Real Estate Investing

I’ve been reading with a great deal of interest the FAQ’s provided by the National Association of Realtors regarding the expanded tax credit for existing homeowners who buy something else.  I am working with a couple of buyers now - and my sister is thinking about buying again after just selling her home - who have lots of questions.  For my buyers:

Can the home already have been sold and some time passed to qualify when buying again?  The answer is yes.  If the new home buyer has owned the same home for at least five consistent years, they may qualify for the $6500 tax credit.  So if they sold their home two years ago and have been renting since, but owned for five years before selling, they retain their eligibility.

What if the seller owned one home for four years, then another for three?  The buyer may NOT be eligible for the tax credit in this case because the ownership must be for five consecutive years.  I’d advise anyone in this situation to consult with the IRS to clarify if this is the case, but that’s how I’m reading the FAQ’s.

Is there a minimum purchase price on the new home?  If haven’t found where there is a minimum purchase price yet, but the maximum is $800,000.  And my own thoughts… if you can afford an $800,000 home, then you don’t really need the lousy $6500 tax credit, do you?  Yeah, I didn’t think so.

You need to be under contract no later than April 30th and close by June 30, 2010 to get the tax credit.  Happy house hunting!

I come from a generation and a location where buying a home for $50,000 was a big deal.  If you purchased a home for $86,000, you had more money than sense.  And a house for over $100,000?  You must be insane!  This has always made me question the true value of a house anytime my husband and I are in a position to buy.  We’ve made mistakes that haunt us today and yet we’ve not been completely insane in our decisions.

This post was a very refreshing story in someone’s home-buying experience.  Posted on The Housing Bubble Blog, a lender who calls himself “An Englishman in NJ” wrote about his decision to delay his home purchase.

Even although I work for one of the largest mortgage lenders in the world, I decided to contact a couple of “mortgage brokers” referred to me by my in-laws. One said that given my credit and income I could get a loan for “over $2 Million” with nothing down. My income was approximately $300K per annum at that time. I went home and told my wife we were not buying for a while because something incredibly insane is going on. Later that week at a family function, a BIL tells me that I should “buy something for $700K or $800K because there is no chance you will lose anything at that price”, implying that is a “low-end” purchase.

He did eventually buy a home at a reasonable price (for his area).  Indeed I applaud his decision to hold off not just until he and his wife were ready, but when the market was ready.

If you’re thinking about buying now, here are some quick money-wise tips:

• Save a down payment (again required by FHA and most conventional loans).  No more 0% downs!
• Make sure your agent runs a comparable market analysis before you buy to make sure the home is priced correctly according to the neighborhood.
• Ask the seller to pitch in for closing costs.  This is something that’s negotiable so it doesn’t hurt to ask.
• ALWAYS get a home inspection to be sure there are no major hidden defects in the home.
• Be prepared to negotiate again if the appraisal comes back short.  You have the ability - if you wrote an appraisal contingency in the contract - to walk away, but the seller may be willing to drop the price which will actually improve your monthly mortgage payment.

Happy house hunting - and remember … only 53 days left to close to get the $8000 first-time homebuyer tax credit.  Move fast if you want it and you’re eligible!

There’s an agent in my area who shall remain nameless.  He’s a big, popular agent.  He guarantees his listings will sell in 60 days or else.  The else is the charming part… or else what?

Or else he’ll buy them personally?  No.

Or else he’ll sell them without charging a commission?  No.

Or else he’ll just re-list them again and again so it will appear it’s only been listed for 60 days?  Bingo!

A friend of mine - before I became an agent myself - once said that she called him and learned that to list with him you were required to sign at least six listing forms.  Each form was good for 30 to 60 days.  When one listing date expired, his staff would re-input everything into the MLS thus creating a new MLS number.  We’re not supposed to do this - it’s against the MLS rules… more specifically there’s supposed to be a 10-day rest period before a home listing shows back up as a new, active listing.  Here’s what I found the other day on one home:

August 6, 2007 - 49 days
September 24, 2007 - 49 days
November 12, 2007 - 46 days
December 28, 2007 - 61 days
February 28, 2008 - 46 days
April 14, 2008 - 46 days
May 30, 2008 - 63 days
August 1, 2008 - 45 days
September 15, 2008 - 45 days
October 30, 2008 - 48 days
December 17, 2008 - 170 days (wrong picture)
June 5, 2009 - 119 days

I definitely sense a pattern that the agent is tired of the 45 days listings and is expanding them to three and four months! So this may be a boost for sellers - to give them optimal exposure because we agents do keep an eye on the hot sheets - to see what’s new on the market, what prices have come down, who’s withdrawn and expired.  Yet it’s misleading to buyers UNLESS their agent performs due diligence and looks at the full history of the house.  If I was the buyer’s agent, my thoughts would be that since it’s been on the market for 787 DAYS, they may be willing to negotiate.  OR they probably are NOT willing to negotiate!

Maybe we should just call this Reason #29 to Interview and Hire a Professional Realtor to Represent Your Best Interests.