Archive for May, 2010

PROPOSED REAL ESTATE TAXES WILL AFFECT YOUR FUTURE

By: Maria Hass

Lawmakers are considering changes to the tax code in order to pay for a number of tax provisions expiring in 2010. Two of these provisions would impact real estate.

The first would require all owners of rental properties to file IRS 1099 forms for all contractors they do business with if they pay that contractor $600 or more in any given year. This proposal applies to any landlord even with one rental property. The proposed real estate tax will add further costs to the “little guys,” many of whom are holding on to their rental properties despite a negative cash flow in hopes the market will rebound. Any additional taxes imposed on the “small guys” are untimely and unwarranted. A majority of homeowners are losing a lot of money on their homes.

Regarding the second provision, on December 9, 2009, the House of Representatives passed the Tax Extenders Act of 2009 (H.R. 4213), also known as the “carried interest” bill. The tax bill would govern how general partners in real estate investments pay taxes when the investment is sold. The president proposes to tax the income from so-called carried interest as ordinary income rather than as capital gains as under current law. Ordinary income is subject to marginal rates up to 35% (39.6% in 2011) while income from capital gains is taxed at a maximum rate of 15% (20% in 2011), so Obama’s proposal amounts to a tax hike. The proposed bill is awaiting Senate debate.
These new tax burdens will further delay the real estate market recovery and are ill-advised, inopportune and potentially destructive.
Please contact your Congress members today and tell them to oppose these provisions.

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May 26, 2010 at 5:56 pm Leave a comment

What Should a Buyer Expect When Buying in Today’s Real Estate Market?

By Maria Hass, Realtor

A buyer who is looking to purchase a home in today’s market should expect to either wait on a short sale, play the games of the lenders when bidding on bank-owned properties or pay a little more for a traditional sale or a new construction home.
1. Short Sales – This type of transaction could work for buyers who have the time to wait and are flexible about price changes. Short sales could take anywhere from two to eight months to close. The sale and price are not guaranteed until approved by the lender. This may be frustrating for buyers who waited a long time for a house only to find out that the seller’s lender wants an additional $10,000 or more from the buyer to close the deal.
2. Lender-owned Properties – This type of transaction usually ends up in multiple bids because the home is listed for way below market value. The lender’s strategy is to hold on to offers and specify 7 to 14 days on the market prior to reviewing the offers. Some lenders go through three rounds of counter offers before deciding on who the lucky “winner” is. First, they counter with highest and best. Buyers come back with a higher offer than before. Then, the lender makes a short list of who to counter to. By doing this, the lender hopes to improve the offer for the second time before finally deciding on the lucky winner. The potential buyer could go through an emotional roller coaster — and could end up frustrated.
3. Traditional Sales – This is the simplest and easiest transaction. The homeowner sells his/her house through a Realtor. No banks are involved. A response to your offer can be received within 24 hours.
4. New Construction Homes – Spec homes are available for occupancy within a certain time frame. The transaction is simple, easy, and the response is fast. Pricing for spec homes is a little higher but you get a brand new home with a warranty and usually can still choose your flooring colors and upgrades to give the home a personal touch.
One thing buyers should realize is that depending on the price range, area and your home’s features, buying a house in today’s market may offer challenges and some waiting time. Having a lot of patience and starting three to five months prior to your desired closing should give you enough time to find a home. At times, a buyer may submit three or four offers (or more) to a distress home prior to finally winning one.

May 18, 2010 at 9:34 am Leave a comment

Market Summary for April 2010 in Metro Phoenix, AZ

Based on the Cromford Report, below is a market summary for the beginning of April 2010.

City, Appreciation,Days Inventory

Phoenix 27.2% 119
Buckeye 7.3% 110
Litchfield Park 5.6% 123
Glendale 5.4% 112
Fountain Hills 5.3% 284
Queen Creek 4.6% 124
Avondale 3.5% 82
Mesa 3.3% 141
Surprise 3.3% 128
Apache Junction 2.8% 112
Anthem 2.0% 93
Maricopa 1.7% 118
Goodyear 1.1% 128
Sun Lakes 0.0% 243
Tolleson -0.7% 81
Gilbert -2.0% 152
Arizona City -2.4% 99
Sun City West -2.7% 211
Chandler -3.2% 158
Peoria -3.8% 153
Casa Grande -4.1% 120
Gold Canyon -4.1% 237
Laveen -5.0% 138
Tempe -6.8% 186
Paradise Valley -7.8% 610
Sun City -9.0% 194
Scottsdale -10.1% 288
Cave Creek -13.9% 255

Note that the market in Phoenix has been dominated by very heavy sales volume of distressed properties in the west and south where prices reached alarmingly low levels in the first half of 2009 and then recovered sharply. The east and north areas of Phoenix did not follow this same pattern.

Generally the lower priced areas have shown upward price movement, while the higher priced areas declined. Exceptions to this rule can be seen however, as in Fountain Hills, Laveen and Casa Grande. Note however that the $/SF in Fountain Hills is quite volatile on a monthly basis depending on the mix of homes that sold during the month.

Inventory levels are now particularly low in Avondale, Anthem and Tolleson, but remain high in Paradise Valley, Scottsdale and Fountain Hills although these too are showing downward trends as sales rates for luxury homes have picked up from the very low level of a year ago.

Although the overall volume of foreclosure activity still suggests we are past the very worst, March was a very heavy month for trustee sales, with 5,556 for Maricopa County across all real property types. This is partly because March contained more working days (23) and partly because trustees cut sharply into the pending notices. Pending foreclosures declined by 1,314 bringing us down to 49,102 compared with 51,466 at the end of 2009. The number of new foreclosure notices was 8,045, which is 25% below the number in March 2009. The mix of properties in foreclosure is moving slightly away from low end single family homes, while commercial properties and luxury homes in distress are becoming slightly more numerous. As a result many upper-end communities are seeing an increase in distressed properties while lower end communities are stabilizing, having already seen the worst.

The increased activity by trustees caused REO inventory to grow and we will probably see a corresponding swell in lender owned properties offered for sale on ARMLS over the next 2 months. On the other hand, demand for lender-owned properties remains very high and multiple-bid situations will remain the norm.

Sales pricing for REOs and short sales increased during March by 1.2% and 3.2% respectively, but $/SF for normal sales moved lower by 2%. Overall sales $/SF increased by 1.2% while list pricing for actives fell by 1.3% continuing a long downward trend.

May 16, 2010 at 7:27 am Leave a comment

Q AND A ON HAFA GOVERNMENT RESCUE PROGRAM FOR HOMEOWNERS

Today, May 11, 2010 I attended one of the first Realtor classes on the Home Affordable Foreclosure Alternative (HAFA). This government initiated program is aimed at expediting and simplifying the short sale process. HAFA took effect on April 5, 2010. Since it is so new, many lenders, Realtors and other professionals in the real estate industry as well as the public have little knowledge about it. This is the third program that the government has created to help homeowners and improve the housing market.
HARP
First there was the Home Affordable Refinancing Program or HARP. This program did almost nothing to help homeowners in Arizona. Since only loans that are 25% or less upside down are qualified to refinance and most loans in Arizona are underwater by more than 25%.
HAMP
Next there is the Home Affordable Modification Program or HAMP. People were excited to hear about this rescue program only to find out that their lenders did not participate in the program. Very few people were helped. Based on the US Treasury report through February 10, 2010, the program resulted to 40,000 active trials and only 9,763 or just over 20% became permanent modifications. The rest of the homeowners went back in default. To find out about Home Affordable programs by the government, go to Hmpadmin.com.
HAFA
The latest creation of the government is the HAFA program designed to speed up the short sale process nationwide by setting a pre-approved short sale price and providing incentives to the servicers, subordinate lienholders and homeowners.
What are the eligibility requirement of HAFA?
· Owner Occupied 1-4 family residence
· $729,750 maximum loan balance
· Applies only to 1st position loans
· Loan was originated prior to Jan. 1, 2009
· Monthly payment exceeds 31% of gross income
· Hardship exist
· Loan is in default or at risk of default
What are the features of HAFA?
· Pre-approved short sale
· Short contract approval or denial
· No “commisionectomy”
· Full release of liability on 1st and subordinate liens
· Foreclosure suspension
· Payment forbearance or reduction
· $3,000 to seller for moving expenses
· Servicer incentives of $1,500
· Investor incentive of $2,000 maximum to release subordinate liens
· Subordinate liens to get a maximum of 6% or $6,000 per lien
Does my servicer participate in the HAFA program?
Many major banks participate in HAFA. To find out if your lender participates in this program, go to http://www.Makinghomeaffordable.gov and click on servicer.
What loans do not qualify for HAFA?
· Freddie Mac and Fannie Mae loans
· FHA and VA loans
What are some misconceptions about HAFA?
· To qualify for the program, the borrower should have been denied a loan modification or failed during the loan modification trial period. Not true. A borrower could apply directly. Although, during the HAFA short sale process, the borrower will be offered a loan modification program. At which point, the borrower may or may not accept the loan modification.
· Borrowers NOT in HAMP could not qualify for HAFA. Not true. A borrower could submit a HAFA application and if it meets the HAFA guidelines, then the borrower is qualified. HAFA approval will depend on Investor and PMI approval.
Other important notes on HAFA
· Homes bought from a HAFA short sale cannot be flipped and resold within 90 days of closing.
· Arms length transaction applies. Eg. A seller may not sell the home to his son.
· HAFA approval is subject to investor guidelines.
· Investor guidelines are discretionary.
· HAFA approval is subject to the Private Mortgage Insurance approval.
Though the program sounds rosy just like the earlier programs conceived by the government. The HAFA program’s success is yet to be determined. If the program makes sense to the servicer, investor, PMI company and subordinate lienholders, then there is a chance it may help many homeowners. At the moment, only 25 to 30% of loans qualifies for HAFA. Freddie Mac and Fannie Mae which comprise majority of the loans are disqualified. Like any government program, it will take sometime for all parties involved including the servicers, investors, PMI company, title companies, Realtors to know every detail about the program.
To learn more about HAFA or short sales, go to
http://www.Makinghomeaffordable.gov – Information on HAFA and HAMP
http://www.Makinghomeaffordable.gov/contact servicer.html – List of Servicers involved in HAFA
http://www.HMPadmin.com – Administrative website for servicers involved in HAFA and HAMP
http://www.Realtor.org/realtors/basics short sales?wt.mc id=rd0041 – Realtor site with short sale information
http://link.brightcove.com/services/player/bcpid74425227001 – Realtor HAFA video, April 2010

May 12, 2010 at 2:45 pm Leave a comment

GOVERNMENT FORECLOSURE RESCUE PROGRAM – HAFA

Cromford Report, a highly recognized real estate market tracker reports that the number of active short sales in the Multiple Listing Service (MLS) in Metro Phoenix have increased by 35% compared to last year from 11,992 on May 8, 2009 to 16,326 yesterday.

To help homeowners who are unable to keep their homes under the Home Affordable Modification Program, the Home Affordable Foreclosure Alternative (HAFA) program may make a short sale or a deed-in-lieu of foreclosure a viable option to help them avoid foreclosure. The HAFA Program, which took effect on April 5, 2010, provides servicer, seller and junior lien holder incentives for these transactions and is designed to simplify and streamline use of short sales and deeds-in-lieu of foreclosure.

To understand the HAFA program, click on the link below to watch the video.

http://link.brightcove.com/services/player/bcpid1465406675?bctid=75779465001 . You may also go to Nar.org for more information.

Time will tell if HAFA will hold any promise. Earlier the government initiated loan modification rescue plan dubbed as Home Affordable Modification Program or HAMP helped almost no one. The failure was largely due to the fact that lenders are not obligated to join the program and HAMP qualifications apply to only a few. If HAFA makes sense or should I say, “cents” to the lenders and is effectively executed then perhaps, we will see the goal of expediting short sale come to fruition. Thereby, truly helping distressed and troubled homeowners.

May 9, 2010 at 11:27 am Leave a comment

Maricopa County Trustee Sale and Investor Seminar a Great Success

An audience of investors and Realtors filled the room to attend a FREE trustee sale and investors’ seminar on Saturday, May 1, 2010.
Mr. Jameson Van Ness of AZForeclosureList.com spoke about the process, pros and cons, and requirements for bidding at the trustee sale. The audience asked many questions that were addressed by Mr. Van Ness.
The seminar was hosted by Chandler Realtor Maria Hass of Realty Executives. Ms. Hass holds FREE seminars on real estate matters regularly. She believes in educating her clients and fellow Realtors to help them make better decisions. Attendees went home with a clear understanding of what the Maricopa County trustee sale is all about and what it takes to be a successful investor. The trustee sale and investors seminar was a great success!

May 3, 2010 at 7:15 am Leave a comment


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