Brian Leavitt, REALTOR®

Dibbs

There was an interesting story on the news this week about a homeowner who discovered that someone had moved into their vacant home claiming that the home had been abandoned.  The new occupant said she rented the property from a property management company who in turn claimed that they had acquired the property by filing a "deed of adverse possession" with the county recorders office.  Pretty good trick if you can pull it off.  Last I checked there were a couple of elements of adverse possession that I suspect this property manager may have forgotten. As a refresher, adverse possession is a means of acquiring title where an occupant has been in actual, open, notorious, and continuous occupancy of a property under a claim of right for the required statutory period.  In this case the period would be 7 years.   The property manager is 6 years 12 months short of the requirement.   Since a real estate license is required to manage property here in Washington it makes me wonder how some people actually pass the license test in the first place but that is another story.  

The property owner, in my opinion, was quite gracious to the occupant allowing her and her family to move out over the weekend.  I have heard that similar claims to vacant property been happening in other parts of the country but this is the first time I have heard about it here.  If you have seen this in your market I would love to hear about it.  Part of my initial reaction is that consumers could be protected against becoming entangled in this sort of mess by using trusted real estate professionals except that in this case the renter thought that is what they were doing.

This reminds me of a transaction I worked on a number of years ago where a man rented a home from one of my clients and then proceeded to offer it "for sale by owner" at a drastically reduced price drawing in several buyers and obtained cash earnest money deposits before fleeing town cash in hand.  The would be buyers then contacted my client to get a refund.  The problem is my client did not sell the home.  Tough luck for the buyers.  The moral of the story here is to know who you are dealing with.  As a consumer remember that true authority withstands questioning.  As a broker I always determine if in fact my client has the legal right to sell, or in this case, rent the home.  As a consumer or selling/leasing agent, you can do the same.  To do this simply review the tax records to see if the person claiming the right to sell or rent is the person in title.  If the home is for sale ask for a copy of the preliminary title.  Verify that your agent is a member in good standing with the Association of Realtors and check the status of their license.  In many states you can do this in a few seconds online.  Sorry, no "Dibbs" today.

Tax Credit Extension

Right now a battle is being waged in the House of Representatives over extension of the $8000 tax credit for first-time buyers.  On Monday the House voted unanimously to extend the deadline for one group of home buyers.  The extension was granted for military personnel, Foreign Service and intelligence officers.  HR 3590 was passed granting the extension to those that meet the underlying criteria and who are serving overseas or have spent at least 90 days deployed outside of the US during the current calendar year.  The bill was introduced by Rep. Charles Rangel (D-NY) because families serving overseas were being passed over for the one time opportunity to purchase a home.  Under the original law, a homeowner was required to occupy the home for 36 months or the credit would be recaptured.  Because the military and other Foreign Service employees frequently relocate many have been reluctant to apply for the credit even if they did purchase a home.

As far as the extension for the rest of us, there is no news as of yet as to whether any extension will be approved.  Both the National Association of Realtors and the National Association of Home Builders are strongly in favor of the extension. 

Let's hear it for the good guys

An article appeared yesterday regarding the legendary secrecy of the Swiss banking system.  This is from a newsletter we receive from one of our business associates, Am Trust Bank.

"In times like these, norms change for everyone including the Swiss banking system which is renowned for its policy on secrecy. Following a tax evasion investigation, the Swiss bank UBS was forced to reveal the names of a few hundred U.S. clients suspected of unscrupulous tax deeds. The U.S. justice department is pushing for the names of any remaining dubious account holders in the U.S which could number upwards of 52,000. If successful, billions of tax dollars could be recovered. This would indeed be a welcome relief for the cash-strapped U.S. government. "

Let's hear it for the good guys.

<P><font face=Arial>by Brian Leavitt </font><A href="http://www.northstone.net/">Northstone Real Estate, Inc.</A></P>
<P><A href="http://www.brianleavitt.com" target=_blank>Brian Leavitt</A> is a Licensed Real Estate Broker and a Licensed Mortgage Broker representing&nbsp; <A href="http://www.northstone.net" target=_blank>Northstone Real Estate Inc</A> and <A href="http://www.northstonemortgage.com" target=_blank>Northstone Mortgage.</A></P>
<P>Brian Serves clients within the <A href="http://www.nwrealestate.com/nwrpub/" target=_blank>Northwest Multiple Listing Service</A>.</P>
<P>You can contact Brian directly by phone at 425-837-4700 or toll free at 800-806-3145 or by email at <A href="mailto:broker@northstone.net">broker@northstone.net</A></P>
<P><A href="http://realtytimes.com/124/BrianLeavitt" target=_blank>Click here to see Brian's client newsletter.</A></P>
<P>Brian is licensed by the <A href="http://www.dol.wa.gov/business/realestate/brokerslicense.html" target=_blank>Washington State Department of Licensing</A> and the <A href="http://www.dfi.wa.gov/" target=_blank>Washington State Department of Financial Institutions</A>&nbsp;License number 510-MB-19802 and is a memberr of the <A href="http://www.nwrealtor.com/" target=_blank>Seattle King County Association of Realtors</A> and <A href="http://www.nwrealestate.com/nwrpub/" target=_blank>Northwest Multiple Listing Service.</A></P>

Short Sale Not A Cure All

In a recent conversation with another agent I was surprised to hear him boasting how the surge in short sales is such a great opportunity for distressed sellers because it "really bails them out"  Hold on there... This is a common misconception with short sales because it isn't necessarily so.  In real estate, and especially short sales, you do not get what you deserve, you get what you negotiate.  Let's take a look at some common misconceptions.

1.  There is no such thing as a free lunch:  Although the bank may willingly cooperate with a short sale, don't be surprised if they ask the seller, their borrower, to repay the unpaid portion of the obligation.  This usually takes the form of an unsecured note.  If the seller does not pay, the lender may seek a judgment against the seller that can follow them around for as long as 20 years and could become a lien against future real estate purchased, wages, etc. 

2.  No such thing as a free lunch, continued:  Don't be surprised if the lender issues the seller a 1099 for the portion of the obligation that is not paid.  In the event the lender does not require the seller to agree to repay the unpaid portion, you can expect they will receive a 1099 reporting the forgiven debt to the IRS as income.  The seller may have an out with this one because of the debt relief act, but they need to consult a qualified tax adviser before agreeing to a short sale.

3.  A short sale is "always" better for the seller than a foreclosure:  As we see in items 1 and 2 above it is likely that the obligation will follow the seller after the sale at some level.  Not so with a foreclosure in most cases.  In a non judicial foreclosure the obligation is wiped out.  Unfortunately the sellers credit is wiped out as well.  However this is true of both short sales and foreclosures but remember, if an unpaid obligation is following the seller around for the next 20 years that WAY outlasts any negative impact of a foreclosure.

When representing a seller in any short sale or foreclosure it is imperative that you, the agent, advise your seller to seek legal counsel.  A short sale or foreclosure, for many sellers, will have the greatest legal impact on them that they may experience in their lifetimes, so it is just too important for them NOT to have legal counsel.

 

Top 10 Homeowner Tax Breaks for 2008

Listed here, not necessarily in the order of highest priority, are the top 10 homeowner tax breaks for 2008:

1.  Mortgage insurance:  qualified borrowers can deduct the full amount of their private or government mortgage insurance if their mortgage was originated between

2.  Forgiveness of debt tax:In many instances when a lender allows a homeowner to forgo repayment of principle, and/or interest the debt is considered ordinary taxable income.  This law allows certain taxpayers to exclude discharged debt from taxes provided a lender discharges the debt in 2007 2008 or 2009.

3.  Mortgage loan interest:This is usually the largest deduction, a homeowner has because most of the monthly payment is interest.  Mortgage interest is deductible on a maximum of $1 million in mortgage debt secured by a first and second home.  The $1 million level applies to married tax filers who filed jointly and single taxpayers.

4.  Energy tax credits: As part of the energy policy act of 2005, tax credits of up to $500 are available for upgrading many energy components of the home.

5.  Points: Points are often deductible over the life of the loan.

6.  Property taxes: Property taxes on real estate are usually fully deductible.

7.  Home improvement loan interest: Interest on home improvement loans is usually deductible.

8.  Capital gains exclusion: An excellent tax shelter comes from provisions of the taxpayer relief act of 1997, which allows married taxpayers who filed jointly to keep, tax-free, up to $500,000 in profit on the sale of a home used as a principal residence.

9.  Selling costs and capital improvement:  When you sell your home you can reduce any taxable capital gains by the amount of your selling costs, which include real estate commissions, title insurance, legal fees, advertising and inspection fees.

10.  Home-based business deduction:Home-based businesses owners who use some of their home exclusively for business can deduct the same percentage of home related costs as their business actually exclusively uses.

And as an added bonus...

11.  Moving costs: Moving as a result of a new job may allow you to deduct some of the cost of moving.

Often the rules and regulations surrounding these deductions are complicated and confusing so I  strongly recommend that you seek professional help to make sure you get the maximum benefit of all available tax breaks possible.  Also keep in mind that some tax breaks take the form of a deduction, which reduces your taxable income and some as a tax credit which is a dollar for dollar reduction in the actual taxes that you owe, so again, consult your tax adviser for detailed information on these and other tax breaks that may be available to you.

by Brian Leavitt Northstone Real Estate, Inc.

Brian Leavitt is a Licensed Real Estate Broker and a Licensed Mortgage Broker representing  Northstone Real Estate Inc and Northstone Mortgage.

Brian Serves clients within the Northwest Multiple Listing Service.

You can contact Brian directly by phone at 425-837-4700 or toll free at 800-806-3145 or by email at broker@northstone.net

Click here to see Brian's client newsletter.

Brian is licensed by the Washington State Department of Licensing and the Washington State Department of Financial Institutions License number 510-MB-19802 and is a memberr of the Seattle King County Association of Realtors and Northwest Multiple Listing Service.

Housing Rescue Plan Details

The Obama administration today spelled out details of a plan that would pay lenders to refinance or lower monthly payments on mortgages for homeowners who qualify.  This program is designed to help up to 9 million homeowners stay in their homes.  The plan is in response to the slump in home prices that began in 2007 and has led to massive foreclosures nationwide and is the root of the worst economic crisis since the Great Depression.

MSNBC reports that Treasury Secretary Timothy Geithner says.  "It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets."  Geithner provided many details of the plan which was originally announced on February 18.  For borrowers who qualify, their interest rates could drop as low as 2% or their loan could be extended for as much as 40 years.  The lender has the option to forebear principle for borrowers whose homes are worth less than their loan amounts.  The program aims to reduce monthly payments to no more than 31% of the borrower's gross monthly income.  In order to qualify for financial incentives of as much as $4500 to modify a loan, mortgage servicers will have to agree to follow strict guidelines established by the Treasury Department, according to MSNBC.  Other details include guidelines that only allow borrowers to have their loans modified once and the program only applies to first lien loans made on January 1, 2009 or earlier.  Some of the details are still in the process of being ironed out and treasury officials indicate that the program will only be available to responsible homeowners who did not buy more home than they can afford. 

As final program details are announced, we will be posting them here.  If you or someone you know is in need of loan modification, or is considering selling their property, especially in a short sale situation, please contact us, we can help.

$15,000 Not Just For First Time Buyers

MSNBC reports that the Senate has Okayed a $15,000 tax break for homebuyers. This time it's not just for first-time buyers. The hope is that the $15,000 tax break will revitalize the housing market. This tax break is part of the economic stimulus bill that is part of President Obama's recovery plan. It is estimated that the cost of this tax break will be at least $19 billion. The proposal would allow a tax credit of up to 10% of the value of new or existing homes up to the $15,000 limit. Right now the law allows for a $7,500 tax break, but only for first-time homebuyers. Both Democrats and Republicans agreed to the proposal.