Presenting The Lister Sisters!

This is a wonderful short sale piece that was done by Kare 11, here in Minneapolis. It is a great resource! Happy home hunting!

I have been looking at a ton of homes all over the Twin Cities under $300,000.  I have seen it all Foreclosure, Short Sales, Estate homes, traditional seller homes, but the home I would like to talk about are the flip homes that are flops or just the Flip Flop.

Flip Flop homes are houses that have been bought at supposed bargain prices.  These “great deals” are then polished and shined to sell and sell fast.  But do they?

I can’t tell you the countless number of homes out there that fall into this category.  There seems to be quite a few people out there that have watched all those inspiring remodeling and flipping home shows on television.  In today’s market and especially in the Twin Cities, it is hard to find that truly good deal that allows for a flip home to be successful.

Why?  Because the market is very different from the hay days of real estate.   The market is much slower.  There is not a frenzy or urgency to buy (unless you are buying homes under $150,000.)  People have time to look and take their time to decide.   Because of this, they are looking closer at homes, at the craftsmanship and quality of remodeling.

Many of the flip flops I have seen are great at first glance, but when you really start to look close the work is not up to par or is not consistent.  I have seen a trend to use cheap grades of carpeting or cheap laminate hardwood flooring that look good today, but will not wear well.  Another flooring disaster; tile or natural stone floors placed in kitchen sand baths without replacing worn out or uneven subfloor.  Can you say crack?

Another flip flop favorite is painted cupboards in the kitchen with new hardware that look good on the surface, but have not been painted and primed properly.  How about the popular granite or siltstone countertops on old cupboards?  What a waste of money.

One of the biggest problems I see with flip flops are that the flippers themselves are not buying the right house to flip.  Don’t buy the inherently undesirable home and try to make it desirable.  That bargain on a busy street is still on a busy street. The two bedrooms without space to expand no matter how well the flipper remodels the home, is still a two bedroom home.  Generally people want three plus bedrooms and preferably on one level.

My final point is that many times  a flip flop occurs because the flipper buys an older home, a home they may have bought for a good price, and but they  remodel  the home without really understanding the market.  They may have done an outstanding job at remodeling and updating the home.  The home is picture perfect.  But has the flipper really added a ton of value to the home or have they just made the home more sellable at a slightly higher price.

This market is brutal.  Ask any traditional seller.  Everyone’s home needs to be picture perfect to sell or the owner will be knocked down on the price.  In this market when you have home, it expected that you have maintained your home.  Part of this maintenance is replacing flooring when it is worn or dated, updating your kitchen and bath after a certain period of time, replacing appliances and mechanicals, painting or taking down dated wall paper,  replacing old dated window treatment, fixing what needs to be fixed and repairing or replacing what needs to be repaired or replaced.  This is home maintenance and this is part of home ownership and now more than ever it matters.  Unfortunately for the inexperienced flipper they may be doing what is expected in this buyer driven market.  They are not adding a ton of value to the home, but just making it more sellable to a buyer.

Now don’t get me wrong.  Not every flip is a flop.  There are plenty of great homes out there that investors buy, remodel and sell.  They are usually in highly desirable areas and they sell fast.  They may also be homes that are truly bought for a “deal” which allows the investor to update the home to make it on par with the other homes in the neighborhood.  In these scenarios:  Hurray! For the investor who makes a profit and saves a home.  Hurray! For the buyer who gets to buy an updated home.

Tags: First time home buyer, Home Conditioning, home flipping, Home Staging, remodeling

Hot off the press from NAR

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn’t receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says. His remarks came in an address to several thousand REALTORS® gathered Tuesday morning at “The Real Estate Summit: Advancing the U.S. Economy,” at the 2009 REALTORS® Midyear Legislative Meetings & Trade Expo in Washington, D.C..

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

• $8,000 fast cash for first-time homebuyers (money.cnn.com)
• FHA plans to allow use of tax credit for down payments (seattlepi.com)
• $8K Tax Credit CAN Be Used As FHA Downpayment (hsh.com)
• 8-Point Overview of the $8,000 First-Time Homebuyer Credit (realtyresolve.com)

Tags: FHA, First time home buyer, First Time Home Buyers Tax Credit

Ready to have a place of your own, sick of renting, parent’s basement getting you down, failure to launch?

Calling all campers…come and join this fun and exciting class just for First Time Home Buyers and their guests.
Taught by two knowledgeable and experienced Realtors, Kristin Rial and Lisa Pearl as well as our Mortgage Specialist Robyn Kellogg, you’ll walk away with with the knowledge you’ll need to buy your first home. This is a no pressure class, taught with you in mind. We’re teaching what you want to hear and you’ll be surprised. It’s your time to buy!

Saturday-May 9, 2009
10:00 am to 11:30 am
Edina Realty Eden Prairie
11800 Singletree Lane #401
Eden Prairie, MN 55344

Please RSVP-
Kristin Rial 952-210-3121 KristinRial@edinarealty.com
Lisa Pearl 612- 226-4673 LisaPearl@edinarealty.com

For those who need to launch, but don’t know how to do it….

• Falling Home Prices Also Hurting Sales (hsh.com)
• Recovery (dealerdan.blogspot.com)
• Existing-Home Sales Rise for a Second Month (nytimes.com)

Tags: buyers, buying, class, first time home buying, Kristin Rial, Lisa Pearl, real estate home buying seminar, Realtors, Realty, Robyn Kellogg, seminar, Taught

Fannie Mae Foreclosure Tips

There are a few things that I recently learned doing a Fannie Mae foreclosure transaction.  I was representing the buyers. 

Closing costs –The bank did agree to pay some closing costs.  We had this negotiated in the offer.  What the bank did not make clear was that they are not going to pay for their Title Company’s fees and closing costs associated with the transfer of the deed.    This was a little hard to swallow a week before closing.   What was even more frustrating was that we were working with a Title company proving to be unreliable, but were unable to choose another even though my buyers were footing the bill.

Title Company – You do not have to choose the banks Title Company for your side of the transaction.  They will say that it is easier to do both sides in one office.  Do not be lead to believe this is true.  Make sure that you are using a reliable Title company so that you are sure that there will be no issues with the deed later.

Gap Coverage – Make sure that your buyer is given gap coverage along with coverage from any future mechanics liens, assessments, etc., as there is a title company here in the metro area that has recently deleted this kind of coverage on ALL bank owned properties.

Escrow – Escrow money for the Proceedings Subsequent.  Properties are purchased at foreclosure auction and then listed by REO immediately; the name on the deed will still read the pre-foreclosed owner.  Proceedings subsequent are the actions taken to transfer the Torrens property into the new buyer’s name.  There are Lawyer fees associated with these proceedings.  $2500 was put in escrow by the bank to take care of the fees. 

 LOI Letter – You need a special letter from the foreclosure attorneys to close and have clear Title.  Make sure that the Bank’s Title Company is creating a letter from the foreclosure attorneys.  You need this letter to satisfy the proceeding subsequent for the closing.

48 hour HUD review – The bank will take 48 hours to review the HUD.

Sincerely,

Michelle Shirley – Lister Sister

Tags: Closing costs, Escrow, Gap Coverage, Letter of Intent, LOI Letter, Title Company

What to Watch For
New construction homes continue to go the way of the dodo bird. There are
currently 3,149 new construction units listed for sale in the MLS system, down
25.0 percent and over 1,000 units from a year ago. Unfortunately, sales are
down even farther, which has pushed the Months Supply of Inventory for new
construction properties up to 11.3 months.
You may have heard the news that home sales are increasing in the Twin Cities.
The rise is entirely in the single-family detached segment, however, as both
townhomes and condominiums are selling less frequently this year than they did
a year ago.
Similarly, the recent uptick in sales has missed the upper bracket market. Home
sales above $190,000 are down 20.0 percent in the last year.

maar 2009

Tags: maar report, New construction twincities, single family detatched minneapolis. house sales minneapolis

In 2008, Congress enacted a $7500 tax credit designed to be an incentive for first-time homebuyers to purchase a home. The credit was designed as a mechanism to decrease the over-supply of homes for sale.

For 2009, Congress has increased the credit to $8000 and made several additional improvements. This revised $8000 tax credit applies to purchases on or after January 1, 2009 and before December 1, 2009. Tax Credits — The Basics
1. What’s this new homebuyer tax incentive for 2009?
The 2008 $7500, repayable credit is increased to $8000 and the repayment feature is eliminated for 2009 purchasers. Any home that is purchased for $80,000 or more qualifies for the full $8000 amount. If the house costs less than $80,000, the credit will be 10% of the cost. Thus, if an individual purchased a home for $75,000, the credit would be $7500. It is available for the purchase of a principal residence on or after January 1, 2009 and before December 1, 2009.
2. Who is eligible?
Only first-time homebuyers are eligible. A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years previous to the day of the 2009 purchase.
3. How does a tax credit work?
Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual’s income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. So, if before taking any credits on a tax return a person has total tax liability of $9500, an $8000 credit would wipe out all but $1500 of the tax due. ($9,500 – $8000 = $1500)

4. So what happens if the purchaser is eligible for an $8000 credit but their entire income tax liability for the year is only $6000?
This tax credit is what’s called “refundable” credit. Thus, if the eligible purchaser’s total tax liability was $6000, the IRS would send the purchaser a check for $2000. The refundable amount is the difference
FIRST-TIME HOMEBUYER TAX CREDIT
between $8000 credit amount and the amount of tax liability. ($8000 – $6000 = $2000) Most taxpayers determine their tax liability by referring to tables that the IRS prepares each year.
5. How does withholding affect my tax credit and my refund?
A few examples are provided at the end of this document. There are several steps in this calculation, but most income tax software programs are equipped to make that determination.
6. Is there an income restriction?
Yes. The income restriction is based on the tax filing status the purchaser claims when filing his/her income tax return. Individuals filing Form 1040 as Single (or Head of Household) are eligible for the credit if their income is no more than $75,000. Married couples who file a Joint return may have income of no more than $150,000.
7. How is my “income” determined?
For most individuals, income is defined and calculated in the same manner as their Adjusted Gross Income (AGI) on their 1040 income tax return. AGI includes items like wages, salaries, interest and dividends, pension and retirement earnings, rental income and a host of other elements. AGI is the final number that appears on the bottom line of the front page of an IRS Form 1040.
8. What if I worked abroad for part of the year?
Some individuals have earned income and/or receive housing allowances while working outside the US. Their income will be adjusted to reflect those items to measure Modified Adjusted Gross Income (MAGI). Their eligibility for the credit will be based on their MAGI.
9. Do individuals with incomes higher than the $75,000 or $150,000 limits lose all the benefit of the credit?
Not always. The credit phases-out between $75,000 – $95,000 for singles and $150,000 – $170,000 for married filing joint. The closer a buyer comes to the maximum phase-out amount, the smaller the credit will be. The law provides a formula to gradually withdraw the credit. Thus, the credit will disappear after an individual’s income reaches $95,000 (single return) or $170,000 (joint return). For example, if a married couple had income of $165,000, their credit would be reduced by 75% as shown: Couple’s income $165,000 Income limit 150,000 Excess income $15,000 The excess income amount ($15,000 in this example) is used to form a fraction. The numerator of the fraction is the excess income amount ($15,000). The denominator is $20,000 (specified by the statute).
In this example, the disallowed portion of the credit is 75% of $8000, or $6000 ($15,000/$20,000 = 75% x $8000 = $6000) Stated another way, only 25% of the credit amount would be allowed. In this example, the allowable credit would be $2000 (25% x $8000 = $2000)
10. What’s the definition of “principal residence?”
Generally, a principal residence is the home where an individual spends most of his/her time (generally defined as more than 50%). It is also defined as “owner-occupied” housing. The term includes single-family detached housing, condos or co-ops, townhouses or any similar type of new or existing dwelling. Even some houseboats or manufactured homes count as principal residences.
11. Are there restrictions on the location of the property?
Yes. The home must be located in the United States. Property located outside the US is not eligible for the credit.
12. Are there restrictions related to the financing for the mortgage on the property?
In 2009, most financing arrangements are acceptable and will not affect eligibility for the credit. Congress eliminated the financing restriction that applied in 2008. (In 2008, purchasers were ineligible for the $7500 credit if the financing was obtained by means of mortgage revenue bonds.) Now, mortgage-revenue bond financing will not disqualify an otherwise-eligible purchaser. (Mortgage revenue bonds are tax-exempt bonds issued by a state housing agency. Proceeds from the bonds must be used for below market loans to qualified buyers.)
13. Do I have to repay the 2009 tax credit?
NO. There is no repayment for 2009 tax credits.
14. Do 2008 purchasers still have to repay their tax credit?
YES. The $7500 credit in 2008 was more like an interest-free loan. All eligible purchasers who claimed the 2008 credit will still be required to repay it over 15 years, starting with their 2010 tax return. Some Practical Questions
15. How do I apply for the credit?
There is no pre-purchase authorization, application or similar approval process. All eligible purchasers simply claim the credit on their IRS Form 1040 tax return. The credit will be reflected on a new Form 5405 that will be attached to the 1040. Form 5405 can be found at www.irs.gov.
16. So I can’t use the credit amount as part of my downpayment?
No. Congress tried hard to devise a mechanism that would make the funds available for closing costs, but found that pre-funding would require cumbersome processes that would, in effect, bring the IRS into the purchase and settlement phase of the transaction.
17. So there’s no way to get any cash flow benefits before I file my tax return?
Yes, there is. Any first-time homebuyers who believe they are eligible for all or part of the credit can modify their income tax withholding (through their employers) or adjust their quarterly estimated tax payments. Individuals subject to income tax withholding would get an IRS Form W-4 from their employer, follow the instructions on the schedules provided and give the completed Form W-4 back to the employer. In many cases their withholding would decrease and their take-home pay would increase. Those who make estimated tax payments would make similar adjustments. Some “Real World” Examples
18. What if I purchase later this year but can’t get to settlement before December 1?
The credit is available for purchases before December 1, 2009. A home is considered as “purchased” when all events have occurred that transfer the title from the seller to the new purchaser. Thus, closings must occur before December 1, 2009 for purchases to be eligible for the credit.
19. I haven’t even filed my 2008 tax return yet. If I buy in 2009, do I have to wait until next year to get the benefit of the credit?
You’ll have a helpful choice that might speed up the process. Eligible homebuyers who make their purchase between January 1, 2009 and December 1, 2009 can treat the purchase as if it had occurred on December 31, 2008. Thus, they can claim the credit on their 2008 tax return that is due on April 15, 2009. They actually have three filing options. If they purchase between January 1, 2009 and April 15, 2009, they can claim the $8000 credit on the 2008 return due on April 15. They can extend their 2008 income-tax filing until as late as October 15, 2009. (The IRS grants automatic extensions, but the taxpayer must file for the extension. See www.irs.gov for instructions on how to obtain an extension.) If they have filed their 2008 return before they purchase the home, they may file an amended 2008 tax return on Form 1040X. (Form 1040X is available at www.irs.gov)
Of course, 2009 purchasers will always have the option of claiming the credit for the 2009 purchase on their 2009 return. Their 2009 tax return is due on April 15, 2010.
20. I purchased my home in early 2009 before the stimulus bill was enacted. I claimed a $7500 tax credit on my 2008 return as prior law had permitted. Am I restricted to just a $7500 credit?
No, you would qualify for the $8000 credit. Eligible purchasers who have already claimed the $7500 credit on a 2008 return for a 2009 purchase may file an amended return (IRS Form 1040X) for the 2008 tax year. This amended return will enable them to obtain the additional $500 credit amount.
21. If I claim my 2009 $8000 credit on my 2008 tax return, will I have to repay the credit just as the 2008 credits are repaid?
No. Congress anticipated this confusion and has made specific provision so that there would be no repayment of 2009 credits that are claimed on 2008 returns.
22. I made an eligible purchase of a principal residence in May 2008 and claimed the $7500 credit on my 2008 tax return. My brother, who has never owned a home, wishes to purchase a partial interest in the home this spring and move in. Will he qualify for the $8000 credit, as well?
No. Any purchase of a principal residence (or interest in a principal residence) from a related party such as a sibling, parent, grandparent, aunt or uncle is ineligible for the tax credit. Since you and your brother are related in this way, he cannot qualify for the credit on any portion of the home that he purchases from you, even if he is a first-time homebuyer.
23. I live in the District of Columbia. If I qualify as a first-time homebuyer, can I use both the $5000 DC credit and the $8000 credit?
No; double dipping is not allowed. You would be eligible for only the $8000 credit. This will be an advantage because of the higher credit amount, plus the eligibility requirements for the $8000 credit are somewhat more easily satisfied than the DC credit.
24. I know there is no repayment requirement for the $8000 credit. Will I ever have to repay any of the credit back to the government?
One situation does require a recapture payment back to the government. If you claim the credit but then sell the property within 3 years of the date of purchase, you are required to pay back the full amount of any credit, including any refund you received from it. A few exceptions apply. (See below, #24). Note that this same 3-year recapture rule applies, as well, to the $7500 credit available for 2008. This provision is designed as an anti-flipping rule.
25. What if I die or get divorced or my property is ruined in a natural disaster within the 3 years?
The repayment rules are eased for many circumstances. If the homeowner who used the credit dies within the first three years of ownership, there is no recapture. Special rules make adjustments for people who sell homes as part of a divorce settlement, as well. Similarly, adjustments are made in the case of a home that is part of an involuntary conversion (property is destroyed in a natural disaster or subject to condemnation by eminent domain by an authorized agency) within the first three years.
26. I have a home under construction. Am I eligible for the credit?
Yes, so long as you actually occupy the home before December 1, 2009.

WITHHOLDING EXAMPLES: Note: The impact of estimated tax payments would be the same.

Situation 1: Sally plans her withholding so that her withholding is as close as possible to what she anticipates as her income tax liability for the year. When she fills out her 1040, her liability is $6000. She has had $6000 withheld from her paycheck. She also qualifies for the $8000 homebuyer credit. Result: Sally’s withholding satisfies her tax liability and reduces it to zero. She will receive a refund of the full $8000.

Situation 2: Nick and Nora file a joint return. Nick is self-employed and makes estimated payments; Nora has taxes withheld from her salary. When they compute their taxes, their combined withholding and estimated tax payments are $11,000. Their income tax liability is $9800. They also qualified as first-time homebuyers and are eligible for the $8000 refundable tax credit. Result: Ordinarily, their combined estimated tax payments and withholding would make them eligible for a refund of $1200 ($11,000 – $9800 = $1200). Because they are eligible for the refundable tax credit as well, they will receive a refund of $9200 ($1200 income tax refund + $8000 refundable tax credit = $9200)

Situation 3: Cesar and LuzMaria both have income taxes withheld from their salaries and file a joint return. When they file their income tax return, their combined withholding is $5000. However, their total tax liability is $7200, generating an additional income tax liability of $2200 ($7200 – $5000). They also qualify for the $8000 first-time homebuyer tax credit. Result: Cesar and LuzMaria have been under-withheld by $2200. Ordinarily, they would be required to pay the additional $2200 they owe (plus any applicable interest and penalties). Because they are eligible for the refundable homebuyer tax credit, the credit will cover the $2200 additional liability. In addition, they will receive an income tax refund of $5800 ($8000 – $2200 = $5800). If they owed penalties and/or interest, that amount would reduce the refund.

Tags: First time home buyer, First Time Home Buyers Tax Credit, home buying, tax credit

Minneapolis Area Association of Reltors released their monthly stats news release last week. Here’s what they said:
The Twin Cities housing market’s oversupply of homes for sale is being reigned in at an accelerated pace. The number of new listings in February was 6,648, down 19.4 percent from February 2008. That’s the 14th month of the last 15 to feature fewer new listings than the same month one year prior.
Alongside the jump in sales seen over the last nine months, this decline in new listings has brought the total inventory of homes for sale down to 25,825-a drop of 13.5 percent and 4,017 units from this time last year. Given the current rate of sales, this amounts to 7.8 months of supply, down from 9.2 months a year ago.
This is all good news for what has been an oversupplied market.
There were 3,314 pending sales in February, up 7.4 percent from last year. That’s the ninth consecutive month of year-over-year increase. Of these newly signed purchase agreements, 60.5 percent were lender-mediated foreclosures or short sales. Closed sales finished at 2,070, up 3.0 percent.
The overall February median sales price of $150,000 is 23.1 percent lower than last February. Traditional properties, which exclude foreclosures and short sales, had a February median sales price of $205,875, down 5.2 percent from last year. For the same year-over-year comparison, lender-mediated homes had a median sales price of $125,000, down 20.6 percent.
With mortgage rates still down in the low 5 percent range, improved affordability and the recent announcement of a $8,000 tax credit for first-time home buyers who purchase a home in 2009, the stage is set for continued absorption of Twin Cities housing inventory in 2009.

Tags: housing supply, twin cities housing, twin cities real estate, twincities housing supply

We wanted to send out a “Thank You” to all of you that attended our First Time Home Buyer Seminar! It was a ton of fun for us to put it on! We hope you enjoy the information (and of course the food!) If we can be of assistance to you in anyway, please let us know. If you were unable to attend, and are interested in learning more about being a First Time Home Buyer, any of the Lister Sisters would love to sit down and talk about YOUR situation! Thanks again! We look forward to helping you on your home buying journey!

Michelle and Nicole

Tags: First time home buyer, home buying, information

Good Morning!

You are invited to our First Time Home Buyer Seminar.  Hosted by two of your very own Lister Sisters, Nicole and Michelle, and our fabulous in-office Edina Realty Mortgage Officer, Robyn Kellogg. Please join us for some Buca and great information. This is a pressure free information session. You won’t be asked to sign any contracts or anything like that. (We will have a drawing for a fun door prize or two, so you may want to sign up for that…) We just want to be your Real Estate Resource! Oh, and did I mention that it is 100% free to attend!

Here are the details…..

When: Tuesday, March 3, 2009 6:30 PM

Where: Edina Realty, Eden Prairie Office.  11800 Singletree Lane, Eden Prairie, MN 55344

Questions, Comments, Concerns? Contact us! We’d love to hear from you!

Tags: first time buyers, Mortgage, seminar