Both Houses OK Tax Credit Extension, Expansion

The House today and the Senate yesterday passed legislation to extend the $8,000 home buyer tax credit to May 1, 2010, for first-time buyers and add a $6,500 tax credit for repeat buyers if they’ve lived in their home for five of the past eight years. Home prices are capped at $800,000.

The legislation in both houses was included in a bill to extend unemployment benefits and is expected to be signed by President Obama shortly.

“REALTORS® appreciate the swift action by Congress to extend the home buyer tax credit and expand it to some current homeowners,” says NAR President Charles McMillan. “As the leading advocate of housing and real estate issues, we urge President Obama to sign this legislation into law quickly to keep the momentum going in the fragile recovery of the nation’s housing market.”

Under the bill, income limits are expanded to $125,000 for individuals and $225,000 for joint filers. Individuals with incomes up to $145,000 and joint filers with incomes up to $245,000 qualify for reduced credits.

Households who have binding contracts in place by April 30 will be allowed an additional 60 days to complete their transaction. The deadline for members of the military serving out the U.S. for at least 90 days between Jan. 1, 2009, and May 1, 2010, has been extended one year.

Taxpayers can claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a check. Taxpayers will be able to claim the credit on their 2009 income tax return for purchases made in 2010.

More on the credit is available from NAR.

Source: The Associated Press (11/5/2009)

Renters Feeling Less Safe

 Renters seeking an apartment are increasingly concerned about the safety of the home they rent, according to a survey of 750 renters by Apartments.com. More than 66 percent of renters say they feel moderately to extremely safe living in their current neighborhood, down 12 percent from 2006. The top-five safety features renters say they would pay more to have are: In-unit security alarm, 49 percent 24×7 building security patrols and a doorman, 45 percent Security cameras on the property, 42 percent Mandatory background screening for all new applicants, 30 percent Cylinder deadbolt locks on all windows and doors, 29 percent

Source: Apartments.com (10/27/2009)

Homebuyer Credit Gets New Life

 Key law makers in the Senate have tentatively agreed to extend the existing $8,000 tax credit for first-time home buyers and also offer a new $6,500 credit for existing homeowners who have lived in their current residence for a consecutive five-year period in the past eight years. Home buyers must be under contract by April 30, 2010, and close before July 1. House Democrats have expressed concern about the cost of the tax credit for the government, and allegations of abuse have resulted in an IRS probe of the program.

Source: Wall Street Journal, Corey Boles and John D. McKinnon (10/29/09)

10 Safest Places to Live in the U.S.

A sense of security is one of the big reasons why people choose a home. Forbes magazine has created a list of the nation’s safest places to live by examining four factors: workplace accidents, weather catastrophes, crime rates, and traffic accidents.

The result is this list of top 10 safest metropolitan areas:

1. Minneapolis-St. Paul-Bloomington, Minn.-Wisc.
2. Milwaukee-Waukesha-West Allis, Wisc.
3. Portland-Vancouver-Beaverton, Ore.-Wash.
4. Boston-Cambridge-Quincy, Mass.
5. Seattle-Tacoma-Bellevue, Wash.
6. Providence-New Bedford-Fall River, R.I.
7. San Jose-Sunnyvale-Santa Clara, Calif.
8. New York-Northern New Jersey-Long Island, N.Y.-N.J.-Pa.
9. Cincinnati-Middletown, Ohio (tie)
10. Cleveland-Elyria-Mentor, Ohio/Denver-Aurora, Colo. (tie)

 

Tax Credit Extension Seems Likely

It seems likely that the U.S. Senate will approve a deal to extend the First-Time Homebuyer Tax Credit, but the devil is in the details.

Florida Democrat Sen. Bill Nelson told reporters traveling to Florida with President Obama on Monday that he thought that the extension would be approved, but both senators and representatives are among those who think that there should be some fiscal offset for the cost of the extension. Spending any more money on the stimulus effort also could stir up a hornets’ nest in some circles.

The proposal in the Senate that appears to have the most likelihood of passage would extend the $8,000 credit through March 31, then its value would drop by $2,000 for each of the subsequent three quarters of 2010. This plan was offered by Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus, a Montana Democrat.

Source: Associated Press, Andrew Taylor (10/26/2009) and The Wall Street Journal, John D. McKinnon (10/27/2009)

Nonprofit Seeks $4 Billion for Green Housing

Enterprise, a national nonprofit group dedicated to creating affordable housing, said on Wednesday that it hopes to raise $4 billion over the next five years to make homes for low-income people more energy efficient.

The effort, which builds on the group’s previous commitments, will result in the creation, preservation, or retrofitting of 75,000 green homes and buildings, it said.

Enterprise, which also has a private branch that provides capital for housing, will lend to existing multifamily building owners for energy and water reduction capital purchases and healthy living environment improvements. Funds will also be dedicated to design new affordable housing.

Doris Koo, Enterprise’s chief executive, says green investments in affordable housing can yield big returns.

“For a small premium on the construction side, about 2 percent on the front end, you are seeing 20 to 30 percent savings on the energy,” she said.

Source: Reuters (10/21/09)

Housing Starts Rise

Housing starts rose 0.5 percent in September compared to August to an annual rate of 590,000, according to a report released Tuesday by the U.S. Commerce Department.

Single-family home construction, which accounts for 85 percent of the market, increased 3.9 percent to a 501,000 annual rate. Multi-family housing fell 15 percent to an 89,000 rate.

Building permits, an indicator of future construction, declined 1.2 percent from the August rate to a 573,000 annual rate in September.

Most of the gain in single-family starts was attributable to a 7.1 percent increase in the South. The other regions fell with the West declining 8.8 percent.

Source: Bloomberg News, Courtney Schlisserman (10/20/2009)

Why Short Sales Aren’t for Everyone.

Everyone wants a bargain, especially in this market.  But the truth is that many bargains go to investors and people inside the industry, because they can handle all the hiccups better than owners who plan to occupy the property.  Whether it’s a short sale, a foreclosure, an estate sale or other “discounted” property, often it’s like buying yesterday’s donut.  You can expect something to go sideways in a short sale, and often you can’t get it to go perfectly straight.

1) The closing date may be delayed. In fact you can pretty much count on it.  For someone who is trying to coordinate a move, this can wreak havoc on their life.  If you are trying to link together the sale of your house with the purchase of a short sale, well good luck with that one.  If you are trying to give notice to your landlord and be able to move into the short sale property on a firm given date, not always a reasonable expectation.  Most often short sales involve a series of extentions strung together until it closes. If someone is not planning to live in the house, such as an investor, not a huge big deal.  But for someone trying to move into it, it can be a nightmare of uncertainties.

2) The bank does not approve the sale price. One of the hardest things to understand about a short sale is that the buyer and seller agree to a price, but the bank is the one calling the shots.  Even when you get the HOORAY OK from the bank, the road can be very bumpy to the end.

Say you are buying a house for $820,000 and the payoffs on the seller side are $860,000 including a first and second mortgage and seller’s closing costs including exise taxes.  The 1st mortgage is going to be paid in full, so it is the second mortgage lender who is agreeing to whatever is left after other costs are paid. You send them an estimate that they are going to get $60,000 of the $120,000 owed to them.  They say OK.  Now during the time you waited for them to say OK, guess what happened.  Yup.  ALL THE COSTS INCREASED!  The first mortgage payoff got a lot higher than expected.  The utility bills went into arrears and the utilities may even have been shut off.  The arrearages grew and grew and now the 2nd lender who agreed to take $60,000 is only getting $50,000.

You can see how this can turn into a big yo-yo affect with the buyer feeling like someone is not telling the truth.  Yes the 2nd approved the short sale.  No the 2nd isn’t letting it close now.  You must remember that the 2nd mortgage never approves the sale price of $820,000 in the example above. They approve the amount that they are going to be “short” on their payoff.

The buyer thinks the bank approved the sale price of $820,000 when we got the first Hooray OK, when in fact what they approved was receiving $60,000.  Now when you do the final closing statement and the payoff is $50,000…you are back to square 3.  You are not back to square 1.  You have made progress.  But not as much as you thought and the closing date is again delayed and the sale, again, may not happen at all.

3) Now you get to the final stage.  The bank approves the $50,000 or the buyer agrees to come up with an additional $10,000.  Somehow the gap between the $60,000 approved and the $50,000 left to pay the 2nd mortgage has to be bridged.  Possibly with a little give and take on everyone’s part, including the agents.  The buyer who is now being asked to give a bit more than agreed to at a sale price of $820,000 doesn’t understand why.  “I thought the bank agreed to the price of $820,000?”  Remember, the “shorted” lien holder never appoves a sale price.  They approve the “short payoff” which is a moving target! It can get very frustrating and difficult to comprehend and follow.

4) Now the buyer wants to walk through the property the day of signing.  Uh-oh…the utilities are shut off.  Anyone who can’t make their mortgage payment and who is not living in the house, is not likely to keep the utility bills current during this long approval process. Yes it is reasonable for a buyer…normally…to want the utilities on for the final walk through or for the inspection.  But getting them turned on is easier said than done.  Whose name do they get turned on in?  If it is closing in the buyer’s name in 3 days, they likely don’t want the utilities in their name yet.  In fact the utility companies may not even let a non owner/non-tenant put the utilities in their name.  It clearly is not something a lawyer would advise a buyer to do prior to closing.

The seller isn’t forking out any money to get the utilities turned on, they have no proceeds and are not putting any money into the house.  Same goes for repairs.  You walk through and see something wrong with the house and want the seller to get it fixed.  No way Jose.  Seller is walking off with his tail between his legs licking his wounds.  He’s often depressed and disgusted and beat up by life.  He’s not coming over with a licensed contractor to make repairs.

4) The Buyer Agent often agrees to a short commission.  So if you have arranged with your Buyer Agent to recieve a portion of the commission, don’t be surprised if that amount changes at the end.

Lots of headaches.  Lots of uncertainties.  The truth is that investors foresee most of this.  They don’t care as much about the mundane things like what date it will close or making repairs.  They are going to gut it anyway.

So the next time you wonder why investors and insiders always seem to get the best deals, ask yourself this.  Who else would put up with all of this nonsense?  Looking for a bargain?  Great.  Just remember this.  It’s often like buying yesterday’s donut instead of a warm Krispy Kreme straight from the oven.  The taste left in your mouth after all’s said and done…may be a little stale.

Friends and Family Referal Program!

Everyone is looking for some side income these days! FSP wouold like to pay for our friends and families for reffering business to us. We are a full service real estate brokerage specializing in Property management and Realty Services. We Lease, Sell and Manage; Condos, single family homes, Multi-units, strip malls, and Associations in Cook counties and the 5 outlying counties. If you know of anyone that can benefit from our services refer them over to FSP and we will pay you:

• For someone looking to BUY a home: $350
• For someone looking to LIST a home: $200
• For someone looking to RENT OUT (lease) their home: $50
• For someone seeking MANAGEMENT services: First month Management Fee

Going Green Tips and Tricks!

We would like to help you save energy for your home and apartment. when you use less power it is not just helping you to save money, but it lowers the carbon foor print and in the long run it will help everyone!

1. Set your thermostat a few degrees lower in the winter and a few degrees higher in the summer to save on heating and cooling costs.
2. install (CFLs) Compact Fluorescent light bulbs when your older incandescent bulbs burn out.
3. Unplug appliances when you’re not using them. Or, use a smart” power strip that senses when appliances are off and cuts “phantom” or “vampire” energy use and unplug charging transformer (ticks) energy sucker.
4. Wash clothes in cold water whenever possible. As much as 85 percent of the energy used to mahcine-wash clothes goes to heating the water. use a timer on your electric hot water heater. Wrap your hot water heater with a thermal blanket just for the hot water heater.
5. Use a drying rack or clothesline to save neergy otherwise used during maching drying.
6. Take shorter showers to reduce water use. This will lower your water and heating bills too. Install a Low-Flow shower head, they dont cost much, and the water and energy savings can quickly pay for it.
7. Buy Energy star appliances.
8. If you can, turn off your computer when not in use or set the computer to energy saving.
9. Remove your plug in cover adn light switch plant and place a rubber gasket made just for plug adn switch cover. This will help hold the heat in the winter and the cool in the summer.
10. Place a quart jar with water in the water tank of your toilet. This in the long run will save you a quart of water each time you flush.