DOWN PAYMENT ASSISTANCE AND THE $8,000 TAX CREDIT

There were many proponents in favor 

of using the $8,000.00 first time home buyer tax credit as down payment assistance.  This has recently been shut down by HUD.  It seems there were just too many hurdles, IRS issues, the “repayment” issues, ——-

“That tax credit should be savings, not debt,” said Patricia Garcia-Duarte, Executive Director of Neighborhood Housing Services in Phoenix.

Garcia-Duarte said the proposal too closely resembled a now-illegal practice known as seller-funded down-payment assistance, which allowed a home’s seller to “gift” the down payment to a specific buyer through a non-profit organization.  

The FHA loan is still the best way to go as it requires only a 3.5% down payment as compared to at least 10% with other lending institutions.  I am in favor of the 3.5% or higher as forcing people to have a down payment no matter how small gives them equity in their home from the start.  What ever happened to saving to buy something.  That is what got us into this mess in the first place.

PHOENIX MARKET UPDATE

According the Cromford Report, here are the  

facts concerning sales, pendings and overall statistics regarding the Phoenix real estate market in May, 2009.  This statistical report is provided to anyone who wants to purchase it, however, our board is providing a complimentary trial period through the end of 2009, so I’ll be reporting periodically about what’s going on in the market….statistically speaking.

SCOTTSDALE - ACTIVES:  From a high in March of 4,110 active listings, we are down to 3,882.  Overall the inventory is lower while sales are up.  However, days on the market are up and price per square foot is down.  

PARADISE VALLEY - ACTIVES:  From the highest in March of 581 down to 574.  Keep in mind that the average price is higher and there are fewer homes overall than say Scottsdale.   Pendings are up.  Days on the market are edging toward 1 year.

PHOENIX - ACTIVES:  From a high in early January of 10,871 actives are down to 7,479 this week.  This is due to the lower price point throughout Phoenix which will most likely cater to first time home buyers.  Pendings are up…even from the same time period in 2008, and days on the market are down.

We continue to see positive signs here and there — glimmers of hope if you will.  I would say the  decrease in prices (value) is significant especially if you bought at the high 2004-2006.  However, I am of the mind that if you hold on — can hold on — there will be improvement throughout the next couple of years.  

Should you require more in-depth information, I’d be happy to provide it….just let me know.

LOAN MODIFICATION

Are you in need of a loan modification?  Do you

know if you qualify for a loan modification?  The vast majority of Americans don’t even know if they qualify.  To qualify for a loan modification, you’ll need to prove hardship, i.e., loss of job, decrease in income, illness, etc.  This is not for people who are “upside down” in their mortgage.  My suggestion is that if you are upside down and you can ride this out, hang in there.  Pay your mortgage and deal with it.  There are a lot of people out there in homes all over the valley in all price ranges who are suffering the same unfortunate circumstances.  

Have you tried calling your bank?  Are you getting anywhere?  Does this sound like your situation?  Unfortunately, there are many companies out there taking advantage of people — making promises they cannot keep.  Here’s your clue, if a loan modification company wants money up front, that is a sign that they are not operating above board.  They should not take a dime from you until and unless they can help you.  There are computer programs that honest companies have that allow them to input information which then tells them if you are a “pass” or a “fail” for loan modification.

I am working with a company that employees former bank employees that worked within those banks loss mitigation departments.  They know how to get the information through.  They know who to call.  

In addition, should you not qualify for a loan modification, they’ve done the paperwork to set you on the right track for a short sale scenario.

I’ve linked to the site….great people with your best interests in mind.

HOW TO USE THE HOME BUYER TAX CREDIT

Although the tax credit is available, many 

people are either unaware of it’s existence or don’t know how to use it.  First and foremost, buyers need to have a relationship with a lender who is knowledgeable with regard to what the requirements are to take advantage of this.  

This is a first time home buyer tax credit….it doesn’t have to be your first home.  You would qualify if you’ve not owned a home in the last three years.  This credit has increased to $8,000 from $7,500 and it does not have to be paid back.  People should be jumping up and down about this.  However, there are many people who have no idea that this exists.  I’ve mentioned it to people and they were surprised.  This is “free money”!  What are you waiting for?

The credit is $8,000 or 10% of the purchase price whichever is less.  You also have to stay in the home for a minimum of three years.  This is not for investors.  This is for folks who have been wanting to buy a home and now is the perfect time before the rates increase, while the prices are at these levels and while this tax credit is available.

PHOENIX HOUSING MARKET NEWS

The sky isn’t falling after all….there’s good news to be had

out there in the form of statistics and housing sales within the Phoenix metropolitan area.  This information from Grubb & Ellis commercial, timely none the less:  ”the first quarter of 2009, we saw an improvement in almost ALL markets including housing (sic)…..most experts predicting the bottom to form in the next couple of quarters.”

Other interesting statistics:

• Phoenix ranked #1 in most affordable of western cities.
• Phoenix is now #9 in foreclosures.
• Active listings dropped below 50,000 since February, 2007.  
• New home closings up 16%, resales up 42%.
• Builders are reducing their inventory which is a critical step toward recovery.

All of these indicators are just a bright spot that need to be watched over the remainder of 2009.  It’s still a great time to buy as the prices are competitive and the interest rates are still low.  All indications are that the rates will begin to climb throughout the summer.  Because we’ve never seen anything like this before it is still anyone’s guess as to how this will all play out.

BUYERS–FORECLOSURE QUESTIONS

In the current marketplace, buyers are very curious

about foreclosures and bank owned properties.  How do you maneuver through the quagmire?  What are the potential pitfalls?  Here are a few questions you as a buyer should be asking a real estate professional which will help you decide if foreclosure is the route to take.  (Information gleaned from Realtor Magazine - April, 2009)

• Is now a good time to buy?  This varies from market to market — different parts of the country as well as different parts of each State.  For instance in Phoenix, there are many areas with higher rates of foreclosure than others.  While no one community in metropolitan Phoenix has been immune to this, there are more foreclosures in certain valley cities.  
• What do I do first?   As a realtor, I request that my buyers see a lender and get pre-approval.  Have at hand a Loan Status Report completed that can be presented with any offer.  It will show the bank that you are  serious and qualified which will up the chances of having the offer accepted.
• What is the difference between a bad foreclosure and a good one?  Be sure that you know about any liens on the property, which would include mortgage debt, lines of credit, construction loans, and/or 2nd or 3rd mortgages — these could be transferred to you, the buyer if you don’t do your due diligence.  However, if the property has gone through auction and become bank owned (REO), that debt has most likely been addressed.
• If you’re a qualified borrower, can you negotiate better loan terms?  Arizona is one of the harder hit areas, so lenders are trying to get these properties off their books.  If you have a good credit score, the bank may be willing to cut you a deal.  It doesn’t hurt to ask.
• What costs are associated with buying a foreclosed property?  If you are considering buying a property as an investment and want to rent it out, consider that there are costs associated with the upkeep and marketing of the property whether as a rental or sale.  These costs include paying a sales commissions, marketing costs for rent or sale, taxes, insurance and maintenance and upkeep.   
• Will the choice of neighborhood will affect the foreclosure investment?  Of course it will.  If there are many, many signs up and down the streets of a certain neighborhood, this should be a red flag.  A lot of foreclosures in a single neighborhood would indicate there may be further decline in value in order to sell them all.  

Bottom line, be sure that your do your homework.  While there are great deals out there, they are not without their issues.  The days of fix and flip are over for awhile.  If you’re going to buy a foreclosed property and live in it, great or if you’re going to rent it, great.  Remember you must be patient.  

I’ve heard many different stories from various realtors about buying and selling foreclosures.  I would prefer a foreclosure to a short sale.  At least the process is far enough along which will allow you to get an answer from the bank in a reasonable amount of time.

MORTGAGE NEWS - PHOENIX

Here’s what’s happening in the lending business 

these days.  While interest rates are at historic lows it seems that money is still somewhat hard to come by.  February saw a tremendous increase in applications for refinancing.  However, many homeowners are still running up against roadblocks from banks.  Does anyone else think that the banks are all laughing at us once we leave?  

Apparently, it is still difficult to get the banks to loan money even though they’ve gotten lots and lots of it from the government — no wait, from us!  What are they doing with it?  Investing?  Putting it away for a rainy day?  

I digress.  Perhaps you are one of the lucky ones who is able to get some of that cash.  But, there are many who are not getting too far.  I know that there are people out there with stellar credit and they are having trouble.  

Until the financial institutions are willing to give up the green we will continue to see slow recovery from this meltdown.  Hang in there…..better days are ahead.  And, remember cash is king….this is still a great time to buy and lest we forget about FHA!

REO PITFALLS

REO or real estate owned properties can pose a few problems for potentials buyers the least of which is non-compliance.  Let me explain.  A friend of a friend found a foreclosed property that she liked.  She drew up the standard Arizona real estate contract and also has a contract from the bank who owns the property.

She was scheduled to close on March 15th.  It is March 20th and she still has not closed.  She asked me what she should do.  Well, I asked why her realtor had not issued a cure notice to the bank.  What about the bank’s representative?  Both the buyer and seller agent should be all over these properties.  

Now because the property has not closed, this woman is going to lose her rate lock.  She’s frantic.  

This should not have happened.  Her agent has a responsibility to represent his/her client.  This is a lack of representation, in my opinion.  How could they have let this ball drop?  

I know we hear horror stories about short sales and foreclosures.   The banks are inundated with these properties, but the housing crisis has been going on for awhile.  The banks need to get their act together.  It’s extremely frustrating for all parties when no one knows “who’s on first”.  

Buyers need to beware of the pitfalls of buying a foreclosed property.  In addition, be sure that you have an agent that stays on top of the situation.   There’s nothing more stressful than rearranging your life around a closing date and having it put off due to incompetence.

TERRAVITA–GREAT NEWS

I have a listing in the gated golf community of Terravita in North Scottsdale.  As in most communities throughout the valley we are seeing many more active listings than in previous years.  Although lending practices have once again become more stringent, we are seeing sales.  There are two properties on the same street as my listing that have changed their status to pending.  

This is a great sign as these homes are $600k plus.  This shows that people are starting to move forward with purchasing.  You’ll get all different opinions on the market regarding “have we hit the bottom yet”, but you just need to see that homes are selling.  It’s still a buyer’s market, but for those who can buy, it’s a great time.  I do believe that within the next year to two years we are going to see the interest rates increase which will make it more difficult for people to purchase a home with a mortgage due to the higher interest rates.  This is bound to happen.  With the money that is being printed by this government, it’s just a matter of time.  

That being said, I’m having the entire inside of my listing painted.  Take another look after March 29th at the new and improved home at 6526 E. Evening Glow Drive.  This home is owned by the original owner who lived by himself, no pets and no children.  This is a gently used home with amazing views of the 7th fairway of the Terravita Golf Course and Black Mountain.

SOCIAL NETWORK MARKETING FOR REALTORS

I’m very new to this whole social networking world.  It’s actually been quite positive.  I’ve had my blog for about 6 months and it is a work in progress.  I am redirecting my efforts from the White Mountains of Arizona to the Scottsdale/Phoenix market.  I don’t spend enough time up there to make it worth my while and it’s quite expensive to maintain the membership.  

I’ve joined Facebook, Twitter and LinkedIn.  I also go into other realtor blogs and comment so that hopefully they’ll link back to my blog.  I’ve actually had communications back and forth with some very nice people.  I’m a total optimist and believe that most people are well-intentioned.  I’ll go along on my merry way like that until someone disappoints me and then I start all over again.  

I enjoy seeing where all the people come from who are on these sites.  I’ve had followers on Twitter from England!  That’s amazing.  It is even more important in this economy to network and these sites provide the vehicle for that.  I am confident that if persistent it will pay off in terms of information gathering and cross networking.