If you are a first-time home buyer, you are in a GREAT time to buy. (I don't mean just great, but GRRRREAT.) The reasons are the home price has gone down 30-40% in many areas since 3 years ago, record low interest rates, and now the tax incentives. Although you might have missed the absolute bottom so far (it happened right before or shortly after the stimulus package came out in early March in many areas), you are still in a great position to get your first home. You have been saving all your money (but not putting it in stock market, I hope) these past few years when the home prices were beyond reach, haven't you?
There are two tax incentives this year. The $8,000 refundable tax credit is from the Uncle Sam, and it applies to new and existing homes. You will be qualified for this tax credit if you purchase a home this year until December 1st. The best part of this tax credit is it's refundable, and it applies to your taxes, not income. Say if you owe $3,000 in taxes in 2009, and you purchase a home, you will actually get $5,000 back next tax season.
The $10,000 tax credit is from the State; it applies to only new constructions and is to be credited over 3 years. You have to live in the property for 2 years after you purchase it.
With these tax incentives, there are a lot of activities in the starter homes market. Prepare yourself by getting pre-approved. If you are ready to take on the pride of home ownership, email me or call me at 858.382.1805 to dicuss your needs. I'd be happy to assist you.
Tuesday, April 28, 2009
Saturday, April 25, 2009
What are short sales? How does it work?
Short sales or short pays are transactions in which the banks are selling the properties for less than the owners' loan amounts, ie selling them short. They do not mean the transaction time will be short. In fact short sales typically take a much longer time than normal sales, about 3-6 months before you hear back from the bank. Given that said, the banks are finally getting a little better with these transactions, and we have seen short sales close in 2 months.
If you want to sell your house in a short sale
You should have a genuine hardship such as divorce, job loss or death that would make you unable to pay for your mortgage. You do not short sale simply because your house is now only worth 1/3 of what you paid for 3 years ago. You need to qualify for short sales.
The short sale process doesn't start until you receive an offer from some buyer. After you have an offer, your real estate agent will put together a package to be sent to the bank, explaining why you have no choice but to sell the property. This package typically contains:
If you want to sell your house in a short sale
You should have a genuine hardship such as divorce, job loss or death that would make you unable to pay for your mortgage. You do not short sale simply because your house is now only worth 1/3 of what you paid for 3 years ago. You need to qualify for short sales.
The short sale process doesn't start until you receive an offer from some buyer. After you have an offer, your real estate agent will put together a package to be sent to the bank, explaining why you have no choice but to sell the property. This package typically contains:
- a letter explaining your financial situation and hardship
- last 2 years of tax return
- evidence of unemployment or latest paystubs
- letter authorizing real estate agent to be your negotiator with the bank
- financial statements
Be sure to send in a complete package, because any missing document will slow down the process even further. Negotiation begins when the lender eventually assigns a negotiator to your file.
When the short sale is finally approved, the buyers made the offer 5 months ago might have walked away. In the meantime, you should continue to make payments so your property won't be foreclosed on.
Short sales will hurt your credit for about 12 months, as opposed to a foreclosure which will hurt for 3-4 years. By being hurt I mean you won't be able to get up and buy another property.
If you want to purchase a short sale property
You will submit a normal offer in standard CAR forms, but be prepared that it will take 3-6 months before you hear from the lender, although we have seen it improved recently.
In most cases the lender will not agree to repair requests. You might be able to negotiate to get some credits if the inspections are really bad.
Be prepared to submit your highest and best offer when the short sale is approved, if you are still interested.
If your offer is the lucky one to be accepted by the bank, you might have shorter contingency period to perform (the standard is 17 days, but the bank might only give you 7 or 10). So be sure to act quick to do your inspections and get your loan in place. Although the bank might not do repairs, you should still do inspections so you know what you are buying.
If you are considering buying or selling a property through short sale, please email me or call me at 858.382.1805 for more information. I'd be happy to assist you.
Friday, April 24, 2009
Temporory Property Tax Relief
If you have purchased your home in the past few years, the value of your home might have dropped below your assessed value by the County Assessor. If you think that is the case, you can file for a Temporary Property Tax Relief by filling out this application and providing 3 sales comparables preferrably between 10/01/08 and 03/31/09. For the 2009-10 tax year, you will need to file your tax relief claim by 05/01/09. So you only have a few days to do it!
In the future should your home value rises over your original assessed value, the new assessed value will be the original assessed value before the temporary cut.
If you need help locating sales comparables for your property, you can contact me at justinedlin@yahoo.com. I'd be glad to be of assistance, free of charge.
In the future should your home value rises over your original assessed value, the new assessed value will be the original assessed value before the temporary cut.
If you need help locating sales comparables for your property, you can contact me at justinedlin@yahoo.com. I'd be glad to be of assistance, free of charge.
Thursday, April 23, 2009
What market is this?
Depending on who you are talking to, you will get different answers. Some will tell you the market will go down another 10%, while others will tell you it's been bottomed. Today the UT said "Default notices hit record in county", and "Apartment rents fall; vacancies are rising". On the other hand, News 8 reported yesterday that a home in North Park received more than 80 offers.
While agencies like DataQuick are having objective numbers, they might not truly reflect areas of the market. What I see is that some bank owned properties seem to be priced particularly low to attract traffic, and the buyers bid up to market value supported by comparables. The banks want to make sure the properties would be sold. A property in my office was listed for $395,000, although our agent wanted to list it somewhere between $420,000 and $450,000. The agent received an offer in the first day, and eventually received 16 offers, all well over the asking price. I helped hold the open house (wouldn't even need it since the agent had 6 offers in writing before the open house, and 4 were coming), the traffic was non-stop for 3 hours. Some came by after 4 to look at the house, while others came by to look at the house one more time, after submitting their offers.
I can't tell you if this is a good time to buy, because it depends on your personal financial situation more than anything else. Since the stimulus package came out last month, we have seen a lot more people out looking at properties. If your financial sitation is stable, and you are considering, it is a great time to buy, particularly if you are purchasing for the first time.
If you are a first-time buyer, you will get $8,000 or 10% of the purchase price, whichever is less, refundable tax credit from the federal government this year. You have until December 1 to make the purchase. I think that's the reason many buyers are out looking at open houses.
On a side note, if you are considering buying a short-sale property and want to qualify for the tax credit, you need to start your purchase process soon because although short-sales are moving along much faster now, it still typically takes about 3 months to go through the bank approval. Keep that in mind when you are purchasing.
While agencies like DataQuick are having objective numbers, they might not truly reflect areas of the market. What I see is that some bank owned properties seem to be priced particularly low to attract traffic, and the buyers bid up to market value supported by comparables. The banks want to make sure the properties would be sold. A property in my office was listed for $395,000, although our agent wanted to list it somewhere between $420,000 and $450,000. The agent received an offer in the first day, and eventually received 16 offers, all well over the asking price. I helped hold the open house (wouldn't even need it since the agent had 6 offers in writing before the open house, and 4 were coming), the traffic was non-stop for 3 hours. Some came by after 4 to look at the house, while others came by to look at the house one more time, after submitting their offers.
I can't tell you if this is a good time to buy, because it depends on your personal financial situation more than anything else. Since the stimulus package came out last month, we have seen a lot more people out looking at properties. If your financial sitation is stable, and you are considering, it is a great time to buy, particularly if you are purchasing for the first time.
If you are a first-time buyer, you will get $8,000 or 10% of the purchase price, whichever is less, refundable tax credit from the federal government this year. You have until December 1 to make the purchase. I think that's the reason many buyers are out looking at open houses.
On a side note, if you are considering buying a short-sale property and want to qualify for the tax credit, you need to start your purchase process soon because although short-sales are moving along much faster now, it still typically takes about 3 months to go through the bank approval. Keep that in mind when you are purchasing.
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