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This Just In: Senators extend, expand homebuyer’s tax credit NAR’s lobbying efforts succeed yet again. Today US Senators passed a measure extending the first time homebuyer’s tax credit. Additionally, a reduced credit of $6500 is available to move-up buyers who have lived in their current homes for five years or more. The credit applies to those who sign sales agreements by April 30, 2010. The bill must still be voted upon by the full Senate, be reconciled with the House and be signed by the President.

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Here is a transcription of the audio above:

Hi.  This is Daniel Odio with DROdio Real Estate.  I'm just taking some clients around today in Washington D.C. and we're coming up against a very interesting issue that I want to make you aware of especially if it's important to you to be able to get FHA financing.

00:18    If  you're not sure what FHA financing is, this isn't the audio blog to tell you about it, but you can definitely search on our site for knowledge-based answers about FHA Financing.  The quick and dirty on it is simply that it allows you to put a much lower down payment down, as low as 3-1/2% where as the traditional, also called conventional financing typically requires something in the neighborhood of 20%, especially right now with the way that the loan market is after 2004 -2006 excess.  Lenders are being much more cautious now.

01:00    The problem is this: my clients found a condo that they were interesting in.  It was a two unit condo association which I don't see very often, but they're out there.   The problem was it was a developer who had rehabbed both units and was selling them.  Now in order for a property to qualify for an FHA loan it must be at least 51% owner occupied.  Since both these units were being rehabbed at the same time the developer owned both of them, that renders them both ineligible for FHA financing which is a shame because my clients were very interested in the units and the developer already has one of them under contract.

01:44    So you would think then if the developer already has one under contract, would it be possible to get some kind of exception so that you could still do FHA financing, and the answer if probably not.  We may still attempt what's called a spot exemption from FHA, but it is unlikely just because it's under a four unit condo association.  It's only two units, so that makes FHA very nervous and the fact that the other unit has not settled and been settled for at least a year which means that the budgets for the condo association is probably not accurate.

02:28    What happens is the developer at some point needs to turn the condo association over the owners and the owners then run and manage the condo association.  When that happens, often times the condo fees with have to be reassessed because there might not be enough money in the budget for reserves or the building might need more maintenance than was originally expected and the government knows this.  So when they're backing FHA loans, they typically require that it has been owner occupied for at least a year and that there are budgets in place and some level of certainty as to what the condo fees are so that there won't be any surprises down the road and that's not the case here.

03:13    I think the take away is if you are looking at a unit that's for sale and it looks to be a small condo association, make sure that the primary owner requirements are met and it's not a number of investment owners or developers that currently own the unit because you will have a very hard time getting FHA financing.  It's worth looking into that first before you go too far down the road on the contract of the property simply because you'll just be wasting your time if you need to do FHA financing.

03:52     So I hope that was useful.  Again, Daniel Odio with DROdio Real Estate.  We are happy to talk to you specifically about your buying or selling needs.  If you'd like, just give us a call (800) 705-2782 or shoot us an e-mail info at DROdio.com.  Thank you.

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You just tell us which property or properties you want us to visit, and we'll do the rest. We also offer recorded tours. This service is great for remote or overseas buyers, or for buyers who are too busy to view homes in person. Here's a video of our agent Amber in action! Just contact us at right if you'd like to schedule your own live virtual tour. Here is another example of a Skype Live Virtual Home Tour: 

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Q: Is there any difference between a short sale and a short sale where the bank promises a quick response? Are the risks associated with short sales still the same?
Thanks for your help!

A: Most likely, the bank has promised a 'quick response' because they are further along in the negotiation process with the property owner (they are open to a short sale), and are looking to accept an offer in a timely fashion.

All short sales are the same in terms of being risky, because there is no guarantee that the bank will accept the short sale price. That being said, many short sales come with the risk of having to wait months before hearing back from the bank, and a quick response would mitigate this risk.

Does this make sense? Please let me know if I can clarify anything further!

Q: The property is in a great location but it is out of our price range. Generally speaking can you give a low ball offer on a short sale?
As always, any information you could provide would be helpful! Thanks!

A: While you can make a lowball offer on a short-sale, 99% of the time it's fruitless because it plays out in one of these 2 ways:

Scenario one: the listing agent has not started negotiating with the bank: In this scenario, the listing agent is just hoping for an offer, so s/he can go to the bank and say, "look, I have an offer, will you play ball?" But since the listing agent has no idea what the bank wants to get out of the property, this is not a smart way to go about doing things because the bank may not even be open to doing a short sale at all, and the listing agent just wasted his/her time and the seller's time and your time.

Scenario two: Most short-sale listing agents have wised up to this, and so the first thing they do when they have a seller who wants to sell, is have the seller start talking to the bank. This is the "hardship packet" that the seller has to fill out, etc. Then the bank assigns a negotiator to the case, and the bank sets a price they're willing to take on the property. So in this scenario, you do know what the bank is willing to take (that's almost always the listing price; it wouldn't be logical to list it for something other than the amount the bank has said they'll take). This is the case the short sale you're interested in seems to be in, where they have some level of understanding with at least one of the trusts on the property is willing to take. In this scenario it's very difficult to offer under that price, because then the bank has to go through the reviewal process all over agin, and that takes copious amounts of time, if you even get a response from them at all. Lowball offers on short sales = very, very low chance of success, unless they're within striking distance of the list price (1% off, for example), and even then it isn't worth the hassle of trying to get that 1% discount.

So main take-aways are that lowballs on regular sales are very good, lowballs on REO properties that have been on for more than 60 days are very good, with short sales we can try a lowball (it never hurts to try) but i would not hold your breath, and it'll be a month-long process at a minimum. Does that help at all? If you really like this property and want to try something, at the very minimum we can try to get some info out of the listing agent.

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Short Sale: A short sale is when a lender agrees to take less than the full amount owed on a property. This usually happens when the owner is in default (has not been making their mortgage payments) and the bank agrees to this in order to avoid foreclosure. The costs of foreclosure usually outweigh the loss the bank would take on a short sale, and would help the bank avoid risks such as not being able to sell the house at an auction. Since banks are not in the business of managing real estate, they'd much prefer the money, even if its less than they're owed.

Foreclosure: Foreclosure is the act of the bank taking ownership (or title) of the property as a result of the owner's default on their mortgage payments. This is a very specific legal process, with set timelines and outcomes. Once foreclosed on, the owner no longer has possession of their property's title (unlike in a short sale where they hold the title and sell their property). Foreclosures are NOT sold by a Realtor, but instead sent to be auctioned at a Trustee Sale at the Court House in the County where the property resides. Here, properties are sold for much less than other properties in the area, but come with HUGE risks such as title problems, IRS liens, or tenants/owners still occupying the property. Only serious investors should consider buying a foreclosure.

REO: REO stands for Real Estate Owned properties. If a property does not sell at an auction, then the property becomes an REO, owned by the bank. The bank then hires a Realtor to sell their property, and will usually free up any liens or title issues with the property in order to sell it quickly. Banks are not in the business of owning properties, and REOs tie up their capital reserves and make it more difficult for them to continue lending. Therefore, an REO property is generally the best bet for getting a good deal on a property!*Hope you find this info helpful. Stay tuned for more articles around this topic...

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What caused this? It's a result of the Federal Reserve pouring money into the mortgage market to spare the U.S. housing market, buying up $600 billion of mortgage securities and related debt. Additionally, the Fed, aiming to jump start the economy, cut its key interest rate from 1% to .25%. This resulted in 30-year fixed mortgage rates falling to 5.19 percent the weekend before Christmas, and have continued to fall for the second week in a row, reaching rates below 5 percent.

So what does this mean for you? It may be an incredible time to buy, as fixed mortgage rates combine with declining home prices. Lenders' phones are ringing off the hook with on-the-fence buyers looking to inquire about financing, and those with stellar credit wanting to refinance. Different lenders have varying criteria for who qualifies for these rates, so it's important to shop around.

Keep an eye out for more related articles as housing industry lobbyists continue to put pressure on Washington to further support the industry and entice potential home buyers.

I've included a chart taken from the Washington Post which shows trends in the common indexes used to set rates on adjustable mortgages.adj-rate-mortgage-chart.pdf

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Fairfax, like many other counties, has additional tax districts, and the indicated levy is simply added to the base rate ($0.92 per $100 of assessed value). These districts are listed below:

Countywide - Pest Infestation Control - $0.001 per $100 of assessed value

Reston Community Center - $0.047 per $100 of assessed value

McLean Community Center - $0.026 per $100 of assessed value

Burgundy Village Community Center - $0.02 per $100 of assessed value

Lake Barcroft Watershed Improvement District - $0.103 per $100 of assessed value

The county meets every January to re-evaluate the tax rates, and it's worth noting that taxes don't always go up! Below I've listed a brief history of Fairfax real property tax rates for the past few years:

2004 - $1.13

2005 - $1.00

2006 - $0.89

2007 - $0.89

2008 - $0.92

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