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Jon Griffith's Blog

By Jon Griffith | Agent in Scottsdale, AZ
  • The Right Time to Buy a Home May Not Be In A Down Market

    Posted Under: Home Buying in Scottsdale  |  August 25, 2010 1:38 PM  |  1,217 views  |  No comments

    It's all dependent upon the interpretation of the term, "The Right Time to Buy."

    For a pushy sales person, the right time for you to buy a home may be RIGHT NOW!  TODAY!  Don't WAIT...can't you smell the steak on this grill?  But the truth of the matter is, the right time for you to buy a home is when you are able to, financially.  There aren't any programs, tax credits, special incentives, or "great deals" that should make you feel as though you're losing out if you don't buy, especially when you're not ready to handle the responsibilities associated with owning a home.

    That includes when the market is down.  In fact, I would submit that the fluctuation in the market is going to affect only a few things for the buyer who is ready, and those things are location, location, location.  True, a down market (or a market where real estate is on sale, like it is now) it would be the best time to buy for someone who is ready to buy.  But, it may not be until the market has climbed a bit before you're prepared.

    Your finances should be in order before you consider such a commitment.  You should have 6 months of reserves based on the prospective home's costs to survive if you experience an emergency.  You need health insurance.  You need to be generating income.  You need to budget and plan your retirement and your children's college funds.  AND you need to be in the mindset that you won't enter into a purchase contract on a home until you can put 20% down and take out no more than a 15-Year fixed rate mortgage that carries no more of a payment than 25% of your net take-home pay.  You need to have all of your debt paid off, have no car payments, no credit card balances, and no student loans.  If you're about to get married, wait until you've been married for a year before buying, even if you're financially ready.

    Sound like an unreasonable proposition?  It's very possible, provided you've made some good decisions along the way.  If you haven't, and you've gotten yourself deeply in debt, don't buy a house yet.  Wait.  I don't care how "good of a deal" it is, and how "down" the market is.  You may not be ready to buy that house until the market is up, in which case, you'll buy something a bit smaller, perhaps in a different location, but with the goal of owning the home free and clear as fast as possible so that you can pursue the next venture.

    The right time to buy a home is when you have a plan that will lead you to not having payments on it.

  • My Real Blog is Located Here

    Posted Under: Home Selling in Scottsdale  |  August 25, 2010 1:09 PM  |  1,214 views  |  No comments
    If you really want to get to know my style, head over to http://www.realscottsdaleliving.com where I post all of my articles.
  • There Is No Such Thing as a Pre-Approved Short Sale

    Posted Under: Foreclosure in Scottsdale  |  July 27, 2009 1:18 AM  |  1,401 views  |  No comments
    Disagree?  Please read my article and comment on it if you agree or disagree.

    http://www.realscottsdaleliving.com/index.php/2009/07/27/pre-approved-short-sales-do-not-exist/


  • Is There A Benefit to Foreclosure vs. Short Sale?

    Posted Under: Foreclosure in Scottsdale  |  June 3, 2009 10:34 PM  |  931 views  |  No comments

    When you consider the fact that whether or not you are able to sell your home before the bank forecloses, the bank will eventually foreclose if you don't pay your mortgage, it would be beneficial to you to at least attempt to sell the home before that happens.

    It's really not Foreclosure vs. Short Sale

    There's no competition here.  There's no "one way is the right way" scenario.  The bottom line is, once a homeowner stops paying their mortgage, they are headed for foreclosure.  A short sale can be conducted at any time prior to foreclosure. You do NOT have to be behind on your mortgage payment for a competent real estate agent to negotiate with the bank to allow you to sell your home for less than you owe.  If you are headed for foreclosure, there's absolutely NO disadvantage to attempting a short sale.  In fact, there is a benefit.

    Banks Pay Big Bucks to Foreclose

    That's right.  When the bank reposesses your home, they spend money to do so.  The hire attorneys to handle mountains of paperwork and they have costs associated with conducting a trustee sale.  Then, when all is said and done, they have to hire a real estate broker to list the home for sale, which will cost them additional fees.

    Who Makes Up The Difference

    Let's say you purchased your home for $150,000 and over a year's time it increased in value to $200,000 and you decided to take out a $50,000 equity loan based on the current value.  The market values fall and now you find that the house is worth $160,000 and you're upside down by $40,000.00.  You fall on hard times and can no longer afford payments on your combined mortgages of $200,000.

    When you owe $200,000 on your home, and the bank forecloses and sells the home for $160,000 it is you who are responsible for the difference.  Since Arizona is a non-deficiency state, the bank will probably write it off.  However, and keep in mind that I am not a tax expert, if the $50,000 you pulled out of your house was not used to invest in that house, and instead it was used to invest in something else, like another house, or a vacation, or a car, then you're in a sticky situation.  The bank may come after you, because that loan was probably tied to you with a personal guarantee.

    Whenever a bank writes off a deficiency from a foreclosure or a short sale, they issue a 1099-C so they can show the IRS that they have a loss.  This 1099-C is an income statement for you and it must be reported to the IRS.  If your financial situation meets certain criteria, then you may be able to deduct that same amount from your tax return and thus not owe any taxes on it.  If, however, you do NOT qualify, you may find yourself paying income tax on the deficiency.  So it would make sense to reduce the liability as much as possible.

    Sell It Short

    The best way to reduce your potential liability is to give your local real estate expert an opportunity to sell your property BEFORE it forecloses.  Look, the property is headed for foreclosure anyway.  The banks know that it costs them a fortune to reposess homes and sell them at auction, so they are much more likely in economic times such as these, to allow you to sell it BEFORE they incur those expenses.  Rather than pay the attorneys, the bank agrees to pay the real estate expert, and saves a bunch of money.  Bank owned properties sell for less than properties that are selling short, and that translates to a smaller deficiency, and less reported income, saving you potential tax dollars.

    Don't simply walk away without giving your local real estate expert the opportunity to help both you and the bank save some money.  And guess what, it helps them out too, because that's how they feed their families.

 
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