Friday, October 16, 2009

Owners Still Try to Price Homes High

Real estate practitioners in the heart of foreclosure hotspots are talking turkey about pricing to their clients.

"I don't sugar-coat anything. I don't tell people what they want to hear. I tell them what they have to hear," says Mike Aubrey, an associate with RE/MAX Metropolitan Realty in North Potomac, Md.

"[Setting the initial price too high] is not only a waste of time, but you stigmatize your property," says Joe Manausa, president of Century 21 First Realty in Tallahassee. "People wonder why nobody bought it, why it's been on the market so long."

In fact, setting a price too high is “downright willful negligence,” Manausa declares.

Source: Inman News, Mary Umberger (10/14/2009)

Foreclosures: Down But Still Elevated

Mortgage foreclosure filings declined in September for the second-straight month, but September was still the third-highest monthly total behind July and August since real estate data firm RealtyTrac began keeping count in January 2005.

September filings were down 4 percent from August, according to a report released Thursday, but they were up 29 percent compared to August 2008. Third-quarter filings were 5 percent higher than the second quarter.

One in every 136 U.S. housing units received a foreclosure filing during the third quarter. "Bank repossessions, or REOs, jumped 21 percent from the second quarter to the third quarter, corresponding to jumps in defaults and scheduled auctions in the previous two quarters," James J. Saccacio, CEO of RealtyTrac, said in a statement.

Nevada’s foreclosure rate led the nation, followed by Arizona, California, Florida, Idaho, Utah, Georgia, Michigan, Colorado, and Illinois.

Unemployed homeowners are driving the increase.

Source: Reuters News, Julie Haviv (10/15/2009)

Congress Debating the Tax Credit

Congress is considering expanding and extending the $8,000 first-time homebuyer tax credit, which expires Nov. 30.

More than 1.8 million home buyers will have used the credit by the end of November, including an estimated 355,000 who wouldn’t have bought a home without it, according to the National Association of REALTORS® and other analysts.

Mark Zandi, chief economist for, is among those in favor of extending the credit. Zandi would also make it available to all homebuyers. "The most fundamental argument for the credit is that nothing works in the economy if housing is falling," Zandi said. "[The credit] is a good insurance policy. It's vital to stem the housing price declines."

Opponents argue that the tax credit is too expensive and doesn’t help enough people.
Extending the credit through the end of 2010 and making it available to single filers earning up to $150,000 and joint filers earning up to $300,000 would cost an estimated $16.7 million. Some in Congress propose using unspent money from the $787 billion stimulus bill to pay for it.

Source:, Les Christie (10/14/2009)

Keeping Mortgage Loans in the Family

Low-interest intra-family loans can be the best way for parents to help their children purchase a property.

The strategy makes the purchase more affordable, increases the size of the home a cash-strapped purchaser can afford, and helps the parent leverage his gift to reduce a taxable estate.

The parent must charge interest at a market rate on family loans, says Ken Kilday, an adviser with USAA Wealth Management, or face IRS penalties. But parents can then take the $13,000—$26,000 for a couple—that can be gifted without eating into the gift exemption and apply it annually toward paying off their child’s loan.

Kilday also suggests that parents put in their will that upon their death, the loan be fully forgiven.

Source: Dow Jones Newswires, Taylor Smith (10/15/2009)