Dallas Fort Worth Area Homes and Real Estate

HUD has continued to promote their HUD $100 down program for home buyers in the Dallas Fort Worth area.  The program is a great opportunity for home buyers to get into a HUD Home without having to pay the normal 3.5% down payment that is required for FHA loans.

HOW DOES THE HUD $100 DOWN PROGRAM WORK?

There are some specific guidelines that have to be followed:

• The buyer must obtain FHA financing in order to get the HUD $100 Down. 
• The buyer must intend to occupy the property.  HUD does not allow the $100 Down program for investors or for buyers that will not otherwise occupy the home.
• The buyer must submit a minimum bid for at least the list price.  Offers submitted below the list price do not qualify for the HUD $100 Down Program.
• Buyers may bid more than the appraised amount of the property, but must pay the difference between that and the offer price, plus the $100 in cash at closing.
• The program follows all of the other general requirements of purchasing a HUD Home. 
  

Home buyers interested in purchasing a HUD home should consider working with professionals that have prior experience with HUD Homes because of the complexity of the transactions.  HUD has very specific guidelines regarding their bidding process, the earnest money, home inspections, the closing process and situations where the property may need additional repairs.   

Buyers who are interested in bidding on a HUD Home and taking advantage of the HUD $100 Down program can contact me for a list of qualified HUD Homes in their area.  I have past experience with this program on the lending side and also as a full time Realtor(R).  Although I am no longer a licensed loan officer, I can help you find a lender that is experienced with HUD transactions.       

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WHAT IS A HUD HOME?

A HUD HOME is a foreclosure where the previous owner had an FHA loan and the lender negotiated with HUD to take over liquidation of the property.  It is essentially no different than any other foreclosure, except HUD allows certain incentives, such as the HUD $100 DOWN PROGRAM, since they are both the seller and the loan guarantor in cases where the buyer is obtaining FHA financing.

HOW MUCH ARE CLOSING COSTS WHEN BUYING A HUD HOME?

The closing costs vary depending on the type of loan the buyer obtains, the total origination charges a buyer chooses to pay relative to their interest rate, as well as other factors determined by how their loan is structured.  Other prepaid items, such as insurance and taxes, will affect a buyer's total out of pocket costs at closing.  Only a qualified loan officer can answer this question on an individual basis.  Contact me and I can put you in touch with a lender that's experienced with HUD homes. 

HOW LONG DOES IT TAKE TO CLOSE ON A HUD HOME?

HUD's contract automatically allows for up to 45 days from the time the contract is executed.  In my experience, buyers should expect closing to take up to this long in most cases.  HUD's closing agent typically requires documents as much as eight business days in advance of the closing date.  This alone means that closings will typically take at least two weeks longer than non-foreclosure transactions.  With all the new Federal rules in place that require waiting periods on loans, this can add up to several extra days. 

In the event a closing is delayed past the normal 45 day closing window, HUD may allow for an extension.

I'VE HEARD THAT ALL HUD HOMES ARE IN POOR CONDITION.  IS THIS TRUE?

Not at all, although some are definitely in various states of disrepair.  Unfortunately, some foreclosures are in this state because the previous owners could not afford to maintain the home.  And in some cases, home owners who knew their home was going to be foreclosed may have vandalized it or stripped the home of appliances and other loose items, such as ceiling fans and light fixtures, before they moved out.  The condition of the home, as is the case with most foreclosures, is often factored into the asking price.  In some cases, the discount on the sales price over current market value may be more than enough to cover needed repairs, improvements and upgrades and still leave the buyer with some equity.  Every situation is different, and the market value of homes in all areas is always a moving target. 

DOES HUD ALLOW FOR A HOME INSPECTION?

Yes.  HUD has a specific policy regarding home inspections for owner occupant purchasers.  In order to obtain an inspection, a buyer must request this in writing and have their agent submit to HUD's asset  manager within 15 days of an accepted offer.  The buyer is also responsible for turning on all utilities necessary to complete the home inspection. 

In general, HUD will either allow items in need of repair to be escrowed into an FHA loan, or they may discount the price of the home in some situations.  However, they will not allow buyers to escrow items that have been marked as "deficient" on the property condition report unless an escrow amount for these items was already determined and included as part of the list price.  So the bottom line is that buyers should read over the property condition report and make sure they are OK with items marked as "deficient" because there is usually no way to go back and ask for these items to be fixed after the fact. 

In many cases, HUD will have already alotted for a repair escrow on certain items that the property condition report has marked as in need of repair.  For example, if HUDs property condition report shows a faulty front door, they may have already stated in the bid that they will allow a repair escrow of $500 to cover fixing the door. 

CAN I PURCHASE A HUD HOME MYSELF WITHOUT USING A REAL ESTATE AGENT OR BROKER?

There is no way purchase or even bid on a HUD Home without using the services of a licensed real estate agent or broker.   Buyers who wish to purchase a HUD home should storngly consider working with an agent that is experienced with HUDs because the transaction is somewhat different from one where the seller is an individual.  HUD also has very specific guidelines and deadlines for not only the contract, but certain other addenda, the home inspection process, requesting repairs, receipt of earnest money by the closing agent and also the  

WILL I HAVE TO PAY MONEY OUT OF POCKET TO USE THE SERVICES OF A REAL ESTATE AGENT OR BROKER WHEN BUYING A HUD HOME?

NO.  The agent commission is paid by HUD directly to the real estate broker.  The buyer pays nothing out of pocket for this. 

WHAT HAPPENS IF THE HOME INSPECTOR DISCOVERS A PROBLEM THAT WAS NOT DISCLOSED ON HUD'S PROPERTY CONDITION REPORT?

In these cases, a buyer can petition HUD to allow for a repair escrow if they are obtaining FHA financing.  The buyer's lender must also agree to this as well and they must also submit a written request to HUD.  HUD will then assess the report and decide whether or not to allow the escrow.  In cases where the total amount of repairs are less than $5,000, HUD will allow this to be structured as a "203B with escrow" loan.  In this case, the work is compelted after closing and both the buyer and the contractor are issued a check.  The buyer typically endorses the check and gives it to the contractor to cash as payment for their services.

However, in cases where the total amount of repairs exceed $5,000, the loan must be restructured into a 203K loan.  A 203K is an FHA loan with a repair escrow of over $5,000.  The 203K loan process is a bit more complex than a simple 203B with a repair escrow.  Also, only a handful of lenders in the Dallas Fort Worth area handle 203K loans. 

IN EVERY CASE, I recommend buyers conduct a full home inspection.  My experience has been that the property condition report sometimes overlooks certain items that may be in need of repair.  DO NOT EVER CONSIDER HUD'S PROPERTY CONDITION REPORT TO BE THE SAME THING AS A HOME INSPECTION!  HUD CLEARLY STATES ON THESE REPORTS THAT THEY ARE NOT HOME INSPECTIONS AND ARE MERELY MEANT TO SERVE AS A GENERAL GUIDE TO THE OVERALL CONDITION.  THEY ARE NOT NEARLY AS THOROUGH AS A HOME INSPECTION. 

I have experienced some cases where a property condition report missed items that were defective - the most recent case was a HUD home that had TWO defective HVAC units that the property condition report stated were functioning normally.  In this case, we were able to successfully petition HUD and the lender for a repair escrow to pay for a new HVAC, which was escrowed and installed after closing.  So in the end, it all worked out.  But if the buyer had neglected to perform a home inspection, they would have had to come out of pocket with several thousand dollars in expensive repairs. 

Contact me at (972) 978-3553 or email me for more information on HUD homes and the HUD $100 Down Program for Dallas / Fort Worth area home buyers. 

Texas is one of only a handful of states in the US that has successfully deregulated electricity providers in a manner that has arguably promoted consumer choice and savings.  There are many electricity providers that service various areas of the state that have been fully deregulated.  Many consumers are still not aware that they are now able to choose their electricity provider.    

Some areas of Texas have still not been fully deregualted because the state feels those areas still need a significant investment in infastructure.  These areas are typically still under the control of electricity co-ops or providers that are owned by municipalities, so home owners in those areas are still not able to choose their electric provider.  Many of those providers shop for the best wholesale electricity rates on the open market and may pass some of that savings on to consumers, but still have a de facto monopoly.   

Companies that provide electricity in deregulated areas are called Retail Electric Providers.   Despite the fact that some areas may offer service from several REPs, maintenance and service of the equipment and infastructure are still the responsibility of the company that owns the equipment and not necessarily the company who bills the consumer for their electricity. 

Consumers who want to compare prices of electricity providers can now compare rates and programs online.  This search feature is provided at no cost to consumers by Powertochoose.org.   

The website allows users to search for electric providers by zip code and sorts the results based on many variables such as rate, contract term, cancellation penalty and also has links to the terms and conditions of each offer. 

Here are some other links that might be helpful to consumers looking for information on electricity choices in Texas:

LIST OF CITIES IN TEXAS THAT ARE DEREGULATED

REASONS TO CONSIDER SWITCHING PROVIDERS

GUIDE TO UNDERSTANDING YOUR CHOICES

QUESTIONS TO ASK ELECTRIC PROVIDERS WHEN SHOPPING AND COMPARING RATES

Home buyers who are pre-approved for FHA financing need to be aware of FHA's Guidelines for property condition.  All buyers who utilize FHA financing to purchase their home will have a licensed FHA appraiser perform an appraisal. 

The appraisal is typically ordered by the lender once the home inspection process is complete and the option period has expired.  In addition to determining an opinion of market value, an FHA appraiser must also note certain deficiencies that may exist with the property condition.

Prior to 2006, FHA was considered by many to be overly strict with regards to property condition.  In fact, many home sellers and/or their real estate agents would refuse to accept an offer from a buyer using FHA financing because appraisers would often require a significant amount of repairs. 

Often times, the homes were in good structural condition and did not pose a health or safety issue to the occupants. 

Back then, appraisers could require items such as damaged countertops, cracked window glass and some other cosmetic deficiencies to be repaired prior to closing, even on homes that may have been sold at a reduced price to offset the less than perfect condition. 

In addition to scaring off some home sellers, these requirements would often discourage buyers looking for homes priced below market for cosmetic reasons from using FHA financing. 

But on December 19, 2005, HUD published mortgagee letter 2005-ML-48, which eased many of these restrictions.   Homes that are structurally deficient or that may pose a health or safety risk to the occupants will still have to be repaired prior to closing.  But for the most part, FHA appraisers will no longer require minor property conditions to be repaired prior to closing. 

EXAMPLES OF MINOR PROPERTY CONDITIONS NO LONGER REQUIRED TO BE REPAIRED BY FHA INCLUDE:

• Missing handrails on stairs.  Prior to this change, any staircase with more than three steps required handrails to be installed.  Of course, it's still a good idea to have this done, but is no longer required by FHA.
• Damaged exterior doors that are otherwise operable.  Generally speaking, if a door will close properly and does not have significant holes or damage, it will not have to be repaired.
• Cracked window glass. 
• Defective and/or peeling paint on homes that were built after 1978.  Lead paint was banned by the Consumer Product Safety Commission on September 2, 1977.
• Minor plumbing leaks.  Appraisers can still require major leaks to be repaired.  The definition of "minor" is subjective, so the final call is up to the individual appraiser. 
• Defective floor finishing or excessively soiled carpet. 
• Evidence of previous termite infestation and damage in which no evidence of unrepaired structural damage exists.  If termites are active and damage is present, an appraiser will typically require this problem to be corrected prior to closing.
• Rotten or worn out countertops. 
• Damaged plaster, sheetrock or other wall or ceiling materials in homes constructed after 1978. 
• Poor workmanship.  Again, this is subjective and doesn't mean that ALL poor workmanship will be excused.  Poor workmanship that results in a structural, health or safety issue will likely still require repair.  It's ultimately up to the appraiser and the underwriter. 
• Trip hazards, such as heaving sidewalks and carpet that was poorly installed.
• Debris and/or trash present in the crawlspace of a home.
• Lack of an all-weather driveway surface.

IMPORTANT NOTE!! - Some lenders have OVERLAY GUIDELINES, which are arbitrary guidelines over and above FHA's minimum requirements.  Home buyers purchasing homes with any of these conditions should consult with their lender and/or loan officer to see if they will require any of these items to be repaired or replaced before closing. 

EXAMPLES OF PROPERTY CONDITIONS THAT STILL REQUIRE AUTOMATIC REPAIR PER FHA INCLUDE, BUT MAY NOT BE LIMITED TO:

• Leaking or worn out roofs.  If more than three layers of shingles exist on a bad roof, all must be removed before roof can be replaced.
• Inadequate access to exits from bedrooms. 
• Evidence of structural and/or foundation problems.  (NOTE-Contrary to popular belief, Conventional loans such as Fannie Mae and Freddie Mac may also require foundation and structural problems to be repaired prior to closing.)
• Defective interior or exterior paint surfaces in homes built prior to 1978.
• Defective exterior paint surfaces on homes built after 1978 where the finish is otherwise unprotected.

PROPERTY INSPECTIONS (SEPARATE FROM A HOME INSPECTION, WHICH I RECOMMEND FOR ALL BUYERS)

FHA also no longer mandates automatic inspections for the following:

• Termites and/or wood destroying insects unless active infestation is observed by the appraiser.  
• Well and septic test.
• Inspection for a roof that is flat or otherwise unobservable. 

IMPORTANT NOTE!!-Individual lenders may require these inspections to be conducted even though FHA does not specifically require them.  Again, these requirements are called OVERLAY GUIDELINES and can be imposed by lenders that choose to require a higher standard than FHA's basic requirements.  These inspections may also be required if mandated by state or local laws or if they are customary for the area. 

FHA will continue to require inspections when the following conditions exist:

• Standing water against the foundation and/or excessively damp basements.  Such conditions can easily lead to foundation and other structural problems and also can be very conducive to wood destroying insect infestation. 
• Hazardous materials on site or located within the improvements.
• Faulty or defective mechanical systems, including electrical, plumbing and HVAC.
• Evidence of structural problems or structural failure, including foundation cracks. 

HOME BUYERS that haven't already signed a buyer's representation agreement with another agent: If you are looking to purchase a "fixer-upper" home, contact me to discuss other financing options that may be available.  There are still loans that allow repairs, both minor and major, to be escrowed.  I can evaluate your options and put you in touch with lenders that can help.  There are also some great programs available on foreclosures that allow repairs to be rolled into the loan.   I have ten years experience as a lender prior to becoming a full time Realtor(R), so put my experience to work FOR YOU!

HOME SELLERS that haven't already signed a representation agreement with another agent and are concerned about whether or not their home meets FHA requirements should call or email me with questions.  DON'T AUTOMATICALLY ASSUME THAT FHA WILL NOT ALLOW YOUR HOME TO BE FINANCED without consulting with me first.  The pool of FHA buyers has increased significantly over the last few years due to many reasons, such as the increase in down payment, credit score and general credit guidelines for Conventional loans, as well as the fall of subprime and Alt A loans. 

You may be missing out on a large pool of buyers if you refuse to accept an offer from an FHA approved buyer.  Call or email me today and we'll evaluate your individual situation.  I have ten years experience as a lender prior to becoming a full time Realtor (R), so use my experience to HELP YOU sell your home! 

Over the last few months, a new scam involving bogus rental listings has surfaced on Craigslist in the Dallas / Fort Worth area.  Recently, I had a client who forwarded me an ad she found on Craigslist that seemed a little too good to be true.  The ad featured a very nice home in the Park Cities area, walking distance to Bradfield elementary, complete with three bedrooms and two baths and well over 2000 square feet. 

According to the ad, the owner was only asking a mere $900 per month for rent!  Anyone who knows the Park Cities area will tell you that would be the deal of the century!

Well, you know the saying.  If it sounds too good to be true, than it probably isn't true.

Luckily I had already heard about this scam while attending a class at Keller Williams Elite in Park Cities.  There had been a recent incident involving an agent with another broker that had received an angry phone call from a person who had fallen victim to a scammer via a fake Craigslist ad.  The scammer had stolen pics of one of her listings and had used them to post a bogus rental ad on Craigslist. 

Unfortunately, the renter had wired money to the scammer's overseas account to secure the property and learned the hard way that she should have had a Realtor® looking out for her interests.  She was trying to take her frustrations out on the listing agent, but should have consulted with a Realtor® long before wiring money overseas.  A Realtor® would have easily been able to figure out that it was a scam by checking MLS, verifying tax records and market rental comparables in the area.

Here's how it works: The scammer scans various real estate listings on the internet for homes that are listed for sale or rent in the Dallas area.  They will often find a really nice home and then place a fake ad on Craigslist for a ridiculously low price. 

In this case, the market rent for this home advertised at $900 per month should have been in the range of $3,500 to $4,000 per month.  That's not to say that there are not occasionally some great deals on rentals available below market, but this was desperately low.

So I instructed my client to not call or email on this ad and then I proceeded to do a little research.  After checking with varous sources, I quickly concluded that this was definitely a scam. 

But I went ahead and emailed the scammer just to see what kind of response I would get.  Here's the reply I received to my email inquiry: (Scammer's reply is in italics.  My notes are in parenthesis.  Bold and underline emphasis added by me.)

Good day Applicant,
 
Thanks for your email and interest in renting my house. I am Brian XXXXXX, the owner of the house you are making enquiry of. Actually I did reside in the house with my family, my wife and my only daughter before and presently we have moved out due to my official job transfer or posting, whatever you may call it, which has now found me in Warsaw, Poland. Presently my house is still available for rent for $900 USD per month (which includes utilities), though i intended selling it off but on a later thought changed my mind and have decided putting it on rent. More so now, I’m currently in Lagos, Nigeria for an international Christian follower's crusade taking place at the Nigeria national stadium, by one Pastor Chris of the Christ Embassy Ministry.

(Hmmmm.)
 
I want you to understand that I spent a lot on my property that you have requested to rent, so I will solicit for your absolute maintenance of this house and would want you to treat it as your own because cleanliness they say is next to Godliness. It is not all about the money to be paid on rent or spent; it is all about a good maintenance culture which I want you to adopt on the property. I want you to keep it tidy all the time so that I would be full of smiles whenever I come and above all, a good, strong and tight relationship between us when I come for a check up. Please one more thing, I wouldn’t like to have any benefit of trust in you because I want to stand in your words that the property would be well taken care of all the time.

(He's playing the trust card like the ace of spades...)
 
I believe you have see how lovely it is if from only the pictures you saw in my posting compare to the 100% comfort to be derived from it as an occupant. Please note than you will only be able to drive by the house for now but can't have a look at the interior until i have sent the keys and documents of the house to you. Reason because, i couldnt find someone trust worthy to drop the keys with as my call down here was so sudden. I do hope you understand.

(If the terrible grammar and spelling hasn't already sounded off an alarm, the fact that he's not allowing anyone to view the home prior to sending money should have the alarm bells rattling your eardrums.)
 
It has a dramatic entry foyer with ceramic floor. Extremely spacious rooms throughout with lots of big windows...nice and light! New neutral paint and some newer carpet. Very quiet, low traffic area. New fridge (7/07)...I believe it’s absolutely a perfect home for you and your family. Utilities include Water, Trash, Sewer, Gas etc. Please note that, a deposit payment would be required if accepted to have the property rented.
 
SO IF YOU ARE REALLY INTERESTED I WILL WANT YOU TO FILL THE RENT APPLICATION FORM BELOW.
RENT APPLICATION FORM.
FIRST NAME:__________
MIDDLE NAME:__________
LAST NAME:__________
PROFESSION:__________
PHONE: _______________
(CELL)PHONE__________
(WORK)PHONE__________
(HOME)PHONE__________
ARE YOU MARRIED: __________
KIDS _____ (YES/NO), HOW MANY ________
PRESENT ADDRESS: _____________________
CITY: _______________
STATE:______________
ZIP CODE: ____________
HOW LONG ___________IF RENTING
WHY ARE YOU LEAVING__________
IF THIS HOUSE IS BEING GIVEN TO YOU,HOW LONG DO YOU INTEND STAYING ____________
WHEN DO YOU INTEND MOVING IN ______________
IF YOU HAVE A PET: _________
NAME OF PET: _____________
KIND OF PETS: _____________
HABITS: ___________
DO YOU SMOKE ______________
DO YOU DRINK ______________
DO YOU WORK LATE NIGHT ____
HOW SOON CAN YOU MAKE THE MOVE IN DEPOSIT ($900) REQUIRED: ____________
WHEN AND WHERE DO YOU WISH TO RECEIVE THE KEYS AND DOCUMENTS OF THE HOUSE: _______________

(I really contemplated filling this out with fake info just to mess with the guy, but figured my time would be better spent informing the public about this scam.)

Looking forward to hearing from you with all this details so that I can present it to my family, pray over it (because I consult the Almighty God before making any decision) and if accepted, and then have them stored in my file in case of issuing the receipt for you and contacting you. Await your urgent reply so that we can discuss on how to get the document and the keys to you, please we are giving you all this based on trust and again I will want you to stick to your words, you know that we are very far apart now and only putting everything into God's hands and hope that you will not let us down.

(Again, he's playing the trust and religion cards like pocket rockets in a poker tourney.  Gotta love it...)
 
The house will be available for rent for a period of five and a half years so you have a choice of deciding how long you intend staying there.. Here is my number 011-234-XXXX-XXXX or  011-234-XXXX-XXXX, I will be expecting to hear from you.
 
Feel free to call me for more information and arrangements.
 
God Bless,
Brian.

Ok folks, there you have it.  There are several dead giveaways that this is a scam:

• The name shown as the owner of record on the Dallas county tax rolls is a different name than the person in this email.  I deleted the address to protect the owner's identity, but it was listed in the Craigslist ad. 
• The rent of $900 that he is asking for this home is thousands of dollars below market for the area.  Since I have full access to the MLS system, it was easy to look at market rent for this area.  Plus the price supposedly included all utilities.  The utilities alone could actually top what he's asking for rent.  Again, if it sounds too good to be true.....
  
• He's not allowing anyone to see the home prior to wiring him $900.  Big, BIG problem.  Don't walk.  RUN!
  
• The home was listed FOR SALE in MLS, but was not also listed for rent.  The scammer obviously stole the pictures and description from the listing on another website and then published this fake rental ad on Craigslist.

Luckily for my client, she had me to check all of this out for her ahead of time.  And since the Realtor® commission is generally paid by the landlord, my services did not cost her one penny. 

So the moral of the story is...Use common sense when dealing with people on Craigslist (Craigslist even had a prominent warning about wiring money overseas and/or dealing with landlords that cannot meet in person), and it's well worth it to have a licensed Realtor® working for you when searching for rental properties!  Watch out for scammers on Craigslist!!!

Crime reports and statistics are important to Dallas home buyers searching for new homes.  While Realtors can provide a wealth of information about schools, recreational facilities and home price trends in neighborhoods, we cannot refer to an area as "safe" or "low crime" because of liability issues and the subjective nature of such labels.  Referring to an area as "safe" or "low crime" could be considered steering and/or redlining, which is a practice that is forbidden by Federal law and can result in serious consequences. 

However, we can provide information about where to obtain reliable data related to crime statistics.     

Dallas home buyers curious about crime statistics have many options available online that provide helpful information about incidents of crime that have occured in various cities and neighborhoods. 

The methodology for how law enforcement agencies compile and report crime statistics is managed by the FBI via their Uniform Crime Reporting program.  This program dictates how crime data are compiled and reported by law enforcement agencies across the country.

LINKS TO AND INSTRUCTIONS FOR SITES WITH INFO ABOUT CRIME STATISTICS AND SEXUAL OFFENDERS:

* www.crimereports.com - Information from over 700 law enforcement agencies and sexual offender data for all 50 states. 

• Type in the property address on the home page to see results.
• Results page allows sorting by crime, date or distance. 
• Selectable time period of three, seven, 14 or 30 days. 
• Results shown on a Google map with detailed information provided to the left of the map. 

* www.localcrimenews.com - Updated crime news and arrest records for local cities, including crime graphs, newsletters, RSS feeds for city crime news and many charts and graphs showing crime statistics for cities all over the United States. 

• Click letters A-Z to show statistics by city.
• Smaller cities may not be covered by this site.  Works best for larger metro areas and suburbs.
• Links to crime maps, RSS feeds, graphs and statistics are located on city pages.

* http://www.fbi.gov/ucr/ucr.htm - Information about the FBI Uniform Crime Reporting Statistics and Crime Data Reporting Methodology.  The FBI created the Uniform Crime Reporting Program in 1930 as a means of collecting and reporting crime statistics in a uniform manner throughout the United States.   A good site to read if you're curious about regional, state and federal crime data, as well as how the data are compiled. 

Home buyers should consider researching crime statistics in their current neighborhood so they can compare them to neighborhoods they are interested in viewing.  Virtually all neighborhoods in the United States have some level of crime.   Often times, buyers may be surprised to see that their own neighborhood has a higher level of crime than they might have expected, despite the fact that they may have considered it a "safe neighborhood".  This helps to put things in perspective when comparing neighborhoods. 

Home buyers concerned about the safety of a particular neighborhood should also consider speaking with neighbors, neighborhood associations, the police department, as well as other law enforcement agencies.  Driving a neighborhood at night is also sometimes a good idea.

Many Dallas home buyers, especially those that are first time home buyers, often have to use their imagination to picture how furniture will fit within the dimensions of a room.  First time home buyers often move into their first home from an apartment or a smaller home and then will buy furniture after closing.  It is always important to consider bedroom sizes when choosing a home to ensure there is enough room to fit the bed as well as any other bedroom furniture that will be in the room. 

While mattress size is always important to consider, always add a little extra to account for the size of the bedframe as well.  Bed frames come in a variety of different sizes and shapes and can have a huge impact on the total dimensions of the bed. 

HERE IS A LIST OF MATTRESS SIZES:

TWIN SIZE:

Dimensions - 39" wide by 75" long.  That's 3.25' X 6.25'.  In a 10X10 bedroom, which is a common size bedroom in smaller, production built homes, that leaves almost four feet of room in between the foot of the bed and the wall.  It also leaves about 6.75 feet of space in between the bed, depending on whether it's up against a wall or put in the middle of the room to allow for space on both sides. 

EXTRA LONG TWIN SIZE:

Dimensions - 39" wide by 80" long.  That's 3.25' X 6.67'.  The width is the same as a regular twin but it's five inches longer. 

FULL SIZE:

Dimensions - 54" wide by 75" long.  That's 4.5' X 6.25'.  So a full size mattress is the same length as a twin size but is 15 inches wider. 

QUEEN SIZE:

Dimensions - 60" wide by 80" long.  That's 5' X 6.67'.  At this point, it is especially important to take note of the size of the bed frame because many headboards and baseboards on queens are often substantially longer than full size and twin beds. 

KING SIZE:

Dimensions - 76" wide by 80" long.  That's 6.34' X 6.67'.  So a king size bed is the same length as a queen size, but is a full 16 inches wider. 

CALIFORNIA KING SIZE:

Dimensions - 72" wide by 84" long.  That's 6' X 7'.  A California King Size mattress is a little less wide than a regular king size but is four inches longer. 

In today's market, almost half of the homes listed for sale are distressed sales - meaning they are either short sales or foreclosures.  The percentage varies depending on the city and region, but foreclosures and short sales generally make up a large part of the home inventory in many metropolitan areas in the United States, including the Dallas - Fort Worth area. This will likely remain the case for at least the next couple of years.

And while it is true that many foreclosures and short sales are great homes, buyers should know the possible advantages and disadvantages of entering into these types of transactions. 

Foreclosures and short sales are not the same thing.  A foreclosure occurs when a home owner is unable to make their mortgage payments to the point that they default per the terms of their note.  At that point, the trustee forces the property to be sold at auction on the courthouse steps and the lender places a minimum bid equal to the amount of the delinquent mortgage.  If the lender happens to be the highest bidder, then they end up owning the property (called an REO or "Real Estate Owned" property).  Sometimes the lender will negotiate with the guarantor, such as Fannie Mae or FHA, to take over the task of selling the asset.  Other times, they will keep it on their books and sell it themselves.  A HUD home is a property where the previous owner had an FHA loan, the property was foreclosed and the lender negotiated with HUD to take over and sell the home.  And likewise, a Fannie Mae, Freddie Mac or VA foreclosure is essentially the same situation.    

A short sale occurs when when a home is still owned by the home owner, but the amount of money they owe on their mortgage plus the costs to sell the home exceed the total market value.  When this happens, the home owner usually either has to come up with the deficiency balance in cash or they must negotiate with their lender to accept a payoff that's "short" of the amount they owe.  So a short sale is exactly what it sounds like-a home owner is selling the property short of the total cost to liquidate the home. 

In a non-distressed sale, a home buyer usually just has to deal with negotiating the offer with an individual seller.  For example, if I wanted to sell my house right now, I would hire an agent to market my home and obtain an offer.  Once a buyer came along with an offer, I would instruct my agent to negotiate per the terms I was willing to accept.  I do not have an asset manager or a department of people in my living room tasked with making this decision - it's a somewhat simple decision that I would make quickly and efficiently because it's the only home I have to sell.

In the case of a foreclosure, the seller is usually a bank or asset manager, so the process is often somewhat different.  Some foreclosures do not take much longer, sometimes no longer, to close than a transaction with an individual seller.  It ultimately depends on several factors, mainly the bidding and paperwork process required by the lender.  Often times, the bidding process is very straightforward and efficient (as in the case of HUD Homes).  Other times, it can be a complete beaurocatic nightmare.

In the the case of a short sale, the seller is still the individual who owns the home, but they must negotiate with the lender to allow a portion of their loan balance to be forgiven (written off).  This is the main drawback to short sales - they can take an extraordinary amount of time to close in some cases because it may take the lender weeks or even months to perform all of the internal steps they must complete in order to make their decision.  I've heard stories of extreme cases, some here on Active Rain, about short sales taking upwards of six to nine months to close.  In my experience this is not typical, but they almost always take significantly longer than sales involving individual sellers and even most foreclosures.

For home buyers looking to take advantage of the tax credits and the low interest rates, time is of the essence and this may not be the route they should choose if trying to close as quickly as possible.  Having said that, there are instances where short sales may only take 30-60 days to close.  It all depends on the lender and also whether or not the process of negotiating the reduction in payoff was started prior to the buyer entering into the transaction.

BUYING A FORECLOSURE - ADVANTAGES AND DISADVANTAGES

Possible Advantages:

• Some lenders offer incentives to home buyers purchasing their foreclosures, such as the HUD $100 Down program.  Fannie Mae and Freddie Mac also offer incentives to owner-occupant purchasers, such as reduced down payments and extended home warranties. 
  
• In the case of a HUD Home, HUD may allow certain repairs to be escrowed (rolled into the loan).
  
• Homes are sometimes sold below market value.  In some cases, they may require few, if any, repairs or upgrades.  This is not typical but it does happen in some cases.  It is a myth that all foreclosures are in an advanced state of disrepair. 

Possible Disadvantages:

• Depending on the lender, the transaction may take longer to close.  Lenders often require loan documents to be at the title company far in advance of closing.  Furthermore, inspections may take longer becuase utilities must be turned on in many cases.  Other circumstances may arise that can cause delays. 
  
• Lenders are not required to complete a seller's disclosure on foreclosures, so the buyer must rely on their home inspection, agent advice and intuition to assess the condition of the property. 
• Lenders may require the buyer to sign certain addenda which may supercede some of a buyer's rights contained within the state promulgated real estate contract. 
• Buyers who close late may have to pay per diem penalties, or worse yet, may lose their earnest money and forfeit the contract if they do not close on time.  Of course, this may be the case in any transaction but per diem fines seem to be very common on foreclosures.  Buyers purchasing foreclosures should make sure their lender has the capability to close their transaction in the time required by the seller. 
• The lender will often refuse to make any repairs to the property.  In some cases, such as in the case of FHA loans, the buyer's lender may refuse to complete the loan if certain deficiancies exist, such as foundation problems or other issues that may jeopardize the home owner's safety. 
  
• In cases where a home is in a severe state of disrepair, it may be hard or impossible to obtain traditional financing. 
  

BUYING A SHORT SALE - ADVANTAGES AND DISADVANTAGES

Possible Advantages:

• As is the case with some foreclosures, short sales may also be priced below market.  This depends on a bank's final judgment as to whether or not a short sale would be more of an advantage to them over proceeding with a foreclosure.  Banks do not negotiate short sales for the benefit of home buyers or home sellers - it is strictly a business decision from their standpoint. 
  
• Buyers who are willing to tolerate a long approval process may find they have less competition since many buyers do not have the stomach nor the time to deal with a short sale transaction.  

Possible Disadvantages:

• The seller may not be able to make any repairs, especially since they may already be in a distressed financial state.  The lender will usually not agree to make any repairs either, and may also refuse to pay a portion of the buyer's closing costs.
  
• Not only do many short sales take a long time to close, many lenders also take a long time to physically accept or reject a buyer's offer.  So in the above cases where I mentioned some short sales may take months to close, most buyers do not know whether the bank has accepted their offer until the last minute.  And furthermore, many banks will demand a quick closing after they have let the buyer and seller languish in limbo for months. 
• Buyers stuck in limbo waiting for an answer may miss out on low interest rates and/or the home buyer tax credit.  Banks will typically not lock loans for longer than 60-90 days, and even ones that do will require a premium to lock in a rate for this long.  Add that to the risk of missing out on the tax credit and it may not be worth it to some home buyers.  
• Banks may refuse to honor an agreement if the buyer fails to close within the time required by the agreement. 
• Imagine waiting 30, 60 or even 90 days for an answer....and the answer is "NO".  Buyers in this position must now start from square one and they've lost all of that valuable time. 
• In some rare cases, banks have foreclosed on properties while in the middle of negotiating a short sale.  Sounds crazy, but some banks' left hands don't know what their right hands are doing if you can believe that....

As with anything else in real estate, every transaction is different.  This is not meant to discourage home buyers from attempting to purchase foreclosures or short sales, it is merely meant to show the possible advantages and disadvantages.  I have worked with foreclosure and short sale transactions on both the loan and real estate side, and each one had its ups and downs.  In every case where the buyer was prepared, they were typically pleased with the outcome.  But buyers should be aware of the drawbacks, especially the long waiting periods associated with some of these transactions, mainly short sales.  Buyers who need to close within a certain time frame should always evaluate the risks before beginning negotiations.

Below is a list of property tax rates for cities in the Dallas Fort Worth metroplex listed in order from lowest to highest tax rate.  These tax rates are for tax year 2009 and will apply to taxes due at the end of 2009.  Tax rates may change every year, so it is important to compare rates for the current year.

This list covers six counties in the Dallas Fort Worth area: Dallas County, Tarrant County, Collin County, Denton County, Rockwall County and Kaufman County.

Since many of these cities lie in different counties and school districts, the tax rates may vary slightly from what is shown here.  Cities marked with an asterisk (*) are known to lie within multiple counties and school districts.  Some other cities may also lie in multiple districts as well.  Some cities are listed more than once if they lie in multiple counties.

There are several factors that determine the final amount of taxes that a home owner may have to pay besides just these tax rates.  The exemptions offered for each city, school and county taxing entity vary significantly.  For more information about how property taxes work in the State of Texas, please check out my article about how property taxes are determined.  

The information on this list was obtained by third parties.  While I have made an effort to ensure it is accurate, I do not make any claims or warranties as to the accuracy of the data presented.

Many homebuyers and even some veteran homeowners don't understand how property taxes in Texas are determined.  Texas property taxes are somewhat confusing, and there are a few factors that determine the amount of taxes a homeowner will owe on their property.

While it is very common for homebuyers to compare homes based on the property tax rate, there are actually THREE main factors that determine the total amount of property taxes that each homeowner will owe every year, which are:

• THE TAX RATES adopted by each respective taxing entity (City, County, School District, plus some additional entities and special districts).
• THE APPRAISED VALUE of a home as determined by the county appraisal district's appraiser.
• PROPERTY TAX EXEMPTIONS offered by each taxing entity that excludes part of a property's value from taxation.  Each city, county and school district has a list of the respective exemptions they allow. 

And here's a breakdown of these three factors:

TAX RATES

There are three main taxing entities that each homeowner will typically have to pay:

City Tax Rates are determined by each city based on their operating budget each year.  The tax rate itself is not determined by voters, but is determined by elected officials.  City taxes pay for services such as the police and fire departments, as well as many other expenses necessary to the operation of the city.  Homes that lie in unincorporated areas of a county typically do not have to pay city taxes, although they may have other taxing entities, such as MUD districts.

School Tax Rates are set each year by the school board of each district based on their operating budget for the following year.  School taxes in Texas pay for a large percentage of the cost of teacher and staff salaries, as well as building maintenance and other expenses.  School districts also receive money each year from the state and federal government. 

The Texas Constitution sets a cap on the tax rate that school districts are allowed to charge.  However, the school board does have the option of calling a special election to let the voters decide to exceed that cap if they deem it necessary to raise additional funds because of a budget shortfall.  

County Tax Rates are also set once a year by county officials based on their operating budget.  County taxes pay for services such as the Sheriff's department, county road maintenance and county employees' salaries and expenses.

Some counties have additional taxing entities that collect for other expenses, such as county hospitals and colleges.  For example, Dallas county has a tax for Parkland Hospital and the Community College District, but these are generally referred to as part of the "county tax rate" as they are part of the services offered to residents of the county itself.   

Additionally, there are some special taxing districts that may exist in some areas.  A Municipal Utility District (MUD) is a special taxing entity created to provide water, sewer and sometimes other utility services in an unincorporated part of a county that is being developed.  Once the cost of developing the utility infastructure is recovered or the area is incorporated into a city, the MUD tax usually goes away. 

APPRAISED VALUE

Property taxes are "ad valorem" taxes, which means they are taxed "according to value".  The appraised value of a home is determined by the central appraisal district in each county once a year between January 1 and April 30th.  The methodology used to determine the appraised value of a home may vary from one county to the next, but Texas state law requires it to be a uniform system within each county. 

Despite the fact that there may be several entities that collect taxes for each home, the appraised value is always determined by the county appraisal district in which the home lies.  The value they assign to the home applies to each taxing entity.  In other words, the appraised value determined by the county for each home is used to calculate taxes for the city, county and school.  Each entity does not perform a seperate appraisal (although this used to be how it worked until 1979).   

And contrary to popular belief, the tax appraised value is often not the same as the actual market value of a home at any given time.  The price a home may sell for on the market may be higher or lower than the tax appraised value because the real estate market changes from month to month. 

Market value is defined as the price a willing seller will sell and a willing buyer will pay for a home at any given time.  When a home is sold to a buyer obtaining a mortgage, the lender will typically require a new appraisal to be performed by a licensed appraiser.  This appraiser may consider many of the same factors as the county appraiser did to determine the tax value, but their opinion of value may vary significantly from the tax appraiser's value based on recent market data.

Home buyers and sellers should always have their Realtor® provide a list of recent sales that have comparable features to the home to help determine the current market value.  Most lenders and appraisers will not consider comparable sales that have sold more than six months ago, and most are focusing most heavily on sales that have occured within the last three months since real estate values have been declining in many parts of the country for the last few years.

PROPERTY TAX EXEMPTIONS

A property tax exemption is a reduction of the appraised value granted to homeowners based on certain qualifying criteria.  The amount of the exemption is subtracted from the home's appraised value and then the tax rate is factored into to this result to calculate the amount of tax owed. 

Some entities calculate exemptions based on dollar amounts, whereas others base them on a percentage of the home's appraised value.  Each county maintains a list of exemptions for each taxing entity.

Here's a list of the most common exemptions allowed in Texas:

A HOMESTEAD EXEMPTION is a deduction allowed for a homeowner's homestead property (primary residence).  Each person is only allowed to claim one home as a homestead, regardless of whether or not they own additional homes in other counties or states.  To claim a homestead exemption, a homeowner will need to complete and file a short form with the county appraisal district.  There is no cost to file a homestead exemption, but the homeowner must occupy the property on January 1st of the year in order to claim the deduction for that calendar year's taxes.  Homestead exemptions can typically only be filed between January 1 and April 30th of each year.

AN OVER 65 EXEMPTION is a deduction for senior citizens.  Each senior citizen is only allowed to claim the exemption on one home.  If only one spouse is over 65, most taxing entities will at least allow a partial credit to be taken.  In addition, many will grant the full exemption to the surviving spouse of a homeowner who was over 65. Some taxing entities allow an "over 65 cap" on a property's value once the exemtion is filed, which means the taxable value of the home is frozen and cannot increase from that point forward even if the home increases in value.

A DISABILITY EXEMPTION is a deduction allowed for homeowners who are disabled.  In order to qualify for this exemption, a homeowner must meet the social security definition of disabled.  Homeowners who receive benefits from the Federal Old Age Survivors and Disability Insurance Program will qualify, but receiving disability income from a former employer or insurance company doesn't automatically qualify them for the exemption.  Also, documentation that the homeowner has a chronic illness that is expected to result in death will often times be enough to obtain the exemption.  DISABLED VETERANS can also claim an additional exemption in many tax districts. 

These exemption amounts vary from one taxing entity to the next, and can have a significant impact on a homeowner's tax liability.  This is the main reason why simply comparing tax rates doesn't always show an accurate picture of the true cost of property taxes for each city.  However, exemptions are typically not allowed on investment (non-owner occupied) properties, so investors may find it useful to compare the various tax rates for each city.

Property taxes are required to be paid each year regardless of a homeowner's income and also regardless of whether or not they have a mortgage on the home.  Depending on a homeowner's down payment, interest rate and terms of their mortgage, property taxes can make up as much as 30-40% of the total monthly cost of home ownership. 

Most mortgages today are "budget loans", which means the lender requires the taxes and insurance to be collected along with the monthly mortgage payment.  This means the payment itself is higher than if the homeowner was paying their taxes each year directly to the county, but also keeps the homeowner from having to budget and save for taxes seperately from the mortgage payment.

In the case of a budget loan where taxes are escrowed, the homeowner's mortgage company will receive and pay the tax bill at the end of each year.  If the amount of taxes is higher than the mortgage company collected, the monthly payment will usually increase within 2-4 months after the taxes are paid.  So even if a homebuyer obtains a fixed rate mortgage, the actual amount of the monthly payment may increase if the property taxes increase. And likewise, it can decrease if the taxes go down. 

Conventional loans, such as Fannie Mae and Freddie Mac, will typcially give buyers the option of "waiving escrows" if they make a down payment of at least 20%.  However, FHA, VA and USDA loans all require the homeowner to pay taxes and homeowner's insurance as part of their monthly payment regardless of their down payment.

The $8000 Homebuyer Tax Credit has been officially extended and expanded to include a new $6500 tax credit for move-up buyers.  Dallas area first time homebuyers and move-up buyers now have until April 30, 2010 to obtain a written, binding contract and until June 30, 2010 to close the transaction. 

Some of the details and guidelines for the homebuyer tax credit were changed slightly with passage of this new legislation.  Some of the guidelines were loosened while others were tightened.  And there is a sepearate set of guidelines for the new $6500 tax credit for repeat buyers as well.

EXTENSION OF THE $8000 FIRST TIME HOMEBUYER TAX CREDIT

The new legislation extends most of the guidelines of the previous $8000 first time homebuyer tax credit with the exception of the deadline extension, increased income limits and a few other details: 

Guidelines that REMAINED THE SAME:

• Amount of tax credit remains the lesser of $8000 or 10% of the purchase price.
• Home must be primary residence that will be occupied by the owner.  Investors do not qualify.  
• The tax credit does not have to be repaid unless the homeowner sells the home in the first three years. 

Guidelines that worked out BETTER for homebuyers:

• Deadline to obtain a WRITTEN AND FULLY EXECUTED CONTRACT is now April 30, 2010 and the transaction must CLOSE ON OR BEFORE JUNE 30, 2010.  The previous program had no specific date to obtain a fully executed contract, but the deadline to close the transaction would have been November 30, 2009.
• MILITARY SERVICEMEMBERS who were on active duty overseas for a period greater than 90 days in 2008 or 2009 will be allowed until April 30, 2011 to claim the first time homebuyer tax credit. 
• Income limits for single taxpayers raised from $75,000 to $125,000.  The program phases out completely at $145,000.
• Income limits for married couples raised from $150,000 to $225,000.  The program phases out completely at $245,000. 
  

Guidelines that became MORE STRICT for homebuyers:

• Maximum purchase price cap is now $800,000.  Previous program had no price cap.
• Requires written proof of home purchase in the form of a certified HUD-1 closing statement.  Also, the IRS has more authority to conduct oversight on claims for the tax credit.  The previous program was plagued with fraud since it did not require homebuyer to show any proof of purchase. 

CREATION OF THE $6500 TAX CREDIT FOR MOVE-UP HOMEBUYERS

This is a completely new program that was passed as part of the legislation that expanded the first time homebuyer tax credit.  Current homeowners who are "moving up" will quaify for the $6500 tax credit beginning with all purchases that close after November 6, 2009 and who meet the other guidelines listed below.  Many of the guidelines and deadlines are the same or close to the same as those of the first time homebuyer tax credit:

General guidelines (beginning after November 6, 2009):

• Amount of tax credit is the lesser of $6500 or 10% of the purchase price of a new home. 
• Homebuyer must have owned and lived in their previous home for at least five consecutive years out of the last eight years.
• Home purchased must be a primary residence that will be occupied by the homebuyer.  Investors do not qualify.
• Maximum purchase price is $800,000.
• Tax credit does not have to be repaid unless the owner sells the new home in the first three years.
• Income limits are the same as for the $8000 first time homebuyer tax credit ($125,000 for single filers and $225,000 for married couples, phases out completely at $145,000 and $245,000 respectively). 
  
• A written, binding contract must be signed on or before May 1, 2010 and the transaction must close on or before July 1, 2010.  This is ONE DAY LATER than the deadline for the first time homebuyer tax credit for some reason, perhaps because simultaneous closings can often take two days to fully consummate.
• IRS will require proof of purchase for the new home and will likely require proof that the previous home was both owned and occupied by the homebuyer. 

Stay tuned for some additional updates and some frequently asked questions.  If you have any questions about the extension and expansion of the homebuyer tax credit, please email me.