Boise makes TOP 10 TURNAROUND MArket

Posted on May 18, 2012 by Roger

Posted in Boise-Nampa Real Estate Statistics | Leave a comment

Troubled Idaho Homeowners-10 Common Myths-Short Sale vs Foreclosure

Posted on May 10, 2012 by Roger

A great treatment of many of the myths surrounding short sales, also from the folks at KCM Blog. Many of our homes here in the Boise-Nampa Metro area are still in this situation so it is good to know the facts.

It’s likely you’ve heard the term “short sale” thrown around quite a bit. But what, exactly, is a short sale?

A short sale is when a bank agrees to accept less than the total amount owed on a mortgage to avoid having to foreclose on the property. This is not a new practice; banks have been doing short sales for years. Only recently, due to the current state of the housing market and economy, has this process become a part of the public consciousness.

To be eligible for a short sale you first have to qualify!

To qualify for a short sale:

Your house must be worth less than you owe on it.
You must be able to prove that you are the victim of a true financial hardship, such as a decrease in wages, job loss, or medical condition that has altered your ability to make the same income as when the loan was originated. Divorce, estate situations, etc… also qualify.

Now that you have a basic understanding of what a short sale is, there are some huge misconceptions when it comes to a short sale vs. a foreclosure. We take the most common myths surrounding both short sales and foreclosures and give a brief explanation. LET’S BUST SOME MYTHS!!

1.) If you let your home go to foreclosure you are done with the situation and you can walk away with a clean slate. The reality is that this couldn’t be any farther from the truth in most situations. You could end up with an IRS tax liability and still owing the bank money. Let me explain. Please keep in mind that if your property does go into foreclosure you may be liable for the difference of what is owed on the property versus what is sells for at auction, in the form of a deficiency balance! Please note this is state specific and in most states you will be liable for the shortfall, but in some states the bank may not always be able to pursue the debt. Check your state law as it varies widely from state to state.

Here is an example of how a deficiency balance works

If you owe $200,000 on the property and it sells at auction for $150,000, you could be liable for the $50,000 difference if your state law allows it.

Not only could you be liable for the difference to the bank, but in some situations you could also be liable to the IRS! Although there are exemptions (mostly for principle residences) under the Mortgage Debt Forgiveness Act, there are times when you could be taxed on both a short sale and a foreclosure, even in a principle residence situation. Since the tax code on this is a little complicated and I am not a CPA, I advise always talking to a CPA when in this situation as you are weighing your options. Hard to believe? Well, believe it or not, the IRS counts the difference between the sale and the charged off debt as a “gain” on your taxes. That’s right-you lost money and it’s counted as a gain! (I didn’t make that rule, that’s a wonderful brainchild of the IRS). Banks and the IRS can go as far as attaching your wages. Not to mention if you let your home go to foreclosure you will have that on your credit, as well.

Guess What? A short sale can alleviate your liability to the bank, in most situations. There are also exceptions to this, but in most cases banks are releasing homeowners from the deficiency balance on a short sale.

2.) There are no options to avoid foreclosure. Now more than ever, there are options to avoid foreclosure. Besides a short sale, loan modifications along with deed in lieu are also examples of the many options. In most cases (but not all) a short sale is the best option. Either way, there are more options today than there have ever been to avoid foreclosure.

3.) Banks do not want to participate in a short sale, or, it is too hard to qualify for a short sale.Banks would rather perform a short sale than a foreclosure any day. A foreclosure takes a long time and creates a huge expense for the banks; a short sale saves both time and money. Banks have more foreclosure inventory than ever before, and certainly do not want any more. Banks more than ever welcome short sales. Qualifying for a short sale is easier than you think, you need to have a true financial hardship, or a change in your finances and your house has to be worth less than what you owe on it. Not only do consumers, but banks also now have government incentive to participate in short sales.

4.) Short sales are not that common. At this present time, short sales range from 10-50 % of sales in various markets and it is predicted that in 2012 we will have more short sales than any other year, to date. Due to economic changes in the last few years, this is something that is affecting millions of Americans. Short sales are in every market, and are not just limited to any particular income class. This has affected everyone from all facets of life. A short sale should be looked at as a helpful tool, not a negative stigma. That is why the government is offering programs that actually pay consumers to participate in short sales. It is not just affecting one community; it is affecting communities and consumers across the nation.

5.) The short sale process is too difficult and they often get denied. Though the short sale process is time consuming; it is not as difficult as the media would have you believe. The problem is that most short sales are denied because of a misunderstanding of the process. It is true that if the short sale process is not followed correctly there is a good chance of getting denied. An experienced agent knows how to avoid this. Short sales require a lot of experience, and a special skill set. If you are looking to go the option of a short sale make sure your agent is skilled and experienced in this area.

6.) Short sales will cost me money out of pocket. A short sale should not cost you any out of pocket money. In fact, you could get between $3000-up to $30,000 to participate in a short sale. In many ways, a short sale may put you in a better financial position than prior to the short sale. Almost every short sale program now has some type of financial incentive for the home owner, as long as it is a principle residence, and we are even seeing relocation money being paid on some investment/second homes. As a seller of a property you should never have to pay for any short sale cost upfront to any professional service. Realtors charge a commission that is paid for by the bank. In most communities there are also non-profits and HUD counselors who can help you with foreclosure prevention options for free. The only potential cost you could incur is if the bank would not release you from a deficiency balance in the short sale, which is happening less and less now.

7.) If I am behind on my payments, I can perform a short sale any time. The farther you get behind on your payments, the harder it is to get a short sale approved. The closer a property gets to a foreclosure the harder it is to convince the bank to perform a short sale. As they get closer to a foreclosure sale more money is spent, thus deterring them from doing a short sale. If you think you need to perform a short sale, time is of the essence; the sooner you start the process, the better. Waiting too long can trigger the ramifications of a foreclosure, losing the ability to do a short sale as a viable option.

8.) I have already been sent a foreclosure notice so I can’t perform a short sale. For the most part just because you received a foreclosure notice or notice of default it does not mean that you do not have time to perform a short sale. The timeline and specifics do vary from state to state, but having done short sales all over the country, I have seen banks postpone a foreclosure to work a short sale option as close as 30 days prior to the scheduled foreclosure auction, but the longer you wait the less chance you have. If you have received a legal foreclosure notice, please reach out to a professional right away. The longer you wait, and the closer you get to foreclosure, the fewer options you have. If you have received a notice to foreclose this means the bank is filing paperwork and starting the process to take legal action to repossess the house. You still have time at this point to prevent foreclosure, but do not hesitate! The closer you get to the foreclosure date the harder it becomes to negotiate with the bank for whichever option you choose.

9.) I was denied for a loan modification, so I know I will get denied for a short sale. Short sales and loan modifications are handled by two separate departments at the bank. These processes are totally different in approval and denial. If you got denied for a modification you can still apply for a short sale; in some cases you can get a short sale approved faster than a loan modification, as some loan modifications are denied because they cannot reduce the loan low enough based on the consumers income.

10.) If I go through a short sale I cannot buy another house for a long time. The time to buy another house depends on your entire credit picture and can vary from 12-24 months. There are even a few FHA programs that allow for a purchase sooner than that. I have worked with clients who went through a short sale and bought another house in less than 12 months.

These are just a few of the common myths surrounding short sales and foreclosure. With the options available today, no homeowner should ever have to go through foreclosure, and hopefully this information can help a few more homeowners think twice before walking away from their home not realizing the possible long term ramifications a foreclosure can have.

I have successfully assisted many home owners negotiate a short sale and I am in the process of taking several more thorugh the process. Give me a call today if you are in this situation, time is of the essence. 602-0055 or roger@lowesflatfee.com

Posted in Help for Troubled Idaho Homeowners, Selling a House | Leave a comment

Boise Home Buyers! Don’t overlook these!

Posted on May 9, 2012 by Roger

What Buyers Often Overlook in Home Purchases

DAILY REAL ESTATE NEWS | FRIDAY, MAY 04, 2012

While many buyers may be swayed by the home’s appearance, financing, and location when choosing a home, housing experts say they often overlook other important factors that may keep them happy for years to come with their home purchase.

A recent article at U.S. News & World Report lists tips for those often-forgotten aspects of home ownership. Here are some of those overlooked aspects:

Zoning of nearby areas: What you see today may not be what you see a few years from now. Communities’ and neighborhoods’ landscapes can drastically change in a few years. And while some of these changes may be good — such as the addition of a nearby recreation park or school — some may be viewed as a negative, like a new highway overpass behind the property, the article notes. By reviewing upcoming plans and existing zoning at the city’s urban development department, home buyers can get a better idea of what the future may hold for the surrounding area of the neighborhood they choose.
Remodeling rules: Some community associations may set limitations on what you can do to property, particularly if the buyer ever wants to make exterior changes like adding a garage or guest house. Purchasers who are looking to have a house grow with their family’s needs through the years may want to investigate any such rules beforehand to make sure that they’ll be able to add onto their home as needed.
Impact of crime rate: Home purchasers may be concerned about making sure their new home falls in a low-crime-rate area but they may fail to realize how it can also impact their monthly budget. For example, “living in a high-risk neighborhood can send monthly bills upwards, like inflated auto insurance premiums,” the U.S. News & World Report article notes.

Posted in Buying a House | Leave a comment

Look Nice vs. Perform Well-Idaho Homeowners Decide

Posted on May 8, 2012 by Roger

How to turn must-do home improvements
into things of beauty

(ARA) – When it comes to home improvement, you can spend money in two basic ways: on things that make your home look better and things that make it function better. Under the first category, you’ll find all the things you want to do, like replacing narrow casement windows with a lovely bay window. Under the second, falls all the things you must do, like replacing those drafty windows with something more energy-efficient.

When “want to” and “have to” meet, they create the opportunity to make a smart buying decision – and choose an upgrade that will look good and improve the livability of your home. The key to making smart home improvement decisions is to recognize these opportunities and take full advantage of them.

Here are a few “have to” improvements that have the potential to turn into a good-looking, energy-efficient, enjoyment-enhancing “want to.”

Replacing the hot water heater.

You probably don’t care what a new hot water heater looks like sitting in your garage or basement – or wherever it resides in your home. But the right replacement water heater can help your house achieve a lovely shade of green. High energy-efficiency water heaters can help reduce energy usage, thereby trimming your energy bills and your home’s environmental impact. Solar water heating systems take the beauty a step further by using the power of the sun, collected through low-profile solar panels on the roof, to heat water – at a monthly savings that’s about 80 percent less than the cost of traditional heaters.

Getting some light in here.

Do you really need a bunch of scientific studies to tell you that a home filled with natural light just feels better? Probably not. Illuminating your home with natural light is a smart buying decision on multiple levels. First, you don’t pay to power the sun. Second, natural light delivers a host of mood-enhancing benefits. If you have the wall space, by all means add some windows.

But for rooms where a window is impossible (like a powder room) or where you don’t want to sacrifice privacy (like a master bathroom) a tubular skylight is a good alternative. Some, like Velux’s Sun Tunnel products, are easy enough to install that a seasoned do-it-yourselfer could accomplish the task. They cost less than traditional skylights and bring natural light to hard-to-light areas like closets, hallways and other small spaces.

Getting some air in here.

Just as natural sun is good for your mood, ventilation can be good for your health. An Energy Star qualified venting skylight is a great way to passively vent stale, moist air from inside your home, especially from baths and kitchens. While some skylights are “fixed,” those that do open can be controlled by a remote to open when you want fresh air and close when you want to retain warmth. They can also close automatically in case of rain. In addition, they introduce free light into your home. Adding blinds – also remote-controlled – can help you better control the amount of sun a skylight admits into your home. And blinds are not just functional – you can get them in colors and patterns to complement your decor while increasing energy efficiency. Compared to other venting solutions, a skylight is a relatively low-cost, great-looking way to address ventilation issues while adding drama to a space. Log on to www.veluxusa.com to learn more about skylights.

When one door opens …

Beat up, weathered garage and front doors not only look bad, they can be a source of air leaks that make your heating, ventilation and cooling system work harder. Exterior doors aren’t something you buy every day, but they can have a big impact on how your home looks and on its energy efficiency. They can definitely be a smart buying decision if you opt for doors that not only look good, but are also highly rated for energy efficiency. If you’re not sure how to choose, look online, where you’ll find guides for buying garage doors and front doors.

Posted in Home Ownership | Leave a comment

My Boise River Weekend

Posted on May 7, 2012 by Roger

It seemed to be a Boise River weekend for me and no it was not because it is at flood stage and it was not for recreation. I had activity that seems to surround the river.

First my lovely home that is close to the Boise River in the Spring Meadow subdivision accepted an offer. And then I have a couple that have been looking for just the right place for the past nearly 2 years. The parameters at first required a tree top view of city of tree, Boise. But suddenly over the weekend after looking at the home with just such a view and private location like they had been desiring, they switched and fell in love with a Boise River front lot in the Waterfront Development. So after a mad scramble to get an offer in, as the sellers had already countered on a different offer, we were able to get it secured. My buyers are thrilled!

Posted in Buying a House, Home Ownership, Random thoughts of the Day!, Selling a House | Leave a comment

Boise-Nampa Home Buyers-Another Reason to Buy Now!

Posted on May 7, 2012 by Roger

You likely may not have heard of the “QM” but it could have a major impact on obtaining a mortgage.

What Is ‘QM’ and Why Does It Matter?

We often discuss the difference between the PRICE and the COSTof a home. We want buyers to realize, in many ways, the cost of a home is more important to them than the actual price. Obviously, price is part of the cost equation. The other piece, available financing, is also crucial. Soon, there will be major decisions finalized by the government regarding house financing moving forward. These decisions could negatively impact many buyers.

“QM” is a new term which stands for qualified mortgage. The new Bureau of Consumer Financial Protection(CFPB) will be responsible for defining QM thereby setting the consumer guidelines banks and lending institutions must follow before issuing a mortgage.

Richard Cordray, the Director of CFPB, plans to finalize the definition this summer. The Center for Responsible Lending quotes American Banker on this timeline:

“The Consumer Financial Protection Bureau will issue a final rule by the end of June defining what constitutes a ‘qualified mortgage’ that will be exempt from new rules compelling lenders to verify borrowers’ repayment ability.”

The fear of many is that the definition will be too ‘narrow’ resulting in many purchasers not being able to qualify for a mortgage under the QM definition. In a letter to Director Cordray, several industry organizations talk to this issue:

“Most economists and housing market analysts in government and in the private sector agree that today’s underwriting standards are tight and are contributing to a slow housing recovery. Our organizations believe that an unnecessarily narrow definition of QM that covers only a modest proportion of loan products and underwriting standards and serves only a small proportion of borrowers would undermine prospects for a housing recovery and threaten the redevelopment of a sound mortgage market…

We are convinced that the choices around this important rule, including in large measure the breadth of the QM standard, will affect sustainable homeownership for generations to come.”

What Could This Mean To a Home Buyer?

If a buyer does not qualify under the new ‘QM’ rules, the cost of financing a home will increase. As the letter mentioned above states:

“A narrowly defined QM would put many of today’s loans and borrowers into the non-QM market, which means that lenders and investors will face a high risk of an ability to pay violation and even a steering violation. As a result of these increased risks, these loans are unlikely to be made. In the unlikely event they are made, they will be far costlier, burdening families least able to bear the expense.”

Securing a mortgage before these new guidelines take effect may make sense to many buyers.

Posted in Buying a House | Leave a comment

Further Proof the Real Estate Market is Coming Back

Posted on May 5, 2012 by Roger

From KCM Blog

Last week, the National Association of Realtors (NAR) released their Pending Sales Report which showed that contracted sales were 12.8% higher than the same month last year and higher than any time since sales were impacted by the Homebuyers’ Credit back in April of 2010. The index stood at 101.4 which represents a level that is “historically healthy” (see methodology below).

Here is a graph showing pending sales over the last twelve months:

METHODOLOGY (as per NAR)

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

Posted in Buying a House, Home Ownership, Selling a House | Leave a comment

Bidding Wars Have Returned to Idaho Real Estate!

Posted on May 4, 2012 by Roger

I noticed this article in the Real Estate News, a daily update service of the National Association of Realtors. It is so appropriate to what is happening to the Boise Area Market. The bidding wars are back and are very common, particularly in the lower priced homes.

Some quick examples; I checked on a home in Caldwell for some people this morning-5 offers and all above asking price. I also received 5 offers for a new listing I took in Kuna. I have a family who has made 8 offers on homes, most above asking and was outbid every time. (The good news for him is I had an inside track on a home and we just got his offer approved by the short sale lender this morning.) I received multiple offers on another listing I have in Hazelwood Village.

So be prepared if your are looking for homes today, look at the value not so much at the asking price. No one wants to pay above asking price, but doing so still may get you the best deal!

“Home buyers are unexpectedly finding more competition this spring in landing their dream home. Bidding wars are increasingly being reported in markets across the country, from California to Florida, The Wall Street Journal reports.

“It’s a little surprising because we thought bidding wars were done with,” Andy Aley, a home shopper in Seattle, told The Wall Street Journal. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report.

“We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for-sale, leaving home buyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling their homes off the market. Also, a surge in investors has made the market more competitive, as investors snatch up homes in bulk in all-cash deals.

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALOTRS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago.”

I am posting a graphic about the pending sales tomorrow!

Posted in Buying a House, Selling a House | Leave a comment

VA Loans and Idaho and YOU

Posted on May 3, 2012 by Roger

When listing a house I often get asked about whether or not to accept VA loans. My answer is yes, they are not the bugaboo they once where. And just importantly let us support those men and women who have put their lives on the line for this country! I have helped a lot of veterans purchase homes, and a lot of home sellers sell using VA financing and with more Veterans all the time let’s keep it moving.

Here is an article from KCM Blog about Mortgages and Veterans

One of the great things about this country is that we do a lot for those who have served us. And in the area of real estate financing, we can do exceptional things.

Understand that the VA (Veterans’ Administration) is, in the mortgage world, like HUD is with FHA financing. They are an insurance company, collecting premiums and using the backing of the Federal government to guarantee the payments to lenders. Because of the government’s guarantee, lenders can stretch traditional guidelines and offer very competitive terms (of course, while adhering to the VA’s guidance).

Some of the more attractive features of a VA loan are:

100% Financing on Home Purchases – Veterans, assuming they are in good standing, can buy a home with no money down. In most cases, the maximum VA loan is $417,000.
The Ability to Finance Reasonable Closing Costs – On many VA loans, the closing costs are negotiated into the sales price and the seller pays them. This feature can significantly reduce the cash a veteran needs to buy a home.
More Understanding with Regards to Credit Challenges – In an effort to help those who served us, lenders are more liberal towards hiccups in credit.
Common-Sense Look at Income – Rather than approve loans strictly by income ratios, VA mortgages incorporate what is called Residual Income. There is a form that actually budgets all expenses (not just housing) to account for family size, heating and electrical usage, and more.
Financed Insurance Premium – The VA charges what they call a Funding Fee to set up a fund to reimburse lenders, should a default occur. The Funding Fee varies on loan terms and usage (consult your lender for exact costs), but the good news is that it is typically just added to your loan. Instead of paying thousands of dollars up front, you can pay $10-$50 a month in a higher payment.
Refinancing Your VA Loan is Easy – Through the I.R.R.L. (Interest Rate Reduction Loan) Program, getting a better rate (if the market has better rates) does not carry with it all the verifications of income, credit, appraisals, and assets of other loans…and closing costs can be added into the loan! The logic is the VA is already “on the hook” and lowering the payment increases the likelihood of continued payments, so why not be as lenient as possible.

Posted in Buying a House, Home Ownership | Leave a comment

Ada and Canyon County PTC Index

Posted on May 2, 2012 by Roger

A super indicator of the Treasure Valley’s market strength. Thanks to Pioneer Title Company!

The PTC Index is a monthly measurement of the vibrancy of the Treasure Valley real estate market. Based on a custom weighted algorithm, it combines nine critical measurements of the real estate market into a single, useful number: the PTC Index. To give you some perspective, when the market was at its most active point in 2005, the PTC Index average would have been 225. In January of 2010 we reached a low of 28. Though times have changed, the need for this data is greater than ever.

March 2012

Building Permits	182
New Home Sales	108
Existing Home Sales	643
Refinance	1164
Average Sales Price	140550.5
Financial-Bond Market_{(10-yr Treasury)}	2.17
Days on Market	76.5
Distressed_{(Short Sales and REO)}	2759
Notices of Default	392
PTC Index	162

March was indeed a sight for sore eyes as the real estate industry typically makes gains this month and sets a tone for the rest of the season which extends to early fall. The average sales price of a home fell slightly by 4% from the month prior, but is up 8% from a year ago. Notices of default and distressed properties (short sales and real-estate owned) also fell a bit by 6% and 4.4% from the month prior, respectively. Building permits made big gains in March as well with a 16% increase from the month prior. Looking at building permits a year ago, we see a whopping 43% increase since then in March 2012! New home sales ticked up by 10% across the valley, while existing home sales continue a positive trend up nearly 20% from the month prior. Refinances also continued their momentum up 15% from the month prior; they show a massive gain of 56% in the year-ago time period.

February was at 131.