Real Estate News

New Forms to Claim The First-Time Homebuyer Tax Credit

January 17, 2010 by Sasha Farmer · 1 Comment 

The new forms to submit when claiming the first time homebuyer tax credit have finally been released! Form 5405 will now be needed when submitting a tax claim, and this is likely mainly due to the large numbers of tax fraud we were experiencing in res

ponse to the First Time Homebuyer tax credit. Please be sure to file this along with your claim, so you don’t experience any sort of delay in claiming your credit!

Click HERE to directly download a copy of Form 5405 from the IRS website for yourself.

From the Washington Post coverage of the new forms…

“Form 5405, First-Time Homebuyer Credit and Repayment of the Credit” can be downloaded from the IRS web site.

First-time buyers will have to send a copy (keep your originals!) of one of these documents to back up their claim to the tax credit:

• A copy of their HUD-1 Settlement Statement, complete with dates and signed by all parties.
• Mobile-home buyers can send in a copy of their signed, dated and fully executed sales contract.
• New-home buyers who don’t have a HUD-1 settlement statment must send in a copy of the certificate of occupancy.

All of these documents need to show names, dates, addresses, signatures, and prices.

[From Local Address - New tax forms released for claiming the home buyer credit ]

The experience of my clients thus far has been that getting the credit has been fairly painless. I hope that this will continue through the extension of the credit in 2010, but I would love any feedback you may have!

[Photo Credit: The Backyard Wealth Blog]

Just Released! The Charlottesville Area Association of Realtors’ Year-End Market Report

January 14, 2010 by Sasha Farmer · Leave a Comment 

The Charlottesville Area Association of Realtors has just released it’s Year End Market Report this morning, and it includes some very valuable information that home buyers and sellers should really be aware of.

Click here to download and read the full report. 2009 CAAR Year-End Market Report

I will be doing a more thorough analysis this weekend, but until then, some of the salient points…

Some people have suggested that the first time home buyer credit hasn’t been effective, but I have completely disagreed with that, and while this data isn’t a clear indicator that the credit is working, it would suggest that more first time buyers (in the below $300,000 price range) have been in our market in Q4 2009, than we are typically used to.

As reported for the past two quarterly reports, significantly lower home prices (down 20% or more) are driving the pick-up in sales. In addition, the $8,000 tax credit for first time buyers supercharged the sale of starter homes (below $300,000) in 2009. 67.5% of home sales for the year were in this starter home category, which is approximately a 10% increase in this category.

- CAAR Year End Market Report.

One thing to be aware of is the average price per square foot we’re seeing across the different counties. This is one of the more profound ways to see that our pricing has returned to that of 2005 levels (at least), if not gone lower. My personal belief is that our prices are actually closer to what they were in 2004. Take a look at the $/SF analysis below to see how your county has fared.

Price Per Square Foot (Finished)

Another indicator that allows us to see the decline in home prices is a major drop in the price per square foot numbers. The average price per square foot of finished space in homes is not a scientific number, but a downward trend over the years clearly indicates a decrease in prices (and vice versa). According to the chart below, prices peaked in 2006 and have declined for the past three years. There has been a $28 per square foot drop since the peak in 2006. The current $143 per square foot is the lowest number since 2004.

- CAAR Year End Market Report.

According to the CAAR Year End market Report, our inventory of homes is slowly declining. Of course this was the main aim of the First TIme Home Buyer tax credit, and we are all anxious to see what will happen to inventory once it expires.

Inventory of Homes for Sale

“The inventory of homes for sale in the Charlottesville has continued to decline very slowly. As we have reported for the past several quarters, the excess of inventory is causing many of the problems with our local housing market. The decline in inventory is very encouraging, but we will still have too many homes on the market for the current demand. This could change very quickly going into the busy spring market.”

- CAAR Year End Market Report.

Average Days on Market

One piece of information that I always want future sellers to be acutely aware of is the average days on market. The days on market is a measure of homes SOLD BY AN AGENT THROUGH THE MLS, and how long they’re taken on the market being actively marketed before they have sold. This number does not include some very high days on market numbers for all of the homes that never sell, it only calculated DOM for solds, so it is artificially lower than days on market of ALL HOMES. If you are thinking of selling your home in the near future, you need to be acutely aware of the average days on market for your county and be sure to give your real estate agent a reasonable amount of time to accomplish your goals.

Will be elaborating more on this report later, but would love some questions from all of you!

Before beginning a new home improvement project- Check this list!

December 23, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

Before choosing which home improvement project you will take on next, check out this list for a national survey on which improvements are the most valuable and will produce the highest return on investment. The survey is broken down region-by-region and then parsed into large metropolitan areas; the closest to us in terms of size, location, and economy being Richmond. Take a look, you may be surprised at what you find!

2009 Remodeling Cost vs. Value Report

According to NAR, 4 out of 10 Recent Buyers Used FHA Loans

December 23, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

As you probably already know, FHA loans are becoming an extremely popular loan device for purchasers in this marketplace. FHA loans used to evoke lots of negative connotations, a few of which were; lots of extra requirements, much longer time to process, and stringent and difficult home inspection standards. However, these hassles have been eliminated, and FHA loans seem to rarely differ in difficulty from pursuing a conventional loan. I expect that the use of FHA loans will only continue to grow into 2010.

According to the most recent REALTORS® Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration-insured loan. REALTORS® who took part in the November survey also reported that the number of first-time home buyers continued to climb to 51 percent.

“FHA helps provide affordable mortgage financing to home owners, particularly first-time home buyers who are so important in drawing down inventory to help stabilize the current housing market,” said NAR President Vicki Cox Golder. “These recent survey results reaffirm that, despite its current challenges, FHA is a critical part of the American housing fabric.”

—NAR

[From REALTOR® Magazine-Daily News-4 out of 10 Recent Buyers Used FHA Loans]

Answer these questions to determine if purchasing a bank owned home/foreclosure is right for you…

December 23, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

Please read carefully through the following items when trying to determine whether or not you are interested in looking at REO (Real Estate Owned) and Foreclosure properties.

1. Would you be okay with a delayed closing? Purchasers of foreclosures may have to wait for a significant amount of time before closing can occur. Are you on a tight deadline to get out of your lease? Are you attempting to take advantage of the Home Buyer Tax Credit (in which homes must close by June 1, 2010?) If so, this may not be the best choice for you.
2. If closing were delayed, would you be okay with re-applying for your loan and possibly losing your current loan lock? All during the time that we are awaiting closing, mortgage rates will be fluctuating, and if the loan lock deadline passes, you will have to re-apply for the loan and incur any related charges.
3. If closing is delayed, will you be able to adjust the timeframe for your date of possession? It is very unlikely that we will be allowed to occupy the property prior to closing, so you would need to have a backup residence in mind, in case of any delays. If this is your primary home, some sort of temporary living arrangement would need to be made, and it may include moving twice- from your current home to the temporary residence, and the temporary residence to your new home.
4. Even if the property is priced extremely competitively, do you have other funds that may be necessary for updating, cleaning up, and repairing the property? Sometimes REO and foreclosed homes will require a significant cash investment just to bring them up to standard living conditions.
5. Are you comfortable purchasing a home “as is”? Most REO and foreclosed homes will come in “as is” condition. A handful of them will not allow any sort of home inspection prior to purchase at all, however most allow a home inspection for information only. Would you be comfortable making any necessary repairs yourself (or with a contractor, of course) and after closing?
6. Would you be willing to sign addenda that heavily sways negotiations in favor of the Lender/Bank who owns the property and overrides most of the standard protections granted to the buyer? Most of these forms override rights that we outline in the standard Virginia Association of Realtors Residential Contract to Purchase. Oftentimes, the lender will allow no revisions to be made to these documents. Some of the changes that are often arranged in the addenda; tougher restrictions on the Purchaser, shorter timelines for the Purchaser to secure a loan, conduct a home inspection, etc, a larger deposit, deposits to be held in the escrow of the lenders choice, and very few provisions that will allow for the Purchaser to get out of the contract and many ways for the lender/seller to walk.
7. Would you be okay with getting up to the week of closing, only to find that the lender received another offer and has chosen to take that offer and void their contract with you? Many of the packages of documents that the lenders have you sign will include a provision allowing for this.
8. Would you be comfortable with your earnest money deposit to be escrowed with a escrow company or attorney of their choice? This money will not be accessible during the time that the property is under contract.
9. Are you prepared to do a title search and purchase title insurance? You will want to verify that the lender does hold title of the property (not all homes transfer from the previous sellers right away). You will also want to make sure that any liens that may have been held against the previous owners (who may have had difficulty paying many bills, aside from their mortgage) have been released and you will have the ability to purchase the home free and clear of liens and encumbrances.

If these items would not cause a major inconvenience for you, then you may be a perfect candidate to purchase a REO or foreclosure property- there are some incredible deals to be had!

Any more thoughts/additions to this list from others who have had bank owned/foreclosure homes?

Please do not hesitate to contact me if you’d like to be set up on a search that will send you foreclosure and bank-owned homes that might meet your search criteria!

An interesting thing about interest rates and value…

December 23, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

I have spoken to many of my clients about this previously, when saying that often a 1/4 point increase in interest rate can result in a higher monthly mortgage payment than would a 5% increase in sales price. What this means, is that the buyers out there who are waiting for the market to “hit bottom” may end up finding that their dream home becomes more expensive, even as the price drops. Marc Roth, writing for BusinessWeek sums it up nicely (emphasis added);

So, what can we learn from the historical trends and numbers?

First, rates have far further to move upward than downward; for more than 30 years, 7% was the low and 18% the high. The norm was 9% in the 1970s, 10% in the mid-1980s through the early 1990s, 7% to 8% for much of the 1990s, and 6% only over the last handful of years.

Second, the last time the long-term trends reversed from low to high, it took more than 20 years (1970 to 1992) for the rate to get back to where it was, and 30 years to actually start trending below the 1970 low.

Finally, the most important lesson is to understand the actual financial impact the rate has on the cost of purchasing and paying off a home.

Every quarter-point change in interest rates is equivalent to approximately $6,000 for every $100,000 borrowed over the course of a 30-year fixed. While different in each region, for the sake of simplicity, let’s assume that the average person is putting $40,000 down and borrowing $200,000 to pay the price of a typical home nationwide. Thus, over the course of the life of the loan, each quarter-point move up in interest rates will cost that buyer $12,000.

[From If You Don't Buy a House Now, You're Stupid or Broke - BusinessWeek]

Don’t just look at list prices when trying to determine the cost of your home- your interest rate may actually have a significantly higher impact.

If you could use a recommendation to a good local lender, who can walk you through all of the stipulations of your financing and help you determine if now is the right time for you to buy, please don’t hesitate to call.

[Image courtesy of http://www.tutor2u.net/blog/files/interest_rates.gif]

New Tax Credit for Current Home Owner's Making a Home Purchase and the Extended First Time Buyer Credit

November 7, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

Today, President Obama signed off on the Extended Home Buyer Tax Credit, now to include a credit for current Home Owners.

This new initiative will continue the current $8,000 first time home buyer credit to eligible participants until 2010- July 1, 2010 to be exact, which is when all closings must have occurred. In order to be eligible for this credit, you must have the property under contract no later than April 30, 2010.

It has also expanded the credit to current home owners. Anyone who has used their residence as a primary residence consecutively for 5 our of the last 8 years are also eligible for a tax credit when making their next home purchase. This is a $6,500 credit and the same deadlines still apply; April 30, 2010 for homes to be under contract, and July 1, 2010 for the sale to have closed.

Many of the details are explained in the following PDF document- please contact me with any specific questions!

Click here to download the November 7, 2010 Extended and Expanded Tax Credit.

CAAR Releases it's Third Quarter Market Report

October 18, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

The Charlottesville Association of Realtors’ Third Quarter Market Report has just been released and it definitely contains some interesting data.  As we all know, we still have much more inventory than we can absorb with the current number of Purchasers in the market.

Check out the market report here;

CAAR Third Quarter Market Report

Forbes Names Virginia as Best Business State

October 4, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

According to Forbes Magazine, Virginia is the best business state yet again (for the 4th year running), “booming compared to the rest of the nation.”

http://www.forbes.com/2009/09/23/best-states-for-business-beltway-best-states.html

Forbes attributes this to our highly educated workforce, low energy usage, and business-friendly incentives.

100 Abandoned Houses

July 13, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

It is undeniable that Charlottesville has suffered far less than many other parts of the nation throughout the housing crisis. I just came across a website that is truly fascinating- 100 Abandoned Houses. This site documents photographs of homes all throughout Detroit that have been abandoned due to hardship. The homes are truly fascinating, some of them beautiful.

We are blessed in Charlottesville not to have been surrounded by abandoned and neglected homes. Others have not been so lucky.

Check out some of the incredible images here; 100 Abandoned Houses.

CAAR Mid Year Market Report 2009

July 9, 2009 by Sasha C. Farmer Realtor · Leave a Comment 

Click here to check out the CAAR Mid-Year Market Report!

Alison Rothschild, WCAV, CBS19

November 12, 2008 by Sasha C. Farmer Realtor · Leave a Comment 

“Sasha is a hard working, detail oriented, committed business person and every time I have had the pleasure of working with her on committees and serving the community in her company I have been impressed with her. As soon as I am ready to purchase a home, she will be who I turn to.”

-Alison Rothschild, Non-Profit Marketing Partner, WCAV, CBS19

Charlottesville Named by National Geographic as one of the 50 Best Adventure Towns

September 20, 2008 by Sasha C. Farmer Realtor · Leave a Comment 

According to National Geographic, Charlottesville is one of the top 50 places to relocate right now and for the future;

A change of address can bring instant gratification. You could wake up tomorrow in Missoula and kayak off your own deck at dawn, sneak in singletrack at lunch in Chattanooga—or choose your own adventure in any one of the country’s best base camps. But a move is a long-term investment. So this year we selected 50 innovative towns that aren’t just prime relocation spots right now, but smart choices for the future. Not only do they have the action. They’ve got a plan. Now we’re giving you a plan too. Inside, you’ll find hometown picks that range from adventure 24/7 hubs loaded with outdoor options to urban players that offer a variety of jobs and cultural activities without sacrificing green space. You’ll also hear from recent transplants who made the move and have a better quality of life to show for it. So go on—get packing.

It remarks about Charlottesville;

“Leave all the afternoon for exercise and recreation.” So said resident Thomas Jefferson, and no wonder—he had the Blue Ridge Mountains out back. Today, University of Virginia grads follow his advice in the lush hills of Shenandoah, while city planners protect urban forest and build new trails.”
Population: 40,315 
Median home price: $279,500 

Go to read the full article here!

The State of Our Market

March 10, 2008 by Sasha C. Farmer Realtor · Leave a Comment 

I have gotten several individual requests recently from both buyers and sellers to give them specific numbers and data about the current Charlottesville market.  I have run some numbers and gotten together some data, but also wanted to just make some general statements as well.  We are currently experiencing a buyer’s market.  What this means is that there are more (in some cases, many more) people who are currently trying to sell their home than there are people trying to buy new homes.  One number that shows this well is called an absorption rate.  

An absorption rate essentially indicates approximately how many homes sell in an average month (in the current market climate), then looks at the number of homes currently active on the market to determine about how long it will take for all of those homes to be sold (or to be “absorbed”). Obviously it cannot take into account the number of homes that will be added to the market in the time that the others are selling off of it, nor will it take into account those that expire or those that are withdrawn throughout the process.

What the absorption rate DOES tell you, if you are a seller, is exactly how much competition you have and exactly HOW outstanding your home must be in order to be one of the few homes in the sea of inventory that sells in the next 30 days, as opposed to the next 60, 90, 120 and (gasp!) beyond.

Example; In the price range of $300,000 – $400,000 there were 426 home sales between the City of Charlottesville and Albemarle County in the previous calendar year (March 1, 2007 – March 1, 2008). In a very rough calculation that would tell us that in the past year, in this price range, about 36 homes were sold each month. Then by looking at our current inventory of 261 active properties in that price range, we can see that with an estimated 36 homes selling a month, the absorption rate is about 7 months. This tells us that we have a 7 month inventory of homes in that price range, or that it would take (at a minimum) 7 months for the market to absorb all of these homes (though as we all know, many of these homes will not sell and thus will not be “absorbed”).

This number is actually quite optimistic.  Since that number is calculated with the past YEAR of sales (including the earlier months of 2007 when the market was moving faster), it actually gives us a slightly enhanced view of our odds.  

Now, what this tells you if you are going to list your home in this price range amongst the sea of other homes out there, is that your home needs to be in the top 36 of the 261 homes out there if you have any desire to sell in the next 30 days. You will need to stand out of the crowd, and the three major ways to do this will be through price, terms, and condition.  If you can already think of 36 homes out there that are much better maintained, decorated, or with newer systems and lower maintenance, then either you have a lot of work to do or you need to consider a different price range- this is, of course, unless you are in no rush and can wait 7+ months to sell.

What absorption rate doesn’t include is the handful of nice, new properties that will inevitably enter the market in your price range again next month, or the month after that, just serving to push yours further down the list if it’s not up to par.  What this COULD mean, is that even if not another property was listed between now and then, we would still have inventory left on the market at Easter, still some at Memorial Day and over the summer and homes would still dwindle unsold through the 4th of July.

This could be looked at as a grim story. On the flip side, however, it also tells us that there is an opportunity for 36 home sales in this specific price range in the next 30 days. With the proper pricing, staging, and maintenance- there is still a chance! It is certainly no surprise to hear that if you want your home to sell, your property must be PERFECT in comparison to the other homes available in that price range. If it is not perfect in comparison, then it is not in the right price range. This will be a very difficult reality for people to face. The days of the past when selling your home for more money than you purchased it are no longer a guarantee. What you purchased your home for has absolutely no bearing on what you will sell it for now.

A “neutral market” is described as being one in which the absorption rates hover around 6 months of inventory- this is an indication that there are are relatively the same number of people trying to sell homes as there are looking to buy. We are currently in a “buyer’s market” in all price ranges in the City of Charlottesville and Albemarle County. I have listed the absorption rates for several different price ranges in the chart linked here-  March 10 Absorption Rates. 

On a closing note, sellers- do not fret. In most cases a buyer’s market also has many benefits for sellers, as most sellers are moving on to buy another home (and often moving “up”). We are in buyer’s markets nationwide, so it is likely that what you might perceive as your loss on your next sale can become your gain in your next purchase.

Charlottesville is #4 on the list of the Best Affordable Suburbs in the U.S.

March 5, 2008 by Sasha C. Farmer Realtor · Leave a Comment 

According to Business Week, Charlottesville is ranked #4 of the Best Affordable Suburbs in the U.S.  Read the article here.  The criteria they used;

 All indices are based on an average of 100; cost of living and violent crime based on national average, test scores based on state average.    

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