Joel Dameral's South Lake Tahoe Real Estate Blog (530-545-8827)

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The buying public seems to think that “great deal” equals foreclosure, short sale or bank-owned property. The truth is that these properties may appear to be bargains, but in many cases you could be buying someone else’s problems. If you’re looking for a bargain property, here are some key issues to consider:

1. What is your time line for purchasing?
You may find the perfect short-sale property, and the seller may accept your offer. The challenge is that you don’t have a deal until the bank approves the short sale. At many large lenders a single processor may have up to 500 files on his or her desk at one time. Realtors are reporting that it can take six or more months to get an offer approved. The wait can be extremely frustrating. It can also be costly.

For example, if prices are still declining in your area and price range, the offer you made six months ago may be too high. Also, if you qualify for a loan now, will you still qualify six to eight months from now if mortgage interest rates have increased? More importantly, can you afford to make a higher monthly payment? If possible, search for a short sale or an REO where the bank has preapproved the sales price. It still may take a long time to close, but not as long as it would if the price was not preapproved.

2. Are you prepared to be in a multiple-offer situation?
Since so many buyers are searching for distressed properties and the approval process takes so long, multiple offers are common. The lender will not tell you about other offers. They may, in fact, tell you that your offer will “probably” be approved — but you cannot rely on this representation.

If another offer comes in at a higher price and at better terms, the bank is obligated to take the best offer. If the property is a short sale, the seller’s signature on the document merely opens the negotiation — it does not finalize it. Furthermore, the seller/lender may continue to market the property even after they have signed a contract with you. This is simply smart business, as so many borrowers are having trouble closing transactions due to appraisal issues.

3. Ask the agent if the seller participated in the “Cash for Keys” program
The best candidates for good bargains are those properties where the sellers are still occupying them. Many banks have a program called “Cash for Keys.” This program pays the owners of foreclosure and short-sale properties money to keep the owner from trashing the property when they move out. I have seen copper piping ripped out of properties, concrete poured down the plumbing, and appliances stolen or destroyed. Cash for Keys is designed to minimize these behaviors.

4. Beware of vacant properties
Never purchase any property without doing a physical inspection. Also, if it takes more than 90 days to negotiate the transaction or if the house has been vacant, have the property re-inspected prior to signing off on the final deal. The reason for this is that the longer a house stays vacant, the more likely it is to have problems.

For example, pack rats and mice are more likely to move into vacant properties. They can chew through the wiring and generally wreak havoc with the home’s electrical systems. Also, if the dishwasher is not run at least once a week, the seals can dry out. If you live in an area where the pipes are not winterized and there are freezing temperatures, a pipe may burst. You may not discover the problem until you turn the water back on after closing.

5. Is the deal more important than your lifestyle?
A property can be a great deal in terms of the price, but is it worth it if it’s in a poorly rated school district or if the commute is an hour from your workplace? What if the property has a terrible floor plan, is in the flight path for a major airport, or occasionally gets a whiff of the sewage treatment plant? When you purchase, it’s important that you take all of these issues into consideration rather than focusing exclusively on the price. A property with any of these types of problems will be harder to sell in the future.

It’s important to consider the price in conjunction with the quality and the convenience of your lifestyle once you move in. For example, an extra 30-minute commute over a number of years can easily chew through thousands of dollars in terms of your vehicle costs, not to mention the wear and tear from the additional stress of commuting.

There are good distressed property deals out there. Nevertheless, don’t limit your search. Have your agent show you seller-occupied homes that are not distressed properties. Thirty-five percent of all properties are owned free and clear. These properties are often lovingly maintained, in top-notch condition, and in more desirable locations. In the long run, they may be a much better bargain.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of “Real Estate Dough: Your Recipe for Real Estate Success” and other books.

 

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Holiday Consumer Cheer
Consumers became more optimistic and loosened up their wallets in November which helped boost retail sales figures and consumer sentiment data released on Friday.  U.S. retail sales jumped 1.3% in November driven by a strong start to the holiday shopping season.  Retail sales in November posted its strongest monthly gain since August when retail sales surged 2.4% due to the government’s Cash for Clunkers program.  It will be important to watch December retail sales figures when they are released next month to see if there was sustained consumer activity throughout the holiday shopping season or if November retail sales were just boosted by bargain-hunters capitalizing on early holiday deals.  The University of Michigan/Reuters Index showed consumer sentiment increasing to its highest level since September which enforces the notion that consumer strength has reemerged.
Generally positive economic data provided support for stocks over the past week.  Although initial weekly unemployment claims reported a surprise increase on Thursday, most of the economic data released in a relatively quiet week have been good.  The Commerce Department reported on Thursday that the trade gap was narrowed to $32.9 billion in October due to a rise in exports which benefitted from a weaker dollar.  The broader S&P 500 index is on pace to close higher for the week, up a marginal 0.4% to 1,106 in early afternoon trading on Friday.

The Economy
The Commerce Department reported on Friday that November retail sales increased 1.3% which is the strongest increase in sales since August.  Retail sales also posted a 1.9% increase from November of last year which is its first year-over-year gain since August 2008.  Auto sales increased 1.6% while retail sales excluding automobile sales rose 1.2% which is its largest gain since January.
The University of Michigan/Reuters Index for consumer sentiment jumped 8.9% in December to a reading of 73.4 from 67.4 in November.  This is the highest reading for the index since September.  Consumer sentiment regarding the current economy increased to a reading of 79.1from 68.8, which is the highest it has been since April 2008.
Initial unemployment claims posted an unexpected rise this past week by 17,000 to a seasonally-adjusted figure of 474,000.  Initial weekly unemployment claims have fallen in the past five consecutive weeks before this week’s increase.

Housing Market
National average mortgage rates increased from the previous week to 4.81% in the latest Primary Mortgage Market Survey released weekly by Freddie Mac on December 10th.  This was the first weekly increase in average fixed-rates since the beginning of November.  Rates last week were at their lowest levels since Freddie Mac started the survey in 1971.  This is also the sixth straight week that fixed-rates have averaged lower than 5.0%.  In the week ending December 4th, the MBA’s seasonally-adjusted purchase index increased 4.0% from the previous week but was still down 16.3% compared to the same time last year.  This was the third consecutive weekly gain for purchase applications which have been unseasonably high due to the extended homebuyer tax credit and record-low mortgage rates.
New home sales rebounded in October after posting its first monthly decline since March in September.  Seasonally-adjusted new home sales increased 6.2% from the previous month to an annual rate of 430,000 units.  New home sales for the previous three months were also revised higher by 7,000 units.  The seasonally-adjusted annual rate of new home sales is at its highest levels since September 2008.
In October, the median new home price increased to $212,200 from an upwardly revised figure of $210,700 in September.  Median new home prices are up 0.7% from the previous month but still 0.5% lower than they were this time last year.  The median new home price has now recorded ten straight months of year-over-year declines.  Competition from lower priced existing homes along with foreclosures and short sales have dragged on new home prices.
In October, new home inventories declined to 240,000 from a September figure of 252,000 on a non-seasonally adjusted basis.  Seasonally-adjusted inventory of unsold new homes have declined for 30 straight months to 239,000 units.  Seasonally-adjusted months of new home inventory dropped to 6.7% in October which is the lowest it has been since December 2006.
Existing home sales in October jumped due to the anticipated expiration of the original homebuyer tax credit.  The seasonally-adjusted annual rate of total existing homes sold surged 10.1% in October to 6.1 million units.  Existing single-family home sales increased 9.7% from last month to 5,330,000 units while condo and co-op sales were up 13.2% from last month to 770,000 units.  Existing home sales are at their highest annual rate since March 2007.
The median existing home price in October declined to $173,100 from $176,000 in September.  This is the fourth straight month that existing home prices have declined and the lowest they have been since April.

Existing home inventory declined for the third straight month in October, falling 3.67% to a preliminary 3,574,000 units from an upwardly revised 3,710,000 units in September.  This is the lowest level of existing home inventory on the market since January 2007.  Months of existing home inventory dropped significantly due to a jump in sales activity along with the drawdown in units for sale. At the current sales pace, there are 7.0 months of supply of existing homes on the market compared to 8.0 months in September.  The market is approaching the 5-6 months supply of inventory level that is considered typical in a healthy housing environment.
Pending home sales rose for the ninth straight month in October, according to the National Association of Realtors.  The trade group’s Pending Home Sales Index, which is a forward-looking indicator based on sales contracts in October, increased 3.7% to a reading of 114.1.  The index is at its highest levels since March 2006.

For market-level data and analysis please visit our website at http://www.hwmarketintelligence.com.

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Well its that time of the year again.  The 2009 Turkey Trot will be held at Bijou Community Park on Al Tahoe Blvd on Saturday, November 21st rain or shine.  All participants are encouraged to bring one non-perishable food item to donate to Christmas Cheer.  Those of us that are 18 and older have a $2.00 entrance fee, the young ones are free.

The events are sponsored by the South Lake Tahoe Optimist Club, Tahoe Mountain Milers, and the City of South Lake Tahoe Parks and Recreation Department.

Registration starts a 10am.  Kids races start at 11am, and the adults race starts at 12 noon.  There are events for the whole family from the 25 yard dash for the 3 and 4 year olds to the 2.7 miles for the adults.

1st place is of course a turkey.  I am shooting for 2nd or 3rd however because of the pumpkin pie for those slots.  Gobble Gobble…..

For other information pleas call 542-6056.  See you there.

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RISMEDIA, November 6, 2009—President Barack Obama has approved the first-time homebuyer tax credit extension which will extend the tax credit until April 30, 2010.

The extension is part of a $24 billion economic stimulus bill that will extend the $8,000 tax credit for homebuyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to homeowners who have lived in their current home for at least five years and are seeking to relocate.

The following details apply to the homebuyer tax credit expansion:

Who is Eligible
-First-time homebuyers, who are defined by the law as buyers who have not owned a principal residence during the three-year period prior to the purchase, may be eligible for up to an $8,000 tax credit.
-Existing homeowners who have been residing in their principal residence for five consecutive years out of the last eight and are purchasing a home to be their principal residence (“repeat buyer”), may be eligible for up to a $6,500 tax credit.
-All U.S. citizens who file taxes are eligible to participate in the program.

Income Limits
Homebuyers who file as single or head-of-household taxpayers can claim the full credit ($8,000 for first-time buyers and $6,500 for repeat buyers) if their modified adjusted gross income (MAGI) is less than $125,000.
-For married couples filing a joint return, the combined income limit is $225,000.
-Single or head-of-household taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.
-The credit is not available for single taxpayers whose MAGI is greater than $145,000 and married couples with a MAGI that exceeds $245,000.

Effective Dates
-The eligibility period for the tax credit is for homes purchased after Nov. 6, 2009, and before May 1, 2010. However, home purchases subject to a binding sales contract signed by April 30, 2010, will qualify for the tax credit provided closing occurs prior to July 1, 2010.

Types of Homes that Qualify
-All homes with a purchase price of less than $800,000 qualify, including newly-constructed or resale, and single-family detached, townhomes or condominiums, provided that the home will be used as their principal residence. Vacation home and rental property purchases do NOT qualify.

Tax Credit is Refundable
-A refundable credit means that if the amount of income taxes you owe is less than the credit amount you qualify for, the government will send you a check for the difference.
-For example:
-A first-time buyer who qualifies for the full $8,000 credit who owes $5,000 in federal income taxes would pay nothing to the IRS and receive a $3,000 payment from the government. If you are due to receive a $1,000 refund, you would receive $9,000 ($1,000 plus the $8,000 first-time homebuyer tax credit).
-A repeat buyer who owes $5,000 would pay nothing to the IRS and receive $1,500 back from the government. If you are due to get a $1,000 refund, you would get $7,500 ($1,000 plus the $6,500 repeat buyer tax credit).
-All qualified homebuyers can take the tax credit on their 2009 or 2010 income tax return.

Payback Provisions
The tax credit is a true credit. It does not have to be repaid unless the home owner sells or stops using the home as their principal residence within three years after the purchase.

The www.federalhousingtaxcredit.com site is being updated. Check the site next week for more detailed information on the new tax credit.

For more information, visit www.nahb.org.

On Wednesday the Senate voted, 98-0, to extend and expand the current first time home-buyer tax credit that is scheduled to expire at the end of November.  The house voted today 403-12 in favor. 

Buyers who have owned their current homes at least five years would be eligible for tax credits of up to $6500.  Anyone who has not owned a home in the last 3 years (including first time home-buyers) would still get up to $8000.   This tax credit is only good for primary residences costing less than $800,000.  There is a phase out for individuals with incomes of greater than $125,000 and $225,000 for joint filers. 

To qualify one must sign a purchase agreement by April 20, 2010 and close by June 30, 2010.  As always, consult your tax professional before making any tax related decisions.

I ran 3 miles this morning, and boy could I feel all the sweets that I have eaten in the last few day.  Now all we need to do is figure out how to get all that candy from the kids- good luck to us.

Speaking of kids…. We went to some friends house yesterday for trick-or-treating.  We picked up some chicken wings at Hunan and spent the evening with about 15 other families.  The food and drink spread was outrageous, but the trick-or-treating was the main event.  Our friend hooked up a hay wagon (huge trailer) to his tractor and we took the kids around the neighborhood.  We hit about 15 houses- and the kids had a bag full of candy and huge smiles on their faces.

Its nice being in a community where one can go to one of the organized events for the kids, or go out for a more traditional evening.  I love this town.