The Cornerstone Group Louisville Real Estate Blog

Why a Realtor over "FSBO"

2011-09-07T07:21:00-07:00

WHY REALTORS OVER FSBO? Source: The KCM Blog It's hard to resist commenting on the story which recently appeared in the Wall Street Journal regarding Colby Sambrotto, the founder and former CEO of forsalebyowner.com. It seems the founding father and lifelong evangelist of the concept of selling your home without a real estate agent was forced to hire a broker to sell his home after failing at what he preaches others should do. After failing to sell his NYC apartment on his own as a For Sale By Owner (FSBO), Sambrotto hired a broker and paid a 6% commission in order to get the job done. His personal experience helps refute some of the myths Sambrotto has been espousing for over a decade. Let’s look at two of those myths: Myth #1 – You Will Pocket More Money Selling on Your Own Most FSBO sites say you can save the commission by selling on your own. What happened in Sambrotto’s sale? From the WSJ article: “The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers. By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.” Myth #2 – The Internet Alone Can Sell Your Home Many have said that, with the introduction of home search on the internet, hiring an agent is no longer a necessity. What happened to the FSBO guru when he attempted to only depend on the internet? From the WSJ article: “Looking to move his family to the suburbs, [Mr. Sambrotto] said he carefully staged his apartment for sale himself, and put it on the market. But after using a mix of websites to publicize his apartment, he said he had only ‘middling success’ and switched to a broker because many buyers were so reliant on brokers.” Bottom Line: There is a reason the real estate industry has been around for centuries: it performs a valuable service.

Enhanced Energy Star Program

2011-09-01T06:21:00-07:00

New 'most efficient' label takes Energy Star a step further By Taylor Knight, USA TODAY When was the last time you saw a commercial advertising a washer, dryer or some other appliance that didn't bear the Energy Star label for energy efficiency? It's probably been a while. In fact, the program, jointly run by the Environmental Protection Agency and Department of Energy, has fielded criticism through the years that too many appliances were winning the designation, which in some minds diluted its impact. Consider this from the EPA's Office of Inspector General in October, 2010: "We believe the Energy Star program has sought to maximize the number of qualified products available at the expense of identifying products and practices that maximize energy efficiency." Now, in its continuing effort to tighten the criteria for these appliances, EPA and the Department of Energy are announcing a new label, "most efficient," to recognize the best-of-the-lot products in terms of energy efficiency. The Energy Star Most Efficient program, which will operate on a pilot basis through 2011, has established top-performance standards for a limited number of appliance categories, including clothes washers, heating and cooling systems, televisions and refrigerator-freezers. Katharine Kaplan, EPA's team lead for Energy Star Product Development, says the first categories to be eligible were chosen based on data that showed that as a group they had "super efficient" levels and were also ones promoted at a higher level for their efficiency by utilities and state-sponsored utility programs. Specifications were not created "with a particular percentage of products in mind," Kaplan says. But the criteria are associated with the top 5% of energy-efficient products. EPA's guidelines say the most efficient products "must demonstrate efficiency performance that is truly exceptional, inspirational or leading-edge — consistent with the interests of environmentally motivated consumers and early adopters." At the same time, geography can be a factor for some products, such as cooling and heating equipment. What's high-efficiency in one region may not be in another, the guidelines say. Household names such as Sears' Kenmore, LG, Samsung and Panasonic are among those with products to earn the most efficient label in the program's rollout. Products earning the label can be seen at energystar.gov/mostefficient. However, the initiative is aimed at not only identifying the most efficient appliances currently available, but also to spur innovation among manufacturers. Originally the program aimed to recognize the top 25% in energy efficiency, but Consumer Reports in 2010 said roughly three-quarters of TVs, dishwashers and humidifiers qualified for Energy Star designation in 2009. The consumer magazine said the focus should be on toughening standards. "When more than 35% of all products sold in any category qualify for Energy Star, that should signal that the technology and economies of scale have reached a point where achieving an Energy Star is too easy and that the bar needs to be raised," the magazine said. Indeed, as more have met the standard, the program has stepped in and continued to raise the bar, Kaplan says. Now, program administrators "have upped the ante on the speed of our revisions," especially for fast-evolving products such as consumer electronics, she says. She denies that the "most efficient" initiative was spurred by criticism, but rather came from "EPA and DOE interests in driving efficiency faster and satisfying early adopters." Kaplan calls Energy Star "a market transformation program aiming to incrementally move the market" with the goal that eventually all the market might meet the criteria. The program also took criticism initially because manufacturers were able to certify the efficiency of their own products. But that's no longer the case. Both the base Energy Star products and the ones rated "most efficient" are now tested in EPA-recognized testing laboratories. Anticipating a second year for the initiative, the EPA is expected this fall to consider new categories for addition as well as to update the existing standards. "We see this as a great opportunity to do well for consumers as well as for the climate and the environment," Kaplan says. Contributing: Dennis Kelly

FM Warns of Short Sale Fraud

2011-08-30T07:03:00-07:00

Freddie Mac Warns of Short Sale Fraud

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Short sales are being used more frequently by homeowners, lenders, and investors to avert a foreclosure, and industry data released by RealtyTrac this week shows that these pre-foreclosure transactions are being pushed through at a faster pace.

Freddie Mac says its short sales have risen from about 4 percent of completed workouts in 2000 to nearly 14 percent in 2010. The GSE warns that with the increase in short sale transactions comes an increase in fraud.

Short sale fraud has become the top priority for Freddie Mac’s fraud investigation unit, according to Shelley Poland, single-family chief credit officer. She says the GSEis working with agents and others in the field to identify real estate professionals who rig sales and hide higher offers from Freddie Mac and the seller in order to turn around and flip the property for a profit.

“We have allies in this fight,” Poland said in a blog post. “There are many conscientious real estate professionals who want to do the right thing. We often receive calls in our servicing, quality control, fraud investigation, outreach, and HomeSteps divisions from real estate agents who know they’ve seen something inappropriate and won’t look the other way.”

She stressed that real estate fraud turns a shortsighted profit at the cost of the public’s long-term confidence in homeownership and the housing industry.

“We strongly believe responsible Realtors are America’s natural first line of defense against such scams,” Poland said.

Freddie Mac has begun reaching out to Realtor associations in target markets to educate them about the latest trends in short sale fraud, the red flags to watch for, and what actions they can take to stop it, Poland said.

In addition to flipping schemes, the GSE is seeing trends in which agents manipulate the short sale price and obtain a low broker price opinion (BPO) by inflating repair estimates or making the house look more distressed than it really is, something called reverse staging.

Freddie Mac prohibits the buyer, buyer’s agent, buyer’s attorney, or a third-party short sale negotiator to be the contact point for the agents preparing the BPO.

The company says fraudsters are falsifying title and loan documents to obtain mortgages to buy short sale properties that can be flipped, and manipulating the HUD-1 settlement statement to skim net proceeds from the sale.

As a result of the uptick in short sale issues, Freddie Mac now requires all of the parties involved to sign an affidavit attesting that it is a true arms-length transaction, Poland said.

“These affidavits not only deter individual participation but also give us a stronger legal path to enforce our rights,” she said.

Known perpetrators are added to the GSE’s “Exclusionary List” – firms and individuals barred from conducting business with Freddie Mac – and face prosecution from law enforcement agencies.

By Carrie Bay

What do you know about your Realtor

2011-06-28T06:16:00-07:00

How well do you know your Realtor? These statistics, compiled through member surveys of the National Association of Realtors, show the averages for those who participated. As an involved member of Greater Louisville Association of Realtors (GLAR) and the Kentucky Association of Realtors (KAR), I thought these numbers were a little low. At Cornerstone Group Realtors we emphasize education, both continuing professional education and designations. Our Realtors hold the following Designations: E-Pro, Accredited Buyer's Representative (ABR), Graduate of the Realtor Institute (GRI), Senior Real Estate Specialist (SRES), and Eco-Broker as well as having spent many class hour learning to assist our clients with the issues of distressed properties. Hours worked by all REALTORS® (nationwide): 40 per week Gross personal income by hours worked: $48,000 (median for 40-59 hrs.) Percent of business generated by REALTOR® personal web site (all REALTORS®): Zero: 37% Over 25%: 10% Real estate experience of all REALTORS® (median): 10 years REALTORS® by gender: Male 43%; Female 57% Formal education of REALTORS®: Some college: 32% Associate degree: 11% Bachelor's degree: 29% High school graduate: 9% Graduate degree and above: 11% Some graduate school: 8% Sides per agent: For all REALTORS® in 2009, the typical brokerage specialist completed 7 transaction sides or commercial deals Median tenure at present firm (all REALTORS®): 5 years REALTOR® affiliation with firms: Independent contractor: 81% Employee: 6% Other: 13% Source: 2010 National Association of REALTORS® Member Profile

Survey Finds Kentucky below Nationwide Average in affordability.

2011-06-20T07:28:00-07:00

I was reading an article today about home affordability around the country where they looked at the price of 4 bedroom, 2 bath homes. The survey was conducted by Coldwell Banker Real Estate and the results were interesting. California was the most expensive, but that shouldn't suprise anyone. Upstate New York was the most affordable; that was not what I expected. The average listing price of a home in Louisville was about $197,600, as indicated by the survey, which ranked the market as the 14th most affordable among 27 Kentucky markets sureyed. The most affordable market in Kentucky was Somerset ($151,000), and then Franklin ($151,600) and Radcliff ($154,300). The least affrodable or most expensive was La Grange, with an average listing price of $269,400 out of the 27 markets surveyed. That was followed by Versailles ($256,200), Elizabethtown ($237,376) and Lexington ($231,000). The surveyed showed the U.S. average listing was about $293,000 for a similar home.

Nationwide Open House Louisville

2011-06-02T17:10:00-07:00

Gas Prices Influence Buyer Behavior

2011-05-25T06:49:00-07:00

Daily Real Estate News | May 18, 2011 | Share High Gas Prices Trigger Changes in Buyer Behavior The rise in gas prices is influencing buyer decisions as they shop for a new home, causing more buyers to make short commutes and home offices a top priority, according to a new Coldwell Banker survey of more than 1,000 of its real estate professionals about buyer trends. Seventy-five percent of the real estate professionals surveyed say the spike in gas prices is influencing their clients’ decisions on where to live. What’s more, if gas prices continue to increase, 93 percent predict that even more buyers will choose to live somewhere closer to their work. Gas prices are topping $4 a gallon and higher, and are up about 30 percent over last year, which is starting to put a dent in many Americans’ pocketbook. More real estate professionals also report that the rise in gas prices is prompting more buyers to look for homes that will allow them to work-from-home. Indeed, 77 percent of those surveyed say that more of their buyers are showing an interest in having a home office compared to five years ago. Gas prices also seem to be spiking a renewed interest in urban living. More than half of real estate professionals surveyed say they are seeing more buyers wanting to target homes in urban areas compared to five years ago, citing shorter commute times, being able to walk to more places, and being near public transportation as the most likely reasons for the urban-area migration. More buyers are also choosing homes closer to shops and services due to the increase in gas prices, according to the survey. Source: “Coldwell Banker Real Estate Survey Finds Spike in Gas Prices Is Impacting Where Home Buyers Choose to Live,” MarketWire (May 18, 2011) and “In Consumer Behavior, Signs of Gas Price Pinch,” The New York Times (May 17, 2011)

Spring is the time for bed bugs.

2011-03-30T05:24:00-07:00

As an integral part of the earth's eco system, insects and other pests are each beneficial in their own way, but also problematic when they infest a house. Spring is the season when folks have to be vigilant to the stepped-up activity of insects such as ants, spiders and termites. Some can cause damage to your home’s structure while others can cause bodily harm. Some can spread diseases while others just bite. One insect that has been a problem for centuries is the bed bug. The extensive use of pesticides that began back in the 40s helped to reduce bedbug populations through the proceeding decades, but the use of certain insecticides decreased due to environmental and health hazards. Since then, the rate of travel and the incidents of bed bug infestations have increased dramatically. Adult bed bugs grow to be small, oval, wingless insects that reach about 1/4 inch in length. They’re flat, reddish-brown bodies may be mistaken for a tick or small cockroach. They don’t develop wings, so they can’t fly. They do their thing mostly at night – biting unsuspecting victims as they sleep. The bit itself isn’t painful, but the saliva injected under the skin could lead to itchy, swollen areas, which can become infected when scratched. The bed bugs are crazy hitchhikers sometimes latching on to consumer products like new clothing. While sanitation is a factor, bed bug infestation can be found in any home. Mattresses, box springs and other upholstered furniture are primary targets, but folks and exterminators are finding them even in places like televisions sets, computer keyboards and electric switches. They reproduce quite rapidly; female bed bugs can lay five eggs a day. Newly hatched nymphs are a little more than a dot. They can reach maturity in a month or so and feed on blood from humans or animals.

GE expands Smart Grid technology efforts to include home energy management.

2010-12-16T06:03:00-07:00

By Tilde Herrera Published November 30, 2010 Email | Print | Multiple Page View GE launched a new energy management business today aimed at helping consumers use smart grid technologies to reduce their household energy use. GE's new Home Energy Management (HEM) unit brings together a range of smart energy products under one umbrella in anticipation of widespread smart grid technology deployment in the coming years. Already the company has rolled out several smart grid-ready products, including a water heater, refrigerator, and dishwasher. They are meant to complement a home energy management system called the Nucleus, which acts as a data storage and communication hub linking these appliances to the electric grid. All are designed using open protocols to encourage interoperability with other smart gadgets from different vendors, Dave McCalpin, HEM general manager, said in a phone interview Tuesday. "We very much believe that open protocols are the way to go. We're not naive enough to believe we can control the world." Still, the move sends a signal to the market that GE is determined to be a major smart grid player. Other companies, including big names like Google and Microsoft, have introduced applications to help consumers track household energy use in recent years, but they don't produce the appliances that tap into the network. "From our perspective, we think that part of the reason we're headed down this road and committed to being a leader in this space is because GE is uniquely positioned," McCalpin said, noting the company's experience both on the utility side of power generation and transmission, to the consumer-facing appliance side of the business. "We bring that consumer voice to the table," he said. "We bring the power and potential of the smart grid into consumers' hands." The Nucleus Energy Manager will debut early next year in the $149-$199 range, essentially a small computer that links to in-home smart meter, smart appliances, and wireless network within the home. It displays on a PC or smart phone, where consumers can monitor energy use and track electricity rates, set thermostat controls remotely, and program appliances to operate at times when electricity rates are at their lowest. Current smart grid-ready products include a refrigerator, clothes washer and dryer, hot water heater, ranges, microwaves, and dishwasher, with plans for more. In addition to some general smart grid advertising campaigns and participating in consumer-facing electronics forums, the company is also laying the groundwork for "when the time is right for a broader-based consumer education campaign," McCalpin said. GE is also focusing on educating public officials and utilities, helping them to visualize the potential impact of smart grid technologies on the residential market. Utilities, McCalpin said, now largely represent the front line in introducing the smart grid to consumers. "A lot of it is in their hands, in terms of how fast the market is going to evolve here," McCalpin said. "As utilities roll out residential smart meters and start to connect homes to the smart grid, the utilities are going to be at the forefront of helping consumer become aware of what that means for them." A video of the Nucleus Energy Manager is available here. Image courtesy of GE.

Have yourself a Merry Green Christmas

2010-12-15T06:35:00-07:00

Green Living: Have yourself a Merry Green Christmas! by Akhila Vijayaraghavan Posted On: November 22 I'm guessing Christmas shopping has already started for many and I know of some people who have put up trees already. Christmas is a nice season: it wraps up the end of the year, gives us time to contemplate, spend time with families, shop and eat. Who doesn't like all of that? Modern Christmas is also supremely consumerist, so like with other holidays, it is essential to consider your personal footprint. The recent survey released by price comparison site GoCompare via the Energy Saving Trust of British householders revealed just how much energy is wasted by Christmas lighting. 52% of respondents intended to display decorative Christmas lighting outside their house. With this in mind, GoCompare calculated that a display of 100 five-watt bulbs switched on for six hours a day over the festive period will consume 207 Kwh, the equivalent of 22.8 days of the average British household's electricity consumption. According to the American Environmental Defense Fund one of the easiest ways to lower Christmas electricity bills is by buying energy-saving LED decorative lighting, suitable for both outdoor and indoor displays. Though LED Christmas lighting often costs more than traditional alternatives, in the long term it consumes far less energy, which leads to lower electricity bills and reduces the environmental impact of the festive season. They also last longer. Lighting is not the only way to reduce your festive footprint, as ethical consumer this can be extended to the food and drinks you serve as well as the presents you give, cards, the tree you choose - the list is endless. There are now many options when it comes to trees as well. A real tree wins, because artificial trees are made of PVC which is hard to recycle. Christmas tree farms, have sustainability built into the business: when you cart your tree off for trimming, they'll plant another one to sell a few years down the line. However, make sure that you opt for an organic farm that does not use pesticides and fertilizers. Additionally find out if you can rent a Christmas tree, or plant one in your backyard which you can use year after year. Green gifts are an excellent idea as they not only promote your idea of ethical living but also reduce the user's footprint as well as yours. Think of recycled items like jewellery, or eco-friendly cosmetics or a Fairtrade hamper. Think of buying gifts that will benefit the people who make them, like handicrafts. When it comes to greeting cards, think of making your own or using recycled, eco-friendly paper or even ethically sourced fabric. How about the idea of not giving presents at all? Instead donate old clothes, toys and your time to a favourite charity or organize a day of volunteering. Maybe without the focus on stuff, the true meaning of the season can be discovered. 'Tis the season of giving, after all.

New Lead Based Paint Rules

2010-11-05T08:36:00-07:00

Yesterday I attended a class/lecture on the hazards of lead in older homes and what the new EPA rule will mean for families who want to renovate or for sellers with homes that require repairs. The lecture was delivered by on of our top renovation company's owner and an attorney from one of our leading real estate legal firms. As a Realtor I feel it's important to learn as much as we can about rule changes that directly affect our clients. This could have a significant impact on buyers and sellers. As a Broker, I need to make sure my agents are knowledgeable about safety issues. Buyers and especially those with young children, need to be aware of the hazards of lead in paint and possibly other building materials. Although it is much less a problem unless it is disturbed, what constitutes disturbed is important to know so the proper precautions can be taken. We also learned about how important it is for Realtors to inform their clients that if they find a home that need repairs that will be done by the seller, those repairs need to be handled following the new EPA guidelines if the they disturb areas containing lead. Sellers have it a little easier. If a seller is working on his personal residence, the rule are not as strict, but they still need to be aware to protect themselves and to properly clean and area after work is completed. Although we focus on the danger to children, lead can have adverse effects everyone. If you have any questions regarding the new EPA rules you can contact us any time. We can provide brochures and renovation guides. You can also check out www.epa.gov/lead/pubs/brochure.htm.

10 tips for hiring a contractor

2010-10-16T10:32:00-07:00

Getting your home ready to sell in a flooded market. Once you've decided to list your home there are few things to consider. First is how you're going to compete in the marketplace. Today there are almost twice the number of listing as 4 years ago. Hard to believe with the market being what it is, but the reality is there are many more option for buyers including distressed and updated homes. If you're planing to get top dollar for your home, your Realtor will go through your home with your and objectively point out the deferred maintenance items that need to be addressed before your ready to sell. If some of those items are beyond your capabilities, it may be necessary to hire a handyman or contractor. Below are 10 Tips for Hiring a Home Remodeling Contractor. RISMEDIA, October 16, 2010-- Through advice and stories shared by both contractors and consumers, StageofLife.com, a blogging resource for homeowners, discovered 10 important tips on how to find a trustworthy home remodeling contractor to help ensure the right person or company is hired for your next home improvement project. Tip #1: Does Your Contractor Have Proof of Insurance? Ask the contractor to have his insurance company mail or fax a copy of his current contractor insurance card to you. If the contractor can't do this - stay away. Why? If there is an accident at your home, you are then liable. This also applies to any sub-contractor or employee that the contractor may use - those individuals should have active insurance cards faxed or mailed to you as well. Tip #2: Did You Check References and See Photos? Ask for at least three references - with two of them being for the same type of project you are planning - and then call the references. Additionally, ask the contractor to provide photos of previous work, especially for the same type of project. If he produces lawn and garden photos and you're planning a bathroom remodel, you may want to check out another contractor. Tip #3: Does Your Contractor Take Debit or Credit Cards? Besides your ability to earn a few points, bonus miles, or cash back on your project, a good sign that a contractor is financially savvy and has a bank behind his business is his ability to take debit and credit cards. This doesn't just apply to big contracting companies. Many small, one-man shops will take cards if they have a good relationship with their business bank or credit union. Tip #4: Manners and Appearance? If the contractor drove his vehicle to your home to give you an estimate, take a look at the way he keeps the equipment and vehicle. Are things clean? Neatly arranged? If not - that's a big warning. The way a contractor treats his tools is a direct connection to how he'll treat your home. During the initial meeting, does the contractor present himself in a professional way? Do you feel comfortable around him or his employees? They will be working in your home after all. Tip #5: Clean Up Policy? Ask about the clean-up policy. For example, if your home improvement is a multi-day project, will the contractor be cleaning up at the end of every day or will he leave the dust, wood chips, and other mess laying there for day #2? The more mess in your home - the more it gets tracked around. Many homeowners find themselves with mouths gaping wide after the contractor has left for the day and their floors and home are dirty and messy around the project area. Tip #6: Will the Contractor Put It In Writing? Is your contractor willing to put both his bid and the scope of work in writing? If not - walk away immediately. You'll be surprised how many homeowners have been duped by contractors who verbally tell you what's included in their scope of work, but will then, in the middle of everything, require extra money to finish the remodel, thus holding you hostage with an uncompleted home project. Tip #7: Availability? Can the contractor get the job done in your timeline rather than his timeline? There's nothing more frustrating than if a contractor tells you that a job will be done by a certain date and then it isn't . On the flip side, if you can't find a good contractor that's willing to commit to your timeline, your expectations may be too high and you may need to adjust your timeline. Tip #8: Does Your Contractor Use "Subs?" Does your contractor plan on doing everything himself? Or will he "sub out" work to the "trades?" For example, if you are remodeling a bathroom, you may need a plumber, electrician, and carpenter. It's okay if the contractor subs work out to these specific trades - it shows he wants the work done right. Also, it's fair to say that you can expect your contractor to make money off the trades, or other sub-contractors, by marking up those quotes for the project. That is a standard practice to help the general contractor recover costs in the time it takes to manage the schedule. If you don't want to spend the extra money on your contractor marking up the trade quotes, then you should prepare to project manage the remodel yourself, but know this may limit your options on contractors willing to work with you. Tip #9: Quoting & Billing Procedure? Ask the contractor about his quoting procedure. Will it contain general information, or will it be specific? For example - most contractors will charge you for a fuel surcharge, material up-charges, waste removal, labor, etc. Some will show you these exact costs in a line item invoice, but others roll it up into one big bill. How much detail do you want? You should clarify that with your contractor upfront. Also - what is the payment or billing policy? Is money required upfront? If so, go back to #1 and #2 above to make sure you have the contractor's references checked and have a copy of his contractor's insurance. Tip #10: Did Your Contractor Get the Permits? Ask your contractor to take care of the permits. Although permits cost you money, the inspection process is meant to protect you from poor workmanship and to make sure that everything is being built to code. By following these 10 tips for hiring a home contractor, you'll feel more confident that you've found the right contractor for your remodeling job.

Louisville Area Statistics

2010-10-11T13:38:00-07:00

Louisville Area Statistics: It is interesting as we typically start to see a reduction in listings this time of the year. Currently there are about 10,000 active listings. That is almost twice what it was just 4 years ago and that is when the market was hot. If you're going to list your home today, you have to be ready if your expectation is to get top dollar. There are many home right now that are listing below or being reduced to below what the owner originally paid and that is across the Metro. LISTINGS Residential (Single Family & Condo) Oct. 4-10 = 504 Last Year = 573 SOLDS Sept. 26-Oct. 2 = 240 Last Year = 350

Owning now a better deal than renting in major markets.

2010-10-11T07:26:00-07:00

Owning Now Cheaper than Renting in 18 Major Markets Written by: Steve Cook Fri, October 8, 2010 Consumer Reports, Consumer Trends, Housing Markets, Market Trends, featured Print Rising rents and falling property values in many major markets are combining the change the rent vs. buy equation for thousands of potential homeowners around the country. Suddenly homeownership is within reach of buyers who don’t need a tax credit to make the numbers work. Rents in the third quarter were up 2.6 percent nationally over a year ago, and with occupancy rates climbing sharply, to 93.9 percent. The outlook is good for further rent hikes in the balance of the year, according to MPF Research. “While sluggish employment growth has triggered only mild new household formation, apartments are capturing a disproportionately large share of total housing demand,” said Greg Willett, MPF Research’s vice president of research and analysis. “That pattern is likely to be sustained for a while, in part because current mortgage qualifications standards have made it tougher to buy a home. Expansion of the country’s population of young adults, who tend to favor renting over ownership, also is working in the apartment sector’s favor.” At the same time the median price of an existing home fell 2.1 percent from July to August. Though prices are still 0.8 percent above last year’s level, most observers expect them to continue to fall as high levels of foreclosures flood many markets and demand slackens. Prospective buyers in more and more markets are finding that it is actually cheaper to buy than rent. The Trulia.com web site calculated the comparative costs of owning versus renting in the nation’s top 50 markets and found that in 18 markets it is much less expensive to buy than rent. Top five markets in which to buy are Arlington, TX, Fresno, CA, Miami, FL, and Mesa and Phoenix, AZ. “Choosing to buy a home or continue to rent is a highly personal financial and life decision that many people are grappling with right now,” said Pete Flint, CEO and co-founder of Trulia. ”In the wake of the foreclosure crisis and ongoing struggles in the industry, we created the Rent vs. Buy Index to provide a bit more context about current marketplace conditions to help prospective buyers make the right decisions for their own personal situations.” Trulia calculates the price-to-rent ratio using the average list price compared with the average rent of two-bedroom apartments, condos and townhomes listed on Trulia.com. To create the list, Trulia analyzed the largest 50 U.S. cities by population. High foreclosure rates, falling home prices and widespread unemployment have led to multiple Florida and Arizona cities reporting homeownership as more affordable than renting; Detroit and Columbus also made the list of Top 10 Cities for homeownership affordability compared with renting for similar reasons. On the other end of the affordability spectrum, owning is significantly more expensive than renting in national and regional job centers like New York, Omaha and Seattle. Top 10 Cities to Buy vs. Rent Rank City State Price: rent ratio 1. Arlington TX 7 2. Fresno CA 8 3. Miami FL 9 4. Mesa AZ 9 5. Phoenix AZ 10 6. Jacksonville FL 11 7. Detroit MI 11 8. Columbus OH 12 9. El Paso TX 13 10. Nashville TN 14 11. Baltimore MD 14 12. Tucson AZ 14 13. Long Beach CA 14 14. Raleigh NC 15 15. Houston TX 15 16. Albuquerque NM 15 17. Milwaukee WI 15 18. Indianapolis IN 15 Trulia calculated the price-to-rent ratio for the 50 largest U.S. cities using the average list price compared with the average rent on two-bedroom apartments, condos, townhomes and co-ops listed on Trulia.com. This Index considers both the total cost of home ownership against the total costs of renting (examples of costs for both home ownership and renting outlined below). Sample Price-to-Rent Ratio Calculation: Average List Price: $90,445.60 Average Rent: $936.30 Price-to-rent ratio: $90,445.60 ÷ ($936.30 x 12) = 8.05 Price-to-Rent Ratio of 1-15: It is much less expensive to own than to rent a home in this city.

Freddie Mac Chief Economist Frank E. Nothaft

2010-10-06T18:36:00-07:00

Yesterday I attended a great presentation at the Olmsted in Louisville hosted by Fifth Third Lending. There were a couple of speakers, the first being a Real Estate trainer with a message on how to keep your clients by making their transaction easy...Easy-fy your transaction and the experience for your clients and they will come back. He was quite entertaining and very informative. The second speaker was Frank E. Northaft, Chief Economist with Freddie Mac. As most economist do, he had a computer full of slides to illustrate his points about the economy. I wont go into details here; there are many blogs for those of you who really understand all that and want to read about it. The overall message was a positive one; things are getting better. Mr. Northaft showed data that went back several years, but also some projections from the FOMC (Federal Open Market Committee). It was a little bright spot in his presentation, but it's great that those who run our Federal Reserve Banks and help shape our monetary policy feel that we are moving slowly, but still moving forward. With the lowest interest rates in almost 60 years and prices coming down or holding steady, it is a great time to buy a home or investment property. Unless you're concerned about your employment prospects in the next year or two, you should be looking. You can search our site for some homes that look good to you, but sit down with one of our agents and talk to them about your ideas and your needs and let them explain the market and help get you qualified. Let them do the work and make it EASY.

Louisivlle Metro Home Sales

2010-08-16T11:49:00-07:00

Statistics Residential (Single Family & Condo) LISTINGS August 9 - 15, 2010 567 Last Year 561 SOLDS August 1 - 7, 2010 192 Last Year 243

Area Statistics 7/26

2010-07-26T09:02:00-07:00

Current Area Statistics, two of which are ours at Cornerstone Group Realtors; 1608 Eastern Parkway and 3320 Bardstown Road unit 127. Call to see these or any other area listing or search using our search tools. Single Family & Condo LISTINGS Residential July 19 - 25, 2010 540 Last Year 565 SOLDS July 11 - 17, 2010 212 Last Year 276 Sold information reported in these statistics is based on the date the sale was entered into the MLS system. MLS rules require that the listing broker report properties as sold within 48 hours of closing. Please assist us in making sure our statistical information is accurate by properly recording your property status in a timely manner.

90 Percent of home owners do not regret purchasing their current home

2010-07-25T08:45:00-07:00

90 Percent of Americans Do Not Regret Buying Their Current Home Many home owners are happy with their purchases. The small percentage of home owners in the following study that were unhappy sited issues regarding financing. How you pay for your new home and the guidance you receive is very important to a smooth transaction and your ability to stay in your home after the sale. If you don't already have a financial professional in your corner, your Realtor can usually suggest several option for financing. You must ask the right questions and make sure you're comfortable with all aspects of the loan, fees and payment. Your Realtor may be able to shed some light on items that may not be very clear or explain the process, but they are not a lender; there's no substitute for a professional mortgage specialist. RISMEDIA, July 24, 2010--A new study released by Bankrate, Inc. shows that, even with home prices sliding and mortgage rates the lowest in decades, the vast majority of Americans do not regret buying their current home. The poll, conducted by Princeton Survey Research Associates International, can be seen in its entirety here: http://www.bankrate.com/finance/mortgages/poll-few-homeowners-regret-purchase- 1.aspx. Among the findings: -- Ninety percent of homeowners say they don't regret buying their home versus a mere nine percent who said they do; -- Among those who regret buying their homes, the most common reasons cited were because they cannot sell their home and move on along with those who say they regret their purchase since they can't afford their monthly mortgage payments; -- Only eight percent of Americans don't know what type of mortgage loan they have, down from 26 percent who didn't in a Bankrate poll commissioned two years ago; -- Fixed-rate mortgages are rising in popularity with 79 percent of those polled saying they have a fixed-rate mortgage on their home; -- Wealthier Americans most overwhelmingly favored fixed-rate mortgages with almost 90 percent of those polled who make over $75,000 saying that their home was paid for with a fixed-rate mortgage. "It's surprising - and reassuring - to hear 90 percent of homeowners say they don't regret the purchase of their current homes," said Greg McBride, CFA, senior financial analyst for Bankrate.com. "And all the nasty headlines in the past two years have really moved the needle in terms of mortgage awareness, with a significant drop in the percentage of borrowers who don't know what type of mortgage they have." This national random-digit-dialed phone study of 1,001 adults 18 or older was conducted for Bankrate by Princeton Survey Research Associates International. The sample was weighted by demographic factors including age, gender, race, education and census region to ensure reliable and accurate representation of adults in U.S. households. The overall margin of error for the survey is +/- 3.5 percentage points based on the total sample.

Kentucky New Home Tax Credit

2010-07-22T05:54:00-07:00

New Home Tax Credit From the KY Department of Revenue: The New Home Tax Credit is a nonrefundable credit, up to $5000, against individual income tax allowable to a qualified buyer, provided a cap of $15,000,000 for all approved New Home Tax Credits has not been met. Click here for additional clarification about this credit in a new administrative regulation, 103 KAR 17:150. Do You Qualify? You Can Claim the Credit if All of the Following Apply: Your qualified principal residence is a single family dwelling; Your qualified residence is purchased to be the principal residence of the qualified buyer(s) for a minimum of two (2) years; You purchase a new home after July 25, 2009 and before January 1, 2011; and, You meet qualifications and receive approval from the Department of Revenue. You Cannot Claim the Credit if: Your new residence has been previously occupied. Your application is received after the New Home Tax Credit cap has been reached. You are eligible for first time homebuyer credit ($8,000 credit) under Section 36 of the Internal Revenue Code or the amendment to the homebuyer credit signed into law on November 6 as part of the Worker, Homeownership, and Business Assistance Act of 2009 ($6,500 credit) and purchased your home on or before November 6, 2009. You are building or contracting construction of your own home. The new home tax credit is only for those taxpayers who purchase a new previously unoccupied single-family dwelling. "Purchase" means a point within the approved times when escrow closes between the qualified buyer and the seller of the qualified principal residence. Homeowners who build newly constructed homes on their own land do not qualify for the credit based on KRS 141.388. Your application is not received via FAX within seven (7) calendar days from the purchase date. Any application submitted via mail will be denied. How to Apply To Apply For the Credit: Submit a Kentucky Form 40A103 Application for New Home Tax Credit application via fax within seven (7) calendar days of the escrow closing between the buyer and the seller. Kentucky Form 40A103 may be accessed via link to application. FAX to the Department of Revenue at (502) 564-3706 The Department of Revenue will notify taxpayers in writing if their application has been approved or denied. Using the Credit Approved Buyers Qualified buyer(s) approved for the credit will receive a credit allocation letter with a four (4) digit approval code from the Department of Revenue. This letter must be attached to the income tax return filed for the taxable year during which the qualified principal residence was purchased. Electronic filers: Information from the credit allocation letter and the New Home Tax Credit Worksheet D (for electronic filers only) must be included with any electronic return submitted. Make sure the software used to submit the return can meet these requirements. Use of Credit Against Tax Liability Credit is claimed on page 1 of your Kentucky tax return. Approved credit, up to $5000, applies to Kentucky tax liability, after applying any allowable credit for Family Size Tax Credit, Education Tuition Tax Credit, and Child and Dependent Care Credit. For example, if your Kentucky tax liability, after allowable credits, is $7000, then you would be allowed the full $5000 credit and only owe the remaining $2000. New Home Tax Credit is NONREFUNDABLE A nonrefundable credit means that any unused portion will not be refunded and may not be carried back or forward to another tax year. For example, if your Kentucky tax liability, after allowable credits, is $2000, then your credit would be limited to the $2000 liability and the remaining amount lost. Terms Defined “Approved time” means the period of July 26, 2009 through December 31, 2010. “Authorization Code” means the four-digit code provided with the credit allocation letter. A “qualified buyer” is a resident of Kentucky that purchases a qualified principal residence. A “qualified principal residence” means a single-family dwelling, built to be occupied by a single family. It must be certified by the seller as having never been occupied and must be the principal residence of the qualified buyer for a minimum of two years. It may include a detached house, an attached condominium or townhouse, or a manufactured home, including house trailers and modular homes. “Purchase” means a point within the approved times when escrow closes between the qualified buyer and the seller of the qualified principal residence. For additional questions or information about this credit: Please call Taxpayer Assistance at (502) 564-4581, or Take advantage of our Live Help service available on the main page of Revenue’s Web site. Last Updated 6/8/2010

Energy-Efficient Homes through Smart Design

2010-07-21T03:51:00-07:00

Smart Design Creates Energy-Efficient Home By Jean Patteson RISMEDIA, July 21, 2010--(MCT)--The Lake County, Fla., home Paul Fallman shares with his wife and two daughters has 4,000 square feet of living space. Yet his electric bills have averaged just $180 a month so far this year, despite record-low winter temperatures and close-to-record summer highs. His natural-gas bill for two tankless water heaters and a fireplace averages $25 a month. "My focus with this house was energy efficiency," says Fallman, owner of Fallman Design & Construction in Clermont, Fla. "It's so easy to do. It's a great marketing angle. And it's the right thing to do." The key to the energy efficiency of the lakefront home, which is certified by the Florida Green Building Coalition, is its south-facing orientation, said Fallman, who has made green-building his specialty. Before starting construction, he commissioned a solar-path study to track the angle of the sun in winter and summer. He used the information to design a home that would be flooded with sunlight during the cooler months, but shaded by porches, balconies and extra-wide roof overhangs when temperatures soar. "It's the single thing a builder can do to make a home more efficient without much more expense," he says. The three-garage home on the site of the historic Clermont Yacht Club, which was torn down in the early 1950s, also is angled to maximize views across two-mile-wide Lake Minnehaha. Facing the lake on the first floor are the kitchen, dining room, living room and master suite, which either open onto screened porches or are shaded by wide roof overhangs and high-performance windows — tinted, Low-E4 and argon-filled. Upstairs, covered balconies or roof overhangs shade the windows and walls of the three bedrooms and loft area. An apartment above a second garage has similar features. To receive certification from the green building coalition, a home must be inspected by a green certifier and an energy rater, Fallman says. (Approved certifiers and raters are listed on the coalition's website, floridagreenbuilding.org) The green certifier makes as many as 10 checks of the site and home before and during construction, checking for items such as site drainage and properly sealed plumbing pipes, doors and windows. The energy rater conducts a duct-blast test, blower-door test and thermal-envelope test to determine how airtight the home is. The Fallman home has a Home Energy Rating System (HERS) score of 62 out of 100. The lower the score, the more energy efficient the home. For a home to be Energy Star-rated, it must score 85 or lower. (For more details on Energy Star ratings, visit energystar.gov) At present, about 70 percent of the payback for building green is improved energy-efficiency, Fallman says. Spending $3,000 to $5,000 on equipment upgrades and an additional $2,000 to $3,000 on green construction will pay for itself in 5 to 10 years, he figures. Certainly, better air-handling equipment cuts down on dust and indoor humidity; better insulation creates a quieter home; drip irrigation in the yard saves water. The Fallman home, which is on the market for $1.1 million, also features these energy-efficient elements: Fifty-year shingle roof with Icynene spray-foam insulation, which: keeps cool air in, heat and dampness out; protects against dust and insects; and improves structural strength. Concrete-block walls with rigid insulation on the first floor, and 2x6 frame with R-19 batt insulation on the second floor. Semi-air conditioned, 200-square-foot attic, which keeps ducts about 30 degrees cooler in the summer, so the air-conditioner doesn't have to work as hard. Low-E4 windows with tinted, high-performance glass and wood frames, which don't conduct heat. Non-conductive fiberglass doors with insulated glass. Dual-compressor 20 SEER (seasonal energy efficiency ratio) air-conditioner and timeable bathroom fans for humidity control. Two tankless gas water heaters. Gas fireplace with electric ignition. Windows at the top of the stairs to vent rising hot air and ceiling fans in many rooms. Energy-Star appliances, which use less energy. Compact fluorescent lighting. (c) 2010, The Orlando Sentinel (Fla.). Distributed by McClatchy-Tribune Information Services.

Low Ball offers; how to handle; area statistics

2010-07-20T06:03:00-07:00

Things to Consider When Receiving a Low-ball Offer Is a low-ball offer a good chance to see things with fresh eyes? The low-ball offer is hardly uncommon, especially with the number of all-cash "let's make a deal" buyers who feel that a "bad news economy" gives them purchasing leverage in any market. Now, obviously you have an obligation to present all offers. And yes, your seller might be insulted at first, but a low-ball offer is a good time to reflect on the listing, your buyer, and possibly see things with fresh eyes. Here are a handful of things to consider: What's your seller's position? Are they facing foreclosure? Are they facing other personal or professional deadlines? Are there any cosmetic or physical reasons the listing might be encouraging low-ball offers? Is this a wake-up call? How close do you think the offer is to a likely appraisal? Will the appraisal strengthen or weaken your negotiating position? Do you think the buyer is legitimately open to negotiation, or is this a "see if it sticks" pitch? Are they serious buyers? Are there recent comps which suggest this "low-ball" isn't as low as it seems? How confident are you of the pricing? Finally (and most importantly): Is this low-ball offer a great opportunity to have a difficult conversation with your seller regarding any/all the above issues? Here also are current area statistics: Statistics Residential (Single Family & Condo) LISTINGS: July 12 - 18, 2010 690 Last Year 646 SOLDS: July 4 - 10, 2010 179 Last Year 251

Louisivlle Metro Home Sales

2010-07-12T10:48:00-07:00

Here are the latest Listing and Solds stats for the Louisville Metro Area. Listing were down a bit for the first couple of weeks in July. The last stats posted show listings almost even. Almost two months after the Tax Credits have ended and we are still posting higher sales than last year; that is encouraging. We have been less dramatically affected by falling values, but they have declined in some areas. Some are less willing to list if they don't have to move. The upside? You're benefiting from lower prices on the buy side of your transactions. I just sold a condo for a client and although they didn't do as well because of the market, they saved when they purchased. Sellers also need to remember is that it's a business transactions; you must look at the numbers and try to let go of the emotional aspects of owning your home. I asked a client to make some changes in his home just before we listed to help it show better and he responded that it was no longer his house; it was for sale. That may sound cold, but it helps to have a more detached attitude so as not get too emotional and loose out on a serious offer that could work for you and your financial goals just because you couldn't let go. Statistics (Single Family & Condo) Residential LISTINGS July 5-11, 2010 510 Last Year 633 SOLDS June 27 - July 3, 2010 355 Last Year 335

Area Statistics

2010-07-08T05:53:00-07:00

Statistics Residential (Single Family & Condo) LISTINGS June 28 - July 4, 2010 575 Last Year574 SOLDS June 20 - 26, 2010 326 Last Year 273 Sold information reported in these statistics is based on the date the sale was entered into the MLS system. MLS rules require that the listing broker report properties as sold within 48 hours of closing. Please assist us in making sure our statistical information is accurate by properly recording your property status in a timely manner.

Congress Passes Extension

2010-07-01T05:06:00-07:00

There had been earlier reports that the extension to close your loan and still be eligible for the Homebuyer Tax Credit (HTC) had passed when it had not. It was attached to an extension of unemployment benefits that the Senate didn't want to pass because of deficit issues. Now it would appear that we have the extension. This should have come a month ago to save a lot of home buyers, loan officers and underwriter the stress and long hours to get under the wire. After a close brush with the deadline, Congress has passed an extension of the Homebuyer Tax Credit closing deadline, the Homebuyer Assistance and Improvement Act (H.R. 5623). The extension applies only to transactions that have ratified contracts in place as of April 30, 2010 that have not yet closed. The legislation is designed to create a seamless extension to new closing deadline for eligible transactions, which is now September 30, 2010. There will be no gap between June 30 and the date the President signs the bill into law. NAR worked closely with Congressional leaders on both sides of the aisle to enact this important legislation. Extending the Tax Credit Closing deadline will help provide additional stability to real estate markets across the nation. For additional information on the extension visit www.realtor.org/government_affairs Additionally, the United States Senate has passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569) an extension of the National Flood Insurance Program until September 30, 2010. This will allow transactions to move forward. The bill is retroactive and covers the lapse period from June 1, 2010 to the date of enactment of the extension. For more information on the flood insurance program visit www.realtor.org/government_affairs

What is Xeriscaping?

2010-06-29T07:55:00-07:00

I attended a Volunteer Appreciation Party for Pandora Production last weekend and ran in to a client that is very passionate about the ecology and sustainability. We were discussing her new landscaping in the front of her yard where she took everything out and replaced it with drought tolerant Kentucky native plants from a local nursery. I am planning the same type of move with the beds in the front of my house once I get the painting done; one step at a time. I came across this information and thought it would be of interest to my clients and others interested in sustainability and water conservation. Conservation Through Xeriscaping: A way to help preserve our most precious resource, water. Xeriscaping (or xerogardening) is the practice of landscaping and gardening in ways that reduce or eliminate the need for excess water. Taken from the Greek word, "xeros" (meaning dry), xeriscaping was initially designed to provide landscaping options for areas which are particularly sensitive to draught. Given that water is the most precious resource on the planet, you might find that your clients would be open to a conservationist's approach to landscaping their home. In addition to reducing the costs of watering and chemical maintenance, well executed xeriscaping can actually improve the curb appeal and value of a home. If you've heard a client recently bemoan their lawn or the hassle of maintaining it, you might introduce them to this green alternative. Below are a few links on the topic of xeriscaping: An Overview of Xeriscaping: http://eartheasy.com/grow_xeriscape.htm Google Images of Xeriscaping: http://tinyurl.com/23keqet A sample article featuring Florida homeowners who have embraced xeriscaping: http://www.beacononlinenews.com/news/daily/2751

Getting down to the Wire

2010-04-13T04:27:00-07:00

We are getting down to the wire. Less that 18 days left and I still have buyers calling to see if they can get in on the tax credits. You have to be under contract by the end of the month, but the deals I have that are trying to close are backed up due to underwriting backlogs. It is not going to be pretty come the end of May. Some of the listing I thought would be gone by now are still with out offers. Most Realtors would say it is the price, but I check the price regularly and it is priced well, but apparently buyers are not seeing the value and that is the key. Clients hate to hear that the price is an issue because most had to be strong armed to list at the price you suggested in the first place. The market will not end April 30th, but I think we need to do all we can to move these properties by the end of the month. How to do that is the question, because there are other strategies besides just lowering the price. Buyer clients are getting more and more to choose from today. I have one, who's condo I sold in less than a week, getting as many as five new listings their price range every couple of days. The home she really wanted received and offer just as we decided to make an offer ourselves. It was a nice home, but a little over priced; it will be interesting to see what it actually brings.

National Open House Day

2010-04-11T18:52:00-07:00

It has been a long weekend. This was the National Association of Realtor's National Open House Weekend. Here in Louisville, Kentucky, it was beautiful. I had several of my listing open with the help of some of the agents and it was pretty successful. We had the help of NAR pushing the open houses nationally and the buyers were out. Just the push we needed before the tax credits end. Other than the open houses, several of my sellers are now buyer and they took advantage of National Open House Weekend to shop. We are still running into multiple offers; some client prefer not get into an emotionally driven bidding war. The competition is getting tough for the good listings. There are several closing scheduled for this week if all goes well. Most are ready to go, but I have a Fannie Mae contract that has been a little bit more difficult than I would have thought. We will know tomorrow if it will close on time, but it is going to close. There is always something new in the industry; especially now with the banks and other lenders changing rules almost dally. I hope everyone has a great week. Check out my Facebook fan page for more about Real Estate, the economy and Sustainable building, remodeling, selling and living.

End to the Tax Credit just around the corner.

2010-04-09T07:00:00-07:00

Well according to my desktop countdown clock there are 21 day until the deadline for being under contract; closing will be another issue. I already have clients calling me with comments about how their lender is not being responsive and not getting back to them in a timely manor (with in 10 min.). I have heard many say the stimulus hasn't really done anything for the housing market; I guess we will see in May. It has made a difference with the group I work with; first time home buyers. I enjoy first time home buyers and guiding them through this process. I had the opportunity to make some long term clients in this market that will be ready to move up in the next 3-5 years and are already sending me referrals. If your ready to make the jump to home ownership, call, email, text, tweet or visit the website and find yourself a little slice of Louisville.

First Time Home Buyer Tax Credit: Basic Information

2010-03-30T13:45:00-07:00

Updated Nov. 6, 2009, to note new legislation. The new legislation extends and expands the first-time homebuyer credit allowed by previous Acts. The new law: * extends deadlines for purchasing and closing on a home * authorizes the credit for long-time homeowners buying a replacement principal residence * raises the income limitations for homeowners claiming the credit Q. What is the credit? A. The first-time homebuyer credit is a new tax credit included in the Housing and Economic Recovery Act of 2008. For homes purchased in 2008, the credit operates like an interest-free loan because it must be repaid over a 15-year period. The credit was expanded in 2009 for homes purchased in 2009, increasing the amount of the credit and eliminating the requirement to repay the credit, unless the home ceases to be your principal residence within the 36-month period beginning on the purchase date. It was further expanded in late 2009 to extend deadlines and to allow long-time homeowners buying replacement homes and people with higher incomes to qualify for the credit. (11/12/09) Q. How much is the credit? A. The credit is 10 percent of the purchase price of the home, with a maximum available credit of $7,500 ($8,000 if you purchased your home in 2009 or early 2010) for either a single taxpayer or a married couple filing a joint return, but only half of that amount for married persons filing separate returns. The full credit is available for homes costing $75,000 or more ($80,000 in 2009 or early 2010). Long-time homeowners who buy a replacement home after Nov. 6, 2009, or in early 2010 may qualify for a credit of up to $6,500, or $3,250 for a married person filing a separate return. (11/19/09) Q. Which home purchases qualify for the first-time homebuyer credit? A. Any home purchased as your principal residence and located in the United States qualifies. You must buy the home after April 8, 2008, and before May. 1, 2010 (with closing to take place before July 1), to qualify for the credit. For a home that you construct, the purchase date is considered to be the first date you occupy the home. Normally, taxpayers (including spouse, if married) who owned a principal residence at any time during the three years prior to the date of purchase are not eligible for the credit. This means that you can qualify for the credit if you (and your spouse, if married) have not owned a home in the three years prior to a purchase. However, a long-time homeowner can also get the credit for a qualifying replacement home purchased after Nov. 6, 2009. To qualify, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you by your new principal residence. If you make an eligible purchase in 2008, you claim the first-time homebuyer credit on your 2008 tax return. For an eligible purchase in 2009, you can choose to claim the credit on either your 2008 or 2009 income tax return. For an eligible purchase in 2010, you can choose to claim the credit on either your 2009 or 2010 return. (11/19/09) Q. If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land? A. Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit. Q. Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit? A. Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit. Q. Can a taxpayer who purchases a travel trailer qualify for the credit? A. A travel trailer that is affixed to land may qualify as a principal residence. Q. Can an individual who has lived in an RV qualify for the credit? A. For purposes of the first-time homebuyer credit, an RV with a built-in motor is personal property that is not affixed to land and does not qualify as a principal residence. Accordingly, someone who has owned and lived in an RV within the past three years may still qualify as a first-time homebuyer. Q. Can I apply for the credit if I bought a vacation home or rental property? A. No. Vacation homes and rental property do not qualify for this credit. Q. Who is considered to be a first-time homebuyer? A. Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase are considered first-time homebuyers. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008. In addition, Long-time homeowners who buy a replacement home after Nov. 6, 2009 or in early 2010 can also qualify. Under this rule, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you by your new principal residence. For an eligible taxpayer who, for example, bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009. (11/19/09) Q. Can a dependent on someone else’s tax return claim the first time homebuyer credit if they otherwise qualify? A. Different rules apply depending upon whether a dependent buys a home after Nov. 6, 2009, or on or before that date. Dependents are not eligible to claim the credit on any purchase after Nov. 6, 2009. However, a dependent who buys a home on or before Nov. 6, 2009 may qualify for the credit. (11/19/09) Q. Can a minor buy a home and claim the credit? A. Usually, no. However, different rules apply to purchases after Nov. 6, 2009 and those on or before that date. Minors are generally barred from claiming the credit on home purchases after Nov. 6, 2009. To qualify for the credit, a purchaser must be at least 18 years of age on the date of purchase. For a married couple, only one spouse must meet this age requirement. A dependent is not eligible for the credit, regardless of age. For purchases on or before Nov. 6, 2009, the tax law does not bar a minor from buying a home and claiming the credit. However, taxpayers who do not otherwise qualify for the credit do not become eligible for the credit simply by using a minor child’s name. In addition, under state law, children under the age of 18 generally are not bound by any contract they sign and cannot be required to comply with the terms of the contract. Thus, it is extremely unlikely that a seller of a home, or a lender if financing is required, would enter into a bona fide sale of a home to a child. Merely using the child’s name to purchase a home does not qualify the child for the credit if, in substance, the child is not a bona fide purchaser of a home. (11/19/09) Q. When do I have to buy a new home to get the credit? A. The credit is available for eligible home purchases after April 8, 2008. You must enter into a binding contract to buy the home before May 1, 2010 and close before July 1, 2010, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home. (11/19/09) Q. How do I apply for the credit? A. The credit is claimed on IRS Form 5405, First-Time Homebuyer Credit, and filed with your 2008, 2009 or 2010 federal income tax return. (11/12/09) Q. I submitted an amended 2008 return for the first-time homebuyer credit more than eight weeks ago. How long will it take the IRS to process my return? A. The normal processing time for amended returns is approximately 8-12 weeks. Recent changes to the tax law have resulted and will continue to result in larger than normal volumes of amended returns. This increased volume has increased our processing time to 12-16 weeks. It is not necessary for you to follow-up with the IRS regarding your amended return if you are within these time frames. (11/23/09) Q. Are there income limits? A. Yes. The credit is reduced or eliminated for higher-income taxpayers. The credit is phased out based on your modified adjusted gross income (MAGI). Different income limits apply to purchases on or before Nov. 6, 2009 and those after that date. For purchases on or before Nov. 6, 2009, for a married couple filing a joint return, the phase-out range is $150,000 to $170,000. For other taxpayers, the phase-out range is $75,000 to $95,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $150,000 or less and for other taxpayers whose MAGI is $75,000 or less. For purchases after Nov. 6, 2009, for a married couple filing a joint return, the phase-out range is $225,000 to $245,000. For other taxpayers, the phase-out range is $125,000 to $145,000. This means that the full credit is available for married couples filing a joint return whose MAGI is $225,000 or less and for other taxpayers whose MAGI is $125,000 or less. (11/19/09) Q. Can a taxpayer claim the first-time homebuyer credit after entering into a contract for the purchase of a residence but before closing on the purchase? A. No. Taxpayers cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase. (7/2/09) Q. Can a taxpayer claim the first-time homebuyer credit if the purchase is pursuant to a seller financing arrangement (for example, a contract for deed, installment land sale contract, or long-term land contract), and the seller retains legal title to secure the taxpayer's payment obligations? A. If the taxpayer obtains the "benefits and burdens" of ownership of a residence in a seller financing arrangement, then the taxpayer can claim the credit even though the seller retains legal title. Factors that indicate that a taxpayer has the benefits and burdens of ownership include: 1. the right of possession, 2. the right to obtain legal title upon full payment of the purchase price, 3. the right to construct improvements, 4. the obligation to pay property taxes, 5. the risk of loss, 6. the responsibility to insure the property and 7. the duty to maintain the property. (7/2/09) Q. I purchased a home that qualifies for the first-time homebuyer credit. I will be renting two of the bedrooms and reporting the rental income on Schedule E. Will I still qualify for the credit if I use the home as my principal residence? A. Yes, if you meet all first-time homebuyer eligibility requirements. See Form 5405, First-Time Homebuyer Credit, for more details. Q. I purchased a duplex home with two separate dwelling units. I will live in one dwelling and will rent out the other dwelling unit and report the rental income on Schedule E. May I qualify for the first-time homebuyer credit, and what amount do I use for the purchase price to determine the amount of the credit? A. Yes, you may qualify for the credit for the dwelling unit that you use as your principal residence. To determine the amount of your credit, you must allocate the purchase price of the duplex between the two separate dwelling units. You may not use the entire purchase price of the duplex to determine the amount of your credit. Q. If two unmarried people buy a house together, how do they determine how much each may take of the credit? A. IRS Notice 2009-12 provides guidance for allocating the first-time homebuyer credit between taxpayers who are not married. Q. I am a single co-owner of a home. How do I get this credit? A. Depending on the year of purchase, you will claim the credit on your 2008, 2009 or 2010 federal income tax return. (11/19/09) Q. I don’t owe taxes and/or my income is exempt from tax and I do not have a filing requirement. Do I qualify for the credit? A. The credit is fully refundable and, if you qualify as a first-time homebuyer, having tax-exempt income will not preclude eligibility. Although there are maximum income limits for qualifying first-time homebuyers, there are no minimum income criteria. Thus, someone with no taxable income who qualifies as a first-time homebuyer may file for the sole purpose of claiming the credit for a refund. Q. Does the first-time homebuyer credit apply to homes located in the U.S. Territories? A. No. Q. Would I be considered a first time homebuyer if I owned a principal residence outside of the United States within the previous three years? A. Yes. A taxpayer who owned a principal residence outside of the United States within the last three years is not disqualified from taking the credit for a purchase within the United States. Q. If qualified, are homebuyers required to claim the first-time homebuyer credit? A. No. Q. Who cannot take the credit? A. If any of the following describe you, you cannot take the credit, even if you buy a new home: * Your income exceeds the phase-out range. * You buy your home from a close relative. This includes your spouse, parent, grandparent, child or grandchild. * You do not use the home as your principal residence. * You are a nonresident alien. (11/19/09) Q. Does previously inheriting a home and living in it automatically disqualify me as a first-time homebuyer if I buy a different home on or before Nov. 6, 2009? A. Yes, an ownership interest in a prior principal residence would bar you from being considered a first-time homebuyer. As long as you owned and used the prior home as your principal residence, you are not a first-time homebuyer. There is no exception for taxpayers who did not buy their prior residences. (11/19/09) Q. If I claim the first-time homebuyer credit in 2009 and stop using the property as my main home before the 36 month period expires after I purchase, how is the credit repaid and how long would I have to repay it? A. 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 the 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. (05/06/09) Q. If a person does not actually make the payments on a home that’s their principal residence, but the deed and mortgage documents are in their name, can they be considered a first-time homebuyer? A. Yes. If a taxpayer purchases a home to be used as a principal residence from an unrelated person and has not owned a home within the previous 36 months, the taxpayer is eligible for the first-time homebuyer credit regardless of who makes the mortgage payment. (05/06/09) Q. Do taxpayers affected by Hurricane Katrina or other disasters qualify as first-time homebuyers if their principal residence (i.e. main home) became uninhabitable more than three years ago and they have not formally disposed of the uninhabitable home or purchased or built a new home in the interim? A. Yes. They may be eligible for the first-time homebuyer credit when they purchase a new principal residence. (11/19/09)