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Happy Holidays!
Curb appeal is an often overworked term when it comes to selling a home, but a house that is
prepared successfully will sell faster and for a greater value than the one that appears run down and in need of work. Just like dressing up for a fancy dinner, the same applies to a home when getting it ready to sell. That’s not to say that a complete face lift needs to be done in order to bring a good price. In most instances, some very inexpensive but effective types of cosmetic improvements can make a significant difference. Things like cutting lawns, pruning shrubbery to be below windows, fertilizing lawns and shrubs, installing a few well placed plants, cleaning out garages and closets, eliminating clutter, painting outside trim, shampooing carpets or picking them up to expose hardwood floors. Cleaning or painting some inside walls can go a long way in presenting a home in its most favorable light. An experienced Real Estate Agent can
take an objective look at a home and give advice on what inexpensive touches would help in
dressing a home for sale.
In the process of a real estate transaction, closing costs are often confusing or unexplained. A quick run-down:
For the seller, closing costs normally involve real estate commissions, termite clearance, title insurance, escrow fees and fees associated with paying off any existing loans. Some areas also have transfer taxes that are paid by the seller. These are all deducted from the gross sales price, along with the remaining balance of any loans. For the buyer, closing costs may entail loan fees such as appraisal, credit report, document fees and loan discount points, in addition to title/recording fees, also move in deposits and application fees (co-ops). Insurance premiums and prepaid interest on the new loan are also common closing costs. Although who pays for which costs can be negotiated between the parties, most regions of the country have their own customary fees and normal division between the buyer and seller as to who pays what.
Landscaping and the effective use of plants can add wonders to your home. This is especially true when it’s time to put your home on the market Well-placed flowers, shrubs and trees – attractively arranged – can highlight features of your home. A house that is well groomed can mean a lot more dollars in your home’s market value. Many professional landscapers can create a look that will make your home stand out among others on the market, thus creating a fresh, inviting look that actually draws buyers to take a closer look. However, landscaping doesn’t necessarily mean spending thousands of dollars with a professional. It can be as simple as planting a few flowers, cutting back lawns or trimming hedges to give your property a cleaner appearance. When it’s time to sell, landscaping can be one of the easiest and least expensive tune-ups for your home that will help attract buyers. It often adds far more value to the house than the dollars spent. With my 25 years as a former landscape designer, professional lawn/tree/shrub licensed applicator and irrigation specialist, I can advise and consult you on the most cost effective choices. I will get you the “Biggest Bang for the Buck” improvements in staging your home for sale.
O ne of the key dates in the purchase and sales contract is the occupancy date. T his
should not be an afterthought. T his is the date that the home belongs to the buyer and
he can move in. T he seller and all personal property must be out by this date. It will take 30 to 45 days for a loan to be approved and settlements are usually 60 to 90 days after a contract has been accepted. If necessary, the buyer can negotiate a rental agreement with the seller to allow him to occupy the property after the occupancy date. Naturally, a fair rental fee would be agreed on by both parties. However, it is preferable to decide on a date that can be carried out by both parties – one that does not have to be altered. Timing is critical when the buyer and seller are also involved in buying and selling other properties (which is often the case). It is not unusual for both parties to arrive at settlements with their belongings packed in a moving van.
In the past, trade-up buyers tended to roll over all the equity from their previous home
into the new home. Then they took out loans to furnish the house or buy a new car. That
no longer makes good fiscal sense, since consumer interest is no longer tax deductible. Yet, many trade-up buyers find it hard to change buying habits. Buyers moving to a new home today have a unique opportunity to save money and improve their financial picture. The formula? Borrow more on the new house and use the cash for furnishings, landscaping, or a car or to save for future financial needs, such as college expenses. By making a low down payment, buyers can maximize their mortgage interest deduction and lower their after tax payments.
THIS LOW DOWN PAYMENT STRATEGY ISN’T FOR EVERYONE.
The ideal candidate is a move-up buyer who has a strong income, substantial cash
reserves, and good credit!!!
An often overlooked source for the dollars to make a down payment on a new home is tax free
gifts from wealthy relatives. Let’s say a young couple’s parents (grandparents, etc.) have built up a sizable estate during their lifetime and upon their deaths fully intend to leave a substantial inheritance to the couple. With careful planning, the parents or grandparents could give the couple part of the money now and, at the same time, possibly reduce overall estate taxes that may be due when they die.
Under current law, any individual can give a gift equal to $11,000 per child every year without
paying any gift taxes. A married couple together can claim an annual gift tax exclusion totaling $22,000 per child a year. Any attorney, financial planner or related professional who specializes in estate planning and taxes can provide details about how to set up a gifting program that can benefit the benefactors as well as the recipients.
An often overlooked source for the dollars to make a down payment on a new home is tax free
gifts from wealthy relatives. Let’s say a young couple’s parents(grandparents, etc.) have built up a sizable estate during their lifetime and upon their deaths fully intend to leave a substantial inheritance to the couple. With careful planning, the parents or grandparents could give the couple part of the money now and, at the same time, possibly
reduce overall estate taxes that may be due when they die.
Under current law, any individual can give a gift equal to $11,000 per child every year without
paying any gift taxes. A married couple together can claim an annual gift tax exclusion totaling $22,000 per child a year. Any attorney, financial planner or related professional who specializes in estate planning and taxes can provide details about how to set up a gifting program that can benefit the benefactors as well as the recipients.
Happy New Year!
Here are some points to remember when selling your home:
1. Let your real estate agent do all the negotiating.
2. Look at all offers, even if they are low. Your agent has an obligation to present all offers. Some buyers feel they have to make a low offer to reassure themselves that they got the best price possible.
3. Do not become angry with a low offer and react with an unreasonable counter offer out of
anger. Your goal is to sell the house – not punish the buyer.
4. Never judge buyers by the car they drive or how they are dressed. Be kind to all people viewing your home.
5. Your goal is to sell your home, so try not to place barriers about whom you want to buy it.
6. If you feel you have to make a counter offer, make the best one possible, and remember, there are no guarantees.
In the current real estate market you must be cognizant of what is absolutely necessary in preparing your home for serious buyers who are still actively looking. In this changing environment, every potential qualified and capable purchaser must view your home as their home! They must visualize your castle as their castle and it is extremely important to de-personalize you home. If you have the following in your home you should remove and/or put them away:
1. Personal photos on you walls, shelves, of coffee table
2. Decorations or furniture that would make the buyers defocus from their vision of how they think you home should look, by their standards
3. Remove ALL CLUTTER from your home, basement, and/or yard that would send a signal to the buyer that you are ‘messy’ or disorganized
4. Pets and their accompanying smell that may not offend you but would the buyer
5. Do a thorough scrubbing, cleaning, dusting, vacuuming and whatever necessary to show the home at its best!
It is also important that you do the necessary scraping, caulking, & painting on the outside and inside. Caulk all windows and holes that will allow cold air into your home. Small holes are the main reason for loss of heat and allowing cold air into your house. Make sure gutters and leaders are in good shape. Have you inspected your roof lately, for broken or worn out shingles and cracked flashing. Have you chimney and fireplace been cleaned over the last few years? Any leaks by the chimney due to worn out flashing or necessary pointing of the bricks?
Have you fertilized and seeded your lawn? You can still do it this winder in preparation of the spring; as long as the ground is workable. This will green up your property faster during the seasonable days of the winter and spring. Also, some seed might germinate as long as moisture is available. This will build rhizomes and tillers and a thicker lawn this spring; however, the best time to begin repair and build your lawn is the middle of August. (I happen to be an ex-landscape designer and E.P.A. Certified professional lawn-tree-shrub Applicator). When the ground is warm the seed will properly germinate faster and mature into a thicker healthier lawn, going into the following spring. You should also prune and trim back all trees and shrubs, especially, where windows are being blocked. Cut shrubbery below your windows. You can also deep root reed your trees and shrubs and spray your evergreens with an ant desiccant to minimize water loss and eliminate winter burn and scorching of the leaves. Patch any holes in your driveway through October and possibly November if warm enough.
In the inside of your home you should have a checklist and go through you home as if you are the purchaser. Is the paint clean and fresh? If you have wallpaper, is it secured properly to the walls? How is the wood trim? How are your floors? Carpeting? How is the toilet seat? Worn? Does your home have a great smell? Baking some cookies or bread will add a different warm and inviting freshness to the air. Some of the smallest improvement will save you money, headaches, and the possible loss of a sale or reduction in your selling price. When it snows are your walkways cleaned and de-iced. You wouldn’t want potential buyers to fall, hurt themselves, or open yourself up to a lawsuit and the potential loss of your sale! (By the way, when was the last time you checked your homeowner’s insurance policy? Do you have adequate coverage, umbrella coverage?)
In the current slower market, it will be imperative to pay for a pre-inspection by a certified engineer or home inspector. This will save you potentially thousands of dollars, headaches and loss of a sale! Know what is wrong and right with your home, before your buyer hires their inspector and then the surprises occur and the renegotiation of your sale price. (You will also have to deal with the next hurdle of the bank appraiser). They are being ever so conservative in appraising the value of your home; they represent the lending institution, not you. They have to protect their money and not over appraise, as has been down during the crazy hot days of the real estate boom! However, if your home needs a major facelift/renovation, it probably will not be necessary to do anything. In the present market, you will probably not get you money back and it will surely reduce the profit you will take with you the reason for this is that someone probably will knock down you home (assuming it is a buildable lot or a new home can be built upon the original foundation). In this situation you would be wasting you equity on a renovation. The land is where you value will lie, not the renovated home!
One last thought. IF you do not need the money from the sale to purchase your next home, what you might want to consider is renting you home out for 2 years (then it would be considered an investment property) and you could do a 1031 Exchange. More on that in a future article.
Have you hired a mover? Begun to pack your personal belongings? Have you given away those items that you will not be taking with you? This is very important not to leave for the last minute. Also make sure you fill out a change of address form for you post office 1-2 weeks in advance of you move. Hopefully the day of the closing you will have minimized your stress by doing these things in advance of the sale that I have suggested.
I am hearing many reports on TV, Cable News, the internet and from some fellow Realtors, locally and around the country, that the market is turning around, not necessarily at the pace we would all like, but at least, at a more positive pace than negative one we have experienced.
According to MLS of Long Island, sales are up about 17%, (50% in California, which had the most foreclosures). In the past, housing inventory had been around 10 months in Long Island and is now around 13 months. Nationally, inventory at the end of April was at a 10.2 months compared to 9.6 months in March. Although this is not the best situation, it could always be worse. Homes are selling. As the foreclosed properties or REO’ s (Real Estate Owned by the banks) sell and as the short sales increase (a short sale occurs when the offer is less than the mortgaged amount on the property and the individual or bank holding the mortgage is willing to take less than the full amount of what is owed), regular sales of property will also come back to a more normal pace. In the near future, prices should go up by a normal inflation rate for that time period (2-3 %, maybe less, depending on the level of the economy, public perception and some provable and somewhat sustainable numbers. The distressed and foreclosed properties obviously must be sold first and inventories need to be reduced for a more “normal environment” to be established within the housing market. The craziness of several years ago, hopefully, will never return in our lifetime, in the same fashion that it existed. However, anything is possible when it comes to what people can concoct and create to make money many times at the expense of the less fortunate, less knowledgeable and ignorant public( especially the lower socio-economic groups) as well as those looking for abnormal returns on their investments, which are usually to good to be true (Madoffi). It shows that our economy and the global economy are so very connected and that what we sell andlor other countries purchase from us can and will affect other each other’s bottom line. eg. (toxic loans/CDD’s-Collaterized Debt Obligations). We sneeze and someone else gets a cold or worst financial pneumonia!!! Can we will eliminate the greed, probably not, just try to minimize it. There is light at the end of the tunnel and it is the 30 million Generation X’ers and Y’ers. They will be our future purchasers and there is a pent up demand that is growing among that group. Also, the current approximate 11 million illegal aliens, who may someday, somehow, obtain legal resident or work status and the continued legal immigration into the U.S. will also add to the absolute necessary housing demand that will be coming. According to Lawrence Yun, chief economist, for NAR (National Association of Realtors w/2. 1 million members), “first-time buyers are entering and influencing the market and there is a seasonal increase of repeat purchasers. Most are looking for lower priced properties and according to a NAR practitioner survey in April showed first-time buyers declined by 40% of transactions, implying more repeat buyers are coming into the market the traditional spring home-buying season. Activity is increasing mid-priced homes throughout the country, however, high-end homes are still having difficulty finding buyers. “The Federal Reserve needs to restore the health of the Jumbo mortgage market by buying these loans under the TALF program. It also showed that the number of buyers has increased 14 percent from a year ago. Home sales based on the latter forecasts should increase 10-20% by the last quarter of 2009 over the second half of 2008. More foreclosed properties will and are coming to the market during 2009 and 2010 at steep discounted prices, especially ones will get sold as is the case in California, Nevada and Florida. This will help in stabilizing the market that we so desperately need and hopefully move our housing economy into a brighter environment over the next few years.
(RTSMEDJA, MAY 29, 2009) The lending institutions throughout the country have taken a necessary stand and are demanding excellent credit, consistent income with good jobs and long range plans. Mortgage rates are still at a 40 year low and with the $8000 first-time buyer tax credit (that you do not have to pay back!), this is helping many buyers that qualify for a mortgage to come back into the market. Regionally, the Northeast existing home sales spiked 11.6% to an annual pace of 770,000 in April, but are 10.5% below April 2008.
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