The First Buyer To Make an Offer Is Usually the Most Interested Buyer

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We’ve seen it time and again. A seller eagerly lists their home, finds a buyer with a serious offer but chooses to wait things out and see if other (better) offers come along. While it can happen and it does sometimes, the problem is that there is a process usually followed by buyers and along with it a pipeline. Here is a look at how they lead up to making an offer and how by the time the first buyer seriously considers your home they are likely the most viable one.

Buyers Are More Educated

With the advent of technology, the entire real estate industry has changed. Gone are the days when buyers would rely solely on their agent to find a home to suit their needs. Today, the Internet has taken over. In fact, studies show that over 90% of buyers spend weeks online searching for their perfect home before even talking to an agent.

So by the time a buyer is at your doorstep with an offer, there is a good chance they have thoroughly researched every aspect of the local market. They are fully aware of your competition, have weighed all pros and cons of your home and are seriously interested in your property. After countless open houses and obtaining plenty of education about the real estate market in their area, they know when they see a property that suits their needs. In many cases they are waiting for the perfect one to become available so the minute it does, they make an offer.

By the Time They Make an Offer, They Are Well Into the Process

Where sellers go wrong is to want to wait for more offers. In the process, those very serious buyers that have already made their interest in your home known will likely find another home to suit their needs. Buyers today are savvier than ever before – and with that education that they so readily find and absorb from various sources (the Internet, other publications, their peers, professionals) they have an acute knowledge of the market.

In the process of selling your home, it is critical to keep all factors in mind. Factors such as the condition of the market, your agent’s recommendations, current inventory levels, the number of days most properties remain on the market before being sold and of course prices. Putting all of that into play will change how you handle that first buyer but remember – the first buyer will almost always be your best buyer.
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For a consultation that is customized to your needs, contact us today. We look forward to serving you!

Obama's Healthcare Tax Affects Many Secondary/ Investment Homes

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President Obama’s new Medicare tax on unearned investment income will be one that will change things for our marketplace. Though most of the American population will be unaffected by his new tax imposition, we feel that our area is one that will indeed feel it.

There is much debate about who will have to pay the additional 3.8% taxes on top of already existing capital gains taxes for properties that fall under specific criteria. But one thing is certain. Many of the properties and sellers in our area come will be impacted. To help explain it further, I’ve put together a couple examples after briefly outlining the guidelines for this new tax.

Tax Applicable to Secondary Homes and Investment Properties

The first thing to keep in mind is that this tax will not apply to homes sold that are primary residences. Since most of the properties in our marketplace fall in the other, secondary category, read the following points carefully to find out if you may be subject to additional capital gains taxes. There are some nuances to the tax law as well that have to do with whether or not the property is used for personal enjoyment, is rented out and how long it is rented out for during the year. These (and other) points are mentioned in this concise list of FAQs about the Medicare tax published by the National Association of Realtors.

Gains Over Specified Amount for Individuals and Couples Apply

If the total amount of capital gain exceeds $250,000 for individual sellers or $500,000 for married couples –then the 3.8% tax applies to the amount exceeding the normal capital gains limits. We deal with properties well over this amount regularly and in some cases these properties were purchased a while back, resulting in present day sales that yield significant capital gains.

Upper Level Incomes Are Impacted by New Real Estate Tax

As is the case with most of our clients in this area, the annual Adjusted Gross Income must be at $200,000 for individuals and $250,000 for married couples filing jointly for the tax to be applicable. When these sellers have a capital gain on their property exceeding the capital gains limits mentioned above, the sale involves secondary or income generating properties and they have incomes starting at $200k/$250k, the tax will be applied. For married couples filing separately the AGI threshold is $125,000.

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It is important to keep in mind that both conditions (income and exceeding capital gains limits on relevant properties) must be applicable in order for the tax to be imposed. Here is another report published by the National Association of Realtors outlining additional scenarios where this real estate tax would be applied.

Scenarios to consider:

Example 1:

A property bought by an individual in 1990 for $200,000 that is now worth $700,000 sells accordingly. The capital gains that go above and beyond $500,000 would be taxed an additional 3.8% as long as the seller has an income of at least $200,000. Since the allowable capital gains before taxation for an individual is $250,000 – in this scenario, the amount additionally taxed would be $250,000. The healthcare tax for this property would be $9,500.

Example 2:

A home that was purchased by a married couple filing jointly with a combined income of $220,000 in 2000 for $350,000 and sold today for $800,000 would yield capital gains amounting to $450,000. Since this is $50,000 under the capital gains limit prior to taxation and they earn less than the required income level for couples, they would not have to pay the additional 3.8% tax on the sale of this property.

If you are considering selling your property and are unsure of whether you will be subjected to these taxes in addition to all the other expenses that go along with selling, contact us today.

Home Inspector to the Rescue!

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You Better Give Sherlock Holmes a Ring!

No, you don't need the fictional detective inspector. However, you do need a home inspector! Think of this as a "pre-emptive strike" to maintain or increase your home's value before you put it on the market. Here are the benefits an inspector provides you:

Benefit 1: The inspector can uncover any problems that need fixing, and you can correct them before any potential buyers enter your home. Such an inspection can prevent your sale from falling through!

Benefit 2: With an inspection, you can show prospective buyers receipts to prove the work has been done. Buyers love proof! In reality and in their eyes, it underpins the value of your home and the asking price.

Benefit 3: You may be able to factor the cost of the inspection into the asking price for your home!

Benefit 4: When you have a pre-sale home inspection completed, you're able to estimate if the discount the prospective buyer is asking is reasonable. In other words, you can refuse unreasonably low offers if you know the value of your house, including the degree of its defects.

So, How Do I Find a Qualified Home Inspector?

I can recommend a certified home inspector who will do a great job for you. However, if you decide you want to do it on your own, make sure he or she is qualified!

Con artists sometimes pose as home inspectors, taking your money and giving you nothing but grief in return. Here's how to know if an inspector is the real deal:

Ask your friends for referrals. If they've had a good experience, go with that home inspector. I’d recommend you interview a minimum of two or three inspectors before choosing one. Make sure they’re full-time professionals conducting several inspections a year.

If possible, select a home inspector who’s a member of The American Society of Home Inspectors or the National Association of Home Inspectors.These association members follow a stated code of ethics. In addition, they’re prohibited from having a professional interest in the sale, repair or maintenance of a property they inspect. They’re also forbidden from using their inspection business as a way to find customers for a handyman service that they “happen” to own. You may want to go on the Internet and use ASHI’s “Find a Home Inspector” link to identify potential candidates in our locality.

As part of the interview process, ask for samples of comprehensive reports (about 20-50 pages in length). The samples should be painstakingly done and backed up with complete details, including photos and diagrams. If an "inspector" refuses to give you a report or provides only a sloppily written 2-to-5 page sample, run the other way!

What Does a Home Inspector Cost?

Frankly, the rates vary. On a national level, the rates fall in the range of $200 to $500. As part of the interview process, I recommend you ask several inspectors for their rates so you can get an idea of the price range. In the end, keep in mind that while the cost of an inspection may seem high, it can actually add several thousand dollars to the value of your home! So, don't think of it as a cost; think of it as an investment!

What Exactly Does a Home Inspector Evaluate?

In general, he or she will look at the following areas:

- Electrical System Wiring, Service Panel and Service Capacity

- Energy Conservation/Safety Items

- Exterior Walls, Siding, Trim

- Floor, Wall, Ceiling, Roof Structures

- Foundation, Footings, Crawl Space, Basements, Sub-flooring, Decks

- Gutters, Downspouts

- Heating & Cooling Systems

- Insulation & Ventilation

- Interior Floors, Walls, Ceilings

- Moisture Intrusion/Mold

- Overall Structural Integrity

- Plumbing Systems

- Property Drainage/Landscaping

- Roof & Shingles, Chimneys, Attic

- Walks and Drives
 - Windows, Doors, Cabinets, Counters, etc. 

Should I Be Present During a Home Inspection?

You bet! A typical inspection takes three hours or more, so I recommend that you be present for at least the first 30 minutes to make sure the job is being done thoroughly. At the end of the inspection, the home inspector should give you a point-by-point summary of what needs to be corrected in order to add value to your home!

Hope you enjoyed this very useful information about home inspection! If you have more questions, please don't hesitate to contact me!