The Louisville Real Estate Blog of Joe Hayden, Realtor - Your Real Estate Expert!

Negotiating 101 - The Sacred Cows

2011-07-05T18:58:00-07:00

This is the first installment in a new series that I am going to write over the course of the next several weeks. The first few parts are not necessarily in order as they are providing component information to the entire Art of Negotiation. And in fact, since I just mentioned it - keep in mind throughout this series that there is an Art and a Science to negotiating for a home and you have to master both aspects to be successful. We will discuss the Art and Science of negotiating for a home throughout this series. To commence this series, I want to recognize and then begin to kill off several Sacred Cows of negotiating for a home that can lead to big trouble for a home buyer. All of these Sacred Cows are initiated from the perspective of a potential home buyer and are in no particular order. 1. 'The average price reduction in the area is 5%, so I should get at least 5% off of the asking price.' - As with most price reduction arguments put forward by a potential home buyer, this Sacred Cow assumes that the home's listing price is essentially 5% over the correct market price. What happens if the asking price is 10% over the market? You run a great risk of over-paying for the home if you believe this Sacred Cow. What if the home is perfectly priced on the market and it is a competitive listing? This Sacred Cow can cause you to offer too low and potentially lose the home to a more savvy buyer. Solution - Always objectively analyze the local market conditions affecting home pricing, the actual home's condition, appeal, and location, plus give consideration to your likely future buyer and their likely opinion of the home for a future sale. 2. 'Most homes in the area are selling for $25,000 less than asking price, so I want $25,000 off of the asking price.' - This is the exact same Sacred Cow as above only expressed in dollars as opposed to a percentage of price. It does not matter if it is a percentage reduction or a dollar figure reduction, you can make the same mistake of greatly over-paying the market or under-bidding for a competitive home. All a seller has to do to defeat a buyer that thinks like this is to raise their price by a figure close to the average area sales price and hope that the buyer does not do their homework. To make the point more clearly, taking $25,000 off of a listing that is $50,000 over-priced could be a devastating mistake for a home buyer. Solution - It's the same as above - always objectively analyze the local market conditions affecting home pricing, the actual home's condition, appeal, and location, plus give consideration to your likely future buyer and their likely opinion of the home for a future sale. 3. 'My friends say that I should make a really low offer and see what happens. What can I lose?' - Well, you can lose time and money, plus you risk losing a great home by following this Sacred Cow. We are in a highly-distressed market right now and if you are like most home buyers that I know you are struggling to find a suitable home. Have you considered why this is so in this 'buyer's market'? It is because most home sellers with the best homes who do not have to sell are holding their homes through the downturn. It makes it much tougher to find a great home and if you fail to reasonably negotiate for and acquire the best possible home for you, you can lose the time spent searching for that home, the time it takes to find another suitable home, plus you can lose money if the home you fail to acquire is one that will hold its value or increase in value as the market slowly recovers. This is not a market that will fix mistakes buy a negligent home buyer. Solution - Exactly the same as before - do your homework with the facts and think about the future. Keep in mind that I am not telling you to not negotiate for a home and keep in mind that home sellers frequently over-value their home and it requires aggressive negotiations to get to the correct price. I am telling you to not take a random stab in the dark about pricing as it can cost you big-time in the future. Do your due diligence! I could go on and on with describing Sacred Cows and then offering you solutions, but you would find that I am going to be offering essentially the same solution to every Sacred Cow. You absolutely must not put bounds on yourself based upon what you hear in the media, what you hear from friends and family, what your agent tells you, or by what you believed to be true in the past. If you are going to buy a home in this market, you have no choice but to perform your due diligence, objectively analyze the specific homes that interest you, research the actual home's appeal, condition, and location, and you must give consideration to how the home may appear to a future buyer when it comes time for you to sell. Stay tuned for the next article in our series on Negotiating. I will continue to outline the information you need to know as we break down the Art and Science of negotiating to turn you into a Louisville Real Estate Expert!

Welcome to the New JoeHaydenRealtor.com!

2009-04-03T08:34:00-07:00

Welcome to the new JoeHaydenRealtor.com website! After many months of hard work by Ben Peskoe of Sierra Interactive and myself, we have developed what I consider to be the finest real estate website available in the Louisville, KY real estate market. The primary focus and feature of this website is to allow you, the potential home buyer, to search the Louisville, KY MLS for all available homes for sale in the area. You can use an interactive map search, fill out a search form, search by community or you can contact me directly for assistance with searching for your new home. In addition to the search features offered on this site, you can save listings, email listings, request showings and request additional information about any home for sale in the Louisville area that interests you. I also offer you a wealth of information about buying a home in Louisville, KY, selling your Louisville home and information specific to first time home buyers. You can learn about all facets of a real esate transaction and closing, plus gain insightful tips and guidance designed to make your experience positive and enjoyable. Thank you for visiting my new site and let me know how I can help you!

The $8,000 IRS First Time Home Buyers Tax Credit

2009-04-15T00:24:00-07:00

This post is intended to help home buyers determine whether or not the $8,000 First Time Home Buyers Tax Credit applies to their particular situation. I have taken selected passages directly from the IRS website that explain in detail how the credit is supposed to work. As always when dealing with tax and financial issues you should secure the assistance of professionals in those fields to best protect your interests. The tax credit is available to qualified first time home buyers who have a home under contract by April 30, 2010 and close on the home by June 30, 2010. First let me present some scenarios from the IRS website to help you determine if you are eligible. These scenarios can be found at this link - First Time Home Buyer Credit Scenarios. Scenario One: If a single person (Taxpayer A) qualifies as a first-time homebuyer at the time he/she purchases a home with someone (Taxpayer B) that is not a first-time homebuyer and then later that year they marry each other, is the credit still allowed? Answer: Eligibility for the first-time homebuyer credit is determined on the date of purchase. If Taxpayer A, a first-time homebuyer, buys a house and then later that year marries Taxpayer B, not a first-time homebuyer, the credit is allowable to Taxpayer A. Taxpayer A may take the maximum credit. Scenario Two: Taxpayer A is a single first-time home buyer. Taxpayer B (parent) cosigns for A and does not qualify. Both names are on the mortgage. Can Taxpayer A claim the credit and, if so, how much? Answer: Yes. Taxpayer B is not a first-time homebuyer and cannot claim any portion of the credit, but A may claim the entire credit ($7,500 for purchase in 2008; $8,000 for purchase in 2009), if the home was purchased as Taxpayer A's primary residence. Scenario Three: A taxpayer owned her principal residence. Several years ago, she decided to relocate to a rented apartment, but did not sell the former residence. Instead, she rented it out to tenants. Now the taxpayer plans to buy another house and make it her new principal residence. Does she qualify for the first-time homebuyer credit? Answer: A taxpayer who owned rental property within the past three years is still eligible for the credit. The taxpayer cannot have owned and used a home as his or her principal residence within the last three years. Scenario Four: If husband and wife wanted to sell the home that the wife owned when they got married, and the husband had not owned a home within the past three years, could he qualify as a first-time homebuyer for the credit even though the wife would not qualify? Answer: No. The purchase date determines whether a taxpayer is a first-time homebuyer. Since the wife had ownership interest in a principal residence within the prior three years, neither taxpayer may take the first-time homebuyer credit. Section 36(c)(1) of the Internal Revenue Code requires that the taxpayer and the taxpayer's spouse not have an ownership interest in a principal residence within the prior three years from the date of purchase. The husband may not take the credit even if he filed on a separate return. Here are some questions and answers specifically targeted at persons who make their purchase in 2009. These questions and answers can be found at this link - First Time Home Buyer Tax Credit Questions and Answers. Is the IRS currently accepting e-filed returns that claim the new $8,000 homebuyer credit in/for the 2008 tax year? Answer: Yes. Taxpayers can file Form 5405, First Time Homebuyer Credit, electronically for home purchases in 2008 to claim the first-time homebuyer credit. IRS began processing these returns electronically on March 30, 2009. I bought my home in 2009 (early) and filed my 2008 tax return claiming the $7,500 first-time homebuyer credit that has to be repaid. Now the expanded law provides for an $8,000 credit that doesn’t have to be repaid. What do I need to do to get the $8,000 credit that doesn’t have to be paid back? Answer: You can file an amended return. If I purchase a home in June 2009, and have already filed my 2008 tax return, can I amend my 2008 return or will I have to claim it on my 2009 return? Answer: You can either file an amended return to claim it on your 2008 return or claim it on your 2009 return. I am in the process of buying a home. I expect to close the deal before December 1, 2009. Can I claim the first-time homebuyer credit now? That would allow me to use the refund for a down payment. Answer: No. You may not claim the credit in anticipation of a purchase that has yet to happen. Until you have finalized the purchase of your home, which for most purchasers occurs at the time of the closing, you do not qualify for the credit. IRS news release 2009-27, First-Time Homebuyers Have Several Options to Maximize New Tax Credit, contains details for filing options if the home is purchased after April 15, 2009. When must I pay back the credit for the home I purchased in 2009? Answer: Generally, there is no requirement to pay back the credit for a principal residence purchased in 2009. The obligation to repay the credit on a home purchased in 2009 arises only if the home ceases to be your principal residence within 36 months from the date of purchase. The full amount of the credit received becomes due on the return for the year the home ceased being your principal residence. If I claim the first-time homebuyer credit for a purchase in 2009 and stop using the property as my principal residence before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it? Answer: If, within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full amount of the credit is due at that time the income tax return for the year the home ceased to be your principal residence is due. The full amount of the credit is reflected as additional tax on that year's tax return. Form 5405 and its instructions will be revised for tax year 2009 to include information about repayment of the credit. I hope this post has given you basic guidance as to whether or not you qualify for the $8,000 First Time Home Buyer Tax Credit available for purchases in the year 2009. You can follow the provided links to learn more information!

Home Staging Tips to Help Sell Your Louisville, KY Home

2010-05-03T09:43:00-07:00

Did you know everyday clutter, bright paint colors and mix matched out-dated furniture could be the main reason buyers aren’t giving your home a second look? If you are thinking of putting your home on the market or you currently have your home listed with a Realtor, Home Staging can make the difference between a showing and a sale. Staging your home to sell helps to ensure that when buyers enter your home they like what they see. It helps them envision themselves and their furnishings living in the space. There are many things you can easily do to make sure your home doesn’t fall into the “what were they thinking” category. #1: Paint Colors – Be sure you have neutral paint colors throughout. (Don’t leave that one lime green bedroom because you think it won’t matter, it does). #2: De-Clutter – Be sure to de-clutter all surfaces including countertops in Kitchen and Bath as well as dressers in bedrooms. Be sure to clean out all closets. Rent a storage unit if necessary. A good rule of thumb is that you should be able to see the floor entirely inside every closet. This helps buyers to visualize the size of the closet. Don’t be fooled, they will look in there. We are all looking for ample closet space! #3: Furniture Layout – Your furniture should be set up in the most ideal way to show off your square footage. Sofas and other chairs should be centered on focal points in the room such as a fireplace or TV. Remove extra furniture so rooms are not too over-crowded. This will help buyers see the size of your room and visualize if their furniture will fit in it. It is also a trick to make your rooms look larger! Even if you don’t live this way on a regular basis, your home should be set up the way people expect to see it. Each room should be designated for a specific function. If you have your dining room set up as an office, you need to change it back to a dining room. You can look into borrowing items from friends or family members or possibly rent pieces as needed from local rental shops. #4: Curb Appeal – Don’t forget the outside of your house too! Your front entrance or porch makes the first impression on buyers. They will decide within 15 seconds or less whether they want to enter your home or keep driving. Don’t be the one they pass by! Make sure your front door is freshly painted and your house numbers, mailbox and lighting are updated and clean. Add some freshly planted flowers to your porch to show someone who cares about the property currently lives there. We hope that these tips will set you off in the right direction. If you live in Louisville, KY or the surrounding areas, we would love to assist you. We offer different packages for Home Staging – We give “quick” staging consultations with a written report telling homeowners what changes are most advantageous for them. We will work with you picking paint colors, moving furniture and helping you to decide what should stay and what should go! This can all be done in a 1-2 hour visit depending on the size of your home. We also offer a more comprehensive staging package for homes that are vacant and need furniture rental. You can contact us at 502-338-8687 or visit our website at J Renee Designs. You can get great inspiration and information about all things Louisville at our blog: Louisville Design Blog.

Home Inspections

2009-10-02T08:45:00-07:00

A professional pre-purchase home inspection can reduce anxiety by screening for problems and itemizing them in a comprehensive report. This home inspection report may include approximations of repair costs and recommendations of useful upgrades to the property systems. The general result of a professional home inspection is that property buyers make significantly more informed purchases. Screening for Problems: All homes have strong and weak points, they are not always what they seem. Gain the perspective and sound information you need to make better decisions with a home inspection performed by an experienced professional home inspector. A good home inspector works through a very long checklist of potential concerns to identify the major and minor deficiencies in the home. A good report will clearly describe the problems and illustrate them along with the what-to and how-to of repairs. Provide Owners Benefits: Home owners who are planning to make improvements to their homes in order to increase its market value would be well advised to have it inspected first. A home inspector can help prioritize home improvements and offer advice on the best ways to approach repairs. More importantly, an inspector can help the seller identify potential or undiscovered problems before those problems become material for contract contingencies. By taking a pro-active approach one can avoid the frustrations many owners encounter when they are asked to re-negotiate their contracts because of unanticipated problem areas. Credentials: Like any other professional, home inspectors have varied degrees of expertise. All home inspectors should be licensed and carefully screened. Additionally, home inspectors learn from experience. It takes a few thousand inspections and a more than a few complaints for a home inspector to LEARN what it takes to satisfy clients. This post courtesy of Michael Del Greco of Accurate Inspections in New Jersey. Please see this list of home inspectors in Louisville, KY.

Use the $8,000 First Time Home Buyer Tax Credit as a Down Payment

2009-06-03T10:36:00-07:00

It's official! Qualified first time home buyers can use the $8,000 tax credit as a down payment towards the purchase of their new home by following certain guidelines. This change in lending policy was announced last week by the HUD Secretary and is designed to further relieve the strained housing market. Essentially, the HUD / FHA is now going to allow certain third-party vendors to lend you the money for the $8,000 tax credit as a second mortgage on the home that you will pay off once you receive the tax credit from the IRS. There are restrictions and guidelines that will need to be met to allow first time home buyers to receive this second mortgage, but if you qualify it could potentially be a very good deal. To use the $8,000 First Time Home Buyer Tax Credit as a down payment on a home you should first review the FAQ to make a preliminary determination if you are eligible. In addition, I recommend consulting a tax professional to ensure that you are indeed eligible before making any commitments to buying a home. Once you feel that you may qualify, contact me for further information and I will make certain all of your questions are answered.