Information for Buyers and Sellers of Chicago Area Residential Real Estate. Learn more at mhwasserman.com.
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FREDDIE, FANNIE both Offering Incentives to (some) REO Buyers, Brokers
By Michael H. Wasserman
You might not know it from a look out the window or a walk around the block just yet, but the spring real estate market is upon us, and home buyers are out en masse in Chicago searching for the right opportunities. Everyone’s favorite semi-governmental real estate entities, Fannie Mae and Freddie Mac both seem intent on capitalizing on this now to further reduce their respective REO inventories. Each has announced new incentive packages to try to entice prospective buyers. Notable in the two announcements is the differing strategies they are using. Fannie Mae is offering fairly sizeable incentives to buyers themselves. Freddie Mac, while offering a token to buyers seems to be much more focused on motivating the sales agents that guide buyers.
Last week, the Federal National Mortgage Association announced that Buyers can receive up to 3.5 percent in closing cost assistance when purchasing Chicago area Home Path properties under its “first look” program. The first look period offers FNMA owned properties to prospective owner-occupant & public entity buyers exclusively for the first 15-20 days they are listed for sale. The closing cost contributions will be available on purchase offers made no later than March 31st on contracts that must close by May 31st. Homepath typically also offers special financing opportunities as well, although not everything that is “special” about that financing is necessarily beneficial to borrowers: For example, Homepath financing does not require a property appraisal requirement. Buyers might end up over-paying for homes relative to market if they do not do their homework.
By contrast, the Federal Home Loan Mortgage Corporation announced this week that it would extend the current winter sales promotion to all first look offers received by April 15th. Freddie Mac is taking a different approach to the incentives: here, the Realtors who list and sell its Homesteps properties stand to make an additional $500-1,000 bonus. Owner-occupying buyers may also be receive a $500 concession that can be applied towards condo assessments, home warranties or flood insurance. These contracts must close by May 30th.
Buyers wishing to purchase foreclosed properties often see great opportunities to buy properties at prices discounted off the ordinary market valuations, but these opportunities also can present some measure of risk and extra effort. As always, a good idea for prospective buyers to assemble a competent, experience real team (Broker, Lender Inspector, and Lawyer) to help steward them through the process.
Set aside any discussion of climate change for a moment. It’s winter. It’s Chicago. It snows. As a homeowner, you owe it to your friends, family, neighbors and delivery people to keep the sidewalks free of snow and ice.
Paying property tax bills before the end of the 2017 may help some owners save on their federal income tax liabilities.
The Tax Cuts and Jobs Act has been called the most sweeping tax reform bill in decades. Like it or
not, tax reform is coming. Others might wring their hands with glee or with worry. We are already working on ways to minimize the pain this reform might cause.
One aspect of the pending tax reform plan presents a clear challenge for most Chicagoland home owners, the elimination of deductions for State and Local Taxes (SALT). The house and senate plans both limit deductibility to $10,000. Once the tax reform is signed into law, we will pay federal income taxes on the money we use to pay our local taxes exceeding that $10,000 threshold.
Some homeowners who have the foresight (and lets face it, the savings) to act swiftly may want to pre-pay their first installment 2017 property tax bills this year before the tax laws kick in, so that those payments …