President Obama on Friday, Nov. 6 signed a bill extending and expanding the Federal Tax Credit for Home Buyers. The bill passed the U.S. House of Representatives yesterday and the U.S. Senate late Wednesday.The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.
What does this mean? Well, First Time Buyers will get up to an $8000 tax credit to buy their first home and move up buyers will qualify for a $6,500 credit. I think that this will spur Market Activity for the first half of 2010 and afterwards, we may see a slight drop in activity. Time will tell, but if you're thinking of moving up to a larger house, 2010 is your year to do it!
Thursday, December 10, 2009
Wednesday, December 2, 2009
Seller Pays for Buyer's Closing Costs
Welcome again to my Real Estate blog. I recently had an issue come up in a transaction that left my buyers a bit confused, and could potentially be a problem for Buyers in the future, so I thought that I'd address this: Closing costs.
These days, many buyers are asking sellers to pay for their closing costs or a portion of the closing costs. This is the money that is required to close a transaction. This includes loan fees/expenses, the down payment, buyer's title insurance(ALTA), seller's title insurance(CLTA), escrow fee and associated tranfer fees (private, city or county).
There are only a fee of these expressly referenced in the CAR purchase agreement:
1. CLTA (Owner's Title Insurance).
2. Escrow Fee
3. Tranfer Tax (Humboldt County)
Typically, these are split between Buyer and Seller - 50/50, and are only a small portion of these expenses. On a $300,000 home the escrow fee is: $621.00, the CLTA is $1184.00 and the transfer tax is $1.10 per 1000 or $330.00. The total is: $2135.00
The problem arose because of the number of offers I'd written for these particular buyers. I have written 5 offers for them The buyers didn't want to hear the full explaination each time, so when it came to the "allocated costs"I said, "The costs are split." This meant that the costs discussed in the contract were split: escrow, title insurance, and transfer tax. The buyers thought we were splitting the closing costs. They thought that is was ALL of the closing costs.
Quite a big misunderstanding if I do say so myself.
As a buyer, you have the right to ask a seller to pay for some of the closing costs, but it has to be specifically asked for. A dollar figure needs to be provided to the seller so they know what their bottom line is. This is only fair.
Ideally, you have met with a lender and received a "Good Faith Estimate". This is a document that out lines the closing cost and all of the fees for any given loan amount. By law it has to be provided to a borrower prior to closing, but the lenders that I use provide them up front. This way you will know what you can ask for.
The bottom line is that if you pay them now or have the seller pay them, they will be paid. If you have them paid upfront, it's done. If they are paid for by the seller, they are financed over 30 years. This is because the seller would have taken less for an offer that didn't include closing costs. So keep that in mind: there are no freeies in real estate: you always pay.
Negotiations can be tricky, but keep a realistic outlook and try not to be attached to the outcome. Happy Home shopping!
These days, many buyers are asking sellers to pay for their closing costs or a portion of the closing costs. This is the money that is required to close a transaction. This includes loan fees/expenses, the down payment, buyer's title insurance(ALTA), seller's title insurance(CLTA), escrow fee and associated tranfer fees (private, city or county).
There are only a fee of these expressly referenced in the CAR purchase agreement:
1. CLTA (Owner's Title Insurance).
2. Escrow Fee
3. Tranfer Tax (Humboldt County)
Typically, these are split between Buyer and Seller - 50/50, and are only a small portion of these expenses. On a $300,000 home the escrow fee is: $621.00, the CLTA is $1184.00 and the transfer tax is $1.10 per 1000 or $330.00. The total is: $2135.00
The problem arose because of the number of offers I'd written for these particular buyers. I have written 5 offers for them The buyers didn't want to hear the full explaination each time, so when it came to the "allocated costs"I said, "The costs are split." This meant that the costs discussed in the contract were split: escrow, title insurance, and transfer tax. The buyers thought we were splitting the closing costs. They thought that is was ALL of the closing costs.
Quite a big misunderstanding if I do say so myself.
As a buyer, you have the right to ask a seller to pay for some of the closing costs, but it has to be specifically asked for. A dollar figure needs to be provided to the seller so they know what their bottom line is. This is only fair.
Ideally, you have met with a lender and received a "Good Faith Estimate". This is a document that out lines the closing cost and all of the fees for any given loan amount. By law it has to be provided to a borrower prior to closing, but the lenders that I use provide them up front. This way you will know what you can ask for.
The bottom line is that if you pay them now or have the seller pay them, they will be paid. If you have them paid upfront, it's done. If they are paid for by the seller, they are financed over 30 years. This is because the seller would have taken less for an offer that didn't include closing costs. So keep that in mind: there are no freeies in real estate: you always pay.
Negotiations can be tricky, but keep a realistic outlook and try not to be attached to the outcome. Happy Home shopping!
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