What is on the Horizon? How will it affect REALTORS®, Buyers and Sellers

 Three major events are going to occur in the very near term, and every one is a call to action for those thinking of buying or selling. 

Event 1:  Deadlines for the Home Buyers Tax Credits

All contracts will need to be completed on April 30 for the transaction to qualify, and all transactions will need to be closed by June 30, 2010.

Will there be another extension? Maybe, but many economic pundits are saying “This is it”.  Concern about the bulging deficit may outweigh the boost that a continuing tax credit would give the housing market.

 Event 2:  Increase in FHA Up-Front Mortgage Insurance Premium

The FHA Up Front Mortgage Insurance Premium will increase from 1.75% of the loan amount to 2.25% on April 5, 2009.  While this fact is not setting off wild alarm bells for most buyers since the MIP is financed into the loan, here are a few reasons to act before this happens:

1. Overall Loan to Value:  with this change, the loan for FHA buyers will increase to a 98.75% loan to value ratio.  If there is any market decline, the FHA borrower will slip “under water” in a very short time.  It will also take longer for the FHA borrower to gain any equity when their 3.5% down payment is reduced to 1.25% at closing through the addition of the mortgage insurance premium.
2. More to come:  In addition, HUD is seeking permission for and plans two other changes:  an increase in the down payment amount to 5% and a restriction of seller contributions to 3% from 6%.  While the date for these changes is not yet announced, be certain that they will soon follow.  Insurance payments on belly up FHA loans are enormous, and the agency will have to make changes.

 Event 3:  Fed to Stop Purchasing Mortgages

One of the largest buyers of mortgage backed securities is getting out of that market on March 30, 2010.  The Federal Reserve is winding down its purchase program, and has been clear that it really is ending this program of propping up the prices on these securities.  Once their demand for these mortgages is removed, and if the supply of mortgages continues at its current rate, one likely result will be a reduction in the price paid for the securities and higher interest rates for the home buyer.

 The net result:  Buyers, it is truly the time to make a buying decision.  Giving up the $8,000 tax credit means that after April 30, you will be paying $8,000 more for your home.  Sellers, think about the fact that rising interest rates will shrink the pool of buyers qualified to purchase their properties.  It is time to take a hard look at offers that are currently on the table or making market-wise pricing adjustments sooner rather than later.

How’s the Weather?

Many folks have been asking if this crazy Austin weather hinders home shopping, and the answer is simply NO!  Warm one day, cold and rainy (or sleeting) the next… nothing has stopped the buyers I’m working with from wanting to tour homes.  During the day, evenings, and weekends, buyers are determined shoppers right now, excited about looking at homes and writing contracts before the April 30th deadline for the Tax Credit.  

Sellers have voiced concerns about dormant lawns and landscaping, but buyers are not expecting beautiful yards this time of year.  If you’re a seller, plant some Pansies for color.  They can endure our ever-changing temperatures and are an unexpected surprise.  Some sellers have planted winter rye seed for greener lawns, but keep in mind you’ll need to keep it manicured, which can be a challenge with soggy soil underneath. 

Spring is just around the corner!  The rules will change as the wildflowers begin to pop.  Use those random days of sunshine to caulk, paint and clean out those gutters.  These small improvements will go a long way with buyers right now.  Also, until daylight savings time changes again, make sure those front porch lights are nice and bright.  It helps agents open your front door and show your home with ease.

Upcoming Seminar: Selling Your Home in 2010 – Positioning Yourself for Success

Join us for a free seminar!

What are the Austin values doing?  How can I compete against low-priced foreclosures?  What are buyers looking for?  Which homes are selling and which are not?  Receive current information and straight talk from our real estate experts.

(on the southwest corner of MoPac (Loop 1) and Braker Lane)

Visitor parking is located on the south side of the building.

Date:	February 16, 2010
Time:	6:00 PM
Location:	West Pickle Research (WPR) Building 3925 West Braker Lane Austin, TX 78759

Protect Your Wealth with Knowledge

 Did you know that a home should be insured for replacement cost and not necessarily the loan amount?  Often times these amounts can be quite different. What does replacement cost mean?  Replacement cost is the estimated amount of money that it would cost to completely rebuild a home in the event of a total loss including debris removal. According to Travelers Insurance Company, it costs up to 30% more to rebuild a home than to build it brand new.   How is that possible?  Often, when a home is built, it is part of a development or subdivision.  Contractors are able to purchase supplies at a discount because they are building in large quantities.  In addition, a contractor can schedule electricians, plumbers, carpenters, etc. more efficiently which saves time and money.  Reconstruction involves the removal of damaged materials and the need to work around an existing landscape.  All of this requires highly skilled workers who charge a higher rate.  Carrying the correct amount of coverage is the best step that you can take to protect your wealth in the event of a disaster.        ~Cindy Forister

Call for more information- Cindy Forister, UFCU Insurance Agent      (512) 421-8152

 

Home Shopping Online

The market has really heated up over the last few weeks.  Folks are doing lots of shopping and getting pre-approved to buy.  One thing we’re noticing (and getting several emails about) are people shopping for homes online, falling in love with a property, only to find out that it has a contract pending on it, or it sold a few months ago.

The issue is public websites like www.zillow.com and www.trulia.com are not regulated by anyone and the information there can be outdated or incorrect.  No one is required to go back in and change the status of a home to “pending” or “sold”, and if the information is incorrect, no one is fined or penalized. 

If you are just getting your feet wet to see what’s out there, the best place to get the most accurate information on homes for sale is www.austinhomesearch.com.   This is directly connected to the Austin Area Multiple Listing Service (MLS) and brought to you by the Austin Board of REALTORS®.  Agents are responsible for updating this information and ensuring its accuracy or they can be fined and penalized per occurance.

Of course, if you’re very serious about looking for a home and want to begin the process, the best place to get your information is from a REALTOR®.  Many times, there is information within the MLS that only agents have access to, like whether or not a home is a foreclosure, a short sale, is vacant, or occupied by the owner or a tenant, etc.  Let your agent earn that commission by doing the homework for you.  Finding a home is easy, it’s the details that you can’t rely on using public websites.