Category: Selling

Tips and information about selling a home.

Short Sale vs. Foreclosure

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Some homeowners at their wits end are ready to throw in the towel and give up on their house. They can’t afford the payments, they are stressed out and no longer want to deal with a mortgage. If you’re in a similar situation, take a deep breath and listen up. I know it’s a lot easier to walk away from your problems, but this is what I tell homeowners facing foreclosure: “Short sell it”.

The consequences of going through a foreclosure process is a lot more damaging than short selling your home. The biggest and foremost reason to try and avoid foreclosure proceedings against you is to minimize damage to your credit history. When you short sale your home, the lender is willing to accept a payoff amount that is less than what you actually owe. Yes, this information is reported to the credit bureaus, but it shows that you made an effort to rectify your financial situation by selling your home at the current market value. Short sale information typically stays on your credit history for about a year.

Conversely, foreclosures are judgments against you and therefore, can stay on your credit history report for 5 to 7 years. Furthermore, the next time you apply for a mortgage, you’re going to have to check that little box that asks whether you have ever been involved in a foreclosure. Even if it’s been more than 7 years, it still doesn’t look good.

Bottom line: hang in there, and seek the advice of a real estate professional in your area who can work through a short sale process for you.

Categories: Selling Short Sales and Foreclosures

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Capital Gains Tax in Real Estate

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When you sell a stock, you owe taxes on your gain—the difference between what you paid for the stock and what you sold it for. The same is true with selling a home (or a second home), but there are some special considerations.

How to Calculate Gain

In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate this:

  1. Take the purchase price of the home: This is the sale price, not the amount of money you actually contributed at closing.
  2. Add adjustments:
    • Cost of the purchase—including transfer fees, attorney fees, inspections, but not points you paid on your mortgage.
    • Cost of sale—including inspections, attorney’s fee, real estate commission, and money you spent to fix up your home just prior to sale.
    • Cost of improvements—including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
  3. The total of this is the adjusted cost basis of your home.
  4. Subtract this adjusted cost basis from the amount you sell your home for. This is your capital gain.

A Special Real Estate Exemption for Capital Gains

Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:

  • You have lived in the home as your principal residence for two out of the last five years.
  • You have not sold or exchanged another home during the two years preceding the sale.

Also note that as of 2003, you also may qualify for this exemption if you meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency. Consult your tax professional for detailed information.

Categories: Investing Selling

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How can a home have multiple appriasal values?

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I had a client once who didn’t understand why his house had multiple appraised values. He had hired an appraiser to come out and tell him what his house was worth before deciding to place it on the market. When he called me in to list his house, I did my research and provided him with a comparable market analysis which averaged an amount much different than his appraised value, and when we got a ratified contract, the buyers appraisal showed yet another value. So he wanted to know what the deal was with the different amounts.

Here’s the thing: appraisals are really opinions… educated and objective opinions, but opinions none the less. Appraisals are used for different purposes and because of that, can sometimes vary. When a home is bought or sold, appraisals are normally based on the market selling price. For tax purposes, the value is based on a lot of factors specific to to the jurisdiction the house is in. Insurance values are based on how much it costs to replace the home, factoring in the cost of materials.

So it is possible to have multiple appraisal values, but if you’re thinking about selling your home, save yourself a few hundred dollars and ask a real estate agent to provide you a current and detailed report of the market value in your neighborhood.

Categories: Buying Selling

Selling Price vs. Timing

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Most people planning to sell their home are anxious to know how soon their house will be sold. Aside from obtaining a comparative market analysis report from your real estate agent, a good general statistic to keep in mind is that most activity occurs when the house is first listed and tends to slow down the longer the home remains listed:

Activity based on weeks on market

Timing is extremely important in the real estate market. Remember that the greatest opportunity you have to get your home sold is during the first few weeks it is listed.

Categories: Selling

10 Tips To Selling Your Home Quickly

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No one wants their home sitting on the market for months, so BEFORE you list your home, follow these quick tips to help you get sold quickly:

  1. Remove the clutter. Show off available space by removing loose items and excess furniture.
  2. Paint and repair any damages on the walls.Try to stay with neutral colors.
  3. Repair any flooring defects. Replace flooring if possible.
  4. Remove or minimize personal photos. Let the buyers imagine themselves in your home.
  5. Clean up the yard. Curb appeal is important so get your front looking great and buyers will want to see more.
  6. Invest in air fresheners or air cleaners, especially if you have pets in the house.
  7. Clean and dust around major appliances, including the furnace and hot water tank.
  8. Add plants for greenery room fillers to give the place a lively appeal.
  9. If you want to list your home as 3 bedrooms, then try to make sure that each room functions as a bedroom, or at least show that a bed can fit in the room.
  10. Clear off kitchen counters. Everyone loves counter space. Try putting toasters, coffee pots and knife blocks in cabinets when not in use.

Remember that once you list your home, you need to keep it looking good throughout the listing period. Think about how you feel when you see a nice luxurious hotel room– no clutter, clean and inviting. That’s the same feeling you want buyers to see when they walk into your home.

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Categories: Selling

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The Home Selling Process

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Selling your house may sound easy at first and you may decide to try to sell your home on your own. This post will show you what steps are normally involved in the home selling process, and maybe you will see how valuable selling your home with a real estate agent can truly be:

  1. Understand your market. Do some research and find out what the market is doing in your neighborhood. Your real estate agent can provide a detailed report of the current real estate activity in your area.
  2. Market your home sale. Create flyers and brochures, and offer open houses. Ideally you are working with a real estate agent who will enter your home into the Multiple Listing Service.
  3. An offer received begins the negotiation and counter-offer process.
  4. Once the contract is ratified by all, the buyer(s) may choose to order home and termite inspections.
  5. Remove any contingencies after negotiating terms from home or termite inspection findings, etc.
  6. Buyer(s) will do a final walk-through prior to settlement.
  7. Close on the property.

This is just a basic overview of the process, and because there are many factors that could affect each step, it’s recommended that you hire a real estate professional knowledgeable in handling unique situations.

Categories: Selling

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