WHAT IS DIFFERENT IN THE 2009 REAL ESTATE MARKET?

EVERYBODY IS HOPING TO PURCHASE AT THE BOTTOM OF THE MARKET

We will not know that we have hit the bottom of the market until the prices start to rise. And, that can happen very quickly when the time comes. What we do know is that buyers have the largest selection at the lowest prices in several years and mortgage interest rates are at the lowest levels in decades. We do know that the bargains are in the inventory of lender owned foreclosures. We do know that the lender owned homes are going under contract at the rate of about 10 houses per day in Montgomery County. Currently, the REO properties are selling faster than the inventory is increasing. So, if the timing is right for you and you are planning to own your purchase for several years, we recommend that you take advantage of the buyer market this year.

Lenders are reducing the prices until the properties are under contract. A recent example is a 3 BR/3 BA single family REO at 3224 Park View Road, Chevy Chase, MD 20815. The lender reduced the price from $649,000 to $535,000. The 2009 tax assessment is $752,240. Is this a bargain?

Investors have learned to make offers on REO properties that have been on the market for some time. Some lenders will consign the homes to auction if they are not sold within six months. For example, one lender has asked us to seek offers on a condo that is scheduled to be consigned on February 25. They would rather have a direct sale than go to the expense of an auction. This 2 BR condo is 436 Girard Street #103, Villa Ridge, Gaithersburg, MD 20877 and the price was reduced to $79,900. Another lender responded by reducing the price of another unit in the same complex to $75,000. Price battles between lenders owners benefit smart buyers.

THERE ARE MORE FIX-UP PROPERTIES

With the large inventory of lender owned homes, there are more properties that need repairs or renovation. Most of the home owners that face foreclosure do not have the funds of normal maintenance and the updating that every house needs from time to time. So, purchasers of lender owned foreclosures find many of the best bargains also provide the challenge of funding the needed improvements. If you or a family member is seeking a fix-up situation, you should discuss the options of renovation financing with your loan officer when you get pre-approved. Excellent renovation financing is available. Many owner occupants purchasers use FHA 203 (k) which will cover the acquisition costs plus the improvements. One of our clients is scheduled for a settlement today on a lender owned property that needs total renovation. The 203 (k) consultant has provided complete cost estimates on everything that needs to be done to advise the buyer and support the financing. Since FHA financing is not available to investors, they need to use conventional renovation financing.

An example of the renovation bargains is the REO listing at 23312 Woodfield Road, Gaithersburg, MD 20882. This 5 BR/3 BA single family home is priced at $213,000. It has 1,546 sf of living area and a detached 440 sf garage. The lot size is 20,283 sf. It sold for $415,000 in 2005. Why is it priced so low? It has mold.

FIRST TIME BUYERS HAVE MUCH AVAILABLE ASSISTANCE WITH MORTGAGE FINANCING

FHA has become the preferred purchase money mortgage financing for many first time buyers. The minimum cash requirement is 3.5% and family assistance is allowed. Contracts can be structured to have the seller pay the closing costs. The $7,500 federal tax credit is available and may be improved with currently pending legislation. In Montgomery County, the Housing Opportunities Commission (HOC) is offering financing for moderate income families. Frederick County also has several special programs to assist buyers with cash requirements.

The Lieberman/Isakson Amendment was included in the senate version of the Economic Stimulus Bill by a unanimous voice vote. This amendment would provide a Tax Credit to all home buyers at the rate of 10% of the sales price up to a limit of $15,000. The credit would be available for a one year period to all purchasers of primary residences

Home buyers may qualify for the Countrywide Home Loans $3,000 Express Grant depending on their income and property location. Currently the Grant is available from Countrywide until March 31, 2009. There are two ways a buyer can qualify for the Grant. The first is the income qualification for low to moderate income limits. These limits do vary from county to county but for example a person/couple buying in Montgomery, Frederick or Prince George's counties can get a $3,000 grant with income below $52,000. They can get a $1,500 grant with income up to $83,000. The second option for grant qualification is by property location. The property must be identified to determine eligibility. If eligible, another $1,500 grant is available. Total grant available per buyer is $3,000. The grant does not have to be repaid and is not a loan. One of the loan officers offering this assistance is Joanne Blum. cell 301-943-6567.

LENDER OWNED FORECLOSURES (REO)

We provide client reports on the lender owned homes that are available for purchase and we represent buyer clients as their exclusive agents. If you decide to us another agent, you will want to be sure that your agent has experience in the REO sector. All buyers should obtain pre-approval for mortgage financing before submitting an offer. The sellers require a lender letter with the contracts. Investors with outstanding mortgage loans on four of more properties are finding more limited access to investor financing. Ask us for a referral to a loan officer if you do not have a personal relationship with your prospective lender.

Please contact us with your real estate questions. We will always appreciate your referrals!

Your Real Estate Professional,

Roy Kelley

Roy Kelley & Associates
Associate Broker, RE/MAX Realty Group
6 Montgomery Village Avenue, Suite 200
Gaithersburg, MD 20879

Direct: 301-921-4569 Client Assistance: 301-670-8996
Email: roykelley@mris.com Fax: 301-921-4586 Main Office: 301-258-7757 x 569
Home Search Website: www.roykelley.com (All available listings may by viewed on Homes Prospector)
Blog: http://activerain.com/blogs/roykelley