Shopping for Your Home

Tuesday, June 22, 2010

How to Deal with IRS Tax Credit Rejections

YES, the IRS has been rejecting first-time buyer claims from anyone who shows as Form 1098 Mortgage Interest Expense in their prior years. Many of these rejected first timers are entitled to the credit because their previous mortgage interest deduction is for a timeshare, mobile home, boat or other recreational property.

Here is some advice from Enrolled Agent Eva Rosenberg of

  • Respond to the IRS immediately and tell them why their rejection is wrong. Be prepared to prove that the mortgage the IRS is seeing isn't on a personal resisdence. First-time home buyers are entitled to own other types of real estate and still get the home buyers credit, so provide proof that the previous mortgage was on something else.

  • Send a letter explaining the situation and providing proof of a previous rental or other non ownership living situation, including copies of rental contracts for the past three years, an old driver's license showing that address, utility bills, etc.

  • Home buyers who believe the IRS may view their situation in this way should be proactive, providing proof that they are a first time buyer when they initially file for the credit.

  • Anyone who is rejected after two attempts to explain the problem to the IRS should call the Taxpayers Advocate Service toll free, (877) 777-4778, their Congressman, and their Senator, Rosenberg advises.


Buyers are killing deals in this tough market by requesting over the top concessions of sellers after home inspections!!!

According to Glen Kelman, CEO of Redfin, "We see buyers who must have learned their moves from The World Wrestling Federeration. They think the final smack-down occurs at the inspection, where the seller will be reluctant to refuse any demand because the altenative is putting the house back on the market as damaged goods."

Questions? Comments? Advice?

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Monday, May 3, 2010


The Four Fundamentals of SELLING YOUR HOME:

  1. PRICING - When looking at comparables, see what has sold in your immediate area within the past three months, look at what is "for sale" and look at what sales are pending (in escrow/under agreement).

  2. UPLOAD Photos/Video - Stage your property, then take pictures and video. Professional photographers do this the BEST!!!

  3. DISCLOSE - Honesty is ALWAYS to best policy, so tell potential buyers what's wrong before they figure it out themselves. This will eliminate cold feet and/or re-negotiations.

  4. CLEANLINESS = $$$ - Potential buyers will likely pay more if the property is clean and clutter free.

Fannie Mae's Incentive to AVOID FORECLOSURE

This coming July, Fannie Mae will be allowing financially troubled home owners to either complete a "deed in lieu of foreclosure" or a short sale and be eligibile to apply for a new Fannie backed loan in TWO years. Presently, if you complete a deed in lieu of foreclosure, you must wait four years (5 years if foreclosed upon).

Mortgage rates SLIGHTLY LOWER
Freddie Mac reports for the week ending April 29th

  • 30 year fixed dropped to 5.06% from 5.07%

  • 15 year fixed held steady at 4.39%

  • 1 year ARM rose to 4.25% from 4.22%


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Saturday, April 24, 2010

5 Costly Mistakes First-Time Buyers Make's Les Christie has listed five common and costly mistakes first-time buyers make:
  1. Ignoring the costs of having a low credit score. Lower-score borrowers pay thousands of dollars in increased interest rates over the life of the loan.
  2. Muddying the waters by shopping for other things before closing. Lenders continue to check credit scores right up until the time of closing. Too much shopping could cause the lender to take back the loan.
  3. Scrimping on an inspection. Being surprised by the need for expensive repairs can be financially devastating.
  4. Buying without contingencies. Buyers should give themselves an out if the inspection turns up problems or the bank raises the interest rates.
  5. No money for insurance. Insurance can be surprisingly pricey. Buyers who don’t budget for it can face a nasty surprise.

Home Buyers can now push for lower closings costs!

Closing costs (lending charges, local tax & transfer fees, title insurance, appraisal costs and other 3rd party services) are typically 3% of the cost of the property. According to Guy Cecala, publisher of Inside Mortgage Finance, most buyers should be able to do better than the 3% standard. Wire transfer fees, loan application-processing fees and high FedEx charges are some fees buyers shouldn't have much trouble negotiating.

Freddie Mac reported:
  • 30 year fixed stayed flat averaging 5.07%
  • 15 year fixed loans down to 4.39% from 4.4% last week
  • 5 year hybrid adjustable-rate mortgage averaged 4.03% down from 4.08%
  • 1 year ARMS rose to 4.22% from last weeks 4.13%

Questions? Comments?
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Friday, April 16, 2010

Foreclosure rates SURGE!!!

According to Realty Trac Inc., the number of homes taken back by banks jumped 35% in the first quarter of the year compared to last year's. Also, homeowners facing foreclosure rose 16% during the same period; 7% in the last three months of 2009. Rich Sharga, a Real Trac senior VP says, "We're right now on pace to see more than one million bank repossessions this year." This means that banks are wading through the backlog of troubled home loans at a faster pace...

Remember last year our Obama Administration put pressure on banks to modify home loans for troubled borrowers. This pressure, coupled with state enacted foreclosure moratoriums and the banks' issues with the handling of all the problematic loans eased foreclosures, however it's now REVERSING! "We're finally seeing the banks start to process the inventory that has been in foreclosure, but delayed in processing," says Sharga. "We expect the pace to accelerate as the year goes on."

The states with highest foreclosure rates in the first quarter were:
  1. NEVADA - 1 in every 33 homes was facing foreclosure
  2. ARIZONA - 1 in every 49 homes there received a foreclosure related notice
  3. FLORIDA - 1 in every 57 homes
  4. CALIFORNIA - 1 in every 62 homes
There is good news, the sooner we get the foreclosures out of the mix (obviously not entirely) the sooner the market will stabilize, however prices WILL RISE!!! So if you are thinking of buying, DO IT NOW while the deals are still a steal!!!

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Tuesday, April 13, 2010

HOAS getting SLICK, Floridians in "woe" & Distressed properties on the RISE

HOAS (homeowner's associations) in need of cash are using a tactic to force banks to pay association fees . The "reverse foreclosure" tactic works like this:
When a homeowner/borrower stops paying their mortgage, backs more times than not delay taking the property into foreclosure. During this delay neither the owner nor the back pay the association fees. So, to remedy this the association files its own foreclosure notice. If and when the association takes over the title, it is still not able to sell the property due to the bank's lien. So, the association goes to court, renounces the property and asks the judge to give title back to the bank. When the judge does this, the bank has the obligation of paying the fees. Touche HOAS!!!

When it RAINS it POURS!
We all know, especially us here in Florida, this cold winter was not only unexpected but not appreciated. However, that's not all Floridians had to "woe" about. Homeowners who faced foreclosure during our housing downturn were not just driven there by one factor but were victims of multiple issues that left them financially strapped, according to a study conducted by Strategic Guidance Stems. Joel Searby, their director of marketing, said “What we found in talking with people who've gone through foreclosure is that there's a 'plus-one factor,' meaning job loss coupled with other circumstances such as divorce or health problems that usually led to homeowner distress."

Are distressed sales gaining greater market share?
Yes, according to First American Corelogic, distresses properties accounted for 29% of all U.S. homes in January 2010 (average sales price $161,600). Real estate owned sales rose 22% up from December's 19% (average sales price $247,700) and short sales rose to 8% from 7% with an average sales price of $141,900.

Numbers don't lie folks prices are rising, however the ship has not sailed so

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Thursday, March 11, 2010

Potential Home Buyers who DELAY have a lot to LOSE

Springtime is the time when the market HEATS UP, so all you potential buyers need to be prepared to move quickly on a particular home. First time home buyer and move up tax credits worth $8000 and $6500 expire APRIL 30th. So, my best advice is to begin working with a Realtor NOW!!!

As I mentioned before, the foreclosure home inventory is decreasing, so some buyers are experiencing "bidding wars" which are pushing prices up. Currently about 30% of markets are experiencing price increases.

We still have low mortgage rates, however if the FED stops buying morgage-backed securities at the end of March- 30 year rates will probably rise 6%.

Don't miss this GREAT opportunity, because as we all know this is the time to BUY!!!!

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Now I had a California Facebook friend ask me an important question about a Landlord's responsibility concerning security. Here is a general list of Landlord's Responsibilities...

Providing a livable unit. LIVABILITY means the unit should:
  • be weather and waterproof
  • have working plumbing
  • provide enough hot and cold running water
  • have a working heating system
  • have an electrical system in good working order
  • be free from infestations of insects and rodents
  • have sufficient trash cans
  • have floors, stairways and railings in good repair
  • have natural lighting in every room
  • have working windows that open at least halfway or mechanical ventilation
  • have safe fire or emergency exits leading to street or hallway
  • have a working deadbolt lock on main entrance
  • have working security devices on windows
  • have working smoke detectors
The landlord/owner must return the tenant's security deposit within 21 days of regaining possession of the unit. If he/she has withheld part of the deposit, an itemized statement must be made available to the tenant.

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Monday, March 1, 2010


THE END IS NEAR, according to Barclay's Capital the number of foreclosures available fell to 617,000 in December, down from 845,000 in November 2008. Buyers hoping to find a "steal" on a foreclosed home are finding it more difficult because the supply is decreasing. Remember when DEMAND exceeds SUPPLY = PRICE INCREASE!!!

On a related topic, the Mortgage Bankers Association announced that there are signs that the foreclosure crisis is ending. According to Jay Brinkmann, MBA's chief economist, "The continued and sizable drop in the thirty -day delinquency rate is a concrete sign the end may be in sight..."
30-day delinquencies have been a leading indicator of foreclosures
"...[This] gives us growing confidence that the size of the problem now is about as bad as it will get."

and more good news, The Fed announced that interest rates will remain low, the Federal Reserve chair Bob Bernanke told Congress that the rates are likely to remain low for an extended period. He also stated that the economy "still requires support for recovery."

Now for those of you smart and savvy. Buyers that have purchased and qualify for the TAX CREDIT, here is what the IRS requires when filing your income tax r
eturn. You will still need to file Form 5405, however they are not demanding that all parties' signatures be on the HUD-1 settlement statement in areas where both
the buyer and seller signatures isn't common. They also ask that the buyer sign the statement before attaching to the tax return.
Now for you fortunate repeat Buyers, the IRS is seeking documentation proving residency in the previous property for five consecutive years of the the past eight years. Proof can be property tax records, home owner insurance records, or mortgage interest statements.

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