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Seattle Housing Buzz

Coldwell Banker’s buyer bonus event

With the $8,000 First Time Home Buyer’s Tax Credit set to expire tomorrow (April 30th), Coldwell Banker Real Estate LLC is launching its own buyer incentive program. Starting May 1st, participating sellers listed with Coldwell Banker, nationally, will be offering up to 3% of the accepted offer price, up to $8,000, to buyers who contract by July 31, 2010. There is no deadline for closing. Additionally, Coldwell Banker’s program is not limited to first-time home buyers.

 

According to the company, “while 34 percent cite the current tax credit extension (expiring April 30) as the primary reason their customers are currently for searching for a home, 28 percent said that they feel the limitations of this credit will prohibit some buyers from taking advantage of the credit.”

 

“The Buyer Bonus Sales Event will allow participating Coldwell Banker home sellers to essentially extend the benefits of the credit,” said Jim Gillespie, president and chief executive officer for Coldwell Banker Real Estate LLC. “Without restrictions such as household income caps, the Coldwell Banker Buyer Bonus Sales Event allows for greater participation for all homebuyers. And our sellers have a unique opportunity to allow their home to stand out from the competition in their marketplace.”

 

While it’s fantastic to see Coldwell Banker take the initiative in continuing the velocity produced by the government tax credit, good real estate agents may very well negotiate better pricing values and contract terms for their clients, with or without the carrot.

Related: Coldwell Banker press release

Redfin revamps its listing services

Redfin announced yesterday that they’ve overhauled their listing program throughout their service areas.

 

Redfin Redfin agents will now offer in-home listing consultations, provide pre-listing recommendations, host open houses & private tours, post a personalized agent “for sale” sign, print flyers, aggregate listings on 3rd-party websites and implement on online system for agent feedback. Essentially, Redfin services have been revamped to match those offered by traditional full-service companies.

 

As a result of the expanded services, Redfin has modified its fee structure. The new listing fee is 1.5% (4.5% when factoring in a 3% buyer agent commission) with a minimum of $5,500. Previously, they charged either $5,000 or $7,000 depending on the level of service provided.

 

I think this is a positive move on Redfin’s part. Though, as the scrappy upstart matures and grows, expanding its services and market areas (they just launched in Phoenix), they are seemingly morphing more and more into a traditional discount real estate company. On a cost side, Redfin’s fee is lower than what most brokerages charge. However, as fees are negotiable their advantage is less apparent than before since many full-service agents list for less than the norm as well. Redfin’s superior technology and customer feedback/reviews sets them apart, yet as other companies begin to follow suit, the lines of differentiation are becoming blurred.

John L. Scott receives Microsoft Innovation Award

Excerpted from press release:

Pat Giles, Vice President of John L. Scott Real Estate’s marketing, interactive marketing, and IS departments recently received the “Microsoft Innovation Award” for her leadership in driving John L. Scott’s internet strategies and award-winning website.

According to Microsoft, the Innovation Award is given to customers who leverage new and innovative technologies from Microsoft to advance their business in creative, emergent, and innovative ways. The description goes on to say that while this process is a ‘group’ effort the award is meant to recognize one’s strategic thought, decision making, and execution of specific ideas and initiatives.

John L. Scott Real Estate began partnering with Microsoft in 2006 when it became the first residential real estate company in the nation to feature Virtual Earth interactive mapping (now Bing Maps). This was followed by John L. Scott’s Neighborhood Wizard which uses Microsoft’s polygon drawing technology. The most recent product of John L. Scott’s relationship with Microsoft saw the launch of JLSconnect which utilizes Microsoft’s emerging technology Silverlight and Live Services as a gateway to the growing ecosystem of social networking services. Read the Case Study that Microsoft conducted about the development and launch of JLSconnect.

Lennox Scott blogs

Recently, Lennox Scott, the CEO of John L. Scott Real Estate started a blog. While it’s intended audience are those affiliated with the company and the industry in general, its also a great resource for buyers and sellers. And, there probably aren’t too many real estate CEOs with the courage to blog in light of the market place.

Lennox’s latest post is good one and very timely - about the effect that interest rate and the tax credit have on a buyer’s purchasing power:

if interest rates increase by one-half point from the current rate, as has been predicted by many economists, a buyer with a loan amount of $200,000 will lose approximately $11,000 in purchasing power. Furthermore, if a buyer does not act prior to the expiration of the tax credit, that’s an additional loss of purchasing power ($8,000 for first time buyers; $6,500 for repeat buyers). In other words, if a first time buyer takes advantage of CURRENT interest rates AND the $8,000 tax credit, their purchasing power is a whopping $19,000 more than if they bought after interest rates rise and the tax credit expires ($11,000+$8,000=$19,000).

Time to resuscitate

Admittedly, this blog has been a little neglected while I devoted most of my time to The Seattle Condo Blog and the housing marketing being in the doldrums. With Spring approaching there’s a lot starting to happen so I figured it’s about time to resuscitate this blog.

To get things in motion, the April 30, 2010 deadline is nearing for the two tax credits - an $8,000 first-time home buyers tax credit and the $6,500 repeat buyer tax credit. This time around purchases only need to be under contract by April 30, 2010 and buyers will have an additional two months to close the sale.

Additionally, members of the military, foreign service and the intelligence community who served outside the U.S. for at least 90 days between December 31, 2008 and May 1, 2010 have a one year extension. The deadline to purchase a home is April 30, 2011 with closing no later than June 30, 2011. Further, members may be exempt from the 3-year recapture rule if they need to sell or move from the residence as a result of an official extended duty.

Here’s a quick overview of the two tax credits (click on image to download the PDF):
Tax credit chart

HUD awards $300,000 in local housing counseling grants

HUD Logo

Washington State families facing foreclosure, seeking affordable rental housing, or hoping to buy their first home will have a greater opportunity to find housing, or keep the homes they have, because of $297,235 in housing counseling grants announced on Wednesday by the U.S. Department of Housing and Urban Development.

 

Solid Ground of Seattle will receive $49,402, the Spokane Neighborhood Action Program will receive $49,716, the Community Housing Resource Center of Vancouver will receive $32,236, and the Washington State Housing Finance Commission will receive $166,881 to provide counseling to help Washington families “navigate” the homebuying and homeowning processes. Last year HUD awarded $207,366 to housing counseling agencies in Washington.

 

“Now, more than ever, it is crucial that Americans understand how to manage their money, navigate the homebuying process, and secure their financial future.” said HUD Secretary Shaun Donovan. “This critical funding will help counseling organizations continue to assist families in making more informed choices before they buy a home and counsel families facing foreclosure.”

 

Housing counseling grants will assist families in becoming first-time homeowners and remaining homeowners after their purchase. HUD-approved counseling agencies not only provide homeownership counseling, but also offer financial literacy training to renters and homeless individuals and families.

 

The funding is part of $60 million in housing counseling grants awarded nationwide.

 

National and regional agencies distribute much of HUD’s housing counseling grant funding to community-based grassroots organizations that provide advice and guidance to low- and moderate-income families seeking to improve their housing conditions. In addition, these larger organizations help improve the quality of housing counseling services and enhance coordination among other counseling providers.

 

Counseling agencies will use $8 million to help assist senior citizens seeking reverse mortgages or Home Equity Conversion Mortgages (HECM). These agencies will provide counseling for the rapidly growing number of elderly homeowners who seek to convert equity in their homes into income that can be used to pay for home improvements, medical costs, and other living expenses.

 

The organizations that provide housing counseling services help people become or remain homeowners or find rental housing, and assist homeless persons in finding the transitional housing they need to move toward a permanent place to live. Grant recipients also help homebuyers and homeowners realistically evaluate their readiness for a home purchase, understand their financing and downpayment options, and navigate what can be an extremely confusing and difficult process.

 

In addition, grantees help combat predatory lending by helping unwary borrowers review their loan documentation, and avoid unreasonably high interest rates, inflated appraisals, unaffordable repayment terms, and other conditions that can result in a loss of equity, increased debt, default, and even foreclosure. Likewise, foreclosure prevention counseling helps homeowners facing delinquency or default employ strategies, including expense reduction, negotiation with lenders and loan servicers, and loss mitigation, to avoid foreclosure. With foreclosures at critical levels nationwide, these services are more important than ever.

 

HUD awards annual grants under the housing counseling program through a competitive process. Organizations that apply for grants must be HUD-approved and are subject to biennial performance reviews to maintain their HUD-approved status.

Adapted from a HUD press release.

JLS mobile optimized for iPhone

John L Scott iPhoneAdd John L. Scott Real Estate to the list of real estate companies (Zillow, Coldwell Banker, Trulia) developing applications or enhancing features specifically for Apple’s iPhone.

With its latest mobile release, JLS took heed of iPhone’s popularity. According to Pat Giles, VP of Marketing, “The iPhone represents over 50% of all smart phone web traffic and its growth is outpacing other devices by a significant margin. We felt it was important to tap into the iPhone user and provide a fluid online experience that maximizes the phone’s seemingly limitless capabilities.”

New Features for iPhone on JohnLScott.com:

  • WebApp: instead of creating an application that must be downloaded and updated, JohnLScott.com automatically detects the iPhone and provides specific enhanced features to those users.
  • Geo Location*: GPS technology automatically pinpoints your location and then displays real time real estate information as you go. Click one button and see all nearby homes for sale and open houses; you may also locate the nearest John L. Scott office.
  • Touch Gestures: use your fingers to slide from one photo to the next.
  • Orientation Change: rotate your iPhone for landscape (wider) view of information and photos.
  • * Compatible with iPhone OS 3.0 or greater

Other changes to the mobile application, applicable to other smart phones, include:

  • Larger Photos: Click on the individual thumbnails to reveal larger images that allow you to get a better view of the home.
  • Orientation Change: For smart phones that support this functionality the screen automatically adjusts itself when the device is rotated.
  • Property Tracker: Now you can sign into your Property Tracker account, view saved favorites and saved searches, save new favorites, as well as see your Online Agent’s contact information (if applicable).
  • Agent Search: This search tool allows you to easily look up John L. Scott agent contact information while on the go; one click to call or email.
  • Additional Search Fields: Square footage and acreage have been added to the existing search fields which include address, radius, price, and numbers of bedrooms/bathrooms.

NAR proposals FHA enhancements

Today several members of the industry testified before the Senate Appropriations sub-committee on Transportation, Housing and Urban Development. Lennox Scott, CEO of John L. Scott Real Estate, testified on behalf on NAR’s proposal for FHA enhancements to streamline the agency and incentives to spur homeownership.

According the Scott, FHA’s volume has increased four-fold since 2007 and now has a 30% market share. To facilitate FHA’s capacity to handle business and provide more loans, NAR has proposed the following improvements to FHA:

  1. Increase funding for staffing and technology enhancements. FHA currently has about 900 on staff. With its substantial growth NAR estimates that FHA is understaff by about 160 positions. FHA’s current systems on average are 18 years old and NAR recommends that FHA upgrades its systems such as replacing the 30-year old legacy-based COBOL mainframe systems with web-based applications.
  2. Monetize the $8,000 first-time homebuyers tax credit to make it available for use at closing through a collateralized loan against the tax credit. This would allow buyers to use the credit towards a down payment. NAR estimates this could incent up to 500,000 first-time home buyers into the market place, particularly when combined with FHA’s low 3.5% down payment requirement.
  3. Make the higher loan limits permanent in order to provide stability in the market. Currently, the temporary loan limit for King, Pierce and Snohomish counties is $567,500.
  4. Ease financing for condominium purchases through reducing the owner occupancy percentage and removing the environmental review requirement. NAR recommends reducing the 51% owner-occupancy ratio for all condo developments, thus allowing more condo buyers access to FHA financing. Additionally, removal of the environmental review will help streamline the approval process. NAR recommends that FHA accept state and local environmental review findings in lieu of a federal review.

Of the four proposed improvements the one that’ll have the most direct impact for consumers is making the $8,000 tax credit available at the time of purchase. Though this would only apply to FHA loans, FHA is becoming one of the most prevalent loan options for first-time homebuyers.

Homeowner relief plan

President Obama’s $75 billion Homeowner Affordability and Stability Plan is intended help struggling homeowners by providing incentives to lenders, servicers, mortgage holders and borrowers to help modify mortgage loans.

More on the plan:

Wall Street Journal Blog: FAQ: Who Qualifies for Housing Bailout?

Washington Post: How the Program Would Work

CNN Money: Mortgage help: Do you qualify?

Bloomberg: Mortgage Plan Effect May Be Limited, Analysts Say

US News: The Obama Housing Fix: 5 Things to Know

ABC News: Obama’s Housing Rescue Plan Will Slow Home Value Slide as Early as March

CBS News: Who’s Eligible For Obama’s Mortgage Plan?

US Today: Millions could get help, but is foreclosure plan fair?

Time: Will President Obama’s New Housing Plan Work?

$8,000 tax credit and other housing related stimulus provisions

Passed by both houses of Congress and expected to be signed by the president, The $787 billion American Recovery and Reinvestment Act of 2009 (aka stimulus bill) has several provisions aimed towards real estate and housing. Here’s a brief overview.

Tax Credit
The bill includes several modifications to the current $7,500 first-time homebuyers credit, which includes:

  • Increases the credit to $8,000.
  • Removes the pay back requirement, previously it was a 15 year zero interest loan.
  • Has a recapture component if the home is resold within three years
  • Is retroactive to January 1, 2009 and extends through November 30, 2009.

Tax payers who purchase a home this year can apply the credit to their 2008 tax return.

Comparison chart of the existing tax credit and the new $8,000 tax credit.

 

Higher Loan Limits
Another provision of the bill reinstates the higher loan limits that were available last year for FHA, Fannie Mae and Freddie Mac. For King, Pierce and Snohomish counties the loan limit is expected to increase to its 2008 level of $567,500.

 

Neighborhood stabilization
The bill provides for an additional $2 billion for the Neighborhood Stabilization Program. The funds can be used to purchase, manage, repair and resell foreclosed and abandoned properties. The homes are to be used to assist people earning less than 120% of the area median income.

 

Energy efficiency credits

  • Through 2010, homeowners who make energy efficient improvements (purchase of a new furnace, windows and insulation) can claim a 30% tax credit (up from 10%) with a $1,500 cap.
  • $5 billion weatherization assistance for low-income households.
  • $2 billion for Section 8 efficiency efforts.
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