Undervalued Appraisals Creating Problems

The real estate market is recovering but still faces hurdles from tight
mortgage credit, but problems with a sizeable share of real estate appraisals
also are holding back home sales.

Most appraisers are competent and provide good valuations that are compliant
with the Uniform Standards of Professional Appraisal Practice. However,
appraisals generally lag market conditions and some changes to the appraisal
process have been causing problems in recent years, including the use of
out-of-area valuators without local expertise.

I recently have had two transactions fall apart because of undervalued appraisals.

For more real estate news and information in the Destin-Niceville-30A area, go to www.DestinHomeRealty.com or contact me at 850-305-6256.

 

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Mortgage Forgiveness Debt Relief Act Future?

NEW YORK (CNNMoney) — The clock is ticking on a taxbreak that saves struggling homeowners from paying thousands of dollars to the IRS.

If the Mortgage Forgiveness Debt Relief Act of 2007 does not get extended by Congress by the end of the year, homeowners will have to start paying income taxes on the portion of their mortgage that is forgiven in a foreclosure, short sale or principal reduction.

So if you owe $150,000 on your home and it sells for $100,000 in a foreclosure auction, the IRS could tax you on the remaining $50,000. For someone in the 25% tax bracket, that would mean paying $12,500 in taxes on the foreclosure.  Similar taxes would apply for forgiven amounts in short sales and principal reductions.

“People trying to do short sales are freaked out about it,” said Elizabeth Weintraub, a real estate agent in Sacramento, Calif. “They’re telling me they’ll do whatever it takes to close by the end of the year.”

Should the tax break expire, a large number of mortgage borrowers could be affected. More than 50,000 homeowners go through foreclosure each month.Meanwhile, the number of short saleshas tripled over the past three years to a rate of about half a million a year.And, under the terms of the $25 billion foreclosure abuse settlement, roughly one million borrowers may have their mortgage debt lowered through principal reductions over the next couple of years.

“If there ever was a no-brainer in housing policy, this would be it,” said Jaret Seiberg, a policy analyst for Guggenheim Securities.

Yet, Seiberg is skeptical the exemption will get extended. Now that the election is over, he thinks Congress will be heading into a “lame duck” session, with very little legislation moving forward through the end of the year.

In addition, the cost of the exemption could make it a point of contention, he said. The office of Sen. Max Baucus, who heads the finance committee, estimated the cost of a one-year extension at $1.3 billion.

Others disagree. Tom Kolpien, the press secretary forRep. Tom Reed of New York, said Congress will likely act before the end of the year. (Reed is currently pushing for the extension on the House Ways and Means Committee).

“Both parties, both houses of Congress agree it’s good policy and it needs to get done,” said Jamie Gregory, chief lobbyist for the National Association of Realtors, which supports an extension. “The hold up is the process. I’m confident it will get done. I just don’t know how.”

Even if Congress allowed the exemption to expire, not all borrowers withforgiven mortgage debt will take a tax hit. If the debt is discharged in a bankruptcy, no tax is due. And anyone who is insolvent — meaning they have more debt than assets — at the time the debt was forgiven — would not have to pay the tax.

BP Slapped With Record Breaking Fine

NEW ORLEANS (AP) – Oil giant BP has agreed to pay the largest criminal penalty in U.S. history, totaling billions of dollars, for the 2010 oil spill in the Gulf of Mexico, a person familiar with the deal said Thursday.

The person, who spoke on condition of anonymity because they were not authorized to speak on the record about the deal, also said two BP PLC employees face manslaughter charges over the death of 11 people in the explosion of the Deepwater Horizon oil rig that triggered the massive spill. The person said BP will plead guilty to obstruction for lying to Congress about how much oil was pouring out of the ruptured well.

The person declined to say exactly how much the fine in the billions of dollars would be. The Deepwater Horizon rig, 50 miles off the Louisiana coast, sank after the April 20, 2010, explosion. The well on the sea floor spewed an estimated 206 million gallons of crude oil, soiling sensitive tidal estuaries and beaches, killing wildlife and shutting vast areas of the Gulf to commercial fishing.

The spill exposed lax government oversight and led to a temporary ban on deepwater drilling while officials and the oil industry studied the risks, worked to make it safer and developed better disaster plans.

BP’s environmentally-friendly image was tarnished, and independent gas station owners who fly the BP flag claimed they lost business from customers who were upset over the spill. BP chief executive Tony Hayward stepped down after the company’s repeated gaffes, including his statement at the height of the crisis: “I’d like my life back.”

The cost of BP’s spill far surpassed the Exxon Valdez spill in 1989. Exxon ultimately settled with the U.S. government for $1 billion, which would be about $1.8 billion today.

Real Estate Prices on the Rise

For local information about the Destin, Santa Rosa Beach, Niceville, and Crestview areas, contact me at MykeSaysSold@aol.com  850-305-6256

Reasons To Buy a NEW Home–Santa Rosa Beach Area

Top 5 Reasons to buy a new home

I have been helping customers negotiate some great deals on new homes here in the Florida Panhandle.

I wanted to share the top 5 reasons to buy a new home compared to a re sale.

You have to look at the total savings or as I like to call it the total cost of
ownership.

New Homes usually come with special incentives that are not always advertised “Free Stuff
New Homes will have a lower cost to insure when compared to a re sale
New Homes must meet a very high level of energy efficiency
New homes can be bought with very attractive financing offers
New Homes have a lower cost of annual maintenance

When you stack up all the savings purchasing a New Home is something you want to take a closer look at.

Although a new home may have an initial higher purchase price the overall monthly cost of ownership can be much lower than a home only ten years old.

New home builders are always contacting realtors about specials that are about to become available before they are made available to the general public.

DR Horton has 13 new communities here in the Florida Panhandle–great homes at a great price!  Contact me today to take advantage of these deals.

Rental Market Tightens, Prices Rise

By: Krista Franks Brock

Demand in the single-family rental market continues to expand even as inventory tightens, according to the latest MarketPulse report from CoreLogic. Comparing lease rates, supply, pricing, and the ratio between bid prices and asking prices clearly demonstrates an increasingly tightening market.

“[S]ome of the new demand is being driven by former homeowners who have experienced foreclosure,” CoreLogic stated in its report. As a result, markets experiencing the greatest growth in single-family rental demand are the same markets that were hardest hit by the housing crisis, including Florida, California, and Arizona.

Nationally, single-family leases were up 7 percent in August year-over-year and have shown a 12 percent increase year-to-date. The August data is not an anomaly but a growing trend, according to CoreLogic, which reported leasing volumes rising sequentially each month over the last two years.

At the same time, inventory has been decreasing. In August, single-family rental inventory was down 11 percent from a year earlier.

The market held about 2.6 months’ supply in August. A year earlier, supply was at about 3.2 months.

Inventory declined sharply this past summer with a strong rise in closings, according to CoreLogic.

Listings are being rented faster. In August, a listing took about six weeks to rent, down from eight weeks a few years ago in 2009.

After declining for two years, rental prices have been on the rise since 2011, rising 2 percent over the year in 2011 and 1 percent year-to-date in 2012.

CoreLogic expects rental prices to continue to rise throughout the rest of this year and next. Rental prices are generally less volatile than home prices, and home prices have experienced increases of late.

The ratio between listing rent and actual rent paid is another indicator that points to a tightening in the single-family rental market. Two years ago when rental prices were declining and inventory was higher, the spread was about 4 percent. Today it stands at about 2 percent.

“[A] weak labor market, tight underwriting for owner-occupied properties and elevated foreclosures will ensure continued strong demand for single-family rentals,” according to CoreLogic.

Foreclosures Not Huge Savings Especially Places Like Destin or 30A Florida

While “foreclosure” remains a buzzword for bargain seekers, a study finds that
the actual discount off a “normal” price is far less than it used to
be.
According to a study by Zillow, the national average discount of a
real estate owned (REO) property compared to a non-REO was only 7.7 percent in
September – a sizable change from the 23.7 percent average discount that peaked
nationally in August 2009 and less than the average 9.1 percent discount one
year earlier.
In some areas of Florida, REOs aren’t a bargain at all.
Zillow included three Florida metro areas in its analysis and claims an average
REO savings of only 2.9 percent in the Miami-Fort Lauderdale market – a
significant drop from the peak of 22.7 percent in August 2008 and a notable
decline year-to-year; in September 2011, a South Florida REO sold for 6.8
percent less.
In Tampa, a REO in September 2012 sold for 9 percent less
than a non-REO sale, down slightly from the 9.6 percent discount one year
earlier, but significantly lower than the peak 29.1 percent discount recorded in
November 2008.
In Orlando, the REO discount of 4.6 percent rose slightly
year-to-year; in September 2011, it was 2 percent. However, both numbers are
down from the peak 24.4 percent discount for a REO recorded in January
2010.
“The smallest foreclosure discount is found in places where  (DESTIN/30A corridor, Florida)“, says Zillow Chief Economist Dr. Stan Humphries. “People are willing to pay
the same amount for a foreclosure re-sale that they would for a non-distressed
home simply to take advantage of historic affordability.”

Year-over-year foreclosure discounts fell in roughly three-quarters (76.9 percent) of metro
areas analyzed, and all metros are down from their peak. Nationwide, foreclosure
discounts reached their height in 2008 and 2009, and in some areas peaked at
more than 30 percent.

© 2012 Florida Realtors®

Fall Maintenance for Northwest Florida Panhandle

The calendar has turned to November; the month during which we transition from fall into winter (not so much in Florida).

With less sunlight, colder temperatures, and shorter days ahead for Northwest Florida , it’s an opportune time to cross those last-minute maintenance items off your homeowner to-do list.

Practicing preventive care — both inside and outside your home — can save thousands of dollars in repairs come later this winter. What follows is a brief checklist to get you started.

For outside the home :

  • Inspect exterior lights and outlets. Be sure that none of the outlets are cracked or broken, or have exposed wires.
  • Clean gutters and clear all blockages. If leaves are falling, redo after leaves are off all trees.
  • Inspect and test outdoor railings and stairs.
  • Have problem trees trimmed, including those that may damage your home in a storm.
  • Protect outdoor water faucets from freezing. Consider using foam cups, sold at hardware stores.

For inside the home :

  • Change batteries in all smoke detectors and carbon monoxide alarms, whether they’re “dead” or not.
  • Vacuum refrigerator condenser coils, plus the front bottom grill. Empty and clean the drip pan.
  • Inspect wood stoves and fireplace inserts. Hire a certified chimney sweeper to clean the chimney, if needed.
  • Insulate bare water pipes running through your home to prevent freezing and to limit condensation on cold-water lines.
  • Inspect automatic garage door opener. Lubricate chains according to manufacturer’s instructions. Make sure bolts and screws are properly tightened and secured.

As a constant series of chores, home maintenance is a four-season job and one which should not be taken lightly. The tasks of each season are unique and November’s jobs are mostly preparatory in advance of colder weather.

If your routine maintenance uncovers larger issues including a faulty HVAC unit, or a leaking faucet, for example, seek professional help to make the repair.

October Statistics–Positive Employment, Low Interest!

Mortgage rates are performing surprisingly well after Friday’s release of the October 2012 Non-Farm Payrolls report. The Bureau of Labor Statistics’ monthly report beat Wall Street expectations, while also showing a giant revision to the previously-released job tallies of August and September.

171,000 net new jobs were created last month against calls for 125,000 and revisions for the two months prior totalled 84,000.

October also marked the 25th consecutive month of U.S. job growth — a period during which 3.8 million jobs have been reclaimed. This sum represents more than half of the 7.3 million jobs lost between 2008-2009.

Nationally, the Unemployment Rate rose by one-tenth of one percent last month to 7.9%. It may seem counter-intuitive to see unemployment rates rise even as job growth soars. However, it’s a sign of economic strength.

October’s rising Unemployment Rate is the result of more workers entering the U.S. workforce and actively looking for jobs, a manifestation of rising consumer confidence levels and optimism for the future.

Typically, mortgage rates in FL would worsen on a strong jobs report like this. This month, however, rates are improving. This is mostly the result of Hurricane Sandy, which is expected to create a drag on the U.S. economy with its $50 billion damage tag.

The storm has Wall Street looking past the strong jobs report, positioning itself for the next few months. Investors are moving into less risky assets until the uncertainty surrounding the storm’s effects subside. Mortgage-backed bonds are considered “safe” and are benefiting from this safe haven buying pattern.

For home owners and buyers in Parkland and nationwide, the shift is yielding an opportunity to lock mortgage rates at artifically-low levels. 30-year fixed rate mortgages remain well below 3.50% for borrowers willing to pay discount points, and home affordability is approaching an all-time high.

Home values are expected to rise through 2013 so consider this week’s low rates a gift. If you’re in a position to go to contract and/or lock a mortgage rate, you may want to take that step today.

New Short Sale Guidelines In Effect November 1

Starting today, Nov. 1, 2012, new short sale guidelines spearheaded by the
Federal Housing Finance Agency (FHFA) go into effect. The new rules impact all
mortgages under the federally controlled Fannie Mae and Freddie Mac.

One part of the change allows a handful of the nation’s larger mortgage servicers to
approve a short sale without needing Fannie or Freddie to sign off on it.
Servicers include in the agreement are:

CMG Mortgage Insurance
Company
• Essent Guaranty Inc.
• Genworth Mortgage Insurance
Corporation
• Mortgage Guaranty Insurance Corporation
• PMI Mortgage
Insurance Company
• Radian Guaranty, Inc., Republic Mortgage Insurance
Company

“We applaud the nation’s mortgage insurers for committing to work
with us and our servicers to help more borrowers obtain short sales and other
foreclosure alternatives,” says Tracy Mooney, senior vice president, servicing
and REO at Freddie Mac. “By paving the way for more borrowers to avoid
foreclosure, today’s announcement will support the housing recovery and help
reduce taxpayer losses.”

In addition to quicker short sale approval,
other changes become effective today. They including new guidelines for
homeowners hit by a financial hardship, moved by the military or held back by a
home’s second mortgage:

• Borrowers facing an approved hardship don’t
have to be delinquent.

• Service members with Permanent Change of Station
orders have greater flexibility, including the elimination of back-end
debt-to-income ratios or a cash contribution promissory note.

• Fannie
Mae and Freddie Mac won’t pursue deficiency judgments in certain cases under new
rules. Servicers will evaluate borrowers as part of the short sale approval
process.

• FHFA gave servicers more consistent guidelines to process and
execute short sales, and consolidate existing short sales programs into a single
uniform program.

• Fannie Mae and Freddie Mac will offer up to $6,000 to
second lien holders to expedite a short sale.