Real Estate Information

At the end of business today the first deadline for  first time and move-up buyer tax credit expires.  Now all those buyers that raced to get into contract will now be racing the clock to get their escrow closed by June 30th.  With the frenzy initially over, you have to ask yourself is it still a good time to buy?

Of course it is.  Homes in the Reno-Sparks market are more affordable than they have been in years.  Interest rates which are predicted to rise in the coming year are still in the low 5% range.  Homeownership still give you the  things that your parents looked for when they bought houses - shelter, pride of ownership, sense of community, freedom to make it your own and an a great tax write-off.  In many cases rent in our area is easily equilient to what you would pay for a home mortgage. 

Buyers may continue to face some challenges in our market as inventory levels remain low in the super competitive price ranges under $300,000.  Also with the high number of short sales in our market buyer will need a skilled agent to help them navigate listings that may have a better chance of closing sucessfully.  Buyers will also continue to face mulitiple offers on bank owned and traditional sales as these properties types will continue to close more easily than short sales. 

Without a crystal ball we can't see into the future, but for now the signs all point to a thumbs up for purchasing a home. 

The number of short sales closed in the Reno-SpaSparks area was just nine short of equaling the number of bank owned listings sold in the first quarter of 2010.   According to data from the Northern Nevada Regional MLS, there were 449 short sales closed in the first quarter of 2010.  There were 458 bank owned listings sold, 345 fair market sales and 141 categorized as "other" (typically Freddie Mac owned or HUD owned properties).  If you combine the bank owned, short sales, and other categories you get a good picture of the distress market sales in our area, which during the first quarter of 2010 made up 75.2% of the market. 

Buyers looking for a home in today's market are forced to consider short sales as they account for 57.9% of the active listings.  What is not surprising is the number of buyers waiting for short sale approval.  There are currently 1,591 pending sales that are classified as short sales in the Reno-Sparks area, while only 764 are other sale types.  So, in the pending category the number of short sales is 67.5% of pending sales.

Short sales still remain a long and sometimes frustrating process for both buyers and sellers.  Many loan servicers are overwhelmed by the volume of offers they are processing which leads to long wait times for approvals or even for a response.  Be sure that your agent is knowledgeable about the short sale process.

REALTORS Care Nevada will be hosting a Housing Counseling Event for homeowners in the Reno-Sparks and surrounding areas on Saturday, May 8th from 10 a.m. to 4 p.m.  The event will be held at the Reno Sparks Association of REALTORS which is located at 5650 Riggins Court, Reno.  Homeowners will have the opportunity to hear from a panel of local counselors, an attorney and a CPA.  After the panel discussion they will have the opportunity to meet one-on-one with these HUD-approved housing counselors.  Panel members include:  Jill Perry, Northern Nevada Director, Counsumer Credit Affiliates; Jeni Temen, Branch Office Mangager and Certified Housing Counselor with NID Housing Counseling; Rhea Gertken, Esq., Nevada Legal Services;Tim Nelson, CPA with Evans, Nelson & Company CPAs; and Elizabeth Fielder, Attorney with Jones Vargas.  For more information visit foreclosurehelpfornevadans.org

Homeowners should come prepared with the following documents:

1. Monthly mortgage statements.
2. Information about other mortgages on your home if applicable.
3. Two most recent pay stubs or other income documentation for all borrowers, if self-employed a profit and loss statement.
4. Two most recent bank statements.
5. Account balances and monthly payments for credit cards and debts.
6. Estimates of monthly expenditures (medical, utitilies, insurance etc.)

In the State of Nevada real estate agents have specific duties they are required to provide to all parties and more specifically to the client with whom they are representing.  These duties are clearly defined on the Duties Owed By a Nevada Real Estate Licensee.  This form is provided to all clients, in every real estate transaction and is a required document by the State of Nevada.

To all parties in a short sale the agent must act in a manner which is not deceitful, fraudulent or dishonest, while exercising reasonable skill and care.  The agent must also disclose to each party in the transaction all material and relevant facts. 

Reasonable skill and care would require the agent to seek training on short sales as they are much more complex transactions than a regular purchase or sale.  The agent should be familiar with marketing strategies for short sales, the short sale process, bank requirements, and diligently follow up through the transaction.  The agent must disclose to each party material facts – what lien holders are involved, has a Notice of Default or Sale been filed against the property, what is the homeowner’s hardship.   In addition to any other facts that might be pertinent – are their other liens, is the agent using an 3^rd party negotiator, is the seller current or delinquent, is this the seller’s primary residence, does the seller qualify for HAFA?  These are all material and relevant facts in a short sale.

In addition, the agent is charged with additional duties to their client – the buyer or the seller.

1.  Exercise reasonable skill and care – again the agent should seek education on short sales. 
2. Not disclose confidential information without written consent of the client – in a short sale transaction the seller authorizes the agent to discuss confidential information with the seller’s lien holder.
3. Seek a sale, purchase…at the price and terms stated in the brokerage agreement or price acceptable to the client.  This is done through agents listing the property in MLS, marketing the property etc. 
4. Present all offers made to, or by the client as soon as practicable, unless waived by client.  The listing agent has the obligation to present all offers made to the seller.  If the seller accepts an offer then subsequent offers should be presented for back up position.  Only one offer should be forwarded to the seller’s lien holder.
5. Disclose to the client material facts of which the licensee has knowledge concerning the real estate transaction.  The licensee should inform the seller of the legal and tax implications of a short sale, how the short sale process works etc.
6. Advise the client to obtain advice from experts relating to matters which are beyond the expertise of the licensee –  it cannot be stressed enough that agents should not be giving legal, tax or credit counseling advice to clients.  These are all areas where clients should be referred to a licensed professional.
7. Account to the client for all money and property the licensee receives in which the client has an interest.  When representing a buyer on a short sale, if the earnest money is not going to be deposited until short sale approval is procured, the agent should clearly identify who has these funds. 

The new Home Affordable Foreclosure Alternative (HAFA) program introduced by the Treasury starts today.  This program was designed to help homeowners who did not qualify for the Home Affordable Modification (HAMP) program or were unsucessful at completing a trial modification.  The new HAFA program allows the homeowner to apply for and get a pre-approved short sale on their FIRST MORTGAGE.

The key to the new HAFA program is that the homeowner must meet the HAMP guidelines to be considered, which are as follows:

1. Property must be the homeowner's primary residence.
2. The first mortgage must have originated before 2009.
3. Mortgage payments must be delinquent OR default is reasonably foreseeable.
4. Unpaid balance is not more than $729,750.
5. Homeowner's TOTAL monthly payment (principle, interest, taxes, insurance and HOA dues) MUST EXCEED 31% of thier GROSS MONTHLY INCOME.

Timelines for this program are set at much shorter periods than traditional short sales. 

1. Within 30 days of the request to be considered the servicer must respond to the homeowner.
2. 14 calendar days from the servicer's response the homeowner must sign the "short sale agreement" and return it to the servicer.
3. At this point the homeowner then lists the property.
4. Once an offer is recieved the homeowner must submit it to the servicer within 3 business days.
5. The servicer then has 10 business days to accept or reject the offer.

If the servicers can meet these deadlines it will greatly improve the market for these short sale properties.  (I for one am currently in the watch and see mode.) 

Here are some other key points that must be considered....

1. Homeowner gets a $1500 incentive for relocation assistance at the conclusion of the sale.
2. Homeowner must negotiate separately with any second mortgages etc.
3. If there is mortgage insurance the insurer must waive their rights to recieve additional payment.
4. Must be an arms-lenght transaction.
5. Servicer/Investor must agree not to pursue a deficiency balance against the homeowner (this is huge!)

Contact me for more detailed information and to see if you might qualify for this program. 

HopeNow, the US Department of Treasury, HUD and Neighborworks are sponsoring a Foreclosure Prevention Event in Reno on Tuesday, April 6, 2010 from 1 p.m. to 7:30 p.m.   The event will take place at the Reno Sparks Convention Center, 4590 S. Virginia Street.  Homeowners who are struggling with their mortgage can come to the evern and meet one-on-one with their mortgage lender or a HUD-approved housing counselor. 

Come prepared!  To make the most of the event you will want to bring the following: (1) your monthly mortgage statement, (2) information about additonal mortgages on your home, (3) 2 most recent pay stubs, income documents from all sources and a profit & loss if you are self-employed, (4) 2 most recent bank statements, (5) account balances for all monthly payments for all debts, and (6) estimates for other monthly expenditures (utilities, medical bills etc.).  Bring copies not orginials. 

In addition you can  go to http://www.makinghomeaffordable.gov  to download and complete the Request for Modification and Affidavit and the IRS 4506T-EZ.  If you do not have a computer the forms will be provided. 

Parking is free or you can take RTC Rapid and use the Convention Center stop.  For more information you can visit http://www.makinghomeaffordable.gov or call 1-888-995-HOPE(4673).

With the first time and move-up buyer tax credit deadline quickly approaching, I think it is important to ask yourself is that the only reason I am buying a home right now?  Yes, who wouldn't want to take advantage of this great $8000 or $6,5000 give-away from the government?  I think there are some other really great reasons to buy right NOW.

Home prices are more affordable than ever.  Interest rates are low.  Homeownership give you a great sense of accomplishment.  You become part of a community and neighborhood.  You get to deduct the interest on your home loan on your taxes (my personal favorite).  You can decorate and personalize the home to make it your own.

The tax credit requires buyers to be in contact for the purchase of home by April 30, 2010.  That is about 45 days away.  Then you have to close your transaction by June 30, 2010.  That's 60 days after the deadline.  At this point it is less than 90 days total.  Unfortunately if you are considering a short sale you may not make the closing deadline as many short sales can take 120 days or more.  I say that if you find a home you love, make the offer.  If you close in time for the tax credit - BONUS!  Don't make the mistake of rushing into a purchase just to get the tax credit and then realize you didn't buy the home you really wanted.

Want to know what's happening in the Sparks-Spanish Springs real estate market.  Here is a recap of what sold in February 2010. (Stick built homes in Sparks-Spanish Springs from MLS data)

There were 45 short sales closed in February with a median list price of $159,900 and median sold price of $156,000.  The average days on market for these closed sales was 190 days.  Short sales accounted for 40.2% of the total sales in February. 

There were 41 REO/foreclosure properties sold in Februrary with a median list price of $150,000 and median sold price of $143,000.  The average days on market for these closed sales was 86 days.  The REO/foreclosure properties accounted for 36.6% of the total sales in February.

There were 26 homes sold that were not distressed sales in February with a median list price of $179,950 and a median sold price of $178,200.  The average days on the market for these closed sales was 106 days.  These sales account for 23.2% of the total sales in February.

Looking forward here is a recap of the Active and Pending Sales in the Sparks-Spanish Springs area.

There are 584 short sales currently on the market.  203 of those are active and 381 are pending short sale approval.  The median price for active/pending short sale listings is $168,250 and the average days on market is 145 days.  Short sale listings account for 62.3% of the active or active pending inventory.

There are 133 REO/foreclosure properties currently on the market.  45 of those are active and 88 are pending sale.  The median price  for active/pending REO/foreclosure properties is $145,000 and the average days on the market is 71.  REO/foreclosure listings account for only 14.2% of the active/pending inventory.

There are 220 non-distressed propertys listed.  137 are active and 83 are pending.  The median price for non-distressed listings is $249,999 with an average of 122 days on the market.  Non-distressed properties account for 23.5% of the active/pending inventory.

So, what does this mean for home buyers and sellers?  Short sales are a large part of the market.  Whether you are buying or selling a home in the Sparks-Spanish Springs area be sure to enlist an "EXPERIENCED" short sale agent to assist you.  These are complicated transactions that require a REALTOR with not only certifications but actual closing experience.

REO/foreclosure sales are becoming more scarce has banks begin to see the value of short sales and slowly release their foreclosed inventory.  These properties require immediate action from buyers as they will typcially go into contract quickly and often with multiple offers.

Non-distressed properties are in demand by buyers, but many sellers continue to over price these properties.  Some buyers are willing to pay for the convience, but not many will over pay just for the convenience.  Sellers for you that means sharpening your price and being realistic about current market conditions.

You are sitting in front of a listing wondering what the price is, how big it is etc.  The flyer box is empty and you can't reach the agent on the phone.  You're frustrated.  Nof if you're sitting in front of a listing that offers information via Text Messaging.  Text messaging is exploding throughout America.  As a buyer you demand the information on the property to educate yourself prior to interacting with the seller.  I am using Goomzee, a technology that allows me to deliver information directly to the buyer while they are sitting in front of my listing.  A simple sign rider directs the buyer where to text.  Instantly the buyer receives the most important details along with pictures of the property.  The buyer is also given my contact information to schedule a showing if they want to see more.  Buyers love it, sellers love it and agents love it.  The information is shared quickly.  Not to mention it's GREEN.  No paper flyers.  A definite win-win.

Congress has extended and expanded the homebuyer tax credit.  The updates will become effective when President Obama signs the bill. 

Here are the highlights for the December 1, 2009 to April 30, 2010 Rules:

1. First Time Buyer Credit remains unchanged at $8,000.
2. First Time Buyer still defined as somone who hasn't had an interest in a principal residence in the past 3 years.
3. New - Current homeowners can now take advantage of a $6,500 credit if the sell their home and buy a new one.   These homeowners will have to have lived in the home they are selling for more than 5 consecutive years of the previous 8 years.
4. Credit terminates on April 30, 2009.  Buyers who have written, binding contracts to purchase in effect on April 30, 2010 will be given until July 1, 201o to close.
5. Income limits increased to $125,ooo for single and $225,o0o for married couples. 
6. Purchase price of the home cannot exceed $800,000.

Please contact your REALTOR for more information, as well as your tax preparer to ensure your eligiblity.