Archive | Tips for Buyers
According to data from the Northern Nevada Regional MLS, sales in the Sparks area (which includes Spanish Springs and Wingfield Springs) had short sales leading in the 3rd Quarter of 2010. Short sales accouted for 35.4% of the sales in the quarter, traditional sales 34.9% and bank owned 29.8%. Compared to 3rd Q 2009 when bank owned sales topped the charts at 41.43%, traditional sales at 26.7% and short sales at 26.5%
The total number of sales for the Sparks area (MLS area 108) dropped slightly from 2009 to 2010, down about 6.1%. In addition, the median price also fell from $170,000 in 3rd Q 2009 to $160,700 in 3rd Q 2010, a drop of 5.5%.
There are currently (as of 10-22-2010) 568 active listings available to buyers in the Sparks area market. Of these 48.6% are short sales, 34.4% are traditional sales and 16.9% are bank owned. Key here for buyers is to make sure you have a buyer’s agent working for you that knows the ins and outs of short sales – doing your homework before making an offer on a short sale is key.
Bank owned properties continued to earn the highest list to sale price ratio. In 3rd Q 2010 bank owned lisitngs got an average of 99.6% of the asking price, short sales 98.9% and traditional sales 97.4%. Fewer foreclosed properties at low prices, continued mis-understanding of short sales and over-priced traditional listings drive these numbers.
As expected short sales have the highest average number of days on market. For 3rd Q 2010 short sales averaged 184 days on market, bank owned 79 and traditional sales 77. As a note the average number of days to close a short sale is relatively the same between 2009 and 2010. We keep being told by the banks that they are improving their processes. Hopefully this will reflect soon in our average days to close a short sale.
According to a Yahoo.com report on 10-20-2010 more than 55% of the active mortgages in the Reno-Sparks area are upside down. I think we will continue to see more and more short sales as homeowners become more educated about short sales as an option to foreclosure. The key is making sure that you select an agent that is highly skilled in the short sale areana and get legal and tax advice as well.
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At the end of business today the first deadline for first time and move-up buyer tax credit expires. Now all those buyers that raced to get into contract will now be racing the clock to get their escrow closed by June 30th. With the frenzy initially over, you have to ask yourself is it still a good time to buy?
Of course it is. Homes in the Reno-Sparks market are more affordable than they have been in years. Interest rates which are predicted to rise in the coming year are still in the low 5% range. Homeownership still give you the things that your parents looked for when they bought houses – shelter, pride of ownership, sense of community, freedom to make it your own and an a great tax write-off. In many cases rent in our area is easily equilient to what you would pay for a home mortgage.
Buyers may continue to face some challenges in our market as inventory levels remain low in the super competitive price ranges under $300,000. Also with the high number of short sales in our market buyer will need a skilled agent to help them navigate listings that may have a better chance of closing sucessfully. Buyers will also continue to face mulitiple offers on bank owned and traditional sales as these properties types will continue to close more easily than short sales.
Without a crystal ball we can’t see into the future, but for now the signs all point to a thumbs up for purchasing a home.
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In the State of Nevada real estate agents have specific duties they are required to provide to all parties and more specifically to the client with whom they are representing. These duties are clearly defined on the Duties Owed By a Nevada Real Estate Licensee. This form is provided to all clients, in every real estate transaction and is a required document by the State of Nevada.
To all parties in a short sale the agent must act in a manner which is not deceitful, fraudulent or dishonest, while exercising reasonable skill and care. The agent must also disclose to each party in the transaction all material and relevant facts.
Reasonable skill and care would require the agent to seek training on short sales as they are much more complex transactions than a regular purchase or sale. The agent should be familiar with marketing strategies for short sales, the short sale process, bank requirements, and diligently follow up through the transaction. The agent must disclose to each party material facts – what lien holders are involved, has a Notice of Default or Sale been filed against the property, what is the homeowner’s hardship. In addition to any other facts that might be pertinent – are their other liens, is the agent using an 3rd party negotiator, is the seller current or delinquent, is this the seller’s primary residence, does the seller qualify for HAFA? These are all material and relevant facts in a short sale.
In addition, the agent is charged with additional duties to their client – the buyer or the seller.
- Exercise reasonable skill and care – again the agent should seek education on short sales.
- Not disclose confidential information without written consent of the client – in a short sale transaction the seller authorizes the agent to discuss confidential information with the seller’s lien holder.
- Seek a sale, purchase…at the price and terms stated in the brokerage agreement or price acceptable to the client. This is done through agents listing the property in MLS, marketing the property etc.
- Present all offers made to, or by the client as soon as practicable, unless waived by client. The listing agent has the obligation to present all offers made to the seller. If the seller accepts an offer then subsequent offers should be presented for back up position. Only one offer should be forwarded to the seller’s lien holder.
- Disclose to the client material facts of which the licensee has knowledge concerning the real estate transaction. The licensee should inform the seller of the legal and tax implications of a short sale, how the short sale process works etc.
- Advise the client to obtain advice from experts relating to matters which are beyond the expertise of the licensee – it cannot be stressed enough that agents should not be giving legal, tax or credit counseling advice to clients. These are all areas where clients should be referred to a licensed professional.
- Account to the client for all money and property the licensee receives in which the client has an interest. When representing a buyer on a short sale, if the earnest money is not going to be deposited until short sale approval is procured, the agent should clearly identify who has these funds.
Agents should clearly not be giving sellers advice on the legal, tax and credit implications of short sale but directin them to the great FREE resources available in our community. On the buyer’s side, agents should be collecting as much information about the short sale as possible to help thier buyer’s make informed short sale purchase decisions.
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With the first time and move-up buyer tax credit deadline quickly approaching, I think it is important to ask yourself is that the only reason I am buying a home right now? Yes, who wouldn’t want to take advantage of this great $8000 or $6,5000 give-away from the government? I think there are some other really great reasons to buy right NOW.
Home prices are more affordable than ever. Interest rates are low. Homeownership give you a great sense of accomplishment. You become part of a community and neighborhood. You get to deduct the interest on your home loan on your taxes (my personal favorite). You can decorate and personalize the home to make it your own.
The tax credit requires buyers to be in contact for the purchase of home by April 30, 2010. That is about 45 days away. Then you have to close your transaction by June 30, 2010. That’s 60 days after the deadline. At this point it is less than 90 days total. Unfortunately if you are considering a short sale you may not make the closing deadline as many short sales can take 120 days or more. I say that if you find a home you love, make the offer. If you close in time for the tax credit – BONUS! Don’t make the mistake of rushing into a purchase just to get the tax credit and then realize you didn’t buy the home you really wanted.
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You are sitting in front of a listing wondering what the price is, how big it is etc. The flyer box is empty and you can’t reach the agent on the phone. You’re frustrated. Nof if you’re sitting in front of a listing that offers information via Text Messaging. Text messaging is exploding throughout America. As a buyer you demand the information on the property to educate yourself prior to interacting with the seller. I am using Goomzee, a technology that allows me to deliver information directly to the buyer while they are sitting in front of my listing. A simple sign rider directs the buyer where to text. Instantly the buyer receives the most important details along with pictures of the property. The buyer is also given my contact information to schedule a showing if they want to see more. Buyers love it, sellers love it and agents love it. The information is shared quickly. Not to mention it’s GREEN. No paper flyers. A definite win-win.
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As a Real Estate Broker, focused primarily on distressed property sales, I can honestly say that I have. August – October of this year I was just about as busy as I have ever been in the business of Real Estate. Most the people I chat with in Mortgage, Title, Inspection Services, etc. say the same thing. The transactions were typically affordable in nature but it was nice to see a lot of them. More importantly there was a sense of urgency in the market-place. In certain price ranges and neighborhoods demand clearly exceeded supply. When considering the following points I can’t help but feel as if another shoe is about to drop.
- The extension and expansion of the credit has left some recent buyers wondering why they were in such a big hurry. Meanwhile some would-be buyers are feeling a little less confident. All are worried they will or have paid too much.
- Housing demand is typically created by one or more of the following: Household formation, employment opportunities, attractive financing and the lure of home equity. All of these are lacking in my market.
- I sense that many if not most of the recent first-time buyers would have eventually purchased a home regardless. The looming expiration of the tax credit served to get them of the fence. This created a somewhat false demand.
In short I do think we’ll suffer a bit of a hang-over this next year. As a generality banks are holding a bit firmer to their prices when dealing with fore-closed properties. I do expect interest rates to rise at some point. Short sales are just as mixed up as they ever have been. It will be interesting to see how things turn out for the big auto companies after the “cash for clunkers” revenue stops showing up on their bottom line. Perhaps an indicator for the near future in our housing market.
That said, if you’re in the market for a home now, don’t be too concerned. Your income should be secure. The monthly payment should be conservative in relationship to your income. It needs to be the right house at a fair price. If all those pieces fall in place, I say go for it. Prices will inevitably rise & fall and I think the joy of home ownership has been relatively under-rated lately. Planting a tree or shrub wherever you wish, knocking a hole in the wall to hang the family heirloom or driving down your street to the “best” house on the street; some things are priceless.
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Congress has extended and expanded the homebuyer tax credit. The updates will become effective when President Obama signs the bill.
Here are the highlights for the December 1, 2009 to April 30, 2010 Rules:
- First Time Buyer Credit remains unchanged at $8,000.
- First Time Buyer still defined as somone who hasn’t had an interest in a principal residence in the past 3 years.
- New – Current homeowners can now take advantage of a $6,500 credit if the sell their home and buy a new one. These homeowners will have to have lived in the home they are selling for more than 5 consecutive years of the previous 8 years.
- Credit terminates on April 30, 2009. Buyers who have written, binding contracts to purchase in effect on April 30, 2010 will be given until July 1, 201o to close.
- Income limits increased to $125,ooo for single and $225,o0o for married couples.
- Purchase price of the home cannot exceed $800,000.
Please contact your REALTOR for more information, as well as your tax preparer to ensure your eligiblity.
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After two weeks of delay, the Senate last night cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.
The homebuyer tax credit, due to expire in 28 days, would be extended through April 30 of next year. First-time buyers who are in process of making a purchased would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.
For the first time, the legislation cleared last night makes move-up buyers as well as first-time buyers would be eligible for a credit. The $8,000 maximum first-timer credit will continue and will now available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.
By Steve Murray of Real Trends
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The deadline is quickly approaching for buyers who want to take advantage of the $8,000 First Time Home Buyer Tax Credit. Buyers must close escrow on or before November 30th.
Many buyers are still anxiously hoping to close in time for the credit. There are currently about 1890 pending sales in the Reno-Sparks area for stick built, single family homes. Of this number about 61% are short sales which typically take 60-90 days to close. Buyers will need to consult with their REALTOR if they are concerned about closing in time.
According to Moody’s chief economist mark Zandi, by the time the credit expires it will have been responsible for sales of 400,000 new and existing homes, out of a total of 1.4 million sales. That is about 28.5%. Personally 75% of the buyer transactions I have closed so far this year were with buyers who qualified for the tax credit.
As of today there are only 28 more “escrow closing” days. There are 4 holidays between now and the end of November, and with escrows only recorded Monday through Friday time is definitely of the essence.
Currently there are over a dozen bills presented to Congress to extend the credit. If you are a buyer waiting to close and concerned that you might not close in time, I would highly recommend that you contact your Representatives in Congress and urge them to extend the credit. The National Association of REALTORS estimates that for every home sold $63,000 is pumped into the economy which is the equivalent of one new job. This credit is a win-win for both home buyers and the economic recovery.
A recent Zillow survey found that 70% of prospective first-time buyers said that the tax credit was the primary influence, a significant influence or some influence to their purchase decision. Zillow stated that if the credit were extended it could account for another 334,000 home sales. With increasing foreclosure rates, this could be a major factor in whether or not we see a good year next year or one that has continued negative pressure on prices.
The bottom line is that regardless of whether you have enough time to close before the tax credit expires, conditions are still ideal to purchase a home – low prices and competitive rates. If you get the tax credit – it’s a great bonus!
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An REO (Real Estate Owned) is a property that goes back to the mortgage company after an unsuccessful foreclosure auction (also known as a Trustee’s Sale). Trustee Sales (often an auctions held on the courthouse steps) begin with a minimum bid that includes the loan balance, any accrued interest, plus attorney’s fees and any costs associated with the foreclosure process. In order to bid at a foreclosure auction, you must have a cashier’s check in your hand for the full amount of your bid. If you are the successful bidder, you receive the property in “as is” condition, which may include someone still living on the property. There may also be other liens against the property. Trustee’s Sales are typically advertised via local, public notices such as local newspapers.
Since what is owed to the bank is almost always more than what the property is worth, very few Trustees’ Sales result in a successful closing. If the Trustee’s Sale is unsuccessful the property reverts to the bank or loan servicer and is now considered REO, or “real estate owned” property.
The bank now owns the property and the mortgage loan no longer exists. The bank will handle the eviction, if necessary, and may do some repairs. They will typically negotiate with the IRS and local municipalities for removal of tax/municipal liens and they normally pay off any homeowner’s association dues. As a purchaser of an REO property, the buyer will typically receive “clear title” and the opportunity to thoroughly inspect the property. These are the properties buyers will typically see on MLS.
A bank owned property might not be a great bargain. Do your homework before making an offer. Make sure that the price you’re offering is comparable to similar homes in the neighborhood. Consider the costs of renovation. Last but not least, consider your loan type and down payment amount. Loans with high “loan to value” (small down payment) generally require that the home be in good condition.
A well informed real estate agent, representing the buyer exclusively is invaluable in such a transaction. There are many pitfalls and complications that can be avoided with such representation.
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Friday, October 22, 2010 By: Amy Shocket
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