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.

When buying a home, you’ll want to have an inspection done by a licensed inspector. This is a visual inspection of the home that will provide you with detailed information on the condition of things such as the plumbing, mechanicals, electrical systems, roofing, structural soundness, and potential environmental hazards. While the inspector will create a detailed book of all the positives and negatives about the home you are buying, the main thing that you are looking for is issues of safety and habitability. This would mean anything that would affect you or the home in a negative way such as causing a fire, allowing water to enter your home uncontrolled, or diminish your health.

Here in Indiana one of the biggest problems that arises, especially on homes with basements, is radon. What is radon? It is an invisible, radioactive gas that develops from the decay of uranium in soil, rocks, sediments, and ground water. Sounds scary doesn’t it? While radon is not dangerous to people as it escapes from the ground into the air, it can be deadly if it builds up inside your home. According to the Environmental Protection Agency (EPA), radon is the leading cause of lung cancer for non-smokers and is responsible for 20,000 deaths in the US each year.

So what do you do if you test for radon and the levels are too high? Do you abandon the home and continue your search? No. Radon is easily mitigated and controlled with the installation of a radon reduction system which consists mainly of a vent fan and PVC piping. Unfortunately, even though the device is pretty simple, it is probably not something that you should install yourself. You are best off contacting a local radon mitigating expert and making sure it is done right. The experts I have worked with always give my clients a five year guarantee.

While there are many skeptics about whether there is really any risk with radon, most people are of the camp that you’re better safe than sorry. I grew up in a home with a basement, which did not have a radon reduction system, and I do not have lung cancer at this time, but I’m glad to know that my house today does have a system and that my wife and kids are at less risk than I was growing up. Besides, we face enough risk in other things that we do, so why not eliminate one?

Ultimately, if you do come across radon in your home inspection, the seller is going to be responsible to mitigate the radon to complete the sale. You could give the seller a break and not force them to mitigate and either live with the radon, mitigate it yourself, or just walk away from the deal if the seller refuses, but the decision is up to you as the buyer. What ever you decide to do, be an informed buyer because one day when you go to sell, the next buyer will most likely be testing for radon and want it mitigated if the levels are too high.

To learn more about radon and its causes and risks, visit the EPA’s website at http://www.epa.gov/radon/.

You can also check out these resources to make sure your home is environmentally safe:
Healthy Home Kit: Inspecting for Environmental Hazards Working With Professionals to Avoid Risks Cleaning Up Radon, Lead, Asbestos and More!
Kidde 442020 Radon Gas Detection Test Kit
Element of Risk: The Politics of Radon

Remember the commercial that asked, “Is it live… or is it Memorex?” The commercial claimed that the recording quality of Memorex tapes was so high that you couldn’t tell the difference between a live performance by Ella Fitzgerald and a tape recording. While it was a little difficult to take that claim seriously, a recording of Ella would possibly be the next best thing.

When it comes to home ownership, sometimes furnishing your home with the real thing or the top of the line item can be a little too pricey. And while the next best thing may not be as good as the top of the line, it may be an acceptable substitute.

Probably one of the most acceptable faux home products is vinyl siding. Sure, it’s not brick or cedar or even a composite, but it can give the appearance of wood (sometimes), it’s easy to install, and easy to replace when damaged. Here are some other faux ideas for your home that I’ve come across. Some of these solutions may look or work just as well and in turn save you a good chunk of change.

Big Dogs in Small Packages: The best way to keep intruders out of your home is to have a big dog.  Of course the problem with keeping a big dog is that they need attention and space and they can cost a lot of money. As much or more than an alarm service. What’s the solution? A security gadget like this Rex Plus, The Electronic WatchDog.

Devices like this have radar eyes that can sense movement through doors, walls, and even glass, and when it detects an intruder, it’ll play realistic barking sounds that resonate through the house and can be heard outside. For more realism, the bark of the “guard dog” gets louder and more frequent the closer the intruder gets. No fancy installation is required; just plug it in and mount it somewhere it can keep an electronic eye on the premises.

A Window to your Heart: How about dressing up the exterior of your home by adding a window or two to that outside wall? Real window installation can cost thousands but a company called FoWin makes fake windows that dress up the outside of your home.  You can’t see out of them, but from the outside they can add that inviting touch and break up the monotony of endless siding.

Another Vinyl Brick in the Wall: Is your house covered completely in vinyl siding? Do you wish that you had a little brick or stone work to break up the siding pattern? One option is to consider Vinyl stone or brick work siding. It installs like regular vinyl siding and can create a great realistic look. – Most people aren’t opposed to using vinyl siding which is supposed to give the appearance of wood, so why would someone complain about vinyl stones. Check out this: Texture Plus Indoor/Outdoor Siding Panel, Stacked Stone, Light Tan – Interlocking

Some other faux home products include:

While these products may not be exactly what you dreamed of, for the time being they may be the next best thing. And since Ella isn’t going to make an appearance, Memorex will work just fine.

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.

If you’ve been thinking about buying a home, but have been sitting on the sideline for some reason, now is the time to buy.  Rates are low, home prices are low, and you may be able to get an $8000 tax credit.

How do you qualify for this credit?  It’s pretty easy.  Are you a first time home buyer or have you not owned a home for the last three years?  If you answer yes to that question, then you’re past the first hurdle.  The second hurdle has to do with your income level.  The income limit for single taxpayers is $75,000 and $150,000 for married taxpayers filing a joint return.

But wait there’s more!  Just because you make more than those totals, you’re not completely shut out.  There is a phaseout range of $20,000 for the tax credit program, so a single taxpayer may earn up to $95,000 and joint filers up to $170,000 and still participate in a portion of the tax credit.

If you think you qualify for this program but still have questions, you should look at the Federal Housing Tax Credit website.  It would also be wise to speak with your tax professional.

Time is running out though, if you are interested.  As of this date (9/26/2009) there are only 65 days left before the program disappears on November 30, 2009.  Also, you have to have your purchase closed by the end date and in most situations, you need to give yourself at least 30 days to close.  So don’t wait.  If you qualify, you should take advantage of a great opportunity.

If you’re in Central Indiana and interested in this opportunity, contact me at jack@4indyhomes.com or Beth Lugar at elugar@4indyhomes.com.

Vacant home with staged kitchen/breakfast room.

You are better off selling your home while you still live in it.  Yes it’s harder to live in your home and keep it clean and ready to show at a moments notice, but think of the alternative.  A vacant home is uninviting, boring, and cold.  A vacant home only draws more attention to its flaws.  A vacant home garners a lower sale price because of it’s appearance and the buyer thinks the seller may be desperate.

Of course, sometimes you have to sell your home once it is vacant.    When this happens what do you do?  You do your best to make it look like someone still lives there.

The cheapest option is to leave as much of your furniture and decorations behind.  Maybe it’s worth sleeping on an air mattress and eating while sitting on the floor at your new home for a while to make your old home move more quickly and for a better price.

If leaving your furniture is not an option, then you really should hire a professional to stage your home.  It won’t make it look like someone lives there, but it will provide a freshness and style that makes your home more inviting.  Staging gives the potential buyer an idea of where furniture could be placed and distracts they buyer’s eye from minor flaws.

Ultimately, you want to make your home as inviting as possible.  And if it has to be vacant, spending a little extra to keep the home looking fresh will most likely pay you back at closing.

Want to know more about staging your home?  Check out Elisabeth Lugar’s blog.

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.

AFTER

I’m pretty sure all my clients knows this, but for some reason many of them do not think it applies to their home. Just because you put $20,000 into a new kitchen, it doesn’t mean that your house is now worth $20,000 more. There is rarely a dollar for dollar increase in the value of a home for work done. In most cases, the best you can expect out of a renovation/remodeling project is 80% of what you spent, and that really depends on what neighborhood, city, and/or state you live in. And that number is extremely optimistic.

BEFORE

So if you’re considering doing some updates to your home, keep in mind the reason why you are doing the updates. Are you updating to sell the home? Or are you updating because you want to enjoy the new, modern look and amenities? If you’re updating to sell, cost is more important than ever. Obviously, you don’t want to give your hard earned money away, and that’s exactly what you will be doing if you buy top of the line. You want to spend on your updates so that the home sparkles for the buyers when they first walk in, but also doesn’t say “cheap remodel”. On the other hand, if you are remodeling to enjoy it, then go for it. But remember that when you go to sell, you’re not getting all that money back.

Often people put upgrades in their home that force them to overprice their home for the neighborhood. If you live in a neighborhood where every home has laminate countertops and standard cabinetry, and you put in granite and custom cabinets, the price of your home may not increase at all (you have to get past the appraiser). The advantage you have is in salability. The buyer will more likely choose your home over other listings because of those high end updates. So your upgrades may not increase your home’s value, but they may make for a quicker sale, and that right there can easily translate in to dollars.

If you’ve decided that you need to make some updates to prepare you home for sale, you should focus on two areas first: the kitchen and bathrooms. This does not mean that you should neglect the rest of your home. You still need to do a deep cleaning, re-paint or touch-up certain areas, and repair the trim work. But if you are planning to go all out, you’ll get more of your money back on kitchen and bath remodels. However, if your home needs new windows and has rotting siding, you are going to have to give those attention because when it comes time for the inspection those issues are going to come up.

Ultimately, it goes back to one of my previous posts where I stated that it is expensive to sell your home. Not only do you need to do a heavy cleaning and decluttering, but you may need to do some expensive updates or repairs. And then there is the exterior and the all so necessary curb appeal. Try and put your money where it will provide you with the best return. I regularly enoucourage my sellers to starting with the exterior because that is what the buyer sees first when they come to look at your house. Next focus on the entry because again it is the first impression of the interior of your home. And if you feel like you must do a major remodel or update, save that for step two. You may find that with a few simple touch-ups, a remodel isn’t needed and save yourself a ton of money.

Have you ever done any remodeling or major fixes before listing your home for sale? What special tricks have you used to make your home sparkle without spending a lot of money? Please share your successes and failures.

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?