Lisa and Jim's Northern Nevada Real Estate Blog: February 2009

Part 4 of 6

#4: COACHES KNOW THAT LESS IS MORE.
 
Paradoxically, coaches often help people become more efficient by getting them to do less. In a book called Working Ourselves to Death, Diane Fasel writes that people who put in the most effort “are not the best producers in terms of efficiency and creativity.”
 
Instead, the most successful individuals are the ones who strike a comfortable balance between their work and personal lives. Many clients I work with grapple with trying to do too much, and wind up feeling trapped by their current circumstances. Typical scenarios include trying to meet unrealistic deadlines, being on the job “24/7,” feeling paralyzed by too many urgent demands, and fearing that pushing back will result in income loss.
 
Experience shows that when people decide to say no to excessive demands (self-imposed or not) and re-prioritize according to what brings them a sense of accomplishment and fulfillment, the conditions of their lives improve, almost “magically.”
 
The key is…you must really want to improve your life. Coaches prepare people to let go of the old to make room for the new.

Are you ready?

John Alexandrov, CEO
Real Estate Inner Circle
www.realestateinnercircle.net

Part 5 of 6

#5: COACHES CHALLENGE THE STATUS QUO

Living in the status quo can be a comfortable and safe place to be. If only we could maintain the status quo. An interesting thing about the world economy however is that status quo for all effective purposes means “out of business.” Changing market trends, shifts in competition and technology simply don’t allow us to remain in the status quo for very long.

Challenging the status quo is critical to our continued and long term business and personal success.

The Fifth Discipline Fieldbook contains an intriguing exercise called “The Five Whys” that can help to identify the origins of a business problem:

State a recurring situation (e.g. sales are falling) and then ask, “Why is this happening?” Write down the answer, and to that reply ask again, “Why is this happening?” (for example, sales are falling … why is this happening? Customers are opting out of email marketing … why is this happening? We’re sending them too many solicitations … Why is this happening?... ). Repeat
the questioning for a total of five “whys.” What emerges as the root issue may surprise you.

Once you identify your “root issues," you'll be well on the way to increased profits and growth.

John Alexandrov, CEO
Real Estate Inner Circle
www.realestateinnercircle.net

As it pertains to the First-Time Homebuyer Tax Credit, you are deemed a First-Time buyer and qualify if you, or your spouse, have not owned a principal residence in the three years immediately prior to your purchase... even if you have previously owned a home.  There are really two programs now... the Credit as created July 2008 that applies to all qualified purchases on, or after, April 9, 2008, and the Revised Credit, effective for purchases on, or after, January 1, 2009.  There are many similarities between the two programs, and some critical differences.  We will focus here on the Revised Credit for Buyers who bought after January 1, 2009, or will buy before December 1, 2009. 

The best part of the Revision for Buyers is that now the credit need not be paid back ... unless the home is sold within three years.  A sale within three years on homes purchased in 2009 will require that the entire amount of the credit be recaptured on sale.  Another benefit from the Revision is the maximum amount was increased to the lesser of ten percent of the cost of the home or $8,000.  Values in our region are such that you can pretty much figure on receiving the maximum of $8,000 here.  There are income limits - the full amount is available for individuals with adjusted gross income of no more than $75,000, $150,000 on a joint return.  It phases out above those caps up to $95,000 and $170,000 where it is then not available. 

Interestingly, IRS rules say your principal residence can take a wide variety of forms including "houseboats, housetrailers, cooperative apartments, condominiums," among others.  This affords new investment opportunities for the broad thinker.  How can you make it work for you?  

Pay attention to changes or refinements that may be enacted in the future that modify the Act and how it is applied.  The legislation happened quickly and there are certainly going to be questions of applicability that arise as individual case studies are addressed.  Idea - buy now, close escrow, and file your Credit request with your 2008 return before things change too drastically.  

Our Advice:  Don't count on this credit for help with closing costs.  This is a tax credit that will help you pay your tax obligation, not something you receive at the close of escrow.  If your tax liability is less than $8,000, however, you will get a refund for the balance.  You can elect to claim the credit on your 2008 tax return which makes sense considering the basic economic principal that "money sooner is worth more than money later."  Renting with a roommate you like?  With the low home prices and good interest rates we have these days, you can partner up on a home with a minimal down that will give you a payment not much more than you are paying in rent ... plus get $4,000 tax credit each!  

Remember that you will enjoy significant tax benefits with your new home ownership, and now you also have Great Pricing ... Great Interest Rates ... and a Great Federal Incentive.  What are you waiting for?  Control your destiny and buy the home you want now.  When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781- 5472.  carsonvalleyland@hotmail.com, www.carsonvalleyland.com

Here's a great chart that further summaries the major changes and improvements to the First Time Homebuyer Tax Credit. The chart compares the previous credit with the one retroactive to January 1, 2009.

As always, be sure to consult with your CPA and Real Estate Broker before making a decision to purchase, sell or exchange real estate.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

Direct: 714 276-7006

 

There are two seldom discussed points about the new $8,000 tax credit that present potential benefits to qualifying buyers.

1. The taxpayer can choose to take the tax credit on their 2008 or 2009 tax return, depending on which is more advantageous.

2. The taxpayer can amend or extend their 2008 tax return in order to receive the credit sooner!

Here are the details:

Question: If I'm qualified for the tax credit and buy a home in 2009, can I apply the tax credit against my 2008 tax return?

YES! The law allows taxpayers to choose ("elect") to treat qualified home purchases in 2009 as if the purchase occurred on December 31, 2008. This means that the 2008 income limit (MAGI) applies and the election accelerates when the credit can be claimed (tax filing for 2008 returns instead of for 2009 returns). A benefit of this election is that a home buyer in 2009 will know their 2008 MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their 2008 tax return, but who have already submitted their 2008 return to the IRS, may file an amended 2008 return claiming the tax credit. You should consult with a tax professional to determine how to arrange this.

Question: For a home purchase in 2009, can I choose whether to treat the purchase as occurring in 2008 or 2009, depending on in which year my credit amount is the largest?

YES! If the applicable income phaseout would reduce your home buyer tax credit amount in 2009 and a larger credit would be available using the 2008 MAGI amounts, then you can choose the year that yields the largest credit amount.

As always, the most important thing is to consult with your tax advisory before implementing any real estate or tax strategy.

Nancy Moeller, CPA, Real Estate Broker

Seven Gables Real Estate

Direct: 714 276-7006

To say it's exhilarating is an understatement. 

The local news confirms it....although the median prices are lower than they were a year ago, the number of sales increased.

Buyers who were apprehensive months ago, seem to be buoyed by the good news that list prices are lower, the interest rates are still low, there are quite a few properties to choose from, there's room for negotiation, and there are more incentives (tax credits) available for home buyers.

And according to DQNews reports:

California January 2009 Sales Report

An estimated 29,458 new and resale houses and condos were sold in California last month. That was down 22.1 percent from 37,836 in December and up 53.9 percent from 19,145 in January 2008. Sales have increased on a year-over-year basis for the last seven months.

Celebrate to inspire

In our office, we make it a practice to celebrate each escrow that is opened by making a general announcement to all the agents and the staff. Imagine our delight when nearly every day this week, someone opened an escrow. Every single sale is cause for celebration.

We are all pumped!

Buyers, we love buyers....we love lots and lots of buyers

Today, it was back-to-back appointments for me, starting with a young couple who want to buy an investment property for owner-occupancy, and ending with a more mature couple who want to downsize and find a one-level ranch home.

Hallelujah!

Real Estate auctions have been around a long time, but rarely have they occurred in our market ... until now.  We participated in two different local real estate auctions last weekend.  Are they a substitute for a traditional selling process?  That depends on your specific ownership status and property situation.  

One of our bank-owned listings was part of a 300-plus home auction based out of Las Vegas.  Advertised opening bids were low - some in Southern Nevada as low as $500 and $1,000.  Our listing opened at $89,000, list price is $229,415.  The low opening bids generated interest, but the proverbial "fine print", the Terms and Conditions, revealed the "catch" - an undisclosed reserve.  A reserve means that the Seller has a minimum price they will accept.  After substantial advertising, three weekend open houses, and a lot of fanfare ... it didn't sell at Saturday's auction.  

We attended another auction last Saturday that did result in a sale.  The property was spectacular -10.7 acres, magnificent views, over 3,775 square foot home with a 3,775 sq.ft. basement, 2,400 sq.ft. shop with four roll up doors, etc.  Well constructed and maintained, the property cost the Seller over $650,000 to build and was owned free and clear.  After extended traditional marketing at well over $700,000 without a sale the Seller hired an auction firm from Missouri to hold an absolute auction.  An absolute auction means the property will sell at the highest bid price with no minimum, reserve, or other "catch".  The auctioneer worked with a local real estate agent in marketing, staging and conducting the auction. 

The absolute auction attracted around ten bidders including our investor/friend that we were representing.  The auctioneer did a great job of disclosure and informing the participants of how the process would work.  At the advertised time, 10:07 a.m., the sale started.  After bids stalled at $350,000 there was a three minute break so people could consult with their real estate agent, spouse, partner, etc.  Bidding resumed and soon there were but two active bidders.  The successful bid was $400,000, effectively $440,000 as the Buyer had to pay a 10% auction fee (5% in the auction for our listing - pay attention to fees!).  The Seller sold his house.  

Our Advice:  If you are considering selling or buying a property at auction do your homework.  As a Seller you need to decide what kind of auction you will hold, reserve or absolute, and what the ramifications of each will be.  Ideally, auction frenzy will grip a bidder and they will pay too much ... isn't that why you are thinking auction?  Your home hasn't sold at a realistic market value so you want to find the greater fool?  Buyers at real estate auctions are quite savvy and are actually looking for something better than what they can get in the traditional marketplace.  We were pleased to see the number of people with money to invest.  Sure, they were typical Buyers in today's market looking to make a great buy ... but they were there with money in hand ready to spend it.  That's refreshing. 

Different than foreclosure or tax sales, themselves auction-based sales processes, these real estate auctions have a different feel to them.  Your personal situation and property specifics will determine if such an auction will work for you.  Consult with your real estate agent to see if it will help you meet your objectives.  When it comes to choosing professionals to assist you with your real estate needs... Experience is Priceless!  Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781- 5472.  carsonvalleyland@hotmail.com, www.carsonvalleyland.com