Buying · Real Estate · Taxes

One Last Thing to Pack

Whether you buy or sell a home, you will face moving day.  It should be a happy occasion, and you can invite Uncle Sam to the party!  That’s because if you’re relocating and working in a new place, you could qualify for a generous deduction on your income tax return.

Regardless of whether you own or rent, or whether you itemize your deductions or take the standard tax deduction, you can deduct qualified moving expenses.  There are two “litmus tests,” the first of which is that your new job location must be at least 50 miles further away than your old job.  Second, you must remain and work full-time for 39 out of the first 52 weeks after your move.

Even if you haven’t yet worked all 39 of those weeks when you file your next return, you can still claim the deduction.  If for any reason you do not fulfill that requirement after filing, then you’ll have to amend your next year’s return to delete those moving costs.

What sorts of expenses qualify? Hiring movers (or just the moving truck), storage costs (up to thirty days), even the gasoline if you drive from your old home to your new one.  So, before your move, designate a folder for all of your receipts, because the more you can substantiate, the more you can claim! Always check with your CPA or tax professional. Happy Motoring!

Note:
This article was originally published on this site on June 12th, 2012. It has been updated reflect the current home market.

Buying · Financing · Real Estate

Make Me a Match

Real estate agents are not necessarily mortgage specialists.   However, we all know that financing is an integral part of any real estate transaction, and buyers often look to agents for some guidance relating to their loan options.

It is for this very reason that agents maintain strong relationships with local lenders and mortgage specialists.  With all the issues involved in coordinating the sale and purchase of property, many agents simply don’t have the resources to become experts in such an ever-changing field as mortgage products.

There are now more choices than ever in terms of documentation, payment options, and loan terms.  Just as examples, some of the most popular loans are Fixed-Rate Mortgages, Adjustable-Rate Mortgages (ARMs), and Interest-Only loans.

“Fixed” are just that – regular principal and interest payments for an established period of time.  ARMs fluctuate, but new “hybrids” offer a fixed rate after a certain number of years.  Interest-only loans are uncertain if you choose not to pay any principal in the early part of the loan, but can work out if you need short-term cash flow or intend to move or refinance shortly.

Every buyer has a best mortgage match, and there are literally hundreds of options.  It can make your head spin!  Have an agent recommend another professional who can help get you into the home of your dreams.

 

Note:
This article was originally published on this site on January 30, 2015. It has been updated reflect the current home market.

Buying · Real Estate · Selling

How Much is Enough

My word is my bond!  That expression held great meaning to land buyers and sellers in the “olden” days.  Most real estate sales were made with a handshake, and a verbal promise to complete the transaction at some future date.

Later, as a show of their good intentions, buyers would give sellers a sum known as “earnest money” to be held until the sale was consummated.  This deposit had more ceremonial significance than monetary assurance of a completed sale.

Today, earnest money deposits are a part of most every real estate transaction.  The amount used as a deposit is negotiable between buyers and sellers, with no minimum or maximum required by law.

There is, however, a strong message attached to the amount of money tendered by buyers.  As the saying goes, “Money talks!”  If sellers are presented with two identical offers on their home, one with a $10,000 deposit, and the other with $500, which do you think they are most likely to accept?  Sellers believe the higher deposit indicates buyers who are more qualified to complete the purchase.

Having said that, understand that earnest money is just one factor to be considered when buying or selling a home.  The amount of the deposit is relative, and depends on the unique nature of each property.  Detailed information about earnest money deposits is available from the real estate agent you choose.

Buying · Financing · Real Estate

Keep the Horse Before the Cart

While many buyers are aware that a mortgage pre-approval letter increases their buying confidence and power, most may not understand exactly why pre-approval is so important.  Why should you jump through the application hoops before even beginning your home search?

First, you’ll know exactly how much loan you can afford, making your initial home search much easier.  Why waste your time looking at homes either out of your reach or well below your financial grasp?

Second, pre-approved buyers stand on solid negotiating ground with sellers.  Sellers working with well-qualified buyers are more likely to accept the offer and less likely to stall on terms and conditions.

Notice that the topic of this column is “pre-approval,” and not “pre-qualification.”  What’s the difference?  Pre-qualification is easy – you provide basic information to a lender, and in a few short minutes, you have an answer.  Pre-approval requires strict verification of documentation relating to your employment, credit history, sources of income, etc.  It takes more time, but is more accurate and carries more weight.

Understand that pre-approval is not binding, and is still subject to a satisfactory appraisal on the prospective purchase.  If your financial situation changes, interest rates rise or fall, or the deadline passes, a recalculation will be necessary; but a little legwork now will pay off handsomely as you approach the finish line on your contract.

Note: This article was originally published on this site on May 5, 2016. It has been updated reflect the current home market.

Buying · Inspections · Real Estate · Selling

Avoid the Red Tag

Have you ever noticed clothing sales that advertise “seconds” at greatly reduced prices? The “second” quality merchandise may exhibit flaws like uneven seams and pulled stitches, and capitalizes on the slightly lower quality in exchange for a lower price.

Much like those “markdowns,” a home being offered for sale with obvious flaws also invites a lower price. Homebuyers, like other savvy shoppers, quickly become aware of needed repairs, and then begin scrutinizing the home for other defects.

If you plan to sell your home and expect to receive a reasonable offer, be certain that all needed repairs are completed before the “For Sale” sign appears out front. If you don’t, expect to receive about $2 less for each $1 in needed repairs.

Protect your investment by asking an agent for advice. They will walk through your home as a buyer would, making notes of all attention. This could range from a cracked windowpane to carpet in need of replacement. No matter what the flaw may be, if it attracts attention, it also becomes a point on which the buyer may negotiate a lower sale price.

Your real estate agent can guide you further by providing marketing tips to make your home more attractive to buyers. Remember that by offering a “first quality” home, you may expect to receive the best price.

Note: This article was originally published on this site on April 21, 2016. It has been updated reflect the current home market.

Buying · Inspections · Real Estate · Selling

Don't Panic

Property inspections are common in most real estate transactions, and are recommended even in the hottest markets. The question becomes what do you do when the inspector’s report comes back with items listed in need of repair. Whether you’re the buyer or the seller, just keep a cool head and approach the repairs logically.

Focus on the major defects. Minor repairs are not the ultimate goal of the inspection. Major repairs should be handled as soon as possible, in order to avoid any delays in closing.

Once the buyers have secured quotes for repairs, they should present their requests to the sellers either for the repairs or for a reduction in the selling price. The sellers may also choose to solicit quotes, and if there is a significant difference, the two parties may negotiate.

Either party may complete the repairs, but sellers who are busy preparing to move may offer a credit to the buyers so the buyers may have the repairs completed later to their satisfaction. Once agreed to, the final terms of the arrangement should be put into writing, and then signed and dated by both parties.

Whoever accepts responsibility for the repairs should have paid receipts for all of the work done. Proper documentation of each step in this process will protect each party and help ensure a smooth and successful closing.

Note: This article was originally published on this site on March 17, 2016. It has been updated reflect the current home market.

Buying · Inspections · Real Estate

Inspection Protection

You’ve found the home of your dreams, and you’re preparing to make your offer. As you consider price and terms, be sure to include one of the most critical components of the offer – a home inspection contingency. The contract should clearly identify how any reported problems will be rectified.

By including a satisfactory inspection in the terms of the contract, you give yourself three valuable options if repairs are needed. You can either:
a.) Request that the sellers complete the repairs before closing
b.) Negotiate a price reduction if you expect to pay for the repairs yourself
c.) Withdraw your offer without penalty

That last option isn’t very appealing, especially if you really love the home. However, you must be prepared to walk away if the sellers are uncooperative or the numbers don’t add up.

While the selling market was so hot these last few years, many buyers would forgo the inspection, just so their offer looked better than others, or to get the home before prices increased again. These normal or cooler markets allow you to be more financially sensible and insist on the inspection.

If the inspection proves to be a deal breaker, don’t sweat it, because there will be other comparable homes for your consideration. Chances are, though, that repairs will be minor and the sellers will be happy to cooperate.