Brenda: The real estate market continues to be very busy, especially with buyers. When I list a home now it only takes two to three weeks or less to get a contract on it as the inventory of homes available for sale is at record lows. As of Sept. 10, the absorption rates, the number of active listings divided by the average number of sales per month, were as follows: Avalon Park 1.3, Stoneybrook 5.20, Eastwood 2.76, Waterford Lakes 2.19. The absorption rate is the month’s supply of homes for sale. If no other homes come on the market this is the time it would take for these homes to sell. A six-month supply is a balanced market, less than six months is a sellers market and more than six months is a buyers market. With this low inventory of homes, the agents often have multiple offers on one property. I am seeing this for both short sales and conventional sales. Pamela what are you seeing on the buyer’s side and what are you advising for your buyers?
PAMELA: The most important item the buyer must have prior to looking for their home is their pre-approval letter from their lender or bank. There are numerous reasons for this but the top two are: 1) by seeing their pre-approval, I know the type of financing they qualify for. Different types of financing allow us to look at different homes. This is so important for me to help them in their search; 2) Once we find the home, we will need the approval to present an offer. If the buyer’s financing is not completed ahead of time; this will hold up an offer for one to two days. This will take the buyers out of any multiple-offer situations and they will most likely lose the chance to offer on the home. Brenda what are some of the reasons our inventory is so low at this time?
BRENDA: There are many reasons for our low inventory homes available for sale on the market. The record-low interest rates, the prices of the homes are starting to rise slowly, the upcoming change in the FHA loans and the tax forgiveness deadline coming up for short sales. As of October 1 the limit for FHA borrowers is now going down from $353,750 to $274,850. This means that buyers who are doing an FHA loan with their lender can now only borrow up to $274,850. About 80 percent of buyer loans are an FHA loan, so this will limit their loan to $274,850.
PAMELA: Brenda, most people are not aware of a very important piece of legislation that will be changed as of December 2012. Currently, if you short sell your primary residence you are forgiven the taxes on the amount the bank forgives the seller. If you owe $200,000 on your home and sell for $100,000 the government currently does not charge you taxes on the $100,000 which was forgiven. Starting Jan. 1, 2013, you will pay taxes on the amount forgiven. So the $100,000 amount forgiven will incur taxes. If you are in the 20 percent tax rate, this will mean paying $20,000 in taxes!
BRENDA: Many people ask me about the back log of “foreclosures” coming on the market. There is a backlog of foreclosures for most communities, but the banks are just releasing a number of these homes per month. There are numerous banks on these foreclosures so each bank releases the foreclosures they have on their own schedule. So not all the foreclosures are coming on the market at once. When a bank puts a foreclosed home on the market they typically price it very low and under the market. This drives the price up with multiple offers and the banks usually accept the “highest and best offer.”
Our next Free Monthly Educational Short Sale Seminar featuring Karen R. Spell, P.A. (real estate attorney) is Saturday, Oct. 8, 10-11 a.m. at 13013 Founders Square, Avalon Park. Or if you wish to talk to Karen R. Spell directly please contact her at 407-306-0454 or karen@karenrspellpa.com
Brenda Kolbrich, CRS
Keller Williams Realty Advantage II
Brenda@TopOrlandoHomes.com
407-963-6876
Pamela Rehbein, GRI, ABR
Keller Williams Realty Advantage II
pamela@HomeForYourHeart.com
407-488-4078