As we sit at the eve of Thanksgiving, we are thankful for so much more than we could ever begin to list from the past year including the arrival of a new baby girl, a blossoming business with well over 30 closings on the year, and continued good health.  Perhaps the most heartbreaking and heartwarming experience for us this year was an encounter with some new clients, Jeff and Ingrid from New Jersey. 

Jeff and Ingrid were referrals from a lender that has since moved on from the business, but while he was active, we referred a lot of business to him because he was so on top of things.  When we received a referral from him, we knew that it would be special, and it was.  Jeff was being transferred to Atlanta with Taylor Bean and Whitaker in the midst of the worst financial crisis we have seen in virtually forever.  Jeff was brought in to help “straighten things out,” and it was obvious that he had the attitude and ability to do just that.  His lovely wife Ingrid was in charge of the search, and Atlanta was going to be a welcomed change from anywhere else they had lived in the past.  She was excited, and her excitement was contagious.  She and their son Coleman booked several trips down from New Jersey, and we enjoyed multiple days exploring and looking at property in Cobb, Fulton, and DeKalb counties.  I served as tour guide, and as it was their introduction to the city, I wanted it to be as positive and informative as possible.  We built a great relationship fast, and they affectionately reffered to me as “Andrew,” my middle name and a name typically reserved for my mother and mother-in-law.  It should be pointed out that that’s the kind of relationship we built.  We had a great time, and in the end we found a wonderful home in Sandy Springs that met virtually all of their needs AND wants, including a 3+ car garage and a swimming pool.  We made the offer and negotiated a purchase price roughly 10% less than the appraised value of the home.  In short, it was a steal. 

About three weeks after we went under contract, Jeff received an unfortunate call from his company, which was imploding before our eyes.  The Feds raided the Florida headquarters, and the company shuttered in the day that followed.  I followed the news and internet stories for days afterwards in pain, having had a direct connection.  It was a heartbreaking realization that their impending move to Atlanta was now not going to happen.  Jeff and Ingrid were in shock, and unfortuantely lost transaction costs in addition to obviously a wonderful job with relocation benefits.  Its always been our policy to pay the upfront price in everything we do.  As Zig Ziglar says, “It’s imporant to get the money out of your eyes.”  I honestly feel like we do that when we work with our clients.  Sure, it was disappointing to lose a larger transaction, but it paled in comparison to the disappointment we shared for Jeff and Ingrid.  Their response to the situation was as inspiring as it was sad.  They didn’t get down on themselves.  They pulled it together, and I’m happy to report that Jeff has secured a new job, taking them to St. Louis.  I’m thankful for Jeff and Ingrid, their willingness to blindly trust a real estate agent in a strange city, their attitude, their energy, their response to adversity, and most of all their friendship.  We’ll keep in touch with them wherever the go, and they’ll get a Christmas card every year from the Peters from now on! 

I received the following email this morning from Ingrid, and it was more than enough to spark this post.  It’s important to have good people like Jeff and Ingrid in your life, and it’s even better when they are clients.  Give thanks today to those who are important in your life, whether they are friends, family, clients, or all of the above.  Happy Thanksgiving!

Andy and Lesley,

At the time of year we are all giving thanks for the wonderful people that touched our lives this year, Jeff, Coleman and I want to recognize you. Even though the end result was painful and disappointing, the process of learning about Atlanta and trying to find the perfect home for us was so wonderful. It was the two of you that made that happen. We will always be disappointed that we couldn’t begin a life long friendship with you and your beautiful children.

Good news is that Jeff is finally working. He went back to Citibank last week. We will move back to St. Louis probably before March 1. Jeff and Coleman are very happy and I am getting used to the idea. If I can find a job working again with the wonderful friends I had during our past 8 years in St. Louis, I will be happy too.

Andy I must tell you that I have officially graduated from the Andrew Peters school of real estate negotiations. I expect the purchase of our next home will be just like our Atlanta experience. Maybe we can even get a higher appraisal!!

We didn’t get any reimbursement from TBW and will be happy if a check comes in the mail but we don’t expect it. Life goes on.

Happy Holidays and give those beautiful babies a smooch for me.

Best regards,
Ingrid

Red Alert!

After months of speculation, Congress has extended and expanded the home buyer tax credit. On November 6, 2009, President Obama signed a bill to extend the tax credit for first-time homebuyers (FTHBs) through June 30, 2010. The bill also opens up opportunities for others who are not buying a home for the first time.

While there’s no denying the impact the past credit has had on the ailing real estate market, it was obvious from our perspective that the move up market was not impacted as much as originally thought. We constantly met with Sellers that had little to no motivation to move up from their existing home because they were underwater so much. While the new expanded tax credit isn’t going to make millionaires out of move up Sellers, it definitely incents homeowners to consider moving up and taking advantage of a historical market marked by higher inventories, depressed values and amazing interest rates. 

Here are some important details on the new credit:

Who Gets What?

First-Time Homebuyers (FTHBs): First-time homebuyers (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Current Owners: The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

 What are the New Deadlines?

In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010.

 What are the Income Caps?

The amount of income someone can earn and qualify for the full amount of the credit has been increased.

• Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible
• Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

What is the Maximum Purchase Price?

Qualifying buyers may purchase a property with a maximum sale price of $800,000.

What is a Tax Credit?

A tax credit is a direct reduction in tax liability owed by an individual to the Internal Revenue Service (IRS). In the event no taxes are owed, the IRS will issue a check for the amount of the tax credit an individual is owed. Unlike the tax credit that existed in 2008, this credit does not require repayment unless the home, at any time in the first 36 months of ownership, is no longer an individual’s primary residence.

How Much are First-Time Homebuyers (FTHB) Eligible to Receive?

An eligible homebuyer may request from the IRS a tax credit of up to $8,000 or 10% of the purchase price for a home. If the amount of the home purchased is $75,000, the maximum amount the credit can be is $7,500. If the amount of the home purchased is $100,000, the amount of the credit may not exceed $8,000.

Who is Eligible fort FTHB Tax Credit?

Anyone who has not owned a primary residence in the previous 36 months, prior to closing and the transfer of title, is eligible.

• This applies both to single taxpayers and married couples. In the case where there is a married couple, if either spouse has owned a primary residence in the last 36 months, neither would qualify. In the case where an individual has owned property that has not been a primary residence, such as a second home or investment property, that individual would be eligible.
• As mentioned above, the tax credit has been expanded so that existing homeowners who have owned and occupied a primary residence for a period of five consecutive years during the last eight years are now eligible for a tax credit of up to $6,500. 

How Much are Current Home Owners Eligible to Receive?

The tax credit program includes a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years.

Can Homebuyers Claim the Tax Credit in Advance of Purchasing a Property?

No. The IRS has recently begun prosecuting people who have claimed credits where a purchase had not taken place.

Can a Taxpayer Claim a Credit if the Property is Purchased from a Seller with Seller Financing and the Seller Retains Title to the Property?

Yes. In situations where the buyer purchases the property, even though the seller retains legal title, the taxpayer may file for the credit. Some examples of this would include a land contract or a contract for deed.

According to the IRS, factors that would demonstrate the ownership of the property would include:

1. Right of possession,

2. Right to obtain legal title upon full payment of the purchase price,

3. Right to construct improvements,

4. Obligation to pay property taxes,

5. Risk of loss,

6. Responsibility to insure the property, and

7. Duty to maintain the property.

Are There Other Restrictions to Taking the FTHB Credit?

Yes. According to the IRS, if any of the following describe a homebuyer’s situation, a credit would not be due:

• They buy the home from a close relative. This includes a spouse, parent, grandparent, child or grandchild. (Please see the question below for details regarding purchases from “step-relatives.”)
• They do not use the home as your principal residence.
• They sell their home before the end of the year.
• They are a nonresident alien.
• They are, or were, eligible to claim the District of Columbia first-time homebuyer credit for any taxable year. (This does not apply for a home purchased in 2009.)
• Their home financing comes from tax-exempt mortgage revenue bonds. (This does not apply for a home purchased in 2009.)
• They owned a principal residence at any time during the three years prior to the date of purchase of your new home. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.

 Can Homebuyers Purchase a Home from a Step-Relative and Still be Eligible for the Credit?

Yes. As long as the person they buy the home from is not a direct blood relative, the purchase would be allowed.

 If a Parent (Who Will Not Live In The Property) Cosigns for a Mortgage, Will Their Child Still be Eligible for the Credit?

Yes, provided that the child meets the other requirements for the tax credit. 

The Peters Company is well versed in today’s real estate market whether you are buying or selling. With over 30 homes sold in 2009 to date, we are helping our clients take advantage of the market. Now’s a perfect time to consider your alternatives, and rest assured that we will give you good honest counsel without any strings attached. If you are an Atlanta first time homebuyer, your clock is still ticking! Before you continue to rent, let’s talk about your options. Give us a call or send us an email. We’d love to help you in any way.