Jerry Raviol

1640 S. Stapley Dr., #124 • Mesa, AZ 85204
TOLL FREE: 1888-JRAVIOL (572-8465)
CELL: (602) 695-5478
Office: (480) 820-3333
Fax: (480) 907-1443

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West USA Realty

Archive for August, 2010

Aug
20

Home Buyer Tax Credit Extended Until 2011

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YES, you can still get $8,000 in government stimulus money for buying a home if you purchase your home by June 30, 2011.  Congress has acknowledged the unique circumstances affecting members of the military, the Foreign Service, and civilian employees stationed outside the United States for any 90 day period between December 31, 2008 to May 1, 2010. 

As a person who served, this is your opportunity to either buy your first home or move up to a better home and take advantage of the following:

  • Low prices
  • Historic low interest rates
  • Government stimulus money that is no longer available to those who did not serve

These exceptions apply to both the $8,000 tax credit for first-time home buyers and the $6,500 tax credit for repeat home buyers.  They are available until June 30, 2011.

It is important to note that these are TAX CREDITS.  For example, if  before you bought a home you were entitled to a $2,000 tax refund, then after buying a home if you qualified for the first time home buyer tax credit, you would qualify for an additional $8,000.   In this situation your tax refund would increase to $10,000.

If you qualify and have owned a home during the last 5 years but want to move up to a better home you can get $6,500. Each person’s situation is different and you need to speak to a tax expert. 

If, however, you want a list of homes you can buy and get $8,000 from the government give me a call.

Jerry Raviol
West USA Realty
http://www.houseaz.com
602-695-5478

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Learn more about my commitment to you
and why I work by referral.

 

Jerry Raviol
West USA Realty
http://www.houseaz.com
602-695-5478

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Aug
11

Positive Cash Flow Vs. Fix and Flip

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How real estate can put cash in your pocket every month.

Everything old is new again -  Back in the days before housing prices zoomed through the roof like a rocket, the way to make money on rentals was to create a positive monthly cash flow, and to count future price appreciation as gravy for a later day when you wanted to sell.  Right now is the first time in years that 4 important factors have aligned so that you can once again both make money every month and build your wealth the old fashioned way –

  1. Low purchase prices – Many homes can be purchased for less than it cost to build them, and sell for 70% less than their market high. 
  2. Crazy low interest rates that you can lock in for 30 years – Today’s rates mean your monthly expenses for principal and interest payments are easily 30% less than a few years ago.  Combine the low interest rate with a low purchase price and your monthly nut can easily be 50% less than in years gone by. 
  3. Stable rent prices – Although rents have fallen, they haven’t fallen by nearly as much as the purchase price of the homes.  This is in part due to the increased number of renters.
  4. A larger pool of renters / increased customer base New mortgage guidelines which make it harder to buy a home + the large number of folks that have lost their homes and need to rent = more renters

Another benefit to a positive cash flow with a one year lease is that it eliminates the need to stress over resale prices every month.  When you are putting cash in your pocket every month, a change in resale prices is less of a concern.  Many of the landlords that got knocked out of the rental business were completely invested in double digit price inflation.  They did not care about the good old fashioned benefits of positive cash flow because they thought they would make it back when they “flipped” it.  When prices went in the wrong direction, and they were sitting on a negative cash flow, all their potential profit was gone. 

I’m buying rentals and I think it is something you should also consider.  Contact me and I’ll be glad to discuss if it makes sense for you to try and get both a monthly return on investment (ROI) combined with future asset appreciation.

Jerry Raviol
West USA Realty
http://www.houseaz.com
602-695-5478

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Should you do a short sale or a foreclosure? Is a short sale or foreclosure better for your credit rating? How do you qualify for a short sale? If these are some of the questions you may have then a short sale and foreclosure specialist is what you need. I can help with these kind of questions and issues. I know how to deal with the short sale process and I always recommend my clients speak to an attorney and tax accountant. Read more about the short sale process below and if you know someone that is thinking about a short sale or foreclosure be sure to share this link with them. It could save them from future legal and financial problems they didn’t know could happen.

10 Things They Didn’t Teach You in Short Sale School

Issues that Could Cost You and Your Client Money

By Neil Thomson & Don Doerr
Arizona REALTOR® Magazine – August 2010

Everyone involved with short sale transactions has run into issues trying to get them closed.  Problems with lenders are an everyday occurrence.  But the following examples are beyond the normal and expected issues.   These are the kind of events that could result in a borrower having to file a lawsuit against the lender.  REALTORS® need to be aware of these potential problems to avoid fallout in their direction.  We hope that this information helps REALTORS® avoid these traps.

A note from AAR: You’ve heard it before, but we’ll say it again. REALTORS® working with clients on a short sale should always strongly advise their clients in writing to seek legal, tax and credit advice from those qualified to deliver it. The Short Sale Seller Advisory is a great resource to begin this conversation. Be the source of the source, not the source itself!

  1. Most people know that the fine print in the account agreement signed when opening a new bank account provides the bank the ability to sweep funds in an account to pay other delinquent accounts.  We recommend that our clients close all accounts they may have at any bank that services their mortgage(s).  But in one case, the bank took it far beyond simply sweeping an account.  A borrower had a nearly empty checking account with $1000 of overdraft protection.  The bank, without the consent or permission of the borrower, increased that overdraft amount to $10,000 so that the bank could process a mortgage payment through this account (even before the borrower was late).  This action changed this amount from a potentially non-recourse obligation to a recourse obligation, and since there is now an unpaid balance on this checking account, the borrower could not close the account until this negative balance was corrected.
  2. Homeowner arrives home to find out the locks on the house have been changed and several boxes of their personal belongings were taken.  The trustee’s sale had not been completed, and the lender admitted to having the locks changed.  In one case, after settling with the lender, the lender did the same thing a second time. 
  3. Pursuant to RESPA, when a lender accepts a Qualified Written Request (QWR), it cannot report that borrower to any credit agencies until the issue has been resolved.  RESPA also specifies that the lender has 60 days to resolve the disputed issue.  In the past, lenders generally adhered to these requirements.  However, early in 2009, lenders started to ignore this requirement and started reporting on borrowers in violation of RESPA regulations.  Because the reward to the borrower from the lender who violates this regulation is maxed at $1,500, borrowers are unlikely to take this to court.   Many lenders have apparently made the decision to disregard the requirements and continue to report borrowers to credit agencies.
  4. The second lien holder refuses to allow a short sale to close unless money is paid by the borrower outside of escrow.  This is referred to as “greenmail.”  In many of these cases, the borrower would have no obligation to this lender if they let the home go to foreclosure, so there would be no legal reason to submit to these demands.  This is where the borrower should definitely get legal advice before paying any funds to a lender.
  5. Lender makes promises for a modification or extension of trustee sale only to later deny or retract the offer.  We have seen this in the case of both verbal and written offers from some lenders. 
  6. Temporary modifications can be used against the homeowner if payments are missed.  Because the temporary modification involves a payment less than the original loan terms, the lender can interpret this as missed payments, therefore placing the borrower in a default position.  The lender may file for trustee sale, even if the borrower was current before accepting a temporary modification.  This removes the borrower’s leverage of not making payments to force the lender to re-evaluate the borrower’s loan modification request and minimizes the chances of a successful short sale.
  7. Lender attempts to retain homeowner’s payout on the sale of a property to offset loss on another delinquent property serviced by that lender (no language in loan documents to support the lender’s claim to these funds).
  8. The lender’s mortgage insurance company demands a note from the homeowner before a short sale closing.  This usually occurs at the eleventh hour and comes as a complete surprise to the borrower.  In most cases, the borrower was unaware that the lender had purchased mortgage insurance on their loan.  Again this is an example where the borrower needs legal counsel prior to any payments being made.
  9. A borrower vacates their home in preparation of a foreclosure.  The home is vandalized while empty.  The borrower is responsible for this damage as long as they still own the home.  The borrower’s homeowners insurance covers the damages, but the lender directs the homeowner to sign the check over to the lender for disbursement to the contractor after close of escrow (COE).  After COE, the lender refuses to pay the contractor and sends funds to the note holder for missed payments, leaving the homeowner with an unpaid bill from the contractor.
  10. Second lien holder gives amount in a short sale for release of lien.  This is not a full release from deficiency.  This is just the amount they require to allow the short sale to close.  From a borrower’s point of view, it makes no financial sense to agree to pay this if there is not a full release, as the lender could still pursue a deficiency suit against the borrower.  If the second lien holder persists and the first lien holder will not provide the funds to the second lien holder, it is generally better to let the home go to foreclosure.
  11. Jerry Raviol
    West USA Realty
    http://www.houseaz.com
    602-695-5478

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If you’re a conscientious homeowner, you may ultimately pay the price. A new report from the W. P. Carey School of Business at Arizona State University shows that while home prices overall in the hard-hit Phoenix-area market continue to gradually rise, when you break it down, some segments of the market are going up while others continue to stay in negative territory. The prices of foreclosure homes and lower-priced homes are doing better, while non-foreclosure homes and higher-priced homes remain down in value compared to last year.

“The foreclosure and non-foreclosure indices continue to move in opposite directions, with foreclosure houses showing small increases and non-foreclosure prices declining at double-digit rates,” said professor Karl Guntermann, the Fred E. Taylor Professor of Real Estate, who authored the new report with research associate Adam Nowak. “The data also indicates the higher-priced segment of the market is likely to show small year-over-year declines through the rest of 2010.”

The Arizona State University-Repeat Sales Index (ASU-RSI) measures annual changes in average Phoenix-area home prices. The newest index confirms what was announced in previous reports, that April 2010 was the first month that the overall market showed a year-to-year increase since the recession began. From April 2009 to April 2010, the index moved up 0.7 percent. The increase from June 2009 to June 2010 is estimated to be about 1.8 percent. However, the positive momentum could end soon.

“Based on index values from last year and current conditions in the housing market, it is likely that small increases in house prices will continue for only another month or two, followed by an extended period where house prices remain relatively flat,” Guntermann said. “Unless economic and housing market conditions change dramatically, prices are likely to be relatively stable going into 2011.”

The overall median price for Phoenix-area single-family home sales included in the April index was $135,000. The preliminary figure for June is $133,000. Guntermann notes the median moved to $130,000 last September and has stayed within $5,000 of that ever since.

He also says the townhouse/condominium segment of the market appears to be leveling off at an annual rate of decline just under 20 percent. Townhome/condo prices are very low, with the median sale price in June estimated to be around $73,000. That’s another big step down from the low $80,000s, where prices had been for the previous several months.

Glendale, Peoria and Mesa have prices leveling off the most among Phoenix-area cities. However, home price declines for all areas of the Valley appear to be slowing.

The ASU-RSI is based on repeat sales, the most reliable way to estimate price changes in the housing market. Repeat sales compare the prices of a single property against itself at different points in time, instead of comparing different homes with different quality factors.

The ASU-RSI is produced through the Center for Real Estate Theory and Practice at the W. P. Carey School of Business. The new report can be found at http://wpcarey.asu.edu/realestate/housing-market-reports.cfm. Further ASU-RSI analysis is also available from Knowledge@W. P. Carey, the business school’s online resource and biweekly newsletter, at http://knowledge.wpcarey.asu.edu.

Debbie Freeman, Debbie.Freeman@asu.edu
(480) 965-9271
Communications Manager, W. P. Carey School of Business

Jerry Raviol
West USA Realty
http://www.houseaz.com
602-695-5478

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