Archive for the ‘Buyers’ Category

Fannie Mae has a program called HomePath, which offers subprime-era terms for buyers: minimal down payments, no appraisals, no mortgage insurance and lower minimum credit scores.

In some cases this is a GREAT deal for buyers, sometimes not. Nevertheless buyers should keep an eye out for these types of opportunities, not only as a personal residence but for rental properties too.

To view the full article from the LA Times: click here

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I continue to be frustrated when I read news reports about the housing market. It drives me crazy that people who know nothing about real estate, aren’t in the business, continually write reports that are misleading (in my opinion).

A recent LA Times article talks about both year over year and month over month data. It is almost always misleading to evaluate the real estate market based on month over month data, especially a broad measure like median sales price.

The key to the market’s health is ALWAYS, let me say it again, ALWAYS about volume and transactions. As long as their are willing and able buyers, the market is good and healthy.

The challenges over the last 18 months has been not only the lack of buyers, particularly in the higher price ranges, but also the lack of ABLE buyers. In other words, there are many cases where there are WILLING buyers, but because of the huge lending pull back, these buyers are not able to obtain financing.

As you can see from the graphic below, the Denver market as a whole is showing broad strength in looking at year over year numbers. For some of the southern area markets, such as Centennial, Highlands Ranch, Castle Rock, Parker – the year over year numbers are much more pronounced; meaning that Q1 of 2009 was exceptionally weak, and Q1 2010 was substantially stronger.

source: LTGC, Metrolist

In any case, I continue to see progress in the market as a whole. Sure, there are still several problems: financing for condos remains difficult and the upper end of the market is still out of balance in terms of sellers and buyers (more sellers than buyers). However, I am seeing higher end properties begin to sell when the buyer(s) begin to see the value (i.e. “deal”).

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(for more info, click on the full article on reltor.org)

The Basics: Extended Home Buyer Tax Credit 2009/2010

Bringing the Dream of Homeownership Within Reach
As part of its plan to stimulate the U.S. housing market and address the economic challenges facing our nation, Congress has passed new legislation that:

Extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.
Expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.
Here is more information about how the Extended Home Buyer Tax Credit can help prospective home buyers become part of the American dream. If you have specific questions or need additional information, please contact a tax professional or the Internal Revenue Service at 800-829-1040.

Latest news:

Watch: REALTOR® Party Tax Credit Video Contest Winner (Nov. 12)

Home Buyer Tax Credit Has Added Benefits for Armed Services Members, Others (Nov.11)

Tax Credit Extension a Positive Step Toward Real Estate Recovery (Nov.5)

Who Qualifies for the Extended Credit?
First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010.

Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.
To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see: 2009 First-Time Home Buyer Tax Credit.

Which Properties Are Eligible?
The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Is Available?
The maximum allowable credit for first-time home buyers is $8,000.

The maximum allowable credit for current homeowners is $6,500.

How is a Buyer’s Credit Amount Determined?
Each home buyer’s tax credit is determined by two additional factors:

The price of the home.
The buyer’s income.

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

Buyer Income

Under the Extended Home Buyer Tax Credit, which is effective on November 7, 2009, single buyers with incomes up to $125,000 and married couples with incomes up to $225,000—may receive the maximum tax credit.

These income limits have changed from the 2009 First-Time Home Buyer Tax Credit limits. If you or your client purchased a home between January 1, 2009 and November 6, 2009, please see 2009 First-Time Home Buyer Tax Credit.

If the Buyer(s)’ Income Exceeds These Limits, Can He/She Still Get a Credit?
Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?
Under the Extended Home Buyer Tax Credit, as long as a written binding contract to purchase is in effect on April 30, 2010, the purchaser will have until July 1, 2010 to close.

Will the Tax Credit Need to Be Repaid?
No. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount credit will be recouped on the sale.

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I can’t say it enough: this is about as good as it is going to get to buy and sell real estate. With prices having taken a beating over the last several years, and interest rates at probably the lowest point for possibly the next 20+ years, you HAVE to ask yourself: Am I living NOW in the home of my dreams? If not, what is holding me back?

Although some neighborhoods around town have not experienced significant declines in price, the majority have to some degree. Factor into your cost of money (interest rate on your mortgage) and like I said, now is an UNBELIEVABLE time to buy.

If you are a Seller, you have to consider the following: there is not that many homes for sale! In many neighborhoods, such as Willow Creek, Homested – there is a shortage of homes on the market (exception: the upper end of the market – homes >$750k). The listing inventory for the last 2+ years has steadily declined (see chart below).

September 2009 Listing Inventory - Denver MetroList

Regardless of where you fit in these scenarios, it may be in your best interest to take a few moments to re-evaluate your situation.

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People tend to think that when the market is down, they should do nothing, and wait until the market goes back up before they make a move. While that might make sense if you are “cashing out”, that is not the case if you are moving “up” into a more expensive property.


Let’s use the following example:
Your current house, House A, was worth $300,000 at the peak of the market.
Your “move up” house, House B, was worth $500,000 at the peak of the market.

So, to keep the math easy, let’s now say that the market is down 20%.
– House A is now worth 20% less, or $240,000 (20% of $300,000 is $60,000)
– House B is now worth 20% less, or $400,000 (20% of $500,000 is $100,000)

Here is the point: House A lost $60k, House B lost $100k. The difference between the two is $40,000. You actually SAVE/MAKE $40k by making the move BEFORE the market goes back up. Yes, you are losing $60k on your current house, but you “making” $100k on the new house. Why wait to pay $100,000 more for your new house?

AND, we haven’t looked at interest rates yet, which can make things even more expensive. Stay tuned!

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I just gave a speech on this topic, and actually, another way to say this is:

You can’t afford not to buy real estate right now.

I know this sounds like a sales pitch, and technically I am a salesperson, but being “salesy” is not my genetic makeup (that’s my wife – just don’t tell her I said that).

Seriously, there are three very good facts about why it makes sense to buy real estate RIGHT NOW.

First Time Home Buyers – Everyone has heard this right now, but if you are  first time home buyer, or you have not owned a home for less than 3 years, you can get $8,000 back from the IRS.  This is not a loan, this is an ACTUAL cash credit.   Why is this important:  the median sales price for a home in the Denver Metro area this yea is $195,000.  So the IRS is giving you 4% of the purchase price in cash to buy the house.  You only need 3 1/2% for a down payment, so essentially you can be getting a half a point back for buying your own home.  Need I say any more?

The other major factors to buy now are:

It always makes financial sense to MOVE UP in a down market.  So, you want that 3 car garage, or the house with a view, or the extra bed and bath for when you have visitors.  Whatever the reason, I will go through why this mathematically makes sense.

 Interest Rates affect your Purchasing Power, and interest rates are still at historic lows.  Every 1% change in interest rate fluctuation is equal to 10% purchasing power.  If the rates go up 1%, you just lost 10% of your purchasing power.

My next two posts will look into these two items in more detail

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Direct from the horse’s mouth: how you qualify and can receive the first time homebuyer credit.


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