5 Steps to Financing a Sale

Selling a home and helping the buyer finance may be a good option to getting a house sold, experts say. Yet it is imperative that the seller thoroughly investigate the buyer’s finances before agreeing to the deal.

Here are some important initial steps to take:

• Investigate the buyer by asking him to fill out a Uniform Residential Loan Application.


• Get bankruptcy details by checking out the case through Public Assess to Court Electronic Records (PACER), a service of the U.S. Judiciary.


• Pull the buyer’s credit report and eviction and criminal history via the American Apartment Owners Association Web site.


• Insist on 20 percent down or offer a contract for deed, which only confers full ownership rights after the home is paid off.


• Consider offering a lease-option with part of the payment going toward the purchase price, which gives the buyer time to repair his credit before seeking conventional financing.

Source: The Wall Street Journal, June Fletcher (08/28/2009)

Video: How To Sell A Home (Err...Maybe Not!)...

If Timothy Geithner—the current United States Secretary of the Treasury—can't price his home to sell...what does that say about the ability of your clients to price a home correctly in today's market?
Watch this hilarious outtake of how NOT to sell a home. And this is from the man with a large role in directing the Federal Government's economic response to the financial crisis—unbelievable!!...

http://www.thedailyshow.com/watch/wed-july-29-2009/home-crisis-investigation

IRS Is Scrutinizing Mortgage Deductions

According to published reports, the Internal Revenue Service is more closely examining how taxpayers are reporting mortgage interest deductions.

The IRS is reportedly examining some returns with high deductions for mortgage interest and enforcing obscure rules that most home owners and many accountants could be unfamiliar with.

The calculations are very complex and rely on precise records that some home owners may have trouble producing.

Experts advise home buyers who have borrowed more than $1 million in mortgages and home equity loans since 1987, the year deductibility limits were enacted, to consult a tax expert because the newest loan may not be tax deductible.

Source: Investment News Daily, Art Auerbach (08/25/2009)

Bill Encourages Energy Improvements

A bill that helps home buyers afford energy improvements and encourages banks to offer a discount on loans to pay for reducing energy usage passed the U.S. House in June and could pass the Senate in the fall.
The American Clean Energy and Security Act of 2009 requires Fannie Mae and Freddie Mac to offer discounts on mortgages that include extra cash for making a home more energy efficient.
These discounts, which are already in effect at some lenders like J.P. Morgan Chase & Co. and Bank of America, include savings on closing costs for homes that have Energy Star appliances.
The Federal Housing Administration is offering a plan through its approved lenders that allows borrowers to add the cost of making efficiency improvements into the mortgage, but the extra money doesn’t count toward determining how much loan a borrower can qualify for. For instance, a borrower who adds $5,000 to a $100,000 loan to afford new Energy Star appliances would only have to qualify for $100,000 – not $105,000.
Source: The Wall Street Journal (08/24/2009)

What Has the Housing Crash Cost Americans?

How much real wealth have Americans lost so far in the real estate crash?

The Federal Reserve estimates that the total market value of U.S. homes fell 18 percent from $21.9 trillion to $17.9 trillion or about $13,000 per person from the end of 2006 through March 31, 2009.

The Fed also estimates that homeowner’s equity has declined 40 percent from the peak and now accounts for just 41.4 percent of real estate values. By comparison, after the last slump in the 1990s, home equity levels remained in the high 50s.

This collapse in equity makes it difficult for potential buyers to sell their homes and trade up, which many experts say will weigh heavily on the housing recovery.

Source: The Wall Street Journal, Brett Arends (08/20/2009)

Message to Buyers: You Can Probably Afford It

Housing is remarkably affordable these days.

A family earning the nation’s median income of $64,000 a year could afford to buy 72.3 percent of all homes sold in the United States during the second quarter of 2009, according to the National Association of Home Builders and Wells Fargo.

Sellers are the ones who are paying the price. More than 30 percent of all homes sold during the second quarter sold for less than the sellers paid originally, according to Zillow.com.

A significant percentage of owners who bought within the past five years and sold during the quarter lost money on the deal, according to Stan Humphries, Zillow's vice president in charge of data and analytics.

[Editor's note: Although discussion of trends on a national level can be useful, conditions in a local market can be vastly different from what's happening statistically on a national level. For that reason, conditions for owners who've bought in the last five years might or might not resemble what analysts are seeing statistically on a national basis.]

Source: CNNMoney.com (08/19/2009)

Greenspan Unsure About Recovery

Former Federal Reserve Chair Alan Greenspan said the economy seems to be improving in some areas, but he was dubious that improvement is sustainable.

“I think we’re going to be OK for the next six months,” he says. "We are getting a recovery in (housing) starts and motor vehicles, but the process doesn't have legs to it.

"Greenspan adds that while the decline in construction is reducing inventory, it is unlikely that the percentage of home owners will ever be as high as it was at the peak, and that will result in a reduction of the overall size of the market.

Source: Reuters News, Emily Kaiser (08/17/2009)

FHA Program Offers Purchase, Renovation Aid

The Federal Housing Administration is encouraging use of its little-known 203(k) loan program.

The 203(k) lets an owner-occupant borrow money for both the purchase and renovation in one loan, and put down only 3.5 percent.

The program requires the use of credentialed contractors and can include cosmetic improvements as well as major renovations like replacing plumbing or electrical. Completing the application process requires patience, says Nancy Hammock, an associate with RE/MAX Properties in Western Springs, Ill.

But in this lending environment, more homebuyers are finding 203(k)s worth the hassle. In fiscal 2008, the government insured about 6,700 of the 203(k) loans. This year, more than 11,000 loans have already been insured, according to the Office of the Comptroller of the Currency.

Source: Chicago Tribune, Mary Ellen Podmolik (08/14/2009)

Economists Pronounce the Recession Over

The majority of economists surveyed by the Wall Street Journal say the recession is over and Federal Reserve Chair Ben Bernanke deserves another term.
Of the 47 economists the newspaper surveyed, 27 said the recession has ended and 11 predict another trough this month or next. The rest refused to commit. But they were nearly unanimous is saying that Bernanke should be rehired.
Gross domestic product is expected to grow 2.4 percent in the third quarter at a seasonally adjusted annual rate. Economists were also heartened by a better-than-expected jobless report in July.
Source: The Wall Street Journal, Phil Izzo (08/12/2009)

No Bones About It: This Is a Dog House

Paris Hilton’s Chihuahuas – Tinkerbell, Marilyn Monroe, Prince Baby Bear, Harajuki, Dolce, and Prada – have closed on new digs, reports Life & Style magazine. The property in Hollywood is a $325,000, 300-square-foot canine palace complete with a balcony, a backyard, living room furniture, and a chandelier – plus central air.

“It’s a miniature version of my house,” says Hilton. “I designed it with the help of my interior decorator, Faye Resnick. I wanted it to be fun, cute, comfortable and beautiful. My friends just love it and think it’s so adorable and cool.

”Source: Life & Style (08/05/2009)

Convicted Ponzi Schemer's Properties Hit the Market

The federal government is about to sell off more than $20 million in real estate owned by Ponzi scammer Bernard Madoff. Properties for sale include his Upper East Side Manhattan duplex; valued at $7.5 million; his 3,000-square-foot, Long Island, N.Y., beach house, $7 million; and his 6,475-square-foot Palm Beach, Fla., mansion on the Intracoastal, $7.5 million.

Besides these properties, the Feds are selling Madoff’s 55-foot fishing boat for $1.5 million, approximately $6 million in furniture, and they’ve already unloaded a three-bedroom vacation house on the Cote d'Azur for $1.48 million.

Some observers say the government’s estimate for the Manhattan duplex and the Florida mansion to be high, but they think the Long Island beach house may be bid up beyond the sale price because it is closer to the water than current zoning would allow.

Source: CNNMoney.com (08/03/2009)

6 Real Estate Investment Basics

Miami real estate investor Kenneth D. Rosen outlines his “Big Six” investing guidelines in his new book, Investing in Income Properties.
Here are his six principles in a nutshell. He says all of them need to be present to make a deal worth doing. “If one’s not there, you stop and you don’t buy,” he says.
Location. “A” locations are in areas where there is little land left to build on and the neighborhood has a certain prestige.
No-frills design with quality construction. He looks for three or four parking spaces per 1,000 square feet, no more than 15 percent of space devoted to common areas, and simple but visually pleasing design.
Few or no vacancies. Buildings with lots of small offices are easier to keep full than those that rely on renting out entire floors to one tenant.
Potential for appreciation. Older buildings with lower rents have the most upside potential. As leases expire, the new owner can raise the rent.
Available financing. Find a financial pro to help negotiate the right provisions.
Sale price based on existing income. Avoid buying based on projected income.Source: Miami Herald, Matthew Haggman (08/03/2009)