FARUKI

Coming up with money to buy a first home is brutally tough. This is particularly true with the current market which is such a nightmare. Fortunately, the government is helping people in addition to the banks.

The housing market is a bottom up feeder system. Simply put, you buy a home, build some equity in it over time and then sell it. You use your gain to buy a bigger house and so on through life.

As a long time homeowner, you might scoff at first time buyers. You should not. Without them, you will never sell your home? Why? Well, who is going to buy it? If they people below you cannot sell, they have no money to offer to you. Without first time buyers, this is exactly what happens.

First time buyers are staying away from the current market. Regardless of all the other issues hurting this market, this is a giant problem. The government has acted swiftly to change things and get these buyers active again.

When the government wants to get serious, it can really do some amazing things. It is desperate now. How desperate? It is now offering first time homebuyers a tax credit in the amount of $7,500. This a huge figure if you understand tax credits.

Stop whining about tax deductions disappearing. Yes, they are valuable, but not like a tax credit. Tax deductions reduce your income and then taxes are figured based on the reduced amount. Tax credits reduce your taxes directly dollar for dollar.

Taxes can be mind numbing, so consider an example. I have a tax credit of $6,000. My accountant does my taxes and tells me I owe the IRS $3,000. Will I be writing the agency a check? Nope. When my tax credit is applied, they will be writing me a check for $3,000.

Can I actually get back more than I owe? Not always. With this first time homebuyers tax credit, however, I can. It is fully refundable, which means that it is not limited by the amount I owe the IRS.

When there is a big carrot, there is often a line tied to it. Sadly, this is the case here. The government is not giving away a freebie. You have to pay back the credit. You have 15 years to do it, which means about $40 bucks a month.

The amount of money you make also can be a problem. Couples making more than $150k and non-couples making over $75k face a phase out problem. If you are making this kind of money, however, you probably should already own a home.

Everyone gripes about the loss of tax deductions, but they miss the points. Tax credits are the real golden egg for taxpayers. Claim as many as you can. If you are considering buying a home, this one should help a bunch.

Do you realize that you might be prevented from renting your investment home? Prohibiting property owners from leasing their properties is a trend that is growing increasingly popular with some developers and many Homeowners’ Associations (HOA).

It’s rare that you can buy a new home in a development that does have a HOA. As a homeowner you are bound by the HOA restrictions found in the Covenants, Conditions and Restrictions (CC&Rs).

The CC&Rs regulate your use of your property, restricting everything from the color of the house, window coverings, holiday decorations, sports courts, pets, to landscaping and etc.

One of the most recent restrictions that builders are including in their CC&Rs is a restriction that prohibits the homeowner from leasing their property. Builders have a provision in their sales contracts stating that the home will be a primary or secondary residence and that the purchaser will occupy the home. The owner is strictly prohibited from renting the home.

Why this trend? The idea is to limit the number of rentals in a subdivision because lenders believe that a high number of rentals in a community affects the value of the property and can erode the security of their loans.

Existing HOAs like the idea of no rentals and there seems to be a growing movement to amend their CC&Rs to add the “no leasing” provision.

Investors Beware!

The new homebuyer should be made aware of the no leasing restriction when they buy. But what about the investor who buys a home a few years later? If the investor fails to read and understand the CC&Rs he or she may end up owning a property that they cannot rent.

You can’t count on the home seller alerting you to the restriction. They may be the third or fourth owner of the home and not even be aware of the restriction.

Oh sure, you could buy the home, rent it and hope you are not discovered violating the CC&Rs.

However, anyone who has ever dealt with a HOA soon discovers that there are always a few other homeowners with an eagle eye out for the slightest infraction of the CC&Rs. They delight in notifying the HOA management company,,, and the management company is bound to investigate and enforce the rules. For you the investor is no appeal… and there is no recourse.

This is a strong reminder that every investor should have a clause in every purchase contract that says the purchase agreement is contingent upon you receiving, reading and approving a copy of the CC&Rs.

This is a potential ulcer-creating situation that no investor can afford to ignore.

Want Acreage? Miami is one of the hottest markets. Miami has crazy beaches. Want a leisure time home? Try Miami, one of the best cities in the world. Remember land around Miami has become more in demand than ever before.

Rescently, Southern Florida was accepted to be a realtor’s dream with great real estate value. In the early 2000s the prices of acreage went up as high as 260% in some areas.

Miami grew by adding buisness and employment oportunities, while real estate prices increased dramatically . Miami grew to be one of the most desired cities to live in.

Today real estate has decreased to levels of affordability. But even though values have decreased, Miami is still sunny, warm and a great place to live.

Some homes in Miami are taking longer to sell, but that is because it is a buyer’s market and the average investor and homeowner can negotiate low low prices.

Many homes remain unsold for a long time because they’re over-priced. Pricing your home right is essential if you want to sell your home in quick time. Expecting more for your home than the rates that prevail in the market will only delay the sale of your home, unless your home has something more to offer than other homes. When it comes to pricing your home for sale, you need to consider that your home is going to be competing with other similarly priced homes in your area and unless there’s a short supply of homes for sale, you’re going to have to set a competitive price.

All that said, some homes do sell for more as do some homes for less. It all comes down to how you set your asking price, how you go about negotiating and what are your costs involved in the selling process. Here, we’ll discuss how you can determine a fair asking price for your home in prevailing market conditions.

Real estate agents - Whether you intend on using the services of an agent to sell your home or not, they will call you to offer their services so you may as well get them to provide you with some information. Agents will usually offer to give you a free “Comparative Market Analysis (CMA)” of homes recently sold and presently on sale in your neighborhood. This data should be useful in helping you set a reasonable asking price, keeping the features of your home in mind and how it compares with the others.

Internet Listings - Browsing internet home listings will give you a fair idea of how much homes are priced in your neighborhood and how much you can sell it for. There are plenty of ‘by owner’ sites with many internet listings and there is also realtor.com which offers MLS listings.

Driving by the neighborhood - Surveying the area yourself and visiting homes presently on sale will give you a good idea of how much you can quote for your home.

Home Appraisal - Getting a real estate appraiser to put a value on your home, based on its condition and recent home sales in your neighborhood, should give you a fair price range in which you can sell your home. The appraisal can also be used to help justify your price when negotiating with buyers. (Get a free home appraisal done here.)

So set your price after investigating two or more sources, so that you can justify for the price you set. Your home will sell fast as long as there’s a reasonable amount of demand for homes in your neighborhood and you don’t overprice your home when compared to other homes in your area.

Some people choose to use a real estate agent and some people choose to go it alone. One thing I have noticed over the years is that a number of seasoned investors looking in a new city will seek out a good agent while novice investors will frequently go it alone. I have even had a number of successful real estate agents seek out my help when they are moving to our city. Why do some of these seasoned investors choose to work with an agent? Below is a list of 7 benefits of using an agent.

1. Understand potential restrictions of the property. I recently heard a story from a friend at the city development office in Austin Texas. A couple had saved up for their retirement. They wanted to retire and live out in the hill country. They went to the foreclosure auctions. At the auction they purchased a lot for 500,000. It had great views and they were going to build their dream house on it. They had researched the lot before the auction and found it was zoned SFR which means a single family residence can be built on it. After purchasing the lot they started plans to build their retirement house. At this time they discovered the lot was in the 25 year floodplain. My friend at the city development office explained that the lot could not be built on and was basically worthless.

2. Know about new developments that might affect a properties value. A good realtor will know of proposed new developments that might affect different properties in which a buyer is interested. Whether these developments are positive or negative can be valuable information when weighing different housing options.

3. Find potential problems with a property. It is always a good idea to have a home inspector look at a potential house. However, a Realtor is a good first line of defense to see if a house has inherent problems. A Realtor that can know about common problems, such as foundation or electrical, that affect a particular neighborhood.

4. Understand contracts specifics. Whenever you buy or sell a house you are entering into a large personal transaction. It helps to have someone on your side that deals with these types of transactions on a daily basis. A Realtor can help you understand contracts and can explain what is typical for your area. The most common pitfall into which I see unrepresented buyers fall is to become involved in an atypical contract that is not to their benefit. For instance a seller will sign an offer that has an option period that is 4 times longer than what is typical. A buyer might put in offers on multiple properties with long option periods. The buyer will wait and see if the market appreciates. If the market has appreciated the buyer buys the house at now and undervalued price. If the market has gone down the buyer walks away.

5. Misperception of a benefit of going it alone. Buyers frequently think that by not using a buyers agent they will get a better deal from the seller. In most situation the listing agent asks for 6 percent from the seller. If a buyer comes with an agent the listing agent splits the 6 percent with the buyers agent. If an unrepresented buyer comes the listing agent keeps the whole 6 percent. On the selling side, For Sale By Owners (FSBO) often think they are saving alot of money by avoiding a listing agent. Nationally, FSBO homes sell for 14 percent less than agent listed homes in the same neighborhoods. In addition alot of FSBO’s still end up having a buyers agents involved. There is also money spent on advertising. Since an agent has experience marketing homes the agent often can spend money more effectively on advertising. Agents often know which advertising sources produce the most potential buyers.

6. Save time when looking for listings. Looking for listings without an agent can take up large chunks of time. When looking with an agent you can see several homes in a few hours. When going it alone you have to call the listing agent for each house and wait at the house for the agent to arrive and open up the house. In addition agents often know houses which are not listed or may have already identified potential problems with a particular house of interest.

7. Insure Security. When a home is listed with a broker, agents coming to the house have to usually log in. This allows the listing agent to keep a record of every party coming into the house. Since their business is on the line, agents are more likely to protect the house from damage or theft. For a variety of reasons, it is generally not a good idea to have random people you do not know come into your house. Often sellers simply have a phone number, but that phone could be their house, a friend’s house, a pay phone, or even a stolen phone.

Searching for a home can be stressful and difficult but it can also be fun. Whether you choose to look for a home on your own or with a Realtor its a good idea to be a extremely careful when you seek out your dream home.