Archive for April, 2010

The Intero Insider: Missing Out On The Tax Credit Is OK. Really.

By Gino Blefari | April 27th, 2010 0 Comments

Ah, yes. The Homebuyer Tax Credit. It ranks right up there with health care reform and Eyjafjallajökull as the most-discussed news item of 2010. The proverbial dead horse has been beaten to a fare-thee-well, yet still keeps coming back for more.

The tax credit has, I think, driven many buyers who were on the fence about whether or not to purchase a home into the marketplace. It’s been something of a boon to those who have been able to take advantage of it. If you were able to qualify, that’s a great thing. $8000 (or $6500, if you were already a homeowner) is nothing at which to stick up one’s nose.

But is it, on its own, a reason to purchase a home? Absolutely not.

Everywhere I turn, I see advertisements, blog posts, and the like reminding people that the deadline for being able to claim the tax credit is rapidly approaching. To claim it, you must, in fact, be under contract by Friday, April 30, and you must be able to settle on that contract no later than June 30, 2010. At this point, however, any potential homebuyer who hasn’t been in the trenches and actively looking for a house — and looking seriously — should bide their time. They should not, under any circumstances, rush to sign a contract on a home by Friday, simply so they can claim an $8000 credit.

Why?

Because that $8000 isn’t worth the heartache and sleepless nights that will come with making a $300,000 mistake. Because of the pressure associated with meeting this deadline, lots of people are going to dive headlong into a decision that they’re not actually ready to make.

Any REALTOR worth his or her salt will stand up and say so. A good REALTOR — one who’s really looking out for his clients’ best interests — will not urge that decisions be made on a factor that, in the long run, won’t matter all that much.

And if you miss the credit? Don’t worry. The real estate market will, most likely, adjust once the credit expires. The bustling spring sales market will start to ebb. Sellers of real estate will have to consider absorbing some of the letdown, either by conceding some closing costs or, perhaps, agreeing to helping buyers buy points on their mortgages, or agreeing to other credits that will entice buyers to sign when the time is right.

A good REALTOR will understand these things and a good REALTOR will advise his clients of those options of which they might not have been aware.

So, yes. The Homebuyer Tax Credit was nice while it lasted. But don’t fret about having missed it. It’s OK. Really.

  • Get new posts via email
  • Subscribe

Intero Insider: Wait – I Still Owe What?

By Gino Blefari | April 21st, 2010 0 Comments

Each day, the news brings us tiny glimmers of hope that the economic woes that have turned the real estate market into a morass of unpalatable realities might just be behind us. Each day, however, there seem to be items served alongside those glimmers that give me pause.

These items, after making me take several deep breaths, have me advising my clients, customers, and Intero agents that patience will be the better part of valor when it comes to economic recovery.

We know that millions of Americans, and lots and lots of Californians among them, have lost their homes to foreclosure. Going through that process is more difficult than most people can possibly imagine. It’s a pride-swallowing siege that affects every aspect of your life. Once it’s done, however, it’s done and, typically, people can begin the process of rebuilding their lives.

Unless they can’t.

What if, after going through a foreclosure and having a mortgage discharged, you also have a second mortgage to pay? What then?

California is a non-recourse state. This means that any loan taken for the purpose of buying a home is discharged once a foreclosure has taken place. Debt collectors cannot pursue borrowers for loans in default that were used to purchase a home.

Loans that were taken for other purposes? Lenders can, and often do, do whatever it takes to collect what is owed.

If a second mortgage was taken and that money was used to help finance the purchase of a home, then it’s non-recourse debt. But often, banks and lenders won’t tell the borrowers that. There’s a loophole in the legal speak that governs such things that says that there’s nothing preventing the borrower from “voluntarily” repaying the debt. So lots of people who’re not under an obligation to repay find themselves on the receiving end of dunning calls and letters and struggling to make payments when and where they can.

If a second mortgage was taken and it was not used as part of a home purchase? Well, those monies are due and payable, regardless.

Whether lenders will try and collect is another matter altogether.

In California alone, almost $500 billion in home equity lines of credit (or other such loans) were taken out by homeowners. Banks are going to collect when and where they can. Sadly, a borrower’s personal net worth may be the deciding factor in their decision to pursue or not to pursue.

So, what are the options?

Well, one is to pay the debt if you’re able. If you can’t, my best advice would be to consult with an attorney to discuss your options.  You may find your attorney will tell you that a short sale would allow you to negotiate part or all of your deficiency away.  If this is the case, find a certified short sale agent within any of our offices to help guide you through the process.

There are options, but it’s best to explore them sooner, rather than later. If you have concerns relating to foreclosure or your ability to borrow money to purchase a home, please consult your Intero agent. The road to recovery is a tough one, but it can be ridden. We all just have to be patient.

  • Get new posts via email
  • Subscribe

IT’S AMERICA’S TIME TO SHINE

By Rick Soukoulis | April 15th, 2010 0 Comments

If you’ve been noticing the headlines recently, you’ve seen that some European countries are going through extremely difficult economics problems. The headlines you’ve probably seen the most have been about Greece. Their government spending was way out of whack, and their economy is paying the price.

The other countries having hard times are Portugal, Italy and Spain, and when you add Greece, the initials for Portugal, Italy, Greece and Spain spell out PIGS. You may have seen this term in the news.

Why do I point this out?  Why is this at all relevant to selling homes and getting mortgages for homebuyers?

The reason I find this relevant and interesting is that the PIGS countries are just starting to sink into their economic problems.  They’re going through now what we went through two years ago.

They’re just starting to grapple with their problems, and we’re starting to come out of our recession.

Two years ago a lot of Americans thought the world was coming to an end.  Washington Mutual, Bear Stearns, Lehman Brothers and Indy Mac all failed, and AIG, General Motors, and our biggest banks had to get emergency financing from our government.

Serious people on the news and in the newspapers would ask if the Bank of America would fail, and when questions like this can be part of our national dialogue, you know people are scared.

Things are different now.

  • Get new posts via email
  • Subscribe

Can Your Roof Save You Money and Cool the Planet?

By Tadas Narauskas | April 14th, 2010 2 Comments

Did you know that your roof color can actually affect your energy bill, your comfort in the house and even contribute to climate change?  It’s true.  Our traditionally dark composition roofs contribute to what is called an “urban heat island.”  The problem with most home roofs is that they absorb the heat of the sun, the temperature of the area rises, and our air conditioners have to work much harder to keep us all cool and cozy.

What’s a Heat Island?

No, it’s not an island in the Bahamas.  “Heat island” describes built up areas that are hotter than nearby rural areas.  According to the EPA, the annual air temperature of a city with 1 million people or more can be 1.8–5.4°F warmer than its surroundings. In the evening, the difference can be as high as 22°F.

Heat islands are no joke.  They can affect communities by increasing summertime peak energy demand, air conditioning costs, air pollution, greenhouse gas emissions, and heat-related illness.


graph provided by EPA

What Can Home Owners Do?

Very simple.  Next time you are replacing your roof, opt for a light colored type with a radiant barrier.  You see, this type of roof reflects and the sun’s heat back into space instead of transferring it to the building below. This helps keep your roof cooler and reduces your cooling load and air conditioning needs.  Cool, isn’t it?

Most roofers in San Jose area are aware of this and do offer options to address this problem.  All we need to do as a community is to ask.

Let’s say you opt for the most common option – a standard 30-40 year, light tile composition roof.  All you need to do is combine OSB (oriented strand board) sheathing with radiant barrier foil and lay the tiles on top it. Voilà!  You got yourself a cooler roof.  There are some other methods of achieving the same but you get the point – the solution is not complicated or expensive.

The installation cost premium for cool roofs versus conventional roofing materials ranges from zero to 5 or 10 cents per square foot for most products but the benefits of these cool roofs are huge.  In fact, according to the EPA website, a California study found that cool roofs provide an average yearly net savings of almost 50 cents per square foot. This number includes the price premium for cool roofing products and increased heating costs in the winter as well as summertime energy savings, savings from downsizing cooling equipment, and reduced labor and material costs over time due to the longer life of cool roofs compared with conventional roofs.

Now cool roofs are not going to entirely solve the heat island problem.  In order for that to happen we will still need more vegetation and cool pavements but it’s a start.  Steven Chu, the US Secretary of Energy and a Nobel prize-winning scientist, said a few months ago that making roofs white or light-colored would help to mitigate climate change.

So there you have it, another no brainer solution that requires nothing but a shift of awareness and a slight style adjustment.  Not only your energy bills will be lower but you will be doing a great deal of good for the environment.

More on Green Homes:  http://SanJoseGreenHome.com

  • Get new posts via email
  • Subscribe

Intero Insider: Did You Hear That?

By Gino Blefari | April 13th, 2010 0 Comments

A collective sigh of relief is being issued by taxpayers who’d not only lost their homes, their dreams, and large chunks of their pride, but who were staring down tax bills that they couldn’t fathom how to pay.

It might not soothe all their wounds, but a measure passed last week by the California State Legislature will, when signed by Governor Schwarzenegger, give some much-needed breathing room to the thousands of Californians who lost their homes to foreclosure or who had to sell them in a short sale.

You see, mortgage debt that is forgiven, which happens when your mortgagor allows you to sell your home short or after a foreclosure, is taxable, both federally and at the state level. A moratorium was placed on the federal tax, but in California, a state riddled with crushing debt, there were serious questions about whether the tax would be levied.

Others affected by this measure are those who got loan modifications that lessened the amount that was owed to the mortgagor.

Assuming that the governor signs the bill, which he has said he will do, it will provide relief to upwards of 100,000 Californians through 2012, when the measure is set to expire.

Our state is certainly one that needs income, and it’s estimated that California will collect about $34 million less in taxes as a result of this bill. No matter how badly the money is needed, however, generating that income at the cost of rendering our taxpayers, quite literally, penniless is too much of a price to pay.

If you’ve been involved in a foreclosure, short sale, or have had mortgage debt forgiven, you may be eligible to claim the relief on your 2009 State and federal income tax returns.

As always, whenever you have questions relating to taxes, be sure to contact your accountant or financial planner; they’ll have the best advice and will give you the proper guidance.

  • Get new posts via email
  • Subscribe

Intero Insider: Reality Check!

By Gino Blefari | April 7th, 2010 0 Comments

Each time a glimmer of positive news about the real estate market shows its face, economists, real estate professionals, and politicians alike begin to shout, “We’re on our way back up! Nothing but blue skies ahead!”

While I remain hopeful, I think assertions like this are foolhardy and irresponsible.

Anyone who lives in the State of California, or who’s considered moving here, knows that the real estate market for the past several years has been pretty grim. As quickly as California’s home values increased through 2005, they have since fallen considerably due to the economic downturn, and foreclosures have run rampant.

Recently, some improvements have been noted. In the last S&P/Case-Shiller home price index, for example, home prices in California were shown to have strong gains. In Los Angeles, prices rose 1.8% in January. There were gains in San Diego of 0.9% and in San Francisco, the gain was 0.6%.

This is terrific news, make no mistake, but I suggest that a more cautious view be taken.

Here’s why.

Historically, spring home sales (and the spring market doesn’t wait til March to begin, I assure you) are the strongest of any throughout the year. Weather improves, making it more pleasant to look at homes, and people want to be able to buy a new home, so that they can move at the end of the school year, or what-have-you.

This year, we also have the Homebuyer’s Tax Credit driving more buyers into the marketplace. Add to this the fact that mortgage rates are still at rock-bottom levels, which have been made possible, in large part due to the Federal Government’s sizable activity in mortgage-backed securities, and the market for buyers is very, very attractive.

Here’s where things get sticky.

The tax credit is set to expire in just a couple of weeks. The pressure to buy before it expires will be gone. Strike one. The Federal government is about to remove itself from the mortgage-backed securities game. Mortgage rates are going to rise. Strike two. There’s wide speculation that foreclosures are going to get worse before they get better (unfortunately). Strike three.

At Intero, we choose to stay level-headed. We choose to stay in the game that’s currently being played, not the one that may or may not come in the near future. We are hopeful that things will improve, but until they do, you need agents who are dealing with reality. You need agents who will tell you like it is. Agents who know the markets in which they work and live. Intero are those agents.

  • Get new posts via email
  • Subscribe