The Mary Monday Team - RE/MAX Peak Properties

As we move from summer into fall, the countdown has begun for first time purchasers to earn a homebuyers tax credit of up to $8000 on their 2009 federal income tax. The American Recovery and Reinvestment Act of 2009 provides the credit to home buyer's who have not owned a home in the past three years. To qualify for the full $8,000 tax credit, couples filing jointly must earn less than $150,000 in adjusted gross income for 2009 and the home must be closed on by November 30 of this year. The credit will go away on December 1, 2009. The refund is a true tax credit; not a deduction. In other words if your tax bill for 2009 is $8000 and you have earned the full tax credit your final tax bill is $0.

To educate yourself on the value of this once in a lifetime opportunity, go to the internet and conduct a search for the credit. There are countless articles, videos and blogs describing the merits of the legislation. The National Association of Realtors web site at www.realtor.org contains a wealth of information describing the eligibility and value of the program.

There is some movement by various organizations to get the tax credit extended and expanded, however as I write this I know of no legislation being considered. With time getting short some mortgage lenders, realtors and economist are predicting that there will be a rush of people who want to buy and close on a home before the deadline passes.

Some statistics indicate that many people have not yet heard of the tax credit, so if you or someone you know may qualify and be interested in buying a home it is imperative that they move quickly. The first order of business is to visit with a mortgage lender. We have many here in our community who are knowledgeable about the credit and are ready and able to assist in getting you pre-qualified for a loan.

If you are considering using this gift from Uncle Sam time is of the essence. You must act soon as time is getting short! My advice; don't look back in a few months and say; I could have, should have, would have, it may be too late.

If you have followed the local real estate market the past year you know that townhomes and condominiums have become popular with home buyers. Town homes are more affordable than single family homes, making them more attractive to first time home buyers. Town homes and condos are gaining appeal not only for primary homeowners but also for second home buyers who are looking for a weekend get-a-way to Flagstaff as well as for parents looking for a place that their kids can live in while they attend NAU.

In many cases a town home or condo may be a better investment than a single family home. To ensure that you make a good investment, review what your objectives are for purchasing the unit and what location would work best for you. Is it going to be a second home, will it be a place for your kids to live while attending school, is your objective an investment property that you plan to use for a rental, will it be your primary residence?

The difference between a condo and town home is sometimes a bit hard to discern. The best definition I have for a town house is that it is a type of ownership where individuals actually own the building or unit they live in and the ground below it, but common areas are owned jointly with the other members of the development or association. In a condominium, an individual owns the airspace in the unit, but the buildings and common areas are owned jointly with the others in the development or association.

When you purchase a condo or townhouse you automatically become a part of a homeowner's association to which you pay dues. The dues cover the cost of maintaining and insuring the common areas. The complex where the property is located is governed by CC&Rs (Covenants, Conditions and Restrictions), which restrict your ownership rights. Read and understand the CC&Rs and any other pertinent governing documents before you complete a purchase.

The past few years have seen a number of local apartment complexes converted into Condominiums. Many of theses projects have an abundance of amenities such as swimming pool, basketball courts, and fitness centers. These units are especially popular with young people.

There are many bargains in our town right now so if you are in the market for a Townhome or Condo it is a good time to start looking. As in any real estate transaction it all comes down to location and what works for you.

Back in the old days determining the market value of real estate was a fairly straight forward process. An agent would obtain sales records from comparable properties for the past few months and with input from the property owner a value would be determined.

In today's market the concept remains the same, however there are some new considerations that must be taken into account. First and foremost is the number of foreclosure and short sales that have occurred in a market area. When these sales are factored into a comparative market analysis (CMA) the result is often a shock to prospective sellers.

This is the situation that has put buyers in the driver seat in our current market. But whether you're a buyer or a seller, knowing the fair market value of a home is important. It can make the difference between a quick sale or having a home languish on the market for months or even years. If you are a buyer, knowing the comparable sales in a market area gives you confidence in the negotiation process. If you are a seller as distasteful as it may be, you must consider the effects of foreclosures and short sales on the value of your property.

Market value is defined as; "The most probable price a property should bring if payment is made in cash and the buyer and seller are unrelated, well informed and acting without pressure". Just as each property is unique, so are buyers and sellers. Emotions, desire, and the necessity to buy or sell all play a part in the negotiation process even when the market value is known by both parties. Even with all of the comparable sales information from a CMA, arriving at a fair market value is an art and not a science. All the numbers and data considered; each house is a unique property at that moment and time.

A professional Realtor, with knowledge and experience in the market and in dealing with people, can help both parties reach an agreement on the value of a property. When all is said and done the true value of a property is the amount paid at the time of closing.

As we continue in this cycle of short sales, foreclosures, and other distressed property transactions "As Is" sales are becoming more and more common. Banks and other lending institution who acquire a home through foreclosure usually have no idea what the property looks like and whether there are any material defects that should be disclosed.

When this occurs, the institution usually offers the property for sale in "As Is" condition. This means that the seller makes no warranty to the buyer either expressed or implied as to the condition of the premises, the zoning of the premises, or the premises fitness for any particular use or purpose. However "As Is" does not relieve the seller of the legal obligation to disclose all known material latent defects to a buyer.

An individual considering the purchase of a property in "As Is" condition should proceed carefully. Upon negotiating a contract, the buyer should conduct an independent inspection and investigation regarding the premises. Upon completion of the inspections and any other investigations, the buyer can ask the seller to repair those items that may be health or safety issues. However most institutions who are conducting a distresses property sale will be reluctant to make repairs as they are likely losing money on the transaction.

In Arizona, members of the Arizona Association of Realtors use an "As Is Addendum" which is included with a listing contract. The real estate agent representing the seller will have included it in the listing agreement and a buyer must sign that they acknowledge the risks associated with buying such a property. I have posted a sample of the addendum here.

My best advice is to enlist the services of a competent realtor if you decide to purchase a distressed property in "As Is" condition. You will be glad you did.

While I am not an accountant and don't give tax advice I do know a great opportunity when I see one. Therefore I felt it imperative that this month's article address the tax incentives that are provided in the economic stimulus bill recently passed by congress with regard to real estate.

First there is an up to $8,000 tax credit for first-time homebuyers. A first-time homebuyer is anyone who has not owned a home in the past three years. To qualify for the full $8,000 tax credit, couples filing jointly must earn less than $150,000 in adjusted gross income for 2009 and the home must be closed on by November 30 of this year. The credit will go away on December 1, 2009.

Second there are green tax credits for homeowners. There is now a $1,500 lifetime tax credit for home improvements such as energy-efficient windows, doors, mechanical systems and insulation. Homeowners can take a 30% tax credit for every dollar they spend on green upgrades like solar heaters, heat pumps and fuel cells. The credits apply through 2010.

It's important that you as a buyer or homeowner understand that tax credits are a great form of tax relief. They are a direct dollar-for-dollar reduction of your tax liability - and for first-time homebuyers, if the credit is larger than the tax liability, you get a refund! As a prospective home buyer you should obtain advice from a professional tax advisor to see what tax credits you may be eligible for.

Real Estate prices in Northern Arizona are the most affordable they been in the past few years. If you qualify for a loan there is no better time than now to invest in a home. Interest rates are low and with these tax incentives, a home buyer cannot help but come out ahead. The National Association of Realtors has recently developed a brochure entitled "It's a Great Time to Buy". You can view an electronic copy on my web site at www.marymonday.com/documents/brochure.pdf. There are several hyperlinks within the brochure that expand on the tax credit and home buying information.

My advice; don't walk by a house that you had considered buying and kick yourself because someone else is moving in. It will happen!