Problem

Among the many topics around the first time home buyer tax credit, the most prevalent are a November 30th, 2009 extension, tax credit fraud and the tax credit cost to the tax payer. According to Reuters: The National Association of REALTORS® (NAR) is urging members to e-mail elected officials to “extend and expand” the homebuyer tax credit. The NAR says nearly 170,000 people have contacted their Congressional representatives so far. Article

Cost

Before the Subcommittee on Oversight, Committee on Ways and Means, House of Representatives. The United States Government Accountability Office reported (report summary) on October 22, 2009 that according to preliminary data from IRS, as of August 22, 2009, over 1.4 million taxpayers have claimed the FTHBC for homes purchased in 2008 and 2009. This represents total foregone tax revenue of about $10 billion through August 22, 2009.

Questions

Of course my fellow REALTORS® want the tax credit to be extended, it makes the entire industry money. But there’s a few questions to ask:

• Is the tax credit going to buyers who would buy a home anyway?
• Is it fair to the non-home buying tax payer?
• Is the level of fraud associated with the program acceptable?
• Can the U.S. Government afford it?
• Is this another debt we want to pass on to our kids?

Solution

Last summer I was reading Tribes, a terrific book by Seth Godin, where he details how one person can change an industry. So I said “time to get going and change an industry!” REALTORS® should privatize the $8,000 first time home buyer tax credit and open it up to all buyers. It doesn’t cost the government a penny. No more fraud or the cost of chasing the culprits. Greater stimulus for the economy because the money is available to all buyers. REALTOR® privatization will be ongoing with no distractions for our government so they can focus on bigger issues.

How

1. Home Buyer Rebates: The selling office on every real estate transaction should rebate all earned commissions over 1 percent to the home buyer.
2. Help world children too: With every closed transaction the selling office should also buy one pair of Tom’s Shoes which means a child who needs shoes will get a pair for free.

According to the 2008 National Association of REALTORS® Profile of Home Buyers and Sellers, 87% of all home buyers used the Internet as an information source Realtor.org. That means while foregoing the traditional Realtor activities and with the buyer actually doing the heavy lifting of researching the neighborhoods, schools, demographics and homes. The REALTORS® are still pocketing the typical 3 percent commission for selling the property. Now is the time for change in this archaic business model. Further, here is what the Department of Justice says about home buyer rebates: D.O.J.

What to do

Put this article on your Facebook page, Tweet the link: http://blog.lionssharerealty.com and email 10 people to do the same. Ask readers, who agree, to write their Governor, Senator and congress person to end the $8,000 first time home buyer tax credit. And finally, encourage home buyers to only work with REALTORS® who rebates part of their selling commission.

As a caring tribe we can make a huge difference.

California contact information:

Governor Arnold Schwarzenegger
State Capitol Building
Sacramento, CA 95814
Phone: 916-445-2841
Fax: 916-558-3160

Boxer, Barbara
112 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-3553

Feinstein, Dianne
331 HART SENATE OFFICE BUILDING WASHINGTON DC 20510
(202) 224-3841

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Client Testimonial:

Listen to how we helped our client David find a great home in Dana Point and get a home buyer rebate!

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Negotiation Phase

The most obvious is in the negotiation phase, where the broker makes sure the buyer is paying no more than fair market value for the home.

Home Buyer Rebate

Next is with a home buyer rebate where the buyer receives the majority of the brokers commission. The home buyer rebate can be applied to the buyers down payment or closing costs, or taken as cash, providing there are no lender restrictions, or the amount of the commission rebate can be deducted from the final sales price of the home.

Reports and Inspections

The broker needs to make sure all inspections are accounted for and there is a home buyer warranty included. Getting the right inspections and warranty in place is easy for a competent broker. The tricky part is getting the seller to agree to pay for them in advance.

Referral Services

The biggest one is the lender. For example I recently referred a lender who saved the buyer .25 in rate on a $532,000 loan. That’s over $13,000 in the first 10 years. Other areas include an arms length property inspector and a reputable termite company. Never use the recommendations of the listing agent who works for the seller.

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According to the California Association of Realtors Media release last week “The median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to C.A.R.’s “2010 California Housing Market Forecast,” presented at CALIFORNIA REALTOR® EXPO 2009 in San Jose. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.”

In other words, demand is projected to go down yet prices are expected to rise. I don’t believe this is true especially in light of the record numbers of loans in the foreclosure pipeline has never been greater. According to CA industry foreclosure analyst Mark Hanson; loans in the foreclosure pipeline — post NOD and NTS have never been greater. “This all is future housing market supply that must be considered.” See Mark’s full report

What I do think is the California market will be flooded with distressed homes in the coming months and supply will greatly increase. Contrary to C.A.R.’s 2010 Housing Market Forecast, I also believe prices will drop rather than increase.

What to do:

First off, be prepared to purchase when a great deal comes your way. Secondly, do not pay top dollar for a home when comparable prices are thousands of dollars less. And lastly, use the upcoming foreclosure wave to find the home that best meets your needs.

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Cash back rebates save home buyers thousands of dollars. Every penny over one percent of the buyer side commission goes back to the home buyer.

Prior to viewing any home or making an offer to purchase a home; the Buyer and Lion’s Share Realty agree in writing that Lion’s Share Realty will never represent the seller that involves the buyer. Further, the agreement also outlines the specific structure of the rebate agreement which is also supported by the Dept. of Justice.

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• Today’s Buyer Researches the Internet for Homes.

• Find a Broker to Represent You Exclusively.

• Get a Rebate and Save Thousands.

It’s that simple!

Lion’s Share Realty is an exclusive buyer’s discount brokerage where we rebate today’s home buyer everything above 1 percent of the selling office commission. Here’s a comparison Lions ShareRealty (LSR), Redfin, and Zip Realty. The company rebates below are based on a typical 3% selling office commission and could fluctuate:

Buyer Rebate Example

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