Sandy Springs, GA

Hooray - The House and the Senate this week 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.

Compare the current tax credit with the newly passed version on REALTOR.org.

More on the credit is available from NAR.

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

HGTV's real estate Web site Frontdoor.com has identified what it calls the "tricks and treats" of buying a foreclosure:

Tricks to avoid:
**Just because a foreclosure has a low price tag doesn't mean it's a bargain. Many need lots of expensive repairs.

**Buying a foreclosure property isn't for amateurs. Buyers need a knowledgeable real estate practitioner to guide them through the process.

Foreclosure treats:
**Well-maintained foreclosures priced at 50 percent or less of their market value make home-ownership very affordable.

**Building a relationship with a lender's REO (real estate owned) department can help when it's time to make a deal.

Source: Frontdoor.com (10/29/2009)

Key lawmakers 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)

A lot of folks I've met are not really interested in leasing their homes. I certainly appreciate why that would be. It seems that they are worried about getting their homes back in good condition that they can sell at a later point. Also, a number of prospective landlords are not really sure how to be a landlord and what would be involved.

There are a couple of good reasons to lease and house out. These include:

As we enter the 4th quarter of 2009, we've seen a sluggish economy continue for the year. We have extensive statistics for real estate and sales are down dramatically overall for the past few years. Having said that, some recent indicators are that sales will be improving. I'd love to believe that is true, but I am not betting the farm on this. There are a number of reasons why.

First, to buy a home, folks have to be credit worthy. Credit is definately tightening and much larger amounts down in terms of percentages are required. For instance, if the loan amount exceeds $417k, it's considered a Jumbo loan amount with a minimum of 25% down with a limit of 75% LTV (Loan to Value). This is a big change from years past when even at a sales price of $800k, I saw 100% financing.

Along that same line, the value is challenging to ascertain in today's market. Buyers want to buy with room for the market to fall. Banks and mortgage companies have made so many bad old loans that for today's loans they want a great appraisal or two. Along the appraisal guidelines, those have changed with comparable sales needing to be within 3 months and close by. More and more homes today, even if they go under contract are having a huge challenge getting a solid appraisal that will meet the lenders criteria in today's market.

Uncertainty with the job market is another big factor. Even if one still have a good job, those big bonuses probably won't hit this year or the concern about losing a job is forcing some folks to put off buying.

Importantly along those lines is the consideration is how much house do I need. We see this especially in the Buckhead, Sandy Springs market I work where the Mega McMansion is really hard to sell these days. Folks are deciding how much house, payment, taxes they need and I would say we are seeing a scaling back trend that will continue.

Lastly, there is definately a wait and see trend going on. Folks are on the fence about the prospects of real estate and when the market is going to recover. It has made for a robust leasing market. While there are more homes on the market to lease, there are more folks looking to lease, waiting to see if they want to purchase.