Saturday, March 29, 2008

Best Places to Get Foreclosure Deals

In markets where housing appears to be stabilizing, buying a foreclosure could be a very good deal.

Forbes magazine has analyzed the country’s 100 largest metro areas and then differentiated among inexpensive foreclosure markets and those that were undervalued.

For instance, there are plenty of homes going for practically nothing in Detroit, but the chances of recouping your investment are made more difficult because of the city's economic challenges. On the other hand in a city like Raleigh, N.C., where the local economy is booming, searching for and buying a discounted foreclosed property could be a very good deal.

Forbes identified the healthiest economies and then looked at the spread between median prices and foreclosure prices, with data supplied by RealtyTrac, to determine where banks and sellers were offering the largest discounts on foreclosed properties.

Here are the top 10 cities where the magazine believes the best bargains can be found:
  1. Charlotte, N.C.
  2. Raleigh, N.C.
  3. Nashville, Tenn.
  4. Oklahoma City, Okla.
  5. San Antonio, Texas
  6. Albuquerque, N.M.
  7. Knoxville, Tenn.
  8. Seattle, Wash.
  9. Indianapolis, Ind.
  10. Washington, DC-Arlington-Alexandria, Va.

Source: Forbes, Matt Woolsey and Jon Bruner (03/19/08)

Sunday, March 16, 2008

Foreclosed Properties at a Bargain

Now’s the time to pick up properties at fire sale prices, says Ralph R. Roberts, author of Foreclosure Investing for Dummies and Flipping Houses for Dummies.

"Properties could double in value over the next 10 years. But you have to be willing to go in, buy them, and hang on for the longer term," he advises.

Roberts, owner of Ralph Roberts Realty in suburban Detroit, who says he has bought and sold more than 2,000 foreclosed properties in his career, says profitable investing in foreclosures requires exhaustive records searches in advance.

Roberts recommends that buyers of foreclosures create a file that contains a range of property information that will establish what the property is worth and help avoid bureaucratic snafus.

Here is his list of must-have information:

  • A copy of the foreclosure notice, or notice of default.
  • Title commitment and a 24-month history in the chain of title or the last two recorded documents.
  • Deed with the current home owners' names.
    Last recorded first mortgage, so you know how much the current home owners owe.
  • Documentation of all liens against the property, including property tax liens.
    Map showing the location of the property.
  • Exterior home inspection (with photos and videos), plus neighborhood photos.
  • City worksheet on the property showing all repairs, inspection reports, and other information.
  • MLS data showing how much comparable homes are selling for in the area.
  • Tax bills.
  • SEV (standard equalized value) of the property, on which property taxes are based.
  • Any notes documenting conversations with neighbors.

Good Luck Investing!

Sunday, March 9, 2008

Tax Benefits of Owning a Home

Before a home owner curses the troubled housing market, he or she should take solace in the U.S. tax code, which makes buying a home a good deal for almost everyone.

Here’s why:

Mortgage interest deductions, including in some cases mortgage insurance premiums, reduce home owners’ tax liability by reducing income. The deduction includes interest paid on both a first and a second home.

Interest on home equity loans is also deductible — whether the borrower uses the money to remodel the kitchen or to take a vacation to Disney World.

Profits from selling a house are potentially a huge windfall. When a home owner sells a primary residence, any profit on the sale of the property is tax free up to $250,000 for single home owners and $500,000 for married home owners filing. Any profit above that is nearly always a long-term capital gain taxed at 15 percent — less if the seller’s tax rate is less than 20 percent.

Home owners can itemize. That opens up opportunities to deduct a host of other items that wouldn’t be deductible if the taxpayer took the standard deduction.

The Boston Globe, Leonard Wiener (03/02/08)

Government Announces Conforming Loan Limit Increases

The Office of Federal Housing Enterprise Oversight (OFHEO) today announced it has temporarily increased limits on conforming loans offered by government-sponsored enterprises, Fannie Mae and Freddie Mac, from $417,000 to as high as $729,750 in fourteen counties in California for loans originated between July 1, 2007 and Dec. 31, 2008. Fannie and Freddie are reported to be working out new underwriting standards and expect to begin offering the new loans soon.

Also, on Wednesday, the government raised the conforming loan limit for mortgages guaranteed by the Federal Housing Administration, and has begun offering the maximum limit of $729,750 for 14 California counties, up from $362,790, for loans originated between now and Dec. 31, 2008.

The Fed’s economic stimulus package approved earlier this year called for temporary increases on conforming and FHA loan limits to allow troubled borrowers to refinance out of sub-prime loans and make it easier for many new buyers to qualify for mortgages in high-cost areas, particularly in California where home prices remain among the highest in the nation.