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July 10th, 2010
 Well Congress finally got their act together on something.
Both the House & Senate approved a bill to allow homebuyers with purchase contracts dated by April 30, 2010 to close on their transactions until September 30, 2010. The bill is now on its way to President Obama to be signed into law.
Why the extra time?
According to the National Association of Realtors, approximately 180,000 homebuyers would lose out on the credit as they can’t close by the current June 30th deadline.
NAR blames backed up lenders, delays in Flood Insurance and the Rural Development programs and new construction issues as the primary reasons homebuyers can’t close.
Here’s NAR’s 180,000 list broken down by state:
Alabama, 2,590; Alaska, 830; Arizona, 5,440; Arkansas, 2,090; California, 17,700; Colorado, 3,390; Connecticut, 1,770; Delaware, 400; District of Columbia, 300; Florida, 14,830; Georgia, 6,270; Hawaii, 710; Idaho, 1,270; Illinois, 7,030; Indiana, 3,560; Iowa, 2, 030; Kansas, 1,840; Kentucky, 2,540; Louisiana,1,800; Maine, 840; Maryland, 2,630; Massachusetts, 3,930; Michigan, 6,470; Minnesota, 3,760; Mississippi, 1,530; Missouri, 3,600; Montana, 760; Nebraska, 1,110; Nevada, 3,800; New Hampshire, 690; New Jersey, 4,300; New Mexico, 1,160; New York, 9,190; North Carolina, 4,890; North Dakota, 460; Ohio, 8,510; Oklahoma, 2,760; Oregon, 2,090; Pennsylvania, 5,830; Rhode Island, 500; South Carolina, 2,460; South Dakota, 500; Tennessee, 3,910; Texas, 15,340; Utah, 1,130; Vermont, 400; Virginia, 3,890; Washington, 3,190; West Virginia, 940; Wisconsin, 2,690; and Wyoming, 390.
What about all the buyers that have contracts on short sales?
Short sale can easily take 4 months or longer to close. So, if a homebuyer entered into a purchase contract in April, there’s a very low chance they would be able to close by the current June 30th deadline.
A good portion of short sales will be lucky to be able to close by the soon-to-be extended deadline of September 30th.
Now if only Congress could get its act together on the Flood Insurance issue…
MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY
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Drew Sygit: CMPS, CMC, CRMS, CMLO, CALO, MBA, NAMB/MAMP Instructor & Speaker
The most Certified Mortgage Expert in the Midwest
Contact him for The Lending Edge
P: 248-356-3739 • F: 866-215-3755 • dsygit@TheLendingEdge.com • www.TheLendingEdge.com
Tags: Credit, Expert, extension, Michigan, Mortgage, tax
Posted in First Time Buyer, Housing Tax Credit, Purchase, Real Estate Sales, Recovery, Tax Credit | 1 Comment »
June 12th, 2010
Have you been watching mortgage rates over the last few weeks in Michigan?
They’ve touched on record lows. Take a look at this graph of Mortgage Backed Security prices – where higher prices mean lower rates:
The chart above shows the market over the last 2 years. Michigan Mortgage Rates for borrowers have pretty much hit record lows again, subject to daily fluctuations.
So where are all the homebuyers?
Mortgage applications have dropped for three straight weeks and housing sales have turned down a bit.
Michigan Homebuyers may have been spoiled by the Homebuyer Tax Credit, but might want to get past it.
Figure out a monthly payment you can comfortably afford, as now is not the time to stretch your budget.
Then go out a find a house! With record low mortgage rates and the drop in housing prices, you may never find a time homes are more affordable than today!
So, what’s your excuse now?
_______________________________________________________________
If you enjoyed my blog post,
I invite you to connect with me on the social networks below & subscribe to my blog!
“Referrals are Sending Someone You Care about, to Someone You Trust!”
So, forward this blog post to someone that’ll appreciate it!
_______________________________________________________________
Drew Sygit: CMPS, CMC, CRMS, CMLO, CALO, MBA, NAMB/MAMP Instructor & Speaker
The most Certified Mortgage Expert in the Midwest
Contact him for The Lending Edge
P: 248-356-3739 • F: 866-215-3755 • dsygit@TheLendingEdge.com • www.TheLendingEdge.com
Tags: Birmingham, Bloomfield, Detroit, Expert, Michigan, Mortgage, Rochester, Royal Oak, Troy
Posted in First Time Buyer, Housing Tax Credit, Michigan, Mortgage, Purchase, Rates | No Comments »
April 12th, 2010
“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.”
MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY
The quote above is right from the IRS website and concerns the Homebuyer Tax Credit.
For most of the population, the Homebuyer Tax Credit expires this year. For some Michigan Homebuyers, there’s a one year extension.
This isn’t anything new as it was part of the extension passed November 6, 2009.
It is something those that protect our country should be aware of and definitely take adavantage of.
To be eligible, the following applies:
- Must be a member of the uniformed military service, Foreign Service or intelligence community.
- Must have served a minimum of 90 days qualified official extended duty service outside the United States during the period January1, 2009 through April 30, 2010.
- All other conditions to qualify for the tax credit apply.
Remember that our veterans also have access to the best zero-down program still in existence – the VA Morgtage.
If you know of a Michigan Homebuyer that happens to be a veteran that may qualify, please have them contact me to discuss further.
For more information, please visit the IRS website.
Posted in 1-TLE, Housing Tax Credit, IRS | No Comments »
January 10th, 2010
Well 2009 is in the books as a very challenging year for most.
Michigan Real Estate did not have a good year, unless you were selling foreclosures. Some of the 2009 negatives:
- Record foreclosures
- Falling property values
- Almost 50% of mortgaged properties have more owed on them than they’re worth.
- Loan modifications not getting done despite a new Michigan law (as of July 6) that more or less requires lenders to offer face-to-face modification meetings.
- City assessors not dropping taxable values in synch with the real estate market.
Most of those negatives will continue to haunt Michigan Real Estate in the new decade. There are some positive headwinds though:
- Mortgage rates are still low.
- The Homebuyer Tax Credit was extended and expanded to repeat buyers. (it expires at the end of April though)
- Property sales are recovering due to the above rate & tax credit environment, also due to the affordability of real estate.
- Job losses are finally slowing.
- New guidelines from the state of Michigan should lead to fairer property assessments this year.
- Taxpayers are getting fed up enough to take action with all the Wall Street bailouts that don’t seem to make it to Main Street.
What’s in store for the mortgage market in 2010?
- A new Good Faith Estimate went into effect January 1. Once everyone is used to it, it will actually make it easier for a borrower to understand. It’ll also be tougher for corrupt/incompetent lenders to bait-and-switch borrowers.
- Expect more delays in closing a mortgage as new rules also require any changes in fees or rates to be re-disclosed to a borrower at least 3 days prior to closing. Great news that are competition now has to do what we’ve always done!
- All mortgage originators have to be nationally registered by the end of July to weed out the undesirables.
- Expect appraisal issues to continue as FHA implements changes to put “firewall protection” between appraisers and loan originators.
- FHA also wants to implement pricing/rate adjustments tied to credit scores. This keeps getting pushed back, but it could happen this year.
- The Federal Reserve is scheduled to discontinue the purchase of Mortgage Backed Securities at the end of March. This could be significant as rates were at 6% before they started buying.
Overall I personally think that 2010 will be a turning or tipping point for Michigan Real Estate and the economy in general. The public is past the shock stage and has come to terms with our new realities. That doesn’t mean we’re all happy with the developments, but we’re not surprised by them anymore.
I hope that more taxpayers watch, understand and start to do something about the corruption and nepotism between Wall Street and Washington D.C.. The banking industry that pretty much caused this Great Recession we’re in through their greed, is buying votes in Congress to thwart any real policy changes to clip their wings. Making it more likely that this will happen again – although probably worse.
We’ve also got several changes going on at The Lending Edge Team for 2010:
- We’re now part of First Michigan Bank, a small community bank in Troy with a very competent support staff.
- We’ve switched our blog from Blogger to WordPress for more versatility.
- We’ve got a new website (www.TheLendingEdge.com), please check that out. It’s not totally done as we’ll be adding more & better content.
- We’ve also switched to a new, more robust database. Please be patient with us though as we’re still learning to use it, removing duplicate records and re-categorizing our contacts.
- We’ll also be launching a new e-newsletter once we get the database situated.
- Drew Sygit will be doing more webinars and speaking engagements in 2010. He was also recently voted onto the Board of Directors of the Financial Planners Association of Michigan (the only mortgage lender on the Board).
Despite all the challenges of 2009, remember to be positive and always look to the future. Positive energy attracts positive people & events!
Posted in 1-TLE, Appraisals, FHA, First Time Buyer, Foreclosure, Housing, Housing Tax Credit, Housing Values, Loan Modifications, Michigan, Mortgage, Property Tax, Rates, Real Estate Sales, Recovery, Upside Down | 13 Comments »
November 14th, 2009
The extension of the tax credit gives buyers, sellers and industry professionals a bit more time to stabilze the housing market.
MORTGAGE, EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY
The First Time Home Buyer (FTHB) Tax Credit has been extended with new provisions for those that already own a home. So, I guess we need to start calling it the Home Buyer Tax Credit (HBTC). If you have any questions on qualifying for the tax credit, be sure to read one of my earlier posts.
Combined with bargain basement house prices, this could be the best opportunity to buy a home in many of our lifetimes.
The challenge is, there are many that would like to buy a home, but don’t have a down payment to do so. Read the rest of this entry »
Posted in 1-TLE, First Time Buyer, Housing Tax Credit, Purchase, Tax Credit | 5 Comments »
November 6th, 2009
President Obama signs bill into law that extends the $8,000 first-time buyer tax credit – and expands it.
MORTGAGE EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY
Well, it’s official. The home buyer tax credit legislation made it through the political process in Washington D.C. in seemingly record time. After just passing the Senate Wednesday, the House passed the bill today and Obama signed it soon after.
The bill also extended unemployment benefits for 14 weeks for most states, but for another 20 weeks for hard hit states like Michigan. This extension will also keep many from losing their homes to foreclosure, so shouldn’t be overlooked.
Now let’s take a look at the “new & improved” homebuyer tax credit.
Who Gets What?
First-Time Homebuyers (FTHBs): First-time homebuyers (defined as not owning a home in the last 3 years) are eligible for up to 10% of the purchase price or a maximum of $8,000.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
Current Owners: The new tax credit program now gives those who already own a residence incentive to move to a new home. If they’ve owned a primary residence for 5 consecutive years out of the last 8, their eligible for up to a $6,500 tax credit.
Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.
What are the New Deadlines?
In order to qualify for the credit, all sales contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.
What are the Income Caps?
The amount of income someone can earn and qualify for the full amount of the credit has been increased.
Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.
What is the Maximum Purchase Price?
Qualifying buyers may purchase a property with a maximum sale price of $800,000.
What is a Tax Credit?
A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.
How Much are First-Time Homebuyers (FTHB) Eligible to Receive?
An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.
Who is Eligible fort FTHB Tax Credit?
Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.
This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.
How Much are Current Home Owners Eligible to Receive?
The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.
Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?
No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.
Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?
Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.
According to the IRS, factors that would demonstrate the ownership of the property would include:
1. Right of possession,
2. Right to obtain legal title upon full payment of the purchase price,
3. Right to construct improvements,
4. Obligation to pay property taxes,
5. Risk of loss,
6. Responsibility to insure the property, and
7. Duty to maintain the property.
Are There Other Restrictions to Taking the FTHB Credit?
Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:
- They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
- They do not use the home as your principal residence.
- They sell their home before the end of the year.
- They are a nonresident alien.
- They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
- Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
- They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.
Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?
Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.
If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?
Yes, provided that the child meets the other requirements for the tax credit.
Also, be sure not to try and buy a property in the name of a child as the IRS is also pursuing prosecution of an estimated 500 tax filers reported to have done this.
Posted in 1-TLE, Affordability, First Time Buyer, Housing Tax Credit, Real Estate Sales, Recovery | No Comments »
November 1st, 2009
Contrary to what many have reported, it’s not a done deal yet.
MORTGAGE EXPERT, MICHIGAN, BIRMINGHAM, BLOOMFIELD, DETROIT, ROCHESTER, ROYAL OAK, TROY
The most talked about real estate news of the past week seemed to be all about the First Time Homebuyer Tax Credit getting extended.
I’ve had numerous people contact me asking for the details and have had to tell all of them that nothing has passed yet.
Given the confusion and misinformation I thought I’d give an actual update on where the extension is.
The big news is that an unofficial voice vote passed the Senate last week, and Senate Majority Leader Harry Reid announced that he’s planning an official November 2nd vote on the extension in the Senate. Discussions with his counterparts in the House lead him to believe that the House will also pass the bill in the coming week.
This could put the bill on President Obama’s desk by the end of the week.
What could go wrong? Well, the vote was held up last week by demands for votes on several other amendments, one calling for an end to the Treasury’s TARP program by year end. An extension of unemployment benefits is also rumored to be causing issues. Popular bills like this one often have other amendments added to them that might not pass otherwise, so a lot of compromising goes on.
Some New Wrinkles
In its current form, the bill would extend the tax credit to the end of April 2010. There are several proposed differences from the current tax credit:
- To qualify, a sales contract would have to be signed by April 30th and the transaction closed by June 30.
- Income limits would be increased from $75k for single people & $150k for couples, to $125k and $225k respectively.
- Buyers who have lived in their current home for the last 5 years would be eligible for up to a $6500 tax credit (or 10% of the purchase price).
- The maximum allowed home purchase price would be capped at $800,000.
- Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.
- To combat fraud, a HUD-1 Settlement Statement will have to be attached to the tax return to secure the credit.
Stabilizing the Housing Market
The Homebuyers Tax Credit is probably the best program passed by the government since the financial meltdown started. Other measures to stabilize the economy are increasingly under fire for racking up trillions in tax payer debt, while mostly benefiting the elite on Wall Street.
More than 1.25 million taxpayers have taken advantage of the tax credit to pursue the American dream of home ownership. This has used up approximately $8.5 billion of the $13.6 billion originally set aside for the program.
Reports show home sales have increased and inventory is down. Many buyers are finding it difficult to locate a home, being outbid and outhustled.
Concerns
Even this program has its problems and detractors though. Recently, the Treasury’s Inspector General for Tax Administration, J. Russell George, told Congress that at least 19,000 filing for the credit hadn’t bought a house when they filed. Another 74,000 appear to have owned a home in the last 3 years, making them ineligible for the program. 500 plus filers for the tax credit are under 18 years old!
The IRS is pursuing criminal cases against at least a 100 offenders and is reportedly trying to audit every return where the credit is claimed this year. They’ll also be auditing themselves as Mr. George is also on record stating that they are investigating at least 53 cases of IRS employees filing illegal or inappropriate claims for the tax credit.
Many detractors are claiming that the tax credit is subsidizing housing values and just pulling forward sales that would have happened anyways.
One potential problem that the media hasn’t focused on yet, is that the tax credit may be encouraging banks to sit on foreclosed homes. Many real estate experts have pointed out that the number of foreclosures has been outpacing the number of units entering the market for some time now. Instead of putting these homes on the market to be sold, banks could be sitting on them to drive down inventory and push up prices – using bailout funds to support this endeavor. Not a lot that can be done at the “street level” about this, but surely something for our representatives to look into
Don’t Procrastinate
Hopefully, the extension of the tax credit won’t turn more buyers into procrastinators who wait until the last minute to buy. Buyers should keep in mind that finding a home isn’t like shopping for Christmas items or even a car – where their are multiple copies of the desired item.
Homes are much more unique, rarely are even two homes remotely alike. Start your search now, as it could take awhile to find what you want. When you do find it, jump on it or someone else usually will.
Posted in 1-TLE, Affordability, First Time Buyer, Government, Housing Tax Credit, Purchase, Recovery, Tax Credit | 2 Comments »
June 3rd, 2009
HUD issues then retracts a letter, “Using First-Time Home Buyer Tax Credits” and then releases it again.
May 29, 2009 — DETROIT, MI – Oops! Someone has some explaining to do to their boss at HUD. In case you missed all the hoopla, on May 11th HUD issued Mortgagee Letter 2009-15 on its website and then pulled it later that same day. The letter, with an important change, was released again on May 29th.
It sounds like someone didn’t follow protocol and jumped the gun in releasing the letter the first time. Hope they still have a job.
If you’ve been out of touch with the housing news of late, President Obama’s housing recovery plan includes an $8,000 tax credit for anyone buying a home that hasn’t owned one in the last three years. Home purchases between January1, 2009 and December 1, 2009 qualify.
Unlike President Bush’s homebuyer incentive, which was really a $7500 loan that had to be paid back over 15 years, the $8,000 tax credit is a real credit. Qualifying homebuyers just have to file their federal tax return to claim it. They can even amend their 2008 return after buying a home to get the credit this year.
HUD was basically forced to release their letter and play catch up, in response to several state governments creating programs using second mortgage and/or short-term loans to advance the tax credit money to qualifying homebuyers. The homebuyers than used this money as their down payment to buy homes with FHA financing.
At this time there are 10 states with these “tax credit advance programs” and several more working on and considering them.
HUD now allows the following entities to offer tax credit advance programs:
- Federal, state and local government agencies
- Non-Profit Instrumentalities of government
- FHA-approved non-profits
- FHA approved lenders
These entities can either advance the tax credit through a second mortgage or by purchasing the tax credit from the homebuyer.
If using a program with a second mortgage:
- No cash back to a borrower.
- The loan amount can’t exceed the total needed for down payment, closing costs and prepaids.
- Secondary financing may OR may not require monthly payments.
- If payments are required, they must be included in debt ratios for the FHA mortgage.
- If payments are deferred, the deferment must be at least 36 months in order to exclude the payment from qualifying ratios.
- If the tax credit advance loan has a short term for repayment and the borrower fails to repay by the designated deadline, principal and interest payments begin automatically or the loan converts to a “soft” second (no payments).
- No balloon payments before 10 years.
If using a tax credit purchase program:
- Proceeds of the sale of the tax credit may not exceed the anticipated tax credit due.
- Borrower must sign a certification that the tax credit is not subject to offset of other debt.
- Copy of form IRS 5405 must be retained by the FHA lender.
- Costs associated with the tax credit purchase cannot exceed 2.5% of the anticipated credit. (Example: $8k tax credit means maximum $200 cost)
- The proceeds of the sale of the tax credit to FHA approved lenders, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financially benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs.
This last condition is mainly what HUD changed when they retracted the first letter they released.
Many real estate agents and mortgage lenders are misinterpreting HUD’s announcement to mean that Down Payment Assistance (DPA) programs are back. (DPA programs allowed a seller to basically give the buyer their down payment funds). They’re hoping the $8k tax credit can be used to fund the DPA. Not going to happen. Let me be clear – HUD will not allow the $8k tax credit to be used for the 3.5% down payment required on FHA loans.
HUD was pretty adamant about stopping the use of DPA programs and finally succeeded in April of 2008. Their internal statistics showed default rates on loans with DPA were three times higher than the rest of their portfolio.
The revision HUD made to their mortgagee letter was specifically done to avoid the return of DPA programs. The language, “any third party or entity that is reimbursed, directly or indirectly” is the key to that goal. Any entity that advances the tax credit can only be paid back by the borrower, no one else. On top of that, they can only charge 2.5% of the tax credit, which means a maximum of $200.
I don’t think many lenders are going to go through the hassle of setting up a special program to take advantage of this allowance by HUD, given that the tax credit program ends December 1st.
So, that leaves buyers in the other 40 states without a tax credit advance program hoping that one develops in their state soon – or else the opportunity will be gone.
Of course, they can also hope that President Obama extends the program past its December 1st deadline. That might actually happen as the housing crisis is far from over.
Posted in 1-TLE, FHA, First Time Buyer, Government, HUD, Housing, Housing Tax Credit, Mortgage, Purchase, Tax Credit | No Comments »
April 26th, 2009
A look at the 3rd quarter numbers reveal some interesting statistics that show the housing crisis is not over.
DETROIT, MI – According to a recent National Association of Realtors (NAR) report, national homes sales were up in February, but down slightly in March when compared to last year.
In the Detroit Metro area, sales through the end of March were up in every area:
This of course, is good news as our area has been hard hit with the highest unemployment in the country and for awhile, Michigan led the nation in foreclosures.
So start the party as our housing crisis is ending?
Put the champagne and party hats away.
A deeper look at the numbers, show that it’s the sales of distressed properties that are responsible for the improvement:
Now let’s look at what’s happening with the sales of homes owned by private individuals (true retail sales):
(*Note: Realcomp recently introduced fields for several distressed types of transactions, so these numbers may be somewhat suspect)
As you can see, retail sales are drastically down everywhere.
It’s obvious that first-time buyers and real estate investors are scooping up distressed properties and ignoring retail properties.
Why? Because distressed properties are cheaper and potentially better values than retail properties.
This is not good news for homeowners that have to sell. It also affects move-up buyers that would like to sell their existing home to buy a bigger home and take advantage of low home prices.
Home sales are heading in the right direction, but don’t let anyone tell you we’re in a full recovery yet. That won’t happen until retail sales at least stabilize.
For now, first-time homebuyers need to understand that there’s lots of competition out there for distressed properties. Not only from other first-time buyers, but also from real estate investors – many from out of state. These investors usually buy with cash and banks are more likely to accept a slightly lower cash offer than a higher offer that requires a mortgage. Too many mortgage applications are being declined these days due to tightened lending standards.
All this may require first-time homebuyers to settle for a good deal, rather than a great deal.
Posted in 1-TLE, Affordability, Detroit, Distressed Property, Expert, First Time Buyer, Foreclosure, Housing, Housing Tax Credit, Housing Values, Michigan, NAR, Purchase, Real Estate Sales, Recovery, Short Sale | 1 Comment »
April 4th, 2009
First-time buyers looking for deals discover they have to outbid investors for houses.
Reading the national headlines about record drops in home prices and record  foreclosures, might lead homebuyers to assume they can get a steal of a deal on buying a home these days.
Adding to this perception are the stories, both in the news and from family & friends, about buyers getting homes for a fraction of what they sold for a few years ago.
Well, four first-time buyers I talked to this week found out that perception is often not reality.
After getting all excited about a house they already perceived as being theirs, reality blind-sided them as they were all outbid and didn’t get their dream deals. One person in fact, lost out on two homes, one of them to a cash buyer with a lower offer.
I’m sure these homebuyers were a bit shocked when their real estate agents told them their offer, not only didn’t get accepted, but that someone else got the house.
An increasing number of real estate agents & real estate investors tell me they’re seeing foreclosures priced aggressively to sell from the first day they’re listed This is dramatically different than last year when they seemed to be generally priced at the high end when initially listed and it took months for price reductions to bring them in line with buyer expectations.
So, what should serious home buyers do?
Don’t assume what you hear in the news is 100% accurate. Most of us have seen the word “assume” broken into three words that describe what happens when we assume too much.
Talk with real estate experts and find out what’s happening now with real estate in the area you’re looking in. Most of what’s in the news is not area specific and is often broad generalizations.
Keep in mind, even the advice of well-intentioned family & friends is often based on hearsay or second-hand stories.
 Homebuyers should consider the magnitude of what they’re investing when they buy a home. If you inherited $100,000 and were trying to decide where to invest it, would you follow the advice of family & friends or would it be better to seek out financial experts and follow their advice? The number of broke lottery winners would probably surprise you. Most of them lost their money by following the advice of family and friends.
Buying a home is a significant investment and should be handled accordingly. Seek the advice of real estate and mortgage experts – unless you want to fall victim to the old saying, “a fool and his money are soon parted”.
Posted in 1-TLE, Distressed Property, Expert, First Time Buyer, Housing, Housing Tax Credit, Mortgage, Purchase, Real Estate Sales, Recovery | No Comments »
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