Michael Roberts' Blog -San Jose Homes, Real Estate and Houses for Sale

You want the Short Sale approved by the Jr. Lien Holder?  It can be like a Birthday Party!

Invite the Jr. Lien Holder to the Birthday Party if you want the Short Sale approved.

Remember when you were a kid and went to  birthday parties and the Cake never seemed to be divided exactly even?    If you saw Johnny get a bigger piece you wanted a bigger piece.  The Jr. Lien Holder has the same reaction.

The Jr. Lien Holder knows  the HUD1 only allocates to them what the First Lien Holder is willing to serve.   All the so called ‘experts’ say they have no recourse.    This is wrong in many cases!  You must persuade them to accept what the First is offering or find alternatives.  They may want the corner piece.  Not only is this important to know and execute, there is the question of the second position.  Is it a purchase money loan or HELOC (Home Equity Line of Credit)?

If the second mortgage is a purchase money loan, loan used as purchase money at the time of the purchase, then there really is no recourse… IF you do not fall prey to their tactics.    But Wait! Is the Second mortgage a HELOC?

In the case of a HELOC their recourse is to leave open the option of  a Deficiency Judgement against you.  It is important to know the law in your State regarding DJs.  Your Realtor and Attorney will know this.

I recently found one of my clients was being led into foreclosure by the HELOC second holder.     Not only was there a so called  “Short Sale Expediting Company” involved there were 2 different lending institutions involved and the cake was not going to be divided evenly.   Birthday parties are always more fun if everyone feels they are getting their fair share of the Birthday Cake.  Actually, the SSEC was not doing anything for my new client.   They had not even tried to cut the cake.    I became involved and quickly learned the Jr. Lien Holder wanted MORE ( Really?) and was not going to settle for what the First was willing to offer.  I found that the Jr. Lien Holder would allow items to paid outside of escrow (POC).   It became obvious they only wanted to see contributions.  They were not necessarily concerned with the size of their slice of cake anymore.  The were more interested in the size of the other pieces.   Guess they didn’t like butter cream either.

Short Sales with 2 or 3 different lenders, in most cases, have a HELOC  in Santa Clara County.  How can you convince them that their piece of cake is satisfactory?    Talk with an accomplished Realtor and an Attorney if you find this is your situation.   Often, you can find a Realtor and Attorney who have a successful record of executed Short Sales and negotiated strongly with HELOC lenders.

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• Only 5 percent plan to buy a home next year (msnbc.msn.com)

Buying a short sale is like being a miner…A miner will dig and dig, for months, until they find gold right?  Buying a short sale can be very much like mining for gold.  You need to have a miner’s mindset and use better tools than the others.

“How many months is this going to take?”   This question is being asked with great regularity… too much really.   The answer…It depends on who has the mine.  Period.  If the Listing agent  (who has the mine or short sale) is not proactive then it doesn’t matter how hard your Realtor works or how high your offer is…you won’t find any gold.

Your Realtor is your mining pick.   They need to know how to qualify the listing agent’s knowledge, experience and ability or, at least, be willing to work to help the listing agent make progress with the bank who is ultimately going to approve the short sale and…shine the light on the gold.

A successful gold miner will have a map of the gold mine and know how to navigate it.   Your Realtor of choice will need to have a good map and understand the best way to navigate their way to the gold and extract it.   This map is developed through representing sellers AND buyers of  short sale properties, understanding all the pitfalls  and the best practices to avoid them.

More and more short sales will be coming to the market and,  the best homes and best buys available, will likely be short sales.   This is the market condition reality for the next year or longer according to Banking industry experts and Real Estate professionals based on market statistics and economic conditions.

The extremely low interest rates are bringing droves of buyers out and multiple offers on the best homes are the norm in San Jose as well as Los Gatos and all around Santa Clara County, for that matter.  Too many miners and not enough mines.  You can avoid having to compete with these buyers if you realize they are overlooking the opportunity in front of them.  The Short Sale properties.    Agents are avoiding them because they think  that most of them will never close.    Ahhaa!    The key!   Find other mines!  Be a good miner and have the sharpest pick!

The Debt Relief act of 2007 has been revised and every Seller considering a short sale better brush up!  Tax  Software has yet to be updated and one needs to get the new form 982 from the IRS or Post Office.  Those extensions are due!!!!

From the official IRS website:

The late-December enactment means that reporting procedures for this law change were not incorporated into tax-preparation software or IRS forms. For that reason, people using tax software should check with their provider for updates that include the revised Form 982. Similarly, the IRS is now updating its systems and expects to begin accepting electronically-filed returns that include Form 982 by March 3. The paper Form 982 is now being accepted, but the IRS reminds affected taxpayers to consider filing electronically, which greatly reduces errors and speeds refunds.

The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. In most cases, eligible homeowners only need to fill out a few lines on Form 982 (specifically, lines 1e, 2 and 10b).

The debt must have been used to buy, build or substantially improve the taxpayer’s principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.

Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1099-C) from their lender. For debt cancelled in 2007, the lender was required to provide this form to the borrower by Jan. 31, 2008. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

The IRS urges borrowers to check the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home ( Box 7).

Note: Legislation enacted in October 2008 extended this relief through 2012. Thus this relief now applies to debt forgiven in calendar years 2007 through 2012.

Bringing the Dream of Homeownership Within Reach

I have waited to post this info since, the last time the program was announced it was removed and now, finally, we can rely on it’s use.   I have added a link below, from the housing dept., to clarify the details for you and everyone in our Santa Clara County community of interested buyers and investors.

Congress has passed the legislation that grants a tax credit of up to $8,000 to first-time home buyers.

Here is more information about how the 2009 First-Time Home Buyer Tax Credit can help prospective home buyers become part of the American dream.

Who Qualifies?

First-time home buyers who purchase homes between January 1, 2009 and December 1, 2009.

To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Which Properties Are Eligible?

The 2009 First-Time Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Will the Credit Be?

The maximum allowable credit for home buyers is $8,000. Each home buyer’s tax credit is determined by two factors:

The price of the home-the credit is equal to 10% of the purchase price of the home, up to $8,000.    In our San Jose market this is a no brainer…the whole $8000 credit can be used if you meet the income restrictions.

The buyer’s income-single buyers with incomes up to $75,000 and married couples with incomes up to $150,000-may receive the maximum tax credit.

How to use the credit

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $75,000 and $95,000 for single buyers and between $150,000 and $170,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income-over $95,000 for singles and over $170,000 for couples are not eligible for the credit.

Will the Tax Credit Need to Be Repaid?

No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during the three-year period, the credit will be recouped on the sale.

Wow,  it’s 98 degrees out!  The number of sales for the month of April for Santa Clara County are also hot and very encouraging.    It is obvious our market is stabilizing,  finally!  Or is it?  Could this just be a spike that will pop this little bubble?

If  I were a gambling man, I would bet that the heat today might keep (some) buyers away.  Nah!  Didn’t apply yesterday.

Yesterday,   Saturday,  there were so many agents and clients showing/viewing property that parking in front of many listings was hard to find.     Several new home listings, a few my clients found worth pursuing, were already looking at multiple offers.

The average days on market for the County was down by almost 30 days.     We were looking at 125+days and now we are seeing 108 days.   The average sales/listing price percentage is up to 96% and has held consistently here for a couple of months now.

I wonder if I should buy that 30,000sq ft home now.  It;s only $64mil.  Maybe after Ice Cream!

While searching for a particular single family home for a recent buyer client, looking for REO’s (bank owned properties) (foreclosure to be specific), I kept getting the same results….good relative data that was current and up to date in the right communities.   In the meantime,  my new client forwarded a handful of MLS numbers and excitedly asked  “Can we see these foreclosure homes this afternoon?”   Funny thing was… They were no longer available.  One had a  pending sold status another was no longer on the market and the last one…I could not even find.

Frustrated, I asked my client where did you find these listings?   The answer was disappointing…another website.  I won’t share which one as I have found the data there to be poorly arranged and not current by any standards.   Figures!   I asked “Why would you go to another website to find a home when I have been sending you the most recent daily updates?”   I got another “figures” answer. …”I saw it on the web and they advertised on the TV news”.    Oh Gosh!  Not the web monkeys!

Many new websites and data exchanges have been popping up lately.  The problem with these other sites is that their data is third party.   They are built by web masters to capture leads that are then sold to the uninformed Real Estate agent looking for new business. These sites load from the same place your search is sourced from.  The one you set it up with your Realtor whom you probaly hired to find you the best home at the best price available.

Unfortunately, the web architecture does not have a true update process programmed in.  This allows for information to become old and irrelevant.    Much of the information is derived from Title records too.  If someone refinances their mortgage it will report it as a sale when it is “far from that”.   If you thought a home sold for $250,000 which was actullay in a million dollar neighborhood…good chance it did not REALLY sell.    Then there is the home that is $300,000 under market price….it actually sold 2 years ago!

In short,  all the homes available for sale were right here at their finger tips.   The data derived from this search tool is current, changes are updated by the minute and there is the capability to have any new results, based on the home search criteria, emailed directly to them.

The map search is the Best home search tool for many buyers.  This allows you to draw a line around a neighborhood and see only those results without being overwhelmed with a zip code search that will, invariably, return homes not anywhere near your desired neighborhood.   San Jose is rich in investors and fast, filtered results are paramount in being the first to find the best buys.

I hope I remember, the next time a meet a new client,  to share with them the dynamic web source for home buyers is right here.   Santa Clara County, Los Gatos, Cambrian, Blossom Valley, East Hills, Silver Creek, Milpitas, Fremont and Campbell etc… are included.   Cities in Merced, Stanislaus, Alameda and San Joaquin County are participating in the results found in this too.

Maybe I should post a bulletin on TV!

Which season is the best time to be a homeowner? Tax season! Along with the freedom to paint and remodel, tax breaks are one of the many perks of homeownership.

The bad news? Unless you choose to take the standard deduction, your days of “EZ” tax returns are over. You’ll need to pick up the 1040 long form and itemize your deductions on Schedule A. Get IRS forms here.

Most state and local governments charge property taxes, which are an annual tax on the value of your property. You can deduct all of the real estate taxes that you pay.

There is some good news about those monthly mortgage bills: A part of the soul-crushing sum can be deducted on your tax return. For most homeowners, the bulk of each payment goes towards interest. That interest is tax deductible, up to a total of $1 million ($500,000 if you are married filing separately) on loans taken out to buy, build or substantially improve a principal residence and a second home. Any type of home is eligible: a mobile home, house, condo or even a houseboat.

In order to deduct mortgage interest on your second home, you must stay there at least 14 days a year or more than 10 percent of the days it is rented during a year. If you don’t meet this requirement, it is considered a rental property rather than a second home.

Also, other rules apply if you rent out space in your primary residence.

“Talk to a tax professional. You have to report the income because that is business use of the home as well as residential,” explains Alison Flores, a research analyst at the H&R Block Tax Institute.

You can also deduct interest on home equity loans of less than $100,000 ($50,000 if single or married filing separately), as long as the first and second mortgages total less than the value of your home.

EXAMPLE: You take out a $40,000 home equity loan to pay for your son’s college tuition. Your home is worth $100,000, and you owe $70,000. You can deduct the interest on $30,000 dollars of the loan, but you’re on your own for the remaining $10,000.

If you deduct enough mortgage interest to get a tax refund, you’ll need to claim that money as income in the year you receive it.

Always consult your tax advisor. For more information, read IRS Publication 936.

Scroll Down for More Tax Tips….

Congratulations — you’re a homeowner! Now that you’ve moved into your new digs, you’ll need to:

• Decide what color to paint the living room
• Sort through those last few boxes (eventually)
• Learn about tax deductions for new homeowners

Even before you sign on the dotted line, you can get a mortgage credit certificate (MCC), which is intended to help lower-income buyers afford homeownership.

If you qualify, you can claim the credit each year to cover part of your home’s interest. The only catch: You must get an MCC before you get a mortgage and buy a home. Contact your state or local housing finance agency for more information.

You’re eligible for a host of tax deductions the minute you get the keys to your front door. Like all homeowners, you can subtract real estate taxes and mortgage interest from your tax tab. Even if you bought a home in December, it’s worth getting a few dollars off your IRS bill.

The year you buy your home, you can also deduct any money paid towards mortgage points. The term “points” refers to charges paid by a borrower to get a mortgage, and can also be called loan discounts, discount points, origination fees or maximum loan charges.

You must meet these criteria to qualify: You are buying (not refinancing) a primary residence. Your loan must be secured by the home you live in most of the time.

·  Your overall cash paid at closing exceeds the points charged. This can include money from you, or points paid by the seller. You can’t deduct points you paid for with borrowed funds from a lender or mortgage broker.

·  You’re not using the points to avoid traditional closing costs. If you paid points in lieu of closing costs, like title insurance and attorney’s fees, you can’t get a tax credit.

If you meet that criteria, the amount on your settlement statement that’s listed as “points charged for the mortgage” can be deducted from your taxes.

If you refinanced your mortgage, the points you paid are not deductible in the year you paid them, unlike the points you paid when you first took out your mortgage. For refinanced mortgages, you have to deduct the points equally over the life of the loan. This also goes for loans you take out to buy a second home or investment property.

HERE’S HOW: Divide the points paid by the number of payments to be made over the life of the loan. EXAMPLE: If you paid $2,000 in points and will make 360 payments on a 30-year mortgage, you can deduct $66.72 [($2,000/360) x 12] each year, assuming you make 12 mortgage payments in a year.

There is an exception: If you use part of the money for home improvements, you can deduct the portion of points related to the improvements in the year you paid them.

EXAMPLE: If you refinanced your $200,000 mortgage with a new 30-year loan of $250,000, paid $2,000 in points and used the extra $50,000 to make home improvements, you can deduct 20 percent or $400 [($50,000/250,000) x 2,000] of points in the year they were paid. The remaining points paid must be deducted equally over 360 monthly payments or $53.28 [($1,600/360) x 12] each year.

NOTE: If your mortgage ends early because you paid it off, refinanced it with another lender or sold the home, you can deduct any remaining points for the mortgage in that year. So, in the above example, if you sold the house the following year, you can deduct $1,546.72 ($1,600-$53.28).

“I want to remodel now however, the market is so soft will I waste my money?”   That depends on the property value and what your LTV (loan to value) actually is.   Consider this news from NAHB.  The residential remodeling market declined further during the final quarter of 2008, according to the latest National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI). The current market conditions indicator slid to 27.7, from 33.5 in the previous quarter. Future expectations of remodeling work plummeted to 19.6, from 27.7 in the third quarter. Both these indices descended to historic lows since the start of the RMI in 2001.

Wow!  If you have a low LTV and plan to be in your home fro a few more years maybe a small re-do would be of value now.  I bet some contractors are ready to get any job to keep some cash flow and stay relevant.

The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number over 50 indicates that the majority of remodelers view market conditions as improving. The RMI has been running below 50 since the final quarter of 2005, following decreasing remodeling expenditures since that time.

“During the last quarter many remodelers were asking if their phones were still working because they received virtually no calls for work,” said NAHB Remodelers Chairman Greg Miedema, CGR, CGB, CAPS, a remodeler from Tucson, Ariz. “The jobs we are getting are for smaller projects and necessary home maintenance.”

 Yep, it is time to make the call.

Nationally, market conditions for major additions and alterations shrank to 20.2 (from 29.4 in the third quarter), while minor additions and alterations conditions slowed to 33.5 (from 38.51). Maintenance and repair dropped to 27.6 from 30.9 in the previous quarter. Overall, major additions and other large remodeling jobs have experienced a greater decline than smaller remodels and maintenance.

“Remodelers suggest that the huge decline in consumer confidence, volatility of the stock market, and uncertainty about the future of the economy have made homeowners delay remodeling decisions,” said NAHB Chief Economist David Crowe. “These anxieties are causing consumers to wait and see if conditions improve before they are willing to commit to home improvement spending.”

All measures for future expectations in the remodeling market (calls for bids, amount of work committed for next three months, backlog of remodeling jobs, and appointments for proposals) dropped. Current market expectations slipped in all regions during the fourth quarter, with the Northeast declining to 24.9 (from 32.9 in the third quarter), the South 30.7 (from 31.5), the Midwest to 28.0 (from 36.2), and the West to 25.0 (from 36.1).

 Ok!  So, If you bought a REO (foreclosure) you know you bought at a super price probably very near the bottom, and you can see yourself living in your home for a few years then it is definetly time to take advantage of the soft remodel market and get your bids.  Good Luck ….and remember I am always a great source for tips.

This Green Co. is flourishing…More jobs maybe?

Sol is for Sun…This company (linked below) appears to be adding some sunlight to our recent rainy days.

SolFocus Inc. raised an additional $19.28 million in its third round of funding on a day when we are all focused on the economic stimulus.

The Mountain View-based company in January reported raising $47.5 million and said it expected to close the third round between $60 million and $70 million.

The developer of concentrator photovoltaic systems said it will use the new funding to accelerate expansion of its manufacturing operations and extend its early base of commercial CPV deployments. The company aims to grow deployments from .5 MW in 2008 to approximately 100MW by the end of 2010. 

This should help add jobs and relieve some pressure in our local real estate market.   Especially where most of the work force lives, San Jose right? 

Does the Green Economy have staying power though?  I think about the wind farm subsidies and how they went away in the 80′s.   I wonder if these new Solar co’s will last. 

 SolFocus Inc.

Good News for both Sellers and Buyers.

Sellers will sell and buyers will buy at a 40% discount statewide according to the California Association of Realtors.

quote:

“Statewide sales in January edged past the 600,000 threshold for the first time since October 2005,” said C.A.R. President James Liptak. “The strength in California home sales in recent months signifies that the market is gradually working its way through the large numbers of distressed sales that have followed in the wake of the troubled mortgage problem. With favorable home prices and historically low mortgage rates, affordability in the California housing market is now at its highest since the start of the decade.” unquote

Closed escrow sales of existing, single-family detached homes in California totaled 624,940 in January at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 100.8% from the revised 311,160 sales pace recorded in January 2008. Sales in January 2009 increased 14% compared with the previous month.

The statewide sales figure represents what the total number of homes sold during 2009 would be if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during January 2009 was $254,350, a 40.5% decrease from the revised $427,200 median for January 2008, C.A.R. reported. The January 2009 median price fell 9.5% compared with December’s revised $281,180 median price.

“A lot of attention has rightfully been directed toward the high number of distressed properties,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “California’s housing market also is feeling the effects of a drought in the availability of jumbo mortgage loans.

“Since the start of the credit crisis in 2007, jumbo lending has been severely constrained to the point where markets that rely on jumbo loans experienced a 24% year-to-year decline in sales in the month of January. This stands in contrast to the 100% sales gain the overall market experienced,” she said.

Highlights of C.A.R.’s resale housing figures for January 2009:

- C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in January 2009 was 6.7 months, compared with 16.6 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.
- Thirty-year fixed-mortgage interest rates averaged 5.05% during January 2009, compared with 5.76% in January 2008, according to Freddie Mac. Adjustable-mortgage interest rates averaged 4.92% in January 2009, compared with 5.23% in January 2008.
- The median number of days it took to sell a single-family home was 49.9 days in January 2009, compared with 70.8 days (revised) for the same period a year ago.

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, none of the 331 cities and communities reporting showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 list is generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for January may be exaggerated due to compositional changes in housing demand.

Statewide, the 10 cities with the highest median home prices in California during January 2009 were: Santa Barbara, $939,250; Redondo Beach, $672,500; Pleasanton, $655,000; San Clemente, $602,500; San Ramon, $582,000; Yorba Linda, $566,750; San Francisco, $561,000; Huntington Beach, $555,000; Encinitas, $550,000; and Sunnyvale, $530,000.