Tax Credit’s all but gone…

Last year Both the Obama administration and the State of California rolled out tax incentives for first time home buyers and for New Homes sales.

 
The First Time Home Buyer incentive of up to $8,000 dollars is still available for those New Home buyers (New meaning you have not owned a property within the past three years) however they have to close escrow on the purchase of their home before December 1st, no word yet on whether this program will be extended, up to this point there are no signs showing that it will be. What this translates to for people looking to take advantage of this Tax Credit is that, you must be under contract by early September if you intend on using financing, it also means that people looking to buy a Short Sale property or just starting to look are running against the clock in a big way.

 
Regarding the $10,000 dollar tax credit for new homes, unfortunately that one has gone away. They had allocated $100 million dollars for that program and by July 2nd applications to qualify for this Credit were no longer available according to the State of California Franchise Tax Board Web Site http://www.ftb.ca.gov/aboutFTB/press/2009/Release_36.shtml They were slammed with request and the money has all been allocated.
Many buyers are still unaware of both tax credit’s expiring and they are doing their numbers taking this into account. Please talk to your CPA for more details on both and whether you qualify for the $8,000 credit.

 
The question at this point remains, how is the market (particularly home buyers) going to respond to this, many experts believe that this money back from the government played a big part in the market reactivation specially in the $600,000 and bellow price range that has become a sellers market in many parts of the State of California. This together with the “upcoming wave” of foreclosures that is expected to hit the market during the fall according to some analyst.
Next question would be, is there something that can be done pro-actively to mitigate both things happening at once? if so, is it being done?
I always appreciate your comments and questions, please keep sending them my way.
If you want more information on this or any other Real Estate related subject please visit my web-site at www.my858realtor.com. You can also follow me on Twitter http:/twitter.com/rinapodolsky or on Facebook  http://facebook.com/

Has buying foreclosures become a speed sport?

If you are someone who has been thinking of taking advantage of the current Real Estate Market crisis and all those foreclosure properties that have been hitting the market, you are not alone, you are however thinking too much and not acting fast enough.

What I mean by that is that there are many people already out there trying to do just that, they are making offers and trying to buy these properties. You have individuals looking to buy their personal residence, small investors looking at one to four properties and you also have major investors looking to buy in bulk or at the very least very large quantities of bank owned properties also called REO’s.

There are in fact so many people trying to buy them, that when you put it together with some of President Obama foreclosure prevention efforts, particularly the foreclosure moratorium, the outcome has been that it brought the inventory of homes in the $300,000 range which is the average REO listing price way down, according to the California Association of Realtors it went from a 10 month inventory to a 3.5 month inventory in one year. Nationally REO’s went down 26% from June of 2008 to June of 2009.

Some areas like Sacramento which was one of the hardest hit areas by foreclosure’s are even down to a 30 day inventory or less.

So, how is this translating into the actual buying process? Well,people who are looking to buy these homes basically are getting just one shot at making and offer, they have to offer what has been now called their “highest and best” gone are the days of negotiating, starting low and getting a counter offer. If you have been writing offers and trying to buy a property for the last 6 months, by now you know that if you see a good one you act on it quickly, you come in at asking price or over asking price and when you are looking you better be ready to move fast or it won’t be there by the time you are ready, this means having your financing in place, pre-approval and proof of funds as well as down payment all ready to go.

When you look at what has been happening it is very interesting to see that some of the properties in this up to $500,000 price range come into the market and go into pending sometimes less that 2 hrs later. Before banks were leaving properties on the market for 3-4 months before accepting an offer, however some banks finally figured that it was costing them too much in HOA’s, taxes and other fees so they are moving them very quickly.

The other reason some people have mentioned as to why are trying to get this properties out of their books quickly is because they are concerned of a new wave of foreclosures inundating the market sometime next fall.

One of the ways that they had managed to lower the number of foreclosures was by trying to do loan modifications with some of the homeowners, I have to say that from what I have seen not many of these have worked out, most people have gone to the next option which is attempting a “Short Sale”. From the ones that were modified, it has been reported that 53% of them have fallen back into arrears, making Loan Modifications only a temporary extension of the problem but not a solution, and one of the reason for that concern regarding a new wave of foreclosures.

Short Sales and Loan modifications are 2 other subjects that I would like to address on a later post, there is a lot to be said about them as well.

But in closing, The market for REO’s at the price point we have been addressing here is a hot market and the more information you have and the faster you can make an educated offer, the greater the chances of your success in acquiring one of these homes. You will be in a much better position if you have an experienced team and a clear strategy.

If you want any information or need any help getting started just contact us and we will be happy to help.