Anna-Lise Troup's Tucson Area Real Estate Update: August 2008

Click on the title of this article to read this great article in the Wall Street Journal. It provides an overview of the American Housing Rescue and Foreclosure Prevention Act of 2008, passed by Congress at the end of July. First time home buyers who purchase a home after April 8, s008, and before July 1, 2009, are eligible for a $7500 tax credit. This credit, however, comes with a catch. You'll have to pay it back.

See the article for more info about income limits, etc. For more details and examples of how the new law works, visit the web site of Congress'es Joint Committee on Taxation at www.jct.gov and look for publication JCX-63-08 on the home page.

Take a look at the following article published by Rismedia. There's some interesting information for first time home buyers!

RISMEDIA, August 13, 2008-(MCT/RISMedia)-Some first-time home buyers find it difficult to save up the cash needed for a deposit on a desired property. While those buyers may forever struggle to fill that cookie jar, President George W. Bush inked a bill last month aimed at giving those entering the housing market a financial boost.

“First-time home buyers make up about 40 percent of the entire market,” Sandy Dunn, president of the National Association of Home Builders (NAHB) and a home builder from Point Pleasant, W.Va., said during a recent news tele-conference. “They don’t have a home to sell and they bring demand to the market. As more than 2 million anticipated first-time buyers enter the market and claim the credit, this will stimulate buying up the housing ladder.”

For homes bought between April 9 and June 30 by first-time home buyers, the law provides a one-time refundable tax credit of $7,500 or 10% of the property’s purchase price.

However, this is not a free-money deal.

For example, a buyer who claims the $7,500 tax credit on their 2008 tax return will be required to pay back that money in $500 annual increments deducted from their income taxes for 15 years starting in 2010.

While getting more first-time home buyers into the market will help to whittle down existing inventory, Ed Brady, a home builder from Illinois who builds about 130 homes annually, noted that the new law provides FHA insurance for a program geared to prevent families facing foreclosure from losing their homes.

“Together, the first-time home buyer tax credit and foreclosure relief in the housing bill will help to reduce inventories,” said Brady. “In turn, this will firm up prices and send a signal that we are either at the bottom or very near the bottom and that there isn’t a better time to buy than today’s market.”

But, before a first-time home buyer can take advantage of the tax credit, they must qualify to buy a house and fully understand all that this new plan offers. According to a survey of 1,029 adults with household incomes of $40,000 or more, conducted by Market Tools on behalf of Beazer Homes, 77% of respondents were unaware of the new temporary tax credit. What’s more, however, 29% of survey respondents said the availability of such a credit would increase their likelihood of purchasing a new home now.

So, here are answers to some commonly asked questions about first-time homeownership and expert opinions on how to guide your new home buyers through the process:

How is the real estate market for the first-time home buyer?

“For the first-time home buyer, the market is very good. The number of properties on the market gives them a much greater choice compared to a few years ago. And with much more properties on the market, it allows the buyer much more room to negotiate price.” — Steve Snell, executive director of the Realtors Association of York & Adams Counties in Pennsylvania.

What should first-time home buyers be looking for, in terms of price?

“My only counsel is, if we have learned anything over the years, that first-time home buyers should not overbuy. They should determine what their needs are over their wants. The high number of foreclosures in the county tell us that some people cut it too close. You have to allow a little room for life to happen,” Snell said.

How much does a buyer need to put down on a house?

“The majority of first-time home buyers will need 3% down. A buyer can still get 6 percent seller assistance — that’s money, up to 6 percent of the sale price of the house, given back to the buyer by the seller to help with closing costs.” — Raymond McGettigan of Fidelis Mortgage in Lancaster County.

Which type of homes are first-time home buyers looking to purchase?

“In terms of first-time home buyers, we are seeing them stay in the $150,000 range and looking for starter homes that could have two bedrooms and one bath,” McGettigan said.

What credit range should a first-time home buyer have in order to buy a home?

At a minimum, they should have a 580 score. Anyone in the 700 range has good control of their finances. The higher the score, the better your interest rate is going to be,” McGettigan said.

When it comes to the real estate outlook, NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said the housing stimulus package will provide long-term relief. “Provisions to stem foreclosures are helpful, but a greater lift to the economy should come from higher mortgage limits, enhancements to the FHA loan program and the first-time home buyer tax credit,” he said.

“These are excellent tools that will help buyers get into the market to take advantage of the unprecedented drop in home prices in many areas, as well as a wide selection of inventory, to make an investment in their future.”

Click on the above link to view some interesting information about the impact of downpayment assistance programs in Arizona.

If you're getting ready to sell your home, news reports of foreclosures, a buyer's market or slower home sales may not sound encouraging. The good news? You're not really competing with the entire world—you're competing with your neighbors!

Remember: All real estate is local. What's happening nationally, in other regions or communities, has little relationship to your local real estate micromarket, which has a buyer demand, housing supply, location and amenities that are unique to your area. Even neighborhoods within larger markets can differ a lot in home prices and the pace of sales.

Also understand that buyers typically narrow their sites to a particular neighborhood; then they zero in on the best value among the homes for sale in that neighborhood. Value means more than price—it's a combination of amenities (location, size, style, condition, conveyances, etc.) and financial considerations (price and monthly payment, closing costs, utility bills, taxes and so on).

To sell quickly today at the best price, you must show buyers that your home offers better value than competing neighborhood homes. Accomplishing that in a buyer's market calls for a creative approach. Consider the following strategies.

Price Right from the Start

Many home sellers are tempted to start their home sale with the highest listing price they could hope to get. Unfortunately for sellers, today's buyers are more educated about home values than ever before—and they're comparison shopping. In a buyer's market, a creative strategy is setting your home's price at the lower end of its market-value range, maybe even below neighborhood comparables. This attracts pent-up buyer attention fast and generates competition that could result in a full-price (or higher) offer. We'll be happy to conduct a comparative market analysis (CMA) to determine the best listing price for your home.

Maximize Visual Appeal

We've discussed in previous newsletters how important it is to create curb appeal, clean everything, declutter, remove personal items, paint and recarpet, update fixtures and repair anything that's not working properly. Those are necessary basics to home selling in today's market. Here are some creative strategies to consider:
•Hire a professional to “stage” your home. Using proven design techniques, “stagers” rearrange furnishings to best complement a home's unique features. The stager may ask you to place some of your furnishings and possessions in storage or might bring in furniture to create a particular look.
•Add fresh flowers for scent and color in rooms throughout the home and, weather permitting, in flowerbeds and pots outside.
•Decorate dining tables with beautiful cloths or placemats and full place-settings to emphasize the entertainment possibilities of the space.
•Focus on first impressions. Pay special attention to the front-door area outside and the area a buyer first sees upon walking inside.

Get the Word Out

Having your agent include your home in the local multiple listing service is important, of course, but you can do other things yourself to turn up the volume on your home-sale announcement.
•Make sure your home's property flyer highlights the unique and attractive aspects of your home: upgrades to structure or systems; new appliances; energy-saving features; landscaping; etc. Enlist a child to keep a brochure box filled. Consider a map showing proximity to amenities such as public transportation, parks, schools, supermarket and so on. Include a floorplan showing location and sizes of rooms, so buyers can plan how their furniture might fit.
•Use your e-mail signature to promote your home sale. Even if recipients aren't interested, they may know someone who is.
•Inform your most likely buyers (first-timers, young families, empty nesters, retirees, etc.) through organizations you and/or they may be involved with. Use bulletin boards, newsletters, websites, meetings, etc.

Make It Easy

With tighter loan standards and higher required down payments, some buyers need extra help to purchase a home.
•Show buyers how to buy your home. We can contact a lender to provide a “Buy Today” summary of down payment and monthly payment options for different types of loan programs based on your listing price.
•Be flexible with contingencies. A home-sale contingency, for example, allows buyers time to sell their current home, so they can afford to purchase yours. Or, let the buyers specify their move-in date, even if you have to rent temporary accommodations before moving to your next home. Remember, contingencies for financing and inspections (general, pest, radon, mold, etc.) are fairly common in a buyer’s market.
•Consider a lease/purchase. If you don’t need your funds right away, let the buyer rent your home with a delayed settlement, if you are sure the purchaser will eventually qualify for a loan. Part of the rent money could be applied to the down payment.

Offer Incentives
Pay some closing costs. This strategy helps buyers reserve cash for their down payment. They can also get an extra tax deduction for any loan points you pay.
•Take back a second mortgage. You’ll want to make sure the buyers can qualify, of course, but offering a loan for some or all of the down payment could put you way ahead of the competition.
•Add conveyances such as a chandelier, appliances, riding mower, yard tools, window treatments, playset, yard bench, porch swing, etc.
•Pay for a year of utilities, homeowners association dues, lawn service, pool cleanings, gym membership or offer a decorator’s or furniture allowance.

Remember, every creative technique doesn’t fit every property. Together we’ll select the best creative strategies that will help you beat your neighbors to a sales contract. Simply give us a call to find out more!