PhillyMontco Real Estate Blog

The Home Buyers Tax Credit Has Been Approved!

The much-anticipated extension to the home buyer tax credit has finally been approved.  The Senate's vote yesterday resulted in a 98-0 win and today it was passed in the house.  The bill now moves to the President's desk for a final signature. 

First-time home buyers have been eligible for tax credits of up to $8,000 since last January as part of this year's economic stimulus package.  The newly backed program will expand the credit to include existing home owners.  

Under the revised program, those who have owned a home for at least five years will be able to apply for tax credits of up to $6,500 when they purchase their next home.  To qualify, buyers will have to sign a purchase agreement by April 30, 2010 and close by June 30. 

The maximum purchase price on a home will be $800,000 with vacation homes not eligible. Income limitations are $125,000 for single tax payers and $225,000 for joint filers. 

The National Association of Realtors (NAR) and the National Association of Home Builders (NAHB) have been lobbying hard for the extension and expansion of the tax credit.  NAR claims that so far, about 1.4 million first-time homebuyers have qualified for the program and they estimated that 350,000 of these buyers would not have otherwise purchased. 

The tax credit is also set to be extended for another year for military personnel serving outside of the United States until June 30, 2011. 

Senator Johnny Isakson, who heavily pushed for the extension, along with his own version that would have increased the credit to $15,000 stated, "This is probably the last extension." 

But, is this really true?  When April 2011 comes around and the housing market is still not in full recovery mode, will the politicians be able to let this go and actually come to an end, or could it possibly become a more permanent subsidy? 
 

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Push On To Expand $8,000 Tax Credit!

 
Some want to expand the tax credit for homebuyers. Supporters say it could stem price declines. Critics say it would just be a costly, temporary fix.

 

NEW YORK (CNNMoney.com) -- Congress is considering proposals to greatly expand a soon-to-expire $8,000 tax credit for first-time homebuyers -- potentially applying it to all but the wealthiest homebuyers.

Supporters say doing so would further boost home sales, stabilize housing prices and generate jobs. Opponents say extending and expanding the credit would be a waste of money and only temporarily stave off further price declines.

The credit now can be claimed by anyone buying a home who has not owned one for three years and who closes the deal by Nov. 30.

Beyond extending that deadline, some lawmakers want to make the credit available to all homebuyers who meet income eligibility requirements. And some want to increase the amount of the credit from $8,000 to $15,000.

Currently the first-time home buyer credit is available in full to those buying their primary residence who make $75,000 or less ($150,000 for joint filers). A partial credit is available to those making between $75,000 and $95,000 ($150,000 to $170,000 for joint filers).

The case for expanding the credit

Through mid-September, 1.4 million tax returns had qualified for the credit, according to the IRS.

Some portion of those returns, which the IRS couldn't specify, represents buyers who took advantage of an earlier version of the tax credit, which was only worth $7,500 and has to be repaid over time.

By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors.

Mark Zandi, chief economist of MoodysEconomy.com, favors extending the current credit until June 1, 2010, and making it available to all home buyers regardless of income or at least to everyone except those at the highest end of the income scale. He estimates the cost of doing so wouldn't exceed $30 billion over 10 years.

Zandi's reasoning: Foreclosures are expected to rise next year because of rising unemployment, and that will drag home prices down further. Extending and expanding the credit will help mute that decline. And by June, there's a chance the job market will have stabilized.

"The most fundamental argument for the credit is that nothing works in the economy if housing is falling -- it hurts household wealth and credit becomes tight," Zandi said. "[The credit] is a good insurance policy. It's vital to stem the housing price declines."

To kick start economic activity, Zandi believes lawmakers should set aside an amount of money for an extended credit and tell potential home buyers "first come first served."

The National Association of Home Builders would like the credit extended for all of 2010.

Why Are You Pricing Your House Like Clothing At The Mall?

Sellers who really want to sell their property NOW so that they can move on, are more involved with analyzing their price point than ever before.  It seems that most sellers want to price their property with something that ends in '99'--$399,000 or $399,900, etc.  Here's what I ask them:

"You're about to move to Cheltenham and your Realtor has set up a search for you through his/her MLS.  Can you tell me what your price parameters are for that search?  When you're searching online at night for homes in Cheltenham (or destination city of choice), what price points do you use in your own search?"

They'll say, "We're moving up a bit so, we enter $400,000 - $500,000."

"What if you were searching from $200,000 to $300,000 here in Milton?  You would completely MISS this home in your search!  Had you priced it at an even $400,000, you would capture buyers from both the $500,000 - $600,000 AND the $600,000 - $700,000 ranges.  Setting the price at $399,000, will cause you to lose an entire group of buyers for your home!"

They look at me for a minute and my analytical-minded clients have an ah-ha moment!  Then, they competely agree with me!

 

Try it, it WORKS!  I recently listed a home in a high price range.  We tried a little higher, and then dropped to $350,000 (not $349,999) and got multiple offers within a few days.  If you searched MLS for the even number, either way (least price or highest price) you would catch this listing!  When you look at another identical model with slightly less features, it was listed for the "wrong" price, with an 'off-beat' number, which was missed by 1/2 of their prospective buyers. 

Stop pricing your homes as though they were sale-price clothing at the mall!  Use those 'round' numbers and see how it works for you.  You'll instantly expand your pool of buyers! 

Sellers who really want to sell their property NOW so that they can move on, are more involved with analyzing their price point than ever before.  It seems that most sellers want to price their property with something that ends in '99'--$399,000 or $399,900, etc.  Here's what I ask them:

"You're about to move to Cheltenham and your Realtor has set up a search for you through his/her MLS.  Can you tell me what your price parameters are for that search?  When you're searching online at night for homes in Cheltenham (or destination city of choice), what price points do you use in your own search?"

They'll say, "We're moving up a bit so, we enter $400,000 - $500,000."

"What if you were searching from $200,000 to $300,000 here in Milton?  You would completely MISS this home in your search!  Had you priced it at an even $400,000, you would capture buyers from both the $500,000 - $600,000 AND the $600,000 - $700,000 ranges.  Setting the price at $399,000, will cause you to lose an entire group of buyers for your home!"

They look at me for a minute and my analytical-minded clients have an ah-ha moment!  Then, they competely agree with me!

 

Try it, it WORKS!  I recently listed a home in a high price range.  We tried a little higher, and then dropped to $350,000 (not $349,999) and got multiple offers within a few days.  If you searched MLS for the even number, either way (least price or highest price) you would catch this listing!  When you look at another identical model with slightly less features, it was listed for the "wrong" price, with an 'off-beat' number, which was missed by 1/2 of their prospective buyers. 

Stop pricing your homes as though they were sale-price clothing at the mall!  Use those 'round' numbers and see how it works for you.  You'll instantly expand your pool of buyers! 

Dear Unreferred Home Buyers and Sellers...

This is an open letter to all the people who contact me about a listing or who visit our website...

Dear Unreferred Home Buyer,

Let me take a minute to tell you that I'm sorry.  I'm sorry I didn't return your email quickly.  Or at all.

I feel really bad that you had to call a few times.  I know, I make you jump through hoops sometimes.

It's nothing personal.  We do our best to help everyone... in practice, we operate much like a nurse doing triage at the hospital.

The fact is, we speak to thousands of buyers every year.  If you don't fit into the following criteria, we really don't feel good about putting a lot of effort into your cause...

If you're not friendly, if you don't have a plan and are willing to share it, if you're not moving in the next 12 months, and most importantly if you're not excited to have us help you, then experience shows we're not a good match.

Don't get me wrong - you don't need to be referred to work with us.  But we are crystal clear about who we choose to help.

I'm afraid you're guilty until proven innocent sometimes.

I know there are a lot of other agents that will settle for less, but we only want the best because we give so much to you.  And then we count on you to tell the people you care about.

Please don't be mad.

I wish my arms were big enough to hug you all at the same time.

But they're not...

My God I'm reading this and it sounds really snobby.  It's not meant to be.  I just feel guilty when I see a pile of paper printed from website visitors on my desk, and I realize I can't help them all because I'm working with awesome people who were referred by awesome people.

Sincerely,

Wayne

P.S.  The good news is that if we're not a good match, or our model doesn't feel comfortable for you, I can probably refer you to someone who works a little more "transactionally".  Just be warned that you'll get the taxi treatment instead of the limo.

Then again, I know a few other good limo drivers, too.  :)

FREE REPORT: How To Beat Other Buyers To The Best New "Hot" Listings

Wayne Joell of Weichert Realtors Specializes In Helping Buyers
Find The Best Homes At The Lowest Prices

Do You Know About Every Home For Sale?

If you're looking for a home, you may have been calling real estate companies and attending open houses. You may even have some agents sending you information on some homes.

Are You Missing The "HOT" Listings?

"How do I know that I'm not missing out on the perfect house?"

"How do I know that I'm being shown everything I want to see?"

"Why are the good homes sold before I find out about them?"

If you're calling on ads and visiting open houses, you probably will miss out on the perfect home. Nice homes, priced fairly (called "Hot Listings") usually sell quickly, often within a week.

Do You Have Computers Working For You?

With our free Preferred Buyer Search, you help us program our powerful computers to search all listed homes for sale. Our computers match homes that meet your exact specifications. We then email you the information daily.

Our state-of-the-art computer software has direct access to the Association of REALTORS® mainframe computers. You'll know about new listings the day they are entered into the Multiple Listing Service (often 4 to 7 days before other buyers know about these homes – and a week or more before these homes are advertised or held open).

No matter what style of home you want, you'll find it with our computers. Do you want two baths? A garage? How about a finished basement? Do you want an acre of land in the country?

Do You Decide Which Homes You Want To See – At Your Convenience?

Our computers will provide you with information on every home available meeting your specifications. You obtain all the facts you need. You see exactly what is available for sale. You tell us what homes you like. We'll make private showing arrangements, at your convenience, for any home, anywhere, listed by any real estate company.

Will You Obtain The Best Home Loan?

Many of our Preferred Buyers report to us that other real estate agents tell them that they need $10,000 - $20,000 to buy a home when you add in all the closing costs. This is not always true.

There are more than 60 different ways to finance a home. Many agents are familiar with only 4 or 5 methods. We know about, and use, all 60.

Perhaps you want the lowest possible interest rate. How about a super-low down payment?… perhaps zero down! If you have spotty credit, we know home lenders who can help. There are even home loans where the lender will pay your closing costs.

All Of Our Services Are Free!

All of our services are free. We're paid by the seller if you buy a home. If you look at homes for a while and decide not to buy, that's fine. There is never any pressure or obligation.

Ask For Our Free Money Saving Reports:

• How To Obtain The Very Best Home Loan
• Five Common Mistakes Made By Home Buyers… And How You Can Avoid Them

Call Me At 215-517-3392 or email Wjoell@weichert.com

Call me today to learn more about our free services or to ask us to email your free money-saving reports. If you wish, you can make an appointment to learn more about these free services. We're here for one reason – to help you find the perfect home at the very best price and terms.

Call Me Today. We'll Show You:

• How To Find The Best New Hot Listings
• How To Beat Other Buyers To The Best New "Hot" Listings
• How To Use Our Computers To Search For Thousands Of Homes In Your Price Range
• How To Save Time, Money And Gas
• How To Make Sure You're Seeing Every Home For Sale
• How To Find The Very Lowest Down Payment

J Wayne Joell

Weichert Realtors 215-517-3392

Need a mortgage? Consider an FHA loan

Government-insured Federal Housing Administration loans now make up about 25% of the mortgage market. Here are five things you need to know.

By Beth Braverman, Money Magazine staff reporter

Last Updated: September 23, 2009: 9:17 AM ET

Money Magazine) -- 1. Chances are good that you'll come across one. During the heyday of no-money-down lending, you were unlikely to have a buyer using a government-insured Federal Housing Administration (FHA) loan, which lets borrowers purchase a home with a down payment of as little as 3.5%. Now FHAs are the only game in town for anyone who can't put down the minimum 10% many banks require to get a conventional loan.

About a third of buyers have 10% or less saved for a down payment, according to a recent Zillow.com survey. No wonder FHA loans have skyrocketed from 3% to 25% of the market. While you may not need to take out an FHA mortgage to purchase your next home, there's a good chance you'll be selling to someone who does.

2. Borrowers can qualify with any income. Historically FHA loans have gone mostly to low-income borrowers. But, in fact, there's no cap on what someone can earn. "The overriding factor that we look at is the ability to make payments," says Lemar Wooley of the Department of Housing and Urban Development.

Borrowing limits may be higher than you think too: Though the max is $271,050 in areas where real estate is cheap, buyers can take up to $729,750 in high-priced markets like California or New York.

3. Expect a tough appraisal. The home will need a clean bill of health from a government-approved appraiser, and the seller must fix any issues before a buyer can close on the loan. A few years ago the FHA eased up on repair requirements for minor problems like missing handrails or cracked windows. But it still won't budge on leaky roofs or mold damage.

If you're selling, know that an FHA appraisal stays on record for six months, even if the deal goes kaput or the buyer switches lenders. "Get one low FHA appraisal and you're stuck with it," says Dallas realtor Bruce Lynn.

4. These loans are pricier than they seem. Nominal rates on FHA mortgages are comparable to those on conventional loans. But hefty fees on the FHA variety up the cost. There's a 1.75% upfront charge as well as a 0.5% annual insurance premium for five years and until the principal balance hits 78% of the sales price or the home's appraised value.

If you're buying, ask if the seller will pick up some of the insurance costs as part of the deal, says Manchester, N.H., realtor Scott Godzyk. According to FHA rules, sellers can pay closing costs up to 6% of the home price.

5. They've gotten easier to obtain. FHAs once had a well-deserved rep for onerous paperwork and a longer, more difficult closing than conventional loans. But thanks to a new automatic underwriting system and the looser repair requirements, FHA mortgages take only a few days longer than conventional loans to close, says Bill Banfield, a vice president at Quicken Loans.

FHA loans still require written documentation of income, including pay stubs and tax returns. But stricter underwriting across the board means that you will probably need such paperwork no matter what type of loan you get.

Last Chance for $8,000 Tax Credit!

 

The $8,000 tax credit for first-time buyers passed by Congress earlier this year has created an excellentopportunity for those wishing to capitalize on today's affordable housing market. Yet, with the average real estate transaction taking 45-60 days to complete, buyers wishing to claim the $8,000 tax credit should be under contract to purchase a home within the next three weeks in order to make the Nov. 30 deadline.

If you are interested in taking advantage of this large financial incentive, here are some steps to take to get the ball rolling on a home purchase:

•

Engage an expert. If you have not done so already, speak with a real estate sales professional familiar with the area in which you would like to purchase a home. He or she can help you with your home search and all of the details necessary to complete your purchase.

•

Visit open houses. Check the Sunday real estate section and browse online to map out a few Open Houses to visit this weekend. This allows you to easily see a variety of homes in your price range, and viewing homes in person can help you narrow down the options.

•

Attend a homebuyers seminar. Register for Weichert's "Know When Opportunity is Knocking" seminar taking place in many Weichert offices on Saturday, Sept. 26 at 11:00 a.m. The seminar is designed to educate first-time buyers about the $8,000 tax credit and the other benefits of buying a home in the current market.

Call me at 267-664-8064 for more information.

 

Seth Godin on social networking.

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