The EBA Way - A Better Way to Buy a Home

You may have heard that Congress has approved an extension to the Home Buyer Tax Credit and an expansion of the credit to include existing homeowners. We have been monitoring the progress of this legislation and are please with the progress made. All that is left is for President Obama to sign the bill and that is expected to occur very soon.

In the meantime, below are some great questions we have been asked about the changes to the tax credit.  We thought you might have the same questions so we answer them here just for you!

 1.      For existing home owners to benefit from the new tax credit, must the new house cost more than the old house?  

No, individuals who move from a high cost area to a lower cost area who meet all eligibility requirements will qualify for the $6500 credit.  

2.  I am an existing homeowner.  On October 25, 2009, I signed a contract to purchase a new home.  I have lived in my current home for more than 5 consecutive years and am within the new income limits.  I will go to settlement on November 20.  If President Obama has signed the bill by the time I go to settlement, will I qualify for the new $6500 tax credit?

Yes.  The existing homeowner credit goes into effect for purchases after the date of enactment (when the bill is signed).   There is no reference to the date of contract for the new credit. The provision looks solely to the date of purchase, which is generally the date of settlement.  

3.  I am a first-time homebuyer but was not within the prior income limits at the time I entered into my contract to purchase on October 30, 2009.  I will be covered, however, by the new income limits.  If the new rules have been signed into law by the time I go to settlement, will I be eligible for a credit?  

Yes.  The new income limitations go into effect as soon as the President has signed the bill.  The income limit and other eligibility rules will look to your status as of the date of purchase, which is the settlement date.  So if the new rules have been signed when you go to settlement, you should be eligible for the credit (or a portion of the credit if you're within the phase-out range).

4.  I am an eligible existing homeowner.  I have a fair amount of equity in my home.  I have found a home with a non-negotiable price of $825,000.  Will I be able to use any of the $6500 tax credit?

No.  The $800,000 cap on the cost of the purchased home is firm at $800,000.  Any amount above $800,000 makes the home ineligible for any portion of the credit.  The $800,000 is an absolute ceiling.  

5.  I owned my home for 10 years, but sold it two years ago and have been renting since.  If I purchase a home, will I be eligible for the $6500 tax credit if I meet all the other eligibility tests?

Yes.  Because you lived in the home for more than 5 consecutive years of the previous 8, you will qualify for the $6500 credit.  For example, Say John and his wife bought a home in 2000 and lived there until 2008 when he got a divorce. Whether John has been renting or bought in the interim, he WOULD INDEED be eligible for the credit because he owned a home and occupied it as his principal residence for 5 consecutive years out of the last 8 years. The keyword here is "consecutive." As long as he lived in that house for 5 years straight, what he did since 3 years doesn't impact eligibility.

6.  I am an eligible first-time homebuyer.  I entered into a contract to purchase on November 1, 2009.  Do I have to go to closing before December 1?  How does the extension date affect me?

You do not have to close before December 1.  Once the legislation has been signed, it will be as if the Nov 30 date had never existed.  Therefore, so long as the contract settles before April 30 (or July 1, worst case), the purchaser will be eligible for the credit. 

First Time Homebuyer Workshop Scheduled for Fayetteville Area

Are you ready to take advantage of an historic homebuyers market and buy your very own home?

Do you know about the $8,000 tax credit for 1st Time Homebuyers which has been extended until April 2010? 

Do you know what Down Payment Assistance Programs are available?

Then you will want to clear your calendar and make plans to attend the December First Time Homebuyer Workshop on Saturday, December 19, 2009 from 8:30 to 4:30 to be held at Myers Recreation Center, 1018 Rochester Drive.

Preregistration by 12-16-09 is required. Call 910.323.3192 for details!

Will your Fayetteville area real estate agent guarantee 100% loyalty to you?

Maybe not! Every year the National Association of Realtors (NAR) surveys home buyers and sellers across the country and those buyers and sellers are asked to share information on the role that real estate professionals played in their respective transactions.  The recently released NAR 2009 Profile of Home Buyers and Sellers emphasizes a disturbing trend. 

One area that is troubling to those of us who have chosen to represent home buyers exclusively relates to agency disclosure; specifically if and when it is made. Agents in every state are required to disclose who they represent in a real estate transaction before discussing anything of a personal or confidential nature which could negatively impact a home buyer’s negotiating strategy. Unfortunately, the survey shows this is too often occurring too late in the process at best or not being done at all. The National Association of Exclusive Buyer Agents (NAEBA) feels so strongly about the issue of agency disclosure that they are working on proposed legislation that would standardize the agency disclosure practice nationally to protect the homebuying consumer. 

With the release of the survey, I thought it would be a good time to remind everyone considering purchasing a home to ask every agent they talk to one question first, “Who do you represent?” But, before you even speak with an agent, you should review the consumer protection brochure published by the NC Real Estate Commission which explains in detail the way real estate agents work in North Carolina, "Working with Real Estate Agents". 

The charts below outline the findings of the 2009 Home Buyer and Seller Profile relating to disclosure practices. The first chart reflects if and when home buyers signed a disclosure statement; while the second chart demonstrates buyers’ knowledge of the agency agreement in effect during their real estate transaction.

DISCLOSURE OF AGENT REPRESENTATION*

Disclosure Statement Signed?	All Buyers	1st Time Buyers	Repeat Buyers
Yes, at first meeting	31%	26%	36%
Yes, when contract was written	23%	23%	23%
Yes, at some other time	9%	9%	9%
No	20%	23%	18%
Don't know	17%	19%	16%

 * 18-23% of home buyers indicated no agency disclosure

 Buyer Agency Agreement*

	All Buyers	1st Time Buyers	Repeat Buyers
Yes, an written agreement	43%	40%	45%
Yes, an oral agreement	19%	20%	17%
No	28%	27%	29%
Don't know	11%	13%	8%

* 27-29% of home buyers indicated they were not in a buyer agency agreement with their agent

Buyers Advantage Group Realty Agents only represent buyers and there is never a danger that what is discussed with our agents will ever benefit a seller. It is, and always has been our practice, to explain to our prospective clients the different ways in which a real estate agent works.  This is just one of the ways we use knowledge of the homebuying process to help you find the right home!