The main reasons for the difference in value is usually the difference in condition between a foreclosed home and one that is not in distress. These statistics reinforce the need to put your home in tip top condition for selling. Almost every normal property for sale has competition from a foreclosed or short sale property. The magic phrase you want a buyer walking your home to say is “All we have to do is move in!” In today’s busy world despite most buyers having some romantic idea of taking on a “work in progress” to save money, when faced with the choice between a ready to go home or a home needing work the majority choose the home in better condition.

1. When speaking to others, how would you rate your agent’s level of service?
—X— Outstanding ——Good ——Fair ——Poor

2. How well did your agent explain and resolve your Real Estate questions?
—X— Outstanding ——Good ——Fair ——Poor

3. How was your agent at keeping you up to date during the entire process?
—X—Outstanding ——Good ——Fair ——Poor

What points did you like best about Prudential Preferred Real Estate?
Response: “Your agent, Dave Kupernik, was excellent. His knowledge and wisdom guided us smoothly through the entire purchasing process. He responded promptly to our questions we had and explained in more depth when we needed additional information.

General Comments:
Response: “Excellent service by Dave. Very professional and plesant experience from start to finish. Thank you for assigning Dave to us; because of him we were able to purchase exactly what we had in mind. Thank you so much!”

Arapahoe, Douglas, Denver, and Jefferson Counties all show improvement 2010 versus 2009. Days on market has dropped and sales volume has increased in all 5 Counties.

This is a positive sign. There is some additional data that will temper this news a little. The month’s supply appears to have increased in some areas as inventory has risen. In general there is about a 6 month supply in those counties. It a little higher in the rural areas roughly around a 10 month supply.

Based on what I am seeing the market still favors buyers more than sellers if you are comparing single sided transactions. Where it can balance for a seller is when you are buying a replacement home. Highlands Ranch continues to be a bright spot both in time to sell and percentage of sold price to list price. I will also say that appraisals in Highlands Ranch seem to be doing better than the average.

The biggest unknown right now is how much inventory is being stockpiled in pending foreclosures. I have not seen any improvement in the processing of short sales so we are likely to see more bank owned properties coming on the market over the next 12 months. I will say I have not seen the predicted “massive shadow inventory” that was supposed to hit in the first quarter of this year so that has been good. The original prediction was a doubling of inventory almost overnight. This is important as one foreclosure in a single neighborhood can have a dramatic temporary impact on values so a multitude would be a real challenge.

If you are wondering if now is the right time to sell I will do a thorough market analysis on your entire market area to help you decide whether or not to put your house on the market. If you decide to put it on the market then let’s put our best foot forward in marketing, home preparation and staging, and in pricing so your house sells quickly and you can avoid getting blindsided by a foreclosure.

I do have to apologize to many of you who did not get an invitation. I went paperless this year and it seems my email list is sorely in need of updating. I have added a new link to my website so you can easily send me your email address by clicking on the “contact me” and sending me your information. Please take a minute to do that as keeping in touch with all of you is important to me. I appreciate every one of you and would love to keep you up to date on my events as well as real estate related news. I will hopefully be offering my newsletter in email format in addition to print later this year so keep an eye out for that.

Once again Thank You! I was so blessed with so many of you coming by and joining in the fun.

February and March were relatively busy compared to last year.  Mortgage rates are starting to bounce up a little and there is some anticipation that they will rise more in the next 30 days as the Federal Reserve discontinues its purchases of mortgage backed securities, so this is adding some additional incentive to motivate buyers to commit.  It is also incentive to get your house sold now as a rise in mortgage rates can affect a buyer’s purchase power significantly. An increase of 1% in mortgage rate can reduce a buyer’s affordability by $22,000 on a mid 200K home.

We continue to see a lack of outstanding inventory, while this is good it is countered by the fact that the rest of the inventory (i.e.; short sales, bank owned, and poor conditioned properties) continue to be priced so low it is keeping downward pressure on the pricesof the exceptional properties.

Denver was just rated as the 5th best market for 2009 with an estimated increase in value of 1.2% versus 2008.  I think the majority reason for that was the under 200K market activity.  It experienced a healthy year with multiple offers often being submitted.

If you caught March 2010 new home sales report I would like to temper that news a bit.  Nationwide new home sales dropped over 2%.   However if you look at the statistics for the Western Region, of which Colorado is included, sales were up approximately 26%. While we are experiencing a tough market, we are certainly in better shape than most of the rest of the country.
As you can see in my activity report on the last page of this newsletter, I have personally had 3 clients go under contract on new construction in the first quarter of this year.  There is activity out there.  In fact, even the market from $300K to 500K is showing some improvement in activity over last year.
I would summarize by saying there are really good opportunities for homebuyers, sellers who are also buying, and investors. Give me a call if you are thinking about buying, selling, or investing and I will share with you the opportunities I am seeing. Thanks as always for your support and trust.

The Realtor® of the Year is given based on a vote of my fellow Realtors in the Association for embodying the “Realtor Spirit” in business practices and charitable activities.

I have to thank all of you, my friends and clients as my inspiration and motivation to serve comes from the great relationships I have experienced with each of you.  I am motivated to stay educated, informed, and proactive so that I can provide the best service to you.

The byproduct of serving on charitable and professional organizations is my ability to represent you effectively both in the business and legislative arena, while still keeping up with the latest developments in marketing, technology, and regulation.  I am blessed to know each of you and appreciate your continuing support and trust.  I will continue to work hard so you can rely on me for great results.

To determine modified adjusted gross income (MAGI), add to AGI certain amounts of foreign-earned income. See IRS Form 5405 for more details.
6. If my modified adjusted gross income (MAGI) is above the limit, do I qualify for any tax credit?
Possibly. It depends on your income. Partial credits of less than $6,500 are available for some taxpayers whose MAGI exceeds the phaseout limits.
7. Can you give me an example of how the partial tax credit is determined?
Just as an example, assume that a married couple has a modified adjusted gross income of $235,000. The applicable phaseout to qualify for the tax credit is $225,000, and the couple is $10,000 over this amount. Dividing $10,000 by the phaseout range of $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time home buyer tax credit that is available to this couple, multiply $6,500 by 0.5. The result is $3,250.

Here’s another example: assume that an individual home buyer has a modified adjusted gross income of $138,000. The buyer’s income exceeds $125,000 by $13,000. Dividing $13,000 by the phaseout range of $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $6,500 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,275.

Please remember that these examples are intended to provide a general idea of how the tax credit might be applied in different circumstances. You should always consult your tax advisor for information relating to your specific circumstances.
8. How is this home buyer tax credit different from the tax credit that Congress enacted in July of 2008? How is this different from the rules established in early 2009?
The previous tax credits applied only to first-time home buyers and were for different amounts of money.
9. How do I claim the tax credit? Do I need to complete a form or application? Are there documentation requirements?
You claim the tax credit on your federal income tax return. Specifically, home buyers should complete IRS Form 5405 to determine their tax credit amount, and then claim this amount on line 67 of the 1040 income tax form for 2009 returns (line 69 of the 1040 income tax form for 2008 returns).

No other applications are required, and no pre-approval is necessary. However, you will want to be sure that you qualify for the credit under the income limits and repeat home buyer tests. Note that you cannot claim the credit on Form 5405 for an intended purchase for some future date; it must be a completed purchase. Home buyers must attach a copy of their HUD-1 settlement form (closing statement) to Form 5405 as proof of the completed home purchase.
10. What types of homes will qualify for the tax credit?
Any home that will be used as a principal residence will qualify for the credit, provided the home is purchased for a price less than or equal to $800,000. This includes single-family detached homes, attached homes like townhouses and condominiums, manufactured homes (also known as mobile homes) and houseboats. The definition of principal residence is identical to the one used to determine whether you may qualify for the $250,000 / $500,000 capital gain tax exclusion for principal residences.

It is important to note that you cannot purchase a home from, among other family members, your ancestors (parents, grandparents, etc.), your lineal descendants (children, grandchildren, etc.) or your spouse or your spouse’s family members. Please consult with your tax advisor for more information. Also see IRS Form 5405.
11. I read that the tax credit is “refundable.” What does that mean?
The fact that the credit is refundable means that the home buyer credit can be claimed even if the taxpayer has little or no federal income tax liability to offset. Typically this involves the government sending the taxpayer a check for a portion or even all of the amount of the refundable tax credit.

For example, if a qualified home buyer expected, notwithstanding the tax credit, federal income tax liability of $5,000 and had tax withholding of $4,000 for the year, then without the tax credit the taxpayer would owe the IRS $1,000 on April 15th. Suppose now that the taxpayer qualified for the $6,500 home buyer tax credit. As a result, the taxpayer would receive a check for $5,500 ($6,500 minus the $1,000 owed).
12. Instead of buying a new home from a home builder, I hired a contractor to construct a home on a lot that I already own. Do I still qualify for the tax credit?
Yes. For the purposes of the home buyer tax credit, a principal residence that is constructed by the home owner is treated by the tax code as having been “purchased” on the date the owner first occupies the house. In this situation, the date of first occupancy must be after November 6, 2009 and on or before April 30, 2010 (or by June 30, 2010, provided a binding sales contract was in force by April 30, 2010).

In contrast, for newly-constructed homes bought from a home builder, eligibility for the tax credit is determined by the settlement date. Be sure to check with a tax advisor in cases where a HUD-1 form is not used at settlement to be sure you have sufficient documentation to attach to IRS Form 5405.
13. Can I claim the tax credit if I finance the purchase of my home under a mortgage revenue bond (MRB) program?
Yes. The tax credit can be combined with an MRB home buyer program.
14. I am not a U.S. citizen. Can I claim the tax credit?
Perhaps. Anyone who is not a nonresident alien (as defined by the IRS) and who has owned and resided in a principal residence in the United States for at least five consecutive years of the eight years prior to the purchase date can claim the tax credit if they meet the income limits. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. The IRS provides a definition of “nonresident alien” in IRS Publication 519.
15. Is a tax credit the same as a tax deduction?
No. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes. That means that a taxpayer who owes $6,500 in income taxes and who receives an $6,500 tax credit would owe nothing to the IRS.

A tax deduction is subtracted from the amount of income that is taxed. Using the same example, assume the taxpayer is in the 15 percent tax bracket and owes $6,500 in income taxes. If the taxpayer receives a $6,500 deduction, the taxpayer’s tax liability would be reduced by $975 (15 percent of $6,500), or lowered from $6,500 to $5,525.
16. Is there a way for a home buyer to access the money allocable to the credit sooner than waiting to file their 2009 or 2010 tax return?
Yes. Prospective home buyers who believe they qualify for the tax credit are permitted to reduce their income tax withholding. Reducing tax withholding (up to the amount of the credit) will enable the buyer to accumulate cash by raising his/her take home pay. This money can then be applied to the downpayment.

Buyers should adjust the withholding amount on their W-4 via their employer or through their quarterly estimated tax payment. IRS Publication 919 contains rules and guidelines for income tax withholding. Prospective home buyers should note that if income tax withholding is reduced and the tax credit qualified purchase does not occur, then the individual would be liable for repayment to the IRS of income tax and possible interest charges and penalties.

In addition, rule changes made as part of the economic stimulus legislation allow home buyers to claim the tax credit and participate in a program financed by tax-exempt bonds. As a result, some state housing finance agencies have introduced programs that provide short-term second mortgage loans that may be used to fund a downpayment. Prospective home buyers should check with their state housing finance agency to see if such a program is available in their community. To date, 18 state agencies have announced tax credit assistance programs, and more are expected to follow suit. The National Council of State Housing Agencies (NCSHA) has compiled a list of such programs, which can be found here.
17. HUD allows “monetization” of the tax credit. What does that mean?
It means that HUD will allow buyers using FHA-insured mortgages to apply their anticipated tax credit toward their home purchase immediately rather than waiting until they file their 2009 or 2010 income taxes to receive a refund. These funds may be used for certain downpayment and closing cost expenses.

Under the guidelines announced by HUD, non-profits and FHA-approved lenders are allowed to give home buyers short-term loans. The guidelines also allow government agencies, such as state housing finance agencies, to facilitate home sales by providing longer term loans secured by second mortgages.

Housing finance agencies and other government entities may also issue tax credit loans, which home buyers may use to satisfy the FHA 3.5 percent downpayment requirement.

In addition, approved FHA lenders can purchase a home buyer’s anticipated tax credit to pay closing costs and downpayment costs above the 3.5 percent downpayment that is required for FHA-insured homes.

More information about the guidelines is available on the NAHB web site. Read the HUD mortgagee letter (pdf) and an explanation of the FHA Mortgagee Letter on Tax Credit Monetization (pdf). An FAQ about monetization (pdf) is available at the NAHB web site.
18. If I’m qualified for the tax credit and buy a home in 2009 (or 2010), can I apply the tax credit against my 2008 (or 2009) tax return?
Yes. The law allows taxpayers to choose (“elect”) to treat qualified home purchases in 2009 (or 2010) as if the purchase occurred on December 31, 2008 (or if in 2010, December 31, 2009). This means that the previous year’s income limit (MAGI) applies and the election accelerates when the credit can be claimed. A benefit of this election is that a home buyer in 2009 or 2010 will know their prior year MAGI with certainty, thereby helping the buyer know whether the income limit will reduce their credit amount.

Taxpayers buying a home who wish to claim it on their prior year tax return, but who have already submitted their tax return to the IRS, may file an amended return claiming the tax credit using Form 1040X. You should consult with a tax professional to determine how to arrange this.
19. For a home purchase in 2009 or 2010, can I choose whether to treat the purchase as occurring in the prior or present year, depending on in which year my credit amount is the largest?
Yes. If the applicable income phaseout would reduce your home buyer tax credit amount in the present year and a larger credit would be available using the prior year MAGI amounts, then you can choose the year that yields the largest credit amount.