I stood my ground on an earlier blog titled Will the Tax Credit be extended again?  In that posting I knew that a second “home buying” extension would not be granted past April 30, 2010 and I was correct.  What this newly passed legislation (today June 16, 2010) means is that if your home has a binding contract on or before April 30 you can now close up to September 30 to obtain your tax credit.

Kudos to the Senator Issakson (former Realtor) who saw the nightmares we were experiencing out in the field.  There was such a rush in the spring to take advantage of the tax credit that many buyers and Real Estate Agents took advantage of the great deals on distressed properties like foreclosures and short sales.  What we all found out is that the same approval timeframes we were accustomed to pre-tax rush (such as Wells Fargo short sale approvals coming in under 45 days) did not necessarily apply this Spring and Summer.  Actual numbers won’t be out for months but I have a very strong feeling that the already overwhelmed departments of distressed lenders found themselves devastated once the avalanche of offers came pouring through in 2010.  For the past few weeks buyers and agents have been scrambling, stressing over the impending deadline and thanks to a few Senators, we have a little breathing room to continue working towards our goal.

So if you have a contract on a short sale, foreclosure, new construction or resale that went binding on or before April 30, take a breath a relax.  You now have until September 30, 2010 to close on the home to receive your tax credit.

Not long ago I was in a listing appointment when the potential sellers asked if a reduced commission could be negotiated if they used me on their subsequent home purchase.  I am always happy to accommodate clients who are selling a home to buy another so I responded with “yes, what area are you looking in”?

Alpharetta.

I paused for a moment and spoke with honesty.  “I am always happy to assist you wherever you purchase.  While I am familiar somewhat with Alpharetta and North Fulton county (I have taken quite a few clients there), I feel compelled to tell you that I am not the subject matter expert there as I am here in Cobb, East Paulding and North Douglas counties.  Obviously I can take you to see the listings and be your expert negotiator however if you are looking for someone who specializes specifically in that area, I may not be the fit for you.  You will not hurt my feelings at all.  I feel confident I can sell your home here in Mableton, why don’t you think about it and once your home goes under contract, we can discuss then.”

I am pleased to report I did land the listing, a stucco beauty loaded with upgrades just waiting for the perfect Mableton home buyer.

While I do have multiple buyers agents on staff who handle different areas in and around metro Atlanta GA, as a listing agent I specialize in the selling homes in the following real estate areas:

Acworth, Austell, Dallas, Douglasville, Hiram, Kennesaw, Lithia Springs, Mableton, Marietta, Powder Springs, Roswell, Smyrna, Villa Rica and Vinings.

While many buyers are disappointed with the tax credit deadline and failure to extend, there is one exception according to the IRS.  Any Federal employee or member of military who served outside of the United States for 90+ days between December 2008 and May 2010 will be granted a one year extension to the home buyer credit.

According to the IRS:

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010

Don’t let the tax credit get away, contact a Realtor today to get started!

Historically peak market in metro Atlanta runs from 3^rd week of January through Memorial Day weekend.  People are very surprised to find that the summer months (June and early July) are very slow.  Your typical American tends to think of the summer months as the real estate boom time, when kids are out of school and families are scurrying around trying to locate, close and unpack a home before the kids start back the next school fall.  While that may be true in other markets, Atlanta (at least the western suburbs that my team specializes in:  Cobb, Douglas, Paulding, Cherokee and Fulton counties) tends to get things under contract in the spring with closing no later than June 30.

So the million dollar question is now with the April 30 tax credit expiration, has the market prematurely ended?  While it is only the beginning of the second week of May, all indicators tend to point that way.  Although I keep a positive outlook on all things real estate and beyond, I had estimated that the spring housing rush would peak in April with a loud crescendo at month’s end leaving May with nothing but crickets chirping.  So far I am correct.  What the tax credit did was push some buyers off the fence and other buyers to rush to get under contract a month earlier.

Unfortunately in the melee of last minute scurrying buyers, a lot of things were rushed:  buyers choosing properties they didn’t necessarily love but wanted the tax credit, lenders not taking full loan apps or fully qualifying buyers.  The first week of May saw a lot of contracts falling apart much to the dismay of sellers who received multiple offers in last minute bidding scenarios with no buyers to fall back on now.

But never fear, although June tends to be one of the slower months of new activity (kids getting out of school, settling into summer routines, family vacations), historically the market picks back up a bit in July and more in August.  It has been my experience that September – November are also very strong months.

Now I realize I may be just a local Realtor but I stand strong that the worst is behind us.  The market has stabilized, data now shows the market hit bottom last summer/early fall 2009.  If we can all be a bit more patience, I see beautiful blue skies ahead!

Every state has different real estate laws and procedures and this blog is written for Georgia’s procedures of purchasing AS IS short sale and foreclosure properties.

In the GAR (Georgia Association of Realtors) standard contracts, there are two ways to purchase real estate:  Due Diligence and AS IS.  Since the bulk of real estate transactions currently are some form of distressed properties (REO Bank Foreclosures, Short Sales, Pre-Foreclosures) it is very important to understand the difference especially when the contract instructions state that property is sold AS IS.

First allow me to define the differences:

DUE DILIGENCE – means the purchaser would have a mutually agreed upon period of days to inspect the property and its surroundings.  This includes the actual inspection of the home structure, systems, roof, etc.  It also includes any additional tests the purchaser may want to perform during this time period:  termite inspections, radon gas, soil tests and inspecting the neighborhood and surroundings.  The later would include research for any landfills, high voltage power lines, registered sex offenders, etc.  The costs and work of these are the sole responsibility of the buyer.

AS IS – means the purchaser is forgoing all inspections purchasing the property AS IS with any and all faults whether known or unknown.  The Seller will not perform repairs of any defects.

What becomes confusing is when the Bank/Seller advertises the property AS IS.  This does not mean that the Seller will not allow inspections to take place as it is the right of the purchaser to inspect the premises.  What this means is that after the inspections have been completed, the purchaser understands that no matter the outcome, the seller is stating they will not make any repairs.  In distressed sales (foreclosures and short sales) purchasers should always choose the “due diligence” route and perform inspections knowing that within the timeframe they can either accept the property “as is” OR terminate the contract and receive their earnest money back (within the due diligence time frame).

Now with that being said, if a purchaser submits an offer on a bank owned foreclosed property and inspection finds issues that would not allow purchaser to move forward with the property through their VA or FHA appraisal, I have seen instances where banks did in fact complete repairs.  You may be saying that this is in direct conflict of what is written above and you are correct!  Since the end of 100% financing in 2008, the two most popular financing options have become FHA and VA loans due to their lower required levels of down payment.  As of 2010, VA still offers 100% financing and FHA offers 96.5% financing.  Since the majority of current buyers are using these two types of loans, if the home does not pass FHA or VA minimal inspection guidelines then the bank realizes it will take longer to sell therefore the required repairs must take place to get these homes off their books.  There are two common solutions to this problem: 

1. Some banks will pay for the repair costs out of their own budget
2. Some banks will repair however roll the repair costs back on top of the sales price

It is important for the purchaser or purchaser’s agent to inquire before submitting an offer whether the property will pass FHA or VA inspection.

You have been out scouring the area you want to be in, walked through dozens of homes in search of the right one.  Finally you find it, your dream home!  You submit an offer and are looking forward to an acceptance or a counteroffer but instead you are hit with a “Multiple Bid Scenario – Please submit Best and Final Offer”.

What?!?

What this means is that other buyers have stumbled across your prized home and fell in love just like you did!  Sometimes it is a foreclosure property, sometimes a short sale and sometimes it is a regular resale listing.  Many buyers become very stressed out asking me how to handle it and my answer is always the same.  “Best and Final” is actually what it means.  The seller is looking for your absolute best and final offer, there will be no counteroffer, the seller will move forward with the best net offer on the table by the offer deadline.  The offers of others will always be held confidential (sometimes so will the number of offers on the table).

In these scenerios it is crucial to know the comps of other properties in the neighborhood.  In the event of a foreclosure, the property could be priced well below fair market value and the bidding could significantly increase the final sales price.  For instance, not long ago a foreclosure hit my client’s radar hours priced at $114,000.  After reviewing the comps I found that sales in that Powder Springs subdivision ranged from $189,000 – $260,000 and this particular foreclosure was the largest floorplan in the subdivision.  We submitted an offer for $135,000 which was $21,000 OVER ASKING PRICE.  Unfortunately we lost the bidding war.  We found out later that the property sold for $164,000 – Fifty thousand over asking price.  While that is not the norm, it is an example of how important comps are when bidding.

Normally, as detailed in a previous blog “The Skinny on Foreclosure Bidding”, multiple bid scenerios usually result in a final sales price at or above list price.  With that being said, how do you know which number makes best sense for you?

I always tell my client to think about the number that they can sleep well at night knowing that they wouldn’t have paid 1 penny more for in the event they lost it.  Nothing worse than a client coming back to me and saying “I know I bid $150,000 but I really would have gone up to $154,900”.  In best and final scenarios, your absolute highest bid is what you should submit.  If your submit best and final is truly that, there is nothing more you can do.  Good Luck out there!

1. Initiate the Short Sale -  Every lender is different as some lenders will want the homeowner to call and verbally initiate it whereas some lenders will not initiate the beginnings of a short sale until an offer has been submitted.
2.  Collecting Homeowner’s Financials – Gathering a bunch of financial documentation isn’t always easy, especially if you are packing up the house or have already moved.  What banks are looking for are two years of taxes, 60 days of bank statements, last couple pay stubs, all other financial statements (investments accounts, retirement accounts, etc).  You will also need to provide a hardship letter stating why you are seeking a short sale.  Hardships can include:  job loss, chronic illness or injury, reduction in income, increase in interest rate, divorce, death.
3. Submitting the Offer – Most of my short sale listings are taken immediately after first contact so upon listing the property for sale, I immediately introduce the homeowner to my short sale coordinator to obtain the above stated financial documents ASAP.  I try to set the goal to have all documentation in within the first 48 hours of listing the property.  Sometimes an offer comes in before we have all our financials uploaded and sometimes an offer comes in after everything has been submitted and properly uploaded into the system.
4. Valuations Process – This is the very slow and quiet time, typically the time where uneducated buyers and buyer’s agents with unrealistic views of the process walk away.  The valuations process can take 30-60 days with little or no contact from the bank.  During this time the lender is ordering appraisals and/or BPOs (Broker Price Opinions) and evaluating the current state of market, local comps and getting a very specific idea of what the property is worth at the present time.
5. Offer Review and Approval – this is what I consider “Rock n’ Roll time”.  After periods of long silence from the lender a flurry of activity ensues.  Lenders ask for updated seller financials and updated Buyer’s preapproval letter.  This is typically the second tier negotiator who is getting the file complete to present to the investor of the loan for final short sale approval.
6. Closing – Once final short sale approval is granted, there is typically a 30 day window to close the sale.  This is the period where the buyer will inspect the property, lock interest rates, order appraisal and generally get the loan ball rolling.  A good short sale agent (like myself) will begin all contingencies (appraisal, financing, inspection, etc) at time of final short sale approval.  In essence, the last 30 days are what typically happens in a normal resale closing.

For more information on Short Selling your home in Georgia, please visit our Short Sale FAQs for Buying Short Sales and Selling Short Sales.  There is also a lot of information in previous Short Sale Blogs.  The Walker Derby Team specializes in short sales throughout the following areas in Georgia:  Acworth, Atlanta, Austell, Canton, Douglasville, Hiram, Kennesaw, Lithia Springs, Mableton, Marietta, Powder Springs, Roswell, Sandy Springs, Villa Rica, Vinings and Woodstock.

Most of the last 2 years made your typical “resale” listing the ugly stepchild of real estate.  (Note “resale” is defined as a reselling of a previously owned home by a seller/home owner).  The hot commodity of real estate since the downturn of the market has been the distressed market which is comprised of foreclosure, bank owned REO, pre-foreclosure and short sales. While April showers may bring May flowers, April will also bring a huge (albeit temporary) sell off in resale inventory!

There are tons of first time and return home buyers who have straddled the home purchase fence for months.  Now that the tax credit deadline looms, buyers are becoming frantic!  Short Sales are time consuming and this late in the game cannot be guaranteed a June 30 closing date to meet tax credit deadlines.  With the influx of foreclosure offers, some banks are now taking WEEKS to respond to offers leaving many buyers worried that they won’t have enough time to find a back up property in the event their foreclosure bid loses.

Enter the beautiful position of the average home resale.

Sellers are available, motivated and ready to make it happen!  A good listing agent has advised their sellers that it is do-or-die time until April 30, 2010.  Today (Saturday April 17) I received an offer for a resale listing of mine at 1:09 pm and had it binding with a counter offer by 4:25pm.  Definitely a refreshing change from the typical bank’s snail like pace and the buyer met the tax credit deadline!  That makes THREE of my listings that have gone under contract this weekend and it is only Saturday afternoon!

Metro Atlanta (including suburbs) typical peak spring market runs from late January through Memorial Day weekend.  With the tax buyers credit deadline (which said tax credit is not expected to extend) at the end of April, we may actually see an early end to what has really been an amazing spring selling season!  Only time will tell however at this moment through the end of the month, resale sellers have become the belles of the ball.  Enjoy this brief moment to shine and SELL, SELL, SELL!

I was recently out with a buyer showing a brand new listing in Marietta, GA.  As we pulled up, an agent with buyers were leaving.  As we walked around the house and property, two more sets of agents with interested buyers came through.  When we left another agent pulled in.  Since I knew this was exactly what my buyer had been waiting for being priced well under fair market value, I told him that “time is of essence”.  We had lost out on two other homes before now so he agreed that we should go to my office and prepare an offer.  Even after losing two other bids I was floored when he told me “paying list price is just paying too much, Jennifer”.

One of the biggest misconceptions in real estate is that paying list price is simply overpaying or not getting a good deal.  Nothing could be further from the truth, especially in the land of foreclosures and distressed properties.  As detailed in the recent blog “The skinny on foreclosure low-balling”, it is not uncommon for both banks and distressed selling agents to price a property aggressively and watch a flurry of activity ensue.  Often this flurry ends with the property selling well over list price.

As a short sale agent, when I take a new short sale listing I purposely price the home at the lowest price I feel the bank will accept.  I don’t pull numbers out of the clear blue sky, I base them on actual distressed sales within the past few months as before any short sale is approved it must pass a BPO (Broker Price Opinion).  When agents show my short sales and call for offer instructions, I communicate how price was derived and that we expect a full price offer.  Every once in a while you get the buyer that refuses to put in an offer at list price and 99.99% of the time that buyer loses out on the home.

Buyers:  Do not base your emotions on the list price, base them on the comps!  If the home is listed at $200,000 and comparable homes in the neighborhood have sold between $215,000 – $245,000 then you are getting a good deal at list price.  Don’t allow a misconception get in the way of the home of your dreams!

The legislation was drafted by Georgia Senator, Johnny Isakson, who ironically spent almost 30 years as a Realtor.  The last extension put in place required all first time home buyers to be under contract by April 30, 2010 and close no later than June 30, 2010 to receive the $8000 tax credit ($6500 tax credit for repeat buyers meeting qualifications).  Senator Isakson told the GAR, Georgia Association of Realtors, that he assured Congress that he would only ask for ONE extension and this is it.  He will not go back on his word and ask for a second extension.

For all home buyers (first time and repeat buyers) on the fence thinking this amazing tax credit will be extended, it is time to get down and take advantage of this amazing deal!  There is a mini buying frenzy out in the market place right now on homes priced below market value so do not wait until the last minute or you will find yourself out of luck.

For more information on the First Time Home Buyers Tax Credit of 2010

For more information on the Repeat Home Buyers Tax Credit of 2010

The Walker Derby Team has Buyer’s Agents ready to assist you in the following markets:  Acworth, Austell, Atlanta, Canton, Dallas, Douglasville, Hiram, Kennesaw, Lithia Springs, Mableton, Marietta, Powder Springs, Roswell, Smyrna, Villa Rica, Vinings and Woodstock.  Contact us for more information!