According to information posted on Realtor.com, the “American Recovery and Reinvestment Act of 2009″ passed both the House and the Senate on February 13, 2009.  The President signed the bill into law on February on February 17, 2009.

This is a major break for first time home buyers because included in this bill is the “Home buyer Tax Credit”.  This tax credit is an $8000 tax credit available to first time home buyers for the purchase of a principal residence after January 1, 2009 and before December 1, 2009.  This credit does not require repayment.  The credit is designed to be a credit on a tax return to reduce the purchaser’s income tax liability.  If any tax amount remains unused it will be refunded as a check to the purchaser.

Since Idaho Housing will loan this amount at the time of closing, if a first time home buyer in the State of Idaho decides on an IHA mortgage they can use this money up front for down payment and closing cost even before it has been refunded.

What’s the catch???  This is a true incentive and there really are no catches.

How do you take advantage of this credit?  The first step is to get together with a good lender who is up to date on all of the new programs and get pre-qualified.  Then find yourself a knowledgeable Realtor® who understands your needs and find that perfect home!

For the past couple of blogs we have been talking about short sales and foreclosures and since I am currently in the process of helping some clients negotiate a short sale, I thought I would continue by telling you all about some first hand experiences I have had with short sales and foreclosures.

When placing an offer on home that is a short sale property be sure to make your highest and best offer. I am saying this because the short sale addendum requires that the home remain as an active listing until closing so the potential of being bumped by a higher offer remains in place until the actual closing. Also, lenders do not usually make counter offers – they either accept the offer as written or they don’t. I have seen as many as a half a dozen offers fail before one actually made it through to closing on a short sale property.

If the property has already gone through foreclosure and is currently bank owned do your research and make sure you have all of your ducks in place before you make the offer. Lenders are extremely busy in their “loss mitigation” departments and you may only get one chance to make an impression on them. Be sure you include your loan approval letter at the time the offer is presented and any other pertinent information. The offer I am currently working on is being presented with several pages of photos of existing damage on the home. This particular lender is located in a different state so I wanted to be absolutely sure the lender knows the current condition of the home and are being realistic about its marketability.

And finally, be patient. Lenders work on their time not ours.

Now that you know what a short sale is, I would like to take a few moments and explain what is necessary to get one done.

The major difference between a short sale and a standard real estate transaction is that the lending institution holding the note on the home is now involved in the sale and must also be in agreement with the terms of the contract.

Before calling the lender in question, it will be helpful to have the following information in place.

1. A “Letter of Authorization” signed by all borrowers to release information necessary for the negotiation of the short sale.

2. A “Hardship Letter” written and signed by the seller explaining and documenting the reasons making the short sale necessary.

3. A “Seller’s Financial Statement” to substantiate the necessity of the short sale.

4. Two month’s of the Seller’s bank statements along with explanations of transactions.

5. One month of pay stubs for each borrower on the loan.

6. Two years of Seller’s tax returns.

7. A “clean” copy of the purchase and sale contract.

8. A statement of the property’s value – either an appraisal or a broker’s price opinion.

9. An estimated HUD statement for the lender to review based on the agreed upon selling price.

10. The seller’s listing agreement showing agreed upon Realtor® commissions.

11. The marketing history on the home to show the lender that every reasonable effort has been made to sell the home.

Once all of the information is in place it is necessary to talk to the decision maker at the lending institution.  Many lenders now have “Loss Mitigation Departments” set up specifically to handle short sales.

As you can see a short sale is sort of a loan in reverse and quite a complex process.  Getting all of this documentation from a seller who is already in a distressed financial situation is not an easy accomplishment.  To make matters even worse, lenders are also requiring that the home in question be left on the market during the escrow period.

So, if you are a buyer looking to take advantage of a short sale be prepared to be patient and run the risk of being bumped out of the transaction if a better offer comes in before you and your lender can get it deal closed.

Having been a Realtor in Idaho Falls for nearly twenty years, I have seen very few actual foreclosure sales in southeast Idaho.  Recently however, I have been gaining first hand experience in what is commonly know as a short sale.  A short sale differs from a foreclosure sale in that it is a voluntary acceptance by the mortgage holder for less than the full amount of debt against the home or property rather that a legal proceeding set into place by the terms of the deed of trust.

There are several factors that have contributed to an increased number of homes in Idaho Falls currently being good possibilities for short sales.  Historically homes in Bonneville County have appreciated approximately 5% a year, but for several years we experienced double digit appreciation.  Idaho Falls real estate became a “hot” investment and people were buying bigger, more expensive homes.  Lenders reacted to this upswing in the Idaho Falls real estate market by offering loans with “no down payment”.  Because sellers had larger profit margins, they made their homes easier to purchase by offering to pay the closing costs.  Add to this booming Idaho Falls real estate climate a relaxation in lender qualifications and everyone was jumping on the real estate band wagon to trade up or to purchase their first home in Idaho Falls.

Unfortunately, the past year has seen this booming Idaho Falls market level out. Even though southeast Idaho has the good fortune to be one of the few areas in the country where the average selling price of a home is still increasing, many homes in Idaho Falls now have more debt load against them than buyers are willing to pay making them perfect properties for a short sale negotiation.

Although a short sale is a complicated process, all parties to the transaction benefit.  The benefit to a seller is that a foreclosure can be avoided.  The buyer benefits because they are able to purchase an Idaho Falls home at a less inflated price.  And the lender is perhaps the biggest winner because the expensive, lengthy legal foreclosure process is avoided and financial losses are minimized.

Now that is definitely a win/win/win situation for all parties involved in the short sales of Idaho Falls!

As many of you who will be visiting this blog already know I have been a Realtor for nearly two decades. In the past I have enjoyed keeping in contact with friends and clients by writing periodic newsletters. The newsletters will continue, but in between the mailings I hope you will enjoy the information I will be posting here.

For those of you who do not already know me, I am an experienced Idaho Falls Real Estate Professional who chooses to live, work, and play in beautiful southeast Idaho.  Having been born and raised on the east coast, I have grown to love the space and pace or the greater Yellowstone area as well as the open friendliness of the people who live here in Idaho Falls.

Real estate is my chosen career, but it does not totally define who I am. To relax I enjoy cooking for friends and family as well as restoring my 1930′s “Numbered Street Charmer”.  A lot of fun moments are spent with Max, my over zealous Jack Russell terrier.  My most relaxing time is spent hiking, biking, or cross country skiing in this beautiful place I am lucky enough to call my home.

So, if you are looking to purchase your own little “Piece of Paradise” in southeast Idaho please consider choosing me to represent you in your real estate transaction.  I will put my experience to work for you to find exactly what you are looking for in the price range that suits your needs.

On the other hand, if you are looking to sell your Idaho Falls home or property, my marketing expertise and large base of knowledge will sell your home in the least amount of time and for top market value.