You probably noticed that there are many more offers per property than the usual amount, that offer prices are going up fast and that it became much harder to actually get an offer accepted.

A good portion of this phenomenon is due to the upcoming expiration of the tax credits.

Many would-be homeowners are scrambling to get properties under contract before the deadline. In lower-priced markets where good homes can be bough under $100,000, the $8,000 tax credit is a huge portion of the cash required to close. (if not more than the entire amount of cash required ). This holds true for the $6,500 credit as well.

Needless to say, this deadline has created a real shift in many real estate markets, but especially in the ones that represent the best bargains.

One result is that many realtors in many markets provide rosy statistics about how “their market is on an upswing” and the “average prices are going up” and “we have passed the bottom and are on the way up”. Some news outlets have seized on these reports and we have seen recent articles extolling the recovery of many real estate markets nationwide.

I believe most of these reports reflect the “flash-in-the-pan” phenomenon of buyers rushing to get their tax credit before the deadline.

Many markets may still show good closing activity for the next two months reflecting all these hasty contracts actually closing. Thus we are in for more reports about a wondrous recovery.

After all the tax-credit related closings occur, some hard reality may present itself.

This whole phenomenon bodes well for real estate investors beginning May 1^st 2010. Starting May 1^st, the competition for many bank-owned properties is likely to decline dramatically. Prices may be closer to the banks’ low asking prices with not as furious a bidding war as we experience now.

Happy investing!.

Needless to say this strange and arbitrary limitation did not help people trying to fix and flip houses, nor the local neighborhoods where such fix-and-flips would have created a positive effect.

HUD has now (as of January 15th, 2010) recapitulated - temporarily, and lifted the limit for the duration of one year. Hopefully it will stay like this.

Here is the link to the HUD website announcing the news.

The conference theme is “Recovery - What will it be like?”

It will be on Friday November 13th. The real estate panel is between 4:00-5:30 PM at the Wells Fargo room.

The conference is an all-day event. The keynote speaker is Dr. George Akerlof – winner of the 2001 Nobel Prize in Economics and a professor of Economics at UC Berkeley.

A link to the conference info is:
http://groups.haas.berkeley.edu/fc/conference/index.html

Attendees can register at:
http://www.acteva.com/booking.cfm?bevaid=191379

I hope some of you could attend.

Adiel

Many of you may know by now that Arizona governor Jan Brewer signed HB 2008 on September 4th 2009. HB 2008, among other things, repeals SB 1271 which called for adverse changes to Arizona’s anti-deficiency laws.

Thus Arizona’s anti-deficiency is as strong as it was before SB 1271.

We had a tele-seminar with an Arizona attorney regarding a detailed explanation of Arizona’s anti-deficiency laws. We have recorded it and can share it with you.

Please just contact us (details at our main web site www.icgre.com).

Many of us are using loss mitigation experts to assist us in attempting to short sell properties we wish to dispose of that are underwater.
There is a notion, which is mistaken, according to the attorneys I have talked to, that just closing on a short sale (which means the lender approved it), magically gets rid of our potential liability for any deficiency.

I believe this is entirely false.

Every attorney I talked to emphasizes that even if the lender has approved of a short sale, there needs to be SPECIFIC LANGUAGE in the contract as well as in the closing documents, stating explicitly that the loan has been satisfied fully and that the lender will not retain the right to sue for a deficiency at a later date.

I have been talking to many of you about my on-going recommendation to use a lawyer in conjunction with the short-sale specialist you are using. I believe this is quite important and this blog post enables me to warn everyone I may not have talked to. We also put this post in our recent newsletter. The lawyer can compose the right language to be put into the short sale contract, make sure that the right language is present in the closing documents, and demand that the lender put the right language in the documents before closing.

I believe using a lawyer while attempting the short-sales is a great safety mechanism. Just because you closed on a short sale does not necessarily make you immune to a future deficiency suit. The lender may even just sell the note to a collection agency who then may attack you and try to collect.

I recommend taking the necessary steps to get legally protected in a short sale.

Bill talked about the anti-deficiency law in the state of Arizona and how it is quite generous in protecting the borrowers against deficiencies in many cases when it relates to single family homes on regular sized lots (under 2.5 Acres).

We were very surprised to hear that about 30 days ago, the Arizona governor has approved a legislation called SB 1271 that severely reduces this protection, especially for investors.

Rather than try to describe the vagaries of the new language involved with SB 1271, I would say it’s worthwhile doing a search for “SB 1271” to read the details for yourselves.

If this is truly final, it will greatly reduce the anti-deficiency protection in Arizona. It is supposed to start to take effect as of 9/30/2009. This begs the question – what does that mean? Does it mean it will apply to a foreclosure that occurred past 9/30/2009 on a loan taken out in the past? Think about it – if this is really the case then it is retroactively “pulling the rug” from someone who may well have taken their loan in the past knowing about the Arizona anti-deficiency laws and counting on them. I wonder how it will hold up legally (I am not a lawyer so the great legal minds can chime in here for their feedback).

It seems quite clear the AZ government was not aware of the full unintended consequences of this legislation. Needless to say many real estate organizations are fighting it tooth and nail and I read that the person who had actually brought this piece of legislation up in the first place has now “seen the light” and he himself is asking for its repeal (sources only from the net so it’s only hearsay).

There is no doubt that if passed, this legislation could also hamper Arizona’s real estate market recovery. Before SB 1271 Arizona held a clear edge over many other states and thus would be a magnet for investors and others to choose to buy in it over other states. With SB 1271 investors and others may distribute their buying over many states, hurting Arizona’s special edge and thus possibly its recovery.

Let’s stay tuned to see the final results of this drama. It could affect many owners of Arizona real estate dramatically.