$8000.00 Homebuyer’s Credit And Fido

By Tanya Ocampo

Dear Tanya,

Dear Need It Now,

To be eligible for the $8,000 Homebuyer Credit, you must be a first-time homebuyer. By IRS definition, a “first-time homebuyer is an individual (and that individual’s spouse, if married) who has not owned another main home during the 3-year period ending on the purchase date”.

To be eligible for the $6,500 ($3,250 if filing separately) Homebuyer Credit, you and your spouse, if you are married, must have owned and used the same home “for any 5 consecutive-year period during the 8-year period ending on the purchase date of the new main home”.

Assuming that you qualify for a Homebuyer Credit, you need to file IRS Form 5405 with your return or an amendment, and you must prove to the satisfaction of IRS that you are eligible.

For the $8,000 Credit, you need to attach a copy of your contract showing that you executed the agreement on or before April 30, a HUD Settlement Statement that shows closing took place on or before June 30, and a copy of the recorded deed to your new home. IRS does not specifically ask for proof that you haven’t owned a homestead in the last three years, but it has an uncanny way of finding out.

For the $6,500 Credit, you must furnish utility bills and property tax statements to the IRS to prove 5 years of continuous residency in the prior 8 years. As with the $8,000 credit, you will need to attach a copy of your purchase agreement dated on or before April 30, a HUD Settlement Statement dated on or before June 30, and a copy of the recorded deed to your new home.

FYI: Even if you qualify otherwise, you will be disqualified if your contract is dated May 1 or you close on July 1.

IRS is inundated with claims now, and it may take as long as 8-10 weeks for you to get your money. If you owe money to IRS, the amount owed will be deducted from the credit, and you will receive the remainder.

Not surprisingly, IRS has numerous special rules that apply to changes in the use of the main home for which credit was claimed, including foreclosure, sale, conversion to a rental or business, divorce settlement, deployment, death, condemnation of property, and more. To make sure you do everything right and don’t create delays by inaccurate filing and incomplete documentation, consult a qualified tax specialist.

Dear Tanya,

I’m looking for a house and have found a Realtor I like and trust. She has asked me to sign a Buyer Representation Agreement, but I don’t want to be bound by a contract. Can she refuse to work with me if I don’t sign? -Noncommital

Dear Noncommital,

The Texas Real Estate Commission has produced a document called “Information about Brokerage Services”, which outlines how real estate licensees can represent you and which agents provide to their prospects. To fully appreciate the various types of brokerage services, you should understand the word “fiduciary”, which comes from Latin “fidere”, to trust. You probably know other related word: fidelity, meaning faithfulness, and Fido, a popular dog’s name meaning faithful.

To answer your question, yes, your Realtor may refuse to work with you. Or at her discretion, she may legally represent you without a written agreement. If she acts like your fiduciary, making herself legally responsible for what belongs to you by safeguarding your equity, your confidential information, your best interests over all others’, she is your fiduciary. She is your trustee and you are the beneficiary in this relationship of trust and confidence. She provides you with what we call “client-level services”.

As long as she is showing and selling you properties that are listed by other brokers, she can fulfill her duties as a fiduciary 100%. However, if you want to deal on property listed in her broker’s inventory, the picture changes.

Let me remind you that the broker of the company is the real agent. He assumes all the business generated by the licensees he sponsors. If the listing agreement commits him to a fiduciary relationship with the seller, and the Buyer Representation Agreement, to a fiduciary relationship to the buyer, you can easily see there might be a conflict of interest if the buyer represented by the broker wants to buy the seller’s property represented by the same broker .

Texas law has addressed this gray area, giving real estate practitioners specific instructions for in-house sales. Licensees must treat all parties honestly, not disclose that the owner will accept less or that the buyer will pay more, unless authorized to do so in writing, and not disclose confidential information without written authorization, unless this information is material fact relating to the condition of the property or is required by court order or the Texas Real Estate License Act.

To practice intermediary, Texas law requires the informed written consent of the parties. The owner agrees to intermediary at the time of the listing, the buyer at the time of the Buyer Representation Agreement. If you don’t sign the Buyer Rep, your Realtor cannot deal on any property listed in her brokerage’s inventory until you sign, though she can, of course, sell you properties listed by other firms.

The second important issue addressed in the rep agreement is the agent’s compensation. Agents typically receive their commission on closing. Till then they work for free. The representation agreement serves as an employment agreement, guaranteeing that if the client buys, the agent will have a payday.

Usually the buyer’s agent is paid a portion of the commission negotiated at the time of the listing. The commission comes from the seller’s proceeds, even though the buyer’s agent does not represent the seller. The buyer’s agent is, if fact, something of an antagonist to the seller. Notice that representation and compensation are mutually exclusive.

In certain situations, when the seller will not pay a commission, the representation agreement addresses how the agent’s compensation will be handled.

Considering the weighty issues addressed in the Buyer Representation Agreement, serious buyers should enter the market knowing all their rights and responsibilities, and agents should know they won’t be spinning their wheels. Buyers shouldn’t expect loyalty and commitment if they themselves aren’t willing to give it.

Tanya Ocampo

Licensed Broker Associate Realtor

RE/MAX Real Estate Group

tanyaocampo@remax.net.