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Bill Gross' Blog

By Bill Gross | Broker in Los Angeles, CA
  • Tax Credits for Home Buyers Forecast to run out soon!

    Posted Under: Home Buying in California  |  May 5, 2010 8:02 PM  |  2,071 views  |  No comments

    I am writing this email to alert you about an important change that will affect the real estate market in the next few weeks.

    You may be aware that the federal tax credit of $8,000 for each first time home buyer expired on April 30. While it was widely anticipated that it would be extended by Congress, it is at this time expired. The tax credit was a major factor increase the demand for houses and may be responsible for keeping prices higher than they otherwise would be.

    You may also be aware that the state of California initiated a $10,000 credit designed to replace the end of the federal tax credit.

    However, what you may not be aware that the $100 million allocated for California’s first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to the California Association of Realtors (CAR) Economics team. California’s Franchise Tax Board planned to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.

    CAR’s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.

    If you are interested in buying a house to take advantage of this tax credit, please call me immediately so we can see what can be done to expedite things to get in line for the credit. If you are considering selling your house, let’s discuss what we can do to expedite the sales process to catch the buyers interested in this credit to help you get the best net equity from your sale.

    I am here to help you take advantage of this opportunity!
     http://www.ftb.ca.gov/individuals/new_home_credit.shtml

  • Do you want to be Happy or Happier?

    Posted Under: Home Buying in Los Angeles  |  April 28, 2009 1:17 PM  |  2,426 views  |  No comments


    We can learn much from studying the history of our great country, especially from legendary leaders like George Washington and Alexander Hamilton!

     

    Take the above two photos for example. Now I’ll admit I’m no expert on analyzing facial characteristics, but it does appear to me that President Grover Cleveland looks just a TAD happier than President Washington, and I’m willing to bet it’s all about the wisdom of their respective real estate investment strategies!

     

    Our First President probably decided to spend the entire current real estate crisis trying to guess just when prices would FINALLY reach “rock bottom”. That’s why his face is on a nice, safe $1 bill…

     

    Our 22nd President Grover Cleveland, however, probably took a careful look at attractively underpriced properties with plenty of upside in great neighborhoods and decided to jump back into the market while interest rates and prices were BOTH at or near historical lows—which is why HIS picture is on a very tasty $1,000 bill!

     

    And I’m further willing to bet that the REAL difference between these two esteemed gentlemen is that Cleveland’s real estate broker and advisor was a SOLID PRO!

     

    I don’t have any customers who have bought homes in the last 6 months that regret that decision. I have many that have NOT offered full price or played around deciding that are kicking themselves on missing out on a great deal. This market is possibly a once-in-a-generation opportunity to buy a great home in a great neighborhood with a great fixed rate.

     

    So, what’s your preference— a few nice, safe, wrinkly $1 bills, or a bundle of very tasty Hamilton’s?

     

  • Mortgage Protection Plan for Buyers

    Posted Under: Home Buying in California  |  April 18, 2009 9:50 PM  |  930 views  |  No comments

    To help provide first-time home buyers with peace of mind when purchasing a home, the CALIFORNIA ASSOCIATION OF REALTORS®' (C.A.R.) Housing Affordability Fund is offering a new mortgage protection program to first-time home buyers.

    Through the C.A.R. Housing Affordability Fund's Mortgage Protection Program, first-time home buyers who lose their jobs due to layoffs may be eligible to receive up to $1,500 per month, for six months, to help make their mortgage payments. A qualified co-buyer also can participate in the program, and receive a monthly benefit of $750 per month for up to six months. Program benefits also include coverage for accidental disability and a $10,000 death benefit.

    To qualify for the Mortgage Protection Program, applicants must:
    · Be a first-time home buyer - someone who has not owned a home in the last three years;

    ·  Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009;

    ·  Use a California REALTOR® in the transaction;

    ·  Purchase the property in California; and

    ·  Be a W-2 employee (cannot be self-employed).

    For a copy of the Mortgage Protection Program application contact me.

  • Bank Owned Properties: What You Need to Know to Get a Great Deal

    Posted Under: Home Buying in Los Angeles  |  March 29, 2009 8:12 PM  |  1,100 views  |  2 comments

    For most homebuyers, bank owned properties, or REO’s (short for “real estate owned”) are the bargain of a lifetime. Most buyers see more opportunities than they have a chance to actually purchase, as these properties are very competitive and require a strategy appropriate with this market.

    Searching REO’s: There are many websites touting the ability to search bank owned properties, yet buyers are often more confused afterwards than before. The simple answer is the vast majority of properties available to non-cash buyers are on the Multiple Listing Service (MLS) and those not listed almost always are not really for sale. I have lists of homes for sale from virtually every major lender, and every single listing is in the MLS. I also work with most of the most successful agents that specialize in representing banks, and often they will provide a heads up to a property coming online, but very rarely. So many websites claim to offer access to foreclosed homes, but really all they do is subscribe to RealtyTrac. And almost all of these are in the process of foreclosure where a buyer cannot get to the property. Worse, I have found the data on RealtyTrac to be dated and inaccurate. RealtyTrac offers a tease of data for free, but the actual information has never led me to a property that was really still for sale.

    REOs are priced to sell: One large company determined that REOs were 17% cheaper per square foot than non-REOs. Remember, however, that banks usually will not negotiate any credits for repairs, often do not clear termites from the properties, the properties are often in rougher condition, and the terms of the contract are much stricter. At the end , a buyer can expect to save significantly.

    When to offer more than list price: Banks typically set competitive prices to move their inventory, so often the price is at, close to, or even below the market price, causing a lot of competition to purchase. If a home is in good condition and priced correctly, expect many offers and a competitive situation. In several situations I have been one of 8 or more offers, and I have a colleague who claims to have had 105 offers on one property! Banks rank their offers Good-Better-Best. Best is an all-cash offer. Better is a 10% or more down payment conventional offer. Good is an FHA offer, so typically an FHA offer has to be fast and at full price or needs to wait for the property to be on the market 30 days or so.

    When to negotiate: In the Westside of Los Angeles, bank owned properties sell for an average of 98% of their list price and average 60 days on the market. That is an average, and includes all the tough properties next to the freeway, burned out homes, etc. Properties in desirable areas and in decent condition go for their asking price. However, each bank and each listing agent they use have different pricing strategies. I have developed a system to track a particular seller to see their track record on pricing which is a good indicator of what the price should be to win the bid.

    Preparing your offer:  Most banks require a buyer to be pre-qualified with one of their loan officers even if the buyer is already prequalified with another reputable bank. Buyers, therefore, need to have all their documents ready to resend to that lender to get preapproved as quickly as possible. I also recommend that buyers initially get prequalified with Chase, Wells Fargo, or BofA/Countrywide initially as odds are one of them will be the owner of the property you will want to purchase.

    The contract: Most banks will counter with their own contracts. The intial challenge is the form may be new to the buyer, the selling agent, even the listing agent, so it needs to be reviewed both thoroughly and quickly. The standard California Association of Realtors form for bank owned properties recommends buyers to retain legal counsel for review. Our company has every bank addendum reviewed by our legal department, but that is mostly for legal compliance issues. Typically, the addendums provide for the property to be purchased “as is,” causing increased risk for the buyer. Additionally, the banks will almost always counter with short periods for inspections and loan approval, often with ambiguous language or unrealistically short time periods. All of these need to be reviewed with your agent for your strategy. Finally, since the bank has not lived in the property, they typically cannot disclose defects, so an thorough inspection is critical.

    Conclusion: While bank owned properties include substantially more risks, these are all risks that can be negotiated with a professional agent that is familiar with this market. Please let me know if I can help in ANY way.

  • Tax credit for home buyers

    Posted Under: Home Buying  |  February 9, 2009 4:52 PM  |  1,312 views  |  No comments

    Last week, the Senate verbally approved the Fix Housing First Act, an important amendment to their version of the Economic Stimulus Bill. The piece of legislation and the Stimulus Bill are still awaiting Senate and House negotiations, but could provide all home buyers of primary residences over the next year with a tax credit of $15,000 or 10 percent of the cost of the home, whichever is less. The credit will not need to be repaid unless the home is sold within two years of purchase. This Senate's version of the tax credit, if implemented, will replace, or “sunset” the current $7,500 credit.

    · Click here to download a step-by-step guide for contacting your Senator or Representative via phone or email.
    · Click here for a composed note to send to you Senator or Representative.


    Should the legislation become a law, it will act as a major incentive for home buyers and, coupled with several years of pricing corrections could boost the number of home sales around the country. Until then, the
    current $7,500 tax credit for first-time home buyers is in effect. Below is a summary of the current law.

    Expires June 30, 2009!

     1. Who is eligible?

      • First-time homebuyers or any homebuyers who have not owned a principal residence in the last three years

      2. How does it work?

        • Eligible purchasers can claim the $7,500 credit on their annual tax return form  
          Amount of credit: 10% of cost of home or a maximum of $7,500

        3. Repayment:

          • Two years after the credit is claimed, the homebuyer will have to start paying it back.
          • 15 equal annual installments will have to be paid back to the IRS every year.

          (1)   6.67% of the borrowed amount or a maximum of $502

            • If home is sold before 15 years, the remainder of the loan will have to be repaid to the IRS upon the sale.

            (1)   Part of the liability can be forgiven if the gain on the sale is less than the amount of the loan.

            1. Restrictions:
            • Home purchase time limit:

            (1)   Homes purchased on or after April 9, 2008 and before July 1, 2009

              • Home must be a single family residence (including condos, coops) that will be used as a principal residence.
              • Home must be located in the United States.
              • Home cannot be financed through mortgage revenue bonds.
              • Income restriction:

              (1)   To qualify for full $7,500 credit, the taxpayer must make no more than

              a.    $75,000 for single returns

              b.   $150,000 for joint returns

              (2)   To still qualify for credit but at a lesser amount, the following income caps apply

              a.    $95,000 for single returns

              b.   $170,000 for joint returns

               

              For more information on the tax credit:

              http://www.realtor.org/gapublic.nsf/files/hbtaxcreditqa2008.pdf/$FILE/hbtaxcreditqa2008.pdf

              http://www.federalhousingtaxcredit.com/faq.php

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            1. Buyers Market

              Posted Under: Home Buying in Los Angeles  |  January 13, 2009 9:36 PM  |  781 views  |  1 comment

              Every buyer these days goes online and sees lots of properties. Typically, they see the prices and decide they do not want to buy in the area they really want to live in. This is a big mistake in this market.

              When I work with buyers daily, I tell them there are 3 markets of listed properties:

              A. Retail properties: listed by typical real estate agents, they are usually over-priced by 10% in the hopes the seller will get motivated and lower the price faster than it goes down in value so it can sell. The savvy buyer will look at them and look for those listed over 30 days and make an offer knowing that they may need to make 8 offers to get one accepted;

              B. Lender Owned; Usually priced right, these homes move. In West LA, I did an analysis of single family homes 3 bedrooms or more under $1 million that were lender owned, and they averaged 28 days on the market and selling at 98% of the list price. A quarter sold at list price. These are also segmented by different agents, as REO agents price them to sell and retail agents that get lender owned listings over price them. It is important to note the listing agent;

              C. Short sales: This is the Wild West. Some are priced ridiculously low. Often, these are fraudulent attempts by the seller to short sale to a family member. You can smell this when the listing does not return repeated calls to see the property. Other short sales are by agents that have no idea what to do. It is important to check the public records and note the loans to see if the sale is even possible. A sharp agent can weed through these and find a gem with research and communication with the listing agent.

              Typically 10% of the properties listed for sale in any market segment are even competitive with what has sold recently, and these are typically the lender properties. Researching the Retail properties and Short Sales can offer additional options.

             
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