Archive for March, 2010

Short Sales In Lieu of Forclosures

March 31, 2010

According to http://www.CNNMoney.com — Short sales are the hottest thing going in the distressed-property market, and the trend is expected to get even hotter in coming weeks, when the government starts handing out cash to encourage lenders to close these deals.

“Banks have ramped up short sale approvals,” said Duane Legate of House Buyer Network, which connects short sellers with buyers. “They’re hiring a lot of the people who once worked in the mortgage-lending industry and moved them over to short sales.

These transactions, where lenders allow homeowners to sell their houses for less than they owe, accounted for 17% of all residential real estate sales in February, up from nearly 13% in November, according to a monthly real estate market survey by Campbell/Inside Mortgage Finance.

And Bank of America (BAC, Fortune 500), the country’s largest mortgage servicer, has more than doubled the number of short sales it processed in recent months.

Elizabeth Weintraub, a Sacramento, Calif.-area real estate agent who handles many short sales, was amazed at how quickly a recent deal went through. “Bank of America approved it in 24 days,” she said. “That flipped me out.”

This is a huge change from even just six months ago when the short-sale market was stalled and most people would describe the process has real estate hell. Because lenders stand to lose so much on these transactions, they have been reluctant to make short sales happen, often waiting months before getting back to potential buyers.

Beware: You lost your house but still have to pay

“In the past, many short sales would never come to fruition and the ones that did averaged over half a year to complete,” said Chris Saitta, CEO of Equator, which produces short sale software.

“Things would just fall into a black hole and not come out again,” added Weintraub.

And even when banks did agree to the sale, the process could be further complicated if the original owner had a second mortgage.

In most cases, the first lender is repaid in full before any money flows to a second-lein holder. And because most distressed borrowers are severely underwater, there’s usually nothing left to send on. As a result, second-lein holders are left holding the bag and have been killing many deals.

But that has been changing. For one thing, banks realize that they make out far better financially with a short sale than a foreclosure. “The lenders lose 50% on a foreclosure and only 30% on a short sale,” said Glenn Kelman, founder of the real estate Web site Redfin. “And short sales offer a way to get distressed properties off their books quickly.”

And on April 5, lenders and mortgage investors will have even more incentives to offer troubled borrowers short sales instead of foreclosing.

Under the new Home Affordable Foreclosure Alternatives program, borrowers will earn a $3,000 “relocation incentive” and servicers will get $1,500 for handling a short sale.

The investors who actually own the mortgage notes will get $2,000 in exchange for sharing proceeds of the short sales with any second-lien holders. And, finally, those second lien holders will receive up to $6,000 for releasing their claims.

Lenders participating in the program must also determine the market values of properties early on and inform the owners of just what price they’re willing to accept. Then, if owners come back to the lenders with bonafide offers, they have to be accepted within 10 days.

Equator’s Saiita anticipates a short sale explosion in response to the new program. “The challenge will be handling all the volume,” he said.

The company has already tweaked its software, which 58 servicers use, to handle the new HAFA rules. And that should help reduce the time it takes to execute a sale, which currently averages 88 days.

The boom in short sales may accelerate the end to the foreclosure crisis by cleaning out the overhang of borrowers in distress and replacing them with more stable homeowners.

Plus, these sales are better for distressed borrowers because their credit scores suffer less. Going through a foreclosure can knock 200 points off a FICO score, twice as much as the penalty for a short sale.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.

You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

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Time is Running Out for the Home Buyer Tax Credits – Part 4

March 30, 2010

Claiming the new home buyer credit: For qualifying purchases, taxpayers have the option of claiming the credit on either their 2009 or 2010 return. A new version of Form 5405, First-Time Home buyer Credit, is now available on the IRS website. Taxpayers claiming the credit on their 2009 returns, will not be able to file electronically because of the added documentation requirements, but instead will need to file a paper return by using the new version of Form 5405. A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the current version of Form 5405.

In addition to filling out a Form 5405, all eligible home buyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

  • A copy of the settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
  • For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
  • For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

The IRS expects to start processing 2009 tax returns claiming the home buyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements and to deter fraud related to the home buyer credit. Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those homebuyers filing early, the IRS expects the first refunds based on the homebuyer credit will be issued toward the end of March.

– The new $8000 credit can be used towards the down payment of a house bought in the credit qualifying period. You need to work with your lender to take advantage of this provision.

Tax Credit Exclusions: Homes that cost more than $800,000 aren’t eligible for the credit and you must be over 18 years old to claim the credit (dependents are not eligible to claim the credit either). Those who sell their new home or stop using it as their main residence within three years would have to repay the credit. You cannot claim the credit if acquired your home by gift or inheritance OR if you acquired your home from a related person

– If two or more unmarried individuals buy a main home, they can allocate the credit among the individual owners using any reasonable method. The total amount allocated cannot exceed the smaller of $8,000 or 10% of the purchase price. Note: A reasonable method is any method that does not allocate all or a part of the credit to a co-owner who is not eligible to claim that part of the credit (I would go with 50/50 as a reasonable method if one person is not eligible for the credit)

– The purchase date is how you decide which credit you are eligible for. Only homes purchased from Jan 1 2009 to April 1st 2010 are eligible for the fully refundable $8000 credit. If you constructed your main home, you are treated as having purchased it on the date you first occupied it.

Foreign or Overseas Homes: You are considered a first time home buyer when buying an American residence, even if you owned principal residence outside of the United States within the previous three years. Non-resident alien’s cannot claim the credit.

– Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

Time is Running Out for the Home Buyer Tax Credits – Part 3

March 29, 2010

Current Homeowners looking for a replacement primary residence could also qualify for a $6,500 (up to $3,250 for a married individual filing separately) under the new “long-time resident” provision. They must have lived in the same principal residence for any five-consecutive year period during the eight-year period that ended on the date the replacement home is purchased. This new provision also only applies to homes purchased after Nov. 6th 2009. The IRS has stepped up compliance checks involving the home buyer credit for those with past homes and they must provide a mortgage Interest Statement, Property tax records or Homeowner’s insurance records, to prove compliance with past residency criteria.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

Time is Running Out for the Home Buyer Tax Credits – Part 2

March 28, 2010

Income qualification limits: The home buyers’ credit would be available to individuals with a modified adjusted gross income (MAGI) of up to $125,000, or $250,000 for couples, up from $75,000 for individuals and $150,000 for couples under the original rules. The higher income limits are only for homes purchased after Nov. 6, 2009. That is, the existing MAGI phase-outs of $75,000 to $95,000 or $150,000 to $170,000 for joint filers still apply to purchases on or before Nov. 6, 2009. Those with incomes higher than the above limits do not qualify for any part of the tax credit.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

Time is Running Out for the Home Buyer Tax Credits – Part 1

March 27, 2010

With the end in site, I’ve had a lot of folks asking for specifics on the Federal Government’s Home Buyer Tax Credit Program.  Here are a few details that may help to clear things up.

Qualification Period : First-time home buyers who bought after January 1, 2009 and before April 30th 2010 (with closing to take place by or on June 30, 2010), would get the $8,000 home buyer tax credit. This means you need to have purchased on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, a home purchase completed (closing, final inspection etc) by June 30, 2010 will qualify.

For the purposes of claiming the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner. If you and your spouse claim the credit on a joint return (both of you must meet the income and past ownership criteria to qualify), each spouse is treated as having been allowed half of the credit for purposes of repaying the credit. So the total amount claimable is still only $8000.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

March Sales to Date in Fairhope, AL

March 26, 2010

So far, in March we’ve had 20 closed sales in March 2010.  7 of those were under $200K;   10 were in the $200k’s and 2 were in the low $300k’s.

We currently have 51 non-waterfront homes “pending” or “Under Contract” .  30 of those are under $200K; 15 are from $200k-$400K and 6 are over $400k with on listed at over $600k (listed at $1.2M large home with acreage on Hwy 181).

One piece of really exciting news for our market is that the water front is finally seeing some movement. We currently have 6 properties in Fairhope on the bay that are either “Under Contract” or “Pending”.  List prices for these properties range from $299,500 to $1,498,900.  This is the most activity (especially on Hwy 1) that we’ve seen in several years.

Anyway, stay tuned and I’ll update you on the selling prices of these and the other pending homes in coming weeks.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.

You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

Baldwin County Residential Market Update

March 25, 2010

Report for the period ending February, 2010

Baldwin County Residential Market (Total, North, Central, South)

This snapshot view of the residential housing market is designed to provide a useful source of data and information. We hope you find it useful. Comments are always welcome.

The average sales price in Baldwin County for February fell 3.88 percent to $204,288 while the median sales price increased 5.14 percent to $160,000. Average sale prices in the North showed a substantial decrease of 28.77 percent to $147,489, increased 7.8 percent to $176,909 in the Central area, and declined 2.7 percent to $249,324 in the South region.

Concurrently, sales rose to 117 in the Central area, declined to 11 in the North, and declined to 85 in the South. For the whole county, sales increased by 28 to 213.

Average days on the market for the whole county rose to 183 from 166 in January. The North increased to 197, decreased to 163 in the Central region, and increased in the South from 170 in January to 208 in February.

The number of sales for December in the U.S. decreased by 12.3 percent while the median sales price grew by 0.3 percent to $170,500. The number of months required to sell the existing inventory increased to 7.2. The National Association of Realtors recommends a 6 to 8 month range for a healthy market.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.

You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

Update for Orange Beach & Gulf Shores Condo Sales

March 23, 2010

Here’s a quick glance at the condo market down on Alabama’s beaches for February 2010.

The Baldwin County MLS shows us that we had 60 total closed sales; compared to 53 for the same time period in 2009.  Of that number, we had 36 at $200K and under (averaging $152/sf); compared to 14 for the same period last year (average $175/sf).  Between $201-$400K, we had 19 closed sales (ave. $250/sf) compared to last year with 29 (ave. $251/sf.).  From $401-$600k, we had 4 closings (ave. $248/sf.) compared to last year at 7 (ave. $261/sf).  For closings with unit prices above $600K, this February we only had 1 –  a Caribe for $645,000 ($275/sf) compared to last year with 3 (average $246/sf).

Overall, the trend is that more units are selling at lower per square foot values.  Most of us think the bottom was found at the beach several months ago, but new bottoms can be found sporadically on a per-complex level.  These have been selling in days once they’re listed.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.

You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

Price Reduction on Great Home in Quiet, Convenient Foley, AL Neighborhood

March 20, 2010
Price Reduction on Great Home in Quiet, Convenient Foley Neighborhood FRG.gif

524 West Amanda - Front
524 West Amanda Ave.  Foley, AL
Offered at $117,520
Well maintained split floor plan in quiet subdivision in Foley, convenient to schools, shopping and beaches. With large bedrooms, lots of storage, separate living room and den and attached double garage, this home is a must see. New dimensional roof, front and rear porches with low maintenance brick and vinyl exterior. Large, extended concrete drive with room for an RV in the back. Appliances negotiable.

If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.

You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.

New Price = Great Deal on Immaculate Summerdale, AL Home

March 17, 2010

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Hwy 71 Front

19100 Hwy. 71
Summerdale, AL

Beautiful brick, custom home on a large lot in tranquil setting convenient to Hwy 59. Enjoy the open floor plan with large rooms, closets and garage – plenty of storage space. Great kitchen, large master bath, and loaded with extras. Large back yard with privacy fence. Truly a great deal as priced.



If you’d like more information on the Fairhope, Orange Beach, Gulf Shores, Daphne or Baldwin County  markets, or on specific properties down here, feel free to email me at Terryl@FairhopeRealtyGroup.com; or call me at 251-990-8838.You can also visit my web-site and search the MLS on your own at www.FairhopeRealtyGroup.com.