My 2009 Recap message

Wow, what a year we have had. It really has been a roller coaster ride for real estate. We began the year with a very slow sellers market. Prices were dropping and homes just sitting on the market and buyers were getting amazing home buys. By the time June came around we saw multiple offers and all cash began to be the norm in some of our markets. We also saw interest rates drop to a 50 year low down in the low 4% range. By November we saw inventory of homes available for sale drop below average, an increase in the number of sales and more motivated and happy sellers. Bank owned properties in the high end market began to appear and short sales began to actually close and with quicker turn around times than we had seen in the previous two years.  By the end of December we saw rates begin to slowly climb in order to keep inflation in check and the market becoming a more stable environment.

The good news is that we have all found a way to survive this ride and we should see a payoff of this emotional trek we have been on  in 2010. Happy New Year’s and hope 2010 will be one filled with peace and prosperity!

If you would like more specific information please feel free to email or call me and I will be more than happy to provide that to you.

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President Obama Signs Homebuyers Tax Credit Extention

RISMEDIA, November 6, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion:

Who is Eligible
-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.
-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

The www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit.

For more information, visit www.nahb.org.

Mortgages, 620 the new magic number!

Qualifying for a mortgage under current lender standards is more difficult nowadays than in years past.  Beginning Nov. 1 or Dec. 12, depending on the type of loan, Fannie Mae is tightening its lending standards to the 620 credit score benchmark—including loans backed by the Federal Housing Administration and Veterans Affairs.  Borrowers with credit scores of less than 620 will find it very difficult to qualify for a mortgage.   However, to qualify for the best rates, consumers generally need credit scores of 720 and must have verifiable, steady income.

 As for loan type, most real estate professionals agree that a fixed-rate mortgage is the best choice for buyers and refinancers.

Why are my offers not getting accepted on REO’s in San Jose?

That is a very good question that many buyers are having in our current market.  There are three main reasons; price, terms and paper work & process.  We have to remember that when dealing with REOs, bank owned  properties, we are dealing with an asset manager who will make decisions based on guidelines and policies not emotions.  Let’s address these three categories that if done properly by buyer and Realtor will get offers accepted in most cases.

First is price.  Currently many REOs are being price just below the market value range of a property in order to create the activity needed to produce multiple offer and obtain the highest possible price for the owner.  Your Realtor should be able to give you a market value range so that you know what you are willing to pay for that property.  Just because it is an REO doesn’t mean it will sell for less, more likely it will sell higher than asking price if there are multiple offers.   If you really want the home put your best price and make sure you will qualify and/or have the cash to close.

Second is terms.  Terms under what circumstances are you willing to buy the property.  This can be the amount of cash down and financing needed, all cash, as-is, how quickly you will  remove any contingencies and close escrow.  You have to be able to perform on the terms in the contract and the easier the terms the better for the owner.  Know how much you can qualify for, will the lender accept and as-is purchase for the loan they will give you, what repairs will they require for the property to qualify.  If all cash you should be able to provide evidence of money to close and even if it is not all cash this will be a requirement.  Make sure your terms are not only acceptable to you but very likely acceptable to the owner as well.  Keep it simple and the less you ask of the owner the better.

Third is the paper work and process.  If yo have the first two solid and this one weak, your offer will not get accepted.  This part is where an experienced Realtor  is so important to have in your representation of buying any home.  Your Realtor should inform you on how many offers there are, when is the deadline to have an offer in, how long the response time should be, what paper work will need to be included with your offer and what will be the process for presenting your offer.  Your Realtor should follow up to confirm you offer has been received and when it will presented and communicate all information to you immediately.

If you do all of the above you should have a strong edge in getting your offer accepted.  Put you best foot forward when making your offer.

If you have any comments, opinions or questions I’d love to hear from you.