My New Blog

Well, another year has come and gone. Sales of single family homes began to pick up in 2009 and 2010 looks like it will be a very good year. The IRS tax credit has been extended and expanded. First time homebuyers are eligible to receive up to $8000.00 and some prior homeowners may be eligible for up to $6500.00. The homebuyer must have a home under contract by April 30 and close on the sale by the end of June, 2010. If you have owned a home for 5 out of the last 8 years and are looking for a new home, you may qualify for the new tax credit. The buyer will need to live in the home as an owner-occupant for three years in order to not be required to pay the credit back. You can find more information on this at www.irs.gov by looking up the instructions for form 5405. Only time will tell if the credit will be extended after April 30, 2010, but we hope that it will.

First time homebuyers may still be eligible for the Florida Bond down payment assistance program of $7500.00. This money is set up as a second mortgage on the home with no payments and no interest. The homeowner will only pay it back if they refinance their home in the future or they sell the property. At that time the money will be paid out of the proceeds of the transaction. The funds may be used for down payment and closing costs. The buyer will only have to invest $500 of their own money to purchase a home. However, the purchaser will probably need $1000 initially for a binder deposit in order to put a contract on the house. $500 of the binder will go toward their down payment to fulfill the requirements of the loan. Other expenses the buyers will incur include having a home inspection done prior to closing, paying for the appraisal upfront, completing repairs required by the lender (in some cases), and a home warranty (optional).

We are living in the type of economy that produces real estate millionaires! Therefore, it is a good time to purchase homes for investment purposes. I work with several investors seeking homes under $65000 to renovate and resell to first time home buyers or to keep as rentals. These investors are providing a valuable service to the community by repairing foreclosures in order for future buyers to be able to obtain financing to purchase them. In Jacksonville, many of these homes will rent for $750 - 950 per month. Many of these homes need new roofs, fresh paint inside and out, new flooring, new hardware, landscaping, and some upgrades in the kitchens and baths. Homes purchased under $65000 will usually resell between $90000 - 135000 depending on the neighborhoods they are located in.

Investors are combining their resources to purchase property and sharing the responsibility and liabilities of renovating homes. If you have friends that have considered investing in real estate, now is the time for you to get together and seriously discuss whether you would like to partner on a home purchase. Most investors set up an LLC, a partnership, or a trust to operate under. You can check with your local attorney and go to www.sunbiz.org to set up your Articles of Organization and Operating Agreements for your new company. You will also need to go to www.irs.gov to complete the paperwork to obtain a Federal Identification Numer. Investigate the responsibilities for bookkeeping requirements and tax consequences.

The first step is to set up the company you will be purchasing the property under. Then, you need to obtain a loan approval letter from your lender or acquire your "Proof of Funds" letter to prove your ability to pay to the seller of the property. Next, contact me to send you a list of homes available in the price range you are seeking. Check out the neighborhoods and call me back with your selection of the homes you would like to preview. Be prepared at the time of selection to enter into a contractual agreement to make an offer on the home. Read the contract documents beforehand so you will know what you are signing.

I am certified to show HUD owned properties and I have full access to MLS. Almost all foreclosures are listed with NEFAR's MLS system because the banks and government agencies that own the homes need full time agents to oversee the marketing. Any real estate member has access to show all homes listed, reguardless of who the listing agent is. Therefore, you can preview the homes with the agent you feel most comfortable working with. I hope you choose me!

Brenda Gravitt CRS, GRI with Coral Shores Realty

904-573-9638 or cell 904-238-9314

New expanded home buying tax credit.

Did you know that if you're a first-time homebuyer you can get up to $8,000 tax credit toward the purchase of your home? That's pretty amazing, and almost unheard of. It's all part of President Obama's stimulus package for the economy, and it's meant to save homes from foreclosure while allowing people to buy new ones with greater ease. This tax credit has been extended to include homes purchased by April 30, 2010 and closed before July 1, 2010.

You no longer have to be a first-time homebuyer to qualify. If you have owned your home for 5 out of the last 8 years, you can qualify for a credit of up to $6500 on the purchase of a new home. This applies even if you have not owned a home in the past two years.

So, what does the tax credit do for you, and how can you qualify for it?

1. A first-time homebuyer is a person who is buying a home for the VERY first time, or who has not owned a home in over 3 years. An existing homeowner must have owned a home for 5 years out of the last 8 years. Even if you have been renting or sold your home less than 3 years ago, you could still qualify.

2. It is not a loan, but a tax credit. You don't need to re-pay it unless you sell the home within the first three years of owning it or transfer title, in which case you would owe the tax credit back at closing when you sell the property.

3. The tax credit only applies to houses that are to be used as primary residences.

4. It is only available on homes that are under a fully executed contract between January 1, 2009 and April 30, 2010 and closed before July 1, 2010.

5. Income limits have been increased from the previous $75,000 a year for singles and $150000 a year for married taxpayers.

6. You can't get the credit if you're buying the house from a relative.

If you meet these requirements, you may find that the homebuyer tax credit is just what you need to get into a home of your own. Talk with your real estate agent about your eligibility, and soon, you may be living in the home of your dreams, and best of all, you'll own it!

Contact Brenda Gravitt CRS, GRI for more information on first time home buyer down payment assistance at bkgravitt@comcast.net.

Real Estate Market in Jacksonville, FL USA 25 Sep 2009, 5:07 pm

I have held a real estate license since 1984. I hold a license in Alabama and a license in Florida. I also hold a Home Builders/Remodeler license in AL. I have been affliated with the construction industry since 1982. I have over 10 years of management experience specializing in bookkeeping, income tax preparation, budgeting, and liquidations and acquisitions.

Sales and Pending Sales have increased for the last six months. Probably about 40% of the sales have been to first time homebuyers (those that have not owned property in the last three years). Increase in sales have been generated by income tax credits, low interest rates, lowere home values, and down payment assistance programs.

60% of the inventory is either under contract or short sales. Short sales are primarily controled by the lien holders of the mortgages on the properties. A short sale contract can take 2-9 months to be accepted by all parties. For the contract to be accepted, the lien holder must agree to accept less than the homeowner owes on the current mortgage and either "forgive" the balance or obtain a deficiency judgement.

Unemployment is approximately 9-10% which has caused the increase in short sales and foreclosures. A decrease in home values has also greated situations where the homeowners owed more on the home than the value of the property. This has caused many homeowners to walk away from their investment in the property.

Banks have been at the crux of the situation by promoting predatory lending practices and lower qualifying restrictions in the past. Basically, the Banks approved loans that were not substainable for the borrowers. Now, the Banks continue to complicate the issue by not expediently accepting the short sale offers that are presented to them. They continue to confuse the market by rejecting the short sale offers, then foreclosing on the properties, and marketing them for $30000 - $50000 less than the purchase price of the short sale offers. This promotes the opinion that are not dealing honestly or fairly with their customers or the public. It is unsure what their objective actually is. Some feel they are delibrately driving home values down in order to establish a more stable economy in the future. Others feel that it is a ploy to obtain more "bail out" money from the government and, therefore, from the taxpayers.

Currently, inventory appears to be high creating a buyers market. In actuality, because most of this inventory are short sales that the banks have tied up, the inventory of sellable homes is much lower than the inventory implies. Therefore, it is still a very competitive market for desirable properties. All the offers I have presented this year have been in a multiple offer situation where the highest bidder wins. Therefore, market values are increasing at approximately 3% a year because the supply is less than the demand for properties that are acceptable to the buyers and lenders. There is a shortage of homes over 2000 square feet for under $150000 in certain areas desired by purchasers. Therefore, in certain categories, it is actually a sellers market.

Appraisers and BPO (broker's price opinion) suppliers are confused as to how to maintain their integrity in this market. Lien Holders are demanding BPO suppliers produce lower values on properties in order to get paid for their services. The government is trying to establish "firewalls" between appraisers and mortgage companies in order to protect the public from manipulation of the appraisers by the banks. Appraisers are being required to establish values on properties in areas they are not familiar with to satisfy these firewalls. This creates financial loss and confusion for the homebuyer trying to understand why they cannot obtain a loan on the property they have selected because the appraisal does not establish the true market value and, subsequently, they are not approved for their loan.

Banks are not allowed to hire real estate associates with an active license to assist in the foreclosure, loan origination, and loss mitigation departments. These are the potential employees that have the most knowledge on how to correct the situation. Hiring them would also reduce the unemployment rate because they are the income producers who have lost the most during this economy (along with those in the construction industry). Hiring them would also increase the tax revenue.

This is basically my opinion of the real estate market in layman's terms.

Brenda Gravitt CRS, GRI
bkgravitt@gmail.com

1.) Contrary to what you are hearing in the news media, purchasing a home in today's market is more competitive than you think.

Every offer I have made for my customers this year has been in a multiple offer situation where others have submitted offers also. There have been from 2-10 other offers on the subject property at the same time. The offer that is accepted is usually above the list price. Items that the seller looks for are type of financing the purchaser is using, closing date, price, sellers concessions, and financial strength of borrower.

Normally, if there are multiple offers, the listing agent will notify the selling agents that they require "highest and best offer" from their customers within a certain time frame. This is you final opportunity to make your offer as appealing as possible to the seller (lien holder) within the guidelines of what the buyers' lender says they can afford on the loan approval letter that was submitted with the offer. If necessary, you can request a new loan approval letter from your lender for the maximum you qualify for.

2) If you are purchasing a home that was built between 2004-2007 your agent should attach a "Chinese Drywall Disclosure". This gives the buyer an opportunity to withdraw from the contract and receive a refund of their binder deposit if the home inspector finds that chinese drywall was utilized in the construction of the home. This drywall disintegrates the electrical and mechanical systems of the home and emits a gas that is hazardous to the health of the occupants of the home. Time limits apply to complete the home inspection and transmit the results to the seller.

3) New guidelines are in effect for mortgage lenders concerning required disclosures to customers that could extend the amount of time needed for your loan to close. Your agent needs to keep these time frames in mind when inserting dates for approval and closing in the contract. What use to take 30 days may now take 45 days and what took 45 days may take 60 days. You do not want your contract to expire without closing or the next contract in line will become the primary contract. This would cause you to lose the money you have invested in home inspection, appraisal, and WDO inspection, as well as, the time you have invested.

4) I recommend asking for the seller to pay the buyers closing costs and prepaids in the offer in order to reduce the buyers out-of-pocket expenses at closing. For an FHA mortgage this is limited to 6% of the purchase price and for a conventional mortgage the amount is limited to 3% of the purchase price. If you are asking the seller to pay these expenses, then, you need to increase your offer to cover them so the seller will "net" the same amount after closing in order to get your offer accepted. In most of the cases I have seen this year, this requires increasing your offer over list price. However, you must also be sure that the property will appraise for that amount. EX: If the home is listed for $150000.00 and you are asking for 6% in buyers closing costs, then the offer should be approximately $159000 - 160000. This allows the seller to spend ~$9500 for the buyer and still net the same as they would with an offer of $150000 where the buyer is paying their own closing costs.

5) If you are making an offer on a short sale, it could take 4-8 months for your contract to close. In this type of situation, you may want to consider a lease purchase if the owner of the home is agreeable. You will need to know if a foreclosure is eminent. There has been a law passed that requires the bank that foreclosed to give a tenant 90 days notice to vacate the property in the event of a foreclosure. At that time, you can then submit an offer to purchase to the new owner of the home, which will be the bank that foreclosed. If you cannot reach an agreement on the sale with the foreclosure company, then, you would incur the costs of moving back out of the home. In some cases, there are programs available to assist with relocating expenses for tenants of foreclosed homes using them as owner-occupants. I recommend that a lease be entered into that is contingent upon the acceptance of a contract to purchase signed by the owner of record. I also recommend that the rent payments be placed in escrow toward the purchase to cover repairs the property may need to be accepted by the purchasers' lender. The lease agreement needs to define what these funds can be used for like repairs, toward the purchasers' down payment, to pay closing expenses, or to reduce the debt of the existing mortgages, etc.

6) There are numerous legal issues to be evaluated in the purchase of a home in the current market. Please find a Realtor that you feel comfortable working with. That Realtor, through their cooperative agreement with the MLS system and the network of colleagues, can show you all the homes available in your area, regardless of which company or agent has the listing. Almost all of the foreclosures and short sales available are listed through the MLS system because the banks want to insure that a full time professional is handling the marketing.

If you are purchasing in the Jacksonville, FL area, please feel free to contact me for a consultation and assistance of the purchase of your new home.

Brenda Gravitt CRS, GRI

bkgravitt@gmail.com

There are numerous programs available for down payment assistance to first-time homebuyers. Some of them are currently out of funds due to the increase of sales. Most of them will be refunded next year though. The ones available as of 8/10/09 are the Florida Assist Bond program, the FHOP, and the NSP (can also be used by those that are NOT first-time homebuyers).

Other programs that will probably be re-funded next year: H2H, SHIP, and FHLBA. Different areas have different programs available so check with your local lender to see what programs they offer. Many of these programs can be combined.

If you don't qualify for assistance, you will need 3.5% minimum down payment for an FHA loan.

Another way to save is to make an offer on a short sale and make it contingent upon acceptance of a lease. Since short sales tend to take 4-8 months to close, you may be able to negotiate for a portion of your rent to be escrowed to go toward the down payment. It's time to "think outside the box". Many short sales need repairs in order to be accepted by the buyers lender. A rent concession could be given to allow the buyer to apply part of the rent payment toward completing certain repairs that would be required by their lender.

If you need a Realtor to assist you in this confusing market, please give me a call at 904-573-9638 or contact me by email at bkgravitt@gmail.com

Homeowners of short sales are getting a raw deal in Jacksonville, FL. The lien holders are rejecting short sale offers and then foreclosing on the homes. Afterwards, they are listing the properties for sale at $40000 - 50000 less than the amount of the short sale offer they previously rejected.

Apparently, the lien holders have a hidden agenda and are not dealing honestly with the public or their customers. In my opinion, it amounts to thievery. The lien holders have stolen that money from the homeowners and hit them with a deficiency judgment to attempt to recoup the amount. Of course the lien holders will not be able to collect because if the homeowner had the money they would have been paying their mortgages to start with. Therefore, they have ruined the customer’s credit for nothing.

This will affect the mortgage industry for the next seven years by reducing the customer base of those that qualify to purchase a home. Realtors are required to keep a copy of all offers made for 5 years. I predict that in the years to come, these offers will become documentation in court cases to prove that the lien holders did not deal with their customers fairly. I suggest that the effected prior homeowners form a class action suit to have these deficiency judgments removed from their credit and restitution made by the lien holders for the damage done. The sooner this is done, the faster it will stop it happening to other homeowners.

Neighbors of these homes are also being affected by lower home values based on appraisals of the foreclosed property. I think the government should stop bailing out the mortgage companies and put that money into the hands of the citizens being foreclosed on.

Brenda Gravitt CRS, GRI

Coral Shores Realty

Jacksonville, FL

bkgravitt@gmail.com

This is a hot topic but the media is not really telling what is happening in the mortgage place:

1. The majority of foreclosures could be prevented if the lien holders would modify the loans to the price they end up listing the foreclosures for sale for.

2. Foreclosed/REO homes are less expensive than short sales and less hassle.

3. Short sale lien holders are turning down offers for more money than they end up listing the property for after foreclosure. Contact me if you want specific examples in Jacksonville, FL. bkgravitt@comcast.net

4. REO companies marketing foreclosures are giving the buyer only 5 calendar days for inspections and 15 days to close if a cash transaction. If it is a financed transaction they are only giving 14 days for loan approval. Most mortgage companies can not get a loan approval in 14 days, especially if the buyer is using down payment assistance. Therefore, the buyer is at risk of losing their binder deposit.

5. With down payment assistance the process works like this: once you have a fully executed contract the appraisal is ordered and takes about 7 days to get the written report, then the appraisal is given to the H2H inspector and he takes another 7 days to file a report. During this time the WDO inspection and the home warranty inspection must be completed and paid for by the buyer. At this point the buyer will have almost $1000.00 invested in inspections and $1000 for their binder deposit, all of which the buyer is at risk of losing if the deal does not close.

6. It takes a minimum of 45 days to close a loan with down payment assistance if everything works like clock work, which it usually doesn't.

7. If you are a first time home buyer you must close on your new home by Nov 30, 2009 or you will not be eligible for the IRS tax credit of up to $8000.00.

Advise: Before you select a home have your loan company send your application through their underwriting department, Not just a pre-approval. This means that all documents like employment verifications, bank verifications, etc. are ordered and sent with your package through underwriting.

Don't bother with short sales unless you have a lot of time and are prepared for disappointment. If your offer is not within 80% of the sellers loan amount, then you are wasting everyone's time.

Be prepared to make any repairs required by your lender out of your own pocket before closing without causing your loan application to be jeopardized.

Ask for the seller to pay up to 6% of the purchase price for buyers closing costs, prepaids, and discount if you are getting an FHA loan or 3% if you are getting a conventional loan. Even if you have to raise the sales price to do this.

For more assistance if you are planning to purchase a home in Jacksonville, FL contact Brenda Gravitt CRS, GRI at bkgravitt@comcast.net

Mortgage guidelines have tightened and purchasers need a credit score of at least 620 to get approved for a loan.

The $8000 tax credit can not be used to satisfy the 3.5% down payment required by FHA but it can be used for closing costs and down payment over the 3.5% required.

I advise to get qualified for a mortgage before looking for a home so you will know that you qualify for the homes you are looking at.

Brenda Gravitt CRS, GRI

bkgravitt@comcast.net

Well,

The government has agreed that you can use the tax credit to use toward your down payment at closing by setting it up similar to a "bridge loan". However, the mortgage companies have not figured out how to implement this. They are concerned that they can't require the buyer to either amend their 2008 return or file their 2009 return so that the money can be assigned to them by IRS. Also, they are not assured that the credit will not be used to pay back debts that the taxpayer owes.

IRS has the right to keep any tax refund to go toward any federal or state past debt, as well as debts owed for back child support, student loans and other debts owed to state and federal agencies. This could potentially reduce the amount of credit the mortgage company would be sent.

In addition, the down payment assistance programs have guidelines that do not allow for other liens agaisnt the property because the down payment assistance is set up like a "silent" second and third mortgage. They are still working the kinks out.

Solution: If the buyer will agree to submit a completed and signed amended 2008 return at closing to the settlement agent this can be forwarded to the mortgage company along with the other closing documents. The mortgage company can then submit the return to IRS along with an assignment of the refund to them. Consumers can make this suggestion on a case by case basis and see if they can get their mortgage company to try this option.