Tips

All Your Home's A Stage 

Spring is here, and with it a new crop of homeowners seeking to cash out before interest rates rise further. Some are even hiring professional "staging" companies to dress their house into a Pottery Barn paradise. Or you can list your home with Warren and he will stage your home to sell quickly. But there are simple improvements you can make to your home on your own that may boost its chances of selling.

  • Make a favorable impression. Paint the mailbox, plant flowers and leave the porch light on all day. Buyers consider exterior lighting among the most desirable home features, according to the National Association of Home Builders.
  • Eliminate clutter. The typical buyer wants to upgrade to a 33 percent larger home, so start your spring cleaning now to create a feeling of extra space. Remove some clothes from closets (it makes them look bigger) and be aware that family photos can be distracting. Start packing now, if you list your home with Warren you will be moving soon.  
  • Let there be light. Brighter light creates an upbeat mood and can add more than $1,000 to your sales price. Buy cheap, decorative uplights and place them behind furniture, suggests Barb Schwarz, president of Staged Homes.
  • Appeal to the five senses. Keep the dining table set, burn scented candles and turn on light music. Home builder Toll Brothers bakes cookies or cinnamon rolls in model homes.
  • Highlight neighborhood assets. A high school team pennant can call attention to a good school district, says Toll Brothers Chief Marketing Officer Kira McCarron. More than 70 percent of buyers say neighborhood quality is essential.

Price with Precision By Martin H. Bosworth

Your neighbor’s home may have sold above list price in a few short weeks in early 2006, but that doesn’t mean yours will. That’s because California has entered what’s called a buyer’s market, so  buyers now have more properties to pick and choose from. In fact, year-to-year prices have declined as much as 30 percent in some areas since 2005, and many sellers are experiencing waits as long as seven months on the market, according to the CALIFORNIA ASSOCIATION OF REALTORS®.

Before placing your home on the market, you need to give careful consideration to pricing your home properly. Here’s how to do it:

Step Back: Buyers don’t care how much you paid for the home or how long your family has resided in it. Your home’s value is determined by how much a capable buyer is willing to pay for it. Your emotional attachment to the home should not factor into the process of setting a price.

Team Up With Your REALTOR®: Your REALTOR® is your best asset to ensuring an accurate and reasonable price for your market. Your REALTOR® can provide an impartial assessment and reconcile the gulf between price and value. Home sellers should interview several REALTORS® and inquire about their price opinion and tactics for selling the home, before choosing a REALTOR®.

Research: Your REALTOR® can obtain competitive market analyses (CMAs) of similar properties that have recently sold in your neighborhood, as well has homes that failed to sell and their listing prices. Your agent can provide counsel and advice on the data contained in the CMAs. In addition, your REALTOR® may recommend that you hire an appraiser.

Accent the Assets: Does your home sit on a corner lot? Is it in a good school district? Does it have new copper plumbing, a new roof, drought-resistant landscaping, or other improvements? These factors will boost your listing price. Remember, buyers are choosier—and they can afford to be in this market.

Spruce Up the Faux Pine Paneling: Your REALTOR® can help you evaluate your house objectively for any enhancements that will improve a potential buyer’s first impression or remodeling that can help assure a solid listing. In consultation with your REALTOR®, you can decide whether a professional home stager is needed to help improve your home’s appearance for open houses.

CMA - A competitive market analysis is a detailed report that compares your home to similar properties, with regard to location, design, and enhancements.

Appraisal - Your REALTOR® may recommend that you hire an appraiser. Typical costs are $250 to $500, according to the Appraisal Institute®.

Value versus price - Your home’s value is determined by how much a capable buyer is willing to pay.

Martin H. Bosworth is a writer/editor for Housing.com and ConsumerAffairs.com.

Proposition 8 – What is It?


In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when a property suffers a “decline-in-value.” A decline-in-value occurs when the current market value of your property is less than the current assessed value as of January 1.1

Seven tips for homeowners who can't wait until the market turns around

So you say you're selling your house? Hey, it could be worse. You could be selling a Hummer.

If you've been waiting for a good offer to come through, this probably isn't exactly big news to you: This is the worst home-selling market since Herbert Hoover was president. In much of the country, prices are already way down and probably heading even further south. Houses are sitting on the market for months longer than sellers expected.

 

 

 

 

 

 

 

And don't think this is just a momentary lull, a short slowdown before the market recovers and then takes off again. What you see today is the market you have, for now and, quite possibly, for a long time to come.

"At best, I think we're a year away from the bottom," says Sally Bodmer, who has sold Tampa-area real estate for 31 years and has never seen a worse selling climate. She operates mainly in the newer suburbs on the far eastern edge of the metropolitan area. It was a super-hot area in 2005, when developers couldn't build houses fast enough. "Now," she says, "you can't give them away."

To be sure, things are not awful everywhere. Prices in metropolitan areas bypassed by the Big Bubble -- places such as Charlotte, N.C., or Rochester, N.Y. -- have held relatively firm or risen modestly through the Big Bust. And in some of the worst markets, elite properties and houses in the best neighborhoods may still buck the trends.

But even the perennial playgrounds of the upper crust aren't immune. According to Zillow, a real-estate Web site, prices in Palm Beach, Fla., are down about 10% from last year. Prices are down 13% in Santa Barbara, Calif.

Call Warren Nass today to sell your House! 714-606-0329

 

 

 

So what's a home seller to do? What does it take to sell a house today?

If your job or life circumstances leave you no alternative other than to sell in this market, you must be prepared to go well beyond the usual feints and gimmicks if you want to get potential buyers in the front door and, ultimately, to the closing table. By all means, feng shui the living room, bury a statue of St. Joseph in the front yard and bake brownies before the open house.

But if you really want to sell the place, you need to think and act like a salesperson. Most important, you must separate your emotional attachment to your family home from your financial interest in your family's largest asset. Selling a house is business, and you must approach the sale in a businesslike manner.

Here are seven points to keep in mind:

1. DON'T WAIT AROUND.

Even in the better housing areas, it's taking a long time to sell houses; and in the hardest-hit metro areas, inventories of unsold homes are stretching well past 180 days.

So, don't try to sit out the market. That's what hundreds of other timid sellers are doing, each of them hoping -- somehow, some way -- that hanging on the sidelines will improve prices and, ultimately improve his or her chances for selling success. It won't. Not if you expect to sell anytime soon. If you want your place sold, the best way to make sure that happens is to put it up for sale.

Obviously, you should take advantage of your local market cycles -- early spring is usually better for selling in much of the country -- but otherwise don't try timing the market. You won't have any better luck than a stock trader who's always holding out for the market highs or lows.

2. FIX IT UP AND CLEAN IT UP.

Buyers are taking your house out on a date. It has to make a good impression.

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Don't spend a lot of money -- absolutely no big-ticket renovations -- but do see that everything is in good repair. And give the place a new paint job and a general sprucing up. (Caution: This won't necessarily give you any pricing advantage over less fixed-up places, but it will attract buyers and keep them interested.)

As you get closer to the date that the house actually goes up for sale, start moving out by decluttering the place. No buyer wants to see a house filled to the rafters with other people's things. They want to imagine their stuff filling the place. "Stage" the place with only enough furniture to make it look livable; put the rest in storage.

3. PRICE IT CHEAPLY.

Don't fight the market by trying to price your house at bubble-era levels or by factoring in all those improvements you made. It won't fly.

Set a realistic, salable price on day one. Don't let the house hang around on the market as you gradually lower the price. Forget what you think the house should be worth or what it was worth three years ago. That's not what it's worth today.

Smart buyers will be looking for bargains. So you must set your price below comparable nearby properties. Look at the asking prices of neighboring houses, and set your price to beat them. If prices in your area are generally down 20% from where they were at the bubble peak in 2005, then price your house 25% to 30% below its peak bubble value. Your area down 40%? Be prepared to take just half of what the house was worth three years ago. Yes, it's painful. But if you want to sell, you don't have much choice.

And remember: In much of the country, renting is still a better deal right now than buying. As you try to settle on a price, look at rents on comparable properties. Buyers are not likely to be counting on huge price appreciation, as they did during the bubble, so they may be less willing to take on the higher monthly costs of home buying and owning. You must set a price that makes someone's prospective mortgage and home-owning costs look like a better deal than a month's rent.

4. HIRE A TOP REAL-ESTATE AGENT - WARREN NASS.

Get the best, most aggressive selling (listing) agent you can find.

When everything was selling before it even hit the market, of course, you didn't need the best. You just needed the cheapest. But not these days.

Fortunately, in this market, real-estate brokers are even more anxious than you. They're eager to get whatever work they can, so don't rely on your cousin with the real-estate license or your best friend's wife.

Ask, instead, for the local real-estate office's top salesperson. All offices have one or two sellers who greatly outperform their colleagues. That's who you want.

Interview various agents and insist that they present you with a well-conceived marketing plan that goes way beyond the usual Internet page, one or two open houses and a yard sign. (Think about using a professional photographer for multiple shots on the primary Web listing, your house as the featured "home of the week" in the local newspaper, a decorating segment on a morning chat show, a stop on the local garden club's spring tour.)

Sellers of higher-end properties should be able to negotiate a lower commission percentage, but this is no time to quibble over a couple of percentage points. Also, offer the agent a big bonus if he or she sells the house in 30 days or at your asking price. Offer other agents bonuses if they bring in the ultimate buyer.

5. PROMOTE. PROMOTE. PROMOTE.

Don't rely on the agent to do all the work. The agent should pay the usual marketing costs, but you should be prepared to pony up for extras, especially if you insist on more expensive or untraditional promotions.

You want the house listed regularly in local newspaper classifieds and, if it's a special, high-end property in a desirable location, in national publications, too.

Make sure your house is on the leading real-estate Web sites; Trulia, Zillow, Cyberhomes, Eppraisal and Realtor.com are some of the top ones.

Beyond that, get really creative. Advertise in corporate newsletters and intranet listings. Check in with local relocation firms that help transferring corporate executives find new homes. List the house on eBay. Put it on Craigslist. Put it in your church bulletin.

Trophy house in an upscale neighborhood? Hire a string quartet for the open house. Something a bit more midmarket in a family-friendly subdivision? Put a clown on the corner handing out brochures.

6. PLAY THE BANKER.

As bad as things are, there's one big factor in your favor: the tight credit market. If you have no mortgage you have to pay off, your strongest selling point might be your ability to finance all or a substantial part of a buyer's purchase.

You're a lot more flexible than a bank that has the Federal Reserve looking over its shoulders, so you might even be able to charge a higher interest rate than a commercial lender as well as command a higher sale price. (You'll need a real-estate lawyer to make sure everything is done to protect you and an accountant to set up a payment system. Peer-to-peer lenders such as virginmoneyus.com have systems to handle mortgage payments.)

Worst case? Your borrower defaults and you take the property back. And sell it again.

7. TAKE THE OFFER.

If any qualified buyer comes in with a reasonable offer, be prepared to accept it.

You don't want to lose the deal by digging in your heels over a few dollars. Every real-estate office keeps records that show the percentage difference between asking and selling prices, so it's easy to figure what's an appropriate offer and what's not.

Negotiate, of course, but recognize that the buyer has a lot more clout than you do. Your house, as wonderful as you think it is, is worth only as much as someone is willing to pay for it.

And that, unfortunately, will probably be a lot less than you think.

--Mr. Crook is editor of The Wall Street Journal Sunday and author of "The Wall Street Journal Complete Real-Estate Investing Guidebook." He can be reached at david.crook@wsj.com.

 

Nail That Sale  by Kate Ashford and Donna Rosato MONEY Magazine
 
ASkrivanek and Gu - Their problem: Tough competition
Home location: Georgetown, Tex. (suburb of Austin)  Original list price: $163,000
Time on the market: 6 months

When Britt Skrivanek landed a new job in northern Virginia last September, he and his wife Athena Gu were excited. The job - developing software applications for a big defense contractor - meant a fatter paycheck and a promising new career track for Skrivanek, a former artillery specialist who left the Army in 2003 to work in information technology.

The game plan: Gu would stay in Texas with their four-year-old daughter Deanna, continuing her job as a data analyst for the University of Texas until their home sold. The couple figured the separation would last a few months. But nearly six months and more than 50 showings later, they've gotten only one offer, which fell apart in a clash between the buyers and the homeowners association.

They've tried sprucing up the place to enhance its appeal by adding a formal table and chairs to the dining room, storing some furniture and personal items to make the rooms appear more spacious, and repairing broken fixtures. Still nothing.

Meanwhile, Britt lives in a one-bedroom rental apartment and flies home once a month - the couple can't even think of buying in the more expensive northern Virginia area until they sell their Texas home. And they're desperate to reunite as a family. "We never thought it would take this long," says Britt. "Living apart is really stressful."
 
Create a better first impression
Buyers usually seek out large rooms, and clutter is never appealing. To ensure that Skrivanek and Gu's house looks inviting to prospective buyers when they first walk in, Barie Pinnell and Evie Boston, stagers at WRE Interiors, suggest a few visual tricks to make the sparsely furnished living room and den look warmer and more spacious.

Among them: Create a focal point in the living room by moving the couches away from the walls and positioning them adjacent to the fireplace. Then add new curtains and throw pillows to brighten up the room. The nearly empty den would look better with a neater desk and bookcase, art work on the wall and computer wiring tucked away.

Becki Gregg, owner of Home Girl Staging, urges Skrivanek and Gu to clear off countertops and clean out closets to make the house look more spacious. She says, "It's hard for a homeowner to see that items they use every day, such as a calendar on the refrigerator or a coffeemaker, just look like clutter to a potential buyer."
 
Fix what's missing
You have to understand what the competition has that you don't. So visit open houses in the area and do some honest comparisons, advises Vickie Sneed of Hot on Staging.

Skrivanek and Gu fall short on landscaping: Although Gu has planted a few bulbs in the yard, it looks bare compared with their neighbors' lush foliage. For less than $100 they can put mulch on the planting areas, trim shrubs and add colorful annuals to the planters on their front porch.
 
Make it look like a bargain
Skrivanek and Gu, like most sellers, based their asking price on what other homes in their neighborhood were listed for. Instead, they should ask their realtor for the going price on houses that are under contract or have sold in the past month or two.

"You have to look at what's actually selling, not what people are hoping to sell their homes for," says Denise Riordan, a vice president at realtor NRT. Then price the home lower than those recent sales so it looks like a great deal.

"You need a dramatic number to generate interest," says Riordan's partner, Jay Schweppe. Best-case scenario: The perception of value will attract multiple bids as buyers compete with one another, driving up the price.
 
Get past old expectations
Listing your house below what other homes in the area are selling for is a tough emotional hurdle for many homeowners, especially if neighbors sold their homes for much loftier amounts just six months or a year ago. But with a new development going up just across the road - one that's offering powerful incentives to both buyers and realtors - it's especially important for Skrivanek and Gu to undercut the competition on price.

Yet they can't bring themselves to go that far: Although Riordan and Schweppe's formula suggests a deeper cut, the couple decide to lop $2,000 off their price, bringing it to $161,000. Riordan is pleased that they've lowered the price but worries that the drop won't be quite big enough.

"Sellers still want what their neighbors got two years ago, but that's ancient history in this real estate market," she says. "You have to put aside your emotional attachment to your home and treat the sale like any other business transaction."
 
Generate more enthusiasm
Aggressive marketing can help a home break away from the pack when there's an oversupply of houses on the market. Riordan urges Skrivanek and Gu to update their MLS listing and hold open houses, both for the public and for realtors who represent prospective buyers. If the agents like what they see, their clients will soon follow.


Update: After updating their MLS listing to reflect some of the changes recommended here, Gu and Skrivanek held an open house in March and got an offer the same day. The final price, $159,000, was just $2,000 below what they'd hoped to get. Most important, they are overjoyed that the whole family will soon be living together again.
 
The Leochas - Their problem: Too soft a sell
Home location: Fairfax, Va.  Original list price: $729,000
Time on the market: 9 months


Jeannie Leocha lights up when she talks about the house that she and her husband Joe plan to build in Winter Haven, Fla.

The 3,000-square-foot structure will have three big bedrooms and a huge lanai with a lakefront view - the perfect place to enjoy Joe's retirement from his job as a lease-disposition specialist with the Navy Federal Credit Union. (Joe's last day of work was March 1.)

"I know what the house is going to look like and feel like," says Jeannie. "I'm dying to get going."

But the Leochas can't give their builder the go-ahead until they sell the home they're in now. And after nine months on the market, the house hasn't elicited a single offer.

The couple, who are trying to sell the property themselves, have spent about $6,000 to make the house look more appealing - painting most of the rooms, cleaning carpets, refacing the kitchen cabinets and installing new light fixtures.

They've held three open houses and dropped the price twice, from $729,000 to $696,000, then again to $676,000. Still no offers.

And the financial pressure is building. Since Joe retired the couple's health insurance bill has risen sharply, and the cost of living in Fairfax is far higher than in Florida. "I think if we could just get more traffic, the house would sell," Jeannie says. "It's frustrating."
 
Get aggressive about marketing
In a tough market, you need all the help you can get. Since the Leochas aren't working with a realtor, they have to be especially assertive about bringing their property to the attention of buyers.

Toward that end, they paid $900 to list the house on ForSaleByOwner.com and put it on the multiple-listing service so realtors representing buyers see it.

But, says David Lawrence, author of For Sale by Owner, "they have to be a lot more aggressive than that." He suggests they advertise in the local newspaper (cost: less than $250 for an eight-line weekend ad), distribute fliers at local realtors' offices and hold an open house for buyer's agents.

They should also add a virtual tour to their Web listing and update their MLS description or add new photos every 30 days, since realtors sometimes sign up their clients for automatic e-mails of new and updated MLS listings.
 
See your house as others see it
In this market, buyers aren't going to select a home based on its possibilities. Instead, says realtor Damon Nicholas, "they'll choose what they want to live in now."

The Leochas have listed their home as a four-bedroom, but the house technically has only three - the fourth bedroom, in the basement, isn't a legal bedroom because it doesn't have a closet.

Moreover, the design isn't as family-friendly as four bedrooms above ground, and most people want to use a basement as a rec room.

Jeannie believes that a buyer who really wants a fourth bedroom on the top floor could convert the giant master suite into two rooms.

But Candace Moe, a realtor and co-owner of Staged Homes of Virginia, thinks prospective buyers may feel misled once they see the house.

The advice: Change the listing to a three-bedroom with a finished basement, and turn the downstairs space into the study
 
Smart cosmetic fixes
Of course you hate to spend money on a home you are trying to sell. But a few targeted investments to make the house look better can pay off in a faster sale or a better price.

The Leochas' bathrooms are outdated, for instance, so Moe suggests refinishing the cabinets, installing new light fixtures and updating the knobs and faucets for a more modern feel. Cost: $200 to $400 per bathroom.

If you have a discerning eye, you can figure out the most effective changes to make yourself. Or you can hire a professional stager: A consultation might cost $200 to $400; if the stager executes the plan, expect to pay between $1,500 and $6,000, depending on the work involved.
 
Make it vanilla
Buyers need to be able to visualize their own belongings in a room, says Moe's partner, Chelle Gassan. If your taste is too unusual, they can't do that.

The Leochas, for instance, had teal-colored walls in the master bedroom but repainted them a more neutral color at Gassan's suggestion. The stager also recommended removing a standing glass cabinet filled with knickknacks from the foyer.

"People walk in and look at your stuff, not your house," Gassan says. The goal is not for people to admire your home but for them to be able to imagine it as theirs
 
Price it right
Nothing counts more than price. The Leochas used the price of other homes in the area as a benchmark to set their asking price. But most of those houses have four bedrooms; since the Leochas' home has only three, it is overpriced by $50,000, says Joe Grouby, a member of the American Society of Appraisers.

Realtor Moe recommends dropping the price from $676,000 to $624,900. But the Leochas balk, convinced that they can get more, and drop the price by just $26,100 to $649,900.

Says Jeannie: "We want room to negotiate."
 
Shower them with extras
Everyone likes to think they're getting a bargain. Even a small incentive can make buyers believe they're getting the better end of a deal and may tip the scales in favor of a sale.

While the Leochas can't match the freebies that builders are increasingly offering on new homes - gourmet kitchens and spending sprees at Pottery Barn, for example - they might offer to pay some of the buyer's closing costs, provide a home warranty covering repairs for the first year (say, if the AC breaks down or the fridge dies) or throw in a washer and dryer for free.

To entice more brokers to show the property, their marketing materials should trumpet the fact that they're paying the traditional 3 percent commission that buyer's agents get. Hey, realtors need a little motivation too.

Update: The Leochas have made most of the suggested cosmetic changes but haven't done more marketing and are holding firm on the four-bedroom listing and price. They still haven't gotten an offer, in part because so few buyers have come to look at the house. If their home doesn't sell soon, the couple say, they'll hire a realtor to take over the marketing for them.
 
Garage Sale Time

Now is a great time to get rid of all those unnecessary things you accumulated - things you no longer want or need - and bring in a little extra cash at the same time. 

A garage sale is not hard to prepare for and can be fun!  Enlist the help of the whole family in organizing and pricing your merchandise.  Perhaps you could arrange a joint sale with a few neighbors.  Advertise the sale in your local paper and with signs placed around the neighborhood.  I would suggest advertising in the local Recycler or Pennysaver. Be prepared to bargain and drop prices, if necessary, to clear out your inventory.  Make arrangements with a local charity to collect all the leftover items after the sale. Some cities may have limitations or require permits for garage sales. Depending on the area, I may be able to provide some signs.  Limit your times from approx. 7:00 or 8:00AM to 1:00PM - Fri., Sat., and Sun. State "No Early Birds!"  

Tax Deductible Moving Expenses

Many of the expenses connected with moving may be tax deductible, if the move is job related.  Some of these include:

The cost of moving your household goods.

Expenses incurred while house-hunting.

Travel expenses during the move for you and your family.

The cost of meals and temporary lodging for up to 30 days after you get the new job.

The expenses, of selling your house and buying a new one.

To substantiate your claim, keep an accurate, detailed account of your moving expenses, including all receipts.

Effective January 1, 2007, AB 1169  reestablished the 60-day notice requirement for residential landlords to give tenants in order to evict such tenants if the tenants have lived on the property for more than one year and are currently living under a periodic tenancy.  A landlord is still only required to give a 30-day notice to terminate a tenancy, however, when the following factors are all present: 1) the dwelling is a single family home, 2) an escrow has been established with a bona fide purchaser, who is a natural person, to buy the property, 3) the buyer intends to occupy the property as a principal residence for at least one full year, and 4) the notice is given within 120 days after the escrow is opened and was not given previously to the tenant.

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California Capital Gains Taxes

Under existing law, escrow companies are required to withhold 3-1/3 % of the sales price in any sales transaction that is not exempt.  (Some common exempt transactions are those involving principal residences or 1031 exchanges)  Effective January 1, 2007, pursuant to AB 2962, a non-exempt seller may choose to have escrow not withhold the full 3-1/3% of the sales price but instead may choose to have the escrow company withhold a sum of money equal to the maximum California personal or corporate tax rate (currently 9.3% for individuals) multiplied by the anticipated recognized gain on the transferred property.  Thus, even if the seller is not exempt from withholding, the seller can choose to have escrow withhold only the actual California capital gains tax owed, rather than an arbitrary 3-1/3% of the sales price.

10 Most Overlooked Real Estate Tax Deductions

What tax deductions can I take on my property?

Home acquisition mortgage loan fees. If you have bought a primary or secondary home in the past year, you probably obtained a mortgage to finance the purchase. That mortgage is called an "acquisition mortgage" because it enabled purchase of the residence. If you paid a loan fee to obtain that acquisition mortgage, usually called "points", that loan fee qualifies as an itemized interest deduction for each point paid

Home improvement loan fees. Similarly, if you paid a loan fee to obtain a home improvement loan, that loan fee is fully deductible in the tax year it was paid.

Loan fees paid to refinance a home loan or borrowed against other real estate. If you refinance your existing home loan, or borrowed against other real estate such as an apartment building, any loan fee you paid must be deducted over the life of the mortgage.

When refinancing, deduct any un-deducted loan fees. Thanks to low mortgage interest rates, many homeowners refinanced again after previously refinancing a year or two earlier. These homeowners should remember to deduct on the income tax returns any un-deducted loan fees from a prior mortgage refinance.

If yon bought or sold property in the past year remember to deduct prorated real estate taxes. A major tax deduction many real estate buyers and sellers overlook is the prorated property tax they paid at the close of escrow. Even if the other party remitted the payment to the tax collector, buy you were charged a prorated portion of the tax bill, be sure to deduct your share on your return.

Deduct prorated mortgage interest in the year of property purchase or sale. Similarly, If bought a residence and took over an existing mortgage, don’t forget to deduct your prorated interest share for the month of the sale. Your closing settlement statement shows your prorated share of mortgage interest.

Mortgage prepayment penalty. If you paid off an existing mortgage early and were charged a prepayment penalty by the lender, that prepayment penalty qualified as an itemized deduction.

When land rent payment qualify as interest deductions. Millions of home are located on leased land.. IRS code 163 allows land rent to be deducted like interest when the lease: a) is for at least 15 years, including renewal periods; b) is freely assignable; c) contains a present or future option to buy the land; and d) is like a security interest, such as a mortgage. Payments to buy the land are not deductible, nor are the ground rent payments deductible if you do not have the option to buy the land, such as in a mobile home park.

Home construction loan interest. If you built a new home in the past year, or are building on now, don’t forget to deduct the construction loan interest paid. It’s deductible if the construction period does not exceed 24 months before occupancy of your principal residence.

Deduct prepaid property taxes and mortgage interest. If you prepaid your current year's real estate taxes last year, as homeowners do to increase their tax deductions, or if you pay your January mortgage payment in December of the previous year, don't forget to deduct these extra mortgage interest and property tax payments on your income tax returns.

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Special Care for Pets & Plants

Moving companies are not allowed to handle the shipment of pets, so you you will need to explore your alternatives.

Shipping animals by air is the fastest and most convenient method.  Most airlines are familiar with the care and handling requirements of animals.

If you must take your pet with you in the car, call ahead to make sure pets are allowed at your overnight stop.  Check with your veterinarian for hints that could make the trip more enjoyable for both you and your pet.  Before moving, be sure licenses and all vaccinations are up-to-date.

House plants do not travel well in the dark interior of moving vans.  Plants are difficult to pack and may have to survive several days without light and water.  Moving companies will not guarantee the condition of plants that are shipped and some states will not allow you to bring plants across their state line due to the possible transportation of harmful insects or diseased vegetation.   Check ahead before bringing plants with you to ensure that you will be allowed to cross state borders with them.

Preparing Your Home For Sale

Whether you're ready to sell now or just curious about the process, we can help.  Many homeowners begin thinking about selling long before they are really ready to move!

The sale of property in California involves legalities that even a For Sale By Owner must conform to.  We provide the following services in preparing your home for sale.

Provide a free, no obligation market evaluation for your property.

Recommend that you consult with your favorite real estate attorney or tax consultant.

Provide an estimate of your cost of sale and your net equity based on your property.

Inform you of building codes and current laws which may apply to your property.

Explain Fair Housing Laws.

Provide you with a copy of the California Seller Disclosure Act form.

Explain why offering a home warranty for your property may be in your best interest.

Help you decide if your property should be inspected by a certified home inspection service.

Help you determine which repairs are necessary and which are not.

Is your laundry room a fire hazard?

If you're like most people, you may often start the dryer and walk away without giving it a second thought. If dryers are not properly maintained, they can catch fire. Such fires have been responsible for nearly $100 million in damages in a single year.  

Lint, dirt and other debris can accumulate in the vent due to improper maintenance. This limits air circulation and causes build up of heat. If the debris gets hot enough, it can catch fire.

There are some obvious indications that your dryer vent may need to be cleaned, including lengthy drying times, deactivation due to high temperatures, and increased heat and humidity in the area of the dryer.

Maintaining your dryer vent can help keep your dryer running safely. Here are some tips to consider:

Make sure the vent length does not exceed the dryer manufacturer's recommendations. Include elbows, transitions and outdoor hood assemblies in your measurement. If the vent length exceeds the manufacturer's recomendation, move the dryer or consider installing a booster fan.

Regularly inspect and clean the lint screen, duct and outdoor hood. Depending on the vent length, options include cleaning the vent yourself with the proper tools or hiring a professional to complete the job.

If you have plastic, flexible duct, check it frequently for kinks. This type of duct is more likely to trap lint than ducts without ridges. You may want to replace it with a rigid or flexible metal duct.

Never run dryer when no one is home, or when everyone is asleep. In the event of a fire, you want to be able to respond quickly.

With regular maintenance, you can detect dryer vent problems berfore they become fire hazards.  

Source:  Nationwide.com

Cost of Keeping Cool Expected to Heat Up

Sep. 19--Temperatures are starting to fall after one of Chicago's hottest summers, but prices for central air conditioners are forecast to climb.

The reason? New federal energy regulations will make 90 percent of the systems now produced obsolete next year. The next generation of cooling systems will be bigger and more expensive--as much as 50 percent more expensive by some estimates--but is aimed at saving homeowners money in the long run through lower utility bills.

Manufacturers of residential air conditioners are scrambling to meet the new standards, which go into effect Jan. 23, while distributors, contractors and service companies are bracing for sticker shock.

Though some of the current low-efficiency systems may be in the inventory of distributors or installers early in 2006, shoppers looking to buy new units by midyear "will not have an option," said Halsey Cook, the Indianapolis-based president of North America Residential Air Conditioning for the Carrier Corp., the biggest domestic producer of residential central air-conditioning units.

About 8 million residential central air conditioners are sold each year, according to Karl Zellmer, vice president for air conditioning sales for Emerson Climate Technologies, a maker of air-conditioner components. Seventy percent are replacement units, while the remaining 30 percent, most minimum-efficiency models, are installed in new homes, he said.

Like automobiles, household appliances are covered by government rules to improve energy efficiency.

Seasonal energy efficiency ratio, or SEER, measures the efficiency of air conditioners. All air conditioners cool the air, but SEER is akin to the miles-per-gallon ratings for automobiles and measures the amount of energy it takes to run the system. The higher the SEER rating, the more efficient the system.

The current minimum 10 SEER was mandated in 1992. In 2006, 13 SEER will become the new minimum standard. Models up to 21 SEER already are on the market, and those below 13 will be discontinued.

The stricter standard does not apply to window units and will not affect current parts and service agreements.

Supporters of the switch say the new air conditioners will be 25 percent to 30 percent more energy-efficient, which with rising energy prices should save homeowners on utility bills.

"We think people will want to do this because of the rising price of oil and the talk of natural gas going up," said Cook, who noted that higher-SEER units will save consumers an estimated $100 annually, more for those who live in the South.

"It will be a tremendous energy savings" that will help fight global warming while stabilizing "summer-time electricity" in places like New York and New Jersey where on hot days the air-conditioning load is 25 percent of the total electric grid, said Katherine Kennedy, senior attorney for the National Resources Defense Council, based in New York.

Air-conditioner manufacturers are retooling product lines and factories to meet the new rules. Carrier, for instance, is investing $250 million in a redesigned product line and the expansion and retooling of a plant outside of Memphis.

Product revisions are necessary mostly because the new systems will be 20 to 50 percent larger than current models.

"You have to add more heat exchange surface" to achieve the improved efficiency, explained Glenn Hourahan, vice president of research and technology for the Air Conditioning Contractors of America, an industry trade group. Those added surfaces of copper and aluminum will push unit prices up.

How much higher is difficult to say. Stephen Yurek, general counsel for the Air-Conditioning and Refrigeration Institute, the industry trade association, said he has heard estimates from $150 to $700 in additional costs before installation. Because of the size, weight and complexity of the units, installation costs are expected to rise.

Those figures and a number of other changeover questions concern contractors and those who service air conditioners.

Matt Prazenka, vice president of operations for Northbrook-based American Weathermakers, a residential heating and cooling service, said he believes "the real surprise will be for some condo owners" who may find installation costs skyrocketing.

While the installation should be easier in single-family homes, he expects costs for the new systems to be significantly higher.

Replacement for a 3-ton 10 SEER outside condenser appropriate for a 2,400-square-foot house is about $2,300, he said. Based on past experience with new models, he estimates that next year, the outside condenser will cost about $2,850 to $3,000.

"Add $600 for a new evaporator coil in the furnace to be compatible with the condenser and $200 for an new expansion valve, and you are looking at $3,600," said Prazenka.

He also questions whether the savings touted by suppliers would apply to Chicago-area consumers.

"There are merits to the change," he said, citing the reduced utility bills and noting that more efficient units are usually quieter and more reliable.

"But can I justify the additional cost? If you are in Florida, the 13 SEER makes a hell of a lot of sense. But you are applying one standard across the board. In Minnesota, it doesn't make any sense. In Chicago, ditto. You have 600 hours annually of usage," Prazenka said.

Air-conditioner producers and their unlikely allies, environmentalists, say such concerns are overblown.

"It will mean slightly higher costs, but it will pay back," said Cook. It is true "it pays back quicker" in Phoenix than Chicago, but "seven or eight years is the highest payback time I've seen. Our equipment has a 15-year life."

And at the National Resources Defense Council, Kennedy defended the single standard of 13 SEER, pointing out it will reduce electric consumption while maintaining comfortable conditions.

And she predicted prices will eventually drop.

"What we have seen from other products like refrigerators, even as they have become more efficient, prices have gone down," said Kennedy. "Refrigerators today use one-third of the electricity, and the real price has gone down. When manufacturers are given a standard to meet, then they figure out ways to bring the cost down."

Andrew deLaski, executive director of Appliance Standards Awareness Project, a Boston-based coalition representing environmental and consumer groups, added: What is "cost-effective in Mississippi is not cost-effective in Minnesota. What you have is a compromise."

Some public utilities offer rebates for more energy-efficient appliances, which may make the payback quicker.

"Air-conditioner rebates are not something we offer at this time, but we are willing to consider it," said a ComEd spokesman. "We've done rebates in the past for clothes washers, refrigerators and lighting."

In a recent ComEd program, 1,000 low-income customers in Chicago participated in an exchange of old air-conditioner units for newer, energy-efficient ones. The utility plans to expand the program outside of Chicago later this year.

Freon, the refrigerant used in most residential cooling systems, also will be phased out by federal mandate. By 2010, R22, commonly known as Freon, will be eliminated in favor of a new environmentally friendly refrigerant R410A, known by the trade name Puron.

About 70 percent of air-conditioner units are built with Freon, and while some supplies of Freon are likely to be available beyond the changeover date, the refrigerant likely will become more expensive as supplies dwindle.

Buffalo Grove resident Steve Handler upgraded his air-conditioning system to a 15 SEER unit after his 20-year-old unit conked out in March.

"I am looking at living in this house for the next 20 years," Handler said. He opted for the higher-efficiency model, figuring he will recoup some of the higher cost with savings on his utility bills.

Handler said his system's efficiency will be "higher than what is going to be required" and it uses Puron rather than Freon. While he has not had his new air conditioner long enough for a real test of utility savings, he noted, "I have a bigger house, and I am using less kilowatt hours."

To see more of the Chicago Tribune, or to subscribe to the newspaper, go to http://www.chicagotribune.com. Copyright (c) 2005, Chicago Tribune.   Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.  UTX, Source: Chicago Tribune. Publish Date: 2005-09-19

Should You File a Homestead Declaration?

The filing of a declared homestead does add to the homestead protection that the law automatically provides to all homeowners. While the typical homeowner need not file a declared homestead to enjoy some basic homestead protection, homeowners who are in financial trouble, or who expect to be in financial trouble, probably should file a homestead declaration, just to be on the safe side.

The following are some of the reasons that a homeowner who is or expects to be in financial trouble should file a declared homestead and not rely exclusively on the automatic homestead:

The owner who files a declared homestead can choose which of several different dwellings will be protected as the person’s home.

The protection that is provided by a declared homestead will continue to apply to that homestead even if the owner moves. If a declared homestead has not been recorded, the automatic homestead protection may be lost if the owner moves.

The protection that is provided by a declared homestead will apply to the proceeds of a voluntary sale. If no declared homestead has been recorded, the protection of the owner’s equity in a home may be lost in the event of a voluntary sale of the home. (This means that the proceeds of the voluntary sale of the home will go to the judgment creditor or creditors rather than the owner.)

If a declared homestead has been recorded, the law is clear that the proceeds of sale (up to the dollar limits of the homestead law) can be used to purchase another home.

Only if a declared homestead has been recorded will the proceeds of a voluntary sale assuredly be protected after they are used to purchase another home; only then will the protection given to the first home be carried over to the second home.

However, neither the automatic homestead nor the declared homestead will protect a homeowner against the loss of his or her home to a secured creditor -- such as the lender who has financed the original purchase, or a lender who extended a second mortgage loan, or to a contractor, subcontractor or laborer who has filed a valid claim of mechanic's lien. The protections of both the declared and automatic homesteads, however, extend to most other kinds of creditors.

A homeowner who is in financial trouble, or one who expects to encounter financial trouble, should consult an attorney for advice on how to protect their home.

A homeowner may prepare and file a homestead declaration by carefully following a good "do-it-yourself" guidebook.

You bought your home because of the many things you love about it and its hidden potential. But before find yourself in a megastore with hundreds of feet of crown moulding in tow, consider what projects should be done by a professional and which require a permit. You might be surprised! 

Do-it-yourself.

Many of the projects on your wish list can be done without bureaucratic intervention. But it's important to check with your local municipality to find out if a building permit is required before making modifications.  Even small projects such as installing a water heater or building a fence may require permits.  While a permit may add time and expense to your project now, if the building department finds illegal work down the road, the fines could be staggering (up to nine times the permit fee in some cases).  Plus, it could sour the deal for a prospective buyer: An appraiser may ask for permit records to determine your home's value.  Without paperwork, your buyer may be denied a loan.

Hire out.

Complex jobs - those that involve moving walls or creating a new space - may benefit from a team of professionals.  Even if you already have a detailed plan, many professionals will review your plan and offer suggestions for an hourly consultation fee.  For a large build out, you'll want to consider hiring an architect-contractor duo or a design-build company.  And it's a good idea to consider a kitchen, bath or interior designer to ensure that you end up with the look you've been dreaming about.  Bonus: Most contractors pull required permits as part of their project scope and fee.  But be sure this is clearly spelled out in the contract.

Sleep on it.

The last thing you want to do is *remuddle rather than remodel.  So before you rearrange a turn-of-the-century floor plan to have a contemporary feel, or add Victorian crown moulding to a modern structure, consider the "bones" of your home.  Likewise, even if you despise the stone flooring in your kitchen, think about the resale value before topping it with laminate wood flooring.  After all, what you dislike about your home may be just the thing that helps it sell down the road.  

Remuddle v. - The act of remodeling your home without regard to architectural style and resale value. "By putting up imitation crown moulding in her midcentury modern home, she just remuddeled it."

You may skip the paperwork for: Replacing portions of the roof with the same material, Painting eterior or interior walls, Replacing a window or door within the same frame, Installing new flooring, Replacing a faucet or plumbing valve.

A Permit is probably needed for: Replacing a roof, Building a deck, Replacing an electric stove with a gas model, Replacing plumbing fixtures, Building a retaining wall, Building a fence.  You may also need separate electrical, plumbing and mechanical permits.  Always check with your state's permit office.

Recall - Over The Range Microwave Hood Combination

Important Safety Notice -- Fire hazard, do not use microwave.

In cooperation with the U.S. Consumer Product Safety Commission (CPSC), Whirlpool Corporation, of Benton Harbor, Mich., is voluntarily recalling about 1,800,000 Whirlpool, KitchenAid and Kenmore brand "over the range" microwave-hood combinations. The recall does not include countertop microwaves. Use of the microwave-hood unit poses a risk of fire, which could cause personal injury or property damage.

This recall involves Whirlpool, KitchenAid and Kenmore brand microwave-hood units with serial numbers that begin with XC. The serial numbers, as well as the model number, can be found on a label on the bottom edge of the food cavity, inside the microwave door.

Department, mass merchandise and appliance stores, as well as builders and re-modelers sold the microwave-hood units nationwide from January 1998 through September 2001 for between $249 and $749.

Consumers with recalled microwave-hood units must immediately stop using the unit and disconnect the unit by unplugging it. Every potential user of the unit should be informed of the risk of fire and told not to use the microwave.

 

Property Taxes

Supplemental Assessments


State law requires the Assessor to reappraise property upon change in ownership or completion of new construction. The supplemental assessment reflects the difference between the new value and the old value. The Auditor-Controller calculates the supplemental property tax, and prorates it, based upon the number of months remaining in the fiscal year in which the event occurred. The fiscal year runs from from July 1 through June 30.

A change in ownership or new construction completion which occurs between January 1 and May 31 results in two supplemental assessments and two supplemental tax bills. The first supplemental bill is for the remainder of the fiscal year in which the event occurred. The second supplemental bill is for the subsequent fiscal year.

Notices of Assessed Value Change are mailed to property owners before supplemental tax bills are issued.

Remember that supplemental tax bills are in addition to the regular annual tax bills. Supplemental bills go directly to the property owner, and not to an impound account - where one might exist.

Benefits of Proper Pricing

Faster sale: When your home sells faster, you save carrying costs, mortgage payments and other ownership costs. A quicker sale creates less inconvenience for you.

If you've moved before, you know the energy it takes to prepare for showings: keeping the home clean, making child care arrangements and altering your lifestyle. Proper pricing reduces these demands on you, by helping your home
sell faster. At market value your home will gain exposure to more prospects who can afford the price. Sellers who list at a high price are looking for that one buyer who will pay it. Sellers often do not realize that they have discouraged
many potential buyers who could have afforded the home. The final sales price is probably one that will be affordable by more purchasers. This is because sellers many times accept a much lower price at a much later date since that one buyer willing to pay the higher price never comes.

Increased salesperson response: When salespeople are excited about a home and its price, they make special efforts to contact all of their potential buyers. Knowing that it is priced properly for its market, they expect it to sell soon and encourage their prospects to act quickly. Their excitement is contagious!

Better response from advertising and sign calls: Ad calls and sign calls to Realtors turn into showings when price is not a deterrent. Most serious prospects are well educated about asking prices in the areas they are seeking. They will not waste their time on a home they consider overpriced.

Higher offers attracted: Buyers fear they might lose out on a good home when it is priced right. They are less likely to make "low ball offers." Better pricing attracts multiple offers, too!

Means more money to sellers: If a home is priced right, the excitement of the market produces higher sale prices. You net more both in terms of actual sale price and in less carrying costs.

Can't sell? Stop trying -- better yet, figure out what you're doing wrong By Lew Sichelman, United Feature Syndicate March 25, 2007

WASHINGTON — If your house has been for sale for almost 90 days, nothing has happened and the listing agreement is about to expire, you have some tough decisions to make.

Although you can always take the house off the market and wait for better times, that's not really a viable option for most people. However, if you sincerely would like to sell but don't really have to, taking down the "for sale" sign for a few months may be just the ticket.

That's because one of the first questions most buyers ask is, "How long has the house been on the market?" If the answer is a long time, the general perception is the house has something wrong with it or is overpriced.

If you don't have the luxury of time, however, you have essentially three alternatives: Extend the listing with the same agent, sign up with another agent or try to sell on your own. But before you determine which choice is best, take a moment to consider why your place hasn't sold.

There are usually three reasons, said David Knox, a real-estate sales trainer based in Minneapolis, Minn.: The marketing plan is poor or nonexistent, the place is not in selling condition or the price is too high.

Price is most often the culprit. Because buyers tend to shop at the top of their price range, an overpriced house is often "invisible" to those it will appeal to most. Potential buyers will never see it, Knox said.

The importance of pricing a house correctly cannot be understated, because the initial marketing period for a new listing is the most critical.

Buyers typically descend upon a new listing during the first weeks it is on the market. After that, activity tapers off.

How do you know if your price is too high? Knox suggested you pay more attention to feedback from would-be buyers than from the comparative market analysis your agent prepared.

Like its name suggests, such an analysis compares how your house stacks up against those like it in your neighborhood that have been sold during the last few months. But basing your price solely on such an analysis could be a mistake, Knox said. "Real market feedback is much more authoritative, because it will tell you if the market is rising or falling."

An outside perspective also will reveal much about how the market perceives the condition of your house. Living condition is one thing; showing is another. So if you tried to sell without first giving the place a fresh coat of paint, cleaning it from top to bottom or performing other tasks your agent recommended when you signed the listing, now is the time to get busy.

Of course, even if the place is priced right and looks great, it may not sell if it is not marketed properly.

A good agent will present you with a comparative marketing analysis and a complete marketing plan. If your agent doesn't stick to that plan, it is probably time to jump ship.

But what if the agent did everything promised but not one single offer was submitted?

In that case, it's time to re-evaluate.

If a lower price is in order, bite the bullet and adjust. A lower price will put your house in a different place in the multiple-listing system, where it should attract an entirely different group of buyers.

If you've got to spruce the place up, do so. Whether you switch agents, or decide to sell the place yourself, make sure you have a marketing plan. A good one will include, among other things, open houses (not only for would-be buyers but also for other agents), an advertising schedule and promotional material such as brochures, fliers and direct mail.

Of equal importance is presence on the Internet. The vast majority of buyers today start their search online, so you might want to create your own website or use an agent who can create a site for your property.

Preparing Your Home For Sale

Whether you're ready to sell now or just curious about the process, we can help.  Many homeowners begin thinking about selling long before they are really ready to move!

The sale of property involves legalities that even a For Sale By Owner must conform to.  We provide the following services in preparing your home for sale.

  1. Provide a free, no obligation market evaluation for your property.
  2. Recommend that you consult with your favorite real estate attorney.
  3. Provide an estimate of your cost of sale and your net equity based on your property.
  4. Inform you of village ordinances which may apply to your property.
  5. Explain Fair Housing Laws.
  6. Provide you with a copy of the Seller Disclosure Act form.
  7. Explain why offering a home warranty for your property may be in your best interest.
  8. Help you decide if your property should be inspected by a certified home inspection service.
  9. Locate your real estate property index number.
  10. Help you determine which repairs are necessary and which are not.

Garage Sale Time

Now is a great time to get rid of all those unnecessary things you accumulated - things you no longer want or need - and bring in a little extra cash at the same time. 

A garage sale is not hard to prepare for and can be fun!  Enlist the help of the whole family in organizing and pricing your merchandise.  Perhaps you could arrange a joint sale with a few neighbors.  Advertise the sale in your local paper and with signs placed around the neighborhood.  Be prepared to bargain and drop prices, if necessary, to clear out your inventory.  Make arrangements with a local charity to collect all the leftover items after the sale.

Tax Deductible Moving Expenses

Many of the expenses connected with moving may be tax deductible, if the move is job related*.  Some of these include:

  • The cost of moving your household goods.
  • Expenses incurred while house-hunting.
  • Travel expenses during the move for you and your family.
  • The cost of meals and temporary lodging for up to 30 days after you get the new job.
  • The expenses, of selling your house and buying a new one.

To substantiate your claim, keep an accurate, detailed account of your moving expenses, including all receipts.

* It is recommended that you consult with your own tax advisor or attorney to determine what is currently allowable under IRS codes specific to your individual circumstances.

Special Care for Pets & Plants

Moving companies are not allowed to handle the shipment of pets, so you will need to explore your alternatives.

Shipping animals by air is the fastest and most convenient method.  Most airlines are familiar with the care and handling requirements of animals.

If you must take your pet with you in the car, call ahead to make sure pets are allowed at your overnight stop.  Check with your veterinarian for hints that could make the trip more enjoyable for both you and your pet.  Before moving, be sure licenses and all vaccinations are up-to-date.

House plants do not travel well in the dark interior of moving vans.  Plants are difficult to pack and may have to survive several days without light and water.  Moving companies will not guarantee the condition of plants that are shipped and some states will not allow you to bring plants across their state line due to the possible transportation of harmful insects or diseased vegetation.   Check ahead before bringing plants with you to ensure that you will be allowed to cross state borders with them.

Property Taxes - Q & A

 

Q: 

How do property taxes work?

A:  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.

Q:  Are property taxes deductible?
A:  Property taxes on all real estate, including those levied by state and local governments and school districts, are fully deductible against current income taxes.

Q:  Where can I learn more about appealing my property taxes?
A:  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.

Q:  How is a home's value determined?
A:  You have several ways to determine the value of a home.

An appraisal is a professional estimate of a property's market value, based on recent sales of comparable properties, location, square footage and construction quality. This service varies in cost depending on the price of the home. On average, an appraisal costs about $300 for a $250,000 house.

A comparative market analysis is an informal estimate of market value performed by a real estate agent based on similar sales and property attributes. Most agents offer free analyses in the hopes of winning your business.

You also can get a comparable sales report for a fee from private companies that specialize in real estate data. You also can find comparable sales information available on various real estate Internet sites.

 


Q:  Are taxes on second homes deductible?
A:  Interest and property taxes are deductible on a second home if you itemize. Check with your accountant or tax adviser for specifics.

 


 

Fixer-Uppers - Q & A

Q:  Where are fixer-uppers found?
A:  You can find distressed properties or fixer-uppers in most communities, even wealthier neighborhoods. A distressed property is one that has been poorly maintained and has a lower market value than other houses in the immediate area.

Ascertaining whether the property you're interested in is a wise investment takes some work. You need to figure what the average house in a given area sells for, as well as what the most desirable houses in that area are like and what they cost.

Some experts suggest that buyers who take this route try to find a "cosmetic fixer" that can be completely refurbished with paint, wallpaper, new floor and window coverings, landscaping and new appliances. You should avoid run-down houses that need major structural repairs. A house price that looks too good to be true probably is. A smart buyer will find out why before buying it.

The basic strategy for a fixer is to find the least desirable house in the most desirable neighborhood, and then decide if the expenses needed to bring the value of that property up to its full potential market value are within one's rehab budget.

 


Q:  What kind of return is there on remodeling jobs?
A:  Remodeling magazine produces an annual "Cost vs. Value Report'' that answers just that question. The most important point to remember is that remodeling a home not only improves its livability for you but its curb appeal with a potential buyer down the road.

Most recently, the highest remodeling paybacks have come from updating kitchens and baths, home-office additions and extra amenities in older homes. While home offices are a relatively new remodeling trend, for example, you could expect to recoup 58 percent of the cost of adding a home office, according to the survey.

 


Q:  Are there gov't programs for rehab?
A:  The U.S. Department of Housing and Urban Development's Section 203 (K) rehabilitation loan program is designed to facilitate major structural rehabilitation of houses with one to four units that are more than one year old. Condominiums are not eligible.

The 203(K) loan is usually done as a combination loan to purchase a fixer-upper property "as is" and rehabilitate it, or to refinance a temporary loan to buy the property and do the rehabilitation. It can also be done as a rehabilitation-only loan.

Plans and specifications for the proposed work must be submitted for architectural review and cost estimation. Mortgage proceeds are advanced periodically during the rehabilitation period to finance the construction costs.

For a list of participating lenders, call HUD at (202) 708-2720.

If you are a veteran, loans from the U.S. Department of Veterans Affairs also can be used to buy a home, build a home, improve a home or to refinance an existing loan. VA loans frequently offer lower interest rates than ordinarily available with other kinds of loans. To qualify for a loan, the first step is to apply for a Certificate of Eligibility.

Another program is the Fedeal Housing Administration's Title 1 FHA loan program.

Resources:
* "Rehab a Home With HUD's 203(K)" brochure, U.S. Department of Housing and Urban Development, 7th and D streets S.W., Washington, DC 20410.

 


Q:  How do building codes work?
A:  Building codes are established by local authorities to set out minimum public-safety standards for building design, construction, quality, use and occupancy, location and maintenance. There are specialized codes for plumbing, electrical and fire, which usually involve separate inspections and inspectors.

All buildings must be issued a building permit and a certificate of occupancy before it can be used. During construction, housing inspectors must make checks at key points. Codes are usually enforced by denying permits, occupancy certificates and by imposing fines.

Building codes also cover most remodeling projects. If you are buying a house that has been significantly remodeled, ask for proof of the permits involved before you purchase to avoid future liability for fines.

Resources:
* "The Ultimate Language of Real Estate," John Reilly, Dearborn Financial Publishing, Chicago; 1993.

 


Q:  What are some resources for info on home improvements?
A:  If you're getting ready to embark on a home improvement project involving contracting help, "Ready, Set, Build: A Consumer's Guide to Home Improvement Planning Contracts" lays out a road map for selecting the right contractor, obtaining competitive bids up to what to include in a contract. There also is information on consumer rights, liens and financing.

The book is available for $9.95 through Consumer Press and Women's Publications, Inc., Dept. SR01, 13326 Southwest 28th St., Fort Lauderdale, FL 33330-1102; (954) 370-9153.

Resources:
* Profiting From Real Estate Rehab, Sandra M. Brassfield, John Wiley & Sons Inc., New York; 1992.
* Remodeling magazine's annual "Cost vs. Value Report", available for a nominal fee from the magazine; call (202) 736-3447 to order a copy.

 


Q:  Are there any special tax breaks for historic rehab?
A:  Qualified rehabilitated buildings and certified historic structures currently enjoy a 20 percent investment tax credit for qualified rehabilitation expenses. A historic structure is one listed in the National Register of Historic Places or so designated by an appropriate state or local historic district also certified by the government.

The tax code does not allow deductions for the demolition or significant alternation of a historic structure.

Resources:
* National Trust for Historic Preservation, Washington, D.C.; (202) 588-6000.

 


Q:  Are fixers a good idea in bad areas?
A:  Distressed properties or fixer-uppers are everywhere, even in wealthier neighborhoods. Such properties are poorly maintained and have a lower market value than other houses in the neighborhood.

Many experts recommend that buyers find the least desirable house in the best neighborhood and then decide if the expenses needed to bring the value of that property up to its full potential market value are within one's budget. Most experts say inexperienced buyers should avoid run-down houses that need major structural repairs and instead look for properties that only require cosmetic fixes.

 

 


Income Taxes - Q & A

 

Q:  Where do I get information on IRS publications?
A:  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"
Order by calling 1-800-TAX-FORM.

Q:  How do I reach the IRS?
A:  To reach the Internal Revenue Service, call (800) TAX-1040.

 


Real Estate Value - Q & A

 

Q:  What is the difference between market value and appraised value?
A:  Appraised value is a certified appraiser's opinion of the worth of a home at a given point in time. Lenders require appraisals as part of the loan application process; fees range from $200 to $300.

Market value is what price the house will bring at a given point in time. A comparative market analysis is an informal estimate of market value, based on sales of comparable properties, performed by a real estate agent or broker.

 


Q:  How do you find out the value of a troubled property?
A:  Buyers considering a foreclosure property should obtain as much information as possible from the lender about the range of bids being sought.

It also is important to examine the property. If you are unable to get into a foreclosure property, check with surrounding neighbors about the property's condition.

It also is possible to do your own cost comparison through researching comparable properties recorded at local county recorder's and assessor's offices, or through Internet sites specializing in property records.

 

 


Q:  How do you increase the value of your property?
A:  The biggest factor outside of a homeowner?s control is market conditions. But other issues -- including the condition of the property, specific home improvements and neighborhood stability and safety -- can influence property values.

The greatest rise in home prices occurs when the economy is strong and the number of home sales is increasing.

Though markets vary, that has occurred twice in recent history -- in the early 1970s and the late 1980s. However, single-family homes appreciated much more than condominiums. While overall market conditions are out of the homeowner's control, other factors are not.

For example, specific home improvements can increase the value above the cost of the improvements. According to Remodeling magazine, which publishes an annual "Cost vs. Value" remodeling report, a remodeled bathroom returns 81percent to the owner, a bathroom addition, 89 percent and a master bedroom suite, 82 percent.

Remember, quality pays. Well-planned and well-executed remodeling jobs are a good investment while bad work seldom enhances value or livability.

If you live in a high-crime area, an organized community watch program not only will lower the crime rate but also have been known to enhance property values.

 


Q:  What are the standard ways of finding out what a house is valued at?
A:  A comparative market analysis and an appraisal are the standard ways consumers, lenders and realty agents deterimined what a home is worth.

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. You also can research "the comps" 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 cost $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.

 

 


Q:  Can you buy homes below market?
A:  While a typical buyer may look at five to 10 homes before making an offer, an investor who make bargain buys usually go through many more. Most experts agree it takes a lot of determination to find a real "bargain." There are a number of ways to buy a bargain property:
*Buy a fixer-upper in a transitional neighborhood, improve it and keep it or resell at a higher price.
* Buy a foreclosure property (after doing your research carefully).
* Buy a house due to be torn down and move it to a new lot.
* Buy a partial interest in a piece of real estate, such as part of a tenants-in-common partnership.
* Buy a leftover house in a new-home development.

Q:  How can I improve the value of my property?
A:  The biggest factor outside of a homeowner?s control is market conditions. But other issues -- including the condition of the property, specific home improvements and neighborhood stability and safety -- can influence property values.

The greatest rise in home prices occurs when the economy is strong and the number of home sales is increasing. Though markets vary, that has occurred twice in recent history -- in the early 1970s and the late 1980s.

Specific home improvements can increase the value above the cost of the improvements. According to Remodeling magazine, which publishes an annual "Cost vs. Value" remodeling report, a remodeled bathroom returns 81percent to the owner, a bathroom addition, 89 percent and a master bedroom suite, 82 percent. Remember, quality pays. Well-planned and well-executed remodeling jobs are a good investment while bad work seldom enhances value or livability.

The safety and security of a neighborhood can affect property values, too. If you live in a high-crime area, an organized community watch program not only will lower the crime rate but give home values a boost, too.

 


Q:  What kind of return is there on remodeling jobs?
A:  Remodeling magazine produces an annual "Cost vs. Value Report'' that answers just that question. The most important point to remember is that remodeling a home not only improves its livability for you but its curb appeal with a potential buyer down the road.

Most recently, the highest remodeling paybacks have come from updating kitchens and baths, home-office additions and extra amenities in older homes. While home offices are a relatively new remodeling trend, for example, you could expect to recoup 58 percent of the cost of adding a home office, according to the survey.

 

Q&A

Ask An Attorney

Q. I heard that under the new 2005 California withholding law, a homeowner need not have lived in his or her home for two out of the last five years to be exempt from payment of the 3 1/3 percent withholding tax when the property is sold. Is that correct?

A. Yes. Under AB 1338, there is no particular time period that the homeowner needs to live in the home prior to sale as long as its “last use” is as the “main home.” Thus, a homeowner may have lived in the home for only three months, but still be exempt. Several factors determine whether the property is a “main home”: (1) place of employment; (2) location of the family members’ home; (3) mailing address for bills and other correspondence; (4) address listed on the homeowner’s state and federal income tax returns, driver’s license, car registration, and voter registration; (5) the location of the homeowner’s banks; and (6) location of recreational clubs or religious organizations to which the homeowner belongs.

Sonia M. Younglove is senior counsel for C.A.R.

 

 

21 Reasons To Use Warren Nass For Your Real Estate Needs:

  1. National Century 21 name recognition
  2. Worldwide VIP Referral and Relocation system
  3. Furnish a Property Evaluation to help you choose the most effective listing price
  4. Have the internationally recognized Century 21 sign installed on your property
  5. Provide you with the Century 21 Seller Service Pledge
  6. Show your property to qualified buyers
  7. Discuss financing terms and alternatives
  8. Full time local Realtor
  9. Hire a professional photographer to take pictures of your home for the internet and flyer
  10. Provide virtual tour of the property
  11. Advertise your home on the front cover of the local Pennysaver Magazine
  12. Advertise your home on over 1150 internet websites including http://warren4realestate.com and http://c21westworld.com
  13. Process your property in the CRMLS Matrix MLS and the MLS Alliance
  14. Answer all of your questions at any time regarding real estate
  15. Provide full color photo flyers for your property
  16. Arrange open houses, as agreed upon 
  17. Have our entire office preview your property on our weekly caravan
  18. We attract more buyers due to our location and advertising
  19. Provide a one of a kind "Quality Service"
  20. I will take care of all of your needs with the utmost honesty and integrity
  21. Stage your home for sale to show its best and ensure a quick sale

Call Warren Nass for all your Real Estate needs!

(714) 606-0329

 

 

WARREN NASS

WARREN NASS

P: 714.606.0329

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