Good Time To Buy, But Money's Tight

Consumers are grappling with market conditions that have created a buyers' housing market at a time when economic conditions are scaring off would-be buyers. The media also gets another bashing for consumers' cognitive dissonance.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Falling home prices and rising inventories are putting home buyers in the best position they've had this decade.

Unfortunately those same falling home prices and rising inventories are putting home sellers in the worst home-selling position they've had this decade.

It's quite a quandary for housing consumers.

Two recent polls tell the story.

On April 16, a new Reuters/Zogby poll found that most, nearly 54 percent of consumers, believe it's a good time to buy a home.

On April 13, an Associated Press-AOL Money & Finance poll, found that even more, 60 percent of consumers polled said it was a good time to buy.

Eric Mangan, spokesperson for ForSaleByOwner.com, said, "While today’s real estate market offers low home prices, low mortgage rates and supply of available homes, the missing ingredient to recovery within the housing market has been consumer confidence. (These) findings are a great sign of growing consumer confidence and awareness that market conditions have provided unique buying opportunities."

However, the AP-AOL poll also revealed 60 percent said they won't buy a home in the next two years.

Why the disparity?

Economic fears are causing some consumers to tighten their purse strings. Media-critics also say consumers are being spoon fed an unhealthy diet of national news instead of a balanced meal with local flavor.

The Reuters/Zogby poll said nearly three in four Americans believe the U.S. economy is currently in a recession, and nearly half give their personal financial situation a negative rating.

Also, 81 percent of those polled rated economic policy as "poor."

The AP-AOL poll said one in seven mortgage holders fear they will soon miss a mortgage payment. And three in 10 said they are concerned their home's value will decline over the next two years.

AP-AOL also found that 50 percent of those surveyed believe homes are overpriced. Half think this is a very tough time for first-time buyers and nearly 66 percent says it's tougher for first-timers than it was five years ago.

What's a consumer to do?

Real estate experts, like Marcie Hahn at Williams Realty in Salt Lake City, say pay more attention to your local market, than national surveys.

"A direct impact of this national reporting is that consumers do not realize that, in reality, real estate markets are local, not national, and that the doom and gloom reports broadcast nationwide are not necessarily a true reflection of what is happening in their particular market," said Hahn

Market conditions are most favorable for those who plan to buy now and stay put for years.

"The interest rates are so good right now that this factor alone could actually trump any sort of loss, real or imagined, that a buyer could be worried about by putting in an offer now, said Hahn.

• Media bias or media backsliding?

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Consumer Alert: Property Tax Reduction Offers

Beware of fee-based offers to reduce your property tax, especially those that arrive with an official-looking letterhead. Get the facts from your local tax office or assessor.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - Larry Stone, Silicon Valley's tax assessor , is warning homeowners to beware of companies seeking cash to help homeowners lower their property tax.

He says a local company, asking for $99 to perform a property tax reduction services, is "disgraceful" because the assessor's office performs the service for free.

The sales pitch also arrives with official-looking letterhead.

"There's simply no reason at all for a property owner to pay a fee to a private company for a service taxpayers receive from the Assessor's Office without charge," Stone said.

This consumer alert comes from Silicon Valley's Santa Clara County, but it's good advice for any homeowner anywhere facing lower property values.

Here's why.

When your home value falls, a small consolation can come in the form of a temporary property tax cut. That's provided your property tax jurisdiction, like Silicon Valley, bases your home's assessed value on market values and or sales prices.

If you live in Silicon Valley, depending on the location, your home value may have fallen by 20 percent or more since the market peaked.

This month 41,231 Silicon Valley homeowners had their assessed values reduced, netting an average $900 per-home reduction in annual property taxes, for the 2008-2009 assessment roll.

That's a healthy chunk of change in hard economic times, especially when the reduction in assessed values and property taxes did not cost them a dime.

That's because Silicon Valley's assessor uses a relatively unique -- even in California -- proactive property tax assessment process that includes annual examinations of property values when the market is in decline.

Computer models using recent sales flag properties that warrant a reduction in assessed values, the assessor automatically makes the reduction and if you don't agree with the reduction or any assessment, you can always appeal it -- at no charge. Silicon Valley offers informal appeals directly with the assessor and another level of appeal with an independent appeals board.

Jurisdictions vary on how they handle property taxes. But, before you spend a penny, check with your assessor or tax office to determine if, when and how to get your property taxes reduced. Most assessors have Web sites that make this information available.

"(There) are questionable operators, bottom dwellers who are feeding upon the increased fears of homeowners stressed out by a declining real estate market and the loss of equity," said Stone.

Stone said the pitch for the $99 service comes just weeks before the assessor's office sends out property tax levy notifications. That could encourage homeowners to apply for and pay for a property tax reduction the assessors office has already granted.

In some jurisdictions you may have to pay for professional services if your appeal process asks you to document your home's value and you don't want the headache of making the effort. Typically you can choose to use an appraisal or comparable market analysis to prove your case.

An appraisal is typically conducted by a licensed appraiser who physically examines your house, factors in market conditions, building costs and other homes like yours, among other factors, and then sets a value based on professional opinion derived from their work.

A comparable market analysis, to determine a value, considers homes like yours that were recently sold. The homes should be as much like yours as possible in terms of square footage, lot size, age, floor plan, rooms, building materials, style and other factors. An appraiser typically includes comparables in his analysis.

You can obtain comparable market analysis information from public records where deeds are recorded, but in a moving market, faster access to recent sales may give you a more accurate value.

The most recent sales are available through the members-only multiple listing service. Real estate agents and other eligible real estate professionals have access, but they could charge you a fee for pulling the comparables. It you choose this alternative, some fee could be worth it to get comparables that have actually closed. In today's market, "sold" doesn't always mean "closed escrow."

Hiring a real estate attorney could be another option if your jurisdiction allows legal representation to prove the value of your home for property tax purposes.

A final note, in Silicon Valley and other California jurisdictions, a property tax reduction lasts only as long as the market warrants it. Once values begin to rise so does the property tax amount -- and fast -- to the cap set by law.

Golden State law generally mandates that property taxes rise no more than two percent a year.

However, once property values have been reduced, and later begin to rise, the assessed property value rises too -- in a hurry.

Once a property's value returns to the pre-reduction level, the assessed value gets put on the fast track and quickly jumps back to its pre-reduction level -- where it would have been if there was no reduction -- plus the allowed 2 percent a year.

That could be a sudden increase in property taxes at a rate much steeper than the otherwise normal 2 percent annual increase.

Again, contact your local jurisdiction's property tax agency and get the straight scoop before you listen to someone offering you property tax reduction services for a fee.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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First Timers' Dos And Don'ts

First-timers have a lot of ground to cover -- from learning about market conditions to landing the best loan. Here are some "Dos" and "Don'ts" to help simplify the process.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - If you are a first time home buyer, you have a lot to learn.

Working from a blank slate you must build an understanding of the housing market, determine what you can afford, land a loan and hone in on a home that's a good fit for your lifestyle.

The transaction will likely become your largest asset ever so there's little room for error.

It is a daunting task, but you can ease your concerns if you take the process step-by-step, watching your footing as you move along the path toward the American Dream.

To that end, Coldwell Banker recently released a list of "Dos and Don'ts" to help first timers turn that stress into the self-confidence you'll need to move closer to your first home. DeadlineNews.Com tossed in some additional hints and useful links to keep you on the straight and narrow.

The list focuses on areas first-timers typically stumble over in their initial home buying attempt. Knowing what you could face will help you avoid some of those trip ups.

The Dos

• DO browse for housing information. Begin your search by arming yourself with information. For example, Coldwell Banker's the Home Price Comparison Index allows you to compare average housing costs in over 400 U.S. markets. RealtyTimes Market Conditions gives you a snapshot of thousands of local markets. About.com's Home Buying/Selling section is chock full of the nitty gritty insight you'll need to get going. Stick with the known, long-time real estate information Web sites and you'll learn more than you need to know.

• DO examine your credit standing. You need to know your credit standing. You may need to request corrections if there are errors. You may need to adjust your habits if your credit behavior is less than sterling. And you need to take those steps before seeking a loan. Your credit report is free from AnnualCreditReport.com, the federally regulated place to go. You can stagger retrieval of your credit report from each of the big three credit bureaus, getting one from a different agency every four months. Your report is free, but you may have to pay a nominal fee for your credit score (a numerical scoring of your creditworthiness) depending upon your state law and other factors. Learn more about your score at Privacy Rights Clearing House.

• DO explore a mortgage pre-approval or commitment. An early green light on a loan will put you in a good negotiation position when you find your dream home. It will also help you shop within your budget.

• DO line up a dream team of professionals. You may need a real estate agent, attorney, mortgage broker, home inspector and others to be your professional eyes during your home search.

• DO buy for your lifestyle. Your first home may not be your last, so try to anticipate how long you'll live in your home and buy based on plans for the duration. Raising kids, starting a business, taking on a new job, housing Grandma could all impact the size or type of home you need first.

• DO heed housing priorities. Separate your "wants" from you "needs" so you know where you can compromise to stay on budget.

The Don'ts

• DON'T get taken by the first house or neighborhood you see. Keep an open mind and spend sufficient time finding the right fit in a house and neighborhood for your needs.

• DON'T buy more than you can afford. Lenders will often loan you as much as your financial condition warrants, but that may not be what you can comfortably afford. It's better to live with a comfortable mortgage on a smaller home than to struggle every month paying a mortgage on a house with more room than you really need. The down payment, closing costs, monthly expenses and taxes must in total all be within your income and savings range.

• DON'T treat your home like a stock portfolio. Homes appreciate and depreciate in cycles which often aren't so predictable. Don't expect your home's value to skyrocket. Buy a home because you need a roof over your head, not for a quick profit.

• DON'T try to time the market. Pinpointing the bottom of the market almost always happens after the market has started to turn up. How, otherwise, can you see the bottom? Focus on personal lifestyle needs, not market trends, in terms of timing your home buy.

• DON'T sign for a confusing mortgage. Shop around for the best loan, read every detail of your loan contract and get some help understanding terms and provisions that confuse you. Avoid exotic, "creative financing," multi-option loans you don't understand. Again, lifestyle is key. Get a loan that fits.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Tax Rebates For Buyers, Sellers, Homeowners

You've paid your tax dues in Club America. Now, thanks to the Economic Stimulus Act, you'll get a little something back. If you are a home buyer, homeowner or home seller, how should you spend it? See when your rebate will arrive.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - What should a smart housing consumer do with that fat federal tax rebate check?

Well, it's not THAT fat, but it could come in handy for buyers before, during and after the home buying transaction.

The the Economic Stimulus Act of 2008 includes, among other provisions, tax rebates, bureaucratically dubbed "economic stimulus payments."

Starting in May, the U.S. Treasury Department will begin sending rebates to taxpayers, who had $3,000 of income and filed a 2007 tax return and have a valid Social Security number. Eligible taxpayers will receive up to $600 ($1,200 for married couples). Parents will receive an additional $300 for each eligible child younger than 17.

If you are a retiree, disabled veteran or low-wage worker who is otherwise exempt from filing a tax return, you must file a tax return this year in order to receive a rebate.

The rebate -- both the basic component and the additional funds for qualifying children -- begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds.

You can estimate what your tax rebate take might be with the Economic Stimulus Payment Calculator online.

Now here are a few things you ought to consider doing with that unexpected windfall, if you are a home buyer -- before, during and after your home purchase.

• Save it. If you don't have that three to six months-worth-of-income emergency savings fund, now's a good time to begin. Stuff happens around the home when you least expect it. And you'll need some pocket money for incidentals during your home purchase. Look for a savings account that offer the best return. Online bankers generally offer the best interest rates, but shop around for other liquid savings, checking or investment accounts you can start up for the amount of your rebate.

• Rent a safe deposit box. After you buy a home, you'll need somewhere to securely stash all those important documents including your mortgage note, title and escrow papers, insurance policies, home improvement contracts, tax returns and estate documents. In many cases, the rebate will give you enough cash to rent a safe deposit box for decades. The boxes cost from $10 to $100 a year, plus a key deposit. If you sock the cash in an interest-bearing account and let the bank automatically withdraw the fee each year -- or do it yourself manually -- you'll earn a small return in the process.

• Buy a home inspection. Even if the seller offers his or her own inspection you want your eyes on the prize as well. Home inspections are good deal for resale, as-is (so that you know what "as-is" is) listings and new home purchases as well, given the possibility of new home defects. If your inspection costs only a few hundred dollars and you get a rebate for $600 or more you can save a portion of the rebate for an inspection years down the road, say when you want to check the condition of your home, put it on the market, or to inspect the next home you buy.

• Buy enough homeowners insurance. For small homes, condos and townhomes the largest rebates available will cover many policies for a year. That doesn't mean only buy what your rebate can afford. Make sure you buy enough replacement value coverage. If you work at home, use the rebate to buy extra business coverage as well as special liability coverage for your business.

• Complete deferred "green" maintenance. Caulk the windows and doors. Add insulation. Have you furnace or HVAC (heating-ventilation-air conditioning) system inspected and cleaned. Swap out incandescent bulbs for CFLs (compact fluorescent lamps) and otherwise make your home more energy efficient and you'll get your money back from savings on utility costs.

• Splurge, but shop around. The real purpose of the tax rebate is to get you to spend money on stuff in the retail sector that will help kick-start the economy. If, after buying a home, you have you financial basics covered, shop around for the best deals at the lowest cost on goods and services for your home. For example, for around $1,000 Consumer Reports found Panasonic, Samsung and Sony offering the best 32 inch LCD TVs and LG, Samsung and Hitachi offering the best 42 inch plasma models. The key is to get the most "stuff" for your money.

• Buy quality services. Likewise Consumer Checkbook, for a subscription fee of $34 for two years, will give you ratings on good service workers. The independent rating service is affiliated with and somewhat like Consumer Reports, except it rates services rather than goods in seven metropolitan areas. There are other local consumer service groups and so-called rating services but none of them offer the scrutiny provided by Consumer Checkbook. Among services to consider before and after moving into your new home, Checkbook offers ratings on appliance repair, carpet & rug cleaners, fence builders, home security firms, house cleaning services, plumbers, roofers, tree care specialists, window washers and a lot more.

And here are a few things you ought to consider doing with that unexpected windfall, if you are selling your home.

• Give it to the buyer. Cash is a great concession to help coax a buyer into escrow. Buyers can find a lot to do with a few hundred dollars to $1,000 or more, especially first-time buyers who likely will be strapped when the deal closes. A cash gift could be a deal maker.

• Buy a home inspection. Use a home inspection to determine what you need to do to put the home in the best competitive shape for the market, or to price it fairly to sell as-is. The inspection could also turn up building code violations the law mandates you correct before selling. The buyer may also opt to use the inspection as a guide to the condition of the home.

• Put some extra zeal in your curb appeal. Curb appeal, the first impression your home conveys to prospective buyers, should create an emotional desire to own the home and enjoy the lifestyle and status it represents. Putting the best face on your home also should give a lasting impression that motivates buyers to cross the threshold and take that first step toward closing the deal. More like a home improvement or exterior staging job than a cosmetic makeover, curb appeal that sings is particularly crucial when buyers are calling the shots. Hire a landscaper, consider painting the exterior of your home, tidy up the grounds.

• Clean house. Hire a round of service workers to get all the dirt and grime out of every nook and cranny and make the home look neat and tidy. Include house cleaners, carpet and rug cleaners, fence repairers, handy men and women, window washers, organizers (for the garage too), the works. To get the best help to make your home Spic and Span ready for fussy buyers, consider a $34 two year subscription to Consumer Checkbook, a service that rates service workers, like its affiliate Consumer Reports rates goods.

• Set the stage. Hire a staging expert. Staging is to the interior of a home what curb appeal is to the exterior -- nipping and tucking, furnishing and accessorizing, buffing and polishing until the place looks like a model home, without appearing too clinical. The new look will pay for itself in terms of sales speed or a higher sales price.

• Set the stage online. Hire a creative virtual staging professional to create an online listing with all the digital whistles and bells he or she can muster. Extra marketing is key in a tough market and a competitive boost in any market. Consider a Web site or blog dedicated to your home to give it that 24-hour, open house feel. Add a virtual tour as well as videos (of the home, neighborhood), photos, maps, informative editorial content and links to neighborhood, school, crime and employment information. Gift the Web site or blog to the new owner.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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