HOA is the problem?

Home Owners Associations serve a very useful purpose in helping subdivisions and condominium complexes maintain uniformity and desirability by enforcing certain rules for the benefit of all. One of these rules that applies more to condominiums than to single family homes, is a rule that states only a certain portion of the condos in the complex are rentable. The idea is that owners would be better care takers than renters, thus maintaining a certain level of standards. However, as the outward appearance is maintained by the HOA, why should it matter to the HOA who lives in the unit and what the unit looks like inside, be it the owner or a renter?

This worked well in the good times when real estate prices kept rising, but it has now become a thorn in the side for some complexes where there are fewer buyers and rental limit has been approached. While some units have been listed at steep discounts, even investors that can afford to buy, don't want to buy a property that they cannot rent out as it is a loosing proposition for them. The net result has been that these units have to be discounted deeply and be listed far longer to find qualified buyers that plans to live there for a very long time. Thus these units sit idle and vacant, dragging down the prices of other units along with it, and continues to be a downward spiral for the entire complex. Immagine a few units that is listed at 60% of the price of comparables that is sitting idle, while you want to put your condo up for sale around its fair value.

I think the time has come for the HOAs to adapt to the times and get rid of this rule, as it has now become a rule that unnecessarily brings down the property values of the whole complex. As the HOAs often view it as just another rule to be enforced, and not as their problem, it is up to the home owners to realize that this is a real problem that affects every one, and to urge the HOAs to change the rules. The down side, of course, might be having a renter that dosent care for the upkeep of the unit as an owner would. However, the HOA should still be able to penalize the property owner and the renter if any other applicable rules are broken or neglected, shouldn't it?

Random Act of Kindness

In the cold, cruel world of foreclosures, here is an amazing story of a random act of kindness by a Foreclosure Angel.

Home buyer credit back in Gwinnet

Let's Do Business Gwinnett is offering up to $5000 in down payment incentives and special interest loans as low as 3.49% on select homes and land lots valued up to $205,000 in the Gwinnett county through a coalition of local banks.  They are also offering a 6.49% financing on select homes to borrowers that needs time to improve credit.  The special interest loans are offerred thru a coalition of Gwinnett banks, including The Brand Banking Co., Independence Bank of GA, Legacy State Bank, Piedmont Bancorp, Gwinnett Community Bank, and Quantum Bank.

For more information, please check the following links
AJC - Gwinnett group offers sweet deal to boost housing market
Gwinnett Daily Post - OUR VIEW: Stimulus a good boost for Gwinnett
Gwinnett Chamber of Commerce Business Directory

Buying Forclosure Property

If you are in the market for buying property, there are many advantages available to the fist time home buyers, including incredibly low prices, very low interest rates, the highest affordability and a $8000 Tax Credit. Along with all these advantages, it is hard to ignore the glut of foreclosures that have been priced well below the market rate of comparable homes. However, there are many things to consider when buying foreclosures as each one tends to offer different challenges. What is commonly referred to as "Forelcosures" fall in to smaller subsets that can be classified as Pre-Foreclosures, and Real Estate Owned (REO).

Buying Pre-Forclosure properties

Pre-Forclosures stage is the period prior to lender forclosing on a defaulted property, where the seller can sell the property to pay off the defaulted loan. The seller would generally be willing to sell the home instead of going into foreclosure. Keep in mind that you may have to buy the property ASIS as the seller may not have the abilty to fix repairs due to hardship. If your offer is below the current mortgage amount, this may leads to a Short Sale where the property is sold at a lesser amount than the current mortgage obligations. If this is the case, it needs the approval of all lenders. However, as the time is a constraint, the property may go into foreclosure.

Buying Short Sales

A Short Sale is generally negotiated by the Seller's Agent (on behalf of the seller) and the Lenders such that the Lender agrees to take a loss on the mortgage and forgive the difference between the sale price and the mortgages. The Lender is only acting in self interest in minimizing their loss so that they can take the lesser loss of a Short Sale or letting the property go into Foreclosure. Unlike in a traditional sale where only the buyer and the seller needs to agree to the sale, Short Sales require that the lender agrees to the sale as well. If the Lender does not agree to the conditions of the sale, there will not be a sale on the property, despite both the Buyer and Seller agreeing to the sale. Due to this reason, Short Sales can be the most frustrating and time consuming and often may not lead to a sale. Additionally there can be a lot of interest from bargain hunters, but if the offers on the property is too low, the bank may let it go into foreclosure instead of giving it away.

Buying foreclosed properties at the Court House

Another option is buying the forclosed properties at the court house where foreclosed properties are auctioned off every month. Foreclosed properties are generally auctioned off on the first tuesday of every month at the County Court House and the Lender has the first right to purchase. It is generally up to the buyer to clear any clouts on such properties and can be a risky option for the uninformed buyers. Additionally, you may be buying property with people still living in the property, and you may have to go thru the process of evictions, which will not be a pleasant process for all invovled.

Buying from an Auction

You can also buy properties from auctions such as REDC, but be sure to view the properties first to find out about the condition of the property. From what I have seen so far, these properties generally gets sold on impulse, so may not always be a great deal. Be sure to do your home work before going to the auction.

Buying REOs/Bank Owned properties

Buying REOs are generally a safe option as you get a clear title to the property. However, some of these properties may require a lot of work due to neglect and vandlism. When buying REOs you run into several different ways of how the offers are handled. Sealed Bids is where highest offer is selected by a given date and generally practiced by HUD and BidSelect. Other REOs may counter offer, or request for the Highest and Best offer when multiple offers are present and may even counter offer on your Highest and Best offer if there is sufficient interest.

Since these properties are listed at prices far below the market prices, there is immense competition at these price points as many bargain hunters are searching for "great deals." If your idea of a "great deal" is "buying property under the listed price," you may have to change that definition to mean "buying property well below the current market price, but not necessarily below the listed price." This is not to say that you wont be able to buy properties below the list price, just that those you find below list price is generally ones most would ignore and require significant work.

My advice to clients has always been that by giving low offers for already bargain basment prices, you are only letting some one else get the bargain. You dont know how many others are making offers and you dont know what they are offering. Trying to save a few thousand dollars will be what stands between you getting the home you want and some one else getting it.

If you can get a $250K home for $165K even if the property was listed for $150K, you still got a great deal. If you have to do a bit of repairs for $10K, you've got $75K of instant equity. I am putting emphasis on this, because this is what I have been seeing with the many offers my clients have made. You can always find great deals if you didnt have any criteria and are merely looking for a bargain. However, most people have some criteria such as good schools or good curb appeal. Once you factor in these criteria, there are a lot of others that are looking for similar criteria as yours.

I absolutely have no problem making low offers on behalf of my clients and instead of refusing to make low offers, the approach I have taken is that I have the patience to let my clients find it out for themselves. After making several such offers and getting rejections, or no response at all from the banks, they eventually come to terms with it. I'll give you right the advice, but its up to you take my advice or not.

Buying HUD Homes

HUD offers deeply discounted properties in order to encourage home ownership. When buying HUD homes, you can seach for homes on BidSelect.com and place bids through a HUD approved agent. When placing bids, there are several things to keep in mind

1. If you bid as "Owner/Occupant" you are given priority over other types of bidders such as Investors. However, this comes at a cost of you having to live at the property for a period of 1 year. Failing to live up to these obligations can lead to steep fines.
2. There is a List Price and a AS IS Value. List Price is less than or equal to the AS IS Value.
3. If you bid over the AS IS Value, you will have to pay the difference in cash.
4. Closing costs you request are deducted from the offer price. If you are asking for closing costs, be sure to add it to the offer price, so it can become part of the offer to be financed.
5. Due to the lower priced properties, your agent is entitled to a 5% commission, this also is deducted from the offer price.
6. What is important to HUD is the final offer price after all the deductions.
7. If the property has a Repair Escrow amount and you are financing the purchase, you have to find a lender willing to handle the Repair Escrow. Not all lenders do so.
8. All offers require signatures and changes to be in Blue Ink, so faxing back and forth will not work and meeting face to face is the quickest approach.

Even with these restrictions, HUD homes offer great deals, especially if you are a first time home buyer willing to put in some sweat equity.  Whether you are out in the market for your dream home or looking for great deals in investment properties, I can help you with your search for an ideal home in a no pressure environment.

Happy New Year!

Wish every one

A Very Happy and Prosperous New Year!

First Time Home Buyer Tax Credit Extended

Realtor.org reports that the First Time Home Buyer Tax Credit has been Extended for contracts signed through April 30th, 2010 that will close by the end of June. The income limits have been expanded as well to include Single buyers making up to $125,000 and Married Couples making up to $225,000. Additionally, those who are looking to trade up may also qualify, provided they have owned and occupied a home for at least 5 years out of the last 8 years.

Detailed information - Realtor.org
$8,000 homebuyers tax credit extended - CNN
First-Time Homebuyer Credit
Frequently Asked Questions - IRS.

Wish every one a Very Happy 4th of July!

Today, the 4th of July 2009, we celebrate the independence day. "We the people" are guaranteed certain rights and liberties by the Constitution of the United States of America, to which we ALL should be grateful.

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

As citizens of the USA, it is up to us, "We the people," to protect and exercise these rights in our daily lives, and to pass these rights on to the future generations.

We should never underestimate the power of the people, collectively, and in our own selves in making positive changes in our lives and of those around us. We are truly blessed to have the power of the ballet over the bullet and we should exercise it at every opportunity to keep our politicians honest and unswayed by the special interest groups. The government is a representation of the people, by the people, for the people, not the other way around. We should never forget that an elected government official is a servant of the public, and we should hold these people to the highest ideals and expect the best from them.

Use this special day to remind yourself to declare your own independence day from irresponsible spending and to reaffirm to your self to manage your debt responsibly so as not to become a slave due to unmanageable debt.

Bad advise?

An article on Realtor.org is reporting that the pending home sales were boosted by record low mortgage interest rates.

"Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®."

This is certainly good news just in time for the home buying season. With the amount of incentives out there for first time buyers, this is certainly a good time to buy. The article goes on to say that a median-income family making $60K could afford a home costing $296K, which I found rather disturbing.

"A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20 percent downpayment, assuming 25 percent of gross income is devoted to mortgage principal and interest."

While this may be possible if the family has no other debts such as car payments, drives a fully paid clunker and lives a very, very, very frugal life, I would not recommend this advice even to my worst enemy. Some one wanting to buy a $296K home with a $60K income has to be either the biggest gambler or the biggest fool on earth. As is often the case, expenses have a habit of popping out of no where; a car breaks down, a major repair needs to be done on the house, or the HOA asks you to paint your house. In this time of a bad economy, the best advise I can give is to buy a house that you can afford, not as an investment but one to live in, and certainly not to impress others.

CDC Federal Credit Union offers $10,000 Mortgage Grant Program for Down-Payment Assistance

In addition to the $8000 Tax credit offered to first time buyers, CDC Federal Credit Union and Federal Home Loan Bank of Atlanta has teamed together to offer $10,000 in down-payment assistance for qualified buyers. There are strict income limits in order to qualify, and the buyer must contribute $1000 towards down payment in order to receive assistance of $5000 or put a down payment of $2000 to receive the full $10000. If the buyer retains the home for a period of 5 years, the grant is cleared completely and does not require repayment. The program is available on a first come, first server basis, and up to $1 million has been allocated towards this program. For more information, please visit the CDC Federal Credit Union

Housing blues

MarketWatch is reporting that four states, Nevada, Florida, California, and Arizona (in order of the number of foreclosures) are the main culprits in dragging down the housing prices. These four states contributed 193,659 of the 342,038 foreclosure filing nationwide. This equates to these four states contributing about 60% of all foreclosures in the nation. Due to these foreclosure issues, these states are also contributing to dragging down the national median home price by a record 14% to $169,000.