Use the following link to determine property eligibility for USDA Rural Economic Development loans.  After going to the site look on the left side under property eligibility, click single family, this will take you to a screen of the disclaimer, after clicking accept, you will be taken to the address screen.
http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

This site is used to determine eligibility for certain USDA home loan programs. In order to be eligible for many USDA loans, household income must meet certain guidelines. Also, the home to be purchased must be located in an eligible rural area as defined by USDA.

FORECLOSURE SALES

            If sellers are unsuccessful in their attempts to sell their property privately, or if the lender/servicer determines that there is no reasonable likelihood that a loan workout or short sale is feasible, then the lender/servicer will proceed with a foreclosure action. Technically, there are two types of foreclosure proceedings available in North Carolina, a judicial proceeding and a nonjudicial proceeding. However, judicial proceedings are used only when the deed of trust securing the indebtedness, i.e., the promissory note, does not contain a power of sale clause, which is very rare. Judicial proceedings are commenced by the filing of a complaint and summons setting forth the claim for relief asserting why the plaintiff is entitled to a court order directing that the property be sold. Once the complaint is served on the defendants and their answer period has expired, generally thirty days, which may be extended to sixty days, and a hearing is held before a judge at which point each party states their claim or defense, an order is entered directing that the property be sold at public auction (assuming that the plaintiff prevailed). Notice of the auction is then posted, the auction is held, and the highest bidder acquires the property, assuming that no upset bid is filed within the ten day period following the auction. Title is conveyed to the new purchaser pursuant to an Order entered by the Clerk of Court.

Non-Judicial Foreclosure

            Again, judicial proceedings are almost never used anymore, as virtually all deeds of trust contain a power of sale clause which authorizes the trustee to sell the property in the event the borrower defaults in meeting his/her obligations under the promissory note. Once the borrower defaults, the servicer notifies the trustee to proceed with foreclosure under the power of sale and the trustee or substitute trustee merely files a preliminary Notice of Sale indicating the property address, the date, time and place of sale. Recall, however, that the servicer must first send a notice to the borrower 45 days in advance of initiating any action if the underlying loan is a “subprime loan” and must file certain information with the Administrative Office of the Courts. As of January 1, 2009, all servicers seeking to foreclose on a mortgage loan must first provide written notice to the borrower itemizing payments in default, any other charges necessary to bring the loan current, etc. 45 days prior to initiating any action.

            If the deed of trust specifies a particular place or manner of sale, then that procedure must be followed. Otherwise, after the preliminary notice is filed, a hearing is held before the Clerk of Court (not a judge) who will determine whether a sale may take place. If the Clerk finds that a sale is warranted, then the Clerk will issue a Notice of Sale. The Notice of Sale must name the borrowers, the lenders, provide a description of the property and state the date, time and place of the sale. The Notice must be mailed to the borrower by first class mail at least twenty (20) days prior to the sale date. (Note, certified mail is not required.) If the property has less than 15 residential rental units, then notice also must be mailed to each tenant advising each of the impending foreclosure and informing each of his/her right to terminate leases entered into or renewed on or after October 1, 2007.

            The Notice of Sale must also be published in a newspaper of general circulation in the county where the property is located once a week for two successive weeks with the last advertisement published not less than ten (10) days prior to the sale. Lastly, the Notice of Sale must be posted on the courthouse door for twenty (20) days prior to the sale. The sale must be conducted at the courthouse in the county where the property is located between the hours of 10:00am and 4:00pm. The property will be sold to the highest bidder, although upset bids may be filed with the Clerk within ten days of the foreclosure sale. Each time an upset bid is filed, a new ten day upset period commences and continues until such time as no further bid is filed within the ten day period from the last bid at which point the sale becomes final. An upset bid must exceed the last bid by at least five percent (5%), but no less than $750.00. A sale may be postponed by announcing the need to postpone at the time and place the original sale was to occur and a notice of the new date and time must be posted on the courthouse door.

Deficiency Judgments

            Lenders may initiate a separate lawsuit against the borrower seeking a judgment for the costs of sale and for any remaining balance due under the note which was not satisfied by the proceeds from the foreclosure sale. This is known as a deficiency judgment. There are two exceptions to the right to sue for a deficiency judgment. One is where the deed of trust secured a purchase money mortgage held by the seller. Where the seller finances all or a portion of the sales price and takes a deed of trust securing that note, s/he will not be entitled to pursue a deficiency judgment against the borrower for any remaining sums not satisfied by the proceeds of the foreclosure sale.

            The other exception is where the lender is the high bidder, but obtains the property by bidding less than the amount owed the lender, but the fair market value of the property exceeds the amount owed. For example, the outstanding principal balance and accrued interest under the note is $120,000.00, but the lender bids only $100,000.00 and is the high bidder. The fair market value of the property is $150,000.00. The lender should not be allowed to obtain a deficiency judgment against the borrower for the $20,000.00 difference between what the lender was owed and what it bid, as it now holds title to property worth $150,000.00 and can be made more than whole by selling the property to a third party. However, if the lender attempts to sue the borrower for the alleged $20,000.00 deficiency, the borrower must affirmatively raise the argument in defending against the lender’s suit. Had the property been sold at the foreclosure sale to a third party, not the lender, for only $100,000.00, then the lender would be entitled to obtain a deficiency judgment against the borrower for the $20,000.00 difference.

Borrower’s Right of Redemption

            Borrowers retain the right to redeem their property and regain title by paying in full all principal and accrued interest due under the note even after the foreclosure sale during any upset periods until the sale becomes final, which is when no further upset bids are filed within the ten day period. Typically they may accomplish this only when they can borrow sufficient sums or obtain a new loan from another lender. However, it may be possible, particularly as in the last example where the fair market value of the property exceeds the amount of the remaining indebtedness, i.e., $150,000 fair market value versus $120,000 owed. In reality, such a property most likely would be sold through a voluntary private sale long before foreclosure occurred.

If you have any questions or need additional information, please contact Bill at 704-944-4260 or bgallagher@superiorschoolnc.com.  Bill Gallagher teaches a real estate continuing education course on Foreclosures, Short Sells, REO’s and Auctions.

To view  a schedule of classes in North Carolina, please visit www.ssore.com/classes.php.

By: Bill Gallagher

            President/Owner, Superior School of Real Estate

            www.superiorschoolnc.com

Superior School of Real Estate congratulates Terry Wilson on obtaining the Distinguished Real Estate Instructor (DREI) designation. This honor was designed by the national Real Estate Educators Association (REEA) to recognize excellence among real estate instructors. It is awarded only to those REEA members who demonstrate outstanding knowledge of their profession, experience and classroom performance.

DREI is the latest of many prestigious designations in Terry’s real estate career. Since 1997, when he entered the field after several years as a corporate system trainer and owner of a successful property management company, Terry has earned designations from Seniors Real Estate Specialists (SRES), Graduate REALTOR® Institute (GRI), and Council of Residential Specialists (CRS).

Industry leadership
Such achievement is normal among the instructors at Superior School of Real Estate. Owned by industry veteran Realtor® and instructor Bill Gallagher, the organization brings together a results-oriented team of professionals to teach a curriculum rooted in practical advice and proven strategies. The instructors at Superior School of Real Estate have been instrumental in advancing the careers of thousands of licensees and Realtors® across North Carolina.

For further information, please contact Steve Connell, Chief Operating Officer, at 704-944-4260 or at sconnell@superiorschoolnc.com. Find out more at our website: superiorschoolnc.com.

The following example from the NC Real Estate Commission is discussed in our Update 2008-09 Course on pages 41 and 42. I want to give everyone a “friendly reminder” regarding the disclosure of compensation applying to dual and designated agency sales in your firm. Our NC Real Estate Commission is “adamant” that all licensees comply with brokerage and compensation rules effective October 1, 2008.

SOURCE: 2008-2009 Mandatory Update Workbook, NC Real Estate Commission

Example of Disclosure Required When Company/Broker Acting as Dual Agent

Example #6:
Facts: XYZ Realty represents a seller. In its listing agreement, the seller agrees to pay the Company a 5.5% commission and authorizes the Company to pay 2.5% to any buyer agent or seller subagent who brings a buyer. The listing agreement also specifies that the seller will pay any selling agent a $2,000 bonus above the commission split offered a selling agent, and that the seller authorizes the Company to act as a dual agent. An agent with XYZ Realty is working with a buyer as a buyer agent under an oral buyer agency agreement. The buyer agent told his buyer client initially that the broker expects to receive a commission from the listing company or seller equal to 3% of the sales price of any property on which the buyer makes an offer which is accepted by the seller. After showing the buyer several properties listed with other companies, the buyer now decides she wants to see XYZ’s listing. Prior to showing the property, the buyer agent orally informs the buyer client that they are now in a dual agency situation, obtains the buyer’s consent thereto, and also tells the buyer client that the seller of this property will pay a total commission of 5.5% of the contract price plus a $2,000 bonus to the Company which is acting as the agent for both parties. After viewing the property, the buyer decides she wants to make an offer on the property. What must the buyer agent do?

Comments: Because as yet there is no written agency agreement with the buyer, the buyer agent must prepare and have the buyer client sign a written buyer agency agreement in which the buyer also authorizes the Company to act as a dual agent. Since the buyer agent already knows what compensation is being offered on this particular property, the agent should specify that the buyer authorizes the Company to receive a 5.5% commission plus a $2,000 bonus as its compensation, all paid by the seller, if the buyer’s offer is accepted. The agent may indicate that the Company will not hold the buyer responsible for any sums not paid by the seller.

After obtaining the buyer’s signature on the agency agreement, the broker may prepare an offer on behalf of the buyer. Had the buyer agency agreement already been in writing and authorized dual agency and had it specified a commission of 3% paid by the seller, then the buyer agent merely would have been required to tell the buyer that the Company would receive a 5.5% total commission and a $2,000 bonus paid by the seller. Prior to preparing the offer, the agent would also confirm in writing to the buyer the amount of the total commission and bonus the Company would receive from the seller. Total commissions and bonuses or consideration to be paid to the Company by either the buyer or seller must be disclosed to each principal in a dual agency situation as there is no “split” – the Company receives all consideration paid by either principal.

Summary

Once the underlying buyer agency agreement is in writing, identifies the amount of compensation the buyer agent expects to receive from the listing agent or seller, and also authorizes the buyer agent to receive any bonuses, incentives or additional compensation paid to a buyer agent by the seller or listing company, the buyer agent does not need any additional consent from his/her buyer client, as s/he already has that permission in the written buyer agency agreement. What the revised rule requires is that the buyer agent merely put his/her principal on notice by timely disclosing to his/her buyer client those properties which are offering compensation above the amount stated in the buyer agency agreement, the value of the additional compensation, and to confirm that oral disclosure in writing prior to submitting an offer on behalf of the buyer. The buyer agent also should inform his/her buyer client if the compensation offered by the seller/listing company is less than the amount the buyer agent told the buyer s/he expected to receive. This is particularly important if the buyer agent expects his/her buyer client to pay the difference between the amount stated in the buyer agency agreement and the amount the seller/listing company will pay. The buyer should understand what his/her financial liability will be before s/he makes an offer. Where the buyer agent is working under an oral express agreement with his/her buyer client, s/he still must orally disclose to the buyer in a timely manner the amount or value of any compensation offered by the seller which differs from the amount the buyer agent has informed his/her client s/he expects to receive and must confirm that disclosure either in the buyer agency agreement itself when reducing it to writing prior to preparing any offer, or simultaneously in a separate writing at the time the broker and client enter into the written buyer agency agreement.

In a dual agency situation, because the Company has two principals and does not share the commissions, fees, bonuses or other consideration with any person or entity outside of the Company and its associated agents, it must disclose to both parties/principals the total commissions, bonuses, incentives, or other consideration the Company will receive from either its seller or buyer. Typically, the seller already is aware of the total compensation the Company will receive as it generally is paid by the seller and should be set forth in the listing agreement. The buyer should be informed orally of all consideration the Company will receive when showing an in-house listing (regardless of whether the Company is practicing traditional dual agency or designated dual agency) and the total consideration to be received by the Company should be confirmed in writing prior to either principal making or accepting an offer, if it is not already in writing. Where the Company also is receiving consideration from its buyer client in addition to any consideration paid by its seller client, then the form and value of the consideration paid by the buyer client must be orally disclosed to the seller client and confirmed in writing before either principal makes or accepts any offer from the other.

At this time, our NC General Assembly is meeting to discuss our state budget. Our General Assembly is considering increasing the NC Privilege License from $50 to $200 annually for real estate. If you would like to discuss this proposal, please contact your local representatives and give them your opinion.

Find a list of our NC Representatives here.

You may also participate in the interactive public hearing on the state budget. The NC House is opening up their budget talk meeting to citizens on-line and at sites around the state. The public hearing will be held tomorrow (Tuesday, April 28th) from 6pm to 9m. For information on access, visit General Assembly of NC Hearing Information.

On February 25, HUD released the 2009 loan limits as a result of the passage of the American Recovery and Reinvestment Act. Most areas will revert to the 2008 levels. The new loan limits, which are effective for any loan closed in calendar year 2009, are in effect through December 31, 2009.

This FHA mortgage limits web page allows you to look up the FHA mortgage limits for your area or several areas, and then list them by state, county, or Metropolitan Statistical Area.

IRS Press Release

Expanded Tax Break Available for 2009 First-Time Homebuyers

IR-2009-14, Feb. 25, 2009

WASHINGTON – The Internal Revenue Service announced today that taxpayers who qualify for the first-time homebuyer credit and purchase a home this year before Dec. 1 have a special option available for claiming the tax credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

Qualifying taxpayers who buy a home this year before Dec. 1 can get up to $8,000, or $4,000 for married filing separately.

“For first-time homebuyers this year, this special feature can put money in their pockets right now rather than waiting another year to claim the tax credit, “ said IRS Commissioner Doug Shulman. “This important change gives qualifying homebuyers cash they do not have to pay back.”

The IRS has posted a revised version of Form 5405, First-Time Homebuyer Credit on IRS.gov. The revised form incorporates provisions from the American Recovery and Reinvestment Act of 2009. The instructions to the revised Form 5405 provide additional information on who can and cannot claim the credit, income limitations, and repayment of the credit.

This year, qualifying taxpayers who buy a home before Dec. 1, 2009, can claim the credit on either their 2008 or 2009 tax returns. They do not have to repay the credit, provided the home remains their main home for 36 months after the purchase date. They can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

The amount of the credit begins to phase out for taxpayers whose adjusted gross income is more than $75,000, $150,000 for joint filers.

For purposes of the credit, you are considered to be a first-time homebuyer if you, and your spouse if you are married, did not own any other main home during the three-year period ending on the date of purchase.

The IRS also alerted taxpayers that the new law does not affect people who purchased a home after April 8, 2008, and on or before December 31, 2008. For these taxpayers who are claiming the credit on their 2008 tax returns, the maximum credit remains 10 percent of the purchase price, up to $7,500, or $3,750 for married individuals filing separately. In addition, the credit for these 2008 purchases must be repaid in 15 equal installments over 15 years, beginning with the 2010 tax year.

Urgent Notice: Revised NCAR Exclusive Right To Sell Listing Agreement, NEW NCAR Short Sale Addendum to Exclusive Right to Sell Listing Agreement, and NEW Short Sale Addendum to Offer to Purchase and Contract.

Attention: Please review and read very carefully the Revised NCAR Exclusive Right To Sell Listing Agreement (Revised January 2009). Because of the increasing number of short sales in North Carolina, NCAR has approved and released a “Short Sale Addendum” (Adopted January 2009) to the Exclusive Right to Sell Listing Agreement.  There is also a new “Short Sale Addendum” to the Offer to Purchase and Contract (Adopted January 2009).

NCAR’s Forms Use Policy allows permitted users a 60-day “grace period” to continue using an old version of a standard form following a modification of the form.  Therefore old versions of the updated forms may be used through the end of March. However, you should check with your broker-in-charge concerning your own firm’s policy on use of the new forms, in case your firm requires that you use them prior to the end of NCAR grace period.

Please read and review these new documents carefully.
If you have additional questions, please email Bill at bgallagher@superiorschoolnc.com.

If you wish to to take a “Short Sale” course, please view our schedule with upcoming dates for Art of the Short Sale.

Myth #1: Staging is Decorating…

Fact: Staging is NOT Decorating or Design! Decorating or Design is personalizing and Staging is De-Personalizing and preparing a house for the un-known Buyer. That is why it’s KEY that you hire someone with training specifically on how to prepare a house for sale.

The Accredited Staging Professional Designation™ (ASP™) is the ONLY nationally recognized professional designation for Home Staging. Make sure to hire someone with this professional designation when selecting a qualified Home Stager.

TIP: When the focus of the Staging becomes about things and not your house, then you are working with a decorator and not a trained Stager. An ASP Stager can use existing items in a house and their creativity to properly Stage a house for sale.

Myth 2: Staging Costs Too Much…

Fact: Staging is an investment in getting a house sold and the investment in Staging is always less than a price reduction. An ASP™ Stager has been trained to work with a Seller’s budget and time frame to properly Stage a house. We like to ask our clients, “Can you afford NOT to Stage?” When compared to other costs associated with the sale or purchase of a home, Staging is very reasonable. In most markets, a Staging report detailing what needs to be done to Stage the house for sale is less than the appraisal or Home Inspection reports.

Read the rest of this entry »

We know you are interested in minimizing the amount of taxes that will be due upon your death and maximizing the amount of property that is transferred to your heirs. The purpose of this letter is to discuss some of the opportunities that you may wish to consider prior to the end of the year to reduce your overall taxable estate and benefit selected family members.

You can decrease your taxable estate dramatically by making gifts to family members, trusts for their benefit, and charitable organizations throughout your lifetime. Not only is the value of the gifted property excluded from your taxable estate, but so too is any future appreciation of the gifted property. Because of the current market conditions and the relatively low values of many assets, now is an excellent time to give away assets that may increase significantly in value.

CURRENT ESTATE PLANNING DEVELOPMENTS

There have been several recent developments that may impact your estate and gift planning as follows:

· The IRS has announced that the annual gift tax exclusion will be increased to $13,000 beginning on January 1, 2009.

· North Carolina has repealed its state gift tax for gifts made on or after January 1, 2009 (including gifts previously subject to the $100,000 “cap” on the gift tax exclusion).

· The current interest rates which are used in many estate planning transactions, such as family loans and grantor trust sales, are at historical lows. For example, the mid-term Applicable Federal Rate (AFR) for December is only 2.85 percent. Accordingly, it may be possible to refinance existing transactions at a lower interest rate.

ANNUAL GIFT TAX EXCLUSION - USE IT OR LOSE IT

One simple but important technique for reducing your estate is to make efficient use of the $12,000 ($13,000 beginning January 1, 2009) per donee annual exclusion from gift taxes.

· By splitting gifts, a husband and wife can together make $24,000 ($26,000 beginning January 1, 2009) per year of annual exclusion gifts to each donee without incurring gift tax.

· Gifts made outright to family members can qualify as annual exclusion gifts, as well as gifts made to certain trusts for their benefit.

If you wish to maximize your gift tax annual exclusions, it is important to consider the timing of the gifts since the end of the year is approaching.

· Only gifts made and completed prior to December 31, 2008 will qualify as annual exclusion gifts for the current year.

Remember also that certain amounts paid directly to providers of medical services or educational services may be fully excludable from gift tax.

USING YOUR $1,000,000 EXEMPTION EQUIVALENT - THE GIFT OF A LIFETIME

Another important estate reduction technique is to use your $1,000,000 exemption equivalent during your lifetime.

* Each taxpayer is provided a $1,000,000 exemption equivalent, which can be used to shelter transferred wealth from gift taxes, if transferred during lifetime, or estate taxes, if transferred at death.

* To the extent the exemption equivalent is used during lifetime is not available at death.

To take advantage of the compounding effect of investments, many taxpayers prefer to use their $1,000,000 exemption equivalent during their lifetime so that any appreciation after the gift has been made is not included in their estate upon their death.

* For example, if a 40% interest in a closely held business is valued at $250,000, you can gift the interest to your children (or a trust for their benefit) now in anticipation that 20 years from now that same 40% interest would be worth over $1,000,000 using an 8% rate of appreciation. As you can see, there is a tremendous amount of leverage if you carefully select appreciating assets for lifetime gifting.

INCOME TAX OPPORTUNITIES IN A DIFFICULT ECONOMY

Finally, if you or a business you own has a break-even or loss year in 2008, you may face significant opportunities to claim tax losses, which in turn, may qualify you for a refund of income taxes paid in prior years. For example, an asset sold at a loss to a person who is not “related” to you as described in the narrow definition used by the IRS, could result in a significant refund of taxes paid in any of the last two years. The opportunity to get money back from the IRS already has helped provide significant relief to some of our clients in these difficult days.

We are available to assist you with your year-end estate, gift, and tax planning, including maximizing your annual gift tax exclusions and exemption equivalents through sophisticated tax avoidance techniques. Please contact us to discuss your options in greater detail.

Sincerely,

CULP ELLIOTT & CARPENTER, P.L.L.C.

IRS CIRCULAR 230 DISCLOSURE:

Under requirements imposed by the U.S. Internal Revenue Service, we inform you that any advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, by any taxpayer for the purpose of (1) avoiding tax-related penalties under the U.S. Internal Revenue Code or (2) promoting, marketing or recommending to another party any tax-related matters addressed herein. The scope of the Firm’s work does not include advice or planning to avoid penalties that may be imposed by any taxing authorities.

If you have any questions or need additional information, please contact Bill at 704-944-4260 or bgallagher@superiorschoolnc.com.