The Invisible Client (The Bank)

Here is an interesing article

It’s a Different World...
In the good ole days, five years ago, when a seller called and said they wanted to list their home there was instant cause for celebration. You list, you market, everyone goes to a closing in a couple of months and you CLOSED. That was then and this is now. The terrain has changed with the increased number of consumers who are default adding a new ‘twilight dimension” to the listing process by the subtle introduction of Mr. “Invisible” bank man as a 5th wheel to the listing party.

Seller’s Rights
The owner of any property has the right to offer their home for sale—at any time they wish—even when they are behind on the mortgage. The equation gets tricky if there is a shortage between what a buyer is willing to pay in the current market and the outstanding balance owed to clear the title. The lender(s) has no authority to block the listing BUT they are under no obligation to accept less than full pay-off of the outstanding balance; hence the dilemma of the short sale. Without lender acceptance of the proposed “shortage,” there will be no closing. Enter . . .

Mr. “Invisible” Bank Man
While he’s “invisible” and not even a party to the contract, he carries a very BIG stick. In cases where the property sale will garner less in an offer than the mortgage pay-off plus necessary expenses (commonly called a short sale) the loudest mouth in the building belongs to the “invisible” partner. It is a wise practice to recognize the existence of this partner in the listing contract, ie. “sale may be subject to lender approval.” Throughout the transaction you and Mr./ Mrs. Homeowner must pay the highest degree of respect to the wishes of the “invisible” partner. The success of a short sale is dependent upon how successful the rest of the team interacts with this team member. Failure to understand this basic concept with likely guarantee a disastrous outcome.

What options does he have?
Let’s consider the options available to the 5th wheel when a borrower falls into default.

They may agree to a workout option for retention if the borrower has funds sufficient to support some kind of payment plan.

If there are insufficient funds for making payments, they may agree to a short payoff—if they have determined the proposed sale to be an arm’s length transaction, with no extraneous payments to the buyer, probably with a requirement of reduced commission to be paid and they have satisfied themselves, the offer represents realistic current value.

hey may agree to accept a deed-in-lieu of foreclosure to save themselves some time, expense, and trouble, while reserving the right to pursue the unsuspecting seller for any shortage at a later time.

They may decide---at any point—to move forward and complete the foreclosure process.

Placating on Pricing
Pricing can be tricky and the devil is in the details. If you price it too high you run the risk of guaranteeing no showings and consequentially, no offers. Price it at or below market and you’ll get an offer---maybe multiple offers---but the “invisible” partner is almost certain to reject any offer under these circumstances as “not being reflective of the true value of the collateral.” So you—Short Sale Agent Extraordinaire---must strike a reasonable balance between what is low enough to generate showings and a possible offer but high enough to stave off any claim of “attempting to give away the bank’s house.” Delicate strategy but one which is taught as part of the two day “Short Sale—Not Your Typical Transaction” class and/or Level I of the FIS certification program. No attempt at being cagey but this is already going to be a long article and that is not a concept I can squeeze in here.

Fifth Wheel Dictatorship
When it comes to counters and price reductions, it would be a serious mistake to overlook the opinion of the “5th wheel.” After all, it is his net balance which you are proposing to reduce so he demands the courtesy of input. Wise agents respect this as an important right and never do price reductions without getting prior approval, in writing, from this unorthodox client. Likewise, it is unwise to allow Mr./ Mrs. Homeowner to sign any counter offer which has not received written authorization from the lender. And no, putting in “subject to lender approval” in the counter and then letting your listing couple sign BEFORE the lender gives approval is never a good idea.

My, How Time Flies
Unlike traditional transactions where the offer is presented to your sellers who make a decision and sign off on it, your primary clients (they’re the visible ones) must wait for a response from the “invisible” one. He usually takes a long time since he may need to consult with the MI company, order and review an appraisal & a BPO, look at title work plus a few other things he forgot to mention to anybody---ALL before he can make a decision. This is further complicated by the fact that apparently all the “invisible” bank people are incredibly busy these days. Nonetheless, you dare not move forward without his express, written permission.

Now About That Commission. . . .
REALTORS and real estate boards across the country are up in arms because they feel the lenders are unfairly sticking their noses in the commission aspect of real estate. Mind you, we are not talking about all transactions—only short sale transactions. But, depending on what part of the country you’re in that could be 35-45% of THE market or perhaps as much as 85-90% of YOUR business. Not only are lenders insisting on sticking their nose in, they are obstinate enough to say “this is ALL we will allow for commissions.” Dot. Period. End of discussion.

I Beg Your Pardon
The “invisible” partner did not sign a listing contract, therefore, there is not a contract for services rendered on his behalf. I am sad to report that most REALTORS and many boards are reluctant to acknowledge the harsh reality that they have only the signature of Mr./ Mrs. Seller on the company contract. Mr. “Invisible” bank man:

DID NOT sign a listing contract
DID NOT agree to pay any commission amount
DOES NOT care what Mr./ Mrs. Seller owe you

Nor, I am afraid, do they care what is the local custom. They have a business to run and right now things are tight. Mr. & Mrs. Seller are in default and foreclosure is imminent. From their prospective “you real estate people should have understood the short sale game.”

Take the Bitter W/ the Sweet
You can build a profitable business at a commission level LESS than the current acceptable standard—STOP YELLING AT ME—provided you:

Stop giving away more of the commission than you keep
Stop taking listings which don’t have a snowball’s chance in Florida
Learn when to get a ”real estate divorce” (watch for the article)
Learn how to handle a “SHORT” effectively.

Ain’t Closed Til It’s Closed
Too many agents have discovered the hard way that the approval of the “invisible” partner carries no real weight---until the closing documents have all been signed. Literally. I know I told you, you had to have it; that is called covering yourself. I am also telling you that until ALL the documents have been signed the lender reserves the right to withdraw their approval of the sale. Whether they have discovered another lien, have a request to transfer the file to the MI company, the lender has gone bankrupt or any one of ten other possibilities, it ain’t closed til it’s closed. All parties need to understand that is how it works in the land of short sales.

View Crime Reports & Sex Offender lists when purchasing a home

There are many sites you can go to when purchasing a home. There are two that I recommend, as a frequently asked question is, "Is this a good area?" The problem of course is that agents cannot steer you or use their biased opinion of areas to tell you where to buy. It is against our Code of Ethics. All we can do is try to get you the information you need to make an informed decision. I recommend in particular to see the crime statistics as well as the registered sex offender list, of an area. :
You can go on to this website: http://www.spotcrime.com/ne/omaha to view where crime is most prevalent. You can also go to this website to see a list of all registered sex offenders: http://www.nsp.state.ne.us/SOR/find.cfm

For More Information on Omaha, Millard, Elkhorn, Gretna, Bennington, Papillion, LaVista Homes for Sale, Don't Hesitate to Call or text me at 402-250-7869.
You can also reach me by Email at:
shawn.murray@remax.net
Please view my website at:
http://www.smurray.theproducersrealestate.com/
RE/MAX The Producers

Tax Credit first time home buyers

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing. Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!

Phaseout Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Mark Wingert Wells Fargo Bank

Home incentive plan

Please check out the link for more information on the 2009 tax incentive plan. 2009

Home buyer tax incentive package

Final score: $8,000 for homebuyers
First-time purchasers get a tax credit windfall if they buy before December.

By Les Christie, CNNMoney.com staff writer
Last Updated: February 17, 2009: 12:13 PM ET
NEW YORK (CNNMoney.com) --

There's a nice windfall for some homebuyers in the economic
stimulus bill awaiting President Obama's signature
on Tuesday. First-time buyers can claim a credit
worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:
"I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"

The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:

Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.

Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.

Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.

To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.

Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.) Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.

Lukewarm reception:
The housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.

"[The Senate version] would have done a lot more to turn around the housing market," said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). "We have a lot of reports of people who would be coming off the fence because of it."

Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors. The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. "I think there are many homeowners who would be trading-up but they have had no buyers for their own homes," Yun said.

Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.

One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the downpayment. Then, when the buyers receive their tax credit from the IRS, they pay back the state.

Other states may follow with similar programs, according to NAHB's Dietz.
Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.
And it provides a nice nest egg for the often-difficult early years of omeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.

Painting the grass green

I thought this was kind of cool.
Green Grass.

How Stimulas can help your Wallet

How stimulus can help your wallet
Congress appears close to finalizing the economic recovery plan. Here's a look at some of the likely provisions for individuals.
By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: February 11, 2009: 10:36 PM ET
NEW YORK (CNNMoney.com) -- Key lawmakers in the Senate and House said Wednesday they had reached a compromise on a final economic recovery package.

The exact language of the compromise bill is still being drafted, and many measures are expected to be amended. But the final Senate version, which was approved Tuesday, provides a framework for a final bill.

Using that Senate version of the bill as a guide, here's a look at what the financial rescue package might mean for you. Keep in mind, lawmakers involved in the negotiations said some tax breaks directly affecting individuals have been scaled back.

As final details become available, CNNMoney.com will update this list.

Make Work Pay Credit: The bill provides a $500 credit per worker and a $1,000 credit per dual-earner couple. The full credit would be paid to people making $70,000 or less ($140,000 per dual-earner couple). It would also be refundable, which means that even very low-income families who don't make enough to owe income tax would be able to claim it. Estimated cost:$139.4 billion.

One-time payments to those who don't work: For seniors who don't work, as well as disabled veterans and retired railroad workers, the bill provides a one-time $300 payment. Estimated cost: $17 billion.

Break for higher income families: The bill includes a one-year provision to protect middle- and upper-middle-income families from having to pay the Alternative Minimum Tax. The AMT was intended primarily for high-income taxpayers but has in recent years threatened to engulf those lower down the income scale. Estimated cost: $70 billion.

Temporary deduction for car buyers: The bill would let those who buy a car in 2009 deduct the interest they pay on their car loan as well as the sales tax charged in the purchase. The full deduction would be available to those earning less than $125,000 ($250,000 for joint filers). Estimated cost: $11 billion.

Temporary credit for home buyers: The bill doubles the size of an existing temporary home buyer credit to $15,000. It also would allow all home buyers to claim it. And it removes the requirement under current law that the credit be paid back. Estimated cost: $39 billion.

New college credit: The bill introduces the American Opportunity Tax Credit, a $2,500 credit for higher education expenses. The full credit would be available to those making less than $80,000 ($160,000 for joint filers). Estimated cost: $10.3 billion.

Pell Grants: The bill increases the maximum Pell Grant by $281 in the 2009-10 academic year and by $400 in the 2010-11 academic year. Estimated cost: $14 billion.

Child tax credit: The bill increases eligibility for the child tax credit by lowering the income threshold that must be met to $8,100. That will allow lower income families to claim more of the credit. Estimated cost: $7.2 billion.

Earned income tax credit: The credit will be temporarily increased from 40% to 45% of qualifying earnings for low-income families with three or more children. It also includes a marriage penalty relief provision for couples who qualify for at least a portion of the credit. Estimated cost: $4.6 billion.

Direct lifeline benefits
Health insurance help for the jobless: The bill includes provisions to help eligible jobless workers pay for health insurance under Cobra. Cobra coverage allows newly laid off workers to keep health insurance provided by their former employers for a period of time.

One of the provisions offers a government subsidy -- 50% of premiums for 12 months -- to help out-of-work Americans pay for healthcare. Estimated cost: $20 billion.

Another provides states funding to help pay for expanded Medicaid rolls for workers who've lost their jobs and can't afford health care on their own or can't get Cobra coverage because their former employer doesn't offer a health care plan. Estimated cost: $87 billion.

Unemployment benefits: The bill provides jobless workers with an additional 20 weeks in unemployment benefits, and 13 weeks on top of that if they live in what's deemed a high unemployment state, of which there are about 30 currently. Estimated cost: $27 billion.

In addition, the weekly unemployment benefit will temporarily increase by $25 on top of the roughly $300 jobless workers currently receive. Estimated cost: $8.8 billion

Plus, the first $2,400 of benefits in 2009 would be exempt from federal income taxes. Estimated cost: $4.7 billion.

Also included in the bill is an incentive for states to provide unemployment insurance coverage for part-time workers and for workers who quit their jobs for compelling family reasons. Estimated cost: up to $2.6 billion.

Food stamp payments: The bill includes a provision would increase food stamp payments by 12%, so a family of four would see an additional $71 on top of the $588 per month they receive currently. Estimated cost: $16.5 billion.

Help for needy families: The bill provides $2.3 billion to states to create a contingency fund through 2010 for the welfare program called Temporary Assistance for Needy Families, which provides cash assistance to the needy. Estimated cost: $2.3 billion.

First Published: February 11, 2009: 5:51 AM ET

Senate approves $15,000 tax credit for homebuyers
ASSOCIATED PRESS WASHINGTON — The Senate has voted to award anybody buying a home this year a tax credit worth up to $15,000 in hopes of jump-starting the sagging housing market.The homebuyer tax credit offered by GOP Sen. Johnny Isakson would apply to any home purchased as a main residence and would cost taxpayers $19 billion. Senators approved it by a voice vote, adding the idea to President Barack Obama's economic recovery bill.People could claim the credit on their 2008 tax returns and it would apply to any home purchased for one year after the recovery plan becomes law.Isakson patterned his plan after a decades-old idea he says helped lift the economy out of recession in 1975.

SO GUYS IF THE HOUSE APPROVES THEN ALL HOME BUYERS NOT JUST FIRST TIMERS ARE INVITED TO THE PARTY!

Please realize that it is a tax credit and not a deduction.

Shawn's First Blog

Hello,
I am just starting to get into this blog thing. I am a real estate agent in Omaha NE.
The market is changing for the better. In December home sales were up 6.3%.
Please visit my new web-site at touromahahomes.com