Here’s a deal for you, great price reduction, more then 50%, now’s the time to buy. A Las Vegas mansion owned by Brunei Prince that was once valued at $60 Million and is now on sale for less than half that amount. Hurry, its only $25 million.
Source: Wall Street Journal
For all your real estate needs, call or email:
John J. O’Dell
Real Estate Broker
O’Dell Realty
(530) 263-1091
Email John at jodell@nevadacounty.com
DRE# 00669941
The upper end market for real estate is picking up. This reminds me of prior downturns, when people waited for the bottom of the real estate market to turn, and when they finally decided to buy, they paid thousands more by waiting because the bottom had passed them by. Which brings up actor Nicolas Cage’s foreclosed 14,306-square-foot Las Vegas home sold the first day it was on the market for $4.95 million. The deal is expected to close today.
Cage purchased the six-bedroom, seven-and-a-half bathroom home in September 2006 for $8.5 million. He owes the Internal Revenue Service nearly $6 million in back taxes, and the IRS has foreclosed on four of his homes including two in New Orleans and one in California.
Cage, who had a variety of properties scattered all around the world, picked up this home in 2006 for $8.5 million. In July 2008 he listed it for $9.95 million. The 14,000-square-foot home with a 16-car garage was later discounted to $9.49 million. The seven-bedroom home is blandly extravagant with a sweeping staircase, home theater, elevator and panoramic views of Las Vegas. The home has a pool and spa and is located in a gated community for privacy. After it was foreclosed it got a discount in line with current Las Vegas prices, Lowman sold Cage’s former home for close to the asking price of $4,950,000.
Last November Cage’s New Orleans homes were sold back to the bank for a total of $4.5 million. His Rhode Island home still appears to be listed at $12 million.
Kenneth Lowman, owner of Luxury Homes of Las Vegas, listed and sold the Las Vegas property. He says the luxury home segment of the market moves in tandem with the stock market. As stock rise, so do top-dollar properties.
“I’ve been preaching to all of my potential buyers who are waiting in the wings the same message over and over. If you have the wherewithal, now is the time,” Lowman says.
Home building rose 8.9 percent in November to an annualized rate of 574,000, the U.S. Commerce Department announced Wednesday.
The rate was still 12.4 percent below what it was in November 2008, but the increases were nationwide, with the Northeast leading the trend with housing starts rising 16.4 percent. Housing starts rose 12.3 percent in the South, 3 percent in the Midwest and 1.9 percent in the West.
Analysts attributed the increase to the extension and expansion of the home buyer’s tax credit. David Crowe, chief economist at the National Association of Home Builders, is cautiously optimistic. “The new credit will have an impact as we move into 2010 and consumers plan for that credit availability, and builders begin to answer expected demand in the spring,” he says.
In another measurement of the industry’s strength, the National Association of Realtors said pending home sales, a forward-looking indicator based on contracts signed, have risen for nine consecutive months. Pending home sales were up 3.7% in October compared to September, and up 31.8% compared with October 2008.
Congress recently extended a tax credit for home buyers, giving first-time buyers until April to claim an $8,000 tax credit. Those who have owned a home for five consecutive years can claim a $6,500 credit for a new home purchase.
“The tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future,” said Lawrence Yun, the association’s chief economist.
The good and bad of foreclosures is a mixed bag. The bad is that banks which pushed these risky loans are going to take a bath. The bad is that people who are being foreclose on either because of being tricked into a bad loan or loss of income, are going to have bad credit ratings.
The good is that those people who have lost their homes will now have more money to spend.
According to the Wall Street Journal
“Analysts at Deutsche Bank Securities expect 21 million U.S. households to end up owing more on their mortgages than their homes are worth by the end of 2010. If one in five of those households defaults, the losses to banks and investors could exceed $400 billion. As a proportion of the economy, that’s roughly equivalent to the losses suffered in the savings-and-loan debacle of the late 1980s and early 1990s.
The flip side of those losses, though, is massive debt relief that can help offset the pain of rising unemployment and put cash in consumers’ pockets.
For the 4.8 million U.S. households that data provider LPS Applied Analytics estimates haven’t paid their mortgages in at least three months, the added cash flow could amount to about $5 billion a month — an injection that in the long term could be worth more than the tax breaks in the Obama administration’s economic-stimulus package.
“It’s a stealth stimulus,” says Christopher Thornberg of Beacon Economics, a consulting firm specializing in real estate and the California economy. “The quicker these people shed their debts, the faster the economy is going to heal and move forward again.”
So as everything in life, there is the good and the bad, what do you think?
I wrote earlier that we should not walk away from your house if you are upside down on your mortgage. I’ve changed my mind. If you lost your job or had a great reduction in income for whatever reason, the banks don’t seem to care. I’ve read and seen were they’ll stall until you have used up your savings, made the very last payment you can and than foreclose on your home.
Here’s a portion of a great article on the subject of walking away from your home that appeared in the SF Chronicle:
“Go ahead. Break the chains. Stop paying on your mortgage if you owe more than the house is worth. And most important: Don’t feel guilty about it. Don’t think you’re doing something morally wrong.
That’s the incendiary core message of a new academic paper by Brent T. White, a University of Arizona law school professor, titled “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.”
White argues that far more of the estimated 15 million American homeowners who are underwater on their mortgages should stiff their lenders and take a hike.
Doing so, he suggests, could save some of them hundreds of thousands of dollars that they “have no reasonable prospect of recouping” in the years ahead. Plus the penalties are nowhere near as painful or long-lasting as they might assume.
“Homeowners should be walking away in droves,” according to White. “But they aren’t. And it’s not because the financial costs of foreclosure outweigh the benefits.” Sure, credit scores get whacked when you walk away, he acknowledges. But as long as you stay current with other creditors, “one can have a good credit rating again – meaning above 660 – within two years after a foreclosure.”
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“How does White’s 52-page manifesto go over with mortgage lenders? Predictably, not well. Officials at Fannie Mae and Freddie Mac – investors who fund the bulk of all new mortgages in the country – disputed White’s characterization of how quickly after foreclosure a walkaway borrower can obtain a new loan. It’s not three years, they said, it’s a minimum of five years, absent extenuating circumstances such as medical or employment problems that caused the foreclosure.”
Remember, before you walk away from your home, check with your accountant and or a tax attorney.
This is a great article, read the rest at San Francisco Gate
So what do you think readers?
It seems that times are getting harder for mortgage brokers. First, they can’t in most cases use their appraiser of choice and now, they have to give you a close estimate of closing costs when you purchase a home. No longer will you be given an approximate closing cost. Than find the final closing costs on your mortgage to be $2000 to $3,000 higher than what you were told you would have to pay.
Worse yet, you had to come up with the extra cash to handle the surprise costs or the home purchase or refinancing could not proceed. A lot of mortgage companies low ball the estimated closing costs just to rope you into doing business with them, than surprise you with extra costs when you are ready to sign the final closing papers.
Here’s what’s about to happen: Starting Jan. 1, loan charges and settlement fees will be spelled out on a revised, more consumer-friendly version of the good-faith estimates (GFE) form that borrowers are supposed to receive within three days of their mortgage applications. Charges will fall into three broad categories on the form:
• Fees that cannot increase from upfront estimates to final closing.
• Fee estimates that come with wiggle room and can increase by as much as 10 percent.
• Fees that can increase without limit, mainly because the lender has no control over them or because the amount is difficult to predict.
Charges in the zero-increase category include the lender’s or broker’s mortgage origination, processing and underwriting charges, where junk fees sometimes sprout — or increase significantly at closing. Also in this category are the lender’s or broker’s loan discount charge, or “points,” based on the interest rate quoted, and local transfer taxes.
Charges subject to a 10 percent aggregate increase include services required by the lender but where the lender chooses the providers, such as appraisals; expenses such as lender’s title insurance and settlement services, where the borrower chooses a firm on a list approved by the lender; owner’s title insurance, when the borrower chooses a company on the lender’s approved list; and recording charges by local governments.
Though any one of these items can increase more than 10 percent from the upfront estimate to closing, the combined total of all the fees in this category cannot jump by more than 10 percent. This is crucial, especially in title insurance and settlement charges, where some of the biggest surprises pop up at closing.
Charges that can increase without limit include lender-required services where the borrowers choose a title insurance, escrow or other settlement company that is not on the lender’s list; the cost of homeowners’ hazard insurance; daily interest charges on the loan; and the amount of the initial deposit by the borrower into an escrow account.
Besides getting rid of closing-cost surprises, the new good-faith estimate encourages loan applicants to shop around before committing. The form has space for comparing up to four competing lenders’ GFEs on interest rates, rate locks, prepayment penalties or balloon payments, among other factors. The cost estimates from each competitor are required to remain available for 10 business days. Interest rates can change unless locked in.
Paired with the new GFE rules will be a new standard closing-cost statement, the “HUD-1,” which allows consumers to directly compare what they were told upfront with what they’re being asked to pay at closing.
Also, for the first time ever, the new HUD-1requires disclosure of the widely misunderstood fee splits of title insurance premiums between the insurance underwriter — the company actually insuring the title — and the title agent, who is often the settlement agent. Consumers may be stunned to learn that in some markets, 80 percent to 90 percent or more of the premium they pay at closing actually goes to the agent, not to pay for the insurance itself.
More than 80 percent of new single-family homes have at least two bathrooms, which occupy an average of 300 square feet of floor space, or 12 percent of the total area, according to a study by the National Association of Home Builders.
The home builder’s study reports a major return on value for extra bathrooms: “When the number of bathrooms is approximately equal to the number of bedrooms, an additional half-bath adds about 10 percent to the home’s value, and one additional bath adds about 19 percent.”
A mid-range bathroom remodel, which costs $10,500 on average nationwide, repays a home buyer at least 100 percent of the outlay when the property is sold, the home buyer study concludes.
It seems that people are always trying to make money by illegal means. If they would put as much effort into doing something legally as the schemes they come up with, they would in all probability make more money. At least they wouldn’t end up in jail.
A case in point is the scheme by a Los Angeles City fire firefighter and part time real estate broker who was arrested on September 23 of this year. In a press release by the Deputy DA of Los Angeles, Brent Lamont Mathews is charged with six counts of forgery, thee counts of attempt to file a false or forged instrument and two counts of grand theft.
Of course to falsify deeds and documents, you need a notary. It was handy of Mathews to have a girlfriend who is a notary. So along with Mathews, his girlfriend Joi Rochelle Smith faces the same criminal charges.
Prosecutors allege that Mathews put himself on the title of a Hacienda Heights property without the true owner’s knowledge or consent through a series of forgeries and false filings. Mathews allegedly went on to defraud two investors in 2008 whom he solicited as partners to flip the house. The victims collectively lost $146,000, which the defendant purportedly borrowed by issuing trust deeds on the property and thereafter filing false reconveyances of those trust deeds.
Smith allegedly notarized key documents, enabling the illegal transactions.
Mathews sold the property for $699,000 and netted $203,969, prosecutors said. None of the proceeds from that sale were used to satisfy the trust deeds or to benefit the true owner of the property.
Detectives of the Los Angeles County Sheriff’s Department, Commercial Crimes Bureau, investigated the matter.
The recommended bail for Mathews and Smith is $846,000. If convicted as charged, the defendants face a maximum state prison term of 11 years and four months.
So isn’t that neat, you put your name on someone else’s property, get some trusting souls to invest in a house that isn’t yours, sell it and net over $200,000. Let’s see divide $200,000 by eleven years in jail, you make about $18,000 a year, minus of course attorney’s fees, income tax and other associated expenses. Of course you have free room and board during your jail time.
The latest figures from ForeclosureRadar show that the number of distressed filings in California, one of the worst hit states in the country, fell in August.
Notices of default in California, which is the first step in the foreclosure process, dropped from July to 36,396 filings, a monthly dip of 19.1% and a 14.2% decrease from August of last year.
In a report the firm says that the government’s Home Affordable Modification Programme which provides cap incentives to servicers for the modification of loans in default or on the verge of default, appears to be having a positive impact.
But Sean O’Toole, founder and CEO of ForeclosureRadar, said that the programme could be hiding the true picture.
‘In effect the HAMP postpones a large amount of filings,’ he said. If it fails, the market would need further government intervention or there would be a wave of new foreclosures, he warned.
But overall the outlook for recovery is still muted.
According to the latest analysis from Moody’s it will be at least another 10 years before residential property prices return to the peak levels of 2006.
Source Property Wire
More people are becoming landlords in an economy where selling a home can be challenging.
The nation’s second-largest home insurer, Allstate Corp., says the number of homeowners converting their homeowners insurance to landlord policies rose 27 percent in the first quarter of 2009.
Jim Bass of Jim Bass Real Estate Group in Frederick, Md., says he has begun offering property-management services for absent owners, many of whom are convinced it will be easier to sell in a couple of years.
Holding on probably isn’t the best answer, says economist Edward Leamer, director of the UCLA Anderson Forecast. Leamer suggests negotiating a short sale instead. “Better to take your losses and move on.”
Another factor to consider is whether renting will reduce or eliminate the value of the capital-gains tax exclusion. Federal tax law requires living in the home at least two of the previous five years to qualify for the full capital-gains tax exclusion when the house is sold. Of course, if there is no profit to be had, then this isn’t a problem.
Source: The Wall Street Journal, M.P. McQueen
We have also started offering property management services. If you have a home that you would like to rent, call us at 530-272-2613.