MAY 2010 – SUN IS SHINING ON TODAY’S REAL ESTATE MARKET

During the past several months, the real estate market has become very active.  Homes are selling almost as soon as they are listed.  That is, of course, if they are priced right.   Contrary to popular belief, the seller who prices their home close to market value WILL NOT have to negotiate much lower.

Pure speculation on the boost in activity can point to several factors; 

• Buyer frenzy over the previous tax credit, which gave the buyer a date of April 30,2010 contract signing date and June 30, 2010 closing date.
• The historically low interest rates that are currently being offered to borrowers with a good credit score.  As of today, approximately 4.75 to 5.25 for a 30-year fixed conventional mortgage.
• A large number of veterans are entering the housing market as first-time homebuyers lately.
• Foreclosures are decreasing, due to buyers picking up the inventory and/or homeowners receiving modifications for their banks/leinholders, due to hardship.
• Lastly, of course, this is the season, in any market climate for real estate to thrive.

Future Industry movement is not easy to predict.  It seems that there is a bit of a light in the middle of the tunnel.  Seasonal changes will probably slow the market in the upcoming months but watch out for 2012.   Not only does it seem like sales will rise but it also looks like it will be the year that prices will start to inch up.

It takes a little over a year from the date a foreclosure notice is issued for that foreclosure to clear off the market.  With that information and the fact that the Veterans will need housing and are being offered wonderful government loans, I will make a risky prediction of Spring 2012 to see a booming market once again.

For Foreclosure and Preforeclosure information:  http://propertyshark.com

Happy Hunting.

 

CLOSING COSTS, ESTATE TAX AND CAPITAL GAINS

When Selling a home in New York, it is very important to know what you will be walking away from the closing table with, in order to have a grasp on what you can afford in your new home.  Along with paying off your existing mortgage, paying broker and attorney fees, which are the usual calcuations, there are recording fees and State taxes that must be paid and certain taxes needed to be paid if there is a gain or it is an Estate property.

CLOSING COSTS -  Fees and  Transfer Taxes when selling a home in New York include: 

NY CITY TRANSFER TAX:  

• If the consideration is $500,000 or less, the rate is 1% of the consideration.
• If the consideration is more than $500,000 the rate is 1.425%.

NY STATE TRANSFER TAX:

You can expect to pay $4.00 on every $1,000 of the Sale price of the property.

 

CAPITAL GAINS TAXES- To calculate Capital Gains Tax, you subtract the original purchase price from the sale price.  If there is one (1) owner on the Deed there is an exemption of $250,000, for two (2) owners on the Deed the exemption is $500,000.  For example if the purchase price of a home was $30,000 and the sale price is $500,000, the gain would be $470,000.  One owner on a Deed would have to pay taxes on $470,000 minus the $250,000 which would calcuate to $220,000 of a gain.  The same transaction for two (2) owners would exempt them from paying any captial gains.

ESTATE TAX - Currently, when you inherit property, the cost basis when you go to sell,  is the property’s market value at time of the person’s death. You pay capital gains tax on the difference between the market value and the selling price of the home. This stepped-up cost basis is set to expire in 2010,  so heirs would have to pay capital gains tax on the difference between the original amount paid for the home and the selling price. President Obama has promised to extend the estate tax law, including this provision for a stepped up cost basis beyond 2010.

If you have any questions please feel free to contact me.

 

$8,000 FIRST-TIME HOMEBUYER TAX CREDIT

Congress has enacted a revised tax credit for the first-time homebuyer.  The previous tax credit allowed homebuyers who purchased their home after April 9, 2007 and before January 1, 2009, $7,500, which was to be paid back over 15 years, interest free.

The new tax credit is available to first time homebuyers if they purchase between January 1, 2009 and before December 1, 2009.  This $8,000 is not a loan and DOES NOT have to be paid back.  It is a refundable credit given  and it is up to 10% of the home’s purchase price.  Unlike popular belief, this is not a check given at closing but a write off at the end of the year. 

TO QUALIFY FOR THE TAX CREDIT:

• You must be a first-time homebuyer.  A first-time homebuyer is someone who has never owned a home or has not owned a home for at least three years.  If you are married, both parties will have ownership history checked.
• As an individual purchasing the home, your income can not exceed $75,000.  Married couples filing a joint return can not exceed $150,000. 
• The home must be a primary residence and it includes:  single family homes, townhouses, condos and manufactured homes.
• You must finalize the sale between January 1, 2009 and December 1, 2009.

This credit, along with the low interest rates and decreased value of homes, makes it a wonderful time for first time homebuyers.  To claim the credit   complete IRS Form 5405 this will determine the tax credit amount, and then claim this amount on Line 69 of  your 1040 income tax return.

 

PRICING TO SELL

There is a preconceived notion by buyers and sellers lately, that a home is and should be priced a certain percentage higher then the actual selling price. 

Sellers, when told what a home will sell for, feel that they need to price the home higher because they will receive offers relatively lower.

Buyers, when ready to make an offer, automatically think there is some kind of formula which inludes a percentage amount lower that they are supposed to offer.

This is becoming all too common lately and it is not always the case.  Sellers need to understand that if they price their home out of the market, they will not even have buyers in to see the home.  When an overpriced home does have showings, they will most likely be for comparison purposes and it usually helps the competition sell their home.

Before setting a marketing price for your home, you must look at Active, Acceptance, Contract and Sold status homes in your area that are similar.  Keep in mind, Actives give a seller an idea of what  the competitor prices are and that is NOT always  the number a house should be listed for.   Acceptance and Contract status homes are the most up-to-date  statistics for price but we don’t always know what those homes sold for until they close.  Agents and banks look at similar homes that were SOLD in the surrounding area within the past 6 months to determine a homes value.

This system is the most scientific way to determine what a home will possibly sell for and more importantly, what a bank will appraise the property for.  Don’t forget, even if there is a buyer who is willing to pay $50,000  over market value, when that buyer goes to a lender, it might not appraise.  Also, this system is always the most accurate in a stable market and not in a market that is quickly rising or declining.

To sum it up with little confusion, look at the Solds first for appraisal purposes but always take your active listings into consideration.  Depending on the market at the time, strategically place your house in a position to sell immediately or quickly.  An immediate sale will come when your home is the lowest priced home for it’s type in the area.  To sell it quickly, keep it mid-range.

Buyers who ask “what is the percentage less that a buyer usually offers” , the answer is:  If a home is priced to sell, you need to come in with your best.  A seasoned realtor once told me when you list a home under market value, you get multiple offers on that home and the home ultimately sells for over market value.

For a Free  Market Analysis:  http://lisashomesite.com.

 

Buying on Emotion, Working on Emotion

I feel compelled to write about an experience I had today while holding an open house.  First of all, it was a very busy open house similar to a few years back when you had hardly any time to give any one customer undivided attention.  Those days, when I  looked at the sign-in sheet to do my feedback the next day, unless I took extensive notes,  I had a faint recollection of who the person was.  There were some cases, as today, when a particular person stuck out in my head and I felt moved to help this person find a home.  I am ashamed to admit, that I am very choosy with the buyers that I work.  I have many listings and feel that since the sellers contract me to sell their home, and I am one person, my concentration should go to getting their homes sold.  In order for me to put my time and energy into working a buyer, I need to see that a buyer is motivated or on some occassions I work on emotion.

My first customer was a wonderful 67 year old woman who had sold a home in Brooklyn.  She was living in an apartment and had been retired for 3 years after working her whole life as a Radiologist.  Her union, 1199, had allowed her to leave her position with a decent Annuity that  could not be touched for another 3 years.  Those of you who are familiar with annuities, there is a penalty when drawn before a certain age, in her case 70.   The sweet and sour of  Annuities are that if you can wait until the age limit your income is lower therefore your taxed in a lower bracket, if not the taxes are much higher.  They do allow a payment of 3% per year to be withdrawn which in her case would cover her utility bills for the year. 

When she explained to me that she had only a certain amount to put down (which happened to be $100,000 less then the ask price of the house we were sitting in) and that she was having a problem getting a minimal mortgage of $50,000, I realized she had no clue what she could afford.  This struck me because she had already been out to see other homes and she also had been speaking to banks and mortgage brokers.  

At this point, I looked at her and stated “Why, after working your whole life, would you want to struggle month to month, why don’t we just try to find something without you having to take a mortgage”.   I went on to explain that there were things out there, maybe not like this house, that she would be comfortable in and she would have no financial stresses. 

After I finished explaining everything to her, she burst out into tears and said “you are the first person that understands my situation”.  I know this sounds odd for a half  hour meeting but not to get too  in depth, the woman was alone after taking care of and losing all of her family to cancer.  She was alone in the world with no one to bounce ideas or decisions off of and she was so happy that someone actually listened to her.

This will be someone that I know I will find a house for and hopefully make a life long friend of.   What I told her was the furthest thing from rocket science anyone could have give her the same advice.  We as realtors love to talk, we have to talk but sometimes we need to just sit down and listen.

If anyone has a 2 bedroom listing in the $250,000 range, with a nice size kitchen and a little yard (she likes to cook and garden) please call me.

 

Shortsales

I have many clients and customers who have questions about shortsales.   I must clear up some confusion about shortsales. 

A shortsale simply means that the seller owes more money to the bank or lienholder then the property is currently worth.  Due to the fact that property values have been coming down, there are many houses selling short. 

In a shortsale situation, the bank must agree to accept the reduced payoff.   All banks handle each case differently but when a request is made by a realtor or homeowner, most bank’s usually want a hardship form filled out.  I want to clarify that seller’s that are current with their payment and have not had a change in  income, might not be looked upon as a hardship.  Of course, previous payment history and hardship is factored in when a bank is making their decision whether to negotiate.  If a bank is in agreement and an offer is made on a property, it must go to a bank representative for approval.  The bank will then ask for a Settlement Statment or HUD to be sent with ALL the seller’s expenses deducted, in order for them to find out their net.  To clear up lots of  questions I have been getting regarding these expenses, they come from the proceeds of the sale of the home.  In layman’s terms:  The buyer does not lay out extra money other then the amount they are willing to pay.  Again, this does not mean that the initial offer will be accepted if the bank does not agree.

Keep in mind, some shortsales are selling for current fair market value because if a house is desirable and there are multiple offers the bank will take the highest offer.

Here is a shortsale that I am handling.   Bank is willing to hear all offers.  Immaculate clean two (2) bedroom Co-op in Dongan Hills by buses, train and shopping.

If you have any further questions regarding Shortsales, please feel free to contact me.

more about “65 Vera Street“, posted with vodpod

 

 

 

Lisa Imbasciani 917-250-5615

 

Foreclosure FAQ’s

I decided to discuss and explain foreclosure properties in this, my first post.  Lately, of course, there seems to be many questions and much confusion about the foreclosure process and problems that can arise.

BANK OWNED PROPERTIES

I am sure there are still many buyers who don’t know the difference between a bank owned foreclosure and a foreclosure property that goes up for auction.  A bank owned property has been taken back from the bank due to default of the mortgage by the seller.  The bank , in most cases, gives the property to a realtor in order for it to be marketed and sold.  When a bank owned property is purchased, the buyer is responsible for all of the transfer taxes and any expenses that a seller would normally have.  The expenses that arise can be anything from adding a kitchen to having a bathroom taken out to meet the criteria of an existing Certificate of Occupancy or obtaining a new one.  So be aware and do your research The bank’s contract is usually a bit more rigid then the usual contract.  The bank makes “no representation”, even when it comes to problems that arise with an engineer:  http://www.ashi.org/.  An engineer is always recommended, in all cases, even if it is just for information purposes only.   In a foreclosure situation,  it is very important to obtain a real estate attorney who is well versed in dealing with a foreclosure.  A lot of the foreclosures that are hitting the market these days are below market value. 

FORECLOSURE AUCTIONS

When a seller is in default of his/her mortgage, it can take approximately one (1) year for the bank to put the seller’s property up for auction.  These auctions usually take place at the County Clerk’s office in the borough that the property exists.  The most important thing a buyer can do before bidding on a foreclosed property at an auction is educate yourself and do the research on the property of interest.  Well before the auction, it is advised to go to the County Clerk’s office and view the file.  This is easier then it sounds, simply look up the block and lot of the address and give the information to the clerk.  The file will sometimes contain further information on any other liens, violations, judgments, etc., that are attached to that property.  When purchasing a foreclosure through an auction, the buyer inherits all of the debt attached to the property.  Be aware that there can be more current violations, liens and judgments that aren’t listed.  In order to acquire the most up-to-date information on the property in question, it is always advised to run a Title search on the property at least two (2) weeks before the auction date.  A buyer will have to lay out some money to order Title but it is well worth it.

The winning bidder at a foreclosure auction must give a ten (10%) percent down deposit to the referee.  To answer many questions I have regarding this, bring several bank checks.  One (1) should be ten (10%) of the highest bid you, as the buyer, have in mind and several checks in One ($1,000) Thousand Dollar increments.  The other checks are a safety for the buyer if they wish to bid higher at some point.  The winning bidder is handed a Referee’s Deed.  The terms of this transaction are for the buyer to obtain a mortgage or complete an all cash transaction for the remaining balance within thirty (30) days.  If these terms are not met, the ten (10%) deposit is not refundable.  Keep in mind, when a buyer applies for a mortgage, an appraiser must go into the property.  Appraisers are not always welcome guests to a seller who is losing their property. This can sometimes cause problems.

If you have any further questions regarding foreclosures, please do not hesitate to call.  For those of you who have inquired about finding auctioned property information, they are listed in your local paper in the Announcements section.  They must be by law.