How To Sell Your House Fast.

How To Sell Your House Fast

  I want to show you how to sell your house fast. This article will explain pricing strategies, how to prepare your home for showings, should you have your home pre-appraised, how to find the right real estate agent, and even how to sell by owner.

Wondering what the value of your home is? Get your 

There are 4 components that must work together to get any home sold in any market.  Those factors are PRICE, CONDITION, LOCATION, AND MARKETING. All four are not “created equal” as we will see.

The Price is Right

seller in love with house

 

The primary factor in selling your home is price.  Who determines if the price is right? Would it surprise you to learn that it is the buyer? In order to sell a house, it must be priced to meet the buyer’s criteria. How do buyers come up with the price range that they might be willing to pay?  They shop and compare.  So, we have to think like those buyers.

The first thing you will need to determine the right asking price is a comparative market analysis.  We have to look at houses with similar amenities, size and location that have recently SOLD, those currently on the market, and those that were marketed for sale that did NOT sell.  If a house sold, we know a Buyer and Seller agreed to that price for that home.  Those currently on the market will be your competition, and those that did not sell were priced too high for what they were offering.

BLINDED BY LOVE Sellers often overestimate

the value of their homes for emotional reasons.
Sol Linero
 

The “Goldilocks Effect”

We all know the story of The Three Bears and the very discriminating Goldilocks. Too big, too small, “just right.” Too hot, too cold, “just right.” Your home needs to be priced “just right” in order to get the most potential buyers interested. Thanks to the internet and HGTV, today’s buyers are pretty savvy when it comes to pricing. Take a look at the chart below. We can see that overpricing will drive away potential buyers before they even view the home.

asking price to property appeal

Another important strategy for pricing your home is to always price it in terms of round numbers. Never list for $xxx,900 or $xxx,999. People don’t search for homes that way! If you are looking for a $200.000 home and the home is listed for $199,900 or $199,999, guess what. They aren’t going to find your home even though you are basically asking $200,000.

The National Association of Realtors® compiled a short list of tips for correctly pricing your home.

Tips for pricing your home

If you would like more information about this topic, please contact me.

Setting the Stage

In today’s market, we are in a pricing war and a beauty contest.  When a buyer walks through your home, they are looking for any reason they can to offer you less than what you are asking. Staging will help you overcome those objections before they ever see them.

You need to maximize that beauty of your home so that you stand apart from your competition. “Paint in a can is worth $100.  Paint on the walls can be worth $1,000’s of dollars.” The colors you choose can have an effect on how people feel when they enter the home.

Choosing neutral colors in lighter shades will make it easier for potential buyers to imagine themselves in the home. In the past, everyone painted their walls white. Then we moved to off-white and beige. For 2017, gray is the new beige. By the way, if you have wallpaper that is outdated, be sure to remove it. NEVER paint over wallpaper.

 

Top 3 Colors

 

Here’s a great article by Tori Toth, home staging expert, author of Feel at Home: Home Staging Secrets for a Quick and Easy Sell, Founder of The Stage 2 Sell Strategy, and Owner of Stylish Stagers, Inc. a NYC based home staging company.

She answers many questions sellers have about how to make their home stand out in their market.

Article “How to Stage a Home to Sell”

Another big piece of the staging puzzle is cleaning. Make sure to give your home a thorough, deep cleaning before you have photos taken and begin showings. Nothing makes a buyer want to run through the showing more than unpleasant odors. I’m sure you’ve seen the commercials about being “nose blind” to odors in your environment. It happens to all of us. So, even if you don’t notice any odors lurking, others might.

De-clutter and depersonalize. Closets should be half full, not overflowing. Too much furniture in a room can make it feel small. It may be necessary to rent a storage unit or a “POD” storage for those things you don’t need right away. Remove all photos of your family. Your goal is to make it easier for the next homeowner to see their family living in the home.

Once you have staged your home, it’s important to keep it looking sharp for showings.Here’s a quick video to help you get ready for those last minute showings.

The Real Estate Staging Association, recently released their 2016 Home Staging Statistics Report, based on home staging statistics self-reported by professional home stagers nationally. Homes staged before listing sell 90% faster than homes listed on the MLS unstaged. Unstaged homes spent an average of 184 Days On Market (DOM). That’s more than 6 months! Yikes! Once those same homes were staged, they sold, on average, in 41 days. However, homes that were staged prior to listing sold, on average in 23 days!

Choose the Right Agent

How do you choose the right agent to sell your home fast? For most of us, buying and selling our home is the biggest financial transaction of our lives. Finding a skilled, well trained, and honest agent to represent you is of the utmost importance.

In today’s world, consumers have many ways available to them to learn about agents. Probably the best way to find out what an agent has to offer you is by interviewing them. It may seem obvious, but many people don’t take the time to do it.

Here are some questions you may want to ask your agent before signing a Listing Agreement:

  • * Do you have a marketing plan for my house?
    • Most agents do the “3 P’s” of marketing. They Put it in the multiple listing database, the Place a sign in the yard, and they Pray that someone comes along to buy it. Ask them if they do the 4th “P”, Prospecting. If they don’t do all 4 P’s, they’re not the right agent.
  • *Do you work full-time?
    • A full-time agent is likely to give you more time and attention than a part-time agent. A part-time agent may not be the right agent for you.
      • * How will you communicate with me?
        • According to the National Association of Realtors, the biggest complaint that sellers have is that they don’t hear anything from their agent. Once the Listing Agreement is signed, they disappear and become “Secret Agents.” If they don’t have a plan to keep you informed, they’re not the right agent.
      • Is your Real Estate License in good standing?
      • * Do you have any client complaints against you?
        • There are websites to check an agent’s license. Ask the agent to provide it to you.
      • * Can you provide me with references who are not relatives?
        • Talking to past clients is a great way to find out if the agent will do what they are telling you they will do.
      • * Can you help me with staging my home?
        • You are in a pricing war and a beauty contest when it comes to marketing your home. The right agent will be able to help you with making your home look it’s very best.
      • * Who takes the photos of my home?
        • Does the agent come in with their cell phone and snap some pics? You only have one chance to make a first impression. This is especially true online. Home buyers look at pictures! If your pictures are blurry or poorly lit don’t expect to get many showings. You’ve worked hard to get the house ready to show. The right agent will hire a professional to take photos that will showcase your home in its best light.
      • * What documents do I need to sign?
        • These should include, of course, the listing agreement and sales contract. If the listing agreement does not have a cancellation clause, ask if you can cancel if you are unhappy with the services. If you have the free right to cancel, the length of the listing agreement does not matter much. Read all documents and ask questions if you don’t understand anything.
      • * Do you have a website and/or blog?
        • Virtually all agents have a website. Visit it to get a sense of the agent and the brand. Not many agents have blogs so don’t hold it against them. But if they do have a blog, visit and read their posts and comments. In my (biased) opinion, you will get enormous insights into the agent’s personality & local expertise, among other things.
      • What past clients have to say about Chris:

Chris was instrumental in helping me to decide to relocate to Mesquite. I retired in Virginia last Fall with a plan to relocate to Las Vegas where I have family. I was unable to find affordable housing on a fixed income in LV and decided to explore Mesquite. In just one day I found the perfect  home. Chris was helpful by allowing me to mail boxes of books to his office until I closed on the home. I was able to use his resources to check emails and/or fax needed documents. Since closing on the house, I have Chris on speed-dial and he has continued to be responsive to any requests. I highly recommend him.
He has been very helpful in finding a house for me. He goes out of his way to find just what I am looking for. I really don’t know of a real estate agent that will do as much. Dottie


Chris went above and beyond the call of duty when we changed our minds on a property on which we’d made an offer. We found the place we eventually purchased in the exact location we desired and Chris provided advice and expertise that helped us close quickly and painlessly. He was friendly,  courteous, and, most importantly, knew the real estate process inside and out. Great guy.
Tom & Julie 1-18-2018


Chris is very knowledgeable in real estate buying or selling. He gives you spot on advice and stayed cool, calm, and collected when I wasn’t! It all turned out to be very positive and we got the home that was perfect for us.
Jerry and Mary 1/22/18

      • To set up an interview with Chris, call or text 435-962-1923.

        Should You Have Your Home Inspected and/or Appraised?

        Selling a home is really a series of milestones that have to be completed. You and your agent will do a lot of hard work to get your home to market. Pricing it right, getting it looking its best, and marketing it to potential buyers are just the beginning. There are two milestones that can make or break the deal. One is the Home Inspection and the other is the Appraisal.

        What’s the difference between a home inspection and an appraisal?

        Simply put, the home inspection concerns the house’s systems while an appraisal concerns the house’s value. Of course, the condition of the home affects the home’s value so doing repairs will definitely help you get a good appraisal.

        Here in Delaware, buyers want a home inspection performed (usually at their expense) and then the seller is asked to perform necessary repairs. Getting a pre-inspection can save you, as the seller, a lot of heartache down the road. Finding a major defect can derail a sale if the seller is unprepared to complete the repair.

        Choosing an Appraiser

        When having your own appraisal done, you get to choose the person who will perform it. In Delaware, all appraisers are licensed.  The Council of Real Estate Appraisers website can provide information about licensed appraisers. When choosing an appraiser, it is important to choose a local appraiser. A local appraiser will be familiar with conditions in your market  Click here to find a local appraiser.

        Prep the House

        Make list of all the problems with the house and fix as many as you can afford. Some of those items may include:

    • woman fixing faucet
      •                       *Stained carpets
      •                       *Loose woodwork
      •                       *Torn window screens
      •                       *Chipped paint on the walls or loose wallpaper
      •                       *Faulty locks and broken hinges
      •                       *Faulty heating and/or cooling system
      •                       *Faulty appliances
      •                       *Leaky roof
      • Once all of the repairs are completed, give the home a thorough deep cleaning. A dirty and/or cluttered house suggests that there may be other problems with the home. Wipe down all surfaces inside the home, including windows and doors. Make sure to clean up the garage and yard as well. De-cluttering makes rooms look larger. Get rid of things you no longer need. Consider a storage unit for things you want to keep.

 

Talk to the Appraiser

Share any information you may have about other homes in the area that have recently sold. For example, if your neighbors were going through a divorce and lowered the price for a quick sale, the appraiser may not be aware of that information. Also, don’t be afraid to ask questions.

Here are some benefits of having your home inspected and appraised:

  • Get higher offers – a pre-home inspectionand home appraisal will lead to higher offers. The buyer knows the home has been recently inspected for termites, repairs, and problems. This also makes you more honest as a seller (in the mind of the buyer) because you will have a report for them regarding the findings of the inspection and appraisal. This gives them a sense that they are getting exactly what you say you are selling, and they do not feel you can be dishonest in such circumstances. This often leads to higher offers due to the fact that buyers believe what you are saying more since there is an appraiser’s signature to back it up.
  • Get more offers – Just as doing a pre-inspection and appraisal leads to higher offers, it can also often lead to MORE offers. As word spreads that you have had the home inspected, repaired, and appraised, it will increase the number of people who are interested in your home. This is why you will want to place this in a prominent location in your ad once you have had this process completed, so that people will know that you have taken the extra steps to ensure that your home is up to par before listing it.  This will also lead people to trust you more and that leads to more offers too.
  • Smoother closing process – The ultimate goal is to get to closing. You can do all of the work to get the home under contract and have the deal fall apart at the last minute because of problems with the home inspection or appraisal. Having the home appraised and inspected eliminates the element of surprise.
  • Give potential buyers the whole picture – The appraisal gives them the market value according to a certified appraiser, and the home inspection ensures the buyer that the home has been checked out from the inside out and meets up to standards. Both of these pieces of the puzzle are important as you prepare to put your home on the market.  These two together, along with a record of whatever repairs or additions you have done, will add greatly to the value of your home and increase the likelihood of closing the sale with buyers in the final analysis.Nothing is guaranteed, but getting your home inspected and appraised puts you head and shoulders above the crowd in terms of presenting your home and yourself with the highest standards and allowing potential buyers to feel that they are getting a straightforward approach to your real estate offerings.

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How To Handle The Stress Of Selling Your Home

How To Handle The Stress Of Selling Your Home

How To Handle The Stress Of Selling Your Home

Three things are certain in life: death, taxes … and undue stress caused by moving. Whether or not you use the services of a REALTOR® to help you wade through the uncertain waters of the buy-and-sell process, moving is stressful, period. And there’s not much you can do to avoid it. And we’re not just talking about packing and paperwork. Moving is an emotional process. If your’e not calming down your nervous children, you’re trying to reassure yourself that you’ll meet people in your new neighborhood, that you bought the best house within your means, and that your kids’ new schools will measure up.

It’s easy to forget while we’re dealing with all of these jitters that moving actually can represent an exciting adventure, a growth opportunity and the prospect of new beginnings. Once the dust settles after your move, you’re entering one of the most memorable times of your life. With any luck, you’ve recruited a REALTOR® who’s familiar with the obvious stresses as well as the insidious (and subsequently more detrimental) ones. Depending upon your relationship with your Realtor, you should be able to rely on him or her for more than just closing the deal. Your Realtor also should be able to calm your trepidations by giving you the support you need — giving you the facts about that new school district, reassuring you that your jitters are perfectly normal, and giving you as much information about your new hometown as possible, increasing your familiarity with the previously unknown.

It’s important to remember throughout the entire selling and buying process, however, to reserve time for yourself and your family. It’s not a waste of time, but rather an insurance policy for your sanity and continued happiness. Stress is sneaky, as we’ve all discovered. It can eat away at us during what are supposed to be the happiest of times, because after all, any major change in life is stressful. If it’s supressed, it can wreak havoc both emotionally and physically and spread throughout the family. And there’s nothing worse than moving a grumpy family across the country. For the sake of your continued family unity, keep in mind the following stress-relieving measures:

First, remember that it’s perfect normal to feel unsure of your decision right now. You’ve just made a major commitment, and all of us experience those last-second “What on earth did I just do” worries after signing contracts and making life-changing decisions. Instead of becoming overwhelmed with “what ifs” and dread, reframe this decision as a prime opportunity to begin your lives in a new environment. The old saying “When one door closes, another one opens” definitely applies here. Trust that your Realtor is looking out for your best interests, ask as many questions as you need to throughout the entire process (that’s part of what your Realtor is paid for), and look forward to the adventure that lies ahead of you.

If you can, keep an emergency fund in case you run into any unexpected costs. One example: If your buyer comes forward after a home inspection is completed and requests a series of repairs prior to move-in, you’ll be prepared. Chances are good that you won’t necessarily agree with the buyer’s requests, but at least you won’t face the additional stress of being short the money for repairs if you plan ahead and save some extra cash (no set amount — just as much as you can handle. A goal you might try to shoot for would be in the range of $2,500). It’s probably in your best interests not to try to guess what the buyer will want to repair, and then fix it ahead of time. That’s because buyers have a habit of isolating areas of your home that you never considered having repaired, and not even noticing the ones you expected them to pinpoint. So save yourself any expenses until you’ve determined their requests.

And while we’re on the subject of finances, try to anticipate and prepare for the initial expenses you’ll face upon move-in. Resign yourself to the fact that during the moving process, you’re going to feel as if you’re holding your wallet upside down, and everyone — movers, contractors, buyer, etc. — is sitting underneath, catching the windfall and demanding a larger share. Keep in mind that this is an investment for the good of your family, and that these costs are a one-time inevitability.

Remind yourself of why you’re moving in the first place. A job transfer, or is it a voluntary choice? Obviously, whether or not you had some degree of control over the decision will affect your outlook. Regardless of your answer to that question, round up as much information as you can about your new hometown. What kinds of cultural offerings does the town/city offer? What are its landmarks and natural attractions? Research some possible day trips you might take with the family once you’re settled. Is your new hometown near state borders, giving you the opportunity to explore different regions of the country without much effort?

Envision your new home. Where will you place the furniture? Remind yourself of the home’s primary selling points. Will you have more space? More closets? A large backyard and/or swimming pool? What does your new streetlook like? Do a lot of young families reside there? If so, your children are likely to be reassured by that knowledge. As often as possible, try to picture yourself and your family fully adapted to your new environment.

Remember to have a little fun occasionally. You’re still allowed, even if you feel as if you don’t have a penny left to your name. Take the family out to dinner, to a movie or a picnic — anything that gets all of you out of the house and away from boxes, paperwork, emotions and all of those pre-move concerns. Keep a regular “date” to get out together — for example, every Friday night leading up to the move. Take your mind off your stress for a few hours, and remind yourself that your family members are experiencing many of the same emotions. Like misery, stress often loves company, so enjoy your time together and remember that this stress won’t last forever. Regardless of what you’re feeling now, the move will happen and everything will eventually fall into place. Journeying into the unknown is what makes life rewarding, so trust in your Realtor’s expertise and in your family’s resilience, and look forward to the journey ahead.

Home Seller Tips To Having A Successful Open House

Home Seller Tips To Having A Successful Open House

Home Seller Tips To Having A Successful Open House

Holding an open house for your soon-to-be-listed or newly on the market home is a lot like being on a game show where edging out the other contestants in a short period of time is key. In TV game shows, such as “Jeopardy,” the contestants don’t automatically know answers to so many trivia questions; they study and they plan and they make it appear to viewers like they walk around with that body of knowledge every day. Open houses need to be thought of similarly. Once your home is on the market, an open house is your opportunity to plan and strategize how you are going to win over buyers in very short time.

Even in a strong real estate market where houses sell quickly, it’s still important to ask your agent to hold as many open houses as possible until the home sells. One reason is that even buyers with agents still like to look at homes on their own without feeling the pressure of a home tour. Sometimes their agent is out of town when your house goes on the market. Many buyers are not represented by an agent and the only way for them to tour a home is through an open house. Your agent will plan the open house to include everything from signage to freshly baked cookies. As a seller, you should take the following steps:

Depersonalize

Back to the game show analogy, think of depersonalizing as studying the answers and questions before trying out for “Jeopardy.” Your house is lovely for how you live in it, but buyers don’t want to see you in your house. In fact, the more your house makes it difficult to guess who lives there (age, religion, gender etc), the better. Take down personal photos, religious emblems, the cute collection of mini ceramic frogs, etc. Analyze your stuff for whether it’s morally, politically, or otherwise socially objectionable and remove all of it. You don’t want to eliminate buyers because they are turned off by your personal tastes.

Declutter

While you are depersonalizing it’s also a good time to declutter as the two go hand in hand. The more simple and understated your home is, the more likely buyers can see the home for what it is and imagine themselves in it. When you have too much stuff cluttering walls and counters and shelves, buyers turn their focus toward those things and sometimes even make the assumption in logic that if you are cluttery, then you are disorganized, which means maybe you don’t take care of the house as well or as on time as you should. A good rule of thumb is to box up or store at least half of the smaller items displayed in your home.

For example, how much is on your kitchen counter right now? Now imagine reducing that number to just three things. What would you choose to keep versus store? Some sellers are benefited by going to other open houses in their area and looking at how other people have decluttered and arranged what is left. Online pictures, such as what is found on Pinterest, can help too. Often you can get some good ideas on what works visually just by seeing how others do it. When you are all done decluttering, clean your home like never before because buyers notice dirt and grime. Hire a maid service if you have to.

Lure Them In

The outside of your home is as important as the inside, especially the front entry area. Before an open house, take care of simple yard maintenance such as mowing, edging and weeding flower beds. A fresh layer of mulch adds color especially in winter months when not much is blooming. At your front door, clean off spider webs, blown leaves, and place a large, colorful pot of annuals or anything you can buy in season.

Complete Your Honey-Do List

While you have the yard power tools out, dust of your workbench and take a walk around your house inside and out. Make a list of all maintenance issues such as wiggly door handles, missing fascia, paint that has chipped, etc. and repair them before the open house. Buyers see even the smallest of maintenance issues as an extension of the condition of larger items such as roofs, plumbing and major appliances and assume you haven’t taken care of the home. You might talk to your realtor about a pre-inspection to deal with all home maintenance and problems upfront, before you get into contract with a buyer.

Be Cautious

Once you have taken the above steps and you are ready for the actual open house, there’s one last thing to plan. Protecting your valuables and identity. It might be rare, but criminals do use open houses as a way to case a house or to find collateral to steal identities. Make sure indoor safes are locked and hidden. Store heirlooms, checkbooks, prescriptions, and valuable jewelry away from prying eyes. Utilize a reliable, trustworthy, identity theft protection service to see you through the entire listing and sales process.

Death And Taxes: Not Always Inevitable

Death And Taxes: Not Always Inevitable

Death And Taxes: Not Always Inevitable

Question. My husband recently died of a massive heart attack, leaving me a widow at a young age. I was thrust into a new life status that was not my choice or my desire. I believe I am being penalized for something that has already devastated my life in many ways.

We were fortunate to have invested wisely in our principal home many years ago, and have made more than $250,000 in profit. I want to sell, and it now appears I will have to pay the tax on any profit over $250,000, since I no longer file a joint return. If couples are making the life choice to divorce, they can sell their home prior to the divorce and get the $500,000 exemption recently enacted by Congress. A widow has no option or choice in the change that has happened in her life.

Please advise me how I should proceed; I need the money for my future more than the government.

Answer. It has often been stated that two things are inevitable: death and taxes. However, there is a measure of hope based on an often forgotten concept in the tax law known as the “stepped-up” basis. And, fortunately, this was not modified or repealed under the new tax law that was just enacted.

Oversimplified, this means the value of a person’s real property on the date of his/her death becomes the basis of the person who inherits that property.

Let us take this example: in 1995, you and your husband purchased your first home for $100,000. You took title as tenants by the entireties — which is the common form of ownership for married couples. Your husband died in 2017, and the property was valued at $800,000 on the day he died.

Your basis is as follows:

Initial basis: (half of purchase price) $ 50,000

Inherited (stepped up) basis: 400,000

New basis: $450,000

Please note that since the property was worth $800,000 on the date your husband died, you inherited his half of the property — namely $400,000.

If you sell your property today for $800,000, your profit (before excluding such items as real estate commissions, legal fees and fix-up costs) will be $350,000 ($800,000 – 450,000). As you correctly pointed out, since you are now filing a single tax return, under the current tax laws, you are entitled to completely exempt the first $250,000 of this gain. Once again, Congress did not repeal or amend this important homeowner benefit.

Thus, your capital gain tax will be on $100,000 ($350,000-250,000). Because the income tax brackets were changed under the new law, please talk with your financial advisors as to what your tax obligation will be.

However, let’s analyze this even further. Did you and your husband make any improvements to your house over the many years of your ownership? If you put on a new addition, installed a new kitchen, or significantly improved the back yard, all of the costs of these improvements are added to your basis. Thus, if the costs of your improvements were at least 100,000, you will not have to pay any capital gains tax at all.

Furthermore, try to find the settlement statement when you first purchased the property. There were a number of costs which you incurred — title examination, title insurance, legal fees — which can properly be added to basis.

Keep in mind that for every dollar you add to basis, you are going to save from paying capital gains tax. Clearly every dollar can add up to a considerable tax saving.

Although you did not raise this next issue, I want to take the opportunity to comment on a question I often get: should you put your children on title now?

Generally speaking, my answer is no. The reason is the same as discussed above — on your death, your children will get the benefit of the stepped up basis, and indeed under the circumstances may not have to pay any capital gains tax. For example, were you to die when the property is valued at $800,000, if your children sold the property for this price, they would have no gain at all — and thus no tax to pay.

However, if you were to gift them the house now, during your lifetime, their basis for tax purposes would be your basis — i.e., $450,000. The law requires that the basis of the donor becomes the basis of the donee. If they sold the property for $800,000 — and the house was not their principal residence — they would have to pay capital gains tax on profit of $350,000 ($800,000 – 450,000) At the maximum rate, this could be a nice gift to Uncle Sam.

You must, of course, fully discuss these issues with your tax advisors. These are not easy questions, and the answers are even more complex.

So much for “tax simplification.”

 

 

 

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Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another

Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another

Portability Initiative Is Designed To Help 55 and Over To Sell Their Homes And Buy Another

The California Association of REALTORS® (CAR) is attempting to qualify a ballot initiative, The Property Tax Fairness Initiative, that will restructure the way property taxes are calculated for buyers over the age of 55 (and also the disabled and/or natural disaster victims). In many cases REALTORS® are already circulating petitions asking for ballot-placement of the initiative, and, in short order, professional signature-gathering organizations will be engaged as well.

CAR’s approximately 200,000 members have been assessed $100 each in support of the effort; and there are expectations that the Association’s substantial reserves will also be tapped in efforts to support the initiative’s passage.

What would this accomplish and why is it needed? In what follows I will seek to summarize CAR’s answer to those questions. First: the why?

As is well-known, California is currently experiencing a shrinking inventory of housing available for sale. This lack of supply has driven up prices, which makes it extremely difficult — in many cases, impossible — for first-time buyers to enter the market. In many cases, it also makes it difficult for move-up buyers to find replacement property.

There are, no doubt, multiple causes for this, but, no doubt, a major one is this: nearly 75% of California homeowners 55 years of age and older have not moved since the year 2000!

Why? Because of the way property taxes are calculated under California’s Proposition 13. For tax purposes, properties are valued on the basis of purchase price, not current market conditions. (Example: Suppose I bought my house for $600,000 a few years ago; and that my neighbor bought the same model — as identical as can be — in this heated market for $800,000. My tax will still be calculated on $600,000, whereas his will be based on $800,000.)

CAR says, “A large part of the reason why [55 and overs are not moving] is that, even if they want to downsize or move closer to family, the prospect of a property tax increase of 100, 200, or even 300 percent, effectively locks our parents and grandparents in their homes.” Thus, CAR maintains, “…The Property Tax Initiative…will help these homeowners to sell their current homes and move without being subjected to a what is effectively a massive “moving penalty.”

How will it help? By modifying current law to expand the conditions under which those over 55 would be allowed to transfer their current tax base — based on their original purchase price — to a replacement home that they are purchasing.

Currently there are only limited conditions under which someone over 55 may transfer his or her old tax base to a newly purchased home. The Initiative would expand this. “C.A.R.’s Property Tax Fairness Initiative would allow homeowners 55 years of age or older to transfer their Prop. 13 tax base to a home of any price, located anywhere in the state, any number of times.”

CAR’s talking points offer two examples of what would happen if the Initiative should pass.

Buy Up Example

  • Original Purchase Price: $100k
  • Estimate Property Taxes: $1K/annually
  • Existing Home Sale Price: $300k
  • New Home price: $400k
  • New Property Taxes: $2k/annually

The $100k difference between the $300k sales price and the $400k purchase price is added to the original Prop.13 property tax base of $100k for a new Prop. 13 tax base of $200k. The buyer still pays their fare share of taxes but isn’t blocked from making the move.

Buy Down Example

  • Original Purchase Price: $100k
  • Estimated Property Taxes: $1k/annually
  • Existing Home Sales Price: $300k
  • New Home Price: $200k
  • New Property Taxes: 1/3 of $200k = $67k [value] or $670/year for property taxes

If a homeowner buys a less expensive home, the property taxes will be proportionally the same as for the original home. In other words, if the tax base was one-third of the sale price, the new property tax would be one-third of the new sale price. Buying down reduces the homeowner’s annual property tax bill.

Among the objections raised to the Initiative is that it will reduce revenues to local governments. In response to this, CAR says: “The revenue loss is the result of a ‘static’ analysis — it only looks at the revenue lost, not the revenue gained which a ‘dynamic’ analysis would do. All buyers of homes formally owned by a senior homeowner will have the home reassessed to market value and pay property taxes based on the reassessed value.”

Lots to think about. There’s an election coming.

 

 

WRITTEN BY

Does It Makes Sense To Buy A New House Before Selling The Old One?

Does It Makes Sense To Buy A New House Before Selling The Old One?

Does It Makes Sense To Buy A New House Before Selling The Old One?

You’re interested in moving. You need to sell your old house first before buying a new one, right? After all, you don’t have enough of a down payment for the new house without selling the old one, and you are pretty certain your bank will not qualify you for two mortgages.

You are in a dilemma; houses in your area are currently receiving multiple offers. Inventory is low. Sure, you can sell your house under the same circumstances, but will you be able to identify a new house so that you can simultaneously move from the old house to the new one? Unlikely. Do you sell the current house, move to a rental [or hotel) while you identify and try and close on the new house? Is the extra hassle of moving twice and the added stress of the inability to simultaneously close on the sale and purchase the new worth it? IF you could purchase a new house while still living in the old house, is it worth the added costs involved with having a second mortgage until you sell the old house? How much is “peace of mind” worth in not having the pressure of having to purchase a new house (because you sold the old house too soon)?

These questions are a reality in today’s world in many parts of the country, specifically, the San Francisco Bay Area, because of the real estate rebound after the Great Recession. According to Jeff Stricker, a real estate professional with Alain Pinel Realtors specializing in the Silicon Valley in California, his clients are faced with these exact situations much of the time, as property is swooped up almost as soon as it hits the market, and, many times, with multiple, over asking prices. Jeff states that, although it is great for his clients as sellers, those same clients face challenging hurdles when buying a replacement property; competing against other buyers, some with cash only offers, who are willing to bid up a property far beyond the asking price in many circumstances. Some buyers are just so frustrated with the process of competing and getting outbid that they act in ways that they normally would never have thought. Overbidding. Settling for a house that they may not have originally envisioned. The list goes on.

Jeff, however, decided to think outside the box. What would happen if another house was purchased (without the added pressure of “living out of a suitcase”, if you will) prior to the sale of the old house? Is it even possible with the banking regulations that were placed upon financial institutions as well as homeowners over the past decade due to the “mortgage meltdown” that happened in 2008 and on? Dodd Frank rules that placed inordinate restrictions on the ability of homeowners to obtain financing left many people unable to get loans in which they previously were easily able to qualify.

Jeff decided to come up with a spreadsheet wherein, if he plugged in some assumptions, he could figure out if it would make economic sense to acquire a new house before selling an old house. The other part of the equation was to find a lender who would allow for a homeowner to purchase a new home without first selling the old home; thus, carrying two mortgages at the same time. Since most conventional lenders would not touch this, Jeff had to look to alternative sources. He found a company called Pacific Private Money, in Novato, CA that specializes in such a product.

Pacific Private Money can lend enough to the borrower to purchase the new home if there is enough equity in the old home to justify a combined Loan to Value (LTV) of 70% or less. Sometimes, if there is not enough equity in the old home, the borrower needs to add cash to bring the LTV to 70%, but, the ability to purchase a new home without having to sell the old one first can solve many issues for the homeowner. First, the new home can be identified without adding pressure since the homeowner is still living in the old house until the new house closes escrow. Second, the stress of moving twice is eliminated. Third, and probably the best (and possibly most surprising) is that this solution may actually cost LESS in terms of increasing net equity to the household than selling the old house and buying a new house with the proceeds from the old house (and new mortgage) in most circumstances wherein the new house is more expensive house than the old house.

In a rising market, the earlier the purchase of the more expensive new house and the delay of the sale of the old will increase the net equity to the homeowner more than the costs associated with carrying two mortgages.

For example, let’s assume the old house is worth $1,000,000 and there is currently a 1st mortgage of $200,000. The homeowner desires to purchase a new home for $1,400,000 and has $100,000 in the bank that can be used for a down payment. We will look at two scenarios; the first is where the homeowner sells the current house, rents for a period of time, and then purchases a new home. The second scenario is where the homeowner borrows the money in order to secure the new home while owning the old home.

Obviously, there are many moving targets with both scenarios, such as how much it will cost to rent a place (in the event of selling the old house first) as well as how long it takes to identify and close on the new house, storage costs for belongings, the cost of obtaining a private loan, and the appreciation assumptions for both houses, just to name a few.

Here is a calculation making the following assumptions; it takes nine months to close on a new house after selling the old house; houses in the area (both old and new houses) are appreciating at 1% per month; interest earned on bank deposits are at 1% per annum; storage costs are $1,000 per month, a conventional bank loan is not available because the homeowner does not qualify and has to use a private loan company; the costs for the private loan are 9% plus 2 points; the interest rate on the old house is 3% per annum.

As you can see, in a rising market, where the new house is worth more than the old house, there is a significant benefit to using a private loan to purchase the new home and sell the old home at a later date. Waiting 9 months to eventually acquire the new house has tremendous opportunity costs, as compared to a net benefit of purchasing the new house right away and eventually selling the old house.

Although assuming a 1% per month appreciation of real estate may seem aggressive, the San Francisco Bay Area, and specifically the Silicon Valley, has experienced such growth. However, even if we lower the appreciation to .5% per month, we still see a fairly significant benefit to purchasing the new house now rather than waiting to first sell the old house and then buy the new house.

Aside from the economic benefit, other factors need to be considered; the lack of stress of moving twice should the homeowner decide to sell the old house first and then purchase the new house; what if the homeowner finds the house of his/her dreams now and does not want to let the house slip away? In today’s market, sellers are not willing to take contingent offers. Can the homeowner budget for both houses at the same time while waiting for the old house to sell? Is the market rising? Is the new house more expensive than the old house? How long will it take to sell the old house? These are just some of the issues to consider before deciding one way or the other; however, and this can’t be stressed enough — when a homeowner finds a house they like, they do not want to lose the opportunity of buying it. This means that they can start looking at new houses before putting their old house on the market. This also allows them time to make any repairs or fix up their old house so as to maximize its value prior to putting it on the market.

Once homeowners know that there is a potential to purchase a new house before selling their old house, they can be proactive in obtaining a commitment letter from the lender. Of course, homeowners should see if they qualify for a conventional loan for buying the new house (owning two houses at once), but they should keep their minds open to procuring a private loan should the bank turn them down. Pacific Private Money is such a private loan company.

 

 

 

WRITTEN BY EDWARD BROWN

Home Buyers & Sellers, Pay Attention in 2018!

Pay Attention in 2018!

Pay Attention in 2018!

We may have a tricky year ahead of us, so what’s the best and easiest strategy for consistent success in 2018?

Pay Attention!

Start the year with or without New Year’s Resolutions, but commit to success this year by paying attention:

#1. To how well informed you and information sources you rely on are

#2. To what’s really going on around you — real and fake, and

#3. To how you react to what’s going on around you — online and off.

Whether you are a real estate owner or a wanna-be… whether you intend to buy or sell in 2018, so much is shifting in real estate, in the economy, and everywhere else that nothing should be taken for granted or assumed in 2018. Concentrate on getting the facts not just someone else’s bias view of where advantages lie for you.

#1. A lot changed in 2017 and the full implications of those changes will continue to emerge in 2018.

Pay attention to ramifications and compromises, subtle and otherwise, attached to changes in everything from tax law and net neutrality to technology’s continued re-write and disruption of much we’ve take for granted:

  • Real estate ownership will be impacted by changes to tax law, estate planning, resulting neighborhood development, and interactions between these and many more elements. Where will advantages lie for you?
  • Changes in the business world may directly or indirectly influence job or retirement security for your family. This in turn may impact qualification for financing, mortgage renewal, and real estate affordability. Projected reductions in funding and donations for social and community support programs and organizations may have widespread impact in neighborhoods, community development, and in education. These shifts may reduce location benefits which, in turn, can affect real estate value. How will your location be affected in 2018?

#2. Whoever or whatever you blamed for distractions in 2017 will be with you in 2018 and might even be worse.

There are only so many hours in the day and only so many dollars in your pay check. Distractions that erode concentration on your needs and goals, and distractions that feed impulse spending will be expensive in many ways. Pay attention to what takes you off point, off track, and off goal to ensure you stay in control. You may blame others for distracting you, but it’s your powers of concentration that should be continually honed and improved to keep you ahead of the pack.

  • Saving for a down payment, home renovation, or to pay down an existing mortgage requires a written budget strategy to guide you toward clearly-defined results.
  • Paying monthly condominium fees, mortgage payments, or heating bills is exhausting when approached as month-to-month catch-up. Shift your focus to cutting costs and increasing income long-term and you’ll move beyond a monthly survival perspective to establish a constructive, long-term frame of reference for success.
  • Steady, dramatic increases in online shopping over the 2017 holiday season mean many households may be combining the impulse spending facilitated by credit cards and click-here shopping carts to undermine their budgets even more dramatically than ever. As the volume of online shoppers increases, convenience, cost saving, and product satisfaction may be compromised, so it’s only the novelty of online shopping that addicts. What’s all this got to do with achieving your core real estate ownership goals?

#3. Significant amounts of what you believed you knew in 2017 about real estate, finance, insurance, home security, mortgages, work, and the internet will be out of date in 2018.

Pay attention to which laws, regulations, services, and real estate expenses have actually changed not just been endlessly, sensationally rehashed in the media and online. Accurate information and clever strategies are gold.

  • Tweets, posts, and other online content arrive in increasingly-overwhelming rates and volumes. This leaves less and less time to uncover facts and realities and to actually learn and think about relevance to you. From shopping or applying for a mortgage to searching for a new home or viewing property, virtual video and online content bring these and other real estate activities onto your laptop and your mobile phone. Is this distance-learning leaving you better informed and smarter real estate-wise than face-to-face meetings with real estate experts and hands-on location and property investigations?
  • Searching out professionals who keep up with change within their profession is a challenge. Time pressures leave some professionals parroting what they hear and see in media and online instead of carrying out thorough research themselves. How do you make sure you receive the professional advice you need to interpret changes from your real estate point of view?

Realty Times and my “Decisions & Communities” column will continue to provide you with real estate facts and perspectives that keep you asking more of yourself and the professionals who advise and serve you.

Let’s meet the challenges and opportunities of 2018 head on!

 

 

 

 

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