How to Buy and Sell A Home at the Same Time

Posted on February 13, 2016 by admin

How to Buy and Sell A Home at the Same Time

Buying a new home is an emotional experience in itself. But when you’re a current homeowner moving to a new home, you are most likely going to be trying to sell your home at the same time. Things can get very
stressful, but it’s important to keep a level head. There’s nothing worse than making a rash decision, especially when making such a large purchase.

As an Accredited Buyer’s Representative (ABR®), my goal is to make sure my buyers know all of the information that they need about the market, and financial solutions. Please let me know if you have any
questions. I look forward to working with you!

Evaluate Your Home for a Master Suite Addition

Posted on February 5, 2016 by admin

A master suite addition is a place to call your own — no kiddie toys, no teens hogging the bathroom — a heavenly space where you can bathe, dress, or simply relax in peace. But paradise doesn’t come cheap.

A 20-foot-by-20-foot master suite addition to a house with midrange fixtures and finishes has a national median cost of $112,500 according to the “2015 Remodeling Impact Report” from the NATIONAL ASSOCIATION OF REALTORS®.

An investment in a master suite paid back about 53% of its cost, according to the “Report.” However, 88% of homeowners said their new master suite increased the enjoyment of their home.

Master Suite Building Basics

Bumping out your house to add a master suite means giving up yard space, excavating, pouring a foundation, framing — the whole shebang that requires the full range of tradesmen, from roofer to plumber to tile-setter.

You’ll need zoning approval and building inspections, expanded heating and cooling systems, and probably an upgraded electrical panel, water heater, and burglar alarm, too.

Think Outside the Bump-Out

If you take advantage of existing space for your master suite addition, you can trim 20% to 60% from your budget. Here’s how.

Build up instead of out: Add your master suite on top of ground floor space — over a porch, garage, or previous addition. The disadvantage? Ground-level space is easier to age into.

Steal underutilized space: Incorporate that rarely used guest room — even better, that extra bathroom — into your master suite. You’ll save thousands if you can tap into existing water and sewer lines.

Finish unfinished space: Convert unfinished basement, attic, or even garage space into a master suite. Because you don’t have to build a foundation, exterior walls, or a roof, you’ll save 50% to 60% compared with a full-scale addition.

Gift That Keeps on Costing

Your master suite expenses don’t end when the last faucet and light switch are installed. Every month you’ll pay higher energy bills to heat, cool, and light your new space.

If you add 400 square feet to a 2,000-square-foot house — 20% more space — your energy bills likely will grow by 20%, too. Your property tax bill may increase by a larger percentage, because you’re adding space and installing a bathroom, which tax assessors value at a higher rate than other rooms.

Also Read:

What Renovations Will Get You the Most Bang for Your Buck?

Be Realistic About Payback

Adding a master suite will make a big difference to your life, but may not equally impact the value of your house. If yours is the only master suite on the block, you’ll recoup less than if master suites are standard in your neighborhood. Not everything is about money, however. If you plan to stay in your house for another three to five years, adding a private oasis could just be … priceless.

How Fancy Bath Salts Can Help You Sell Your House

Posted on February 5, 2016 by admin

You’re not just selling a home, you’re selling a lifestyle.

We get it. You’re pragmatic. You’ll buy that deep cleaning and de-cluttering your house are important steps in a comprehensive home staging process that could help your home receive higher offers and sell faster. But what’s up with those staging recommendations like making your bathroom feel like a spa and your kitchen smell like Rachael Ray just stopped by? Is that froufrou stuff really worth your time?

It is. Actually, the fact that you’re a pragmatist is the reason you’re going to want to shell out for some luxury staging items. The science is in: You’re not just selling your home, you’re selling a lifestyle, and those fancy final touches make a powerful sales pitch.

That’s right. Although the $11,000 you spent on a sturdy new roof might help seal the deal after the inspection, a gorgeous $30 jar of bath salts could be what prompts the offer in the first place.

The Psychology of Emotional Selling

There are plenty of rational reasons for a buyer to want to purchase your house — that new roof is just one of the many. But according to Peter Noel Murray, Ph.D. in “Psychology Today,” decision making and emotions are inescapably intertwined. So much so that people with brain damage affecting the connection between emotions and rational thought are unable to make decisions, even with a clear set of pros and cons before them.

What’s more, functional magnetic resonance imaging, or fMRI, results have confirmed the active role emotions play in consumer decisions about brands. How else can the overwhelming success of brand names over generic products be explained when generics are often the exact same thing?

People want to be associated with the brand that feels more upscale, or as Terrylynn Fisher, a REALTOR® with Dudum Real Estate in Walnut Creek, Calif., says, “Everyone aspires to have more than they have.” In a 2007 study, researchers found that people’s enjoyment of wine increased in tune with the wine’s perceived price — even when it wasn’t actually expensive.

Think of your home as the luxury, brand-name product, and all of the other houses on a buyer’s list as the generic version. Those homes might have a new roof as well, but when it comes to falling in love with a house, it’s that fancy label — aka, the chic bath salts or fancy wine decanter on display — that could make all the difference.

“You stage appropriate to the price range but [staging makes it feel] a notch above,” Fisher says. “[Buyers] want to feel like it’s a move up.”

Of course, different brands have different identities. How can you know that luxury is the right brand to convey to house hunters? In another “Psychology Today” article, Brent McFerran, Ph.D., explains that consumers’ desire to make luxury purchases is tied to their desire to showcase their accomplishments. What could be a better representation of someone’s accomplishments than their home?

When a home appears luxurious, it promises aspirational home buyers the lifestyle they have worked so hard to earn. They deserve to live in a house with fancy wine decanters and an orchid in the bathroom. They’ve earned it.

Leveraging Luxury (Affordably!)

What’s that? Your home isn’t already laden with luxury goods? The good news is that it doesn’t take many luxury items — or any genuinely expensive ones — to create an upscale look for your home staging. Overstock discount stores like HomeGoods or Burlington Coat Factory are great places to find fancy, brand-name items like those bath salts or top-of-the-line bed linen sets at a bargain.

When it comes to the staging items you were going to get anyway, sometimes the right item makes a subtle but impactful difference. In an article for “Houzz,” Kristie Barnett, known as “The Decorologist,” recommends overstuffed, oversized throw pillows. They’re not much more expensive than smaller pillows (a 26-inch pillow stuffed into a 20-inch cover from Ikea will run you about $15), and they add a seriously luxurious touch to the living room. Another inexpensive luxury tip from Barnett: Paint interior doors black. Who knew your doors were one cheap, easy coat of paint away from seriously chic?

Finally, when choosing luxury items for your home staging, be sure to focus on the lifestyle you’re promoting. Yes, those bath salts in that elegant glass jar are beautiful on their own, but the reason you’re using them is to recreate the feeling of a spa in your bathroom. Support that beautifully scented splurge with fresh, white towels, decorative baskets, and maybe even a small bamboo plant.

Sound like the kind of bathroom you’d like to call home? With any luck, that’s what house hunters will think too. You already know your well-maintained home is the best rational choice for the right buyer; this easy staging strategy can make it the obvious emotional choice as well. There’s nothing like a little note of luxury to tug at their hearts and help them envision your house as their future home.

7 Home Ownership Tax Benefits

Posted on February 5, 2016 by admin

7 Home Ownership Tax Benefits

Owning a home can pay off at tax time.

Take advantage of these home ownership-related tax deductions and strategies to lower your tax bill:

Mortgage Interest Deduction

One of the neatest deductions itemizing homeowners can take advantage of is the mortgage interest deduction, which you claim on Schedule A. To get the mortgage interest deduction, your mortgage must be secured by your home — and your home can be a house, trailer, or boat, as long as you can sleep in it, cook in it, and it has a toilet.

Interest you pay on a mortgage of up to $1 million — or $500,000 if you’re married filing separately — is deductible when you use the loan to buy, build, or improve your home.

If you take on another mortgage (including a second mortgage, home equity loan, or home equity line of credit) to improve your home or to buy or build a second home, that counts towards the $1 million limit.

If you use loans secured by your home for other things — like sending your kid to college — you can still deduct the interest on loans up $100,000 ($50,000 for married filing separately) because your home secures the loan.

Prepaid Interest Deduction

Prepaid interest (or points) you paid when you took out your mortgage is generally 100% deductible in the year you paid it along with other mortgage interest.

If you refinance your mortgage and use that money for home improvements, any points you pay are also deductible in the same year.

But if you refinance to get a better rate or shorten the length of your mortgage, or to use the money for something other than home improvements, such as college tuition, you’ll need to deduct the points over the life of your mortgage. Say you refi into a 10-year mortgage and pay $3,000 in points. You can deduct $300 per year for 10 years.

So what happens if you refi again down the road?

Example: Three years after your first refi, you refinance again. Using the $3,000 in points scenario above, you’ll have deducted $900 ($300 x 3 years) so far. That leaves $2,400, which you can deduct in full the year you complete your second refi. If you paid points for the new loan, the process starts again; you can deduct the points over the life of the loan.

Home mortgage interest and points are reported on Schedule A of IRS Form 1040.

Your lender will send you a Form 1098 that lists the points you paid. If not, you should be able to find the amount listed on the HUD-1 settlement sheet you got when you closed the purchase of your home or your refinance closing.

Property Tax Deduction

You can deduct on Schedule A the real estate property taxes you pay. If you have a mortgage with an escrow account, the amount of real estate property taxes you paid shows up on your annual escrow statement.

If you bought a house this year, check your HUD-1 settlement statement to see if you paid any property taxes when you closed the purchase of your house. Those taxes are deductible on Schedule A, too.

PMI and FHA Mortgage Insurance Premiums

You can deduct the cost of private mortgage insurance (PMI) as mortgage interest on Schedule A if you itemize your return. The change only applies to loans taken out in 2007 or later.

What’s PMI? If you have a mortgage but didn’t put down a fairly good-sized down payment (usually 20%), the lender requires the mortgage be insured. The premium on that insurance can be deducted, so long as your income is less than $100,000 (or $50,000 for married filing separately).

If your adjusted gross income is more than $100,000, your deduction is reduced by 10% for each $1,000 ($500 in the case of a married individual filing a separate return) that your adjusted gross income exceeds $100,000 ($50,000 in the case of a married individual filing a separate return). So, if you make $110,000 or more, you can’t claim the deduction (10% x 10 = 100%).

Besides private mortgage insurance, there’s government insurance from FHA, VA, and the Rural Housing Service. Some of those premiums are paid at closing, and deducting them is complicated. A tax adviser or tax software program can help you calculate this deduction. Also, the rules vary between the agencies.

Vacation Home Tax Deductions

The rules on tax deductions for vacation homes are complicated. Do yourself a favor and keep good records about how and when you use your vacation home.

If you’re the only one using your vacation home (you don’t rent it out for more than 14 days a year), you deduct mortgage interest and real estate taxes on Schedule A.

Rent your vacation home out for more than 14 days and use it yourself fewer than 15 days (or 10% of total rental days, whichever is greater), and it’s treated like a rental property. Your expenses are deducted on Schedule E.

Rent your home for part of the year and use it yourself for more than the greater of 14 days or 10% of the days you rent it and you have to keep track of income, expenses, and allocate them based on how often you used and how often you rented the house.

Homebuyer Tax Credit

This isn’t a deduction, but it’s important to keep track of if you claimed it in 2008.

There were federal first-time homebuyer tax credits in 2008, 2009, and 2010.

If you claimed the homebuyer tax credit for a purchase made after April 8, 2008, and before Jan. 1, 2009, you must repay 1/15th of the credit over 15 years, with no interest.

The IRS has a tool you can use to help figure out what you owe each year until it’s paid off. Or if the home stops being your main home, you may need to add the remaining unpaid credit amount to your income tax on your next tax return.

Generally, you don’t have to pay back the credit if you bought your home in 2009, 2010, or early 2011. The exception: You have to repay the full credit amount if you sold your house or stopped using it as primary residence within 36 months of the purchase date. Then you must repay it with your tax return for the year the home stopped being your principal residence.

The repayment rules are less rigorous for uniformed service members, Foreign Service workers, and intelligence community workers who got sent on extended duty at least 50 miles from their principal residence.

Energy-Efficiency Upgrades

The Nonbusiness Energy Tax Credit lets you claim a credit for installing energy-efficient home systems. Tax credits are especially valuable because they let you offset what you owe the IRS dollar for dollar, in this case, for up to 10% of the amount you spent on certain upgrades.

The credit carries a lifetime cap of $500 (less for some products), so if you’ve used it in years past, you’ll have to subtract prior tax credits from that $500 limit. Lucky for you, there’s no cap on how much you’ll save on utility bills thanks to your energy-efficiency upgrades.

Among the upgrades that might qualify for the credit:

Biomass stoves

Heating, ventilation, and air conditioning

Insulation

Roofs (metal and asphalt)

Water heaters (non-solar)

Windows, doors, and skylights

File IRS Form 5695 with your return.

This article provides general information about tax laws and consequences, but shouldn’t be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice; tax laws may vary by jurisdiction.