Taxes, Zillow, and Me -or- What is my house really worth?

We’re all curious what our homes would be worth on the market, even if we have no intention of selling.  If you recently bought, you’re curious if the value has already gone up.  If you have owned for a while, you may be thinking of selling someday soon and want to know if you can even afford to.  And if you just got your tax statement, you might be shocked at how little value the county says you have…or how much they want from you in taxes!

Here are the three most common ways people obtain an outside opinion of their home’s value:

1.  Zillow.  Go on Zillow or another website that offers instant valuation. I mean, it’s 2am and you’re in front of your computer anyway.  Aren’t you at least a bit curious?  Nothing wrong with surfing online, but don’t trust those numbers.  They are based on algorithms, not on expertise.  Zillow certainly hasn’t seen the insides of any of those homes or your home, and much of the time the statistics they are basing value on aren’t even accurate.  Easy and quick, but not worth the pixels it’s written on.  Also expect a follow up from an agent you don’t know.  They will sell your contact info to a local agent.

2.  Taxes.  Even if you aren’t curious what your home is worth, the county or city sends you a letter telling you anyway. There was a time these tax assessed values were all uniformly way too low.  Then the economy collapsed and suddenly they were all uniformly too high.  Now days, they are most commonly a little low to considerably low.  But again, the city has not seen the insides of any of these homes.  So if your property is in disrepair, the tax value might be high.

3.  Me.  That’s right, me!  I’m just as free as the other options, plus I’m actually a living, breathing, thinking Realtor with Edina Realty.  I will happily provide you with a new market analysis.  Did I just do one for you last year?  Okay, then I’ll update that one.  You’re my past, current, and future clients.  I want you to have the best information from a professional that actually has seen all these houses.  And has certainly seen yours!  I’ve been doing this for over 10 years, and it turns out I need clients every year.  So it doesn’t matter to me if you are planning to sell now, later, or maybe never.  Just let me know if you are actually thinking of selling soon so that we can schedule you more urgently.

Market is Back Up and Running

First,  sorry Blog.  I moved this summer into a wonderful large home that needs lots of work.  So I've been distracted with all that work.  Plus I was crazy busy until the first weeks of November.

Yes last fall was crazy.  Buyers were motivated to take advantage of the first time home buyer tax credit, and I was involved in multiple offers on a weekly basis.  This all stopped when the government passed an extension for the credit.  The sense of urgency went away and everyone seemed to take a breather for the holidays.

Second, the holidays are over and the market is back up and running.  New listings are coming on at a fast pace and showings are up too.  My buyer clients had no choice but to take the holidays off as there were no new homes to see.  But now they are eager and ready to see all the new listings as they hit the market.

If you are considering selling in the near future, you might want to make that near future nearer.  Buyers are motivated to find a place before April 30th to claim their tax credit.  And if you've owned for more than 5 years, you can get your own tax credit if you sell and buy and new place.  $6500!  Not too shabby!  If you are asking, "Should I sell now or later?" The answer is:  NOW!

New Homebuyer Tax Credit Bill To Be Signed Today!

What are the specifics?  Well you'll be able to use the $8000 on contracts through April with some expanded income qualifications.  And you'll be able to qualify for up to $6500 even if you're NOT a first-time buyer.  You will have to have owned your current home for 5 years.  This leaves some people out who could really use the $6500, but hopefully it will lead to better inventory for all the first-time buyers.

Check out this news brief from the National Association of Realtors for a break down of changes from the old bill:  http://www.mnrealtor.com/AM/CM/ContentDisplay.cfm?ContentFileID=2950&MicrositeID=0&FusePreview=Yes

$8000 Tax Credit Helps Sellers Too!

Hurry!  Your time is almost up.  The $8000 tax credit is only for first-time home buyers who close before December 1st.  Do the math…  If it takes 45 days to close after finalizing negotiations on a purchase agreement, that means you need to be in a contract by October 16th.  That's just fine if you are actively looking, but if you are still procrastinating meeting with a lender…uh…hurry? 

Should everyone run out and do this?  Well, probably not.  Don't make long term decisions like buying a home just to get your $8000.  Don't buy a home that you will out grow in two years.  Don't buy a home that you can't afford.  Don't buy a home if you might be moving to Washington D.C.

However, if it makes sense for you to buy a home in the next year, then I'm talking to you.  HURRY UP!  You might not find a home.  You might decide not to buy after meeting with a lender or real estate agent (I know a good one by the way).  But if you want to have the option, ACT NOW, or the decision will be made for you.

And if you're a seller, the time-line is even tighter.  Do you want the buyers rushing to find a home before the deadline to have your home to choose from?  Or do you want to miss the boat? 

Not sure what your home is worth (who is anymore?)?  Not sure if your home is in the price range first time buyers are looking in?  Not sure if you should replace that shag carpet and flocked wallpaper?  It's time to figure it out.  Call your agent this week.  Did I mention I know a good one?

Housing Shortage?

What?  That's crazy!  Haven't you heard the news?  It's a buyers market, the market is flooded with foreclosures, and banks aren't lending money.

Well maybe not.  First, banks are lending money.  I've yet to have one qualified buyer turned down for a loan.  Underwriting is taking a little longer, and sometimes they are raising issues the day before closing, causing a delay, but they are still making loans.

Second, listings are down.  Plus a big portion of the listings that are out there are in foreclosure and in poor condition.  Because of changes in the lending industry, first time buyers are almost exclusively buying with FHA loans.  FHA has certain requirements for the condition of the homes it will back a mortgage on.  Most of the foreclosures don't qualify.  So the fanciable inventory is down even further.

Third, who wants $8000?  Any guesses?  Give up?  The answer:  everyone.  This means more buyers.

This is creating a situation where the number of qualified buyers is out growing the number of attractive fanciable well priced homes.  We are seeing homes sell in a week, in a day, in a few hours.  They are all well priced homes, so don't confuse this to mean that your home is actually going up in value.  Buyers still have high expectations for what they can get for the money.  But your chances of selling may be better than you thought.

What’s Up With This $7500 Tax Credit?

Good question.  Congress has been passing laws faster than the industry knows what to do with them.  The current law, as was passed last year, gives a $7500 credit on your tax return for qualified first-time buyers who purchase a home between April 9, 2008 and July 1, 2009.  Except it isn't a credit.  It's a zero interest loan that must be repaid on your future taxes over the next 15 years.

As you can imagine, this did little to stimulate the housing market.  It doesn't increase your ability to purchase a home.  It just makes expenses easier to handle once you're there…eventually…when you get a refund…that you pay back.

The new stimulus plan that passed the house on Wednesday turns that credit into a…CREDIT!  If the bill becomes law, that $7500 would become a straight-forward credit on your 2009 returns.  It would retroactively include purchases made since January 1, 2009 and extend through either June or August (depending on the bill). 

Will this simply be a windfall for the qualified first-time buyers who were going to buy anyway?  Or will this be enough incentive to convince someone on the fence to buy?  It still won't give you $7500 to use towards your down payment.  But knowing it's there in 2010 may just be the assurance you need, that you can afford to buy in this well priced market.

I’ll List Your Home For Free!

Let's save money  Will_work_for_food 

There have always been choices when it comes to hiring a real estate agent.  From do it yourself brokers that put your home on the MLS with pictures you provide for an upfront fee, to full service companies that charge up to 7% of the sale’s price.  Then within each company there are many different agents with different styles, experiences, talents, and ethics.

It’s a lot for the consumer to sift through.

I want to discuss one of the options:  Free.

There are several companies and agents who are trying out a plan where they charge no commission to list your home.  In turn you must agree to work with them on the purchase of your next home, where they will be paid a cooperating commission from the listing broker of that home.

And they do everything a full service agent does, except for open houses.  But you are free to hold your own.

Yeah, right.

Trust me.  Don’t expect them to do anything other than put your home on the MLS and put a sign in your yard.  And they may charge a fee for that much.

Here’s why I don’t like it:

1)        It’s not free.  You still have to pay the cooperating broker that represents the buyer.  That’s typically 2.7%.

2)       You’ve now entrusted what’s most likely your most valuable asset to someone who has told you that what they do is of no value.  If it was of value, they would charge you for it.  I’m willing to cut your hair for free.  Any takers?

3)       Saving $6,000 in commission and then selling your home for $10,000 less than a good full service agent could negotiate for you is hardly a deal.

4)       You have a no-value, limited-service agent on your side.  The buyer may have a full-service, full-value agent on theirs.  Good luck.

5)       The financial incentive of your agent is not connected to the price of your house.  It’s only connected to the price of the next home you buy.  Their best case is to under price your home and sell it quickly at minimal expense to them. 

And remember, I’ll LIST your home for free too.  But I will charge a commission when I SELL it.

Things That Go Bump in the Night

Haunted_house Your haunted house is the prefect place for a Halloween party.  Other parties have to spend lots of money creating the illusions of ghosts and ghouls.  It takes lots of wires, motors, and smoke machines.  You, however, were lucky enough to end up with a truly haunted house.  Sure the spirits keep you up at night, but all your friends say you have the best Halloween parties.  I mean, no one is willing to spend Christmas at your place.  But once a year, October 31st, it's all worth it.

But now, you decided to take a job in Salem and you have to sell your home.  Do you advertise that it's haunted?  Perhaps people will pay a premium for poltergeist.  Or do you paint over the bleeding wall and keep it all a secret? 

I'm not going to tell you what to do, but you should familiarize yourself with the law.  The state of Minnesota requires a nine page disclosure.  In which, it is necessary to disclose any material facts that would affect the normal use and enjoyment of the home by any future buyer.  But you are in luck.  There are a few exceptions to this rule.  And one of them is haunted houses.

Page 9, lines 39-42:  There is no duty to disclose the fact that the property…was the site of a suicide, accidental death, natural death, or perceived paranormal activity.

But I assure you, after the new owners move in and meet the neighbors, they'll learn all about your paranormal parties.  And expect their lawyer to come knocking, regardless of duty to disclose.

Stock Market vs. Real Estate Market

Heard any news about the real estate market lately?  It’s for real. Prices are lower. Homes are being foreclosed on. The bad mortgages are affecting everything in the financial markets. But are houses really the worst investment you could have made?

Since 2001, the average price of a single-family home in Nokomis has gone from $170,066 to $222,542. In Longfellow, the average price was $155,226 in 2001 and $192,772 today. And that number doesn’t consider that many foreclosed homes in rotten condition are skewing the numbers lower. In the same time, the Dow ended up right where it started. Simply, your investment did better in the housing market than it did in the stock market.

But that’s not the whole picture. How many memories have you made in your home? How many have you made in the stock market? Remember that time that you had your entire family over to your stock portfolio for Thanksgiving? Remember your first Christmas tree in your stock portfolio? Remember watching the snow fall out the window of your stock portfolio? No matter how cold it got, your stock portfolio always kept you warm at night.

You don’t have to invest in the stock market. But you do have to live somewhere. And in the long run, it’s better to own that home than to rent it. That doesn’t mean you should buy a home you can’t afford, or buy any home before you can afford it. But the dream of owning your own home is still a valid one. But if you treat it like the stock market and think that you can buy and sell at will as you try to build your fortune, your dream will return the favor just as reliably as the stock market. But put your dream of family and love into that home, and it rarely disappoints.

More Fall Maintenance – this time inside!

Ok, here are some more good tips – this time inside the house!

1.  Check all faucets, valves, and water pipes for leaks and/or corrosion.

2.  Check all waste pipes, toilets, and sinks for leaks and/or loose fittings.

3.  Shut off water supply to exterior faucets and remove hoses.

4.  Change or clean all forced air furnace filters monthly!

5.  If you have a humidifier installed on your furnace, check operation and clean.

6.  Check hot water systems for leaks around boiler and pipe fitting, check each radiator for heat, bleed as needed.

7.  Have pumps and fans lubricated according to manufacturers’ specifications.

8.  Check fresh air intake tubing, making sure outside area is cleared of debris.

9.  Know the location of the circuit breaker panel/fuse box, label all circuits.

10. Be sure you have not stacked flammable items too close to closet light fixtures.

11. Replace regular light bulbs with energy efficient CFB’s or LED’s.

12. Buy and install at least one fire extinguisher.  And learn how to use it!

A dozen useful fall home maintenance tips.  Surely you can check these off your list in a weekend?!