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HERE IS WHERE I POST TIPS FOR CONSUMERS LOOKING TO BUY OR SELL THEIR HOME. The internet is full of information regarding this but here I am trying to take the basic, necessary information to save you hours of searching the web. Let me know if you need more information at mtolman@propertypromotions.net
House Hunting Tips
When acting as an Exclusive Buyer’s Agent, I make a variety of suggestions and recommendations to my clients. Some of these are...
Do secure written approval for a home loan so you can negotiate as a cash buyer.
Do look at enough homes to make certain you are knowledgeable about the best available homes to meet your needs but don’tlook at more homes if one of the first you
see matches your wants, needs and price
Do drive through neighborhoods at different times of the day to get the feel of the area.
Do hire professionals to perform all inspections, surveys, etc. A small fee today can prevent a large “bill” later!
Do protect your own confidences by telling only your Exclusive Buyer’s Agent your time frame for moving, maximum purchase price or financing needs.
Do give your Exclusive Buyer’s Agent’s business card to the host at any open house or new homes subdivision you may visit without your agent. Always make certain other agents know you are represented.
Do tell your Buyer’s Agent when you consider looking at a FSBO.
Don’t lose the opportunity to be represented.
Do secure professional advice before signing any document that you do not fully understand.
Do feel free to open closets, cabinets and drawers in any home you are considering purchasing.
Do continue negotiations until every issue and consideration is resolved and confirmed in writing.
Do have your Exclusive Buyer’s Agent present to protect your position before you enter into any substantial discussion about purchasing a home.
THE FOLLOWING SUBJECTS:
Dwelling on Dwellings - Tips for Sellers Nine Ways to Make a Great First Impression
A Sellers Guide to Making Buyers Feel at Home
Determining the Price of Your Home
Do your homework before selling house
Easy tips for fixing up your home to sell
Home Sellers, Don't Neglect the Home Cellars
Side with a Winner -- Choosing the Exterior Paint that Attracts Buyers Don't Be Absent-Minded About Selling a Vacant House
Before You Sell the House, Sell the Garage (So to Speak)
Smell Well. Sell Well. How to Make Your Home Smell like a Winner Home Warranties Offer Peace of Mind to Buyers
Taxes on home sales not for faint of heart
Holidays Can be Happy for the Home Seller
Open houses Still Have Their Place
Stuck between a box and a hoard place- packing for your move Maintain house’s curb appeal during drought
Junk Yard Wars - What to Do About a Trashy Neighbor
No Sale - What to Do If Your House Won't Sell
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DWELLING ON DWELLINGS
The New England housing market is somewhat an enigma. Despite some pretty severe hits by a surly economy, New Englanders continue to support a strong housing market. Even in the face of significant job losses, residential construction activity rose 15 percent during the first six months of 2002 compared to the same time in 2001. And home-sale activity has increased.
Clearly, because of the unstable job market, many houses have gone on the market as homeowners accept jobs elsewhere in the country. Yet, largely because of low interest rates, buyers continue to snatch up these homes at a good clip. As a result, all indicators still point to the New Hampshire housing market as a seller’s market—although it’s softened from the heydays of a few years ago.
But what if your house is not selling? In a stagnate market, it’s not unusual for a house to remain listed for six months to a year. In a seller’s market, a home that doesn’t sell after only one month may indicate a problem. If your home hasn’t sold in the time frame you thought it would, chances are it’s a combination of the following four reasons:
· Your price is too high.
· You’re not presenting your house in its best light.
· Your neighborhood is mired in a stagnate market.
· Your expectations are too optimistic.
Fortunately, there’s something you can do about each one of these reasons.
Without a doubt, the most common reason a house doesn’t sell is because of price. Certainly, you’ll attract more buyers with a house that is priced correctly for the current market conditions. On the other hand, just being a little overpriced can leave your house languishing on the market. For example, if your price is only 5 percent over market value, it will scare away buyers; they won’t even bother looking.
Of course, the best time to price your house correctly is when you first put it on the market. Lowering your price after you’ve been listed for a while could give your house the stigma of stagnation. Yet, an overpriced house is sure to stagnate. Consult with your real estate agent. If the market conditions warrant it, reduce your price and let buyers know it.
The second leading reason a house does poorly is its condition. If you tried to get by without slapping some new paint in the walls, you may be figuratively slapping buyers in the face. Try videotaping your home interior and watching the playback with a critical eye. Does it look in mint condition on screen? If not, repaint the walls and lay down some new carpet. And use bright neutral colors for both. The transition will be dramatic. And the results should be well worth the cost.
If, on the other hand, your house is priced just right and is in showroom condition, you might be faced with a localized stagnate market. To sell your home in these conditions may take more creativity to attract buyers. For instance, in some markets, sellers have been known to give away new cars to attract buyers. But it’s doubtful that you’ll have to go to such extremes in New Hampshire.
Perhaps you can entice buyers with some regional perks. For example, if your home is in Belmont Country, offer buyers a family season’s pass to Gunstock ski area. If it’s in Portsmouth, try tossing in tickets to the Music Hall. … By accentuating local attractions, you’ll accentuate your home’s locale -- and ultimately give buyers a reason to commit.
Often, however, it comes down to a matter of cash. To help, you could offer to cover some of the buyer’s closing costs … or pick up the property tax for an additional year. There are many ways to give a buyer a break without lowering the price of your home.
As a last resort, consider taking your property off the market and relisting it anew. This may get buyers to take a fresh look at your house. That prospect, however, should give you cause to take a fresh look at your agent, as well. If she or he isn’t working with you, find someone who will.
If, in the end, you feel you’ve done everything you can, you may simply have to be more patient. There are seasonal lulls even in sellers’ markets. So be realistic and ask your agent for advice. After all, your agent is specifically trained to sell homes. Take full advantage of that knowledge.
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Do your Homework before Selling House
Home selling 101 — know thy market The real estate market — like the economy — is in a constant state of flux. Is it a seller's market? Is it a buyer's market? Or is it like New England weather — stick around and it will change? Of course, if you're thinking of selling your house, you ought to know whether the sun shines on the buyers in your area or the sellers. And that's not necessarily an intuitive assumption.
For example, in tough economic times, you might expect home sales to be a bust. Yet according to national statistics, home sales have done pretty well during the recent recession. But whereas single family homes under $200,000 have sold well, luxury and vacation homes have taken a bit of a hit.
So where does your home stand in the market?
Be prepared to do a little research. Markets vary widely from neighborhood to neighborhood. For instance, in New Hampshire, the Concord area is currently experiencing a promising seller's market. An hour away in pricey Concord, Mass., however, sellers are challenged with a bearish buyer's market. Meanwhile, up in Conway, market conditions favor sellers because of low inventory. Understanding the differences between Concord, Concord, and Conway can be, well, confusing.
But understanding the market conditions in your immediate neighborhood may be easier than you think. Using the Internet, you can find out what other homes in your neighborhood have sold — and at what price. Check Yahoo's real estate section at: list.realestate.yahoo.com/re/news.
Be warned, however, an Internet search will only tell you so much. It won't tell you how the houses in your neighborhood compare with yours in terms of type, size, and condition. For a more thorough assessment, ask your real estate agent to provide you with a market analysis. Your agent can tell you what comparable homes have sold in your neighborhood, what the selling prices were, and how long they were on the market.
Also check what the competition is doing. See what other homes in your area are going for. Cruise the neighborhoods. Scan the listings. And pay careful attention to what condition those houses are in. It's important to assess what buyers expect to get for the price range you're trying to set.
Regardless of how much money, time, and effort you put into making your home what it is today, the current market dictates prices. One of the biggest mistakes sellers can make is pricing their house incorrectly. There are horror stories on both sides of the spectrum: sellers who priced their house too high and couldn't sell and those who practically gave away their homes by pricing way too low.
And make sure you continually keep tabs on what other sellers are doing as the market goes on. For example, are other sellers dropping their prices?
Are they negotiating with cash for closing? Are they continuing to advertise in all the same places? Are they updating or improving certain aspects of their property to appeal more to buyers?
Remember, buyers are comparing your home to others on the market. For an honest evaluation of where your home stands, you should be doing the same.
Perhaps the most important aspect, however, in understanding your market is knowing who your buyer is. If you have a four-bedroom home, for instance, chances are your home will appeal to growing families — families with teen-age children who need their space and concerned parents who want garages, home offices, and safe neighborhoods. These families are going to be interested in the quality of schools in the neighborhood, as well as crime statistics. You can help by having this sort of information readily available. Find out what's great about your school system and tell your agent, their agent, and every person who's interested.
If you have a smaller home, your target buyers may be starting families or retiring couples. Endeavor to figure out which ones, because their concerns may vary widely.
Finally, once your home is getting showings, ask agents for honest feedback.
Are prospective buyers receiving your house well? Do they like the decor? Do they like the neighborhood? If you know about potential objections (about price, about the condition of your home, etc.) before the next prospective buyer walks in, you'll be better equipped to manage or even eliminate problems. And that's the advantage of being in the know.
Try to get at least three CMAs from different agents. And beware of an agent who presents an inflated number. If two come in at one price and another comes in high, chances are the high number is more than hopeful. And it can be devastating to list a house too high right off the bat.
Houses on the market generate the most interest within the first 30 days of their listings. If a house gets overlooked because it's overpriced during those first weeks, the listing becomes stale if not tainted. Informed agents in the area will have an idea of how much your house is worth; if they think an appraisal won't support your asking price, they won't show it to potential buyers. After all, it will be a waste of their time to show houses that may have the sale fall through. And if you overprice with the intention of coming down, you open the flood gates to low-ball offers from buyers who will always assume the house is still overpriced. So try to get it right the first time.
To get a better idea of how accurate the CMAs presented to you are, do a little research yourself. Go to open houses. See what the competition is offering in amenities and price. And with a discerning eye and a logical mind, pay careful attention to the biggest price drivers: location, condition, amenities, and terms.
Favorable locations obviously bring better prices. Is your house in a nicer neighborhood than others? Do you have a better view? Or is your home uncomfortably close to busy train tracks? Ask the hard questions and be brutally honest. When comparing condition, check other houses' roofs, foundations, carpeting, windows, and siding. How well does your home compare?
And keep an ear to the overall market trends. Seller's markets will generate bigger prices for your home than buyer's markets will. Currently, most of New England (new Hampshire especially) is still enjoying a relatively strong seller's market.
If you're a stickler for accuracy and like to take the guesswork completely out of the process, consider having your home appraised by a professional. After a thorough and in-person inspection, a professional real estate appraiser will give you the same sort of assessment a potential buyer will get. He or she will inspect the foundation, roof, electrical and plumbing systems, heating and air conditioning, windows, walls, and other items and give you a detailed report along with an estimated value. Real estate appraisers are certified in your state and their evaluations are generally very reliable. What's more, they're impartial.
What they are not, however, is free. Plan to spend $300 to $400 for a professional appraisal. However, you do it, don't take the pricing process lightly. A well-priced house will attract more showings and will sell faster ... for more money and fewer hassles to boot. And that will make everyone a winner in this game. ________________________________________________________________________________
Nine Ways to Make a Great First Impression
It's safe to say your house will not sell sight unseen. So now that you have decided to put your home up for sale, let's discuss how you can put its best face forward.
Change your perspective
Your first - and most difficult - task is to think like a buyer. Take a critical look at your home and ask what bugs you about it. If it bugs you, it will bug a buyer. Then decide what repairs are worth making.
For example, is painting necessary? If it appeals to a buyer, it may be worth the effort. Other items you should look at are leaky roofs (often a deal breaker), broken windows, stained carpets, cracked walls, chipped tiles, and broken appliances.
Make it love at first sight
To make a great first impression, give your house "curb appeal." Keep your lawn mowed and raked. Trim your hedges. Plant flowers. If paint is an issue, paint the front. And make doubly sure your home retains its appeal when buyers get out of their cars. Sweep your walkways. Patch cracks. Put out a clean doormat. Polish your entry door's knobs and knockers. Let everything about your home say, "Welcome."
Let there be light
Bright houses appeal more to buyers. So let the sun shine in. Open drapes. Raise shades and blinds. And clean windows. Even during the day, turn on lights; it will help eliminate shadows. Make sure all your lights work. Buyers will flick switches. It's the real-estate equivalent of kicking tires. To make your home brighter, consider repainting dark walls. (A neutral white or beige is your best choice.)
Store more. Show less
As a seller, you should do more than clean your house. You should eliminate a lot of the stuff you've accumulated over the years. Clutter is an appeal killer. In the kitchen, clear counters by stowing the toaster, blender, and your myriad gadgets. But don't stuff them in cabinets. Buyers will check cabinets and drawers. And they'll be impressed if those are in order, as well. Rather, get a head start on packing and box up all items you can do without. In other rooms, open up floor plans by removing extra furniture. Pack away book stacks, knickknacks, and bric-a-brac. Make sure tables, dressers, desks, shelves, and cabinets are kept clear. Take pictures off the walls. Organize closets and other storage spaces. Let buyers see a house with ample room to put their junk.
Prepare for "nosy" visitors
Nothing turns off a buyer like bad odors. Do your doggone best to eliminate pet odors. Take out the garbage. Eliminate mildew. Don't leave dirty laundry in baskets. And rather than using perfumes or sprays to freshen up your house (it will seem like you're covering up something), use fresh flowers, potpourri, and cedar chips to keep your home smelling like a winner.
Don't be a drip
Good plumbing is plum important. Buyers will flush your toilets, turn on faucets, and they will look for leaks. So replace washers. Caulk tubs and sinks. If you have water stains, seal and repaint them. Having sparkling fixtures that work well will help ensure that offers trickle in.
Give them the facts
Have your agent prepare a fact sheet about your home and place it in a prominent location. The info covered should include price, square footage, room dimensions, tax and utility costs, and any pertinent disclosures.
Do the little things
Little touches can have big effects. Set your table with the good china. Hang your best towels in the bathroom. Make sure your house is the right temperature. In winter, a fire in the fireplace is a nice touch. Fresh flowers and soft music will also give your home more appeal. On a more practical note, oil your hinges so your door knobs turn easy and your doors and drawers don't stick or squeak.
Make yourself scarce
When a showing is scheduled, you should not only leave the presentation to the agent, you should leave. Period. And when you go, take your pets with you. Potential buyers will be less comfortable inspecting your home with you in it. And ultimately, you want buyers to feel most comfortable. Also, agents are trained professionals. They can most likely answer tough questions better than you.
Perhaps there's one last step. And that's to ask your agent for advice. Professional agents are well experienced in what helps make a house sell quickly ... and for the price set. That house might as well be yours. ___________________________________________________________________________________
HomeSellers, Don't Neglect the Home Cellars
It’s autumn, and most homeowners start taking their cues from our arboreal rodent friends. We begin to squirrel away our treasured items, cleaning out our lawns and cluttering our basements and attics in anticipation of long winters.
If you’re a homeseller, however, that’s just a little nutty.
To often, homesellers become so keen on keeping their houses’ exteriors and living areas clean, they neglect their all-important basements. Basements? All-important? You bet.
Consider when you buy a car. What’s one of the first thing you do? You look under the hood ... even if you couldn’t tell a carburetor from carbonara. You assume, if the engine is clean and everything looks in place, the car runs just fine. The same holds true for homebuyers and basements.
Looking at a basement is like looking under a car. There, potential homebuyers will scrutinize the furnace (the home’s “engine”), water heater, water pump, oil tank, any radon mitigation systems (the house’s “exhaust”), and all the exposed water and fuel pipes. If everything looks clean and orderly, they’ll assume your house clicks all on cylinders. (And if everything is legitimately clean and orderly, chances are it does.)
How well a house functions is particularly important to homebuyers looking at houses in autumn and winter. They need to feel assured that they and their families will stay warm during New Hampshire winters. And they start looking more closely at furnaces.
Additionally, homebuyers most often want larger homes and more storage space. They want comfortable places to do laundry and perhaps places to set up rec rooms, exercise areas, or home offices. In this light, a clean unfinished basement can be great selling tool.
Especially in New Hampshire. Unfinished basements are not included in a home’s listed square footage. Savvy homebuyers will see potential in a clean unfinished basement ... and realize that the extra storage space shouldn’t come with an additional property-tax liability.
So, if you have an unfinished basement on the market, clean it thoroughly. Take out as much as the clutter as you can muster. Cluttered basements are more apt to retain moisture and mildew smells; this may lead buyers to believe that there is an excess-water problem -- even when there is not.
To make your basement palatable to buyers:
· Fix any water problems thoroughly. Most basement water problems stem from bad landscaping and outside drainage. Before you spend big bucks on a waterproofing, make sure your down spouts are dispelling water away from your foundation and that rain and ground water drain away from your house rather than toward it. Water in the basement is a huge red flag to buyers -- and not just because of lost storage space. Excess basement dampness increases the potential for structural damage and rot; left unchecked and unfixed, it can break a deal.
· Clean out the typical basement mare’s nest and remove the detritus. Rent off-site self-storage space if you have to. If you must store items in your basement, do it neatly. Don’t store boxes on pallets, however, as it may raise buyers’ eyebrows.
· Mop the floor. And consider painting a plain cement floor. It will brighten the area and demonstrate your confidence in its potential.
· Wipe the furnace, tank, and water heaters. Remember, you want your house to look immaculate “under the hood.” Make sure your furnace has been properly maintained and cleaned.
· Organize the laundry area. If you have your washer and dryer in the basement, make it look amazingly convenient, with neatly kept hampers, available baskets, and a ready ironing table.
· Boost the light. Make sure all lights work and increase wattage if you can. Adding florescent light panels will very much brighten the basement and may make it appealing to the home handyman looking for a subterranean workshop and getaway.
· Swipe all the spider webs out of the ceiling, corners, and windows. (Don’t worry, our little spider friends will survive.)
· Wash down the cement walls with bleach or other mildew-killing cleanser. Clean and/or remove any sources of musty smells.
Remember, the point here is not to finish the basement. It’s to let buyers see the potential of such untapped space. And it’s to make buyers more comfortable with the overall condition of your home.
Basements aren’t necessary the windows to the soul of a house (windows are windows to the soul of a house), but a sparkling basement says an eyeful. _____________________________________________________________________________________
Determining the Price of Your Home
We've all seen the game show where contestants guess the retail price of popular items. Now imagine a big-stakes contest where you have to guess what a buyer will pay. Except this is not a game; it's what potential home sellers face every day.
As a home seller, the biggest mistake you can make is to price your house incorrectly. So how can you accurately determine the price of your home?
Perhaps the best way is to excuse yourself as an arbiter. You have a lot of emotional stock in your home, and unfortunately emotional stock can't be traded on the market. Potential buyers won't care that your son's handprint is in the sidewalk cement; in fact, they might not like that at all. They won't care how many banged-up thumbs you suffered during home repairs ... or how you planned all winter for your garden. To get an accurate assessment of your house's value, scrap the emotions and look at your house as a buyer will.
The first thing to remember is that buyers are comparing your home to other houses. You should do the same. An easy way to do that is to ask several real estate agents to prepare a Comparative Market Analysis (CMA) for your house. A CMA compares similar and recently sold properties to see how well your home stacks up in terms of square footage, location, condition, acreage, and amenities. By seeing what comparable houses sold for, you can get a better idea of what a buyer will pay for yours.
Try to get at least three CMAs from different agents. And beware of an agent who presents an inflated number. If two come in at one price and another comes in high, chances are the high number is more than hopeful. And it can be devastating to list a house too high right off the bat.
Houses on the market generate the most interest within the first 30 days of their listings. If a house gets overlooked because it's overpriced during those first weeks, the listing becomes stale if not tainted. Informed agents in the area will have an idea of how much your house is worth; if they think an appraisal won't support your asking price, they won't show it to potential buyers. After all, it will be a waste of their time to show houses that may have the sale fall through. And if you overprice with the intention of coming down, you open the flood gates to low-ball offers from buyers who will always assume the house is still overpriced. So try to get it right the first time.
To get a better idea of how accurate the CMAs presented to you are, do a little research yourself. Go to open houses. See what the competition is offering in amenities and price. And with a discerning eye and a logical mind, pay careful attention to the biggest price drivers: location, condition, amenities, and terms.
Favorable locations obviously bring better prices. Is your house in a nicer neighborhood than others? Do you have a better view? Or is your home uncomfortably close to busy train tracks? Ask the hard questions and be brutally honest. When comparing condition, check other houses' roofs, foundations, carpeting, windows, and siding. How well does your home compare?
And keep an ear to the overall market trends. Seller's markets will generate bigger prices for your home than buyer's markets will. Currently, most of New England (new Hampshire especially) is still enjoying a relatively strong seller's market.
If you're a stickler for accuracy and like to take the guesswork completely out of the process, consider having your home appraised by a professional. After a thorough and in-person inspection, a professional real estate appraiser will give you the same sort of assessment a potential buyer will get. He or she will inspect the foundation, roof, electrical and plumbing systems, heating and air conditioning, windows, walls, and other items and give you a detailed report along with an estimated value. Real estate appraisers are certified in your state and their evaluations are generally very reliable. What's more, they're impartial.
What they are not, however, is free. Plan to spend $300 to $400 for a professional appraisal. However, you do it, don't take the pricing process lightly. A well-priced house will attract more showings and will sell faster ... for more money and fewer hassles to boot. And that will make everyone a winner in this game.__________________________________________________________________________________
Don't Be Absent-Minded About Selling a Vacant House
If you’re like most home sellers, you’re selling your primary residence to move into another.
In an ideal world, your current home will sell just as you make an offer on a new house; and your two closings will dovetail into your moving plans. But what if you find the perfect house and haven’t yet found a buyer for your current house?
If your name is Trump, Vanderbilt, or Rockefeller, you simply buy the new home (and perhaps donate your old house as a museum or hospital wing).
If, however, you need to sell your old house to afford the new one, don’t despair. With some creative financing you may be able to temporarily roll one mortgage into the other. Or you may be willing to continue two payments for a short while until your old house sells.
Yet, whether a Rockefeller or just an ordinary fellow, you will be saddled with the prospect of presenting a vacant house to the market. Here’s how to make the best of it.
Dismiss the notion that selling a vacant house tips off buyers that you’re desperate to sell. Undoubtedly, you want to sell the house as quickly as you can. And with a few extra touches, you should be able to get as fair and reasonable price.
Touch No. 1: furniture. Contrary to what you may think, vacant rooms can seem smaller than furnished rooms. This is because there is no furniture to provide perspective. If you can swing it, make your unoccupied house seem as lived-in as possible. Leave behind a few pieces of furniture - some chairs, an end table, and lamps, for example. Rather than giving an impression of austere living, it can make a room look simple and elegant. And it will help prospective buyers get a better idea of how well their furniture will fit the space or even go with the decor.
Giving your vacant house a lived-in look also has other advantages, such as discouraging vandals, loiterers, or uninvited squatters. Make sure a few lamps are set on timers to go off and on at certain times of day.
Keeping your lawn mowed and hedges trimmed is another way to lure buyers and shun unwelcome guests.
First impressions are so important in real estate. So keep the front of your vacant home neat. Put on a fresh coat of paint if necessary. If you’re still in the area, stop by often to cut grass, pull weeds, rake leaves, sweep walks, shovel snow, and do routine yard maintenance.
If your new home is too far away to make this practical, consider hiring a house-sitter, soliciting neighbors and friends to keep an eye on things, or using lawn and home-maintenance services. Your real estate agent should be able to recommend some viable options.
Having a volunteer or hired house sitter is the ideal option. Having someone there on the premises will ensure that your house and yard are kept in showing condition (as well as keep pipes from freezing in winter). And it certainly will help keep away vandals. It might also help on insurance costs.
If you must take your furniture and leave your house completely vacant, pay extra attention to the walls and floors. Once your pictures are down and the couch is out, the empty space will amplify every nick in the wall and stain in the carpet.
At the very least, have your carpets professionally cleaned. This may get out the stains you left behind and the puff up depressions your furniture made. If not, consider replacing the carpets all together. A smooth, clean floor is sure to wow a few buyers.
As for the walls, give all bare walls a fresh coat of paint. If you used bold colors to accentuate your decor, switch to a white or neutral beige color now. Sunlight and age will fade wallpaper, which will be all-too-obvious once you remove your wall hangings. If your wallpaper is too faded, too bubbled, or too wrinkled, replace it.
Also consider putting in motion sensor lights and an alarm system to protect your vacant house from unwelcome guests. (Just be sure to give your real estate agent the codes!) And consult your insurance company about any restrictions you have about keeping a vacant home on your policy; there may be a time limit.
But limited time is all you’ll need with the right steps. After all, selling an empty house shouldn’t leave you with an empty feeling.__________________________________________________________________________________
Taxes on home sales not for faint of heart
Oh boy, let’s talk about taxes. And if you’re selling your house, pay close attention.
Here in New England, we’ve just endured a long, mid-term election season, replete with rhetoric, promises and accusations about - what else? - taxes.
For future reference, if any politician wants to convince the public that taxes have become too confusing, all he or she has to do is point squarely at the tax rules that apply when you sell your home.
The Internal Revenue Service has created a pamphlet to explain your obligations, Publication 523 Selling Your Home. ... It’s 32 pages long.
It’s full of details about capital gains and losses, depreciation, adjusted basis, recapture of federal subsidies and, surely what must be a CPA’s favorite word, "exclusions." And in fairness, it does a pretty good job at explaining all the intricacies involved - pretty good, that is, for 32 pages of accountant-speak.
Of course, a lot of the details are for home-sellers in very specific situations, such as selling a house that was used as rental property, or when death or divorce come into play. .First of all, let’s talk capital gains. A few years ago, Congress thought it would make things easier by increasing the amount of profit you could make from the sale of a house before a capital gain tax applied.
As it stands now (before we swear in a slew of new Congressperson- and Senator-elects), if you’ve owned your home and lived in it for two of the previous five years, you can make a profit up to $250,000 ($500,000 if married) with no tax liability.
You might think that rule hurts only home-sellers who bought luxury homes decades ago. ... Buying low and now selling high for nifty profits. After all, according to the N.H. Bankers Association, in 1971, the average new home sold for a smidge over $28,000. Today, they go for scads more.
But the IRS doesn’t only consider the gains you made on the sale of your latest house; it wants you to calculate in the profits you made from houses you sold prior to 1997 and rolled into buying the house you’re selling now.
For example, let’s say you owned three houses since 1982. You sold your first house for a profit of $60,000 and rolled it into your next home.
You sold the second for a $95,000 profit. And let’s say, in a hot Seacoast market, your current house sells for a $120,000 profit. That could add up to a total gain of $275,000, leaving you liable for taxes on $25,000.
Or maybe not. ... Break out those worksheets.
And speaking of worksheets, what if you have a home office and previously took a few deductions to which you were entitled? According to the IRS, if you used part of your home for business during the ownership-and-use periods, you "cannot exclude the part of your gain equal to any depreciation allowed or allowable as a deduction for periods after May 6, 1997."
What’s that mean? It means you’ll probably owe money, even if you’re profit is well under the $250,000 or $500,000 limit.
Home office deductions are stringent and specific. But generally, you can deduct direct expenses 100 percent and indirect expenses based on the percentage of your house your home office occupies. For example, if your home office comprises 25 percent of your total home square footage, you may be able to deduct 25 percent of your utility costs and other expenses.
And whether you claim it or not, your home office may qualify for a deduction for depreciation, the allowance for the wear and tear on the part of your home used for business.
Here’s how the IRS explains it: "If you have qualified business use of your home that entitles you to a depreciation deduction, you are required to reduce your basis in the home by the amount of depreciation allowed (deducted) or allowable (could have been deducted). Whether you choose to deduct the depreciation on your current return(s) will not matter. For tax purposes, you will still be treated as if you had taken the allowable deduction, and your basis is reduced."
To read the rest, visit http://www.irs.gov/ and download Publication 523. But if you’re like most people, passages like that translate to "call a tax professional." Oh boy.
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Home warranties offer peace of mind to buyers
You’ve done everything you can to make your house sellable.
You’ve made all the necessary minor repairs. You’ve repainted. You’ve spruced up the spruces and the other landscaping. And you’ve cleaned and cleaned and cleaned.
Let’s face it, your house is immaculate. You’ve done so well, in fact, you can’t understand why any buyer wouldn’t see owning your home as owning a little piece of heaven.
Yet, buyers in today’s market may want more. They may want a little peace of mind, as well.
And in that light, to sweeten the deal and entice more buyers, you may want to add a home warranty to your offering.
No doubt, many buyers are anxious about the dependability of appliances and mechanical components within a home -- especially first-time buyers, who may have previously always relied on landlords and rent agreements to make and pay for repairs.
To counter, home warranties can help ensure that homebuyers won’t incur significant repair expenses within their first year of ownership. They are, in essence, short-term insurance policies for major mechanical systems and appliances. Most warranties cover plumbing, heating and air conditioning, and electrical systems. Additional coverage can be purchased for roofs, water heaters, washers and dryers, refrigerators, foundation walls, basement walls ... even swimming pools.
Typical policies will pay for the cost of fixing and, if necessary, replacing covered items. Generally, they do not, however, pay for service visits. And they do not cover pre-existing damages and cosmetic repairs, such as rust or paint.
Yet, for a seller, a home warranty can be an excellent selling tool. If you list your house as fully warranted, buyers can feel more confident in their purchase decision. They realize that, with the cost of a down payment and closing fees, their cash reserves may be depleted.
A home warranty will help hedge the odds that they won’t be stuck with a huge repair bill during their first year of ownership.
For example, a typical furnace repair could cost thousands of dollars. That would be a tough bill to handle in the wake of myriad closing and moving costs. With a home warranty, the same repair may only cost the price of a service visit plus or minus any policy-specific deductibles.
If you have your home up for sale, consider the following:
According to a Gallup poll, 8 out of 10 buyers prefer to buy a warranted house. (The real question, however, should be what are those other two buyers thinking?)
According to the National Home Warranty Association, properties offered for sale with a home warranty sell up to 50 percent faster than similar properties for sale without a warranty.
According to Business Week, offering your home for sale with a home warranty may increase the sales price, up to 3 percent on average. Quicker sales. Higher prices. As a seller, why wouldn’t you want to include a warranty?
For starters, a basic warranty fee can run from $250 to $600.
However, it often can be paid at closing and represent no money out of your immediate pocket. But $600 is $600.
And, in truth, warranties are not a panacea for all repairs that ail a homeowner. Coverage is limited. And there are deductibles. These issues are more of a concern for buyers than sellers, of course. But if you want to stake your reputation on a policy, make sure you’re working with a reputable warranty company -- one that you wouldn’t mind doing business with yourself.
In some cases, you may indeed be working with the warranting agency. When you offer a warranty as a seller, you may be covered for certain repairs should an item malfunction while your house is on sale.
But before you invest in a home warranty, check with your real estate agent first. Lately, some agencies have been including home warranties as part of their services to attract customers. Besides, given the current market conditions, your agent should be able to tell you whether issuing a home warranty on your house is a good idea ... or if it would be unnecessary or redundant.
Offering a home warranty may be just the enticement you need to close a deal. But remember, buyers shouldn’t consider it an adequate substitute for a professional home inspection. If a home inspection finds major flaws with your plumbing, electrical systems or appliances, you may be faced with other negotiating point altogether.
And, in the end, that may warrant some other enticements.
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