Life At The Beach

If You HAVE TO SELL!

Elaine Cerrato (Coldwell Banker) — Tue, 07 Apr 2009 15:23:53 -0700

Some things you should know if you HAVE TO SELL.....

If you have to sell your home for one reason or another but you owe more on it than it is actually worth you may have heard that you can do a Short Sale, and when that's behind you all will be well. This is not as easy as it sounds, and as with everything else in life, there may be some serious repercussions. There are lots of variables, and getting a short sale transaction approved and closed is a very complicated matter.

Since you can't sell the property for enough money to pay off your loan (or loans if you have a second mortgage) the first person you need to be speaking with is your Lender. You begin by asking the Lender to accept less money than what they are owed. If the Lender agrees, you will be making a payoff that is short of what it should be; hence the term "short sale.

Each bank will have different criteria for how you make your appeal for them to accept less money but there are some universal requirements you can count on; brace yourself for filling out tons of forms and supplying everything from tax returns and bank statements to whatever else your Lender asks for. This alone is overwhelming and hopefully you've already surrounded yourself with some professional people who know what they are doing. The first person you need is a competent REALTOR who's done this before and knows the ropes. Trying to sell a property on your own is tough enough when there's value in it and we're in a Seller's market. In challenging times such as these, negotiating with the bank, and getting to closing on time is almost impossible if you try to go it alone.

Then you will need to consult with an attorney. Depending on where you live and other variables, after the sale is done and you've moved on, there is a possibility your Lender can sue you for a "deficiency judgment", which would be the difference between the short pay-off and the amount you actually owed the Lender. For example, if you owe the bank $350,000, sell your house for $300,000, and make a short pay-off to your Lender of $280,000 after selling expenses, the Lender may have the option to sue you for the $70,000 difference. A discussion with an attorney can fill you in on what the latest rules are and how they apply in your state.

On the other hand, the lender may decide not to sue you, and to "forgive your debt". In that case, they let you and the IRS know by sending a 1099C to you and the IRS for the $70,000 you didn't pay them. They've forgiven it and they can write it off their books, but the IRS is not quite that understanding. The forgiven debt is actually called a "cancelled debt" by the IRS and becomes "phantom income" on which you may have to pay "phantom taxes". And you'll have to pay with real money-no "phantom cash" accepted. So another friend you'll need during all this is a good tax accountant.

Here are some suggested steps to get this process started:

1. List the property with a REALTOR. Be sure that it is priced to sell.

2. Start assembling financial information such as W2's, pay stubs, bank statements, a list of assets and liabilities, and a list of monthly debts. The more you can provide the bank, the better chance you have of getting your file looked at in a reasonable amount of time. The number one cause for delay in a short sale transaction is Lenders not having enough information or incomplete packages.

3. Write a hardship letter telling the bank the reason why they should accept less money than what they're owed. Keep your letter brief, factual and as precise as possible. Explain what your hardship is, and why a short sale would benefit not only you but the bank as well.

Once you have an offer on your property, send all your documentation to the proper department as your Lender directs. This is generally known as their "Loss Mitigation" department. If your Lender accepts the offer they will send you an Approval Letter indicating the terms of the approval and the minimum payoff they are willing to accept. They may also tell you whether or not they will send you a 1099C for the deficiency, but they probably will not. It's then up to you and your REALTOR to negotiate with the buyer for the amount that the bank has approved.

If the bank comes back with "maybe" there are any number of ways the situation can go. That's where it really becomes important for you to have your REALTOR, Attorney, and Tax Consultant to advise you. Remember, the Lender wants to lose as little as possible and it's up to you and your advisors to make the best case you possibly can for them to see things your way.

Good luck!

Federal Tax Credit for Home Buyers

Elaine Cerrato (Coldwell Banker) — Tue, 07 Apr 2009 15:19:08 -0700

Homebuyer Tax Credit Forms and Rules Now in Place

For the purpose of this credit, a first time homeowner is defined as one who has not owned a home for the 36 months ending on the date of purchase.

The Treasury Department has moved at record speed to implement one piece of the new American Recovery and Reinvestment Act of 2009 (aka the Stimulus Act).

The Treasury Department and the Internal Revenue Service which will manage this credit announced on Wednesday, February 25^th, that forms and regulations are already in place for homebuyers who wish to claim the first-time credit enabled under the act.

The credit is available to homebuyers who purchase a home before December 1 of this year. In an effort to make the effects of the credit felt quickly in the economy, homebuyers can claim the credit either on their 2009 tax return or if they have already purchased a home in 2009, can claim the credit immediately on the 2008 return due by April 15.

The tax credit represents 10 percent of the purchase price of a home up to a maximum of $8,000 or $4,000 for married taxpayers filing separate returns. The $7,500 credit that was authorized under earlier legislation last year was actually a 15 year loan; the new tax credit does not have to be repaid by the homeowner under ordinary circumstances. It does have to be repaid if the homeowner sells the home in less than 36 months or if the home ceases to be his principal residence during that time.

The credit is available to taxpayers with adjusted gross incomes up to $75,000 or $150,000 for married taxpayers filing jointly. Above those income levels the credit is phased out gradually.

Homeowners who purchased a house between April 8 and December 31, 2008 are not eligible for the new credit. They are covered by the earlier legislation and can claim the $7,500 repayable credit.

Forms and instructions for claiming the credit on 2008 tax returns are available at www.irs.gov. The form number is 5405.

Federal Housing Proposal, February 17, 2009

Elaine Cerrato (Coldwell Banker) — Tue, 07 Apr 2009 15:14:07 -0700

Removing a limit on refinancing for "responsible homeowners"

The bill for the New Housing Plan will remove the current restrictions on Fannie Mae and Freddie Mac that prohibits them from guaranteeing refinancing on mortgages valued at more than 80% of the home's value. This allows many more homeowners to refinance at lower rates.

You may qualify if:

Your Mortgage debt is between 80% and 105% of the value of your home.

For example: Your home drops in value from $475,000 to $400,000. You owe $337,460 at 6.5% on your mortgage. It has been impossible to refinance because you owe more than 80% of your value.

Under the new guidelines, you can refinance at a rate of 5.16% saving you $331. per month.

You don't qualify if:

Your mortgage debt exceeds 105% of home value.

Your existing loan is not owned or guaranteed by Fannie Mae or Freddie Mac.

Your mortgage is above a certain threshold--$417,000 in most areas or as much as $729,750 in higher priced regions.

Helping renegotiate loan terms for "at-risk homeowners"

The bill creates incentives for lenders to modify the terms of subprime and other loans. Participating lenders will reduce payments to no more than 38% of borrower's income, with the government matching further reductions down to 31%.

You may qualify if:

You have higher mortgage debt than your home is worth.

For example: Your home's value has fallen from $230,000 to $189,000. Your mortgage balance is $214,016. Job loss has reduced household income and your mortgage payment can't be made.

Under the proposal you could modify the mortgage for five years so that payments are manageable, saving over $400 a month.

You don't qualify if:

Your home is not owner-occupied.

Your mortgage is above a certain threshold, $417,000 for single-family homes in most areas and $$729,750 in higher priced regions.

Those who apply more than three years after the program's start.

THIS INFORMATION IS RELIABLE AS OF THE END OF FEBRUARY, 2009.

IF YOU ARE IN EITHER OF THESE CATEGORIES, SEEK COMPETENT LEGAL/ACCOUNTING ADVICE!

Bank Owned/Foreclosed/REO/Short Sales

Elaine Cerrato (Coldwell Banker) — Tue, 07 Apr 2009 15:09:48 -0700

Some things EVERYONE should know.....

The times have definitely changed, and several new terms have crept into common usage in real estate. Words like "short sale", "REO Property", and "bank-owned" each carry their own meaning and implication, and you need to be familiar with what they are. Can't have you not keeping up with the times, can we?

The easier terms to understand are "bank-owned" and "REO". "REO" simply stands for "Real Estate Owned", so these two have basically the same meaning. When you see these words, the property has already gone to foreclosure and it is the bank that has listed and is selling it. The asking price is generally very attractive and well below market value, and the decision of how much will be accepted for the property has already been made. With this preliminary work having been done, the bank is in a position to move quickly, so the time frame from contract to settlement is about the same as it would be for any other sales transaction. In many cases it's even easier than dealing with the original owner because the bank has no emotional attachment to the property. The thing to keep in mind is that the bank does not want to be bothered with dickering about the value of furnishings or the cost of repairs to be made. They will accept a certain price, but they're not going to start paying for things like worn carpets, broken windows, or faulty dishwashers. In many cases, they won't split transfer taxes, either. The bank says take it or leave it, and doesn't get upset if you walk away.

Short sales are another matter entirely, and should not be properties you pursue unless you are willing to wait...and wait...and wait. A short sale occurs when a Seller owes more on a property than the property is worth and can no longer make the mortgage payments. Once that Seller has missed a few payments the case is turned over to the Lender's "Loss Mitigation" department which requires a substantial amount of documentation from the Seller up front. The Seller lists the property with an agent and waits for an offer. When that offer comes in it is forwarded to the Lender for approval. Any number of factors can impact the speed with which a response from the Lender is forthcoming. These range from the enormous number of cases of this nature and the Lender's lack of personnel to process them in a timely manner, right down to documentation not having been forwarded to the Lender by the Seller or the Seller's Agent. The Lender doesn't take the time to beat up the Seller for additional paperwork when something is missing. They put the file aside and work on another until such time as the Seller contacts them and asks what the problem is. Frequently, months go by and in the end, the offer that has been submitted is rejected. Over fifty percent of such offers are.

If you need to sell another property in order to purchase, neither foreclosures nor short sales are for you. The bank will not accept any offer with such a contingency. They want a nice, clean offer from buyers who are ready to go.

Spring 2009

Elaine Cerrato (Coldwell Banker) — Tue, 07 Apr 2009 15:05:26 -0700

Starting off . . .

What a winter this has been. Not too much snow, but I've not seen the temperatures this low since I moved down here from New York to my home in Ocean Pines back in 1991. Granted that the Pines is a terrific place to live, and I do love my home, but this winter I kept thinking that I should have gone to Florida instead of stopping in Maryland. There were times that I sincerely believed I'd never be warm again!

So much for my grousing... Spring is finally back and lovely warm days are once more the rule rather than the exception! Folks are strolling the beach and boardwalk again, and before you know it, there will be sailboats on the bay and swimmers in the ocean. How I love driving in to work over the Route 90 bridge and seeing the sun reflected off the oceanfront buildings and shimmering on the water. The sight lifts my heart, lightens my mood, and makes the world seem wonderful.

The heck with Florida, I love Ocean City!

Following Through...

The days are getting longer again and the whole town is going through it's usual spring cleaning ritual, gearing up for another busy season. Restaurants are re-opening, and there are lots of terrific two-for-one deals going on. Great for those of you who can't wait for summer to come on "down the shore".

If you're planning a trip down soon, try to avoid the Route 50 Bridge. They're back to the second phase of the renovations and it's going to be down to one lane in each direction through most of the spring. A little harrowing and more than a little time-consuming, especially on the weekends. If you're heading for the Inlet, it's probably going to be safer and faster to take Route 90 and then head south.

I promised to keep you informed about slots at Delmarva Downs, but right now there's not a lot to tell. Latest word is that 800 slot machines have been requested, but final approvals are not in and, from what I can see, not a whole lot of renovation is going on.

Of course, the big news is property values and we are most definitely in a Buyer's Market. There are still those who don't have to sell and are holding tight to their prices, but many really spectacular deals are being made. On the oceanfront, two-bedroom units in the Plaza sold for as much as $640,000 in 2005 and 2006. Today, there are seven listed at between $449,000 and $550,000. On the bayside at The Island at Hidden Harbour during the same time period, 15 units sold between $405,000 and $454,000. Today, seven are listed for sale between $380,000 and $424,000. Two sales in late 2008 were at $340,000 and $375,000. New construction is totally unbelieveable! The Sapphire Sea on the oceanblock at 35^th St., built in 2007, was selling for $575,00. The last four units are now offered at $425,000 each. And you won't find this on the internet, but the fabulous Gateway Grand which was selling for a cool million per, will now accept your offer for half that-and maybe a little less. Hard to believe, but it's all true. So what will it take to get you down here?

Last But Not Least . . .

I don't guess there's anyone left who's not at the very least aware of the situation in this nation right now. Everyone is touched by it in some way. That's why I though it would be appropriate to make sure you got some information that was all in one place, not too wordy, and phrased as simply as possible. It's emotionally and psychologically hard enough to read some of this stuff at all, let alone all the mumbo-jumbo that surrounds it.

So I've included two pages of add-ons to this newsletter in the hope that some of the latest mortgage and tax changes will be a little clearer. I hope you don't need the info, but if you do, I sure do hope it helps. My dream for you is to that you have a wonderful life, including a terrific beach place of your own, and my dream for me is to help make your vacation place happen. Any questions or comments, just let me know. In the meantime,

...See You On The Beach!

Condos Under $200,000!

Elaine Cerrato (Coldwell Banker) — Thu, 08 Jan 2009 14:03:13 -0800

Over 140 Condos are for Sale in Ocean City that are Priced under $200,000!

Choose Your Favorite and Call Me Today!

On the Oceanside:

Two units at the "Mallard" on Sixth St. near the boardwalk. Each two-bedroom, one-bath. $185,900 and $199,900

Two units at the "Sea Nymph" at 17^th St. near the boardwalk. Each one-bedroom, one-bath. $155,000 and $175,000. Pool!

Four efficiencies at "Three Cheers" on 31^st. St. $137,900 to $149,900. Pool!

Three units at "Seaplace" on 36^th St. Each one-bedroom, one-bath. $179,900 to $190,000.

One efficiency at "Convention Center Villas" at 39^th St. $134,900.

Six units at "Ocean Point" on 40^th St. Each one-bedroom, one-bath from $130,000 to $189,900.

Four efficiencies at "Dominica Beach" on 41^st. St. $165,000 to $179,900.

Two condos at "Ocean Point" on 41^St. St. One-bedroom, one-bath. $185,000 and $189,000.

One efficiency at "Ocean Waye" at 45^th St. $136,000.

Three units at "Old Wharf" on 46^th St. One-bedroom, one-bath. $189,900 to $199,900.

One unit at "Siesta Villas" on 51^st St. One-bedroom, one-bath for $159,900.

One unit at "Coral Reef" at 51^st St. One-bedroom, one and one-half baths. $195,000.

Two units at "Beach Point" on 52^nd St. One-bedroom, one-bath. $195,000 and $199,900.

Four efficiencies at "Marshall Inn" on 62^nd St. $139,000 to $149,000. Pool!

One unit at the "Lazy Whale" on 63^rd St. One-bedroom, one-bath. Great ocean view!

One unit at the "Sea Mark" on 64^th St. One-bedroom, one-bath. $199,000.

Two units at "Ocean Terrace" on 69th. One-bedroom, one-bath. $189,521, and $200,000.

Two units at "Atlantic Court" on 72^nd St. Each two-bedroom, one and one-half baths. $199,000 and $199,900.

One efficiency at "Seaward Villas" on 91^st St. $169,000.

One efficiency at "High Point North" on 114^th St. $199,900. Pool!

One unit at "Mirabella" on 122^nd St. One-bedroom, one-bath. $149,000.

One unit at "Bonnie Belle", 123^rd St. One-bedroom, one-bath. $189,000.

One unit at "Marylander", 127^th St. One-bedroom, one-bath. Indoor Pool!

One efficiency at "Sea Harbor" on 128^th St. $144,900.

One unit at "Bluewater East" on 134^th St. One-bedroom, one-bath. $189,000. Pool!

One unit at "Sand Dunes" on 141^st St. One-bedroom, one-bath. $185,000.

One unit at "Aloha N" on 142^nd St. One-bedroom, one-bath. $187,500.

On the Bayside:

One unit at "Parrot Bay" on 5th St. One-bedroom, one-bath. $189,900. Pool!

One unit at "Surfside Eight" on 8^th St. One-bedroom, one-bath. $115,000.

Two units at "Virginian" on 11^th St. One two-bedroom for $179,900 and one one-bedroom for $139,900

One unit at "Villa Six" on 12^th St. Two-bedroom, one-bath. $199,850.

One unit at "Royal Palm Court" on 12^th St. Two-bedroom, one-bath. $180,000. Pool!

Two units at "Westward Ho" on 23^rd St. One-bedroom, one-bath. $129,900 and $142,000.

One unit at "Lark Lane" on 27^th St. Two-bedroom, two-bath. $159,900

One unit at "Sunset Six" on 27^th St. Two-bedroom, one and one-half bath. $199,900.

Five efficiencies at "Key West Villas" on 28^th St. $135,900 to $154,000.

Five units at "Summerwinds" on 28^th. St. Each two-bedroom, one-bath. $159,900 to $190,000. Pool!

One unit at "Future I" on 28^th St. Two-bedroom, one-bath. $199,900.

One unit at "Eagle's Landing" on 28^th St. Two-bedroom, two-bath. $185,000.

Five units at "Bayshore" on 28^th St. Each one-bedroom, one-bath. $139,555 to $169,900

Four efficiencies at "Jamaica Daybreak" on 32^nd St. $119,900 to $139,900

Five units at "Jamaica Bay" on 33^rd St. Each one-bedroom, one-bath. $164,750 to $199,900. Pool!

One unit at "Native Sun" on 36^th St. One-bedroom, one-bath. $199,900.

One unit at "Sand and Foam" on 37^th St. One-bedroom, one-bath. $139,000

Four units at "Bradley on the Bay" on 37^th St. Each one-bedroom, one-bath. $189,900 to $200,000.

One efficiency at "Makai" on 42^nd St. $199,400.

One unit at "Denise" on 72^nd St. Two-bedroom, one-bath. $189,999.

One unit at "Seaward 7&11" on 116^th St. Two-bedroom, two-bath. $199,000.

Two units at "Harbor Sails" on 116^th St. Each one-bedroom, one-bath. $199,900 and $199, 999. Pool!

Eight units at "Jockey Beach Club" on 123^rd St. Each one-bedroom, one-bath. $145,900 to $195,000. Pool!

One unit at Jamaica III on 123^rd St. One-bedroom, one-bath. $198,500.

Six units at "Raffles" on 127^th St. Each one-bedroom, one-bath. $149,900 to $179,900. Pool!.

One unit at "Tiburon" on 139^th St. One-bedroom, one-bath. $199,900. Pool and Tennis Court!

Six units at "Orleans Court on 122^nd St. Each one-bedroom, one-bath. $$159,900 to $184,900. Pool!

Seven units at "Lighthouse Village" on $142^nd St. Four on-bedroom, one-bath, and three two-bedroom, two-bath. $160,000 to $199,900.

One unit at "Pine Needle" on 142^nd St. One-bedroom, one-bath. $149,000

Two units at "Sandalwoods" on 142^nd St. Each one-bedroom, one-bath. Each $154,900.

Three units at "Wedgewood" on 142^nd St. One one-bedroom, two two-bedroom. $169,000 to $199,900.

One unit at "Wanmar Villas" on 143^rd St. One-bedroom, one-bath for $153,000

One unit at "Atlantic Mist" on 143^rd St. Two-bedroom, one-bath. $160,000

Two units at "Sonesta" on 143^rd St. Each two-bedroom, one-bath. $184,500 and $185,500.

Two units at "Lost Colony" on 144th. St. Each two-bedroom, two-bath. $187,000 and $199,900.

One unit at "Wanmar" on 144^th St. Two-bedrooms, two-baths for $195,000

What's Your Buying Power?

Elaine Cerrato (Coldwell Banker) — Thu, 08 Jan 2009 13:47:15 -0800

What's Your Buying Power-Interest Rates vs Purchase Price

Most folks think that when they apply for a loan the Lender qualifies them for a certain total amount of money. This is only partly true. What you are being qualified for is the amount you are able to pay EACH MONTH, and this determines the total amount that the bank will lend you.

Let's suppose you want to borrow $200,000 to buy a new home. You have the down payment and closing costs saved up and you contact the Lender for a loan. When the Lender runs your credit report and checks your other documentation it is found that you can afford to repay $1200 per month. If the current rate of interest is 6%, you're going to get your financing, because a 30-year, fixed-rate loan of $200,000 at 6% requires a payment of $1200 per month.

But what happens if the current interest rate is 7%? Payments on the same $200,000 loan at 7% are $1332 per month. Since the bank doesn't think you can pay that, they will only approve you for $180,000. You'll have to pass up your dream home and find something $20,000 less expensive.

On the other hand if the interest rates drop and you're looking at a 5.5% rate, your loan amount could increase by $10,000 to a loan of $210,000. You can afford more house! So to compare:

$210,000 @ 5.5% is $1192.35 per month

$200,000 @ 6% is $1200.00 per month

$190,000 @ 6.5% is $1200.92 per month

$180,000 @ 7% is $1197.54 per month

Would you rather pay $1200 a month for a $210,000 mortgage or $1200 a month for a $180,000 mortgage? The first one gets you a $30,000 more expensive property for the SAME MONEY!

Prices are as low here at the beach as they will probably get. It's not a "depressed" or "declining" market the way the primary market is. If you're waiting for prices to go down another $20,000 or $30,000, chances are that will not happen. And if interest rates go up you will have missed your best chance altogether.

Smart buyers know that property values always increase in the long run. When interest rates are low, they cut their best deal knowing that their value will eventually go up. If you've been "on the fence" now is definitely the time to buy. Call me!

Around Ocean City--Winter 2008-09

Elaine Cerrato (Coldwell Banker) — Thu, 08 Jan 2009 13:44:30 -0800

Starting off . . .

Happy New Year! May 2009 bring you health, wealth, happiness, and all you desire!

2008 took us for quite a ride and most of us are glad to be putting it behind us. Now it looks as though we're going to be taking a different direction as a nation, and regardless of your political affiliation, I know you join me in wishing President-Elect Barack Obama and his whole team the strength and wisdom to make the wisest of decisions and provide the best of leadership for the American people. As George Washington would have said, may Divine Providence smile upon them all-and us as well!

Things in real estate are chugging along here at the shore. We're certainly not getting the volume of sales we're used to, but we're not overrun with listings, either, and our inventory is declining every month. Here at the beach we don't have the high proportion of foreclosures or short sales that are prevalent in primary markets, so many sellers are waiting it out till prices start to climb again and they'll put their property on the market when that happens. Others who already have properties on the market are holding out for their price and don't care how long that takes; they're able to wait.

Other aspects of the economy aren't helping either, are they? Even though prices are low for real estate, and interest rates are about as low as they've ever been, lots of folks don't feel comfortable enough to buy their dream place. They just don't know which direction to take so they do nothing. It's a shame, because those who really can afford to buy are missing out on a great time to do so. But everyone has to do what's right for them!

Following Through...

So let's say you're going to look into taking advantage of the low prices and interest rates and several properties appeal to you. First thing is always to talk to a Lender. You may have experience with buying in the past, but so much has changed in the last few months in banking and there's a whole new set of criteria that you

need to be aware of. Buying a second home today is not anywhere near as easy as it was two or three years ago!

Gone are the days of five percent down. Your minimum now is ten percent down and there are no more 80/10 loans that enabled buyers to escape the Private Mortgage Insurance (PMI). If you put down less that 20% you will be paying PMI.

Low interest rates are out there, but you'll need a darn good credit score-at least 740--to get one. A score of 620 will get you a mortgage, but your interest rate is going to be higher.

Income and assets will have to be documented and your lender will also need to see proof of taxes and insurance amounts for your primary home and any other real estate you own.

And last but not least, if you are purchasing a condominium, the building must meet current Fannie Mae standards. There's a whole laundry list of criteria but fortunately, local lenders who know the buildings can get you a quick answer on whether or not some buildings would work for you and which to avoid. The big kicker with new construction is that the building must already be 51% sold. If you're the first or second buyer in a 50 unit building you won't get your mortgage but if you're the 27^th you'll be fine.

Last But Not Least . . .

Over the years, Americans have had an off-again, on-again romance with slot machines. Here in Maryland they became illegal back in 1984 except for a handful of nonprofit or charitable organizations that could use them for fundraising purposes on the eastern shore. They were permitted in every county on the shore except Worcester.

Now voters have decided to bring them back and it looks as though Ocean Downs Racetrack just off Route 50 will soon be home to up to 4750 machines. Lots of work to be done and decisions to be made so I'll be sure to keep you informed as things progress.

...See You On The Beach!