House Prices Increase Slightly in 3rd Qtr 2009

U.S. house prices rose modestly in the third quarter of 2009 according to the Federal Housing Finance Agency’s (FHFA)

RISMEDIA, November 25, 2009—U.S. house prices rose modestly in the third quarter of 2009 according to the Federal Housing Finance Agency’s (FHFA) seasonally adjusted purchase-only house price index (HPI). The HPI, calculated using home sales price information from Fannie Mae and Freddie Mac-acquired mortgages, was 0.2% higher on a seasonally adjusted basis in the third quarter than in the second quarter of 2009. Over the past year, seasonally adjusted prices fell 3.8% from the third quarter of 2008 to the third quarter of 2009.

FHFA’s seasonally adjusted monthly index for September 2009 was unchanged from August. The monthly change for the July-to-August period was revised to -0.5%, from an initial estimate of -0.3%. “These data provide some evidence of short-term stabilization in housing prices, a likely result of the many ongoing efforts to stabilize markets,” said DeMarco. “Given the headwinds facing markets across the country, including high unemployment rates and continued high levels of delinquency and foreclosures, the longer-term view remains uncertain.”

While the national, purchase-only house price index fell 3.8% from the third quarter of 2008 to the third quarter of 2009, prices of other goods and services fell 2.8%. Accordingly, the inflation-adjusted price of houses fell approximately 1.0% over the latest year.

Unlike the FHFA purchase-only index, FHFA’s all-transactions house price index, which includes data from mortgages used for both home purchases and refinancings, fell over the latest quarter. The index declined 2.4% in the latest quarter and 4.1% over the four-quarter period.

Additional findings include:
-Of the nine Census Divisions, the Mountain and Pacific Divisions, both in the Western U.S., experienced the most significant price movements in the latest quarter. Prices fell 1.4% in the Mountain Division, while prices increased 1.9% in the Pacific Division.

-Seasonally adjusted, purchase-only indexes indicate that prices rose in the latest quarter in 19 states and Washington, D.C. Prices rose over the latest four quarters in only seven states.

-The purchase-only index for California rose 2.1% between the second and third quarters of this year.

-Of the purchase-only indexes for the 25 most-populated metropolitan areas in the U.S., four-quarter price declines were greatest in the Phoenix-Mesa-Scottsdale, AZ Metropolitan Statistical Area. In that area, prices declined 22.0% between the third quarters of 2008 and 2009. Prices held up best in the Denver-Aurora-Broomfield, CO Metropolitan Area, where prices rose 3.3% over that period.

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Posted by Mark Gipple on 11/26/2009 in Kansas City Market, — Add a Comment

Homebuyer Tax Credit Extended until April 30, 2010

President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit

RISMEDIA, November 9, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion:

Who is Eligible
-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.

-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

The http://www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit.

For more information, visit http://www.nahb.org [2].

Posted by Mark Gipple on 11/09/2009 in Financing, — Add a Comment

Appraisers Not Responsible for Low Appraisals

The appraiser organizations recommended four specific areas of guidance to mortgage lenders and financial institutions

RISMEDIA, October 20, 2009—Responding to recent testimony before the House Small Business Committee, the Appraisal Institute, one of the nation’s largest organizations of real estate appraisers, reminded the Committee’s leaders that appraisers are not responsible for so-called low appraisals.

The Appraisal Institute joined the American Society of Appraisers, the American Society of Farm Managers and Rural Appraisers, and the National Association of Independent Fee Appraisers in a letter reacting to recent testimony by National Association of Home Builders President Joe Robson. The four appraiser organizations, representing more than 35,000 members, urged Committee Chair Nydia Velazquez, D-N.Y., and Ranking Member Sam Graves, R-Mo., not to “shoot the messenger.”

“It is important for the Committee to understand that appraisers do not create value in the housing market; they report on what is occurring in the market,” the letter stated. “The fact that some home sales have failed to close is largely the result of the housing market we are in today. Accordingly, we urge caution in connection with those who would prefer to ‘shoot the messenger’ rather than face the realities of today’s distressed market.”

Robson’s testimony to the Committee alleged the improper use of foreclosed properties and properties from distressed sales as comparables in determining values of single family homes where no adjustment had been made to reflect the relative condition of the properties. His testimony also suggested that a high number of new home sales have fallen through because the appraisal reflects a value below the contract sales price for the property.

“Professional appraisers fully understand and agree that if foreclosure and/or distressed property sales are used as comparables, they must be treated carefully,” the letter stated. “Appropriate adjustments must be made by a qualified appraiser to reflect the physical condition of such properties as compared to the subject property. This is common practice. It is the professional real estate appraiser’s responsibility to be aware of these conditions and analyze the market, considering all relevant data and applying proven techniques and methods.”

The letter also stated that, “Given the complexity of this issue in today’s market, the competency and qualifications of the real estate appraiser is of critical importance in our system of real estate financing. Lenders or their agents–including appraisal management companies–would be well served by retaining the services of highly qualified appraisers where such conditions exist.”

The appraiser organizations recommended four specific areas of guidance to mortgage lenders and financial institutions:

-Seek out the services of highly qualified appraisers for complex appraisal assignments.
-Recognize that sales concessions are as important as the condition of a property to the credibility and reliability of the appraisal.
-Provide sufficient time for the real estate appraiser to conduct the proper analysis of the subject property and comparables used.
-Promote communication between appraisers, builders and real estate agents.

Read more: http://rismedia.com/2009-10-19/appraisers-not-responsible-for-low-appraisals/#ixzz0UPslnTQi

Posted by Mark Gipple on 10/19/2009 in Home Buying Tips, — Add a Comment

Finding Your Dream Foreclosure: What to Know When You’re Buying an REO Property

Buying a foreclosure often is appealing to buyers trying to stretch their dollars. It’s finding a good one can that can be hard.

By Amy Hoak Print Article
RISMEDIA, October 5, 2009—(MarketWatch/MCT)—Buying a foreclosure often is appealing to buyers trying to stretch their dollars. It’s finding a good one can that can be a challenge.

“The vast majority of the banks don’t want us to advertise them as ‘bank-owned’ because it comes with a negative connotation,” said Ryan Melvin, co-owner of More Realty Group in Las Vegas.

That means no sign on the front lawn indicating the home is anything other than a traditional sale. A buyer probably won’t find a property advertised as a foreclosure on marketing materials, said Melvin, who specializes in real-estate owned properties, or REOs, those that have been reclaimed by a bank, typically after an unsuccessful foreclosure auction.

Plus, in some markets, including Las Vegas, foreclosure inventory is actually down compared with last year as government programs attempt to keep owners in their homes and banks aren’t putting as many homes on the market, Melvin said. That’s making it harder for buyers to snag a foreclosure, and those paying with cash often win a bid over someone who needs financing.

If you’re considering the purchase of a home that is now owned by a bank, it’s also important to know at the outset just how much work you’re in for — and how much it is going to cost you. Many foreclosures are in various states of disrepair; some of the fixes are cosmetic, but some can be extensive.

Those looking for the best deal probably shouldn’t rule out non-foreclosure properties, either, said Mark Goldman, a mortgage broker with Cobalt Financial Corp., and a real estate lecturer at San Diego State University. Sometimes, people set their sights on bank-owned properties “like the word ‘foreclosure’ equals ‘good deal,’” he said.

And that’s not always true.

One option for finding foreclosure listings: Go straight to the bank.

Lender Web sites, such as those operated by Bank of America, Chase and Citibank, will list the properties the financial institution has reclaimed when borrowers defaulted. To find a list, simply do a Web search for REOs and the name of the lender. Contact information for the property’s listing agents is usually provided for each entry.

For a fee, other sites will hunt down properties for you. RealtyTrac.com, which helps people find foreclosure and pre-foreclosure properties, charges $49.95 a month, after a free seven-day trial. The company also recently launched BankHomesDirect.com, which charges $19.95 per month and lets people search just for REOs.

Foreclosures.com charges $49.95 per month, after a free seven-day trial.

Otherwise, you might want to enlist the help of a realty agent. Someone who works regularly with REOs might be able to track down the properties more easily than a traditional agent. Melvin is a member of the National REO Brokers Association, nrba.com, which has a searchable database of brokers on its site. There’s also the REO Network, reonetwork.com, which connects buyers with those who specialize in selling REOs.

Lenders aren’t held to the same disclosure requirements as sellers who have lived in the home, mainly because the lender hasn’t occupied the home to notice leaks or other problems. For that reason, an inspection is crucial.

“If there are lessons out of the last couple of years, it’s certainly buyer beware,” said Dan Steward, president of the home inspection firm Pillar to Post, which has a U.S. headquarters in Tampa, Fla.

“We have all heard the stories of people ripping the copper pipe and wiring out … people have literally gone to the light switch, disconnected the wire from the switch box and have pulled the wire through the drywall,” Steward said. Some have ripped out toilets and kicked in walls or left water faucets running before they left the house, often out of anger.

You don’t need to be told the toilet is gone, but an inspector can tell if there is damage 20 feet down the water line because of the way that toilet was ripped out, he said.

Other issues could pop up due to the property being vacant. Large banks will often hire a field service to cut the grass, shovel the snow and winterize a home, yet when homes aren’t occupied it’s harder to catch small problems before they become big ones.

“When we live at home or drive the car, if something is off we notice it. We notice it and we deal with it,” Steward said. When a place is unoccupied, pests could become an issue. If you were living in a home, a nest of raccoons probably wouldn’t be able to find a home in your crawlspace—not for long, anyway.

A neighborhood environmental report might also be worthwhile, he said, which could reveal if the property was the site of a drug lab, for example. When a meth lab is operating in a home, air quality issues can arise; when a home was used for growing marijuana, there is a tendency for mold problems from the high humidity, Steward said.

The time it takes to complete the sale can vary from lender to lender. In some cases, the process goes smoothly, Goldman said. Other lenders are disorganized.

“It really depends on who you’re doing business with,” Goldman said.

But for your best chance at having an offer accepted and for a quick closing process, have everything in order before making the offer, said Duane Andrews, CEO of Clear Capital, a company that provides valuation products for the mortgage and lending industries. That includes having the financing firmed up and writing a clean offer — for example, asking for new oven racks as part of the deal could peg you as a demanding buyer who will be annoying to deal with, he said.

“What this tells the seller is this guy is going to be a pain and they don’t have time for this pain,” Andrews said.

In fact, most bank-owned properties are sold “as is,” so if there is something you want fixed, it’s best to just factor that into the price you’re offering, Melvin said.

But don’t expect to bargain the listing price way down, Melvin added.

Banks typically price their properties at a 20 percent to 30 percent discount anyway, he said. If the property has been on the market for a week or two, don’t expect the bank to drop the price; if the listing is older, you might have more power, he said.

Also, don’t be surprised if the bank that is selling the property asks you to get an approval from its mortgage operation; you often don’t have to take the loan from their company, but they may want to get a closer look at your finances to make sure you’re a solid buyer, Melvin said.

Above all, make sure to follow directions when submitting the offer, he said. That likely includes having an approval letter from the bank and the correct amount of earnest money.

“Most listing agents will have instructions how we want buyers agents to submit the offer,” he said. Delays can occur when instructions aren’t followed exactly.

(c) 2009, MarketWatch.com Inc.

Distributed by McClatchy-Tribune Information Services.

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Read more: http://rismedia.com/2009-10-04/finding-your-dream-foreclosure-what-to-know-when-youre-buying-an-reo-property/#more-40681#ixzz0T5EhfdTZ

Posted by Mark Gipple on 10/05/2009 in Home Buying Tips, — Add a Comment

$8,000 Tax Credit

The $8,000 first-time homebuyer tax credit expires December 1st. The usefulness of the credit diminishes daily if the credit is not extended well before that date.

A homebuyer is eligible for the tax credit only if the home is “purchased” before December 1st.  Buyers have to find a house, complete a contract, satisfy any contingencies, secure financing and go to closing by November 30th

Posted by Mark Gipple on 09/24/2009 in Financing, — Add a Comment