Amos Elroy

Home Ownership Moves the Economy(HOME) Act of 2009. HR 2801 was introduced by Howard Coble (R-NC).The bill is currently put in front of a house committee for review.

It would continue the current tax credit for first time home-buyers set to expire on December 1, 2009, with a couple of notable changes:

Home Ownership Moves the Economy (HOME) Act of 2009 - Amends the Internal Revenue Code to:

(1) extend the first-time home-buyer tax credit to all individuals who purchase a principal residence (currently, only first-time home-buyers as so defined).

(2) extend such credit and the waiver of recapture requirements for such credit through 2010.

(3) repeal the limitation on such credit based on modified adjusted gross income.

If approved this could be great news to those who are unable to buy before the deadline, or are in-eligible due to having had a previous property in the last 3 years, or due to their income level.

Before you count your eggs, though, be aware that the majority of bills that are presented to committees are killed than and there before emerging out the other side. Still, there is place for hope!

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There is still much confusion about the First-Time Homebuyer Tax Credit, so I decided to pitch in and help clarify the issue.

The name would suggest only people who nevere owned a home would be eligible. Well, not quite. From the IRS standpoint anyone who has not owned a principal residence property (home) in the last 3 years is considered a first time home-buyer.

If you are buying a home jointly, with someone other than a married spouse, it is enough that one of the individuals has not owned a principal residence property in the last 3 years, in which case the tax credit is entirely attributed to that person.

If on the other-hand you are buying jointly with your husband/wife, you are eligble for the tax credit only if neither owned a principal residence property. In the case you do qualify the tax credit will split between the two spouses.

Also, to be eligible you have to have closed on the property before the 1st of December 2009.

To find out about Terms of the First-Time Home-Buyer Tax Credit, please refer to my other blog entry. Or visit me at my site and contact me for additional information.

Additional Resources:

IRS Intro Video: English | Spanish | American Sign Language

Explanation Video: English

Recently I have encountered the argument that it would be unfair to include short-sales and bank sales in CMA's. There are Realtors out there that intentionally remove those properties from their analysis.

Why is this wrong?

Well, it is important to understand the true purpose of the CMA. The analysis is there to provide an objective reference to a market value of a property as closely as possible; some Realtors unfortunately see it as a tool to justify setting a price they believe is fair. The problem with the later is that the market is blind, and regardless of what they think is reasonable, or what they have learned to expect in the neighborhood they work in through past experience, the market does not lie.

There is no good justification to exclude distressed sales as they are every bit as valid as any other sale. When a buyer compares their options, these short-sale or bank sold properties are part of the selection. Why would a buyer pay twice as much if they can find what they want as a discounted short-sale? Of course since those offerings are added to the available inventory, this must, inevitably, have an effect on the pricing throughout the entire inventory. If a hot dog stand opened next to a restaurant row, this would have an effect on some of the restaurants.

Artificially elevating the CMA price, by ignoring certain properties that do not fit into a Realtor's view of the universe, does not benefit neither the client nor the agent themselves. If the price is set too high, the likelihood is the property will languish on the MLS, and the client will either hemorrhage funds, or just grow skeptic of the agent's ability to sell it.

This is not to say some adjustment is not justified for distressed sales in the analysis. Obviously there are some limitations and shortcomings of distressed sales compared to regular ones. For instance the short-sale process is not equally suitable for every buyer and their purchase time frame requirements. These differences do impact the price. Making this adjustment however could be a tricky issue.

One way of figuring such adjustment as accurately as possible is to compare non-distressed properties to distressed ones, in the neighborhood at question, the specific property type, and the particular price range. The average difference in price ($) between the two groups of properties needs to be determined. Once this number is obtained, which will likely vary from neighborhood to neighborhood, you could use this number to make adjustments in the CMA, just as you would with addition or subtraction of features (bathrooms, parking, etc.). Of course this is still a gross approximation, but it at least does take this segment of the market into account when determining the appraised price.

The market has its own rules, even if those occasionally offend the sensibilities of an agent. The sooner the Realtor accepts their role as observer of events, rather than setter, the better a service they will provide.