Tips in Kentucky

	Ivan ‘Z’ Newell
	eXp Realty, LLC Serving the Greater Lexington, KY Area Blog: www.Zrealestateman.com Website: www.LexHome.com Direct or Text: 859.321.7202	Tweet

So what’s so different about buying property in Kentucky?  While the real estate market around the country has been in general upheaval for quite some time now, Kentucky has actually not experienced as severe a market change as some of the coastal states like Florida and California. In some of those areas predatory investors are pouncing on properties and the market has rapidly dropped out from under the average homeowner. The result of that is that many homeowners who once held the “American Dream” as sacred, can now personally testify that the reality of that dream can fast become a nightmare instead –especially those who have to make a move and can’t hang on through this huge dip in market values.

 

On the more positive side, a housing market such as Kentucky’s has proven to be more stable relative to some of the other regions mentioned. They say ‘slow but steady wins the race’*, and that may prove to be a plus for a typical consumer over time. This is not to say that the Kentucky market has not been affected, but overall we have managed to maintain a fairly steady pace of change and recovery. There is still a larger than normal inventory of homes available, which makes it clearly a “buyer’s market”. This surplus of homes, along with an abundance of foreclosures, definitely has given the Buyers an edge to start. This, combined with relatively low interest rates, makes this a prime time for any Buyers able to get into the market place. Smart consumers and investors, like Warren Buffet, buy when the prices are low. That’s when the real profit comes…built right into the overall low acquisition prices.

 

However, because Kentucky has not been hit quite as severely by the home recession as other areas, consumers may have to dig even a little bit deeper to find those ‘special deals’. Specialty properties, like Kentucky Horse Farms, are holding their overall value fairly well. So in many instances, “finding the uncommon deal” may often translate into “finding the right financing”, as the average consumer typically does not have pockets full of cash to negotiate with, as do seasoned investors.

 

Many of the points made in Adam Leitman Bailey’s Finding the Uncommon Deal are right on the money and truly common to the majority of marketplaces. For the average non-investment savvy consumer, I truly believe that the key is in finding a knowledgeable “guide” or consultant to help you through the process. This may sound generic (find a good Realtor), and if so, there is a reason for that!

 

Probably the largest single key to “finding a good deal” lies with finance knowledge and preparedness. A seasoned Realtor will have many sources of finance outlets, including established relationships with local lenders and mortgage brokers, as well as possible private investors. In KY, this means that you may be eligible for programs not available anywhere else, or available only to specific consumer profile guidelines. As an example, the Kentucky Housing Corporation’s Downpayment Assistance Program (DAP) allows for assistance up to $4500 with no monthly repayment, which is completely forgiven if you stay in your home for at least five years. Their HOME Special Program may give assistance up to $10,000, also completely forgiven after five years, as well as their HOME Family Program. Each of these has particular eligibility requirements, and is unique to the Kentucky housing market.

 

In the Commonwealth of KY (that’s right, we are one of only several that is not technically a “state”!), we also had a New Home Tax Credit specific to new construction, which allowed for up to $5000 in Tax Credits when building. Although this recently expired at the beginning of 2011, it’s a prime example of the type of legislation that is not always well-known. A good professional Realtor stays abreast of changes in financial offerings and this can be key for many consumers to make or break their qualifying.

 

One more current example that’s a beauty is the Mortgage Credit Certificate (MCC). Although the $8000 First Time Home Buyer’s Credit, sadly, is a thing of the past, most first-time home buyers don’t know that if you are purchasing your first home (which includes not having owned a home in the past three years), then you may actually be eligible to claim an ongoing tax credit that puts extra cash in your pocket each month, so that you can more easily afford a house payment. This means that fewer tax dollars will be withheld from your regular paycheck, increasing your take-home pay.  An MCC gives you a straight tax credit of 25% (not to exceed $2000) of your home’s mortgage interest for as long as you own that home! The remaining 75% of your home mortgage’s interest can then be applied additionally to your itemized deduction applicable to your tax returns. The difference is that this tax credit is a direct, dollar for dollar reduction in the total tax you owe, which is more direct than the tax deduction. (Note: If you sell your home in the first nine years of ownership, you may be subject to the Federal Recapture Tax).

 

So, other than finding out about programs specific to Kentucky financing, what else might a truly seasoned Realtor be able to do for you to find the best possible deal?  Well, there are ‘tricks of the trade’ that only come with a bit of experience. For example, a tech-savvy Realtor should be able to set up specific property search parameters within their MLS system that will actually sort through properties that have been on the market for, say, over six months. While the public may not be able to see this data, sorting by criteria such as this, as well as “vacant” properties, will allow some of those more tired properties to surface. This typically translates into more motivated sellers, which is crucial to getting the best possible price in your negotiations. In Kentucky, it is the Realtor representing the Buyer who typically does the negotiating, with the attorneys and title companies basically focused on the legalities of property transfer. So finding an experienced negotiator with a proven track record is critical to protecting the Buyer’s interest throughout the transaction, including the initial negotiations, the inspections and often even the lender’s terms by way of helping their Buyer clients ‘shop’ the best rates.

 

Other skills a seasoned Realtor can offer include many of the topics listed in Finding the Uncommon Deal. A knowledgeable Realtor will know about creative financing possibilities, and may also help to protect you by sharing other unknown ‘fine print’ facts that could help avoid some disastrous situations. For example, did you know that, under KY Statute 426.530 Right of Redemption, if you purchase a foreclosed property in KY for less than 2/3 of its appraised value, the defendant and his representatives may redeem it within a year form the day of sale by paying the original purchase money plus ten per cent per annum interest. So, you may even be a cash buyer who has scored a heckuva deal on the Commissioner’s foreclosure sale. You then proceed to renovate and get ready to “flip” your property for a major profit and Voila! Along comes the previous owner or their “representative” (investors who may purchase an option from them to buy back the property) and your find yourself having to turn over your “deal” purchase plus improvements and labor, which you will not be reimbursed for!

 

Bottom line: Find an experience professional Realtor to assist you, whether you are a first-time or seasoned buyer who may ‘know it all’. As a Realtor, I have even repeatedly assisted both Buyers and Sellers in “For Sale By Owner” situations by stepping in and ‘overseeing’ the process from beginning to end. Will it cost you more to work with a Realtor? Doubtful.  A good Realtor will earn their commission back by helping you to buy right and avoid pitfalls. This doesn’t mean that they will have all the right answers all the time, but you surely will increase the odds of asking the right questions!

 

*Let’s not take this metaphor too seriously, for we are in the heart of the Thoroughbred Race Industry’s racing and breeding grounds and ‘slow but steady’ doesn’t always cut it at the track! For some real excitement, c’mon out to Keeneland race track in Lexington or Churchill Downs in Louisville (home of the Kentucky Derby). You won’t be able to sit in your chair when those horses come round the bend!