You’ll notice that my tax credit countdown widget has been reset.  It’s a nice feeling to look and see that there are 231 days left to take advantage of the $8000 tax credit for first time buyers.  It’s even better to know that a $6500 tax credit was added for those who already own a home.  Of course some restrictions apply.

However, it already hit me today that even though we now have until April 30, 2010 to take advantage of the tax credit, that’s really not that far away.  Winter is notorious for a slower real estate market, and when you consider that you should give yourself at least thirty days to close, you shouldn’t waste anytime.  I’m not usually an alarmist, but when you think about it, if you wait until after Christmas, you’ll only really have three months to work with.  And I’m very doubtful that Washington will give us another extension. I figure they chose April 30 with the hopes that the usual spring uptick will take over when the credit disappears.  Also, they’re probably hoping for a better economy.  Let’s hope that’s the case for both the spring market and the economy.

If you’re thinking about taking advantage of the credit, let me know and I can get you more information to make sure you definitely qualify.  Now is the time to buy if it fits with you current life situation.  I don’t figure we’ll see an opportunity like this again anytime soon.

Growing up in Indianapolis, I often heard the story about the House of Blue Lights.  It was the story of a rich young widower who was so pained by the death of his bride that he had her placed in a glass coffin lit by blue lights and kept her in one of the upper rooms.  At night the blue light would emanate from the window out into the darkness.  And every night he would go to her room to talk with her and say good night.

Of course the story wasn’t true, but it made for a good chill as we’d drive by the house on a dark night.  Pretty much any where you live there’s a good story about a haunted house in the neighborhood.  Even today, there’s a vacant house in my neighborhood, and my kids always ask me if they can go to the “haunted house” to play.  I’m not too concerned because the house is hardly five years old and boasts no paranormal activity to my knowledge.  But it’s fun for the kids to pretend.

Of course if you’re trying to sell your home, the fact that your home may be haunted could create a problem.  Often a seller or their agent is not required to disclose if a property is stigmatized unless the buyer asks.  But once asked, the seller needs to reveal the stigma which can range from the fact that someone was killed in the home or it used to be a crack house or the home is haunted.  Of course that may be exactly what the buyer is looking for.

When the issue is a haunted house, it’s pretty subjective.  While some people are strong believers in the spirit world and the presence of ghostly beings, other people never give it a second thought.  So how do you disclose that your house is haunted when you don’t believe it is?  Good question.  The answer is that it’s probably best to err on the safe side.  If you think your home is haunted or the neighbors talk about your home being haunted, you may be better off disclosing it to the buyer.  Why?  Take a look at the New York case Stambovsky v. Ackley, where a buyer of a home in Nyack, NY discovered that the house he had recently contracted to purchase was widely reputed to be possessed by poltergeists.  Even the seller and members her family had reportedly seen the ghosts on numerous occasions over a nine year period.  As a result, the buyer was able to rescind his contract (following a long court battle) because as the court said, “the most meticulous inspection and the search would not reveal the presence of poltergeists at the premises or unearth the property’s ghoulish reputation in the community. Therefore, there is no sound policy reason to deny plaintiff relief for failing to discover a state of affairs which the most prudent purchaser would not be expected to even contemplate.”  Stambovsky v. Ackley, 572 N.Y.S.2d 672, 676 (N.Y.A.D. 1991).

So what does all that really mean?  It means that if your home is haunted or has the reputation of being haunted, you should probably call the Ghostbusters to de-poltergeist your home or be ready to disclose the stigma to your buyer.

Because the people looking at your home now, are.

Every buyer is different. Something that might deter one buyer from making an offer on your home may actually be the thing that encourages another. Here are some things that you probably cannot change about your home but may hurt its market price.  If this is your home then try an accentuate the positive.
1. Are you near a major street? Is it in front of your home or in back? People with young children may be concerned about this. Adding a fence in your back yard may help, but top notch interior design might be the best thing to help distract the buyer from the negatives of a busy road.

2. Is your home on a pond/lake? This is often a double edged sword. The views can be wonderful, but again, parents with little children are often scared away.

3. Are you near a railroad track or airport? While some people love to watch the trains and airplanes as they pass by, the threat of excessive noise at strange hours will deter many buyers. Not much you can do about this other than hope the right buyer comes along.

4. Does the neighborhood have a home owners’ association? Some people love them, and others hate them. They can be restrictive and sometimes expensive, but they will make sure your neighbor takes care of his lawn or does not build an amazingly ugly addition off his garage.

5. What is the condition of the neighborhood? Often when there is no home owners’ association, the neighborhood can become a bit disheveled. Does the neighbor have a broken down car in the front yard or a privacy fence that is falling down? Many features of the neighborhood that are outside or your control as a seller are very important to the buyer.

6. What are the schools like? If the schools are award winning and receive good word of mouth, then you have a better opportunity to sell your home. If you live in a bad school district, you are going to have to hope for empty nesters, singles, or rich families who will use private schools.

7. Will the bathrooms and closets be adequate in the future? The trouble with older homes is they are designed differently than modern homes. The construction may be better, but usually the closets are too small and there are not enough bathrooms. While a closet may be easy enough to add, a bathroom is an expensive venture. If your home is lacking in these or other features, you’ll need the perfect buyer who is knowledgeable about the home’s amenities. You just have to be patient to find the right buyer.

While no hurdle is too high that you can’t overcome it, you need to be realistic about your home’s potential shortcomings.  Ultimately, it will all come down to price.  When these challenges are present, sometimes the only change you can reasonably make is to the price.

I recently added the countdown clock for the $8000 tax credit on my site.  See it over there to the left?  It provides up to the second information on when the $8000 tax credit for first time home buyers ends.  When you combine great low rates, a buyer’s market, and $8000 back on your taxes, now is the time for first time home buyers to jump into the market.  You don’t want to wait though because it takes at least 30 days to close and you have to close before December 1, 2009 to get the credit.

If you’re in the Central Indiana area, contact me, and I’ll help you buy a great home for a great price.  Send me a note at jack@4indyhomes.com.

If you own a home and are thinking about selling it, here are a few things you need to keep in mind.
1. It can be expensive to sell your home. When you sell your home you will have Realtor costs and title insurance costs that will eat into the sales price of your home. In some states you pay your property taxes in arrears so you will also possibly have around a year’s worth of taxes due. Once those expenses are paid, the remainder will go to pay off the mortgage.
2. All loans connected to your home – first, second & third mortgages, as well as home equity lines of credit (HELOC) – must be paid off at closing. If there is a shortfall, you will have to cover that amount at closing either from your savings, credit cards, or family loan.
3. You will have to make repairs to your home that involve safety and habitability issues. After you have agreed to a sales price with the potential buyer, that buyer is going to hire an inspector to look at the home and make sure there is nothing wrong. Depending on the problems found in the home, the buyer is going to write an inspection response and ask you, the seller, to have certain items repaired. While you don’t have to agree to fix everything on their list, items that present safety or habitability issues will need to done or the buyer could walk away from the deal and get their earnest money back.
4. Your home should look like a model home. You need to do everything you can to make your home ready to show. Get a few of the home magazines and mimic some of the ideas shown in the pictures. Better yet, hire a professional to stage your home. Remember, you live in your home differently than when you are trying to sell your home. You want your home to look like it is home to the buyer.
5. Get rid of the clutter. Clutter can be the junk just lying around or it could be too many personal pictures on the wall or mantle. It never hurts to take a few books off the shelf and box them up. Less is more when you show your home. This can also pertain to furniture too. Nothing makes a room look smaller than over sized or too much furniture. You may want to take your favorite La-Z-Boy and put it in storage or loan it to a friend. Just because you love it, doesn’t mean the potential buyer will. (Oh yeah, is your furniture covered with dog or cat hair? Get rid of it! Not the pet, the hair.)
6. Speaking of pets, get rid of the smell. Cooking smells can be just as bad… and smoking. Most people don’t notice the smells in their own home, but they may be offensive to a buyer. Usually you can find a product that will absorb, not just mask, the odors in the home. Check at your local hardware/home store. Also, remember that over scenting your home can be just as bad. When a home smells too strongly of scented candles and air fresheners, the buyer thinks you’re trying to hide something. It’s best to get rid of the bad smells and minimize the good smells.
7. You may have to pay property taxes at closing. In some states, property taxes are paid one year in arrears. This means that you will have to credit the buyer around one year’s worth of taxes at closing.
8. It is very common for the buyer to ask you to pay their closing costs. The lower the price of the home, the more likely the buyer will ask you for assistance on many of the lending costs. To many sellers this doesn’t sound right, but usually the buyer needs this assistance or they would not be able to buy your home. The buyer may have good cash flow and enough to cover the down payment, but not enough for the closing costs. The key is to negotiate the sales price to cover these costs as long as the home appraises.
9. Some buyers even ask for the 3.5% down payment. Don’t be surprised if the buyer asks for the down payment too. Again, the buyer has good cash flow, but no cash. So keep working on the price.
10. The pre-approval letter that the buyer shows you isn’t worth the paper it’s written on. Just because a lender was willing to write a letter that essentially guarantees nothing, it doesn’t mean that the buyer is qualified to purchase a home. Home loans have to go through a nasty process called underwriting, and until the underwriter says there is a deal, there is no deal.
11. Even though you agree on a price with the buyer, the appraiser has the final say on what your home is worth (unless the buyer’s paying cash). In the current market, appraisers are not as likely to rubber stamp the agreed upon price. Higher scrutiny on their work as led to lower appraisals. Also, it has become common that appraisers are covering home locations (neighborhoods, towns, etc.) they are not familiar with due to recent changes in the law. This also can make for low appraisals. Unfortunately, there is not much you as the seller or your Realtor can do about the appraisal process except cross your fingers or pray (it’s your choice which one to do).
12. You need a Realtor you can trust. Yes, a Realtor costs money and it always seems to be more than reasonable, but just like any other profession a Realtor has extremely high expenses and works for free until your home actually closes. It’s a high risk and sometimes high reward business. So what are the real benefits of using a Realtor? If you want to be on the Multiple Listing Service, you need a Realtor. Also, a good Realtor is going to explain the process, guide you through the sales maze, help you negotiate the agreement, make sure you understand the good and bad of potential decisions, and make sure that no one takes advantage of you. Of course you can go it on your own, but realize that 80-90% of “for sale by owners” eventually are sold by Realtors. It might not hurt you to give FSBO a try, but if you’re in a hurry, call a Realtor.

Do you have any good or bad experiences in selling your home that you would like to share?