CHICAGO – Nov. 20, 2008 – Some people go to real estate Web sites because they want to buy a home, but just as many go there just to see how much property is worth, according to a study conduct by Move Inc.

The study concluded that 62 percent of consumers are just checking out home values when they peruse a real estate Web site.

The study found that 82 percent believe that the availability of mortgages is a serious problem keeping potential home buyers in the sidelines, and 50 percent said they believe President-Elect Barack Obama should make assistance for troubled home owners a priority during his first days in office.

About 23 percent say he should do that by increasing the supply of mortgage credit, and 16 percent say he should set up a program to assist first-time home buyers.

Of the 37 percent of respondents who said they would like to buy a home, 41 percent said economic conditions have prevented them from making the move.

Nearly five percent of respondents plan to buy a home in the next 12 months, with an additional 18 percent planning to purchase a home in one to five years.

Source: Inman News (11/12/08)

The U.S. government passed a $700 billion economic bailout package in an effort to stabilize the flailing banking sector. So far, it hasn’t worked as hoped and the financial crisis has deepened since the law was approved. That’s the bad news.

The good news is that there is a lot more than help for just banks in the 451-page legislation. Lawmakers added hundreds of other “sweeteners” to make the bill more popular with the public. See if you can benefit from any of the following provisions:

More insurance for bank deposits: Now your bank deposits are protected up to $250,000 for each account. Formerly, the Federal Deposit Insurance Corporation (FDIC) backed your deposits up to $100,000. The increase is temporary, but is likely to be extended.

AMT Reform: Fewer taxpayers are going to get hit with the dreaded Alternative Minimum Tax, a parallel tax code that was originally intended to make sure wealthy people paid their fair share of taxes, but which has increasingly slammed middle-income earners. Basically, unless you make more than $100,000 for single taxpayers or $175,000 for married taxpayers filing jointly, you shouldn’t have to worry about the AMT due to the change.
Easier to get your mortgage terms modified: The new law asks Federal agencies to encourage companies that service mortgages to help their borrowers who are having trouble making payments modify their loans so they become more affordable. It sounds a little vague, but lenders are already responding to government prodding and agreeing to modify mortgage terms for some distressed borrowers. Bank of America, for example, announced a new plan Oct. 6 that will aid certain former Countrywide mortgage holders.

Caps on executive pay: Again, the terms here are a little murky, but basically executives of firms that participate in the bailout could have to repay some of their bonuses if the funds were awarded based on inaccurate financial statements. Execs also should not get so-called “golden parachutes” or large payments if they are fired. This provision may have psychic, rather than monetary benefits for those Americans who are angry about the high pay awarded some of the same bankers who have presided over the economic crisis.

Banks may be less at risk of failing due to accounting issues: In a controversial move, the law asks the Securities and Exchange Commission (SEC) to consider changing accounting rules that require banks to value securities at market prices even when there are no buyers. That so called “mark-to-market” requirement means banks have to account for some securities as if they are worthless (putting them in bad stead with rating agencies), even if they are sure the securities will eventually be worth something.

Insurers have to treat mental health like other illnesses: The law requires health insurance companies to cover treatment for mental illnesses the same way they cover any other disease. This became part of the law due to procedural requirements. The Senate’s financial rescue plan was actually added to a bill for “mental health parity” that passed the house last March.

Assorted niche tax breaks: The bailout plan has been faulted for including lots of pork – provisions that benefit a small number of people, but that can be key to a politician’s reelection bid. The law contains tax breaks that benefit makers of wooden arrows used in children’s toys, the rum industry of Puerto Rico and the Virgin Islands, wool manufacturers and racetrack owners to name a few.

More development of alternative energy: The law contains extensions for some tax breaks intended to spur the use and development of alternative energy. Homeowners can continue to get tax credits to cover part of the costs of solar panels, windmills, geo-thermal heating systems and electric cars. Companies that invest in alternative energy technologies will also continue to enjoy some nice tax breaks.

Lower taxes in the future? A part of the law which invites skepticism currently, allows the government to take equity stakes in Wall Street firms that participate in the bailout. Theoretically these stakes could one day be quite valuable. Another provision states that after five years, if there are any losses due to the bailout, the government will recoup the shortfall from the financial services industry. In theory, one day this could mean increases in government coffers without tax hikes for individuals. That would be nice.

What do you see? How is this going to impact your life and how quickly will you feel the relief?

BUYERS:

This is your time! Inventory is at all time highs, prices are dropping, sellers are flexible, and rates will remain steady through the end of the year (http://www.msnbc.msn.com/id/26436824). It really IS a wonderful time to make some money in real estate and with no skin off your back.

“[During the boom] buyers usually accepted the property as-is, and we even occasionally offered to pay the seller’s state and county transfer taxes. No more!” said Washington D.C. based agent John Sullivan. Buyers are in the driver’s seat and they know it. They’re using that leverage to pry more concessions out of desperate sellers than they ever dreamed of during the bubble (http://money.cnn.com/2008/08/29/real_estate/sellers_concessions_in_buyers_market/index.htm).

“Real estate decision-making has always been one of the most critical exercises that a household must undertake. Home ownership impacts not only your emotional well-being and lifestyle on a very large scale, but also your family’s personal financial wellness, both monthly and lifelong. A generation ago, people treated decisions such as the one you are currently facing with a deliberateness and gravity appropriate to the importance of the subject matter, but over the past decade or so — not so much. The recent foreclosure crisis, in addition to creating opportunities for buyers, has also had the silver lining of creating a national-level consciousness of what can happen when real estate decisions are not made with sufficient information, long-term lifestyle and financing planning, or attention to detail” (http://www.boston.com/realestate/news/articles/2008/08/28/get_rid_of_buyers_block/).

There are 3 things a buyer in this market should do to arm himself for the home-buying process.

1.) Mindset Management - Rather than approaching this home-buying experience from a place of fear and paralysis, approach it as a project. Your task is simply to gather the specific information you need to equip yourself to make the right decisions throughout your home-buying process. Warren Buffett, advised an audience to “look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”

2.) Need-to-Knows - Real estate markets, values, negotiating practices and transactional procedures are very local –many real estate news reports that confuse people are not. You simply cannot know what the market is like in your state, county, city or even neighborhood unless and until you obtain specific information from a local real estate professional to determine whether now is the right time for you to buy, and how to harness current market conditions to make the best buy possible.

3.) Action Plans - First, decide to make your decision whether to buy or sell based on your lifestyle and life plans. Next, get educated about your local market and make decisions about how to best execute your plan of buying in a way that takes advantage of current conditions. And finally, get your own team of professional advisors, by referral. At the very least, talk with a CPA about the tax implications of home ownership; a mortgage broker regarding the mortgage rates, terms and price you can qualify for; and a Realtor about current, local market conditions and what sort of home you can expect to find at your price range.

Being a player in this market is a tough one. Buyer’s are hesitant to buy and seller’s are weary of whether or not their listings will sell. Because of all the fear floating around, more fear comes as a result. We are in a self perpetuating real estate crisis!

In order to get things moving again, buyers and sellers need to come to grips with the realities of this market and start acting bold in the face of uncertainty. Action is the only way we are going to get out of this and if you are up to the challenge of jump starting our housing mess, then buckles up and heed the advice of the play makers making a difference in our current housing market.

SELLERS:

We’re in the midst of a challenging home-sale market in many areas. However, soft markets can provide opportunities for some home sellers. If you want to sell your home, you’ve got to set yourself apart from the competition. You can still sell your home despite the current marketing conditions: all it takes is a little creativity, some clever strategies - and a whole lot of patience!

1.) Price Right - ”Sellers need to know that correct pricing is and always has been the key to a successful marketing process.” says agent Chelsey Samonte. (Price Shopping-True Value, Seattle Metropolitan Magazine, September 2008) Pricing your home right for today’s market is a vital step to take when selling your home! Reference my last blog, The True Value of a Home, for a more in depth look at pricing your home effectively in this market.

2.) Offer Financial Incentives - Buyers are in the driver’s seat now and sellers need to follow suit. By offering financial incentives to prospective buyers to cover a portion of the closing costs, you will attract a larger portion of today’s buyers looking for a great deal. Often times, potential buyers are hit with hefty closing fees from mortgage lenders, and can often be scared out of purchasing your home. If you offer $3,000-$6,000 for assistance with closing fees, you’ll save much more money than by lowering your asking price by $10,000 or more - and you’ll provide prospective buyers with a selling point that many other homeowners wouldn’t think to offer.

3. Prepare Home for Buyers - Buying a house is largely an emotional decision because people are not just purchasing a home; they are buying a dream … a lifestyle. If you can help them with their vision so they don’t have to rely completely on their imagination, you positively impact how they feel in the home, which will be reflected in the sales price and number of offers you receive. Effective staging maximizes those feelings, creating an atmosphere that makes people want to linger and imagine themselves living in the space. Ultimately, staging creates a home the prospective buyer will not be able to live without. Dana Dickey, vice director of Interior Redesign Industry Specialists said, “We want to give each home that ‘wow’ factor, especially in today’s housing market, in which home buyers largely make their final decision based on emotional factors, it’s important that a house make a good first impression” (http://rismedia.com/wp/2006-10-17/effective-home-staging-proving-crucial-in-swaying-buyers-in-competitive-housing-market/).

DISTRESSED HOMEOWNERS:

We know all to well of the mess of people in financial hardship due to housing situations. Legislation signed by the President has started to help thousands of homeowners get out of risky loans and into more affordable ones. There are also organizations and coalitions such as The Hope Now Coalition that are working hard to rescue desperate families in need. Hope Now has helped more than 2 million at-risk borrowers stay in their homes during the past 13 months, according to numbers released by the coalition last week.

“Despite this progress, foreclosures continue to climb; 91,752 families lost their homes in July. That represents an increase of 14% from June and more than double the number of July 2007, when only 42,043 homes went to foreclosure.

But even now, after months of publicity, many borrowers still fail to respond to Hope Now’s offers to help.

Of the nearly 1.6 million letters that have gone out since November 1, 2007 to borrowers 60 days past due, more than 80% of borrowers still had not called their lenders a month after receiving the letters, according to Schwartz. ‘Outreach is crucial,’ she said. ‘Borrowers have to talk to their lenders. That’s the most important message we communicate’ “  (http://money.cnn.com/2008/08/26/real_estate/Hope_now_hits_two_million/index.htm).

If you find yourself facing the same situation that 91,000+ families faced last month, you need to take some steps to pull yourself from the fire.

1.) Speak up - A foreclosure is nearly as much trouble for your lender as it is for you. Banks are more than willing to do what it takes to help you get out of this mess.

2.) Know your options - The first thing a mortgage company will do is put you on a repayment plan, which will likely involve either suspending or reducing your payments for a few months. Whatever you don’t pay will be rolled back into the mortgage for repayment later on or save up enough money to get back on track. If the repayment plan doesn’t help, the company’s next offering will probably involve an interest-rate modification. They can freeze it interest rates or even lower the interest rate to keep your payments down. This can make a world of difference when it comes to the amount of money you’re forking over on a monthly basis.

3.) Seek outside help - Organizations like HOPE NOW, a non-profit alliance of mortgage services, counselors and investors (888-995-HOPE) is there for you in your time of need- Use them! 

4.) Learn your lesson - If one good thing has come out of this housing situation, it’s that it’s served as a not-so-gentle reminder of the importance of having a long-term lifestyle and financing plan. I have said it before and I will say it again, Dave Ramsey’s 7 Baby Steps is the most effective way to dump some serious debt and building great wealth (http://www.daveramsey.com/etc/cms/baby_steps_2867.htmlc).

So whether you are a buyer, seller, or are in pretty big pickle, take note of the options out there and use them to your advantage and turn this crisis situation into a profitable one.

Listen up, now. Before you sign anything, you need to know the consequences. Check out the following scenarios and decide which of them you think are legally binding.

A buyer tells a seller he wants to buy his house and will pay his asking price. The seller says, “Fine, we have a deal.” Nothing is in writing.
A buyer makes a written offer to buy a house. The seller signs the offer without making any changes. An hour later he realizes he should have changed the closing date.
A buyer makes a written offer to buy a house. The seller reads it over and makes a counteroffer.
A buyer submits an offer. The seller makes a counteroffer. The buyer signs the counteroffer without making any changes.
The buyer and seller are in the tenth round of offers and counteroffers. Right now the seller is reading over the latest counteroffer from the buyer, who has signed and dated it. Is there a deal?
The seller makes a counteroffer to the buyer in writing, signs and dates it, and gives the buyer a deadline of 5 p.m. Monday to respond. The buyer responds at 7 p.m. The seller says, “Sorry, I accepted a better offer at 6 p.m.” Did the first buyer have a legal deal?
Answers: Go to the head of the class if you said there were binding deals made in examples two and four. The seller in number two very likely can still amend the contract to change the closing date.

As for number six, the first buyer did not have a final deal, but a dispute could easily arise. If an agent were involved, phone calls likely would be placed to make sure the buyer was really backing out. There may have been a legitimate reason for the delay. Anyone working solo would be advised to check with an attorney before accepting the second offer.

Bottom line: Once both parties have signed a document, it is legally binding.

So is there no way out? Remember the contingencies in the contract? The deal could yet fall apart. Among the possible reasons:

There’s a difference between what the bank will loan and what the buyer agreed to pay and she can’t come up with the rest.
The buyer is unsatisfied with the inspection report.
Seller and buyer can’t agree on who pays for which repairs.
The title is clouded by unpaid back taxes, or an ex-spouse is contesting ownership.
There’s almost always a creative way to mitigate a potentially deal-breaking scenario. Experienced agents know what’s worked for others and how to amend the sales contract. But in almost all cases, the seller and buyer have to be willing to return to the dining room table to negotiate a solution.

Real Life: Using the Inspection Loophole
Here’s a story about an attempt to use a loophole. After the inspection of a unique waterfront property uncovered some dry rot, the first-time buyers remained enthusiastic about the home. The sellers agreed to make repairs before the sale closed and immediately hired a contractor.

The buyers started dropping by unannounced, sometimes one of them, sometimes both, while the repair work was underway. One day they would love the property and talk about their planned new color scheme. The next they would sound as if they were suffering from buyer’s remorse. The dithering young couple assured the sellers they were seeking financing. But even the real estate agents were getting exasperated with the couple’s behavior.

The buyers eventually backed out. Their qualms had nothing to do with the property and everything to do with their unresolved personal issues. They said frankly they decided to continue to spend their money on their devil-may-care, “champagne and oysters” lifestyle. Responsibility for a mortgage and maintenance were not their thing. They escaped the deal through the inspection loophole by saying they were unsatisfied with the inspection report.

By now the property had been tied up for weeks. The sellers did not have a backup offer in hand and the market was cooling a bit. Taking a hard look at their options, the sellers decided to pull the property off the market and list it again the next spring.

During late winter, they hired their own inspector to eliminate any surprises that could slow a deal. Anything that might give a buyer pause was repaired. They also installed new carpeting in the master bedroom and hallway and updated paint colors in the bathroom and home office. With the property in gleaming, move-in condition it sold quickly and for a much better price than the previous year’s offer.

Bottom line: For sellers who have time to wait, having a flaky buyer walk away can sometimes mean a better deal.

Ah, the life of a seller. All the weeks of living with everything spiffed up and on public view.

Will you ever again be able to hang your threadbare bath towel on a hook in plain sight? Drop your gym clothes in the entryway? Let your teenage daughter festoon her room with shorts and shoes? In other words, will life ever feel normal again?

Yes. But take a deep breath. What’s coming next is very important and takes a different kind of energy. You are about to negotiate a binding legal contract.

Skills required? An ability to focus on technical detail and a talent for meeting and talking with strangers.

You will hear over and over that the value of your house has nothing to do with what you need to get out of it. But when you have an offer, it’s important for you to know precisely what you need from the sale of your home before you start negotiating with a buyer. One strategy is to make two lists. On one, record the best scenario you can imagine. On the other, list the minimum terms you can accept and still have a deal work for you.

How to Get Started
First determine the minimum amount of money you need to clear on the sale. Will you need to pay off a mortgage? Clear credit card debt? Make a down payment on another house? Make repairs to your present home if the buyer’s inspector finds something dire? Don’t forget your portion of agent commissions and closing costs. And there will be fees, taxes, and insurance at closing.

Speaking of commissions and fees, can you afford to pick up a percentage of what the buyer usually would pay if it means keeping a deal together?

Also figure out how much it costs to live in your home each month for mortgage, taxes, and insurance. This total could help you at the negotiating table when you are deciding whether to accept an offer for less than your asking price, but one that would get you out of the house quickly.

Give some thought in advance to the kinds of personal property a buyer might request and list items that are definitely off limits - the kids’ play set in the backyard, the freezer in the basement, the standalone basketball hoop, the lawn mower. Are any of them deal breakers?

Know your best timing for a move. Do you have a job waiting in another town? Do you want to stay put until your spouse returns from military duty? Would it be ideal to stay in your home until school is out?

Your Two Lists
Here’s an example of how you might apply your lists. Let’s say you’ve already made an offer on another home contingent on the sale of your home by a certain date, so you want a quick sale.

Your best deal might be:
A full price or higher offer
A buyer pre-approved for a mortgage
A buyer willing to waive the inspection, or to be responsible for any necessary repairs if you lower the sales price
A buyer who wants to close in 30 days, sooner if possible
A buyer who doesn’t want any personal property

Your minimum deal might be:
A buyer who offers 7 percent below the asking price
A buyer who agrees to close in 60 days
A buyer who asks only for standard financing, inspection, and clear title contingencies
A buyer who compromises on personal property, giving you the freezer you want to keep

Each offer that comes to you as the seller will set up a different scenario. You’ll have to decide which to reject and which to try to negotiate terms favorable for you. Advance work is time well spent whether you are working on your own, with an attorney, or with an agent.

Seller’s Tip: Dissect your personal circumstances with surgical precision so you are very clear about what you need from a buyer, including the minimum sales price you can accept.

Former Federal Reserve chairman says housing market could stabilize next year or ‘beyond’ - report.

Important facts to be aware of concerning the recent bill that was signed related to the $7,500 tax credit for first time homebuyers. There is some misunderstanding of it’s purpose.

Here’s some important facts  About the First-Time Homebuyer Credit

• Establishes a first-time homebuyer refundable tax credit equal to 10 percent of the purchase price of a principal residence, not to exceed $7,500.
  * This is a tax credit claimed on federal income tax returns. This is not down payment assistance that can be used at closing.
• Requires taxpayers receiving the credit to repay it over 15 years in equal installments by imposing a surcharge on the taxpayers’ annual income tax.
• Allows the credit for purchases on or after April 9, 2008 and before July 1, 2009.
• Phases out the credit for taxpayers with incomes over $75,000 ($150,000 for joint returns).
• Prevents credit from being allowed to any taxpayer for any taxable year if:

1. The taxpayer receives the District of Columbia first-time homebuyer credit.
2. The residence is financed by the proceeds of a tax-exempt MRB.
3. The taxpayer is a nonresident alien.
4. The taxpayer disposes of such residence before the close of the taxable year.

 Bottom Line - If they are first time buyers, it is most often more advantageous to use the state and county assistance programs as these offer down payment assistance rather than just a credit on their taxes and they cannot utilize both! Its one or the other.

FLORIDA 

properties in foreclosure. Recent research indicates that the negative effect of these foreclosures can be felt up to a half a mile away and can depress property values for as long as five years. Under the Senate-passed formula, Florida stands to benefit from $288.8 million in direct funds for neighborhood stabilization with a multiplier effect of an additional $623.5 million as the grants are leveraged to create new jobs as houses are rehabilitated and returned to productive use. The estimated overall economic benefits of the neighborhood stabilization grants are $912.3 million in direct, indirect and induced activity at the state level. It is estimated that these funds would be used  to restore 8,669 properties to productive use, providing safe, affordable housing to its occupants. Rehabilitating those houses is anticipated to generate 5,813 new jobs, most of which will be in construction, but will also stimulate jobs in retail, business services and the restaurant industry. In addition, localities can expect to see a direct return of$12.7 million in property taxes (since in many cases, banks will not pay taxes on properties they do not expect to sell) as well as a savings of$86.7 million on trash collection, police, and fire services that they must otherwise expend on foreclosed and abandoned properties. This analysis does not include the property tax revenues that will be retained from properties no longer at risk of significant declines from being in close proximity to foreclosed and abandoned houses.