Time To Buy? Don’t Listen To Me!

Real estate agents are ALWAYS saying it’s time to buy!  Attached is a free report from the investment community with their views.  As an accredited real estate consultant, I help my clients decide if buying now is a good decision for them.  It is a decision based upon many individual factors.  Strictly from a general financial point of view, it is time to buy real estate.  Today’s situation is unique, and it won’t last long.  Read about the general market conditions, and call me if you would like to discuss your opportunities.

TimetoBuy

Real Estate Consulting?

An interview with Bob Ashauer, RE/MAX Alliance
an Accredited Real Estate Consultant

Q – What In The World Is Real Estate Consulting?

A –  Mostly, it is a business approach taken by a Realtor to a client.  A consultant works only for a client, putting the client’s interest first, just like many other professionals.  Most real estate agents still work on a commission basis, even though there has been a gradual shift from a sales perspective to providing expert decision support for clients.  Some REALTORS today are becoming more like consultants than salespeople to meet the needs of their clients.

Q – So Why Do I Need To Know About This?

A – It has always been important to know who an agent is working for – you, someone else or for the sale.  In today’s market, it is even more important to have professional service dedicated to you and your interests alone – and for you to know it.  Real estate transactions are complex, expensive and the results last a long time.

Q – Can I Save Money With A Consultant?

A – In today’s economy, that’s a real good question!   Consulting is not cut-rate, reduced service.  (There are some of those around, still trying to provide one-size fit-all options.)  Consulting, however, is full professional service dedicate to you as a client.  It starts with your needs and your choices.  Consulting fees are fully transparent, with who pays what, when and why.  A consultant may be paid on a commission, or a flat fee, or both.  Yes, you may save money working with a consultant, but for sure you will receive the best value for professional services that you actually need.

Q – Is Consulting For Buyers Or Sellers?

A – Both, really.  In fact, a consultant offers professional services even if you are not ready to buy or sell at the moment.  (Did I mention consulting is based on your needs, not on a sale?) 

Q – How Do I Find A Real Estate Consultant?

A – Truthfully, there many traditional real estate agents that service their clients very well.  But how do you know until the deal is done, or even then?   Well, you look for an Accredited Consultant in Real Estate – an ACRE® REALTOR.  Real estate professionals who have earned the ACRE® designation have completed a course of study and taken an exam that tests their ability to provide unbiased counsel to the consumer in matters that deal with real estate.  They have developed tools to offer different choices to you based upon a comprehensive needs analysis.  Most importantly, they conduct their real estate business on a consultant basis with only you as a client.

You can learn more at my page http://www.eastofthearch.com
Or find ACRE agents at http://www.myreconsultants.com/

Or just call me at 618 581 1695 for a free 1-hour initial consultation.

Homeownership Is Priceless

I don’t often re-post a blog entry from someone else, but this one from Steve Harney expresses what I’ve recently felt with some clients.  Steve is one of the sources we rely upon to keep us current on the quick changes in the real estate market and industry.  His more personal message is woth reading.
Bob

What Homeownership Truly Means
by Steve Harney on March 15, 2011

 

My son, Bill and his fiancé, Charlotte

My Son, His New Home, and What It Means

Every week we try to help you put an accurate value on housing in today’s real estate market. We give you all the charts, report on all the surveys, and quote every housing expert willing to talk on the subject. And we are still not 100% sure what prices should be. At best, we can only tell you what we think.

This week was different. I was able to personally FEEL the true value of a home. My older son closed on his first home yesterday. I have the great fortune to work with him at our company. I get to see him a lot when I am not traveling. This week I was home and got to spend every day with him.

I saw how nervous he was as he got all the last minute paperwork together. I heard the relief in his voice when he found out that he had overestimated his costs and would need to bring a little less money to the closing. I could feel how proud he was when he hugged me as he left the office the night before the closing.

He should be proud. He just purchased his own home. He just took a major step toward accomplishing the American Dream. He now owns a piece of this country. He now has a community he can call his own. He has a place to go ‘home’ to every night, a place where he can work in the yard, a place he can invite friends and showoff his ‘castle’, a place where he will someday raise his family.

Owning a home makes things different. You can’t necessarily explain it logically. But you can feel it. That feeling is the real value of a home AND IT IS PRICELESS.

My son slept in his own home last night. I am happy for him.

Feel Wanted?

 

Uncle Sam Wants You

Uncle Sam Wants You (to own your home.)

I am always surprised when I meet potential first time home buyers that don’t understand the tax benefits of owning a home.  I suppose I shouldn’t be surprised – if understanding income tax filing was easy, there wouldn’t be tax preparation services on every street corner.  Everyone’s tax situation is different, and from a Realtor perspective, the only proper advice we can give is to “consult your tax professional.”  Well, almost.  Here’s a hint for renters.  As you file your taxes this year, or even if you’ve already mailed in a short form, take a few minutes to do a “what if” look at what your taxes would have been if you did own your home.  Pencil in the itemized deductions page -  deducting your annual mortgage interest and property taxes paid every month on an imaginary home you might have owned.  Don’t know how?  Ask a homeowner (there are plenty of us around – smile.)  You may be pleasantly surprised – or maybe not.  You need to know!  My annual income tax bill is about $4000 a year less because of these deductions alone.  That’s over $300 a month less compared to if I was renting (and letting my landlord have the tax benefits!)  It may be different for you, depending upon your tax rate.  The annual amount of income tax reductions from owning a home can be factored into those monthly house payments verses the rent you are paying.  In many cases the rent or buy descion is a “no brainer.”

Now, pure economics is not the only, or even best, consideration in buying a home.  There a whole lot of other things to think about.  But in this time of tight budgets, it is a real good idea to know the numbers.  Spend a little time with a pencil.  It is worth it.  Visit my web page just for First Time Home Buyers for more considerations.

Also, it must be mentioned that our politicians are looking at revisions of the tax code to reduce our nation’s deficit, including eliminating the tax deductions for mortgage interest paid by homeowners.   Not going to happen in my opinion.  Looking at the tax code is a good thing – they’ve been talking about simplifying the income tax code for years.  The National Association of Realtors is watching, and of course opposing, any changes that would massively affect homeowners.  Private ownership of property is one of the wonderful benefits of being an American – it’s an essential part of the American dream that we can never take for granted.  That’s not going to change.  Uncle Sam wants you —–to own your home (and will allow you some great tax reducing deductions if you do!)

 

The Elephant In The House

When looking at the real estate market, I am reminded of the story about a group of blind men sent out to investigate and describe an elephant.  Each returned with a quite different description, depending on which part of the elephant they each touched and explored.  None could describe the whole elephant – it was just too big.

In the real estate market, prices are down and probably will go down some more this year.  This is certainly one view of the elephant, and an important subject for another post, or for a phone call.  A longer perspective of price appreciation, however, gives a different view of the beast.  Forbes said recently, “With all the teeth-gnashing over the real estate bubble, the bust and the mortgage mess, you can be forgiven for failing to notice this little tidbit: Housing had a superb decade – 58% average gains per square foot!” Let’s take a comparative look:  The chart below from MSN Money shows the return on an investment in stocks compared to owning Real Estate over the past ten years.

Now that’s Interesting! Even with the recent plunge off the bubble in home values, real estate outperformed the stock market!  I would also note that you can’t live in a stock certificate.  The point is that for the past few years we have focused on the short-term prices of houses, when for generations Americans have considered home ownership as part of the American dream – a place to live and raise their families.   And in the long run, it was a pretty good investment, too.

Recently, Realtors have noticed that older customers, who have lived in their homes and raised their families, are advising their children of this generation to buy a home.  It’s often good advice.  That first home purchase is an important step into becoming established in a community, into taking roots.  If you are considering your first home purchase, or you are advising someone to make that first purchase, please have them visit this web page For First Time Home Buyers.  It is designed specifically to help them in today’s market.  Yes, the process of buying a home, like nearly everything else, has changed from the past.  I would be glad to discuss home ownership with them.  First time buyers are my favorite clients.  Tell them about the elephant.

Bob Ashauer
618 581 1695

Market Views

There are many aspects of national real estate trends I watch while keeping current on local market conditions.  Some of them, taken in isolation, are just plain interesting, like the data below.  Please contact me to get a full analysis of local market conditions and directions that affect your plans to sell or buy property.

The Government Can:

The chart below from The National Association of Realtors shows that homes sales are on a steady rise since last summer – not anywhere near prior years, but getting better every month and continuing into 2011.  Notice the big spike in the spring and the rapid drop in May and June.  That was the influence of the $8000 tax rebates, mostly for first time home buyers.  The whole industry scrambled for the rebate buyers, and the market fell flat after it expired.  It was a fun summer.  The industry is now slowly recovering from this “help” – returning to a more normal market.  Perhaps there will be less help in 2011!

Political views aside (right!), my favorite video of the year is below, and I hope it gives you a chuckle. Laugh a little with me, but don’t hesitate to contact me for a serious view of local market conditions and how they may affect your plans.

Bob Ashauer
Your personal Realtor
618 581 1695

The Government Can Video

 

“Psst – Hey Buddie, Wanna Buy A House?”

By now, most in the industry, even the media talking heads, are predicting home prices will continue to fall for the next several years.  The advice is that “if you are going to sell a house, do it now.”  Sorta makes sense.  At the same time, today is touted as a great time to buy!  Sounds like typical Real Estate hype, right?  It’s like we flipped a coin and it landing on the edge – neither heads nor tails.  That’s the problem with predicting the future, it’s a gamble.

I don’t know much about when we’ll hit the bottom, or when appreciation will be back, but I do know some things about buying now.  First, I know that for many of my clients, price is not the only, or most important, factor in buying a home.  Our homes are where we spend most of our time– where we raise our families – where we live!  Our homes define our lives.  Remember the phrase, “A man’s home is his castle.”   Many smart buyers today have not forgotten.

So second, let’s do look at the numbers – the price – for buying a home today.   Sure, interest rates are way down, prices are low, and inventory is high, but what does that actually mean to a potential buyer – maybe to you?  The bottom line for many families is really a question of how much a month do you want to spend for your home.  A few short years ago, in about 2003, when interest rates were around 6%, a $200,000 loan would have cost about $1200/month.  Let’s assume with insurance and taxes that this payment would have put a potential buyer in the category of “I might be able to afford that, but only for the right home.”   Thinking back, the market was hot, prices were high, and many home shoppers just didn’t see an advantage of making that purchase decision for the homes available.  By comparison, their present home or apartment looked pretty good!  So what about today, in terms of the same monthly outlay?  That same budgeted monthly payment would now “buy” a loan of about $240,000, because of lower interest rates.  But that’s not all!  The homes available in the $240,000 range today were often priced at $300,000 or much more back then!  From that perspective, it means that today there is a whole new market of desirable homes available for that given monthly payment.  Is your “dream home” one of them?  It may just be!  Of course every family’s budget is different; and yes, you may have to take a “loss” on a home you now own.  But the point is that for a given monthly payment, there is a whole new set of beautiful homes available today that may not have made sense for your budget just a few years ago.  So is it a good time to buy?  For some, it’s never been better.

Contact me.  Let’s take a look at homes that are now available for you to consider. 

Holding Our Breath

The strangest thing is happening on the way to higher interest rates and the affect on our real estate market.  The mortgage industry has been anticipating a period of rising mortgage rates, triggered by the end of the Federal Reserve’s $1.25 trillion mortgage-securities purchase program. Conventional wisdom held that mortgage rates would rise as the Fed pulled back from propping up the market. Enter the financial turmoil in Europe, which unleashed a massive wave of cash into U.S. bonds from investors around the world, pushing domestic mortgage rates to the lowest levels of the year. Many in the industry now say rates could drift as low as 4.5% this summer instead of rising to 6% as many economists projected.

It makes a big difference to buyers and sellers. Interest rates directly affect payments for buyers considering a home purchase. In terms of monthly payments, a general rule of thumb is that every one percentage point change in a mortgage rate is the equivalent of about a 10% change in the home price for the buyer.  The longer current low rates hold steady or drop, the more stable our local market remains.  This plateau we are on is a very good time for buyers and sellers.  Let’s hold our breath.

Future Home Prices in the Metro East

So where are we heading?  Will my home be worth more or less in two years?  Should I wait or do it now? Advising clients on the future of our housing market so they can make good decision is part of my job as a Realtor.  Keeping informed is a challenge because the factors affecting our future, both economic and political, seem to change quickly.  Filtering solid information from the news is critical.  My clients often see headlines and news broadcasts where interpretations of exactly the same data or event vary extremely.  “The market is back!” to “Here comes the second crash!”  The news is often misleading and aggravating.  It is safest to only focus on near term market conditions, but helping clients make decisions based on a realistic view of the future is part of the job. OK, it’s crystal ball time again. 

In this post, let us examine a snapshot of several strong national factors that will very likely affect home prices nationally, and examine them locally in the metro east of Saint Louis.  Reliable analysts are predicting a further slide in home prices in the next several years.  Other sources, of course are “pumping sunshine” that we have hit the bottom and are firmly on the road to recovery.  Keeping a view of the national economic health of the nation is important, of course, to all of us.  Which view is probably correct and why?  Two factors are being touted to erode prices over the long run. One is the “shadow inventory” of homes that are owned by banks or near foreclosure, but not yet on the market.  Many sources estimate there is a bubble of 4.5 million properties in this shadow inventory, many expected to come onto the market soon as banks attempt to sell them. These foreclosed properties will increase the supply of homes dramatically, and they are priced low because of their condition.  That tends to depress the sales value of all other homes. The second factor predicted is an increase in mortgage interest rates within the next year, which changes the dynamics of home buying.  Just a one percent increase can significantly raise potential payments for households already facing economic pressure.  Decreasing the buyer pool would put downward pressure on home prices.  These two factors seem to be likely forces that will drive home prices down nationally over the long run. 

Let’s take a closer look at these predictions on a geographical basis.  Where in the country may we see these trends? Here?  One of the sources I look to is PMI, Inc, a national company that underwrites or insures mortgage loans.  They have an inherent interest in the future value of property held as collateral and the subsequent risks of their loans.  The data they use is extensive and beyond what we can examine in this short post, but their national view is interesting to us.  They recently published a chart (below) that shows the probability of home prices being lower in two years than they are today.  In the red areas of the country, for instance, they predict that it is 100% certain home prices will drop over the next two years.  In our area, they indicate only a 30 to 50% chance that home prices will be lower; or about a 50 to 70% chance they will be higher.  We might well question their ability to predict the future (a real hazard in today’s turbulent times, and did they see the crisis coming in the first place?)  However, the relatively lower risk in our area that they predict is useful, and it makes sense based upon our experience.  Our market did not see the same extreme changes in the past that others have.  Certainly we did have a bubble in home prices, have suffered through drops in value, foreclosures will probably increase in our area, and an interest rate increase would affect us.  The national problems will continue to be felt and reflected here. When we see or hear about national trends, however, they must be tempered by our relatively stable economic conditions.  Need I say it?  OK, all markets are local! 

So what’s up today?  I observe we are on a plateau for now, and I think it will last through the next few months at least.  The spring influence has brought a normal increase in market activity and slight increase in prices.  Homes that are priced right for the present market conditions are selling well. Many buyers realize the great opportunity offered by this market.  I will say though, that the mix of homes that make up the market place is also very complex.  If you could consider for a moment the full range of homes for sale, all reflecting the perspective of their owners and agents. and could imagine the full range of opinions and feelings of potential buyers, and their agents, you could easily get a sense of what I mean by complex.  Add a mix of property conditions from move-in ready to distressed properties with special purchase requirements and you see the market as something we’ve never experienced before.  It’s good, but different. There has never been a time when it is more important to rely on a professional Realtor.  Get one today, smile. 

Future prices?  Our local economy and unemployment level are key factors, of course.  Trying to get into a local restaurant on a weekend indicates to me that all is well, but in reality a lot of family budgets are pinched.  Overall and in the long run, I believe national factors will keep home values from appreciating in the next few years like many of us home owners would like, but it depends greatly upon price range and even neighborhood.  We need to get used to this market, and have a realistic understanding of costs, price and value.  It will be here for a while.  It is a soft and bumpy bottom, at best.

 

Elvis Has Left The Building

   

   

 Well, the tax rebate buyers have left the market, anyway.  Many Realtors expected a slump in the market after the federal tax rebates expired.  It looks like the slump was only in the kind of activity we have experienced.  The general consensus in the industry is that the tax rebates were not that big a factor in the decisions actually made by buyers.  Looking back, it’s hard to tell if the program really stimulated as much awareness among potential home buyers as expected.  It sounded like a good idea, for sure, but simple dollars and cents is often a real poor reason alone for buying a home.  I always urge my non-investor clients to separate the buying decision into two separate and quite different steps:  First, and most important, do I want to buy this home, live here, enjoy my life here – is this the home I want to be the center of my life?  Only when there are some yes answers to these questions does it make sense to commence serious bargaining and negotiating.  Getting “a great deal” on the wrong home misses the whole point in the long run of home ownership.  The turbulent economic times have certainly caused many consumers to focus on the short term economic, or investment, aspects of the housing market, perhaps too much in some cases. To the vast majority of us, a home is much more than an investment, a tax write off, or a market commodity.  It is where we live, raise our families and enjoy our lives.  With spring comes a natural feeling of renewal where we often take stock, and perhaps evaluate where we live and the opportunities for change. Certainly, our personal budgets determine the choices that may be possible or necessary.  Well, the housing market this spring offers these opportunities.  Many feel the market this spring is returning to “normal” with a great inventory, low interest rates and stable prices.  I, for one, am glad.  As to the tax rebates, good by Elvis, we enjoyed the show!  

Visit my Face Book page.
You don’t have to be a face book member to enjoy it!


 

City to Buy Foreclosures !

 

The Edwardsville City Council announced plans to purchase foreclosed homes in the area in a move to prevent a further decline in local home prices.  Funding will be from the National Recovery Act, but the city operational budget will be used to maintain or improve the homes to be held until market prices increase.  Acting Mayor Gaines questioned why only investors should reap the profits from buying and improving property at these low prices when it is taxpayers that have suffered from a drop in their home values because of foreclosures.  In a bold move, the city plans to purchase the homes in the name of city employees so that they receive the $8000, or $6500, federal tax rebates from the IRS.  The Mayor sees no problem collecting the rebate funds into the city treasury, as city employees are very loyal. Final discussion and approval on the plan is expected by April 1^st.

 

 

 

 

 Gotcha! 

Interest Rates – Buy Now???

Interest rates for mortgages are really, really low at the moment.  Will they go up sometime?  Sure, of course.  Should that affect your decision to buy now?  You bet.  For my younger generation of potential home buyers, let me take a short trip down memory lane, along with others who remember: 

First, look over the graph below showing the history of mortgage rates.  Let’s go back just a few years to the 70’s with a personal reflection: 

I was mobile, like a lot of families – pretty much knew I would have to move to and from somewhere in the country every 3 or 4 years.  Real estate was an important part of the game plan.  Many of us bought homes; let’s say mine was for about $180,000 with a VA loan at a decent interest rate in 1976 – maxed out with very little down – leverage, right? 

Then the early 80’s happened!  Interest rates careened to ridiculous levels.  Buyers cringed, as you can imagine, or can remember.  But my home sold in a matter of weeks, and at my asking price with a nice profit!  A lot of others did as well.  The magic was my assumable loan.  My interest rate and the relatively low monthly payments had more selling power than the home itself!  True, the buyer had to come up with a big down payment to get to my asking price and to assume my loan.  Sure glad I had taken the loan out for the maximum amount at the time I purchased because that helped.  

Assumable loans were golden to buyers and sellers.  Assumable loans – now there’s a term we haven’t heard about lately, so let’s think about it in light of today.  Holding an assumable mortgage at today’s low interest rates may be an important hedge for homeowners against a surge in interest rates.  It could make the difference in being able to sell your home in the future. (By the way, after my move I sat it out – rented for two years until sanity returned to the mortgage industry.)  Lucky?  No, I had some real good advice, and I listened. 

So let’s pose some questions to Cindi Myers from USA Mortgage (http://cmyers.usa-mortgage.com).  Cindi, what kind of loans are being made today, and are they assumable?  All of them?  Could it be important in the future?  

“Well Bob,  only government loans are assumable in this day and age. When I say government, I mean FHA and VA loans. FHA is your traditional first time home buyer loan, with a 3.5% down payment requirement, which is backed by the government. VA loans are for veterans and active military, who have served the minimum required time to qualify. VA loans offer 100% financing. A later assumption is handled directly by the lender.  There is normally a $500 fee associated with this type of transaction. The homeowner would inquire directly with their lender and the lender would send out a loan package that the potential buyer would have to complete and return with the predetermined fee. In these days, they would have to credit qualify for the assumption, as well as to qualify for a debt to income ratio. The advantage is the new buyer is literally taking over the loan balance at the rate the original borrower took out. Of course, the owner’s equity is a whole other discussion. On a VA assumption, if the new potential owner is not a veteran, the original veteran’s entitlement stays with the property, which means the original veteran doesn’t have the full benefits restored to him. Obviously, dependent on the circumstances, that might be a problem. With all of the refinancing that has taken place recently, I would say there is a considerable about of government loans that could be assumed. With Freddie & Fannie tightening their belts and all of the additional overlays of risk that lenders have implemented, government loans have dominated.”

So, if history repeats itself, and it always does, we will see higher interest rates in the future.  Having an assumable loan may be a great hedge against the  future sale of your home.  Can you see your listing when interest rates are above 10 %?  “Take over the payments on my 5%  loan!”  Think about it.

The Clock Is Ticking – no, Twirling!

When I was in high school (about 100 years ago, smile), my social studies teacher explained we shouldn’t get concerned about the National Debt.  Something about those big numbers not meaning anything real.  I hope he was right – hope he’s still right, but …….

I ran across this National Debt Clock – you just have to see it!   You decide.  Inflation, anyone?

RE/MAX is DOING SOMETHING

Meet Dave – my team at RE/MAX Alliance has.  I seldom post outside articles, but  we are proud of the role our Chairman has taken to help America recover from the housing mess consumers face.  He knows and speaks the plain truth about our market, and works tirelessly with government and industry leaders to make changes that will lead to real improvements.  And they listen!  Dave’s message to Realtors is simple:  Become an expert on the market and learn new tools to best serve our clients.  And at RE/MAX, we listen, too.  Meet Dave:

Editor’s Note: The following is a Feb. 10 press release from RE/MAX International.

RE/MAX Urges Lenders to Release Properties
Record Foreclosure Numbers Need to Be Tackled Head On 
 
(Denver, CO, February 10, 2010) – Dave Liniger, RE/MAX International Chairman and Co-Founder, urged government and economic leaders to push lenders to release foreclosures to help speed the housing recovery. Liniger made his comments as a featured speaker at the Five Star Government Forum in Washington D.C. The Forum brought government and industry leaders together to share ideas for building stability in the nation’s housing market. 

 ”Most of us feel that there is a tsunami of properties out there. I can assure you in the hardest hit areas of the country, there are bidding wars going on,” said Liniger, the only speaker representing a real estate company. ”So, for those lenders who are here listening, now is the time to release properties, because you’ve got the Homebuyer Tax Credit that’s driving buyers into the market, and a limited window of opportunity to get these properties sold before the credit expires this year.”

Liniger explained that in some markets experiencing high foreclosure rates, homes in price ranges that qualify for FHA financing are attracting a lot of attention. In these areas, there are multiple offers from investors and first-time buyers, which indicates there’s a real shortage of available homes.

The Five Star Forum focused on the Home Affordable Modification Program (HAMP), and the challenges facing mortgage lenders in modifying loans under the program. It brought this group of influential leaders together to begin the hard conversation on how better to keep more Americans from losing their homes.

Over the past year, RE/MAX International has led the way on the housing recovery.  Liniger and other RE/MAX representatives met with Housing and Urban Development Secretary Shaun Donovan, as well as officials with FHA, Fannie Mae, the Treasury Department, and the Homeowner Preservation Office. RE/MAX offered recommendations for streamlining the Short Sale process, some of which the Treasury Department adopted when it announced a new process last November. 

In 2009, RE/MAX trained more than 10,000 agents to handle Short Sales. More RE/MAX agents have earned the Certified Distressed Property Expert (CDPE) designation than agents with any other real estate company. Surveys show that after earning a CDPE designation, agents are twice as likely to be able to keep families in their homes. And, if the best route is a Short Sale, CDPE agents are much more successful at completing the transaction. 

“In our industry, we talk about distressed properties, but we’re dealing with distressed sellers, distressed human beings,” said Liniger. “They’re humiliated by their situation, and that’s why 70% of them never pick up the phone to help themselves when they’re faced with a foreclosure. That’s where Short Sales come in. They provide a better way for both the homeowner and the lender.”

While some cities and markets are experiencing a recovery, as both home sales and prices rise, others are not faring as well. Overall, the real estate industry is in a correction, according to Liniger, who sees distressed properties making up the majority of sales for the next three to five years.  And, after that, another housing boom may be on the horizon.

“Once this correction is over, we have a whole new generation of homebuyers waiting to get into the market.  But we have to get through this first, and the best way to do that is to take it head on.”

Is it REALLY for sale?

Or –  “Why do I need a Realtor to find a home – one more time!”  Self-searching for a home on the Internet has become the rage!  Well I, for one, think that’s great.  It whets the appetite for potential buyers, and besides, it’s just a whole lot of fun – better than reading e-mail jokes all day!   There are so many great sites with so much information, and they are growing more useful every day.  Wait to you see what is coming this year on Realtor.com;  home values, market trends, transaction records – Our National Association of Realtors is bound and determined to “out-do” the non-Realtor sites like Zillow, Trulia, Google, Yahoo and the many Find-All-Homes-But-I-Want-The-Name-Of-Your-First-Born-Child.com.  Ha!  We individual Realtors try to compete, of course, with our own search sites – everyone has one.  (By the way, mine is the best at  www.EastOfTheArch.com – smile.)

Fun, but there is a creeping problem for the home buyer – a problem that is growing in the 2010 market, and you need to know the solution when you search for homes.  Not every home listed for sale is equally “buyable,” even on the good sites that keep their listing inventory fresh.  We Realtors today are spending much more time evaluating listings to see if they are truly “buyable” for a given consumer, and under what conditions.  This information is not apparent to you as a consumer on a home search.   Calling the number in the listing for “more information” seldom gets you all the information you need.  After all, the purpose of that listing, and that number, is to sell the home – to anybody!

That is why you always need the number or a buyer’s agent in your phone’s contact list.   Hopefully someone you know and trust, and have chosen to potentially represent you.   Ok, I’ve said all that before, but the 2010 market is making it even more important to you.  Let me list some of the categories of homes listed for sale these days.   They’ve always been there, but the mix is getting broader in today’s market, and you can’t always tell the difference.

Traditional Sales,                                  
“As Is” Sales,
Short Sales,
REQ sales,
Foreclosed sales,
HUD owned sales,
New Home sales,
FSBO sales,
And more…..

Each kind requires a different buying process that may or may not match your ability or needs – or your interests!  Often you simply can’t tell a book by the cover.  It takes some research by a Realtor – a buyer’s agent – to get “the rest of the story.”  The best solution is to sit down with a Realtor, learn about the different buying processes for various sale possibilities, discuss in confidence your needs and wants, and let your Realtor help you screen your search for homes that are truly “buyable” by you.  I’m never too busy to meet with you to do just that – it’s how I work and what I do.  Or, simply call me about any listing, but give me a little time to research the situation behind the pretty pictures and glowing description.  Every home today presents a different kind of opportunity, and the differences are usually as important as the more obvious features shown in the listings.   So yes, you really do need a Realtor to find a home, more than ever in today’s market and Internet environment!

Bob Ashauer, Your Personal Agent
618 581 1695
www.EastOfTheArch.com

Is Your Dream Home Someone Else’s Nightmare In 2010?

You’ve never found the home you’ve always wanted, with just the features, style and location for you.  Oh, some have come close, but not at a price you would pay!  When the other owner has your great taste, they know it - and they have priced that jewel way up there when they sell.  Besides, close is just not good enough at the prices you’ve seen.  After all, you don’t really have to move – it’s just a dream!  But you’ve keep your eyes on the market for years – maybe someday!

Well, wake up from your dream state; it may be time to take a closer look at the market in 2010!  Your dream home may be sitting there on the market this year as a nightmare for someone else!  Selling prices are down, interest rates are at the bottom for now, and many people do have to sell those jewels, for any number of reasons.  True, your dream house may not be in perfect condition, or may not be exactly what you have always wanted, but in this market those are opportunities!  This year, there are ways to buy a home at a bargain price, have immediate improvements made to your own tastes, and turn that nightmare into the dream home you’ve always wanted!  We call this market a perfect storm!  With it come opportunities for smart buyers – not just investors!  Learn more of how the 2010 market realities may be the perfect time for you at this new web site:  http://sites.google.com/site/homebuying2010/

Tell your friends- they may be interested in how 2010 is the year to realize their real estate dreams!

Father Time & Baby New Year On Real Estate

Baby New Year:
“Happy New Year!  But hey, old man, there seems to be a lot of long faces and frowns on the folks.  What kind of mess did you leave me in your year of 2009?”

Father Time:   
“Blah!!  I didn’t do it – not my fault – could have been worse – it didn’t start on my watch – give me a break – I did the best I could –mumble, grumble and Blah!”

 Baby New Year:
“Ok, OK, so what happened?”

Father Time:   
“Well, basically, people’s homes are not worth what they used to be, or what they thought they would be.  There was a whole lot of finger pointing going on in my year – bad loans, greedy people, bubbles, stupid people, bad this, bad that and bad some other things.  Everyone assumed home values would continue to go up – they always did before – but for the past few years they’ve actually gone down!  Just my bad luck to be the one in charge of the year when things didn’t come back to “normal,” whatever that is – blah!  We tried and tried – had all our fingers crossed – but the good times of steady home appreciation just didn’t come back – something about some bubble bursting.  It’s terrible – caused lots of other troubles too – lots of pain and discontent.  My year was the pits – blah, blah!  You can have it!”

 Baby New Year:
“Easy, old man, I’m sure you did your best last year.  So, what’s it look like for 2010?  What are you leaving me for my year?”

 Father Time:   
“Well kid, home values are in the pits, there are a lot of homes for sale that people couldn’t afford to keep, most owners don’t have money to fix up their homes to sell, even if they have to move – some even owe more than their home is worth!  Interest rates are in the cellar because nobody is borrowing money to buy a home.  It’s so bad the government stepped in to help, but you know how that goes!  You still happy?”

 Baby New Year:
“OK, I can see why you are grumpy, but let me get this straight.  Home prices are at their lowest level in years.  Interest rates are at rock bottom.  Money is available for government backed loans with small down payments for the purchase of homes and for making improvements.  The government is giving tax credits for new and existing home owners to purchase a home, giving credits for energy saving improvements and even providing down payment assistance.  Wow!  Sounds like I’m going to be in charge of a great year.  So how do I start, if you can get out of the dumps for a minute?”

 Father Time:   
“Yea, the truth is that conditions are right for a good year, but it’s complicated.  People just aren’t used to how things are at the moment.  They want things to be like they used to be, so they can’t see how bright the future year can be.  There is help, though.  Tell people to sit down with a Realtor, like Bob Ashauer with RE/MAX Alliance, to understand the new reality of real estate, and to see what the year can bring for them and their family.  Sure, it’s different, but different in a good way.  Maybe I didn’t do such a bad job with my year after all.  Good luck, young 2010!”

 Baby New Year:
“Thanks, Father Time.  Happy New Year to you!  I’ll have the folks call Bob at 618 581-1695 to see how the New Year looks for them – it looks great to me.  Maybe with a little help we won’t be as grumpy at the end of 2010 as you are now.  I know I won’t be – this baby is out looking for a good buy on my dream home!  Hey Bob …………..”   

Tax Time – Did you make an improvement?

Did you make any home improvements that earned you an energy tax credit?  Review these links as a reminder.  Remember, there is always next year.

• 

  Tax Credits for Solar Water Heaters

  A federal tax credit makes energy-efficient solar water heaters a more affordable and sustainable option for many homeowners. Read

• 

  Tax Credits for Replacing Heating and Cooling Systems

  Upgrading to an energy-efficient heating and cooling system can save hundreds on your utility bills and up to $1,500 on your tax bill. Read

• 

  Tax Credits for Replacing Your Roof

  Upgrading to a qualifying energy-efficient metal or asphalt roof can cut your cooling bill as well as knock off up to $1,500 from your tax bill. Read

• 

  Tax Credits for Adding or Replacing Insulation

  Adding insulation is one of the easier and cheaper ways to improve your home’s energy efficiency and cut your heating and cooling bills. Read

• 

  Tax Credits for Replacing Windows, Doors, and Skylights

  If money seems to be escaping through drafty windows, doors, and skylights, this federal tax credit might make energy-efficient replacements more affordable. Read

Visit houselogic.com for more articles like this.

© Copyright 2009 NATIONAL ASSOCIATION OF REALTORS®

Opportunity Knocks! $6500 Move-Up/Repeat Buyers Tax Credit Information

The $6,500 Move-Up / Repeat Home Buyer Tax Credit at a Glance

• To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight years.
• The tax credit does not have to be repaid.
• The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500.
• The tax credit applies only to homes priced at $800,000 or less.
• The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010. However, in cases where a binding sales contract is signed by April 30, 2010, the home purchase qualifies provided it is completed by June 30, 2010.
• Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

Frequently Asked Questions About the
Move-Up/Repeat Home Buyer Tax Credit

The Worker, Homeownership, and Business Assistance Act of 2009 has established a tax credit of up to $6,500 for qualified move-up/repeat home buyers (existing home owners) purchasing a principal residence after November 6, 2009 and on or before April 30, 2010 (or purchased by June 30, 2010 with a binding sales contract signed by April 30, 2010).

The following questions and answers provide basic information about the tax credit. If you have more specific questions, we strongly encourage you to consult a qualified tax advisor or legal professional about your unique situation.

1. Who is eligible to claim the $6,500 tax credit?
   Qualified move-up or repeat home buyers purchasing any kind of home are eligible to claim this credit.
2. What is the definition of a move-up or repeat home buyer?
   The law defines a tax credit qualified move-up home buyer (“long-time resident”) as a home owner who has owned and resided in a home for at least five consecutive years of the eight years prior to the purchase date. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. Repeat home buyers do not have to purchase a home that is more expensive than their previous home to qualify for the tax credit.
3. How is the amount of the tax credit determined?
   The tax credit is equal to 10 percent of the home’s purchase price up to a maximum of $6,500. Purchases of homes priced above $800,000 are not eligible for the tax credit.
4. Are there any income limits for claiming the tax credit?
   Yes. The income limit for single taxpayers is $125,000; the limit is $225,000 for married taxpayers filing a joint return. The tax credit amount is reduced for buyers with a modified adjusted gross income (MAGI) above those limits. The phase-out range for the tax credit program is equal to $20,000. That is, the tax credit amount is reduced to zero for taxpayers with MAGI of more than $145,000 (single) or $245,000 (married) and is reduced proportionally for taxpayers with MAGIs between these amounts.
5. What is “modified adjusted gross income”?
   Modified adjusted gross income or MAGI is defined by the IRS. To find it, a taxpayer must first determine “adjusted gross income” or AGI. AGI is total income for a year minus certain deductions (known as “adjustments” or “above-the-line deductions”), but before itemized deductions from Schedule A or personal exemptions are subtracted. On Forms 1040 and 1040A, AGI is the last number on page 1 and the first number on page 2 of the form. For Form 1040-EZ, AGI appears on line 4 (as of 2007). Note that AGI includes all forms of income including wages, salaries, interest income, dividends and capital gains. To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
   Possibly. It depends on your income. Partial credits of less than $6,500 are available for some taxpayers whose MAGI exceed the phase-out limits.
7. Can you give me an example of how the partial tax credit is determined?
   Just as an example, assume that a married couple has a modified adjusted gross income of $235,000. The applicable phase-out to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phase-out range of $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 home buyer tax credit that is available to this couple, multiply $6,500 by 0.5. The result is $3,250. Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phase-out range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $6,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,275. Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008? How is this different than the rules established in early 2009?
   The previous tax credits applied only to first-time home buyers and were for different amounts of money.
9. How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
   You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns).  No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and repeat home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.
10. What types of homes will qualify for the tax credit?
    Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.  It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.
11. I read that the tax credit is “refundable.” What does that mean?
    The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even the entire amount of the refundable tax credit.  For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $6,500 home buyer tax credit. As a result, the taxpayer would receive a check for $5,500 ($6,500 minus the $1,000 owed).
12. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
    Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be after November 6, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April 30, 2010).  In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date. Be sure to check with a tax advisor in cases where a HUD-1 form is not used at settlement to be sure you have sufficient documentation to attach to IRS Form 5405.
13. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
    Yes. The tax credit can be combined with an MRB home buyer program.
14. I am not a U.S. citizen. Can I claim the tax credit?
    Perhaps. Anyone who is not a nonresident alien (as defined by the IRS) and who has owned and resided in a principal residence in the United States for at least five consecutive years of the eight years prior to the purchase date can claim the tax credit if they meet the income limits. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. The IRS provides a definition of “nonresident alien” in IRS Publication 519.
15. Is a tax credit the same as a tax deduction?
    No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $6,500 in income taxes and who receives a $6,500 tax credit would owe nothing to the IRS.  A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $6,500 in income taxes. If the taxpayer receives a $6,500 deduction, the taxpayer’s tax liability would be reduced by $975 (15 percent of $6,500), or lowered from $6,500 to $5,525.
16. Is there a way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 tax return?
    Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the down payment.  Buyers should adjust the withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.  In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a down payment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 18 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.
17. HUD allows “monetization” of the tax credit. What does that mean?
    It means that HUD will allow buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain down payment and closing cost expenses.  Under the guidelines announced by HUD, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.  Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent down payment requirement.  In addition, approved FHA lenders can purchase a home buyer’s anticipated tax credit to pay closing costs and down payment costs above the 3.5 percent down payment that is required for FHA-insured homes.
18. If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
    Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.  Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.
19. For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
    Yes. If the applicable income phase-out would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.

Real Estate and Your Cell Phone

We all know that searching for homes from a computer is one of the greatest benefits that have grown out of the Internet (and it just keeps getting better.)  But just driving around looking at homes is equally important and popular.  Did you know that starting today you can combine these two common activities in your home search?  I have purchased and set up home information for my clients to receive on their cell phones!  (And if you are reading this, it’s available to you too – and it’s free!)  Imagine pulling up in front of a home that catches your eye and wondering about the price, or the details.  No more trying to call the number on the sign, getting a sales pitch (if anyone answers), or trying to reach your agent.  Just punch a button on your own cell phone and get the answers in private and right when you want them!  I use it every day myself and I can’t imagine how I got along without it.  My clients love it as well.   

It works on any enabled cell phone.  (See below on how to turn your cell phone into a real estate search machine.)  You may already have phone features where you can search Internet sites from your phone, but my program is different.  I provide the same home data available on my website searches to your cell phone, according to your phone’s capability.  If yours is a smart phone, you can get pictures, virtual tours, maps and home details.  If you have a GPS phone, a simple click will provide the homes currently for sale at and near your location on a map!  It is awesome!  And my data is fresh – updated daily!

So what’s the catch?  None.  As always, I simply hope you will call on me to represent you when you are ready.  Nothing will replace the service you need, and I will provide, when the time is right.  OK, how do you get this on your phone?  Just click below to learn how – it’s really easy.

Get it here!