In the current guidelines, if a homeowner is forgiven of debt on their primary residence which is defined as being occupied for 3 out of the last 5 years, the IRS will forgive the income taxes owed on the forgiven debt. If you’re still thinking… ‘What the heck?’… let me explain with an example.

Sally the Seller has lost her job and is forced to relocate to secure another job position. She can not continue to make her payments on the home that she’s lived in for 4 years and she owes $250,000. Larry the Listing Agent is able to sell her home as a short sale for $150,000 and Sally’s lender agrees to waive the right to the deficiency balance which is roughly $100,000 (the difference between $250,000 and $150,000 – this example does not include additional costs associated with the short sale paid by the lender). The following year Sally receives a 1099c in the amount of $100,000 from her lender for the amount of the forgiven debt or deficiency balance. When Sally takes her tax documents and 1099c to her CPA, they determine that she does not have to pay income taxes on the $100,000 since she qualifies under the Mortgage Debt Relief Act.

An extension to the act has been requested, but many say it will not be extended or it will be reenacted in 2013 since this is an election year – time will tell.

For more information on the Mortgage Debt Relief Act, please go to the IRS.gov website.
For more information about short sales or to find out if you may qualify, please contact me!

http://www.irs.gov/individuals/article/0,,id=179414,00.html

Let’s start with the most recent widely understood type of market, the Buyer’s Market… this is when inventory is high and buyer demand is low. There are tons of homes to choose from and not much competition – buyers are able to negotiate with the most advantage since they are in the driver’s seat. Sellers are fighting to attract buyers by lowering their listing prices and offering crazy incentives such as no closing costs, new appliances, carpet allowances and even throwing in cars and personal property. This is the type of market we’re just beginning to come out of after the most recent real estate market crash.

Then comes the Transition to the Seller’s Market which is marked by an increasing buyer demand with declining inventory with sales prices stabilizing and eventually increasing. The decline in inventory and increase in demand drives prices up which pushes us into a Seller’s Market.

A Seller’s Market is when buyer demand is high, inventory is low and sales prices are high. Prices will continue to go up until buyer demand cools off. Once buyer demand begins to slow and inventory starts to increase with sales prices stabilizing and eventually declining again – we’ve entered the Transition to a Buyer’s Market. The Transition to the Buyer’s Market shows declining buyer demand with increasing inventory. When seller’s capitulate and start dropping prices again, we’ll be back into the Buyer’s Market.

There’s a much more involved way that utilizes a calculation to determine which type of market we’re in however this is an easier and more instinctual way to figure it out and utilizes all that stuff your friends and family are telling you!

For more information about the current market and to find out how to stay ahead of the cycle, please feel free to contact me via email or phone by clicking on ‘About Me’ at the top of this page.

FHA requires a 3.5% down payment which can be gifted with property documentation. Due to the low down payment and higher loan to value, mortgage insurance is required with FHA financing and currently is 1.15%. The program also allows up to a 6% seller contribution which means all closing costs could be covered by the seller of the property.

There is a minimum credit score requirement of 620 and there are loan limits predetermined based on location. Flips are allowed, but probably will require a second appraisal. The seller should always keep copies of receipts, invoices, and a list or repairs to help support the change in value.

Also, something that’s not widely known about FHA is that under certain circumstances, short sale sellers who remain current on payments may be able to purchase a home right after the closing of their short sale. There are certain guidelines that must be met, but this can be a great opportunity for people who are relocating or who have a change in circumstances.

Another key area of FHA financing is the 203k loan program which is available in two forms: a streamline and a standard 203k program. There are different repairs allowed for each type of loan and there are guidelines for each that must be met. This type of loan is incredibly involved and requires a lot of work for the borrower but can be an amazing opportunity to purchase a home and build equity.

This loan program allows first time homebuyer, and in some cases, second home purchasers relocating, to purchase homes without a down payment. The loan provides up to 102% of appraised value in financing which means some of the closing costs and guarantee fees can be financed, depending on the appraised value. The loan also doesn’t require cash reserves and gift funds are acceptable for closing costs.

Another great feature is that sellers can contribute up to 6% towards the buyer’s closing costs – this means that a buyer could potentially purchase a property with no money down – and the mortgage payment will probably be less than rent!

Rates are comparable to FHA financing and flipped properties are allowed. The property must be owner occupied and there are some household income limits, but most first time homebuyers will fit into the program guidelines.

First… you’ll need large plastic eggs. The larger your pooch, the larger your egg – just in case they try to eat them whole! Then, gather your pup’s favorite treats and snacks. You can also include pieces of hot dogs and cheese. Oh and if you’ve got a ton of those colored hard boiled eggs lying around, those will do too!
You’ll want to break up the treats and cheese so they’re easily able to fit into the eggs – figure about 10 to 12 plastic eggs and 2 of the real eggs per participating pooch. If you’re inviting others to participate in the hunt, you can also use coupons or other prizes inside the eggs for larger prizes like stuffed animals, tennis balls, or rope toys that obviously won’t fit inside the eggs.

Once your eggs are complete – begin to hide away! Don’t get too creative, but be sure to place them in inconspicuous places. Oh and be sure Fido is not watching!

After your eggs are all hidden, let your pooch begin the hunt. Your pup’s sniffer will locate the eggs containing treats first – so as soon as their nose touches the eggs, be sure to praise!
Oh and don’t forget to pick up all the real eggs – otherwise your gardener will be in for a stinky surprise!

These numbers change even more drastically in certain price brackets, for example if we look at a price range of $75,000 to $125,000 there were only 161 active listings for sale at the end of December 2011 which is down from 258 in December of 2010. There isn’t a shortage of qualified buyers either indicated by the blue and green bars on the same graph, which makes the competition for properties even stronger!