Things you should know: REAL ESTATE to make you THINK!

SHORT SALES:

A short sale is when a house is sold, with lender agreement, for less than is owed to lenders. It can often be a less painful process than forced foreclosure for both owner and lender. There are a lot of "short sale" listings on the market now and they are sometimes offered and sold a little cheaper than would be the case normally. This attracts "bargain hunters" and can also affect the sales price of local properties even when they are not in short sale mode. HOWEVER, buying short sales can be a long and frustrating process. Very often there will be multiple offers, driving the price up, and the bank approvals can take weeks or even months. Many "short sale" listings end up not being sold at all. (An owner finds a way to catch up and keep the house, or the bank will not take the short sale offers and forces foreclosure). If you consider buying a short sale, as a home or investment, be prepared for some frustrations. Having said that, in some areas, more than half the condos for sale are short sales right now.

BANK-OWNED:

This is a house which has been repossessed by the lender, and is usually put back on the market through a realtor. These can be bargains, and are an easier process than a short-sale but are not as numerous.

CONDITION OF HOUSE:

Remember that a short-sale or bank-owned property has probably been occupied by an owner who has lost the house and is getting nothing from it's sale. At best they may have been unable to pay for all maintenance; at worst they may have taken out their frustration on the house!

NEW FHA LOAN LIMIT:

Until the end of this year the FHA loan limit has been raised to $729,750. With FHA you can usually buy a house with a minimum of 3% down, all of which can be a gift. Fairly good credit is still needed (as with all loans now) plus income documentation. This really helps buyers in this area as the average house around here can now be bought with an FHA loan, which was previously impossible.

MELLO-ROOS TAX IRONY:

Mello-Roos tax is a flat amount in $ each year. As house prices rise, this makes the effective tax rate on the house decrease. HOWEVER, in the present market, where prices have come down, it means the effective tax rate on houses with Mello-Roos increases.