HOMESTEAD DEDUCTION-Don’t Miss this!

If you are like most homeowners your property taxes are paid through your mortgage company so you might not have paid much attention to the recent tax bill which included a nice pretty pink piece of paper. That pink paper was important. Here’s what it’s all about:

There’s a new state law aimed at preventing tax fraud and requires homeowners who want to claim the Indiana Homestead Deduction to file for the tax break, even if you’ve done it in the past.

What is a homestead? The official definition is defined as a “dwelling used as an individual’s primary residence, one garage and up to one acre of immediately surrounding land”…basically, it’s your home.

Why should I care about this? Well…the homestead standard deduction reduces the taxable assessed value of the ‘homestead’ portion of a property by the lesser of 60% or $45,000. It’s saving you money!!

What if I’m already receiving a homestead deduction? You still must file a Homestead verification form to certify residency and eligibility for the deduction!(Click here for the form) -Yes, more paperwork!

How much time do I have to do this? If you didn’t return it by April 30th, you still have time. Whew! The homestead verification form will be mailed with the 2010, 2011, and 2012 tax bills and must be completed at least once by January 1, 2013.

Why in the world do I have to do this? For security purposes and to prevent fraud. The form must include the individual, or the married couples last five digits of both the driver’s license and social security numbers which will then be used to populate a secure homestead database to prevent homestead fraud.

What happens if I ignore this? Your homestead can be removed beginning with the 2012-pay-2013 property tax bills. OUCH!

What if I’m totally confused right now? 1) you can call me and I’d be happy to walk you through this, or 2) click here for (Frequently Asked Questions)

Brad Applegate

FC Tucker, Indianapolis, Indiana

Real Estate Weekly Market Update

Foreclosures remain front-page news. RealtyTrac reports the number of homes taken over by banks jumped 35% in the first-quarter of 2010 compared to the same year-ago quarter. More worrisome, foreclosures grew 7% from the last three months of 2009.

It appears we’re backsliding again. The foreclosure rate was easing late last year, as banks were pressured to modify home loans. In addition, many states enacted foreclosure moratoriums to give troubled homeowners some breathing room to catch up on their payments. Never mind that banks were struggling with their own survival.

Our modus is to accentuate the positive when possible, since the positive is given short shrift by the mainstream media. On that front, the foreclosure problem remains concentrated in 10 states, lead by the usual suspects – Nevada , Arizona , Florida , and California (but not the entire state).

We found more positive news in the NAHB/Wells Fargo Housing Market Index, which showed a marked improvement in homebuilder sentiment, rising to 19 from the consensus estimate of 16. Many commentators credited additional business driven by the impending expiration of the federal homebuyer’s tax credits, but that doesn’t make sense. We’re all aware that a buying surge was likely heading into April, but homebuilders are surely looking beyond April. Perhaps the fact housing starts posted at a better-than-expected 626,000 units for March is a better measure of the renewed optimism.

Other variables are at work too; many are positive, including economic activity, which increased in most parts of the country, according to the Federal Reserve. We’re not surprised. In past editions, we noted that the stock market is a reliable economic indicator, and the stock market continues to show a strong recovery.

Our optimism appears to be rubbing off on more consumers, of whom 72% opine that it’s a good time to buy a house, according to a recent Gallup poll. Gallup said the figures were “potentially encouraging,” presenting sellers with an audience of buyers who believe buying a home would be a good investment.

Brad Applegate, FC Tucker, Indianapolis Real Estate

Lawless Team

Economic Update-Last week in the news

New home sales rose 26.9% in March to a seasonally adjusted annual rate of 411,000 units from an upwardly revised rate of 324,000 units in February. Economists had expected a pace of 330,000 units. It was the biggest monthly increase in 47 years.

The index of leading economic indicators — designed to forecast economic activity in the next three to six months — rose 1.4% in March after a revised 0.4% gain in February. It was the 12th straight monthly increase and the fastest pace of growth in 10 months.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending April 16 rose 13.6%. Purchase volume increased 10.1%. Refinancing applications jumped 15.8%.

The producer price index, which tracks wholesale price inflation, rose 0.7% in March, following a 0.6% decrease in February. Economists had expected a 0.4% rise. The increase was largely due to a sharp rise in vegetable prices after a cold snap damaged crops in Florida.

Existing home sales rose 6.8% in March to a seasonally adjusted annual rate of 5.35 million units from 5.01 million units in February. The inventory of unsold homes on the market rose 1.5% to 3.6 million, an 8-month supply at the current sales pace, down from an 8.5-month supply in February.

Orders for durable goods — items expected to last three or more years — fell 1.3% in March after a revised 1.1% increase in February. Excluding volatile transportation-related goods, orders posted a monthly increase of 2.8%.

Initial claims for unemployment benefits fell by 24,000 to 456,000 in the week ending April 17. Continuing claims for the week ending April 10 fell by 40,000 to 4.6 million.

Upcoming on the economic calendar are reports on the housing price index and consumer confidence on April 27, and gross domestic product on April 30.

Brad Applegate

FC Tucker, Indianapolis

Lawless Team

Short Sale: The Basics

A short sale is when a home is sold for less than the amount owed on the mortgage for the home. This occurs when the bank agrees to take less than the full amount due on the mortgage.

A seller does not have to be behind on a home loan to seek a short sale. If sellers wish to pursue a short sale, they must owe more than what the home is worth, demonstrate the house cannot be sold for the amount owed, and suffer from a legitimate financial hardship that makes the mortgage unaffordable.

The next step in the short sale process is to assemble a short sale package. This package will include such things as a financial statement showing monthly expenses, income documentation, bank statements, tax returns, a listing agreement, purchase agreement, an estimated HUD statement and a financial hardship letter.

If the home is sold as part of a short sale, there will be a difference between the amount owed and what the bank collects. This is called the shortage or the deficiency. Sometimes this deficiency may be negotiable. Some banks will seek a promissory note for the deficiency, meaning that the seller may be responsible to pay the difference between what the home sold for and what is owed to the lender. Some lenders might choose to file a collection or a judgment for the amount owed. The seller should be certain that any amount of debt, or release from debt, is received in writing. If the deficiency is forgiven, the lender can write off the shortage with the IRS, which means the seller may be responsible for paying taxes on the amount of the deficiency. However, the Mortgage Debt Relief Act of 2007 generally allows taxpayers the potential for relief from tax on mortgage debt forgiveness.

A short sale will affect the seller’s credit score. To minimize the effect on a credit score, sellers should avoid making late payments on their mortgage and work with the bank to report the sale in the best possible manner.

We are not a law firm, nor an accounting firm, nor a credit repair organization. For advice regarding potential tax liability or credit scores, please consult a tax attorney or an accountant.

For More Information

Brad Applegate

FC Tucker, Indianapolis

Lawless Team

MarketWatch-The latest news on your local real estate conditions

March pended home sales up 10 percent in Central Indiana

Eight counties see increase in housing prices

INDIANAPOLIS – More than 2,500 Central Indiana homes recorded pended sales in March, with eight of nine Central Indiana counties reporting increases compared to the same time period last year, according to pended sales statistics compiled by F.C. Tucker Company.

Overall, March home sales jumped 10.6 percent with 2,509 homes pended compared to 2,268 in March 2009. Shelby County posted a 34.3 percent increase, followed by Hamilton and Johnson counties with a 20.3 percent and 15.7 percent increase, respectively. Boone County was the only Central Indiana county to show a decrease in home sales, with a 21.4 percent decline.

Tucker’s just-released data also indicates that eight of the nine Central Indiana counties saw increases in average year-to-date home prices. Homes in Marion County sold for an average of $105,616, a 17.4 percent increase over the same period last year. Also, Hancock and Morgan counties showed 14.8 percent and 13.7 percent increases, respectively. The average year-to-date sales price for a home in the nine-county area was $139,533, which is 12.1 percent more than January to March of last year.

“Pended home sales in Central Indiana have steadily increased each month in 2010,” said Jim Litten, president of F.C. Tucker Company. “We hope this trend continues throughout the spring home-buying season as Hoosiers take advantage of the final days of the federal tax credits and continued low mortgage rates.”

As homeowners readied their homes for the traditional spring and summer home buying season, available homes for sale in the nine-county region rose 2.3 percent in March 2010 with 15,986 homes on the market, 358 more homes than in March 2009. Five counties still experienced above average inventory declines. Johnson County experienced the greatest decrease in inventory at -4.9 percent, followed by Hamilton County with 0.2 percent.

Federal tax credit to expire April 30

Potential Central Indiana homebuyers have until April 30 to take advantage of the first-time and move-up buyer tax credits before they expire. To qualify, homebuyers have to sign a purchase agreement by April 30 and close by June 30. For additional details, please visit http://talktotucker.com/buying/federal_tax_credit.asp.

Quick Links:

Pended single-family and condominium home sales

Active Listings – Inventory

Average Sale Price

Pended single-family and condominium home sales

Active Listings – Inventory

Average Sale Price

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Editor’s Note: All statistics were compiled by F.C. Tucker Company from a report drawn from Propertylinx statistics on April 8, 2010. Pending means the sales contract has been signed, but the transaction has not closed. According to the NAR, pending sales typically are finalized within a month or two of signing.

With more than $2.2 billion in annual sales, F.C. Tucker Company is Indiana’s largest independently owned comprehensive real estate firm with 45 offices and more than 1,300 sales associates throughout Indiana and select markets in Kentucky. Less than one percent of all real estate firms have the longevity of F.C. Tucker. Founded in 1918, the company’s family of businesses includes a full range of real estate services—mortgages, title insurance, relocation services, a full line of insurance products, auctioning and homeowner warranty products. F.C. Tucker has earned a reputation for its exceptional service, experienced sales associates and “Golden Rule” commitment to its clients and employees.

Brad Applegate

FC Tucker, Lawless Team Indianapolis

The April 30 tax credit deadline is right around the corner.

Homebuyer Tax Credit Countdown

The clock is ticking on the $8,000 first-time home buyer and $6500 homeowner tax credits. Buyers must have a binding written contract in place by April 30 and must close on the property by June 30.

To claim the tax credit on their 2009 return, home buyers must fill out IRS form 5405 to determine the amount of their available credit; apply the credit when they file their 2009 tax return or file an amended return, and attach the documentation to the return or amended return.

It’s all About You,

Brad Applegate

FC Tucker, Indianapolis

6 Questions Foreclosure Buyers Should Ask

There are questions that buyers in any market should be asking before they make an offer on a property in foreclosure.

Is now a good time to buy a foreclosure?

This is a very common question from both real estate professionals and prospective buyers. Obviously, because local market conditions vary, the answer is different from market to market. But there are questions that buyers in any market should be asking before they make an offer on a property in foreclosure.

What’s the first step buyers need to take?

Require buyers you work with to be preapproved for a loan before you help them shop for a foreclosure. If they’re thinking of buying a foreclosure as an investment or second home, they need to understand that financing the home will be more difficult and more expensive than financing a primary residence. Lenders typically charge higher interest rates and require a larger down payment for investment or second homes.

How can you tell a bad foreclosure from a good one?

Certainly there are great deals in many markets for both investors and buyers looking for a primary residence. But making a sound deal can be tricky. Buyers need to be wary of unpaid liens, including mortgage debt, taxes, construction loans, home equity lines of credit, and possibly a second or third mortgage. Any or all of these financial obligations could become your clients’ responsibility when they purchase a property in foreclosure. Unless the property goes through a foreclosure auction and becomes a bank-owned REO, the outstanding foreclosure liens and fees could be simply transferred to the new owner—your clients. Don’t let them fall into the same financial trap as the previous owner.

If I’m a qualifying borrower, can I appeal to banks for better loan terms?

Lenders are drowning in defaults—particularly in hard-hit real estate markets such as Arizona, California, Florida, Michigan, Nevada, and Ohio—so they may be motivated to cut a deal. If your clients have a good credit score, many banks will offer them a below-market-rate loan on a bank-owned home. Unlike paying down with points, this doesn’t cost anything in fees, and it gives them the ability to spend more for the home.

What are the costs of buying a foreclosure?

It takes money to make money. The best opportunities are for buyers with cash. If your clients are planning to rent out the property or even resell it for a quick profit, make sure they consider the carrying costs, including sales commissions, marketing costs, vacancies, taxes, insurance, and maintenance costs. Once you’ve calculated all the expenses, add on another 10 percent to 15 percent. If they don’t build in a “surprise fund,” your clients might be the next foreclosure statistic.

How does choice of neighborhood affect foreclosure investments?

Clients looking for a good investment should generally avoid neighborhoods overrun with foreclosures, particularly newer subdivisions in overbuilt exurban areas. Investors will be tempted to buy foreclosures in these areas because they offer the steepest discounts—but they also carry the most risk of further depreciation. Look in well established neighborhoods with good schools and transportation. If you’re in a market where prices are still falling, encourage your clients to factor falling prices into any offer they submit on a foreclosed property. Source: James J. Saccacio

It’s All About You,
Brad Applegate

FC Tucker Indianapolis

5 Tips for Buying a Foreclosure

When lenders take over a home through foreclosure, they want to sell it as quickly as possible. Since lenders aren’t in the real estate business, they turn to real estate brokers for help marketing their properties. Buying a foreclosed home through the multiple listing service can be a bargain, but it can also be a problem-filled process. Here are five tips to help you buy smart.

1.Choose a foreclosure sale expert.
2. Be ready for complications.
3. Work with your agent to set a price.
4. Get your financing in order.
5. Expect an as-is sale.

Buying a Foreclosure

It’s All About You!

Brad Applegate

FC Tucker

Nabbing a Bargain-Basement Mortgage Before Rates Rise

Is it time to rush out and buy a house before mortgage rates go up?

As the Federal Reserve winds down its intervention in the mortgage market, rates on home loans are generally expected to rise at least modestly during the rest of this year from today’s unusually low levels. Some analysts believe mortgage rates will jump to around 6% by year end from 5% in recent weeks, while others see only a slight increase. Meanwhile, federal tax credits available for some home buyers are due to expire at the end of April, adding to the sense of urgency many shoppers feel.

Learn More

It’s all About You!

Brad Applegate

FC Tucker

Investors are buying houses again

Some Pay in cash to avoid interest; goal is rental income for the short term.

More home buyers are buying up properties with cash, a trend driven by investors returning to the market after four years of falling prices around the country.

The share of home sales involving all cash transactions was 26% in January, up from 18% a year earlier, according to the National Association of Realtors. It’s a different kind of investor going after foreclosed properties and expecting to hold on for longer time frames.

Many investors say they’re financing their purchases with cash on hand, rather than borrowing. This trend indicates that now is the ideal time to make such purchases. It’s because prices have dropped so much and rents really haven’t.

As an investor myself I find many deals out there that will not be around for long, investors typically have a Realtor watching the market daily. People get into real estate for financial independence. It’s not a quick fix. It appreciates overtime especially when you buy low. It doesn’t happen overnight.

Want more information contact me!

It’s All About You,

Brad Applegate

FC Tucker