A Little Discrimination in the 2010 Home Buyer Tax Credit?

It’s very late in the game with the 2010 home buyer tax credit, the finish line is only days away.  My purpose in mentioning this issue now is so something like this doesn’t happen again.  The next time Congress enacts a piece of legislation such as this, there shouldn’t be any discrimination against people because they’re newly married.

My team is working with a home buyer who just discovered he and his wife are not eligible for the 2010 home buyer tax credit.  He qualifies for the repeat home buyer tax credit because he’s owned his home for more than 5 years. He married 3 years ago, so his wife does not meet the 5 year rule to qualify.  She, of course, is eligible for the first time home buyer tax credit, but he is not.

Here are some questions and answers about this very issue from the National Association Of Home Builders website’s frequently asked questions. In addition, I checked out H.R. 3548, the bill that included the tax credit, (it’s in Section 11), but it really tells you nothing.

For married taxpayers, the law tests the home ownership history of both the home buyer and his/her spouse.  That is, both spouses must qualify as long-time residents, with at least five years of principal residency for each.

Does a married couple qualify for any home buyer tax credit in the following situation? Spouse A has lived in and owned the same principal residence for at least five years. Spouse B has lived in and owned the same principal residence for less than five years.
In this situation, the couple does not qualify for any home buyer tax credit. Because the couple is married, the law tests the ownership history of both spouses. Spouse A clearly does not qualify for the $8,000 first-time home buyer tax credit, so neither does Spouse B.

Ironically, if they weren’t married, they could qualify:

How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.

The language is very much the same with regard to the first time buyer tax credit:

  1. How can two unmarried buyers allocate the tax credit if one qualifies for the $8,000 first-time home buyer tax credit and the other qualifies for the $6,500 repeat home buyer credit?
    The buyers can allocate the tax credit in any reasonable manner, provided neither claims a tax credit higher than the one they qualify for and the home purchase does not yield a total of more than $8,000 in tax credits. For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.
  2. Does a married couple qualify for any home buyer tax credit in the following situation? Spouse A has lived in and owned the same principal residence for at least five years. Spouse B has lived in and owned the same principal residence for less than five years. In this situation, the couple does not qualify for any home buyer tax credit. Because the couple is married, the law tests the ownership history of both spouses. Spouse A clearly does not qualify for the $8,000 first-time home buyer tax credit, so neither does Spouse B.
  3. Spouse A does appear to qualify for the $6,500 repeat buyer credit, but because Spouse B has not owned and lived in the same principal residence for at least five years, neither of them can claim the repeat home buyer tax credit.

So, please tell elected officials not to discriminate against married, unmarried or newly married people.  Everyone should have had an equal opportunity for the home buyer tax credit.

What do you think?

Posted on April 22, 2010 at 4:36 pm
The Beaupain Team | Category: 2010 Home buyer Tax Credit, For Buyers, Real Estate, Real Estate Opinion | Tagged , ,

Consider the Future When Making a Home Purchase

What may happen in the Seattle area economy in the future? Appraiser Richard Hagar spoke with John Maynard about this topic on KPLU the other day. The piece was geared to the glut of high end condos in downtown Seattle that are now selling with significant price cuts, but then Mr. Hagar shared more about what he sees in Seattle’s real estate future.  He wasn’t talking about the near term, but some significant issues to consider when looking at Seattle real estate in the next 5-7 years.

Some of the highlights from Mr Hagar’s talk:

Real estate prices have gone down in the past, even in the 30’s and the 70’s, but they’ve come back up both times.

Population in the Seattle area is increasing.  Last year there were 60,000 people new to the area, in ten years the projection is for a total of 600,000 people new to the area, all whom will need a place to live.

Builders are grabbing up land, finished lots for $35,000,  which is steal, in the south end locations Auburn, Kent, and Puyallup.

And lastly, “The Rich Get Richer” by planning ahead and making good buying decisions for the future, not just for now.

———————

Making good buying decisions is the key.  If you decide you to buy now, then make sure to consider the future in your decision. Look for areas with good growth potential:

  • good access to transportation.
  • Good schools.
  • Close to economic centers and jobs.
  • Close to shopping and other amenities  (check out walkscore and drive score)
  • Check out the neighborhood and make sure the homes are well maintained throughout.

Seattle is going to grow, which will be a benefit to all of us in terms of the economy in both jobs and the real estate market.  Consider this future growth in your buying decision. You’ll end making a better buying decision for the long term.

Posted on April 8, 2010 at 11:51 am
The Beaupain Team | Category: For Buyers, For Sellers, King County Real Estate, Real Estate, Real Estate Opinion, Seattle real estate | Tagged , , , , , , , ,

Are You Selling Your Home In The Next Five Years?

Are you selling your home in the next 5 years?  Well, grab your camera now and take pictures of your yard. Seattle is beautiful right now, so take advantage of the natural color that surrounds your home.   You’ve got a few months coming up, so start now and take photos throughout the spring and summer season.  After all, you never know when you may decide to sell your home, it could be in the dead of winter when everything is gray here in Seattle.  Photos of your home in any season can be used when selling your home, no matter what the time of year.

Seattle spring flowers

Seattle spring flowers

spring time in Seattle

Spring in Seattle

Posted on March 18, 2010 at 10:34 pm
The Beaupain Team | Category: For Homeowners, For Sellers, Real Estate, Real Estate Opinion, Seattle real estate | Tagged , , , ,

Fixing Up Your Home to Sell? Call Your Real Estate Agent First.

Getting ready to sell your home and needing to get it in show condition? There was a great article filled with tips on what to fix to get your home ready in last week’s Seattle Times. But there was one important thing I disagreed with in the article.

So before you call a real-estate agent, go over the property to determine what needs to be repaired or possibly replaced. Make a list of both major and minor jobs. Tackle big projects first.

I disagree, call your Real Estate agent first!  Why?   Because your agent can help you with this list, saving you time and money.

Here’s an example of what I’m talking about:

I’ll never forget the time an excited client called me to list their home.  They’d spent several months preparing their home for sale.  Teal blue carpet greeted me when the front door was opened.  My heart sank. It was brand new carpet. They were so proud of it.  They just loved the color.  Unfortunately, this carpet color was the number one complaint I heard from buyers and other agents.  Buyers didn’t love the teal blue.  It took a lot longer to sell the house because of the carpet color, costing the sellers time and money with the sale of their home.

I could give other examples, but the point is a seasoned real estate professional who’s out working with buyers on a regular basis will be in a position to tell you what needs to be done.  Since agents are out seeing homes all over Seattle’s eastside and work with both buyers and sellers, they’ll know what’s expected in the marketplace. Buyers will need to be excited about your home, see it as fresh and ready, and a good value in order to buy.  The agent can help you establish what the right amount of repairs and remodeling is so to meet the expectation of your local real estate market and the local buyers.  You don’t want to overdue it nor do you want to “under do” it either.   You don’t want to replace your bathroom vanity, as an example, if you don’t need to do so.  Maybe a dimensional formica or engineered granite will work in your home instead of granite.  Maybe you don’t need to do a complete kitchen remodel, but new appliances will do the trick. The goal is to have your home looking “mahvalous” as Billy Crystal would say, by only doing the things that really should be done.

Your agent will help you develop a list of the important things that must be done down to the “it would be nice to be done” category.  By doing so, the real estate agent will help you spend your money wisely. A good agent will know some of what an inspector, appraiser, and a buyer will expect to be done. It’s impossible to know everything, since not all things are visible and every home and buyer are different, but a real estate agent can add quite a lot from past experience.  They’ll have a list of skilled contractors who show up on time and do the job right.  Your real estate agent may also know contractors who are more reasonably priced who could do the job.

If you don’t already have an established relationship with an agent, interview agents right away.  Establish a working relationship with the agent you select to represent you.  Expect this agent to be your home advisor from the “get go,” well before the buying public knows you want to sell. The agent should spend time helping you create your repair list, making contractor and materials suggestions, and provide general advice about the local real estate market.  This should all happen well before you go on the real estate market and the “For Sale” sign is posted in your yard.

Posted on March 9, 2010 at 6:16 pm
The Beaupain Team | Category: For Homeowners, For Sellers, Home maintenance tips, Real Estate, Real Estate Opinion, Real World Real Estate | Tagged , , , ,

Should You Buy a Home on Seattle's Eastside Now or Wait?

Should you buy a home now on Seattle’s eastside now or wait until after the tax credit expires at the end of April?

People were talking on the Wall Street Journal site and on Zillow about this very issue.  Today people don’t just ask, “How’s the real estate market?”  They ask, “What do you think will happen to the real estate market after the tax credit?”

Here are some of the things people are wondering:

  • Do I buy now?
  • Do I wait?
  • Will I get a better deal now or if I wait?
  • Is it worth passing on the tax credit and waiting to see if prices come down after April 30th?
  • Is it better to buy now because there is a healthy number of homes for sale and good interest rates?
  • Will there be more homes to choose from later?
  • Will interest rates go up and cancel out any possible decline in prices?

I got my crystal ball out as did many others. Money Magazine made a strong case for buying now. Warren Buffett, on the other hand, thought the real estate market would pick up in 2011. Luke Mullins of US News and World Report presented the positive aspects of home ownership, even in today’s real estate market. Truthfully, no one knows what will happen and we can only speculate about what may happen with prices, the number of homes on the market and interest rates.  But all these variables should be considered when making a decision about whether to purchase a home now or later.

I believe there are good deals on a home now and will be after the tax credit, but it’s on a case by case basis.   Here’s why I say this:

Right now…

$6500-8000 home buyer tax credit available for most buyers.

Historically low interest rates.

Good selection of homes, many with very realistic home sellers and prices.

Having the tax credit of $6500-8000 and terrific interest rates,  increases buying power.  Typically, your loan payment is amortized over 15 or 30 years,  a lower interest rate means more dollars per month in your pocket.

Later…

Will prices drop after the tax credit goes away on April 30th?  No one really knows. There may be more homes on the market, which we typically see in the summer months in the Seattle area.  If so, the law of supply and demand will kick in.  More homes + less demand= lower prices.  But we really don’t know if this will happen.  We don’t know if there will be less demand. We can only guess.  We can only gamble on what may be.

However, there’s a good chance  interest rates will go up, which means purchasing power will go down. If rates go up 1%, then purchasing power goes down by about 10%.  This means if you could afford a home for $330,000, if rates do go up by 1%, you would then qualify for a home at $300,000.

The impact of interest rates on buying power

Buying a home will, obviously, be less expensive if prices drop (but we don’t know if they will),  and mortgage rates could also be a higher ( again, just a guess, but looking pretty certain), which could more than cancel out any savings in the price of the home.  Remember,  I’m not just talking about your initial investment, I’m talking about spreading the total cost out over the time you own your home.

The location factor:

Real estate is hyperlocal. There is no one size fits all real estate locales, individual buyers or individual sellers.   Some areas of the Seattle- eastside real estate market will remain stronger than others.  Within each city on the Eastside, Bellevue, Redmond, Kirkland, it will vary.   The East of Market neighborhood in Kirkland may be vastly different than Kirkland’s Rose Hill real estate market.  We see that today with a difference in real estate sales performance in different areas on Seattle’s eastside.  So no one should make a “one size fits all” about the real estate market.  It will depend on how hot the area is, how many homes are on the market, and how hot the house may be. ( The Queen Anne neighborhood in Seattle seems to remain hot through most real estate markets, as an example.)

Some neighborhoods will be full of homes for sale and the homes in these areas will need to be priced more competitively.  Other areas will have fewer homes to buy.  These areas will have stiff competition among the sellers to grab the buyers.  Buyers will be looking harder at the overall value each home brings them.

The home factor:

In every real estate market, you’ll find fabulous homes.   These homes will be perfect, priced right, and terrific values.  Homes that shine will be the ones to sell in any market.

The emotional factor…

For most people, it’s a huge personal decision when to buy and what home to buy.  If you find a great house and are able to get it for a reasonable price for the real estate market at the time, it may make sense to you to buy.  There are the financial aspects of buying a home and the emotional aspects.  You might find the home you can’t live without and it’ll be worth it to you to buy now rather later.  You may not find a home now and miss using the home buyer tax credit, but you may not want to buy a home now just to get the tax credit.

There are going to be great homes now and in the future.  There are also going to be great deals now and in the future.  The difference in today’s market is you’re dealing with a known quantity.  You have to decide what works for you.

What do you think will happen with the Seattle-eastside real estate market later this year?

Posted on March 8, 2010 at 4:10 pm
The Beaupain Team | Category: 2010 Home buyer Tax Credit, Financing, For Buyers, For Sellers, Real Estate, Real Estate Opinion, Seattle real estate | Tagged , , , , , ,

Is The Seattle Eastside Home Sales Race Soon to Be On?

Everyone who has wanted to sell on Seattle’s eastside in the last few years seems wants to sell in the next 60 days, including me.

I know some home sellers Angie Bondurant, my business partner, and I will be representing  have been madly getting their homes ready to sell.   I bet contractors on Seattle’s eastside are busier than they’ve been in a long time.  The contractor I use has gone from working on a rental home I plan to sell to a client’s home.  As home seller wanna-bes, we’re all in the same boat, scrambling to meet the looming deadline of April 30th.  We’re hoping to catch that home buyer who wants to get the benefit of the 2010 home buyer tax credit.  (By the way, I don’t think the market will fall apart after April 30th, 2010, but those thoughts will be for another post)

Right now, the number of homes and condos for sale in King County is doing it’s normal spring time creep up (yes, it’s spring here in Seattle).  So far, the number of properties for sale isn’t unusually high.

Number of homes and condos for sale in King county, WA
King County, WA Real Estate For Sale, 3-2-10

In some of the Seattle-eastside neighborhoods where I’ve sold a lot of homes and which I blog about, I’ve talked about the fact that there are fewer homes on the market. I think that may be changing and I am wondering if others are experiencing the same thing.

Are other Realtors seeing the same thing happening with their business?

Do you have more homes coming up for sale in the next 60 days?

Do you expect to sell more homes or condos in the next 60 days because of the tax credit?

Are home owners seeing more “For Sale” signs popping up in their neighborhoods?

Posted on March 2, 2010 at 7:20 pm
The Beaupain Team | Category: 2010 Home buyer Tax Credit, Bellevue Real Estate, For Buyers, For Sellers, Kirkland, Real Estate, Real Estate Opinion, WA real estate | Tagged , , , , ,

Have You Sent Thank You Notes to Your Buyers and Sellers This Week?

I’ve received about half a dozen thank you notes from stores and services in the two dozen years I’ve been in Seattle.  I can tell you who sent me each note.  Because there have been so few, I remember who sent them.  I got to thinking about personal notes, and the lack thereof,  because I just received a hand written note from a Bellevue patio furniture store, Summer House.  Not only does the store have great products to sell,  they have great customer service with a nice personal touch.

The note reminded me that people, businesses, and the service industry need to combine the personal touch with the online world.  When business people, including Realtors,  jump on the blogging/Facebook/Twitter/Linked In train, they need to take the traditional marketing tools, the traditional ways to communicate, on board with them.

When was the last time you received a personal note from a business?  I bet you remember, simply because they are so few and far between. More importantly for growing your business, when was the last time you sent a personal note to a past, present or future client?

Home buyers and sellers are having a difficult time right now, even though the Seattle area real estate market is so much better than 2009.  It’s still a lot of work in today’s market.  It can be fun, wonderful, and scary to be either a buyer or seller.  So thank your buyers and your sellers for making a move and making that move with you.

I’m giving a talk about blogging at my Windermere office meeting this Monday and I just found one of my key points here.  To be a successful business person/Realtor it takes a combination of traditional marketing with its personal handwritten notes, mailings,  client parties, or whatever works for you, with an online marketing strategy.  Marketing and communication should combine the best of the traditional means with the best of the online avenues to work successfully in today’s real estate market.

Posted on February 5, 2010 at 5:30 pm
The Beaupain Team | Category: Real Estate Opinion | Tagged , , , , , , ,

Should Cul-De-Sacs Be Banned From Future Development In Washington?

cul-de-sac living

Neighborhood cul-de-sac

There aren’t going to be any more cul-de-sacs in new developments in the State of Virginia. Yes, Virginia will have no more cul-de-sacs.  Cul-de-sacs have been banned from new neighborhood developments.    Cul-de-sacs are the quintessential icon of the 1980’s-2000’s American suburb.

Here on Seattle’s eastside, new neighborhoods were generally built all over with cul-de-sacs sprinkled throughout. If the neighborhood was a new pocket neighborhood on infill lots in an older part of Kirkland or Redmond, as an example, there might not be room for cul-de-sacs, but if you look everywhere else on the eastside, cul-de-sac neighborhoods were the standard.   Woodinville, Sammamish, Issaquah, Snoqualmie, Redmond, and Kirkland all have neighborhoods where cul-de-sacs prevail.  Streets with cul-de-sacs were the prized streets to live on, the premium lots, the more expensive lots. Realtors and builders would tout the benefits of living in a cul-de-sac:

  • No through traffic
  • A place to play
  • A place for neighbors to congregate, meet and greet each other at the mailbox.

So why did Viriginia ban cul-de-sacs in future development?

Cul-de-sacs unite the people who live in the cul-de-sac, but separate  them from other streets by foot and by car.  It’s harder for fire and emergency vehicles to respond quickly when a neighborhood doesn’t consist of through streets.  Road maintenance is more expensive with cul-de-sacs instead of through streets.

The New York Times magazine finishes each year with an issue highlighting the great ideas from the past year.  The most recent great ideas issue had an article about the cul-de-sac ban in Viriginia.   The concept fits with the new sensibility rising in many places as highlighted by the popularity of sites such as walkscore.   Walkability and connectivity are this decade’s buzz words for living. Planners are looking more for connectivity, walkability, and better traffic flow for neighborhoods.  People are now looking for easy commuting, more connectivity, and more places to walk.

The Sustainable Cities blog highlighted the NYT article and wondered whether the ban on cu-de-sacs is the wave of the future for neighborhoods.

What do you think?  Should cul-de-sacs be banned from future neighborhoods?  What do you see as the advantages and disadvantages?

Posted on February 2, 2010 at 1:24 pm
The Beaupain Team | Category: Built Green and Sustainable Living, For Homeowners, Real Estate, Real Estate Opinion | Tagged , , , , , , , , ,