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As you’ve read in previous posts, the “bottom” of the real estate market is here, right now! As we’ve also said previously, don’t take our word for it…. click here for an expert opinion. The speaker advises you to buy real estate now. In years past, we’ve owned real for shelter, for investment, and for lifestyle. Today, owning real estate is about opportunity. The opportunity to re-build lost wealth, the opportunity to buy at prices last seen in the 1990’s, and the opportunity to take advantage of artificially low interest rates. If you believe real estate prices will stay this low forever, we advise you to put your money under a mattress. But, if you believe, as we do, that real estate prices are on the way back up, now is the time to act. Like sunrise over the ocean, this opportunity won’t last forever. The bottom never does!
Check out Real Estate Today radio from the National Association of Realtors. This free show, with host Gil Gross, offers credible information on the real estate market and includes expert interviews, field reports, and timely market conditions. Click here to listen.
Deficiency Judgment
The lender may seek a deficiency judgment against the debtor when a property sells at public auction for less than the loan amount secured by the property. If the lender prevails, the judgment obtained will apply to all of the debtors’ remaining real and personal property.
REO Properties
REO (Real Estate Owned) are properties that were purchased by the lender at the foreclosure sale. When a third-party purchases an REO property, the lender is the seller. Because lenders are in the business of financing property, not owning and managing a portfolio, REO properties are generally listed at very competitive prices for a quick sale.
REO properties are sold “as is,” with all faults and as suitable for the buyer’s intended use. The seller will generally not negotiate repairs to the property. When a debtor is not financially able to make his note payments, he likely has not been maintaining the property. Therefore, costly deferred maintenance items may have accumulated, which will require attention from the new owner. In addition, the lender does not usually provide a seller’s disclosure, which is not required in Georgia. Should the lender provide such a disclosure, the lender, not having occupied the property, may not be fully aware of adverse conditions. Lastly, the lender will not warranty the condition of the property. Should the buyer take possession and discover a hidden adverse condition, he will not be able to pursue the lender to rectify the problem.
A thorough inspection of the property by a team of professionals, including, but not limited to, home inspectors, termite inspectors, heating and air conditioning experts, and surveyors, will help protect the REO buyer from adverse conditions. However, in spite of a thorough inspection, unknown or unforeseen conditions may be discovered after completion of the sale.
Title to an REO property is conveyed by a Limited or Special Warranty Deed, rather than by a General Warranty Deed. The grantor warrants the title only against defects occurring during the grantor’s ownership and not against any defects existing before that time. Buyers of REO properties should thoroughly examine the public land records pertaining to the property to identify any title defects.
Foreclosures, REO properties and real estate in general offer one of the best values around! Purchasing real estate at today’s prices provides an opportunity to rebuild lost wealth through appreciation as shrinking inventories poise prices to rise. According to Alan Zibel, writing for the Associated Press in an article published in the Brunswick News on November 24, 2009, “Homes sales nationwide are now up nearly 37% from their bottom in January, although they are still 16% below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.”
For a limited time, buyers will continue to enjoy the best real estate opportunities in a decade:
(1) Interest Rates Below 5%: Competition for money, including the Federal government’s extraordinary deficit spending, will likely drive interest rates up, and soon. But, for a limited time, rates are affordably low. If you are waiting for prices to drop, stop waiting. A 10% decrease in price is required to offset a 1% increase in interest rates. Increasing prices and increasing interest rates are much more likely.
(2) A Pricing “Do-Over”: On certain properties, today’s pricing is on par with pricing from early 2000. During 2005-06, many of our purchasers opined, “If we had only bought in 2002, look how much we would have made on this property!” Our view is that 2002 has come again, as will 2005-06. If you are smart enough to enter the market now, you can have a “do-over!”
(3) Selection: The choices are plentiful in most price ranges. However, since limited new inventory is being added to the marketplace, these choices will diminish with each passing week.
(4) Demand Backlog: People have deferred important real estate decisions for almost three years, particularly the baby-boomers who plan to retire “south.” Improving market conditions will release this pent-up demand, which will absorb more of the available inventory. Prices will likely rise as demand increases and supply decreases.
(5) Tax Advantages: The federal government continues its support of the housing recovery by expanding the tax credit to more buyers and more expensive properties.
Record numbers of foreclosures and falling home prices have created enticing real estate ownership opportunities. Increasingly, consumers are tempted by pricing on foreclosures and bank-owned properties, which may sell for 30-40% below comparable new homes and re-sales.
While foreclosure prices may be “rock bottom,” prudent purchasers weigh the risks involved before choosing a foreclosure or bank-owned property. Foreclosure is a specialized field. Unless you have foreclosure experience, you need a team of competent professionals to protect your interests in the transaction, including a real estate practitioner with foreclosure experience, attorney, tax advisor, home inspector, appraiser, and a general contractor, if extensive repairs are required.
The Mechanics of Foreclosure
Real estate financing includes two contracts: (1) a promissory note, which is the buyer’s personal promise to pay, and (2) a security instrument, which secures the debt with either the title to the real property or a lien on the title. In Georgia, the lender holds “legal” title to the security property until the note balance is paid fully.
The lender has the power to sell the property if the debtor fails to pay the note as agreed. The lender must publish a required notice of the impending foreclosure sale for four consecutive weeks in the newspaper in the county in which the property is located.
The Short Sale
Prior to the foreclosure sale, the lender may permit the delinquent debtor to sell the property to a third party for an amount less than the note balance.
Application for a short sale reverses the process by which the debtor qualified for the original loan. The debtor must prove to the lender that (1) he has neither the income nor the assets to make the note payments as required, and (2) the property will not sell for at least the amount owed.
Any debtor considering a short sale should seek the guidance of a real estate professional who has successfully closed short sale transactions.
The Foreclosure Sale
Foreclosure sales are conducted on the first Tuesday of each month, between 10AM and 4PM, “at public outcry” on the steps of the courthouse of the County seat where the property is located. During the auction, bids are opened to third-party purchasers. The lender, or his representative, will be present at the sale and will bid for the property if other bidders do not offer at least the amount owed. Interested purchasers may bid against each other and against the lender.
Once the foreclosure sale has been concluded, the debtor’s interest in the property is terminated; Georgia does not provide for redemption of the property following the sale.
Disadvantages of buying property at the foreclosure auction include: (1) not being able to inspect the property or the public records pertaining to the property prior to making the purchase offer, (2) purchasing the property in its present condition without a seller’s disclosure, (3) assumption of unknown liabilities, including unpaid property taxes, and (4) cash or cashier’s check required for payment. All sales are final!
On November 5, 2009, Congress passed a bill extending and expanding the housing tax credit. The bill is awaiting the President’s signature. In order to help you better understand the new legislation, we are posting a comparison chart provided to us by the National Association of REALTORS.
The expiration date for the tax credit will move to April 30, 2010. First time buyers who have not had an interest in a principle residence for three of the past five years are still eligible for the credit, which is still a maximum of $8,000 for married couples and $4,000 for separate filers. A tax credit is now available for homeowners, who have consecutively resided in their primary residence for five of the last eight years. The maximum credit amount is $6,500 for married couples, and $3,200 for those filing separately.
The credit is available for home purchases up to $800,000. Income limits have been raised to $125,000 for single buyers and $225,000 for married couples.
Local market conditions are improving, as purchasers scramble to take advantage of the best buyers’ market in two decades. The expansion of the tax credit into the “move-up” market is expected to further fuel a housing recovery, as inventories continue to shrink and interest rates remain artificially low. The prevailing perception amongst buyers and the media is that the housing market has bottomed out and is on its way to stability and upward price movement.
At last, news media from around the country are reporting positive trends in the real estate market. The general consensus is that the real estate recession is over. If you’ve been waiting for the bottom to invest in real estate, the time to buy is now. But, don’t take our word for it!
Economists and other experts, such as CNBC’s Cramer, are saying that residential real estate has finally found a floor. As Cramer told CNBC viewers in June, the sector’s long, steep descent is all but over. According to a June 16th article posted on the web by Tom Brennan, “New housing data reported today indicates a dramatic change for the better. The latest news, along with much lower prices and the working off of inventory, validate (Cramer’s) prediction that housing would stabilize this month.”
Among other encouraging statistics, the National Association of REALTORS’ Pending Sales Index, a forward-looking compilation of signed or “pending” contracts, has increased seven months in a row… a winning streak not seen since 2001! The last data available confirm that pending contracts were up 6.4% in August 2009 over July 2009.
Many parts of the country are reporting stabilizing prices amid increased sales. According to RealtyTimes, “In September, sales increased 8.2% in the Northeast, 7.6% in the Midwest, 1% in the South, and 16% in the West. On average, prices were 3.4% higher in August 2009 over August 2008.”
According to Jeffrey Humphreys, writing for Georgia Trend Magazine, “Georgia’s prolonged and severe housing downturn ended in the second quarter of 2009, when single-family housing starts bottomed at 12, 500 units.” Mr. Humphreys predicts that “… the upturn in new home construction and housing sales that began in mid-2009 will gain momentum in 2010.”
Evidence that prices are stabilizing and demand for real estate is increasing here in Coastal Georgia becomes more apparent each day. Inventories, which were never extensive along this section of the Coast, are shrinking, particularly in new products. During the last two years, builders have adjusted housing starts in response to market conditions. Increased interest from prospective purchasers, which began in early spring, is now reflected in pending contracts and closings. For example, increased transactions in the last three months are reminiscent of the hot sellers’ market of three years ago. Multiple offers on desirable, well-priced properties are increasing. Many real estate companies report that phones are ringing with inquiries; website traffic is also increasing.
For the near future, buyers will continue to enjoy the best real estate opportunities in a decade:
- Interest Rates Below 5%: Competition for money, including the Federal government’s extraordinary deficit spending, will drive interest rates up, and soon. But, for a limited time, the Federal Reserve Board is holding rates affordably low. The U. S. Weekly average for the first week in October for a 30-year fixed rate mortgage was 4.94%; that’s rock bottom pricing for long-term money! If you are waiting for prices to drop, stop waiting. A 10% decrease in price is required to offset a 1% increase in interest rates. Increasing prices and increasing interest rates are much more likely.
- A Pricing “Do-Over”: On certain properties, today’s pricing is on par with pricing from early 2000. During 2005-06, many of our purchasers opined, “If we had only bought in 2002, look how much we would have made on this property!” Our view is that 2002 has come again, as will 2005-06. If you are smart enough to enter the market now, you can have a “do-over!”
- Selection: The choices are plentiful in most price ranges. However, since limited new inventory, particularly new construction, is being added to the marketplace, these choices will diminish with each passing week.
- Demand Backlog: People have deferred important real estate decisions for more than three years, particularly the baby-boomers who plan to retire “south.” Improving market conditions will release this pent-up demand, which will absorb more of the available inventory. Prices will rise as demand increases and supply decreases.
- Tax Advantages: Both the Federal government and the State of Georgia will pay qualified individuals to buy a home, up to $9,500, in real money. If you qualify, you should move quickly, as this opportunity ends soon.
Market conditions are changing…. and quickly. As Mr. Brennan states, “…people are as blind to the bottom as they were to the top. You can’t wait for some analyst to make the call. You have to buy now if you want to make some money.” Thank you, Mr. Brennan. We couldn’t have said it any better!
The professionals at Hodnett Cooper know the best opportunities in today’s market. Request our “Best Buy” list and become a part of the real estate recovery. Sometimes, you can have a do-over. Don’t miss this one!
In the last couple of days a great deal of seaweed has piled up on the beach here on St Simons Island. It’s Sargasso Seaweed and it comes from the Sargasso Sea, the western side is the Gulf Stream. When we have an extended period of east winds and swell, the seaweed is sent our way. This is a typical time of the year for the arrival of beds of Sargasso.
The Sargasso Seaweed is wonderful and is a floating city when out on the water. It is a city for a variety of marine life and sea turtles. Most of the fish have enough sense to swim out to more of it as the seaweed hits the breakers. Some of the little creatures cling on for dear life and end up on the beach where, to the delight of the shore birds, they pick thru it and eat the little shrimp and crabs that didn’t bail out in time. The Seaweed then becomes a great natural way to keep the beach in place as it sinks down into the sand and helps to hold the beach in place. Sweeping it up to please the beach goers in the long run may have the beach goers crying “where is the beach” as the beach slowly erodes away. This seaweed has piled up on these beaches for hundreds, even thousands of years and helps to renourish the fragile beach ecosystem. The creatures that live in the Sargasso are very unique and have adapted well to their floating city. Most of them are the same orange color of the seaweed itself.
The real estate recession is over. If you’ve been waiting for the bottom to invest in real estate, the time to buy is now. But, don’t take our word for it!
Economists and other experts, such as CNBC’s Cramer, are saying that residential real estate has finally found a floor. As Cramer recently told CNBC viewers, the sector’s long, steep descent is all but over. According to a June 16th article posted on the web by Tom Brennan, “New housing data reported today indicates a dramatic change for the better. The latest news, along with much lower prices and the working off of inventory, validate (Cramer’s) prediction that housing would stabilize this month.”
Hodnett Cooper Associates celebrated the market turn-around with a cookout at its Mainland Office. To quote one Associate, “This is the last time we’ll be eating hotdogs. From now on, its steak and champagne!” 
On a serious note, evidence that prices are stabilizing and demand for real estate is increasing here in Coastal Georgia becomes more apparent each day. Inventories, which were never extensive along this section of the Coast, are shrinking, particularly in new products. During the last two years, builders have adjusted housing starts in response to market conditions. Increased interest from prospective purchasers, which began in early spring, is now reflected in pending contracts and closings. For example, the Hodnett Cooper Mainland Office has produced 23 pending transactions in the last three weeks, activity reminiscent of the hot sellers’ market of three years ago. Multiple offers on desirable, well-priced properties are increasing. Our phones are ringing with inquiries; traffic on our website is up dramatically.
For a few more weeks, buyers will continue to enjoy the best real estate opportunities in a decade:
(1) Interest Rates Below 6%: Competition for money, including the Federal government’s extraordinary deficit spending, will drive interest rates up, and soon. But, for a limited time, rates are affordably low. If you are waiting for prices to drop, stop waiting. A 10% decrease in price is required to offset a 1% increase in interest rates. Increasing prices and increasing interest rates are much more likely.
(2) A Pricing “Do-Over”: On certain properties, today’s pricing is on par with pricing from early 2000. During 2005-06, many of our purchasers opined, “If we had only bought in 2002, look how much we would have made on this property!” Our view is that 2002 has come again, as will 2005-06. If you are smart enough to enter the market now, you can have a “do-over!”
(3) Selection: The choices are plentiful in most price ranges. However, since limited new inventory is being added to the marketplace, these choices will diminish with each passing week.
(4) Demand Backlog: People have deferred important real estate decisions for almost three years, particularly the baby-boomers who plan to retire “south.” Improving market conditions will release this pent-up demand, which will absorb more of the available inventory. Prices will rise as demand increases and supply decreases.
(5) Tax Advantages: Both the Federal government and the State of Georgia will pay qualified individuals to buy a home. If you qualify, you should move quickly, as this opportunity ends in just a few months.
Market conditions are changing…. And quickly. As Mr. Brennan states, “…people are as blind to the bottom as they were to the top. You can’t wait for some analyst to make the call. You have to buy now if you want to make some money.” Thank you, Mr. Brennan, we couldn’t have said it any better!
The professionals at Hodnett Cooper know the best opportunities in today’s market. Request our “Best Buy” list and become a part of the real estate recovery. Sometimes, you can have a do-over. Don’t miss this one!
In order to create a catalyst for turning around the real estate market, the federal and state governments have approved unique tax incentives for 2009 home buyers. As the market is already turning around, with inventories shrinking and prices stabilizing, these incentives may not be extended upon expiration. This opportunity may never come again!
Federal Tax Credit:
If you purchase a home for $80,000 or more, you will receive a credit of $8,000 toward your federal income tax liability. (If the home costs less than $80,000, your credit is 10% of the purchase price.) You must purchase a principal residence (owner-occupied home) between January 1, 2009 and December 31, 2009; your income cannot exceed $75,000 single or $150,000 married filing jointly. If you have not had any ownership interest in a home in the 3 years previous to the day of your purchase, you qualify. Every dollar of the credit reduces the income tax you owe by one dollar. For example, if you owe $10,000 and you qualify for the full credit, you will only owe $2,000. If you only owed $5,000, you will receive a check for $3,000. You do not have to pay this money back. You do not have to make an application for the money; simply claim your credit on your form 1040.
Georgia Tax Credit:
All purchasers (filing a Georgia tax return) of a single family residence (including condominium residences) located in Georgia that was listed for sale prior to May 11, 2009, may claim a credit for 1.2% of the purchase price, with a maximum credit of $1,800. You may combine your state and federal credits, if you qualify for both. You must purchase the home by November 30, 2009. Your credit will be applied to three (or more) tax years, 1/3 of the full credit amount in each year. You may live in the home as your permanent residence, or you may use the credit toward a vacation/second home… even an investment property. You may claim the credit regardless of your income!
Enjoy all the advantages of owning real estate and get cash back!
The July issue of Southern Accents contains a brief feature of St. Simons Island and Sea Island. In an article entitled “A Summer of Savings at the Beach,” Hodnett Cooper and the Cloister were selected as the accommodations providers of choice. The article includes a photograph of Coast Cottage Lane and the new Sea Island Beach Club.
View the complete article online here: http://tinyurl.com/l2jzqb
