Jim Scheller - ABR, SRS, e-Pro, GRI

Now that the stimulus package is in place, you can count on getting the $8,000 tax credit if you are a first time homeowner (definition: either you never owned a home or you haven't owned one for three years) when tax time rolls around next year. You will be eligible for a tax credit equal to 10% of the value of your home purchase, up to a maximum of $8,000. Unlike the 2008 housing bill this tax credit will not be repayable. So that means that you will get a direct reduction of the actual amount of tax you owe of your eligible tax credit, and if you have any left over, you will receive a check for that amount from the government. Here's how it might work:

You are just starting to look around, but this whole tax credit thing sounds good. You like the area so Mankato real estate is what you decide you're after. You decide you like the Mankato MLS Map Search on my site, so you go to www.MankatoHomesOnline.com and look around a bit for a four-bedroom home. You decide you could use one for you and your spouse, one for each of the girls, and one for your home office.

You find a few likely candidates, give me a call, we figure out your status with your lender, and go out looking. Together we find just the Mankato house for you and we put in an offer. After a bit of negotiating, we come to a price and terms amenable to all the Principals involved.

The inspection and appraisal both come back okay, and you close on your new home successfully in the next month or two. Time to unpack! You love your house and your new neighborhood, the months fly by, and sooner than you can say "Jack Frost" it's Christmas. Then tax time. You breathe a sigh of relief, because the Mankato house you bought in 2009 is going to make this a very good spring indeed.

You take your taxes to your tax person, or you buy some software, or you just sit down and crunch your numbers. Turns out you owe Uncle Sam $5,200 dollars for 2009.

However, and this is a big however, you paid $179,000 for your new Mankato house (which you thought was a steal), and your income is not high enough for the reduced eligibility to kick in, so you qualify for the entire $8,000 tax credit.

The money your employer took from your paychecks for Federal taxes totalled $4,800, so the net amount you would have owed to the IRS if you had not bought your new home would have been $400 ($5,200 - $4,800). Instead, the government writes you a check for $7,600. Not taxable, not anything. Spend it (as the President would have you do), save it, or put it against your credit cards. Whatever.

The point is, you can do anything you want with this money. And you can only get it if you buy a home in 2009.

Give me a call.

Keep your fingers crossed; there may be a pretty decent tax break coming for home buyers. In their version of the new stimulus package, the Senate has included a tax break worth 10% of the price of the home they buy (up to $15,000) for all home buyers who will live in their home for two years. Get that bill through committee and onto Obama's desk!

Jim Scheller
www.MankatoHomesOnline.com

Okay, my recent blog on pricing notwithstanding, if you want to sell your home for the most money as quickly as possible, you need to get it in front of the right buyers. Namely, those buyers who will be interested in your home.

Not many Realtors appreciate the subtlety of that statement. Sign it up, put it on the MLS, throw up a sign and a lockbox, and wait.

I don't do that. I can't go into much detail here, or every Realtor worth his or her salt will start copying me, and what kind of unique selling proposition does that leave me with? Suffice it to say I have a much more involved system to get your home in front of the right buyers.

Give me a call, and I'll be happy to share.

Is is cold enough for ya? You betcha it is, that's for sure.

And I sure am enjoying the wood stove we have in our living room on a day as cold as this one is, that's for sure, too. No doubt about it. It does take some work and some wood to make it go, though. And wood ain't cheap, either. No, it's not.

But that's okay.

Oh, and I sure hope you all are keeping warm, too.

I don't suppose you saw in the paper the other day how somebody wrote in about how it sure is hard to see where all this global warming is supposed to be when you're basically freezing your tookas sitting on the john. Drives me crazy, a guy like that does. How come? Well, anybody can take a swipe at global warming like that. It's the easiest cheap shot in the world, and people think they're clever when they think of it. Like they made it up or something.

But that's not the biggest deal of course. The big deal is that global warming is a climatological event, and a cold day in the middle of winter (which I would have expected, I guess how about you) is a meteorological event. What's the difference? Well, there's this guy on MPR who is a climatologist and a meteorologist and he explained it this way: meteorologists are basically looking ahead, on a very short term basis, to see what's likely to happen. The climatologist looks back to study long-term trends to see how that might affect what's likely to happen in the long run.

Sure you can have cold days, and we're sure going to keep on having them around here, but overall the temperature of the whole world is going up.

Jim Scheller
www.MankatoHomesOnline.com

Sellers, this may be news to you, but homes are selling. At times like these people feel they need to spend their dollars carefully. So pricing your home correctly is the key to a quick sale. In fact, according to the National Association of Realtors (NAR), homes that sold within one week sold at 99.7% of the original asking price. Those that sold in four or more months sold at 88% of the original asking price. Staying ahead of the curve, even if it is a slightly downward curve, will keep you ahead of the game.

What explains these results? Let's look at an illustration.

Let's say you and your neighbor both put your homes on the market, and they are both worth $235,000 in today's market. You talk to your Realtor, and he says "I know your house was worth $250K or $260K a year or two ago, but that was then and this is now. Look again at these comps, and you'll see you should price your house somewhere between $230K and $240K, tops. The closer you go to the bottom number, the faster you home should sell." You listen to him, but think $230,000 is just too little. "Okay," you say, "Let's do this at $235,000."

Your neighbor, on the other hand, sees the same comps, but can't get over his house going down that much in value. His Realtor talks him down from $259,900 to $255,000 as a list price.

Both houses go on the market. Both bring some buyers during the first two weeks, the hottest time for new listings.

Your house brings a few buyers who are looking for homes up to $240,000, and, because you priced it realistically, your home compares favorably to the other homes on the market. You get a purchase agreement sent your way for $233,500, and you take it. That's less than a 1% hit. Not bad.

Your neighbor's house brings buyers looking for homes in the $250,000 -$275,000 price range, and his home compares quite poorly to the other homes these buyers are looking at. In a good market his house would be worth only $260,000, and in this kind of market, at his price, he's competing with homes that, in a good market, would have been selling for close to $300,000. These buyers don't take much time looking around, and a few decide to stay in the car and move on. No offers.

A month later, the Realtor shows your neighbor feedback from Buyer's agents saying the home is overpriced. A week later he lowers his price to $247,900, which gets him under the $250K search threshold anyway. That's better, but his house is still at least $7,900 overpriced, and after another three weeks no offers come his way. He's starting to get frustrated, and his Realtor is not having much fun taking his calls either.

So, finally, your neighbor lowers his price to where it should have started: $237,500. That would have been an okay first list price, and it might have worked at that price. In fact, your Buyer might have seriously considered your neighbors house too, and you might still be looking for a Buyer, not your neighbor! So I guess you can thank him, but I'm not sure that's a very good idea at this point...

Okay. Your neighbor's house is now priced correctly, or pretty close to correctly. The problem now is that it's a couple months late. There actually have been a few potential Buyers watching what happens to that house, because it is, after all, in a great neighborhood near some schools. But those Buyers aren't jumping on the house yet. Why should they? The house has been going down in price for quite a while now. Who's to think it won't go lower still? So they wait.

Finally, three months and two price decreases later, your neighbor gets his price down to $229,000, and he accepts an offer for $227,000. His final price is 11% lower than his original list price and $6,500 less than you got for your house, and you didn't have your neighbor's months of worry and hassle (not to mention his holding costs...).

The moral of the story is: Do yourself a favor - price your home correctly at the start.

Jim Scheller
www.MankatoHomesOnline.com