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Market Watch: 4 Reasons to Move Up to Your Dream Home This Spring


Spring is in full force; the summer months are right around the corner. If you are debating moving up to your dream home, here are four great reasons to consider listing your current home and moving up to your dream home now, instead of waiting.

1. Buyer Demand is High & Inventory is Low

Recent numbers show that buyer demand is at the highest peak experienced in years, and inventory for sale is at a 4.5-month supply, which is still markedly lower than the 6 months needed for a historically normal market.

Demand in many markets is far exceeding the supply, and more properties in March sold in less than 30 days (42%) than in any month since last July.

Listing your home today can greatly increase exposure to buyers who are out in force and ready to act.

2. Prices Will Continue to Rise

CoreLogic recently released their latest Home Price Index in which they predict that national home values will appreciate by 5.3% by this time next year.

The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting for your current home’s value to increase before selling could price you out of your new home if you aren’t careful.

3. Mortgage Interest Rates Are Still Near Record Lows

Interest rates have remained below 4% for some time now and are substantially lower than the rate previous generations paid when getting a mortgage.

The Mortgage Bankers Association, Fannie Mae, Freddie Mac & the National Association of Realtors are in unison projecting that rates will rise over the next 12 months.

An increase in rates will impact YOUR monthly mortgage payment. Even an increase of half a percentage point can put a dent in your family’s net worth. Whether you are moving up or buying your first home, your housing expense will be more a year from now if a mortgage is necessary to purchase your home.

4. It’s Time to Move On with Your Life

The ‘cost’ of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise. But, what if they weren’t? Would you wait?

Look at the actual reason you are buying and decide whether it is worth waiting. Have you always wanted to live in a certain neighborhood? Would a climate change be just what the doctor ordered? Would you like to be closer to your family?

Bottom Line

If the right thing for you and your family is to move up to the home of your dreams this year, buying sooner rather than later could lead to substantial savings.


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Top 10 Real Estate Tax Deductions for Homeowners

Posted by Matthew T Smoot March 28- Filed in  Mortgage and Finance

Since the deadline to file income taxes approaches, we need to take a new look at the changing tax landscape for homeowners. The dynamic atmosphere in Washington, D.C. has a different effect each year on which tax breaks are proposed, rescinded, changed, and extended for taxpayers who own a home.

Thanks to the efforts of many real estate industry groups like NAR, many of the tax benefits that homeowners enjoy–which were on the chopping block over the past few months–have been protected and extended through the 2013 tax season.


1. Mortgage Interest Deduction

The mortgage interest deduction has always been the most-beloved tax benefit of home buyers in the U.S. New homeowners’ monthly mortgage payments are made up almost entirely by interest for the first few years. Their ability to deduct that interest can result in a healthy reduction in tax liability. Affordability for first-time home buyers is directly linked to their ability to deduct the interest on their mortgage.

Homeowners who itemize their deductions can deduct the interest paid on a mortgage with a balance of up to $1 million. While there is some movement to limit the total itemized deductions for taxpayers with higher incomes (over $400,000), the current deductions holds for all tax brackets. Americans save around $100 million every year by deducting mortgage interest on their tax returns.


2. Home Improvement Loan Interest Deduction

The interest on home equity loans used for “capital improvements” to a home can also be a tax deduction. On loans with balances of up to $100,000, the interest is tax-deductible for a homeowner who uses the loan to make improvements to the home such as adding square footage, upgrading the components of the home, or repairing damage from a natural disaster. Maintenance items like changing the carpet and painting a home are usually not included as capital improvement projects.


3. Private Mortgage Insurance (PMI) Deduction

Homeowners who make a down payment of less than 20 percent are usually paying some sort of Private Mortgage Insurance. PMI (sometimes abbreviated MIP or just MI), can be a few dollars to hundreds of dollars per month, and it is a large portion of many homeowners’ mortgage payments.

If your mortgage was originated after Jan 1, 2007, and you have PMI, it can be a tax deduction. The deduction is phased out, 10 percent per $1,000, for taxpayers who have an adjusted gross income between $100,000-$109,000 and those above that level do not qualify. The extension of this tax deduction in 2013 was one of many last-second saves by real estate industry advocates.


4. Mortgage Points/Origination Deduction

Homeowners who paid points on their home purchase or refinance can often deduct those points on their tax returns. Points, often called origination fees, are usually percentage-based fees which a lender charges to originate a loan. A one percent fee on a $100,000 loan would be one point, or $1,000.

On a home purchase loan, taxpayers can deduct the entirety of the points that they paid in the same year. On a refinance loan, the points must be deducted as an amortization over the life of the loan. Many taxpayers forget about this amortized benefit over time, so it’s important to keep good records on the deduction of points on a refinance.


5. Energy Efficiency Upgrades/Repairs Deduction

Homeowners can deduct the cost of the building materials used for energy efficiency upgrades to their home. This is actually a tax credit, one which is applied as a direct reduction of how much tax you owe, not just a reduction in your taxable income.

10 percent of the total bill for energy-efficient materials can be used as a tax credit, up to a maximum $500 credit. Insulation, doors, new roofs, and many other items qualify for the energy efficiency credit. There are also individual limits for certain items, such as $150 for furnaces, $200 for windows, and $300 for air conditioners and heat pumps.


6. Profit on Sale of Real Estate Deduction

If you’ve sold a home in the past year, you’re likely aware that individuals can claim up to $250,000 of profit from the sale tax-free, and married couples can claim up to $500,000 tax-free. Of course, there are some requirements to escaping the capital gains tax on this profit.

The home must be a primary residence. This means that you must have lived in the home, as your primary residence, for two of the past five years. You could rent it out for years one, three, and five, while living in it for years two and four. In this way, a homeowner could potentially claim this tax break on multiple homes within a fairly short time frame, but each tax-free sale must occur at least two years apart from the previous tax-free transaction.


7. Real Estate Selling Cost Deduction

For those lucky folks whose profits on the sale of their home might exceed the $250k/$500k limits, there are still some ways to reduce the tax burden. The costs of selling the home can be significant, and those in themselves can be claimed as tax deductions.

By adding up all of the fees paid at closing, capital improvements made to the home while you owned it, money spent to make repairs to damaged property, and marketing costs necessary to sell the home, you can add a significant figure to the cost basis of your home. This basically raises the original price you paid for the home. Your cost basis begins with the original price of the home, and then adds in the improvement and selling costs. When the new cost basis price is compared to your selling price, it reduces your potentially-taxable profit on the home significantly.


8. Home Office Deduction

The home office tax deduction is often cited as a deduction that increases your likelihood of being audited. While the raw numbers might add some credibility to that perception, it’s really the way a home office is deducted that gets some taxpayers into audit purgatory.

This deduction, when used correctly, is just as safe as any other. Homeowners deduct a percentage of their mortgage, utilities, and repair bills in direct proportion to the amount of their home that is dedicated office space.

There are a few hard and fast rules to live by when deducting the costs of your home office. The home office must be your principal place of business (the primary office location where you get the majority of your work done). It needs to be exclusively used for business (it can’t be your kitchen by day and office by night). You need to be realistic with its size and use (unless you enjoy audits).


9. Property Tax Deduction

New homeowners often don’t know that their property taxes are deductible. While it may sound strange to have a tax-deductible tax, the overall effect is that you don’t pay income tax on money that was spent on property taxes.

Homeowners should be careful to only deduct the amount of property tax actually paid to their local municipality for the year. This is not necessarily the amount you paid to your escrow account, and should not include any other city/county fees that might potentially be on the same bill as your property taxes.


10. Loan Forgiveness Deduction

The Mortgage Debt Forgiveness Relief Act of 2007 was created when short sales were becoming a new and growing part of the real estate market. An underwater homeowner might convince their lender to agree to a short sale of their home at $100,000, even though they owe $150,000 on their mortgage. While the lender forgives the extra $50,000 owed after the short sale, the government views it as $50,000 in taxable income (a gift from the lender to the borrower).

The Debt Forgiveness Act temporarily relieved the taxpayer of that burden, but was set to expire this year. Through much effort, it was extended along with many other homeowner tax relief measures this year and homeowners can continue to claim this tax relief in 2013.

IRS-suggested disclaimer: To the extent that this message or any attachment concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. This message was written to support the promotion or marketing of the transactions or matters addressed herein, and the taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.

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3 Myths of the Market Recovery

If you follow the news about real estate, you’ve likely noticed a dramatic direction turn in the tenor of headlines over the last year or so. From underwater seller woes, foreclosure highs and listings lagging on the market with no sale in sight, the stories have turned to reporting on multiple offer buyer woes, interest rate lows and listings flying off the market with no inventory in sight!

Every time the market turns – in either direction – the flood of information and opinion about it always comes with a few myths and misconceptions that have the potential to send you off course in terms of how you respond and reposition yourself and your business in the current market climate.  And this time is no exception:  here are five myths of the current market rebound that we should bust, with no further ado.

1.  This is a momentary uptick – nothing to get excited about.

No one can say for 100% certain how long this ascending market will last.  The unemployment rate is still relatively high. Relatively large numbers of people are dropping out of the job market altogether – though some of this is likely due to retiring Boomers and people shifting to self-employment.

But the good signs are also plentiful.  Banks have gotten savvy about releasing their foreclosed inventory in a trickle, rather than flooding the market with it; the foreclosure rate has declined, increases in buyer activity have driven home value increases in many area, resolving some of the appraisal issues that so plagued the market during the downturn.  And looser lending guidelines with low interest rates are making it easier for buyers to, well, buy – when they are victorious over other offers, that is.

And aside from the issue of how long the uptick or recovery will last, my advice is this: you should get excited. As I see it, there are 3 different types of agents.  The first type are the agents who blow stay stuck in the fear and disappointment of the past few years

The second are the agents who will get just a little temporary bump in revenues, but will fail to fully reap the business-building opportunities of today’s market because they lean back and take the few extra calls the upturn brings them, instead of diving in and doubling down on their marketing and skill-building.

Then there will be agents who take full advantage of this rebound – whether it lasst 6 months or 6 years – as an opportunity to grow their businesses and reposition them for a new level of lasting prosperty, by:

  • increasing their listing business
  • increasing the price point of their average sale
  • closing deals for new buyer niches, and
  • using their increased income to level up their marketing, give their brand stronger footing in their local market (one way: our Local Ads) and render their business more recession-resistant than ever.

You get to decide which type of agent you’ll be.  Up to you!

2.  The famine is over – it’s feast time, baby!

Yes – it is true that there is much abundance on the market, compared with what we’ve had to deal with in the last 5 or 7 years – an abundance of buyers, for certain, and also a relative abundance of loan moneyBut that doesn’t mean that it’s easy money time, nor thaat big profits will just fall into your lap, though I happen to believe there is massive opportunity for agents who want to grow their businesses to do it now.

It will just take some work, because there are some critical scarcities to deal with, too.  Inventory is low – extremely low, compared with buyer interest.  As a result, buyers are having trouble closing, which also impacts some owners who would be sellers (see #3, below).  Prospective listings are definitely out there, but all the smart agents are after them. And over the past decade, both buyers and sellers have developed a whole new level of expectations, technological savvy and expertise demands.

It can be a time of abundance, but big profits won’t just fall into your lap. If you want to use this market recovery to build and grow a thriving, long-term business, you’ll have to up your game, when it comes to marketing, fluency with the market data metrics that matter to buyers and sellers, and client management skills.

3.  Sellers are your for the picking.

There is certainly a pent-up cache of potential listings, representing people who wanted to sell but were stuck in underwater mortgages that are now – or will soon be – back in the black.  This is a potentially massive growth opportunity for agents who want to increase their seller business.  But one thing that many agents are overlooking is that most of these sellers are also prospective buyers.

So, when they see and hear about low inventory conditions and the problems buyers are having being successful in multiple offer situations, many simply stay put, disqualifying themselves from ever even calling you in for a listing interview because they don’t want to deal with the possiblity of selling and finding themselves unable to buy.

As you market to your farm, write posts or answer questions about your local market on Trulia Voices, or reach out to your past clients, address this very real concern that is holding some prospective sellers back from listing their homes.  Educate your local market audiences about possibilities and insider tricks you can offer to help workaround this issue, like strategic transaction sequencing, rent-back agreements and listing to sell contingent on buying.

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The North Texas Real Estate Market in One Pic…

The North Texas Real Estate Market in One Pic...

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April 8, 2013 · 8:35 pm

The North Texas Real Estate Market has turned on a dime…

3124 Charring Cross, Plano

SERIOUSLY???!!! Contract for $5K over asking 20 minutes after it hit the MLS. This is crazy. If you were thinking about selling, NOW is the time!!!  www.KimCan.com

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