Real Estate Trends

As soon as the sun comes out, activity in the Real Estate business tends to pick up. Between now and the end of April, we are going to see a significant up tick in the amount of activity going on in our local market place. Now there are two reasons for that and it’s the big push. Is the Home buyer tax credit, whether your a 1st time home buyer or an existing home buyer, a lot of people are now starting to say, “Wow, the clock is really ticking on this”. There’s a lot of movement in congress that this may be the last of this home buyer tax credit. They probably are not going to extend it. They are going to take the money and use it in other places to help spur economic development and job creation. Of course, we (Realtors) believe that can be done in the housing industry especially if we have new starts. So we’ll see where that goes closer to the end of April.

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The $8,000 tax credit runs out Nov. 30th but it can take 45-60 days to close on a home. There are some ways to expedite your home purchase so you can take advantage of this gift.

To find out if you qualify for the credit, check the IRS website.

The process of buying a home is neither quick or easy. Gathering your financial paperwork, applying for a  loan, negotiating an offer and signing contracts can take months. That’s if it goes smoothly.

Here are 2 of 4 tips that can expedite a closing:

1. Make sure you’re liquid

Be prepared for the down payment. Have enough cash available. Funds should not be tied up in a stock portfolio, 401 (k) plan or other investment that could delay the money. Even using a ‘gift’ can delay the process because the bank underwriting will need a paper trail to track the money’s origin. Money that just shows up in your account can raise a red flag and buyers should expect a thorough financial examination which would slow down the process.

2. Forget about the short sales

A short sale occurs when a homeowner is no longer able to make his mortgage payments and owes more on his home loan than what it can sale for in the current market. They are attractive but can take months to close. So if your after the tax credit, this won’t work for you. When you make an offer on a short sale, not only does the seller have to accept the offer, but the bank must accept and approve it, too. It could approve in 30 days or 300 days.

smartmoney.com

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My favorite comment made by a friend of mine is, “You can’t day trade real estate.”

It was not made in this context but it’s very true, Real Estate takes time. In other words, finding the property, negotiating the contract, making sure that the property meets the inspection criteria; repairs have to be done, etc.  All those different factors are part of this process and that process is taking longer with underwriting. So when you start looking at your time frame, having 60 days to find a home is not long. Yes, this afternoon I could find you one. Not a problem, give me the criteria. But we also want to have time to go in and look at the homes, make sure it’s the house that you want.  For the 1^st time home buyer, usually those people don’t historically run fast.  They need time to be able to say yes this is where we want to establish our life, do whatever it may be.  Going a step further, if this is the house then you’ve got to go through the loan application process and all the due diligence that goes along with that, you’ve got to negotiate the contract ( sometimes that happens quick and sometimes it doesn’t happen as quickly as you want), then you got to have appraisal and inspection reports.  All those different factors apply to finding and closing on a home. So a 45 to 60 day closing time frame is a necessity once we have found the home these days.

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The process of asking to have the tax credit extended is an uphill battle because it’s real money. When you start looking at the comparison of “can we spend this real money on stimulating the economy and helping home buyers” or “now providing health care to 97% of Americans”, guess what’s going to win out.

When you start looking at actual dates. December 1st is a Tuesday. That means that the last day of November is on a Monday. But guess what’s right before that Monday date? Thanksgiving! So now, all the sudden you need to be in the market place and there’s a renewed sense of urgency. We really are going to lose that last part of November looking at it from the business calendar days. If your going to set up a closing, you need to go ahead and call the attorney now. We really need to be pushing people to look at closing homes around the beginning of November. Making sure that they are in the loan process and ready to be funded and go the week of November 16th. Really, to take advantage of the tax credit, you have the rest of August and September to find a house, because it is taking about 30 to 45 days for the loan application to be processed and approval process.

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Real Estate typically picks up during the summer months. Obviously, for this summer, the number of total transactions are still down, but there seems to be a renewed understanding of some of the issues that are coming up later in the year. Such as, the likely hood of changes in interest rates, the reduction in inventory and whether or not the $8,000 tax credit is going to be renewed. A few weeks ago, the President went on National television to discuss health care reform. I will tell you that health care reform has become the huge standard in Washington that they are going to deal with. Extending a tax credit for Real Estate has become 2ndchair or maybe not even in the top 10 chair. Unfortunately with the Realtors, we’ve been kind of pushing for extending it beyond the 1st time home buyers and not so much extending it. I just don’t see it going. By December 1st, it looks like this tax credit will be gone.

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122 days left to take advantage of the $8,000 tax credit! Spread the word.

Visit rinehartrealty.com today to find out if you qualify!

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If I am a buyer with a good job, decent credit, and the ability to repay the loan (the character there), then you could not ask for a better time (probably in your lifetime) to get into this market place. It is amazing what’s out there on the market. The opportunity presents good inventory, low interest rates, $8,000 gift for 1st time home buyers and for those that aren’t 1st time home buyers, the opportunity to put money somewhere that you won’t be losing it all the time like the stock market. Get out there, look at the inventory and choose where you might want to spent 3-10 years or get into the neighborhood that you want to be in, the one you have been dreaming of. You might be surprised and be able to afford more house than you originally thought.

There have been 1150 transactions closed here in York, Chester, and Lancaster counties since the beginning of this year. So the Real Estate market is humming. That has traditionally been the slowest part of our year. We have got 350 pending right now, we expect 2 to 3 times that by the end of the summer months. And then we will look at a strong finish by the fall. Again, 1st time home buyer, if your not closing by November 30th you lose that tax credit.

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There will be a lot of information coming out of the mortgage industry about using the $8,000 tax credit and leveraging it at closing. The specifics are still coming out but your gonna hear it from the mortgagers. First of all it will be a second mortgage, it would allow the lender to say, I’m gonna give you a 2nd loan that’s gotta be paid back when you get your $8,000. It would not throw your ratios off and would be limited to the amount of your down payment and closing costs. In other words, you can’t get “cash back” but your money  would be immediately available to be used at closing. If you were worried about having enough cash for settlement and your a 1st time home buyer, this is good news from HUD because they may be putting that money you need right in your lap if you want or need to use it at closing.

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Things are looking good, particularly at Rinehartrealty.com. You can see the upswing in activity and we hope the same is true throughout this entire Piedmont region for all the Realtors. Most of the 1st time home buyers coming in are attracted by that $8,000 “gift” from the Obama Administration and Congress to help them get into a home. Yes, it is certainly generating a lot of interest and if you fall within that criteria, which really is pretty broad for 1st time home buyers, then it’s something that absolutely can be taken advantage of.  One major plus is that it can be taken advantage of on your 2008 taxes, but don’t file your tax return until after you have closed on that propertyto take advantage of it. You’ll have to do any extension so that you’ve got it until August to file. But for many people if they need it right now for new appliances or down payment it could be a great opportunity. So the message is getting out and people understand that this $8,000 gift is available to most of the buyers out there! Purchasing the “new home” price range wouldallow those homeowners to move up into a higher price range and stimulate the higher price range homes to move again.

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We have a stimulus package that’s now in place and some positive vibes coming out of Washington. And locally we have good news, the FHA loan limit was raised back to the 2008 numbers. $303,000 limit for FHA in our area. That’s really good for the higher end of the market. The mortgage money is there with unbelievable rates. Perhaps once in a lifetime rates ~ definitely, once in a generation rates. If you have an opportunity with a good job and moderately good credit, you CAN buy a home right now! I’m not advocating buying more house than you need or can afford. But certainly a home that you will be comfortable.

What better time than spring to get out and look for a new home! Look for the TEXTMYMLS signs and get a digital brochure at a Rinehart Realty listing.

First time home buyers, I would like to remind you of the $8,000 tax credit that’s being offered. Get it now.

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