The Isakson/Lieberman Amendment

News out of our nation’s capital is providing perspective buyers with reason to celebrate and look ahead in the housing market. We have all heard of the “American Recovery and Reinvestment Act” that President Obama wants enacted immediately. An amendment to benefit buyers of primary residences was introduced by Senator Isakson (R-GA) and Senator Lieberman (ID-CT).

Comments from Senator Lieberman, “The rapid decline in housing prices lies at the heart of the economic crisis.”  “Real economic growth will not resume until housing values stabilize and American families once again have faith and confidence that the most valuable asset they own – their home – is safe and secure. This kind of credit could repay dividends many times over by increasing housing values, creating construction jobs, and generating state and federal tax revenue.”

The amendment was met with bipartisan support and was approved. The important provision in the amendment was the establishment of up to a $15,000 tax credit for buyer’s purchasing their primary residence.

How Does It Work?

The calculation for how to determine how much your tax credit would be is performed in this manner. Your will get a tax credit for 10% of the purchase price of the residence up to a maximum of $15,000. One of the nice provisions of the amendment is that the tax payer may choose to take the credit all in the first year or it can be split between two (2) years. One very positive feature, as opposed to the First Time Buyer Tax Credit of last year, is that this tax credit does not have to be repaid.

What Is The Timeframe?

Upon enactment of the legislation a buyer will have one year in which to complete their purchase. This sounds like a long time but in reality now is the time to start looking. The housing inventory is at a peak and your best selection for that home that meets your exact requirements may be right now.

What Are The Drawbacks?

The only drawback or downside to this amendment is that if the residence is sold or is not utilized as the primary residence in the first two years, the tax credit must be repaid. There are of course circumstances where this repayment would not apply.

As of July first of this year all builders and remodelers in the state of Georgia are to be licensed by the State Licensing Board for Residential and General Contractors. There are three types of contractors that must obtain a license by July 1, 2008.

*  Residential-Basic Contractor (Contractor work relative to detached one-family and two-family residences and one-family townhouses not over three stories in height).
* Residential-Light Commercial Contractor (Contractor work or activity related to multifamily and multiuse light commercial buildings and structures).
* General Contractor (Contractor work or activity that is unlimited in scope regarding any residential or commercial projects).

A fourth classification of contractor is the specialty contractor who is not required to be licensensed. This classification would include painters and roofers for example and they are not allowed to hire subcontractors.

I would think that the purpose of this law would be to help protect innocent homeowners and home buyers from unscrupulous contractors. We have all heard horror stories about homes and projects that have not worked out as originally planned. One big advantage of this law is the requirement for contractors to meet minimum standards for education, financial stability and workers compensation.

So what will the down side of this law be? Since Atlanta is so close to Florida, some of what happens there makes its way to our news programs. When a major event such as a hurricane hits Florida, it can sometimes take additional time to even get bids on getting work done much less getting the work itself performed.

What is the best verbiage to use when marketing a sale on new construction in Greater Atlanta? I recently received an email marketing a builder that was titled “Your Buyers have 2 more weeks to get a Great Deal”. What do you think this email was actually trying to say? Was it that after this two week period is up the deals on this builders homes will really suck? Was it that in 2 weeks the bank was going to foreclose on all this builders inventory? I don’t think that it was either of these two, but the builder needed to clarify his intentions. I feel fairly certain that the builder was trying to create a sence of urgency and increase traffic to the communities he is building in, but don’t do it to the extent that prospective buyers and the agents representing those buyers get the wrong impression.

What About Pricing

One problem that I see with new homes in the Atlanta market is that some of the builders are asking inflated prices for them and then discounting the list price by huge amounts. What is going to happen when this real estate slow down rebounds? Will the builders want to go back to the inflated pricing? Natural tendency would be to say yes. But guess what, the appraisers will be using the discounted pricing for establishing the value of future sales. Kind of a catch-22 don’t you think? Certainly no one expects the builders to work for free. They are entitled to a return on their investment and should run their business accordingly, just be realistic. When I see prices discounted by $50,000 to $100,000 on individual homes, something tells me that the builder is acknowledging that the home was overpriced to begin with. Why not price the homes competitively and negotiate the transaction in a normal manner.

Several years ago when the real estate market in Greater Atlanta was booming, builders viewed real estate agents as a necessary evil and tolerated our existence. With Buyer Agency being so well advertised and promoted as the best course of action by consumer advocates, builders now realize that collectively the REALTOR community is working with the majority of the buyers.

For more information about buyer agency and an Atlanta Buyers Agent contact Mack.

Update for Down Payment Assistance in Atlanta

The Nehemiah Program

This morning I had the privilege of attending a seminar about down payment assistance and how it can benefit both buyers and sellers in the greater Atlanta market. The seminar was taught by Leslie Kane, Area Manager, of The Nehemiah Program. The Nehemiah Program is charitable organization that has helped over 40,000 families in Georgia achieve their dream of home ownership.

The Nehemiah Program began in Sacramento, California in 1994 and was designed to help a particular community become more stable. The program gets its name, Nehemiah, from a biblical figure that helped rebuild the walls of Jerusalem and since the program was being utilized to help rebuild a community it just seemed to fit.

How Down Payment Assistance Works

If a buyer is qualified to purchase a home using FHA financing then they are automatically qualified to purchase a home using the Nehemiah Program. The home being purchased must be owner occupied and can be single family, duplex, triplex, quadraplex or a FHA approved a condo. With FHA loans the buyer is required to make a minimum down payment of 3% of the loan amount. By utilizing the Nehemiah Program the seller contributes the down payment for the buyer. At the time of entering into a contract with a buyer for the purchase of the home, the seller agrees to contribute the down payment and a small processing fee to the program. This is accomplished using the Participating Home Agreement form from Nehemiah. The program in turn contributes the down payment for the buyer. The buyer completes a Gift Letter form detailing where the gift funds came from and what address they will be used for purchasing. This type program can only be performed by a charitable organization. (Sellers are only committed to pay the contribution and fee if a buyer utilizes The Nehemiah Program to purchase the home.)

Who Benefits From a Down Payment Assistance Program?

The Nehemiah Program is helping both buyers and sellers in the greater Atlanta market. Obviously buyers benefit by being able to purchase homes with little or no money out of pocket. Generally speaking this type program would be for buyers with credit that is good enough for them to be able to purchase a home but they lack having the funds for a down payment. Typically prospective buyers who are currently renting or living at home are good candidates for this type program.

Sellers are also benefiting from this program. With the recent increase in FHA loan limits to $346,250 in the metro Atlanta area and $271,000 in outlying areas, more home sellers find themselves in a position to participate in this type program.

Who Qualifies For Down Payment Assistance?

As was stated earlier, if a buyer is qualified to purchase utilizing a FHA loan then they are automatically qualified to participate in this down payment assistance program. To find out if you qualify for FHA financing and down payment assistance Contact Mack.

So you have decided to build your new dream home. How do you find the right builder? Are you just going to leave it to chance? I hope not. You are preparing to make what is possibly the largest purchase you will ever make. As a buyer you owe it to yourself to practice your due diligence and find a builder who is qualified to build your dream home as well as being someone that you can communicate with about your wishes and desires in your home.

In the Atlanta Real Estate market, the most common ways for a buyer to find prospective builders are via the internet, their REALTOR, word of mouth from their family and friends or from the local Home Builders Association. Once the candidates have been identified the buyer and their buyer’s agent should begin the due diligence period by asking questions to determine the best fit. Here is a list of possible questions to ask:

• How long have you been building homes? (You are looking for 3+ years)
• Is your primary source of income derived by homebuilding?
• What insurance coverage’s do you carry? (You are looking for general liability, workman’s comp, and builder’s risk.)
• What is your primary source of information regarding changes in building codes? (You are looking for trade associations such as the home builder’s association or various continuing education classes)
• What is your written warranty on the homes you build and can I have a copy of it to review?
• What is your policy on home inspections? (You must be allowed to use a code certified inspector)
• Will you provide me with references from your homeowners?
• Due to today’s economic time and the state of the real estate market, would you be willing to share your financial information with us?
• Why should we select you to build our home?

While these may not include every question that you may need to ask, it should provide a good start. Even if the home you are looking to purchase is already started and at some stage of completion you should still ask questions of the builder. After all you are interviewing as an employer. You are hiring someone to build your home.

So what exactly does the FHA do? The FHA provides mortgage insurance on loans made by FHA approved lenders throughout the United States. Since it inception in 1934 FHA has insured more that 34 million loans. Generally FHA loans are easier for buyers to qualify for as they do not have the more strict underwriting guidelines of conventional loans.

We have known that it was coming, we just didn’t know how high the limits would be raised. Well we got the answer today. The Federal Housing Administration, FHA, has increased the loan limits on a FHA insured home loan in Metro Atlanta to $346,250 up from $252,890, an increase of 27%.

This action by FHA should help spur the housing industry in the Atlanta market. Any home priced below $346,250 just became easier for more buyers to qualify for.

Now more than ever it is increasingly important for Atlanta consumers to be represented by an Atlanta Real Estate Expert. The landscape of the real estate market in Atlanta is rapidly changing and having an agent that is educated and understands the nature of the market can represent substantial savings both financially and emotionally.

Georgia Real Estate Contracts Change

The Georgia Association of REALTORS has just released the 2008 version of the forms that Georgia  REALTORS utilize. And yes there are changes. The major changes came on the Purchase and Sale Agreement, better known as the contract. The legal description can now be attached as an exhibit which would apply to a meets and bounds description or the full legal description for platted subdivisions can be incorporated into the contract. Now for the biggy, the method of payment shall be all cash at closing! Does this mean that you can not finance a home in Georgia anymore, of course not. To protect a buyer with a financing contingency an agent must complete additional documents. While time frames have always been important, knowing how to use them to protect a client especially with the financing and appraisal contingencies now puts them at a premium. The inspection portion of the contract is now the "Due Diligence Period" and also includes the statement that it is the duty of the buyer to inspect the neighborhood.

The News Media Failed

The uncertainty in the mortgage market has gotten most of the attention recently from the news media. One thing the news has failed to cover is the fantastic opportunities available to buyers in this market. Whether new construction or resale it doesn’t matter, it’s a buyers market in Atlanta and consumers need an agent that understands how to do business in this enviornment.

Recognized as one of the leading builders in the southeast, John Wieland Homes will be offering buyers in Atlanta, Charlotte and Raleigh N.C., Charleston S.C., and Nashville, TN. what corporate President Eric Price is calling the value of a lifetime and one-of-a-kind in the home building industry.

Save Up To $100,000!

John Wieland Homes is offering up to $100,000 in savings along with a lifetime structural warranty on every new home whether it is existing inventory or being  contracted to be built. So what’s the kicker? Well just like every good retailer all sales, especially one titled "The Sale of a Lifetime", doesn’t last forever. Buyers must take advantage of this sale from January 25th through February 3rd 2008.

About John Wieland Homes

John Wieland Homes was founded by John Wieland in 1970 and currently is building in 60 neighborhoods in the southeast. In 2005 the company won the building industries top award when named "America’s Best Builder". Today they offer a wide variety of floor plans in both single family residences and townhomes ranging in price from the $200,000s to over $1 million.

What The Experts Say

Long recognized as one of the industry leaders in the following and reporting of home prices in the United States, Standard & Poors Case-Schiller Home Price Index sheds an interesting light on the Atlanta Real Estate market. The Index, while showing statistics back to January of 1987, has each of it’s 20 metropolitan areas on a level playing field in January of 2000 with an index rating of 100.

As of January 2007 the Atlanta index was at 133.45 and with the October report, which was released on December 26, 2007, the Atlanta index was 133.79. While the increase is small, the indication is that real estate in Atlanta continues increasing in value.

The Office of Federal Housing Enterprise Oversight latest quarterly report also shows some positive results for the Atlanta Real Estate Market. This report shows a 2.61% increase in value over the last year, a decrease of 0.56% for the quarter and a 20.18% increase in value over the last 5 years.

Why Is Atlanta Better Off?

Some will ask why is this the situation in Atlanta while other metropolitan markets have suffered so greatly? Just as an appraisal is a reflection of the value of a home in a specific location, values for an area are based on that area not what is happening in another area of the country. I guess you would have to base Atlanta’s ability to maintain even minimal growth on the fact that the region’s housing prices are fueled by relocation and job growth rather than speculative buying as happened in some areas of the  country.

Additional databases that lend information to the overall real estate landscape in Atlanta is from our local listing services. One of the important statistics currently shows that the inventory in the Greater Atlanta Market is shrinking. As inventory is reduced, pricing should continue to increase.

What Does It All Mean?

So what does all of this mean? Simply stated, prices will probably not be going down in the Atlanta Real Estate Market. Couple this with the fact that interest rates are very favorable right now and you have a great time to buy a home in Atlanta.

Recently I attended a meeting where part of the discussion was about a study done by The National Association of REALTORS®. This particular study is titled "2007 Profile of Home Buyers and Sellers" and contains one set of statistics that quite frankly is scary. I hate to think how much money buyers have lost nationally just by not implementing one simple strategy when purchasing new construction.

For years now consumers have heard that it is in their best interest to use the services of a REALTOR® when purchasing a home. This still remains the best practice for a buyer to follow. According to the study 88% of all buyers purchasing pre-owned homes utilized the services of a REALTOR®. Here is where the scary part comes in. 50% of all buyers purchasing new homes were not represented by an agent. That’s right 50% of new home buyers bought their home utilizing the services of the agent that represented the builder. WOW!

Perhaps the REALTOR® community has done better job promoting the attributes of our services for buyers purchasing resale properties as opposed to new construction. Personally I don’t believe that this is the case. I think buyers perceive that the services of a REALTOR® are needed more for the purchase of a resale home. After all, there are the inspections to deal with, coordinating the moves and of course warranty concerns. Well guess what folks; you have just as many concerns on new construction. You still need to have an inspection, you still need to coordinate the move, you still have warranty items that arise within the first year of ownership and the list goes on.

Let’s examine some of the reasons why a buyer would want representation in purchasing new construction:

• Making certain that you, as the buyer, obtain the right home, at the right terms and conditions is the goal of your REALTOR®

• Not having representation to provide relevant sales data before making an offer, including how much the builders have been contributing to closing costs and handling the negotiations for the entire transaction can be expensive for a buyer

• The buyer’s agent does not cost the buyer anything, the seller pays the commission. So the thought that you can save money by not utilizing the service of a buyer’s agent may in turn cost you money.

• Understanding the contract and it’s time frames so the buyers interests are protected

• Handling the inspections and preparing any amendments to remove the inspection contingencies

• An educated buyers agent in Atlanta can compare relative data from various subdivisions and neighborhoods to provide buyers with the best comparisons to use in their decision making process, including detailed school information.

By law in the State of Georgia a buyer is entitled to representation. The law is called the Brokerage Relations in Real Estate Transactions Act. Georgia was one of the first states to enact legislation to protect consumers in real estate transactions. As the buyer of a new home in the Atlanta Real Estate Market, make certain that you are properly represented and that you have all the comparable data that you are entitled to so that you can make a truly informed decision. After all knowledge is power and you want to deal from a position of strength.

Mack Perry is an Accredited Buyers Representative, ABR, and represents buyers of both new construction and resale properties in the Atlanta Real Estate Market. For a confidential meeting to discuss your real estate needs and the exact criteria for your next homecontact Mack today.