Tax Credit Update

Looks like we have a NEW plan to consider on the extension of the home buyers’ tax credit. (We talked about the old one yesterday). Seems Baucus/Reid/Dodd/Isakson team has come to an agreement to merge their proposals into one. Media outlets are all reporting different income limits, but this is what the Congressional Quarterly reported as of late last night:


◦$8K tax credit — amount remains the same for first time home buyers
◦Extension — will be for sales contracts entered into by April 30, 2010, and escrow closed in 60 days
◦Homeowners included — $6.5K tax credit for existing home owners as long as they’ve been in their homes for 5 consecutive years in the past 8 and meet the income limits
◦Income limits increased — Single $75K–> $125K and Married $150K–>$250K$225K (updated by CQ, 10:41 am PT)
◦AND - the White House endorsed the plan a few hours ago this morning.
My questions:
1) Why extend this to “step-up” buyers? Ultimately, I’ve read that something like 97% of all Americans fall into the income limits. Assuming that 60% of them are homeowners, then roughly 58% of all Americans can potentially qualify. How much is this going to cost?

2) Will this bring more instability to home prices as the flood gates are now open on this tax credit — this bill is looking more and more like the “cash for clunkers” program. If inventory moves thanks to this stimulus, will we experience a drop off in demand come April 30, and resulting dip in home prices?

As far as I can tell, it’s unclear how this proposal will move — as an amendment to the unemployment insurance legislation (HR 3548) or as a stand alone bill. No matter how it progresses, in order to be effective, the plan must stabilize home prices, drive increased spending for consumer products and help revive communities faced by foreclosure. Once those three areas are addressed, we’ll have a much healthier market.

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How to Know When to Refinance

Refinancing is most often motivated by lower interest rates, which can bring the dual benefit of lower mortgage payments and lower interest costs over time. But there are many other legitimate motivations. Some are a product of "creative" financing products such as Adjustable Rate Mortgages that were rare a generation ago. Your personal priorities will drive decisions on how to refinance. There is no "one-size-fits-all" solution, but here are a few reasons why you might want to refi.

Lower payments: When rates fall, it's always tempting to refi. A common rule of thumb is that a two-point drop in rates will make it worthwhile. But this is not universal. For a homeowner with a $300,000 balance, a rate reduction of even one percent can lower the monthly payments by a couple hundred bucks and cut long-term interest expenses by hundreds of thousands.

A common mistake with this strategy, however, is to "start over," and refinance, a 17-year-obligation with a new 30-year loan. Sure, stretching out the term will lower the payments, but wasn't the interest rate help enough for you? Don't be greedy. When you choose the term of a new loan, think about some day getting out of debt.

A quicker payoff: This is often a worthy goal, if you can afford somewhat higher payments. Replace a 30-year-term with 15 years, and obviously you'll be out of debt sooner - and won't have to double your payments to do it. They'll rise by about 40 percent (assuming here that both loans are at about 6 percent interest). Conversely, choose the ease of a 30-year term and the payments will go down a lot less than you'd expect.

Lower interest costs: Locking in a better fixed rate is great, but it is not the only way to lower interest bills. ARMs, or Adjustable Rate Mortgages, generally offer lower rates in the early years followed by higher ones later. It can be a fool's game to think you can defer your big bills until later in life, but if you plan to be in the house for just a few years or less, an ARM may make a lot of sense.

Cash out: Liquidating the equity in a home became a national pastime in the last housing boom. Creative loan products and rapidly rising home values often made it easy to refi (at a lower rate if you were lucky) and walk away with a satchel full of cash. Taking cash out of your mortgage can be an entirely legitimate way to consolidate other debts. The downside was that gains in equity were in some cases an illusion, driven by a housing market bubble - and this way, you'll never be able to pay off the property.

Top 10 Tips To Sell Your Home For Top Dollar

1. Price your home aggressively
   Setting the right price for your home is the single most important decision you will make when you decide to sell. Go too high and you risk turning off every buyer in the marketplace, go too low and you leave money on the table. One simple but powerful technique for pricing your home aggressively is to spend the day looking at your competitors' homes. By doing so you will be seeing the world through the buyers' eyes. Be tough and honest with yourself. Compared to the competition what would be a price that would position your home as the best value proposition for buyers in your marketplace?
   
2. Use price points
   Buyers don't walk into an agent's office and announce that they would like to see homes priced at a specific price like $227,900 dollars. Instead they ask to see homes between price ranges that are separated by five to ten thousand dollar increments. Because of this, consider setting your price near one of these natural price points. For instance a price $229,900 would probably net you exactly the same number of buyer inquiries as a price of $227,900, but moving your home down to $224,900 (the next price point down) would widen your potential buyer pool.
   
3. Consider value range marketing
   Another pricing technique that may be the ticket to more showings and more offers is to use value range marketing. Value range marketing is a pricing technique in which you choose a listing price based on what you would sell for today if a buyer wrote you a check. You then choose another lower price - one that you wouldn't reject if offered but would use as a starting point negotiate towards some middle ground. So instead of listing your home at a specific price of $496,000 dollars, you list the home between $459,000 and $496,000.
   
4. Offer a bonus to selling agents
   The agent who brings a buyer to your home is typically referred to as the selling agent or the buyer's agent. In a market crowded with inventory many sellers find it wise to provide an incentive to motivate these agents to show their home more frequently. While you may cringe at paying real estate brokers even more money, the fact is it may provide just the push they need to work a little harder to sell your home for top dollar.
   
5. Hire an aggressive listing agent
   Not all listing agents are created equal. To find an aggressive full time agent, take the time to research the market, talk to friends, neighbors, and colleagues about who they recommend, and interview multiple agents before making a hiring decision. In addition, be sure to come to an agreement about a specific, documented marketing plan before signing a long term listing agreement.
   
6. Encourage two way critiques
   Successful sellers aren't afraid of a little (or a lot) of constructive criticism. In fact, they invite agents to give them helpful suggestions on everything, from pricing to curb appeal, to help them secure the highest possible price for their home. On the flip side, when hiring an agent, be sure to find an agent that is open to suggestions. For instance, as a seller you may find ways to improve advertising copy, flyers, photographs, or even virtual tours.
   
7. Offer incentives & pre-paids
   A buyer who has narrowed their search down to two or three top choices may need a little push to motivate them to take action. To encourage buyers, many sellers offer incentives like buying the interest rate down on the purchaser's loan, paying for closing costs, inspections, or repairs, or providing allowances or credits for home upgrades after closing. In addition, many sellers prepay for services like internet services for a year, taxes or homeowners association dues, or even golf club memberships.
   
8. Stage the home & use curb appeal
   Buyers won't pull the trigger unless they become emotionally invested in your home. To help build a stronger first impression start from the outside first by working hard to improve your home's curb appeal. Next move inside and stage each space by creating a focal point and a story for each room. A set dining table, a book by the bed, or a game in the kids room are all simple examples of staging.
   
9. Use a pre-appraisal and pre-inspections
   A pre-appraisal is an appraisal of the home before a buyer has made an offer. By having this done early you will have an objective voice that has provided a value for the property independent of your own opinion and may be a great tool in talking with buyers. In addition, many sellers do pre-inspections of the home to provide buyers with a clear whole home inspection or pest and dry rot inspection. (A word of caution: anything discovered during a pre-inspection will likely need to be disclosed whether you fix the issue or not).
   
10. Learn to fail fast
    If something isn't working, successful sellers have the strength to fail fast by making adjustments to their strategy quickly. For instance, if after implementing your marketing plan buyers don't begin to view your home on a regular basis, this is a clear indication (a red flag) that the market is rejecting your price. There is only one solution: lower your price. On the other hand, if you have steady stream of buyers touring your listing, yet you aren't receiving any offers, this is often a symptom of buyers rejecting, not the price, but the home itself. Something about the home is turning them off. Savvy sellers attempt to identify the problem and take proactive action to correct it.

Visit Green Grass Realty to find the best listing option for you!!!