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Wednesday, October 31, 2012

Sales of previously owned homes rose

Contracts to buy previously owned homes rose less than expected in September, an industry group said on Thursday, but the data continued to point to an improving tone in the housing market.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in September, gained 0.3 percent to 99.5.

Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to rise 2.1 percent after declining 2.6 percent in August.

"This means only minor movement is likely in near-term existing home sales, but with positive underlying market fundamentals they should continue on an uptrend in 2013," said NAR chief economist Lawrence Yun.

The housing market is steadily healing after collapsing in 2006, supported by modest job gains, increased job security and record low mortgage rates. Pending home sales were up 14.5 percent in the 12 months to September.

Monday, October 29, 2012

Like-Kind Property: Does Federal or State Tax Law Control?

Like-Kind Property: Does Federal or State Tax Law Control?

The Internal Revenue Service’s Chief Counsel Advice (CCA) #201238027 addresses the issue of whether state law characterizations of property as real or personal are determinative of whether property is considered “like-kind” pursuant to Internal Revenue Code Section 1031. Section 1.1031(a)-1(b) of the regulations notes that the words “like-kind” refer to the nature or character of a property, but not its grade or quality. Since state laws differ in how they characterize real and personal property, relying strictly on state law property classifications would result in federal tax law being dependent on state laws and state policies. This would be problematic for investors seeking Section 1031 tax deferral involving properties with different property classifications in different states.

The conclusion reached in CCA 201238027 is that federal income tax law preempts state law for determining whether exchanged properties are treated as like-kind for purposes of IRC Section 1031. Although state law property classifications are one relevant factor for determining if property is considered real or personal, the determination should ultimately be made under federal tax law by considering all of the taxpayer’s facts and circumstances.

Thursday, October 25, 2012

Todays Hot Grass Valley and Nevada City Home and Land Deals

Todays Hot Grass Valley and Nevada City Home and Land Deals

18% of signed contracts on existing home sales were canceled

A housing recovery may be under way, but there’s an obstacle that appears to be slowing down the rebound: the unusually high number of buyers who walk away from their contracts.

An average of nearly 18% of signed contracts on existing home sales were canceled during the three months ending July, according to data released this month by Capital Economics, an independent research firm. That’s the highest all year and the most since May 2010, when that figure reached 23%; in the five years before the housing slump started, the average never went higher than 10%.

Separately, 36% of Realtors are reporting some kind of problem with a contract, including cancellations, delays and renegotiations of the sales terms, according to August data by the National Association of Realtors. That’s up from 30% earlier this year.

The latest setback comes as home sales are rising. Existing-home sales increased 7.8% in August from a month earlier and rose 9.3% from a year prior, according to data released this morning by the NAR.

Ironically, the recent pickup in home sales is contributing to rising contract cancellations. As more buyers compete over a limited inventory of for-sale homes, some are bidding aggressively to get the seller’s attention, but not assessing whether they truly want the house until they’re in contract, says Bryan Sweeley, a real estate agent in Santa Clara, Calif., with ZipRealty. This strategy could make it more likely that buyers will walk away from homes if red flags are raised in an inspection or the appraisal, he says. As we previously reported, appraisals have been derailing home sales in cases when the appraised value of the home comes in lower than the purchase price the buyer and seller had agreed to.

Tight lending requirements are also contributing to contract cancellations, says Paul Diggle, property economist at Capital Economics. As more buyers move off the sidelines to purchase a home, they’re finding they can’t qualify for a mortgage, he says. (Data from the Mortgage Bankers Association shows that mortgage applications for home purchases have been relatively flat most of the year with some increases posted in recent months.) While buyers are encouraged to get preapproved for a mortgage before making an offer on a home, it’s not a requirement. But skipping this step opens them up to the possibility of being denied a mortgage on a property that they’ve already entered into contract on.

To be sure, contract cancellations don’t necessarily mean those buyers are leaving the market, experts say. In some cases they’re making offers on other homes or working on a new contract with new terms on the same property in question.

Still, for sellers, canceled contracts can range from a slight nuisance to a major setback. In most cases, they extend the time sellers spend trying to unload their home. It may also set them back financially if the seller has moved out of the property in anticipation of the buyer moving in.

But it’s buyers who can incur the biggest financial setback when walking away from a contract—which can include losing the deposit they’ve paid on the home. Upon signing the contract, buyers typically put a small percentage of the purchase price down to be held in escrow. Paul Howard, a buyer’s broker in Cherry Hill, N.J., says buyers should ask their agents to include contingency clauses in the contract that state the buyer can walk away from the home if financing falls through or if the inspection or appraisal of the home isn’t satisfactory. (Some transactions might require additional contingencies.) In most cases if they abandon the deal based on a contingency clause in the contract, buyers should be able to get their deposit back.

Gary Tippner is Short Sale and Foreclosure Resource Certified
Relocation Specialist ~ Luxury Specialist ~ Investor Advisor

Call 1-877-311-GARY
"One Eight Seven Seven Three Eleven... Gary"

Sunday, October 21, 2012

10 Ways to Stop a Last Minute Collapse of Home Sale

10 Ways to Avoid a Last Minute Collapse of Home Sale

In real estate deals, there are two moments when everyone should be happy: when the contract is signed and when the closing is complete. Unfortunately, things sometimes go wrong and the second moment never arrives.

Sometimes bad luck gets in the way -- a tornado flattens the place. But derailed deals -- otherwise known in real estate parlance as "failed sales" -- can also result from bad faith, bad research or badly written contracts. Failed sales have been on the rise, too.

A failed home sale can be costly. At a minimum, one or both parties will have to start the process all over again. In more extreme cases, a broken deal results in monetary damages, like a buyer forfeiting a down payment. A seller who backs out for no good reason can be sued by the injured buyer.

Many deal failures are avoidable if buyers and sellers take enough care. Here are 10 simple steps to include in the home sale and buying process to avoid a last-minute collapse.

These days, the most common deal-destroyer is the denied mortgage, as lenders are very cautious amid the flood of foreclosures.

1. Require mortgage pre-approval
Sellers can minimize the risk of a denied mortgage by requiring buyers to furnish pre-approvals, which indicate the buyer meets the basic loan criteria. This is different from pre-qualification, which is a less "thorough" mortgage check that most prospective homebuyers go through.

2. Don't overprice the house
The seller should be careful not to over-price the home because, even if a buyer is willing to pay, the lender will balk if the appraisal says the home isn't worth enough to serve as collateral on the loan.

3. Specify mortgage terms
The seller can insist that the sales contract specify a buyer seek a mortgage with terms the lenders are likely to approve, such as a down payment of at least 20% and an interest rate that's not so low it will be difficult to find.

4. Allow plenty of time for mortgage approval
At least 60 day to 90 days is a good benchmark for making sure the mortgage approval process doesn't cause your sale to fail, instead of a 30 day to 45 day period.

5. Know your buyer's income source(s)
A self-employed buyer, or one dependent on bonuses or commissions, is less likely to get a loan than a salaried employee who's been with the same employer for many years.
Many of these precautions apply to buyers, too, like having enough time to secure a loan and not reaching for one that's too big for your income.

6. Buyers need to be careful to meet all deadlines
Most failed deals involve problems with the buyer, but occasionally, a seller will want out because he has a better offer or has changed his mind about selling. Buyers need to mind deadlines like the dates for the balance of the down payment or applying for a loan. If the loan-approval deadline is looming, deliver documents by hand.

The buyer also should scrutinize the contract for any provisions that will be hard to meet. It might be worth a few hundred dollars to have a lawyer look over the contract, and letting the seller know you've done so will show the seller you're not to be trifled with.

7. Both buyer and seller need to scrutinize contingencies
Special contingencies are conditions that must be met for the contract to be valid. The seller, for instance, should be wary if the deal hangs on the buyer selling a previous home.

8. Making the home appealing should never require hiding things
Because homes have been moving slowly, many sellers are feeling a bit desperate. Some will try to conceal problems with a quick coat of water-sealing paint or a well-placed picture or stack of storage boxes. Obviously, this can backfire by wrecking a deal when discovered, forcing the seller back to square one. Still, sellers do try to make their homes as appealing as possible, and buyers should hear alarm bells if any part of the living area, basement, attic or garage is inaccessible.

9. Don't try to "get away with" major structural flaws
Minor problems with the home can cause deals to fall through, so just imagine the impact of a major flaw. The seller should make sure the place is in good shape -- that the furnace or air conditioning system isn't about to blow, that there are no leaks and all the appliances work. To avoid surprises, both parties should attend all professional inspections.

10. Agree in contract to post-inspection remedies.

The contract should specify what happens if an inspector does find problems, like wobbly steps or a water heater that's on its last legs. The parties should agree that the deal will still go through if repairs can be done below a certain cost, typically to be born by the seller, such as $2,000. A higher number favors the buyer, a lower one the seller.

Deals do fall through, but both parties should remember that the contract is a legal document. Violate it and you could be liable for damages. You can never know exactly what's in the other party's head, but you shouldn't sign a sales contract unless you really intend to go through with it yourself.

Gary Tippner is Short Sale and Foreclosure Resource Certified
Relocation Specialist ~ Luxury Specialist ~ Investor Advisor

Call 1-877-311-GARY
"One Eight Seven Seven Three Eleven... Gary"

Wednesday, October 17, 2012

Home Sales on Track to Hit 5-Year High

Real Estate

Home Sales on Track to Hit 5-Year High

Sales of existing single family homes and condominiums beat expectations for August, rising to the highest level since May of 2010, when the government's home buyer tax credit juiced sales temporarily. This time it could be argued that the government stimulus behind sales is record low mortgage rates, but that may not be all of it.

Close to one third of the homes that sold in August went to buyers using all cash, despite average rates on the 30-year fixed sitting around 3.6%. Rates appear to have less of an impact than hoped. Witness mortgage applications to purchase a home fell 4% last week, even as rates fell to record lows on the Mortgage Bankers Association's weekly survey.

"The strengthening housing market is occurring even with difficult mortgage qualifying conditions, which is testament to the sizable stored-up housing demand that accumulated in the past five years," said the National Association of Realtors' chief economist Lawrence Yun.

With the August jump of 7.8% from July, Realtors now say they are confident that home sales for all of 2012 will hit their highest level in five years. They do warn that there are still "frictions" in the market, not the least of which are about 12 million borrowers who owe more on their mortgages than their homes are worth. These so-called "underwater" borrowers are largely stuck in place, unable to cover their debt and unable to move up.

"Bottom line, housing continues to recover, but the bounce still has to be put into the perspective of how much damage was done," notes Peter Boockvar at Miller Tabak. "Looking specifically at single family homes, at a sales level of 4.30mm, it's back to where it was in 1998 and of course still well below the bubble high of 6.34mm in Sept '05."

As positive data begin to outnumber negative, analysts warn of a large pipeline of distressed properties that are still weighing down a potentially more robust recovery. Foreclosure activity increased in August, and states that had all but halted the process on thousands of properties, due to judicial challenges to paperwork, are now ramping up again. This will add lower-priced properties to an already low volume of homes for sale.

The question is, will that distress be absorbed quickly by investors and cease to have the negative impact on surrounding properties and consumer sentiment that foreclosures have had in years past? Investors, big and small, continue to move into this market, unafraid that rent prices will fall any time soon.

"The demand for rental housing is incredible," said former GE CEO and author Jack Welch on CNBC Wednesday. "The home rental idea is moving strongly."

Gary Tippner is Short Sale and Foreclosure Resource Certified
Relocation Specialist ~ Luxury Specialist ~ Investor Advisor

Call 1-877-311-GARY
"One Eight Seven Seven Three Eleven... Gary"

Friday, October 12, 2012

Don't Buy Your Dream Home?

 With interest rates at record lows, it's hard to ignore the constant "buy now" real estate pitches. If you're renting and thinking now is a good opportunity to see what house you can afford, you are probably also thinking about what you may have to give up to buy that house.
In a survey, renters said they are willing to contribute less to their 401(k) to buy their dream home.

"The problem we often face as planners is convincing folks to postpone the 'here and now,' including enjoyable things, and focusing more on the future," Kaplan says. "It is really difficult to live on Social Security, which never was designed to be the sole source of retirement savings."
Americans are just not saving enough for retirement. According to a recent BlackRock survey, 58% of all 401(k) plan participants were not saving the maximum with their plans. The survey also found that eight in 10 retirees regret they did not save more for retirement through their 401(k) plans.
"Contributing less to one's 401(k) could often mean sidestepping a valuable company match," Kaplan says. "It's OK to sacrifice for a home, but a better sacrifice would be to forgo the dream home -- gourmet kitchen, media room, etc. -- and retain 401(k) deferrals."
Instead of reducing or stopping your 401(k) contributions, Ron Howard, managing principal at Siena Wealth Management in San Jose, Calif., recommends reducing or eliminating some other expenses.
Even if you are buying a house you can afford, Howard says, you will still need to give up certain things you were used to doing or spending on as a renter. That's because on top of your mortgage, you will have to deal with many unexpected costs as a first-time homeowner.

Sure, you could afford the house, but what about the property taxes, homeowner insurance, carpet replacement, general maintenance of the home and landscaping? To pay for these, Howard says you may have to do away with exotic vacations, expensive technology gadgets, dining out regularly or going to a coffee shop every day. Now might also be a good time to give up smoking and reduce your bar tab.

With soaring demand pushing rents to an all-time high, homebuying is looking more attractive these days. According to the Mortgage Bankers Association, the average rate on a 30-year fixed-rate mortgage fell to a record-low 3.72% for the week ending Sept. 14, down from 3.75% the previous week.

To determine if you can afford to buy your dream home, use this rent vs. buy calculator. This tool would show you the fees, taxes and monthly payments to compare with your current rent. Use this mortgage loan calculator to see how much interest you could pay and your estimated principal balances.
"Another cautionary element here is folks buying more house than they can afford with an adjustable-rate mortgage. Interest rates may move much higher in the longer term, pricing some people out of the homes that seem more affordable now," Kaplan warns.
If you truly know that you can afford to buy that dream home, Howard says, go for it. But prepare to make lifestyle changes for the unexpected expenses that come with homeownership.

Just don't touch that 401(k), Kaplan says. "No home is worth jeopardizing future funding goals."

Gary Tippner is Short Sale and Foreclosure Resource Certified
Relocation Specialist ~ Luxury Specialist ~ Investor Advisor

Call 1-877-311-GARY
"One Eight Seven Seven Three Eleven... Gary"

Monday, October 8, 2012

Hot Nevada County Homes Deals

Hot Nevada County Homes Deals
Investor and Rental Investments

Housing Market Update

After falling to depths not seen since the Great Depression, the U.S. housing market may finally be rising from the ashes.

It may not seem like a lot, but 27% of Americans believe the value of their homes will increase in the next year, according the CNBC All America Economic Survey.

That is the highest percentage since 2007 and the third straight quarter that such optimism has gained.

Home prices in the nation's top twenty markets rose 1.2% in July from a year ago, according to S&P/Case-Shiller.

All of those markets saw month-to-month price gains, while just four saw annual declines. Atlanta continues to see the largest drop, down just under ten percent year-over-year, but even its declines are easing.

In Phoenix, where distressed properties have made up the bulk of home sales, prices are up 16.6% from a year ago, due to big supply shortages of low-end homes.

Home prices are still down 30% from their peak in 2006, but just the prospect of a real bottom has some buyers finally getting off the fence. In addition, rising prices helped 1.3 million home owners to rise out of a negative equity position on their mortgages in the first half of this year, according to CoreLogic.

Nearly 11 million, or 22% of all borrowers, are still stuck in place, owing more on their mortgages than their homes are worth, and an additional 2.3 million have less than five percent equity in their homes, making a move up unlikely.

The latest numbers, from existing home sales to earnings from the big public home builders, are fueling much-needed confidence in housing, but it would be naïve to declare that this industry is completely out of the woods.

. Suffice it to say, the housing market has come a long way, but it still has a long way to go.

Gary Tippner is Short Sale and Foreclosure Resource Certified
Relocation Specialist ~ Luxury Specialist ~ Investor Advisor

Call 1-877-311-GARY
"One Eight Seven Seven Three Eleven... Gary"

Thursday, October 4, 2012

Why Mortgage-Backed Bond ETFs MightIncrease Your Net Worth

Benjamin Franklin said, “It would be thought a hard government that should tax its people one-tenth part of their income.” Yet recent polls show that the majority of U.S. citizens do not believe candidate Romney’s 2011 effective rate of 14.4% was high enough. Apparently, not everyone seems to feel that one-tenth, or 10%, is harsh at all.
More famously, Mr. Franklin quipped, “In this world nothing can be said to be certain, except death and taxes.” Indeed, Franklin would be surprised to discover that nearly half of United States citizens pay zero federal income tax.
Taxes certain? Far from it. For instance, we may or may not witness a bevy of tax increases (a.k.a. the fiscal cliff) at the end of 2012. Moreover, it is incredibly unclear who will pay more, and how much more.
That said, there is one certainty involving financial matters. Ben Bernanke is guaranteeing that the Federal Reserve will buy $40 billion of mortgage-backed bonds every month. It is an open-ended promise… meaning it has no foreseeable expiration… other than tangible improvements in the labor market and the economy as a whole.
Now, short of the federal government aligning itself with the natural gas industry, there isn’t going to be a significant increase in the labor participation rate; unemployment and underemployment will still weigh on corporate profits. And stock assets will see a great deal of choppiness going forward.
Should you buy the dips? You can… if you use one or more methods of protecting your downside risk.
But what if you want a Ben Franklin-like certainty in your portfolio? Then buy what Ben Bernanke is buying, mortgage-backed bonds. The easiest way to access them is with an ETF like iShares Barclays MBS Bond (MBB). Not only is there a 3.1% annual yield, but the Fed purchases (i.e., demand) should strain supply if the program continues beyond 12 months. In other words, expect some price appreciation as well.
There are several other ways to benefit from the bond buying bonanza. Vanguard also buys agency mortgage-backed securities issued by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). Vanguard Mortgage-Back Securities ETF (VMBS) even has a lower expense ratio than MBB (0.26%) at 0.15%.
The active PIMCO Total Return ETF (BOND) has a large helping of mortgage-backed securities in its portfolio. This exchange-traded tracker has been a monster fan “fave” since its inception.

Gary Tippner is Short Sale and Foreclosure Resource Certified
Relocation Specialist ~ Luxury Specialist ~ Investor Advisor

Call 1-877-311-GARY
"One Eight Seven Seven Three Eleven... Gary"

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