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Doug Bridges
Coldwell Banker Realtor & Broker Areas of Service: Columbia Lexington Elgin Blythewood Chapin Lake Murray |
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Doug is a major contributor to the Columbia Community as he is currently serving as:
1. Board of Directors Greater Columbia Chamber of Commerce
2. Board Member, Northeast Council Greater Columbia Chamber of Commerce
3. Member Richland County Transportation Committee
4. 41 Year member Columbia Board of Realtors
5. Life Member Citadel Association of Graduates
YOU MUST BE KIDDING!
12/30/2012
We all know that sub-prime lending was the major culprit in the economic downfall that we’ve experienced over the past four years. But banks alone were not the cause of millions of foreclosures. Check this out.
In Columbia’s State Newspaper (Business Section), an article was written where three counties in the
Atlanta, Georgia area are suing a large multinational bank, HSBC, for “…costing them hundreds of millions of
dollars in extra expenses and damage to their tax bases by aggressively signing minorities to housing loans that were likely to fail.” As most of you know, I have a fairly sound knowledge of the “Community Reinvestment Act” (CRA) that took affect in 1978. This Act of Congress, signed by Jimmy Carter, mandated to banks that they hadto make loans to “low
income and minority areas without regard for credit demand or the merits of loan applications.” These counties claim that the international bank made loans that represented “discriminatory or predatory lending practices” a direct correlation with the “the housing foreclosure crises.”
Does anyone remember the Community Reinvestment Act (CRA) signed into law in 1977 “to reduce discriminatory credit practices against low-income neighborhoods (redlining)”? This act was enforced by “federal regulatory agencies examining banking institutions for CRA compliance” and using each bank’s grade when considering approval of applications for new bank branches or for mergers or acquisitions.
The clincher…the banks were told by the Federal Government not to discriminate “in loans made to individuals and
businesses from low and moderate-income neighborhoods.” The Government even established a Community Affairs Office to work with banking institutions and the public in identifying credit needs within the community and ways to address those needs.
So, the CRA of 1977 basically mandated to all banks that receive(d) FDIC insurance that they mustmake loans to
“individuals and businesses from low and moderate-income neighborhoods.” Now, local communities, because of massive numbers of foreclosures from which they mainly lose property tax revenues, are suing banks because they made risky loans to risky people.
The Federal Government on one hand told banks that they must give every American the opportunity to own the American Dream. An agency was organized inside the FDIC government agency to actually keep tabs on each bank to ensure that acceptable “Quotas”were being met in regard to loans to minority and low income applicants. This was one of the roots of subprime lending…in many cases banks were making marginal loans because of Federal Regulations requiring that such loans be made. Now local governments are suing banks because they in fact did make loans in compliance with the Community Reinvestment Act. Counties in Maryland and Tennessee have already sued banks and those suits have “resulted in settlements this year.”
You must be kidding!! Would somebody please explain this one to me
I would love to know your thoughts!
Doug Bridges
Dazed
and Confused
INTERESTED IN REAL ESTATE MARKETS IN FLORIDA. NORTHERN VIRGINIA AND CALIFORNIA?
NEITHER AM I! WHAT IS THE “REAL” MARKET DOING TODAY IN COLUMBIA, SC?
03/12/2012
Well..I’m not interested in the other markets, I have a house in WildeWood (subdivision) that I plan on selling and in order for me to get the highest price in the market, I needed to do my own home inspection. This home would have been a great house for DIY to spotlight as I needed to remove old wall paper, repaint the interior, install
new flooring and of course upgrade the kitchen (where is Alison Victoria when I need her!). Not to mention I needed to curb appeal to the front (and back) of the house. I even scoped out home improvement stores hoping
to run into Ahmed that hosts “Yard Crashers” to help me out! I keep writing checks to the contractors for all the work that needs to be done and it’s painful! but I know I have to get this house ready so it can compete in this market.
Look at this up to the second activity report and you will see firsthand what residential markets in Columbia have done compared to the same period last year. Some of the broader differences that I noticed were the number of available home in Irmo today compared to last year (455 fewer) and the decrease in the average sales price in Northeast Columbia (5.5%).See what your area did. I love to talk about real estate!
Let me know what you think? Call me at 803-530-1732. or email me at dbridges1@sc.rr.com.
Thanks,
Doug
WHAT IS AN ECHO BOOMER? 3/12/2012
According to leading economist and market forecasters in our country an “Echo Boomer” is a son or daughter of “Baby Boomers”. These are people born primarily between 1981 and 1995 and who will have a very large impact on American housing over the next 20 years. In a report by researchers from The Urban Institute and the University of Southern California “Baby Boomers” will “swell the nation’s senior population by 30 million.” The supply of housing will increase because people over 65 typically release much more housing than they absorb. This “increased supply” could mean additional buying opportunities for “echo boomers.” The “Echo’s” will probably absorb 75-80% of the available inventory of owner-occupied housing by 2020. These echo folks include nearly 65 million people and should have an enormous impact on the country’s economic and housing policy. They could (should) absorb the current vacant inventory and help stabilize conditions for residential construction. The researches feel that “approximately 12 million new households will be formed over the next decade, requiring construction of up to 15 million new housing starts.”
Doug says, “Go Echo Boomers”!
According to leading economist and market forecasters in our country an “Echo Boomer” is a son or daughter of “Baby Boomers”. These are people born primarily between 1981 and 1995 and who will have a very large impact on American housing over the next 20 years. In a report by researchers from The Urban Institute and the University of Southern California “Baby Boomers” will “swell the nation’s senior population by 30 million.” The supply of housing will increase because people over 65 typically release much more housing than they absorb. This “increased supply” could mean additional buying opportunities for “echo boomers.” The “Echo’s” will probably absorb 75-80% of the available inventory of owner-occupied housing by 2020. These echo folks include nearly 65 million people and should have an enormous impact on the country’s economic and housing policy. They could (should) absorb the current vacant inventory and help stabilize conditions for residential construction. The researches feel that “approximately 12 million new households will be formed over the next decade, requiring construction of up to 15 million new housing starts.”
Doug says, “Go Echo Boomers”!
What's The Real Estate Market Really Doing? 3/12/12
This is the hot topic in real estate today. I get asked questions every day, “How’s the market doing?” “When do you think its going to get better?” “What about the areas around Columbia?” Since my crystal ball is currently receiving a polish and shine I don’t currently have all of the answers; but I am able to help my good friends and blog readers in answering these questions.You will all be interested to know that its really not that bad out there! I know there are some extreme cases, especially in the higher priced homes, but there is hope! Here is a glance at what is in your very own neighborhoods.
In the Market Watch written by William Spiegel and Scott Schean (2/29/12) they gave their opinion on what changes need to be made to improve the (nationwide) housing market: "The excess housing stock needs to be absorbed by household formation before the housing market returns to equilibrium. Once this happens, housing prices will stabilize and eventually increase, followed by a rebound in residential construction necessary to meet the new demands for houses. "Household formation will eventually absorb the excess supply of houses. This is the most underreported driver of the housing market. Key factors that influence household formation: *Change in marital status, *Birthrates, *Immigration, *Combination of households in order to share costs, and *Adult children living with their parents for longer periods.Household formation is significantly below historical averages. However, looking at the real estate figures in the surrounding area, we’re not doing half bad.
I’ll leave it up to you to decide…
This is the hot topic in real estate today. I get asked questions every day, “How’s the market doing?” “When do you think its going to get better?” “What about the areas around Columbia?” Since my crystal ball is currently receiving a polish and shine I don’t currently have all of the answers; but I am able to help my good friends and blog readers in answering these questions.You will all be interested to know that its really not that bad out there! I know there are some extreme cases, especially in the higher priced homes, but there is hope! Here is a glance at what is in your very own neighborhoods.
In the Market Watch written by William Spiegel and Scott Schean (2/29/12) they gave their opinion on what changes need to be made to improve the (nationwide) housing market: "The excess housing stock needs to be absorbed by household formation before the housing market returns to equilibrium. Once this happens, housing prices will stabilize and eventually increase, followed by a rebound in residential construction necessary to meet the new demands for houses. "Household formation will eventually absorb the excess supply of houses. This is the most underreported driver of the housing market. Key factors that influence household formation: *Change in marital status, *Birthrates, *Immigration, *Combination of households in order to share costs, and *Adult children living with their parents for longer periods.Household formation is significantly below historical averages. However, looking at the real estate figures in the surrounding area, we’re not doing half bad.
I’ll leave it up to you to decide…
THE NLRB*INSANITY*YOUR HOUSE 11/18/11
Have you ever heard on the news or radio a story about the economy that just makes you simply crack and say, “You’ve got to be kidding me!” For those who haven’t heard about Boeing building their plant North Charleston, South Carolina, you are going to shaking your head as well asking yourself, what in the…?!
So what’s happening in North Charleston, SC? Boeing, one of the most highly respected, successful, profitable industries in the world selected North Charleston, South Carolina to build a plant that will offer over 1,000 jobs to citizens in that community. In addition hundreds of other jobs will be created to supply and service the Boeing plant. Great news, right? Incredibly, amidst volumes of agreed upon theory regarding the need for jobs in this country (where South Carolina is experiencing over 11% unemployment) the National Labor Relations Board (NLRB) has sued Boeing because Boeing “violated labor laws by opening a plant in South Carolina to punish workers in Washington State for past strikes.” As a result, the NLRB wants the North Charleston plant to be relocated back to the unionized west coast. One reason that Boeing chose South Carolina is because we are a Right to Work state. There are only 22 states the United States that hold this sacred bill and as a result, it attracts good, solid companies like Boeing.
Are you crazy yet? Let’s look at who this NLRB crowd really is. They were formed in 1935 and they are independent federal agency that reports
ONLY to the President of the United States. The NLRB has a five-person Board and a General Counsel. The President of the United States appoints the Board and the General Counsel (Lafe Soloman) and approved by the Senate. The NLRB employs between 1,600 and 1,650 people. The approved 2011 budget for the NLRB was $282.8 Million. The President is asking for that to be raised to $287.7 million for 2012.
Now here is what elevates my insanity to the climax of lunacy. Jobs are the needed vehicle to get the US back on the road to recovery. Boeing brings 1,000 - 2,000 jobs with their new plant. People with jobs buy houses. It is necessary for housing to recover and become vibrant in order for the economy to stabilize and move forward. The lawsuit being carried out against Boeing by the NLRB, who has publicly vowed to “shut the North Charleston plant down” is being paid for by the working class American tax dollars! That alone is not what makes me craziest! It’s the efforts of “big labor” to shut this plant down are financed and facilitated by American (South Carolinians) Federal Income Tax dollars that pushed me over the edge! In 2011, 50% of us who paid federal income tax, paid in over $282 million so that NLRB, this Independent Federal Agency reporting directly to the President can file a lawsuit and attempt to close down a fabulous, much needed plant in our Right to Work State of South Carolina. We are in the midst of the most ubiquitous contradiction that I can ever recall in my forty-four years of living in South Carolina. Throughout this national recession that we are embedded in, Mr. Bernanke along with economist, democrats and republicans have all claimed the high unemployment level as the major element holding back recovery and JOBS is the most critical of all essentials to get us back on track. Furthermore, as former President Clinton recently commented, “The housing market must come back in order for the economy
to recover.” Almost all expert forecasters and crystal balls tell us we must have jobs along with a surge in the housing market in order to mend and restore
strong and lasting market conditions in the United States.
db
So what’s happening in North Charleston, SC? Boeing, one of the most highly respected, successful, profitable industries in the world selected North Charleston, South Carolina to build a plant that will offer over 1,000 jobs to citizens in that community. In addition hundreds of other jobs will be created to supply and service the Boeing plant. Great news, right? Incredibly, amidst volumes of agreed upon theory regarding the need for jobs in this country (where South Carolina is experiencing over 11% unemployment) the National Labor Relations Board (NLRB) has sued Boeing because Boeing “violated labor laws by opening a plant in South Carolina to punish workers in Washington State for past strikes.” As a result, the NLRB wants the North Charleston plant to be relocated back to the unionized west coast. One reason that Boeing chose South Carolina is because we are a Right to Work state. There are only 22 states the United States that hold this sacred bill and as a result, it attracts good, solid companies like Boeing.
Are you crazy yet? Let’s look at who this NLRB crowd really is. They were formed in 1935 and they are independent federal agency that reports
ONLY to the President of the United States. The NLRB has a five-person Board and a General Counsel. The President of the United States appoints the Board and the General Counsel (Lafe Soloman) and approved by the Senate. The NLRB employs between 1,600 and 1,650 people. The approved 2011 budget for the NLRB was $282.8 Million. The President is asking for that to be raised to $287.7 million for 2012.
Now here is what elevates my insanity to the climax of lunacy. Jobs are the needed vehicle to get the US back on the road to recovery. Boeing brings 1,000 - 2,000 jobs with their new plant. People with jobs buy houses. It is necessary for housing to recover and become vibrant in order for the economy to stabilize and move forward. The lawsuit being carried out against Boeing by the NLRB, who has publicly vowed to “shut the North Charleston plant down” is being paid for by the working class American tax dollars! That alone is not what makes me craziest! It’s the efforts of “big labor” to shut this plant down are financed and facilitated by American (South Carolinians) Federal Income Tax dollars that pushed me over the edge! In 2011, 50% of us who paid federal income tax, paid in over $282 million so that NLRB, this Independent Federal Agency reporting directly to the President can file a lawsuit and attempt to close down a fabulous, much needed plant in our Right to Work State of South Carolina. We are in the midst of the most ubiquitous contradiction that I can ever recall in my forty-four years of living in South Carolina. Throughout this national recession that we are embedded in, Mr. Bernanke along with economist, democrats and republicans have all claimed the high unemployment level as the major element holding back recovery and JOBS is the most critical of all essentials to get us back on track. Furthermore, as former President Clinton recently commented, “The housing market must come back in order for the economy
to recover.” Almost all expert forecasters and crystal balls tell us we must have jobs along with a surge in the housing market in order to mend and restore
strong and lasting market conditions in the United States.
db
Harvard, Hot Dogs & Houses 10/24/2011
Have you heard enough about how bad things are? I have. Reminds me of an old story that I heard long ago. For years a proud father had made very good living selling hot dogs on a corner lot in Boston in the late 1920’s. Without any formal education he had saved enough money to send his only son to Harvard. After the first semester the son came home and his father asked, “So, son tell me what your Harvard education has taught you so far.” The son responded, “Dad, I’ve learned this much…we’re in a terrible depression; people are jumping out of buildings and standing in soup lines because the economy is so bad. Didn’t you know that? People can’t make a living in this economic environment….things are awful!” The father, who had been very successful for over 30 years by working hard, staying focused and being consistent, thought about what his son had reported from his Harvard teachings. He didn’t read the papers and was not at all aware that times were bad and that people were struggling. His business was very good! But he thought about all of his hard earned money that he had paid to send his son to Harvard so that the boy could get the wonderful education that he had never been afforded and how his son was now discovering things about business and the world that he, the father, had never even been exposed to or aware of. His son continued, “You’d better shut down you’re stand, Dad, before you start piling up debt like everybody else.” The dad said, “Son, I didn’t know things were so bad…..I really didn’t. I’ve been selling more hot dogs this year than ever before. Business has been great! But, I saved up a lot of money for you to go to Harvard to get an education so that you could learn the important things of the world. Harvard professors are very smart and if they are telling you that business is bad and that we’re on hard times, then things must be so. I just wasn’t aware….I didn’t know.” The father was so proud of his son and so convinced of what the Harvard professors had taught the boy……..that he shut down his hot dog stand, joined the soup lines and became part of the downtrodden American economy. Sometimes that’s what “education in America” does to people.
Today we are besieged by negative economic news. Are you able to escape all the negativity and find something positive to talk about? Here are two negative myths that we can actually turn into positives:
1.) Nobody’s loaning money. ARE YOU KIDDING?? If you have decent credit and a job you can get a 30 year fixed loan for between 4.1 and 4.4%. Now, what’s NOT AVAILABLE is a 100% loan with an adjustable rate note for a person with marginal credit and a short term employment record. That’s the type loan that caused most of our problems to start with.
2.) Nothing’s selling. Columbia’s CMLS reports over 4200 home closings since January 1 of this year (not including Lake Murray or rural properties of Lexington and Richland Counties). So somebody’s buying and somebody’s selling in our community. Did you know that? Surprised?
Do you think hard work, consistency and focus can overcome this recession? Are you “educated”? Will you close down your own hot dog stand or will you continue to persevere through this economic bump in the road? Like the hot dog owner before he got “educated,” I try to work diligently, stay focused and be consistent…I have been able to successfully help my clients accomplish their goals. Things are not as bad as they seem.
Today we are besieged by negative economic news. Are you able to escape all the negativity and find something positive to talk about? Here are two negative myths that we can actually turn into positives:
1.) Nobody’s loaning money. ARE YOU KIDDING?? If you have decent credit and a job you can get a 30 year fixed loan for between 4.1 and 4.4%. Now, what’s NOT AVAILABLE is a 100% loan with an adjustable rate note for a person with marginal credit and a short term employment record. That’s the type loan that caused most of our problems to start with.
2.) Nothing’s selling. Columbia’s CMLS reports over 4200 home closings since January 1 of this year (not including Lake Murray or rural properties of Lexington and Richland Counties). So somebody’s buying and somebody’s selling in our community. Did you know that? Surprised?
Do you think hard work, consistency and focus can overcome this recession? Are you “educated”? Will you close down your own hot dog stand or will you continue to persevere through this economic bump in the road? Like the hot dog owner before he got “educated,” I try to work diligently, stay focused and be consistent…I have been able to successfully help my clients accomplish their goals. Things are not as bad as they seem.
Shoot The Appraiser! 9/30/2011
Do I have a story for you! A qualified buyer contracted to purchase one of my listings in a well-known Columbia neighborhood. The final agreed upon price was $600,000. The bank ordered the appraisal and instead of coming in over the price, it came in $80,000 lower - resulting in the total property value of $520,000! This was ludicrous!
The appraiser that was chosen came from an Appraisal Management Company (AMC). The AMC is made-up of a vast array of appraisers, both experienced and green. The appraisal was ordered by the bank but could not be ordered directly by the lender, from an independent appraiser or appraisal company. The selection of the appraiser through the AMC was based upon two factors: his discounted rate (considerably lower than many other appraisal companies on the “list”) and his zip code (he has to reside in the state of South Carolina). Since this directly affected my sale, I decided to dig a little deeper and I found out a few interesting facts…
1.) This licensed appraiser had only been active for a couple of months (I noticed this by his recent number on his license);
2.) He missed over 300 sq feet of heating area in his measurements;
3.) He used a repossessed home as a sold comparable;
4.) He used a sold comparable that was only 78% complete when title was transferred; and
5.) The appraiser was from Sumter, SC and had never even set foot in this Columbia neighborhood before.
After learning about the missed square footage I presented the difference and two qualified comparables to the appraiser. He raised his evaluation $50,000. The buyer, who had been looking for months at other available houses in the area in the same price range knew the appraisal was askew. The buyer made an unbelievable offer of $10,000 more than the appraisal making thefinal sales price $580,000. In the end, the appraiser cost the seller $20,000 and I bet the appraiser did not loose one ounce of sleep over the $20,000 he cost the seller.
How could this happen? Most of you are aware of Freddie Mac and Fannie Mae. Well, Attorney General Cuomo (New York) sued these two companies for “home-appraisal fraud.” The defendants thought it better to settle the law as opposed to attempt to defend against it. So, a compromise in the name of the Home Valuation Code of Conduct (aka HVCC) was agreed upon. The Federal Housing Finance Agency signed on to the HVCC Code giving the code Federal Rule Status. The intent was to block collusion between lenders and appraisers by inserting a middle layer or a “middleman” to block any contact between the loan company and the appraiser, the AMC. Nowadays, most appraisers must belong to an AMC to survive in the real estate market. AMC’s take as much as 40% for their fee (i.e. if a home appraisal costs $375.00 chances are the AMC is getting $112-$150 and the appraiser the balance).
Here are comments that I have received by some seasoned, professional and conscientious appraisers in the Columbia area regarding HVCC and the ACM’s:
One appraiser said, “I’ve spent 20 years building up my reputation and contacts in the community. Because of HVCC and the AMC’s, all that work of creating business relationships has gone out the window. And because so much of our fees go to the AMC’s I’ve had to lay people off. “
Another commented, ”Almost all of this HVCC business was a result of sub-prime loans and appraisers who were mostly tied into B and C paper (appraisals on high risk, sub-prime loans). When the lenders who made enormous numbers of these loans (Countrywide) started going under the ‘B&C appraisers’ were going under with them….the bad situation was taking care of itself and the marginal appraisers were getting out of the business. HVCC and the creation of AMC’s gave the B&C appraisers new life. AMC’s in reality made all appraisers equal. The experienced, ethical, successful, appraisers were put on the same level with any other appraiser regardless of experience or professionalism.”
And yet another said, ”Three years ago AMC’s had 15% of the market. Today they have about 90%. They control the market and establish procedures. Also, banks such as Bank of America (LandSafe) and Wells Fargo own their own AMC companies. That constitutes a conflict of interest in the eyes of many.”
I would like very much to hear your thoughts. Has this happened to you, a family member or friend? If so, what was the outcome? What do you think about the formation of the HVCC Code and AMC’s? What about all of these good, honest appraisers having to join these AMC’s – do you think that its right? Do you think the AMC’s are necessary and if so, do you think that more or less Government control is necessary for the recovery of the American Real Estate Market?
Please let me know your thoughts.
Doug
The appraiser that was chosen came from an Appraisal Management Company (AMC). The AMC is made-up of a vast array of appraisers, both experienced and green. The appraisal was ordered by the bank but could not be ordered directly by the lender, from an independent appraiser or appraisal company. The selection of the appraiser through the AMC was based upon two factors: his discounted rate (considerably lower than many other appraisal companies on the “list”) and his zip code (he has to reside in the state of South Carolina). Since this directly affected my sale, I decided to dig a little deeper and I found out a few interesting facts…
1.) This licensed appraiser had only been active for a couple of months (I noticed this by his recent number on his license);
2.) He missed over 300 sq feet of heating area in his measurements;
3.) He used a repossessed home as a sold comparable;
4.) He used a sold comparable that was only 78% complete when title was transferred; and
5.) The appraiser was from Sumter, SC and had never even set foot in this Columbia neighborhood before.
After learning about the missed square footage I presented the difference and two qualified comparables to the appraiser. He raised his evaluation $50,000. The buyer, who had been looking for months at other available houses in the area in the same price range knew the appraisal was askew. The buyer made an unbelievable offer of $10,000 more than the appraisal making thefinal sales price $580,000. In the end, the appraiser cost the seller $20,000 and I bet the appraiser did not loose one ounce of sleep over the $20,000 he cost the seller.
How could this happen? Most of you are aware of Freddie Mac and Fannie Mae. Well, Attorney General Cuomo (New York) sued these two companies for “home-appraisal fraud.” The defendants thought it better to settle the law as opposed to attempt to defend against it. So, a compromise in the name of the Home Valuation Code of Conduct (aka HVCC) was agreed upon. The Federal Housing Finance Agency signed on to the HVCC Code giving the code Federal Rule Status. The intent was to block collusion between lenders and appraisers by inserting a middle layer or a “middleman” to block any contact between the loan company and the appraiser, the AMC. Nowadays, most appraisers must belong to an AMC to survive in the real estate market. AMC’s take as much as 40% for their fee (i.e. if a home appraisal costs $375.00 chances are the AMC is getting $112-$150 and the appraiser the balance).
Here are comments that I have received by some seasoned, professional and conscientious appraisers in the Columbia area regarding HVCC and the ACM’s:
One appraiser said, “I’ve spent 20 years building up my reputation and contacts in the community. Because of HVCC and the AMC’s, all that work of creating business relationships has gone out the window. And because so much of our fees go to the AMC’s I’ve had to lay people off. “
Another commented, ”Almost all of this HVCC business was a result of sub-prime loans and appraisers who were mostly tied into B and C paper (appraisals on high risk, sub-prime loans). When the lenders who made enormous numbers of these loans (Countrywide) started going under the ‘B&C appraisers’ were going under with them….the bad situation was taking care of itself and the marginal appraisers were getting out of the business. HVCC and the creation of AMC’s gave the B&C appraisers new life. AMC’s in reality made all appraisers equal. The experienced, ethical, successful, appraisers were put on the same level with any other appraiser regardless of experience or professionalism.”
And yet another said, ”Three years ago AMC’s had 15% of the market. Today they have about 90%. They control the market and establish procedures. Also, banks such as Bank of America (LandSafe) and Wells Fargo own their own AMC companies. That constitutes a conflict of interest in the eyes of many.”
I would like very much to hear your thoughts. Has this happened to you, a family member or friend? If so, what was the outcome? What do you think about the formation of the HVCC Code and AMC’s? What about all of these good, honest appraisers having to join these AMC’s – do you think that its right? Do you think the AMC’s are necessary and if so, do you think that more or less Government control is necessary for the recovery of the American Real Estate Market?
Please let me know your thoughts.
Doug
In The Line of Fire
8-3-2011
I found myself thinking about the assault on mortgage interest deduction for homes and the fact that somebody wants to make it more difficult for me to sell your house.
In 2010 the President organized and appointed the National Commission on Fiscal Responsibility and Reform. They were to identify policies to improve the fiscal situation of the country, which is currently $14.4 trillion dollars in debt and rising at a rate of $3.8 billion a day (check this out at www.brillig.com/debt_clock/). With the current stagnation of the housing industry, the deficit reduction committee, aka the "debt committee" has set its sights on the home mortgage interest deduction (which has been in existence since 1913). The first largest target: tax deductions for mortgage interest payments for high-income earners!
Today an owner-occupied homeowner can declare up to $1,000,000 of mortgage interest and $100,000 on an equity loan tied to their residence. One option that this debt committee has proposed is that it would be appropriate to reduce the $1m interest deduction to $500,000 and turn the itemized deduction in to a 12% non-refundable tax credit available to everyone. Sound familiar? Spread it around a little?
So, why do we think that the high-income earners who have their house financed up to a million dollars, maxing out on the existing tax deduction, will keep a $1m mortgage if the government eliminates a half million dollars as an income deduction? Who is to say that the high-income homeowners will dodge that .45 bullet and pay their home mortgage down to $500,000 since there is no tax deduction advantage to having a $1m loan?
My fear is that if the debt committee gets their way and reduces the tax credit to $500,000, it is just the beginning. Their second target will be on the middle-class homeowners (and why not?). MID (mortgage interest deduction) has been a sacred privilege for Americans for almost 100 years and an investment opportunity enjoyed by middle-class mortgage holders.
Today, 75 million American are eligible for MID and tampering with MID would seriously affect the investment part of home ownership. In Columbia, home sales were down 24% through the first six month of this year (State Newspaper July 16). The drop in home values plus the uncertainty of a real estate rebound has caused an increase in renters. Those who claim mortgage interest deductions save an average of $2,078/year. For most of us, that's a lot of money!
If the government continues to set its sights on assassinating the mortgage interest deductions and MID what will become of the investment facet of homeownership? What do you think?
8-3-2011
I found myself thinking about the assault on mortgage interest deduction for homes and the fact that somebody wants to make it more difficult for me to sell your house.
In 2010 the President organized and appointed the National Commission on Fiscal Responsibility and Reform. They were to identify policies to improve the fiscal situation of the country, which is currently $14.4 trillion dollars in debt and rising at a rate of $3.8 billion a day (check this out at www.brillig.com/debt_clock/). With the current stagnation of the housing industry, the deficit reduction committee, aka the "debt committee" has set its sights on the home mortgage interest deduction (which has been in existence since 1913). The first largest target: tax deductions for mortgage interest payments for high-income earners!
Today an owner-occupied homeowner can declare up to $1,000,000 of mortgage interest and $100,000 on an equity loan tied to their residence. One option that this debt committee has proposed is that it would be appropriate to reduce the $1m interest deduction to $500,000 and turn the itemized deduction in to a 12% non-refundable tax credit available to everyone. Sound familiar? Spread it around a little?
So, why do we think that the high-income earners who have their house financed up to a million dollars, maxing out on the existing tax deduction, will keep a $1m mortgage if the government eliminates a half million dollars as an income deduction? Who is to say that the high-income homeowners will dodge that .45 bullet and pay their home mortgage down to $500,000 since there is no tax deduction advantage to having a $1m loan?
My fear is that if the debt committee gets their way and reduces the tax credit to $500,000, it is just the beginning. Their second target will be on the middle-class homeowners (and why not?). MID (mortgage interest deduction) has been a sacred privilege for Americans for almost 100 years and an investment opportunity enjoyed by middle-class mortgage holders.
Today, 75 million American are eligible for MID and tampering with MID would seriously affect the investment part of home ownership. In Columbia, home sales were down 24% through the first six month of this year (State Newspaper July 16). The drop in home values plus the uncertainty of a real estate rebound has caused an increase in renters. Those who claim mortgage interest deductions save an average of $2,078/year. For most of us, that's a lot of money!
If the government continues to set its sights on assassinating the mortgage interest deductions and MID what will become of the investment facet of homeownership? What do you think?
I’M SICK OF THE HOME INSPECTION PROCESS!
7/2011
Since entering the world of real estate in 1972, I have seen many strange phenomena’s in the Columbia residential arena. The manner in which today’s home inspection process has been conducted takes the cake over all the weird, strange creations of the profession. Here’s a true story with the names changed. John and Mary Smith bought a home in Columbia in 2007 for $450,000. John got another job in Atlanta and the Jones’s put their home on the market for $450,000. After 5 months, they reduced to $390,000 and eventually sold for $370,000. The Smith’s took a bath…the market hammered them but they licked their wounds; the purchaser got a great buy and the sellers we’re ready to move forward. Not so fast…..the Smith’s “SALE” was just getting started. Enter Darth Vader, the dreaded home inspector. Darth (paid by the buyer) spent five hours inside the Smith’s home and came up with no structural deficiencies but $3,600 worth of “chunder” (a Star Wars Drovian slang term for excrement). The buyer (who had just beaten $20,000 off of the Smith’s asking price) said, “I either want all these (cosmetic) items fixed or a check for $3,600 at closing.” The Smith’s, scared to death of losing the buyer, surrendered and paid another $3,600 out of their pocket at the closing! Sound familiar? Have you or any of your friends or relatives sold a Columbia area home in the past 4-5 years?
Do you think it’s fair for the seller to negotiate out a sales contract, establish a price, set up a closing and possession date, go look for another house…and then start the process all over again by negotiating a lengthy home inspection? Of course it’s not fair! In my opinion the real estate “system” has produced this unbalanced process totally in favor of buyers and totally at the demise of sellers. What do you think? Do we need a change in the system?
Don’t get me wrong, I believe in home inspections. I always recommend to buyers that they get one; the validity of a home inspection is not the issue. The issue is the process, which exposes two glaring deficiencies: 1) the parameters, which home inspectors use (some inspectors use 4-pages, some use 34-pages) and 2) the order in which the inspection takes place.
Think about this: why can’t there be a State standard home inspection form that all home inspectors use, like the State CL-100 Termite inspection form that all pest control companies must use? The home inspector form would be restricted to serious reports on structure, electrical, plumbing, etc…no cosmetic hyperbola. The result would constitute a standard home inspection letter. If a buyer wants the “34-page” version then let him pay for the inspection and go at it. However, that exposition must be done prior to any contractual agreements are made between the buyer and the seller. That way the seller does not have to go through the agony of not knowing whether his house will close. The “long version” home inspection form/report done before contract negotiations would allow for transparency for all parties and would eliminate uncertainty and mystery. What do you think? Is that feasible?
I live with this everyday and for my clients it is an ongoing, stressful nightmare filled with frustration.
Let me know your thoughts.
Thanks!
Doug
Do you think it’s fair for the seller to negotiate out a sales contract, establish a price, set up a closing and possession date, go look for another house…and then start the process all over again by negotiating a lengthy home inspection? Of course it’s not fair! In my opinion the real estate “system” has produced this unbalanced process totally in favor of buyers and totally at the demise of sellers. What do you think? Do we need a change in the system?
Don’t get me wrong, I believe in home inspections. I always recommend to buyers that they get one; the validity of a home inspection is not the issue. The issue is the process, which exposes two glaring deficiencies: 1) the parameters, which home inspectors use (some inspectors use 4-pages, some use 34-pages) and 2) the order in which the inspection takes place.
Think about this: why can’t there be a State standard home inspection form that all home inspectors use, like the State CL-100 Termite inspection form that all pest control companies must use? The home inspector form would be restricted to serious reports on structure, electrical, plumbing, etc…no cosmetic hyperbola. The result would constitute a standard home inspection letter. If a buyer wants the “34-page” version then let him pay for the inspection and go at it. However, that exposition must be done prior to any contractual agreements are made between the buyer and the seller. That way the seller does not have to go through the agony of not knowing whether his house will close. The “long version” home inspection form/report done before contract negotiations would allow for transparency for all parties and would eliminate uncertainty and mystery. What do you think? Is that feasible?
I live with this everyday and for my clients it is an ongoing, stressful nightmare filled with frustration.
Let me know your thoughts.
Thanks!
Doug
HEALTH BILL TAX CALLS FOR 3.8% OF YOUR HOUSE SALE AFTER 2012
Aug 2011
Not exactly. Recently, I’ve had many friends and clients ask me about this as well as receiving emails stating that if I sell my home in 2012 I would have to pay a 3.8% tax. Since I didn’t know much about this, I began researching. I emailed the president of the Central Midlands Board of Realtors and contacted a staff member of the Home Builders Association. I also delved into the web and here is my interpretation: there will be a new tax under Section 1402 of the Bill referred to as “Unearned Income Medicare Contribution.” It does impose a 3.8% tax on profits from the sale of real estate,residential, investment and vacation homes. The levy is aimed at high-income taxpayers and will take effect in 2013.
I also learned that the monies received would be allocated to the Medicare Trust Fund, which is part of the Social Security system. CNNmoney.com wrote, “Raising the Medicare tax on wages will raise an estimated $87 billion over 10 years. But combined with a new Medicare tax on investment income, the revenue collected will jump to an estimated $210 billion, making it the biggest single revenue raiser to help pay for health reform.”
Who will pay? For those of us whose adjusted gross income is less than $200,000…good news you are not affected. For the rest, to calculate the tax you must determine which is less: the gain you made on the sale of your house, or the amount by which your income exceeds the appropriate threshold. It’s complicated so I found an example:
If your adjusted gross income is $150,000 and you sell your house making a profit of $400,000 you will not be subject to the new 3.8% Medicare tax.
If your adjusted gross income is $300,000 and you strike it rich and make a profit of $600,000 you’ll have to pay capital gains on the remaining $100,000. The capital gains tax rate is 15%, so you will owe $15,000 to the Federal Government.
This is what my research found; what are your thoughts, comments & ideas?
db
Aug 2011
Not exactly. Recently, I’ve had many friends and clients ask me about this as well as receiving emails stating that if I sell my home in 2012 I would have to pay a 3.8% tax. Since I didn’t know much about this, I began researching. I emailed the president of the Central Midlands Board of Realtors and contacted a staff member of the Home Builders Association. I also delved into the web and here is my interpretation: there will be a new tax under Section 1402 of the Bill referred to as “Unearned Income Medicare Contribution.” It does impose a 3.8% tax on profits from the sale of real estate,residential, investment and vacation homes. The levy is aimed at high-income taxpayers and will take effect in 2013.
I also learned that the monies received would be allocated to the Medicare Trust Fund, which is part of the Social Security system. CNNmoney.com wrote, “Raising the Medicare tax on wages will raise an estimated $87 billion over 10 years. But combined with a new Medicare tax on investment income, the revenue collected will jump to an estimated $210 billion, making it the biggest single revenue raiser to help pay for health reform.”
Who will pay? For those of us whose adjusted gross income is less than $200,000…good news you are not affected. For the rest, to calculate the tax you must determine which is less: the gain you made on the sale of your house, or the amount by which your income exceeds the appropriate threshold. It’s complicated so I found an example:
If your adjusted gross income is $150,000 and you sell your house making a profit of $400,000 you will not be subject to the new 3.8% Medicare tax.
If your adjusted gross income is $300,000 and you strike it rich and make a profit of $600,000 you’ll have to pay capital gains on the remaining $100,000. The capital gains tax rate is 15%, so you will owe $15,000 to the Federal Government.
This is what my research found; what are your thoughts, comments & ideas?
db
Doug with Mayor Bob Coble
Chairman of Columbia Chamber's Northeast Area Council Doug Bridges and Mayor Bob Coble at groundbreaking for new Northeast fire station on Spears Creek Road.
My Losing Season
What Doug Bridges learned from losing, you could write a book about. In fact, someone has. Bridges, a salesperson with Coldwell Banker United, Realtors Inc. in Columbia, SC, was a basketball player at the well-known military college, The Citadel, in Charleston, SC. His team's 1967-68 season was immortalized in "My Losing Season" by his teammate, author Pat Conroy. download to read more
Doug Bridges
Broker/Realtor
Coldwell Banker United, Realtors
1711 Gervais Street
Columbia, SC
803-788-2811
Copyright © 2010 Doug Bridges Enterprises
Coldwell Banker logo used with permission of Coldwell Banker United Realtors, Incorporated.
Broker/Realtor
Coldwell Banker United, Realtors
1711 Gervais Street
Columbia, SC
803-788-2811
Copyright © 2010 Doug Bridges Enterprises
Coldwell Banker logo used with permission of Coldwell Banker United Realtors, Incorporated.