Real Estate Investing

We’ve heard the news that first-time home buyers (defined as someone who has not owned a home in the last three years) will be eligible for an $8000 tax credit from the federal government if they buy their home between January 1 and December 1, 2009 (buy by November 30th).  The home must cost at least $80,000 (so you get the 10% discount) and there are some income limits.

As if this isn’t enough, the news gets EVEN BETTER for these first time home buyers.  You don’t have to wait until 2010 to file for the tax credit.  Yes, you heard me right … YOU DON’T HAVE TO WAIT UNTIL 2010 TO FILE FOR THE TAX CREDIT.

If you buy a home, you can AMEND your 2008  return and receive the refund this year.  You don’t need to wait until 2010 to file your 2009 tax return.

If you’re serious about buying a home this year, don’t think you have ot wait until the latter months to make it happen.  Call your Realtor this week!

For Sale by Owner sites sometimes seem rabid in pointing out that Realtors like to frighten home owners and buyers into hiring them when they sell or purchase a home.  I had one pro-FSBO’er actually write a comment once, “More scare tactics from a Realtor…”

I’ll be the first to admit that not every seller needs an agent.  Sometimes they’ve done their research, they’ve sold homes before so they know the process, and they’ve got plenty of time and energy to do the work themselves.  The parents of my daughter’s best friend from way-before-I-was-a-Realtor sold on their own - sold it the first week it was on the market!  I was amazed at their good fortune and even considered selling my own home by myself.  Then the nanosecond passed!

Scott Daniels of Florida Real Estate reminds me why I hired a Realtor those six years ago when he wrote Mr. and Mrs. FSBO doesn`t care about you! Buyer learns the hard way, why they need a Realtor!  Scott says,

Apparently, the home never appraised for the purchase price, after several attempts of going back and forth with the Seller to no avail the Buyer wanted out of the contract!

No such luck!

The seller and the attorney holding the escrow were adamant about keeping the $7500. They explained to the buyer “The Loan Commitment” expired and they have to “Buy The Home” regardless of appraisal issues.

Unable to secure a loan the buyer is in a huge bind!

Again, I won’t argue that sometimes it’s okay to sell on your own.  You’re probably a stubborn, determined person who works well on your own.  BUT I would absolutely always recommend that buyers find a licensed real estate agent to represent their best interests.  If the FSBO is unwilling to pay your agent’s broker a commission for bringing you - the buyer - to them, then you can (yes YOU!) pay for the services of a Realtor yourself.  Commission is negotiable, so it could be as simple as contacting a real estate company and asking for limited services (like explaining and filling out a contract).  Or you could take a contract to a real estate attorney.

Caveat emptor has been around for a long time - for good reason.   May the buyer beware!

It’s that time of year for the annual convention of the National Association of Realtors.  This year Orlando, Florida is crawling with extraordinary agents from the industry - I would give my eyetooth to be there with them! This morning, NAR released findings that 41 percent of homes in 2007 were sold to first-time buyers.  MSNBC reports, 

According to the study, the median age of first-time buyers was 30, down from 31 in 2007.  The median income for a first-time buyer was $60,600 and typical first-time buyers bought homes costing $165,000.

This is an historic time to jump in the market, but first-time homebuyers do need to educate themselves about the process of buying a home.  Look before you leap! 

• Talk to your bank, credit union, or a lender in advance to see if your credit score, income, and debt will allow you to buy a home and how much.

• When you hear “how much” remember that just because you’re qualified for X amount, it doesn’t mean you can afford it!  Write out a realistic budget and stick to it. 

• Save, save, save for a down payment.  There are still 100 percent loans available, but if you can save 20 percent, you won’t have to pay MIP, an insurance policy that insures the lender against loss if the homeowner defaults on a mortgage.

• Don’t be afraid to interview your agent.  See that your personalities match, that the agent has experience, and they know the area.  Don’t expect them to provide information that will be in violation of fair housing laws.  To find an agent who has completed special courses in buyer representation, find someone who has an Accredited Buyer Representative designation.

• Don’t buy the first home you walk into - or at least look at several before you decide that the first one is THE one.

• Be sure to get a home inspection.  In addition, a termite or wood destroying organism inspection should be completed, along with a septic health inspection if the home is not connected to public sewer.

There are a hundred other first-time homebuyer tips available online.  Go to your favorite search engine and do your homework!