Real Estate Information Archive

Home Buyer Tax Credit is Powerful Stimulus to Home Sales…Should you take advantage of the Government Offer?

The Stimulus Program extended as of December 1, 2009 into this Spring is a powerful incentive to purchasing a home…good whether you are purchasing your first home or actually for any home under $800,000!  If you have never owned a home, need more space than your current home provides, want to downsize or reduce your payments or even want to help your children get a leg up in the home market…NOW IS THE TIME TO ACT.

Why?  It isn’t just a tax credit…it means that even if you don’t owe any taxes, you will receive the full credit.  Other reasons include:
• the availability of historically low interest rates,
• loans that require as little as 3.5% down payment,
• ability to use the tax credit for part of your money down and
• reduced home prices.

Details for First Time Purchasers

First Time Buyers will receive up to $8,000 ($4,000 if married and filing separately).  The credit cannot exceed 10% or the purchase price of the home.  When Congress approved the extension of the incentive, they increased the income limits to $125,000 if single and $225,000 if married.  If you earn as much as $20,000 more than that, there is a phase out of the benefit.

You are considered a first time homebuyer if you haven’t owned a principal residence in the United States in the last three years.

The contract must be negotiated and in effect on April 30, 2010 and closed by June 30, 2010.  Some additional details include: purchases by dependents are ineligible.  Surprisingly, if you co-sign a mortgage to help your non-dependent child buy his of her first home, your eligibility status does not affect your child’s ability to qualify for the credit.  The tax credit money never has to be repaid as long as you live in your home for at least three years.  There are programs that will advance the credit to help with your down payment.  The home price cannot exceed $800,000.

You can claim the credit when you file your 2009 or 2010 tax returns, so it makes sense to consult your tax preparer to determine which alternative may benefit you most. Purchasers must attach documentation of the purchase to their tax return in order to prevent fraud.

Details for the Repeat Homeowners Credit

Are you a current or former homeowner who is considering a home that better meets your needs?

The amount of the credit is $6,500.  Current homeowners must have used the home sold, or being sold, as a principal residence consecutively for 5 of the previous 8 years.  Only a home purchased after December 1, 2009 qualifies for the credit.  The credit amounts to 10% of the purchase price, up to the $6,500 allowed.

If you currently own your principal residence, you don’t have to sell it – but you do have to move into the home you buy.  Your home can cost more or less than your previous home; it doesn’t matter.

The income limits of $125,000 if single and $225,000 if married are the same as for the first time buyer credit.  You can also get some credit payout, even if you earn as much as $20,000 more.

Again the contract must be negotiated by April 20, 2010 and closed by June 20, 2010 and need not be repaid, if you live in the new home for at least three years.

Little known facts include: even if you don’t owe taxes, you can receive the full credit.  The tax credit can be claimed on either your 2009 or 2010 filing of your tax return.

How can the Cincinnati Team Help?

Saralou Durham and Mary Elsener have over 30 years of experience in the real estate business. It is important to us to find a home that meets your needs and goals, if the time is right for your purchase.  You can count on us to be honest about the process, to educate you on conditions affecting your sale and to make sure you understand the buying and selling process.  Call Saralou (513-646-4819) or Mary (513-646-4819) for help getting your tax credit.

The time to act is now, before this tax credit stimulus program is G-O-N-E in 2010.  It is unlikely to be extended again as proof mounts that the economy is improving.

 The Fall From Heaven                                                

You won't want to miss the latest offering from Cincinnati Playhouse in the Park!  It's my favorite show of this year, so far.  Best of all it makes you think about mortality and the whole Heaven and Hell philosophy.

Walter Mosley, author of more than 25 books, has written his first play, based upon one of his novels, The Tempest Tales. I recently heard him speak..without notes he had a lyrical quality to his speech that was almost poetry.

It's exciting that this is the first-ever production.  I expect that it will be performed again and again in theaters around the country.

The Cincinnati Area Board of Realtors has released final numbers for the 2009 year.  The good news...yearly area sales increased by 21 units over 2008 and December homes sales were up 2.5%.  A total of 18,793 units sold in the 2009 year, up .11%  The average price was down 7.17% to $150,640.

Nationally, December home sales increased 15% from a year ago and 4.9% for the year.

Sales were driven by a combination of factors.  First is the extension of the home sales tax credit for first time buyers.  Additionally it has been expanded to include current homeowners who want to buy again.  Eligible first-time buyers can still receive a federal tax credit of up to $8,000, while eligible current homeowners can get up to a $6,500 tax credit.

The low home mortgage interest rates, around 5.25% for buyers with good credit, make the purchase of a homes very attainable.  In fact, national figures point to a housing affordability index that is the best of all time.

So, what does Cincinnati's inventory picture look like?  Currently, there is 8.87 months of inventory on the market, down form 10.38 months a year ago.  It is still a buyer's market, because a balanced market is approximately 6 months of inventory.  This explains the erosion of average sale prices.

Expectations are for a continued strong market this Spring.  Buyers must have a purchase contract in place by April 30 and close by June 30 in order to qualify for the tax credits.  Don't wait too long!

Sunday Jazz Brunches are to be held at the banquet center's in Sharon Woods and Woodland Mound from January through March. The Chris Comer Trio will perform in their traditional swinging piano style.  More than 25 items are prepared for each brunch, including a carving station with prime rib or Virginia ham and an omelet bar.  Each brunch runs from 10:30 a.m. -1:30 p.m.  Cost runs $13.95 per adult and $6.95 for children age 2-12.  Because the event tends to fill up fast, call in your reservations to Sharon Woods at 769-0624 or Woodland Mound at 474-3008.  For mor information or other activities, check out Hamilton County Park's website.

According to a savings index compiled by Coupons.com, Cincinnati is the third most frugal of major American cities.  The study measured coupon use throughout the nation.

They found that Cincinnati residents saved an average of $536 in 2009 by using coupons.  We are certainly to be congratulated for putting money in our pockets each month...or at least being smart about how we spend our money!

Our region ranked behind Atlanta and Tampa.  Other cities ranked in Ohio were Cleveland at eighth and Columbus at twentieth.  Generally, the Midwest and South were found to be the most frugal areas of the country when looking at savings through coupons. 

Wouldn't it be interesting to have the study done by zip code to see what parts of Cincinnati save the most.  Wonder, would it be the East or West side...that old Vine Street divide?  Or would it be inner or outer ring suburbs?

National Market Trends

Another type of distressed sale is the "Short Sale."  These Cincinnati homes are still legally owned by the home owner.  The amount that the seller owes on the mortgage and the selling costs exceed the amount that a buyer will pay for the property (fair market value).

So what happens in a Short Sale?

The seller has two options.  One, they could personally come up with the difference between what is owed and what it can sell for from their savings or retirement accounts or by borrowing the money. Or second, they may negotiate with their lender to accept a payoff that is "short" of what is owed.

A short sale differs from a typical sale, because the buyer first negotiates with the seller, but than the seller must negotiate with the lender to get them to forgive the difference and write that loss off on their books.  The seller submits extensive financial information to prove that they qualify for this kind of relief.

Here's where the problems come with short sales...they usually take an extraordinary amount to time to close.  Lenders may take weeks or even months (we have seen over a year) to make a decision.

What are the Advantages to Purchasing Short Sales?

• Sometimes you will be able to purchase the home below fair market value. That assumes that the bank feels it is to their advantage to accept less than to go to foreclosure, a very expensive process.  Personnel in a bank strictly make business decisions. 
• Because the Seller is occupying the property, they tend to need fewer repairs.
• Buyers who are willing to put up with this long approval process will have less competition, since most buyers do not have that much patience.

What are the Possible Disadvantages to Purchasing a Short Sale?

• Usually the seller has no money to do any repairs and the lender will not do any either.
• Banks will rarely pay any of the Buyer's closing costs.
• Short sales take a long time to close and sometimes even longer to be accepted (or rejected).  Strangely, the banks often demand a quick close after taking months to accept the offer.
• Buyers waiting for an accepted offer could lose out on low interest rates.  Your lender will usually only lock in an interest rate for 60-90 days and charge a premium to do that length of time. Sometimes you have paid a fee to lock in a good rate and by the time it expires, you still don't have an answer and have lost that money.
• If your lender fails to perform on time, the seller's lender may back out of the deal.
• You lose time and other potential homes while waiting for the lender's answer.

We recommend that you never stop looking, if you have written an offer on a short sale.  If a better property comes along, you may be able to get it. Since you don't really have a contract on a short sale until the bank has accepted the contract, you could then rescind the offer on the short sale house.

Again, keep in mind the ramifications if you also intend to take advantage of the government sponsored tax credits.  You have from now until April 30th to be under contract and must close by June 30, 2010.  Waiting for a short sale means you may risk the $8000 or $6500 you could be entitled to receive.

In today's market, there continue to be distressed sales that are either short sales or foreclosures.  First we will discussforeclosures.  In Cincinnati, foreclosures make up a relatively small portion of the inventory in some areas and a large portion of the sales in others.  The stressed areas were often areas with significant subprime mortgages. We expect that will continue to be the case for several more years.

What exactly is a foreclosure?  

Foreclosures occur when a home owner cannot or does not make mortgage payments, until they default per the terms of their mortgage note.  Actually, you are in default if you miss only one payment, but the lender will try to work with you, if they are contacted.  The appointed trustee will force the property to be sold at auction on the courthouse "steps."  Typically, the lender then places a minimum bid on the property equal to the amount still owed on the delinquent mortgage.  If they are the high bidder they then become the owner.  This is where the term REO came from (Real Estate Owned).

The lender's stategy will then either negotiate with Fannie Mae or FHA to take over selling the home.  Sometimes they keep the property and sell it themselves.  When the property owner had an FHA loan, it will be called a HUD home.

So, now, the seller is actually the bank or asset manager and the process is different.  Occasionally, foreclosures do not take much longer to close than a transaction with a normal individual seller.  Every bank will have a different process, so bidding and the paperwork process vary dramatically.  With HUD homes, the bidding process is straightforward and easy to understand, though there is also a lot of paperwork.

Why would you want to buy a Foreclosure?

• HUD may allow you to roll some of the costs of repairs into the loan.
• Sometimes homes are priced below market value, but recognize that they often, but not always, need extensive repairs and upgrades.
• Occasionally lenders offer incentives, such as HUD's $100 Down Program

Are there Disadvantages to buying a Foreclosure?

• It may take longer to close a sale...longer to do inspections because utilities need to be turned on, longer to get all paperwork and title work to be completed.  Because of the lender's beauracracy, each step takes longer.
• Buyers must rely of the home inspection.  The lender will not make the typical seller disclosure.
• Often the lender's contract required that you pay extra if you cannot close on time, so be sure your lender can get the job done!
• Lenders will not make repairs to the property.  However, this can create a difficult situation if the lender requires a termite treatment or structural repairs be done.
• The lender's contract addendums often supersede the local real estate contract.
• It is often extremely difficult to get financing on homes that need extensive repairs.  (Check into 203 loans for these)

If you are hoping to purchase a foreclosure, you need to start looking quickly if you plan to take advantage of the tax credits offered by the government.  You will need to have your contract in place by April 30th and closed by June 30, 2010.

Tired of paying so much in taxes?  Think your house value is too high for property taxes in these Ohio counties, Hamilton, Warren, Clermont and Butler? Many people in Southwest Ohio think it is...and they may be right!

First step in this process is to look up the value placed on your property by the county auditor.  Here are the sites to go to:

• Butler County Auditor
• Clermont County Auditor
• Hamilton County Auditor
• Warren County Auditor

Now compare the values placed upon your home to that of sales within the last 18 months in homes surrounding yours.  Next. compare the square footages of those sales to your home.  If there seems to be a substantial difference, you may want to consider trying to reduce your taxes with an appeal.

There will be several seminars designed to educate you about your right to challenge the valuation placed upon your home by the local county auditors.  Ohio law gives you a legal right to challenge your valuation.  Wouldn't it be nice if you could reduce your taxes!

Free seminars are being held by the law firm of Finney, Stagnaro, Saba & Patterson.  They will go over the process of filing an appeal and possibly reducing your taxes or even getting a refund.

• Tuesday, January 12 - 6-7:30 p.m. at Crossroads Community Church, 3500 Madison Road, Oakley
• Tuesday, January 12 - 6:30-7:30 pm at Indian Hill Church, 6000 Drake Road, Indian Hill

Many real estate agents have also taken classes about the process and can assist you.  The Cincinnati Team will be happy to give information and advice, if you need help.

The Cincinnati Observatory Center (COC) is known as The Birthplace of American Astronomy. It houses one of the oldest working telescopes and was the first public observatory in the western hemisphere. the observatory is on the National Register of Historic Places.

It was founded by Ormsby McKnight Mitchel, a Professor at Cincinnati College in 1842, by generating public enthusiasm for astronomy.  He must have been persuasive, because he organized the Cincinnati Astronomical Society with over 300 shareholders. He was able to purchase the main telescope, an 11-inch Merz and Mahler refractor for $9000, a huge sum at the time.

The site of the original observatory was a 4 acre lot at the top of Mt. Ida, some 400 feet above the City of Cincinnati, on land donated by its owner, Nicholas Longworth. On the 9th of November, 1843, the cornerstone was laid by John Quincy Adams, former President of the United States. It was at the dedication that Adams gave his last public speech. Mt Ida was renamed Mt. Adams following this event.

Mitchel's dedication and enthusiasm for the science of astronomy has led to his being named the "Father of American Astronomy."  The Observatory's early history was difficult with pressures from a depression, lack of funding and the Civil War.

When a new director was named, the Observatory was moved to the country in Mt. Lookout, because of the clouded night skies up the hill from Cincinnati's heated air, smoke and coal dust.  (Both Hyde Park and Mt.Lookout claim the Observatory in their literature.)  In 1871 the University of Cincinnati took over its operation.

In 1997 the Cincinnati Observatory Center was formed as a volunteer committee dedicated to revitalizing and preserving the Cincinnati Observatory and its historic setting.  They currently have a long term lease to the building and grounds from the University.

The broad-based community volunteer group has revitalized educational programs and increased interest in the study of astronomy in the Cincinnati area.

The historic buildings are designated as a National Historic Landmark, and the grounds provide a serene, park-like setting while still being centrally located in the city of Cincinnati.

Future Galileos - Starry Messengers Project

The Cincinnati Observatory has a program to award 60 quality telescopes and training for 60 individuals or teams to become astronomy ambassadors and further astronomy education in the Cincinnati area.

 Sled Riding

By the way...this is a great sled riding hill!