FIRST TIME HOMEBUYER TAX CREDIT

Once again, the tax credit is coming to an end.

It’s set to expire on April 30, 2010.  We’ll see if we have the rush to write contracts in the coming weeks.  If you’ve been pre-approved and are just waiting for the right house, you’ll be fine for the next few weeks.  However, I wouldn’t be looking a short sales.  These transactions take a bit longer.  Stick with the “regular” sales or lender owned.

I took a couple out to look at homes last weekend.  They have put offers in on several homes over the last few months and each and every time there is a multiple offer situation.  It can be very disappointing.  When you find a home you like, make sure your agent calls the listing agent (if possible) to ascertain whether or not there are any offers on the property.  Offer what you would be willing to pay.  For example, if the house (lender owned) is $80,000.  Are you willing to pay that?  What about if you end up in a multiple offer situation?  You’ll be asked to come back with highest and best.  You could be bidding against cash offers.  If you’re an FHA buyer, the seller will most likely take a conventional loan over yours.  If you’re asking for seller contribution for closing costs, that may make your offer less attractive if there are others that don’t ask for contributions.  Be prepared to know how you will proceed.  Once you’ve made an offer on a home, you’ve got an emotional stake in it, and it’s disappointing when it falls through.

I put an offer in on a home and there were multiple offers, so we moved on.  I got a call from the listing agent 2 weeks later that all the other offers had fallen through and was my buyer still interested.  That was a good outcome as my buyers will close in about a week.

It will be interesting to see if when the tax credit expires the number of offers presented on a property decreases and if the market slows down substantially.  I’ve talked to people who don’t care about the tax credit and then some who are counting on it.  Should be an interesting summer in the RE business.

ARIZONA’S ANTI-DEFICIENCY STATUES

Do Arizona’s Anti-Deficiency statutes apply to

short sale transactions?  Well, according to counterpoint opinions in the Maricopa Lawyer, maybe yes, maybe no…it depends.  One attorney states that there is currently no reported Court decisions regarding whether the statutes apply to short sales.  This link will take you to the attorney’s website where you can read the entire statute.

He states “the mere fact that the lender releases the collateral so that the seller can transfer free and clear title to the buyer in a short sale does not necessarily mean that the lender is releasing the debt.  Thus if the seller/borrower wants to avoid the risk that the lender may pursue a deficiency resulting from a short sale, he/she should have the lender sign an agreement that the lender releases the collateral and cancels the debt in exchange for the agreed upon proceeds from the short sale.” (emphasis added) (Kent S. Berk, Berk & Moskowitz, PC)

In addition, the law purports to apply to “purchase money loans” only, i.e., the down payment and not necessarily the seconds that were taken out on the property.  Another lawyer claims that “cautious legal counsel will generally advise a borrower to reject any lender short sale proposal on qualifying property and a purchase money note if the lender conditions approval on the borrower agreeing to remain liable for a deficiency or providing the lender an unsecured note.  Why should a borrower agree to a deficiency where none exists under Arizona law?” (Marc McCain, McCain & Bursh, PLC)

While I am not a lawyer I believe that, for realtors, these are uncharted waters and knowledge is power.  I am in no way advocating that we advise our clients of what to do in these scenarios…..of course, direct them to speak with competent legal counsel.  We should be sources of information for our clients.

PHOENIX REAL ESTATE MARKET WATCH

Here are a few statistics regarding the Phoenix

housing market.  According to RS Media, “-Phoenix was 2009’s most popular city in the country for online home hunters, according to the volume of the total number of home searches on www.ZipRealty.com throughout the year.”  Yes, there are still a lot of distressed properties, but at least we are clearing our inventory.

In addition, there were 6,551 homes sold in December, 2009 as compared to 4,920 sold in December, 2008.  The price range is up to $399k (houses over $400k sold were 393).  Of those 6,551, 43% were REO sales, 23% short sales and 34% regular sales.  We had 36% regular sales in December 2008 and the REO sales percentages have gone down while short sales have gone up. (Thank you, Tom Newell, First American Title).

I think we’ll continue to see these distressed properties for some time to come.  Another short sale statistic might interest you.  Your home will sell for more $$ via short sale than if it goes into foreclosure.  So, you’d think that the banks would be all over this one.  Unfortunately, we are still dealing with people, at the lending institutions, who are slow to respond and don’t care about any situation.

I’d love to hear from you with questions and/or comments on the short sale or REO process.

HAPPY NEW YEAR-WHAT’S AHEAD IN 2010?

I don’t know about you, but I’m glad to see

2009 come to an end.  My family and I have not been immune to the affects of the downturn in the economy.  While my real estate has been my best year yet, my husband’s business definitely saw a tremendous downturn.  We’re hoping that the new “streamlined” attitude within his office and our home will help us to get a better handle on our finances for 2010.

The real estate market will be a buyer’s market for the foreseeable future.  I don’t see the foreclosures and/or short sales ending any time soon.  I will be increasing my knowledge in the short sale process and my brokerage will be marketing to short sale properties within Scottsdale.  I typically steer my buyers away from short sales, but sometimes those are the only properties that are affordable — especially with my first time buyers.

If you’re fence sitting at all perhaps you should take the plunge.  From all indications we could see interest rates inching up by the end of the year.  The way the government is spending money, we are in for a tremendous period of inflation and it’s only a matter of time….

PHOENIX FORECLOSURE NEWS

I was recently in New York and had lunch

with a young man, who is in commercial real estate (former Phoenix resident).  We spoke about the housing market in Phoenix and what our predicitions are regarding same.  He is of the mind that we have not yet seen the bottom of our home pricing.  You know what they say about opinions…..

An article in the Arizona Republic recently says pretty much the opposite.  The article quotes the “Cromford Report”, which I read and feel is a good barometer of our market.  While new housing starts are still off significantly from 2005, we are seeing an emptying of current spec inventory.  Building permits have picked up slightly as well.  December numbers will be telling.  However, keep in mind that the holiday season is typically slower….people are preoccupied.

The foreclosures have dipped in the valley as well.  As first time home buyers enter the market (due in part to the tax credit scenario), investors are also back to buy up the distressed properties, fix, repair, perhaps rent and then sell.  Once again, house flipping is in vogue, and not just for low end homes.  There are some truly amazing properties out there that can be bought for a song.

Keep in mind that if you are an FHA buyer and looking at a home that has been bought by an “investor”, there is a 90 day “seasoning” period before you can purchase that home.  Most agents should note that in their listing, but sometimes it’s missed.

Still and all, it’s a good time to buy if you can.  I am always hopeful, but feel that these are truly uncharted waters and we still don’t know what lies over the horizon.

INQUIRING MINDS WANT TO KNOW

In the current real estate market, sellers want to know

how you’re going to sell their home….a lot of sellers are in a situation that requires “creating buyer urgency”.  Some are turning to unconventional (up until now) ways to market and sell a home.  There are companies that are creating an eBay type of site where potential buyers bid on properties….24 hours a day, 7 days a week.

There is a company out there doing just that.  By using the general theory that properties on the market for over 90 days sell for less than they might be worth, people can sign up for the program which begins with traditional marketing means, i.e., advertising, open houses and preview events.  All prospective buyers are qualified through the site.

It’s an interesting concept and for those who are having a hard time selling in this market, it opens another door through which additional buyers can compete.  The site claims that they have a good deal of “move-up” buyers.

EXTENSION OF $8,000 FIRST TIME HOMEBUYERS TAX CREDIT

Recently, the government has voted to extend the

first time home buyer tax credit through April, 2010.  Keep in mind that any buyers out there should click on and reference this website link regarding the “qualifications” for the tax credit.  There are income limits as well as your marital status which affect how much money you will get.

So, the extended tax credit, low interest rates, affordability and the fact that FHA is the predominate loan for first time buyers makes this a good market for people who are just coming in or have been fence sitting.

In addition, the federal government is extending a tax credit for current homeowners — those who have lived in their residence for 5+ years — in order to get people who were thinking of selling into a “maybe I should” mode.  This, of course, will depend on whether or not the homeowner has equity and is able to sell in a market with lender owned properties and short sales as competition.

You can search for homes directly through my blog site or feel free to contact me to discuss how you can take advantage of this program.

PHOENIX DROPS IN FORECLOSURE REPORT

According to the “Business Journal”, Phoenix has now

officially dropped from the top 10 on the list.  Now at #12, Phoenix saw fewer foreclosures in the 3rd Quarter.  This is a positive sign for the valley, but I don’t think is indicative of a market improvement just yet.  I know I should be more upbeat about this news, but it’s still too early.  We have to have a few quarters of positive before we can consider this a recover or a move in the right direction.

California continues to suffer.  I’ve also noticed a lot more California cars driving around.  Could this be that they are jumping ship?

DELAY IN CLOSE OF ESCROW

If you’re in the process of purchasing a

home and your close of escrow has been scheduled, great!  Just don’t change anything.  The new disclosure requirements may delay your closing.  Be sure that you continually check with your lender to make sure you’re still on schedule.  ANY change to the mix, i.e., rate change, will require additional days for “disclosure” requirements.  Keep in mind that weekends and holidays are not “business days”.

When writing a contract language has been added to the effect that any delay in the close of escrow because of the new disclosure requirements imposed on lenders shall not be the fault of the buyer.  If you do not cover yourself, you could be charged “per day” for any delay.  So, be sure that the language is in the contract.

In today’s marketplace (especially so), an informed buyer is very important.  Make sure that you have an open relationship with both your lender and your realtor.

DOWNSHIFT IN FORECLOSED PROPERTIES IN PHOENIX

From July to August, Phoenix saw a decline

in the number of foreclosed properties.  This according to ASU’s realty studies Director, Jay Butler.  The number of sales are up from the same time last year as well.  The foreclosures are driving the market and we will not really know if the housing market here in Phoenix is truly “recovered” until we see the investors slow down in their buying.  The true measure of a healthy market is “normal sales”…..i.e., people who want to move put their homes up for sale — not people are losing their homes and banks just want some if not all of their money back.

Prices have also increased here in the Valley.  A mere 1%, but it’s an improvement.  In one year, the prices (on the average) have dropped 29%.  Hopefully, we will be able to continue to see recovery.  This will also depend on the rate of unemployment and the state of the economy.  As you know all of these factors are tied together….it’s a house of cards, so to speak.  When you remove a bottom card, the whole tower falls.

Only time will tell.  Consumer confidence needs to return and we need to stop bleeding jobs and opportunity.  This is a capitalist economy and the government needs to let us come back on our own.  By artificially propped up the economy we’re just heading in the wrong direction.