Real Estate Information Archive


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Tax Rebate Use for Sellers

by Desi Sowers, REALTOR, ABR, GRI, SRS, CRS

What should a smart home seller do with that fat federal tax rebate check?

Well, it's not THAT fat, but it could come in handy for sellers who use it wisely.

The Economic Stimulus Act of 2008 includes, among other provisions, tax rebates, bureaucratically dubbed "economic stimulus payments".

Starting in May, the U.S. Treasury Department will begin sending rebates to taxpayers, who had $3,000 of income, filed a 2007 tax return and have a valid Social Security number. Eligible taxpayers will receive up to $600 ($1,200 for married couples). Parents will receive an additional $300 for each eligible child younger than 17.

If you are a retiree, disabled veteran or low-wage worker who is otherwise exempt from filing a tax return, you must file a tax return this year in order to receive a rebate.

The rebate –– both the basic component and the additional funds for qualifying children –– begins to phase out for individuals with adjusted gross incomes (AGI) over $75,000 and married couples who file a joint return with AGI over $150,000. The combined payment is reduced by 5 percent of the income above the AGI thresholds.

You can estimate what your tax rebate take might be with the Economic Stimulus Payment Calculator online.

And here are a few things you ought to consider doing with that unexpected windfall, if you are selling your home.

Give it to the buyer. Cash is a great concession to help coax a buyer into escrow. Buyers can find a lot to do with a few hundred dollars to $1,000 or more, especially first-time buyers who likely will be strapped when the deal closes. A cash gift could be a deal maker.

Buy a home inspection. Use a home inspection to determine what you need to do to put the home in the best competitive shape for the market, or to price it fairly to sell as-is. The inspection could also turn up building code violations the law mandates you correct before selling. The buyer may also opt to use the inspection as a guide to the condition of the home.

Put some extra zeal in your curb appeal. Curb appeal, the first impression your home conveys to prospective buyers, should create an emotional desire to own the home and enjoy the lifestyle and status it represents. Putting the best face on your home also should give a lasting impression that motivates buyers to cross the threshold and take that first step toward closing the deal. More like a home improvement or exterior staging job than a cosmetic makeover, curb appeal that sings is particularly crucial when buyers are calling the shots. Hire a landscaper, consider painting the exterior of your home, tidy up the grounds.

Clean house. Hire a round of service workers to get all the dirt and grime out of every nook and cranny and make the home look neat and tidy. Include house cleaners, carpet and rug cleaners, fence repairers, handy men and women, window washers, organizers (for the garage too), the works. To get the best help to make your home Spic and Span ready for fussy buyers, consider a $34 two year subscription to Consumer Checkbook, a service that rates service workers, like its affiliate Consumer Reports rates goods.

Set the stage. Hire a staging expert. Staging is to the interior of a home what curb appeal is to the exterior -- nipping and tucking, furnishing and accessorizing, buffing and polishing until the place looks like a model home, without appearing too clinical. The new look will pay for itself in terms of sales speed or a higher sales price.

Written by Broderick Perkins

Six Keys to a Successful Real Estate Purchase Offer

by Desi Sowers, REALTOR, ABR, GRI, SRS, CRS

Will your real estate transaction run smoothly to completion, or will it creak along and wobble like a badly greased wheel? A good offer to purchase, also called a purchase agreement, can make all the difference.

Unfortunately, many new agents don’t advise their buyers adequately, and as a result, many transactions never get off the ground. On the other hand, the agents who have mastered the art of the purchase agreement are those who help their buyers understand a few simple rules. Understanding these rules means you’ll have a much better chance of getting the house you really want at terms you’re happy with.

Expect competition.

You should always expect there to be other buyers competing with you. This is true even in a "down market", when you’d expect that buyers would be able to take full advantage of desperate sellers. A buyer’s market doesn’t mean competition disappears. In a buyer’s market, the homes that are priced the lowest still attract multiple offers, while the more expensive homes just sit there. So unless you’re that rare buyer who picks out a home starting at a higher price because it’s exactly what you want, you should expect that there will be other buyers competing against you.

Understand where the price is now.

Before you write your offer, your Realtor® should "run the comps" for you. "The comps" are agent slang for a CMA, or Comparative Market Analysis. This is simply a printout of nearby homes that have sold recently that are similar in age, size, configuration, etc. Remember what we said above about expecting competition? Well, the comps show you whether to expect a lot of competition or just a little. This in turn should be the basis for your price. $10,000 below full price may not be enough discount if the home is overpriced to begin with. On the other hand, going $10,000 over full price may sound like something you’d never consider doing because it’s stupid; it turns out to be not so stupid if the value of the home is $80,000 below market and you can end up moving in with $70,000 in equity.

A purchase agreement is not a referendum on the market.

Real estate agents and newspapers love to publish market update articles, because they’re statistical generalizations that are easy to write. However, when you’re writing an offer on a home, you’re not there to make a statement on the market. Chances are good that the seller and their agent have "run the comps", so they know what they’re offering. The market may be terrible, but the home may be a fantastic bargain! Or the market may be so hot that you’re chasing after an overpriced turkey. Yes, you should have an idea about the forest, but your purchase agreement should zero in on a single tree.

Days on market may or may not matter.

Finding out how long a home has been on the market is a good idea, but you also need to find out if anything has changed in that time. For example, I once worked on an offer on a home that had been on the market for a year. Three weeks earlier, however, the tenant had left, the ugly pink paint was replaced with a neutral color, and the sunscreens on the windows were removed. As a result, my buyers, who were expecting no competition based on the days on market, were surprised to find that theirs was one of two offers on the property. (Yes, they did get the house, by the way!). A much more common example of the same thing is the home that’s been on the market six months and was just reduced $50,000 last week. The right way to think of this house is not as a $400,000 six-month house, but as a $350,000 one week house.

Weak terms need a stronger price.

The classic example of a buyer with terrific terms getting a better price is the cash buyer who negotiates more of a discount because the seller knows he can close. The flip side of this coin is that if you’re coming in with 100% financing based on a down payment assistance program, be prepared to offer the seller more in the way of price.

What’s most important? Avoid kitchen sink offers.

Before you write an offer, you should understand what’s most important to you and craft your offer accordingly. The best offers are written by buyers who understand that there’s another party involved in the transaction. and that an offer is a give and take process. The worst offers are the "kitchen sink offers", so named because they throw in everything but the kitchen sink (and sometimes that, too!). This is the offer that takes 20% off the asking price, where the buyer has no cash, and asks the seller to repair the back fence, trim the trees, and replace the carpet. Oh, yes, did we mention, we want a 120 day escrow! If you think about it, this rule is a variation of rule #5. If you’re negotiating hard on price, be gentle with the seller on terms. Pick your battles well, and you’ll win every time!

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