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Do sellers
have to disclose the terms of other offers?
How do I
prepare the house for sale?
How do you
increase the value of your property?
What kind
of return is there on remodeling jobs?
Where do I
get information on housing market stats?
Can you deduct
the cost of home improvements?
How do building
codes work?
How
are fees and assessments figured in a homeowners association?
Will a
neighbor problem reduce the value of my property?
What repairs
should the seller make?
Whose
obligation is it to disclose pertinent information about a property?
What
are the standard contingencies?
What is the
difference between market value and appraised value?
How does someone
sell a slow mover?
How is the price
set?
What are
the two most important factors when selling a home?
Are taxes
on second homes deductible?
Are
seller-paid points deductible?
What
are the rules on capital gains when inheriting a house?
How do property taxes work?
Are
property taxes deductible?
Where
can I learn more about appealing my property taxes?
What is
an impound account?
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Sellers do
not have to disclose any information about other offers.
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Making your
home look as nice as possible may seem obvious. Apparently,
it’s not, because many sellers don’t do much beyond
vacuuming the living room rug and maybe cleaning the ring off
the bathtub. Short of spending a lot of money the following
are several steps people can take to make their home show better:
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Let the sun
shine in!
Windows and patio doors should sparkle! |
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A well lit home
can make all the difference so make your home as light, airy
and spacious as possible. Draw back the drapes and turn
on a few extra lights when showing your home, even if it's daytime. |
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Tend to the little
things such as squeaky doors, loose knobs, stains that could
be removed, damaged floor tiles, clean the carpeting, burnt out
light bulbs, etc. |
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Keep pets out
of the way and avoid other distractions to a buyer such as TV
and loud music. It is often recommended that you leave
the home during a preview or at least, leave the room.
It is not a good idea to tag along, you will be called if needed. |
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Clarify with your
agent what window coverings or wall attachments you wish to keep!!!
Unless otherwise specified in the contract, all window coverings,
shelving or anything affixed to a wall is considered part of
the real property. |
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Sweep the sidewalk,
mow the lawn, prune the bushes, and weed the garden and clean
debris from the yard. |
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Clean the windows
and make sure the paint is not chipped or flaking. |
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Be sure that the
doorbell works. |
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Clean and make
attractive all rooms, furnishings, floors, walls and ceilings.
It is especially important that the bathrooms and kitchen are
spotless. |
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Organize closets. |
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Make sure the
basic appliances and fixtures work. Get rid of leaky faucets
and frayed cords. |
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Ensure that the
house smells good: from an apple pie or cookies baking, for example.
Hide the kitty litter. |
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Put vases of fresh
flowers throughout the house. |
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Pleasant background
music is a nice touch. |
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Ask Renee for
your FREE Home Enhancement Guide |
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The biggest
factor outside of a homeowner’s control is market conditions.
But other issues -- including the condition of the property,
specific home improvements and neighborhood stability and safety
-- can influence property values.
The greatest
rise in home prices occurs when the economy is strong and the
number of home sales is increasing.
Though markets
vary, that has occurred twice in recent history -- in the early
1970s and the late 1980s. However, single-family homes appreciated
much more than condominiums. While overall market conditions
are out of the homeowner's control, other factors are not.
For example,
specific home improvements can increase the value above the cost
of the improvements. According to Remodeling magazine, which
publishes an annual "Cost vs. Value" remodeling report,
a remodeled bathroom returns 81percent to the owner, a bathroom
addition, 89 percent and a master bedroom suite, 82 percent.
Remember, quality
pays. Well-planned and well-executed remodeling jobs are a good
investment while bad work seldom enhances value or livability.
If you live
in a high-crime area, an organized community watch program not
only will lower the crime rate but also have been known to enhance
property values.
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Remodeling
magazine produces an annual "Cost vs. Value Report'' that
answers just that question. The most important point to remember
is that remodeling a home not only improves its livability for
you but its curb appeal with a potential buyer down the road.
Most recently,
the highest remodeling paybacks have come from updating kitchens
and baths, home-office additions and extra amenities in older
homes. While home offices are a relatively new remodeling trend,
for example, you could expect to recoup 58 percent of the cost
of adding a home office, according to the survey.
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A real estate
agent is a good source for finding out the status of the local
housing market. So is your statewide association of Realtors,
most of which are continuously compiling such statistics from
local real estate boards.
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What you spend
on permanent home improvements, such as new windows, can be added
into your home's cost basis, or amount of money invested in a
home, which reduces capital gains when it comes time to sell.
Capital gains are determined by the difference in price from
the time a home is purchased and the time it is sold, minus the
cost of any permanent improvements.
However, the
1997 tax change virtually eliminates the capital gains tax for
most homeowners (the exemption is $250,000 for single homeowners
and $500,000 for married homeowners.).
Still, it is
worthwhile to save all receipts for permanent home improvements
just in case. They also can be useful documentation when it comes
to marketing your home when you sell.
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Building codes
are established by local authorities to set out minimum public-safety
standards for building design, construction, quality, use and
occupancy, location and maintenance. There are specialized codes
for plumbing, electrical and fire, which usually involve separate
inspections and inspectors.
All buildings
must be issued a building permit and a certificate of occupancy
before it can be used. During construction, housing inspectors
must make checks at key points. Codes are usually enforced by
denying permits, occupancy certificates and by imposing fines.
Building codes
also cover most remodeling projects. If you are buying a house
that has been significantly remodeled, ask for proof of the permits
involved before you purchase to avoid future liability for fines.
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Homeowner’s
association fees are considered personal living expenses and
are not tax-deductible. If, however, an association has a special
assessment to make one or more capital improvements, condo owners
may be able to add the expense to their cost basis. Cost basis
is a term for the money an owner spends for permanent improvements
throughout their time in the home and is used to reduce eventual
capital gains taxes when the property is sold. For example, if
the association puts a new roof on a building, the expense could
be considered part of a condo owner's cost basis only if they
lived directly underneath it. Overall improvements to common
areas, such as the installation of a swimming pool, need to be
considered on a case-by-case basis but most can be included in
the cost basis of any owner who can show their home directly
benefits from the work.
To find out
more about how the IRS views condo association fees, look to
IRS Publication 17, "Your Federal Income Tax," which
includes a section on condos. Order a free copy by calling (800)
TAX-FORM.
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While it may
not reduce the actual value, a cluttered landscape can detract
from the positive aspects of your home. Review your local laws,
which should be on file at the public library, county law library
or City Hall.
A typical "junk
vehicle" ordinance, for example, requires any disabled car
to either be enclosed or placed behind a fence. And most cities
prohibit parking any vehicle on a city street too long.
It also may
be worthwhile to check into local zoning ordinances. An operator
of a home-based business usually is required to obtain a variance
or permanent zoning change in residential areas.
In addition,
if a neighbor's repair work produces loud noises, he may be breaking
local noise-control ordinances, which are enforced by the police
department.
Before bringing
in the authorities, you may want to make a copy of the pertinent
ordinance and give it to your neighbor to give them a chance
to correct the problem.
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Most sellers
like to make all minor repairs before going on the market in
order to seek a higher sales price. In addition, nearly all purchase
contracts include a buyer contingency "inspection clause,"
which allows a buyer to back out if numerous defects are found.
Once the problems are noted, buyers can attempt to negotiate
repairs or a lower price.
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Obligations
to disclose information about a property vary from state to state.
Under the strictest
laws, the seller and the seller’s broker, if there is one,
are required to disclose all facts materially affecting the value
or desirability of the property, which are known or accessible
only to him.
Items sellers
often disclose include: homeowners association dues; whether
or not work done on the house meets local building codes and
permits requirements; the presence of any neighborhood nuisances
or noises which a prospective buyer might not notice, such as
a dog that barks every night or poor TV reception; any death
within three years on the property and any restrictions on the
use of the property, such as zoning ordinances or association
rules.
It is wise
to check your state's disclosure rules prior to a home purchase.
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Most offers
include two standard contingencies: a financing contingency,
which makes the sale dependent on the buyers' ability to obtain
a loan commitment from a lender, and an inspection contingency,
which allows buyers to have professionals inspect the property
to their satisfaction.
A buyer could
forfeit his or her deposit under certain circumstances, such
as backing out of the deal for a reason not stipulated in the
contract.
The purchase
contract must include the seller’s responsibilities, such
things as passing clear title, maintaining the property in its
present condition until closing and making any agreed-upon repairs
to the property.
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Appraised value
is a certified appraiser's opinion of the worth of a home at
a given point in time. Lenders require appraisals as part of
the loan application process; fees range from $200 to $300.
Market value
is what price the house will bring at a given point in time.
A comparative market analysis is an informal estimate of market
value, based on sales of comparable properties, performed by
a real estate agent or broker.
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Even in a down
market, real estate experts say that price and condition are
the two most important factors in selling a home.
The first step
is to lower the price. Also, go through the house and see if
there are cosmetic defects that you missed and can be repaired.
Secondly, home
sellers should make sure that the home is getting the exposure
it deserves through open houses, broker open houses, advertising,
good signage and a listing on the multiple listing service (MLS).
Another option
is to pull the home off the market and wait for the market to
improve.
Finally, frustrated
sellers who have no equity and are forced to sell because of
a divorce or financial considerations could discuss a short sale
or a deed in lieu of a foreclosure with the mortgage lender.
A short sale
is when the seller finds a buyer for a price that is below the
mortgage amount and negotiates the difference with the lender.
In a deed-in-lieu-of-foreclosure
situation, the lender agrees to take the house back without instituting
foreclosure proceedings. But these would be considered more radical
options than lowering the price.
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It's very important
to price your home appropriately relative to current market conditions.
Because the real estate market is continually changing, and market
fluctuations have an effect on property values, it's imperative
to select your list price based on the most recent comparable
sales in your neighborhood.
A comparative
market analysis provides the background data on which to base
your list-price decision. Study the comparable sales material
presented to you by the different agents you interviewed initially.
If the analyses are more than two or three months old, have your
agent update the report for you.
If all agents
agreed on a price range for your home, go with the consensus.
Watch out for an agent whose opinion of value is considerably
higher than the others.
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Even in a down
market, real estate experts say price and condition are the two
most important factors in selling a home. So, the first step
is to lower the price. Also, go through the house and see if
there are cosmetic defects that you missed and can be repaired.
Home sellers
should make sure that the home is getting the exposure it deserves
through open houses, broker open houses, advertising, good signage
and a listing on the local multiple listing service.
If the seller
is using a real estate agent and the property isn't getting proper
exposure, find another agent.
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Interest and
property taxes are deductible on a second home if you itemize.
Check with your accountant or tax adviser for specifics.
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As of Jan.
1, 1991, homeowners have been able to deduct points paid by the
seller. This deduction previously was reserved only for points
actually paid by the buyer.
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When children
inherit a home, the Internal Revenue Service determines their
basis in the property on the date of the person's death. The
cost basis is not the amount the owner originally paid for the
house. It is the property's fair market value on the date of
the mother's death, says Pamela MacLean, assistant public affairs
officer with the IRS.
Cost basis
is a tax term for the dollar amount assigned to a property at
the time it is acquired, for the purpose of determining gain
or loss when it is sold. Assume the property was divided up equally.
If one of the three siblings sold her share, she must pay capital
gains tax for whatever profit she made over one-third of the
new basis, MacLean said.
Other tax consequences
include estate taxes. However, the estate must total $600,000
or more before tax issues become a concern. The IRS allow residents
to pass on property, cash and other assets worth up to a total
of $600,000 before charging the heirs any taxes, according to
MacLean.
Regarding the
transfer of ownership, quit claim deeds often are used between
family members in situations such as this when an heir is buying
out the other. All parties must be agreeable to dropping a name
from the title. Other resources: IRS Publication 448, "Federal
Estate and Gift Taxes." Order by calling 1-800-TAX-FORM.
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Property taxes
are what most homeowners in the United States pay for the privilege
of owning a piece of real estate, on average 1.5 percent of the
property's current market value. These annual local assessments
by county or local authorities help pay for public services and
are calculated using a variety of formulas.
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Property taxes
on all real estate, including those levied by state and local
governments and school districts, are fully deductible against
current income taxes.
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Contact your
local tax assessor's office to see what procedures to follow
to appeal your property tax assessment. You may be able to appeal
your assessment informally. Mostly likely, however, you will
have to go through a formal tax-appeal processes, which begin
with an appeal filed with the appropriate assessment appeals
board.
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An impound
account is a trust account established by the lender to hold
money to pay for real estate taxes, and mortgage and homeowners
insurance premiums as they are received each month.
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