June 2010 Archives

I recently ran across an interesting tool put out by Forbes Magazine. It takes all of the national data concerning where from and where to people moved in 2008. Over 10 million people moved from one county to another. Here is the map looking at the Seattle in-bound and out-bound movers.

I found it interesting to look at different locations and see if there were more people moving in or moving out. Here is the link to the FORBES INTERACTIVE MIGRATION MAP.

David Fletcher of Inman News reports that on June 1, 2010 Fannie Mae rolled out a new set of guildelines for lenders to follow. The Loan Quality Initiative (LQI) provides that a borrower's credit score will be "refreshed" one day prior to closing.

What does this mean? Well, chances are, before you found the home you want to purchase you met with a lender and were preapproved for a loan package. Your credit score played in integral part in determining your interest rate and whether or not you would even get the loan. That may have been 60-90 days before your closing. Your credit score was probably refreshed the day your loan officer received the sale from your real estate broker. Now, besides the long wait to get into your new home, what have you got to do? Buy a new car? Shop for furniture? Don't do it. Something even as mundane as applying for a new credit card can lower your credit score. That would be considered an undisclosed liability. 

Fletcher states:

Under the LQI, the lender could delay the closing, increase the interest rate, ask for a larger down payment, or cancel the closing. In some states, Buyer A could lose his deposit.

Brokers need to have this discussion with their buyer clients...and with their seller clients. There are so many ways in the post recession environment for a closing to be delayed.

Buyers need to make sure that they are talking to their loan officer about these issues. It's hard to do with an online lender. Get someone local, someone you can look in the eye and feel confident that they will be there to help you, your agent, and escrow get your purchased closed on time.   

UPDATED: June 30, 2010, Senate passes homebuyer tax credit. 

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UPDATED: As of June 29, 2010,  In a 409-5vote the House lawmakers have passed a standalone bill that would extend for three months Wednesday's deadline for closing on a home purchase in order to claim the federal homebuyer tax credit.

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UPDATED:  As of June 28, 2010 Congress has failed to pass the House bill that would have completed the extension.  Therefore, as of this time, the Home Buyer Tax Credit that looked automatic HAS NOT PASSED and the deadline has NOT been extended.

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Sorry, the three month extension for the Federal Home Buyer Tax Credit does not allow you to qualify if you have not already put a home under contract.  The extension only applies to the amount of time you have to close your transaction.

The previous deadlines required a Buyer to have mutual acceptance to purchase a home by April 30^th, 2010, that deadline stands.  After reaching mutual acceptance the home buyer had until June 30^th, 2010 to qualify, this deadline has been extended to September 30^th, 2010.

Many lenders were struggling to meet the June deadline and were asking for more time.  The extended timeline will also allow those Buyers that were working a purchasing a 'short sale'.  Often the wheels turn slowly when purchasing a 'short sale' property that must have approval from the Seller's bank.

Lloyd Hara, King County Assessor says his office is looking into the following categories:

• properties on which assessed values didn't change from one year to the next amid a volatile housing market
• properties valued below the price for which they sold
• "personal property" such as art collections on which corporations and wealthy individuals may have failed to pay tax.

But I ask, why not look into properties valued above what they sold for at the same time? If you can back charge some property owners, as the article suggests, do you refund others who have sold, or would the refund go to the current property owner?

A former tax assessor, Harley Hoppe, has been assisting Hara with his efforts to resolve the tax deficit that looms for next year. Hoppe "said he is personally aware of "thousands" of undervalued properties. As part of his consulting business, Hoppe monitors assessment records and property sales.

I have another question. Doesn't the county monitor assessment records and property sales? Why haven't they come up with something before now? And what are the figures?

I did a little tax search myself this morning using tax information available through the NWMLS. I took a typical home in the Ravenna Wedgwood area which sold recently. Then I asked for 50 comparable sales within 2 miles of this property that sold and closed any time since January 1, 2009. The tax data gives both the assessed value and the sold price and well as the assessed value ratio and other information. Here is that document.

I averaged the assessed value ratios and came up with 0.943438. To me that means that in a sampling of 50 properties in a typical Seattle neighborhood, the average sales price was only 93.4% of the assessed value. If homes are selling for less than assessed value, then the assessed value is too high.

If someone knows of, and tells the assessor that there are thousands of under-assessed properties in King County, then by all means, find out why that is so, and go to the people that under-assessed those properties and find out why. It doesn't seem to me that the fault lies with the property owners that were under-assessed. What do you think?