Note: This proposal was subsequently modified. See blogs on $8,000 Tax Credit that follow.
Even before I saw it on CNN, it's my father who called with the exciting news ... finally a stimulus amendment that could actually stimulate the housing market!
The senate said yes to one of the best proposals we've seen to date that can actually make an immediate difference in our housing market. Now, let's see how the house and new President respond.
The $15,000 Tax Credit Prososal
The credit would be for 10% of the purchase price of a house, up to $15,000. The credit would spread over 2 years - $7,500 the first year and $7,500 the second year. Unlike the $7,500 first time home buyer "credit" (which is actually not a credit, but an interest free loan), this real credit would not have to be paid back.
As proposed, the credit would apply to any house purchase - including investors and those crazy flippers out there. (My personal prediction is that this will be rewritten to exclude investors, but we'll see.)
As everyone and their brother tries to get a piece of the $900 billion package (where are we getting all this money anyway?), finally a bargain deal at only $19 billion that can make a difference.
Stay tuned ...
Nancy Moeller, CPA, Broker Associate
Seven Gables Real Estate
Direct: 714 276+7006
Let's say that a seller has had their home listed for $440,000 and although the comps support their price, the property has been sitting on the market for 120 days with no offers. Sound familiar?
As we all know, there is a huge pool of buyers who have capped their search at $400,000 that view this property as "out of reach". Instead of looking at this "standard sale", they are all looking at foreclosure properties hoping that can outrun the other buyers to the next foreclosure in their price range.
Here's the strategy. The seller of the $440,000 property, instead of reducing his price, offers to pay 3% of the purchase price to pay down the buyer's rate by 1%. (The cost will vary, but just focus on the strategy)
It's almost hard to imagine without seeing the math, but this house is now within the budget range of all of those $400,000 buyers. Plus, if this is the only seller actively advertising this incentive, his property now becomes the "gem" that all the buyers are competing for.
| Current Price | With Seller's Incentive | |
| Purchase Price | $ 400,000 | $ 440,000 |
| Down Payment - 3.5% | $ 14,000 | $ 15,400 |
| Loan | $ 386,000 | $ 424,600 |
| Rate | 5% | 4% |
| Payment | $ 2,072 | $ 2,027 |
It's time to get out of the box and start thinking about budget, not price.
Buyer's Strategy: Not many sellers have considered this option. It's time to meet with your Realtor and loan professionals to put together a tight package to present to sellers and their agents that can get you into your dream home within your budget.
Selling a home in today's market requires more than a sign in the yard and MLS entry.
Buyer a home in today's market takes more than a tank of gas and master key.
Nancy Moeller, CPA, Broker Associate
Seven Gables Real Estate
Direct Anytime: 714 276-7006
I just got off the phone with a first time homebuyer - our favorite type of client to help. When we starting talking about price range, he gave me a number. He explained that he came up with the number by comparing his current expenses renting to what his new expenses would be with mortgage, taxes and insurance.
What a refreshing, yet simple approach! So many people ask their lender how much house they can afford instead of looking at own budget. Imagine the mess we could have avoided if buyers a few years ago took this approach instead of relying on "creative loan programs".
To help our buyers, we created our own "Geek Edition" Rent vs. Own calculator. It's a simple Excel Spreadsheet that takes into consideration tax savings, association dues, PMI, insurance, 1st and 2nd mortgages, etc.
If you'd like a copy just shoot me an email at Nancy@TheOCExperts.com ... I'd be happy to share.
Have a great day,
Nancy Moeller, CPA, Broker
Seven Gables Real Estate
714 276-7006
While we haven't decided whether or not to adopt a dog yet, we thought it wise to research dog trainers. In our search, I found this wonderful series of statements which remind me why I love dogs so much.
THEN YOU ARE PROBABLY THE FAMILY DOG
We have a lot of first time homebuyers who are excited about our current market. They are anxious to buy their first home and also dream of buying investment property while prices and interest rates are so low. The problem is coming up with all the money. Investment loans require equity in your principal residence, a higher down payment and higher interest rates. Ouch!
One great strategy is to consider buying a 2 to 4 unit property. Live in one unit and rent out the others. This should qualify you for a owner occupied loan on the entire property - allowing you to get into a personal residence and investment property at the same time for less money!
Here are the quick benefits to buying an "Investment Personal Residence":
As always, location and careful financial planning is everything! Be sure to consult with your CPA and Realtor for the best strategy that matches your investment and personal goals.
As always, you are welcome to call me personally anytime to discuss your unique situation and goals,
Nancy Moeller, CPA, Realtor
Seven Gables Real Estate
714 276-7006
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As a CPA, REALTOR® and financial expert, I focus on protecting our clients financial interests in the sale.
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