In an effort to stimulate housing demand, President Barack Obama included a tax credit of up to $8,000 for certain first-time home buyers in the $787 billion economic stimulus package he signed in February.

Only buyers of principal residences who make purchases before December 1 and have an adjusted gross income of $75,000 or less (or $150,000 for married couples) are eligible for the full credit.

We are experiencing a boom real estate market starting this March right after the law is in effect. Falling home prices have worked their magic and the tax credit has played a key psychological role in pushing buyers off the sidelines.

The tax credit is one of a number of factors that have worked to bolster the housing market in recent months especially entry level home that is priced below half a million dollar in our area.

The federal tax credit of $8000 to the first time home buyer is about to expire on 11/30/09. Although the credit's deadline isn't until the end of November, buyers may need to make an offer on a house by the middle of October to take advantage of it since it will take about 30 days to close an escrow.

Unless the tax credit is extended by lawmakers, this will be the last chance for the first time home buyer to secure a home at an unbelievable low market price (comparing the price from last year) with a great tax incentive.

One of the most common concerns from buyers is the condition of the house. Buyers do not want to end up with a house that has lots of problems.

To avoid that, here are five steps to protect buyer's interest in the purchasing process:

1. Buyer's own visual inspection. Some of the problem can be easily spotted such as broken windows, shifted foundation or mold.

2. Agent's visual inspection reports. Both listing and buying agents will fill out a separate report detailing what they see visually about the property and give buyer a copy.

3. Sellers are required to disclose certain types of information about the homes they are selling. Sellers will provide a report to disclose condition of the house.

4. Professional home inspection detailing the condition of the property. Once the defects are located, buyer can ask the seller to fix those problems.

5. Seller will normally provide a one year home warranty plan to cover any plumbing, electrical, pest control, air condition, water heater, roof leak, and/or Pool/Spa equipment A good agent shall be able to assist you in making that request when filling out the purchase contract.

With all the above steps performed, buyer can rest assured that no serious defects are overlooked and can request for the correction prior close of escrow.

Due to the $8000 federal tax credit to first time homeowners who purchase their primary residences before end of the year, the demand on houses selling less than $500,000 is very high causing a short supply on this type of housing. Buyers who already know their area interests are in a stand by mode waiting for new listings to show up on the market.

Inventory level remains very low in Walnut, Diamond Bar, Phillips Ranch and Chino Hills. It is below 2 months supply in Walnut and Diamond Bar and below 1 month supply in Chino Hills and Phillips Ranch.

This posts a great opportunity for sellers who need to sell their properties due to various reasons to put the houses on the market to satisfy the huge demand generated from the $8000 federal tax credit that will be expired by the end of the year.

For million dollar home buyers, it is a totally different story. Inventory level remains high and price is very competitive. For example, this house in The Country, an exclusive guard gated complex in Diamond Bar, with spectacular city lights view and gorgeous swimming pool on 23509 Ridge Line was listed for sale for $1,490,000 in 2008 and is now listed for $999,990. We are seeing as much of 50% price decline on million dollar homes.

For buyers who need to sell thier smaller homes and upsize to a larger ones, it is a great opportunity to maximize the selling price of their smaller homes and capture the bargains of the larger ones.

Recently I am seeing bank owned homes received 30-50 offers couple of days after it was listed. Especially the ones that are in good move in condition with lots of upgrades.

I am also seeing overbidding on the bank owned properties at a price that is substantially higher than the regular sales at market price.

The followings is a list of example of bank owned homes recently sold to demonstrate this kind of emotional bidding.

No. 1 - 1955 Silver Hawk Drive, Diamond Bar
List Price: $549,900
Sold 18.6 % over asking price for $652,000 On 05/18/09

No. 2 - 1024 Summitridge Drive, Diamond Bar
List Price: $621,225
Sold 12.3 % over asking price for $698,000 On 06/17/09

No. 3 - 20133 Illuso Ave, Walnut
List Price: $400,000
Sold 12.5 % over asking price for $450,000 On 06/11/09

No. 4 - 3258 Olympic View Drive, chino Hills
List Price: $419,900
Sold 10.7 % over asking price for $465,000 On 06/26/09

We were not seeing this kind of crazy bidding even during the 2003-2007 boom market. Before making an offer, ask your agent to give you a list of comps in the area to help you decide on the offering price. Appraisal website such as www.Zillow.com is also a good place to double check and make sure you are not overbidding.

Buyers shall exercise logic and caution when submitting offer on bank owned properties by utilizing facts and reasons to avoid paying a price that is over the market price.

Number of houses sold last month in June 2009 went up dramatically and the buying frenzy continues in July.

According to Dataquick's newest report for California 2009 May Home Sales: "The median price paid for a home last month was $230,000, up 4.1 percent from $221,000 in April, and down 32.2 percent from $339,000 for May a year ago."

Why is it important to hire a agent who is familiar with the area you are buying or selling instead of an out of the area agent who is a trusted friend? The answer may be very simple.

1. Convenience

Is it easier for a local agent to drive 5 to 10 minute or out of the area one to drive 30 to 60 minute to the house for showing? It is more practical to hire a local agent who is nearby due to the showing convenience.

2. Area Knowledge

On top of that, the local agent who specializes in the area knows the neighborhood by heart. They are familiar with the rating of the schools, the crime rate of the area, and where the parks and shopping malls are. Those local knowledge may require some research if the agent is out the area and could be totally unaware of.

3. Pricing Knowledge

A local agent who monitors the real estate market in the area is familiar with the pricing of each home sold on a daily basis. The agent understands the type of buyer for each type of house from experience and can price the house accurately.

There was one bank owned home in Diamond Bar for sale that is located in a extremely busy main street in June 2009. It is difficult to drive in and out of the house due to the street traffic. The same house was sold frequently every few years. It was normally priced about 10% below the market price in the past due to it's functional obsolescence.

It was sold 8 days after it was listed at regular market price. Buyers normally believe bank owned homes are good deals and especially if the value of the property checked out with appraisal site such as Zillow.com. This kind of situation could be easily prevented if buyer is assisted by a competent local agent.

With a good local agent working for you, it can help prevent selling your house too low or buying too high. Therefore, it is to your best interest to hire an agent who is familiar with the area you are buying or selling.

Buy a house in s good school district is one of the main reasons for family looking for a new home in the summer. The following is a chart of State's 2008 API school reports for Walnut, Diamond Bar, Phillips Ranch and Chino Hills to assist buyers who are factoring the shcools into their buying decision.

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Below is a chart of percentage housing price changes in Chino Hills, Diamond Bar, Walnut and Phillips Ranch according to the newest data published by MDA DataQuick, a company that tracks housing price.

Unlike most cities in Los Angeles where the 1 year percentage change are still in the negative, Walnut is up by 17.5%.

Why is housing price holding so well in Walnut? Here are the main reasons:

I. Top Ranked Schools

Walnut School District is famed for it's top ranked schools. For parents who wants to send their school age children to great schools, Walnut becomes a top pick.

II. City's Effort To Minimize Over Development

With City of Walnut's effort in opposing over development in the city in the past decades, Walnut remains one of the nicest residential cities to live in with minimal commercial traffic from outside of the city.

With excellent schools and city's effort in keeping it a small town atmosphere, Walnut remains one of the most popular cities for young family to settle down.