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Gilbert community event, come ride the RE/MAX balloon

atc_balloonThis Saturday, February 28th, we will be having a free tethered balloon ride from 9am-noon in the park behind our office at 725 W Elliot Rd in Gilbert. The RE/MAX balloon will be set up in a large park that is located directly behind us. If you can attend please visit our RSVP page and let us know how many will be coming.

We want to thank all of our clients for their support over the last 15 years and this is just one fun way in which we can do that. We look forward to serving you, your friends and family for the next fifteen years.

FHA limits restored under the stimulus bill

With all the attention of the first time home buyer credit which was increased from $7,500 to $8,000 under the new stimulus bill signed by President Barack Obama last week, another important element of the bill that effects real estate was greatly ignored. The stimulus bill overhauled the Federal Housing Authorization’s mortgage insurance program limits.

In the spring of 2008 the FHA loan limits were increased from $263K to $346K for a single family home in Maricopa County. The new limits expired in late 2008 though and the FHA loan limits were reduced back to $263K. Under the stimulus bill the loan limits wereincreased back to $346,250 for a single family home in Maricopa County.

Will the new housing plan help with my potential foreclosure?

President Barack Obama will be in Mesa Arizona today to discuss his new program to help homeowners. Reading the White House Blog this program may raise more questions than it answers. This is a summary of some vital information from the White House Blog, to read the full blog post you can go here.

One of the primary objectives of the plan is to provide an easier way for homeowners to refinance their loans if they have a Fannie Mae or Freddie Mac loan. To qualify for this refinance program your current first loan on your home cannot exceed 105% of the current market value. Looking at the local Mesa housing market that program will provide little help as most home buyers who purchased their homes between 2004 and 2007 are the ones who need the most help and most of them will owe well over the 105%. If you are current on your payments and you do owe less than 105% of your homes value there may be a good chance to refinance your loan in the current months to a lower interest rate.

If you are currently at a risk of foreclosure you probably will not qualify for the above program and may be wondering what is in the plan to help you and your situation? The government will be providing mortgage lenders with “financial incentives” to modify existing first mortgages. While there will be incentives, there will not be any mandatory obligations for the lenders to work with the homeowners so you will need to check with your lender about your situation. Banks will be smart to work with homeowners as it is in their best interest to keep you in your home, keeping a payment coming in and keeping your home off the foreclosure market which will help home values recover more quickly. But there are no guarantees.

To qualify for a payment reduction you will need to live in the home as your primary residency, your mortgage payment must be greater than 31% of your gross monthly income and your loan must not exceed current Fannie Mae and Freddie Mac loan limits. If you owe more than your home is worth and are facing foreclosure it will be up the lender if they want to work with you in restructuring your loan or not.

For even more information check out the White House Blog on this subject and the Presidents speech in which he will be delivering today. As always, when more information or details become available we will provide you with details on this space.

Obama to visit Mesa and see foreclosure situation, $15,000 tax credit may still come back

obamaPresident Barack Obama will be making his first trip as President to Arizona this week to hear about the Phoenix Area foreclosure market up close and personal. The President is scheduled to tour an unspecified Mesa neighborhood that has been hit hard by the foreclosure crisis before heading to Dobson High School to deliver a speech on the subject.

One suggestion to help the foreclosure market proposed by U.S. Senator Johnny Isakson (R-GA.) was a $15,000 tax credit for all homebuyers who purchase a primary resideance over the next year. That tax credit was cut down to $8,000 and included in the stimulus bill signed by Obama today.

That does not mean the $15,000 credit is dead though. Isakson told a Georgia radion station today he intended to bring the bill back up next week after legislators returned from recess. The new version would not be an amendment, but a stand-alone bill and believed he had the votes to get it through both the Senate and the House. After placing a call into Isakson’s office they did verify the Senator is considering putting the bill in after recess, but has not done so yet.

If you support this idea to give the housing market the boost it needs contact Isakson’s office and encourage them to move forward with the measure.

Latest on the stimulus bill and house tax credit

The US House is voting on the final passage of the bill today and then the Senate will follow shortly after. It is expected the “Stimulus” bill will have little problem getting through either chamber.

One new detail on the housing portion of the bill that I had not previously reported about has come to light. The Senate had wanted the tax credit for first time home buyers to be for on purchases of homes for one year, but the final version is only on purchases of homes that close by August 31, 2009.

Latest update on the house tax credit in the “Stimulus Bill”

making-sausageAt our office meeting this morning there was a lot of talk about the on-again, off-again tax credit in the stimulus bill so I promised a couple of the agents there I would research it when I got back to the office and post an update. Here is the latest. Yesterday the AP was reporting the tax credit was completely removed from the final version of the bill, then word came last night that said it was not removed, but reduced.

After reading more about it online one thing because clear, the old making laws is like making sausage is true. I contacted one of my old political buddies who works on the Hill and he did some quick research for me. Here is what the latest version is to the best of his understanding. He told me they have not even seen the final version has not yet been distributed to Republicans so he is going off what he has heard. In other words don’t take this for gospel.

  • The current tax credit which is set to expire in July is for $7,500. The version that passed the Senate in the new bill was for $15,0000. The final version looks to be $8,000 or 10% of the home purchase price, whichever is less.
  • The current $7,500 tax credit has to be repaid, the Senate version would not need to be repaid if you lived in the home for two years and the new version appears to have not have to be repaid, but we are unsure at this time if there is a time restriction on that.
  • The current credit on the books is for first time home buyers, the Senate version was for any home buyer’s primary residency and the final version is back to first time home buyers. First time home buyer is anyone who has not owned a house in the last three years.
  • There will more than likely be an income cap of around $150,000, you will need to make under that to qualify.

Again this is not gospel, just the best information we have at this time. As new information is clarified we will bring it to you.

$15,000 tax credit becomes zero relief for housing industry

Just a couple days ago I blogged about the “Stimulus Package” provision to add a $15,000 tax credit for home buyers to the bill. The $15,000 credit would have been allowed to have been taken by the home buyer over a two year period. The credit also would not have been required to be repaid.

You can disregard that post. Today the committees killed that provision.

Is buying a short sale the best deal?

father-timeThe phrase “short sale” has made its way into the every day language of home buying. I talk to people every week who are looking for a home and want me to send them a list of short sales. When I ask them why they want short sales they usually respond with something to the effect of “That is where the best deals are.” There can be some good deals in short sales, but are short sales really the best option or best deals for buyers?

If you are a seller a short sale may be your only option, but if you are a buyer a short sale should often be your last option. Contrary to popular belief, a short-sale is not often going to be the best buy for a home shopper. In a rare case where a home may be going to foreclosure in just a couple of weeks and a buyer can come in and make a purchase in cash and close in just a couple weeks, then there may be a good deal, if you can get them accepted. But for most buyers this is not the situation.

More often than not the better deal is going to be in the bank owned foreclosure property. These properties are often selling for 10% to 15% below conventional sales and banks are looking to work with buyers to get rid of them. One of the big differences with short sales vs. a foreclosure property is the time and patience it will take. If you want or need to be in a home in the next three months forget about even stepping inside a short sale listing. It is very common for it to take as much as 10 to 12 weeks just to hear from a bank if they will accept an offer or not. If there is counter or conditions set it could add as much as another four to eight weeks on top of that if negotiations are needed. We currently have one offer on our team that a buyer made on short sale listing which we presented to bank the first week of December and we are still waiting for an answer ten weeks later. No matter how many times we call, we still wait.

During those months that you wait for an answer hundreds of foreclosure properties could come on the market that are better deals than the one you are waiting for. During that time you are off the market completely because if the bank does accept the short sale it is a binding contract you signed. If you were to work on a bank owned foreclosure property over a short sale you are most likely to get an answer from a bank in under a week. If that deal does not go through then there are hundreds of other properties to choose from and you did not waste three to four months waiting to hear an answer.

Another problem that short sales present to buyers is the amount that actually get to closing. Less than 20% of all short sales actually get accepted and go to closing. If you were to put an offer in for a short sale you are taking yourself off the market for up to three months with only a 20% chance at best the deal will get done in the end.

If the market is down, why do some Mesa homes for sale have multiple offers?

lowballofferWe have had many cases over the last six weeks where a home for sale in Mesa or Queen Creek will have multiple offers placed on the home and even ends up going for even more than the asking price in many situations. How can that be if the market is down and this is considered a buyers market?

This may not be the case on every home, the homes this appears to be most relevant with is homes in move-in condition under $100,000. Buyers are in shock because they think they can swoop in with a low ball offer and the banks need to take it. Even though we may advise them against it, it usually takes two busted deals where the home gets multiple offers and sells above the asking price before the light finally comes on and they decide their agent may know what they are talking about.

One recent example was a 1984 Mesa 3 bedroom home that had just gone to foreclosure. The home was in great condition with granite counter tops, tile in the kitchen, halls and bathroom and newer stainless steel appliances. The home was move in ready and came on the market at $109,900. The fair market value for the home according to recent sold homes in the same neighborhood was closer to $118,000. This seems to be the case with many bank owned properties recently, get them on the market for a little below market and watch the investors swoop in and snatch it up quickly.

The buyers I was working with saw the home on the second day it was on the market. They wanted to make an offer and asked for my opinion. Instead of giving them an opinion of what I thought the home was worth I showed them comparables that placed the value of the home around $118K. They were excited and said great then let’s offer them full price. I informed them that I thought their chance of getting the home at that price were close to nil as investors would see the opportunity and bid this one up quickly. The decided they wanted to put in an offer for $112K.

I called the agent and told her the offer was coming. After being told the home already had three offers I asked if we were in the ballpark and she said if we added $10K we would be in the ballpark. The bank issued a highest and best and my clients stayed at $112K.

This is just one of many examples of what is happening right now in the local market. Buyers need to be educated if a move-in ready home is going for under what the current market price is, a low ball offer is not going to cut it anymore. If they want to make low ball offers they should be looking at houses that need work. If real estate agents give them the proper counsel from day one, even if the clients may not believe them at first, the real estate agents credibility will be boosted greatly when what they predicted would happen, happens.

Should I talk to a lender before I look for a house?

prequalify1Should I talk to a lender before I look for a house? When a new buyer starts talking to us, one of the first things we will always ask is have you talked to a lender yet? The biggest reason? We want to save time… time for us, time for you and time for sellers.

Most buyers when they start looking for a home will jump to a website with a mortgage calculator and plug in how much they want their monthly payments to be and hit calculate to produce that magic number. Now they have a selling price they think they should be looking for houses in. That only paints half the picture though. A professional lender is someone who will calculate into your purchase price taxes, insurance. lenders fees, HOA fees and closing costs for a house and will be able to figure that into your price range. Knowing this information going into the home buying process can save you a lot of time and heartbreak if you were to be looking at homes not in your price range.

Another reason to speak to a lender before house shopping is the lender may run across misinformation on your credit report which you will need to clear up. When the lender does find misinformation they can tell you who to talk to about the erroneous report and help you to get it cleared up. Getting your credit cleared up is something you will need to do before you can get the loan anyways, so better to start now.

Getting pre-approved will also help in determining what houses to look at. You may be approved for a VA, FHA or USDA loan, but not all homes will qualify for these loans. Knowing this information ahead of time will save you and your Realtor time in the home search process. It is very important that your Realtor knows these things so they can do their best job for you.

Some bank owned properties and even some private sales will require your Realtor to have a pre-qualification from your lender before they are allowed to show you the house. And when we submit your offer for that dream house when it is found, we just must submit an LSR (Loan Satisfaction Requirement) with the offer showing you are prequalified for a loan on that house.

Some may think it is a waste of their time talking to a lender first, but the truth it talking to a lender first can save you time and money in the long run.