Bill Gassett's MA Real Estate Blog

At this point almost everyone knows that as part of the housing stimulus program the federal government has given 1st time home buyers a tax credit of up to $8000 for the purchase of an owner occupied home or condominium.

This tax credit has been part of the American Recovery and re-investment act.

Massachusetts however, has just introduced a 1st time buyers tax credit program that can be applied to a down payment and closing costs!

Massachusetts joins a growing number of states that allow the tax credit to be used toward the buyers down payment on the home rather than waiting till they file their 2009 taxes.

The program was introducing in a joint effort between The Massachusetts Association of Realtors (MAR) and Mass Housing. Below is a detailed description of what 1st time home buyers need to know about the program.

How it works

1. Home buyers who are using a MassHousing first mortgage loan to purchase their first home apply for the Tax Credit Loan program through their lender.
2. The Tax Credit Loan is used to cover closing costs or as part of the down payment.
3. In 2010, the home buyer claims the $8,000 tax credit on their 2009 federal tax return.
4. The home buyer then repays the MassHousing tax credit loan.
   • No interest is charged if the Tax Credit Loan is repaid by June 1, 2010.
   • Otherwise, the Tax Credit Loan is amortized over the next 10 years, at the same interest rate as the first mortgage.

Eligibility

To qualify for the Home buyer Tax Credit Loan Program, you must

• Be a first-time home buyer using a MassHousing mortgage.
• Meet income limits and purchase price guidelines
• Purchase a one- to four-family home by November 30, 2009.
• Use the property as your primary residence for the life of the mortgage.

Other Information

• The Tax Credit Loan may be used for down payment and closing costs.
• Principal and interest payments on the Tax Credit Loan are deferred until June 1, 2010.
• There is a $300 application fee. If the tax credit loan is repaid by June 1, 2010, the borrower will receive a $300 credit toward the principal of their first mortgage.
• Maximum tax credit loan amount is $8,000 or 10% of the home's purchase price, whichever is less.

A recent study from the National Association of Realtors found that 82% of all 1st time home buyers believe that their biggest obstacle to purchasing their 1st home is coming up with a down payment. This 1st time buyers program is designed to relieve this issue in order to create more buying opportunities.

MassHousing’s home loans feature safe and affordable fixed rates and include unique benefits such as MassHousing’s MI Plus™ mortgage insurance, which will help pay the borrower’s monthly principal and interest payments for up to six months in the event of a job loss.

Mass Housing mortgages offer competitive interest rates, low- and no down payment options, and discounted rates for lower-income borrowers. As a buyer you should check with your lender to make sure they are offering this program. It should be noted that not all lenders are involved with MassHousing loans.

I commend Governor Deval Patrick and others involved with this program as it should open up additional buying opportunities and increase 1st time buyer involvement in the Massachusetts Real Estate market.

One important note that must be mentioned is that the buyer must still have a minimum of 3.5% of their own funds! The tax credit can be used in addition to the 3.5% down payment but can NOT be used to make up any part of the 3.5%.

If you are not going to buy a home using the latest Masshousing loan, the chart below summarizes the current Federal 1st time home buyers 8k tax credit program. Remember a 1st time home buyer is considered someone who has not owned a home in the last three years.

One of the best resources that I have seen on the new 1st time buyers tax credit comes from The National Association of Home Builders website. It is located here at the frequequently asked questions about the home buyer tax credit.

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About the Author: The above Real Estate information on 1st time home buyer tax credits was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356.

Thinking of buying your 1st home in Metrowest Mass? I have a passion for Real Estate and love to share my Real Estate expertise!

For Metrowest Massachusetts Real Estate and homes see Metrowest MA Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Real Estate profile.

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Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 23 years.

In a recent article I wrote about buying a foreclosed home or potential foreclosure property, I discussed the various ways in which you could obtain ownership of a foreclosure. Here is a quick summary of the three scenarios:

• A pre-foreclosure where you buy directly from the home owner before the bank takes over.
• At an auction where you may be in competition with other buyers.
• From a Real Estate company or the bank itself. This is known as an REO aka Real Estate owned.

Here is what you need to know about scenario #3 ~ buying a bank owned home.

The opportunity to buy a bank owned home is one that many buyers often consider due to the fact that there is a prevailing belief that you can buy them for 50 cents on the dollar or less. While as a general rule many bank owned properties do represent a good Real Estate value, you are more likely to be able to purchase one for around 5-20% less than the going rate for a similar comparable property.

Buying a foreclosed home however, is not for the timid at heart and there are many things that buyers need to be aware of going into a REO transaction.

One of the 1st things you should investigate when you become interested in an REO property is the present market value. This is something a skilled local buyer's agent can do to help you.

A Realtor that knows the local inventory and recent sales data should be hired to help you with the transaction. While a banks goal is to get rid of their inventory as fast as they can, don't expect the bank to consider silly low ball offers especially when the home is 1st listed for sale.

In my experience while working as a Massachusetts Realtor for the past 23 years, I have never seen a bank accept anything less than 10% under the asking price. In many cases the price has already been set aggressively to begin with. Like every other seller the banks goal is to maximize the price they receive for a property.

What most people fail to understand is that banks have to demonstrate to shareholders, investors and auditors that they attempted to get the highest price possible.

It is not uncommon for a bank to reduce the price of a home in their inventory after it has been on the market for a while. A bank after all is not in the business of holding Real Estate.

Do not make the poor assumption that banks are desperate sellers and will do anything to clear out their properties. This is rarely the case!

In order for a bank to consider accepting your offer you are going to want to make sure you have been pre-approved by a lender. Most banks will not even consider an offer without proper financial documentation. If you are making a cash offer with no financing contingency be prepared to show the bank proof that you have the funds in an account somewhere. Most banks will require this as well.

Some banks may also ask you to get pre-approved through them as well although it can not be a requirement to do so due to RESPA laws. RESPA stands for Real Estate Settlement Procedures Act as is designed to protect consumers.

Often times with a bank owned property patience is a virtue. In many cases the bank will take days to respond to your offer. Also remember that on weekends banks do not conduct business so you are losing a few days in the week. The process can be even longer if you find yourself competing with multiple offers on the property.                                                                                                                      

When you buy a bank owned property be prepared to be buying it "AS IS". Most banks will not make repairs to a property unless it would effect the buyers ability to finance the property. Some of the things that more than likely a bank would be willing to remedy could include:

• Termite or other insect problems
• Mold issues
• Plumbing or heating system issues
• Electrical issues especially if it involves a safety hazard
• Septic systems ~ some states require a passing inspection in order to close, including Massachusetts
• Structural issues

While these are things many banks would consider remedying, don't assume that it would happen in all circumstances. Every bank is different in how they operate and make decisions. Do not expect a bank to make ticky tack repairs - it is not going to happen! You may be able to possibly get a credit for some repairs  at closing but do not expect it.

Most banks have their own contracts that they use. You will be expected to sign their standard form and in most cases you will not be able to make any changes to it! I have seen attorneys try and more often than not they are rebuffed.

Massachusetts is different than many states in that we have a two part contract including an offer form and a purchase and sale agreement.

The purchase and sale is a more detailed version of the terms and conditions found in the offer. With a bank owned home you will just sign the banks form and that will be considered the Purchase and sale.

In most circumstances you will be given the opportunity to conduct inspections even though the property is being sold "as is".

It is important that your Realtor makes sure that you have proper contingencies in place that cover your ability to inspect the property for such things as the structure, pests, mold, radon , water, and others.

You will want the right to terminate the contract if these do not meet local or national standards. Be aware that the bank is going to want these inspections to be done immediately.

Lastly, banks will prefer that the closing will be sooner rather than later. You will not see the same flexibility that you could possibly get with some traditional home sellers. As a rule of thumb, most banks will want the closing to take place in 6 weeks or less.

One really important clause that you find in many bank owned contracts is the penalty if you do not close according to the stated contract date. In most cases there is a $100 dollar a day penalty for not closing on time! You better make sure your ducks are in order when buying one of these properties.

One little known issue that most consumers would not think of but that has hit close to home with me is the lack of great representation of the part of Realtors working with bank owned homes. Honestly, I have seen some of the worst Real Estate agents representing banks as listing agents. The issue starts with the fact that banks have not divvied up the business well. There are far to many Realtors that have a stranglehold of all of a particular banks REO business.

As an example I just completed a transaction working as a buyers agent on a bank owned property in which the Realtor did not return calls, changed the commission without notification, misrepresented something the bank did not agree to repair, did not check to see if the home was winterized properly, and did not attend any of the inspections.

I never met the agent during the entire transaction!! She did not even bother to attend the closing. It was a nightmare throughout and the communication frankly SUCKED!! Most of my time during the process was complaining to her about not getting back to me with answers to simple questions.

It got so bad during the process I had to call her broker owner to complain. He apologized sheepishly but made the excuse that she was too busy.

She was the biggest Real Estate clown I have ever seen in twenty three years in the business. The perfect example of an agent that sullies our industry. A quick check revealed she had 31 bank owned properties!!

There has been some talk about banks breaking up the monopoly that some Realtors have on the bank owned inventory but so far that has not happened.

So while many banks owned properties can offer exceptional values there is quite a bit to know. Having professionals in your corner who can guide you and protect your interests is very important. I always recommend to my buyer clients that they use a good Real Estate attorney, especially when buying a bank owned home.

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About the Author: The above Real Estate information on Buying a Massachusetts bank owned home was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. 

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise! 

For Metrowest Massachusetts Real Estate and homes see Metrowest MA Real Estate. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Real Estate profile.

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 23 years.

We most likely have a little ways to go before Real Estate markets throughout the country finally hit bottom. After all there is still a significant amount of foreclosure inventory that needs to be sold, as well as new foreclosure inventory that has not yet hit the market.

According to Rick Sharga, Vice President for marketing at Realty Trac, a foreclosure listing firm, there were around 700,000 foreclosed homes nationwide at the end of last year that had not been listed yet. This "shadow inventory" of unsold homes certainly could drag the correction out longer.

This period in time however, could eventually looked back at as one of the best in our history to buy a home.

Think about it for a minute when have we ever had the kind of conditions that we presently have now? A large consolidation in housing prices, interest rates teetering on near record lows, 1st time home buyer tax credits, and on and on.

In some respects the housing market is like the stock market. Everyone would love to find the exact bottom and then buy.

If your time line for home ownership does not include a possible transfer over the next couple of years what are you waiting for? You should be jumping at this chance. The cost of home ownership has never been more affordable!

In many areas throughout the country you can own your own home for less than what a similar home would rent for. This is BEFORE you even take into account the tax savings involved with having a home.

While stocks can often times shoot up in a span of a few weeks and home prices do not, don't be foolish enough to assume that interest rates could not jump in a very short period of time. As soon as inflation starts to rear it's ugly head there will be extreme upside pressure on interest rates.

If you are a 1st time home buyer or want to move up in the market to a larger home there has never been a better opportunity. For those that want to think about moving up in the market and have not made the move because of lost equity - STOP WORRYING ABOUT IT! You will make this up on the purchase, as the home you will be buying will most likely have dropped by a larger percentage. For a detailed explanation of this see selling your home in a buyers market.

Interest rates are the X factor right now! The cost of borrowing money is super low. How long this will last is anybodys guess! I truly believe we are nearing the bottom of the Real Estate correction. Rates will not stay this low forever. Don't kick yourself by saying I coulda, woulda, shoulda after the rates jump!

I will leave you something to think about with this 30 second video:

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About the Author: The above Real Estate information on the housing market coming back  was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. 

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise! 

For Metrowest Massachusetts Real Estate and homes see Real Estate in Metrowest Mass. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Real Estate profile.

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 23 years.

Working as a Metrowest Massachusetts Realtor one of the questions I am asked most often is when I think the market will turn around? While I don't pretend to have a crystal ball or a magic hat and certainly am not an economist, it is easy for me to see that the Real Estate market in Metrowest Massachusetts will not be changing all that much in the next year.

Let me say that this is not about being a pessimist or being negative. This is about being very realistic and honest. Over the last six months I have gone on a number of listing interviews where the seller has decided not to sell their home because they want to wait "till the market comes back". One of the things that I find amusing is the belief by many that the market is going to come back overnight.

Here in Metrowest Massachusetts the Real Estate market peaked in the Spring of 2005. The years prior to 2005 were marked by a run up in home values like we had never seen before. There were years during this time where property values increased by over 10%. These values were not sustainable much like other areas around the country.

Depending on what town you are located in values have dropped by around 20-25% since the peak. Are we near the bottom? That is anybody's guess at this point but if I were a betting man my money would not be on a recovery this year.

One of the things that I find most fascinating about the decision process is a sellers unwillingness to part with the lost equity on their current home, even though they will be turning around and purchasing another home under the same conditions.

In the article I wrote selling your home in a buyers market this concept is explained in greater detail. It seems that people get so caught up in their loss that they forget that when they go ahead and buy another home that property would have also dropped in value.

Another way to rationalize the Real Estate market and what kind of appreciation is necessary to get back to where we were at the market peak is to look at stocks.

Lets say you purchase a stock for $100 dollars and it goes down by 25%. The stock is now worth $75 dollars. Many would incorrectly assume that if the stock goes back up by 25% it would be worth $100 again. WRONG - it would be worth $93.75. The stock needs to appreciate around 33.5% just to get back to break even! It works the same way with housing folks but on a larger scale.

If you owned a home worth $500,000 in the Spring of 2005 and it has dropped by 25% it is now worth $375,000. Well guess what if the market goes up 25% the home will be worth $468,750. Still a long way off from $500,000.

Most economists predict that once we do finally hit bottom we will only see a more historical norm of 2-3% yearly appreciation on our homes. Do the math - with this kind of reality check it is very easy to see why it is going to take a very long time to get to the levels were were at prior to the Real Estate correction.

Some food for thought. As of this writing interest rates are outstanding hovering near 5%. There is talk that due to the massive influx of capital into the credit system that interest rates could be headed to 4.5%!!

If you have wanted to sell your home for whatever reason and are not because you don't want to lose the equity you once had then you could be making a huge mistake.

Interest rates are at a once in a life time level. When the economy does finally improve interest rates this low will not last. Interest rates should be a big X factor in your decision making process.

Seriously folks it could be 5-10 years before we get back to the levels of 2005. What are the chances that interest rates will be where they are when that finally happens? When your home finally does get back to 2005 levels so will all the other homes in the area.

Stop worrying about lost equity if you really want to move.

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About the Author: The above Real Estate information on the Metrowest Massachusetts Real Estate Market what does the future hold was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-435-5356. 

Have a home to sell in Metrowest Mass? I have a passion for Real Estate and love to share my marketing expertise! 

For Metrowest Massachusetts Real Estate and homes see Metrowest Mass Realtor. Want to have MLS access to beat other buyers to your dream home? Sign up with no obligation at my MLS Property Finder Site.

I service the following towns in Metrowest Massachusetts: Hopkinton, Milford, Upton, Southboro, Westboro, Ashland, Holliston, Mendon, Hopedale, Medway, Grafton, Northbridge, Uxbridge, Franklin, Douglas, and Framingham MA.

Click here to view Bill Gassett's Real Estate profile.

Subscribe in a reader

SUBSCRIBE TO MY METROWEST HOMES BLOG via email.

Building lasting relationships by helping people move in and out of Metrowest Massachusetts for the last 23 years.