paid on the mortgage. Many times the loan is bundled with many other loans and sold to investors. Each investor has their own criteria as to what steps need to be taken.
7. Buyers should keep looking for a house, even if they have an offer accepted by a seller. Why? Because the offer could be rejected; the house could be foreclosed on; or they could miss out on another sale that isn't Contingent on Lender approval. A buyer doesn't have a fully executed contract until they have Lender approval.
8. NEVER release the Earnest Money deposit to an escrow company or a seller. You want full control over that money and you never know what will happen. This does not apply to traditional sales, probate sales or REO sales, just Short Sales.
9. Make clear in the offer or with the Listing Agent that ,if accepted, your offer should be the ONLY OFFER submitted to the lender. Any other offers should be put in a back up position. Every additional offer that gets presented to the lender will only SLOW DOWN THE PROCESS. This benefits no one, not the buyer and not the seller.
10. Be ready to accept the property AS-IS. The big question here is whether to perform inspections upon acceptance by the seller. I say yes, but there is an inherent risk: if the transaction falls apart, you lose out on the money spent on inspections. On the other hand if you wait until approval by the Lender, you may find an adverse condition that will affect the desirablity or the amount you want to pay. If you do choose to wait and you request the lender to make more concessions, you run the risk of extending the approval process (which could result in foreclosure) or being told by the lender, "NO".
11. Be prepared to have long periods of time without an answer or an update. Why? Because the agent commonly has no contact with the Lender's Negotiator. To be precise, they have a don't call us, we'll call you mentality. This does not mean that the listing agent shouldn't call after all the squeaky wheel gets the grease.
It's best for a buyer of a Short Sale to be flexible in the sale as to the close date and the process. Pick a reliable agent to help you through the process and have faith that the deal will close...eventually.
For more information about distressed sales, short sales or foreclosures call Andy @ 707-616-3456 or email me: andy@azalearealty.com
Opinions expressed on this blog are those of Andy Parker and not those of any other person or entity.
Friday, January 2, 2009
Humboldt County Real Estate - How long do I have before the bank forecloses?
Greetings and Happy New Year! It might not be such a Happy New Year for everyone though. In these uncertain economic times, a job loss or a death in one's immediate family can quickly change one's financial fortunes in a hurry. The following is a timeline that outlines the legal timeframes for foreclosure. If you are in foreclosure this the minimum amount of time before you lose your house. Actual times may vary because of large workloads placed on the foreclosure departments of lenders and loan servicers.
FORECLOSURE TIMELINE FOR OWNER-OCCUPIED REAL PROPERTY LOANS (made from 2003 to 2007)
The approximate minimum time frames for the non-judicial foreclosure of owner‑occupied real property loans made from 2003 to 2007 are as set forth below. In California, most lenders elect to foreclose non-judicially by conducting trustees' sales, not by judicial foreclosure.
Pre-Foreclosure Period
A lender may initiate the foreclosure process when a borrower defaults on a loan, such as by missing a mortgage payment. However, a slight delay may not justify acceleration and foreclosure by the lender. Hence, in practice, lenders generally wait a few months after a missed payment before starting the foreclosure process.
Day 1: Lender Contacts Borrower
For owner-occupied loans from 2003 to 2007, a lender initiating the foreclosure process must generally contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure. During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.
Day 31: Filing of Notice of Default
For owner-occupied loans from 2003 to 2007, the lender may file a notice of default 30 days after contacting the borrower to explore options for avoiding foreclosure. The notice of default must be filed in the county where the property is located and a copy must be mailed within 10 business days after recordation to the borrower and all other persons who have requested such notice. The notice of default informs the borrower of the default. It must also include the lender's declaration that it has contacted the borrower to explore options for avoiding foreclosure, tried with due diligence to contact the borrower, or the borrower has surrendered the property.
Day 121: Filing of Notice of Trustee’s Sale
Three months after the filing of the notice of default, the lender may record a notice of trustee’s sale setting forth the date, time, and place of the upcoming trustee’s sale. Because of the gravity of a notice of trustee’s sale, it must be widely disseminated. The notice of trustee’s sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.
Day 145: Deadline to Cure Default
Up to five business days before the trustee’s sale, the borrower may reinstate the loan by curing the default or paying the missed payments plus allowable costs. After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire debt, plus interest and costs (not just the arrearage), before the bidding begins at the trustee’s sale.
Day 152: Trustee’s Sale
Although California law allows a trustee’s sale to take place 20 days after the posting of the notice of trustee’s sale, lenders customarily wait at least 31 days instead to help protect against federal tax liens. At the trustee’s sale, the property is sold through a public auction to the highest bidder. Title is transferred to the successful bidder by trustee’s deed.
USING THIS FORECLOSURE TIMELINE
A foreclosure timeline helps you as a listing agent ascertain whether you have enough time to market and sell the property as a short sale. Depending on the stage of foreclosure the homeowner is in (“Foreclosure Stage”), the chart below gives you the total time frame you have, at a minimum, to sell a property as a short sale before the trustee’s sale occurs (“Minimum Time Left to Sell”).
Foreclosure Stage
Minimum Time Left to Sell
Homeowner just missed making mortgage payment for the first time.
About 6 to 8 months total
Homeowner has just been contacted by the lender to explore options for avoiding foreclosure.
About 5 months total
Notice of default has just been filed.
About 4 months total
Notice of trustee’s sale has just been filed.
Date of trustee’s sale is on notice of sale
As an example, if a notice of default has just been filed, you have a minimum of about four months to sell the property before the trustee’s sale may occur. That’s four months not only to find a buyer, but also to get the lender to approve the short sale and close escrow. The short sale lender may agree to postpone the trustee’s sale in some situations (such as when there’s an accepted offer), but be sure to get any agreement for a postponement in writing.
FORECLOSURE TIMELINE FOR OTHER TYPES OF LOANS For loans that are not secured by owner-occupied real property or not made from 2003 to 2007, lenders are not required to contact the borrowers to explore options for avoiding foreclosure. For these loans, the total minimum time for the foreclosure process is roughly only 122 days, not 152 days. If the lender is not required to contact the borrower, the foreclosure process takes a minimum of about 4 months from the filing of the notice of default to the day of the trustee’s sale.
FORECLOSURE TIMELINE FOR OWNER-OCCUPIED REAL PROPERTY LOANS (made from 2003 to 2007)
The approximate minimum time frames for the non-judicial foreclosure of owner‑occupied real property loans made from 2003 to 2007 are as set forth below. In California, most lenders elect to foreclose non-judicially by conducting trustees' sales, not by judicial foreclosure.
Pre-Foreclosure Period
A lender may initiate the foreclosure process when a borrower defaults on a loan, such as by missing a mortgage payment. However, a slight delay may not justify acceleration and foreclosure by the lender. Hence, in practice, lenders generally wait a few months after a missed payment before starting the foreclosure process.
Day 1: Lender Contacts Borrower
For owner-occupied loans from 2003 to 2007, a lender initiating the foreclosure process must generally contact the borrower by phone or in person to assess the borrower’s financial situation and explore options for avoiding foreclosure. During the conversation, the lender must inform the borrower of the right to meet with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency.
Day 31: Filing of Notice of Default
For owner-occupied loans from 2003 to 2007, the lender may file a notice of default 30 days after contacting the borrower to explore options for avoiding foreclosure. The notice of default must be filed in the county where the property is located and a copy must be mailed within 10 business days after recordation to the borrower and all other persons who have requested such notice. The notice of default informs the borrower of the default. It must also include the lender's declaration that it has contacted the borrower to explore options for avoiding foreclosure, tried with due diligence to contact the borrower, or the borrower has surrendered the property.
Day 121: Filing of Notice of Trustee’s Sale
Three months after the filing of the notice of default, the lender may record a notice of trustee’s sale setting forth the date, time, and place of the upcoming trustee’s sale. Because of the gravity of a notice of trustee’s sale, it must be widely disseminated. The notice of trustee’s sale must be recorded, posted, mailed to the borrower and others, as well as published once a week for three consecutive weeks in a newspaper of general circulation.
Day 145: Deadline to Cure Default
Up to five business days before the trustee’s sale, the borrower may reinstate the loan by curing the default or paying the missed payments plus allowable costs. After the reinstatement period expires, the borrower still has the right to redeem the property by paying the entire debt, plus interest and costs (not just the arrearage), before the bidding begins at the trustee’s sale.
Day 152: Trustee’s Sale
Although California law allows a trustee’s sale to take place 20 days after the posting of the notice of trustee’s sale, lenders customarily wait at least 31 days instead to help protect against federal tax liens. At the trustee’s sale, the property is sold through a public auction to the highest bidder. Title is transferred to the successful bidder by trustee’s deed.
USING THIS FORECLOSURE TIMELINE
A foreclosure timeline helps you as a listing agent ascertain whether you have enough time to market and sell the property as a short sale. Depending on the stage of foreclosure the homeowner is in (“Foreclosure Stage”), the chart below gives you the total time frame you have, at a minimum, to sell a property as a short sale before the trustee’s sale occurs (“Minimum Time Left to Sell”).
Foreclosure Stage
Minimum Time Left to Sell
Homeowner just missed making mortgage payment for the first time.
About 6 to 8 months total
Homeowner has just been contacted by the lender to explore options for avoiding foreclosure.
About 5 months total
Notice of default has just been filed.
About 4 months total
Notice of trustee’s sale has just been filed.
Date of trustee’s sale is on notice of sale
As an example, if a notice of default has just been filed, you have a minimum of about four months to sell the property before the trustee’s sale may occur. That’s four months not only to find a buyer, but also to get the lender to approve the short sale and close escrow. The short sale lender may agree to postpone the trustee’s sale in some situations (such as when there’s an accepted offer), but be sure to get any agreement for a postponement in writing.
FORECLOSURE TIMELINE FOR OTHER TYPES OF LOANS For loans that are not secured by owner-occupied real property or not made from 2003 to 2007, lenders are not required to contact the borrowers to explore options for avoiding foreclosure. For these loans, the total minimum time for the foreclosure process is roughly only 122 days, not 152 days. If the lender is not required to contact the borrower, the foreclosure process takes a minimum of about 4 months from the filing of the notice of default to the day of the trustee’s sale.
- The above timeline was reprinted with permission from the California Association of Realtors.
If you have questions about foreclosures or want to know if there is a way to prevent foreclosure from happening to you, please call me today! 707-616-3456 or email me: andy@azalearealty.com
Subscribe to:
Posts (Atom)
