What to Look for In a Real Estate Agent...
Often I am asked what to look for in an agent when people are going out of town. Obviously, I will choose the perfect person for them if they allow me to do so, but it is always good to have a basis of what makes an agent a 'good agent'.
1. Trust:
If you cannot trust that the agent is telling you the truth about everything from the contract, to what other people are saying about the home, to being sure you trust they have your best interest at heart. Trust is the number one thing you have to have with the agent you choose to work with.
2. Like- ability:
I have seen many people choose jerky, slimy, sleazes for their agent and all I can ever think is, why in the world would anyone want to work with that person? Then if you ask how it's going, the appalling part is that they tell you they know the agent is slimy, but they appear to be successful with lots of listings... If you the client doesn't like your agent, there is a pretty good chance other agents don't like your agent, thus don't want to work with them and don't want to show their house if they don't have to. (Plus, some appear to have a lot of listings and I am shocked to find who sells a lot and who lists many or puts their name everywhere...Apparently, the more you spend marketing that your successful, people think you are)
3. Diligence/ Has TIME for You:
Finding an agent that will devote their time, energy, and care about finding the right home or buyer just for you by listening to your wants and needs is crucial. Do you need to sell fast, regardless of price OR have the time, but need the money?
Someone that will do their best to serve your needs you would think goes without saying, but many agents have other jobs (therefore, have limited time, energy, and experience to work for you) AND some take on too many clients, so asking an agent if they will have the time for you at the outset AND finding out if real estate is their full time job is important. Plus, some are strict on when they take/ return calls and the hours they work. It is important to ask or you will never know if the agent you choose works this way.
4. Be Sure They Have Experience OR At Least Experienced Support:
Having a new agent isn't all that bad, as long as they have someone that they run their contracts by so that you as the buyer or seller is covered. Real Estate contracts, technology is always changing so having someone who stays up on the changes is going to be best able to serve you. Real Estate school, the test, the classes to get licensed tell you nothing about how to write a contract or sell real estate, so experience is everything in Real Estate. Even people 20 years in the business are learning something new everyday. They haven't even experienced every scenario because everything changes constantly. Its a dynamic industry.
5. Be Sure They Spend Time/ Money on Marketing on the Web (...if your a seller):
The difference between an average and great agent is all in the marketing. If the agent does not spend money marketing on the web (the number one place people find homes) to add extra pictures, content, enhance and spotlight your listing, your listing is going to be passed over.
Pictures are the number one thing people want to see when they are looking at homes to go see in person. Realtor.com is the number one real estate website and feed over 70+ searches that come from other sites, such as the New York Times, when you click on their search, really its Realtor.com. Be sure they have good pictures in their other listings or their portfolio. You never know what your getting unless you ask and a great agent will show you step by step their marketing plan and what they will do for you.
6. Constant Communication:
A great agent will let you know when to expect to hear from them, how often and by what means. Text, phone calls, email, fax; all of these are great, easy ways to stay connected. Be sure the agent is up to speed on all these technologies and has a plan of how they will keep in contact with you regularly.
housesinomaha.net
Shawn.murray@remax.net
Sunday, March 8, 2009
Tuesday, March 3, 2009
I thought that this was a very interesting article.
The real skinny on why Appraisers use foreclosures to value your home!
By Mary Thompson-Certified Real Estate Appraiser
Okay first let me BUST a MYTH out there. The administration is telling people that even though YOU are not going to get bailed out while your neighbor who is going through foreclosure is, you should be happy because YOUR home will not suffer further loss in value if we can get these foreclosures sold and no longer sitting vacant, etc.
While there is truth to this it sure does not make those of us who have been working hard to keep our mortgage payments current feel a whole lot better. Many will start falling behind on their payments just to get bailout help...sad but true.
But here is the real deal on how appraisers are dealing with the valuation of your home in this foreclosure crisis. We DO NOT typically use foreclosed sales to compare against your home. We first evaluate your individual neighborhoods, streets, subdivisions and trust me when I tell you it can vary street by street in today's market.
If and only IF your subdivision, street or neighborhood is full of foreclosures, more so than your typical arms-length transactions, then we WILL using foreclosures as our primary source for analysis. WHY? because these sales have now defined your neighborhood. If there are more sales in your area which are not foreclosures then we will use those sales primarily.
Therefore your home may NOT necessarily decline in value due to a few scattered foreclosures in your area. Now here is where it gets a little muddy in the water....If you have a home right next to yours or a couple of doors down that has been foreclosed upon and especially if it looks "run down" and obviously vacant, this WILL have an effect on the value of your home to some degree regardless of the number of foreclosures in your area. WHY? because if you were looking to buy a home and the one next door to yours is quite frankly and eye sore, this has an impact on how the market perceives your home. Sad and not fair but true!
The foreclosures in your area or on your street and their proximity to yours have an effect from that point outward as if in a circle. The further the foreclosure/s is from your home, the better off you are!
Again, let me repeat, if you only have a few foreclosures scattered about your development, street (unless you only have a few homes on your street) or defined neighborhood, chances are you are not going to be heavily impacted as appraisers will use non-foreclosure sales whenever it is reasonable to do so and is not misleading to the lender to do so.
One thing I want to make clear! Appraisers do not determine the value of your home...Let me repeat this. Appraisers DO NOT determine the value of your home.....The MARKET DOES! We analyze the market and as long as we do this correctly and as long as we utilize properties that are truly comparable to yours and make the appropriate adjustments for any variances, then the market LEADS us to the appropriate opinion of value....So don't blame the appraiser for the value of your home okay? It is the market you need to blame.
One final note. Appraisers are supposed to protect banks from lending risks. Banks need appraisers to analyze NOW more than ever what the market is doing, what the value of the property is currently, what the trends have been and where they are likely headed.
Banks & Mortgage Companies in the past did not really care too much about the fact that we were trying to protect their interests as they wanted to close loans. Sad fact but true and that is why we are in this mess Today. Appraisers many times are considered a necessary evil and Lenders pressured many Appraisers to do what they wanted. Unfortunately many succumbed to that pressure.
Banks are now going the opposite direction and running scared. They are dictating to appraisers what the comparable properties should be. They are non believers in what our reports are telling them. Before they wanted the highest possible value, now they want the lowest. They are telling us based upon some National Report that we MUST report our area as declining! Well here in Georgia there are some area that are NOT declining but STABLE. I personally do not let lenders dictate to me and I know for a fact I have lost business over this...but I digress...
Bottom line is they are still not letting us do our jobs! We have no vested interest in these properties, if they had let us do our jobs from the start, we would not be looking at a Trillion Dollar plus spending bill. Can you tell I am just a little frustrated? I AM!
So as a consumer what can you take away from all of this. Keep up with what is going on in your neighborhood and do not let lenders determine the value of your home. You get a copy of your appraisal report, review it carefully. If you do not agree with it, protest it! Many banks use review appraisers who either have not even seen your home or who have only driven by your home to refute the original appraisal report. Don't let that happen to you because these review appraisers do not know the home like the first appraiser!
As Realtors, you can do the same thing. You have access to the same information we as appraisers do and even more than we do as you guys see many of the INTERIORS of the comparable properties used by appraisers which we do not see. Sure we have photos of the interiors if you post them on MLS/FMLS but the pictures do not always tell the whole story! So help your clients in this lending process by not letting them reduce or change the value of the first appraisal report without good reason
The real skinny on why Appraisers use foreclosures to value your home!
By Mary Thompson-Certified Real Estate Appraiser
Okay first let me BUST a MYTH out there. The administration is telling people that even though YOU are not going to get bailed out while your neighbor who is going through foreclosure is, you should be happy because YOUR home will not suffer further loss in value if we can get these foreclosures sold and no longer sitting vacant, etc.
While there is truth to this it sure does not make those of us who have been working hard to keep our mortgage payments current feel a whole lot better. Many will start falling behind on their payments just to get bailout help...sad but true.
But here is the real deal on how appraisers are dealing with the valuation of your home in this foreclosure crisis. We DO NOT typically use foreclosed sales to compare against your home. We first evaluate your individual neighborhoods, streets, subdivisions and trust me when I tell you it can vary street by street in today's market.
If and only IF your subdivision, street or neighborhood is full of foreclosures, more so than your typical arms-length transactions, then we WILL using foreclosures as our primary source for analysis. WHY? because these sales have now defined your neighborhood. If there are more sales in your area which are not foreclosures then we will use those sales primarily.
Therefore your home may NOT necessarily decline in value due to a few scattered foreclosures in your area. Now here is where it gets a little muddy in the water....If you have a home right next to yours or a couple of doors down that has been foreclosed upon and especially if it looks "run down" and obviously vacant, this WILL have an effect on the value of your home to some degree regardless of the number of foreclosures in your area. WHY? because if you were looking to buy a home and the one next door to yours is quite frankly and eye sore, this has an impact on how the market perceives your home. Sad and not fair but true!
The foreclosures in your area or on your street and their proximity to yours have an effect from that point outward as if in a circle. The further the foreclosure/s is from your home, the better off you are!
Again, let me repeat, if you only have a few foreclosures scattered about your development, street (unless you only have a few homes on your street) or defined neighborhood, chances are you are not going to be heavily impacted as appraisers will use non-foreclosure sales whenever it is reasonable to do so and is not misleading to the lender to do so.
One thing I want to make clear! Appraisers do not determine the value of your home...Let me repeat this. Appraisers DO NOT determine the value of your home.....The MARKET DOES! We analyze the market and as long as we do this correctly and as long as we utilize properties that are truly comparable to yours and make the appropriate adjustments for any variances, then the market LEADS us to the appropriate opinion of value....So don't blame the appraiser for the value of your home okay? It is the market you need to blame.
One final note. Appraisers are supposed to protect banks from lending risks. Banks need appraisers to analyze NOW more than ever what the market is doing, what the value of the property is currently, what the trends have been and where they are likely headed.
Banks & Mortgage Companies in the past did not really care too much about the fact that we were trying to protect their interests as they wanted to close loans. Sad fact but true and that is why we are in this mess Today. Appraisers many times are considered a necessary evil and Lenders pressured many Appraisers to do what they wanted. Unfortunately many succumbed to that pressure.
Banks are now going the opposite direction and running scared. They are dictating to appraisers what the comparable properties should be. They are non believers in what our reports are telling them. Before they wanted the highest possible value, now they want the lowest. They are telling us based upon some National Report that we MUST report our area as declining! Well here in Georgia there are some area that are NOT declining but STABLE. I personally do not let lenders dictate to me and I know for a fact I have lost business over this...but I digress...
Bottom line is they are still not letting us do our jobs! We have no vested interest in these properties, if they had let us do our jobs from the start, we would not be looking at a Trillion Dollar plus spending bill. Can you tell I am just a little frustrated? I AM!
So as a consumer what can you take away from all of this. Keep up with what is going on in your neighborhood and do not let lenders determine the value of your home. You get a copy of your appraisal report, review it carefully. If you do not agree with it, protest it! Many banks use review appraisers who either have not even seen your home or who have only driven by your home to refute the original appraisal report. Don't let that happen to you because these review appraisers do not know the home like the first appraiser!
As Realtors, you can do the same thing. You have access to the same information we as appraisers do and even more than we do as you guys see many of the INTERIORS of the comparable properties used by appraisers which we do not see. Sure we have photos of the interiors if you post them on MLS/FMLS but the pictures do not always tell the whole story! So help your clients in this lending process by not letting them reduce or change the value of the first appraisal report without good reason
Friday, February 27, 2009
The Invisible Client (The Bank)
Here is an interesing article
It’s a Different World...
In the good ole days, five years ago, when a seller called and said they wanted to list their home there was instant cause for celebration. You list, you market, everyone goes to a closing in a couple of months and you CLOSED. That was then and this is now. The terrain has changed with the increased number of consumers who are default adding a new ‘twilight dimension” to the listing process by the subtle introduction of Mr. “Invisible” bank man as a 5th wheel to the listing party.
Seller’s Rights
The owner of any property has the right to offer their home for sale—at any time they wish—even when they are behind on the mortgage. The equation gets tricky if there is a shortage between what a buyer is willing to pay in the current market and the outstanding balance owed to clear the title. The lender(s) has no authority to block the listing BUT they are under no obligation to accept less than full pay-off of the outstanding balance; hence the dilemma of the short sale. Without lender acceptance of the proposed “shortage,” there will be no closing. Enter . . .
Mr. “Invisible” Bank Man
While he’s “invisible” and not even a party to the contract, he carries a very BIG stick. In cases where the property sale will garner less in an offer than the mortgage pay-off plus necessary expenses (commonly called a short sale) the loudest mouth in the building belongs to the “invisible” partner. It is a wise practice to recognize the existence of this partner in the listing contract, ie. “sale may be subject to lender approval.” Throughout the transaction you and Mr./ Mrs. Homeowner must pay the highest degree of respect to the wishes of the “invisible” partner. The success of a short sale is dependent upon how successful the rest of the team interacts with this team member. Failure to understand this basic concept with likely guarantee a disastrous outcome.
What options does he have?
Let’s consider the options available to the 5th wheel when a borrower falls into default.
They may agree to a workout option for retention if the borrower has funds sufficient to support some kind of payment plan.
If there are insufficient funds for making payments, they may agree to a short payoff—if they have determined the proposed sale to be an arm’s length transaction, with no extraneous payments to the buyer, probably with a requirement of reduced commission to be paid and they have satisfied themselves, the offer represents realistic current value.
hey may agree to accept a deed-in-lieu of foreclosure to save themselves some time, expense, and trouble, while reserving the right to pursue the unsuspecting seller for any shortage at a later time.
They may decide---at any point—to move forward and complete the foreclosure process.
Placating on Pricing
Pricing can be tricky and the devil is in the details. If you price it too high you run the risk of guaranteeing no showings and consequentially, no offers. Price it at or below market and you’ll get an offer---maybe multiple offers---but the “invisible” partner is almost certain to reject any offer under these circumstances as “not being reflective of the true value of the collateral.” So you—Short Sale Agent Extraordinaire---must strike a reasonable balance between what is low enough to generate showings and a possible offer but high enough to stave off any claim of “attempting to give away the bank’s house.” Delicate strategy but one which is taught as part of the two day “Short Sale—Not Your Typical Transaction” class and/or Level I of the FIS certification program. No attempt at being cagey but this is already going to be a long article and that is not a concept I can squeeze in here.
Fifth Wheel Dictatorship
When it comes to counters and price reductions, it would be a serious mistake to overlook the opinion of the “5th wheel.” After all, it is his net balance which you are proposing to reduce so he demands the courtesy of input. Wise agents respect this as an important right and never do price reductions without getting prior approval, in writing, from this unorthodox client. Likewise, it is unwise to allow Mr./ Mrs. Homeowner to sign any counter offer which has not received written authorization from the lender. And no, putting in “subject to lender approval” in the counter and then letting your listing couple sign BEFORE the lender gives approval is never a good idea.
My, How Time Flies
Unlike traditional transactions where the offer is presented to your sellers who make a decision and sign off on it, your primary clients (they’re the visible ones) must wait for a response from the “invisible” one. He usually takes a long time since he may need to consult with the MI company, order and review an appraisal & a BPO, look at title work plus a few other things he forgot to mention to anybody---ALL before he can make a decision. This is further complicated by the fact that apparently all the “invisible” bank people are incredibly busy these days. Nonetheless, you dare not move forward without his express, written permission.
Now About That Commission. . . .
REALTORS and real estate boards across the country are up in arms because they feel the lenders are unfairly sticking their noses in the commission aspect of real estate. Mind you, we are not talking about all transactions—only short sale transactions. But, depending on what part of the country you’re in that could be 35-45% of THE market or perhaps as much as 85-90% of YOUR business. Not only are lenders insisting on sticking their nose in, they are obstinate enough to say “this is ALL we will allow for commissions.” Dot. Period. End of discussion.
I Beg Your Pardon
The “invisible” partner did not sign a listing contract, therefore, there is not a contract for services rendered on his behalf. I am sad to report that most REALTORS and many boards are reluctant to acknowledge the harsh reality that they have only the signature of Mr./ Mrs. Seller on the company contract. Mr. “Invisible” bank man:
DID NOT sign a listing contract
DID NOT agree to pay any commission amount
DOES NOT care what Mr./ Mrs. Seller owe you
Nor, I am afraid, do they care what is the local custom. They have a business to run and right now things are tight. Mr. & Mrs. Seller are in default and foreclosure is imminent. From their prospective “you real estate people should have understood the short sale game.”
Take the Bitter W/ the Sweet
You can build a profitable business at a commission level LESS than the current acceptable standard—STOP YELLING AT ME—provided you:
Stop giving away more of the commission than you keep
Stop taking listings which don’t have a snowball’s chance in Florida
Learn when to get a ”real estate divorce” (watch for the article)
Learn how to handle a “SHORT” effectively.
Ain’t Closed Til It’s Closed
Too many agents have discovered the hard way that the approval of the “invisible” partner carries no real weight---until the closing documents have all been signed. Literally. I know I told you, you had to have it; that is called covering yourself. I am also telling you that until ALL the documents have been signed the lender reserves the right to withdraw their approval of the sale. Whether they have discovered another lien, have a request to transfer the file to the MI company, the lender has gone bankrupt or any one of ten other possibilities, it ain’t closed til it’s closed. All parties need to understand that is how it works in the land of short sales.
It’s a Different World...
In the good ole days, five years ago, when a seller called and said they wanted to list their home there was instant cause for celebration. You list, you market, everyone goes to a closing in a couple of months and you CLOSED. That was then and this is now. The terrain has changed with the increased number of consumers who are default adding a new ‘twilight dimension” to the listing process by the subtle introduction of Mr. “Invisible” bank man as a 5th wheel to the listing party.
Seller’s Rights
The owner of any property has the right to offer their home for sale—at any time they wish—even when they are behind on the mortgage. The equation gets tricky if there is a shortage between what a buyer is willing to pay in the current market and the outstanding balance owed to clear the title. The lender(s) has no authority to block the listing BUT they are under no obligation to accept less than full pay-off of the outstanding balance; hence the dilemma of the short sale. Without lender acceptance of the proposed “shortage,” there will be no closing. Enter . . .
Mr. “Invisible” Bank Man
While he’s “invisible” and not even a party to the contract, he carries a very BIG stick. In cases where the property sale will garner less in an offer than the mortgage pay-off plus necessary expenses (commonly called a short sale) the loudest mouth in the building belongs to the “invisible” partner. It is a wise practice to recognize the existence of this partner in the listing contract, ie. “sale may be subject to lender approval.” Throughout the transaction you and Mr./ Mrs. Homeowner must pay the highest degree of respect to the wishes of the “invisible” partner. The success of a short sale is dependent upon how successful the rest of the team interacts with this team member. Failure to understand this basic concept with likely guarantee a disastrous outcome.
What options does he have?
Let’s consider the options available to the 5th wheel when a borrower falls into default.
They may agree to a workout option for retention if the borrower has funds sufficient to support some kind of payment plan.
If there are insufficient funds for making payments, they may agree to a short payoff—if they have determined the proposed sale to be an arm’s length transaction, with no extraneous payments to the buyer, probably with a requirement of reduced commission to be paid and they have satisfied themselves, the offer represents realistic current value.
hey may agree to accept a deed-in-lieu of foreclosure to save themselves some time, expense, and trouble, while reserving the right to pursue the unsuspecting seller for any shortage at a later time.
They may decide---at any point—to move forward and complete the foreclosure process.
Placating on Pricing
Pricing can be tricky and the devil is in the details. If you price it too high you run the risk of guaranteeing no showings and consequentially, no offers. Price it at or below market and you’ll get an offer---maybe multiple offers---but the “invisible” partner is almost certain to reject any offer under these circumstances as “not being reflective of the true value of the collateral.” So you—Short Sale Agent Extraordinaire---must strike a reasonable balance between what is low enough to generate showings and a possible offer but high enough to stave off any claim of “attempting to give away the bank’s house.” Delicate strategy but one which is taught as part of the two day “Short Sale—Not Your Typical Transaction” class and/or Level I of the FIS certification program. No attempt at being cagey but this is already going to be a long article and that is not a concept I can squeeze in here.
Fifth Wheel Dictatorship
When it comes to counters and price reductions, it would be a serious mistake to overlook the opinion of the “5th wheel.” After all, it is his net balance which you are proposing to reduce so he demands the courtesy of input. Wise agents respect this as an important right and never do price reductions without getting prior approval, in writing, from this unorthodox client. Likewise, it is unwise to allow Mr./ Mrs. Homeowner to sign any counter offer which has not received written authorization from the lender. And no, putting in “subject to lender approval” in the counter and then letting your listing couple sign BEFORE the lender gives approval is never a good idea.
My, How Time Flies
Unlike traditional transactions where the offer is presented to your sellers who make a decision and sign off on it, your primary clients (they’re the visible ones) must wait for a response from the “invisible” one. He usually takes a long time since he may need to consult with the MI company, order and review an appraisal & a BPO, look at title work plus a few other things he forgot to mention to anybody---ALL before he can make a decision. This is further complicated by the fact that apparently all the “invisible” bank people are incredibly busy these days. Nonetheless, you dare not move forward without his express, written permission.
Now About That Commission. . . .
REALTORS and real estate boards across the country are up in arms because they feel the lenders are unfairly sticking their noses in the commission aspect of real estate. Mind you, we are not talking about all transactions—only short sale transactions. But, depending on what part of the country you’re in that could be 35-45% of THE market or perhaps as much as 85-90% of YOUR business. Not only are lenders insisting on sticking their nose in, they are obstinate enough to say “this is ALL we will allow for commissions.” Dot. Period. End of discussion.
I Beg Your Pardon
The “invisible” partner did not sign a listing contract, therefore, there is not a contract for services rendered on his behalf. I am sad to report that most REALTORS and many boards are reluctant to acknowledge the harsh reality that they have only the signature of Mr./ Mrs. Seller on the company contract. Mr. “Invisible” bank man:
DID NOT sign a listing contract
DID NOT agree to pay any commission amount
DOES NOT care what Mr./ Mrs. Seller owe you
Nor, I am afraid, do they care what is the local custom. They have a business to run and right now things are tight. Mr. & Mrs. Seller are in default and foreclosure is imminent. From their prospective “you real estate people should have understood the short sale game.”
Take the Bitter W/ the Sweet
You can build a profitable business at a commission level LESS than the current acceptable standard—STOP YELLING AT ME—provided you:
Stop giving away more of the commission than you keep
Stop taking listings which don’t have a snowball’s chance in Florida
Learn when to get a ”real estate divorce” (watch for the article)
Learn how to handle a “SHORT” effectively.
Ain’t Closed Til It’s Closed
Too many agents have discovered the hard way that the approval of the “invisible” partner carries no real weight---until the closing documents have all been signed. Literally. I know I told you, you had to have it; that is called covering yourself. I am also telling you that until ALL the documents have been signed the lender reserves the right to withdraw their approval of the sale. Whether they have discovered another lien, have a request to transfer the file to the MI company, the lender has gone bankrupt or any one of ten other possibilities, it ain’t closed til it’s closed. All parties need to understand that is how it works in the land of short sales.
Wednesday, February 25, 2009
View Crime Reports & Sex Offender lists when purchasing a home
There are many sites you can go to when purchasing a home. There are two that I recommend, as a frequently asked question is, "Is this a good area?" The problem of course is that agents cannot steer you or use their biased opinion of areas to tell you where to buy. It is against our Code of Ethics. All we can do is try to get you the information you need to make an informed decision. I recommend in particular to see the crime statistics as well as the registered sex offender list, of an area. :
You can go on to this website: http://www.spotcrime.com/ne/omaha to view where crime is most prevalent. You can also go to this website to see a list of all registered sex offenders: http://www.nsp.state.ne.us/SOR/find.cfm
For More Information on Omaha, Millard, Elkhorn, Gretna, Bennington, Papillion, LaVista Homes for Sale, Don't Hesitate to Call or text me at 402-250-7869.
You can also reach me by Email at:
shawn.murray@remax.net
Please view my website at:
http://www.smurray.theproducersrealestate.com/
RE/MAX The Producers
You can go on to this website: http://www.spotcrime.com/ne/omaha to view where crime is most prevalent. You can also go to this website to see a list of all registered sex offenders: http://www.nsp.state.ne.us/SOR/find.cfm
For More Information on Omaha, Millard, Elkhorn, Gretna, Bennington, Papillion, LaVista Homes for Sale, Don't Hesitate to Call or text me at 402-250-7869.
You can also reach me by Email at:
shawn.murray@remax.net
Please view my website at:
http://www.smurray.theproducersrealestate.com/
RE/MAX The Producers
Sunday, February 22, 2009
Tax Credit first time home buyers
Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing. Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
Phaseout Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.
Mark Wingert Wells Fargo Bank
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction – a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.
The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.
Tax Credit Versus Tax Deduction
It’s important to remember that the $8,000 tax credit is just that… a tax credit. The benefit of a tax credit is that it’s a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing. Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit… and still receive a check for the remaining $4,000!
Phaseout Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.
Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.
Mark Wingert Wells Fargo Bank
Friday, February 20, 2009
Tuesday, February 17, 2009
Home buyer tax incentive package
Final score: $8,000 for homebuyers
First-time purchasers get a tax credit windfall if they buy before December.
By Les Christie, CNNMoney.com staff writer
Last Updated: February 17, 2009: 12:13 PM ET
NEW YORK (CNNMoney.com) --
There's a nice windfall for some homebuyers in the economic
stimulus bill awaiting President Obama's signature
on Tuesday. First-time buyers can claim a credit
worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:
"I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"
The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:
Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.
Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.
Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.
To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.
Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.) Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.
Lukewarm reception:
The housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.
"[The Senate version] would have done a lot more to turn around the housing market," said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). "We have a lot of reports of people who would be coming off the fence because of it."
Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors. The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. "I think there are many homeowners who would be trading-up but they have had no buyers for their own homes," Yun said.
Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.
One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the downpayment. Then, when the buyers receive their tax credit from the IRS, they pay back the state.
Other states may follow with similar programs, according to NAHB's Dietz.
Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.
And it provides a nice nest egg for the often-difficult early years of omeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.
First-time purchasers get a tax credit windfall if they buy before December.
By Les Christie, CNNMoney.com staff writer
Last Updated: February 17, 2009: 12:13 PM ET
NEW YORK (CNNMoney.com) --
There's a nice windfall for some homebuyers in the economic
stimulus bill awaiting President Obama's signature
on Tuesday. First-time buyers can claim a credit
worth $8,000 - or 10% of the home's value, whichever is less - on their 2008 or 2009 taxes.
A big plus is that the credit is refundable, meaning tax filers see a refund of the full $8,000 even if their total tax bill - the amount of witholding they paid during the year plus anything extra they had to pony up when they filed their returns - was less than that amount. But there has been a lot of confusion over this provision. Adam Billings of Knoxville, Tenn. wrote to CNNMoney.com asking:
"I will qualify as a first-time home buyer, and I am currently set to get a small tax refund for 2008. Does that mean if I purchased now that I would get an extra $8,000 added on top of my current refund?"
The short answer? Yes, Billings would get back the $8,000 plus what he'd overpaid. The long answer? It depends. Here are three scenarios:
Scenario 1: Your final tax liability is normally $6,000. You've had taxes withheld from every paycheck and at the end of the year you've paid Uncle Sam $6,000. Since you've already paid him all you owe, you get the entire $8,000 tax credit as a refund check.
Scenario 2: Your final tax liability is $6,000, but you've overpaid by $1,000 through your payroll witholding. Normally you would get a $1,000 refund check. In this scenario, you get $9,000, the $8,000 credit plus the $1,000 you overpaid.
Scenario 3: Your final tax liability is $6,000, but you've underpaid through your payroll witholding by $1,000. Normally, you would have to write the IRS a $1,000 check. This time, the first $1,000 of the tax credit pays your bill, and you get the remaining $7,000 as a refund.
To qualify for the credit, the purchase must be made between Jan. 1, 2009 and Nov. 30, 2009. Buyers may not have owned a home for the past three years to qualify as "first time" buyer. They must also live in the house for at least three years, or they will be obligated to pay back the credit.
Additionally, there are income restrictions: To qualify, buyers must make less than $75,000 for singles or $150,000 for couples. (Higher-income buyers may receive a partial credit.) Applying for the credit will be easy - or at least as easy as doing your income taxes. Just claim it on your return. No other forms or papers have to be filed. Taxpayers who have already completed their returns can file amended returns for 2008 to claim the credit.
Lukewarm reception:
The housing industry is somewhat pleased with the result because the stimulus plan improves on the current $7,500 tax credit, which was passed in July and was more of a low-interest loan than an actual credit. But the industry was also disappointed that Congress did not go even further and adopt the Senate's proposal of a $15,000 non-refundable credit for all homebuyers.
"[The Senate version] would have done a lot more to turn around the housing market," said Bernard Markstein, an economist and director of forecasting for the National Association of Homebuilders (NAHB). "We have a lot of reports of people who would be coming off the fence because of it."
Even so, the $8,000 credit will bring an additional 300,000 new homebuyers into the market, according to estimates by Lawrence Yun, chief economist for the National Association of Realtors. The credit could also create a domino effect, he said, because each first-time homebuyer sale will lead to two more trade-up transactions down the line. "I think there are many homeowners who would be trading-up but they have had no buyers for their own homes," Yun said.
Who won't benefit, according to Mark Goldman, a real estate lecturer at San Diego State University, are those first-time homebuyers struggling to come up with down payments. The credit does not help get them over that hurdle - they still have to close the sale before claiming the bonus.
One state, Missouri, is trying to get around that problem by creating a short-term loan on the tax credit of up to $6,750. The state would loan borrowers the money so they could use it at closing as part of the downpayment. Then, when the buyers receive their tax credit from the IRS, they pay back the state.
Other states may follow with similar programs, according to NAHB's Dietz.
Many may look at the tax credit as a discount on the home price, according to Yun. A $100,000 purchase effectively becomes a $92,000 one. That can reassure buyers apprehensive about purchasing and then watching prices continue falling, he added.
And it provides a nice nest egg for the often-difficult early years of omeownership, when unexpected repairs and expenses often crop up. Recipients could also use the money to buy new stuff for their home - a lawnmower, a rug, a sofa - and, in that way, help stimulate the economy.
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