The tax credit is not just for those buying a bigger home, it also works for those wanting to downsize

When the First Time Home Buyer Tax credit was extended and expanded most people thought the expansion was only for home owners who wanted to move up, those who wished to buy a bigger, more expensive home.  In fact, the expansion simply includes those who have owned a primary residence and lived in it for at least five years consecutive years out of the last eight years.  If current home owners want to downsize they can use the tax credit toward their new home, regardless of whether it costs less than the home that they are selling, regardless of whether it is a smaller home than the one that they are selling.

It is an anomaly that everyone assumes the tax credit is only for purchasing bigger and better.  Many people, especially those whose children have grown and left the nest, want to downsize.  After-all, who doesn’t want to make life simpler these days? 

If you have been considering selling your home and moving into a smaller space, consider doing so before the tax credit expires.  Place your new home under contract by April 30th and close by June 30th and you could have a few extra dollars in your pocket.

For more information on the tax credit, click here.

Now might be the best time to lock in a low mortgage rate

Low interest rates have been gracing the real estate market with their presence for the past year but the word on the street is that they won’t be here much longer.  While mortgage rates aren’t going to skyrocket out of sight, it is doubtful that they will decrease and certain that they will steadily begin to rise.

For those wishing to lock in at below 5%, the time just might be now or never (or at least for a very long time).  This past week, the first week in January, the average 30 year fixed mortgage rate was 5.09%.  The general sentiment among economists is that rates are not going anywhere but up from here.

The strengthening of the economy equals less chance for discounted rates.  If you want to refinance or purchase real estate, now might be the best time to do so.

For more information on mortgage rates click here to look at a recent article from CNNMoney.com.

Take time to choose the right broker when selling your home

When preparing to sell your home it is important to find a real estate professional that will best suit your needs.  A warm handshake and a friendly smile is all well and good but if you want to sell your home pick a broker that is experienced and knowledgeable, someone that will do the best job for you.  When selecting your real estate agent here are a few things to keep in mind:

Data.  Get a prospective Realtor to bring in a copy of what they have listed and closed.  They can present you with an MLS report that displays their inventory.

References.  Get references from a potential Realtor and call them.  Find out what other people’s experience with a particular Realtor has been.

Price.  Get an evaluation of your property.  A solid real estate professional will be able to detail what has been selling and for what price.  He will be able to evaluate your home and your location, giving you a value for your home that will help sell it not deter people from looking at it.

Plan.  What does your Realtor plan to do for you in terms of marketing, sales, listing, etc.  Make sure he has a plan for your house and find out what he is willing to do to get it sold for you.

Real estate is often a person’s most valuable asset.  Do your legwork and choose the best broker for your home.  He or she should be a salesperson.  If they can sell themselves to you perhaps they are halfway to selling your home for you as well.

Exterior improvements give more of a return when remodeling

There is an annual report that examines the cost versus value for home remodeling.  The report is helpful for those who are considering making improvements to their homes, especially if their home is one that they consider selling in the near future.  Historically, bedrooms and bathrooms are where people consider spending their money but the return on the remodel investment is not necessarily there.

According to the 2009 Remodeling Cost vs. Value Report the best return for your money are exterior improvements that often are lower cost projects to begin with.  Adding decks, replacing siding, new doors and windows are among projects that recoup the most money when re-selling a home.  The return on these projects is typically 80% or more.

The annual report shows how important first impressions are.  If you are considering selling your home make sure that the exterior is as eye catching as it can be.

Click here to learn more about remodeling costs versus value at The National Association of Realtors’ website.

Real estate is ending 2009 on a more positive note

Real estate is showing strong signs of recovery.  Last month, real estate sales were up over 7% for sales of existing homes.  The increase in real estate sales was seen in every region of the United States, due mainly to the first time home buyer tax credit, which was originally set to expire at the end of November, 2009.  Low mortgage rates and low home prices have also been catalysts.

Foreclosures will continue to rise with unemployment, keeping real estate prices from rising in harder hit areas, and home values as a whole are expected to remain flat for some time.

Interest rates are not expected to continue dropping and will most likely head in the opposite direction, expected to hold steady around 5.2%.  According to the Wall Street Journal, Federal Reserve chairman Ben Bernanke himself recently locked in a refinance on his residence, a clear indication that rates just might be as good as they’re going to get.

For now, the data shows that real estate sales are on the rise and will continue to improve as long as the mortgage rates stay low and the tax credit remains in place.  What happens during the latter half of 2010 is up in the air, but for now the good news is far better than the news of a year ago.

In today's real estate market it is better not to sell unless you have to.

Today’s real estate market is a buyer’s market, which means sell only if you have to.  The bottom of the market is near, if it has not already occurred, which means if you don’t have to sell don’t.

The reason you shouldn’t sell your real estate right now is clear, you are not going to get top dollar.  However, if you have to sell you need to make your home as competitive as possible.  Your home not only needs to be priced right it needs to look its best.
It is not the best time to pour money into your home to fix it up but it is a good time to make it look its best.  Paint it, stage it, make it eye catching.  Most importantly, price your real estate better than  the neighbor’s house and you will be more likely to catch a buyer.

Real estate is expected to drop a bit more if not remain flat.  If you have to sell be as competitive as you can.  If you don’t have to sell don’t.  It will be a while before real estate values start to climb, but if you can hold out you might fare better in the long run.

A 1031 Exchange can be a great way to invest in real estate and defer taxes

A 1031 Exchange is the process of buying and selling investment real estate, enabling a deferment of taxes at the same time.  A 1031 exchange involves the selling of a qualified property and the buying of a qualified property yet the transactions are seen as an exchange instead of a traditional sale and purchase.

What makes the 1031 exchange different, and often complicated, is that in order for properties to qualify they both need to be “Like Kind”.  They need to be business or investment properties and the new property must be equal or greater than the property being exchanged in terms of debt.

The process of selling and buying property during a 1031 exchange has requirements.  When a property is being sold the owner has a 45 day period to identify a new property.  The 45 day period cannot be extended and often more than one property is identified.

The next time period is the “Exchange” time period.  After the closing of the selling property the exchanger has 180 days to close on the new property.  Again, according to IRS rules, the time period is firm and cannot be extended.

The 1031 exchange can provide a great way for real estate investors to sell property and buy new property without having to immediately pay taxes on their capital gains.  For more information on the rules of a 1031 exchange click here.

It is a buyer's market

When it comes to real estate the general sentiment appears to be that of putting 2009 in the past and looking forward to a brighter 2010.  Looking at where we are and where we are headed as far as real estate goes will take us from the present into the future.  Currently home values are affordable, because prices are low and interest rates are low.  Both of these low levels add up to the fact that it is a great time to be a buyer when it comes to real estate.

Interest rates have been hovering at 5% or lower for the better part of the past year, a trend that cannot be expected to continue.  As the market stabilizes more and the economy gets better, interest rates will rise.  While home prices still may drop in many areas of the country, they will not drop much more.  Areas that are less affected by foreclosures, short sales and REO properties are likely to level out faster than other areas due to the lack of distressed sales in their inventories.  A rise in interest rates may bring real estate prices down to sell but the days of 20% and 30% decreases appear to be unlikely.

In a nutshell now is a great time to buy if you have been waiting for the right time to plunge into the market.  Take advantage of low interest rates while they are here.  It is a buyer’s market now, it won’t be forever.

For an interesting analysis of the real estate conditions and a forecast of 2010, by CNN Money, click here.

Finding a mortgage before looking for real estate is a smart idea

The first step in purchasing real estate should be getting a mortgage.  Getting a mortgage, or rather getting approved for a mortgage, lets a buyer know what he can expect to afford when looking at property.  It is important for a potential buyer to know how to secure a mortgage.

There are any places to look for a mortgage these days.  There are banks, mortgage brokers, finance companies, credit unions and private lenders.  Often experienced Realtors have mortgage brokers or banks that they work with often and using a lender that has a good reputation is often a safe bet.

When looking for a mortgage have a good idea how much you can afford to pay each month.  Look into the past, present and future to determine this.  It is of the utmost importance not to bite off more than you can chew when it comes to your finances and the affordability of a home that you might buy.

When applying for a loan a person must provide documentation of income, expenses, and assets.  Have your financial statements and tax returns ready and the process will be much easier.

Having a mortgage ready to go before finding a property will make the entire process smoother.  Financing is harder to get these days and being prepared is a wise step in the home buying process.

For more information on mortgages click here.

Waiting for the bottom in real estate is similar to grabbing a yo-yo at the bottom, you are usually a little early or a little late

There are many people out there waiting for the bottom to hit in many facets of the economy, including real estate.  Perhaps there will be a big announcement one morning across newspaper headlines and across the internet “THE BOTTOM IS HERE: NOW IS THE EXACT MOMENT TO BUY”.  Of course by the time the announcement comes the bottom will have hit and the exact time to buy real estate will have come and gone.

A great analogy to the bottom of the real estate market is a yo-yo.  Take a yo-yo in your hand and use it.  Can a person grab the yo-yo at the exact moment it hits bottom every time?  Chances are a person will grab it just before it hits bottom or just after, rarely at the exact bottom.   Real estate is the same game, if it is indeed a game.  If people knew, absolutely knew, the exact time to buy stocks, real estate, or any other investment then no one would ever have a financial worry.

For people who believe in investing in real estate now is a great time to buy.  Interest rates won’t be low forever, real estate has either already hit the bottom, is about to, or is already on its way up, we’ll know for certain sometime in the future.  If you want to buy at the bottom, buy now or wait until it’s too late, when you can look back and say, “If only I had bought then.”