Brian Hourigan’s Cary Real Estate Report

Did you think that you missed out on a chance at the $8,000 tax credit given to first time home buyers?  You are in luck!  First time home buyers now have until April 30, 2010 to buy their home.  In addition, current home owners who have lived in their home for 5 consecutive years out of the last 8 years is eligible for a $6,500 tax credit.

First, let’s talk about the extended $8,000 tax credit for first time home buyers.  As stated above, you must be under contract by April 30, 2010 and close by June 30, 2010.  To stay safe we encourage buyers to close by the April 30 deadline to prevent any problems or delays which could cause you to miss out on the tax credit all together.  Also, a new provision to prevent fraud has been added.  When you file your return (either an amended 2009 return or 2010 return) you must attach proof of your purchase.  This will likely be a copy of the HUD-1 settlement statement that you receive when you close.  Lastly, the income limits for eligible buyers has increased.  For a single person the limit increased from $75,000 to $125,000.  Married couples went from $150,000 to $225,000 combined income.

Now for the BRAND NEW tax credit for current home owners.  If you have lived in your home for 5 consecutive years out of the past 8 years then you are eligible for a $6,500 tax credit.  In addition, the buyer(s) must meet the same income limits as above and the purchase price cannot exceed $800,000.  The timing of this tax credit is the same as the first time home buyer tax credit so buyers must be under contract by April 30, 2010.

Both tax credits have a “phase out” of $20,000 for the income limits.  In other words if a single buyer makes more than $125,000 but less than $145,000, they are eligible for a portion of the tax credit. 

If you have other questions about the tax credit please e-mail Brian at BrianHourigan@kw.com . 

We are not tax accountants so you will want to consult your CPA to verify your eligibility so that you can make an informed decision. 

For more information visit http://www.federalhousingtaxcredit.com/

Want to hear what the IRS has to say? Read HERE

Happy Home Hunting!

The housing market is looking healthier. Here are six reasons why now is the time to jump into the market.

1. Uncle Sam is willing to help. First-time buyers (defined as anyone who hasn’t owned a home in the last three years) are entitled to a maximum $8,000 tax credit; interest rates are at record lows; and the Federal Reserve is doing its best to make mortgage loans available.

2. People have to live somewhere. About 800,000 new households are formed each year in this country, ensuring that the housing market will tighten, even if the economy doesn’t soar.

3. Borrowers leverage their investment. If you put $10,000 into the stock market and it earns 10 percent, you’ve earned $1,000. If you put $10,000 down on a home and its values increases 10 percent, you’ve made $10,000.

4. When prices come back up, you’ll have instant equity. In parts of the country where foreclosures have driven down prices, better times will mean the price of the home you buy will rise rapidly.

5. Mortgage costs stay the same. If you get a fixed-rate mortgage, the monthly payment stays the same – while everything else, including rent, goes upward.

6. You own it. There is something comforting in the notion that your home is your own. You can paint it any color you want, let the dog run in the back yard and hang a swing for the kids in the front.

Source: The Wall Street Journal, June Fletcher (03/27/2009)

We are in the midst of what could very easily be the best buyer’s market we will ever see.  Never before have low interest rates and low prices intersected the way they are right now. 

Hey, first-time homebuyer: How does $8,000 from your Uncle Sam sound?

Want an extra $8,000?  If you’re a first-time homebuyer then we have a nice surprise for you.

Last fall, the Federal Government introduced a financial incentive to prospective first-time homebuyers — an income tax credit of up to $7,500. The rules were simple: you must have been a first-time homebuyer (as defined by not owning a home in the previous three years) and you met certain income restrictions.

The new $8,000 tax credit is available to those who buy between January 1, 2009 and December 1, 2009. It’s not a deduction, it’s an actual credit.  Unlike the $7,500 first-time homebuyer tax credit introduced last summer; this does not need to be repaid.

First timers who qualify can make no more than $75,000 in adjusted gross income if they’re single or $150,000 if filing jointly. The maximum tax credit is $8,000 or 10 percent of the sales price of the home, whichever is less. Three years residence in the property are required. As always, check with your accountant for details and be sure to submit IRS form 5405 when you file your taxes.

Contact us for more information or to find out how we can help you put this money in your pocket sooner.

Hey guys. I just wanted to share with you my own personal home owning experience to show a real life example of how it can be financially rewarding.

I bought my home 4 years ago for $142,000 with $6,000 in down payment and closing costs. (Note: down payment and closing costs can vary depending on your loan and how you structure the purchase contract. Some of my buyers have actually walked away from the closing table with money in hand). If I sold the house today I’d probably get $160,000, maybe as much as $165,000. However, let’s assume that I sold it for only $155,000. I have $130,000 left on my current mortgage meaning I would be left with $25,000 after the sale.

Now for the deductions. Let’s assume that I wasn’t a Realtor so I had to pay a full commission of 6%: $155,000 x 6% = $9,300. Let’s also assume that I spent $5,000 to make repairs and get the house ready to sell. So $14,300, let’s round up to $15,000, is deducted from my proceeds of $25,000. An initial investment of $6,000 turned into $10,000 in 4 years. That is roughly a 14% return compounded.

And that, my friends, is my example of how home ownership has provided me with a very lucrative forced savings account. I used a very conservative sales price and over estimated my costs to make repairs. But overall it is a pretty fair assessment. We are blessed to be in an incredible Buyer’s Market so 4 or 5 years from now, those who buy in this market could easily have better numbers than I’ve shown above. Let me know when you or someone you know is ready to buy their first or next home. Let me help you begin the path to financial independence.

Want more information?  Contact Brian Hourigan with Keller Williams Realty at (919)280-3646.  We are happy to help you with all of your real estate needs.  To get pre-qualified for a home loan please contact Kevin Martini with SunTrust Mortgage at (919)274-3700 and mention my name in order to be moved into his VIP client file. 

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www.HouriganTeam.com

Hello Readers!

I have previously written about the importance of a home seller to have a pre-inspection completed before putting their home on the market.  However, after hearing countless agents talk about their deals falling through thanks to lengthy inspection reports, I felt like it was time to reiterate the point. 

In fact, I too have had long inspection reports scare a buyer to the point of wanting to exit the contract.  I recently had a 25 page inspection report come back on a property that one of my buyers was attempting to purchase.  Keep in mind, this was not the full report which includes all of the items that are not faulty…this was the summary of items in need of repair!  None of the items on their own were all that bad, but when that many issues show up it’s no surprise that the buyer is concerned.  The buyer did in fact exit the contract despite the seller’s agreement to fix the items. 

This is a great example of how a pre-inspection could have prevented this sale from falling through.  The seller could have repaired many of these items beforehand and then actually held a better position to negotiate later repairs because of the great condition of the home. 

In today’s market, buyers have plenty of choices.  They are not afraid of walking away from a deal because they know another great home is just around the corner.  Sellers need to do everything possible to make their home stand out, and a pre-inspected, pre-repaired home is one way to do just that.

Regards,

Brian P. Hourigan, REALTOR

www.HouriganTeam.com

After the highly publicized mortgage meltdown this past year, it should come as no surprise that 100% financing is a thing of the past.  However, first time homebuyers and others who are “strapped for cash,” still have other options.  The biggest dog in the fight for 100% financing is the FHA loan. 

The Federal Housing Authority (FHA), insures private loans that require a low down payment.  The FHA does not actually make loans, rather they help lenders by insuring loans and reducing the lenders risk.  An FHA insured loan typically requires a 3% down payment.  However, the great thing about an FHA loan is that the seller can contribute that down payment in the form of a “gift.”  This means that a home buyer can still get into a home with virtually no money out of pocket.  Given the right scenario, a buyers closing costs and down payment can be contributed by the seller leaving the buyer with little to no expenses at closing. 

Those are the great features about an FHA loan, however there are some points that you should be aware of.  First, you will be required to pay Private Mortgage Insurance (PMI), both as an upfront cost (built into closing costs) and as part of your monthly payment.  Also, because this is a federally insured loan you will have more stringent documentation needed as part of the loan and contract process.  It is important that you are working with a GREAT lender when you are obtaining any type of mortgage, but especially when working with FHA. 

Please note that the above information is NOT intended as mortgage or legal advice.  Consult a competant mortgage consultant for more information about FHA and other types of mortgages.  An excellent mortgage consultant in our area is Kevin Martini.  Feel free to contact Kevin or myself for more information regarding your next home purchase.

Best Regards,

Brian P. Hourigan

The Hourigan Real Estate Team

In February 2007 there were 164 closing in Cary.  As February comes to anend here in 2008, there were only 99 closed homes this month.  It doesn’t take a Masters Degree in Real Estate to see that the market has slowed down a little bit.  We could talk all day about the reasons for this down turn, but regardless of the reasons the fact remains that we are in a shifting market. 

More numbers for you; There are 616 resales (i.e. NOT including new construction) for sale in Cary at this very moment.  In the last 6 months only 645 homes have sold.  This means we have almost exactly 6 months worth of inventory on the market right now.  So if no more houses went up for sale it would take 6 months to sell off our current inventory. 

The question for today’s home seller is… Do you want your home to sell or do you want it to sit on the market and eat into your profit?  The key to a successful sale in a shifting market is to price your home ahead of the curve.  Pricing your home based on the market 6 months ago will effectively put your home in the “sitting on the market” category.  Being proactive and pricing your home to maximize the current demand will put your home in the “Sold” category.

By pricing your home above what the current market will likely pay, you face the situation of having to reduce the price later.  Now your home has been sitting on the market and you are pricing it where it should have been a month or 2 ago.  During that time period the market may have shifted even more and once again you are behind the curve or “Chasing the Market Down.”  Pricing your home appropriately in the beginning has become ever more important in getting the most money out of the sale. 

In order to ensure your home sells in the fastest time, with the fewest hassles, and netting you the most money, it needs to meet the following criteria.  Compared to your homes competition, it should rest in the bottom third of pricing and the top third in property condition.  By meeting both of these criteria you will ensure that your home is seen by the most number of buyers and will be first in line to receive offers. 

Don’t be surprised if a Realtor turns down as many listings as they are taking in this market.  Remember, we are looking for people that have a problem, the need to sell their home.  Listing a home that is overpriced in a shifting market does not benefit anyone involved.  The picture I have tried to paint is not a grim one, but rather a realistic view of our current market.  Because while the number of homes sold has decreased since last year, the average sales price has increased.  This means that home sellers who are pricing right and staging their homes are still getting their money. 

Brian P. Hourigan

The Hourigan Real Estate Team

an affiliate of Keller Williams Realty

I offer the following advice to every buyer and seller that I work with.

“When negotiating a purchase price, whether buying or selling, put yourself in the other persons shoes.  If you were on the other side of the fence, would you accept the offer that you are suggesting?”

If you enter a negotiation with the thought process that you must “beat” the other person, then it will be a difficult process for everyone involved…including yourself.  Most sellers would not say that they are willing to sell their home for less than it is worth.  Yet buyers often EXPECT to get a below market price when buying, and are UPSET when the seller won’t accept their low offers.  Along the same line, I have seen over and over again a buyer who just got done beating up a seller to get a low price, then get upset because someone makes a lower than expected offer on their own home. 

Now, I’m not suggesting that a buyer or seller should “roll over” when negotiating an offer.  I am however saying that we need to be willing to look at things from the other persons point of view.  In fact, this will allow you to achieve a win-win situation and will make the home buying/selling experience much more pleasant.

One last consideration, there is more to an offer than just the purchase price.  Often times when common ground cannot be found on price, other terms can be adjusted to make both parties happy. 

Real estate is not war.  There are no enemies.  Happy negotiations.

Brian Hourigan

The Hourigan Real Estate Team

As we approach the holiday weekend celebrating the life of Dr. Martin Luther King, Jr., the town of Cary prepares for the annual MLK Dreamfest.  This week and a half long celebration is a series of events meant to educate and inspire us to live in an atmosphere of understanding, respect, and cooperation all year long.

Upcoming events include:

Dream of Community, Art Exhibit & Display - Saturday, Jan. 19, 7-9pm at the Page-Walker Arts & History Center

Dream of Unity, Ecumenical Observance - Sunday, Jan. 20, 6pm at the Herbert C. Young Community Center

Dream of Democracy, Unity March - Monday, Jan. 21, 10am.  The downtown Raleigh march starts at the State Capitol.

For more information on any of these events you may call (919)460-4963.

 Happy Holiday,

Brian P. Hourigan