How to buy a foreclosure in Marin

Many buyers, especially first-timers, hope to purchase a foreclosed property at a bargain price, according to CNN Money.  While purchasing a foreclosed home can be a wise choice for some buyers, it is important that buyers understand the differences in buying at different stages of foreclosure and be prepared to take on the challenges typically associated with each.

• There are three basic stages of foreclosure in California: Pre-foreclosure, trustee’s sale, and repossession, often called an REO or real estate owned by the bank.
• Pre-foreclosure homes are in the foreclosure process, but have not yet been auctioned.  Owners of pre-foreclosed homes often try to sell the properties because they are “underwater,” meaning they owe more on the mortgage than the home currently is worth.  Many homeowners attempt to sell via short sale, where the lender must agree to accept less than the amount owed on the mortgage.  Buying at this stage of foreclosure often is a complicated and slow process. However, buyers of pre-foreclosed properties often are given the opportunity to inspect the home prior to purchasing, whereas this is not always the case when buying at other stages of foreclosures.
• The second basic stage of foreclosure is the public auction at a trustee’s or foreclosure sale.  Homes in this stage often are well priced, but also come with challenges to buy.  These homes may not be available for inspection and buyers may later discover the property needs numerous repairs.  As a result, many of the homes at auction are purchased by investors and contractors who have experience working with homes needing numerous repairs, or taken back as REO by the foreclosing lenders.
• If a home does not sell to a third party at the trustee’s auction, the bank takes the property–the final stage of the foreclosure process. Although homes in this stage typically do not offer buyers the best prices, buyers generally can perform a thorough inspection of the property prior to closing.

People we know who have been on the Marin County Courthouse steps for years tell us that many “newbies” have jumped in, and prices are being pushed up to the point where bargains are scarce now. To get the full story, Call Me or please click here.

Has Your Marin House Value Gone Up or Down? POLL Results

Last week we asked you,  our blog and Twitter folk, whether you thought your house value is going up or down. Below is a chart of your responses, along with your comments.

Your Comments:

“It is holding its own, with perhaps a drop. Doesn’t matter to me, because I’m not moving any time soon. Kentfield will continue to be strong, due to location and schools. It’s part of the Gold Coast and will maintain its value over time.”	virtualtruth
“Live in Forest Knolls; I can recall only five houses sold in canyon area. I don’t believe many are putting their house on the market with an uncertain future looms.”	Anonymous
“Owned the house since 1989… in my opinion value peaked in 2006….”	cg
“AND I don’t want to know!”	pc
“Just guessing here…”	altjl

Thanks to all of you who took a few minutes to complete our POLL and leave your comments. To some degree, we are all just guessing. This morning I was startled to learn that nearly 40% of the homes and condos on the Marin market today are in escrow, with accepted offers. Now that the holidays are over, maybe we will begin to see a bit more inventory – the buyers are certainly out there looking. If you are thinking of selling, call me now because this may be as good as it gets this year. Buyers? As we work out of the stormy season we will begin to see lots more homes to choose from. Now’s the time to start searching, so you can make an informed decision when the right place comes up. What are you thinking?

Visualizing the Effect of Tax Credits

Guest blog from Altos Research

Ah the glorious Home Buyer Tax Credit. Consumers lust for it, and NAR spent a fortune getting it extended. Realtors are indeed finding it a valuable incentive for business this year.

40 Largets Metros, by price quartile. Days on Market and Absorption Rate. 90-day Rolling Average, single family homes. (Click for full image)

And housing stimulus goes beyond the tax credit too, the feds are pumping money into mortgages, keeping rates on conforming loans ridiculously low.

But Uncle Sam doesn’t do jumbos.  And while eight grand makes a big impact on a $150,000 home. For a $750,000 home, not so much. Besides, if I can’t get a jumbo loan, who’s going to use it anyway? So all the money is aimed at the entry points in the market.

All sounds good, I suppose. But is it working? Maybe too well. In city after city, housing demand is active at the entry level and dry everywhere else.

Check it out. This chart shows the 40 largest metro markets in the US, each divided into four price range quartiles. We looked at the Days on Market and Absorption Rate for each. (note: the absorbed stat is measured as of last Friday and is not exactly a count of everything “sold”, closings take a while, contracts fall through. The actual sold won’t be known for a few months, so this number is close enough.) Red is bad relative to the whole country. Green is good. Click through to get the full chart.

Notice that in almost every single metro housing demand, as indicated by higher absorption rates and lower time on market, is significantly more active  in the bottom price quartile (4) and gets weaker as you climb the price range.

As a result of all these goodies, the US Housing market is now like the retailer with a predictable clearance-sale schedule. No one wants to buy at regular prices. I can wait till Boxing Day.

More reading on the tax credit and how Realtors should get it while it’s hot.

Take Advantage of the “Sleeper” Tax Credit

Most of us have heard that the first-time buyer $8,500 federal tax credit has been extended until June 30, 2010. But did you know that if you are a homeowner now, and you buy another house, and you fit certain easy criteria, you can qualify for a $6,500 tax credit on the spot? That’s right. And that means that potentially hundreds of thousands of Americans are eligible for it … right now.

How can you qualify?

1. You have to have owned and used your current home as your principal residence for five consecutive years out the past eight
2. Your adjusted household annual income cannot exceed $125,000 if you file taxes as a single, or $225,000 if you are married and file  jointly.
3. You need to sign a contract to purchase a replacement residence before next April 30, and close the transaction by June 30, 2010.

 

Reduce the Tax You Owe by $6,500

This is  huge for all of us who never thought we would qualify for a tax credit under any circumstances, because we’ve owned our home for years.

 

By the way, although the new program has been called the “move up” tax credit, there is no requirement that you buy a more expensive home. You can downsize if you want and still get the credit.

Want to know how this will effect you? Cal me now 415.300.0432, or mail me at Jack@mmsmarin.com.

Home Buyers Tax Credit Extended, Expanded

More good news for Marin consumers and the housing market recovery. Following the Senate’s favorable vote yesterday, the U.S. House of Representatives just voted 403 to 12 to extend the home buyer tax credit, expanding the parameters to include existing homeowners and not just first-time buyers.  We expect President Obama to sign the legislation in short order.

As it now stands, the federal tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to be eligible for a tax credit of up to $8,000, while existing homeowners will be eligible for a reduced credit of up to $6,500. To qualify for the $6,500 credit, existing homeowners must have lived in their current residences for at least five years. The bill also increases the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000 in both instances.

Under additional provisions included in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The legislation maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

Call me for further information, 415.300.0432. Cheers! Jack

California Mortgage Protection Program (FREE)

What if you buy a house and then get laid off? How are you going to make the monthly?

Payment insurance makes it a bit easier

We can help. Through the state association of Realtors, we can offer a new program designed to provide peace of mind to first-time buyers who are hesitant to enter the housing market due to concerns about potential job loss, and as a result being unable to meet their monthly mortgage obligations. Qualifying buyers can receive up to $1,500 a month for up to six months in the event of job loss, a qualified co-buyer can also receive a $750 benefit for up to six months to help pay the mortgage. The insurance is effective upon close of escrow, and kicks in upon job loss.

Best of all, the program is FREE to qualified home buyers.

To qualify for the Mortgage Protection Program, Applicants must:

• Be a first-time home buyer – someone who has not owned property in the last three years (includes co-buyer)
• Close on or before Dec. 31, 2009 (purchase agreement cannot be dated before April 2, 2009)

• Use a California REALTOR® in the transaction (ahem!)
• Purchase the property in California
• Be a W-2 employee (cannot be self-employed)

Call or text me 415.300.0432 right away for more details. Cheers! Jack