IRS Auditing $8,000 Tax Credit Recipients

If you are looking to take the $8,000 Home-Buyers Credit you better have you ducks in a row according to reports coming out of Washington. The IRS is going to be paying special attention to those taking the credit on their taxes.

The Internal Revenue Service is examining more than 100,000 suspicious claims for the first-time home-buyer tax break, another sign of potential trouble for the soon-to-expire program.
The measure, adopted in February as part of the economic-stimulus bill, gives first-time buyers an $8,000 tax credit in an effort to boost sales and stimulate the moribund housing market. The program is set to end Nov. 30, but housing-industry leaders are lobbying Congress to extend it.

More than a million claims for the credit have been received so far, and housing-industry experts estimated that the credit has helped generate about 350,000 home sales that wouldn’t otherwise have occurred. But some lawmakers and tax experts now say there is evidence that a significant number of the claims might prove to be unjustified, or even fraudulent. via WSJ.com. Out, Presson

WILL THEY EXTEND THE $8,000 TAX CREDIT???

The White House is considering extending an $8,000 tax credit for first-time home buyers, which has helped to boost sales by more than 1 million this year.
Spokesman Robert Gibbs said the administration’s economic team is evaluating the tax credit’s effect on new home sales and will soon make a recommendation to the president.
The credit covers up to 10 percent of a home’s price – as much as $8,000 – for first-time buyers, but sales must be finalized by the end of November. If the credit is not extended past that date, the upward trend in housing sales could be reversed.

I think we will see an extension annouced shortly. It is one of the few programs coming out of Washington that has worked right out of the box. The politicians need something to hang their hat on and the new homeowner tax credit is a success.

NEW APPRAISAL STANDARDS YOU NEED TO KNOW ABOUT

I thought I'd talk a little bit today about the biggest "deal killer" in the real estate market today, appraisals. Most agents can now talk personally about a slam dunk deal recently lost due to the appraisal process.

Appraisals have been a sore spot in the real estate market in the past decade. When things were booming, pressure was placed on appraisers to make the value hit the loan amount. This caused prices and values of properties to skyrocket. Everybody loved 'em in the day.

Then when the downturn hit, appraisers realized their culpability in the boom and tightened their standards. Real estate agents were bamboozled as property sales were constantly getting stuck at the appraisal stage as the values were regularly coming in under the loan amount.
Now let me take a minute to explain I am not blasting appraisers. They are the middle man in the home sales equation and are always in a tough place. If they are too tough they do not get work later on so their is a self interest at stake. I get this.

But now new Fannie Mae and Freddie Mac regulations have put the appraisers in a bigger bind. They demand that lenders control the choice in appraiser, not mortgage brokers or real estate agents.

The cost cutting mentality of the appraisal management companies is lowering the standard on the quality of appraisals. What is ironic is that they are paying the appraisers less but charging the customers more at the same time.

So now the top quality appraisers are being squeezed economically while they also are under the whim of the management company to get work. This is not the recipe for an effective market.

THE MIAMI HEAT DIDN'T GET LAMAR ODOM BUT THE CONDO MARKET IS TURNING

We have all heard since the market began turning for the worse the glut of unsold condominiums down in the Miami area. After a long rough ride, the Miami Condo market is finally getting back to business. The combination of overbuilding and top of the market prices stalled the market. Now investors are coming back as prices are being dropped to the $200 per square foot level and people feel like they are getting a deal.

Did you notice I did not mention any government programs or incentives in this? I did not think so. Just the combination of the right product at the right price bringing out buyers.

What a surprise.

FINALLY SOME GOOD NEWS FOR A CHANGE

The anecdotal evidence I have hearing from other real estate agents in South Florida is also playing out across the country as real estate values have gone up in the May, 2009 Case Shiller report. Numbers were up across the board and into positive or break even territory in all but 5 of the 20 cities.

This is good news. The markets and our buyers have been waiting for consumer confidence in real estate to return for 3 years. Once we have the critical mass of buyers who are ready to buy and feel that their investment is safe the market will have it’s base.

And right now that is us all real estate professionals are looking for. It has been a wild ride for all involved and I know I can say that a little normalcy would be appreciated for all concerned.

Over and Out, Presson

President Obama’s Short Sale Solution to the Real Estate Crisis

Just as many homeowners are working to solve their current financial problems, so too are the FDIC and US Treasury. No one, private citizen or federal agency is well served by a prolonged economic crisis. President Obama has announced a new program to help people paying of distressed mortgages called the “Foreclosure Alternative Program”. The details are available at the US Treasury’s website. But the essence of this program is that the President would prefer to see lenders offer loan modifications or failing that, direct homeowners to reputable, reliable short sale real estate specialists. As always, rely upon professionals. Involve an attorney and possibly even your tax professional to fully understand the personal ramifications of a short sale. If you can find a short sale team that offers all of those services as part of their sales process, all the better. Presson

Beware of offers too good to be true

In troubled times, some amazing new businesses are starting to “pop up.” One recent business, in these times of stressed real estate, is the bulk consolidator of short sales. These Internet based firms offer short sale listings to local realtors to act as the selling agent for a commission. One problem with this approach is the selling realtor has no idea what was promised to the owner selling the property. The bottom line is, deal with a local full service realtor who can help you from start to finish. If you find an Internet site that is making claims to good to be true, beware. When looking for a Realtor, contact several. Trust your instincts when talking to people who want to handle your short sale. You’ll know within a few minutes if you have the right person there to help you. Out, Presson.