Why Buy Today?

On a previous post about buyers just caring about the price, someone from Mesa, AZ left the following comment and questions:

My husband and I just made an offer on a bank owned home in Mesa, AZ. We are first time home buyers. The house needs no work at all and has only been on the market about three weeks - my realtor suggests that we pay the bank what it wants $229K and then try to get 6% closing costs and 3% toward downpayment. We also qualify for the Ameridream program for FHA. Is that good advice if it is all about the price? It is in a great community, etc., and the house was appraised at 255K last year. Even with this market, the bank got a previous offer. In this market, how does one go about making an offer and knowing it is fair? We just don’t want to get ripped off. Thanks for any advice you can give us.

Not being in Mesa, I can’t intelligently comment on the price of the property, but I can tell you how I approach it with my clients here. It starts with questions:

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HR 5830: The FHA Housing Stabilization & Homeownership Retention Act

On April 17, 2008, Rep. Barney Frank introduced in the House a bill that would enable the FHA to refinance home loans at 90% of current market value with the goal of keeping more home owners in their homes. I will track this bill through the House and Senate as I did with the Mortgage Forgiveness Debt Relief Act of 2007. 

In essence, this would provide for a government guaranteed short refinance, where, like a short sale, the lender on the distressed loan takes less than is owed. I will post my analysis of the bill in a future post.

Here is the full text of the bill:

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Short Sale and Phantom Tax Debt Relief Overview

Lots of questions have arisen from people since President Bush signed into law the Mortgage Forgiveness Debt Relief Act of 2007, whereby in certain circumstances, a homeowner does not have to pay federal income tax on debt forgiven on a loan secured by a qualified principal residence via a short sale, foreclosure, deed in lieu, loan workout or short refinance where the loan amount was reduced and forgiven in order for the homeowner to keep the property.

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Bush Signs Mortgage Debt Forgiveness Act

With a stroke of the pen, President Bush signed into law H.R. 3648, The Mortgage Debt Relief Act of 2007, and dramatically changed the lives of homeowners across the country who are facing foreclosure, considering a short sale, negotiating a loan workout, or have done any of these since January 1, 2007.

While this bill has been long awaited by homeowners who would be penalized by the potential phantom tax, and real estate agents praying that it will open the flood gates to more business via short sale listings, the goal of the Administration and legislators is to reduce the number of foreclosures and the need for short sales by allowing homeowners to renegotiate their loans without tax consequences.

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Mortgage Debt Forgiveness Passed by Senate

UPDATE: President Bush signs HR 3648, The Mortgage Forgiveness Debt Relief Act of 2007.

It took them close to two and half months, but the U.S. Senate finally got around to passing H.R. 3648, The Mortgage Forgiveness Debt Relief Act of 2007. Initially sent to the Senate on October 4th, the Senate passed this legislation on Friday, December 14th, allowing Senate Finance Committee Chairman Max Baucus to crow a bit about helping the U.S. homeowner dealing with foreclosure or a short sale.

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Short Sales, Taxes and the IRS

UPDATE: 12/20/2007 - President Bush signs The Mortgage Forgiveness Debt Relief Act of 2007

UPDATE: 12/14/2007 - Senate Passes Mortgage Forgiveness Debt Relief Bill

Given the current state of the San Diego real estate market, it is no surprise that the most frequently asked question we get revolves around the potential tax consequences of a short sale. A short sale occurs when a property is sold for less than what is needed to pay off any loans on the property. When this debt is cancelled, the lender’s obligation by law is to file a 1099-C with the Internal Revenue Service.

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Buyers Just Want Price

You think?

From Bloomberg:

"Buyers just want price,” says Mike Morgan, a Stuart, Florida-based lawyer, real-estate broker and consultant who researches property markets for hedge funds and financial institutions. "Buyers have become educated and they can easily cut through the fluffy incentives.” 

"On one $429,000 home a client wanted me to sell, the seller wanted to give the broker a $30,000 bonus on top of the commission. I told him it wouldn’t help. I told him to just drop the price.”

Then there was this advice about marketing strategy:

Morgan suggests you sell exclusively through Internet-based property sites and local Multiple Listing Services. He has found that newspaper ads, signs and open houses don’t work as well as the Internet.

"If you don’t get any calls on your listing price after a week, drop your price $10,000 or about 2 percent of your original asking price,” Morgan says.

"The market will tell you what the price of your home is. You better be priced 10 percent under your competition — and then be prepared to think about accepting offers under that.”

This isn’t news, or at least it shouldn’t be. It is an inconvenient truth many agents won’t speak. In the spirit of the current election season, I have this message for those agents who tell you that you need to siphon off what’s left of your equity to pay them more: "It’s the price, stupid."

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San Diego Foreclosure Bargains - Fact or Fiction?

The most common "I want a killer deal" inquiry I get are from those looking for foreclosure property in San Diego - at 50 cents on the dollar. After all, it is a buyer market, sellers are desperate, and foreclosures almost out number real estate agents right?

Well… not quite. But how about $90,000 under market, when the market is was $399,000 based on identical units selling just two days earlier?

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San Diego Property Taxes - It’s That Time of Year

Lest we forget, November 1st marks the date the first installment of property taxes are due. The dates tend to confuse many property owners, so below is some basic information about taxes for real property in San Diego County.

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Citi to California Home Buyers: Just Say No

Times, they are a changin’ in the California mortgage business.

Last week we had Bank of America notify 7,000 mortgage brokers that their services will no longer be needed after New Years Eve, only to have Citi take it one step further on Halloween and tell California home buyers, "Thanks, but no thanks".

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