Getting too close for comfort

I’m sure everyone is now aware that the First time home-buyer tax credit is about to expire.  And I am sure that there are going to be thousands of people who will give you the blank incredulous stare when you tell them it’s too late to submit an offer and actually get it closed in time.  Since, in our area, closings are taking approximately 37 days, this Friday (Oct 23) will be the drop dead date to submit offers to escrow in order to actually get them to record on time.  We have to remember that we are going to lose 4 days for the Thanksgiving holiday! 

I know that there are efforts in Congress to get the tax credit extended, but I am not planning on that happening.  Remember – we are dealing with government which does not usually act quickly.  I’m sure once March rolls around and the staggering lack of Real Estate sales for December, January and February are revealed, there may be another effort to re-instate the incentive.  I just hope it is not too little too late.  The sad part is that by the time the drop in Real Estate activity is analyzed and a decision is made to do something, interest rates will be to a point where the bulk of the buyers that this incentive was created to attract will not be able to qualify.

As a veteran Realtor, I know that the market will rebound and we will all look back on the late “2000’s” as a rough time in the market – but a needed adjustment and just part of the cycle of Real Estate.

Mortgage Report

*Estimated rates for the week of June 29, 2009

30 year conforming 5.125 – 5.250
30 year jumbo 5.75 to $600k
7/1 ARM 4.875 – 5.125 conforming and jumbo
FHA/VA 5.25 – 5.50
OR VA 4.99 w/1.50 or 5.125 w/1.00

Rates are trading in a new range of 5.25 – 5.75%. Hopefully, we will see this continue although there is more pressure for rates to increase than to decrease. Economic reports remain mixed and that ’s helping to keep the rate market range bound. However, it’s nice to see that the Oregon VA loan program is back with competitive rates. Remember that the OR VA loan uses regular mortgage insurance unlike the Federal VA’s funding fee (and they don’t lend to 100%).

For a little historical perspective, I just reviewed a rate sheet from June of last year. FHA rates were at the 6.50% level. That’s over a point higher than today – and they could be a full point higher this time next year. Sounds like the time to buy to me.

We are all still dealing with the problems of the HVCC. Although turn times have improved, we are still seeing a lot of issues with values and conditions. We knew this was going to occur but the issues don’t seem to be getting better. There is a large group of industry professionals who are trying to reverse HVCC. For more information and to review the petition, go to this web site http://www.hvccpetition.com/ If everybody signs on, maybe we can get some positive changes made.

And from those who brought us the HVCC, we are due for yet another new round of regulations. The Housing and Economic Recovery Act is set to become effective at the end of July. The Act revises the Truth in Lending Act’s disclosure requirements. The outcome of the new regulation will require more disclosure, more paper, and could, in a few situations, cause delays in closing transactions. In addition to loan disclosures still being sent out within three business days of taking an application, the new rules require that the transaction cannot close before 7 days if these disclosures are mailed. This rule shouldn’t pose much of a problem since most transactions have 30 days to close. What could cause a delay is that if the APR changes by more than .125%. If that occurs, new disclosures would need to be sent again and the transaction can’t close within 3 days from the receipt of the new disclosures. So if things change and the disclosures are mailed, we’re back at the 7 days before closing rule. We are just getting familiar with these guidelines and I’m certain we will all here more about them. A couple of things that we all can do to help make our transactions go more smoothly……get borrowers pre-qualified as soon as possible, make sure the borrowers choose the financing arrangement earlier in the transaction, and get the borrowers to lock the loan early on too. Changing loan programs, changing the rate and points at the time of locking the loan, and loan amount changes could cause the APR to change and trigger the re-disclosure rule. More later

Moles, Voles, Gophers & Ground Squirrels – Oh My!

Yes, I know that these fuzzy little rodents have been glamorized in many a light-hearted film and print media, not to mention the iconic songsters lead by the rebel “Alvin”. BUT….. at my house these guys are a royal PAIN. Two years ago my yard, my veggie garden, my roses and flower beds showed no signs of the little critters, but beginning last summer they moved in with full force.  I live on acreage, so there should be room for everyone but no, overnight the once level soil nearest the house turned lumpy and plants started sinking or falling over as the ambitious miners tunnelled their way through uncharted territory. With no respect for my efforts to practice envirnomentally friendly gardening procedures (so that I wouldn’t poison the soil or the large wild bird population that stops by for their daily rations), these disrepectful brown-nosers have turned me into a raving lunatic.  I’m sure the neighbors get quite a kick out of watching me stomp the ground like a 2 yr old in the throws of a temper tantrum as I crush the multiple paths througout the flower beds.  They will even see me slapping the ground with a shovel every once in a while which I’m sure causes snickers of laughter from the on-lookers as well as the underground perpretators. 

Well…NO MORE!  After replacing about $300 worth of plants this spring – I’ve had it.   I’m pulling out the big guns.  We’ve heard that they don’t like vibration so we have dotted our fence line with windmills, we’ve tried smoking them out by opening up the tunnels and sending burning Sulfur down the runs, and a friend of ours has even purchased an impliment of destruction called the “Rodenator” that sends propane down the holes and then is set on fire to blow everything up!  (Remind you of Bill Murray?)  So now that I have even larger holes in my yard than what the rotten little rodents caused – I’m reduced to chemical warfare.  I know it’s not PC and I hope I don’t encourage the mutation of my bird population – but my patience and pocketbook have gotten the best of me….

DIE YOU BASTARDS…DIE!

$8000 TAX CREDIT FOR DOWNPAYMENT – OOPS…JUST KIDDING….

As we expected – this morning FHA rescinded the notion that the $8000 tax credit for 1st time home buyers could be used as down payment on a home. As my prior blog indicated – it was an idea that sounded good, but just not enough thought was put into the mechanics of implementation. The media grabbed a hold of the “idea” and made it sound like it was fact (very irresponsible in these times, but it sells readership and ratings and that is what is most important to that industry).

That being said, there are some states and non-profit organizations that are seriously looking into offering short term “bridge” loans to possibly accommodate the idea of using the credit for down payments. The success of this will depend largely upon how deep the pockets are of the non-profits and/or state budgets. You still have the issue of whether the buyer’s lender will allow and underwrite this loan.

In any event, be sure to consult with your professional Realtor who can keep you informed on what is REAL and what programs are available in your local market area.  Each market is different.

$8000 Tax Credit- Work in Progress..

WOW! Boy is there a lot of buzz out there about the $8000 first time home buyer tax credit! The good thing is that it’s seems to be working, I have had an increase in the number of clients that want to or who already have taken advantage of the credit.  Now, with the latest FHA announcement of the possibility of using the tax credit as part of the down payment at closing, there is even more interest in the program. Let’s take a look at a couple of common questions that arise:

QUESTION:
1) Who qualifies as a 1st time home buyer?
2) Can you claim the credit on your 2008 taxes even though you bought the house in 2009?
3) What if you owe IRS more than $8000?
4) How can you use the $8000 as part of your down payment?

ANSWER:
1) If you have never owned a primary residence before OR if you have not owned a primary residence for the last 3 years YOU QUALIFY!
2) If you purchased in 2009 you can claim the credit on your 2009 taxes that you file in 2010 OR you can file an ammended return for 2008 and claim the tax credit - YAHOO!
3) Consult your tax preparer, but remember the $8000 is only a CREDIT towards what you owe, so if the bottom line owed to IRS for your taxes exceeds $8000 you don’t receive any portion as a refund.
4)  The POTENTIAL use of the $8000 tax credit towards your down payment has not been authorized yet. The details of just how it will work has not been figured out. It may authorize various states and non-profit organizations to issue “bridge loans” to front the $8000 credit  BUT,  the details have not been worked out.  (IRS has a rule saying that no one besides the specified taxpayer can receive refunds)  Also, will lenders actually underwrite a loan with this provision?  Are we back to encouraging 100% financing ? (I thought that this was one of the things that got us into this mess in the first place) 

I WANT THIS TO WORK as I feel it be one more factor in stimulating a very concerned and scared economy and I really think this is another idea that will help us get over the hump. Yet, this is not a time for campaign reteric - this is a time to figure out what is needed, analyze and plan how it will work and THEN announce it.    The public is looking for a program that is logical and ready to use now – not an empty promise disgused as an off-the-cuff idea that gets bogged down in realistic implimentation.

No matter what the final outcome of this, I strongly suggest that my clients seek professional advise when it comes to taxes and how this or any other government program may affect them.

NOW… let’s look at cracking down on unfair credit card company practices.  Let’s also look at freeing up capital and lines of credit so that businesses can keep their doors open and keep their employees working – if you aren’t working – you aren’t going to buy ANYTHING let alone a home.

Distressed Properties

What does that really mean?  In speaking to friends of mine that are not “in the business” or Realtors, their interpretation of this term means that the property has been abandoned, is in disrepair or has been trashed.  Where that may be true in some cases, it is important that the public understands that in these economic times the term “Distressed Property” actually refers to the Seller that is in financial difficulty and either is currently in the process of foreclosure or will soon be.  The property itself may be in perfect condition, well maintained and spotless.

Because of the state of the economy, the numbers of “distressed properties” are high now, but these numbers may only be the tip of the iceberg.  The reason I say this is because there were a lot of loans that were issued in 2006 & 2007 and as late as early 2008 that may have either adjustments or balloons that will come due in 5, 7 or 10 years.  This will bring on a new crop of borrowers that may not be able to handle those adjustments, therefor potentially creating new foreclosure and short sale inventory.  That quality of inventory brings everyone’s property values down.

Enough of the negative – the POSITIVE  is: 

1) Interest rates are at an all time low, re-finance if you can to avoid problems in the future

2) The mortgage holders are not in the business of owning properties – they don’t want them back – they would rather re-negotiate the terms of the loan or negotiate for a short sale. 

3)  Currently a short sale alone will not show up on your credit history – the loan will typically be reported “paid in full” or settled

4)  If the financial difficulty is temporary – you may be able to avoid foreclosure through forbearance.

And there is much more that a trained licensed Realtor can do to help “Distressed Properties”.  BEWARE of companies that claim to be able to help.  Almost always there are fees involved that are not necessary (it’s just another way for someone to get into your $ pockets).  We as Realtors are paid by the lender as part of the negotiated sales price.  Why pay fees to a company that you don’t know when you can deal with someone that is familiar and has your best interest at heart.

New website coming soon

Change is good, Change is refreshing, Change is educational. 

So – based on those basic ideals – I’m taking steps to change up my website a bit to have it more user friendly and more interactive.  The new website will be filled with more specific neighborhood information, more community news, more relevant Real Estate news and more links to fun stuff.  The launch date is scheduled for late this week and it should be fully “debugged” by the 15th.

Stay tuned and I look forward to your honest feedback.  You can also check me out on Facebook and Twitter.

Been a While…

It’s been far too long since I posted something new on my blog.  The “economic crisis” is the biggest thing in the news and is the topic of almost every conversation.  Yes, it’s hit me hard also, but I have to believe that things will gradually get better and I will have learned some valuable lessons from it.

Lesson 1)     I still need to keep in contact with my past clients and all of the business partners that I have established over the years.  These have always proven to be my best source of business and they never fail to do their best to give me referrals.  Letting them know that I am still in business and there for them is crucial.

Lesson 2)   Short sales and Foreclosures are here to stay for the next couple of years – so learn the process, know the players and understand how to counsel both Buyers and Sellers.  It can be a new source of leads and it’s on the mind of most  Buyers when they start looking for a home.

Lesson 3)  Don’t be offended and counsel your Seller’s not to be offended by low offers.  It’s an offer and a place to start.  In our area (Portland, OR) the final sales price is running about 90-93% of last listed price and that does vary by neighborhood.  Yes, its more work to get the parties to a meeting of the minds, but it will be worth it for our clients.

Lesson 4)  Take a good look at your business and your personal life to determine what is most important. You may have to make some hard decisions about where changes have to be made and how you are going to approach new challenges.  Be flexible and willing to accept change – its very refreshing.

Lesson 5)  Save more – Spend less     DAH!

Home Sick

And I don’t mean away from home and longing to be there.  I mean, I’m sick at home with a killer cold that feels like I’m going to blow the top of my head off everytime I cough.  My eyes feel like they are going to pop out of their sockets and I have dolby surround sound bouncing from one eardrum to the other everytime I breathe.  It’s funny how your body starts making all kinds of weird noises when you have a cold, from the nose whistling to the crunchy sound in your chest as you exhale.  Oh, and how about every muscle aching so much that even combing my hair hurts.  I’m looking out my window to a gorgeous sunshine filled day (yes, it really does happen in Portland!) and would love to be out there soaking up some vitamin D, but alas, I confined here inside waiting for the next marathon cough session that we leave me light headed and cussing the person that decided to breathe in my direction with this awful stuff.  Curses upon you!

Paralysis of Analysis

What is that supposed to mean?  In these days of economic turmoil, unrest and the persistent media blitz of bad news piled on top of more bad news, it is easy to see why there are so many people just holding their breath and doing nothing.  For a Buyer, the big question is….when is it going to hit the bottom so that I can get the best price and make the best deal?  For a Seller….do I sell now and take what I can get or do I wait to try to getter a better price and how long do I wait?  For the Investor…..when are the banks going to loosen their grip on money so that I can take advantage of some of these great opportunities?  Much like the Investor, the Business owner…..how can I keep capitalized, how do I cut operating expenses and when are my sales going to start to increase?  So many are analyzing the market, trying to decide what to do that NOTHING is happening.  Rigor Mortis is setting in. 

What will help?  If nothing else – take a deep breath – let it out slowly and stay calm.  Think about this.  1) If you are a BUYER, you will not know when the bottom has hit until it’s already on its way back up.  Make your moves now while interest rates are still low and the inventory is still good.  A 1 to 1 1/2% jump in interest rate will wipe out any savings you might make by waiting for a lower price.  2) SELLERS, assess your situation and remember – it’s a beauty contest and a price war.  Price it right and make it the best value out there.  You might take a discount on selling your home today, but you will make it up plus some on the buy side.  3) INVESTORS, take advantage of the 1031 tax deferred exchanges, higher occupancy rates, higher rental amounts per unit and your low leveraged properties to create well drafted balance sheet that will go a long way to free up the banks flow of bucks.  BUSINESS OWNERS- network with each other!  Your colleagues, vendor/supplier network and your neighboring businesses can get together and share ideas, needs and marketing tips to draw those reluctant clients back into the mood of supporting the businesses that provide terrific products and services.

We can sit and wait for a hand-out or the sluggish flow of a few $ from the economic stimulus package, but that is not going to handle the immediate need.  DO SOMETHING – you can’t get the ball rolling if you stare at it – you have to start pushing it!