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All the talk among Realtor’s, Mortgage Brokers, Investor’s and first time home buyers is about whether or not the first time home buyer $8,000 tax credit will be extened past May 1, 2010.  Everyone working in Real Estate has enjoyed the surge of sales this tax credit has provided during the past several months. 

It appears certain that the $8,000 First Time Home Buyers tax credit will not be extended past May 1, 2010.  Everyone is wondering what the impact will be while enjoying the final surge of people buying during this last week of April.  Mortgage Brokers and Realtor’s are secretly asking one another what will happen next to the real estate market. 

I am an investor and from my perspective we are still working right in the heart of the Perfect Storm caused by the glut of distressed properties on the market.  Never before has there been such a transfer of real estate wealth caused by the greed of Wall Street.  Today’s home buyers can purchase property as if shopping at Macy’s inventory reduction sale.  Just like finding your favorite clothes marked down 30%, homes can readily be purchased at sharp discounts in most markets across America.   I expect to continue to see some strong movement in the real estate market for the coming months due to the incredible deals that are readily available to home buyers.

The second reason I believe the market will stay strong for several months is the second condition of this perfect storm.  Very low interest rates.  With decent credit home buyers are still financing homes with interest rates in the low 5% range.  In fact we have a closing on a home that was purchased from us scheduled to close may 7th and the borrower qualified for a rate of 4-1/8%.  The very low interest rates will not last forever and the fact is they worth far more than the $8,000 tax credit, assuming the average American spends the $8,000 and does not re-invest it for a profit over the next 15 years.

The third reason I believe the market will stay strong for a while is the wide availability of grants.  In Virginia where I live, and in many states across our nation there are many grants still available to first time home buyers.  We recently sold another home in Virginia where the borrower qualified for a $10,000 grant.  Again, that grant exceeds to return of the $8,000 tax credit.

The good news is that I believe homes will continue to sell for the next several months.  The key to your sales is the same as always:

1.  Property condition:  There are a lot of homes still on the market; to make yours stand out from the others be sure it is 100% clean, clutter free and well maintained inside and outside.  Be sure the outdoor space is appealing with a well cut lawn, mulched flower beds and trimmed bushes.

2.  Marketing:  The majority of home buyers begin their search on-line.  Be sure that your home is marketed heavily on the internet.  You should be sure to have your home listed onto the MLS either list it yourself with a great flat fee MLS listing service such as http://www.justlistem.com or find a strong realtor.  Your home should be listed on craigslist, zillow and trulia along with the MLS.  In addition to internet marketing and the MLS, be sure you have a property flyer along side a great for sale sign that is easily read when people are driving by your home.

3.  Price:  In this market you need to consider your listing price carefully.  Take time to review the comparables of recent homes sold in your neighborhood, speak to a strong Realtor or simply have it appraised.  You will want to price your home competetively and be sure to offer the new Buyer assistance with their closing costs to make it easy for them to purchase your home.

Sit back, relax and enjoy this perfect storm.  There should continue to be strong sales for the next several months due to low interest rates, readily available grant funds and the continued great opportunities to buy.

What do you think the impact of no longer having the $8,000 first time home buyers tax rebate will be?  Leave me your opinions in the comments.  I would love to know your thoughts.

In November 2009 President Obama has signed the extension of the first time home buyers $8,000 tax rebate. President Obama also has signed an expansion of the original plan. The expansion provides a $6,500 tax rebate for qualified buyers who already own their own home. Both will be in effect until April 30, 2010. The provisions are providing a tremendous opportunity for homeowners as a huge incentive for buying a home. The new extension and expansion has created a sense of urgency for those buying homes. According to Mark Sauers, Assistant Vice President with Sun Trust Mortgage

“The only thing i would say is that if history teaches us any lessons we should move forward sooner rather than later. April 30 will be here before we know it. I really do not expect any further extensions beyond this”

The following guide will simplify the qualification process for homeowners looking to take advantage of the home buyer tax credit.

    $6,500 Tax Credit for trade-up buyers who already own their own home:

1. Income qualifications: Single taxpayer incomes must not exceed $125,000 and married couples income can not exceed $225,000

2. Purchase date qualifications: Purchase must be after November 6, 2009 and on or before April 30, 2010.

3. Ownership qualification: Buyers must have lived in their previous home for five consecutive out of the past eight years. The purchase price of the new home can not exceed $800,000 and the new home must be a personal residence (non investment or non-owner occupied).

The total tax rebate is equal to 10% of the purchase price, up to a total of $6,500 and does not need to be repaid back to the Government.

    $8,000 First time home buyer tax credit:

1. Income qualification: Single tax payer income can not exceed $125,000 and couples filing jointly can not exceed $225,000

2. Purchase date qualification: All sales that occur between January 1, 2009 and April 30, 2010

3. Buyer qualification: Anyone who has not owned their own home during the previous three years prior to current purchase

The tax rebate is available for 10% of the purchase price of the home with a maximum of $8,000 and can not be used on a home that is over $800,000. Really now, how many first time home buyers can afford an $800,000 home?

first time home buyers rebate expanded and extendedPresident Obama has signed the bill to extend and expand the home buyer tax rebate.  First time home buyers have been enjoying the $8,000 tax credit since it was signed in early 2009.  The first time home buyers tax rebate was set to expire on November 30, 2009 but now it has been extended to all houses put under contract before April 30, 2010.

Along with the extension President Obama signed an expansion of the original tax credit.  The expansion allows many homeowners, who purchase a new primary residence home, to enjoy a $6,500 refund.  Homeowners are eligible for the $6,500 if they have lived in their home for five consecutive years out of the past eight years.   The earnings income limit for receiving the tax credit are $125,000 for individual and $225,000 for a couple.  The new purchase does not need to cost more than the original purchase and here is an example of how the 5 out 8 consecutive year residency should apply:

Renting scenario:  If you previously owned your home for the five consecutive of previous 8 years, then sold it and chose to rent a different home you would become eligible to purchase a home and receive the rebate. Please contact your cpa or tax specialist to be certain of your situation.

Divorce scenario:  If you and your spouse lived together for five consecutive out of the past eight years, got divorced and went your own paths but did not repurchase a new home you would then potentially be eligible for the $6,500 tax credit.  Please be sure to contact your cpa or tax specialist to be certain of your situation.

It is estimated that approximately 2 million home buyers will take advantage of the tax rebate this year and that this tax credit could pump more than $20 Billion into our general economy.  The hopes of our Government leaders is that it will ultimately lead to a sharp rise in home sales and ultimately help lead to a stabilization in the overall market and economy.

Extending the tax rebate will help to continue to give a great incentive to first time home buyers nationwide.  The expansion is expected to lead to greater sales in the “Trade-up” category where home owners move up to a more expensive home to take advantage of this offer.

invest-now.jpgThe Senate has agreed to extend the first time home buyers tax credit.   Approximately 1.5 Million first time home buyers have taken advantage of the rebate in 2009.  The rebate allows first time home buyers to capture the $8,000 rebate.   The Senators have agreed that the tax rebate be extended to April 2010.  Next up is the vote of the House.  The House is expected to accept the package and send it to the President for signature.  It is expected that President Obama will gladly sign the extension.  In addition to the extension of the $8,000 tax rebate, they have agreed to expand the tax rebate to repeat buyers for a total of $6,500.

What impact will the extension and expansion have on our economy?  National Association of REALTORS® estimates that each home purchase contributes approximately $63,300 into our economy which is the approximate contribution of one new job.   Which organizations financially benefit from a home sale?  Here is a short list of some of them:

Realtor’s and Brokers:  6% commission on each sale.  Assuming the national average of a home sale is approximately $200,000 the commission per sale will average approximately $12,000. 

Settlement Agents:  The title companies and attorney’s generate income by selling the title insurance and providing legal services.

Mortgage Brokers:  Earn commission by writing your loans

Home inspectors and contractor’s:  Earn income on inspecting and then repairing the homes as needed.

Appraisers:  Earn their income for determing the value of your home

Financial institutions:  Earn their income through interest and numerous fee’s associated with your financing.

The first time home buyers rebate has had a big financial impact on our economy.  Expanding it to include a $6500 rebate to everyone will have a huge impact which will be covered in our next blog.

Chris Johnson (Cronson) did our shed demo and yard work this week

Chris Johnson (Cronson) did our shed demo and yard work this week

If you are spray painting, be sure to mask everything!

If you are spray painting, be sure to mask everything!

On our road to financial security our construction goals include elements of quality, speed and cost control.  I have seen many investors make major mistakes on all three of the above.  Some people cut costs and lose quality, others are not prepared to complete the renovation Lightning Fast or on budget. We typically turn a house fully renovated in 3 weeks.  In that 3 weeks we manage the project as tight as possible and make sure that reliable contractors are on-site with their needed materials every single day until we are 100% finished.  From the day of purchase until the day of being complete, we follow a logical process which I will share in a minute.  We are also very conscience of our overall costs/budget as well as the quality of our materials and contractors.

In this blog we are following one of our renovations from start to finish so let me update you on what we did this week.  We first ordered our dumpster which we planned to put in the back yard from the access road behind the house…  that didnt work out because the dumpster driver could not turn tight enough to place it in the back yard.  Needless to say it ended up right out front which we really dont like to do.  Once the dumpster was placed we immediately began the demo.  The demo included gutting the kitchen cabinets and the lower bathroom completely.  It also included getting rid of fine items such as the bedroom doors that the dogs ate through and other great finds along the way. It also includes a lot of exterior work like getting rid of the old, word shutters and mailbox. During demo we also work hard on the yard. Typically grass and weeds are knee high, shurbs heavily over grown, etc. At this house we had two sheds, one is in great shape and the other had to be torn down, see photo above.

Once the demo was complete, we installed the new doors and completed the necessary wall repairs and prep for paint.  This was a lot of work on this house as the walls were in rough condition.  We also completed our rough-in plumbing construction which included installing a new bath tub and surround, fixing the laundry plumbing and other fun items!   Late this week our HVAC contractors came, right on schedule and installed the new furnace and air conditioning.

Now that plumbing is roughed in and HVAC is in-place we have begun priming the walls with kilz.   The kilz works great for hiding a lot of sins and getting us ready to apply the paint.  We typically paint every house the same way which is antique white on the walls, semi-gloss white on the trim, ceiling white on the ceilings and eggshell white in the kitchen and baths.  The historic style mouldings in the this house along with the chair rail and crown pop right out with the semi-gloss white and contrast of the antique white on the walls! 

Whats up next?  This weekend our crew is installing the ceramic flooring in the kitchen and bathrooms.  The middle of next week our new kitchen cabinets will be installed.  From there we will do final plumbing and electrical to prepare to finish it up!

Happy Investing!

Jim Ingersoll

jim@cheaprichmondhomes.com

Gross looking kitchen

Gross looking kitchen

Door with hole in it from dog

Door with hole in it from dog

Gross bedroom before renvoation

Gross bedroom before renvoation

Welcome! We are glad you have joined us for our series on the Road to Financial Security.  We are going to follow a road map that will lead to cash.  Anyone need extra cash in this economy?  Ulitimately the real road to financial security is the buy and hold strategy.  I recognize that our economy will prevent those with job loss and insecurities from following this road map which is why this series will focus on flipping a house for fun and profit.

As mentioned in the previous blog our chosen investment needs a lot of loving in order to restore it to it’s former glory.   This house was literally a Dog House prior to our acquisition.  There is evidence of this point throughout the house.

1.  Severe dog stains on the hardwood floors…  you know what I mean by dog stains right?  You can see and smell them.

2.  Holes in the bottom of the doors and moulding around the doors in the lower bedrooms.  I believe the dogs were kept locked in these bedrooms and the literally attempted to chew their way out.  Take a look at the attached photo to see what I mean on this point.

3.  The whole downstairs really smells bad right now.

Besides the bedrooms ruined by the dogs, the kitchen is the next worst room needing some serious attention.  Take a look at the photo to see what I mean.  We will soon be gutting this kitchen and look forward to brand new cabinets, countertop, plumbing, appliances and a ceramic floor.

We will also be gutting the lower bathroom and installing new ceramic, tub, vanity, etc. into that so it will be brand new as well.  The hardwood floors will be refinished, the house will be painted entirely on the interior.  Once complete you can walk through the front door into the living room and the nice fireplace will catch your attention along with the refinished hardwoods and the newly installed ceiling fan.  From there you will notice the nicely renovated side screened porch and proceed to the brand new kitchen.  This house will offer 4-5 bedrooms, 2 full baths a nice yard and great neighborhood once complete.

On the exterior of this house we will be repairing the vinyl siding, painting the porches, and fixing up the garage along with lots of yard work.

Come along with us on the road to financial security.  The next segment will be coming soon with our construction updates and new photos, etc.

No, you’re not a dummy. I would never say that. But, I DO have to say, this whole “First-Time-Homebuyer-Tax-Credit” thing can be a bit confusing if you aren’t good with numbers, or taxes, or legislation. So, I’ve decided to break it down for you, so that maybe the whole thing will be a bit easier to swallow and/or comprehend. Here are some basic questions about the tax credit, ANSWERED, in a hopefully, clear and concise manner. 

  1. Who is eligible to receive this “tax credit” anyway? The tax credit can go to ANY person who is purchasing/buying a home for the FIRST TIME (in a three-year period) prior to December 1st, 2009. 
  2. What do you mean “three-year period”? Well, say you owned a home, a long time ago. But you have NOT owned a home in the last three years. Well, you’re eligible! But sorry married folks, if you or your spouse has owned a home, you don’t qualify. Only those who have NOT owned a home individually or jointly may qualify to receive the tax credit. 
  3. Wait, so how is the amount of the tax credit determined? Meaning, how much money will you get? The tax credit is equal to 10% of the purchase price/selling price of the home — up to a maximum of $8,000. So, if you purchase your house for $100,000, 10% of that would be $10,000. But that’s too much, so you would get the maximum credit of $8,000. Get it?
  4. How is this NEW first-time-home-buyer tax credit different from the one that Congress passed and enacted in July of 2008? The biggest difference is that THIS NEW tax-credit DOES NOT have to be repaid. I repeat. DOES NOT have to be repaid! Basically, the previous tax credit was like a loan that didn’t have any interest associated with it, basically making it not really an actual tax credit. However, the homebuyer MUST stay in the home for 3 years or else you may have to pay some of it back.
  5. Can you combine this tax credit in conjunction with any other first-time-home-buyer tax credits? Nope, sorry Greedy Gus, you can only choose one. 
  6. How do you make sure you are going to receive this tax credit? Well, you are going to file for this tax credit on your 2009 federal tax return and it will show up then. If you have any doubts, ask an accountant or CPA. I know that I, myself, am not always the best at filling out forms, so it’s always smart to have someone double check your work. Oh, and if you want to receive it early, talk to an accountant. You may be eligible to have less money taken out of your paychecks in 2008. Wouldn’t THAT be sweet? 

So, all in all, this NEW-First-Time-Homebuyer-Tax-Credit is a pretty awesome deal. Essentially making this the PERFECT time to buy a home. The market is TRULY a buyers market and you can only benefit from buying a home right now. 

Need to sell your home? Sell it yourself and save on commission. You can sell your home with our friends, Just List ‘Em

Now is the time to save money and earn the money you deserve. You’ve worked hard. Treat yourself.

-Jim Ingersoll

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This blog post is courtesy of Just List ‘Em: a Flat Fee MLS real estate company geared towards helping YOU sell YOUR home.
We love them. You should too.

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Although we do business in many parts of the country, one of our featured locations right now is the Windy City: Chicago, Illinois. Right now, the housing market in Chicago is on the upturn and really beginning to boom.

The Chicago market is UP, just like the Spyre.

The Chicago market is UP, just like the Spire.

Do you live in Chicago? Are you looking to move and/or relocate altogether? Are you IN Chicago looking to sell your home, townhouse, loft, or condo? Looking to purchase property in and around the city? Now is the time to really get the ball rolling.

Are you a sports fan? If so, then you probably like stats. Here are some recent Chicago housing market statistics:

  • The Illinois Association of Realtors reported that home sales in Chicago were UP 40.6% in March over February. 
  • There were 840 homes sold in February of 2009. There were 1,181 homes sold in March of 2009.
  • The median price for a home/condo in March of 2009 was $220,000. This is an increase of 0.8% from February 2009 where the median price was $218,125.

Now, let’s crunch numbers. If you sold your home with a realtor at the median price of $220,000, you would pay, on average, $6,600 just in listing commission. If you sold your home through Just List ‘Em, you would pay the $299 flat fee to list your home on the MLS (Multiple Listing Service). That is an average savings of $6,300!

So the truth is, the Chicago market is almost hotter right now than Susan Boyle. Ultimately, why is that? Well, a few reasons.

  1. The $8,000 first-time-home-buyers tax credit. This is quite possibly one of the most important catalysts for the upturn of the housing market right now. This tax credit, included in the final version of the stimulus bill passed in February 2009, goes to ALL first-time-home-buyers. It will not be taxed and it does NOT have to be repaid. It is, in essence, $8,000 handed to you by the government. (It will show up when you file your 2009 tax return). So, because of this awesome financial opportunity, many potential home buyers who were on the fence about purchasing in 2009 have now been persuaded to the other side and are jumping at the chance to buy a home. ESPECIALLY in and around the Chicacgo-metro area.
  2. Short Sales & Foreclosures. A short sale is essentially the stage in which a home is on the verge of foreclosure and the seller REALLY wants to sell the house but no one is buying. A lender would rather list is as a short sale, sell the home at a very low price and lose a little money versus listing it and having it on the books as a foreclosure. Therefore, short sales are extremely attractive to buyers because buyers can save a TON of money on a potentially awesome property. Foreclosures are also attractive in that a buyer can save an estimated 10%-30% on the actual price of the property. In some cases, buyers can buy a great home and pay less than the tax value on it at closing. Now THAT is a deal! Just be wary when purchasing a short sale or foreclosed home, as these homes can come with a serious need for repair. And when in doubt, always speak with a real estate professional and get their advice.
  3. Record low mortgage rates. According to BankRate.com, the average rate for a 30-year-fixes mortgage in Chicago is at 4.93% today, even down .03% just this week! And that percentage is still dropping. These mortgage rates are astonishingly low and make for an incredible money-saving opportunity for buyers. This is below the national average and significantly lower than the mortgage rates in past years. What does this mean, exactly? Well, when you buy a house, just like you would a car, you are going to pay interest on that item. The lower the mortgage rate, the less money you pay. The less money you pay, the more money you save. Awesome. RIGHT?

These three things create a powerful housing market in Chicago and really encourages buyers to buy and sellers to sell. If you want to sell your home, now is the time. Just like a pendulum, the market goes back and forth. It’s almost like playing double dutch. You have to jump in at the right moment or you might miss your opportunity.

Don’t forget though, if you are looking to sell your home in Chicago, don’t go through a traditional realtor or broker. Sell your home with us! Just List ‘Em. We will list your home on the MLS (Multiple Listing Service) for a flat fee and we guarantee we will sell you home quickly and efficiently and save you THOUSANDS of dollars on commission. That means more money in your pockets and big smiles on your faces.

-Jim Ingersoll

Jim Ingersoll

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