Seller Trends: A bulk of the media’s attention is focused towards first-time homebuyers. But what about sales trends in Chicagoland? Regine Norgle of R. Hawthorne Group joins PERL Mortgage’s Matt Cochran to discuss sales trends — and ways in which real estate agents and mortgage consultants partner throughout the homebuying process.

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In an effort to stimulate the housing market, the Federal government is rewarding first time buyers with a tax credit of up to 10% of the cost of the home (up to $8,000) when certain guidelines are met.

For First Time Buyers
A first time buyer is defined as a person who has not owned a home in the last 3 years – and these days, first time homebuyers are in the driver’s seat of the U.S. home buying market.  Not only are they receiving a massive amount of attention and support, they’re selecting from the best inventory in recent years and they’re enjoying historically low mortgage interest rates. But buyers must act soon: the tax credit expires on December 1, 2009.

For Experienced Buyers
Sellers who were once timid are now are reentering the market, giving buyers more top quality homes from which to choose. This raises buyers’ confidence towards home values – the increased market activity will ensure appreciation over the next few years, and this heightened interest will cause inventory to flow with more stability.

For Sellers
There’s demand! Finally, the $8,000 tax credit is spurring more activity in the market. With more potential buyers viewing properties, sellers have a better chance of selling at a faster rate. If you’re thinking of selling, consult with a realtor immediately to properly stage and list your home before the tax credit expires.

For Owners who are Staying Put
This increased market activity will boost neighborhood optimism, the number of comparable properties sold in each area, and ultimately property values. Owners will be able to tap into more equity based on a higher appraised value. They’ll be able to remodel, vacation – or even pay off other debts.

Tax Credit Guidelines
First time home buyers with adjusted gross income up to $75,000 ($150,000 for couples) are eligible for the full credit; the credit is phased down if you earn more than those amounts. It’s not available for individuals with an income above $95,000 ($170,000 for couples). If the home is sold within 3 years, the entire amount of the credit is recaptured upon the sale, but doesn’t have to be repaid if the buyer stays in the home for at least 3 years.

The Clock is Ticking
Most buyers need at least 1-2 months to find their dream home. The closing process can take 30-60 days (sometimes longer for new construction). If you’re a new buyer, start your process now – and accelerate your timeline by September 1, 2009. Potential sellers: start staging your homes during the summer months to prepare for a whirlwind of interest this fall!

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A short sale is a sale of real property for an amount less than the unpaid balance of its first mortgage. Once costs such as real estate commissions, escrow, and title are passed along to the lender (who agrees to accept the proceeds as payment in full, despite the shortfall), the sale progresses.

Such a sale requires the consent of the lender and may create taxable gain for the seller — to the extent of the debt forgiven by the lender. Short sales have become a popular alternative to foreclosure, and are a more credit-friendly option.

Sellers who are considering a short sale should negotiate a payoff with their lender first before listing the property. This will help to determine the sales price. In addition, this will streamline the process, as it will make it faster and easier to close once a buyer has been found.

For buyers, short sales can involve a little more paperwork but overall, they are a great way to obtain a good price on a property.

When considering a short sale, make sure to involve a mortgage advisor, realtor, and attorney early in the process. They will  provide guidance lead buyers through the appropriate steps to make the transaction as simple as possible.

Click Here to download a printable pdf of our Spring 2009 Newsletter.

What can we expect to see in the new year? Will home values rise? Will foreclosure rates drop? Will the cloud over the declining market finally lift?

Looking into the future is complicated, and even the best predictions can be flawed. But by analyzing the past and identifying future challenges, we can take a stab at forecasting what 2009 may bring.

Home Prices
Analysts don’t expect a rise in home prices until the later part of 2009, when buyers will benefit from rock bottom pricing and low interest rates.

Lending Guidelines
Banks will maintain strict lending practices. While putting 20% down for a home purchase used to be the gold standard, it’s now moving to the silver or bronze category. Lenders will continue to offer better rates for loans carrying less than 60% of the value of the property. Good credit used to be definied as “620 and above.” Now it’s closer to 720, with incentives beginning above 740.

Advice for Sellers
Wait it out. The 2010 real estate market should be stronger, with fewer homes clogging the market.

Highlight your home. Sellers face tough competition from fellow homeowners, but even more from banks and builders, who are slashing prices to sell new and foreclosed homes. Make sure your home is move-in ready by showcasing unique features, especially those uncommon in new constructions.

Price below market. Talk to your realtor about the value of your home and recent sales in your area, and then price your house 5% below that amount. In a study completed by a New Jersey appraiser (c/o Money Magazine), lower-priced homes had greater exposure and sold for more than those priced above market.

Advice for Buyers
Look for homes that have been sitting around. Beautiful homes linger in the market for over six months, especially in areas with an abundance of new developments. Check-out properties that have been on the market for over 90 days. Chances are, sellers are willing to negotiate.

Bargain. Offer less money right out of the gate. Offering 13% below the seller’s price may be good place to start.

Improve your credit. Lenders charge fees for clients outside of the 720+ credit tier. A boost of 40 points on your FICO score can reduce your mortgage interest rate by as much as a quarter of a point.

The best way to forecast your own financial future is with the help of your mortgage expert. I can review your individual scenario and help you plan for the new year and I look forward to helping you exceed your 2009 goals!

Click here for a printable version of the Winter 2009 Newsletter.

© Copyright 2008 PERL Mortgage, Inc.