OVER 406 BANK OWNED HOMES FOR SALE IN ADA COUNTY

As you probably know, there is a plethora of bank owned homes for sale in Boise, Meridian, Eagle, Kuna and Star.   Banks are motivated to sell and will typically price these distressed homes 10-30 percent under current market values.  Granted, most do need cosmetic work done prior to move-in such as new carpet, paint, lawn maintenanceand other misc items.  However, there are some bank owned property which the previous homeowner has taken it upon themselves to leave the residence in nasty shape by taking a sledge hammer to walls and doors along with pulling all appliances like the range, dishwasher, disposal and microwave (sometimes water heaters and furnaces, too).  Unless you would like to take on the costs, I suggest bypassing some of the bank owned homes on the market. 

It is also important to not look for only bank owned homes.  There are numerous non-distressed homes on the market (fair market sellers) that must sell.  These homes are priced competitively and do not need the improvements that a foreclosed upon home typically does.  With that, it is important to consider the costs of repairs when deciding whether to purchase a home which needs some love (yet is priced lower than the home down the street) or one that is turn key and ready to be moved into.

Bank owned homes will be prevelant in our market through 2010 and part of 2011.  Would you like a list of bank owned homes forwarded to you?  If so, send me an email with your contact info and I will provide a list of bank owned property currently on the market.

To search the MLS real time Click Here
To obtain a free market evaluation for your home Click Here
To chat with Matthew Le Baron Click Here

Buying a foreclosed home 101

Don’t bother browsing through the legal filings in your local paper or showing up to courthouse auctions—there is too much risk and most banks will not sell at auction for less than the amount currently owed against it. Instead, contact myself or another Realtor at Trust Realty that can provide a list of homes for sale that are bank owned. Also, you can go directly to www.TrustIdaho.com to search specifically for bank owned property being offered at rock bottom prices.

It’s makes more sense to purchase homes that are being sold directly through the bank since a buyer purchasing homes at foreclosure auctions must have cash on hand at the time of the sale and typically hasn’t had an opportunity to inspect the home appropriately. Also, many homes sold at auction may have additional liens such as a home equity line of credit or a second mortgage that may have fallen under the cracks. If that is the case then the buyer of the auctioned home is responsible for clearing the lien(s).

When a bank takes final possession after foreclosure and lack of a winning bidder at the auction, the entity will clear the home of all liens and encumbrances. When buying a bank owned home, the purchaser has an opportunity to inspect the home and the offer and earnest money put down is contingent upon buyer approval of the inspection. A home purchased directly from the bank can also be financed.

Bank owned homes currently for sale on the public market typically have been sitting vacant for no less than six months and have often been vandalized or stripped of items such as water heaters, oven/ranges, microwaves and even cabinetry. “One mistake a lot of people make is underestimating how much work the home needs and the cost associated with fixing it,” say Rick Sharga of RealtyTrac. To avoid getting stuck with any surprise bills, it is essential to have a certified home inspector provide the true condition of the home. Secondly, it is important to properly estimate the amount of time and money needed to bring the home back to a livable condition.

Be aware, not all banks are selling their inventory (foreclosures) at fire sale prices; some are listed at or around market value. However, most firms offer property at or around 10% under current market value with the hope that a buyer will purchase within a 30-day timeframe. The larger the inventory of foreclosed homes the bank is holding along with the length of time the home has been on the market will determine your chances of nabbing a home drastically under market value.

Determine your offering price by finding out how many days the home has been on the market along with the activity associated with it (it is important for your representation to inquire with the banks representation to find out if there are alternate interested parties). I suggest offering 10% under the banks asking price unless it is found that the bank is highly motivated. You must also consider alternate buyers that may be willing to pay more than you at that time.

Be prepared to wait for a response to your offer when attempting to purchase a bank owned home. While some banks respond w/in 36 hours, others dealing with an enormous backlog can hold up response for as long as three month. While you wait, another party can unfortunately trump your offer with a higher one. With that, it is important to have multiple properties in mind and to get pre-approved for financing prior to making an offer (unless you plan on purchasing with cash). Even if the home of your dreams has gone into pending status prior to you writing an offer for it, be sure to have your representation continually check the status since real estate transactions do fall.

Remember, it is essential to have representation when purchasing bank owned, short sales or fair market homes. Contact me today to discuss the possibilities!

To search the MLS real time Click Here
To obtain a free market evaluation for your home Click Here
To chat with Matthew Le Baron Click Here

Is Buying the Worst House on the Best Street Good Advice?

Thomas Stanley, Ph. D. is back at it again with his newly released book “Stop Acting Rich.” His name should be familiar to you because he is the author of “The Millionaire Next Door” and “The Millionaire Mind.”

I loved his first two books and when I saw his new book, I couldn’t resist buying it. The message that permeates each book listed above is that most people look rich because they live in big homes or drive expensive cars, but when examined closely, they have accumulated very low levels of wealth. In other words, they wear big hats but have no cattle.

For some reason, we seem to measure our success in life by how we compare to others. Is our house bigger than theirs? Is my car nicer than Jim’s down the street? To feel successful, many people fall into the trap of buying things simply to impress others.

One of the main lessons Mr. Stanley makes throughout this book is that the amount of wealth you accumulate in your life correlates directly to the size and value of your home. Here’s a very telling quote from the book:

“If you examine homes by value from the lowest to the highest, you would find that as the value of the homes increases, so does the proportion of people who are living well above their means.”

The more expensive your home, the more you’ll be forced to spend on home repairs, maintenance and upkeep. This is hard enough, before you factor in what you’ll have to spend to keep up with your neighbors. If you buy a high-end home, you’ll end up sending your kids to expensive private schools and you’ll be forced to buy them all of the expensive clothes and gadgets the other kids have in the neighborhood.

The reason this happens is because it’s hard to avoid copying what you see every day. You won’t want to look like some schmuck who drives a rusty old car and sends his kids to the public schools in out-of-style clothes from Kmart.

The trick is to live in a nice home in a nice neighborhood that allows you to live below your means. It’s better to be a high earner in an average neighborhood than it is to be a low earner in a high-end neighborhood. Remember the old saying about “buying the worst house on the best street?” Well, as it turns out, this “best street” might actually lead you to the poor house.

Most of the millionaires profiled by Mr. Stanley live on less than 80 percent of their income. They are frugal and focus their attention on investment rather than consumption. Their goal is to convert income into wealth, which is significantly different than people who act rich.

A psychology study by Ryan Howell, which was written about in the book, found that having “things” isn’t what usually makes us happy. If “things” do, it’s short-lived happiness.

Instead, what makes us happy are life experiences. The good news is that life experiences are free.

**brought to you by Rob Minton

Short Sales 101

Brushing up on your short sale knowledge is essential in this market since nearly 50% if all homes currently for sale are distressed (either short sale or bank owned).  Bank owned homes can typically be purchased within 30 days since the home has been foreclosed upon and title has been transferred to the bank.  Purchasing a bank owned property is very similar to purchasing from a normal seller yet there are much more disclosures involved.  A short sale means that the current owner is requesting the bank to take less than what is owed in order to avoid foreclosure—short the bank on what is owed is a way to look at it.  This requires approval from the lending institution. 

 The process:

 1)     To be a short sale, the homeowner usually is in default or in a position to be in default (divorce, loss of job, injury, etc) The seller most likely has tried to get their loan modified yet to no avail.  Next step is to place the home on the market as a short sale.

2)     The agent marketing the property will advertise to the public as a short sale.  Short sales are typically priced very aggressively yet it is important to remember that the bank determines the final price. 

3)     An offer is submitted to the seller and the seller accepts it in writing (unless the seller feels that the offer would not be accepted by the bank) 

4)     The seller will compile a short sale package for submittal to the lender (or lenders) that includes the executed offer, seller financial statements, bank authorization letters, previous 2 years taxes, a hardship letter and listing agreement. 

5)     Once the package is submitted to the lender the buyer and seller must wait for approval.  The lender will typically request an appraisal to be completed firstly in order to determine value.  Second, they will compare proceeds of the short sale to the proceeds received if the home is foreclosed upon in order to determine whether or not the sale can be approved. Banks such as B of A and Chase can take as long as 4 months for a response.  Patience is a virtue!

6)     The bank approves, rejects or counters the offer.  If there is acceptances of your offer then expect to close w/in 30 days after the approval is obtained. 

 It is important for a buyer who is pursuing a short sale to keep all options open.  Most offers submitted on a short sale can be cancelled at any time prior to bank approval by both the buyer or the seller.  With that, I suggest continuing to look for homes while the offer is working its way through the approval process.  More often than not, an alternate home will come onto the market that fits the buyer’s needs and IS NOT a short sale. 

 The lending institutions are working in association with the US Government to streamline short sales during the year of 2010 and beyond in order to decrease approval timeframes that in turn helps fewer homes go into foreclosure.  Personally, I have noticed that banks are already responding to short sale offers more rapidly and hope that the trend continues.

BUYING A HOME 101

Buying a home has many components associated with the process. Although every transaction is different, below you will find steps linked with most real estate purchases.

1. Hire a buyers agent. A crucial step since it is essential to have an experienced Broker protected your interests.  Using the services of a buyer’s agent in the State of Idaho is free to the buyer in 99% of all real estate transaction.  Choose wisely!
2. Get pre-qualified.  A pre-qualification will provide you and your agent essential knowledge prior to step 3.  Visit your local bank or mortgage broker.  Or, ask me for a list of home loan specialists that have provided top-notch service along with lower fees. 
3. Start browsing for homes online—if you haven’t already. Go to www.TrustIdaho.com to view property descriptions, interior photos, virtual tours, community information, school ratings and much more.
4. View property.  By now you and your agent have probably have a list of homes to view.  Rely on your agent to schedule appointments and accompany you to all viewings.
5. Write a purchase and sale agreement. Now that you’ve found the home you would like, it is time to write an offer.  Consult with your agent for strategies.  Things to take into consideration are the following:  how many days on the market?  Short Sale or bank owned?  How much interest is there currently on the property? (your agent will find this out for you)   
6. Negotiate.  An essential element of the Broker’s duties.  Hiring an experienced real estate broker that has been involved with hundreds of transactions will have the negotiation skills that will save you time and money.  
7. Earnest money deposited.  Usually after the offer is accepted your earnest money will be deposited in a non-interest bearing trust account.  Your earnest money is credited to you at closing and can be returned if you are unable to obtain necessary financing or have an unsatisfactory inspection or appraisal. 
8. Open escrow or submit your offer to the title company agreed to on the purchase and sale agreement. Your buyers agent will coordinate this step for you and will review the title policy ensuring that you have clean title at time of closing.
9. Order an appraisal. Your lender will typically coordinate the ordering of the appraisal.  The purpose of the appraisal is to ensure value and safety for you and the firm providing financing. 
10. Review and execute all necessary disclosures.  Types of disclosure may include a Seller’s Property Disclosure Form, A Lead Based Paint Disclosure, FHA Disclosures, Lender Disclosures—so on and so forth.  Your agent will help make sense of it all.
11. Get a home inspection—even if the home is brand new. One of the most important aspects when purchasing a home.  Your inspector’s job is to go over your future investment with a fine-toothed comb.  He or she will typically provide a report of the findings.  Ask your agent for a list of quality inspectors if you don’t already have one.   If there are problems, you have the right to request that the seller make necessary repairs.   
12. Removal of all other contingencies. These contingencies could sewer and well inspections along with other miscellaneous contingencies—depending upon the type of property being purchased. 
13. Get Homeowners insurance. Provide to your lender proof of insurance so that it can be reviewed and approved prior to closing.  It is essential to have proper insurance yet remember to insure the structure, not the land.  I suggest shopping for the best insurance rate.
14. Conduct a final walk-through. Done to ensure that any repairs requested were completed along with making certain there was no damage to the property after the inspection was completed.
15. Sign closing documentation. Typically done at a title company.  Your lender and agent will most likely be present to walk you through the documentation.  
16. Deposit funds with the title company. Depending upon the type of financing you choose to use, a check for your down payment and closing costs may be required unless you are taking advantage of the first time homebuyer tax credit.  The title company will verify funds and also request funds from your lender.  
17. Get keys. Within 24 hours necessary monies will be transferred and the property will be recorded in your name.  At this time the home is officially yours. 

Make sure to keep in touch with your agent.  You may have questions after the fact or others that could use the services of a knowledgable real estate broker. Our  job doesn’t end at closing.

Report shows home buyers’ negotiating power gains

Home buyers in much of the United States paid thousands of dollars below asking prices in December and for the first time in 11 months gained negotiating power, real estate website Zillow.com said.
According to December Zillow Real Estate Market Reports, buyers paid 2.7 percent less, or a median of $5,618 below the listing price on homes bought in December, up from $5,538, or 2.6 percent, for homes bought in November.

The gain, however, was still far less than December 2008 when buyers bargained a median 4.5 percent, or $10,018, off the last listing price, Zillow said.The data is calculated by comparing the last listing price of individual homes and the final sale price.November had marked the 10th consecutive month discounts shrunk, meaning buyers were negotiating less and less off the final asking price each month.

More buyer negotiating power tends to put downward pressure on overall home prices and may push more mortgages “underwater.” This negative equity has been one of the biggest banes of homeowners, making many unqualified for home loan refinancing and preventing some from selling.

RELOCATION TIPS

After months of looking, in the midst of this tough economy, you land a job offer — now for the tough part, how to explain to your family it’s out of state. With the job market in a crunch relocation may become a very necessary reality for many Idaho homeowners. Whether you are moving to get work with a new company, or are relocating to stay with the same company, there are any numbers of reasons that you may be facing a unexpected move in your future.

Study Up as a Family
Like most studying, this research will start with online. City and state official websites are a good starting point to get a sense of the school system, recreation and services. Read local blogs to get the feel of a neighborhood or city. Divide up the research among the family so everyone gets to be an expert on a particular subject

Don’t Avoid the Undesirable Topics
With everything that goes into moving your family, it is easy to turn reloating into a endless series of  “to do” lists. Set aside some time to let your family talk out loud about the move and how it is effecting them individually. Some times will seem to fly by, other times it may seem overwhelming. Comfort each other in the difficult time – you are making this move together.

Locate Activities BEFORE you move
If a family member has a special hobby or sport, seek out the best ways to connect with that passion BEFORE you get to the new location- it’ll feel more like home when everyone is able to do what they love.

Start gathering medical and school records
Even in today’s modern world we still aren’t completely free of the paper trail. Start gathering data from your physician, dentist and school administrators earlier rather than later. This will make the transition to your new area easier, and should any emergencies come up during the move you will be ready with this information.

Work with a Real Estate Professional
Finding the right Realtor who knows the area can make all the difference between a simple and a difficult relocation experience. Whether you want to purchase a new home immediately or are opting to rent first to familiarize yourself with the area, a Realtor can provide both guidance and support during your relocation. Having a professional in the real estate business helping you can make all the difference in the world. Don’t hesitate – call Matthew Le Baron today! 

After months of looking, in the midst of this tough economy, you land a job offer — now for the tough part, how to explain to your family it’s out of state. With the job market in a crunch relocation may become a very necessary reality for many Idaho homeowners. Whether you are moving to get work with a new company, or are relocating to stay with the same company, there are any numbers of reasons that you may be facing a unexpected move in your future

Study Up as a Family
Like most studying, this research will start with online. City and state official websites are a good starting point to get a sense of the school system, recreation and services. Read local blogs to get the feel of a neighborhood or city. Divide up the research among the family so everyone gets to be an expert on a particular subject

Don’t Avoid the Undesirable Topics
With everything that goes into moving your family, it is easy to turn reloating into a endless series of  “to do” lists. Set aside some time to let your family talk out loud about the move and how it is effecting them individually. Some times will seem to fly by, other times it may seem overwhelming. Comfort each other in the difficult time – you are making this move together.

Locate Activities BEFORE you move
If a family member has a special hobby or sport, seek out the best ways to connect with that passion BEFORE you get to the new location- it’ll feel more like home when everyone is able to do what they love.

Start gathering medical and school records
Even in today’s modern world we still aren’t completely free of the paper trail. Start gathering data from your physician, dentist and school administrators earlier rather than later. This will make the transition to your new area easier, and should any emergencies come up during the move you will be ready with this information.

Work with a Real Estate Professional
Finding the right Realtor who knows the area can make all the difference between a simple and a difficult relocation experience. Whether you want to purchase a new home immediately or are opting to rent first to familiarize yourself with the area, a Realtor can provide both guidance and support during your relocation. Having a professional in the real estate business helping you can make all the difference in the world. Don’t hesitate – call Matthew Le Baron today!

ATTENTION INVESTORS!! New FHA rule change should encourage house-flipping

A new market will soon open to people who buy houses with the purpose of fixing them up and selling them: FHA buyers.

Since 2003, house flippers have been restricted from selling to buyers using Federal Housing Administration loans for 90 days after purchasing the property. That meant some flippers would shy away from deals with potential FHA buyers, knowing they’d have to wait for that 90-day period to end.

FHA loans often serve first-time and moderate-income homebuyers, enabling them to purchase a house with a low down payment.

The FHA said Jan. 18 that the 90-day restriction will be suspended for a year, beginning Feb. 1.

One result will likely be that more investors will jump into the flipping market, buying up foreclosed homes in disrepair and rehabilitating them for a profit.

Some say this will inflate housing prices, making homes less affordable for buyers. And some say this opens up FHA buyers to scams.

But the FHA says there are rules in place to prevent predatory practices. First of all, deals must be “arms-length:” The parties in the sale can’t have the same interest.  

This is designed in part to prevent homeowners from defaulting on a loan, then bringing in a friend to buy it from the bank at a rock-bottom price and return it to the homeowner at a slightly higher-than-rock-bottom price. In that scenario, the friend/flipper would make a profit and the homeowner would have a cheaper mortgage, all at the lender’s expense.

Another notable restriction prevents sellers from knocking the new price up more than 20 percent from its purchase price, unless an independent appraiser says the renovations justify that increase.

“They’ve seen enough of those abuses now over the past four to five years that they’re getting much better at identifying [predatory] transactions,” said Steve Cox, a branch manager at Boise-based Stonebrook Mortgage and president of the Idaho Association of Mortgage Brokers.

He said the rule’s suspension will help transactions move faster through the closing process, allowing more transactions to be final in time for the homebuyer tax credit, which is set to expire in June.

And he said renovating and selling houses is a “legitimate business activity, as long as they’re not turning around and making a substantial profit after beating up the bank for a low price.”

And since FHA loans have come to play an ever-more-important role in homebuying in the last two years, being allowed to sell to FHA buyers makes house flipping a lot more attractive.

**IBR

FHA Relaxes Property Flip Regulation For One Year

New information imperrative f

Effective for all sales contracts dated on or after February 1, 2010 and for a period of 1 year. Certain property may be resold and financed using FHA insured financing without waiting 90 days. FHA has temporarily waived the 90 day wait period, on certain transactions. These recently purchased homes may be sold and financed with FHA insurance. · Private sellers and investors are now eligible to take advantage of this waiver.

· These transactions must be arms-length, with no identity of interest between the buyer and the seller or other parties participating in the sales transaction.

· In cases where the sales price is 20% or greater than the seller’s acquisition, the lender must justify the increase in value with supporting documentation of renovation, repair and rehabilitation work. 

·If no such work was performed the appraiser must provide an appropriate explanation of the increase in property value since the prior title transfer.  

·The lender must order a property inspection and provide that report to the home buyer. Buyer’s may be charged for the cost of this inspection.

There is much more detail to this wavier and if you have transactions meeting this guideline you are advised to read the waiver in its entirety here:

http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf This is fresh information and I wanted you to have good news as you start your weekend!

TAX CREDITS GALORE!!

Great news for potential Idaho homebuyers! Idaho Housing and Finance Association has awarded $34.2 million in American Recovery and Reinvestment Act funds through the Tax Credit Assistance Program and Tax Credit Exchange Program to developers to help restart Low-Income Housing Tax Credit developments that may have stalled because of declining equity prices. This will doubtlessly stimulate the sluggish Idaho Home Construction industry as well as the Idaho Homebuyers market as new and more affordable Boise Idaho Homes will become available while interest and mortgage rates are at an all time low!

The funding is intended to help kick-start the nation’s ill economy, with it’s primary focus being creating and saving jobs in the near term and investing in an updated infrastructure that will provide long-term economic benefits. Funds will not be committed until all applicable federal requirements have been satisfied. Gerald Hunter, IHFA president and executive director said, “Idahoans will directly benefit from this funding through the new jobs created and through the additional affordable housing that will soon be available for Idaho residents.” The Tax Credit Exchange Program funds projects for construction or acquisition and rehabilitation of low-income housing to continue where developers are unable to proceed due to lack of real estate investors. In this way, the near-term goal of creating and retaining jobs is achieved, as well as the long-term benefit of increasing the affordable housing supply.  

Low-Income Housing Tax Credits provide a dollar-for-dollar federal tax liability reduction for owners of newly constructed or substantially rehabilitated rental housing, encouraging developers to build affordable rental housing. Cities that are home to awardees of this funding include: Ketchum, $7,523,333 – Buhl, $1,432,032 – Montpelier, $1,938,101 – Caldwell, $5,950,000 – McCall, $4,659,074 – Chubbuck, $393,100 – Fruitland, $2,465,000 – Marsing, $646,000 – Grand View, $408,000

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