Joel Dameral's South Lake Tahoe Real Estate Blog

Applications are being accepted for the two way immersion kindergarten classes at Bijou Community School through 4 p.m. March 19.

This is an incredible program that both of my kids are involved in.  My son is in second grade and already fluent in both Spanish and English.  My daughter is in kinder and well on her way with both languages as well.

RISMEDIA, —As part of the government’s high price-tag efforts to rejuvenate the flailing American economy, on November 6, 2009, President Barack Obama signed into law an expansion and extension of the home buyer tax credit.

With housing at the center of the country’s economic engine, extending the lifeline a little further for a little longer is being hailed as a significant measure by both economists and real estate leaders.

The estimated cost of the home buyer tax credit, part of the Worker, Homeownership, and Business Assistance Act of 2009, is $18.5 billion, yet another mind-boggling sum in a series of stimulus strategies. With that $18.5 billion comes great responsibility for real estate professionals—a responsibility to maximize the opportunity and help get the wheels of the housing market turning again.

“The extension and expansion of the home buyer tax credit was absolutely necessary for the housing market and, most importantly, the U.S. economy,” says Alex Perriello, president and CEO, Realogy Franchise Group. “Clearly, Congress and the Administration recognized that inaction on their part—and thus an expiration of the previous first-time home buyer credit—would have been extremely detrimental. We’re proud of the active role that Realogy management and brokers played in educating key policy makers in Washington about the economic benefits of extending and expanding the home buyer tax credit.”

“The extension of the tax credit—and its expansion to include qualified move-up buyers—offers additional hope for a struggling economy and unlimited opportunity for dedicated brokers and agents,” agrees Steve Brown, special liaison for Large Firm Relations, NAR, and broker/owner of Irongate Realty in Dayton, Ohio.

“Activity inspires people—this tax credit has stimulated the entire economy,” says Tami Bonnell, president of the U.S. Organization for EXIT Realty. “There was a glut of people who stood still, not sure what to do. Finally, especially with the addition of the existing homeowner portion of the credit, people are jumping onboard.”

According to Greg Rand, managing partner of Better Homes and Gardens Rand Realty in Westchester County, New York, the home buyer tax credit helped the real estate industry—nationwide—to a 2009 fourth quarter that marked the biggest increase in home sales in 20 years. “The media is finally beginning to pick up on what’s going on and is finally driving some positive consumer confidence. This is prompting people to start thinking about purchasing a home.”

Absorbing the Details…Quickly
As Margaret Kelly, CEO of RE/MAX International, Inc., explains, “Congress extended the tax credit and amended it to include repeat buyers in hopes of securing a more sustained real estate upswing. However, the narrow window suggests none of us should count on another extension.” With a deadline of April 30, 2010 (closing must occur by June 30), consumers need to act fast in order to capitalize on the expanded and extended credit. In order for consumers to act fast, brokers and agents must serve as a trusted guide.

“First and foremost, we cannot and should not assume that real estate consumers know what we know,” advises Perriello. “As real estate professionals, we are closest to the situation and it is imperative for the industry to aggressively impart our knowledge and promote the key facts about the home buyer tax credit in order to educate potential home buyers about the various details that may specifically apply to their specific situations.”

Here are the main points of the tax credit legislation:

-The Timeline: The credit is available for homes purchased on or after November 7, 2009 and before May 1, 2010. The federal income credit can be claimed on one’s individual or joint tax return for the purchase of any single-family home (newly constructed or resale, single-family detached, townhomes or condominiums) between the dates of November 7, 2009 and April 30, 2010. Home purchases subject to a binding sales contract signed before May 1, 2010 will also qualify for the tax credit as long as closing occurs by June 30, 2010.

-Who’s Eligible: The tax credit is now available for first-time home buyers and eligible current homeowners. A first-time home buyer is defined as an individual who has not owned a principal residence during the three-year period prior to the purchase. This law applies for both parties in a married couple; if you haven’t owned a home for three years, but your husband has, then neither one of you can qualify for the tax credit. A qualified current homeowner who wishes to move to a different home (a “move-up” buyer), must have owned and resided in their residence for five consecutive years out of the last eight.

-Salary Requirements: Under the legislation, the income limits to qualify are the same for both first-time home buyers and current homeowners: Single taxpayers with incomes up to $125,000 and married couples with a joint income up to $225,000 qualify for the full tax credit. According to Goldman Sachs, these income limits make almost all first-time home buyers eligible and approximately 70% of current homeowners eligible. Single taxpayers who earn between $125,000 and $145,000, and married couples who earn between $225,000 and $245,000 are eligible to receive a partial credit.

-Credit Amounts: The maximum credit amount for first-time home buyers is $8,000; the maximum credit amount for current homeowners is $6,500. The federal tax credit amounts to 10% of the cost of the home, up to a maximum credit of $8,000 for first-time home buyers and $6,500 for current homeowners. Under the new legislation, a tax credit may only be issued for homes purchased for $800,000 or less.

-Tax Facts: Provided the home-owner stays in the home for three or more years, the tax credit is a true credit and does not need to be repaid. The tax credit is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if you owe no tax or the credit is more than the tax owed. The credit is claimed using Form 5405, which you file with your original or amended tax return. Buyers can claim the credit on their 2009 taxes, even if the home is purchased in 2010, by filing an amended tax return.

-Fraud Prevention: The current tax credit legislation has built-in fraud measures, therefore, anyone claiming the credit must provide documentation to prove that the sale has closed, such as a copy of their HUD-1 Settlement Statement. The law also prevents anyone younger than 18 from claiming the credit.

Motivating Move-up Buyers
While the extended deadlines and increased salary caps of the tax credit are indeed a boon to first-time home buyers, the expansion of the tax credit to include current homeowners stands to have a significant impact on home sales.

According to Scott McDonald, president of RE/MAX Gateway in Chantilly, Virginia, and a member of the Top 5 in Real Estate Network®, “Over the last year, we have seen few move-up buyers as a result of lost equity, uncertainty of perceived value in the market as a result of foreclosures and short sales, and low consumer confidence. It is a matter of education on the Realtor’s part as well as the media to get the word out to our move-up market.”

“The expanded tax credit means that the gridlock caused by a stagnant ‘move-up’ market could be broken and the field could soon be wide open,” says Sherry Chris, president and CEO of Better Homes and Gardens Real Estate.

Ken Trepeta, director of Real Estate Services for the National Association of Realtors, explains that move-up buyers are eligible for the tax credit as long as the home being sold or vacated was their principal residence for five consecutive years within the last eight. “To elaborate, it must be the same home,” says Trepeta. “It is not enough that they have been homeowners for five consecutive years, they must have been in the same home for five consecutive years.” McDonald and Trepeta underscore the important fact that current homeowners need not sell their existing home in order to take advantage of the credit. They may keep it and rent it for additional profit.

Getting the Word Out
For the tax credit to succeed in buoying the real estate market, it is essential for brokers and agents to aggressively market the benefits—and the deadlines—of the legislation to consumers.

At Better Homes and Gardens Rand Realty, Managing Partner Joe Rand, an attorney, has developed a home buyer tax credit website­—www.homebuyertaxcredit.com—and a “Home Buyer Tax Credit Eligibility Test” that will let buyers know if they qualify. If they do, the program will provide an instant option to download the proper tax documents.

To get the word out about the website, the Rands are budgeting $100,000 of the firm’s marketing budget to broadcast media—specifically radio. “We’ve seen a lot of general interest in buying a home,” says Greg Rand. “Right now, if people aren’t aware or clear on the tax credit, they’ll seek out a source that explains it quickly—that, in turn, might just make our company a bit stickier.” Educating consumers on the tax credit is compulsory and many real estate experts are leading that charge.

“The bottom line for all consumers is ‘how does this impact me?’” says Bonnell. “We’re trying to help them answer that and we’re getting excellent results. I put on webinars to the general public—buyers, sellers, investors, etc.—twice on the second Tuesday of every month. On it, we go over the changes since the new adjustment. They can submit questions during the webinars and we typically answer them right there.”

Misunderstanding or confusion over the details of the tax credit can prevent many consumers from pursuing a home purchase. As Perriello says, “As professionals, it is our obligation to make sure we properly communicate the new tax credit details because an educated consumer is an empowered consumer.”

Great Expectations
Industry leaders have high hopes for the extended and expanded tax credit, believing it may be just what the housing market needs to make its way out of the trough in 2010. But time is of the essence—and that’s all part of the plan.

“It is important that there is a clear time limit for the tax credit because the purpose of this economic stimulus is to jump-start momentum in the housing market and the economy,” says Perriello. “The expanded home buyer tax credit is intended to provide an incentive for a broader pool of home buyers to make a home purchasing decision in the early part of the year. Otherwise, lacking the urgency of such a deadline, more potential buyers might stay on the sidelines.”

“We expect the tax credit to continue to encourage home buyers to enter the housing market through the extension dates, then the typical spring market should take hold and the housing industry will help carry us further out of the recession if conditions remain stable,” says McDonald.

“The extended and expanded home buyer tax credit should help increase demand, stimulate home sales and, ultimately, reduce inventory levels,” adds Perriello. “In turn, this should help stabilize home sales prices. Those are all necessary steps that need to occur before we can have a sustainable long-term recovery in the market.”

Read more: http://rismedia.com/2009-01-03/18-5-billion-reasons-to-make-the-home-buyer-tax-credit-work/#ixzz0cN1kZKd1

Despite a slow market and a slight decrease in the resale value of most remodeling projects, Realtors report that the smartest home improvement investments may also be some of the least expensive. Results from the 2009 Remodeling Cost vs. Value Report show that small-scale exterior projects are the most profitable at resale, according to estimates by Realtors who completed a recent survey.

On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000. Certain types of door and siding replacements, as well as wood deck additions all returned more than 80% of project costs upon resale. A steel entry door replacement–a new addition to this year’s list–recouped 128.9% of costs, followed by upscale fiber-cement sliding replacements at 83.6%. Wood deck additions recouped 80.6% of costs.

“Once again, this year’s Remodeling Cost vs. Value Report highlights the importance of a home’s first impression,” said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. “With exterior projects returning a high percent of project costs upon resale, Realtors can help give your home curb appeal while adding value to the real estate transaction.

The 2009 Remodeling Cost vs. Value Report compares construction costs with resale values for 33 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 12th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with Realtor Magazine, as Realtors provided their insight into local markets and buyer home preferences within those markets.

On a national level, the project with the biggest improvement from 2008 was the attic bedroom addition, recouping 83.1% of remodeling costs compared to 73.8% in 2008. The only other interior project that landed in the top 10 was a minor kitchen remodel with 78.3% costs recouped.

Other exterior projects in the top 10 include midrange vinyl and upscale foam-backed vinyl sliding replacements, which returned more than 79% of costs. In addition, several types of window replacements–midrange wood, midrange vinyl, and upscale vinyl–all returned more than 76% of costs upon sale.

Similar to last year’s report, the least profitable remodeling projects in terms of resale value were home office remodels and sunroom additions, returning only 48.1% and 50.7% of project costs.

Regionally, cities in the Pacific states of Alaska, California, Hawaii, Oregon and Washington once again outperformed the rest of the nation in terms of remodeling costs recouped upon resale. The West South Central region of Arkansas, Louisiana, Oklahoma, and Texas; the East South Central region of Alabama, Kentucky, Mississippi and Tennessee; and the South Atlantic region of the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia also performed relatively well.

The regions that generally returned the lowest percentage of costs were New England (Connecticut, Massachusetts, Maine, New Hampshire, Rhode Island and Vermont), East North Central (Illinois, Indiana, Michigan, Ohio and Wisconsin), West North Central (Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota and South Dakota), and the Middle Atlantic (New York and Pennsylvania).

Golder commented that remodeling projects are just one of many factors that contribute to a home’s overall resale value. “As the first, best source for real estate information, Realtors are experts in providing insight into what projects and investments will make a difference in your house. It’s important to consult with a Realtor who can explain the variety of factors that affect a home’s value, such as location, condition of surrounding properties and the regional economic climate,” she said.

For more information, visit www.realtor.org.

Read more: http://rismedia.com/2009-12-23/homeowners-exterior-remodeling-projects-prove-best-bang-for-your-buck/#ixzz0b7Tz34PO

These Mortgages Are Efficient

If you’ve been putting off making energy-efficient upgrades to your home because you are worried about the cost and think you can’t afford them, now is the time to stop procrastinating and take advantage of the energy-efficient mortgage (EEM) program and a new tax credit for upgrades.

What Is an EEM?

>> An EEM helps home buyers or homeowners save money on utility bills by enabling them to finance the cost of adding energyefficiency features to new or existing homes as part of their Federal Housing Administration (FHA)-insured home purchase or refinancing mortgage.

EEMs are one of the most beneficial and under-utilized programs that a homeowner can capitalize on in today’s market. Although they have been around since the ’80s, their use receded when subprime loans took the stage, explains Jana Maddux, program manager for California Home Energy Efficiency Rating Services (CHEERS ® ). “This is the best kept industry secret.”

Why Now?

>> Recent developments make this the best time for homeowners to give serious thought to making the upgrades that will lower utility bills while increasing the value of the home. Earlier, the maximum amount the FHA allowed for upgrades was $8,000. That stipulation was recently modified, so now the maximum amount of the portion of the EEM for energy improvements is to be the lesser of 5 percent of the value of the property or:

• 115 percent of the median area price of a single family dwelling; or  150 percent of the conforming Freddie Mac limit.

Also, under the stimulus plan, upgrades are eligible for a tax credit of 30 percent of qualifying costs up to $1,500, but this is only through 2010.

Who Offers It and How Can You Qualify?

>> EEMs are sponsored by federally insured mortgage programs (FHA and Veterans Affairs) and the conventional secondary mortgage market (Fannie Mae and Freddie Mac). Lenders can offer conventional EEMs, FHA EEMs, or VA EEMs. For instance, anyone eligible for the FHA section 203(b) mortgage insurance can apply for an EEM, once the cost of improvements and estimated savings are determined by a home energy-rating system consultant.

The first step is to have a CHEERS® rater or another approved energy rater complete an analysis of your home and obtain a report, which you then submit to the lender. The main criterion is that your savings after upgrades should exceed their cost.

“The CHEERS® report will show the existing condition of the house after conducting several tests, all of which determine how much air leakage there is and the estimated savings and future utility bills after improvements are made,” Maddux says. Raters are independent, and some may also be able to coordinate the entire upgrade process for you, for a fee.

Which Upgrades Qualify?

>> Insulation, new furnaces, air-conditioning and heating units, dual-pane windows, duct system and air leakage repairs, water heaters, and lighting.

More Info:

• ENERGY STAR: www.energystar.gov/

• To find out more about the FHA requirements and search for EEMs: http://portal.hud.gov/.

• For an FHA lender list: www.hud.gov/ll/code/llslcrit.cfm.

Padma Nagappan is a freelance real estate writer.