A New Era in Housing Education

Who’d have ever thought that real estate would become a popular television viewing category? But thanks to HGTV and TLC, you can watch real estate all day long. Before we talk more about that, however, allow me to update you on a very critical piece of the new government stimulus as it relates to first-time homebuyers.

As mentioned last month, the government was going to endeavor to assist first-time homebuyers with some sort of tax incentive. Last year’s attempt, a $7,500 repayable tax credit, didn’t quite do the trick. This year’s effort will hopefully have greater impact. If nothing else, it is extremely flexible. If you are a first-time homebuyer (whom the government defines as one who hasn’t owned a home in the last three years and who purchased a home between January 1, 2009 and December 1, 2009), you will be eligible for up to $8,000 in tax credit.

As long as this home is your personal residence and you do not sell it within the first three years, you will not have to pay back the credit amount. If you do sell within the first three years, the government will recapture the entire amount.

An interesting bit of flexibility is that this credit can be taken on your 2008 or 2009 tax return. If you have not yet filed for ’08, you can take the credit now. If you have already filed, you can file an amended return, or if you are not yet prepared to make a purchase but expect you may do so in the fall, you can request an extension and file your ’08 taxes in October. If you prefer, you can take the credit on your 2009 return.

Let’s look at an example. You have just purchased a home and you’ve done your 2008 tax return. It appears you will owe $2,000. If you are entitled to the full $8,000 credit, once you’ve applied it, you will be entitled to a $6,000 refund. The limiting provision is that you may deduct up to 10 percent of your purchase price or $8,000, whichever is less. Therefore, with a $65,000 purchase price, you are only entitled to a $6,500 tax credit.

Now that’s incentive! Considering that interest rates are in the mid 5 percent range, there are plenty of homes to choose from, we have the most stable prices in the nation, readily available mortgage funds and mortgage programs with as little as 3.5 percent down—and you can get up to $8,000 in tax credit, why wouldn’t you buy a home NOW? Seems like the intelligent choice to me!

Now, let’s get back to the home shows. Talk about a busman’s holiday—I’m riveted by them. From the perspective of the real estate professional, they are a godsend. We’ve talked in this article, often, about matters that need to be addressed with sellers and buyers. Often these issues are sensitive and difficult to broach. These shows bring these issues to you straight.

For example, one of the most sensitive issues we ever have to confront is a sloppy, cluttered home. It is very difficult, when trying to establish rapport with your new client, to tell them that their home smells of pets or is a cluttered disaster area. The show Sell this House, does a great job of illustrating to homeowners what an effect a little cleaning, painting and staging can have on the sales process.

Or how about Property Virgins, where young couples search for their dream homes and then have to go through the offer and negotiation process? A little realism never hurts. It’s great to finally have verification of how complex our task actually is. Great agents make our work look so effortless that often our clients thinks they are paying too much. After all, what did we do? We just put the house on the market and someone came along and bought it. If it were only that simple. These TV programs bring it all into focus.

There is a great deal going on behind the scenes that the public may not have appreciated until now.

The other home shows I like are those that shine the light of truth on home renovation. It is always interesting to watch as renovation budgets crash and burn and time projections shoot off into the stratosphere. Everything seems to end up costing more than expected and takes longer than expected. These shows bring everyone’s expectations back down to earth.

The greatest benefit of these programs is the reality of them; the perspective. People who work in the real estate field, whether in brokerage, construction, renovation or lending, work extremely hard and take great pride in work well done. Yet seldom are they anxious to relate how much they have done. I’m not sure why; maybe it’s humility. TV is helping us bust the myths. So watch, enjoy, and get entertained and educated all at the same time.

Gary Straub is an independent real estate consultant who has been a real estate professional for 36 years.