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Question:
How do you prepare a house to sell?
Answer:
Doing whatever you can to put
your house's best face forward is very important if you want to get close to
your asking price or sell as quickly as possible. Short of spending a lot of
money, here are several ideas for making your home show better:
* Sweep the sidewalk, mow the lawn, prune the bushes, weed the garden and clean
debris from the yard.
* Clean the windows (both inside and out) and make sure the paint is not chipped
or flaking. And speaking of paint, if your home was built before 1978, new
federal law gives a buyer the right to request a lead inspection. If you think
you might have some problems, do the inspection yourself beforehand and make any
fixes you can.
* Be sure that the doorbell works.
* Clean and spruce up all rooms, furnishings, floors, walls and ceilings. It's
especially important that the bathroom and kitchen are spotless.
* Organize closets.
* Make sure the basic appliances and fixtures work. Get rid of leaky faucets and
frayed cords.
* Make sure the house smells good: from an apple pie, cookies baking or
spaghetti sauce simmering on the stove. Hide the kitty litter.
* Put vases of fresh flowers throughout the house.
* Having pleasant background music playing in the background also will help set
your stage.
Question:
How is the price set?
Answer:
It's very important to price
your home according 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 so-called comparative market analysis provides the background data upon which
to base your list-price decision. When you prepare to sell and are interviewing
agents, study each agent's comparable sales report (the data should be no more
than three months old).
If all agents agree 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.
Question:
What are the standard ways of finding out
how much a home is worth?
Answer:
A comparative market analysis
and an appraisal are the standard methods for determining a home's value.
Your real estate agent will be happy to provide a comparative market analysis,
an informal estimate of value based on comparable sales in the neighborhood. Be
sure you get listing prices of current homes on the market as well as those that
have sold. You also can research this yourself by checking on recent sales in
public records. Be sure that you are researching properties that are similar in
size, construction and location. This information is not only available at your
local recorder's or assessor's office but also through private companies and on
the Internet.
An appraisal, which generally costs $200 to $300 to perform, is a certified
appraiser's opinion of the value of a home at any given time. Appraisers review
numerous factors including recent comparable sales, location, square footage and
construction quality.
Question:
What is the difference between list price,
sales price and appraised value?
Answer:
The list price is a seller's
advertised price, a figure that usually is only a rough estimate of what the
seller wants to get. Sellers can price high, low or close to what they hope to
get. To judge whether the list price is a fair one, be sure to consult
comparable sales prices in the area.
The sales price is the amount of money you as a buyer would pay for a property.
The appraisal value is a certified appraiser's estimate of the worth of a
property, and is based on comparable sales, the condition of the property and
numerous other factors.
Question:
Where do I get information on housing
market stats?
Answer:
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.
For overall housing statistics, U.S.
Housing Markets (meyersgroup.com) regularly publishes quarterly reports on
home building and home buying. Your local builders association probably gets
this report. Finally, check with the U.S.
Bureau of the Census in Washington, D.C.; (301) 763-3199; census.gov.
The Chicago Title company also has published a pamphlet, "Who's Buying
Homes in America." Write Chicago Title 601 Riverside Ave., Jacksonville, FL
32204; (888) 934-3354; ctic.com.
Question:
Whose obligation is it to disclose
pertinent information about a property?
Answer:
In most states, it is the
seller, but obligations to disclose information about a property vary.
Under the strictest laws, you and your agent, if you have one, are required to
disclose all facts materially affecting the value or desirability of the
property which are known or accessible only to you.
This might 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.
Question:
What repairs should the seller make?
Answer:
If you want to get top dollar
for your property, you probably need to make all minor repairs and selected
major repairs before going on the market. Nearly all purchase contracts include
an inspection clause, a buyer contingency that allows a buyer to back out if
numerous defects are found or negotiate their repair.
The trick is not to overspend on pre-sale repairs, especially if there are few
houses on the market but many buyers willing to buy at almost any price. On the
other hand, making such repairs may be the only way to sell your house in a down
market.
Question:
Can a neighbor's property reduce the value
of my property?
Answer:
While it may not reduce the
actual value, a cluttered landscape next door 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.
Resources:
* "Neighbor Law: Fences, Trees, Boundaries and Noise," Cora Jordan,
Nolo Press, Berkeley, Calif.; 2001. Purchase
online.
Question:
What are the standard contingencies?
Answer:
Most purchase 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.
As a buyer, you could forfeit your 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 sellers 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.
Question:
What contingencies should be put in an
offer?
Answer:
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 sellers 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.
Question:
Are property taxes deductible?
Answer:
Property taxes on all real
estate, including those levied by state and local governments and school
districts, are fully deductible against current income taxes.
Question:
Are taxes on second homes deductible?
Answer:
Mortgage interest and property
taxes are deductible on a second home if you itemize. Check with your accountant
or tax adviser for specifics.
Question:
How do property taxes work?
Answer:
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.
Question:
What is an impound account?
Answer:
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.
Question:
Where can I learn more about appealing my
property taxes?
Answer:
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.
Question:
What is seller financing?
Answer:
Seller financing is when a
seller helps to finance a real estate transaction by taking back a second note
or even financing the entire purchase if the seller owns the home free and
clear. Usually sellers do this when a buyer has difficulty qualifying for a
conventional loan or meeting the purchase price.
Seller financing differs from a traditional loan because the seller does not
give the buyer cash to complete the purchase, as does a lender. Instead, it
involves extending a credit against the purchase price of the home while the
buyer executes a promissory note and trust deed in the seller's favor. These
special circumstances must be acceptable to the lender who makes the first
mortgage on the property.
The necessary paperwork is prepared by the title or escrow company after the
terms are worked out between the buyer and seller.
If you are a seller considering such an arrangement, it is critical to
thoroughly evaluate the creditworthiness of the buyer first. Fear of default
makes many sellers reluctant to take back a second. But seller financing can
bring a higher price plus complete the sale sooner in some situations. For more
information, contact the Internal Revenue Service for a copy of its Publication
537, "Installment Sales." Order by calling (800) TAX-FORM.
Question:
How are the rates set for seller
financing?
Answer:
The interest rate on an
owner-carried loan is negotiable. Ask your agent to check with a lender or
mortgage broker to determine the current rate on institutional first (or second)
loans.
Seller financing typically costs less than conventional financing because
sellers don't charge loan fees (points). Interest rates on an owner-carried loan
will also be influenced by current Treasury bill and certificate of deposit
rates. Sellers usually aren't willing to carry a loan for a lower return than
they would earn if their money was invested elsewhere.
Question:
What are the benefits of seller financing?
Answer:
Seller financing offers tax
breaks for sellers and alternative financing for buyers who can't qualify for
conventional loans.
If you are a seller, the risks you face are the same as those facing any lender:
Is the borrower a good credit risk? Will the property hold enough value over
time to allow for the repayment of all loans made against it?
You should run a full credit check on the borrower, require hazard insurance on
the property and include a due-on-sale clause. There also are financing,
disclosure and repayment-term requirements that need to be met. It is wise to
consult a lawyer when putting together this kind of transaction.
Question:
Are seller-paid points deductible?
Answer:
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.
Question:
Are taxes on second homes deductible?
Answer:
Mortgage interest and property
taxes are deductible on a second home if you itemize. Check with your accountant
or tax adviser for specifics.
Question:
What are the rules on capital gains when
inheriting a house?
Answer:
When children inherit a home,
the Internal Revenue Service determines their basis in the property on the date
of the owner's death. The cost basis is not the amount the owner originally paid
for the house, but the property's fair-market value on the date of the parent's
death.
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. For example, one of the three siblings sold his or her share of a property
to be divided equally, he or she must pay capital gains tax for whatever profit
made over one-third of the new basis.
Other tax consequences include estate taxes. However, the estate must total
$675,000 or more for tax year 2001 before tax issues become a concern. The IRS
allow residents to pass on property, cash and other assets worth up to a total
of $675,000 for tax year 2001 before charging the heirs any taxes. This figure
will rise each year for the next several years.
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. For more
information, consult the IRS's Publication 950, "Introduction
to Estate and Gift Taxes." Order by calling (800) TAX-FORM or download
from irs.gov.
Question:
Where do I get information on IRS
publications?
Answer:
The Internal Revenue Service
publishes a number of real estate publications. They are listed by number:
* 521
"Moving Expenses"
* 523
"Selling Your Home"
* 527
"Residential Rental Property"
* 534
"Depreciation"
* 541 "Tax
Information on Partnerships"
* 551
"Basis of Assets"
* 555
"Federal Tax Information on Community Property"
* 561
"Determining the Value of Donated Property"
* 590
"Individual Retirement Arrangements"
* 908
"Bankruptcy and Other Debt Cancellation"
* 936
"Home Mortgage Interest Deduction"
These publications are available for free online or by calling (800) TAX-FORM.
Copyright © 2005 Inman News Features
All Rights Reserved
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