“Highest” and “Best” offers are not synonymous

We see it all the time in the MLS. “Multiple offers received; please submit your highest and best offer by Tuesday at 5 p.m.”

However, “highest” and “best” don’t always go together. A few months ago, one of my listings garnered multiple offers. Some of them were well above the list price and though it was tempting to think big bucks, the sellers picked the best offer. After the property settled and the sales price posted in the MLS, I got an e-mail from an agent who had submitted a higher offer wanting to know why their offer wasn’t selected. It was obviously higher than the closing price.
Patiently, I tried to explain that we looked at all of the offers and selected the one that had the best terms and conditions for the sellers. “But ours was a higher price.” Again it has nothing to do with higher price; it has everything to do with the overall terms. Incensed, they said they’d talk to their broker about the situation since their buyer obviously should have gotten the home.

Buyers and their agents need to realize what they may perceive as their highest and best offer may not always be the one selected. Is an offer well above list price with multiple contingencies better than an offer with no appraisal contingency? Is a cash offer lower than list price with a quick closing better than one above list price with an FHA loan? You can combine multiple scenarios and find that highest and best don’t always go together.

When I sit down with my sellers to review offers, I remind them it isn’t always about the sales price alone; it’s the total contract. If a deal looks shaky on paper then chances are no matter how many stars you get in your eyes from the price, the deal won’t be worth the stress it causes. In the Northern Virginia market where multiple offers are common make sure you’re making the best offer. Remember: the HIGHEST offer isn’t always the BEST offer.
© 2010 RE/MAX International, Inc. RE/MAX Affiliates may share this article, provided they do not charge for it and this notice is included. All other rights reserved.

RE/MAX Achieves Top Market Share In Twin Cities Metro For 2009

BLOOMINGTON, Minn., Feb. 8 /PRNewswire/ — RE/MAX achieved a great accomplishment in 2009, regardless of the static housing economy, and earned number one Market Share status in the Twin Cities 13-county metro for number of listings sold between January 1, 2009 and December 31, 2009. RE/MAX earned this achievement over second place Edina Realty and the remaining top five brands: Coldwell Banker Burnet, Keller Williams and Counselor Realty. This achievement is figured by combining the sold listings of all office locations and independent offices of each multi-office or franchise organization, in which listings were sold, according to data maintained by the Local Board or Regional Multiple Listing Service for the 13-county Twin Cities metro. (A graph representing this data can be found by following this link: http://tiny.cc/marketshare )
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Director of Franchise Development for RE/MAX North Central, Greg Cecchettini, says achieving the number one market share status in the Twin Cities 13-county metro is an accomplishment. “It shows that RE/MAX agents and brokers have been able to adapt to the changes in the market faster and more effectively than our competition. For example, RE/MAX agents make up over 60% of all the Certified Distressed Properties Experts (CDPE) in the U.S., which are focused on helping homeowners who are having challenges in making their mortgage payments or facing foreclosure, sell their homes.”
In addition to earning the number one market share in the Twin Cities 13-county metro, RE/MAX agents proved to be the most productive agents in the metro for 2009; the Sales Associate Productivity report shows the average active RE/MAX agent closed 14.83 transactions between January 1, 2009 and December 31, 2009. This is compared to Edina’s agents’ 10.04 closed transactions and Coldwell Banker Burnett’s 8.73 closed transactions. This is based on data from the Regional Multiple Listing Service on active agents of companies with 100 or more agents. (Follow the link to see the Sales Associate Productivity chart: http://tiny.cc/productivity112 )
RE/MAX currently has more than 1,300 active associates and 91 operating offices in Minnesota with number one market share status in 144 cities; an increase of 30 markets since 2008. RE/MAX North Central is affiliated with RE/MAX International. Since its inception in 1985, RE/MAX North Central has grown to nearly 200 offices and more than 2,100 sales associates throughout Minnesota and Wisconsin, providing residential and commercial real estate as well as relocation and referral services.
About RE/MAX
Based in Denver, CO, RE/MAX International is a global real estate system of franchisee owned and operated offices and their network of nearly 96,000 independent sales professionals. The RE/MAX network is made up of more than 70 regions, varying in size from a metropolitan area to an entire country. RE/MAX values community involvement at all levels of the organization, from individual Associates to corporate headquarters. Children’s Miracle Network and Susan G. Komen for the Cure are two prime beneficiaries.
For more information, visit www.remax.com and www.soldsignblog.com .
SOURCE RE/MAX North Central

IRS Releases Homebuyer Tax Credit Information

WASHINGTON — The Internal Revenue Service today released the new form that eligible homebuyers need to claim the first-time homebuyer credit this tax season and announced processing of those tax returns will begin in mid-February. The IRS also announced new documentation requirements to deter fraud related to the first-time homebuyer credit.

The new form and instructions follow major changes in November to the homebuyer credit by the Worker, Homeownership, and Business Assistance Act of 2009. The new law extended the credit to a broader range of home purchasers and added new documentation requirements to deter fraud and ensure taxpayers properly claim the credit.

With the release of Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and the related instructions, eligible homebuyers can now start to file their 2009 tax returns. Taxpayers claiming the homebuyer credit must file a paper tax return because of the added documentation requirements.

The IRS expects to start processing 2009 tax returns claiming the homebuyer credit in mid-February after it completes the updating and testing of systems to meet the law’s new requirements. The updates allow the IRS to put in place critical systemic checks to deter fraud related to the homebuyer credit.

Some of these early taxpayers claiming the homebuyer credit may see tax refunds take an additional two to three weeks.

In addition to filling out a Form 5405, all eligible homebuyers must include with their 2009 tax returns one of the following documents in order to receive the credit:

A copy of the settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.
For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.
In addition, the new law allows a long-time resident of the same main home to claim the homebuyer credit if they purchase a new principal residence. To qualify, eligible taxpayers must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encouraged homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,
Property tax records or
Homeowner’s insurance records.
The IRS also reminded homebuyers that the new documentation requirements mean that taxpayers claiming the credit cannot file electronically and must file paper returns. Taxpayers can still use IRS Free File to prepare their returns, but the returns must be printed out and sent to the IRS, along with all required documentation.

Normally, it takes about four to eight weeks to get a refund claimed on a complete and accurate paper return where all required documents are attached. For those homebuyers filing early, the IRS expects the first refunds based on the homebuyer credit will be issued toward the end of March.

The IRS encourages taxpayers to use direct deposit to speed their refund. In addition, taxpayers can use Where’s My Refund? on IRS.gov to track the status of their refund.

More details on claiming the credit can be found in the instructions to Form 5405, as well as on the First-Time Homebuyer Credit page on IRS.gov.

FHA Announces Policy Changes to Address Risk and Strengthen Finances

New Measures Will Help FHA Better Manage Risk, While Maintaining Support for the Housing Market and Access for Underserved Communities
WASHINGTON – Federal Housing Administration (FHA) Commissioner David Stevens today announced a set of policy changes to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The changes announced today are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.
The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement. U.S. Housing and Urban Development Secretary Shaun Donovan previewed the changes in December of last year, noting that the FHA would announce additional details before the end of January.
“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities.”
Announced FHA Policy Changes:
1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
o The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
o If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
o This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
o The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
2. Update the combination of FICO scores and down payments for new borrowers.
o New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
o This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
o This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
3. Reduce allowable seller concessions from 6% to 3%
o The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
o This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
4. Increase enforcement on FHA lenders
o Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.
 This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
o Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
 Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
 This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
o Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
 Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
o HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
 Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
 Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches
In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.
###
HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development ad enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

The Skinny

A housing market insight.

Click on the link below for good Real Estate information.

http://mplsrealtor.typepad.com/theskinny/

Re/Max Results
Dir: 952-475-1500
Cell: 952-292-0746
mailto:david@BighamRealtors.com
www.BighamRealtors.com
www.MVPrelocation.com

Weekly Market Activity Report

Fall is officially on in the Twin Cities, but it hasn’t slowed the housing
market as much as usual. After the school year begins, we typically
see a drop in buyer activity, but the 2009 fall market is remaining
robust due in large part to the final weeks of the tax credit for first-time
home buyers. There were 1,056 pending sales for the week ending
September 26, up 41 percent from the same week last year.
As a direct result, inventory is dropping like a stone. There are
approximately 24,500 homes for sale in the 13-county metro area,
down more than 20 percent from a year ago.
The October 2009 Supply-Demand Ratio (SDR) comes in at 6.88
houses per buyer, down 22.5 percent from last year. The SDR has
shown year-over-year drops of 30 percent or more for the past few
months, but we’re projecting that the year-over-year decline for
October will be smaller because pending sales are likely to be
significantly lower if the federal tax credit for first-time buyers is not
extended. If the credit goes *poof*, it will remove buyers from the
market.

The Monthly Skinny On Minnesota Real Estate.

Great Current Minnesota Real Estate Info.

Congress weighs reprieve for seller-funded gifts

STOCKTON, Calif. — A last-ditch effort to head off an Oct. 1 ban on the use of seller-funded down-payment assistance with FHA-backed loans is picking up steam as a compromise bill that would mend rather than end the practice gains momentum.

This would be a huge help to our market. Many home buyers do not have the 3,5,10 or 20% down required for down payment in this market. This could help more homes sell.

Have a good night.

Dave

Open Houses Today 9/7/2008

We will be hosting three open houses today.

1:) 713 Ashley Drive, Chaska. Open 1 – 3 PM: http://matrix.northstarmls.com/Matrix/Public/Email.aspx?ID=5218642224

2:) 6407 Oxbow Bend, Chanhassen. Open 1 – 3 PM: http://matrix.northstarmls.com/Matrix/Public/Email.aspx?ID=5218644892

3:) Forestview Lane, Plymouth. Open 12 – 6 PM: http://matrix.northstarmls.com/Matrix/Public/Email.aspx?ID=5218646862

Open House

I will be having an open house on Sunday 8/31/08 from 1 – 3 PM at our listing in Plymouth.

Click the following URL to see the listing:
http://matrix.northstarmls.com/Matrix/Public/Email.aspx?ID=5193187394