Tuesday, October 16, 2012

3 reasons why buyers are back in force even after going through a short sale of foreclosure

We have been experiencing an incredibly strong local real estate market with brisk sales at a typically slow time of the year.  Over 750 homes went pending out of around 3000 homes available in the month of September 2012.  I can recall how slow it was 4 years ago (just before the election) and can't even compare the two periods.  Well priced homes are selling in weeks instead of months.  


The strength of our market can be attributed to 3 main reasons in my opinion.

1.  Incredibly low interest rates.  Not new news, but this past week I locked in a new home buyer for a single family home for sale in Lakewood Ranch at an incredible low rate of 3.2% for a 30 year FIXED FHA loan.  This allows this home buyer the ability to have a mortgage payment including taxes insurance and PMI, for much less than a comparable home would be rented.  That particular home for sale in Lakewood Ranch at around 150,000 would have had a rent rate of 1,500 a month, plus first last and security.  The buyer if he were to rent a similar home would have had to put down 4,500, along with  no interest deductions and no ability to gain equity.  As a home buyer of a similar type of home for sale they were able to roll in closing costs and have a total out of pocket of 3.5% and a payment less than the equivalent rent, not even factoring in the potential interest deductions. 

2.  Tight inventory supply.  The bottom of the market was most likely hit in the end of 2011.  With prices stabilizing and even rising (quickly) in some neighborhoods in Sarasota and Manatee.  With only a very limited number of options more buyers are vying for the same home causing multiple offers to become commonplace, and over asking price sales a regular occurrence.  The media is reporting the improving conditions that are forcing more buyers that were on the fence about buying into the market.

3.  Additional buyers able to buy after waiting out time from a short sale or foreclosure.  We have had a decreasing market here in Manatee and Sarasota counties since 2006.  Most people that have had financial challenges, forcing them to either short sale, deed it lieu, or let their home foreclose are now at the point were they can now potentially qualify for a mortgage again.  This number of home buyers will be increasing every month as the number of people that short sold their home 3 years ago are now able to be a potential buyer today.  
I have assisted with selling hundreds of short sales over the past 6 years.  About three years ago we were probably at our peak of short sale inventory.  That translates into a lot of potential buyers reentering the market.  Or the "boomerang" buyer.  

Fannie Mae and Freddie Mac will allow a buyer that has done a short sale qualify for a new mortgage after 3 years.  In some cases, even sooner.  VA and FHA have conditions that will even allow for shorter time periods after a short sale.  In fact, The FHA will allow a seller who is current on the payments, short sale their home, and IMMEDIATELY be able to by a new, more affordable home.  
Local portfolio lenders have also stepped up too.

This past month I closed a sale in Palm Aire neighborhood in Sarasota with a buyer that was qualified by a local area lender.  That buyer had a pending short sale that was up north where they were moving from.  They were upside down in that home and were doing a short sale.  This lender qualified and closed this borrower for a purchase here in Florida, before that sale even closed for a new purchase!  Pretty remarkable.  Again, in this situation the borrower was able to get a mortgage payment well below the cost for a comparable rental home.  That home buyer had to have a high down payment (20%) and at higher interest rate than a typical conforming loan but regardless was able to qualify and buy a home before her short sale even closed.  Something I would have thought to be impossible 6 months ago.

So with a tight supply of homes, high demand from an increasing pool of buyers, at ridiculously low interest rates ( below the annual cost of living) Prices are going to continue to rise.  The only control I see that could slow down a massive increase in property values in our market is the back log of foreclosure homes that have yet to come on the market here in Sarasota and Manatee Counties.  There are a ton of homes in some stage of foreclosure, and the odds that a home owner will be able to modify, or catch up payments in arrears is very low.  Can these future homes for sale by the major lenders be absorbed quickly enough to not have a downward effect on pricing??  I think the answer is yes.  

6 months of inventory is considered a "stable" market.  Right now, we are running at around 3-4 months supply.  In certain areas, like Lakewood Ranch, we are under a 3 month supply of homes already. Foreclosure inventory would have to more than double to have any noticeable impact on pricing.  Also, with the media coverage of increasing prices a bunch of home sellers might decide to list their homes with the news of price increases.  If these sellers flood the market that could cause the prices to stabilize by giving the buyers more options.

No one has a crystal ball to predict the market but it is my opinion that anyone that buys a home at current market values is doing great, especially considering the cost to rent in comparison, and the fact that prices are about the same as they were 10 years ago.  

When you are ready to get real estate advice please feel free to give me a call or email.  Whether buying or selling we know the real estate market here in Manatee and Sarasota County.  Real Estate experts for Bradenton and Sarasota.  

Regards,
 
 
 
JOSEPH MURPHY, P.A.
941-780-3260 cell/text
941-739-6670 fax
joe@manateemoves.com
manateemoves.com

COLDWELL BANKER RESIDENTIAL RE
11215 SR 70 SUITE #105
Bradenton, FL 34202
E-mail: joe@manateemoves.com

Top 30 Coldwell Banker Agent in Florida!

Voted Best in Client Satisfaction by my clients and Sarasota Magazine as a Five Star Real Estate Agent -  Seven consecutive years!

 


Posted via email from Joe Murphy Knows Real Estate in Bradenton

Thursday, October 11, 2012

Details on the new Obamacare Tax as it Relates to Real Estate Sales in 2013

What Are The Parameters Of The New Real Estate Tax?

First of all, it is a tax that will only be imposed on households with a combined income above $250,000 or individuals with an income above $200,000.  Regardless of the transaction, this is the first stipulation that must be met and excludes about 97% of all U.S. households.  From there, well you definitely get penalized for making good business decisions!

The next stipulation is that you must make a return on the sale of the investment property above the capital gains threshold which is $250,000 for individuals and $500,000 for couples.  That is a high threshold.  At that point the tax does kick in, but only applies to the amount of income above the exclusion.  For instance, if you sell a property and earn a $550,000 return as a couple, you will be subject to a 3.8% tax on $50,000 provided your adjusted gross income is above $250,000 for the year.  If not, then there is no tax.Regards,
 
 
 
JOSEPH MURPHY, P.A.
941-780-3260 cell/text
941-739-6670 fax
joe@manateemoves.com
manateemoves.com

COLDWELL BANKER RESIDENTIAL RE
11215 SR 70 SUITE #105
Bradenton, FL 34202
E-mail: joe@manateemoves.com

Top 30 Coldwell Banker Agent in Florida!

Voted Best in Client Satisfaction by my clients and Sarasota Magazine as a Five Star Real Estate Agent -  Seven consecutive years!

 

Posted via email from Joe Murphy Knows Real Estate in Bradenton

Friday, September 28, 2012

Blog

FIRST TIME HOME BUYER SEMINAR – TUESDAY, OCTOBER 2  6 PM

LAKEWOOD RANCH BRANCH  OF CHASE BANK. (on Exchange Drive - just off University Blvd.)

 

Would like to invite all interested first time home buyers to a short seminar explaining the ins and outs of obtaining special first time home buying financing and securing your first home.  Meet Kerry Koehler, Mortgage Officer of Chase Bank and Kimberlie MacDonald, Realtor with Coldwell Banker.  Questions call 941-928-1953


 
 
 
Regards,
 
 
 

COLDWELL BANKER RESIDENTIAL RE
11215 SR 70 SUITE #105
Bradenton, FL 34202
E-mail: joe@manateemoves.com

Top 30 Coldwell Banker Agent in Florida!

Voted Best in Client Satisfaction by my clients and Sarasota Magazine as a Five Star Real Estate Agent -  Seven consecutive years!

 

Posted via email from Joe Murphy Knows Real Estate in Bradenton

Friday, September 14, 2012

FIRST TIME HOME BUYER SEMINAR - CHASE BANK - LAKEWOOD RANCH - OCTOBER 2, 2012 - 6 PM

Awesome opportunity to learn the ins and outs of purchasing your first home!  Meet with Mortgage Banker Kerry Koehler of Chase Bank who will inform you on the details of what it takes to qualify for a first time buyers home loan and meet with local Realtor, Kimberlie MacDonald of Coldwell Banker to understand the process of identifying your new home and the processes that a buyer goes through from contract to close!  Expect an informative evening and a question and answer period.  Location - Chase Bank/Lakewood Ranch 6145 Exchange Way - just east of I-75 and in a Publix Plaza on north side of University Blvd - 907-2038.  Call Kimberlie to RSVP 941-928-1953!


Regards,
 
 
 
JOSEPH MURPHY, P.A.
941-780-3260 cell/text
941-739-9120 fax
joe@manateemoves.com
manateemoves.com

COLDWELL BANKER RESIDENTIAL RE
11215 SR 70 SUITE #105
Bradenton, FL 34202
E-mail: joe@manateemoves.com

Top 30 Coldwell Banker Agent in Forida!

Voted Best in Client Satisfaction by my clients and Sarasota Magazine as a Five Star Real Estate Agent -  Seven consecutive years!

 

Posted via email from Joe Murphy Knows Real Estate in Bradenton

Thursday, February 02, 2012

New refinance program announced allowing underwater homeowners to refi

This month President Obama is announcing a new program to help homeowners who want to refinance their home loans to today's lower interest rates but have been unable to do so due to being underwater.

Right now in Manatee county almost half of the homes that have mortgages on them owe more than the current value.  If you are underwater in your home refinancing to get to a lower payment is simply not possible as any lender would require that the home be appraised, and the loan could not be for more than the current appraised value.

The new loan refinance program will have a limited population that it will really help, but could be a boon for those who have a high interest rate loan, and are underwater.  There are some catches to the program though.

  1. You have to be current in your payments for the last 6 months, and you can only have been late on one payment in the 6 months prior
  2. The home loan amount has to meet what is considering conforming loan limits.  In Sarasota and Bradenton, homes that have a loan amount below 416,000 would qualify.  If you have a jumbo mortgage, then you are out of luck.
  3. how they intend to pay for the program that should cost 5 billion or more is to add a tax to to the major banks.  This will be then passed onto everyone through higher fees.  This is assuming that the program that gets through the congressional process that would need to approve this aid program.
Some really good points to the new program

  1. If your home is underwater the program will allow up to 140% OVER the current market value to be appraised.
  2. If you owe over 140% on your primary loan, then apparently there is a caveat that the lender would have to reduce your principle to this amount (140% of market value).  In my opinion, most homeowners would probably rather sell their home, as a short sale, then to keep a home so far underwater.
  3. They are proposing a streamlined application process that my sources (wall street journal) state would only involve verifying employment.  Typically on a loan application, or refinance there is a lot of paperwork to provide, including tax returns, bank statements, etc.  An easy process to apply should really help
I think that this program is well intentioned, however it seems to me to a posturing effort that will allow President Obama to show that he is out to help distressed homeowners.  If this Refinancing program is blocked by Congress, then this could be a talking point that he will use to show how he is on the side of the people, and Congressional Republicans are against homeowners.

The biggest issue with this program is that it does not address those homeowners that are late, or behind in their mortgage.  I meet with many homeowners in Manatee and Sarasota county that are frustrated with their low home values, and feel trapped by the negative equity.  Many have had issues keeping up with the mortgage payments, and even if they are late, once in the past year, this program doesn't help them whatsoever

A recent new short sale home seller in Bradenton summed it up best.  He had bought in 2005, with an adjustable rate loan.  It was a home that was within his budget, but do to the recession, he was unable to keep up with the payments.  He had called his lender, Bank of America, to do a loan modification to lower his interest rates, but was drug through the process with no positive outcome.  He fell behind in his mortgage payments, while waiting for the help that never came. 

Bank of America suggested that he short sale his Bradenton home as an alternative to foreclosure.  So now I am able to help him sell his family's home and avoid a foreclosure.  He owes 400,000 on a home that was 550,000 in 2005.  Now that home will sell for in the 250,000 range.  

They are frustrated as they are going to have to move into a rental, and have damaged credit.  Plus losing the 150,000 in down payment for the purchase.  Meanwhile this short sale home will sell to a new homeowner who will get a much lower interest rate, and have a mortgage close to half of what he was paying.

It's hard not to get angry when you know the next owner of your home will be paying much less to purchase, and monthly payments that they could have easily afforded.

My proposal, would be to have ALL homeowners mortgage payments reset to what the current market value is today.  When the home sells in the future, the negative equity portion would be recaptured by the investor/lender.  All homes will eventually sell, so there will be an eventual gain to the lender.  This idea would keep many thousands of families in their homes, and help stabilize the market by eliminating all those that don't want to sell but are forced to give up their homes through a short sale or foreclosure.

Regards,
 
 
 

COLDWELL BANKER RESIDENTIAL RE
11215 SR 70 SUITE #105
Bradenton, FL 34202
E-mail: joe@manateemoves.com

Posted via email from Joe Murphy Knows Real Estate in Bradenton