Buyers Only Realty

For new and existing home buyers alike, the options to “green up” homes abound.

Green upgrades on homes offer two-fold benefits. They contribute to a healthier environment, both now and in the future, and they can save homeowners big when it comes to energy costs.

How much impact does a green home have on the environment, you ask? The government reports that Energy Star qualified homes built in 2009 are the equivalent of:

• Eliminating emissions from 51,645 vehicles
• Savings 312,399,672 lbs of coals
• Planting 85,372 acres of trees, and
• Saving in the environment 612,678,574 pounds of CO2.

Many homebuyers shy away from green construction and green upgrades because of the upfront cost. But while some estimates have put the construction cost difference at 17 percent, recent estimates from The World Business Council for Sustainable Development put the cost of green construction only 5 percent higher than traditional.

Green building means using recycled, renewable, and native building materials. It also means tapping into the energy sources that nature has to offer, including solar and wind.

Here are a few ideas of simple “going green” ideas to get you thinking.

Energy Star Appliances: Appliances are an easy way to make a home more friendly to the environment. One of the fastest ways to explore your options is to visit energystar.gov. At this government site you can find out more information on tax credits and rebates. As an example of Energy Star appliances and their efficiency, qualified washers use 30 percent less energy and over 50 percent less water.

Toxin-free Paint: Also known as “zero-voc, low-voc, and natural” paint, this is a good option for families that have asthma sufferers. According to the EPA, “Paints, stains, and varnishes release low level toxic emissions into the air for years after application.”

Renewable Flooring: Looking for a beautiful way to incorporate wood flooring into your home? Consider bamboo flooring. How is bamboo a green option? It grows and renews itself quickly, unlikes most woods, making it an ideal and cost effective option for green flooring.

Passive Solar: In effect this option can cost you nothing, if you choose the right designed home. The goal is to design to take advantage of the sun’s positioning throughout the year. o that its windows, roof, doors, flooring, etc to take advantage of the sun’s position through the year.

Low Flow Toilets: Looking to keep utility costs down in your new home? Low flush toilets use 1.6 gallons per flush versus 3.5 in traditional toilets. That’s a lot of water saved. Worried about the efficiency of low flow? There have been major strides made in recent years in improving these toilets. Be sure to talk to your plumber about your options.

Hopefully, these items spur you to seek out your own ways to make your home as green as it can be.

- Written by Carla L. Davis

Selected Rates as of Febuary 25, 2010:

• 30 yr fixed: 5.05%
• 15 yr. fixed: 4.40%
• 1 yr. adj: 4.15%

Homeowners filing for the home buyer tax credit are not allowed to use electronic filing and must file hard copies due to special documentation requirements.

Earlier this year, the Internal Revenue Service (IRS) deployed new home buyer tax credit forms and instructions requiring forms that will force taxpayers to file on paper, rather than electronically.

The new home buyer tax credit filing rules are to ward off a repeat of 90,000 taxpayers who fraudulently claimed the credit, according to the U.S. Treasury.

Under the new and expanded home buyer tax credit rule , the credit is worth up to $8,000 for first-time home buyers and up to $6,500 for qualifying existing home buyers, in both cases, who buy a primary residence or have one built.

The tax credit is refundable. A credit that is larger than the taxes owed is returned to the taxpayer in the form of a refund.

The home can cost no more than $800,000 and qualifying income is limited to a maximum of $125,000 for single taxpayers and $225,000 for joint taxpayers.

Get the full scoop online from the IRS’ “First-Time Homebuyer Credit” page online.

All taxpayers (first time and move up buyers) seeking a credit or refund, must use the new IRS Form 5405 “First-Time Homebuyer Credit and Repayment of the Credit” (Taxpayers must pay back the credit if they sell the home within three years). The instructions, which teach taxpayers what documents are required, are available on IRS FORM i5405.

In addition to Form 5405, also include at least one of the following documents:

• A copy of the HUD-1, Settlement Statement, showing all parties’ names and signatures, property address, sales price, and date of purchase.
• For mobile home buyers who don’t get a settlement statement, a copy of the executed retail sales contract showing all parties’ names and signatures, property address, purchase price and date of purchase.
• For new home buyers who don’t get a settlement statement, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.

Existing home owners applying for the $6,500 maximum tax credit must additionally prove they lived in their old home for the required period.

To do so, options are:

• File IRS Form 1098, “Mortgage Interest Statement.” IRS Form i1098 offers the instructions.
• Also, supply mortgage interest statements or property tax records or homeowner’s insurance records.

Again, because some of the documents required are not standard tax forms, taxpayers seeking the credit cannot file electronically.

They can, however, use off-the-shelf tax software or the IRS Free File online software to prepare returns, but they must still print out the return and mail it in with the required documents.

In addition to accuracy and compliance, the only other way to speed up any refund is to request, with the return, that the home buyer tax credit refund be deposited directly into a bank account.

- Written by Broderick Perkins

Fixating on price in real estate may cost you the deal:

• Sellers who decide that a specific dollar figure will buy their home and won’t budge from that bottom line may sell themselves short.
• Buyers who drop out of a transaction for a property they love because the seller’s counter-offer shocks them may be quitting before they have really started negotiating.

When a buyer makes an offer to purchase a house, condominium unit or commercial property, the purchase price is a prime consideration, but it represents only part of the total value offered to the seller. Problems may arise for both sides of the transaction when this fact is forgotten.

Value Elements in an Offer

The value expressed in a buyer’s offer to purchase, or in a seller’s offer to sell, involves five key elements — a financial package:

• Purchase Price, the stated amount of dollars offered by the buyer, represents a significant contributor to value, but there are other important factors which can reduce the amount the seller receives or which can compromise the transaction. It’s not the purchase price, but the net proceeds of the sale that sellers — and savvy buyers — should concentrate on.
• Closing Date, or the day ownership changes hands and the seller receives the money, can represent cost or value to both parties. Savvy buyers usually attempt to meet the seller’s preferred moving date, especially when the seller has committed to purchasing another property or needs the proceeds of the sale on a specific date. For instance, a closing before that date may be expensive because the seller would have to move out and store everything until they could move into their new home. That double move and the inconvenience represent out-of-pocket costs and time lost that make the actual purchase price lower than stated. A closing date later than the seller’s preferred date may leave the seller owning two homes – and paying off two mortgages – at once. The seller may incur extra costs in arranging bridge financing to meet legal obligations to close on their new home before they receive proceeds from the sale of their current home. Choice of closing date may represent costs or value to the buyer as well. Balancing this reality for both parties is key in negotiation.
• Inclusions and Exclusions to the sale also represent costs and value for both parties. Appliances, heating systems and draperies are common seller inclusions designed to boost value for buyers. If warranties for everything from a new roof or solar panels to new appliances cannot be transferred to a buyer, these items become “second-hand”and will probably represent less value to buyers. Buyers are also free to include excluded seller items, like an antique light fixture, in the offer to purchase. Deals have been lost to disagreements over light fixtures, fireplace accessories and vintage furnishings, so prudent sellers remove contentious items before listing. A buyer may offer less than list price and ask for nothing; a seller could sign back for more money and include items to sweeten the pot. Value is very subjective for these non-real-estate items and that’s where negotiations can get heated.
• Terms and Conditions are clauses in the offer which cover “what if” risks for one party and the obligations of both parties. These clauses detail what the buyer asks the seller to do for the purchase price. Arrange a survey or include a treasured light fixture? Sellers can create conditions in an offer to sell, but usually conditions are of greater concern to the buyer, particularly if approval of a third partly like a lender or city planning department is involved in determining the property’s suitability. Conditions to arrange financing or a home inspection are among the “ifs” that define the offer to purchase. The degree of uncertainty attached to the conditions and the buyer’s related ability to close effect the value of an offer. For instance, a buyer who is pre-approved for a mortgage of sufficient size offers less risk to a seller. However, if the purchase price is significantly-above market value, the lender may not approve the mortgage, so a condition for financing is essential to protect all parties. A full-price offer with conditions that will be difficult to meet may hold less value than an under-list-price offer with no conditions. Alternatively, if the conditions are merely formalities, the conditional offer could represent greater value. Would you recognize the difference if you were the seller? That’s where the expertise of the real estate professionals involved becomes valuable…
• Intent and Sincerity are vital aspects of an offer although difficult to quantify. How determined is the buyer to buy, and why? How determined is the seller to sell? If either party changes their mind after the contract exists and before the closing date, the injured party has remedies in court. These legal steps may not make up for lost time and, perhaps, a missed market. An investor or flipper may decide to cut losses and bail out of the deal if the market drops significantly before closing. A seller may have second thoughts if their plans to move fall through. For both parties, value should lie in the certainty that the other party will close in spite of market shifts.

Yes, price matters, but there’s a lot more involved in creating an offer that demands to be accepted. That’s why an experienced real estate professional is a valuable contributor to success. Professionals can calculate, or at least estimate, the seller’s net proceeds after costs related to the offer and deduction of commission. This information helps the seller accurately evaluate an offer to purchase. Understanding cost and benefit for all elements of an offer helps a buyer intent on ownership to create the best financial package possible.

Tip: Re-read this article when you are ready to make an offer, counter an offer or accept one. This will ensure value is visible to you on all levels before you decide to walk away or sign on the dotted.

- Written by PJ Wade

Selected Rates as of Febuary 5, 2010:

• 30 yr fixed: 5.01%
• 15 yr. fixed: 4.40%
• 1 yr. adj: 4.22%

When most sellers list their home for sale the first thing they think about is how much will I get and that is usually followed by how soon will I get the money. It’s certainly understandable that those two concerns are, most often, top of mind. After all, you’re likely selling your home to buy another one or invest the money in something else.

But, if as a seller, you can get into the buyer’s mindset, the sale of your home can come faster and for more money.

Understanding the way buyers think involves seeing things not from your perspective but from your potential buyer’s mindset. It can sound easy but actually it’s often harder to do than most sellers think. The psychology of buying is driven by emotional experiences, money, and timing. With that in mind, sellers can help create optimal circumstances that literally help walk the buyer through the process and completion of the sale of your home.

It starts with a feeling. When you meet someone for the first time, you form a first impression based on a feeling. That’s exactly what happens when buyers set foot into your home. Work with an experienced agent to learn exactly what kind of impression your home is giving off. If it’s a small home, make sure it’s not overfilled and cluttered.

Pick up all the loose clutter that’s floating around. Throw out old magazines. People like to see things that are streamlined or clean or fresh looking. There’s nothing worse than walking into a place and seeing a stack of magazines all over the place or an unmade bed.

Go the extra step and take care of items that might have been overlooked for quite some time. Steam clean the carpets, the upholstery, the furniture, if that’s what’s needed. Have the windows cleaned, light fixtures cleaned. Make it feel clean when you walk in.

Go back to basics. You may love your turquoise carpet but do you really think buyers will? Getting inside the buyers mind will help you answer these questions. You can also pick up home décor magazines and see what appeals to the masses. You don’t have to change everything in your home, but going back to basics in a few areas will help buyers see how your home can become their home.

As soon as buyers see a really loud red, orange or lemon-green color they automatically think about re-doing. That, of course, means the buyers are already beginning to calculate the amount of money they need to take off of the sale price in order to get the home in the condition they would like it.

If instead you stick with neutral colors such as painting the walls off-white, light beige or Navajo white, you have a better chance in preserving the sale price.

Repair anything that looks torn, worn or broken If you walked into a retail store and saw a garment that you liked but it was torn or missing buttons, chances are you’d search for another one or ask for a discount if that were the only one of its kind.

That’s what buyers will do with your home when they spot torn screens, garage doors that don’t open, or broken light fixtures that are hanging out of the wall. Buyers, if at first they don’t get completely turned off and walk away from the sale, will first begin to think that there is more damage to the home than what they’re able to see and then they start to calculate the cost of repairing those damages. But buyers often exaggerate the amount of money needed to fix the repairs.

In today’s market people are looking desperately to find out what’s wrong with a home so that they can lower the price.

In the buyers’ minds, they come up with some kind of incredible price to fix repairs. In their mind, they go way overboard and eventually it affects the bottom line price for the seller.

Don’t miss an opportunity to get the word out about your home being listed for sale. It only makes sense to let your neighbors know. By doing this your neighbors can sometimes become great facilitators and supporters of the sale.

Most people are visual buyers. If the home doesn’t look clean, spotless, and repaired then the buyer thinks what’s behind the walls, how much more money do I have to put into this home.

Remember understanding the psychology of the buyer’s mindset can help you sell faster and for the price you really want.

- Written by Phoebe Chongchua

A new survey reveals that savvy consumers cashing in on the new and improved homebuyer tax credit are helping fuel economic recovery.

The vast majority of current homeowners say they would spend the expanded version of the homebuyer tax credit on repaying existing debts, home improvements, savings and investments and household expenses, according to a National Association of REALTORS® survey of 1,000 homeowners.

Paying off debts affords consumers more spending power, home improvements likewise put more equity money in their pockets and savings and investments generate income.

Consumer spending, of course, is the real fuel for the nation’s economic engine. And much consumer spending is fueled by the housing market — provided the housing market is energized.

Helping to energize the housing market and the economy is the idea behind the homebuyer tax credit and it’s recent extension and expansion.

By October 2009, before President Obama signed the latest extension and expansion, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes – according to the Treasury Inspector General for Tax Administration (TIGTA).

The new law extends the existing credit for first-time homebuyers, worth up to $8,000, through April 30, 2010.

A new credit of up to $6,500 is available to qualifying existing homeowners who buy a new primary residence (or have one built) by April 30, 2010, if they owned their existing home for five consecutive years over the last eight years. Second homes don’t qualify.

The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.

The maximum allowed home purchase price is $800,000.

More information is available from the Internal Revenue Service (http://www.irs.gov/), including its question and answer page.

As a tangible asset with a host of other tax breaks and the potential for equity gain, a home is often a consumer’s most valuable asset.

As the economic theory goes, when more consumers buy homes, the economy gets a boost.

NAR’s survey appears to confirm the theory.

Among those surveyed, 83 percent said if they purchased a home and qualified for the tax credit they would engage in “smart spending” on things that could ultimately increase income available for spending.

Only 6 percent said they would squander the money on luxury items such as vacation or shopping spree.

According to the survey most consumers would spend their tax credit:

• To pay off debts (34 percent). Paying off debts leaves more money to spend or save and invest for returns that again generate spending money.
• To make home improvements and potentially increase the value of their home and home equity (29 percent). Home equity, can be a way to consolidate other, more expensive debt or spend further on capital improvements that generate more returns on the money.
• To put into savings and investments (28 percent). Saving and investing for returns is a much better personal financial approach than using credit for purchases.

The survey also found, after learning about the tax credit expansion, 20 percent of those surveyed said they were more likely to consider purchasing a home than they were six months ago.

Of course, what will happen when the tax credit expires in 2010, without another extension, is anyone’s guess.

- Written by Broderick Perkins

If the latest numbers on credit card delinquency are any indicator, U.S.
consumers are starting to get a handle on their credit card debt. In the
3rd quarter of this year, according to data from TransUnion, a credit
reporting agency, the delinquency rate dropped to 1.1 percent.

The Associated press reports: “The decline is significant because of its
timing. Delinquency rates usually rise in the third quarter from the
prior period as people spend on summer vacations and back-to-school
shopping,” said Clifton O’Neal, a TransUnion spokesman.” How you handle
your debt affects your credit score and rating, which is what affects
your ability to get a loan to purchase a home. The good thing about
credit scores is that they are merely a snapshot of your credit at a
given time. Missed payments, high credit vs. limits, too much credit,
et. al., can all be corrected and cleaned up and your credit score
return to a new high level.

Tim McLaughlin, senior vice president of Weichert Financial Services,
answers the question – what dings on your credit affect your score and
why it seems all the good loans, seem to favor those with good credit.

The Fair Isaac Corporation maintains the most popularly used score
(referred to as the FICO score) and it ranges from 300 to 850.

“There are five major ‘dings’ that impact your DCS (Decision Credit
Score, or FICO score) the most, some obvious, some not so obvious:

Maxed out credit cards: Doesn’t seem like a big deal in the grand scheme
of things, right? Oh, it is: a maxed out credit card can reduce your DCS
anywhere from 10 to 45 points, according to Fair Isaac, a hefty price to
pay for accumulating debt.

30 Day late mortgage payment: In addition to the late fees, this
occurrence adversely impacts your DCS by 60 to 110 points … a whopping
impact for being late on your mortgage.

Debt settlement: Also known as debt arbitration or debt negotiation, it
is an approach to debt reduction in which the debtor and creditor agree
on a reduced balance that will be regarded as payment in full. The
downside, a 45 to 125 point drop in your DCS.

Foreclosure: Unfortunately, an occurrence we are seeing far too often as
of late. In addition to the event, it will reduce your DCS 85 to 160 points.

Bankruptcy: The event that would have the single biggest negative impact
on your DCS, reducing your score 130 to 240 points; an almost
irreparable event.

FICO has its own web site dealing with the scoring prices and it’s a
good starting place for those trying to repair their credit rating.

Here are the three credit reporting agencies that use the FICO score:

• Equifax (www.equifax.com)
• TransUnion (www.TransUnion.com)
• Experian (www.Experian.com)

- Written by M. Anthony Carr

McLean, VA –Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.99 percent with an average 0.7 point for the week ending January 21, 2010, down from last week when it averaged 5.06 percent. Last year at this time, the 30-year FRM averaged 5.12 percent.

The 15-year FRM this week averaged 4.40 percent with an average 0.6 point, down from last week when it averaged 4.45 percent. A year ago at this time, the 15-year FRM averaged 4.80 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago, the 5-year ARM averaged 5.24 percent.

The 1-year Treasury-indexed ARM averaged 4.32 percent this week with an average 0.6 point, down from last week when it averaged 4.39 percent. At this time last year, the 1-year ARM averaged 4.92 percent.

“Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5 percent once more,” said Frank Nothaft, Freddie Mac vice president and chief economist. “Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve’s target rate following its upcoming committee meeting on January 26th and 27th.

“Because of reduced sample sizes and work disruptions that occur with severe weather, housing starts tend to be more volatile during winter months. And, indeed, housing starts declined 4.0 percent in December, falling short of the market consensus of no change. Building permits, which are less vulnerable to weather interruptions, unexpectedly jumped 10.9 percent.”

Some homeowners have a long laundry list of to-do repairs and, interestingly enough, many of those items don’t get addressed until (or if at all) it’s time to sell the house. In hot real estate markets, repairs are sometimes not done before the sale. Remember bidding wars over properties that needed work? Well, today sellers are looking for the advantage that makes their home stand out. Even though housing inventory declined toward the end of last year, it’s expected to rise as more foreclosures tumble into the marketplace this year.

While fixing up a home to sell can be costly, there are some ways to reduce the damage to your wallet. Cheryl Reed from Angie’s List spoke to me about important repairs that shouldn’t be overlooked. They are: changing your furnace air filters regularly, fixing leaky faucets/toilets, repairing caulking issues in the bathroom and defective electrical outlets/wiring.

“Our experts in the heating ventilation air conditioning industry tell us that 60 percent of all their service calls start because it’s a dirty filter issue. If you have a dirty filter, it affects the efficiency of your furnace,” says Reed. She says that it’s a simple and easy repair that improves the air quality and saves you money.

“You can save about $100 a year if you just change those filters when you should.” She recommends checking your air filter every time you get your energy bill. “If it’s dirty and you can tell, you can see it; just switch it out. You can buy a number of air filters ranging from moderately good to really expensive and high efficiency, in terms of cleaning the air. You have a number of different options, depending on your budget,” says Reed. She also says, depending on health conditions of those living in the home, changing filters more frequently might be necessary. The second repair is annoying and easy to spot. “If you’ve got a leaky faucet or running toilet, that’s going to cost you,” says Reed. “If you don’t get it fixed you’re going to be paying more and more. It can also lead to mold damage. It can lead to a loss of your cabinetry—the flooring in your cabinetry can be rotted away and that can affect your floor underneath and the walls. So you can have a big issue if it’s not fixed soon,” says Reed.

If there are problems with your home when you begin to show it, buyers will spot them. Reed says, “People who come to your house to check out whether they’re going to buy it or not are looking really closely and they’re listening really closely too.” With plenty of housing inventory on the market, buyers are likely to move on if they feel the house needs a lot of repairs.

“You have to put forth your best impression. These small relatively inexpensive fixes are really important,” says Reed.

Dirty tiles and damaged caulking can send a message to buyers that the house may be in need of even bigger repairs. “You’re first going to have an aesthetic issue and second that’s an indication that you’ve got a problem that could lead to mold and nobody wants mold in their house anywhere at all—it will grow if you don’t have proper seals in your bathroom,” says Reed.

“Those are things that you can see every day—sometimes we get so used to seeing them that we forget about them,” says Reed. However, buyers don’t.

Reed offers this advice, “Pretend you’re going to try to buy your own home; what do you see that you wouldn’t tolerate?” She says it’s worth it to take the steps to fix the problems. Buyers don’t want to fix those problems any more than sellers do. Check for defective outlets. Electrical problems are not only irritating but also can be very hazardous. “An electrical fire can destroy your home,” says Reed.

Who should do the job? Of course, saving money is always key. Reed says some of these repairs might be suitable for a handyman but she cautions homeowners to be sure that the level of the repair matches the expertise of the person you hire.

“You’re going to pay more in the end if you don’t check out the person you hire to help you. Make sure that person has a good reputation and if it’s required for him or her to be licensed in your area, you really should [use] a licensed person, even if it’s more expensive,” says Reed. Reed says, you may pay more but you’ll get the job done right the first time.

- Written by Phoebe Chongchua