As much fun as it might be to debate whether real estate transfers or transactions can, should, or will ever, be taxed…this is not the Great Satan that you should lose much sleep over.   The facts are this transfer tax applies to the so called “wealthy” earning $250,000 or more jointly or $200,000 as an individual, if the sale of a house produces a gain of $250,000 (filing single) or $500,000 (married filing jointly).  Even if the gain falls under these qualifiers, there are additional considerations that involve the household’s tax situation.  Keep in mind, this tax also only applies on principal residence sales after the $250,000/$500,000 gain exclusion.

I know taxes get everybody in an uproar when they potentially apply to their own interests.   Housing affects a significant portion of the population so this tax does get people upset.  Just please understand who needs to be upset and who likely will not be affected.  Here is a link to an article the National Association of Realtors have posted.  Also, if you want a deeper understanding, a down loadable brochure has been made available.

Last year  we finished our year by adopting a family so that they could enjoy Christmas.  We are are blessed to be able to share in our time and monetary means.  Most of our team members were able to participate as we shopped, wrapped and then had a very special evening where we delivered presents and food to this family of five.  To see the children’s excitement, as their Christmas tree quickly filled with presents was a personal gift for each of us.  Sharing with this family that their Christmas was courtesy of all the fine people who are a part of the WILMOTH Family (and that includes vendors, contractors, and of course clients) was the best holiday gift decision we had ever made!

Thanks to our clients who allowed the WILMOTH Group to be able to give back to our communities in Indiana and Florida in 2011, and most significantly to this family.   Last year we were able to support eight local community charities that include organizations that feed the homeless, a soup kitchen, youth sports organizations, and direct gifts to other individuals in need.  We learned that giving back was the finest gift we could ever give!

If you were accustomed to receiving a calendar or a gift card, we hope you will understand.  We hope that 2012 allows us to grow in our giving even more, and that somehow, in our rather small way, we make a huge difference in a few lives.

The MFDR was originally created by Congress to assist people who needed to sell their homes with an approved short sale.  It also found value for foreclosed homeowners…in some very limited cases.  Basically, owner occupants who had borrowed up to $2 million are able to exclude what otherwise would be a taxable event-the forgiveness of mortgage debt.    So, a homeowner with a mortgage balance of $250,000, and an approved short sale for $175,000, had a bank forgiveness of $75,000.  This gift was taxable and reported with a 1099-C tax form with a potential cost to a 25% tax bracket of $18,750.  Up to the creation of the MFDR I had watched homeowners choose to file bankruptcy rather than be burdened with the tax debt as a bankruptcy provided a similar tax forgiveness-along with many years of credit problems.   After the MFDR was created, the IRS essentially could not tax the homeowner for what is otherwise considered a gift, and the homeowner did not have to file bankruptcy to receive this protection.

What do you think the chances are that this very helpful law for continuing to create a positive environment for owner occupied short sales will be extended?  I think that is anybodys guess based on election year politics.  If you have been considering selling and have been on the fence, and a short sale is likely, start now to make a decision.  Avoiding taxation on the amount forgiven by the lender is an important part of your future financial well-being.

Fourth quarter 2011 sales activity is creeping up.

140,000 private sector jobs added in November 2011 may add to more optimism and willingness to invest in housing in 2012.

Questions persist though as to whether these events are blips or trends.  Fannie Mae’s chief economist, Doug Duncan, is quoted in Housing Wire saying  ”It’s important to recognize that we’re ending 2011 on a stronger note than we’ve seen throughout the year. Unfortunately, however, our 2012 outlook is not as rosy as our forecast for the fourth quarter of 2011.  Despite recent near-term improvement, the housing market will likely remain subdued next year — a reflection of the winter season, an expected slowdown in economic activity, and a potential increase in distressed sales,” according to Duncan. “Moreover, we expect that the country’s fiscal problems will be hotly debated over the coming year and will weigh on the market.”

Our take on this is this.  2012 will offer continuing opportunities for home buyers who feel secure in their employment situation.  Historically low interest rates will be available to those who have good credit and motivation.  As employment continues to improve, 2013 will likely mean more buyers in the market starting to create demand levels we have not seen in five years.  Demand will bring up values which will improve optimism.  As optimism increases many good things will occur.  Housing leads the economy, so the best opportunities are prior to full blown optimism returning.

The conclusion: 2012 may be the last year for a while where the supply of housing keeps prices and rates low.  If you are considering purchasing, watch the job market closely as this is where optimism starts, and housing values will increase thereafter.

Online Offers System Benefits The Online Offer system simplifies the offer submission process with the following features:

• An easy to use, self-service system.
• A transparent offer process that keeps Selling Agents informed of the status of their clients’ offers on HomePath properties listed on HomePath.com.
• Improved communication between the Selling Agent and the Listing Broker regarding offers on HomePath properties listed on the HomePath web site.

The following instructions are being added in the Agent Only Remarks in the MLS listing, unless prohibited by MLS: “The seller has directed that all offers on this listing must be made online in HomePath.com. Go to HomePath.com, search for the property details, and click the ‘Make Offer’ button to submit an offer.”

To prepare a complete offer for the system, refer to the worksheet posted at HomePath or available at our website.   A complete offer is one which the buyer has signed the local or state contract, the Real Estate Purchase Addendum, and the Owner Occupant certification (if the buyer is an owner occupant).

To learn more about the program and how to manage your offers online, view the HomePath Online Offers Resources Page for training materials, frequently asked questions, webinars and other resources.  The Online Offer Fact Sheet provides step by step instructions for using this new system.

“We have just started to see offers made on the system and believe this will help Fannie Mae to achieve their objectives and provide selling agents with a more transparent experience” stated Jennifer Wilmoth, co-owner of the Wilmoth Group.

One of the issues that commonly is of interest is how to find HUD homes for investors.  Most agents have heard that the owner-occupant preference period has been extended under the Marketing and Management III contract.  There is some misunderstanding on this point, and it is in that confusion lies a golden opportunity for investors.

I will try and keep this simple.  Come to a class to dig deeper into the details.  Basically, HUD provides information for FHA buyers in each home’s listing that assists the FHA buyer in learnign if the home is approved for FHA financing or not.   Homes that are approved for FHA financing can include properties that an FHA appraiser has identified up to $5000 of repairs.  There is a process for the FHA buyer to complete those repairs and have FHA financing.  If the HUD home does not qualify for straight up FHA or the $5000 repairs program (FHA 203B) then HUD places the letters UI in the FHA financing category on the listing.

The approved FHA (IN) and the 203B (IN w/Escrow) properties all have 30 days for owner occupant purchasers to have priority.  No investor bids are possible until day 31.  So one option for investors is to wait for these properties to hit day 31.  From experience, not many of them do.  They are priced well and the advantages for FHA buyers are too great.

It is the properties labeled for FHA financing as UI that you should search for investors.  Look for the new ones that come on the market.  It is possible they may have repairs that are as low as $5100-remember they did not qualify for the FHA 203B.  Here is the kicker..HUD only has a five day owner occupant preference period for these properties!  On day 6 of the listing for UI properties, investor bids are accepted.

Increasingly, banks and government agencies are making strong efforts to only sell to owner occupants.  The game for investors has turned more to auctions and bulk sales.  Bulk sales are for deep pockets.  Here is a way the smaller investor can bid on properties shortly after they have hit the market.   Combined with the possibility that the amount of repairs may not be substantial, this is the opportunity for your investors to participate in buying HUD homes.