Auburn

If you purchase a principal residence in Auburn, WA on or after Jan 1, 2009, and before Dec 1, 2009, you can elect to take the first-time home buyer’s tax credit of up to $8000 on either your 2008 return or next year on your 2009 tax return.  The credit is equal to 10 percent of the home purchase price, up to $8000 limit. Here in Auburn, because home prices are higher than some parts of the country, the full credit will most likely apply.

According to the National Association of Realtors, there are a few filing options for the credit this year:

**If you purchase your home between Jan 1, 2009 and April 15, 2009, you can claim the $8000 credit on your 2008 return, due by April 15, 2009.

**If you are planning to close on your home after April 15,  but by October 15, you can file for an extension and just wait until the October 15th tax deadline to file your 2008 tax return to claim the credit.

**If you have already filed your 2008 return and qualify for the $8000 credit but want to take it this year, you can file an amended return on Form 1040X.

**You could also wait and take the credit on your 2009 tax return which is due April 15, 2010, or adjust your withholdings now to get the benefit before filing your return.  However, adjusting your withholdings now may be risky in case you cannot close the purchase before Dec 1, 2009.  Remember, closings MUST occur before Dec 1, 2009 (Not Dec 31st).

1. Make sure your leases are legal.  If you make a mistake on the lease, you will find it more difficult to litigate if a tenant violates the terms.

2.  Screen your tenants with credit checks, criminal/civil background checks, prior unlawful detainers (evictions), and take the time to call references. It is better to take the time to investigate these items rather than rushing to get someone to fill the vacancy.  It can cause more time, money and problems later trying to get them out.  There are companies that will do this for you, but the ultimate decision is still yours.  For example, you may be able to overlook some things if they have good explanations, for example, for poor credit.  Some prospective tenants may have had to leave their homes recently due to not being able to afford their higher prior house payment.

3.  Be available to show the property to prospective tenants. In order to rent a place quickly, you must live nearby so that you can show it at the caller’s request. Show it to them as soon as possible within a day or two at the latest, since normally they need to secure a place within a week or so, and they need to make a decision as soon as possible.  Good renters will have no problem finding another place to rent, and will move on.

4.  Utilize free advertising.  Craigslist is very popular and is free advertising.  Prospective renters search by price and location, and in you ad you should list neighboring areas and parks to which your rental is near in order to expand your number of hits on your ad.

5.  If you are unable or do not want to do the above items yourself, hire a property management company to do the work for you.

By definition, a “Short Sale” is a transaction whereby a Seller needs to sell the house at less than what is owed on the mortgage, and the lender agrees on the lesser amount, thus being “short” on what is owed to the lender. The reason this situation has come about in Auburn, WA is because the house was more than likely bought or refinanced during the “hot market” of mid-2005 through 2006 and early 2007. Lenders at that time were willing and eager to lend money in an appreciating market, with no awareness nor concern about when the top of the market would be reached. Unsuspecting buyers were eager to buy, out of worry that at the rate home prices were escalating in Auburn, WA and nationwide, they would soon be unable to afford a home at all! Sellers were eager to entertain the highest prices they could, and real estate agents encouraged multiple offers and a bidding war. Appraisers were willing to appraise the houses for a high value, and lenders were willing to lend on the inflated house prices. At that time in Auburn, WA and nationwide, there were loan products available that were previously never available before, some good loans that helped people get into homes, and some bad loans. There also was fraud involved in some cases with the more dishonest, sophisticated, and greedy lenders, appraisers, etc. although not with the normal everyday homeowner and buyer.

Since every lender and every seller’s and buyer’s situation is different, the time can vary from 2 weeks to 90+ days, or anywhere in between, the latter being more common. Beware of too low of a listing price, because some agents are listing the houses too low in an attempt to get a lot of “bids” on the house, resulting in a situation where maybe none will be accepted. This tactic is used to try to get the best “bid” for the house, and then to try to get the lender to counteroffer at the lender’s acceptable sales price. In my opinion, this is wasting a lot of the agent’s and buyer’s time and emotion. If you have ever been a buyer, you know what I mean by emotional time. What an exciting time it is in a person’s life, to buy a home! How disappointing, on the other hand, to find out that you have been mislead, used, strung along, and that you have possibly passed by other opportunities while waiting for this one to finalize.

Also, normally the house is being sold “as-is”, so it is important to get a home inspection. Do not waive the right to do a home inspection. Also, when submitting an offer, the lender of the “Short Sale” will want to see that you have your own loan available and that you are pre-approved. Try to give a time frame to the lender in which to respond, after which you will be free to cancel. If the lender is under no pressure to make a decision, the paperwork may sit on the lender’s desk. A good real estate agent in Auburn, WA, such as myself will make sure that the offer is submitted to the individual who is in a decision-making capacity.