Archive for March, 2010
Short Sale Could Lead To Big Tax Bill
HOME LOANS, SHORT SALES, TIPS FOR SELLERS
The IRS warns homeowners underwater to study the law regarding debt forgiveness before deciding which course of action to take to get out from underneath an over-encumbered property. The Mortgage Forgiveness Debt Relief Act of 2007 details who will be exempt from paying income taxes on debts forgiven by lenders. Some property owners that successfully sold their home are getting hit with huge tax bills because they were not exempt under this act.
Here are some basic provisions of the bill:
- Relief is granted to borrowers with mortgages on a qualified principal residence. Second homes, rentals and business properties do not qualify
- The maximum amount eligible to be forgiven is $2 million for married taxpayers filing jointly and $1 million for single taxpayers. This should cover 99% of Redding/ Shasta County homeowners!
- The loan must have been used to purchase, build or substantially improve a principal residence. Refinances qualify if the debt stays the same or if the mortgage increased, the funds were used for capital improvements or renovations of the principal residence. In the event the money was used for personal purposes such as paying off credit cards, buying a car or boat, or investing in stocks, then the mortgage debt attributable to those items is not eligible for debt relief
- Homeowners in California who sold their homes in 2009 using a short sale or were foreclosed upon, may be stuck with a bill for income taxes from the state
The IRS views forgiveness of debt as a taxable gift from the lender. The homeowner should inquire with a tax attorney or accountant before agreeing to a short sale. Short sales are less likely to cause as much damage to ones credit rating as a foreclosure but if doing so results in a huge tax liability the homeowner must factor this into their decision. Foreclosure or a Deed in Lieu of Foreclosure may be better options to divest oneself of an underwater property depending on individual circumstances and advice from a tax advisor.
Expect a push in coming months by some lenders to write down the principal balance on loans in an effort to keep homeowners in their homes and off the foreclosure block. Bank of America is undertaking a trial program to do just that due to the failure of loan modification programs. Homeowners can avoid unexpected tax consequences by consulting with qualified tax law professionals before agreeing to a short sale or loan modification.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL SALES EXPERIENCE
AG Publishes Names Of Fraudulent Loan Mod Companies
HOME LOANS, LOCAL GOVERNMENT, TIPS FOR SENIORS
State Attorney General Jerry Brown has published the names of individuals and companies that have been sued by the AG for alledgedly running loan modification scams. Some of these companies have pocketed as much as $3,500 per victim promising loan modification services, but done nothing. Those duped in the schemes can apply for restitution through the Ag’s website. Assets have been frozen and property belonging to some of these scammers has been seized in an effort to recover some of the funds for victims.
To see a list of individuals and companies involved, click here:http://ag.ca.gov/loanmod/
If you or someone you know was duped by one of the listed firms, make sure they contact the Ag’s office for information regarding potential compensation from those being sued. It’s likely to be only pennies on the dollar but that’s better than nothing!
Jerry also lists tips to avoid becoming a victim of these schemes.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
First-Time Buyers Capitalize On Interest Rates, Lower Home Prices and Tax Credits
INDUSTRY NEWS, REAL ESTATE PRACTICE, TIPS FOR BUYERS, TIPS FOR SELLERS
A recent report from my trade group, the California Association of Realtors (CAR), states 47% of homes sold last year were snapped up by first-time buyers. CAR lead economist Leslie Appleton-Young predicts a dip in this number for 2010 due to the expiration of the federal tax credit. The federal tax credit, in conjunction with a state tax credit targeted at buyers of new homes, successfully moved many renters off the fence into homeownership. However, she admits her forecast for a decrease in number of first-time buyers in 2010 could be wrong if the high end home market weakens significantly.
The statistics cited came from a survey of 15,000 Realtors conducted across California last summer. The uptick is significant considering first-time buyers only made up 35.9% of buyers in 2008. The highest level recorded was 50% in 1995.
Other forecasts/findings of the study include:
- 5.8 months of unsold inventory for starter homes (6.2 months in 2008)
- 14.8 months of inventory for “top end” homes (26.9 months in 2008)
- Half of all home sales were distressed properties (bank-owned or short sales)
- Slight reduction in volume of units sold for 2010(-2.7%)
- Price increases/decreases will vary by area and price category
She predicts the strongest recovery will be in areas with the sharpest price declines and most distress properties listed for sale. The upper end will “see a more sluggish price performance over the next couple of years”. She believes the reason the middle and upper end markets will not fare as well is due to the fact prices have not declined (yet) as much as the low end of the market.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN A QUARTER CENTURY LOACL SALES EXPERIENCE
Millions Could Save Billions But Can’t!
HOME LOANS, TIPS FOR SELLERS, TIPS FOR SENIORS
Efforts by the Federal Reserve to push mortgage rates to near-record lows have been sucessful but many homeowners can’t refinance their loans. The Wall Street Journal reported that 37% of all borrowers with 30-year fixed rate loans have interest rates of 6% or higher and could benefit by refinancing at current rates hovering around 5%.
Refinance activity is near its lowest level for the year due to lower home values and stricter underwriting standards preventing homeowners from benefiting from today’s low mortgage rates. Estimates place about 25% of all loans as being “underwater“. Homeowners that successfully refinanced in 2009 saved $3.4 billion in interest according to a report from First American CoreLogic.
The tightened credit standards implemented by Fannie Mae in 2008 are also posing new hurdles for prospective “refinanciers”. Credit score thresholds have risen meaning those with decent credit scores( just under 700) must pay additional loan points to get the best interest rate. According to some in the mortgage industry, this has stymied a refinance boom.
Most borrowers consider a refinance when mortgage rates are 1% below their existing rate. Otherwise, the period of time required to recoup the upfront refinance costs with the lower payments becomes so long it isn’t worth the effort and cost. One can easily calculate the break-even point by dividing the net monthly payment savings into the total refinance fees to determine how many months it will take before the borrower reaps the benefits of a lower interest rate. If a payment reduction will offset the upfront cost in 36-48 months, it usually makes sense to refinance.
530-941-7492 or 530-224-6767
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Efforts To Streamline Short Sale Process Underway
HOME LOANS, INDUSTRY NEWS, REAL ESTATE LEGISLATION, SHORT SALES, TIPS FOR SELLERS
Lenders, loan servicing companies and homeowners have been fighting over how to deal with mortgages that are underwater. According to a recent article in the New York Times “more than 5 million households are behind in their mortgages and risk foreclosure”. The Obama administration has targeted billions for loan modification programs that have helped very few.
A new program to be launched April 5 will attempt to help homeowners unload their homes using the short sale process. The program aims to streamline and standardize the process by establishing some ground rules for determining who gets how much. The benefits this program is intended to create include:
- More net proceeds to the investor doing a short sale than a foreclosure
- Set amount of cash for the loan servicer ($1,000)
- A predetermined amount for second lienholders, if any ($1,000)
- Less damage to the home owner’s credit rating
- Relocation money for the homeowner ($1,500)
- Assurance from lender the homeowner will not be sued for any dollar deficiency
- Fewer empty homes waiting to be foreclosed upon
Real estate agents would be used to establish the home’s current fair market value. This value estimate would not be shared with the homeowner but if an offer meets or exceeds the indicated value, the lender must accept the offer. Lenders want proof the homeowner has done everything possible to keep the home including trying to sell the home or utilized available savings to make payments.
Those of us that have handled short sales know how frustrating the process can be for homeowners, title companies, lenders and loan servicing companies. Some are easy to work with while others have made the process very difficult and time consuming. It’s not unusal to have the first couple of buyers fall by the wayside before the investor wakes up and agrees to a short sale. Any help by the federal government to regulate the process is welcomed by real estate professionals.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL REAL ESTATE SALES EXPERIENCE
Confusion Surrounds Curbside Recycling Program
LOCAL GOVERNMENT, SHASTA COUNTY, TIPS FOR SENIORS
Since 2001, Redding residents have been provided blue carts to replace the bins previously used to separate glass, paper and plastic. The “single stream” method allows residents to throw everything in one bin for sorting at the city’s transfer station. However, despite the many years this program has been in place, between a third and one half of items tossed in the recycling cart are non-recyclable.
This week I was headed home from work and noticed all the blue bins left curbside for pickup were empty except one. My neighbor had a large plastic trash bag on top of their full bin preventing the lid from closing. I suspect the driver spotted this non-recyclable item and decided it was filled with items deemed contaminants. The bin was not emptied and likely a form letter was left explaining which items were inappropriately placed in the bin.
This is a common problem, even in our home. My wife and I debate what items should and should not be placed in the cart. I find myself regularly removing items tossed in the blue bin knowing it is not on the list of items that should be placed in the cart. The sticker on the lid detailing what should and should not be recycled peeled away years ago.
The City of Redding’s website has a complete list and explanations of items accepted and common items that should not be placed in the bin. The following link will take you to that page:
Here are some items on the no-no list: http://www.ci.redding.ca.us/solwaste/recyclingrules.htm
- Plastic bags-including trash bags, shopping bags and the blue bag the newspaper comes in
- Styrofoam-including cups,egg containers and packaging materials
- Waxed cardboard-including milk and juice cartons
- Aerosol cans
- Shredded paper-it clogs the sorting machine
- Wire, rope and chain
- Wrapping paper and cards if they contain metallic printing or lining
Most plastics with numbers 1 & 2 are accepted as long as the mouth is narrower than the base. Other items accepted include:
- Glass bottles and jars, aluminum and tin cans
- Newspaper and paper egg cartons
- Junk mail and catalogs
- Cardboard and pasteboard boxes-broken down and plastic liners removed
The drivers also request the various collection carts be positioned at least three feet apart to allow the automated trucks to empty the cans.
The city has tried to make recycling as easy as possible so let’s all help make their jobs easier by educating ourselves regarding what should and shouldn’t be placed in the blue bin.
530-941-7492 or 530-224-6767
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Redding/Shasta County Real Estate Market Update
INDUSTRY NEWS, SHASTA COUNTY, SHORT SALES, TIPS FOR BUYERS, TIPS FOR SELLERS
Distress sales continue to represent a significant number of homes selling in today’s market. The second week of March was marked with 465 homes pending. Of these, 133 are bank-owned homes and 157 are short sales or 41% of all homes under contract. These same two segments of the market only account for 31% of the 1379 active listings.
February saw 131 homes sold. 85% were listed for $300,000 or less. More than a third of the homes sold were priced under $150,000. Ten more homes sold this February than a year ago. The number of bank-owned properties listed for sale has doubled from a year ago.
Home prices continue to slide downward as noted by a local real estate appraiser. The last quarter of 2009 saw the average cost per square foot of homes in all areas served by the Shasta MLS drop from $122.75 to $114.86. On the positive side, prices for new homes actually increased to $158.29/square foot from $147.72. However, there have been far fewer new homes sold year-to-date than the last quarter of 2009. Homes more than 5 years old in Redding sold on average for $125 the end of 2009 and for $120 thus far this year.
The area price declines can be pegged to continuing high numbers of homes in various stages of foreclosure due to high unemployment and sharp price declines after the housing market bubble burst. Banks seem to be in no hurry to clear their books of overvalued assets which prevents steeper declines in prices in the near term but prolongs the overall recovery of the housing sector.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Energy Efficient Mortgage Program Discussed
HOME LOANS, SHASTA COUNTY, TIPS FOR BUYERS
Jonathon Bell, mortgage banker with US Lending in Redding, briefed Realtors on a loan program that allows home buyers to secure a loan to buy and upgrade a home simultaneously using an Energy Efficient Mortgage (EEM). The investor for the loan allows the borrower to add funds into the loan to complete energy efficient retrofits. Most homes built prior to 1994 will qualify.
The concept allows the home buyer to borrow slightly more than they might otherwise qualify for because the higher payment will be offset by lower utility bills. The borrower must pay for a home energy audit using a local HERS (Home Energy Rating System) auditor at a cost of about $350. A report will be produced detailing which energy efficient improvements qualify for the loan program. Monthly energy savings must exceed the additional mortgage payment costs.
Common items covered include windows, HVAC systems, insulation and weatherization of doors, windows, pipes and walls. Water heaters and energy efficient appliances may also be candidates for replacement. Once the buyer selects the items to be upgraded, the loan amount is adjusted to cover the labor and material costs, the loan is closed and funds are held to pay contractors upon completion of the work.
Other benefits to an EEM may include:
- Federal Tax Rebates
- City Utility Rebates
- P,G&E rebates
Check with your tax preparer and utility providers for specific programs and rebates. Homes to be built may qualify for an EEM if additional upgrades are desired above current building codes.
For more information, call Jonathon at 530-356-8658.
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
Nigerian Scams Target Redding Renters
INDUSTRY NEWS, REAL ESTATE PRACTICE, SHASTA COUNTY
I walked into the office this morning to a note from our receptionist from a woman who wanted more information about the home for rent in Stanford Hills. The woman was told the owner had to leave in a hurry for South Africa and wanted to rent the luxury home at a bargain rate. The woman was instructed to wire funds and upon receipt by the owner the keys would be in the mail.
Only one problem here-the home is for sale, not for rent. The owner still occupies the home and knows nothing about it being for rent. Fortunately, this renter knocked on the door and was informed of these facts before any money changed hands. Now knowing it was a scam, she emailed the fellow from Nigeria saying she wanted the rental and just needed to know where to send the money. He quickly provided the instructions which were handed over to local law enforcement authorities.
For unknown reasons, Nigerians have targeted renters in our area. They first peruse the homes for sale on Craigslist, cut and paste photos and property details to a Home For Rent ad and re-post to Craigslist. They typically select an upscale home then attach a below market rent hoping to make the rental look like a bargain. The better they make the deal look, the more likely someone will sight unseen send money for keys before waking up to the fact they have just been scammed.
Anyone coming across a suspicious ad should:
- Ask for a personal showing of the property for rent. If the owner can’t make it, ask that someone else show you the home. If this can’t be done, a big “red flag” should go up.
- If the home is occupied, knock on the door and explain you heard the home was for rent. The occupant should be able to tell you if it is a ruse or not.
- If the home is vacant, call a local real estate agent to see if it is listed for sale or lease. You can also ask the agent to confirm the legal owner’s name and address, which all local agents have access to.
- Do not send money to anyone without a signed rental agreement and keys in hand. This should take place at the property to be rented.
- Call the Shasta County real estate fraud unit at 530-245-6350 with details of suspected scams.
I find it amazing that these con artists can pull this off. Are Americans that gullible? The old adage-if it sounds too good to be true, it’s not true-certainly applies here!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL REAL ESTATE EXPERIENCE
Inability To Make Mortgage Payments Tops Reasons To Sell
INDUSTRY NEWS, REAL ESTATE PRACTICE, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
A recent survey of California home sellers found that the biggest reason cited for putting their home up for sale was difficulty meeting the monthly mortgage obligations. Two thirds of sellers surveyed sold their home due to financial challenges caused by job loss or increases in their mortgage payment.
Complicating factors included an inability to refinance due to declining property values and tighter loan underwriting standards. Homeowners usually explore all their options including refinance as a way to keep their home. Loan modification, short sale, deed in lieu of foreclosure and deed-leaseback are potential options available to sellers who do not want to lose their home to foreclosure.
Other findings of the survey include:
- 99% of sellers chose to work with a Realtor
- 72% cited the agent’s ability to get a higher price as the primary reason they used a Realtor
- Homes sold on average $20,958 less than the listed price
- First-time sellers accounted for 44% of all sellers-a 33% increase from 2008
- Job loss was cited by 18% of sellers as the reasoning for listing their home for sale
- Nearly three-fourths of sellers expressed concerns whether a buyer could secure a loan
- 63% of sellers lost a sale with 70% of those failed escrows due to buyer inability to get an acceptable mortgage
- 26% of buyers had buyer’s remorse and canceled the sale
- 50% stated the sale did not close on time
This year may see an improvement in some of these numbers as prices stabilize and fewer homes begin the foreclosure process across portions of the state. Unemployment rates will need to drop before a housing recovery can get a foot-hold here in the Redding/Shasta County area.
bradgreps@yahoo.com
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL LIVING REAL ESTATE PROFESSIONALS
CORNER OF COURT AND PLACER IN REDDING
MORE THAN 25 YEARS LOCAL SALES EXPERIENCE
PREMIER SERVICE® is the focus of Real Estate Professionals/GMAC. We are located in Redding, CA (at the North end of the Sacramento River Valley) in the midst of river, lake, ranch and mountain terrain.
Our Customer Satisfaction Rating, based on an independent survey, exceeds 97%. This is reflected in our 2008 "QUIE" Award recognizing the TOP 10 REAL ESTATE COMPANIES in NORTH AMERICA! REP/GMAC in #2.
