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full question and answer. |
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Doesn't
it make sense for me to sell my house on my own? This way I can pocket
the Realtor's commission. Right? |
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 Wrong!
It's not that simple. For one thing, the typical buyer is no fool. He'll
expect you to deduct the commission for HIS benefit before you even start
serious negotiations. Then you're on your own to handle some tough bargaining,
curiosity seekers, credit checks and intricate financial arrangements.
In the long run, you'll find that a Realtor will sell it for the best
price and in the shortest amount of time. You've got a lot invested in
your home. It makes sense to sell it the professional way. |
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One
normally refers to stocks and bonds as blue chip investments. Shouldn't
real estate be included in this category? |
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A
well-built home in a good neighborhood is, indeed, a blue chip investment.
In fact, real estate values - long term - increase more than the value
of stocks and bonds. And housing values have always more than kept abreast
of the general rise in consumer prices.
There is not reason to believe that this situation will change in the future.
There is an increasing demand for homes. Also, real estate tax breaks allow you
to keep more of what you earn. It's a blue chip investment - plus! |
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I'm
trying to sell my house on my own and I'm being swamped with "curiosity
seekers". How do you limit these intruders? |
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Curiosity
seekers are one of the plagues which the do-it-yourself broker has
to contend with. It's not only an inconvenience, but it could be a
risk to open the door, day and night, to all who knock. The best solution
is to place your home in the hands of a realtor. He or she will weed
out curiosity seekers from prospects at the office, visit you only
by appointment, and will always accompany prospects. On top of that,
you'll probably end up with more money than by selling it on your own.
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Several Realtors have told me that
my house is overpriced by about 20% and, in the long run, could cost me
money. How can this be? |
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Because overpricing stops buyers
from considering your home . No matter how much is spent on advertising, an
overpriced home will not sell. Prime prospects who should have bought, have
gone elsewhere to buy. When a home remains unsold too long, interest stops
because buyers become wary. Eventually your house will sell, but for less
than you could have realized had you priced it realistically. Use extreme
caution in pricing you house more than 5 percent above its market value. |
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In your opinion, how much of the
home-buying decision should be a family process? |
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 It's
desirable that house-hunting be done by husband and wife wherever possible.
However, in the case where a move over a considerable distance is involved,
the best arrangement is for either the husband or wife to look separately
and then for both to get together to make the final decision-making inspection. |
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I
have a chance to buy a "Handyman Special" worth $96,000 for only $80,000
because it needs repairs I can arrange for the $80,000 but need another
$16,000 for repairs. Help! |
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 Your
answer may be a construction commitment loan based on the future value of
your home - after improvements.
If the bank agrees to an 80% loan, it will give you $64,000 (80% of the
$80,000 sales price) for payment to the seller. It will release the remaining
$12,800 (80% or the $16,000 improvements) when the work is completed. |
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I think my home is worth a certain amount. My neighbor says it should sell for more, but a prospect claims it's worth less. Whose opinion is correct? |
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The
value of your home is not what YOU think it should be, or your neighbor
or even a casual prospect. It is determined chiefly by the location, the
neighborhood and the current market.
Nobody, but nobody, is more acutely aware of the current housing market
than an experienced local real estate firm like ours. Put your faith in
our hands and we'll recommend the best possible selling price. |
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I
have a mortgage loan that is fifteen years old and have now accumulated
enough money to pay it off early. Do you think this is wise or could I put
my money to better use? |
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It
depends on the difference between current interest and your mortgage interest.
Chances are you might be better off to keep the mortgage. With a mortgage
that is old, the interest on the debt and the interest you'd get from investing
it would probably not be too far apart. With the right investment, you might
even get a higher rate of return. The advantage is that you have a cash
reserve while still earning almost as much, if not more than you would by
paying off the debt. |
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What
advice do you offer on the subject of painting your home before putting
it on the market? |
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If
the outside is badly in need of paint, it may be worth your time to paint
it before you start showing the house. Chipped and faded paint is not only
unsightly, but may discourage a sale. Most people do not want to move in
and have to undertake such a big job. The same advice goes for the inside.
No point to completely repainting or papering your walls since the buyer
may want to select his own colors or patterns. However, if a particular
room looks especially shabby, it will be worth your effort to paper or paint
it. |
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Is
it true that it does not make sense to buy real estate when the inflation
rate is low? |
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Let's
not kid ourselves. Whether it's 4% or 20%, inflation is inflation and unless
you do something to protect your hard-earned money from losing its value,
you lose.
If you hide $1,000 in your mattress, and sleep on it for ten years at a
5% inflation rate, the $1,000 will be worth only half of its buying power
when you remove it from the mattress. On the other hand, if you purchase
a home for$100,000, its value would have appreciated 50% to $150,000 during
the same 10 years that you incubated your cash in the mattress. |
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When
selling a home, is it a good idea to leave a lot of personal items for the
new buyer as frosting on the cake or do you advise selling personal items
that you really don't need? |
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Frost
the cake! It's a good idea to include as many extras as possible. Draperies
that you don't need, shelving, porch furniture that you won't have use for,
of maybe that extra lawn mower are some examples. Make sure the agreement
spells out what goes and what does not. |
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I
told my real estate agent that I wanted $120,000 for my house. He offered
to sell it if he could keep anything OVER that amount as his commission.
What do you think? |
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 If
an agent proposes to guarantee you a certain sum from the sale of your home
in return for the chance to keep anything OVER that amount, you have been
offered a "net listing". This arrangement is open to so much abuse that
it is illegal in about half the states.
Any number of complications can arise. The AGENT'S interests are now paramount
although the law requires that you, the client, must come first. |
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How did the homeowner fare under
the latest change in the tax rules? |
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May I say, Fantastic! The new law
allows homeowners to avoid paying taxes on the first $250,000 of profits
in a home if they are single, or on the first $500,000 of profits if they
are married at the time they sell the home. Because a homeowner can use the exemption repeatedly, so long as he
or she lives in each house for at least two years most will never have
to pay taxes on profits from home sales. This change exempts over 99% of homes sales from capital gains taxes. |
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I
plan to buy a home in the near future. When should I decide on whether to
select a fixed or variable mortgage? |
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Actually,
this should be a last-minute decision. The financing market changes often
enough so that the best financing mode one month may not be the best the
next month. If you expect to live in the house for a long time and you feel
that interest rates will increase, you may lean toward a fixed rate. An
equally sound case can be made for the lower initial interest offered on
variable rate mortgages. If you don't expect to live in the home for a vey
long time, the variable rate mortgage would be the answer. |
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What
is meant by the word "leverage" when used in conjunction with
investing in real estate? |
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Leverage
arises because ALL of the income and ALL of the appreciation belongs to
the property holder regardless of the amount of the loan. To illustrate,
assume a $100,00 property was purchased for only $10,000 cash and a $90,000
mortgage loan. Five years later, the same property is sold for $150,000
(a 50% gain in value). After paying off the $90,000 mortgage, the investor
would realize, not a 50% gain, but rather a 500% gain on his initial cash
investment because he only invested $10,000 for the property. That's LEVERAGE! |
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I
am about to purchase a new home. The builder promised that everything wrong
will be taken care of and that his handshake will save a lot of paperwork.
Should I trust him? |
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 Many
a business agreement has been made with a handshake and enforced by the
courts. But when it comes to the never-never world of real estate, you cannot
and should not rely on oral promises. In fact, the law in all states specifically
requires that all agreements and conditions relative to the sale of real
estate specifically be in writing to be enforceable. The way to put teeth
into oral promises is to insist that everything significant be put in writing. |
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My
Realtor suggested to me that he do a "solo act" when showing our house to
prospective buyers. Wouldn't it be wiser for me to accompany them around? |
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One
of the fastest ways to sell your house in a hurry is to keep out of it when
it's being shown. First, tell the Realtor everything that should be known
about the house, then let the REALTOR do the selling. He or she is a skilled
negotiator and knows how to close a sale without emotional involvement.
If you must be around when the house is being shown, greet the prospect
graciously, take the children and pets and retire. |
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Why
does everyone say that home ownership is one of the great hedges against
inflation? |
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 For
one thing, your monthly installment payments never change (unless you have
an adjustable rate mortgage). Also, your investment grows as the value of
your home increases with rising prices. On top of that, you enjoy some fine
tax advantages, especially the property tax and mortgage interest deduction.
There is no better inflation hedge than ownership of a home. And, most importantly,
real estate values have always increased faster than the cost of living. |
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Do
you have any suggestions on how to prepare a home for its best showing? |
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Don't
just sell a house -- sell a home! For evening inspection, brighten your
home from the front porch light on through all the homes of the house. Little
decorator touches, a vase of flowers, a plant, small pillows -- can add
much to the comfortable feeling. If it's winter, a crackling fire adds irresistible
charm. A working fireplace is a major attraction to home buyers. A large
mirror can make a room look larger, reflect and magnify many of your best
selling points. Create that subtle, lived-in atmosphere. |
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Why
is a title search necessary when you buy a home? |
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 Skipping
the title search is like buying a new car without a warranty -- except the
stakes are higher. Although you may be the only buyer, others may also claim
rights to the property. There may be an easement to restrict the use of
your land or unpaid taxes. An heir to a former owner may claim a share of
the property. A title search will check for any such possible claims and
determine if the title is clear. Your deed does not eliminate claims that
others may have. It simply transfers the seller's right of ownership to
you. |
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Just
how important a factor is overpricing when selling a home? |
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 Buyers
buy homes by comparison. The average buyer is no slouch. He'll shop a particular
neighborhood and home type. He'll rarely buy the first one he visits. It's
too big an investment to be nonchalant. He will then compare prices against
comparative value. He'll quickly throw out any obviously overpriced homes.
If the buyer really likes an overpriced home, he may make a counter offer
at a lower price -- closer to its true value. Historically, the buyer probably
will make his offer for one properly valued. Overpricing will hurt a sale. |
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What
is meant by a restriction? |
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 It
is a clause in a deed restricting the use of the property. It might be looked
upon as zoning on a very personal basis.
For example, a house in a commercially zoned area may have a restriction
against use for any commercial purpose. This could create future financing
problems because banks may refuse to loan money for other than commercial
use.
From the point of view of the buyer, it is preferable that the agreement
enumerate any and all restrictions. Bring them out in the open and get professional
advice before going any further. It's for your own protection. |
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Why
do so many homeowners go wrong when they try to set a realistic selling
price? |
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 Most
people base their price tags on these factors: Original price, cost of improvements,
hoped-for profit and what they think similar homes are bringing. The original
price, improvements, and hoped-for profit only determine whether you gain
or lose, but they have nothing to do with the right price to produce a sale.
Prices of other homes? Most of the time you only hear of the asking price,
not the selling price.
Solution: Consult a local Realtor whose business it is to KNOW how much
a property can and will bring. |
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How
does real estate investment fare as in a method of making you financially
independent in retirement? |
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 Being
financially independent in your later years is a feat by itself. According
to a study by the U.S. Government, of all people over the age of 65, only
6% are financially independent. Also, according to this same study, all
of the lucky segment became financially independent partly or wholly through
ownership of real estate.
No one buys their first home as a reason for financial independence at retirement,
but that's the way it often works out. |
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Do
you have any suggestions on how much a home should be lighted when being
shown to a prospective buyer? |
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 In
my opinion -- the brighter the better! Give the prospect the best image
you can of the comfort, beauty an livability you are offering. In other
words, you want to sell a home not a house. Full illumination is the best
way to give your home the "lived-in" look. Furniture, rugs and fixtures
take on a warm glow from the proper lighting. Kitchens should always be
bright, turn on lights in all rooms and especially in closets and storage
rooms. The brighter -- the better. |
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I
understand the most important task in selling a home is deciding on the
right sales price. How do you come up with the best price? |
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This
is not done by looking into a crystal ball or consulting with a guru. The
most important factor is the price of comparable sales in your immediate
area. These are sales which have already been completed of homes as nearly
like yours as possible. The sales should also be near in time, for five-year-old
sales have almost no meaning in today's volatile financial market. Also,
the homes should be similar in style, and condition as your property –
the closer the better. |
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Why
should I use the services of a REALTOR when I can buy all the real estate
I need at the stationery store and just fill them in myself? |
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These
printed forms are only a starting point. There are dozens of varieties of
deeds, leases, and mortgage forms. Which ones are to be chosen to best protect
yourself is a good question for openers. Then, it's what is crossed out,
and what is added that gives you the value, security and protection that
you pay the experts for. Believe me, some of the largest financial losses
and legal entanglements have resulted from printed forms being incorrectly
used. |
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I have received a written offer to purchase my property. What happens to
the original offer if I make a counter offer? |
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A
counter offer is a combination of a rejection of the initial offer and a
new offer by the seller. When the seller demands a higher price, more down
payment, or different terms, the buyer's original offer is, in effect cancelled.
Unfortunately, this may burn bridges behind you. If the buyer refuses your
counter offer, there is no way you can force him to make good on the original
offer because it will have been wiped out with the rejection and counter
offer. This is a tricky area of negotiations that calls for expert advice. |
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I'm house-hunting and get confused when I try to remember the details of
each house I viewed. Any advice? |
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 Once
your Realtor takes you house-hunting, he or she will probably show you several.
Therefore, it's important to take notes on what you have seen or you may
forget which home is where, how big it is, what shape it's in, and the price.
Your Realtor can provide you with a checklist to make this task easier.
This way, you can instantly recall the location, price, construction, number
of rooms, heat, fuel, taxes, an financial requirements. A Polaroid picture
of the house to go with the notes helps too. |
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How far should I go in making major improvements before putting our home
up for sale? |
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An
expensive addition or improvement can be the kind of thing that will cost
you far more than you get back. True, the house should be spruced up and
neat, but it's rare when a large financial undertaking will bring more than
its cost in the final price. There is always the risk of miscalculation,
too. Home improvements frequently end up costing a lot more than originally
anticipated. You may end up with a faster sale and less inconvenience if
you lower the price an equivalent amount. |
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What is the proper relationship between the cost of the lot and the value
of the house on it? |
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 Old
rules of thumb have lost much of their meaning. It used t be that land represented
about one-sixth of the home's purchase price. Then it moved up to one-fourth.
And it will change again as the cost of land continues to rise or fall.
Nevertheless, the land value versus house value ration cannot be totally
dismissed because it does, to some extent, affect the resale value of the
property. It may not make much difference if you put an inexpensive house
on an expensive lot, but it could be a mistake to have to much house for
the land. |
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My home is for sale. One prospect offered to rent it with an option to buy.
What is your advice on this situation? |
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"Rent with option to buy" offer is usually made by someone who is not a
serious buyer for ANY house. I'd suggest putting the offer aside and looking
for a bonafide prospect who wants to BUY the house -- not rent it. However,
if you MUST rent your home under these circumstances, be sure that there
is a consideration for the option over and above the rent. Remember, you
are reducing your sales prospects down to one - and that one is quite dubious. |
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I signed a lot of checks during the closing of the purchase of our home.
Can you tell me which closing costs are deductible from my income tax? |
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 Property
taxes are usually pro-rated so that both the buyer and seller each pay the
taxes for the portion of the year that each owns the property. Each may
deduct this amount. Another deductible item is interest charged to the seller
on the mortgage up to the date of closing. Also deductible as interest is
the amount charged as points.
Fire insurance, FHA mortgage insurance, and charges for rent for occupancy
before closing are not deductible. |
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It looks like I'm the exception to the rule. I put a lot of money into renovating
an overpriced home and now I'll have to sell it at a loss. Any suggestions? |
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You
might consider renting the house out for at least a year of so before selling.
In that way, the house will be considered a business investment and you
can deduct the loss as a business expense.
While you're renting it out, you can also benefit from other tax benefits
such as depreciation and maintenance expense deductions. If you sell a house
which is your primary residence and take a loss, this loss is not tax deductible.
This is a tricky area, so check with your accountant. |
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I
plan to buy a larger home. Do you have any advice on the merits of selling
versus renting out our home? |
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I
would strongly consider selling over renting. To keep the house rented,
you'll have to pay advertising costs or fees to a broker. Maintenance costs
take a bite out of rental income. Each time there is a turnover the house
will have to be cleaned and redecorated. A vacancy can result in a loss
that could take years to recover. A deadbeat tenant could take up to six
months to evict plus legal costs. You're better off selling a single-family
home and using the money to move up to a bigger and better house. |
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© 2010 Patricia A. Skiba Realty