Would you be willing to pay the original builder a fee when you resell your home? That’s what some developers are trying to do to homeowners in their communities.

Many condo and townhouse dwellers are already familiar with the “flip tax,” more formally known as a resale fee. Typically calculated as a percentage of the sale price, it’s a fee due to the condo association or community when an owner sells. These charges fund common-area maintenance or provide a boost to reserve funds, which benefits the association’s homeowners.h

But in some develpoments, homebuilders are including in contracts a 1% fee to be paid to them every time the house is sold for 99 years. This money goes directly into the builders’ pockets. That has the real estate industry and consumer protection groups up in arms.  ”It’s of no benefit to consumers,” said Kathleen Day, of the Center for Responsible Lending. “It’s another innovative way to price gouge. Every extra dollar they suck out of people’s wallets takes away from other spending. It’s not good for the economy.”

The issue has attracted the attention of Washington, where Rep. Brad Sherman, D-Calif., is leading a charge against the fees. “Consumers are not in a position to deal with another level of complexity, one that pits plain vanilla homes against ones that come with fees,” he said.

Freehold Capital Partners, the New York-based financial company that is developing the program, claims it has already signed up thousands of developers nationwide, representing hundreds of billions of dollars of development.

The company’s plan is to monetize that future income — essentially allowing developers to get paid now rather than later. To do that, Freehold would bundle together the estimated income from the future fees and sell that package to investors. It claims this new “asset” would be worth about 5% of the original home prices.

Still, most real estate experts are against these fees. A coalition of real estate industry organizations and community groups recently sent a letter to Treasury Secretary Tim Geithner recommending that he not allow Freehold’s securitization plan to go forward. In the letter, the coalition quoted Rep. Sherman, who called the fees “a new predatory scheme.”

In the past month, the Federal Housing Finance Agency proposed restricting Fannie Mae and Freddie Mac from buying or backing any mortgages that include home resale fees.

Freehold, of course, defends the program. Chief Operating Officer William White argues that the 1% resale fee will actually benefit consumers by lowering home prices: “No one will pay the same for a home with a [resale fee] as they would for the same home without the fee,” he said.

That would make buying a home easier — but reselling one at a profit harder. Meanwhile, builders could offset their lower initial selling prices by either collecting on the back-end income stream from future sales, or selling those future earnings off to investors.

No securitization package has yet been created, according to White. But he’s optimistic: “We have been pleased with Wall Street’s response to date.” Whether the program will ever gets off the ground is an open question: 18 states have already banned or restricted the practice, and if the FHFA proposal goes through, it could derail it entirely.

The Multiple Listing Service of Long Island, Inc. (MLSLI) reported a Long Island closed median home price of $380,000 for July 2010. This figure is slightly higher than $373,000 reported by MLSLI in July 2009 and represents closed sales in Nassau, Suffolk, and Queens County. Nassau County reported a July 2010 closed median home price of $435,000, representing a 6.1 percent increase over last year. Suffolk County reported a closed median home price of $341,500 compared to $349,000 July 2009. Queens reported a closed median price of $355,000 for July 2010, which was the same as it was reported in July 2009.

Between January and July of this year the total number of closed sales on Long Island has significantly exceeded closed transactions reported during the same time period in 2009. That is a result of the tax credit which was very effective in stimulating the housing market. However, as expected, now that the tax credit has expired, Long Island contracted sales have posted a 17.3 percent decrease from July 2009. There were 2,386 purchase agreements signed in July 2010 compared to 2,886 last July. This could be explained by the many would-be summer time buyers accelerating their purchases to take advantage of the tax credit.

In July, contracted home prices on Long Island were up and down amongst the three counties. Contracted home prices is a forward-looking indicator since it represents what deals have been recently written, not what deals have been closed. The July 2010 contracted median home price in Nassau County was $410,000 which represented a 2.5% increase over last July. In Suffolk County, the July 2010 contracted median home price slipped to $325,000, compared to $335,000 a year ago. Queens reported a contracted median home price of $350,000 which is 2.8 percent less than a year ago.

Industry experts predict that home sales in the short term are expected to slow before picking up later in the year providing the job market improves. Joseph E. Mottola, MLSLI CEO says, “To sum up the local housing market, would be to say that it is really trying to hold its ground until the job situation improves. Only after the employment picture begins to brighten will a stronger demand for housing be restored.”

After several failed attempts to fix the country’s housing sector, the takeover of mortgage buyers Fannie Mae and Freddie Mac, $787 billion worth of economic stimulus money, a massive overhaul of America’s health care system, and the biggest re-write of finance rules in 70 years, the government says it’s finally getting serious about solving a root cause of this Great Recession, the housing crisis.

This Tuesday, 08/17, the Treasury Department hosted Washington’s biggest event of the week, a “Conference on the Future of Housing Finance.”  This is where government officials, policy makers and private sector bigwigs discuss winding down arrangements for Fannie and Freddie, which have soaked up at least $127 billion in taxpayer dollars since Uncle Sam put them into conservatorship in September 2008.

“It is not tenable to leave in place the system we have today,” said Treasury Secretary Timothy Geithner in his opening remarks to the conference. Says Shaun Donovan, the Secretary for the Department of Housing and Urban Development (HUD): “The government’s footprint in the housing market needs to be smaller than it is today.” See full remarks of  Secretary Shaun Donovan  - Housing Finance Conference.

If the Obama administration’s track record on these types of gatherings is any indication, legislation is likely to follow soon. (The White House held similar forums on health care and financial reform in the months before major bills—both of which passed—were considered on Capitol Hill.) In the meantime we should keep an eye on the lobbying. The Mortgage Bankers Association, the National Association of Homebuilders, Bank of America, PNC Bank, Morgan Stanley, the National Council of State Housing Agencies and the National Association of Affordable Housing Lenders were among the participants in Tuesday’s conference. They and other groups will have a lot to say about this issue in the coming months.

Nonetheless, it’s highly doubtful that Congress will tackle Fannie and Freddie this year because of  upcoming election and a “lame-duck” session in November.  But this reform we hope could become the legislative issue of 2011.

Homeowners are now able to refinance

After months of hovering near 50-year lows, mortgage rates have fallen even further, into uncharted territory and to a level lenders say is finally igniting more homeowner refinancing. For this week the average interest rate on new 30-year fixed-rate mortgages was 4.44%, according to mortgage giant Freddie Mac. This week’s rate was down from 4.49% a week earlier and 5.2% in early April.

One reason activity is growing stronger is that today’s rates are not only lower, but refinancing has become cheaper. That is because investors have begun paying more for mortgage bonds than in the past, enabling lenders to use this additional money to cover some refinancing costs that borrowers would traditionally bear.

The economist for National Association of Home Builders, Robert Denk’s prediction is coming true. He said, “There will be softness in the summer months followed by firming conditions and momentum as the year unfolds and the economy strengthens”.

There is also the good news the Federal Housing  Administration ,FHA, underwater financing program  will be starting soon and is on track to help 3-4 million homeowners.

As reported by The Associated Press  07/20.10:

Home construction plunged last month to the lowest level since October as the economy remained weak and demand for housing plummeted. But driving the June decline was a more than 20 percent drop in condominium and apartment construction, which makes up a small but volatile portion of the housing market. Construction of single-family homes, the largest part of the market, was down slightly. It dropped 0.7 percent.

Overall, construction of new homes and apartments in June fell 5 percent from a month earlier to a seasonally adjusted annual rate of 549,000, the Commerce Department said Tuesday. May’s figure was revised downward to 578,000. Homebuilders are struggling to compete with a glut of homes on the market, many of them foreclosures or deeply discounted properties.

The number of foreclosures could rise even faster, according to a new report on the Obama administration’s flagship effort to help those at risk of losing their homes. More than 40 percent of those of those who have enrolled have dropped out of the program, the Treasury Department said Tuesday.

One bright area of the new home construction report was an increase in building permit applications, which are a sign of future activity. They rose 2.1 percent from a month earlier to an annual rate of 586,000, however this was also driven by apartment construction. A slumping job market and competition from foreclosed properties have forced builders to limit construction, especially after tax credits that spurred sales expired at the end of April.

“The housing market remains the Achilles heel of the recovery,” said M. Cary Leahey, a senior economist at Decision Economics. “It is hard to imagine confidence recovering to healthy levels until the housing market experiences much less distress.” The lackluster housing report contributed to an early sell-off on Wall Street. The Dow Jones industrial average fell 120 points in morning trading.

In a typical economic recovery, the construction sector provides much of the fuel. Not this time. While developers have cut back on construction and the number of new homes on the market has fallen dramatically, they still must compete against foreclosed homes selling at deep discounts.

Builders may be turning their attention away from new projects to complete those already in progress. Housing completions rose 26.2 percent in June, noted John Ryding and Conrad DeQuadros, economists at RDQ Economics. That could be a positive sign for future activity.

“Our best guess is that housing construction activity continues to bottom out at low levels and that we will see some very modest growth in the second half of the year in new housing construction,” they said in a note to clients.

The National Association of Home Builders said on Monday that its monthly reading of builders’ sentiment about the housing market sank to 14 — the lowest level since March 2009. Readings below 50 indicate negative sentiment about the market. This is causing builders to feel increasingly pessimistic.

The rate of home building is still up about 15 percent from the bottom in April 2009, though it’s down 76 percent from the last decade’s peak in January 2006. New home sales in May dropped 33 percent to the slowest pace in the 47 years records have been kept. The drop-off came immediately after the tax incentives to sign a contract on a home ended on April 30.

Recently Congress passed two bills to extend the home buyer tax credit closing deadline and reauthorize the National Flood Insurance Program. Both bills, strongly supported by the National Association of Realtors®, NAR, cleared the House earlier and is now head to President Obama for his signature. The tax credit closing deadline and the NFIP reauthorization were extended to September 30. Extending the tax credit closing and flood insurance deadlines will help provide additional stability to real estate markets across the nation.

The passage of H.R. 5623, the Homebuyer Assistance and Improvement Act, applies the homebuyer tax credit closing deadline extension only to homebuyers who have ratified contracts in place as of April 30, 2010, but could not close before June 30. The legislation is designed to create a seamless extension of the new closing deadline for eligible transactions to September 30. There will be no gap between June 30 and the date the president signs the bill into law

About the Extended Home Buyer Tax Credit

As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, in November 2009, Congress passed legislation that:

1.   Extended the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.

2.  Expanded the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

According to analysis of recent Zillow Real Estate Market Reports, U.S. homes lost $489 billion in value during the first 11 months of 2009, significantly less than the $3.6 trillion lost during 2008. Furthermore, 48 of the 154 markets tracked by Zillow, or nearly one in three, showed gains in home values during 2009.

The stabilization in home values reduced rates of negative equity in the third quarter of the year. Twenty-one percent of single-family homeowners had mortgages underwater, or greater than the value of their homes, compared with 23 percent in the second quarter.

Negative equity has been one of the biggest banes of homeowners, making many unqualified for home loan refinancing and preventing some from selling. Borrowers with negative equity are more prone to defaults and foreclosures.

Sales have surged in recent months as buyers scrambled to take advantage of the government's first-time home buyer tax credit, which was originally set to end November 30. Last month the Obama administration extended the $8,000 first-time home buyer tax credit, added a $6,500 credit for home owners buying a new residence and increased income limits. Eligible borrowers must sign contracts by April 30 and close loans by June 30.

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Best Buyer’s Broker Realty is an Exclusive Buyer Agent specializing in Long Island real estate (Nassau and Suffolk properties) and neighboring Queens County properties.

We don’t take any seller listings (yet we have more homes for you to see than most agents) and never have any potential conflict of interest like other agents who also represent sellers. We represent buyers only, 100% of the time. We can show you more homes for sale because we have access to MLS, FSBOs, Exclusives (homes that agents try to keep secret), foreclosures and homes not on the market that may be of interest to you.

We are not your traditional real estate agent. Our goal is to advise and protect home buyers and help them obtain the lowest price and best terms on their dream home. Call us at 516-887-6901 to see how we can help you save time and money. Or visit our sites at http://bestbuyersbroker.com or http://bestbuyerbroker.com.

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Low interest rates and a depressed real estate market have some affluent parents asking financial advisers if buying their children a house could accomplish a one-two punch of moving assets out of their estate while grabbing a good deal on property.

The answer is, not exactly.

While parents may get a bargain on real estate, purchasing a home for children may not get them the best bang for their estate-planning buck, particularly if that estate is sizable and includes income-producing assets like securities or a private business interest.

As the federal tax law currently stands, a married couple can give, during their lifetimes or leave to their heirs at death, $2 million before any tax is owed. “A home isn’t an income-producing asset, so it makes more sense to save the $2 million lifetime gift exclusion for other estate-planning techniques which can generate a lot more upside in the future,” said Mark Luscombe, principal tax analyst with Wolters Kluwer, a business that provides tax and legal information.

Instead, advisers say parents intent on helping their children become homeowners consider a cash gift instead.

Individuals are allowed to gift up to $13,000 per person in a given year without dipping into their lifetime gift tax exclusion. That means a couple could give their daughter and her husband $52,000 a year to go toward mortgage payments or the down payment, while removing some assets out of their estate each year. In this situation, the kids would have to buy the home, but would get another break this year: Qualified first-time home buyers who purchase a home before Dec. 1st are eligible for an $8,000 tax credit. This may apply for parents and children who buy the house jointly, although the credit begins phasing out at a modified adjusted gross income of $150,000 when married and filing jointly.

There are other options, like making the kids a loan.

The government sets minimum rates for loans, among family members and others, to not be considered gifts. Those rates now are historically low, ranging from less than 1% to about 4 1/2% depending on the loan term. This method doesn’t actually move money out of the estate, thus freeing up the $2 million exclusion to pass on other assets that are more likely to appreciate over time. Children can use income generated from the appreciated assets to pay off the loan. Parents could use the $52,000 annual gift exclusion for their daughter and husband to forgive both the interest and principal of the debt if they choose.

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Best Buyer’s Broker Realty is an Exclusive Buyer Agent specializing in Long Island real estate (Nassau and Suffolk properties) and neighboring Queens County properties.

We don’t take any seller listings (yet we have more homes for you to see than most agents) and never have any potential conflict of interest like other agents who also represent sellers. We represent buyers only, 100% of the time. We can show you more homes for sale because we have access to MLS, FSBOs, Exclusives (homes that agents try to keep secret), foreclosures and homes not on the market that may be of interest to you.

We are not your traditional real estate agent. Our goal is to advise and protect home buyers and help them obtain the lowest price and best terms on their dream home. Call us at 516-887-6901 to see how we can help you save time and money. Or visit our sites at www.bestbuyerbroker.com or www.bestbuyersbroker.com

Free granite countertops, swimming pools and landscaping aren’t going to convince anyone who’s afraid of losing a job to buy a home. But what about a promise to pay your mortgage if you get laid off?

It started in the auto industry when ads started popping up from dealers promising to make your car payment for a year if you lost your job.

With the unemployment rate at a 26-year high and home sales still in the dumps, a growing number of homebuilders and even some real estate agents are trying to coax buyers with a kind of mortgage unemployment insurance similar to what the auto industry has been offering for a few weeks now.

It’s not a nationwide thing (YET), but where it is being offered, builders can pay anywhere from $450 to $900 per customer for the coverage. Some absorb the cost as they would any other sales promotion, while others pass it on to buyers.

Some real estate firms also are getting into the act, with plans that pay up to $2,500 to cover the full mortgage payment, including taxes and insurance, for six months, should you lose your job.

Do incentives like this make you think twice about buying a home during these troubled times? We’d be curious to hear your thoughts on this idea that is just now starting to take hold in some parts of the country. Leave us your comment by clicking the comment link below.

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Best Buyer’s Broker Realty is an Exclusive Buyer Agent specializing in Long Island real estate (Nassau and Suffolk properties) and neighboring Queens County properties.

We don’t take any seller listings (yet we have more homes for you to see than most agents) and never have any potential conflict of interest like other agents who also represent sellers. We represent buyers only, 100% of the time. We can show you more homes for sale because we have access to MLS, FSBOs, Exclusives (homes that agents try to keep secret), foreclosures and homes not on the market that may be of interest to you.

We are not your traditional real estate agent. Our goal is to advise and protect home buyers and help them obtain the lowest price and best terms on their dream home. Call us at 516-887-6901 to see how we can help you save time and money. Or visit our sites at www.bestbuyerbroker.com or www.bestbuyersbroker.com

According to survey results from a poll conducted for one of the large real estate franchise companies, potential first-time U.S. buyers said they are likely to buy a home in the next two years.

Record low mortgage rates and a new first-time homebuyer tax credit are large incentives, despite obstacles that include greater difficulty getting loans approved.

All of the 1,000 potential U.S. homebuyers surveyed in an online survey said they were likely to buy a house for the first time in the next two years.

More than three-quarters of those polled said this is a good time to buy a home, and almost 70 percent said now is a better time than six months ago, and more than three-quarters of those polled said the $8,000 federal tax credit makes them more likely to buy a house in the next six months.

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Best Buyer’s Broker Realty is an Exclusive Buyer Agent specializing in Long Island real estate (Nassau and Suffolk properties) and neighboring Queens County properties.

We don’t take any seller listings (yet we have more homes for you to see than most agents) and never have any potential conflict of interest like other agents who also represent sellers. We represent buyers only, 100% of the time. We can show you more homes for sale because we have access to MLS, FSBOs, Exclusives (homes that agents try to keep secret), foreclosures and homes not on the market that may be of interest to you.

We are not your traditional real estate agent. Our goal is to advise and protect home buyers and help them obtain the lowest price and best terms on their dream home. Call us at 516-887-6901 to see how we can help you save time and money. Or visit our sites at www.bestbuyerbroker.com or www.bestbuyersbroker.com