Would You Rather Be Told Or Be Shown?

Dave Baxter (Dave Baxter Realty) — Thu, 02 Jul 2009 03:15:15 -0700

People have a lot of questions when they're buying or selling a home.How much is my home worth?How much mortgage do I qualify for?How much should I offer for the home I want to buy?And many others.For the last 5 years I've tried to involve customers in how I determine the answers, rather than just doing the homework myself and telling them my professional opinion. I've been doing this by using screen meetings. This is a meeting where you call me while you are at your pc and we talk on the phone while I let you see what I am doing on my pc screen. This is done auto-magically using something called the internet *wink. It takes about a minute to set up and is just like watching TV for you. You can see what I am typing on my screen and see me moving my mouse. You see everything I see the second I see it.This allows me to take people inside the realtor-only multiple listing service (MLS) so they can see all the assumptions I have to make to answer their questions. One benefit is that the customer often points out things I would have missed. Another benefit is the customer realizes they have questions they really need me to answer before they can make a decision, questions which they never would have known to ask without seeing the information I see firsthand.I'm often hired to sell a home after another real estate firm has been unsuccessful in marketing the home. I am amazed at the number of people who never saw how their home was represented in the MLS, and never knew about all the homes their home was competing with, and all the homes just like their home that had attracted a successful purchase while their home had been actively for sale. Twenty or thirty minutes with me in a screen meeting will save the customer months of a frustration trying to sell their home.I like buyers to see the details of the real estate activity in the neighborhood they are thinking of buying a specific home in, the number of times that homes has been up for sale, the timing of any price changes while the home has been for sale, and the price the current owner paid when they bought the home. I also can show them if there are any registered sex offenders or EPA designated toxic waste sites nearby. It's easy to have an emotional response to a home, and you should have an emotional response to a home you want to buy, but having a screen meeting to really understand what is going on with the house and the neighborhood can avoid a lot of problems. All of that said, I've also learned that some customers are afraid of what they will learn during a screen meeting. And I really struggle with that, because what a customer does with the information I share with them is 100% up to them. I am simply offering transparency and an open dialog.

A Tax Credit For First Time Homebuyers

Dave Baxter (Dave Baxter Realty) — Sun, 21 Jun 2009 09:04:01 -0700

Many people have heard that the federal government is offering "first-time" home buyers a tax credit of up to $8,000. Here's some of the fine print: A "first-time" home buyer is anyone who has not owned a home in three years Closing has to take place between 1/1/09 and 12/1/09 You must live in the home you buy as your primary residence The tax credit is equal to 10% of the purchase price of the home up to a maximum of $8,000 The tax credit is refundable, so if for example you owe $2,000 in income tax in April 2010, you would not pay the $2,000 and the government would send you a tax refund of $6,000 There are income limits to be eligible to receive the credit A new twist to this was announced last Friday which allows certain nonprofit organizations and government agencies to purchase the tax credit a home buyer will receive in the future to give the home buyer some of the money they need to buy a home now.I've been waiting for this shoe to fall. Allowing people to use the tax credit toward the money they need to buy a home sounds good, but part of me thinks that this is the kind of lending policy that helped create the mortgage and financial melt-downs that started a few months ago. Here's my solution to reduce the risk of buying a home you can't really afford without a government bailout and some creative bookkeeping: buy what you can afford on a 15 year loan, instead of a 30 year loan. Every $1,000 you borrow at 5.5% for 30 years costs $5.68 per month. Every $1,000 you borrow at 5.0% for 15 years (15 year interest rates are lower than 30 year interest rates) costs $7.91 per month. The difference in monthly payments for a first time buyer's purchase of an $80,000 home (the sweet spot in the $8,000 tax credit) is only $178.23. If that $178.23 seems like a big increase to pay, please look at it in the context of your total monthly housing expense, which not only includes the principle and interest I am talking about, but also property taxes, homeowner's insurance, mortgage insurance, utilities, and savings for the future maintenance needs of your home. The reason a 15 year loan helps protect you is that you pay down your mortgage balance at a much fast rate, more than three times faster, in the early years of your home loan. One year into a 5.5% 30 year loan, you would have paid off $13.47 (1.3%) for every $1,000 you borrowed. One year into a 5.0% 15 year loan, you will have paid off $45.94 (4.6%) for every $1,000 you borrowed. At five years, it's 7.5% paid off for the 30 year person, versus 25.4% for you on the 15 year loan. If you have to sell because of hard times, or simply because you want a bigger home, your lower mortgage balance allows you to easily cover the expenses of selling, even in a flat market, and gives you a nice payday for your discipline. There's a lot of detail that goes into the tax credit and spending the tax credit before you receive it. Contact me and I'll try to answer your questions or point you in the right direction.

Dave Baxter's (dave_baxter) Blog

Would You Rather Be Told Or Be Shown?

A Tax Credit For First Time Homebuyers