Home Depot shows Housing Boom is For Real

Future Construction contracts soar in the Denver Metro area

Another great sign for Denver Metro housing: contracts for future construction in the Denver-Aurora metropolitan area have soared 47 percent between July 2012 and last month, according to a report released Tuesday by the research and analytics unit of McGraw Hill Construction.

In July 2012, the contracts totaled $264,410,000, and last month, contracts amounted to $389,705,000.

Last month, nonresidential was $116,847,000, a 53 percent increase over July 2012's $76,422,000, and residential was $272,858,000, a 45 percent increase over $187,988,000 for July 2012.

These figures show that builders, developers, and lenders are forecasting major economic growth in the Denver Metro area. As far as the year-to-date on a cumulative basis, residential was up 44 percent, meaning that year-to-date contracts for future construction were up 19 percent from $2,502,141,000 in July 2012 to $2,972,089,000 last month.

The Denver-Aurora metro area includes Adams, Arapahoe, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson and Park counties.

Have you considered getting into a new home? 

Top 10 Towns in Colorado to Raise a Family

Mike Anderson - Colorado is known for its superb outdoors culture: activities like skiing, hiking, rapids and horseback riding are readily available across the state. These recreational activities make the state particularly family-friendly, as do the area’s quality schools, affordability and economic growth.

The Criteria:
As we studied cities and towns across the Centennial State and identified the best for young families, we asked the following questions:

1. Does the town have good public schools? Nerd Wallet measured schools’ academic performance with ratings from GreatSchools.org. This non-profit compares a given school’s standardized test scores to the state average to obtain a rating on a 1 to 10 scale (10 representing the highest score). Higher ratings led to a higher overall score.
2. Can you afford to live there? They looked at both average home values in each town and ongoing monthly home costs, including mortgage payments, real estate taxes, insurance costs, utilities, fuel and other bills. Lower costs led to a higher overall score.
3. Is the town growing and prospering? They assessed a town’s economy by looking at average household income and income growth over the last decade. Higher income and greater growth led to a higher overall score.

Check out Nerd Wallet's cost of living calculator and mortgage rates calculator for more information.

The Best Places for Young Families

1. Superior

Superior’s most outstanding quality may be its esteemed educational system. Served by the Boulder Valley School District, this town earned a perfect rating from GreatSchools for its two elementary schools, each of which provides an engaging environment for kids to learn and succeed. Superior’s students tend to continue their education at Monarch High School, a consistent winner of the John Irwin School of Excellence Award. Over 95% of studentspursue higher education after graduation as well.

2. Highlands Ranch

Only a 30-minute drive from Denver, this city has everything: inviting neighborhoods, acclaimed schools and plenty of venues for outdoor pastimes. Mountain Vista High is regularly recognized for its excellence, and the students consistently outperform the rest of the state. This past year, for instance, the high school’s average ACT score was three points higher than that of the state. As for entertainment, Highlands Ranch residents have their choice from four recreation centers, two dozen parks and two golf courses.

3. Louisville

According to locals, it is hard not to be happy in Louisville. This down-to-earth town has one of the lowest unemployment rates in the state; in 2011, it was two points lower than the state average, at 5.3%. It is also known for its award-winning $9 million public library. When citizens are not enjoying the library’s numerous study rooms, teen areas and a peaceful fireside reading room, you can find them at the Louisville Downtown Street Faire, where games, delicious food and live music bring residents together every weekend during the summer.

4. Erie

The fact that Erie sees 340 days of sunshine every year should be telling enough that this town is a wonderful place to live. Yet in addition to great weather, Erie possesses many other attractive qualities. Located 30 miles from Denver, Erie’s scenic location and brand new educational facilities make it the ideal location for family life. Furthermore, Erie is both an artistically-inclined and environmentally-conscious community: the Arts Coalition of Erieoften hosts visual and performing arts shows while the Erie Community Center conserves with its town-wide interconnecting trail system, a water-saving irrigation system in public parks and a solar-panel installation at its headquarters.

5. Castle Rock

Named for the prominent rock formation that overlooks the town, Castle Rock is cherished for its small-town hospitality. Residents are attracted to the area by its diverse recreational opportunities, panoramic views and the town’s laid-back but lively vibe. Parks comprise 27% of Castle Rock’s total land area, and in summer months, the town organizes weekly family-friendly entertainment events, such as Splash in the Park, outdoor movies and afarmers market. Castle Rock is proud to host both WineFest, a July outdoor event with wine tasting and live jazz music, and the Colorado Artfest, a juried international fine arts show with more than 180 artists, live main-stage entertainment and cultural exhibits.

6. Parker

Parker is the perfect place for the outdoorsy young families. Surrounded by nature, the town has an amazing network of trails for biking, hiking, skating and horseback riding. Additionally, Parker is located near Castlewood Canyon State Park, where hikers can see remnants of an infamous dam that burst in 1933 and sent a 15-foot wave into downtown Denver. There is also the Rueter-Hess Reservoir, which is now open to fishing, hiking and non-motorized boating after an expansion was completed last year.

7. Broomfield

Broomfield is removed from the big city of Denver but offers plenty to do for families of all ages. This small city is home to a quickly growing tech industry; it is located along the technology corridor on U.S. 36 and top employers include Level 3 Communications and Oracle. Broomfield is also home to FlatIron Crossing, a beautifully landscaped shopping district, which features an array of trendy boutiques, department stores, hip restaurants and an AMC Theatre for moviegoers. Residents can attend shows at the recently opened 1STBANK Center, too, which hosts big concerts, circuses and rodeos (just to name a few). There is also a modern recreation center, three golf courses and Broomfield’s many picturesque trails and open spaces.

8. Windsor

The town of Windsor is at the heart of central northern Colorado’s tri-city area, giving residents easy access to fairs and exhibits in Loveland’s art district, Fort Collins’s historic downtown and Greeley’s rodeo grounds and famous jazz festival. The town has plenty of entertainment opportunities of its own, too. Recently, the quiet downtown had been rejuvenated with an upscale restaurant and several modern boutiques. Additionally, the town is home to Windsor Lake, a popular spot for fishing, hiking and, lately, biking, as a scenic 2.25-mile bike trail around the lake was recently completed.

9. Durango

Durango has a plethora of exciting attractions, and one of the most charming is the heritage railway, which takes travelers to Silverton and back on steam-powered trains. The adventurous ride is not only enjoyed by history enthusiasts and tourists, but also by the mountain-biking community, as thousands flock to Durango on Memorial Day to race the steam train. True to the Western culture and traditions of the area, Durango boasts a variety of other outdoor attractions, including a mountain resort for skiers and natural hot springs. For the local foodie, Durango is a hotspot, too, boasting more restaurants per capita than San Francisco.

10. Littleton

A suburb of Denver, Littleton has mastered the craft of converting old to new. Littleton’s downtown is lined with turn-of-the-century buildings that house a mix of hip restaurants and bars, quaint antique shops and art galleries. The town offers a historical museum where residents can learn about the town’s agricultural roots and cherish the hands-on experience of life in a different era. Its exhibits and living-history farm make for a fun family outing as kids will surely enjoy picnicking by the nearby Ketring Lake and playing with the museum’s farm animals.

Rank	City	Nearest big city	GreatSchools rating	Median home value	Monthly owner costs	Median household income	Growth,’99-’11	Overall score for young families
1	Superior	Boulder, Denver	10	$395,000	$2,202	$100,194	22.1%	62.5
2	Highlands Ranch	Denver	9	$334,100	$2,142	$106,495	22.7%	59.7
3	Louisville	Boulder, Denver	9	$365,700	$1,943	$83,682	19.6%	57.8
4	Erie	Boulder, Denver	8	$333,100	$2,147	$103,698	34.5%	57.1
5	Castle Rock	Denver	8	$278,000	$2,067	$85,009	32.5%	56.6
6	Parker	Denver	8	$288,800	$2,072	$92,917	25.4%	55.6
7	Broomfield	Boulder, Denver	8	$270,500	$1,851	$76,531	19.8%	54.7
8	Windsor	Fort Collins, Denver	7	$264,200	$1,927	$78,013	41.9%	54.2
9	Durango	–	7	$367,700	$1,709	$53,674	53.8%	53.9
10	Littleton	Denver	8	$266,200	$1,693	$57,329	13.3%	52.8

Methodology

The overall score for each city was derived from the following measures:

1. GreatSchools city rating. GreatSchools city ratings are calculated by averaging the weighted overall rating for each school in the city (weighted by the number of students enrolled at the school)
2. Median home value from the U.S. Census (2011 ACS, data set DP04, half-weighted)
3. Monthly homeowner costs from the U.S. Census (2011 ACS, data set DP04, half-weighted)
4. Median household income from the U.S. Census (2011 ACS, data set DP03, half-weighted)
5. Income change between 1999 and 2011 from the U.S. Census (data sets P053 and DP03, half-weighted)

57 Colorado cities and towns designated as places by the U.S. Census were included in this analysis. Only places with a population greater than 10,000 were considered.

Denver #3 in U.S. for Soaring Rents, & a Tip for Renters

Rents have been soaring across the country. Of the top 50 U.S. metros with the highest average rent growth, the following areas have seen the biggest spikes, market research firm MPF found:

1. San Francisco: 7.8%
2. Oakland, Calif.: 6.9%
3. Denver: 6.1%
4. Seattle: 6%
5. San Jose, Calif.: 5%
6. Portland, Ore.: 4.4%
7. Houston: 4.3%
8. Austin, Texas: 4.1%
9. West Palm Beach, Fla.: 4%
10. Fort Worth, Texas: 3.6%

The rental increases have developers breaking ground on new projects in these hotbeds while investors are seeking to pick up everything from apartment buildings to existing single-family homes to rent. Even some homeowners are choosing to move out of their homes to rent them and bring in some extra cash. Some plan to use the extra cash to make general maintenance repairs on their home while they move into a second home.

What does a renter do in this market? 

The rental increase is making this an excellent time to buy. Couple that with the recent findings from trulia.com that showed that in all of 100 large metros, owning a home is cheaper than renting one by as much as 44 percent nationwide over a seven-year period (depending on specific assumptions).

If you're considering buying, now is a good time to at least start the process. In some areas the existing housing inventory is lower so finding the right home may be more challenging. Rates are expected to continue to rise but by how much is uncertain. Still, according to Trulia, moderate interest rate increases would still not make owning a home more expensive than renting one.

The best thing interested buyers can do is to begin their research. Picking the most experienced and knowledgeable team to guide you through the process will strengthen your chances of landing the ideal home at the right price.

Luxury Homes in Metro-Denver are Selling "Briskly"

(This luxury home in Greenwood Village just sold on May 28, 2013 for $3.9MM)

The Denver Business Journal is reporting that the sale of high-priced homes in metro Denver surged 33% in a year. There were 101 homes costing more than $1 million each that changed hands in May, according to the report. That's up from 93 sold in April. Although interest rates have ticked up in recent weeks following the Federal Reserve’s announcement of plans to taper its bond-buying program, rates remain near 50-year lows. 

Check these stats out according to the report:

* 14 homes costing more than $2 million closed in May, double the number sold in the same month a year earlier.

* The number of days it took to sell luxury homes continued the downward slide it’s been on all year, to 140 days in May from 155.8 days in May 2012. That average was up from April’s fast (for luxury homes) pace of 120.6 days.

* The most expensive sale in the metro Denver market in May was a nine-bedroom, 11-bath, 13,000-square-foot home in Evergreen that sold for $8.691 million.

* Denver notched the most million-dollar sales with 31, followed by Boulder with 22, Cherry Hills Village with 11 and Greenwood Village with seven.

* Sellers received an average of 94.4 percent of their asking price, up from 93.6 percent May 2012, but off from 95.7 percent in April.

Mortgage Rates Fall with Fed Announcement

Credit the Federal Reserve with lenders pulling the reigns on rising mortgage rates.

After six weeks of the 30-year, fixed-rate mortgage (FRM) inching toward the 4 percent mark, the 30-year FRM and other benchmark rates fell.

The 30-year fixed-rate mortgage (FRM) fell to 3.93 percent, with an average 0.8 point, the week ending June 20, according to Freddie Mac's weekly Primary Mortgage Market Survey.

The rate was down from 3.98 percent a week earlier, but still higher than 3.66 percent a year ago.

Frank Nothaft, Freddie Mac's vice president and chief economist said the rising rates stalled as the market waited for the Federal Reserve's June 19 Monetary Policy announcement.

Fears that the Fed was planning to end buying $85 Billion in bonds each month ($40-billing in mortgage-backed securities and $45 billion in longer-term Treasury securities) gets some of the blame for rates rising through much of May and June.

"The Fed stated that economic growth has been expanding at a moderate pace and that labor market conditions have shown further improvement, although the unemployment rate remains elevated," said Nothaft.

He added, "It noted inflation has been running below the Fed's longer-run objective as well. As a result, the Fed will continue its bond-buying program at the current pace and maintain its highly accommodative monetary policy stance."

Fed stays the course

The Fed said it would maintain efforts to keep short-term interest rates down at least until unemployment reaches 6.5 percent.

The unemployment rate in May was 7.6 percent and unchanged from May according to the U.S. Department of Labor.

The Fed predicted that unemployment will fall to 7.2 percent or 7.3 percent by the end of 2013, but may not reach the 6.5 percent level until the end of 2014, sooner than the Fed projected earlier.

Inflation, among other economic conditions, also factors into the Fed's plan to keep interest rates low.

"The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6-1/2 percent, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored," according to the Fed's June 19 Monetary Policy announcement.

"The Fed also affirmed that the housing sector has strengthened further. For instance, single-family housing permits increased nearly 2 percentage points in May to an annualized pace of 649,000 homes, the most since May 2008. In addition, homebuilder confidence in June rose to its highest reading since March 2006," Nothaft said.

Meanwhile, the average interest rate on the 15-year FRM was 3.04 percent with an average 0.7 point, down from 3.10 percent last week. A year ago, the 15-year FRM averaged 2.95 percent.

Interest rates won't skyrocket

Capital Economics recently forecast rates weren't on a permanent trajectory to the moon.

Echoing a June 7 Kiplinger report for the second quarter 2013, Capital Economics' U.S. Housing reported the Eurozone isn't out of the woods yet.

Capital says another economic flare up in the Eurozone is likely to send investors to the safer-haven of Treasury bonds and that will put a lid on mortgage rates.

Stay tuned.

Meanwhile, for the 5-year Treasury-indexed hybrid adjustable rate mortgage (ARM), the average interest rate was 2.79 percent, with an average 0.5 point, unchanged from last week, and down from an average 2.95 percent a year ago.

Finally, for the week ending June 20, Freddie Mac reported the 1-year Treasury-indexed ARM averaged 2.57 percent, with an average 0.4 point, down from 2.58 percent last week, and down from 2.74 percent a year ago.

(Source: Realty Times)

Buying Cheaper Than Renting Til Mortgage Rates Hit 5%-10%

According to chief economist Jed Kolko, with rents and home prices where they are now, interest rates would have to reach 5%-10% (depending on the city) for rent to be cheaper than buying. 

The recent rise in mortgage rates has made buying a house a little more expensive: the increase in the 30-year fixed rate over the past month from 3.4% to 3.9% (Freddie Mac) raised the monthly payment on a $200,000 mortgage by $56, or 6%. However, because mortgage rates are still near long-term lows, and because prices fell so much after the housing bubble burst and remain low relative to rents even after recent price increases, buying is still much cheaper than renting. That means that the recent jump in rates doesn’t change the rent-versus-buy math much.

Rates are likely to keep rising, but how far must rates rise before buying a home starts to look expensive relative to renting? To answer this, Trulia updated our Rent vs. Buy analysis with the latest asking prices and rents from March, April, and May 2013. Following our standard approach, we calculated the cost of buying and renting for identical sets of properties, including maintenance, insurance, taxes, closing costs, down payment, sales proceeds, and, of course, the monthly mortgage payment on a 30-year fixed-rate loan with 20% down and monthly rent. We assume people will stay in their homes for 7 years, deduct their mortgage interest and property tax payments at the 25% tax bracket, and get modest home price appreciation (see the detailed methodology and example here). Here’s what we found:

Buying remains cheaper than renting so long as mortgage rates are below 10.5%. At 3.9%, the current 30-year fixed rate according to Freddie Mac, buying is 41% cheaper than renting nationally. With a 5% mortgage rate, buying is still 34% cheaper than renting nationally. Mortgage rates would have to rise a huge amount – to 10.5% – to tip the math in favor of renting, which isn’t impossible. Rates were that high throughout the 1980s, but have been consistently below 10.5% since May 1990.

Each local market, of course, has its own mortgage rate “tipping point” when renting becomes cheaper than buying a home. In Denver, buying is a whopping 53% cheaper than renting at the current mortgage rates. Even at 3.9%, buying is cheaper than renting in all of the 100 largest metros, which means the tipping point is above 3.9% everywhere. The tipping point is lowest in San Jose, which would tip in favor of renting if rates reach 5.2%. It’s between 5% and 6% in San Francisco and Honolulu, and between 6% and 7% in New York and Orange County, CA.

Denver: The Fastest Real Estate Market in the United States

According to the Denver Post, Denver's real estate market is the fastest in the country. Denver had the highest share of homes selling within seven days or fewer in April among the U.S.'s major metro areas, according to a report Tuesday from ZipRealty.

Nearly four in 10 Denver-metro-area homes put on the market sold within seven days in April, up from 22 percent in April 2012. Of the two dozen metro areas that ZipRealty studied, the average share that sold within a week was 22 percent.

Denver homes spent a median 11 days on the market in April before selling, which tied with Washington, D.C., for the fastest turnover, according to ZipRealty, an online real-estate brokerage based in Emeryville, Calif.

"We're seeing sales close quickly — in 32 days on average — at nearly full list price," said Lanny Baker, president and CEO of Zip Realty, in a statement.

The tight market, however, isn't translating into strong gains for metro Denver in sales prices as much as elsewhere. The median home-sales price for metro Denver in April was $264,462, a 10 percent increase from a year earlier.

That gain was robust but lagged behind the 16.4 percent gain averaged in the 24 metro areas, which were led by a 46 percent increase in the San Francisco Bay Area and a 33 percent jump in Las Vegas.

Distressed sales, which include foreclosures, fell to 10 percent of the total from 19 percent a year earlier.

The number of new listings increased 10 percent to 8,636 in April compared with April 2012. But the month-end inventory was 34 percent lower than a year ago, reflecting the rising number of sales.

Nearly every sale, 98.9 percent, was at list price or higher in the metro areas surveyed, ZipRealty reported.

Zillow CEO: The Case for Selling Your House Now, Even If You Think Prices are Going to Rise

Challenging Your Assessed Value for Tax Purposes

2013 is a reappraisal year for Colorado assessors. What does that mean?


-You will receive a new assessor’s value on your property by May 1, 2013. The new assessor’s
value reflects:
   i. How the property physically existed as of January 1, 2013.
   ii. The appraisal valuation date is June 30, 2012.
   iii. The value is developed using sales from 1/1/2011-6/30/2012 (Could go back further in time depending upon county).

How do I know if I should protest?
-Remember you cannot protest your taxes only your value!

-What do you think the property was worth as of June 30, 2012?
   i. If your opinion of value is less than the assessor’s value then you should consider protesting.
   ii. You must be able to support that value using sales comparables from 1/1/2011-6/30/2012.

-Make sure you look at time trending those sales as they go back further in time from the 6/30/2012 appraisal date. You may also support a change in value if the assessor does not have your property characteristics correct. Example: assessor says you have a four-bedroom and you only have three-bedrooms.


What is the timeline for me to protest?
-May 1 - May 30
   i. Online (depending upon the county)
   ii. Fax (depending upon the county)
   iii. In-person (depending upon the county)
   iv. Mail (depending upon the county)

When will I hear back from the county?
-The assessor will make a decision and mail a Notice of Determination to you before the last working day in August.

What are my options if I don’t agree with the county’s determination?
-You can file a written appeal with the County Board of Equalization (CBOE) on or before September 15, 2013.

Denver Post & NY Times: Seller's Market Emerges This Spring

Multiple offers on almost every home. Outrageous demand because of high rents and low interest rates, and low inventory is by definition what we in the real estate industry call a "Seller's Market." 

The price of previously occupied homes sold in the metro area shot up in April as buyers battled over a limited number of homes available for sale.

"Low inventory levels coupled with buyer demand is upping buyer competition, resulting in a fast-paced market and increasing home prices," said Gary Bauer, an independent real estate research analyst who prepared the report.

The median price of a single-family home sold in April was $280,000, compared with $268,200 in March. The median price of condos sold rose from $154,000 to $163,500.

April's report showed the seasonal pattern of home activity gearing up, but without a commensurate increase in homes coming onto the market.

The number of homes under contract increased 14.7 percent from March to 6,855. The number of homes closed rose 8.8 percent to 4,714. 

That far outstrips the 3.9 percent increase to 6,945 in the inventory of homes available for sale in April versus March. In April 2012, there were 10,254 homes available for sale.

An analysis done by Jim Smith, owner of Golden Real Estate, found that homes listed for sale since April 1 spent a median four days on the market before going under contract.

"Sellers, be prepared for multiple offers and informed enough to capitalize on creative offers," Bauer said.

Where the numbers really startle are on a year-to-year comparison. The number of home resales closed last month was up 21.2 percent from April 2012. By contrast, the number of unsold homes on the market dropped by nearly a third.

The market is getting tighter despite a strong push from homebuilders to add supply. Metrostudy,in a quarterly survey, found that builders started 1,596 homes in the first quarter in metro Denver, a 52 percent increase from the 1,050 in the same period a year earlier.

They closed on 1,425 homes, a 39 percent jump from the first quarter of 2012. Metrostudy forecasts a 35% increase in home starts in 2013 after a 55% jump in 2012. A shortage of available lots and rising prices will reduce the growth rate of starts, the company predicts.

CoreLogic Reports Continuing Home Price Increases in Denver

I was reading the Denver Business Journal and read a story about how home sales prices continue to post double-digit year-over-year increases across the metro Denver market, according to a report Tuesday from CoreLogic Inc, the stats and analysis company.

In the Denver-Aurora metro area, home prices jumped 11.5% in March from the same month a year earlier, the report shows.

That home price index included distressed, or real-estate owned (REO), properties.

It was the 14th month in a row for year-over-year price gains. Excluding REO properties, local year-over-year prices increased by 11.5% in March.

Month to month, March prices climbed 2.3% from February.

The report closely mirrors local data from Metrolist Inc. showing metro Denver’s spring selling season is stronger than a year ago.

Nationally, home prices increased 10.5% in March from March 2012, the CoreLogic report states.

7 Costly Mistakes When Selling Your Home

There are always appropriate steps to investing in real estate and hopefully, you've garnered many of them right on these pages. However, there are also inappropriate steps sellers can walk down when it comes time to put their house on the market.

For instance, the seller who thought the half bath the builder had located at the front of the house would really be better situated toward the back of the main level (though all the other similar models had the powder room in the same place for the previous 20 years). He got hung up on this detail so much, that he just had to move it -- and did -- for thousands of dollars, just so he could get it on the market the "right way." His hang-up may have settled some deep-seated emotional need for him, but it didn't draw any more buyers, and it drained his bottom line. You might say, that was a costly mistake.

Real estate broker and author Sid Davis has identified another seven costly mistakes that many sellers make when it comes time to put their home on the market. In my business, I've seen each one of these mistakes played out and it just makes me shake my head as to why, sellers forge ahead with unwise strategies, instead of listening to the voice of an experienced professional.

The seven costly mistakes

Mistake 1: Putting the home on the market before it's ready. Most times this happens because the seller gets impatient or is a procrastinator and has pushed himself up against a moving deadline without getting the pre-sale work done. So it comes on the market with the horrible carpet (that gets replaced during the marketing of the home); or they are painting it while it goes on the market. Presentation is everything -- so get the work done before marketing the property.

Mistake 2: Over improving the home for the neighborhood. This happens with additions, bump outs, and upgrades that make the home stick out from among its competitors so much that it's an anomaly, instead of a nice addition to the community.

Mistake 3: Pricing the home based on what he seller wants to net. This pricing strategy always ends in failure. Sellers can control the "asking" price, but they don't control the "sales" price. The market does. It doesn't matter what the seller wants, the price is determined by the black-and-white, matter-of-fact reality of the market. If all the comparable houses next to you are selling at around $250k, then pricing at $275k (unless you have mega upgrades that all the other homes don't) will only increase your days waiting on market, and make your house less desirable to buyers as time goes on. Put it on right around market value, and watch buyers fight for it!

Mistake 4: Not hiring a REALTOR. Make sure you're hiring a professional REALTOR. It might be nice to hand over your largest asset to your nephew or sister who just got their license -- but when it comes to selling your home, you want someone who has experience, qualification, recognition, and a company behind them to have your back. 

Mistake 5: Getting emotionally involved in the sale of the home. This is one of the biggest challenges home sellers face when putting their house on the market. Once you decide to sell your house, it's no longer a home, but a commodity. It needs to be prepared as a commodity, marketed as a commodity, and priced as a commodity. It doesn't matter what you "want," only what the market can bear on pricing. People are going to come in to kick the tires, so to speak, and you can't get emotional about how they may or may not appreciate the nuances of your home of seven years.

Mistake 6: Trying to cover up problems, or not disclosing them. Most states have a property disclosure/disclaimer form -- use it wisely. Just because you disclaim doesn't mean you cannot be sued later for the leaky basement, or dilapidated heating/air system that's discovered 30 days after settlement.

Mistake 7: Not getting your ducks lined up before trying to sell. This would involve financing, reading the fine print on your current mortgage to ensure no pre-payment penalties, not listening to the particulars of your local market, etc. If your local market is dictating lower home prices, then lower it early, not later -- it will cost you more. If the local market dictates selling your home first, then buying second, do it in that order, or vice versa.

Avoiding these mistakes is not that difficult. There are plenty of resources and professionals, who are there to help you step over the pitfalls. Do the research early, and listen to that voice in your head (it's probably the whispers of the finance, real estate, insurance person who's warning you of a hole you're about to step into). Sell well! Call me if you'd like any more information or a consultation absolutely free!

7 Tax Deductions for Home Owners

Owning a home can pay off at tax time. For 2012, you might be able to take advantage of these home ownership-related tax deductions, credits, and strategies to lower your tax bill:

Mortgage interest deduction

Private mortgage insurance deduction
Prepaid interest deduction
Energy tax credits
Vacation or second home tax deductions
Home buyer tax credit repayment
Property tax deduction


PMI and FHA Mortgage Insurance Premiums

Prepaid Interest Deduction
Prepaid interest (or points) you paid when you took out your mortgage is 100% deductible in the year you paid them along with other mortgage interest. 
If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year. 
But if you refinance to get a better rate and term or to use the money for something other than home improvements, such as college tuition, you’ll need to deduct the points over the term of the loan. Say you refi for a 10-year term and pay $3,000 in points. You can deduct $300 per year for 10 years.
So what happens if you refi again down the road?
Example: Three years after your first refi, you refinance again. Using the $3,000 in points scenario above, you’ll have deducted $900 ($300 x 3 years) so far. That leaves $2,400, which you can deduct in full the year you complete your second refi. If you paid points for the new loan, the process starts again; you can deduct the points over the term of the loan.  
Home mortgage interest and points are reported on IRS Form 1098. You enter the combined amount on line 10 of Schedule A. If your 1098 form doesn’t indicate the points you paid, you should be able to confirm the amount by consulting your HUD-1 settement sheet. Then you record that amount on line 12 of Schedule A.

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Home Buyer Tax Credit

• There were federal first-time home buyer tax credits in 2008, 2009, and 2010.
• Members of the armed forces who served overseas got an extra year to use the first-time home buyer tax credit. If you were abroad for at least 90 days between Jan. 1, 2009, and April 30, 2010, and you bought your home by April 30, 2011, and closed the deal by June 30, 2011, you can claim your first-time home buyer tax credit.
  The IRS has a tool you can use to help figure out what you owe.
• If you claimed the home buyer tax credit for a purchase made after April 8, 2008, and before Jan. 1, 2009, you must repay 1/15th of the credit over 15 years, with no interest.

• If you used the tax credit in 2009 or 2010 and then sold your house or stopped using it as your primary residence, within 36 months of the purchase date, you also have to pay back the credit. Example: If you bought a home in 2010 and sold in 2012, you pay it back with your 2012 taxes.

• That repayment rules are less rigorous for uniformed service members, Foreign Service workers, and intelligence community workers who 
• get sent on extended duty at least 50 miles from their principal residence.

Mortgage interest deduction:

One of the neatest deductions itemizing home owners can take advantage of is the mortgage interest deduction, which you claim on Schedule A. To get the mortgage interest deduction, your mortgage must be secured by your home — and your home can even be a house trailer or boat, as long as you can sleep in it, cook in it, and it has a toilet.

Interest you pay on a mortgage of up to $1 million — or $500,000 if you’re married filing separately — is deductible when you use the loan to buy, build, or improve your home.

If you take on another mortgage (including a second mortgage, home equity loan, or home equity line of credit) to improve your home or to buy or build a second home, that counts towards the $1 million limit.

If you use loans secured by your home for other things — like sending your kid to college — you can still deduct the interest on loans up $100,000 ($50,000 for married filing separately) because your home secures the loan.

Helpfully, the government extended the mortgage insurance premium deduction through 2013. You can deduct the cost of private mortgage insurance as mortgage interest on Schedule A — meaning you must itemize your return. The change only applies to loans taken out in 2007 or later.

What’s PMI? If you have a mortgage but didn’t put down a fairly good-sized down payment (usually 20%), the lender requires the mortgage be insured. The premium on that insurance can be deducted, so long as your income is less than $100,000 (or $50,000 for married filing separately).

If your adjusted gross income is more than $100,000, your deduction is reduced by 10% for each $1,000 ($500 in the case of a married individual filing a separate return) that your adjusted gross income exceeds $100,000 ($50,000 in the case of a married individual filing a separate return). So, if you make $110,000 or more, you lose 100% of this deduction (10% x 10 = 100%).

Besides private mortgage insurance, there’s government insurance from FHA, VA, and the Rural Housing Service. Some of those premiums are paid at closing and deducting them is complicated. A tax adviser or tax software program can help you calculate this deduction. Also, the rules vary between the agencies.

Energy Tax Credits

The energy tax credit of up to a lifetime $500 had expired in 2011. But the Feds extended it for 2012 and 2013. If you upgraded one of the following systems this year, it’s an opportunity for a dollar-for-dollar reduction in your tax liability: If you get the $500 credit, you pay $500 less in taxes.

Varying maximums

• Biomass stoves

• Heating, ventilation, air conditioning

• Insulation

• Roofs (metal and asphalt)

• Water heaters (non-solar)

• Windows, doors, and skylights

• Storm windows and doors

• Determine if the system is eligible. Go to Energy Star’s website for detailed descriptions of what’s covered. And talk to your vendor.

• The product or system must have been installed, not just contracted for, in the tax year you’ll be claiming it.

• Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.

• File IRS Form 5695 with the rest of your tax forms.
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Some of the eligible products and systems are capped even lower than $500. New windows are capped at $200 — and not per window, but overall. Read about the fine print in order to claim your energy tax credit.

Property Tax Deduction

You can deduct on Schedule A the real estate property taxes you pay. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement.

If you bought a house in 2012, check your HUD-1 Settlement statement to see if you paid any property taxes when you closed the purchase of your house. Those taxes are deductible on Schedule A, too.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.

Vacation Home Tax Deductions

• If you’re the only one using your vacation home (you don’t rent it out for more than 14 days a year), you can deduct mortgage interest and real estate taxes on Schedule A.

• Rent your vacation home out for more than 14 days and use it yourself fewer than 15 days (or 10% of total rental days, whichever is greater), and it’s treated like a rental property. Those expenses get deducted using Schedule E.

• Rent your home for part of the year and use it yourself for more than 14 days and you have to keep track of income, expenses, and divide them proportionate to how often you used and how often you rented the house.

The rules on tax deductions for vacation homes are complicated. Do yourself a favor and keep good records about how and when you use your vacation home.

Read more at http://www.houselogic.com/home-advice/tax-deductions/home-tax-deductions/

If this is just too much for you, talk to my favorite tax accountant John Ghaly at 714.396.5066