May 2009 Archives

I recently received this information from Kristine Messick, and it was so well presented I asked to share it word for word.

Energy Efficiency Tax Credit

Now is the time to improve the energy features of your house.  During 2009/2010, you can recoup your investment by:

Lower your energy bills               Increase homes value

Save up to $1,500 on tax bill       Improve the environment

Call Crow's Nest Home Inspections to schedule an Energy audit and find out what improvements will make the largest impact on reducing your energy bills now.

The American Recovery and Reinvestment Act of 2009 allows tax credits for energy efficiency improvements. Homeowners may claim up to 30% of costs of all equipment purchased during the aggregate two-year period of 2009 and 2010, up to $1,500 total.

Tax credits for installations made in 2006 and 2007 are still limited to the previous law's $500. Any purchase made in 2008 is not eligible for this tax credit.  

Eligible Improvements  
Owners of existing homes receive a tax credit worth 30% of the cost of upgrading the efficiency of their home. The following improvements are eligible for the tax credit:

Tax credits are available at 30% of the cost, up to $1,500, in 2009 & 2010 (for existing homes only) for:

Windows and Doors                           HVAC

Insulation                                            Water Heaters (non-solar)

Roofs (Metal and Asphalt)                   Biomass Stoves

Tax credits are available at 30% of the cost, with no upper limit through 2016 (for existing homes & new construction) for:

Geothermal Heat Pumps                    Small Wind Energy Systems

Solar Panels                                       Fuel Cells

Solar Water Heaters

Performance and quality standards for tax credit eligibility vary by technology. See the Energy Star web site  for detailed information on qualifying products, http://www.energystar.gov, under Federal Tax Credits for Energy Efficiency.

What is a Tax Credit?
There is an important difference between a tax credit and a tax deduction. A tax credit is subtracted directly from the total tax liability. On the other hand, a tax deduction is subtracted from income before total tax liability is computed. This means that a credit is much more advantageous to the taxpayer than a deduction.

Provided by:
Kristine Messick
Inspector/Energy Auditor
Crow's Nest Home Inspections, LLC
Structural Pest Inspector Lic. No. 67622
ASHI Member No. 242969
Cell (206) 310-2613 or (360) 628-9010
Schedule (206) 354-3092
www.crowsnestinspect.com

LEED ~ Leadership in Energy and Enviromental Design:  Widely known program on a national basis. LEED is offered through the U.S. Green Building Council. Similar to Built Green, it offers different levels of green certification, which are based on features in a development.

The Leadership in Energy and Environmental Design (LEED) Green Building Rating System™ encourages and accelerates global adoption of sustainable green building and development practices through the creation and implementation of universally understood and accepted tools and performance criteria.

LEED is a third-party certification program and the nationally accepted benchmark for the design, construction and operation of high performance green buildings. LEED gives building owners and operators the tools they need to have an immediate and measurable impact on their buildings' performance. LEED promotes a whole-building approach to sustainability by recognizing performance in five key areas of human and environmental health: sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality.

Who uses LEED?

Architects, real estate professionals, facility managers, engineers, interior designers, landscape architects, construction managers, lenders and government officials all use LEED to help transform the built environment to sustainability. State and local governments across the country are adopting LEED for public-owned and public-funded buildings; there are LEED initiatives in federal agencies, including the Departments of Defense, Agriculture, Energy, and State; and LEED projects are in progress in 41 different countries, including Canada, Brazil, Mexico and India.

You can make an important contribution to reduce the amount of storm water and pollutants coming from your property by incorporating rain gardens into your yard.

Are you underwater and considering a short sale?

Annie Fitzsimmons, an attorney that gives general advice to members of the Washington Association of Realtors, cautions agents and their sellers who are considering offering a property as a short sale. There is a trend now for some lenders to allow the sale but not release the seller from repayment obligations. This is a complicated issue and the seller should surely consult with an attorney.

If such a seller is unable to make payments, the other alternative is to let the property go into foreclosure. Another situation where attorney advice should be sought.

The banks may have received billions of dollars in TARP or other recovery funds, but the application of such funds sometimes seems contrary to the design of the recovery.

Put that $8,000 to work for you in the purchase of your first home.  FHA plans to allow first time Buyers to use the $8,000 federal tax credit towards their down payment on a home.  Through the use of short-term bridge loans, the plan will allow Buyers to borrow the funds from approved non-profits, state and local government agencies.

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment," Shaun Donovan,  Secretary of U.S. Department of Housing and Urban Development said.

FHA will soon release details on the new program.

Last month, the Washington Legislature approved a program to provide the credit as a temporary loan, although that has since run up against an IRS rule barring taxpayers from designating someone else to get their refunds.  Once those details are worked out this will be a great option for those wanting to use the tax credit to help with their down payment.  The first time buyer tax credit will essentially become a form of down payment assistance.

Read more in the Aubrey Cohen Seattle PI article

It's a classic dilemma: you found the perfect fixer home for you, but it needs some serious work, something crucial enough to the performance of the home that the banks won't lend on it without the work being done.  The seller can't afford it: after all, if they had the money to do the work it would have already been done (and likely they wouldn't be selling the home).  Do you take a chance and pay for work before closing in order to get the loan to buy the house?  What if something happens and the deal falls apart?  You're out the cash and the seller now has an improved property to sell at a higher price to someone else. 

The solution is a rehab loan (also known as a remodel or renovation loan).  These loans are a highly useful tool that many people don't know are available: not all banks offer them and they are tricky for inexperienced loan brokers.  But the process is intuitive: you find a house that needs work, you write up an offer, negotiate a deal, then bring in a certified inspector who helps you do the numbers and create your list of necessary improvements and their costs.  You submit the paperwork to the bank, they send out an appraiser who determines what the value of the home will be after you have completed the improvements.  If the numbers add up, you're in business.  It's not as difficult as it would sound: on FHA rehab loans they will lend on acquisition cost (which would be the purchase price and the cost of the repairs) or 110% of the future appraised value.   When the deal is all said and done, your money for repairs will be in an account held by the lender and released to you as the work is completed.

As one would expect, there are a few extra hoops to jump through and the fees for these loans are a little higher: after all, the bank is taking a greater risk lending in this scenario.  But the rewards are tremendous: buyers can get into homes that otherwise would be unavailable to them, and often at great prices.  Consider all those fixers out there that are terrific deals but many people think are unavailable to them because they don't have the cash to do the needed work.  Rehab loans are a strong solution in a market full of opportunities.

Mortgages insured by the Federal Housing Administration can be a lifeline for buyers in King County Washington.  These loans have tiny down-payment requirements, competitive rates and easy credit score hurdles.  In fact, terms are so attractive that some may ask why all home buyers don't use FHA mortgages.  Well, a lot more of them do.  Since the housing bust began, FHA lending has soared to account for 20% of the total dollar volume in home loans, up from just 3% in 2006.

There were 384,451 home puchase loans issued during the first two months of 2009, nearly four times the pace of 2008 when 631,649 were issued, and far more than the 278,393 issued for all of 2007.  The number of authorized FHA lenders skyrocketed 500% over the past two years.

FHA loans are especially attractive for home buyers with steady incomes who cannot scrape together a 20% down payment because FHA lenders will finance up to 96.5% of the home price.  Other attractions of FHA loans include:

A better loan moditification program.  The agency has a long history of helping borrowers who fall behind on the payments.  In two-thirds of default cases the agency figured out a plan to keep borrowers in their homes.

They are cheap to refinance.  FHA loans can be easily, and often cheaply, converted to similar FHA mortgages if interest rates drop.

Borrowers with weak or limited credit histories may still qualify.  Mortgage applicants can have very short credit histories or a late payment or two on their records and still get approved with low interest rates.  The FHA guidelines set the credit score minimum at 620, but exceptions may be made for people with even lower scores.

Low rates.  For months, interest rates on FHA loans have been lower than conventional loans. 

Although these loans target low and moderate income Americans, there are no income restrictions.  However, FHA does limit the amount that can be borrowed, based on area home values.  In King County, Washington, the most that can be borrowed is $567,500.  In addition, borrowers must pay an up-front insurance premium totaling 1.75% of the loan, which goes into FHA's fund for repaying lenders if borrowers default.

The one class of borrowers who may be slightly better off with conventional mortgages are the ones with very high credit scores who make substantial down payments.  Please email me if you would like a referral for an authorized FHA lender.  carolgabrielson@lakere.com

Note: This information has been extracted from an article on CNN Money.com, by Les Christie, staff writer, April 6, 2009

Many times a Realtor will recommend that you do major landscaping to improve the value of your home when you sell. Going to all that expense and work is fine if you haven't bothered to get it done while you've lived in the house. Landscaping can add 15% to the value of your home.

But, just in case you are not planning to sell in the near future, why not do some landscaping for yourself? If you are not a gardener by tradition,  start small. Most projects take two years to establish, and five years to mature. During that time you learn what plants work well in your yard and which ones are too big or too much work to maintain.

There are some good examples in an online article on msn today.

Do something nice to your yard, and you'll be doing something nice for yourself.

A full service buyer's agent should:

Be an advocate who acts in your best interest (and only your interest) at all times.

Listen to you!  Your agent should be able to hear what you are saying and understand how to assist you.  If the agent specializes in downtown condominiums and you are looking for a ranch in the country, they should be willing to refer you to a competent agent that will meet your needs, no hard feelings!

Understand your specific goals and act accordingly.  This means you should have an appointment with your agent where you do not look at any properties, just get to know each other and make sure you are a good professional match.

Be proficient with the latest technology.  We are in an electronic age.  A full service buyer's agent should be able to use the appropriate technology to your benefit.

Understand market trends, the changes to local and national real estate law, and be able to explain how these changes and trends might affect you.

Work with a company that has a full-time support staff (broker, office manager, transaction coordinator, etc.) You would be surprised how much the support of these people can enhance your buying experience.

Be an excellent communicator and keep you informed, in the way that works for you (e-mail, text, phone, ESP, whatever you like) throughout the entire process.  Communication is so important during this stressful time and it is better to know what is going on than to imagine the worst!  Find an agent that listens, speaks and acts in the way that works for you.

Be able to give constructive, professional (and even personal) advice during all stages of the buying process.  Listen, good agents have seen it all and should be eager to share their knowledge.

Understand the importance of previewing and knowing the houses on the market.  This ensures that you see the right properties without wasted effort.

Point out potential problems with a property and communicate them to you clearly.  Good inspectors are essential here and there is no substitute for a professional inspection, but an experienced agent should also be aware of any red flags and bring anything they notice to your attention for further inspection.

Let you know of any external factors that may not be obvious but may influence a property's value, either now or in the future. Yes, sometimes in the heat of the moment you may not notice that the home is near the freeway and across from the dump, but your agent should bring these issues to your attention. You may still purchase the home, but you will do it from a position of understanding the pitfalls as well as the benefits.

Advise you to walk away from a property if necessary.  Your agent should be talking to you all the time about what is truly important; if something is wrong they should speak up and counsel you to walk away if that is what is best for you. 

Understand common issues of homeownership and maintenance and relay that information to you as appropriate.  Hey, there is a lot to this stuff! Your agent should have a basic understanding of everything home related and be able to find answers to the things they do not know.

Be a strong negotiator. I cannot stress this enough!  Negotiation is one of the most important aspects of the entire process. This does not mean that they should be mean and spiteful, but they should know the intricacies of how to strongly negotiate AND get you the home of your dreams.

Understand and explain how to best position your offer in competitive situations.  There are many ways to make an offer stand out and your agent should be well versed in what will work for you.  Remember, the goal here is for you to be living in the home of your dreams, so make your offer shine!

Be able to provide competent and professional industry contacts including inspectors, lenders and home repair people.  Your agent is a professional.  Your agent should understand the importance of knowing other professionals, with great reputations, who can provide appropriate services to you. 

Attend all inspections and go over the results to you.  You should also attend the inspection, as that is your time to learn much more than just the specifics of this property.  You will also learn basic home maintenance tips and will then be able to understand in a more thorough way what you are getting into with this home buying thing!  Reviewing and understanding the results (and taking appropriate action) may save you a lot of heartache and money, in the future. 

Manage the closing process.  Many things happen from the time your offer is accepted to when you receive the keys. Your agent must be able to coordinate all of the steps necessary for each party, keep things moving and not allow anything minor to turn into a major issue.

Be able to counsel you about the myriad details of home ownership.  After the sale closes, you should feel comfortable asking questions and your full service agent should be a resource for you as long as you need them!

Did you notice that I did not say that your full service buyer's agent should FIND the house for you?  Hey, they are not hiding homes, they put them right out in the open where anyone can find them!  Go down the street!  Look around, they are everywhere!  Remember, we are in an electronic age and you may "find" the home before your agent, but as I hope I have made clear, there is a LOT more to a successful home buying experience. 

What do you think a buyer's agent should do?  Let me know!

Get out there, find the best agent for you and buy the home of your dreams.  I promise it will change your life!

Many Seattle homes are heated by oil and most are not protected as well as they should be.  An organization called PLIA (Pollution Liability Insurance Agency) will give you $60,000 in FREE cleanup coverage protecting you against tank leaks.  Sign up at www.plia.wa.gov and scroll down to Heating Oil Pollution Liability Insurance Program.  Those of you that have converted to gas and not yet decommissioned your tank-give us a call @ Lake & Company for an inexpensive referral.