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!

THAT’S A LIE !

You gotta love Congress!  How about an imaginary real estate address, now that crying lie is the new behavior.  I’ll do the address, cry lie and do the spin – more efficient that way, and maybe more fun – smile.

Part of the speech:  “I am not a real estate salesman, and I don’t sell houses.  I’m only in the business to provide professional service to clients, whether they buy or sell a house or not!  I always put their interest first – even ahead of my own.  (And by the way, this is a great time for anybody to buy or sell a home!)” 

Shouted from the floor: “That’s a lie.  Everyone knows you only get paid after a sale.  You’re just like a used car salesman that would say anything to make a deal!” 

The truth?  Have you ever felt that way, but were too polite to cry “liar?”  Sure you have, I’ve seen it and felt it, so let’s talk about it. 

From a personal perspective, I try very hard to work only for clients with whom I’ve established a mutually trusting relationship, even if there is only a short time to form it.  Learning a client’s needs, wants and circumstances is my real job – far more important than my knowledge of the market, the properties and the processes in a particular transaction. I am confident, then, to put their interests first (and only).  If a sale or purchase is not right at the time, so be it – the clients interests come first.  From a business perspective, I can only assume that when the time and circumstances are right for a client, they will still allow me to represent them to the finish, and to payday.  It’s hard to hold that perspective in this new day of real estate, where client relationships are formed (and broken) quickly thru Internet connections, and in this wondrous age of extensive consumer information and consumer activism.  Have I taken a role where the client wanted less – been an “order taker,” “a house shower,” a “salesman?”  Sure, it sometimes comes with the job, but I almost always regretted it.  You know the old saying, “If it looks too good to be true, it probably is not true.”  Being handed a pop-up sale, where all I had to do is process it, may seem like a dream, but it often becomes a nightmare.  So, I see my job as building the client relationship necessary to provide true professional service from my client’s perspective – it’s what I do. 

So what’s the point of this post? (smile)  Well, for me it’s a reaffirmation, or reminder, of how I do my work.  For you, the consumer, here’s a hint:  There is a wide range of roles and behaviors of agents in our business – a very wide range.  How you relate to an agent often determines the level of service you receive.  (Approach an agent as a “used car salesman”, and that may be what you get – or you may be passed on to another agent without ever knowing why.)  Ask questions.  Any professional Realtor can answer them with honesty.  (Sorry, I don’t recommend shouting “liar” in someone’s face, even if it did happen to the President!)    But do be active in “hiring” your agent, and work towards that essential trusting relationship. You deserve and need the professional service of an agent who puts your interest first.  No lie.

Every once in awhile …………………

Every once in awhile, there is that special real estate transaction where everyone is very happy.  Below are the buyers and sellers at such a deal that closed today.  Notice the smiles.  That is what keeps me in the business.  Certainly it’s not the size of the sale, or the commission, it’s the size of the smiles.

Ready to close!

The young couple are my clients, first time buyers.  The seller, Mike, (that’s his SUV) is a real estate agent from Missouri, but in this case, he was just the owner and seller.  (His property was listed by an Illinois agent that represented him.) 

Mike, as the owner, went far beyond what he had to do.  He fixed things that didn’t have to be fixed, painted things that didn’t have to be painted, cleaned things that were clean – all to make sure the buyers were getting the best home that he could reasonably provide.  There are people like that – people that strive to put what they sell, whether car, boat or home, in the best possible condition for the next owners.  It has to do with internal pride.  In these tough economic times and hard bargaining, it is trait easily forgotten.  This seller didn’t, and I know my clients thank him. 

But that’s not the end.  Mike Love is also a Realtor, located in the Lake of the Ozarks.  I’m pretty sure that Mike also goes the extra mile to satisfy his clients like he did my clients.  In Real Estate, it’s not always just about getting the best price or spending the least money.  Realtors like Mike work towards the smile that comes from treating clients as if they themselves were in the transaction – that’s his brand of customer service.  I seldom give recommendations, but if you are ever down at the Lake of the Ozarks in need of a Realtor, think of Mike.  I know I will.  His web page is www.soldonlove.net and his phone is (573) 216 6126.  Thanks, Mike.

The National Market

The National Association of Realtors just released the national existing home sales numbers for July. The good news is that existing home sales rose for the fourth straight month in a row, something that hasn’t happened in two years.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 7.2 percent to a seasonally adjusted annual rate of 5.24 million units in July from a level of 4.89 million in June, and are 5.0 percent above the 4.99 million-unit pace in July 2008. The last time sales rose for four consecutive months was in June 2004, and the last time sales were higher than a year earlier was November 2005.

The bad news is the growth in sales was only on the very low end spurred by the federal tax credit for first time homebuyers and falling prices on distressed sales. The following breakdown demonstrates the extreme pressure on housing above $250,000. 

U.S. Existing Home Sales Yr/Yr 
$0 – $100,000,   Up  38.8%
100,000 – $250,000,   Up 8.7%
$250,000 – $500,000,   Down 6.2%
$500,000 – $750,000,   Down 8.9%
$750,000 – $1,000,000,   Down 10.6%
$1,000,000 – $2,000,000,    Down 23.3%
$2,000,000 +,     Down 32.4%
Source:  National Association of Realtors

Total housing inventory remained basically unchanged at a 9.4 month supply (4.09 million existing homes) as more houses were brought to market offset by the gain in sales. Raw inventory totals are 10.6 percent lower than a year ago when the number of unsold homes was at a record.  

These national trends for July generally track with what we are experiencing in our local markets, but all markets are local.  Contact me or your own Realtor to discuss the market for homes in your immediate area.

Saint or Devil?

I recently had some clients whose perfect dream home turned into the house from hell.  Their emotions crashed from excitement and joy to fear and anxiety in a matter of days, while they were under contract to purchase the property!  How can that happen?  Well, meet the home inspector – Saint of Devil.  We should consider first that a home inspection might save you, the consumer, from completing a purchase you could regret for a very long time.  You (and/or the seller) may thank the Saint!  Or, on the other hand, you may be frightened out of the sale for no good reason at all – that Devil!  Nearly all Realtors have seen both extremes, and have seen both buyer and seller clients struggle over decisions with great uncertainty and strong emotions during the inspection process.  It is usually not that way, and it can be avoided!  This short article may help you find the Saint and shun the Devil – after all, the difference is really in the eyes of the beholder.

Let’s first look at the basic home inspection process.  (Please discuss the details with your Realtor or attorney – this is just a very brief overview.)  Homes are sometimes inspected before an offer is made, but normally, only after they are under contract.  After a purchase contract is signed (offers are made, negotiated and accepted,) the purchase contract provides for various inspections – even if the property was listed for sale “as is.”  The written inspection reports and an Inspection Response signed by the buyer must be provided to the seller within 20 days.  Within 10 days of receipt, the seller and buyer are to reach agreement in writing for the possible repair of defects prior to closing.  The many particulars of this simple process usually lead to happy buyers and sellers, and the desired closing.  (The Saints and Angels be praised!)  Or, any number of things in this inspection process can lead to termination of the contract and sale.  Disposition of the earnest money deposited by the buyer and any possible damages suffered by the parties to a terminated contract depend entirely on the circumstances, reasons and behaviors of the parties.  (Devil or Angel – it all depends on the eyes of the beholder!)

Consumers, let us dig a little deeper into the process before I offer my sage advice about Harps and Pitchforks.   There are some legal contract issues involved.  Here is a direct quote from our local sales contract.  Note that all property sold in our area is sold “as is!’ 

“8. PROPERTY INSPECTION CONTINGENCY. Subject to the terms of this Section 8, Buyer and Seller agree that the Property is being sold in its present, “AS IS” condition, with no warranties, expressed or implied, and that conditions of the Property that are visible on a reasonable inspection by the Buyer should either be taken into account by the Buyer in the Purchase Price, or the Buyer should make the correction of these conditions by Seller a requirement of the Contract; this provision shall survive Closing and delivery of Seller’s deed to the Buyer.”

Also note that buyers can request a repair or correction as part of their offer.  This contingency on the offer would be considered by the seller prior to entering the sales contract.  True, a contingency like this might weaken the attractiveness of the offer, but this is the right time to negotiate an issue about the sale – not later!

Well!  Then what is the purpose of the buyer paying for inspections after the sales contract is made?  Good question, and really important to understand.  Inspections such as a Whole House Home Inspection, a termite inspection or a radon inspection are done by qualified, state licensed professionals.  The primary purpose of the inspection process is to identify and/or evaluate latent defects, such as serious environmental or structural defects that may not be easily evident to the buyer.  These kinds of defects may be cause for terminating the purchase by the buyer according to the procedures in the contract.

A second very important part of the inspection process is for the buyer to simply learn about the new home.  Homes today are complex, with complex systems.  Home inspectors will go thru the entire property, pointing out how systems operate, identifying owner maintenance tasks, noting trends and making recommendations to the new owner.  This is a valuable process and the new potential owners should certainly be present to benefit from this service.

OK, what about common, minor defects found during the inspection that the buyer should have noticed, but did not.  That certainly happens during the excitement of choosing this one home to buy.  Not every buyer has the opportunity to make more than one visit to a home before the offer, nor has the chance to bring another set if eyes to look things over.  It is customary in our area, then, for the buyer to ask the owner in the Inspection Response to correct at least some of these defects that the buyer should have noted and considered in the purchase price, even if they do not rise to the serious level of structural or environmental defects noted above. The buyer and seller have 10 days to negotiate and agree on the requested items. Dollar allowances may be involved to resolve small differences, but this is not an automatic process to reopen negotiations on the purchase price.  The agreed purchase price, of course, is a factor in reaching agreement on the extent of corrections or repairs to be made.  Failure to agree on the corrections of inspection items may cause the contract for purchase to fail and be terminated.

So, consumers, the overall advice is obvious, but very important:  Discuss the inspection process with your Realtor before you begin a purchase or sale.  Set your expectations. Control your emotions – this is a business transaction, it’s not personal!  Keep your eye on the ball and what you’re trying to accomplish – buying or selling the home (or not!)  Keep a perspective by considering the cost of an item compared to the total price of the property.  Negotiate clearly and fairly.  Try to see the other party’s point of view. Easy, right?  Most importantly, set a friendly tone with all parties by maintaining the focus you have established!  So, Angels or Devils, inspectors are neither – they are just important players in our industry.  The perceptions are your own, and you need to set your own expectations, because your perceptions are all there is ……

A little more advice:  In the past, I have been a project manager for both small and very large construction projects.  In the extremes of inspection reports, I fondly remember one that had over 300 items and took nearly a million dollars of supplemental funds to clear – business or not, that one caused some emotions.  I have also seen a few perfectly clean final inspections on projects that had full time, on-site project engineers, empowered to direct changes during construction.  That kind of quality program is very expensive, but sometimes necessary. The NASA space program set the standard for zero defect quality programs, and I’m sure you can imagine why.  Residential home inspections also vary, but certainly not to those extremes.  Here are a few observations that may be helpful to you as a home owner or buyer.

Your Realtor
Rely on your Realtor to advise you on the overall home inspection processes.  Do not rely on your Realtor for technical evaluations, engineering opinions or application of standards.  Realtors are not licensed inspection professionals, and in fact, are prohibited from offering assessments to clients about specific conditions of a property.  It is not their job, and besides, real estate agents have various backgrounds and experience. (Or lack thereof.)  Just as Realtors are not attorneys and cannot offer legal opinions, they simply cannot offer you opinions on technical or engineering conditions.

Your Inspectors
Do hire and rely on licensed professional inspectors to evaluate residential property.  They work for you and that is the job they are trained to do.  Inspectors are just people and they come with various skills, but I find they all work against established industry standards.  The main variance in inspections is often a matter of tone and wording in the report, sometimes depending upon the software they use to communicate their findings.  Consumers need to read past the verbiage and concentrate on the technical aspects of findings.  When in doubt, follow up with your inspector for clarification of uncertain or unclear comments.  Getting advice from a trusted friend, acquaintance or relative about a condition is sometimes helpful. But remember, the contract, and other parties to it, only consider opinions offered by licensed professionals.

Codes and Standards
Codes and standards for residential properties vary by location and by time.  Pity the poor professional inspector that tries to apply volumes of code and even more volumes of interpretations as they change for even the simplest of findings.  Professional licensed inspectors have recurrent training to provide home owners, buyers and others with sound advise and recommendations.  As an ex-professional in the construction industry, I know that no residential property meets every code, standard or recommended best practice from every source imaginable.  We could not afford to build, buy, maintain or live in such a home if it did.  (Think about buying and paying for the space shuttle to live in!)   So, consumers, it often comes down to common sense decisions you must make with input from professional sources.

And finally in that vain, there is no perfect home.  All home inspections will reveal items for consideration by the buyer and seller.  That’s the nature of inspectors trying to do a good job for their clients – identifying findings to be considered, whether maintenance items to watch in the future or outright safety conditions that require immediate correction. Even brand new homes can have a long list. (Yes, buyers, you should have new construction homes inspected!)  Existing homes have the extra complications of normal wear and the evolution of standards since they were built.

As a real estate consumer, you are in charge of decisions when buying or selling property.  The inspection process in our area is an important benefit to buyers and sellers when making those decisions. Take advantage of it by understanding the inspection process as an aid to you in making a home purchase or sale.

You’re full of ……………………..

I got some feedback that my posts were to long.  Thanks, I needed that.  Really!  I even agree.  In a world of sound bites, here I am full of (WATCH IT NOW) ……words!   It’s just that some of the subjects I’ve been urged to write about take a lot of words.  Oh well, I’ll try harder.  Soon all we’ll communicate with is two-thumbed twitter short hand!  OMG

Has the Market Bottomed Yet? Tell Me – Answer the poll below!

 

There was a whole lot of positive news about the economy and the real estate market this weekend.  More will come, I’m sure.  That goofy mortgage pitchman on the local radio (you know him, “just call ###-ninety nine ninety nine”) – says this is the time to buy a home!  Even old Alan Greenspan was cautiously calling the bottom of the recession. Great news or wishful thinking? 

Well, it’s not my job as a Realtor to pump sunshine about the market, even if a lot of people think it is.  Sure, I am anxiously waiting for a return to the appreciation of home values because that will truly mark the end of this economic slump.  I hope it’s soon.  No, my job is to attract clients and to serve them well in this, or any market.  Yes, the local market activity is picking up, but don’t rush to the phone to raise the price on your listed home just yet.  If we are at a bottom, it’s a soft bottom that may be here for awhile at best.  Home prices are still low, and cautious buyers may push them lower yet.  Or not?

It is true that now is a very attractive time to buy a home , or to move up for those in an economic position to do so.  Prices are low, interest rates are low and there are some really great homes on the market.  And first time buyers have an unprecedented opportunity to  make a purchase before the $8000 tax credit and other assistance programs expire.  Just this week, I had a customer call me about taking over a listing when hers expires.  A really nice 2 bedroom/2bath brick home she had on the market for nearly $200,000, but is now down to just over $110,000  because she just has to move to a new city. Not a foreclosure, not a short sale – not a distressed property, just a great buy!  There are a lot of homes on the market like this.  You bet, it’s a good time to buy!

How long will it last?  Which way will the real estate market go and when?  Remember, markets are very local – they vary by specific location, price range  and home features.  Attitudes and conditions of the national market do have a big affect on our local market of course.  The overall economic news of the national financial markets looks hopeful.  Unemployment levels are probably the next big watch.  One of the biggest factors on how soon we see a housing recovery will be consumer confidence and attitudes.  That’s pretty hard to predict, as we all know.

So, how do you see the immediate future?  Here’s a short survey, just for fun, for you to express your own view into the crystal ball.  Enjoy!

 

Bargain Homes In Bunker Hill, Illinois

You can get away from it all, find a beautiful refurbished home at a bargain price, have a large lot with an external building and workshop, be close into a safe town with friendly neighbors with great schools and enjoy low taxes just 45 minutes from Saint Louis in friendly Bunker Hill, Illinois – rediscover old fashioned country living less than an hour to the Arch, or 30 minutes to the river at Alton.

I recently showed homes to a couple moving from Canada who had been researching our entire area on-line for more than a year, and had chosen Bunker Hill for their move.  I was impressed with the quality homes we saw at bargain prices. Several were older homes that had been completely refurbished to like new, and some were just exceptionally well maintained.  One thing they liked about Bunker Hill was the large, beautiful lots, many with great external garages or pole buildings with lots of room for work shops or storage.  It brought back memories of how small town America used to be, before postage-sized lots and cookie-cutter developments.  Click this link to the Township’s home page, or just do a Google search to discover this unique location for yourself.  Perhaps it is just what you and your family have been looking for.  http://www.bunkerhill-il.com/ 

As a sample, here are three of the homes our new citizens considered – all nice and at very affordable prices.  Click on the links below to see the details of these homes. 

109 Hickory, Bunker Hill, IL

716 Warren Bunker Hill, Illinois

112 Clinton, Bunker Hill, Illinois

Listing details:
109 Hickory - http://www.sirmlsinc.com/sir/maildoc/a006qh6047.html
716 Warren -  http://www.sirmlsinc.com/sir/maildoc/b006C98911.html
112 Clinton -   http://www.sirmlsinc.com/sir/maildoc/a0075Z8617.html

There are other homes in Bunker Hill, in different price ranges, but  all at prices less than comparable properties in most of our area.  Use my main search page to see the details of all the available homes in this undiscovered gem.  Contact me if you are interested – we can discover the possibilities together.

Bob Ashauer
http://www.EastOfTheArch.com

It’s HERE – The Federal Budget

OK, we're a little off subject here, but you just have to spend some time with this!  You owe it yourself to see where all of our tax money is planed to go.  The graphic is amazing!  Be patient with it, there is a whole lot of information here.  Just click on the link below.  Once there, click on full screen (the black box) and help (the question mark) in the upper right corner.  Then use your mouse to navigate through this visual presentation of the massive federal budget.  You will see this in other places on the Internet, and every American could spend some time understanding the results of our political processes - so forward it to friends and family. Enjoy!

The Federal Budget

Searching by Driving Around

 

Driving through neighborhoods, looking at homes, is still one of the best ways to search for a home; even in this era of internet searches with massive amounts of data on the computer. It is hard to beat being there for getting a feel for the next place you might live, and curb appeal is a really an important aspect of loving a new home. Besides, it is a fun way to get out!

Here are a few consumer hints that may be useful to you. Have the phone number of your chosen buyer’s agent handy – someone with which you have an established, trusting relationship. If possible, let the agent know you are “taking a tour” and may call for information. Your own agent can usually find much more information about a home than any other source, and may even locate a similar, nearby home that is listed, or even about to be listed. Flyers from a curb-side box, when available, often provide additional information, and the 800 recorded information on some homes may provide a description to help visualize the home. But always remember these are promotional sales materials, provided by the listing agent, representing the seller – not you. Your own agent, who should know your needs and wants, is often a better source to ask for additional information.

Secondly, take your smart phone with you if you have one! Much of the MLS data like interior pictures and virtual tours is now available right on your cell phone. Many newer phones are GPS enabled, and they will soon be able to follow you with nearby home listings as you drive. How cool is that! I am negotiating with a custom service that does just that for my clients. Even now there are sites available that provide some of this ability. Contact me of you are interested in forging into the next generation of consumer tools. Finally, keep good notes for follow-up with your agent later. Sometimes it is hard to remember where you were when you saw “that cute two story with the pool.” MLS listings are easiest to find by your agent from the house number and street name. Write them down for follow-up!

Get out, enjoy the drive, and call me if you see a home you would like to know more about or see

Buyer’s Market? Seller’s Market? or …………. Lender’s Market?

 

A Realtor on the west coast recently coined a new phrase to describe his market – the “lender’s market.”  I like it!  Yes, he was voicing his frustration about California-crazy market conditions that are not the same as ours, thankfully.  His concept does explain, however, some aspects that may affect you as a consumer here in the metro east side of Saint Louis.  Let’s look at it.

Classically, a buyer’s market is characterized by a large inventory and a relatively slow sales volume.  It is often expressed in terms of the absorption rate – the number of months it would take to sell off the inventory at the present rate of sales.  Most would agree that we have a buyer’s market here today.  In terms of control, buyer’s rule!  Buyers tend to have greater control of the time frames and also many of the terms and conditions in the contract.  Buyers typically pay less than they might in an active seller’s market, and usually have a larger selection of properties to choose from. 

A seller’s market is just the opposite.  I remember when it was that way – not too long ago.  In a “hot” seller’s market there is a smaller and faster moving inventory with prices generally increasing. Sellers are more in control to determine the outcome of any successful effort to purchase. Buyers tend to pay more, often more than the listed price.  

Well, our market is somewhat mixed, because the nature of properties in our market is mixed.  Let’s consider that there are “normal” properties for sale and then there are “distressed” properties for sale.  For normal properties, yes, this is a buyer’s market.  There is a great inventory and sales are slow.  With today’s low interest rates and prices this is a great time to be a buyer.  But not so fast!  There is that other market segment – distressed properties, where buyers are definitely not in control.  Who is?  Well, that’s what I like about the term “lender’s market.” 

So, if you are looking for a great deal on a foreclosed property, welcome to the lender’s market.  There are a few things to know:  You as a buyer are not in control – the lender is in charge.  Second, you will pay the market price for the property, considering its condition (sorry, you are not the only buyer looking for that great deal!)  And third, things may take a long time.  Let’s look at two kinds of distressed property.  When an owner wants to sell a property for less than is owed on the property, it is referred to as a short sale.  The buyer and seller may agree to a sale; but enter the lender, who must approve the sale, which may incur a loss to the lender.  In fact there may be more than one lender involved, as all liens against the property must be satisfied before the sale is completed.  The other common type of distressed property happens after the rather lengthy foreclosure process.  When a property has been foreclosed and owned by the lender(s), it is called Real Estate Owned ( REO ). Lenders involved in distressed properties are clearly in charge as they determine if they will accept, or not, even the highest offer on the property. In the case of short sales, they can either agree to writing off the short-fall of the loan or opt to continue the foreclosure process. Often they make no decision at all.  It is more difficult to predict the decisions made by lenders than we can for normal owners of property.  What appears to make common sense to a buyer or seller may not appeal to a lender from their vantage point.  It makes it hard to negotiate with them. Lenders also tend to set their own rules concerning purchase contracts and processes.  The second golden rule seems to prevail:  (Whoever has the gold, makes the rule.)  Buying or selling a distressed property is not for the faint hearted or inexperienced.

It may sound as if I personally do not like dealing with distressed properties.  Not true.  They are an important and possibly growing segment of our market.  What is important to me is that customers, and my clients, understand the differences of buying and selling distressed properties in the “lender’s market.” 

I sure like that term!

Timing Is Everything

We are often asked, “How’s the market doing?”  Home prices and sales levels are the implied questions.  Well, here’s an answer to a question that is not asked, but should be:  “It is taking longer today to buy or sell a house than it used to take – sometimes a lot longer!” Several internal process changes, driven by national reforms, are extending the time to close a transaction.  New rules are in effect to make sure home appraisals remain at arms length, away from undue influence.  Lenders and title companies will soon be working with new disclosure processes for greater consumer protection.  Federal incentives for refinancing home loans have invited a massive workload increase.  Whether these government reforms are good for the industry or not (and let’s assume they are) they have slowed the processes of buying and selling property.  A second big change in today’s market is the larger mix of “distressed properties” on the market.  Homes subject to short sales and bank-owned properties often take a very long time to market and sell because of the added complexities and additional parties involved.  Not every home on the market today is equally “buyable” by every consumer. 

So what do these subtle, internal changes mean to you as a consumer?  Each situation is different, but these changes and trends in the market place may definitely affect you.

Consider the importance of timing – it may not be everything, but time frames are an important consideration in realizing your plans to buy or sell a home.  It is also said that time is money – pretty hard to measure that, but true none the less.  Buyers, while considering the features of your dream home, the price range, neighborhoods, loan payments, drive times – all important, for sure, but also consider a time line that meets your needs and wants.  To avoid surprises and dissapointment, you should work with your Realtor to establish the normal times it may take, considering your circumstances, for each phase of the buying process.  It’s called a Timing Analysis, and it may guide your decisions during a purchase.  Thirty to sixty days from the time you decided to buy a home until you had the keys in your hand was “normal”, but that normal is getting longer.  Sellers, knowing and meeting your timing needs and wants is a very important part of marketing your home – perhaps the most important.  Your timing expectations should be a central part of the decisions on listing and marketing your home for sale. 

The clock is ticking – start a time line and back it up to the beginning!

• Want to be in your new home before the kids start school?
• Looking to buy a home for student housing near the University? (At the same time as everyone else?)
• First time buyers – you must own that new home by November 30th, and there are 8000 reasons to be start making your decisions now.
• Should I sell my home before I find one to buy?  It depends on your circumstances, of course, but getting it wrong can cost you money and frustration! 

All good questions that need a timing answer.  This market has changed for consumers, and more is to come.  Work with your Realtor to develop a Timing Analysis of your needs, and get a realistic view of how long it might take to accomplish your plans.  Timing may be everything.

Bob Ashauer
RE/MAX Alliance
Collinsville, IL

In the Beginning ……..

 

Hi,

This is a brand new blog site for Real Estate consumers in the metro east area of Illinois.  Please click Welcome/About This Blog above to see what it is all about.  Then return here to read my posts, or to make one youself.  Everyone is welcome :  customers, clients, or other Realtors.  Enjoy!

Bob Ashauer
RE/MAX Alliance
Collinsville, Illinois