- How Do You Determine the Market Value of Your Home?
- 10 Most Common Listing Mistakes
- Before Putting Your Home on the Market
- Curb Appeal
- 1031 Exchanges
- Understanding Capital Gains in Real Estate
How Do You Determine the Market Value of Your Home?
The Market Value of your Home is Determined in Several Ways.
The Market Value of your Home is NOT...
- What you have into it
- What you need out of it
- What it is appraised for
- What your neighbor's house sold for
- What the tax office says it's worth
- What it's insured for
- Based on treasured memories
- Based on the price of your next home
The True Market Value of your Home IS...
- What a buyer is willing to pay for the property today
- Based on today's market conditions
- Based on today's competition
- Based on today's financing options
- Based on today's interest rates
- Based on consumer confidence
- Based on the property location
- Based on the property condition
- Based on "days on the market"
The Warning Signs...
- Lack of activity from Realtors. If agents don't show a property it may mean that they perceive a home to be overpriced and won't show it to their Buyer clients.
- Lack of activity from Buyers. If a home is being shown with no results, it means that Buyers are finding better values in the same price range.
In either case, this is an indication that the property is not priced at current market value.Top
10 Most Common Listing Mistakes
Selling your home can be an exhausting experience. Inconvenient phone calls, broker previews, endless showings, price adjustments and the possibilities of being stuck with two mortgages are very real concerns for many of today's homeowners. If you're not adequately prepared, you could end up losing hundreds, even thousands of dollars in profit. Oftentimes, the right agent can make the difference between a smooth, profitable transaction and an unhappy experience. By utilizing the knowledge of a competent, qualified real estate professional, you'll be better equipped to avoid the following mistakes most commonly made by Sellers:
Refusing To Invest in Potentially Profit-Inducing Repairs:
It always costs you more money to sell 'as is' than to make repairs that will increase the value of your home. Often even minor improvement will yield as much as three to five times the repair cost at the time of sale. Your agent will be able to point out which repairs will significantly increase the value of your home. Even seemingly small "touch-up" jobs can have an impact on the eventual sales price.
Failure to Consider Alternative Financing Terms:
Cash is not always the most advantageous transaction. Income level, tax benefits, and current legislation are all crucial factors when considering purchase terms. Professional real estate agents are experts in facilitating your home transaction. A smart agent will lead you to the path that will result in the highest yield.
Neglecting to Provide Easy Access for Showings:
Accessibility is a major key to profitability. "Appointment only" showings are obviously the most restrictive, while a lock box is the least. However, there are certain considerations to take into account, such as your lifestyle, time frame for the desired sale and the strength of your relationship with your agent. The more accessible your home, the better the odds of your finding a person willing to pay your asking price. And by developing a trusting relationship with your agent, he or she will show the home with your best interests in mind.
Settling on a Purchase Price Lower/Higher than Comparable Sales:
One critical reason to find the right professional is to make sure the property is priced appropriately for a timely and profitable sale. If the property is priced too high, it will sit and develop the stigma as a "problem property". If it's priced too low, it could cost you considerable profit in the long run. The real estate market has subtle nuances and market changes that should be re-evaluated by your agent every 30-45 days to help you maximize your return.
Relying Solely On Traditional Methods to Sell Your Home:
The innovative agent who is willing to offer new strategies for attracting homebuyers will always outperform the agents who rely solely on traditional marketing methods. As a motivated seller, you should demand around-the- clock advertising exposure, innovative lead generation methods and lead accountability. In today's competitive real estate market, these services are readily available, and your agent should offer them to help sell your home.
Overdependence on Market Timing & Seasonal Selling:
Just as a broker who continually follows the trends of a stock, your professional real estate agent should be continually following trends of your real estate market, a practice that could make you aware if and when the market cycle is poised to net you the most money. Although you may hear otherwise, the prevailing myth that property sales are seasonal is just that: a myth. In any market, real estate is always selling.
Failing to Make Necessary Cosmetic Changes:
As you're undoubtedly aware, the prospective homebuyer's first impression is all-important in the sales process. An inconceivable amount of home sales have been lost to unkempt lawns, cluttered rooms, bad stains, and unpleasant odors, all seemingly minor blemishes that ultimately spoiled a buyer's motivation. The easiest way to avoid this costly error is to imagine that you are the homebuyer and clean your place from top to bottom.
Wasting Time with An Unqualified Prospect:
Your agent's responsibility is to screen a prospect's qualifications before valuable time is lost. Be sure to align yourself with the right professional and eliminate negotiating with unqualified prospects.
Missing an Opportunity by Testing The Market:
Never put your property up for sale unless you are serious about selling. If you're motivated enough, the right real estate professional will find you buyers. If you are flirting with indecision, however, you may just blow the sale.
Believing You Are Powerless To Make A Difference:
Don't be a spectator in your own transaction: take an active role with your agent to see what you can do to facilitate your sale. Networking with professional peers and personal friends has frequently resulted in the sale of a home. In fact, you may be surprised how often homes are sold simply by word-of-mouth.
I am always available to answer your questions pertaining to the market, or the sale of your real estate investments. If you would like a free, no-obligation, market analysis, please call or email meTop
Before Putting Your Home on the Market
- Have a pre-sale home inspection. Be proactive by arranging for a pre-sale home inspection. An inspector will be able to give you a good indication of the trouble areas that will stand out to potential buyers, and you'll be able to make repairs before open houses begin.
- Organize and clean. Pare down clutter and pack up your least-used items, such as large blenders and other kitchen tools, out-of-season clothes, toys, and exercise equipment. Store items off-site or in boxes neatly arranged in the garage or basement. Clean the windows, carpets, walls, lighting fixtures, and baseboards to make the house shine.
- Get replacement estimates. Do you have big-ticket items that are worn our or will need to be replaced soon, such your roof or carpeting? Get estimates on how much it would cost to replace them, even if you don't plan to do it yourself. The figures will help buyers determine if they can afford the home, and will be handy when negotiations begin.
- Find your warranties. Gather up the warranties, guarantees, and user manuals for the furnace, washer and dryer, dishwasher, and any other items that will remain with the house.
- Spruce up the curb appeal. Pretend you're a buyer and stand outside of your home. As you approach the front door, what is your impression of the property? Read on for more suggestions on curb appeal!
Have you checked yours lately?
The old saying about making a good first impression couldn't be truer than when you are selling your home. That first impression has to create interest from the moment a buyer drives up to your home. Curb appeal is that subjective, intangible quality that entices buyers to think emotionally rather than logically. Perhaps it's the way the home sits on the property, or the mix of clapboard and fieldstone. It may be the expanse of grass carpeting, the stately columns, or the boisterous symphony of greenery and brilliantly colored flowers. In any case, it's love at first sight.
How can you tell where your home registers on the curb appeal scale?
One way to find out is to take pictures of your property from various angles. Show them to friends, family, colleagues, anyone known for providing painfully objective feedback. Find out what's appealing about the home and grounds, and what needs improvement. Take the photos to a nursery for a professional landscaper's opinion. Even more important, consult your real estate professional. A local real estate professional has experience selling homes in your area and can be a great resource. Ask the agent to walk around the property with you and view it from across the street. Develop a "to do" list to bring your home up to show condition, then brainstorm easy, cost-effective solutions.
Surprisingly, even small enhancements can make a big difference. Building on your home's curb appeal might be as easy as replacing a broken screen and planting a few flowers near the front door.
Here are some ideas to get you going:
Paint and polish. A fresh coat of paint breathes new life into a tired-looking home. If your home looks dull or suffers from peeling, cracked or chipped surfaces, a paint job is a great investment. Neutral colors are always a good idea! Whether or not you paint, polish your doorknobs and address numbers, as well as any light fixtures by the entry. Wash your windows and screens. Buy a new doormat for the outside of your front door.
Go over the grounds. Mow and edge the grass, and trim the trees and bushes. Also, clear away dead leaves and flowers, and mulch and weed the beds. Check to see that tree branches are not touching the home's roof or outer walls. You can spruce up the property by hanging flowering baskets and placing planters of flowers in strategic spots. Don't forget the side and back yards. Add some flowering plants to the back as well.
Make needed repairs. See if anything is unhinged, loose or just an eyesore. Fix everything including broken fencing, windows and screens. Try the doorbell. Check stairs and railings. Test doors for squeaks. Small problems such as sticky doors, torn screens, cracked caulking, or a dripping faucet may seem trivial, but they'll give buyers the impression that the house isn't well-maintained.
Unclutter. Throw out stacks of newspapers and magazines and stow away most of your small decorative items. Put excess furniture in storage, and remove out-of-season clothing items that are cramping closet space. In bathrooms, put away those old towels and toothbrushes. Add a new shower curtain, new towels, and fancy guest soaps. Make sure your personal toiletry items are out of sight. Clean out the garage, tidy up the deck, patio and back yard. Rearrange the outdoor furniture to look inviting. Put away gardening tools. Clean up the barbecue area. Eliminate any "evidence" of Fido, and restrict him to the back yard when showing the home. Move extra vehicles from the view of passersby
Clean. A clean house will make a strong first impression and send a message to buyers that the home has been well-cared for. Wash fingerprints from light switch plates, mop and wax floors, and clean the stove and refrigerator. Get rid of smells. Clean carpeting and drapes to eliminate cooking odors, smoke, and pet smells. Clean outdoor furniture and cushions. Check for oil spots on cement surfaces, especially the garage floor.
Brighten Rooms. Put higher wattage bulbs in light fixtures to brighten up rooms and basements. Replace any burned-out bulbs in closets. Clean the walls, or better yet, brush on a fresh coat of neutral color paint. Replace heavy curtains with sheer ones that let in more light. Show off the view if you have one.
Remember, a sale can be made or lost as a direct result of your home's curb appeal. Exert a little elbow grease now and you'll captivate buyers at the curb. It's a sure way to a quicker sale!Top
1031 Exchange, named after the IRS code, allows you to sell investment real estate and replace it with other investment real estate without creating a taxable event.
Many investors don't realize that taxation on the sale of investment property does not have the same tax advantages enjoyed when selling their principal residence. Profits are often substantially affected by tax consequences. With a 1031 Exchange, you can defer payment of the tax normally due on the sale of your property that has a taxable gain.
There are many benefits to performing an exchange instead of a sale and new purchase. It can make more funds available for the new purchase by deferring any tax payments that would have been due. It can also help you with your investment income. By allowing you to sell investment properties that aren't giving enough return and use the non-taxed gain to purchase another property that produces more cash flow, you can greatly increase your income.
To qualify for a 1031 Exchange, you must trade real estate that is held for business or investment purposes for other like investment property. 1031 Exchanges can not be used in the sale of your primary residence or second home.
To qualify, you must use a Qualified Intermediary, who in turn buys the next property you have chosen. You are not required to exchange all of your cash from the sale of the first property into the purchase of the second. However, if you take proceeds from the first sale, each dollar taken is subject to capital gains tax. To avoid the tax, you must rollover the entire gain into the new property. You may also exchange one property for several others or vice versa. It does not have to be one for one.
Please consult an accountant for specific advice.Top
Understanding Capital Gains in Real Estate
When you sell a stock, you owe taxes on your gain - the difference between what you paid for the stock and what you sold it for. The same holds true when selling a home (or a second home), but there are some special considerations.
How to Calculate Gain
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate, follow these steps:
1. Purchase price: _______________________
The purchase price of the home is the sale price, not the amount of money you actually contributed at closing.
2. Total adjustments: _______________________
To calculate this, add the following:
- Cost of the purchase - including transfer fees, attorney fees, and inspections, but not points you paid on your mortgage.
- Cost of sale - including inspections, attorney fees, real estate commission, and money you spent to fix up your home just prior to sale.
- Cost of improvements - including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.
3. Your home's adjusted cost basis: _______________________
The total of your purchase price and adjustments is the adjusted cost basis of your home.
4. Your capital gain: _______________________
Subtract the adjusted cost basis from the amount your home sells for to get your capital gain.
A Special Real Estate Exemption for Capital Gains
Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria:
- You have lived in the home as your principal residence for two out of the last five years.
- You have not sold or exchanged another home during the two years preceding the sale.
- You meet what the IRS calls "unforeseen circumstances," such as job loss, divorce, or family medical emergency.