Eminent Domain is a controversial issue which involves the government (local, county, state, or federal) condemning a person’s home so that the land it sits on can be used for the betterment of the community. Eminent Domain has been used to acquire land for the development of new highways, airport expansions, and other major public works.
However government has used Eminent Domain to secure land for private development of office buildings, and hotels. In Cincinnati we saw Eminent Domain enacted on a number of residents near the RookWood Commons plaza. In 2005 the Supreme Court ruled on a case involving Pfizer and a local government enacting Eminent Domain to condemn and seize property for a research park. After 10 years of tax abatement and special treatment from the local government Pfizer has moved out leaving a blighted neighborhood where a strong community once stood.
The story represents the caution and care that government must exercise when using Eminent Domain for non-public works projects. When private developers create proejcts there is often the danger that they may abandon the project at any point in the development.
We are pleased to welcome our first guest blogger Marc Rasmussen, a Realtor with Michael Saunders and Company in Sarasota, Florida. As the weather cools here in Cincinnati we often think of where we may spend our next winter. We are so happy that Marc is with us to talk about luxury real estate in Sarasota, because it will be nice to see palm trees and waterfronts in December.
Marc Rasmussen
I look forward to his posts about thier local market, and the properties and deals for those of us looking for a winter home. Please welcome Marc and enjoy his entries.
Cincinnati’s local public radio station WVXU is running a series of articles and providing counseling and services to those facing a crisis with their mortgage. They have done a very good job of providing reliable and direct information to those facing the hardships of foreclosures and are providing access to a number of resources. The list of local Cincinnati foreclosure assistance resources is listed here.
They have also posted dates and times for two community forums on foreclosures and how they are impacting our city. The sites for the forums are St. Agnes Catholic Church in Bond Hill, 6:30 p.m. Wednesday, Oct. 21, and Our Lady of Lourdes Church in Westwood, 7 to 8:30 p.m. Oct. 27.
This Sunday we are having a bonanza of open houses! We will be holding 5 open houses, so come by and see us!
12:00 PM – 1:00 PM in Deer Park!
4005 East Galbraith Rd
3946 Trebor Dr
1:30PM 2:30Pm in Oakley
3646 Brentwood
3:00Pm – 4:00 PM in Oakley!
2825 Andrew St
3:00PM – 4:00PM in Clifton!
255 Hastings Rd
Recently I have been working with a number of clients who have expressed interest in purchasing a foreclosed property simply because of the savings, compared to the market value of the home. Foreclosures are still abundant in Cincinnati and as the jobless recovery continues, sadly, more foreclosures will be coming on the market.
Thankfully the volume of property has been manageable compared to the foreclosure glut that other states have experienced. According to foreclosure-tracking company RealtyTrac.com
, over half of the country’s foreclosure-related actions in August occurred California, Florida, Michigan, and Nevada. The top 10 list also includes Arizona, Illinois, Georgia, Ohio, Texas and New Jersey.
The word of caution I give my buyers is that with a foreclosure, the savings on the initial sale price may not yield an overall benefit depending on the condition of the home. Those considerations, coupled with the general complexity of the Foreclosure purchasing process, are giving my buyers an appreciation for how much more value a well maintained home has.
If you are interested in purchasing a foreclosure call me at 513-518-1140 or e-mail me for more information.
Outside Magazine recently ranked Cincinnati as a top town to live in. The magazine cites a number of factors including a number of economic, entertainment, and sports related features that helps put Cincinnati at #9 in the poll. Jay Stowe says, Cincinnati boasts “cool architecture, genuinely awesome independent restaurants, and neighborhoods full of affordable, eclectic houses—and one of the country’s biggest Oktoberfests, where people willingly don lederhosen and do the Chicken Dance totally unironically.”
This article by Bernice Ross from Inman News highlights important information if you are considering a short sale. I did not condense it because the original content is excellent. This article pertains to real estate in Cincinnati and around the country.
DEAR BERNICE: We are upside down and are thinking about selling our home using a short sale. Our agent said that because we had refinanced our property twice, that we could have a problem with “phantom income.” She advised us to talk to our accountant. What does refinancing have to do with this and what is phantom income? –Paul S.
DEAR PAUL: First, no matter what your financial circumstances are, it’s smart to talk to your CPA or tax attorney before placing any property on the market. For example, you might think that you can claim the $250,000 (for singles) or $500,000 (for couples) tax break on the sale of your primary residence. However, if you haven’t met all the qualifications in terms of the property being your primary residence, you could end up losing the deduction.
In your case, it’s a good thing that you have a well-informed Realtor who advised you to see an accountant first. When you purchase a home, the original loans that you place on the property are known as “purchase money” loans. Depending upon where you live and the type of instrument used to secure the mortgage, the lender may have limited options in terms of foreclosure on purchase money.
For example, in many states, the lenders cannot collect “deficiency judgments” on purchase-money loans. Their only recourse is to foreclose on the property. If you live in a state that allows deficiency judgments, the lender may be able to force you to sell other assets to pay off the debt. Putting it a little differently, if you own a property in a state that does not allow deficiency judgments, only the property that secures the note is at risk. If you live in a state that does allow deficiency judgments, the court can attach your other assets and order you to sell them to pay back the debt.
The situation becomes much more complicated when you refinance your property. Any loan that is made after the point of initial purchase is no longer considered to be purchase money. “Phantom income” occurs when you sell a property using a short sale and you do not pay off the entire amount of the loan. You can also create phantom income by giving what is known as a deed in lieu of foreclosure. (This means giving the keys back to the bank rather than going through the entire foreclosure process.) In either case, phantom income must be reported to the IRS and may be subject to taxation.
For example, assume that you placed a purchase-money mortgage of $150,000 on your property in 2002, then took out a home equity loan of $25,000 to do some remodeling in 2004, and then placed a third of $50,000 on the property to cover emergency medical costs in 2007.
In the example above, any amount over the $150,000 purchase-money loan could result in phantom income. The amount of phantom income is determined by how much debt relief you receive from the sale. The way the IRS looks at it, is that when you refinanced the property, you received the money. When you failed to pay it back to the lender in a short sale, that money then becomes taxable income. Since the money in the example above was used to improve the property and to pay for medical expenses, the owner may be eligible to deduct part of those expenses against any phantom income that results from a sale. On the other hand, if you are someone who has refinanced your property and spent that money to pay off your credit cards or to buy a car, the probability is that your phantom income will be taxed.
For some people, going through foreclosure may be a better choice. Before you decide to do anything with your property, it is absolutely imperative that you discuss the situation with your CPA or tax attorney to find out the potential consequences of any decision that you may make.
House swapping, the practice of exchanging properties is making a resurgence with help from a number of home swapping websites and services. Home owners who are interested in searching for others willing to exchange properties now have a number of resources to use to make their searches more fruitful.
Property owners are using sites such as onlinehousetrading.com , mkhomeswap.com , and besthouseswap.com to identify potential swap partners in the areas they are looking to relocate to. The reach of the Internet is making finding those elusive swap partners easier and faster.
In most cases these swap site require a registration fee that can range from $20 to over $250. Also the idea of a swap can be misleading. In most cases homeowners negotiate sale prices and work with real estate attorneys and mortgage lenders to facilitate property exchanges particularly when there is a difference in value between the properties. House swapping could be a for home owners looking to sell their Cincinnati Real Estate.
Urban Cincy reported this morning that Mayor Mallory has selected the development company that will finance, plan, design,construct, operate and maintain Cincinnati’s Modern Streetcar System. The location of the streetcar would be on the northern end of the Downtown/Over the Rhine circulator which would head uptown from there. This is great news for Cincinnati Real Estate. The addition of a streetcar in Downtown Cincinnati is great news for Cincinnati Real Estate. The continual development and success of downtown will continue to attract the creative class, which could eventually lead to new businesses moving their headquarters to Cincinnati.
I received some useful information from one of the loan officers I work with, Mike Zipfel from Midwest Mortgage. Home loan interest rates have been on a downward trend for the last few months, however as the economy begins to stabilize, and the stimulus money enters the economy, interest rates are beginning to rise. In the last week, rates have risen above 6% for the first time in recent history.
There are wide economic factors that drive interest rates and a number of economists on a recent NPR program feel that as inflation begins to appear interests rates will rise. A 1% change in interest rates can make a difference in the price range that a buyer afford. Below is a table that shows the impact a 1% interest rate increase can have in the monthly payments on a 30 year mortgage.
With this information in mind we are suggesting that any prospective home buyers who have been considering making a move do so now to take advantage of the affordability of Cincinnati’s current real estate market, the low interest rates, and the $8,000 tax credit for first time home buyers.
