Category Archives: Investing

$8,000 Homebuyer Tax Credit

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Looks like the $8,000 Home Buyer Tax Credit is now signed, sealed and delivered.

Update: Everything you wanted to know about the 2009 home purchase $8,000 credit. (There is a similar link below for the 2008 $7,500 loan/credit)

Zillow reports it is a FULL $8,000 credit, even if the buyers total tax liability is less than that amount. “Buyers may not have owned a home for the past three years to qualify.”

CNN Reports That you can get your $8,000 faster by claiming it on your 2008 Return (or amended return if you have already filed), even though to qualify for this $8,000 non-refundable credit, you have to buy a house between 1/1/2009 and 11/30/2009

There is an income limit of $75,000 for single people and $150,000 for couples, though there are reports that people making over the limit might be able to get a partial credit.

If anyone has any details on the partial credit for people earning over the limits, please do let us know. Update: This answer is in the link at the top of this post.

For people who bought between 4/9/08 and 12/31/08

I don’t see any news so far that there are any changes for people who bought in 2008.

OpenSearch is beyond cool – it’s the new cold

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I was reading Redfin’s Developer Blog and the IE blog a few months ago and I got this desire to write my own OpenSearch provider. OpenSearch was originally created by A9.com (an Amazon.com company) and was primarily designed as a way for web developers to publish search results in a standard and accessible format. This turns out to be a good idea because different types of content require different types of search engines. The best search engine for a particular type of content is frequently the search engine written by the people that know the content the best. Google is great at searching unstructured content on the internet, but when it comes to structured search on a single web site there are much better options (Endeca, FAST, Autonomy, Solr, my favorite SQL database, etc). The other benefit of OpenSearch providers is that it shifts the balance of power away from Google and back toward web browser vendors & web site developers.

Both of the major web browsers support the OpenSearch Referrer extension. IE 7+, Firefox 2+ & Chrome allows you to add search engines to your browser without leaving the web page. The best place to get started is from the browsers vendors themselves. You can add search providers from Microsoft’s site or you can add search providers from Firefox’s add-ons site. In the interest of full disclosure, Opera allows you to add search engines manually, and Safari currently does not support this feature in any form (unless you count using vi to edit the Safari executable or changing your OS’s hosts file as support, which I do not recommend).

Anyway, our developer friends at Redfin wrote a blog post about their OpenSearch provider on their dev blog some time ago. Of course, they took the easy way out by not developing an OpenSearch Suggestions extension (slackers). I decided that a search provider without suggestion support is lame, so I took a stab at creating one. I think what inspired me to write an OpenSearch suggestions provider is that the IE 8 team blogged about their new Visual Search feature (which embraces & extends the OpenSearch suggestions work that Firefox pioneered) and I could leverage the work to improve the search experience for both IE 8 & Firefox 2+ users. (And the satisfaction of having a cool feature that Redfin & Estately haven’t implemented yet was probably another factor).

This functionality is typically exposed to users, via the search engine bar, next to the address bar in your web browser. So in your page markup, you’ll add something like this that tells the browser that your web site has a search service.

<link title="RPA Real Estate Search" type="application/opensearchdescription+xml" rel="search" href="http://www.seattlehouses.com/Feeds/OpenSearch.ashx"/>

The above element points to your site OpenSearch Description XML file which describes your search service in a way the browser can understand. When you visit RPA’s site, the browser will read RPA’s OpenSearch Description file located here and unobtrusively let you add the site’s search providers.

Assuming everything is working correctly, the user should be able to visit RPA’s web site, click on the browser’s search bar to add our search provider like so… (IE’s screen captures are on the left, Firefox’s are on the right).

I’ve also added a button in RPA’s search bar (see above right) in case site visitors don’t discover our search provider via the browser (I suspect most users would miss it otherwise).

After you’ve registered RPA’s search provider with your web browser, you can select it and just start typing. Since I’ve implemented a suggestions service, it will auto complete cities, school districts & neighborhoods as you type them (Didn’t I say this was cool?). I should note that although IE 7 & Chrome support OpenSearch, only IE 8 and Firefox currently support the suggestions providers. Anyway, if you wanted to look for listings in Bellevue, here’s what it currently looks like.

As you’ll notice, IE 8 & Firefox 3 displays suggestions differently on RPA’s site. This is intentional because IE 8 supports a newer version of the OpenSearch standards (Microsoft calls it Visual Search) and I designed RPA’s search provider to exploit this fact. In Firefox, the browser can only handle plain text suggestions, which can lead to ambiguous searches. For example, let’s say you search for Riverview. Riverview is both a neighborhood in Kent and a school district in Carnation / Duvall, so in Firefox there is no means for the user to tell the web site in which context they meant to search for when they typed in Riverview. I suppose one could create a “Did you mean” results page for cases like this, but I think that somewhat defeats the purpose of having suggestions support.

However, in IE 8, if a term has multiple contexts, the search provider can display them all and the user can select the one they meant. Also in IE 8, the search provider can display thumbnails next to the suggestions, which further helps the user quickly find what they are looking for. Although, I haven’t implemented that feature yet (mostly because I wasn’t sure what picture I should put up there for search terms that return multiple results), other web sites have. For example, if you wanted to buy a movie from Amazon or learn more about our 16th president from Wikipedia, the IE 8 search provider experience looks like this…

As the Redfin developers stated, implementing OpenSearch Referrer extensions are surprisingly easy (so I think users will soon request them from all web sites once the word gets out). The OpenSearch Suggestions extensions are more difficult to implement because every single keystroke is essentially a REST web service call. If you aren’t careful, you could bring your web server to its knees real quick. However, given all the AJAX map based tricks today’s real estate web sites perform, this isn’t anything that a professional software engineer can’t handle.

Call me crazy, but I think OpenSearch providers are going to become bigger than RSS feeds over the next year. If IE 8’s forth coming release doesn’t launch them into the mainstream, I think future releases of Firefox & Chrome will improve upon IE 8’s good ideas. Maybe you should think of it as browser favorites on steroids? If search is sticky, then OpenSearch is superglue and duct tape. If Firefox’s suggestions support were the tip of the iceberg, then IE 8’s implementation is cooler than Barrow, Alaska. The future of OpenSearch looks bright, even if it’s cold outside.

PMI Mortgage Insurance Company drop kicks Mortgage Brokers

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Today I had several Mortgage Professionals contact me regarding PMI Private Mortgage Insurance Company cutting off mortgage brokers via email and comments here.    I thought it must be a rumor…but it’s not, effective February 20, 2009 PMI Mortgage Insurance Company will no longer underwrite or insure loans for mortgage brokers.   However if you’re a lender, PMI is ‘Right alongside you…we’re in it for the long run”.  

From an email I received today from a Loan Originator:

It’s believed that PMI is the first of the nation’s seven MI firms to totally exclude loan brokers from their coverage menus. In recent months other MIs – including Genworth and MGIC – have tightened guidelines on broker-sourced loans, particularly condominiums and high LTV notes. A PMI spokesman confirmed the new policy change to National Mortgage News adding that, “This does not apply to correspondents.

$15,000 Home Buying Credit? No! How about $8000 For Some Instead?

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The $15,000 home buying credit in the Stimulus Package seems to be dead.

This credit would have been for more than just first time home buyers and was generating a lot of increased activity over the last week or so both on the Internet and in open houses across Seattle. There have been many arguments both for and against this particular tax credit and over who would benefit from it the most, but in the end the Senate and the House had to come up with a compromise

The Compromise?

According to Los Angeles Times and the Associated Press, only first time home buyers “could

Redfin Circles Back to an Old Biz Model…

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Redfin‘s been through so many business models over the years, I can completely understand why some folks would think that Redfin is entering a new area by working with real estate agents, but I can’t help remind folks that this is a business model that they’ve tried in the past… and it failed miserably the first time.

In only the 2nd time Redfin was mentioned on RCG, Anna was upset (to put it mildly), that Redfin had gone from being a company that did only referral business to agents (accepting a 20% cut), to including a flat-fee option for FSBO’s to get their listings in the MLS.  (Jun ’05)

A few months later, RCG agreed to give Redfin a 2nd chance after they had dropped all references to the flat-fee option for sellers from their website. (Oct ’05)

However, the Redfin evolution when Glenn Kelman took the helm of Redfin in Sept ’05.   From this article Galen published in Jan ’06, Glenn Kelman is being quoted talking about Redfin’s referral busines to agents saying:

“How do we make money now? People sign up for a real estate agent… The real estate agent and Redfin share the fruits of that.”

redfin-screen

I SOOO wish I had a screenshot of Anna’s profile she had on the Redfin site back in early ’05 because the content on the page would be shockingly similar to the current agent profiles.     I can’t remember exactly what the profiles looked like, but I’m almost positive they listed the agent’s recent transactions and had consumer reviews (I vaguely even remember a star system for the agents).

I honestly wish no ill will on the Redfin folks and wish them the best in their latest endeavor.   It’s just that the blogger in me can’t believe so many folks are letting them get away with saying they are doing something new.   About the only thing I see new with this program is that they are charging a 30% referral fee instead of the 20% they used to charge to agents back when Anna took part in ’05.

Buyers: Write Your OWN "Seller Disclosure Form"

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It amazes me that buyers and buyer’s agents don’t sit down and write their own addendum to the Seller Disclosure Form.  In the hot market it likely would have scared the seller, and lost you the house in mulitple offers.  But this is a Buyer’s Market!  Where are the changes as we shift from seller’s market to buyer’s market?

My number one piece of advice for buyers and buyer’s agents today would be to supplement the Seller Disclosure Forms with some REAL questions you would like answered by the seller.

You know the forms at best run up the middle between seller’s interests and buyer’s interests.  You know the forms are geared to “a smooth transaction” and closing for the agents and all parties.  So why do you accept their questions on the form as being all you need to ask and know?

I’ve written a skazillion posts over the last three years on what buyers need to know that no one tells them.  Not the seller.  Not the agent.  Not the home inspector.  Why not put these questions in as an addendum to the things you want the seller to tell you?

Recent comments from Jerry the Seller who wants to keep the buyer’s Earnest Money, are the impetus for this post this morning.  Read the comments of Jerry the Seller and weigh in…should the buyer get their Earnest Money back…or should Jerry get to keep it?

Be smart buyers!!!  Write down the questions YOU want answered, and make the offer contingent on your getting and reviewing those answers.  Don’t merely rely on the questions someone else deemed “enough” for you to know.

Underwriting Update for Financing of Investment Property with Fannie Mae

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Last Friday, when Fannie adjusted the allowance for the amount of financed properties owned from 4 to 10, other underwriting requirements on investment and second home borrowers were updated as well.  (Freddie Mac still has the 4 financed property limit).

Reserve requirements vary depending on the number of financed properties owned (including primary residence):

1-4 financed properties 0wned:

  • 2 months of reserves on the subject property if it’s a second home.
  • 6 months reserves on subj. property if it’s an investment property plus 2 months reserves on each other second home or investment property.

5-10 financed properties owned:

  • 2 months of reserves on the subject property if it’s a second home.
  • 6 months of reserves on the subject property if it’s an investment property plus 6 months reserves on each other financed second home or investment property.

Note:  Freddie Mac’s guidelines are *currently* 6 months PITI.

Other underwriting changes for investment properties include:

  • 70% LTV for purchase of 1-unit and 70% for 2-4 units.
  • 720 minimum low-mid credit score. 
  • No history bankruptcy or foreclosure in the past 7 years.
  • Rental income must be documented with two years tax returns.
  • Borrowers required to sign form 4506 (which you can expect on ALL loans these days–including owner occupied).

Don’t forget that there is a significant price hit of 0.75% to fee from Fannie and Freddie with investment properties on top of the credit score/loan to value adds (LLPA).    Seller contribution is limited to 2% of the sales price with investment property.

Why Connect with Facebook?

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connect-with-fbIf you’re been to RCG recently, you’ve undoubtedly noticed that I added Facebook Connect to the sidepanel.   I really want to invite you all to use this feature, so I thought I’d let you know why I added it:

  1. I’m a Facebook addict, love the service, and enjoy connecting with others.  I’m thinking there’s at least a few other RCG community members who would enjoy connecting via the service
  2. I’ve been looking for a way to give a “carrot” to folks who properly identify themselves when they leave comments. I don’t want to “punish” anonymous commenters, I just want to give a bonus to those who aren’t anonymous.

The carrot we’re now offering is two-fold:

  1. Your comment will bypass almost all of the moderation filters that occasionally slow down a comment from showing up immediately on the site.
  2. Your profile link will be of the “dofollow” variety.

For most of the folks in the RCG community, I’m positive you’re here because you love the conversation and could care less about the positive link luv RCG can give you.   Nonetheless, if you’re willing to identify yourself with your “real” identity, then these two things are just two small carrots we’re now offering…

So, please consider taking advantage by clicking on the “Connect with Facebook” button to the right and follow the simple instructions.  As a bonus, after you “connect”, you’ll be able to update your profile on RCG with a few additional fields that will make it easier than ever to connect with others from the RCG community.

And finally, I launched FB Connect on the site despite the fact that I’m not 100% happy with it yet. Here are some problems I’ve found and/or things I’m working on:

  1. FB Connect plays funny (or doesn’t play at all!) with early versions of Internet Explorer, (especially IE 6.0 and below).  This might sound harsh, but my solution is to beg for you to get and use Firefox (or even Chrome),  but if you’re not willing to do that, at least get the latest version of IE
  2. The feature that let’s you “add your comment to your Facebook feed” was giving some folks some problems, so I disabled it.  I really like the idea of this feature, so I’ll work on troubleshooting exactly what was causing problems, although I think it had something to do with old versions of IE (see previous comment!).
  3. I really want the avatar that shows up next to users to default to the “gravatar” instead of the FB avatar.  My thought here is that many folks have a “fun” avatar on Facebook, but might prefer to have a more consistent avatar on a business site like RCG.  I spent some time trying to get this work and while I made some progress, it’s still not working well enough for me to feel comfortable launching… but hopefully soon.

I have a feeling there’s going to be lots more to come in terms of taking advantage of Facebook tools within RCG in the future. Hopefully, you’ll play along and if there is something that doesn’t appear to be working right or a feature you’d like to see, please let me know!

Are you making your client homeless?

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I’ve been wanting to warn sellers and seller’s agents about this for the last 10 days or so.  Courtney’s new post is a great lead in to this added consideration for sellers and listing agents.

CAN YOU BUY THAT HOUSE, WHEN YOUR HOUSE SELLS?

Having had the benefit of working in a market exactly like this one, back in NJ/PA in 1992 or so, I think this warning will be timely advice for many.

When an agent is called to sell a house, they touch on the subject of “Where are you going to go when this house sells?” But most often the antennae of the agent is focusing on whether you will also be buying a house with them, or if they can get a referral fee by referring you to an out of area agent (usually 25% of the commission.)

WARNING TO SELLERS: IT IS VERY HARD TO GET A MORTGAGE.  In the last market like this, many sellers assumed that since they had a HUGE downpayment, they didn’t have to worry about qualifying for a mortgage on the house that they were planning to buy.  NOT SO!

Having 50% down and little income could leave you homeless, as NWMLS does not permit “provisional” listings.  There’s no turning back.

Here’s how it usually “plays out”:

1) Seller doesn’t want to look at homes until their house has a contract. With houses sometimes sitting on market for well over 100 days, looking at what you will buy when your house sells is often put off until you have an actual buyer for the home.

2) Once the contract is signed around, the seller goes out and makes an offer on a house they are buying with 30% to 50% down.

3) Often the seller and the agent for the seller of the home they are buying are so impressed with the big downpayment, everyone all the way around assumes that someone with that large of a downpayment can get a mortgage.

REMEMBER:  The buyer of a home has a legal out phase lasting about 10 days, but the seller does not have a legal out phase if they can’t get a house to go TO.

Often you can’t just go to the buyer and say, “Sorry.  I can’t buy a house so you can’t have mine.”

So to listing agents, I know you want that listing, and your are primarily interested in getting the seller to sign that listing contract.  But be careful that you are not making your clients homeless. If they are people living on a fixed income, saying they are planning to buy, part loan, your ears should perk up.  Make sure they check with a lender as to getting that loan…before you sell their house out from under them.

We are often in the business of “GETTING PEOPLE FROM HERE TO THERE” moreso than simply “selling houses”.  Don’t leave your seller’s homeless, as you walk off to the bank to cash your commission check for “selling their house”.