If you’re house hunting these days, chances are you’ve run into dozens of short sale listings.  As a Broker, I’ve noticed quickly how little consumers really understand about the term.  The common misunderstanding is that a short sale is just like a foreclosure, but it’s not nearly the same.

Short Sales help people who are underwater on their homes with minimal financial loss.  For example, if homeowner Joe has a loan for $500,000 on his home, but his home is currently only worth $350,000, Joe is considered to be “underwater” on his property by $150,000.  Joe is most likely selling his home because he can’t afford the monthly payments, but how can he sell it when he owes more than it’s worth? Without a short sale, his only option is foreclosure or refinancing, if allowed to.

A common option for Joe is to just stop making the payments on his home, in which case the lender can step in and foreclose on his property.  Joe is kicked out and his credit will be affected for up to 7 years, making it harder for him to get credit cards, auto loans, mortgages, personal loans and even rentals.  Landlords check your credit too!

Joe has another option, in which he puts his home on the market and receives market offers for his property.  He then takes that fair market value offer to his lender, and he, with the help of his real estate agent will negotiate a “short sale” with the lender.  In this scenario, the homeowner and the agent will make the case to the bank that the owner can no longer continue to make the monthly payments.  In many cases, it may be far easier and cost the lender much less to “forgive” the $150,000 the home is “under” and let the sale take place.

For a lender, the short sale is becoming much more appealing these days.  The lender is strictly concerned with his bottom line.  If the homeowner is allowed to settle his debt or “short sale” with the lender, then he is very likely to leave the property in a good condition to ensure the sale takes place.  If, however, the lender decides to foreclose on the home instead, the lender will have to factor in extremely costly and time-consuming foreclosure proceedings, lawyers and other expenses, only to sell the property for fair market value anyways.  The other risk they take is that the homeowner, who may feel betrayed or taken advantage of, will destroy the property and cause major damage to the home upon vacating.  We see this all the time from angry homeowners who were kicked out.  This will in turn make it even harder for the lender to sell after foreclosing and the costs of repair are unpredictable.

The good news for a homeowner who completes a short sale is his credit will NOT be marked by a FORECLOSURE on his credit history, but rather a “debt settlement” flag.  Further, in most cases, this only affects their home buying power for 2 years.

If you find yourself in this position, consider short selling your home and renting for 2 years.  Prices will still be low, even if they rise a bit, prices will be very low compared to what they were in 2006’s peak, and you’ll find yourself owning another home sooner than you think.

A tax credit of up to $8,000 is available for “First-Time Homebuyers” purchasing a principal residence on or after January 1, 2009 and on or before April 30, 2010.  If you have a binding sales contract signed by April 30, 2010 and the purchase is complete by June 30, 2010 the transaction will still qualify for the tax credit. A first time homebuyer is defined as one who has not owned a home at all for the last 3 years. If married, this applies to both spouses. The IRS does allow unmarried joint purchasers to allocate the credit amount to any buyer who qualifies as a first time homebuyer. (IRS Notice 2009-12)

A different tax credit is offered of up to $6500 for “Repeat Homebuyers” who have owned a home for 5 consecutive years out of the last 8 years. This tax credit is only offered for a window of months to purchase a home this year and the beginning of 2010. It will apply to houses sold after November 6, 2009 and on or before April 30, 2010. Again, if a sales contract is signed by April 30, 2010 and the transaction is complete by June 30, 2010 the tax credit will still qualify.  Home sales above $800,000 are not eligible for either of these tax credits.

Income limitations are also in place to qualify for these tax credits.  From Jan 1, 2009 until November 6, 2009, income limits are $75,000 for individuals and $150,000 for married couples filing jointly. After November 6, 2009 it changed to $125,000 for individuals and $225,000 for married couples filing jointly. Please note that married couples are not eligible to qualify for the first time homebuyer tax credit if one of the spouses previously owned a home. They may, however, qualify for the repeat homebuyer’s tax credit. Also, to keep from having to repay these tax credits, homeowners are required not to sell their home for at least three years after purchase.

Lastly, to claim your credit, you must submit a copy of the HUD-1 settlement statement and the IRS form 5405 with your income tax returns. Those whose transactions close in 2010 can claim their credit by filing an amended 2009 tax return. I hope this information helps. If you have additional questions, give me a call. I’d be happy to help you with any and all of your real estate needs.

Your HomeReach.com Specialized Agent,

Lisa Morgan

(619)410-7002

It’s your first home, or maybe you made some mistakes when purchasing a property once before, so you’re not feeling so confident. You’re excited about the prospect of getting a good buy in today’s market, but you want to feel you’re making the right choice. You may feel ready to ask your REALTOR for a tour of homes, but first, here are a few tips to remember before setting out:

Know your Credit Score.

Get Pre-approved with an experienced, reliable lender, so you’ll know what you can afford. This will also help your REALTOR to be able to show you homes within your price range.

Create a Long-Term Budget. Don’t get caught short of cash, somewhere down the road. Make sure you have enough reserves.

Don’t forget about taxes, insurance, utilities, and other possible fees.

Work with a REALTOR who has experience and “know-how”, who will help you every step of the way, including negotiating, answering vital questions, and being there for you when you need advice. A good real estate agent will return your calls within 24 hours, but a great agent will get back to you as soon as possible.

Prioritize your “Gotta-Haves” and “It-Would-Be Nice-to-Haves”, and understand that each home will most likely have a bit of each, but will seldom fulfill all your desires.

Get a Home Inspection, and choose your own Home Inspector, so you are confident there will be no conflict of interest. Your REALTOR will surely be able to give you a list of professional inspectors, but in the end, it’s your choice.

Know what you’re getting into. If the Home Inspection Report lists too many expensive repairs, don’t be afraid to cancel the contract, and continue your home search for a home in better condition.

Know your neighborhood. Show up at various times of day and night to check it out, before you make the move. Be aware of noise, or any other factors that may make the area undesirable to you.

Resale Value. Consider what you pay for your home, and whether it will hold its value over the years. Life has many surprises for us. You may want, or need to sell sooner than you think. Be prepared.

This is one of the most important decisions you’ll make in your life. Don’t hesitate to call as I will be there for you throughout the entire home buying process.

Your HomeReach Certified Agent,

Bonnie Maffei

760-730-2191

If you bought a house between the years of 2005 and 2007, you are probably very familiar with the words “negative equity”. That means your home is “upside down” in its value, and you owe more on your home than it is worth.  The outlook ahead can seem very grim.  It’s heartbreaking to see the house next door being purchased for $200K less than what you paid.  You probably say to yourself, “What’s the point?” I know, I know… the point was to provide your family with a stable home, a nice neighborhood, good schools, and a place to grow old. But deep down I’m sure some of you were thinking, “This house could be worth so much more in the future and possibly help pay for our kids’ college, or go towards our retirement”.

Don’t worry, you’re not alone, and many people feel the same exact way as you do. Some are dealing with their current housing situation and simply accept the fact that their house is underwater and are willing to continue paying their monthly mortgage payment. Others are finding it very difficult. Maybe they have lost a job, or they feel that it doesn’t make sense financially to continue to pay on a home that could take practically the rest of their loan term to get their equity back. This is when they look to the short sale approach to “start over” in a couple of years. This is the “upside”. The short sale option will allow you to sell your home at a loss without having to be obligated to pay for that particular financial loss.  Thanks to the Mortgage Debt Relief Act of 2007, taxpayers can exclude that debt as generated income on their tax returns. You can go to www.IRS.Gov to read more about it.   This act, however, will only be in effect until the end of 2012.

How a short sale affects you: You will not be able to purchase a new home for a minimum of 2 years. A foreclosure will eliminate buying a home for 4. Which sounds better? I think 2 years of renting in exchange for eliminating an extremely high debt with no equity would be my answer. Worried about credit? A short sale will show up on your credit report as a “settled debt” vs. a big fat FORECLOSURE. It’s true, I’ve seen how they both look on a report. The FORECLOSURE does not look pretty. Plus, wouldn’t you want to at least have the opportunity to buy again sooner than later? Yes, it can seem very grim… but there are ways to salvage the situation and put yourself back into a position where you can again purchase a home and not worry about negative equity.  Not worry about an increasing mortgage payment.  If you feel you are underwater and simply can’t swim up, you probably can’t. You don’t have to go through this alone!  Call me, and we can discuss your options for planning a better future for yourself and your family.

Your HomeReach.com Specialized Agent,

Lisa Morgan

(619)410-7002

Three Cash Flowing Neighborhoods in San Diego!

February 18, 2010 – It would have seemed unimaginable for the past few years.  More neighborhoods in San Diego are cash flowing, making them extremely appealing for homebuyers and investors alike.  On average, San Diegan’s are now only paying 16% more to own than they would to rent.  That is a small premium to pay to own your own home and gain from it’s appreciation, tax incentives, and vast benefits.  Compare that to 2006, when it cost 66% more to own than to rent and it’s easy to see why the attractiveness of owning a home back in 2006 came to a quick and strong halt.  The last time owning a home was only 16% more expensive on average in San Diego was in 1999.

1. Oceanside, CA – Oceanside is the 2^nd highest selling community in San Diego County, selling thousands of homes each and every month.  Values dropped 40-50% from their peaks but dropped only 7% for 2009 with an upward trend in the last 4 months of the year.  Strong rental demands from government military and naval bases, as well as thousands of young families moving slightly farther away from city centers find great values here for their money.  Investors have taken note too!!!  See the Best Deals in Oceanside

1. Chula Vista, CA – Believe it or not, Chula Vista is selling more homes each month than any other neighborhood in the County.  There are really two completely different areas of Chula Vista, divided by the 805 Freeway, and spread over 5 zip codes.  The greater part of 3 of those zip codes were only built in the last decade and they are stunning.  For those who have visited, they know what I mean.  It’s clean, brand new, beautifully landscaped, wide streets, homes with some actual land, it’s safe, exciting and the values are on a league of their own.  New schools, parks, shopping centers, business districts and restaurant/nightlife line the avenues of the new Chula Vista, nestled just east of the 805 freeway and just south of Bonita.  Chula Vista was hit the hardest by foreclosures since most of it was built during the peaking years of the housing bubble.  Now, homes values have dropped 40-60% and rents have remained strong because of the schools and low housing costs we have today.  Come take a look for yourself.  Chula Vista is cash flowing!  View Foreclosure Deals in Chula Vista

1. Imperial Beach, CA – Imperial Beach hasn’t been as popular as other coastal areas like Pacific Beach, La Jolla and Del Mar.  But those areas have weathered the storm better and have always been expensive.  Imperial Beach is now getting a 2^nd look, not just from homebuyers, but the city too, which has zoned coastal areas of Imperial Beach as a Redevelopment District.  The Imperial Beach in 10 years from now will be a very different place than it is now, but already we’re seeing major tenants moving into the neighborhood, and redevelopment along the coastline.   Dozens of home owners are taking time to upgrade and update their homes, realizing the future potential of their home.  Imperial Beach is San Diego’s most affordable coastal city for all that it has to offer, with direct access to Coronado Island and the 5 Freeway. Within a two block radius of the naval base, there are dozens of 1 and 2 bedroom foreclosures, completely upgraded, priced between $80,000 and $150,000 that can rent for $800 to $1,500 per month!  Cash flow baby!  View all Imperial Beach Bank Owned Homes!

Visit us online at HomeReach.com to view all San Diego Foreclosures by area or zip code.

As many of you are aware, we have the 1st Annual HomeReach.com Golf Tournament approaching on April 28th at Maderas Golf Club. Labeled as the “One Round. One Cause” Golf Tournament, we wanted to give you an insight into who we are supporting right here in San Diego. Take a look into this amazing model that provides homeless families access to permanent solutions for them to end their homelessness! To Sign Up for the Tournament click here. We hope you are inspired to play in our tournament and we look forward to seeing you out on the course!

Tips for Buying Foreclosures

February 11, 2010 – San Diego Foreclosures are at the top of every homebuyer’s wish list.  With distressed banks trying to unload their assets at record rates, they have drastically cut home prices and put them on the market to sell, and to sell fast!  The longer banks hold on to these assets, the more it costs them in upkeep, attorney fees, property taxes, insurance, utilities, etc.

Here are some helpful tips to buying foreclosures in San Diego’s recovering housing market.

1. Be patient!

With so many buyer’s competing for the best foreclosure bank owned bargains, many of these deals are getting bid up so high that they are no longer the bargain they appeared to be.  It’s best to stick to a price you feel comfortable with and don’t let your emotions carry you into uncomfortable territory.  There are more foreclosures on the way, and the right one for you may hit the market tomorrow or next week!

2. Get pre-approved with the same bank that owns the home

If you’re making an offer on a home owned by Wells Fargo, they may favor your offer over others if you pre-approve with them directly as well.  This is a way for the seller to minimize the risk that you’ll come across third party lender issues, and they may be able to make some gains working on your loan as well.  You can never be forced to use a certain lender so you can always change your mind and choose another lender.

3. Don’t be afraid of a fixer upper

Most banks sell their homes in “as-is” condition.  They rarely want to get into the business of making repairs and other accommodations, as it’s not in their best interest to do so.  That being said, they price the homes accordingly.  Since fixer upper homes usually take more imagination and capital, there are fewer buyers competing for them, so you also have a better chance of getting your offer accepted.  In most cases, the homes are priced far lower than it would take to bring them up to speed again.  Unfortunately, many homeowners who are foreclosed on leave their homes in less than good conditions, and sometimes they trash the home.  A buyer that can look beyond this can get a great deal by investing some time and effort in their new home.

4. Wait for the home to sit for a few days before making an offer

As I’m sure you’ve already noticed if you’re making offers in today’s market, foreclosures tend to have multiple offers within days of being listed.  This is because the buying frenzy has created an environment of desperation.  Some homebuyers have been trying for months to get their offers accepted, so now their strategy has turned to making offers on many more properties, many times without even looking at the homes in person yet.  Tell your agent to talk to the listing agent or seller and try to get a good read of what the other offers may be like.  By waiting a few days for the bulk of the offers to come in, you may get a competitive advantage by waiting for other buyers to show their cards first.

5. Preview homes with a contractor

Having a good contractor by your side when you’re touring properties can be very helpful.  A contractor can tell you how big or small a problem is.  Many times issues may appear more complex than they really are. Conversely, many times what may appear to be a minor issue may actually involve a lot more than expected.  A good agent can help you leverage this information when you’re writing offers.

6. Keep your offers simple and clean

With so many offers on the table, banks much rather go with a simpler contract that doesn’t ask for dozens of little items or ones with lengthy contingency periods, complex addendums, and inconsistent requests.  For the banks it’s all about the bottom line and a quick closing.  Having an agent that’s well versed and experienced in bank owned foreclosures, also known as REOs, is crucial when you’re putting your offer together. Good agents know what a clean offer looks like, while at the same time protecting your interests.

The low interest rates of 2009 are projected to rise this year. Historically low interest rates in 2009 were due to the Federal Reserve purchasing debt and mortgage back-up securities from Fannie Mae and Freddie Mac. The reason for this was to lower interest rates and spark people into home buying.

Search Foreclosures in North Park

The spark is still burning on with the first-time homebuyer tax credit which is soon to expire in April. As long as you’re in a binding contract by April 30, 2010 and close Escrow by July1, 2010 you are still eligible. Look into your loan options and see what is available. Don’t forget about possibly going with a FHA loan requiring 3.5% as a down payment. With lenders now securing loans they are asking for higher down payments, which results in lower interest rates. The days of “no down payments” are a thing of the past.

Looking for a property in North Park contact…

Justin Johnson

619-618-5513

As seen on TV, San Diego 6, the CW San Diego Living.  David Tal explains how HomeReach.com is changing the way people buy and sell homes in San Diego.  The interview was a huge success and drove our website traffic to our highest recorded levels as of yet!  Enjoy!

Search All San Diego Homes For Sale

When it comes to submitting offers on properties making a “Blind offer” might be a good idea. With the way of the market “Time is of the Essence” is something to take in consideration. A lot of homes that are on the market are listed as Short Sales. With that being said multiple offers are on these properties and are first come first serve. You might be interested in a property, want to view it and by that time the property might not be accepting any other offers. If you like what you first see before viewing, make a “Blind Offer” that way it is submitted before it’s too late.

Search homes in Hillcrest.

After the offer is submitted you then can view the property and if it’s not to your liking and your offer is accepted you don’t have to take it. Remember with the inventory on the market majority of these properties are Short Sales. Pick a hand full that are really of interest and submit offers whether they are blind or not. This way if any of them are accepted you feel like you got a home that you really wanted.

Looking for a great property in Hillcrest contact…

Justin Johnson
619-618-5513