The Success of Real Estate Atlanta Blog

By Luke Mullins



While many Americans can't wait to cook their turkeys and decorate their Christmas trees, anyone trying to sell a home in the coming months will have an entirely different perspective of the holidays. More than three years after home prices peaked, sellers are still facing an unaccommodating market. On average, it takes between seven and eight weeks to sell a home these days. That's up sharply from four to five weeks back in September of 2005, according to the National Association of Realtors. But the real estate market's seasonal pattern will insert an additional hurdle in front of home sellers this winter. Since many home buyers with children plan their purchases around the scholastic calendar—starting their search in the spring, signing a contract in the summer, and moving in by late August—sales activity tends to erode as the days grow colder before bottoming out in January or February. That means anyone selling a home over the holiday season will have more than just long lines at the mall to contend with. Here are 10 tips to help sellers get the best deal they can during the sluggish, off-season housing market:


1. If you can, wait: With the dynamics of the national housing market heavily favoring buyers, those in a position to postpone their home sale—even for a few months, until the spring—should consider doing so, says Guy Cecala, the publisher of Inside Mortgage Finance. "If you are really looking for top dollar and what people got a couple years ago, don't even bother putting it on the market," Cecala says. "And there are a lot of people who are making that decision."

2. Know your local market: Nothing will affect the outcome of your home sale more directly than its price tag. But in order to determine an appropriate price, you've got to know the ins and outs of your local real estate market. Truth is, all those stories about the national housing slump aren't nearly as important as the developments going on right in your neighborhood. So sellers should do everything they can to take their local market's pulse: read the real estate section in the local newspaper, click through a good housing blog that covers the area, check out nearby homes that are for sale: How much are they selling for? How long are they staying on the market? Here is where a real estate agent with experience in that local market can be a big help. "You can't just look across an entire marketplace and say, "Here is my metro area, and here is what's happening,' " says Keith Gumbinger of HSH.com, a publisher of mortgage and consumer loan information. "You have to try to attenuate yourself with what is happening in your very individualized local market." In addition, take note of any nearby foreclosed properties, as well as changes to the local economy that could alter future housing demand.

[See 10 Secrets of Off-Season Home Buying.]

3. Price aggressively: Once you've got a handle on local market conditions, it's time to price the property. In so doing, be aware that today's buyers are demanding bargains. "The market is very impatient and unforgiving on high-priced houses," says Ron Phipps, a broker with Phipps Realty in Warwick, R.I. "If you are priced over the market, it is unlikely that anything will happen." That means you might have to list the property at 10 to 20 percent—depending on your local market, of course—below what you think it is worth, Cecala says. "Properly priced houses—i.e., discounted houses—are getting snapped up, and people will even bid on them," Cecala says. "If you are trying to capture what you saw [in home prices] two or three years ago, you may not be able to see that for five or 10 years. And people don't seem to accept that."

4. Negotiate your broker's commission: Since you may have to list your home for lower than you would like, it's worth asking if your broker is willing to accept a reduced cut as well. Broker's commissions averaged 5.20 percent in 2008, according to a March 2009 ForSaleByOwner.com analysis. And by handing a smaller cut to their agent, sellers can help soften the blow of the sluggish market. "You want to negotiate your commissions beforehand, especially if you are already pricing very aggressively," Gumbinger says.

5. Get preinspected: With the economy staggering under the weight of 10.2 percent unemployment, home buyers aren't walking around with a lot of cash for home repairs. That means homeowners need make all major repairs before putting the property on the market. To determine what repairs are needed, sellers should have a home inspector evaluate the house, says Judy Moore of Re/Max Landmark Realtors in Lexington, Mass. "In today's market . . . you can lose a sale over the silliest things after a home inspection," Moore says. "And it's not necessary if you get it taken care of beforehand."

Source:USA Today Sandra Block

Your real estate agent isn't returning your calls, your bank wants your income tax returns for the last 15 years, and you're getting some weird vibes from the people who live next door to the house you're trying to buy.

These home-buying potholes won't prevent you from taking advantage of the $8,000 first-time home-buyer's credit, so relax. A bill signed into law Friday by President Obama extends the credit, originally scheduled to expire Nov. 30, until next spring. That gives you plenty of time to Google the neighbors before closing the deal.

CALCULATOR: How much house can you afford?

And that's not all. The legislation also expands the credit, making it available to some home buyers who already own a home but would like to trade up to a nicer place.

The expanded tax credit was included in legislation that extends unemployment benefits by at least 14 weeks in all 50 states. Jobless workers in states with high unemployment rates are eligible for an extension of up to 20 weeks. On Friday, the government announced that the unemployment rate exceeded 10% for the first time since 1983.

Here's who stands to benefit from the expanded home-buyer's credit:

•First-time home buyers. The law defines "first-time home buyer" as someone who hasn't owned a home in the three years before the purchase. If your spouse owned a home in that time frame, you're not eligible. So, those eligible can claim a tax credit for 10% of the purchase price, up to a maximum credit of $8,000. The credit is refundable, which means that if you owe less than $8,000 in taxes, you'll receive a refund for the difference. The credit is not available for home purchases that exceed $800,000.

You can claim the credit if you sign a sales contract before May 1, 2010, and close before July 1. Members of the military who serve extended duty outside the USA have until July 1, 2011, to claim the credit, as long as they sign a contract before May 1, 2011.

The legislation also expands the income cutoffs for the credit. Single home buyers with modified adjusted gross incomes of up to $125,000 qualify for the full credit; those with MAGI of up to $145,000 can claim a reduced credit. For married couples who file joint tax returns, the credit phases out between $225,000 and $245,000. Previously, singles with MAGI of more than $95,000 and married couples with MAGI exceeding $170,000 were ineligible for the credit.

The credit doesn't have to be repaid unless you sell your home within three years.

•Existing homeowners. Home buyers who have lived in their current home for five out of the last eight years qualify for a tax credit of up to $6,500. The deadlines are the same as for first-time home buyers.

The income thresholds for existing homeowners are also the same as those for first-time home buyers. Likewise, existing homeowners can't claim the credit if they purchase a home for more than $800,000.

Your new home must be your principal residence. You can't use the credit to buy a vacation home, says Clint Stretch, managing principal of tax policy for Deloitte Tax.

However, there's nothing in the legislation that requires you to sell your existing home to qualify, says Mark Luscombe, senior tax analyst for tax publisher CCH. You could keep your first home as a vacation home or rental, he says, although that property would no longer qualify for tax breaks associated with a primary residence.

Anti-fraud measures

Last month, Treasury's inspector general for tax administration told Congress that thousands of taxpayers who weren't entitled to the home buyer's credit have claimed it. Some claimed the credit even though they hadn't purchased a home, and others weren't first-time home buyers, the inspector general said. The report also found that 582 taxpayers who were younger than 18 had claimed the credit, including one who was 4.

In response to those disclosures, the legislation contains provisions aimed at reducing fraud, Stretch says. The law prohibits anyone who is listed as a dependent on someone else's return from claiming the credit, and says taxpayers must be at least 18 on the date of the purchase to claim it. Taxpayers also will be required to attach a copy of their settlement agreement to the tax return.

If you fail to attach your settlement agreement to your tax return, Stretch says, the legislation gives the IRS the authority to adjust the amount of your credit without going through an audit.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: sblock@usatoday.com. Follow on Twitter: www.twitter.com/sandyblock