Your Selling Price Must Be Realistic

When you are thinking about selling your house, don't set an unrealistic price. In my experience as a real estate agent, clients who were asking a very high price ended up with their house staying in the market for a very long time. This is true also for people who are selling their houses without a real estate agent, such as For Sale By Owner.

There are times when a real estate agent advises you to lower the price. The reason behind it is that they have knowledge of the market trends, access to accurate sales data, and know the realistic price ranges of the area at that point in time. Therefore, you would be well advised to rely on your agent's word and trust her recommendation, even if it is not exactly what you would have liked to hear.

If you are still unsure, you can also confirm the suggested selling price by checking the recently sold houses in your community (called "comparable sales," or "comps" for short). The bottom line is that the selling price of your house must be a realistic one if it is to have any chance of selling in this market.

Tax Planning

As soon as you have sold your property, you will have to determine if you have to pay taxes on your sales income!

The government has set certain criteria and requirements that you have to meet so that you can leave out a sizeable amount of your profit from taxes if the home you sold is your primary residence. If you meet the eligibility requirements, chances are may not have to pay taxes on your sales proceeds.

The Taxpayers Relief Act of 1997 specifically states that you do not have to pay taxes up to $250,000 per person (or $500,000 for a married couple filing jointly) on the sale of a primary residence. For example, let us say that the capital gain from the sale of your house is $300,000. If you are single (or divorced), the first $250,000 of the amount is exempt from tax; however, you have to pay applicable taxes on the remaining $50,000.

On the other hand, a married couple who file their income tax jointly would be exempt from paying taxes since their total net is lower than the $500,000 limit for married couples. For this rule to be applicable to you, you must have lived in your primary residence (the house that you sold) for a period of at least two years. There is no limit to the number of times you may claim this exclusion when selling your home and the law does not require you to invest this money into buying another home. You can spend the money as you see fit!

This tax exclusion is conditional on whether or not the house you are selling qualifies as your principal residence. To qualify as your principal residence it must be the house where you spend the majority of your time.

Get a Home Inspection Before You Buy

Your home investment is a big deal in your life - probably the biggest ever - and it is a decision that you must undertake wisely. Just remember that your real estate agent is on your side and can be a great resource during your transaction.

You will receive lots of advice (which you can use or not, of course), and you can ask questions about anything that you come up with. Most real estate agents advise their clients to pay for a home inspection before they get close to finalizing a deal or as a condition of an offer on the property they are interested in.

After a thorough and professional examination, the home inspector is going to give you a report on the condition of the house. This report is extremely important, since there might be conditions which were not obvious, or which you might have simply overlooked. Believe it or not, even buyers of brand new homes should invest in a home inspection. This can help you get issues resolved even before you have moved into the property.

After home inspection, you should know the issues related to that property. Knowing those issues beforehand can become a tool to help form your offer and negotiate to your advantage with the sellers.

DO YOU OWN THE FORECLOSURE YOU BOUGHT!

Thirty one percent of all homes purchased in the first quarter of 2010 were foreclosures, over the twenty nine percent for all of 2009. Buyers that have purchased a property in the past few years may wonder if they really own the foreclosure they purchased. After all, if the home was inadequately handled, the previous owners may just have a lawsuit ready to file against the lender and the attorneys that dealt with the foreclosed property. The advice from the legal side admits to such purchasers loosing there homes or could be liable for financial compensation to the buyer foreclosed property . Attorney Jonas Jacobson comments, "The biggest protection is the 'Bona fide purchaser' law that protects buyers from getting in trouble if they could not have known there was a problem with their purchase" Due to foreclosure paperwork mistakes, there is little danger of homeowners losing homes" says Steven Horne, an attorney and president. He also states there is a small chance that a homeowner can and may be involved in a lawsuit concerning there foreclosure.



The fear for buyers is minimal, yet there is an importance when it comes to protecting yourself with the purchase of a foreclosure. According to attorney Joseph Gentile, a wrongful foreclosure is the perfect example of why home buyers should buy owner's title insurance, which directly protects the owners in a title dispute. Owner's title insurance protects from any defect in the title. Gentile explains, " If a judge determines the foreclosure was not valid, the title company would have to work out the problem, not the homeowner" Homeowners should always know there title insurance status. Gentile recommends purchasers to check for the title insurance policy, especially if you have bought your foreclosure in the last few years. You still have the option of purchasing owners title insurance now, even on the property you previously purchased. Jacobson recommends homeowners review their settlement documents and contact their settlement attorney for reassurance.



Gentile also comments on the future sale of the home, " It is possible when the home is sold, a new title insurance policy would be more difficult to obtain." With the growing amount of foreclosures, the title companies will likely find a way to accommodate insurance in the future.

Competing With Short Sales and Bank Owned Properties

It is no secret that the home selling market is flooded with short sales and bank owned homes, so the question is how to compete with these homes when it comes time to sell your home.

Yes, it is a buyer’s market as some might say but the need or desire to sell your home may still be inevitable.

If you are in this situation then you need to understand your area and the competition. Do you need to price your home the same as a short sale home or a bank owned home? The answer is not likely.

First of all most bank owned homes are in need of much TLC and not necessarily a good comparison to yours. Short sales take so long and are not only in disrepair but the wait as well as possible rejection by the bank often times makes many buyers not willing to deal with these homes. While waiting on the bank’s response just imagine how many homes the buyer will miss out on.

This brings us to homes like yours that is a mainstream sale! Mainstream being an operative word here, basically, not a short sale or bank owned home.

Most home buyers today are looking for mainstream homes for many reasons. The obvious wait time and frustration in short sales has driven home buyers away from dealing with this type of sale.

The competition with cash buyers and investors on well maintained bank owned homes finds most mainstream buyers in an unlikely position to obtain the home.

Buyers have realized that a normal sale in which they can make a reasonable offer, get a response in a timely manner, have an inspection and actually ask for repairs to be done and expect to get the home in good condition is well worth it.

Competing with short sale homes and bank owned homes aren’t that difficult. Real estate agents are on top of the market and will know your competition and how well things are selling for in your area. Be reasonable when it comes to pricing because you still need to appraise when it comes down to it. Obviously, making your home look nicer than most of the competition should be the easy part; let your pride in your home show. Take the advice from your seasoned agent on how to stage your home.
Do not get wrapped up in the fact that you think your home is worth more than what it is likely to sell in this market or you will waste a lot of time with little to no showings. You need traffic, traffic brings potential buyers.

Make sure your home has several shots or pictures of areas in and around your property that makes a buyer want to see more! Neutral tones and less furniture and belongings make your home feel more open and spacious.

You can price your home higher than your competition of short sales and bank owned - just not so far out of reach that you are not going to get potential buyers interested in your home. Homes of all price ranges are selling in this market and yours can too.

Believe it or not, if you and your agent have done a good job, you are likely to sell your home very quickly in a market like this!

The Importance Of Property Management

Many landlords choose to manage investment properties on their own but sometimes landlords need more help, and that's when a property management company might make sense.

Management companies’ deal directly with prospective and current tenants, saving you time and worry over marketing your rentals, collecting rent, handling maintenance and repair issues, responding to the various tenant complaints, and even pursuing evictions. A property management company helps you avoid the hassles of being the landlord and focus on enjoying the benefits.

Why you should hire a management company:

A management company will mainly be handling the maintenance of your investment property. All properties require maintenance however when you have a paying tenant you’re required to resolve maintenance issues promptly. And, regular property maintenance can keep the value of your investment up and in many aspects, keep the property safer; this will actually save you cash in the long run as it will extend the life of your investment.

Depending on the age of a property you’ll probably find more issues; this is why it is crucial your property is thoroughly checked before tenants move in, thus any problems that are found will be sorted out in hopes to cut back the amount of issues and complaints that will occur once the property has been rented out.

There are various kinds of property maintenance that will need to be reviewed and this maintenance will vary from being major issues like roof repairs to minor jobs such as interior painting, carpentry work and landscaping projects.

When should you hire a management company:

You don't live near your rental property. If your rental property is located far from where you live, hiring a property management company can be invaluable in dealing with the many issues that you will not be able to handle from afar.

You're not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if you view rental property ownership strictly as an investment and want little or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property.

Your time is limited. Even if you enjoy hands-on management, you may not have much time to devote to your business, especially if land-lording isn't your day job.

Hiring a property management company is an attractive option if you can afford the fees, and they range from high to low. Some companies will charge a percentage of what you charge the tenant [perhaps 3% to 5%] while other property management companies will charge you a flat rate fee [$100 to $200 per month].

If you do decide to hire a property management firm, use caution in selecting one and ask questions to compare the services offered.

Why Your Lender May Choose Foreclosure Over Mortgage Assistance

The Treasury Department began a loan modification program in March 2009 to encourage lenders to modify troubled loans to prevent foreclosures. But from the beginning, the process proved slow, frustrating and for many non-existent. All the while, foreclosures continue unabated. But why the hesitation by lenders to help homeowners remain in the home?

Many mortgages are handled by loan service agents. They collect the payments and handle all the on-going business with your mortgage. But they also are the one constant villain in the foreclosure debacle.

The loan servicers lose paperwork, foreclose on homes they have no right to foreclose on, accept borrowers into modification programs while trying to foreclose on them at the same time, they deny borrowers a modification even when they shouldn’t, they’re impossible to get a hold of, and their communication with homeowners is appalling. And you know what, it’s depressing but loan servicers win in the end.

A loan servicers’ primary compensation is a percentage of the outstanding principal balance on a mortgage so the higher the outstanding principal the more their compensation package will be. This definitely presents a conflict of interest.

And while investors say they are all for helping out the homeowner, investors really look at the bottom line – are timely payments being made? So when the money is halted investors want to know that something is being done to recoup losses.

Under the government’s foreclosure program a service loan agent that modifies a loan for a homeowner can collect $1,000 from the government, followed by $1,000 a year for each of the next three years. While those sound like a meaningful incentive to help homeowners the government’s incentive cannot compare to what servicers collect by allowing properties to go into foreclosure.

So where should a homeowner start if looking for a modification?

The first thing that a homeowner should do is have an experienced mortgage attorney examine your loan documents for any potential violations of the lender. Lenders are not legally obligated to modify loans so it really is up to the lender to accept your request.

The more ammo you have to help them shift towards helping you the better.

Thinking Of Multi-Family Dwellings As Investments

Looking to branch out a little and invest in steady streams of income?

Think about multi-family dwellings.

What are tenants willing to pay to occupy a unit?

This is the cornerstone of your investment:

The most obvious advantage of buying any income property is real estate investors can grow wealthy in the long run. Holding on to investment property and simply allowing other people's money to payoff the debt, even if there is no immediate cash flow, is what drives people into real estate investing. Moreover, because multifamily properties serve a basic need in that they provide shelter to those who are not ready to purchase a home just yet, the downside risk to multi-family investing is very limited.

OK, there may be a scant downside to owning rental property; it mostly concerns the management problems associated in dealing with tenants. Multi-family properties can be management intensive, and often the reason why investors who purchase rental property hire the services of a professional property management company to deal with the day-to-day issues of running the property. So investors can choose to minimize this obvious disadvantage.

How can an everyday homeowner start investing in apartments?The first crucial piece to this puzzle is using other people's money. The success or failure of the investment depends on the income the property generates to meet your debt and other obligations required to keep the property. The second piece of the puzzle is to understand that when buying any investment property you must establish a sound financing package.

Given that lenders evaluate multifamily real estate based on income stream and generally will structure a loan based on the property's financial strength, keep in mind the significant role the principal of using other people's money plays in financing the investment.

When applying for a loan on a multifamily property, present lenders with a clear and concise cash flow report; you'll obtain a favorable financing package.

What are tenants willing to pay to occupy a unit? This is the cornerstone of your investment. It's crucial to understand local rental market trends for vacancies and rental rates when buying a multifamily property. Rental market trends are easy to recognize, just watch the newspaper or drive around communities noting all rental properties that have vacancies.

The bottom line here is straightforward -- Multifamily property provides investors the opportunity to build wealth and what a perfect time to start investing. Interest rates are low, there's a steady stream of available tenants which can only contribute to a profit.

Are Your Important Documents Organized in a Practical Location?

If you were faced with a sudden emergency could you gather all your important paperwork in less than 5 minutes?

Think about this, can you place your hands on your property titles, life and homeowner’s insurance policy or birth certificate? How about tax forms? There’s certainly nothing fun about organizing all your important papers but it’s definitely well worth all the effort.

Most of us have no idea of the legal shelf life of documents. And even when we do our very best of keeping abreast of important documents, they somehow become scattered around the house. The deed to the house and tax paperwork in the home office while the life insurance, social security cards and birth certificates in the upstairs bedroom.

Important documents should be kept in one significant place that can be obtained swiftly. Say you smelled smoke and had to run out of your home; you wouldn’t run around the house looking for paperwork to take with you. Purchasing a lock box can be one of the most important purchases you make – fire resistant and large enough to keep important documents.

Take a look at the length of time your important documents should be saved:

Tax Documents
Keep tax returns, as well as supporting documents like W-2 forms, receipts, and real estate closing statements for seven years. The IRS may audit you within three years if it suspects good-faith errors; six years if it believes you underreported your income by at least 25%; and unlimited time if you did not file a return or filed a fraudulent one.

Investment Records
Keep as long as you own the securities, plus another seven years. You'll need them to prove capital gains and losses.

Bank Statements
One month. You just need these long enough to check the accuracy of the transactions [Williams]. Unless the statement is your only record for a tax-related transaction, there's no need to keep them longer. Plus, your bank will have them available online.

Retirement Plan Statements
Most, one year, for tax purposes. Keep Roth IRA statements until you retire, to prove you already paid tax on your contributions.

Credit Card Statements
Shred immediately after checking the accuracy of the transactions. These documents are a prime source for identity theft. Unless the statement is your only record for a tax-related transaction, there's no need to keep them longer. Plus, your issuer will have them available online.

Paychecks
One year, until you receive your W-2.

Bills
One year, for tax purposes.

W-2 Forms
Until you begin claiming Social Security. They're the best estimate of your earnings and entitlements.

Most of your documents you’ll never lay hands on again however, should you need to lay hands on them, make sure they are safely stored in a practical location.

Combining Tax Credits with Style and Comfort

This is the perfect time to utilize the year-end energy tax credits and update your home. If you install replacement window or storm door windows and doors in your principal home by December 31, you can claim a federal tax credit of 30% of the cost – excluding installation. You can claim up to $1,000 for the years 2009 through 2010 combined.

Should you replace?

It all comes down to the age of your home and how well your windows have resisted moisture.

• If the original framing is sound and reasonably square, you can install a replacement window into the original opening, replacing the side jams and trim.

• If the original frame is rotted or significantly out of square a new window must be installed, which can cost 50% to 100% more than a replacement window.

Prospective buyers should calculate the payback of installing new windows. It’s not just about adding new style but insulating a leaky home. When replacing windows your energy bill should show an immediate savings.

Choosing the right windows

Are you familiar with the lingo? Double-hung windows may be opened from top and bottom. Casements open with a crank and make the window easy to operate. This is especially handy in those hard to reach places.

Double-pane windows are two pieces of glass that may have inert gas in between to better insulate the home. Tilt-out windows allow you to clean the exterior glass from the inside.

Comparing Window Energy Efficiency

You need to know two critical factors when choosing your windows based on energy efficiency;

• You choose based on the Ufactor and the Solar Heat Gain Coefficient; the lower the Ufactor number the better the window insulates and the greater the energy savings. The range is 0.25 to 1.25, however, to qualify for the federal energy tax credit the Ufactor rating must be less than or equal to 0.30

• The Solar Heat Gain Coefficient (SHGC) is rated based on how well the window blocks heat.

Windows are no longer that element to enhance the facade of your home; it’s the critical element that shields the sun and cold and insulates your comfort.

How the Front Yard Can Make or Break a Sale

The realtor called and they have someone who is really interested in your home. They want to see it this afternoon. So you get the house ready, and you clean up the bathroom and kitchen, and you see a few people pull up into your driveway.

These must be the people who are interested in the home. But wait, where are they going? Are these just strangers making a U-turn in my driveway, or did my front yard just scare them off? No, they were your potential buyers.

When you're selling a home, it's true that staging the inside of your home for interested buyers is important. However, first impressions are even more important. That's why you should pay close attention to sprucing up your front yard. You won't have a chance to make another first impression.

Any real estate agent will tell you when you sell a home, curb appeal and landscaping is key; it can attract the eye of a buyer, or send them back to the internet to continue their search. With so many homes available, there are plenty of homes with impressive yards.

Keep your front yard, and your porch neat, clean and tidy. Here are some easy ways to get your front yard up to speed:

1) Edge your flower beds, and your grass. By fixing many little things, you can improve the overall look of your home.
2) Mow your lawn and remove all the leaves.
3) Prune your overgrown shrubs and trees.
4) Use a weed killer like Roundup to kill the weeds growing through the cracks in your driveway.
6) Mulch is inexpensive. If you need to add mulch to your gardens or around trees, do it. It always looks messy when there are an enormous amount of weeds popping up around mulch that looks 10 years old. The color of the new mulch will also revitalize your yard.
8) Put a $50 bag of fertilizer on your yard. Scott's with weed and crabgrass control comes highly recommended. It won't take long to turn a healthy green color.

Don't leave your yard looking disorderly. Never assume that even if you're selling your house at a bargain price, that the new owners will want to tackle the task.

When the time comes to sell your home, you should always start with your front yard, and work your way in. As one realtor told me, "When your front yard catches their eye, they're always intrigued by what’s inside."

FORECLOSURES: 25% of Sales Are Repo Homes

Forclosure homes made up nearly 1/4 of all residential sales in the second quarter, according to a report Thursday from Irvine-based RealtyTrac Inc.

The foreclosures tracking outfit said 248,534 U.S. homes sold in some stage of foreclosure during the quarter, an increase of 5% from the previous quarter, but down 20% from a year ago.

Foreclosures on average sold at a 26% discount compared with properties not in foreclosures. That's down from 27% in the first quarter.

Nevada, Arizona and California recorded the highest percentages of foreclosure sales in the quarter.

Foreclosure sales in Nevada were 56% of all sales in the state during the quarter. That percentage was 47% in Arizona and 43% in California.

Ohio, Kentucky and California had the nation's best foreclosure bargains. Ohio foreclosures sold at a 43% discount in the second quarter, while Kentucky foreclosures sold 41% below the average sales price of homes not in foreclosure. California's discount was 39% in the quarter.