Q. I am wondering if men and women have a different way of looking at the right home to buy.
A. There was an interesting study earlier this year, by Realtor.com, equating looking for and buying a home to dating and falling in love. There are definitely differences between the sexes. A majority of consumers admit to having home crushes. That is a property they liked so much they were drawn back to looking at it numerous times. But men and women have a different pattern.
Men were more likely than women to move from one home crush to another. 36% of men surveyed say they find a new house crush weekly, compared to 29% of women. Women were more likely than men to have a crush on a home that was out of their price range. 41% of women revealed their home crush is out of their price range compared to only 30% of men.
One thing both sexes agree can make them fall in love with a home is outdoor living space. They both identified this attribute as most important in a home. Women swoon over open floor plans, great curb appeal, fixtures and appliances. Men loved open floor plans, great curb appeal and good garage space. They visualize their toys in it or toys they wish they had.
In life or in Real Estate, finding “the one” is easier when your list of deal breaker’s is short.
Q. In staging a home for sale, how important is the garage?
A. It is more important than many people realize. Generally speaking it is most important if a man is involved in the sale. Women, however, also can appreciate a clean garage with good storage cabinets. It gives her a feeling of practicality to park the car inside and also store items so she doesn’t have to use up all the indoor closets space.
Most buyers can’t visualize the potential of a garage that looks like a dumping site. I suggest renting a storage space when selling a home. The cost is worth the benefit. Not only will the garage look great but other areas of your home will also be less cluttered. Remember it is an important living space.
Good lighting is very important in a garage. You can get a fluorescent fixture. So many garages are dark and dingy. If you have a large garage, at least a double, set up a portion of it as a workshop. Don’t go to a lot of expense. Keep it simple. A set of work horses and a piece of plywood on top is great. A loft area for storage is a desirable storage place for the buyer.
If you have a small, one car garage, park your car there for showings. Potential buyers will see that a car fits in. An empty garage seems smaller.
If the floor of the garage is stained or dirty clean it and consider painting it.
Q. How can I compete if there are multiple offers?
A. Many buyers are finding themselves in multiple-offer competitions in our current market.
When inventories of homes for sale are low and interest rates are also low, buyers can expect to run into competition. Even in slower markets, the best listings at the best prices can generate more than one offer.
Some buyers shy away from multiple-offer competitions for a variety of reasons. They may be afraid of overpaying. They might have lost out before and don’t want to go through the agony of defeat again. Granted, a multi-bid encounter increases the anxiety level of the home buying experience. But, if you are successful, you have the benefit of knowing that you’ve brought a home that was high in demand.
The key to avoid over-paying in a multiple-offer competition is to have a good grasp of current market values in the area. To develop this expertise, look at a lot of listings. Then, follow up with your real estate agent to find out what these listings sold for. It’s also helpful to know how many offers there were.
Buyers who haven’t done their homework may not have a sense of how much they should offer when there is more than one offer. If you haven’t educated yourself about selling prices, you may feel uncomfortable offering significantly more then the asking price even through this may be precisely what you need to do.
One thing you can do is write a letter, to be attached to the offer, telling your story. Usually the sellers have an emotional attachment to the property and they want an idea of who will be living there. You might even want to include a picture of your family.
It helps to work with a real estate agent who has intimate knowledge of the area in which you want to live. He or she can educate you about the listing and selling prices as you spend time together looking at listings. Some buyers find it helpful to take notes and keep a file of listing flyers.
In general, the offer that wins in a multiple-offer competition is the one with a combination of the best price, the shortest closing and the fewest contingencies. A contingency is a condition that must be satisfied before the transaction can close. Typical contingencies are for inspections and for the buyer’s financing. Preapproved buyers have an edge because they don’t need a financing contingency.
Some buyers are choosing to waive contingencies in order to make their offers more attractive to the sellers. But, it’s risky to waive a contingency if in fact the contingency must be satisfied for the transaction to close.
For example, an appraisal contingency makes the contract contingent on the property appraising for the sale price for the purposes of obtaining a mortgage. If the property appraises for less than the sale price and you don’t have the protection of an appraisal contingency, your deposit could be at risk if you back out of the deal. If the appraisal comes in low and you choose to proceed with the transaction, you’ll need to make a larger down payment to make up the difference between the appraised value and the sale price.
Q. My family is going to be moving soon. We have a dog and a cat. I am worried about how they will adjust to the move. Any suggestions?
A. Moving is an adjustment for humans but it is also difficult for pets. We are responsible for easing the transition and keeping the pet safe. I went to the “Pet Realty Network” and got some suggestions:
1. Keep the pets separated from all the chaos of moving day. If your pet isn’t already comfortable with a crate it would be a good idea to get one and get them accustomed to it. Make sure it is sturdy and well ventilated. Put them each in one in a quiet, well-ventilated place. If you don’t use a crate, still find a quiet place such as a bathroom and put their toys or treats in there with them.
2. Find a veterinarian in your new area and ask if there are any local concerns like Lyme disease or any vaccinations or medications your pet may require. If you are moving to another country, carry an updated rabies vaccination and health certificate. It is important to contact the Agriculture Department or embassy to obtain specific information about bringing a pet into the country.
3. Make sure your pet is wearing a sturdy collar with an identification tag, labeled with your current contact information. It should include your cell phone number and destination location.
4. Keep at least one week’s worth of food and medication with you in case of an emergency. Ask your current vet for an extra prescription before you move. Purchase an extra supply of special food in case you can’t find it right away in your new area.
5. If you are moving far enough away that you will be getting a new vet, get a current copy of your pat’s medical records and vaccinations. Keep your current vet’s contact information handy in case of an emergency or in case a new vet needs more information.
6. Prepare a first aid kit. Being prepared and knowing basic first aid could save your pet’s life. Supplies should include: gauze to wrap wounds or to muzzle your pet, adhesive tape for bandages, non-stick bandages, towels and hydrogen peroxide (3 percent).
7. If you are traveling in a car a crate is ideal. A restraining harness is also good. For cats a well ventilated carrier is best. Don’t leave your pet alone in a parked vehicle. Try to keep your pet on its current eating schedule.
8. Prepare your new home for pets. They are often frightened and confused in new surroundings. When you arrive, immediately set out all the familiar and necessary things your pet will need: food, water, medications, bed, litter box, toys etc. Be cautious of narrow gaps behind or between appliances where your pet might try to hide. Keep external doors and windows closed when your pet is unsupervised. If your old home is nearby, your pet might try to find a way back there. Make sure the new owners have your contact information and a photo of your pet.
Q. I am deciding if I would be better off financially by renting or buying a home. How do I do the calculation?
A. It is really simple. If you bought a $500,000 home your property tax would be around $6,500 a year. This is totally tax deductible. If your payment was $2,500 a month the majority of your payment at first is interest. Let’s say $2,300. That is $27,600 a year. Adding $6,500 and $27,600 equals $34,100 total deduction.
If your taxable income is $75,000 you would pay tax on: $75,000 minus $34,100, or $40,900.
If you have a 28 percent income tax rate your tax would be $11,452 instead of $21,000 for $75,000. If you divide the savings over 12 months, $21,000 minus $11,452 equals $9,548; $9,548 divided by 12 months is a $795.66 a month savings. It would make your effective payment $1,704.34.
Most rents these days are higher than this in our area. A couple of other things you should consider: In the first year many of your closing costs are also deductible. The other factor is appreciation of value. You will keep paying the same payment when your property value increases over the years. I guess this is part of the reason that home ownership is the American dream.
Q. Our family wants to sell our house. We don’t want to buy another home for some time. I am worried about capital gains. Do we have to roll over our gain into a more expensive house to defer the capital gains?
A. The law you are referring to was in place until 1997. That year a new and better exemption for capital gains became the law. If you meet certain criteria, $250,000 for a single person or $500,000 for a couple, you may be exempt from taxation. Here are the criteria:
1. You have lived in the home as your principal residence for two out of the last five years;
2. You have not sold or exchanged a primary residence during the preceding two years;
3. You meet what the IRS calls “unforeseen circumstances,” such as job loss, divorce, or family medical emergency.
The way you calculate gain, start with what you paid for the property originally. Add your costs of purchase, your cost of current sale and cost of improvements over the years. Improvements such as repairs or cosmetic additions such as new carpet and paint don’t count.
For instance, if you paid $300,000 in 1990 and sold this year for $500,000 the initial gain would be $200,000. If costs of purchase were $3,000, costs of sale were $18,000, and cost of improvements (such as a new deck, landscaping and kitchen expansion) was $70,000, that equals $91,000. You would add $91,000 to the $200,000 gain, so your total base would be $291,000. Now, subtract $291,000 from $500,000 for a total gain of $209,000. This is well within the exemption for even a single owner.
You don’t have to buy again to receive this and you can do this again every two years.
‘Echo boomers’ to drive housing recovery
Q. What do you think will drive the recovery of the housing market in the foreseeable and longer range future?
A. There are numerous factors that still can affect the housing market in the near future and beyond. One of them is the age demographic. I found an interesting report by the Joint Center for Housing Studies of Harvard University.
They explained that starting this year 2012 and continuing over the next 20 years, the ‘echo boomers’ (born in the late 1970s and early 1980s) will drive the housing market. The study found that many adults under the age of 35 have chosen to stay at home with their parents instead of purchasing their own home; however, they do believe in the value of home ownership and do plan to buy. Another study found that 86 percent believe they will ultimately own a home and 70 percent felt this was a good time to buy. They just don’t feel the need to rush into it before they are thoroughly qualified. But, the fact is, monthly mortgage payments currently compare more favorably to rents than anytime since the 1970s.
The report projected the impact of the ‘echo boomers’ over the next two decades: If the economic recovery continues over the next few years, echo boomers entering into adulthood should support the addition of about one million new households per year over the next 10 years. The echo boomers have the potential to spur new home demand to an even greater extent than their parents did starting in the 1970s, in the next 20 years.
This new generation already outnumbers the baby boomersat the same age. Even modest immigration will help this group to grow larger. If housing affordability continues at historic lows, more and more of the echo boomers will take the plunge into home ownership
Q. I heard that the government implemented some sort of stimulus to improve the housing market. Could you explain in layman terms what this is and how it will help?
A. The stimulus is called QE3 – short for “Quantitative Easing- Round 3.” I hope 3 will indeed be a charm this time.
This is a policy where the Fed buys up debt instruments or assets in an effort to push down long-term interest rates. Their hopes are that lower long-term rates will stimulate the economy by giving consumers and businesses an incentive to borrow and invest more. (It is now cheaper to borrow). Sometimes the Fed’s actions don’t do as much as theyhoped, as far as moving rates, but QE 3 seems like it will be effective because the Fed has committed to buy up “mortgages” (mortgage backed securities) of $40 billion per month. This represents about 25 to 30 percent of overall mortgage volume; this increase in demand will bring down rates. The Fed has committed to QE 3 indefinitely, too, so rates are expected to remain low for a long time.
Q. Please remind me of what expires at the end of this year pertaining to short sales.
A. It is the forgiveness for state and federal taxes on the forgiven amount on a short sale. So, if you are considering a short sale, now is the time to discuss this with a qualified Realtor and get started. There is just enough time to complete most short sales before the end of the year.
Remember, if you are not behind in your payments, you can still do a short sale. It will not affect your credit to the point that you can’t buy a lesser property immediately afterward. Also remember that a foreclosure is much worse on your credit record.