Real Estate Information

Word on the street is that home mortgages are hard to get and that banks aren’t lending.  Certainly lending criteria has gotten more strict, but banks are lending.

In Sparks/Spanish Springs since January 1, 2009 here is how buyers purchased their homes:

• Cash 17.04%
• Conventional Loans 34.92%
• FHA 41.99%
• VA 5.19%
• Miscellaneous .41%
• Owner Financing .41

As you can see the majority of buyers are using FHA financing as this type of loan only requires 3.5% down payment.  Many buyers are also still using conventional financing if they have larger amounts of down payment funds and want to avoid private mortgage insurance. 

The number of cash buyers in the market is on the rise, up from 10.3% to 17.04% over the same time last year.  This could indicate that there are investors getting back into the market because of the lower market prices.

VA financing is really the only 100% financing that is still available to eligible buyers at this time. 

And as you can see it is very rare that owners are financing the sale of a property.

If you have questions about whether or not you qualify for a mortgage you can contact me and I can refer you to several local lenders who would be happy to help.

Many borrowers are under the assumption that their responsibility for a mortgage ends with a short sale or foreclosure.  This is not always the case. 

In a short sale the mortgage holders are increasingly requiring borrowers to sign a promissory note, a written promise to pay back all or a portion of the debt, as a condition of the short sale approval.  Increasingly mortgage holders are asking sellers to sign a promissory note or retaining their right to pursue a deficiency. 

 In many states lenders have the right to come after borrowers for unpaid mortgage debt from a foreclosure or short sale, seeking a deficiency judgment.  Many times it is the second mortgage holder who will pursue the deficiency as the first may have been satisfied through the short sale.

 Whether or not a mortgage holder will pursue the borrower can depend on (1) their agreement with the investor or servicer, (2) what is allowed by State law,  or (3) if the return outweighs the potential return.  In addition, if there isn’t a true financial hardship that is when the mortgage holder might be more inclined to try to collect the unpaid balance.

In Nevada, NRS 40.455 gives creditor 6 months from the date of foreclosure or trustee’s sale to request a hearing and determine if a deficiency judgment is owed the creditor.

As a REALTOR it is outside of my area of expertise to advise a client regarding a promissory note or whether or not they could get hit with a deficiency judgment in the future.  I strongly advise anyone who is faced with a short sale or foreclosure to consult an attorney before making any decisions.

Please keep in mind that in order to complete a short sale you will need a TEAM of professionals including an experience REALTOR, a CPA and an attorney.  Each of these team members will play a critical role in assisting you.

Many borrowers are under the assumption that their responsibility for a mortgage ends with a short sale or foreclosure.  This is not always the case. 

In a short sale the mortgage holders are increasingly requiring borrowers to sign a promissory note, a written promise to pay back all or a portion of the debt, as a condition of the short sale approval.  Increasingly mortgage holders are asking sellers to sign a promissory note or retaining their right to pursue a deficiency. 

 In many states lenders have the right to come after borrowers for unpaid mortgage debt from a foreclosure or short sale, seeking a deficiency judgment.  Many times it is the second mortgage holder who will pursue the deficiency as the first may have been satisfied through the short sale.

 Whether or not a mortgage holder will pursue the borrower can depend on (1) their agreement with the investor or servicer, (2) what is allowed by State law,  or (3) if the return outweighs the potential return.  In addition, if there isn’t a true financial hardship that is when the mortgage holder might be more inclined to try to collect the unpaid balance.

In Nevada, NRS 40.455 gives creditor 6 months from the date of foreclosure or trustee’s sale to request a hearing and determine if a deficiency judgment is owed the creditor.

As a REALTOR it is outside of my area of expertise to advise a client regarding a promissory note or whether or not they could get hit with a deficiency judgment in the future.  I strongly advise anyone who is faced with a short sale or foreclosure to consult an attorney before making any decisions.

Please keep in mind that in order to complete a short sale you will need a TEAM of professionals including an experienced REALTOR, a CPA and an attorney.  Each of these team members will play a critical role in assisting you.

Beginning April 1, 2009 FHA (Federal Housing Administration) has added to its appraisal guidelines.  With 67% of homes purchased in the Reno-Sparks area in the first quarter of 2009 utilizing FHA financing, there are some key things buyers should know about these changes.

FHA appraisers are required to include a Market Conditions Addendum stating whether the market is declining or stable etc.  Appraisers must now include comps that only go back 90 days.  They used to go back 6 months.  Typically appraisals are done with sold comparables, but now FHA appraisals need to include 2 active or pending sales as well.  This is due to the fact that in some cases active listings are priced below the recently closed comparables. 

In addition, appraisers will have to adjust active listings to reflect the list-to-sales price ratios of comparable sales.  FHA is also looking for the appraiser to include the pricing history of comparables, showing price reductions.  If there are known or reported seller concession (closing costs etc.) the appraiser needs to note that.

Lastly, the appraiser will have to calculate the Absorption Rate on the subject property.  This shows the number of months of active inventory given the rate of sale in that neighborhood. 

Based on this, my recommendation to buyers would be to make sure that you buyer's agent is preparing a current market analysis on all properties you are considering writing an offer on, going back no more than 90 days.  Have your agent calculate the absorption rate as well.  Your purchase could be delayed if your offer is over the appraised value of the home. 

Did you know that if you are a first time buyer (or anyone who hasn't had a mortgage in the past 3 years) you can buy a house now and get your tax credit now? 

Here's how it works...Eligible homebuyers who purchase between January 1, 2009 and December 1, 2009 can treat the purchase as if it had occured on December 31, 2008.  That being said you can claim the credit in your 2008 tax return. 

You have several filing options:

1. If you close escrow between January 1, 2009 and April 15, 2009 you can claim the $8000 credit on your 2008 return that is due April 15th. 
2. You can extend your 2008 income tax filing until as late as October 15, 2009. (The IRS grants automatic extensions, but you must file for the extension.) See IRS.gov for instructions.
3. If you have already filed your 2009 return, you can file an amended 2008 tax return on form 1040X which is available at IRS.gov or through your tax providor.
4. Or you can just wait until you file your 2009 return, but why would you if you can get the money now and use it to fix up your new house.

The best part is that you don't have to pay the money back unless you sell the property before you have lived there for 3 years.  (Some exclusion apply to this as well.)

What are you waiting for???? Phenomenal prices, great selection, FHA mortgages with only 3.5% down, historically low interest rates and $8000 in tax credit.  It doesn't get much better than this.

The Making Home Affordable Plan is part of President Obama’s plan and is projected to help up to 9 million families restructure or refinance their mortgages to avoid foreclosure. 

2 of the Key Components:

1. Refinancing for up to 5 million families unable to refi because of falling home values.
2. $75 billion in incentives to loan servicers to provide loan modifications for an additional 4 million home owners.

Only conforming loans owned or securizited by Fannie Mae and Freddie Mac, this would include most conventional loans.  FHA and VA loans are currently not part of this program as they are being modified under other programs. 

How do you know if your loan if owned by Fannie or Freddie?  You can use the following numbers/websites to verify.

Fannie Mae:  1-800-7Fannie or www.fanniemae.com/homeaffordable

Freddie Mac:  1-800-Freddie or  www.freddiemac.com/avoidforeclosure

Criteria For Refinance

1. Property must be owner occupied.
2. Borrower must have sufficient income to support the new mortgage debt.
3. First mortgage cannot exceed 105% of the current market value of the property. (For example, if the property is worth $200,000, the borrower must owe $210,000 or less. 
4. If there is a second the borrower may still qualify if the first does not exceed the 105% and the second lien holders agree to subordinate to the new first mortgage.
5. No cash outs are allowed.
6. Borrowers cannot be delinquent on their mortgage.

Modification Criteria

1. Owner occupant in a one to four unit property.
2. Unpaid principal balance for one unit property cannot exceed $729,750 (higher for mulitiple units.)
3. Loan was taken out before January 1, 2009
4. A mortgage payment (including taxes, insurance, and HOA dues) that is more than 31% of the borrower’s gross monthly income.
5. Borrower must have experienced a significant change in income or expenses to the point where the current mortgage is no longer affordable.

These plans will not help borrowers who CAN make their payments but whose current property value is now less than what they owe.  The plan is to help those that are having problems making their payments in order to help them avoid foreclosures and therefore stabilize housing prices with less foreclosed properties.

If you would like more information on these programs please call me or visit http://www.financialstability.gov/

On December 16, 2008 the IRS announced that is now offering an expedited process for homeowners to avoid having a federal tax lien block the refinancing or sale of a home.  The IRS does not want to be a barrier to people trying to save their homes or to those that are selling them for less than the mortgage lien under certain circumstances.

Taxpayers and their representatives may apply for a certificate of discharge of a tax lien.  For more information and links to the IRS forms needed to make these requests please use this link - http://www.irs.gov/newsroom/article/0,,id=201343,00.html

Start the process early in your transaction so the IRS lien doesn’t become a closing issue.

It is what it is.  That is a saying that I find myself saying numerous times everyday.  The market is what the market is.  My goal is to bring my clients the facts and help them make the best decisions possible given the market facts we are facing. 

Here is what January 2009 looks like for single family home sales in the Sparks-Spanish Springs market.

In January 2009, the sales of bank owned and short sale single family homes in the Sparks-Spanish Springs area was nearly 90%.  66.2% were bank owned foreclosures and 22.5% were short sales.  The median sales price for this area was $202,500 which is down 20.6% from January 2008 when the median was $255,000.  This clearly shows the most motivated sellers, typically the banks and homeowners selling short to avoid foreclosure, are leading the market.  Traditional sellers only accounted for 10% of the month's sales which shows that many who don't need to sell aren't.

On the upside we sold 35% more homes this January than last January, which can most definitely be attributed to lower prices and great interest rates which have significantly boosted affordability.

There are currently 956 active or active-pending listings of single family homes in the Sparks-Spanish Springs area.  Of these 282 are bank owned or HUD foreclosures.  340 of these listings are short sales. 

Let's break the January sales down by area....

Sparks (Downtown Sparks area)- Median sales price in January was $143,625.  The list to sales price ratio for homes sold was 90%.  This area accounted for 17.5% of the sales in the Sparks-Spanish Springs area in January.

East Sparks (Wabash Circle/Mendive area) - Median sales price in January was $158,500.  The list to sales price ratio for homes sold was 96.9%.  This area accounted for 15% of the sales in the Sparks-Spanish Springs area in January.

Sparks Suburban (The Vistas) - Median sales price in January was $237,450.  The list to sales price ratio for homes sold was 97.8%.  This area accounted for 22.5% of the sales in the Sparks-Spanish Springs area in January.

South Spanish Springs (Wingfield & Cimmaron) - Median sales price in January was $235,900.  The list to sales price ratio for homes sold was 92.6%.  This area accounted for 18.7% of the sales in the Sparks-Spanish Springs area in January.

West Spanish Springs (Eagle Canyon) - Median sales price in January was $199,900.  The list to sales price ratio for homes sold was 98.5%.  This area accounted for 16.2% of the sales in the Sparks-Spanish Springs area in January.

East Spanish Springs (Bridle Path) - Median sales price in January was $389,950.  The list to sales price ratio for homes sold was 92.6%.  This area accounted for 2.5% of the sales in the Sparks-Spanish Springs area in January.

Sparks Foothills (D'Andrea) - Median sales price in January was $207,500.  The list to sales price ratio for homes sold was 99.6%.  This area accounted for 7.5% of the sales in the Sparks-Spanish Springs area in January.

Looking on the bright side - sales are up and affordibility is up.

The Reno-Sparks market saw more families become homeowners in December over the previous month and the general concensus is that we will see a strong January as well.  Many agents are seeing more buyer activity this January than they have experienced in the past. 

Bank owned sales and short sales continue to drive the market.  This has led to a fairly significant decline in the median sales price.  In December 2007 the median sales price in the Reno-Sparks area was $283,900 and this year it is $218,900.  Looking for a bright side 21% more homes were sold this year verses last year in December.

Interest rates, declining prices and a large selection have really created some amazing opportunities for buyers.  Still many are still waiting in anticipation of the market bottom.  I just hope they don't blink and miss it. 

Buyers did you know that about 50% of the homes on the market in , Nevada are either bank owned foreclosures (REOs) or short sales (pre-foreclosures)? Probably not, but as of today, September 26, 2008 here is what the landscape looks like for buyers in .  Out of 728 stick built homes - 140 are bank owned, 7 are subject to court approval before purchase, 4 are relocation company properties, 213 are short sales and 364 are traditional sellers. 

What does that mean to you as a buyer in this market?  You may have to rethink your strategies.

Bank Owned - If you are looking at bank owned properties, be prepared to be in a competitive situation if the property has just come on the market and is priced at or below market value for the neighborhood.  You will most  likely get into a multiple offer situation and may end up having to offer over asking price.  If the property has been on the market for an extended period of time you might be able to negotiate a better price than what is being asked for.  Be sure to discuss each individual property's situation with your buyer's agent.  Important Tip:  If you are considering purchasing a bank owned property BE SURE TO HAVE YOUR OWN AGENT.  You want to make sure that you are equally represented in these sales.

Short Sales - Are you a patient person?  If not, you may not want to attempt to purchase a short sale in this market.  In a short sale the seller has to secure approval from their lender to accept less than is owed on the property.  Due to the large number of homeowners attempting to due short sales the banks are simply overwhelmed.  They cannot process the requests in a timely manner.  What does this mean to you the buyer"?  You had better be ready to wait months for an answer, not days or weeks.  Short sales are very tricky.  Make sure you are working with and experienced buyer's agent to help you navigate this type of purchase.

With so many short sales and bank owned properties on the market you would think that every agent you might consider working with is qualified to represent you in one of these transactions - maybe not.  Be sure to ask your agent if they have represented buyers in REO and short sale purchases.