What is a Simultaneous Closing?
With a simultaneous closing, 2 transactions take place on closing day with regard to the subject property.
In the past, this transaction referred to a seller financing technique where the seller financing note is purchased at the closing table to allow the seller to obtain their proceeds quickly, rather than over a period of years.
In recent years; however, a simultaneous closing can also occur when an investor wholesales a property. For example, buyer A enters into a sales agreement with seller to purchase seller’s property for $25,000. Buyer A decides not to rehab the property, but instead, to sell to Buyer B for $30,000. Sometimes, Buyer A will just assign or sell his contract to Buyer B; however, unless there is a provision in the contract permitting the Buyer to do so, Seller may not allow the assignment. That is when a simultaneous closing may be the solution.
Next, keep in mind that some states do not allow simultaneous closings and some title companies will not conduct them.
Housing a Good Investment in 2010
Forbes housing reporter and analyst Francesca Levy makes some thought-provoking predictions in the latest issue of the magazine.
She predicts:
* Real estate will be an attractive investment strategy in 2010 with wealthy investors devoting an increasing segment of their portfolios to it.
* Loan modifications will result in more people who should probably be facing foreclosure slipping deeper into debt.
* Cities like Omaha, Neb., and Buffalo, N.Y., which avoided the housing bubble and most of the bust, will be models for cities trying to avoid another bubble.
* Financial troubles in Dubai will ripple through the U.S. luxury market, creating energy in a market that has been stagnant.
First Time Homebuyers Tax Credit Extension/Expansion is Approved
- Last week, the U.S. Senate and House passed legislation that included an extension and expansion of the tax credit for homebuyers. President Obama signed the bill into law at the end of the week.
- The $8,000 first-time homebuyer tax credit will continue until April 30, 2010, and the income limits have been increased to $125,000 for single filers and $225,000 for join filers.
- Additionally, current homeowners who have lived in their home for five of the previous eight years are eligible for a $6,500 tax credit.
- There is a purchase price limit of $800,000 for the home, and it must be maintained as the purchaser’s primary residence for three years or the tax credit will be due back to the IRS.
- Unlike the current tax credit program, the extended program allows any purchaser who has a binding contract in place by April 30, 2010 to close by June 30, 2010 and still qualify.
Economists Predict Housing Recovery
Economic forecasters predict that 2010 will be the first year since 2005 for housing to contribute to the growth of the U.S. economy, according to a survey released by the National Association for Business Economics.
Home prices are expected to rise 2 percent next year, but forecasters don’t believe the increase in prices will discourage homebuyers.
More than 80 percent of economists surveyed by the NABE think the recession is over and recovery has begun, but they expect the expansion to be slow because unemployment persists.
Bank of America Struggles With Loan Modifications
Bank of America could collect about $6 billion if it meets the deadline set by the federal government to help struggling borrowers for the Making Home Affordable program.
But the Treasury Department released a report last week that showed that only 11 percent, about 95,000, of Bank of America’s delinquent borrowers who are potentially eligible for the program have been given a loan modification. That puts Bank of America at the bottom of the list of major banks involved in the program.
“We’re sure working hard,” said Ken Scheller, senior vice president for home retention at Bank of America, when asked about his company’s low success rate. “We don’t want to be down there.”
There appear to be multiple problems, not the least of which is that many of the employees handling the modifications are completely new to the business. Angry investors complicate the issue, with 15 percent of them demanding that the bank get their approval for every single case.
