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Your Home: Rent vs. Own

Posted on 8. February 2011 by Michael McFarlane

Tax Benefits Just about everyone has heard that there are tax benefits to owning your own home. Just what are these benefits? Do they apply to everyone? One of the major tax advantages of owning is the ability to write off the interest you pay on your mortgage. In many cases, this number is amplified because this reduction will also drop one’s tax bracket to a lower percentage. And yes, these tax deductions will apply to most if not all homeowners who are making mortgage payments. For your specific case please consult your tax advisor or attorney. Your Realtor® can help you get started.

Better neighborhoods Records show that stable neighborhoods tend to have less crime and maintain their financial value better than areas with a high turnover. Since renters tend to move more often than owners home ownership benefits all.

Better schools We are not saying that one school is better than another, nor do we want to get into that discussion here. We are saying that a school which has the ability to anticipate its student’s needs can better meet those needs. Since renters move more frequently than home owners the school’s attendees will change as does the population, and therefore so do the teaching needs.

Greater feeling of security As the population of a neighborhood stabilizes neighbors have more of a tendency to get to know their neighbors. Besides the friendliness issue, one might argue that security is actually increased because 1) since your neighbor knows you they will recognize a stranger poking around your property; and 2) since you and your neighbor have established a relationship you will naturally tend to look out for each other more, being more apt to call the police or get personally involved. It is also easier on the mind to let the children play in an area where people watch out for each other.

Higher property values All of these things (and more I’m sure you can think of) will increase the desirability of an area. As the desirability increases naturally so the values also tend to increase. To see actual numbers for YOUR scenario contact us today!

For ALL your real estate related needs and/or questions call ((530 315-2808) or visit us8 on line at EncoreRES.com or any of the links below. Please note: all visits to our sites are secure AND confidential. We do NOT track your activity!

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California Foreclosures LESS Than Last Quarter and Last Year

Posted on 29. January 2011 by Michael McFarlane

MDA DataQuick Information Systems reported that for the fourth quarter of 2010 the number of California’s completed foreclosures dropped sharply, both from last month’s numbers and from figures of 2009.

Even better news is that the number of NODs (Notice of Default), the first step in the foreclosure proceedings, declined sharply also. The number of NODs was down 16.2% from the third quarter and down 17.5% from last year’s fourth quarter. At 69,799 filings last quarter it is not time to party yet, but it is a sign of progress. That number is about 1/2 of the record high set in the first quarter of 2009.

How much of the improvement is due to the investigations by the feds and by the state, loan modifications, and the lenders cleaning up their own back yards, is unknown. But, the general consensus is that the risky loans from the 2006 bubble are behind us so the housing market will continue to improve right along with the general economy.

$ Source: Los Angeles Times: Business ð

Our take? This appears to coincide with the movement we see locally. However, we do have a large inventory of REO (Lender owned) homes to deal with. This inventory is important because it is a major price driver. While we do have areas with a high density of REO properties, that inventory is decreasing faster than it is added to.

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Homes Sales in California Up Again

Posted on 26. January 2011 by Michael McFarlane

According to the California Association of Realtors® (CAR®) we hit a 7 month high in December. This is an increase of 5.9% over November’s adjusted figures, but down 6.8% from last year’s December report.

The unsold inventory also declined to 5 months in December from 6.2 months in November. Again, last December showed slightly better at only 3.8 months. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

$ Source: Los Angeles Businessð

The impact for our area? This inventory is important because it is a major price driver. While we do have areas with high REO (bank owned) properties, that inventory is decreasing. We believe the banks are also monitoring the rate at which they foreclose on homes so the market is not flooded again, driving the price down rapidly.

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Credit Market Getting Better

Posted on 20. January 2011 by Michael McFarlane

It’s the “Catch-22” syndrome. One of the big things to help the economy is to sell more homes. In order to sell more homes we need better credit. In order to loosen credit we need a better economy.

According to an report recently released by TD Economics U.S. credit appears “to be on the mend”. Several positive indicators lead to this prognosis. Willingness to lend by commercial banks is at a five year high. Easing credit standards coincided with a drop in delinquency rates to signal an improved credit quality. While Real Estate loans have continued to be problematic, unsecured loans have shown improvement.

That improved credit quality gives room for optimism. Credit card and student loans fall into this category. Their upswing in repayment is boosting the rest of the industry. While we don’t want to see over-extended credit like the recent past, positive credit moods stimulate the economy.

A stimulated economy means more jobs and more people able to buy homes. More homes sold means more positive economic movement and credit improves. We are not free and clear. Some lenders are still suffering from the 10% delinquency rate of recent times (up from about 2% the decade previous). But it is a start. And once the housing industry gets moving forward again, the rest of the economy will benefit too.

$ Source: RISMedia ð

The impact for the Yuba-Sutter area? Like most other areas, we have our share of “distressed properties” (the term given to properties (homes mostly) that are in financial trouble). We had a good amount of construction prior to the crash, so we have that inventory to deal with. But, have you noticed that builders are building again? There are new homes going up in Yuba City and in Plumas Lake. Yuba City just opened a new community!

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California Leads the Nation Again!

Posted on 18. January 2011 by Michael McFarlane

Being the trendsetters we are, California leads the nation in foreclosure filings, even as the nation sets a new record! A report released recently by Realty Trac put the number for California at 546,669 and 2.9 million for the nation.

And this new record is despite a slow-down in foreclosure filings while the banks came to grips with their robo-signing and other issues. It is estimated that the number would have easily topped 3 million had the slow-down not occurred; a slow-down that included a 30 month low is December.

Due in part to the slow-down, the actual number of completed foreclosures was down 14%, California retained the country’s third highest rate (4.08%) lead only by Nevada at 9.42% and Arizona at 5.73%. California, Florida, Arizona, Illinois and Michigan make up 51% of that activity, or nearly 1.5 million.

$ Source: Press-Telegram ð

The impact for the Yuba-Sutter area? The banks are learning to handle the influx. While the negative equity is not going away any time soon, Federal and State programs are helping people retain their homes. Refinance programs, short sale assistance programs are just a couple of them. Cash for keys and deed-in-lieu also are being employed.

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Short Sales 101

Posted on 15. January 2011 by Michael McFarlane

Shortening the Short Sale In today’s market, bank owned and short sale properties are the norm rather than an exception. Understanding them can do more than just make them more tolerable. It can actually lead to a faster and more rewarding transaction.

The Short Sale is when a property is sold for less than what is owed against it. A second part, called a short payoff is when the lenders involved agree to accept that sale and give clear title to the buyer. Although these two are slightly different, in today’s market they are both generally referred to as a short sale.

Many recent mortgages were written with a second lender subsidising the down payment. These seconds, as they are called, may also come into play for a refinance, an equity loan, or other reasons. This second is often a different lender than the “first”. This lender must also agree to the financial agreements in the short sale, often meaning they will get next to (or actually) nothing.

MI (Mortgage Insurance) in the Short Sale can cause more delays. MI is generally required when the down payment is less than 20% of the purchase price. Sound familiar? Since they are not required to pay any claims until clear title is demonstrated, every short sale must have an exclusion in order to complete.

These three things (and more) are IN ADDITION to the normal parties and conditions involved in the sale of property. THEY WILL TAKE LONGER! If you accept that things get better. Does that mean there’s nothing you can do to speed things up? NO!

As the Seller have you documents ready. Answer the calls from your lender, and anyone you might have helping you with the process. Be honest about why you are unable to afford the payments (ie. what has changed since you agreed to the mortgage terms). Make sure you have an agent that knows what is required and does it.

As the Buyer accept the fact that multiple entities are involved and that it will take longer than an equity (normal) sale. Make sure you are pre-qualified for the amount needed. Keep your proof of income and bank statements ready and updated. As with the seller, make sure you are working with an agent that understands the process, and acts when needed.

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Mortgage Rate Locks: the Good, the Bad, and the Ugly

Posted on 11. January 2011 by Michael McFarlane

As interest rates climb, many borrowers are being reacquainted with the “rate lock”. This is a procedure that freezes your interest rate while the loan is being processed. Getting that rate fixed can be the difference of affording the home or not.

According to NAR an increase of 1% (yes, only one percent) has historically priced 300,000 to 400,000 would-be buyers out of the market. In a time when rates are beginning to climb, locking rates becomes a cat and mouse game. Getting the lowest rate is usually preferable, but caution must be used.

Generally, locking for a shorter time gives a better rate. Naturally, the temptation is to lock for the shortest period. However, locking for less time than it takes for your transaction to complete does you no good at all, and may actually hurt you.

Some lenders may actually charge for an expired lock. Some have raised the rate slightly above the then current rate to compensate. Some may start the process over since you are now being qualified with a higher rate. This might loose the home you were trying to purchase because it also has a deadline for closing.

Recent changes in the TIL (Truth in Lending) requirements have forced a longer closing process. Other changes, most meant to help protect the purchaser, have also lengthened the time required to close. Last year’s average close times were 52.1 days, up from 2009’s numbers (46.9 days). This has caused some rate locks to expire.

While most lenders are not charging a fee for requesting an extension, they are bumping the rate by 0.1 to 0.25% for a 15 week extension. That could mean $400-$1,000 more due on closing AND an increase in monthly payments.

$ Source: New York Times ð

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Homebuyer Tax Credit: How to Claim It

Posted on 7. January 2011 by Michael McFarlane

Many people became first time home-owners encouraged by the First Time Buyer’s Tax Credit. That was great, for them and the market and economy in general. Now tax time is here and they need to collect but unfortunately there is no tax instruction that went with the loan.

Realizing that some of our own clients were in the position of needing to figure out how to collect the credits due them, we went looking so they don’t have to. If you purchased your home between 30 April 2010 (earliest date of contract) and 30 Sept 2010 (closing date) you may qualify, even if you did not apply earlier.

For the tax credit First Time Home Buyeris defined as a buyer that has not owned a home as a principal place of residence during the last three years. For married couples, this means either spouse. That rule does not apply to unmarried partners (we don’t say it’s fair, just the rule).

If this sounds like something that will help you, read the article by Kelly Phillips Erb (link following). It is reasonable devoid of legalese and pretty readable. And you can always call Encore Real Estate Service at ( 530 315-2808 or email * us with questions. While we are not CPAs or Tax Attorneys we can help with general questions.

$ Read more: WalletPop ð

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Are Big Real Estate Companies Headed the Way of T-Rex?

Posted on 4. January 2011 by Michael McFarlane

The real estate industry, in general, has been slow to accept change, especially in the large brokerages. In fairness, large companies are generally less nimble than “the small guy”. But in real estate the “way we’ve always done it” mentality seams to prevail.

Is there a problem with that? You bet! It costs the client money! Example: Let’s say an office has 5 agents, each of whom close 1 transaction every other month (a pretty good average in these times) and let’s say the office space rents for $2,000 per month. That means that each and every transaction will pay $600 to rent alone!

That is $600 that could have gone to marketing the listed property, or helping a buyer get moved in and settled, or maybe help with closing costs. Which would you rather have? Don’t get us wrong. There are some advantages to being part of a big company. Things like marketing and other large scale items have their costs distributed over a greater number of agents.

But does marketing the brokerage’s name on national TV really help sell your home? Does it help you find your new home? Does their prettier web site really help you? It might be “easier on the eyes”, but do they allow you to get the information you need with security and anonymity?

If one of your New Year’s resolutions is to save money (usually meaning to get more for your money) then consider this: Real Estate really is personal and local. Is your agent? Does your agent’s company allow them to be? Are they using your hard earned dollars to help you or their company?

Read more: RISMedia ð

How does this effect you? At Encore Real Estate Services (http://encoreres.com), Yuba-Sutter Homes and Loans, and other People’s Choice Brokers companies we believe your money should benefit you. Most work from home offices saving you thousands of dollars. We are internet connected giving you the WORLD of information and marketing, not just our office or brokerage/company.

For ALL your real estate related needs and/or questions call (530 315-2808) or visit us on line at EncoreRES.com or any of the links below. Please note: all visits to our sites are secure AND confidential. We do NOT track your activity!

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Home Sales Continue to Improve; Future Looking Positive

Posted on 1. January 2011 by Michael McFarlane

According to the Pending Home Sales Index last month showed an increase in pending contracts for existing home sales. November’s figures are up 3.5% over October of 2010. This figure refers to contracts, not closings, so there is a lag of 1 to 2 months, but it is a good indicator.

NAR’s Chief economist Lawrence Yun cites the historically high housing affordability as a major factor, and expects the trend to continue as the general economy improves which also brings more buyers to the market. We have not reached “normal” levels yet, but are improving.

The western US showed the highest gains with an increase of 18.2% with the Northeast showing 1.8% improvement and the south slipping 1.8% lower. As the economy improves so should these numbers. 2011’s forecast is calling for unemployment to drop to 9.2% and mortgage rates are expected to raise to 5.3% by year end.

“All the indicators are pointing to a gradual housing recovery” Yun said. As the bank owned foreclosures continue to hit the market home prices are expected to remain stable.

Source: NAR Newsroom ð

How does this effect us? As the housing market improves so does the economy. As the economy improves so does the housing market. The two work together and as one as one does not radically outpace the other our economic health should continue to improve.