2009 Home Buyer Incentive in a Nutshell

The rules and standards for home purchases and mortgages, and how they relate to taxes seem to be changing a lot lately. First there is lots of talk about changing them, then more talk, then the rules actually change, then they change again. As of today, these are the details of the tax credit for homebuyers in the new government incentive program.

• This temporary tax credit is available only to first time homebuyers (or someone who hasn't owned a home in the last 3 years).
• Must purchase a home between April 9, 2008 and December 1, 2009.
• This credit will be taken with the buyer's 2009 tax return.
• Single taxpayers cannot exceed $75,000 income and married taxpayer's income is limited to $150,000.
• This program can be combined with the Mortgage Revenue Bond and MCC loans made in 2009.

As of today, mortgage interest is still a tax deduction.

Interestingly, people loosing their homes in a short sale actually show an income for the amount of loss the mortgage company took on the sale. For example, lets say you owed $210,000 on a property and selling it would end up costing a total of $230,000 (closing costs, costs to sell the property, plus what you owe on the loan, late fees, etc.). You can only get $200,000 for it. Your lender is 'short' $30,000 on the sale and you walk away collecting nothing and paying nothing at closing. You now have an income of $30,000 which the IRS is going to want you to pay taxes on. Never mind that you sold the house in a short sale because you didn't have the money.

I'm not an accountant, so I don't know how this will work out. Your lender might get stiffed, but I think the IRS will get theirs at some point. With interest and penalties.

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The "Produce The Note" myth

It seems lots of folks are abuzz about the 3 magical words that they think will help get someone out of foreclosure. They seem to believe the words 'produce the note' are like a 'get out of jail free' card.

Supposedly, a homeowner facing foreclosure can demand that the lender produce the note - the original mortgage note that the homeowner signed when they purchased their property. The idea is that the loan has probably changed hands several times and the lender can't get their hands on a copy of the note. And if they can't prove that you signed a note, then you don't owe them money, right? Wrong.

If you signed a note and bought a house - no magical words are going to make that debt just disappear. Anyone facing foreclosure may try this tactic to delay the process but, at best, it will buy them a little time. They should be very aware of the consequences and the costs.

First, they WILL find the note. It was filed with the deed in the county or city where the property is located. An electronic copy probably exists and it isn't that hard to find. It may take a while, but they will find it. And guess who they are going to charge for the cost of researching the documents? You.

And the extra time you are buying will be expensive. Monthly service charges and fines will continue to accrue. These can add 10% to your unpaid balance in just a few months. If you had any hope of escaping foreclosure, it will disappear.

The people trying this tactic become squatters in their homes. If they have no intention of paying the note, then they figure they can at least get another month or two of free living. What they don't realize is that they are ruining their credit even more. For example, instead of showing bad debt of their $200,000 home loan, they'll show a longer history of non-payment of $250,000 in bad debts. I'm not sure how quickly the finance industry will be to look past those bad debts. Already, we're seeing the rates for home insurance and car insurance differ based on a customer's credit scores.

I predict that credit scores will start having a bigger impact on our lives. Everyone from potential employers to credit card companies look at credit scores as an indicator of risk and reliability. In the long run, a low score will cost you more than a house payment.

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Rags to Riches or Riches to Rags

The curious case of "Slumdog Millionaire" is a pretty interesting journey. Having started off as a Hollywood underdog, it took many by surprise and garnered eight Oscars this week. This unexpected turn of events was nearly as unimaginable as the situation currently unfolding with banking giants Citi Bank and Bank of America. Barbara Meager, a mortgage broker with Granite Mortgage in Dallas, points out the difference:

Slumdog Millionaire is a "rags to riches" tale, while banks seem to be taking the opposite route from "millionaire" to "slumdog."

No one imagined earlier that the stock price of Citi would trade below $2. The Fed pumped more money into Bank of America and Citigroup than those banks' entire market value, and in exchange, taxpayers received a six percent stake in BofA and 7.8 percent of Citi. Fears of nationalization continue to haunt traders, with The Wall Street Journal reporting that Citigroup is in talks with the government that may lead to the U.S. converting its preferred shares into common equity, in an effort to help Citigroup reinforce its capital,. The U.S. could end up holding as much as 25 percent to 40 percent of Citigroup, the report said.

This week is busy with economic activity as investors try to focus on economic news which includes continued banking sector concerns, Fed Chairman Ben Bernanke's semi-annual testimony before Congress on yesterday and today, a Treasury auction and a host of housing data including S&P Case Shiller index, Existing Home Sales (today), Durable Goods Orders on Thursday and GDP on Friday.

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Church celebrities

I'm a long time member of Highland Park United Methodist Church where we're used to our share of local celebrities, multi-millionaires, politicians, etc. Most of our churchgoers are just nice people making their usual Sunday morning visit to worship in the way they choose.

But today, you would have thought Jesus himself was walking down the aisle. Yes, our newest returning celebrities - the former president and first lady - attended early services. Gathered lots of attention. Husband says we'd better leave the guns and knives at home from now on. Amen.

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Pest Time for Carpenter Ants

It's that time of year when carpenter ants and wood destroying insects start making their appearance in Dallas. While both termites and carpenter ants are destructive, they are different.

Instead of living in a colony under the ground, carpenter ants nest in trees, walls or foliage. Usually, several active groups come from one nest. They are found in foliage, doors, wood or old termite decay. They are nocturnal, so you generally don't see them during the day.

You cannot spot treat carpenter ants because they will send more ants from the nest. There are four steps to eradicate Carpenter Ants:

• Cut back all foliage that touches the house because it creates a "bridge" from trees and landscape where most nests are located.
• Bait with chemical pellets in the attic and around the foundation of the home and in dense foliage. If you have a pier and beam home, you must treat the crawl space under the home as well.
• Treat infected area with a chemical that kills on contact.
• Chemically Dust areas that are in high moisture locations.

Typically the chemicals to treat carpenter ants will also eradicate other bugs at the same time. It takes about 3 months for the chemicals to work (just like termites). Now is the time to treat for these distructive pests.

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Take a few days off for a short sale

I need to take off for a few days. I’ll be in the hospital having my brain and heart removed so I can become a mortgage officer in charge of short sales.

A short sale is designed to help prevent foreclosure for a homeowner who owes more on their property than the home is worth. Many of these are for properties that were purchased in the past 5 years with little or no money down. The property sale is negotiated with a mortgage company and that company takes less than the total amount due to sell the home (they are 'short' on the sale). They have become a nightmare for the seller, the buyer and the agent. I'll elaborate more next week.

See you in a couple of days when I've regained my sanity from trying to negotiate two of these short sales.

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Join the Club

The Park City Club is in the midst of a membership drive and are offering a half price initiation fee of $175. Several levels of membership are available with basic resident membership starting at $139 per month. The newest member is the former President of the United States (insert your own thought about how exclusive it is here).

The Club is a favorite dinning spot and hosts special events like wine tastings, an investment club, Distinguished Lecture Series, business networking group, bridge clubs, etc.

For more information, go to http://www.parkcityclub.net/. If you're interested in joining, you'll need a current member to put your name up for membership.

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Dallas January Home Sales Statistics

Residential home sales stats are in for January 2009 and we're not feelin' the love.

The lack of home inventory (especially in the higher dollar range) is giving us a little hurt.

January 2009 Statistics

(single family homes)

North Dallas (south of LBJ, between Midway & Central):

Number of Sales: 14 (down 48% from this time 2008)

Average Sales Price: $976,146 (up 4% from 2008)

Park Cities:

Number of Sales: 21 (down 45% from this time 2008)

Average Sales Price: $1,132,289 (up 4% from 2008)

Northeast Dallas (east of Central, south of LBJ):

Number of Sales: 21 (down 19% from 2008)

Average Sales Price: $212,429 (down 6% from 2008)

Northwest Dallas (west of Midway):

Number of Sales: 30 (up 15% from 2008)

Average Sales Price: $169,990 (down 31% from 2008)

Far North Dallas (LBJ to Plano from Central to Marsh):

Number of Sales: 46 (down 12% from 2008)

Average Sales Price: $287,946 (down 13% from 2008)

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Have a Lovely Day

Happy Valentine's Day.

I hope you are able to spend some time with someone who loves you.

"A person desperately searching for love

is like a fish desperately searching for water."

Deepak Chopra

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Thought for Lucky Friday

Luck to me is something else.

Hard work - and realizing

what is opportunity

and what isn't.

Lucille Ball

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Fabulous Ceiling Solutions

Need to spruce up a ceiling, cover up the popcorn or add interest to a dull space? I'm in love with these ceiling planks and panels from Armstrong (the floor people). These planks work like the snap-together wood flooring.

They are pretty easy to install and cost just under $100 for 30 sq feet (labor not included). They add so much personality and a high-end look to plain painted ceilings. Lots of bang for the buck.

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Meaning of Life

The meaning of life

is to

find your gift

The purpose of life

is to

give it away

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Demand for high-end homes stays strong

Yesterday's Dallas Morning News home section ran a lovely story about the high-end home market featuring this fabulous new home on Armstrong Avenue. The great room (pictured here) features one of 8 antique fireplaces that came from a castle in France and date back to the 1700s. I can stand up in the one pictured here.

You'll be hearing more about this incredible $9,750,000 mansion in the coming weeks. I'll let you know when you can personally take a peek inside the 13,000+ square feet of luxury.

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Your Credit Scores Are Changing

If you're in the market for a home loan, you might want to get your FICO credit score now.

The rules behind how your FICO scores are calculated just changed -- but you probably don't know it and won't know it for some time. These changes to how your credit rating is determined look like they may favor consumers.

However, one of the three major credit reporting bureaus, Experian, is going to stop making its data available to consumers . This may happen as soon as next week and it doesn't bode well for the public. Basically, you will no longer have access to this piece of your credit rating. As most people know, better your FICO score, the lower interest rate you can secure on your mortgage.

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What real estate recession?

I've heard there's a recession going on.

I've decided not to participate.

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Hacking down trees in Preston Hollow

Our utility company dollars have been hard at work in my backyard yesterday and today. A crew of guys in hats knocked on my door and said they needed to trim trees along the power lines. I told them to have at it with the hackberries, but to leave the magnolias and sweet gums alone. As you can probably tell from the photo, there isn't much left of the trees.

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What should be my 'business hours'?

What are your 'business hours'?

Is it just me, or is everyone working 60+ hours a week?

As a full-time Realtor, I work 7 days a week. I'm advised to be accessible and available to clients when they need me and to return calls or e-mails within an hour. In today's on-demand world, if a potential client can't reach me quickly, they'll find someone else and I'll loose their business.

I want to be there for my clients. However, I don't want to work 24/7. I'd be no good to anyone if I did. But I get calls from 7:00 in the morning until 10 o'clock at night. I'm asked to meet clients on holidays, at 10:00 a.m. on a Sunday, 8:00 p.m. on a Friday, and all hours in between. While I'm grateful for the business, I wonder how many people call their accountant, attorney or financial advisor at all hours.

In today's hectic world, we all need time for ourselves and our families. However, in today's economy, we also need all the business we can get. My income is entirely based on what I sell, and if I don't sell something, I don't make anything. As I see it, there are just a few options:

• Set 1 or 2 days a week that are my 'days off' and just ignore business on those days.
• Turn off my phone, ignore e-mails and stop working at 6 o'clock at night.
• Team with another agent to handle my business 2 days a week and I'll take care of their business 2 days a week (where I would squeeze in the time, I don't know).
• Have an assistant deal with what they can on my 'days off'.

If you were my buyer client, how would you feel about your agent's accessibility?

If you had your home listed for sale with me, how would you feel if I wasn't always available to you? Would you resent being passed to an assistant or associate?

In a service industry like real estate, how available should agents be for their clients?

On one hand - maybe people are not as demanding as I think. On the other - I tell my clients to expect more and they probably do. Thoughts? Suggestions?

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