HOW TO SPOT A GOOD DEAL: FORECLOSURES AREN’T ALWAYS WHAT THEY SEEM

Most homebuyers in search of a property automatically assume buying a foreclosed home means they’re getting the best deal out there. However, this often isn’t the case. Purchasing a foreclosed home truly can be a great investment, but it could also be an eye-opening experience for those not aware of the process and problems that can arise along the way.

One of the reasons a foreclosure may not be as good of a deal as it appears to be on paper is that distressed home sellers may have more debt than just their home mortgage. They may have a lien or loans against their property, which the bank could factor into the sale price. Another issue could be the amount of work and repair needed on a home, if the sellers had stopped maintaining it. A home may sit vacant for months, which could be problematic in a tropical climate such as ours, where hot and humid temperatures can cause serious damage. Foreclosures typically take a lot longer to close on the sale, therefore buyers need to be flexible on their timeframe. Securing property prior to a foreclosure can mean the difference in having a move-in ready home versus a bank-owned home typically stripped of its contents. Buyers need to be aware of these types of concerns when pursuing a foreclosure, but if the price is right and the home is free of these types of issues, buying a foreclosed property can prove to be a very wise purchase.

Establishing a relationship with a knowledgeable Horizon Realty International agent and sharing what you are looking for up front will allow you to get a jumpstart on finding the best property for you. Knowledge of the local real estate market and access to a network of resources are invaluable in finding a great real estate opportunity. More often than not, in our market, the best real estate deals are found prior to a property facing foreclosure. Being aware of new inventory before it hits the market, monitoring shifts in the existing inventory (i.e. price reductions) and the ability to act quickly are all key strategies. A reputable Horizon Realty International agent should be able to offer insight on an ideal opportunity if it arises, as they’ll be in tune with a home’s value and current financial situation, both of which will help to determine the true value of the deal.

Our team of Realtors® is out in the local market every single day, networking with our contacts and working together for our clients so we can best represent their needs. Horizon Realty International has a proven track record and longstanding success to best represent you. Contact your Horizon Realty International agent today to learn more about great deals in the area and how we can help you find your next home, 941-238-0953

 

The 6 phases of a foreclosure

If you or someone you know is facing possible foreclosure, you should know what to expect

Many people have either gone through foreclosure, a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership of the property, or know someone who has.

RealtyTrac released its U.S. Foreclosure Market Report on April 15 for the first quarter of 2010. The report calculates foreclosure filings, including default notices, scheduled auctions and bank repossessions, and showed that 932,234 properties were involved in the first quarter. That was a 7% increase from the last quarter of 2009 and a 16% increase from the first quarter of 2009. An astonishing one in every 138 U.S. housing units received a foreclosure filing during the quarter. If you or a loved one are facing foreclosure, make sure you understand the process. While it varies from state to state, there are normally six phases of a foreclosure.

Phase 1: Payment default
A payment default occurs when a borrower has missed at least one mortgage payment. The lender will send a missed-payment notice indicating that it has not yet received that month’s payment. Typically, mortgage payments are due on the first day of each month, and many lenders offer a grace period until the 15th. After that, the lender may charge a late-payment fee and send the missed payment notice.

After two payments are missed, the lender may send a “demand letter.” This is more serious than a missed-payment notice; however, at this point the lender is probably still willing to work with the borrower to make arrangements for catching up on payments. The borrower would normally have to remit the late payments within 30 days of receiving the letter.

Phase 2: Notice of default (NOD)
A notice of default is sent after 90 days of missed payments. In some states, the notice is placed prominently on the home. At this point, the loan will be handed over to the lender’s foreclosure department in the same county where the property is located. The borrower is informed that the notice will be recorded. The lender will typically give the borrower another 90 days to settle the payments and reinstate the loan. This is referred to as the reinstatement period.

Phase 3: Notice of trustee’s sale
If the loan has not been brought up-to-date within the 90 days after the notice of default, a notice of trustee’s sale will be recorded in the county where the property is located. The lender must also publish a notice in the local newspaper for three weeks indicating that the property will be available at public auction. All owners’ names will be printed in the notice and in the newspaper, along with a legal description of the property, the property address and when and where the sale will take place.

Phase 4: Trustee’s sale
The property is placed for public auction and will be awarded to the highest bidder who meets all of the necessary requirements. The lender, or firm representing the lender, will calculate an opening bid based on the value of the outstanding loan, any liens and unpaid taxes, and any costs associated with the sale. Once the highest bidder has been confirmed and the trustee’s sale is completed, a “trustee’s deed upon sale” will be provided to the winning bidder. The property is then owned by the purchaser, who is entitled to immediate possession.

Phase 5: Real-estate owned (REO)

If the property is not sold during the public auction, the lender will become the owner and will attempt to sell the property on its own, through a broker or with the assistance of an REO asset manager. These properties are often referred to as “bank-owned.” The lender may remove some of the liens and other expenses in an attempt to make the property more attractive.

Phase 6: Eviction
The borrower can often stay in the home until it has been sold either through a public auction or later as an REO property. At this point, an eviction notice is sent demanding that any people vacate the premises immediately. Several days may be provided to allow the occupants sufficient time to remove any personal belongings, and then typically the local sheriff will visit the property and remove the people and any remaining belongings. Belongings may be placed in storage and retrieved later for a fee.

The bottom line
Throughout the foreclosure process, many lenders will attempt to make arrangements for the borrower to get caught up on the loan and avoid a foreclosure. The obvious problem is that when a borrower cannot meet one payment, it becomes increasingly difficult to catch up on multiple payments. If there is a chance that you can catch up on payments — for instance, you just started a new job after a period of unemployment — it is worth speaking with your lender. If a foreclosure is unavoidable, knowing what to expect throughout the process can help prepare you.

5 Things that Will Make Potential Buyers Lose Interest in Your Home

If you are selling your home, then you probably have read all the tips for staging a home. However, you should also evaluate your home for things that could make a potential homebuyer leave your home quickly.

1. Not–so-nice DIY projects.
You may have saved thousands by remodeling the kitchen or adding on an entire new room yourself. However, if a potential homebuyer can walk into your house and know immediately that the work was done by the homeowner and not a professional, he will start seeing dollar signs as to how much it will cost to remodel the kitchen or repair the extra room. If you are not a professional contractor, reconsider any major do-it-yourself home improvement projects before putting your house on the market.

2. Oops! The buyer just fell into the pool.
You may have spent long summer days enjoying your backyard pool, but a pool is not always an asset when selling a house. That’s especially true if the pool takes up most of the backyard or doesn’t have a safety fence. If a buyer steps out into the backyard and almost steps into your pool, you can easily lose that buyer. If you have a large pool and a small backyard, you will have lost many potential homebuyers. This can include those who have small children, plan to have children, have dogs, and those that just don’t want the hassle of keeping up a pool.

3. Maybe hire a house cleaner?
The goal when selling a house is to make buyers feel comfortable and want to stay in your house exploring for as long as possible. The longer potential buyers are in the home, the more likely they are to make an offer. However, if your house is a mess with dirty laundry flung on floors and showers or toilets that have not seen a scrub brush in many weeks, then the potential buyers are going to rush the viewing. They will not feel comfortable looking in every closet or cabinet but instead want to get out as quickly as possible.

4. What’s that terrible smell?
Even the best pets with attentive owners can make mistakes. However, if your cat’s “mistake” involves marking the carpet, then do not try to cover up the smell. Adding scented candles or plug-in air fresheners only make the entire house smell worse. Mixing chemically made rose scents with the powerful scent of cat urine really will not make your house welcoming or help others picture themselves living there. They’ll be too distracted wondering where that smell is coming from. If your pet has damaged any floors or other parts of the house, do not try to mask the smell. Remove and replace the damaged flooring.

5. Wish away the wallpaper.
You may have carefully selected the wallpaper for your favorite room. However, wallpaper is out of fashion and not popular with most homeowners. Like the do-it-yourself project, potential homebuyers see wallpaper and begin calculating how much time and money it will take to remove it. When choosing between two well-liked houses and one has wallpaper and one does not, the house without the wallpaper will often win the buyer’s bid.

Some of these are home features that you just can’t change, such as a large pool. If that’s the case, then have reasonable expectations when selling the home. It may take longer to sell the home or you may have to lower your asking price.

Radiant Floor System Adds Heat Under Your Feet

House of Brokers Realty, Inc.

It’s bad enough that you have to get up in the middle of the night to go to the bathroom, but that tile – it’s so cold!

The notion of warming floors for comfort is hardly new. Archaeological digs reveal that, as early as 5,000 B.C., cave dwellers were drafting smoke through stone trenches in an effort to warm their subterranean floors.

underfloor heating and cooling Hydronic heating system being installed

These days, the two most common types of radiant floor heating systems are electric and hydronic, both of which are installed under your flooring. Hydronic systems heat floors by using loops of plastic tubing to run hot water from a boiler or water heater under flooring.

Hydronic systems have lower operating costs than electric systems but, because they generally require a boiler, pump and gas lines, they’re also far more complex. Hydronic heat might be a good option if you’re looking to add…

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Home Foreclosure and Debt Cancellation

Update Dec. 11, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.

This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

The amount excluded reduces the taxpayer’s cost basis in the home. More details. Further information, including detailed examples, can also be found in Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments.

The questions and answers, below, are based on the law prior to the passage of the Mortgage Forgiveness Debt Relief Act of 2007.

1. What is Cancellation of Debt?

If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.

2. Is Cancellation of Debt income always taxable?

Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

• Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
• Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you.You are insolvent when your total debts are more than the fair market value of your total assets. Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
• Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income. The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
• Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences, as discussed in Question 3 below.

3. I lost my home through foreclosure. Are there tax consequences?

There are two possible consequences you must consider:

• Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)
• A reportable gain from the disposition of the home (because foreclosures are treated like sales for tax purposes).(Note: Often some or all of the gain from the sale of a personal residence qualifies for exclusion from income.)
Use the following steps to compute the income to be reported from a foreclosure:

Step 1 – Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)
1. Enter the total amount of the debt immediately prior to the foreclosure.___________
2. Enter the fair market value of the property from Form 1099-C, box 7. ___________
3. Subtract line 2 from line 1.If less than zero, enter zero.___________
The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.

Step 2 – Figuring Gain from Foreclosure

4. Enter the fair market value of the property foreclosed. For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure ________
5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ____________
6. Subtract line 5 from line 4. If less than zero, enter zero.
The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.

4. I lost money on the foreclosure of my home. Can I claim a loss on my tax return?

No. Losses from the sale or foreclosure of personal property are not deductible.

5. Can you provide examples?

A borrower bought a home in August 2005 and lived in it until it was taken through foreclosure in September 2007. The original purchase price was $170,000, the home is worth $200,000 at foreclosure, and the mortgage debt canceled at foreclosure is $220,000. At the time of the foreclosure, the borrower is insolvent, with liabilities (mortgage, credit cards, car loans and other debts) totaling $250,000 and assets totaling $230,000.

The borrower figures income from the foreclosure as follows:

Use the following steps to compute the income to be reported from a foreclosure:

Step 1 – Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)
1. Enter the total amount of the debt immediately prior to the foreclosure.___$220,000__
2. Enter the fair market value of the property from Form 1099-C, box 7. ___$200,000__
3. Subtract line 2 from line 1.If less than zero, enter zero.___$20,000__
The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.
Step 2 – Figuring Gain from Foreclosure
4. Enter the fair market value of the property foreclosed. For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure. __$200,000__
5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ___$170,000__
6. Subtract line 5 from line 4.If less than zero, enter zero.___$30,000__

The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.

In this situation, the borrower has a tax-free home-sale gain of $30,000 ($200,000 minus $170,000), because they owned and lived in their home as a principal residence for at least two years. Ordinarily, the borrower would also have taxable debt-forgiveness income of $20,000 ($220,000 minus $200,000). But since the borrower’s liabilities exceed assets by $20,000 ($250,000 minus $230,000) there is no tax on the canceled debt.

Other examples can be found in IRS Publication 544, Sales and Other Dispositions of Assets, under the section “Foreclosures and Repossessions”.

6. I don’t agree with the information on the Form 1099-C. What should I do?
Contact the lender. The lender should issue a corrected form if the information is determined to be incorrect. Retain all records related to the purchase of your home and all related debt.

7. I received a notice from the IRS on this. What should I do?
The IRS urges borrowers with questions to call the phone number shown on the notice. The IRS also urges borrowers who wind up owing additional tax and are unable to pay it in full to use the installment agreement form, normally included with the notice, to request a payment agreement with the agency.

8. Where else can I go to get tax help?
If you are having difficulty resolving a tax problem (such as one involving an IRS bill, letter or notice) through normal IRS channels, the Taxpayer Advocate Service may be able to help. For more information, you can also call the TAS toll-free case intake line at 1-877-777-4778, TTY/TDD 1-800-829-4059.
In some cases, you may qualify for free or low-cost assistance from a Low Income Taxpayer Clinic (LITC). LITCs are independent organizations that represent low income taxpayers in tax disputes with the IRS. Find information on an LITCs in your area.

Perks to Buying During the Holidays

House of Brokers Realty, Inc.

If you’re house hunting over the holidays, you’re likely a serious buyer with an immediate need.  Perhaps you have to relocate for a new job opportunity, or there’s been a change in your personal life? Regardless, while you may assume it’s not an ideal time to be looking — namely because there isn’t much to look at — there are some advantages to buying this time of year.

Perks to Buying During the Holidays

Less competition

Let’s start with the obvious one: less competition. This lowers the chances of multiple offers and bidding wars (something we saw a lot of last spring/summer), and should translate into a bigger discount for you. Know your market! This is where sites like Zillow come in handy. Start your research here for comps in your area and to see what homes are selling for.

Serious home sellers

Why would sellers pick such an inconvenient time — while everyone is busy entertaining family and friends and enjoying…

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Home Decor Evolution: Trends to Try for an Instant Update

Gone are the days when a stylish home and a busy family have to be mutually exclusive. Home decorating is hotter than ever and everyone is getting in on the trend.

With an ever-increasing focus on DIY design projects, resources such as shelter magazines, design blogs, TV shows and online home decor retailers are making high design accessible to any homeowner. If your budget doesn’t include hiring an interior decorator to update your decor, a few tips from the experts will go a long way.

Design duo Robert and Cortney Novogratz are the stars of HGTV’s “Home by Novogratz” and parents to seven children. Known for using vintage and eclectic items to create fun and stylish interiors that are also family-friendly, they point out that selecting unique pieces for your home is an easy way to make your style stand out.

“Having vintage pieces in your home is very important,” Robert Novogratz says. “Our world is becoming more and more homogenized and a vintage piece really sets your space apart from anywhere else. Vintage pieces add a sense of history, tell a story, and make your space unique. It could be a family heirloom or something from a flea market.”

Still, many people shy away from antique decor, associating it with hunting through flea markets and excessive spending on one-of-a-kind items. With all of the resources available on the Internet, you do not need to be a world traveler or an avid “antiquer” to create an eclectic look and feel in your home.

The leading online curated sales destination for the home, One Kings Lane, recently launched Vintage and Market Finds, which is a permanent online marketplace featuring curated premium antique and vintage treasures. The marketplace is comprised of items from the country’s top vintage and antique dealers, offering remarkable prices and tremendous value to shoppers looking to update their homes with timeless decor.

To help you get in on the vintage trend, Cortney and Robert Novogratz are sharing their secrets for creating unique and family-friendly spaces that fuse style with purpose:

* Embrace the possibilities. When you’re shopping for vintage pieces, consider how they can be repurposed and reimagined for your home. You can use an antique chest as a coffee table that doubles as stylish storage for blankets, pillows and toys. You will find new ways to incorporate pieces you’re drawn to by keeping an open mind.

* Add history to your home. Vintage items, from coffee table books to maps and globes, can be incorporated into lively gathering spaces―or even your kids’ bedrooms. Parents with an eye for style shouldn’t be concerned about adding unique items to their home. While you do not want to not put the most expensive pieces in your kids’ bedrooms, collectables like classic books and vintage maps make perfect decorative learning tools.

* Mix it up. A mix-and-match approach can give a home an eclectic yet comfortable style, adding a touch of livability to ultramodern spaces and pops of personality to more traditional decor. This works well for a dining room table. Balance a traditional mid-century candelabra with bright-colored modern candles for a centerpiece. Using mismatched vintage plates when entertaining guests is a fun way to add eclectic style to a dinner party.

* Play up your story. Your home is your castle, and it should reflect who you are. A personal element, like your initials or a lucky number, can provide inspiration as well as a starting point for looking for vintage elements for your home. Start small and build as you go, keeping an eye out for items like chests, boxes, lighting, books, art and furniture.

Stylish home decor is more accessible now than ever, and with all of the resources available, decorating your space is not only easy, but fun. Using vintage pieces makes a chic statement about who you and your family are and how you live.