Understanding the Extended Home Buyer Tax Credit

Many folks have taken advantage of the first-time homebuyer tax credit that was due to expire at the end of this month. Congress in its wisdom has extended that benefit up to April 30 of 2010. Not only is this good news for people looking to purchase their first home at exceptionally good interest rates, the "move up" buyers are able to take advantage of the tax credit as well. These are people who have been in their primary residence for 5 of the last 8 years.

Why these parameters? It is a generally understood market trend that people who have lived in their home for at least 5 years have build equity in their homes and may start to think about buying something new. Maybe the family is growing, the schools become more important, etc. Savvy investors know that money is made in the "buy" and now is an excellent opportunity to buy low and hold. Sadly, that can mean plenty of short sale and foreclosure homes are available to the move up buyers, but the good news is that this can stop a cycle of downward spiraling home values.

The credit diminishes as incomes increase, which makes sense. In the link below from the National Association of REALTORS® you can see that there are income caps, home pricing caps, and a gradual phase out of the tax credit to high income people. What waits to be seen is if the middle range homes for sale-say over $325,000 in our Pierce County market, start to move. The move up buyer will still need to be able to sell their home for enough profit to upgrade. So far the "entry level" priced homes below $250,000 (which I think can still be a heavy load for many families) have been moving due to the supply of distressed and bank owned properties, or REO's. This is good for getting inventory moving, however the mid-ranged sellers have to compete in pricing with the comparable sales in their neighborhoods and if there are bank properties being snatched up at bargain prices woe to the non-distressed seller. The importance of competitive price, location and presentation are more important than ever now. Professional real estate agents are the best source for this information.

The good news is that there are wonderful homes available in our communities and great opportunities for home ownership. As a homeowner, I want my neighborhood to be full of people who care about where they live and take pride in their homes and streets. By extending the tax credit and re-energizing the desire for home ownership, maybe, just maybe, we will be stabilizing our local economy and our communities.

Below is a simple matrix to help you understand the credits. Check with your CPA on the tax consequences of buying and selling, and always hire a professional real estate agent to assist you in the process.

NATIONAL ASSOCIATION OF REALTORS® GOVERNMENT AFFAIRS BRIEF

Here's to my next great neighbors!

More on that rapidly disappearing Tax Credit...

This is going to go away soon, but if you are already working with a GOOD lender and can get your offer accepted very shortly you may still have time.

Ticor Title Unveils our Short Sale Solutions

I am thankful every day that I have the good fortune to be employed by Ticor Title-I enjoy and respect my co-workers and we are all focused on helping our clients with their real estate needs. We are all working very hard to be the best and stand firm in the economic tsunami that is 2009. That being said, there are many people who have fallen into difficult financial times by no fault of their own and are finding themselves in a terrible dilemma regarding a home mortgage. The dilemma? In a nutshell, too much payment, not enough money. Ends don't meet.

I understand there is no boilerplate solution to a short sale. Each situation is unique with its own set of circumstances. That is why I am pleased that we have created a site that provides resources, forms, and interactive videos that can help. I recommend you navigate through the site, educate yourself as a consumer and as a real estate industry professional. As a title insurance professional, I am not in the business of negotiating, nor would I do the best for my clients to pose as an expert. I must be knowledgeable, however, in order to be a resource. If you are facing a situation you feel is beyond your control, know there are many who can guide you and are willing to help.

Please visit www.ticorshortsale.com

Ticor-achieving excellence in Pierce County since 1883.


Janet

10 Top Reasons Short Sales Don't Close-reposted from Noel Padilla

Top 10 Reasons Why Your Short Sale Will Not Close

10.) You sent in multiple offers to the bank. Put yourself in the bank's shoes, what would you do if you got 3,4,5 or 6 offers on your property? That's right you would wait to see if you get more at higher prices. We all know short sale departments at banks are extremely organized and they can surely keep track of multiple offers (Yes I'm being sarcastic). Oh did I mention accepting and having your seller sign multiple offers is probably a little against the law and at the very least unethically? Third party approval is just a contingency just like an inspection or financing. You wouldn't keep accepting offers if there was an only and inspection contingency right?

9.) You don't call the bank periodically for updates, you rely on them calling you. With literally thousands of short sale offers coming in, you need to keep your file fresh on their minds. Files are always being lost or misplaced, yes even in this digital age they get lost in cyberspace. A file goes to a negotiator via email and the pdf gets deleted accidentally. Do actually think the negotiator is going to remember let alone try and recover that info when he/she has another 100 or so to work on? They just say NEXT.

8.) You don't bother to lower the price periodically. Do I really need to explain this one, this is real estate selling 101.

7.) Your marketing, well sucks! No pictures, no virtual tours, poor description, etc. Again real estate selling 101.

6.) You don't know what the hell you're doing and are too pigeoned minded to actually take formal training to get better because of course you've been in business 28 years or that's what your broker told you to do. Formal training is not some 2 hour course given by your local board nor is it a 2 hour webinar. I'm talking at least 8 hours of classroom instruction or distance learning curriculum. Nothing substitutes for a live instructor if you have a choice chose the classroom.

5.) You don't submit an offer you feel is too low. WHAT? Let the lender tell you it's too low. Get the process going and hopefully you can get a hard number from the bank on what they'll take.

4.) You don't check this property's status and the bank forecloses. The short sale department does not communicate with the foreclosure/legal department. You don't know how many times I've called and informed the S/S department about an impending sale date and they reply, "Oh let me send them a message to delay the sale." This doesn't stop the process but in my neck of the woods if you delay a sale, you just bought yourself 60 days. It takes 30 days to get in front of the judge to schedule another sale date and that date is usually another 30 days out.

3.) Poor communication with the buyers/buyers agent and they walk. Mindset is crucial here. You need to prepare the agent and/or buyer for a long wait at least 90 days before you can go into the sales phase. You also need to let them know that not a whole lot will happen in the first 30 days and to expect updates every two weeks or sooner if developments occur.

2.) You're disorganized. If your the type that gets overwhelm at times (Like me) you need to systematize your business. You should have already done this but this is even more crucial in short sales. I designed an excel spread sheet that holds all my listings. I note whether they are active, pending , short sale, etc. It contains all the info I need in the notes boxes of the spreadsheet and I note every time I call with date and name of person. If you want a copy of it click the hyperlink.

...........drum-roll please........and the number one reason your short will not close is:

1.) Your short sale package is incomplete. A bank will not call you and say hey your package was incomplete. It will go in the round file cabinet. The more info you send them the better. I always call the lender first and ask for their specifics. I then send them what they ask and then some. A complete package should be at least 50 pages. I've seen some that are 100 pages. These servicers do not have a clue about your market. The more you send them pertaining to the market value the better chance you have at getting your package looked at sooner. You come across as a professional that really knows what you are doing, perception is the key here. (Who cares if you just took the Short Sale class 24 hours ago, you're a pro act like it!)

Good luck and happy short selling

Noel Padilla, CDPE

Short Sale Fraud Insight

Once Upon a Time in Montana

Excerpt from the July Fraud Insight Newsletter Courtesy of FNF


When an escrow officer finally made direct contact with a payoff
lender she had been trying to reach, she found out the short sale
negotiator was misrepresenting the transaction. The negotiator had
raised the sale price by $12,000, with $8,000 to be given back to the
buyer at closing and $4,000 to be paid to the negotiator as his fee.

Once upon a time in the Flathead Valley, short sales were just
beginning in the town of Kalispell, Mont. So, when a local escrow officer
Linda received her first short sale transaction, she
consulted her manager on the proper steps needed to close.
Her manager told her to obtain a Seller Authorization form and
payoff information. She was also instructed to order a title report
and prepare an estimated settlement statement for the payoff
lender. The seller had hired a Florida-based “negotiator,” named
Sam, who was going to be communicating with the lender (EMC) to
obtain the short sale approval.

The closer prepared the settlement statement, sent it to Sam and waited
for the title report so she could address any unknown liens. A couple
of weeks passed and the title report did not contain any surprises.
Linda waited for the “payoff approval letter.” During that time an
addendum was generated, increasing the sale price by $12,000.
According to the negotiator, the payoff lender requested the sale
price be increased. The buyers were eager to increase the price, as
they really wanted the house and thought they were getting a good
deal on the property.

The negotiator called to advise he would be collecting a $4,000
short sale fee at closing. Linda told him the fee needed a matching
invoice and would be reflected on the settlement statement she sent
for approval to the payoff lender. He provided the payee’s name and
amount and asked Linda to forward a settlement statement to him
for submittal, which she did.

Viola! Like magic, the payoff approval letter arrived in the next
couple of days and the parties were on track to close. Total amounts
due, closing costs and commissions were all accurate according
to the payoff letter – Linda just needed to have the settlement
statement approved by EMC.

Linda forwarded the settlement statement to EMC for approval with
a copy to Sam the negotiator. Within the hour, Sherry at EMC called
Linda back, asking where the “seller concession” was reflected on
the settlement statement. Linda replied that there was no seller
concession and proceeded to verify this with the listing and selling
agents to be sure she was not missing any addenda to the purchase
contract. The agents confirmed there was no seller concession to be
credited to the buyers at closing.

EMC was quite upset as the negotiator had advised them there
was an $8,000 seller concession to the buyer in exchange for the
increased sale price. Come to find out, the settlement statement
EMC had initially received when they provided payoff approval
reflected a seller credit. EMC had been faxing approvals and other
communication to the title company, but had been given
Sam’s phone and fax number. EMC professionals thought they
were communicating with Linda when all along it was really the
negotiator. Furthermore, they had not approved any type of short
sale negotiator fee to be paid. One of the terms and conditions of the
payoff letter was that EMC receive the settlement statement directly
from the escrow holder. So when EMC received the settlement
statement directly from Linda it was the first valid communication
they actually had with the title company.

EMC called both agents directly for verification of the purchase
contract, demanded that the parties reduce the sale price back to the
original offer and refused to allow Sam to receive any compensation
out of the transaction. The EMC representative told Linda they were
also turning Sam into the fraud division for investigation.
In the end, following our written instruction, internal policy and
“red flag” awareness really saved our Company, both agents and
the buyer and seller from being involved in fraud. Sam was never
heard from again. As a result of her diligence and for following the
payoff lenders’ written instructions, Linda has received a $1,000
reward from the Company, along with a letter of recognition.

Moral of the Story
Had Linda closed the transaction based on the terms provided by
the negotiator, instead of the terms in the payoff letter, we would
not have received a lien release from the payoff lender. Since we
insured free and clear marketable title to the new buyer, as well as
a first lien position to the buyer’s new lender, we would have been
forced to make EMC “whole” in order to clear the lien of record.
The terms and conditions of payoff letters on short sales can be
complex, but continuing to read and follow them is a duty we owe
to the Company and our customers.

www.fnf.com

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