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“You can have brilliant ideas, but if you cannot get themacross, your ideas will not get you anywhere.” — Lee Iacocca: Businessman, author, former CEO of Chrysler Corporation
ALMOST 14,000 HOUSES SOLD YESTERDAY
One of the biggest misconceptions in today’s housing market is that homes are not selling. That is simply not true. Last month’s Existing Sales Report from the National Association of Realtors (NAR) showed that homes were selling at an “annual rate of 5.10 million”. That’s an average of 13,973 every day – 365 days a year!
And the monthly Pending Sales Report, which measures the number of houses going into contract each month, has showed increases in six of the last nine months prompting Lawrence Yun, NAR’s chief economist to say:
“Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own. The index means modest near-term gains in existing-home sales are likely.”
We realize that 40% of the sales are distressed properties and that 22% of buyers are investors. Yet, that still doesn’t negate the fact that homes are in fact selling… and 60% of them are NOT foreclosures or short sales.
And Yun believes this uptick will continue:
“Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year.”
Homes are selling. You probably will need to offer a compelling price if you put your house on the market. But if you do, it will sell.
HOME OWNERS TO CONGRESS: LEAVE MID ALONE
More than half – 53 percent – of home owners recently surveyed say they want Congress to leave the federal tax credit for home owners alone, according to a recent opinion poll at http://www.HousingPredictor.com . Those surveyed also say they want Congress to instead focus its efforts on instituting other tax advantages to stimulate the real estate market.
Some congressional leaders have raised the issue of trimming the mortgage interest deduction as a way to increase federal taxes and alleviate the ongoing budget crisis.
The mortgage interest deduction allows home owners to write off the mortgage interest and state taxes paid as itemized deductions on their personal federal income taxes.
The National Association of REALTORS® has strongly opposed any cut to the mortgage interest deduction and has lobbied Congress to protect it.
BAILING ON MORTGAGE NOT A GOOD IDEA
An estimated 11 million home owners owe more on their mortgage than their property is currently worth. That’s made more home owners consider walking away from their mortgage and home ownership, even those who can still comfortably afford to make their payments (known as “strategic default”).
Walking away from a mortgage usually results in either a short sale or foreclosure. So what are the consequences of walking away? There may be far more consequences than what most home owners ever considered.
The consequences include everything from badly affected credit to potential tax consequences and deficiency risks. There are even possible professional implications, Justin McHood with Academy Mortgage in Chandler, Ariz., warns in an article at Zillow.com.
Home owners’ credit scores will be badly hit regardless of whether they attempt a short sale or have their property foreclosed on. (See How Missed Mortgage Payments Hurt Credit Scores)
There also could be the potential for deficiency risks when walking away from a home, which largely varies from state to state. (View anti-deficiency laws by state.) In some states, lenders may sue you for the difference between what you owe and what your short-sale or foreclosure proceeds are, McHood notes.
Home owners considering walking away also should weigh the potential difficulty they may face from moving too. For example, if moving into a rental property, they’ll have to convince a landlord to rent to them after they have the red flag of missed mortgage payments on their credit record. And paying for moving expenses – which many walkaways fail to consider – can quickly add up too.
Plus, home owners may find professional consequences from walking away from a mortgage, as the number of employers eyeing employees’ credit profiles continues to grow.
3 WAYS TO AVOID LEGAL TROUBLE IN REAL ESTATE
Real estate transactions can be a gold mine for legal disputes. Inman News columnist and real estate coach Bernice Ross recently highlighted common sources of real estate litigation and behaviors you’ll want to avoid to keep yourself out of legal trouble. Here are three:
1. Don’t speculate on the property’s condition. Ross cautions real estate pros in diagnosing any issue regarding the property’s condition when you don’t know the exact cause. For example, she recalls an incident when buyers asked her about a brown spot on the ceiling, which, unknowingly, ended up being caused by a beehive that contained tons of pounds of leaking honey.
When buyers ask about a property’s condition, such as in the case of that brown stain on the ceiling, Ross suggests responding this way: “I don’t know what caused the stain on the ceiling. If you are interested in the property, then it’s extremely important to hire a competent roofer and physical inspection service to thoroughly investigate the condition of the property.”
2. Don’t guess on how much a seller will take for a property. If a buyer asks you how much the seller will take on an offer for the home, you’d be best to respond: “The only way to know for sure is to write an offer,” Ross says. After all, she adds, you don’t even know if the seller will sell for the asking price, so speculating on any price isn’t a good move.
3. Watch what you reveal about the characteristics of a neighborhood. Buyers might ask you if the home they’re interested in is located in a “good family neighborhood that has a low crime rate,” but be careful how you respond to that, Ross warns, or you could violate Fair Housing laws.
Whenever buyers ask about crime, a neighborhood’s ethnic composition, and about the families who live there, provide the buyers with resources to view online, such as school, demographic, and crime data. They can judge it for themselves and then you won’t risk providing inaccurate information or appear steering your buyers away from a particular area, Ross says.