The complexity of new home buyer tax credits leaves potential buyers with many questions. Here are answers to some of the most confusing:

How does a current home owner qualify for the $6,500 credit?
Buyers must have lived in their homes for at least five out of the last eight years. The home they buy must become their primary residence, but buyers don’t have to sell their previous home. They can use the previous home as a rental or a second home and still claim the credit.

Does the new home have to be more expensive than the one the buyer currently owns?
No. It is fine to use it to downsize. If the property sells for more than $800,000, the buyers don’t qualify.

Can buyers who are building a new home claim the credit?
Yes, although the contract must be in place by April 30 and the buyer must move in by July 1.

Can buyers claim the credit if they purchase a home from a relative?
No. The legislation prohibits taxpayers from claiming the credit if the sale is between “related parties,” including parent, grandparent, child, or grandchild.

Source: USA Today, Sandra Block (11/24/2009)

Driven by the home buyer tax credit, existing-home sales showed another big gain in October with a strong uptrend established over the past seven months, according to the NATIONAL ASSOCIATION OF REALTORS®. At the same time, inventories have continued to decline.

Existing-Home Sales—including single-family, townhomes, condominiums and co-ops—surged 10.1 percent to a seasonally adjusted annual rate of 6.10 million units in October from a downwardly revised pace of 5.54 million in September, and are 23.5 percent above the 4.94 million-unit level in October 2008. Sales activity is at the highest pace since February 2007 when it hit 6.55 million.

Tax Credit Fuels Surge

Lawrence Yun,NAR chief economist, was surprised at the size of the gain. “Many buyers have been rushing to beat the deadline for the first-time buyer tax credit that was scheduled to expire at the end of this month, and similarly robust sales may be occurring in November,” he said. “With such a sale spike, a measurable decline should be anticipated in December and early next year before another surge in spring and early summer.”

Now that the tax credit has been extended and expanded, potential buyers have until April 30 to have a contract in place. “There is still a large pent-up demand that can be tapped before the tax credit expires. Our recent consumer survey further shows that 13 percent of successful first-time buyers had a previous contract that was cancelled or fell through—there likely are many more buyers who were attempting to purchase but simply ran out of time,” Yun said.

Historically low interest rates also are boosting the market. “Mortgage interest rates last month were the third lowest on record dating back to 1971,” Yun noted. According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 4.95 percent in October from 5.06 percent in September; the rate was 6.20 percent in October 2008. Last week, Freddie Mac reporter the 30-year rate dropped to 4.83 percent.

Inventory Declines

NAR President Vicki Cox Golder said strong demand by first-time buyers is creating some unusual conditions. “In parts of the country, especially in Southwestern states but also in Florida and suburban Washington D.C., we’ve been getting many reports of multiple bids in the lower price ranges with foreclosed properties getting absorbed quickly,” she said.

“In fact, low-end inventory has become very tight in many areas and in some cases buyers are becoming more aggressive. In this kind of environment it’s important to work with a REALTOR® who can walk you through the process and help you negotiate a satisfactory deal,” Golder said.

Total housing inventory at the end of October fell 3.7 percent to 3.57 million existing homes available for sale, which represents a 7.0-month supply at the current sales pace, down from an 8.0-month supply in September. Unsold inventory totals are 14.9 percent below a year ago.

“The supply of homes on the market is now at the lowest level in over two-and-a half years – we’re getting closer to a general balance between buyers and sellers,” Yun said. The last time the relative housing inventory was this low was in February 2007 when it also was at a 7.0-month supply.

Existing Home Price by Type

The national median existing-home price for all housing types was $173,100 in October, down 7.1 percent from October 2008. Distressed properties, which accounted for 30 percent of sales in October, continue to downwardly distort the median price because they usually sell at a discount relative to traditional homes in the same area.

“In the second half of 2010, if home values show consistent stabilization or even a modest increase, then home sales could remain at normal healthy levels because consumers would no longer be worried about a price overcorrection,” Yun said.

He added that low home prices also are contributing to extremely favorable affordability conditions. “With the abnormal drop in home prices over the past few years, the price-to-income ratio has fallen below the historic trend line,” Yun said. “This is adding to the buying power of the typical family, with affordability conditions this year at the highest on record dating back to 1970, but prices are beginning to flatten and are poised to rise next year.”

Single-family home sales rose 9.7 percent to a seasonally adjusted annual rate of 5.33 million in October from a pace of 4.86 million in September, and are 21.4 percent above the 4.39 million-unit pace in October 2008. The median existing single-family home price was $173,100 in October, down 6.8 percent from a year ago.

Existing condominium and co-op sales surged 13.2 percent to a seasonally adjusted annual rate of 770,000 units in October from 680,000 in September, and are 40.8 percent above the 547,000-unit level a year ago. The median existing condo price was $172,900 in October, which is 10.4 percent below October 2008.

Regional Views

Here’s a look at existing-home sales figures in different regions of the United States:

Northeast: Existing-home sales rose 11.6 percent to an annual level of 1.06 million in October, and are 27.7 percent higher than October 2008. The median price in the Northeast was $235,400, down 2.6 percent from a year ago.

Midwest: Existing-home sales surged 14.4 percent in October to a pace of 1.43 million and are 28.8 percent above a year ago. The median price in the Midwest was $146,600, a gain of 1.1 percent from October 2008.

South: Existing-home sales rose 12.7 percent to an annual level of 2.30 million in October and are 25.7 percent higher than October 2008. The median price in the South was $151,100, down 6.3 percent from a year ago.

West: Existing-home sales increased 1.6 percent to an annual rate of 1.31 million in October and are 12.0 percent above a year ago. The median price in the West was $220,200, which is 14.7 percent below October 2008.

—NAR

Give thanks to the Lord, for he is good! His faithful love endures forever.
Psalm 107:1 (New Living Translation)

The Jackson’s wish you and your loved ones a blessed Thanksgiving!

Today, in the spirit of Thanksgiving, I thought I would share with you a recipe for Brown Bag Turkey. It was made “famous” by Kidd Kraddick, of Kidd Kraddick in the Morning, a syndicated morning radio show based out of Dallas/Fort Worth. It’s great for first-timers, or for those of you that want to try something new. Have a blessed Thanksgiving and enjoy!

Six tips that tell you it’s time

By Michele Dawson

Figuring out whether you’re ready to buy a house — whether you’re a renter or are aiming to move up or size down — can be a daunting task. But there are signs that will indicate whether you’re ready to take the buying plunge.

If you are thinking about buying, you’re not alone. So are you ready to make the move? You might be if you:

1. Are familiar with the market. If you’ve been paying attention to how much houses are listed for in the neighborhoods you’re eyeing and have a realistic view of how much a house will cost you, you’re in good shape. But if you’re dreaming about that big corner house with no clue about it’s asking price, you may want to spend some more time becoming familiar with the market and how much houses are going for.

2. Have the money for a down payment and closing costs. The down payment is a percentage of the value of the property. Freddie Mac says the percentage will be determined by the type of mortgage you select. Down payments usually range from 3 to 20 percent of the property value. Also, you may be required to have Private Mortgage Insurance (PMI or MI) if your down payment is less than 20 percent. Closing costs include points, taxes, title insurance, financing costs and items that must be prepaid or escrowed and other settlement costs. You can expect to pay between from 2 to 7 percent of the property value. Generally, buyers will receive an estimate of these costs from your lender after you apply for a mortgage.

3. Know how much you can afford. Freddie Mac says that as a general guide, your monthly mortgage payment should be less than or equal to a percentage of your income, usually about a quarter of your gross monthly income. Also, your income, debt and credit history go into determining how much you can borrow. As a general rule, your debt -credit card bills, car loans, housing expenses, alimony and child support — should not be more than about 30 to 40 percent of your gross income.

4. Know what additional expenses will come with owning a home. This includes homeowners insurance, utility bills, maintenance costs — roofing, plumbing, heating and cooling.

5. Have your credit in good shape and make sure your credit report is accurate. Potential lenders will view your credit history — how much debt you’ve accrued, how many accounts you have open, whether your payments are made on time, etc. — to determine whether they’ll give you a loan. You should get a report from each of the three credit reporting companies: Equifax, Experian, and Trans Union.

6. You haven’t made any recent major purchases, particularly a vehicle. If you do, you may have a harder time getting a loan — or it could potentially lower the amount you’ll be approved for.

Copyright © by Realty Times

Guide to Home Buying a Home Step-by-Step
By Elizabeth Weintraub, About.com Guide

Line up your financing, set aside a down payment and study the loan programs available. By doing your homework, you will know exactly how much you can pay and what it will cost you.

• Order a Free Credit Report
  Give yourself time to clean up a credit report that contains mistakes. Dispute errors. Try to reduce your monthly debt obligations now by paying down those loan balances.
• Find a Lender
  Check out places to get a mortgage and compare rates and fees. Start with your own financial institution, then interview a few mortgage brokers and choose a loan product you completely understand.
• Determine a Down Payment
  The more you put down, the lower your monthly mortgage payment. Here are 12 places to find a down payment.
• Consider FHA Loans 
  FHA loans carry competitive interest rates, come with minimum down payment requirements and allow sellers to pay some or all of your closing costs.
• Get a Preapproval Letter 
  Showing the seller you are already preapproved for a loan gives you an edge during offer negotiation.

Now that you have signed a listing agreement with a real estate agent, made the recommended preparations for selling your home, including paint touch-up and dressing up the landscaping for great curb appeal, and put the “For Sale Sign” strategically placed in your front yard, what are the next steps for you to take?

Here are three approaches you may want to take to show your house off to its best advantage to prospective buyers:

• Stage your house. The current thinking on staging a home is that it can prove to be very valuable to sellers in terms of price and actual length of time needed to sell. There are professional staging services available for, very often, a small fee. However, with a little thought and effort on your part, you can certainly do the staging yourself. Here are some tips:
  • Remove as much clutter as possible, including personal photos and collectibles. Clean out overflowing closets, remove oversized and worn furniture, and clear kitchen and bath countertops. Buyers become easily distracted by personal belongings and may end up passing on a house (potentially yours!) that suits their needs.
  • Strategically place freshly cut flowers, make sure pet odors have been masked, and light the fireplace while showing for a warm and inviting feeling.
  • Open the window coverings to give a light and airy feel. The more open a property appears, the larger and more welcoming it seems to prospective buyers.
• Plan to be away during open houses Likely your agent has scheduled to hold one or more open houses over the next couple of months. Whether or not you are present during an open house is something your agent should have discussed with you. Real estate brokers are almost unanimous about sellers leaving the home while they conduct open houses. This allows buyers to mentally place their furniture and visualize themselves living in the space they hope to call home. Best practice is to take their advice, step out for a few hours, and let your broker show your home off in the best light to prospective buyers
• For pre-arranged showings, leave the house in the good hands of your agent. Your agent has likely already shown many properties to his buyers. He knows the features and benefits your home offers, and he knows the special requirements of his buyers. It may be they require a large living room to place a piano, or a fenced-in backyard for pets. Your agent has carefully chosen your home to show his prospective buyers, based on their needs and his assessment of how your home meets those needs. It’s wise to let your agent take advantage of his knowledge and experience at this step. The buyers will have more opportunity, and feel more comfortable, peaking into the closets to see if they are adequate and flushing the toilets if you are absent. Before they are ready to make an offer, buyers most often need to get a good sense for the feel of a particular house, including where they might potentially place their furniture. This is done better with the seller absent.

Your agent is a skilled professional who can easily pick up on the obvious and, not so obvious, buying clues prospects give off. They will know best when to “close” the prospective buyers and offer to write up an offer they can present to you - the seller - and your commission will be money well spent.

Good luck selling your home!

http://www.homegain.com/info_center/seller/marketing/open_houses/show_article

How to Interview an Agent

By Elizabeth Weintraub, About.com Guide

Smart consumers interview potential real estate agents before deciding on whom to hire. Just as you are sizing up the potential for a good fit, rest assured that the real estate agent will likely be interviewing you, too. Be wary of agents who don’t ask you questions and probe for your motivation. You wouldn’t work with just any agent off the street, and good agents are just as selective about their clients, too.

1. How Long Have You Been in the Business?

The standard joke is there’s nothing wrong with a new agent that a little experience won’t fix. But that’s not to say that freshly licensed agents aren’t valuable. Much depends on whether they have access to competent mentors and the level of their training. Newer agents tend to have more time to concentrate on you. Some agents with 20 years of experience repeat their first year over and over. Other 20-year agents learn something new every year.

2. What is your average list to sales price ratio?

Knowing the agent’s average ratio speaks volumes. Excluding sizzling seller’s markets, a good buyer’s agent should be able to negotiate a sales price that is lower than list price for buyers. A competent listing agent should hold a track record for negotiating sales prices that are very close to list prices. Therefore, listing agents should have higher ratios closer to 100%. Buyer’s agent ratios should fall below 99%.

3. What is Your Best Marketing Plan or Strategy for My Needs?

As a buyer, you will need to know:

• How will you search for my new home?
• How many homes will I likely see before I find a home I want to buy?
• Will I be competing against other buyers?
• How do you handle multiple offers?
• Do you present offers yourself?

As a seller, you will need to know:

• Specifically, how will you sell my home?
• What is your direct mail campaign?
• Where and how often do you advertise?
• Will you show me a sample flyer?
• How do you market online?

4. Will You Please Provide References?

Everybody has references. Even new agents have references from previous employers.

• Ask to see references.
• Ask if any of the individuals providing references are related to the agent.
• Ask if you can call the references with additional questions.

5. What Are the Top Three Things That Separate You From Your Competition?

A good agent won’t hesitate to answer this question and will be ready to fire off why she is best suited for the job. Everyone has their own standards, but most consumers say they are looking for agents who say they are:

• Honest and trustworthy
• Assertive
• Excellent negotiators
• Available by phone or e-mail
• Good communicators
• Friendly
• Analytical
• Able to maintain a good sense of humor under trying circumstances

6. May I Review Documents Beforehand That I Will Be Asked to Sign?

A sign of a good real estate agent is a professional who makes forms available to you for preview before you are required to sign them. If at all possible, ask for these documents upfront.

As a buyer, ask for copies of the following:

• Buyer’s Broker Agreement (is it exclusive or non-exclusive?)
• Agency Disclosures
• Purchase Agreement
• Buyer Disclosures

As a seller, ask to see:

• Agency Disclosure
• Listing Agreement
• Seller Disclosures

7. How Will You Help Me Find Other Professionals?

Let the real estate agent explain to you who she works with and why she chooses these professionals. Your agent should be able to supply you with a written list of referring vendors such as mortgage brokers, home inspectors and title companies. Ask for an explanation if you see the term “affiliated” because it could mean that the agent and her broker are receiving compensation from one or all of vendors, and you could be paying a premium for the service.

8. How Much Do You Charge?

Don’t ask if the fee is negotiable. All real estate fees are negotiable. Typically, real estate agents charge a percentage, from 1% to 4% to represent one side of a transaction: a seller or a buyer. A listing agent may charge, for example, 3.5% for herself and another 3.5% for the buyer’s agent, for a total of 7%.

9. What Kind of Guarantee Do You Offer?

If you sign a listing or buying agreement with the agent and later find that you are unhappy with the arrangement, will the agent let you cancel the agreement? Will the agent stand behind her service to you? What is her company’s policy about canceled agreements? Has anybody ever cancelled an agreement with her before?

10. What Haven’t I Asked You That I Need to Know?

Pay close attention to how the real estate agent answers this question because there is always something you need to know, always. You want an agent to take her time with you — to make sure you feel comfortable and secure with her knowledge and experience. She should know how to listen and how to counsel you, how to ask the right questions to find out what she needs to know to better serve you.

http://homebuying.about.com/od/realestateagents/tp/Agentinterview.htm

HGTV’s Taniya Nayak shares expert entertaining advice.

http://www.hgtv.com/thanksgiving-videos/video/index.html

The National Association of Realtors® today thanked the many members in the U.S. military on active duty for their services to America, and reminded them of special benefits for them in the recent extension and expansion of the homebuyer tax credit law.

NAR was the main proponent in getting the homebuyer’s tax credit extended into 2010 and expanded to include present homeowners.

“NAR is the leading advocate for private property and homeownership issues, and firmly believes that those who are in service to their country should be full participants in the homebuyer tax credit law,” said NAR President Charles McMillan, broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “These men and women are often hindered by hardships from full participation in the American Dream of homeownership because their duty disrupts them in the buying and selling of a home.”

Two special provisions in the present tax credit law assist members of the military, intelligence and foreign services in taking advantage of the homebuyer tax credit, said McMillan.

Armed services members, as well as intelligence service and foreign service personnel, who are on active duty and out of the U.S. for 90 days during any part of 2009, get an additional year to buy their homes, to May 1, 20ll.

Another benefit is a waiver on the time of occupancy of the home purchased with the tax credit. Homebuyers who purchase their home using the tax credit must use that home as a principal residence for a period of no fewer than three years, or must forfeit the entire credit. Military, intelligence and foreign service members do not have to repay the credit if they have to sell their home after fewer than three years occupancy due to official business.

First-time homebuyers who are eligible can obtain a tax credit of $8,000. Current homeowners are eligible for a $6,500 tax credit, provided they have lived in the home they are selling, or have sold, as principal residence for five consecutive years in the past eight years.

Income limits for eligible home buyers are expanded to $125,000 for single buyers and $225,000 for couples. The purchase price of the home cannot exceed $800,000. To help guard against fraud, buyers are required to attach documentation of purchase to their tax return.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

http://www.realtor.org/press_room/news_releases/2009/11/armed_services