Archive for the 'Real Estate 101' Category
Help for U.S. Housing Woes Signed
July 30th, 2008 categories: Chico Real Estate, Real Estate 101
After months of debate, congress has finally agreed on a plan designed to assist troubled homeowners and , hopefully, help correct the ailing housing market in the United States. The 300 billion dollar “Housing and Economic Recovery Act of 2008″ was signed into law today by the President.
Here is what C.A.R. (California Association of Realtors) had to say about it:
This morning President Bush signed the “Housing and Economic Recovery Act of 2008.” For the past several years, C.A.R. and the NATIONAL ASSOCIATION OF REALTORS® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill. Many of you participated in these efforts by communicating with your Members of Congress.
Thank you to all of you who responded to these Calls-for-Action. Your efforts have made a difference. This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.
The legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas.
The bill permanently increases the conforming loan limit to $625,500. C.A.R. has long advocated for higher conforming loan limits. In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.
Although we would have liked Congress to make permanent the current $729,750 loan limit, C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market.
The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008.
C.A.R. also supports the following bill provisions:
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A temporary increase in mortgage revenue bonds to refinance subprime mortgages.
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New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.
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First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home’s purchase price, up to a maximum of $7,500. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.
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Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.
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Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.
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The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system. The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator. States will have the ability to implement more stringent laws.
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The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years.
Other provisions in the legislation:
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The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.
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The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program. Down-payment assistance from family, employers and other nonprofits is still allowed.
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The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.
C.A.R. wishes to thank those California Members of Congress who supported the bill:
Senator Barbara Boxer, Senator Diane Feinstein, and Representatives Joe Baca, Xavier Becerra, Howard Berman, Mary Bono Mack, Ken Calvert, John Campbell, Lois Capps, Dennis Cardoza, Jim Costa, Susan Davis, David Dreier, Anna Esho, Sam Farr, Bob Filner, Elton Gallegly, Jane Harman, Mike Honda, Duncan Hunter, Barbara Lee, Jerry Lewis, Zoe Lofgren, Dan Lungren, Doris Matsui, Howard “Buck” McKeon, Jerry McNerney, Gary Miller, George Miller, Grace Napolitano, Nancy Pelosi, Laura Richardson, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Adam Schiff, Brad Sherman, Hilda Solis, Jackie Speier, Pete Stark, Ellen Tausher, Mike Thompson, Maxine Waters, Diane Watson, Henry Waxman and Lynn Woolsey.
Thank you everyone for your efforts in support of this bill!
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Range Pricing-What, When, and Why?
March 20th, 2008 categories: Real Estate 101
What?
Range Pricing, also known as Value Range Pricing and Value Range Marketing(tm), establishes, as it’s name implies, a set value range for asking price, i.e. $445,000 to $495,000. And, because this approach does not reflect a specific price point, such as, $485,000, as is more common to what the consumer would expect, this approach has its critics. But, it has many proponents as well. At the very least, it does bring up questions.
Why?
The answer is really quite simple. To attract as much “action” (prospective Buyers) to the property in the fastest period possible, with the ultimate goal of generating a bonafide offer that results in a sale. That is what the Seller wants and it is what they expect their real estate agent to help them achieve. O.K. That makes sense, right?
But, why would the value range approach accomplish this task faster than “traditional” pricing?
The idea, again, is that the more traffic a home gets, the faster it will sell. By attracting Buyers at the lower end of the range, this goal, in theory, is accomplished. And, value range pricing is designed to attract a larger pool of qualified Buyers than would typically be looking at a set priced listing by getting Buyers in the door who are qualified to purchase at both ends of the range.
The critics perspective is that no one would offer more than the lower end of the range. And, that seems like a valid point, even to me. But, in areas where this approach is popular (particularly in the San Diego area), the numbers seem to show that they do.
Like many other agents-especially in this region, I have grappled with the validity of this approach as a tool to marketing property.
What I have concluded, is that there are circumstances that it could be beneficial. And, other circumstances that it would not. First, because this approach is relatively new to our area (Chico, Paradise, Oroville, etc.), explaining the concept to folks who have never heard of it, could be difficult and, could result in confusion in the market place, which would not be good (it can be tough to break new ground).
My other concern is that, in my opinion, the Seller should genuinely and seriously be willing to consider all offers in a particular range and treat all offers on their face. So, if an offer comes in at the lower end of the range, the Seller should be in a position to accept it. They certainly don’t have to. But, they should be willing to engage the Buyer just as they would if they were to receive an offer on a traditionally priced home. Otherwise, it could easily be perceived as a, “bait and switch”, that could result in damaged reputations, wasted time, and perhaps even delay in the sale of the property.
When?
A good example might involve the pricing of a newly contructed home that has numerous “non-traditional” upgrades and amenities that are not common to the market. However, neither the front or back yards are landscaped. It is located in a developing area of unique homes. So, price is difficult to determine. The lower end of the range is very near the bottom of other sold comparables in the area. The high end, is below others. The owners are motivated and facing a declining market and willing to deal at the bottom end of the range if other terms of the offer are strong. These could be things like, cash offer, short escrow, large deposit, etc. But, they would also be willing to provide a buyer things like credits for closing costs and landscaping, if an offer were to build those items into the range price, hopefully, appealing to a greater pool of Buyers with a variety of circumstances.
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