May 8, 2008 Newsletter
This is the Eighth issue of the Colony Title Newsletter.
Colony newsletter number 8. Past newsletters which have covered sales contracts, FSBO’s, 1031’s , foreclosures, shared equity agreements and reverse mortgages are available on our website. As promised we look at TIC’s this week.
TICs (tenant in common properties) are typically office buildings owned by a developer or investment group that sell the building to individual property owners in “pieces.” For example, a ten story office building worth 15 million can be divided into segments which are sold individually or in groups to real estate investors. If you have sold an investment property and have taken advantage of the 1031 exchange, you have 180 days from settlement to identify and purchase the replacement property. If you haven’t identified a replacement in 45 days, you lose the deferral. With a TIC the seller is flexible enough to sell you one or more units within the building to meet the amount you need to use to exhaust the 1031 funds. The developer manages the building, collects the rents and you have another investment property. While TICs are not the perfect solution for your investment strategy, they are a viable alternative if you want to defer the capital gains from selling your investment property, but don’t know what you want to acquire as a replacement property. For realtors reading this, TICs do pay commissions if you bring your buyer to them. Should you need more information, email me at firstname.lastname@example.org.
Short sales and foreclosures will continue to make headlines in the media, but that does not have to be all bad. Short sales will allow homeowners in over their heads to sell and regroup. Investors and first time home buyers can take advantage of the price reductions. Two things to remember. If you are a buyer where a short sale is necessary, accomplishing the short sale requires time. Write the contract with a closing date of 30-45 day closing. Work with the seller and the agents to reach that date, but know that you may need to extend the contract if the short sale is not approved by closing date. Don’t give the lender the extended time, to keep their feet to the fire, but know that ultimately you may need to extend the date for closing since so many requests are being evaluated. The lender agreeing to “selling short” needs to be convinced the contract presented is a bona fide offer, that they are better off selling short as opposed to foreclosing.
Interest rates, (you read this far to find out) have moved to the high five’s 5.875 – 5.625, with jumbos still above 6. The Fed lowered the bank-borrowing rate so loans tied to prime, mostly Home Equity loans will continue to move lower.
The Baltimore Sun reported today that homes in the $225,000.00 and under range have actually increased in sales. The moral there is that there are bargains out there, and first time buyers are taking advantage of the low interest rates combined with motivated sellers. If you know and entry level buyer, get them in the market today. As always if you have a real estate question, email me at email@example.com or call 410 884 1160 x3007.