2009 Tax Credit For First Time Home Buyers

2009 Tax Credit For First Time Home Buyers

1. The NEW $8000 Tax Credit does NOT have to be repaid if the home buyer stays in the home for 3 years.
2. Escrow must close between Jaunuary 1 and December 1, 2009.
   
3. The buyer must be a First Time Homebuyer which is defined as, "someone who has not owned a home for the past 3 years."

Fresno Extreme Home Makeover

The TV hit show "Extreme Home Makeover" is in town filming the construction of a new home this week at 23 E. Robinson. I've been trying to witness the construction progress over the last couple days to no avail. The police and security have roadblocks and are letting in only a limited number of public looky-loos. The entire neighborhood is a zoo, with lots of people and traffic. Finally today, I was able to walk down the street to the construction site. The owner's story is great, because the owner is very deserving of the new house for their family. I took some pictures below and have some interesting info I dug up in the MLS and public records. The original house was 1213 SF, 3 BR 1.5 Baths and it was bought at the height of the market for $235,000 in Sept. 2006. It was in good overall conditon. They Extreme Home Makeover show demolished the entire house down, and are rebuilding a totally new 3200 SF home that is specifically designed for the handicapped owner. The entire construction of the house is done in about 4 days while the owner is sent on a vacation. When they return, they will film the owner seeing the home for the first time after the construction as the show's star shouts out "Move that Bus" The show will air sometime in March 2009

This is a picture from 2006 when she first bought the home for $235,000

These below are taken on day 2 of construction 1/12/2009

Mortgage Changes Effective January 1st 2009

Here are some mortgage changes we will see in the coming new year.

FHA Loans

1. Maximum loan amount for Fresno area $281,750
2. Minimum down payment will be 3.5%
3. Monthly mortgage insurance .55%
4. Up front mortgage insurance premium 1.75%

Conventional Conforming Loans (Fannie Mae and Freddie Mac)

1. Maximum loan amount remains at $417,000
2. 6 month seasoning required for all cash-out refinances
3. Total number of financed properties is four

Fresno Real Estate Market Surging!

We are seeing increased activity over the last several months as prices have dropped dramatically. Many homes are 1/2 the price they were just 3 years ago! Just last week, I got an accepted offer on a bank owned home in Madera for $157,900, that originally sold new in 2006 for $340,500. The bank is also paying 3% towards buyers closing costs. The home is 4 bedrooms, 3 Baths with 2053 SF of living space. Here is a picture of that listing:

It had been roughed up a bit in the foreclosure process, and needs interior painting and carpeting, but will be a "like new" home when those items are completed by the new owner. Prices in Fresno are slightly higher than Madera, but there are many good buys to be found. The negotiating process is slow with bank owned properties due to the massive inventory these banks and asset managers carry, and buyers must be patient. This home took about 3 weeks waiting for an answer to the offer. It was worth the wait.

Fresno Real Estate 4th Quarter Market Snapshot

Here's how our inventory of active listings in the Fresno MLS stand at the start of the fourth quarter 2008. I ran a search today for all active listings of homes and condos in Fresno and Clovis. The results are a total of 3156 active listings. From the total, there are 681 "short sale" listings or (21.5%), 902 "bank owned" (28.5%) and 1573 (49.8%) traditional seller owned listings.
So from these numbers, it shows that a whopping 50% of the homes for sale are distressed and foreclosed properties.

Important Facts About Buying Bank Owned Properties


Prospective purchasers of bank owned properties (REO's), are hereby advised of the following:

1. The bank or lender that owns the property may require that you sign and agree to the provisions of an Addendum to the purchase agreement.
2. These bank owned properties are sold "as-is", without any inspections or disclosures provided by the seller.
3. Addendums are prepared by a lawyer representing the bank. Guarantee Real Estate is a licensed real estate broker and is not responsible for, and is prohibited as a matter of law from explaining or advising you regarding the legal ramifications of the Addendum. If you agree to the Addendum, you are strongly advised to seek the advice of a lawyer or tax consultant, prior to signing.
4. You may risk the return of your initial deposit or any money delivered into escrow if the transaction is not consumated or escrow does not close. The release or return of funds delivered to escrow can only be released by the mutual, written agreement of the buyer and seller, typically emodied in escrow cancellation instructions.
5. Most Addendums include a "per diem" charge which is a fee charged to the buyer for every day the deal is not consummated/closed, beyond the date agreed to for the close of escrow, regardless of which party caused the delay in closing the escrow/consumamation of the purchase agreement.
6. Some banks or lenders may not be duly licensed California corporations or foreign (out of state) businesses, which may create difficulties in filing suit or recovering monetary damages (or return of your deposit).
7. You can attempt to negotiate the removal of the Addendum or certain provisions thereof, including per diem charges, prior to executing the Addendum. Most banks or lenders will not negotiate the removal of the Addendum or any provisions thereof.
8. If you agree to the Addendum, make sure you read it carefully and proceed with diligence in performing your obligations under the purchase agreement and Addendum thereto.
9. If you agree to pay a "per diem" fee, be sure you, your lender and your Realtor act diligently. If possible, avoid making changes to the purchase agreement or escrow instructions, which may cause a delay in the transaction closing or being consummated.
10. If the bank or lender, or escrow company causes delays in the transaction, make sure either you or your Realtor send and email, fax, or letter to the listing agent representing the bank notifying them of the delay, the cause of the delay, requesting a waiver of the per diem and enclose an Addendum waiving the per diem and granting an extension of time to close escrow, sot he per diem fee can be addressed by the parties, for the bank or lender's signature. Also, send email, fax or letter wtiht he ddendum to the escrow officer, signed by the bank or not.
11. If you refuse to pay the "per diem" fee, regardless of which party caused the delay, you must notify the escrow officer that you will not close escrow unless the per diem fee is waived by the bank. While not required, such notification should be in writing, with proof that it has been transmitted.
12. All contracts for the purchase of real property must be in writing. If a verbal acceptance of your offer is transmittd to you, in most cases it is unenforceable and you do not have a contract for the purchase and sale of the property, or the right to compel performance of the bank by court order, unless you received you offer, signed by the bank and all contingencies have been removed.

Tips In Making Offers On Bank Owned Properties

1. Buyers must be "pre-approved" for financing in advance, and submit a letter of pre-approval with the offer. If the buyers are paying all cash, provide a bank statement or proof of funds at time of offer.
2. Be prepared to have the property inspected by a professional home inspector at the buyers expense. Bank owned properties are sold "as-is" and they are exempt from providing any disclosures. Buyer beware!
3. Buyers must be patient, and expect 3-5 days for a response to their offer.
4. If there are multiple offers submitted, expect a counter offer requesting a final "highest and best" offer.
5. Make the offer clean, and without any contingencies of another sale closing.
6. Banks will negotiate on price and many times will pay some of the buyers closing costs, but they are looking at their highest "bottomline" net cash at closing.

Life is Too Short for Short Sales!

When it comes to making sales in real estate, I focus on the listings that are genuine, and can close escrow. I would estimate that 90% of short sale listings never sell and close escrow. The fallout factor of short sale escrows is huge, because what buyer can and would want to wait months to get an answer on an offer? Sure, the owner will accept any price, because he is not getting any of the proceeds due to his upside down equity position. In a short sale, the sellers owe more on their loan than the asking price, usually tens or hundreds of thousands of dollars. The lender holding that loan, must approve of the short payoff and loss. If they do make that decision, it will happen just before the property gets foreclosed on at the public trustees sale on the courthouse steps. The lender may end up approving some loss, but maybe not at the original price the seller accepted. Buyers are reluctant to hang on for months waiting for an unsure tranasaction, and I don't blame them for backing out. Most of the time the property just ends up going thru the foreclosure process and becoming a "bank owned" listing. When it gets repossessed by the bank, the bank will aggressively price it to sell . The market is full of great listings of bank owned and other well priced listings, so why mess with a short sale. In my opinion, the listings that are short sales are nothing more than a big waste of time. Most agents like myself, won't even show these listings.

Fresno County FHA Loan Limits Increased!

Good news in the mortgage market! As of 3/5/08, the FHA has increased the maximum loan limit to $381,250 for Fresno County. This will significantly help the local Fresno Home market, because FHA loans are available with as little as 3% down payment. Madera county had it's maximum FHA limit was also increased to $425,000. There are many benefits to FHA loans, such low down payment, and easier qualifying.


Search the Fresno MLS database of active listings at http://www.fresnohomes.net/

Auctions of Bank Owned Foreclosure Properties in Fresno!

There are a couple of auctions coming up, one tonight where there will be about 30 foreclosed homes up for auction. This is a very small percentage of the actual number of foreclosed homes currently on the market in Fresno. One thing bidders should be aware of, is that these auctions have a "reserve" price, which means if you are the winning bidder, the bank that owns the home may not allow the sale to thru unless the price meets their reserve price. It's really all about the media hype that goes on with the slick TV advertising and auctioneers driving up the frenzy in bidding. The last time an auction came to town, about six months ago, there were about 20 homes that were auctioned off, but only about 5 of them actually resulted in a successful sale with the bank. There are hundreds of homes available that are bank owned in our active Fresno MLS system. Buyers can search all active listings at http://www.FresnoHomes.net

2008 Fresno Real Estate Market Ripe With Opportunities!!

Amid all the negative news we hear daily, with foreclosures, subprime mortgage losses, and failing consumer confidence, there is some real opportunities for investors and serious home buyers. Many of your average buyers are running scared from national news reports that are creating a lot of fear. Many buyers are asking "when will we see the bottom". Well, by the time we know where the bottom is, it will be too late. Get in the market now!!!I'm seeing many outstanding prices in the Fresno, Clovis real estate market today. Investors are starting to take interest in the new values of homes. Interest rates on new loans are at historic lows. The new guidelines for financing, which is really like the old guidelines: (you have to qualify on income and credit scores) Unlike the subprime days when anyone with a heartbeat could get a loan. Hence we have eliminated some buyers from buying homes, but it is fundamentally sound lending now and this will be good in the future as the economy recovers from the current turmoil. For good credit buyers with some money to invest and hold onto, this is a great opportunity time. It was the unscrupulous lending practices that got us into the mortgage mess and slowing economy as we have now. Prices have been falling steadily throughout in Fresno during 2007 and I've seen another round of price reductions at the start of 2008, and the most aggressive pricing is coming from the "bank owned" listings. The properties are being sold "as-is" and many are in poor condition due to deferred maintenance. Visit my website fresnohomes.net where over 7000 properties can be found by searching the Fresno MLS database.

Bank Owned Properties Are Opportunities in Fresno Market!

If your looking for good deals on bank owned properties, check my Featured Listings page on my website FresnoHomes.net These listings seem to be the most aggressively priced listings in the current market. Many are priced below other similar properties that are owner occupied. These are the deals I hear most people asking for in 2007. What you need to understand is, that these properties are sold on an "as-is" basis, without warranty of condition. Many of the properties are in poor showing condition, due to being vacant for some time and lack of maintenance. For some buyers, this becomes a great opportunity for to get a good price.

"Short Sales" are not well understood by buyers!

There are hundreds of "short sale" lisings in the Fresno MLS today. I have found that most buyers I consult with in the Fresno real estate market today do not understand or know what a "short sale" is. A short sale is a situation whereas the existing loans are larger than the asking price, and the owner of the property is behind in payments. If you were to make an offer on the property, the exisiting lender would be making the final decision on the offer, because the lender would be taking the "short" payoff. From what I see, many lenders are taking their time making these decisions and it is frustrating and misleading to the buyers. The buyers get an offer accepted by the owner, only to find out weeks later that the lender is not approving that sale price!! I see many listings where the listing price of a home is $100,000 less than the balance of the existing loans!! Do you think the lender is going to be cooperative and quick to lose $100,000?? I think not! Many times the lender will not appprove of the short payoff, so foreclosure is the remedy. Typically, the existing owner must be able to prove to the lender they are having a financial hardship to get approval for a short payoff. As an agent, I have to make sales. I avoid showing short sale listings most of the time and discourage most buyers from getting involved. Sometimes it will take weeks for the lender to answer an offer, or the owners hardship is not approved, or the lender just forecloses rather than take a short payoff. Also many owners will find out that if the lender approves of a short payoff, that the amount of debt releived is considered income by the IRS, so there can be an income tax consequence for the existing homeowner who sells under a short payoff sale.

Mortgage Business Changing Fast!

The mortgage guidelines have been changing rapidly over the last few months. We are seeing more escrows failing to close due to financing issues. Due in part to the subprime mortgage crisis, and the increase in foreclosures, the lenders are scrutinizing loans and buyer's qualifications. We're seeing them tighten their belts, and declining loan applications, or making them unaffordable with higher than average interest rates or higher mortgage insurance costs. It's no surprise to me, I could've told you that this was going to happen. Now it's back to the old days, when you had to have verifiable income, good credit scores, and money to put a down payment. The days are mostly over for 100% financing, stated income applications, and marginal credit scores. If you were pre-approved for financing a few months ago, you might want to contact your lender again to go over your loan options.

Motivated Sellers Are Willing To Pay The Costs!

Buyers are asking for help with the closing costs, and they are getting it. This is commonly happening in the Fresno market these days. Most of the transactions I see today, the buyer is asking for at least 3% of the purchase price to be contributed to the buyers closing costs. There are truly motivated sellers that are negotiating on purchase price as well as closing costs. I counsel my sellers to expect to see this kind of activity when they list their home, so it is not a surprise when they recieve an offer with these terms. Most lenders will allow up to 3% of sales price to be contributed to the buyers closing costs. Some lenders allow up to 6%, however this seems rather excessive if you do the math.

The subprime mortgage correction period is happening!

Without a doubt, the subprime lending market has been tightening their belts over the last couple of months. Due to increasing loan defaults and foreclosures, this tightening means more people are pushed out of the market. These buyer will have to qualify now like everyone else and qualify on their income and credit scores. They'll have to save for a down payment and build income to manage payments. Gone are the days of lending 100% financing with stated income, or 100% investor financing etc., where any buyer with a pulse can get a loan. These practices, now referred to by the press and media as "predatory lending" have lead to a decline in consumer confidence and decline in housing sales abroad. The changes will be good for the future, and hopefully there will be some legislation to help prevent these unscupulous practices among loan brokers.

Subprime Mortgage Blues!

You've heard it in the news lately, about the subprime mortgage market that's now in trouble. Well, it's about time! We all knew it would catch up to them someday. It just didn't seem right. People were buying houses with loans they shouldn't have qualified for. Stated income, and or 100% financing and other exotic loans are now bad business and referred to in the media as "predatory lending". The notices of default are coming in very fast now as many of these loans were adjustable rates with prepayment penalties and or balloon payments. With the interest rates rising above market level on these loans, monthly payments increasing beyond affordability and many of the borrowers put little or nothing down, it's no wonder that they are walking away from them and letting their property go into foreclosure. Just today, I had a sale transaction fall thru because of these lousy subprime loans and the lenders involved. It was the second time that this escrow fell thru. Both times the buyers were investors going for 100% financing from the "subprime" market. Both times I had pre-approval letters and from the lenders. I will now be very skeptical of this type of financing in offers presented to me on my listings.

Worthless Pre-Approval Letters!

I can't tell you how many times I receive worthless mortgage pre-approval letters with offers on my listings. They say "congratulations, you are pre-approved for a home loan", then it goes on to say that this pre-approval is based on verbal information given to the lender or some sort of inadequate information disclaimer. The letter is not based on a review of a complete loan application, credit review or anything like that!!! It's a letter that's not worth the paper it's printed on. I see this happen all the time. Do these buyers and their agents think this is acceptable? It's not professional to say the least, and they lose some credibility in the offer. If buyers want their offers seriously considered, they should use a reputable lender and be pre-approved based on a complete review of a credit application, verifications of income, job and bank accounts and have a letter that states all this has been verified. With a valid pre-approval letter in-hand, the buyers offer will have more power.

Short Sale Listings Are Increasing in Fresno MLS!

I am noticing many "short sales" in our Fresno MLS. My advice to active buyers right now is to avoid getting involved with short sales if at all possible. Short sales are situations where the owner is typically behind in his mortgage and owes more on the loan than what the value or asking price is of the property. Even if the owner accepts your offer, you may not get the property, because the mortgage company for the seller has to approve the "short", or approve how much money they will lose by selling to you. Most of the time, it's a huge waste of time for buyers and agents alike because the lender drags their feet and eventually denies the short sale or tries to negotiate different terms than originally accepted by the owner. With so many homes on the market, why get involved in a short sale escrow?

Has the Fresno Real Estate Market Bottomed Out?

One thing's for sure. The market is picking up! Our office is seeing increased activity in 2007 now after the holidays are over. The market was slow during the fall months of 2006, but now I see many buyers and sellers believing that the market has pretty much bottomed out. Many buyers are coming out of the woodwork to look at homes. My website www.FresnoHomes.net has had some incredible traffic increases, Jan 13th getting 459 visitors! On the average I get about 250 visitors per day. I got 3 offers on an investment property I listed, and that is a good sign. Many investors have left the market over the last year, but now I see more of them coming back. The Fresno market is attractive to many buyers, basically it's still one of the lowest priced areas in California. Do you think the market has bottomed out?

Pinedale planning to remain residential

Pinedale started in the early 1920s as a new town for employees of the Sugar Pine lumber mill, seven miles north of Fresno near the San Joaquin River's south bank.

[via FresnoBee.com: Local]