Will I pay taxes if I sell my home?

A: When you sell your primary residence, it is excluded from taxation up to $250,000 profit per individual owner when you qualify for the principal
residence profit exclusion. When you own your home with another person, together you may exclude up to $500,000.

To qualify for the exclusion, you need to have occupied the property as your principal residence for at least two of the last five years. When you own your home with another person, you both must be owners and meet the two-out-of-five year occupancy rule. If only one of you meets the occupancy rule, then the profit exclusion is limited to $250,000.

However, when you and your spouse have not simultaneously owned and occupied the residence for at least two of the last five years, you still qualify for the $500,000 exclusion if:

  • One of you owned the residence;
  • You both meet the two-out-of-five year occupancy rule;
  • You file a joint tax return for the year of the sale; and
  • Neither of you has taken a principal residence profit exclusion on another property within two years prior to the sale.

You do not need to occupy the home at the time of sale to qualify for the principal residence profit exclusion under the two-out-of-five year rule.
If you do not meet the two-out-of-five year occupancy rule, you do not qualify for the tax exclusion — with one exception. If you relocated due to personal difficulties, you may still qualify for a partial tax exclusion. Personal difficulties include:

  • A change in employment when your new job is located at least 50 miles farther from your home than your old place of employment or, if you were
  • Unemployed, the job is at least 50 miles away from your home;
  • A change in health, such as age-related infirmities, emotional issues or even severe allergies; and
  • Unforeseen circumstances, such as death, divorce or natural disasters.

With the personal difficulties exception, when you relocate after occupying the property for less than 24 months, you qualify for a profit exclusion
amount equal to the fraction of the ceiling amount ($250,000/$500,000) attributable to the portion of the 24 months you occupied the property.

15 Ways I Can Help You Get Your Home Sold

The secret to a successful sale is the combination of unparalleled client services and good communication. That’s why I go the extra mile to make sure all my sellers profit from the services I offer.

When you list with me I will:

  1. Explain the services I provide.
  2. Conduct a comparative market analysis to zero in on your home’s value.
  3. Help you decide the price to set for your home and discuss fix-ups that will improve the value of your home.
  4. Estimate your home’s equity and discuss your future buying power.
  5. Review my selling strategy for your home.
  6. Review a moving timetable and assist with your next home purchase.
  7. Draw up the listing agreement spelling out the terms including price, listing period and commission.
  8. Place your home on the MLS database and internet real estate sites.
  9. Actively market your home to potential buyers and the most active real estate agents in the area.
  10. Advertise your home online.
  11. Pre-qualify potential buyers and show your home.
  12. Update you weekly on the progress of the sale and on market changes.
  13. Assist with negotiations and answer questions.
  14. Help with all paperwork.
  15. Coordinate closing details, inspections and appointments.

If you would like to talk to me about selling your home
call me directly at 760.476.9560 or email me via the contact tab.

Want to know the current value of your home?

What is my Home Worth

What are HOA Assessments?

A: Ownership of a unit in a condominium project or other residential common interest development (CID) includes compulsory membership in the project’s homeowners’ association (HOA). The HOA is in charge
of managing and operating the entire project.

The obligations you undertake when you purchase a unit in a CID, and the HOA’s documentation of those obligations, fall into two classifications:

  • Use restrictions contained in the HOA’s:
  • Articles of incorporation;
  • By-laws;
  • Covenants, Conditions and Restrictions (CC&Rs) of record;
  • Age restriction statements; and
  • Operating rules.
  • Financial obligations to pay assessments as documented in annual reports which include:
  • Pro forma operating budgets;
  • A Certified Public Accountant’s (CPA’s) financial review;
  • An assessment of collections and the
  • Collections enforcement policy;
  • An insurance policy summary;
  • A list of construction defects; and
  • Any notice of changes made in assessments not yet due and payable.

There are two types of assessment charges to fund the expenditures of the HOA:

  1. Regular assessments fund the operating budget to pay for the cost of maintaining the common areas. Regular assessments are set annually and are due and payable in monthly installments.
  2. Special assessments are levied to pay for the cost of repairs and replacements that exceed the amount anticipated and funded by the regular assessments. Special assessments are generally due and payable in a lump sum on a date set by the HOA when making the assessment or added to the regular assessment monthly installments for a specified amount of time.

Annual increases in the dollar amount levied as regular assessments are limited to a 20% increase in the regular assessment over the prior year. An increase in special assessments is limited to 5% of the prior year’s
budgeted expenses.

It is recommended you review all readily available HOA information with your agent before making an offer. With this information, you and your agent are able to better determine the price you will pay for the unit and whether or not you have the ability (and desire) to carry the cost of ownership after acquisition.

What documents do I need from the HOA when selling?

A: At the listing stage, your agent on your behalf prepares a form requesting homeowners’ association (HOA) documents. It is sent to the HOA
or management company to request their delivery of copies of the common interest development’s (CID’s) governing documents concerning the project’s use restrictions and HOA finances.

The HOA or management company will deliver the documents within 10 days of the request’s postmark or receipt of the hand-delivered request.

The HOA will charge a service fee to prepare and deliver the documents requested. This upfront fee is the same amount regardless of whether the documents are delivered by hand, by mail or electronically.

The HOA will also charge a transfer fee to change its internal records to reflect the new ownership of the unit. This fee is sometimes demanded to be paid up front with the HOA document request — before a buyer is even located.

Upon receiving the written request and appropriate fees, the HOA provides the governing documents you need concerning the project, which include:

  • Articles of incorporation;
  • Declaration of covenants, conditions & restrictions (CC&Rs);
  • Bylaws;
  • Rules and regulations;
  • Operating budget, assessment and reserve funding;
  • Financial records covering at least one previous year; and
  • HOA meeting minutes from at least one previous year.

Your agent makes the HOA documents available to prospective buyers for their review as part of the marketing package for your property. To avoid buyer disputes or cancellation, this information is handed to the buyer with disclosures, and before entering into a purchase agreement.

The buyer reviews the HOA documents along with other mandated property disclosures (such as the Transfer Disclosure Statement (TDS)) to determine the property’s value when preparing their offer to purchase.

Credit Freeze Basics

What is a credit freeze?

A credit freeze limits access to your credit report, making it more difficult for would-be identity thieves to open accounts in your name. You can still use your credit card normally, but you won’t be able to open new lines of credit.

How do I freeze my credit?

To place a freeze on your credit report, contact all three major credit reporting agencies:

Equifax: 800-349-9960
Website

Experian: 888-397-3742
Website

TransUnion: 888-909-8872
Website

You’ll be asked to provide personal information to verify your identity, and may be a fee, depending on your age and where you live.

Are there drawbacks to a credit freeze?

The protection a credit freeze offers isn’t perfect. Credit freezes only prevent new lines of credit from being opened in your name — if an identity thief already has access to one of your accounts, a credit freeze is not an effective line of defense.

In addition, a credit freeze remains active until you decide to unfreeze it. To unfreeze your credit report and open a new line of credit, you’ll have to contact each credit reporting agency with the PIN number given to you at the time of the initial freeze. A fee may be charged for unfreezing your credit.

Types of Agency-Brokerage Relationships

Seller’s agent

Also known as a listing agent, a seller’s agent is hired by and represents the seller. All fiduciary duties are owed to the seller. The agency relationship usually is evidenced by a listing contract. Once a property is listed, the seller’s agent either can attempt to sell it or, in addition, may be permitted by the seller to cooperate with another licensee who will attempt to find a suitable buyer for the property, A seller’s agent negotiates the best possible price and terms for the seller. The agent represents the seller’s best interest throughout the transaction.

Buyer’s agent

A real estate licensee is hired by a prospective buyer as an agent to find an acceptable property for purchase and to negotiate the best possible price and terms for the buyer. The agent represents the buyer’s best interest throughout the transaction. The buyer can pay the agent directly through a negotiated fee, or the buyer’s agent may be paid by the seller or a commission split with the listing agent.

Subagent

A cooperating agent who works for a listing broker-salesperson in the sale of a property. The subagent represents the seller, and therefore, works with the buyer, but not for the buyer. The subagent owes fiduciary duties to the listing broker and to the seller. Although subagents can’t assist the buyer in any way that would be detrimental to their client the seller, a buyer-customer working with a subagent can expect the subagent to treat him honestly. A subagent generally may provide the buyer with certain types of services, often called ministerial services, which are factually based and do not require the licensee’s judgment.

Disclosed dual agent

Dual agency is a relationship in which the brokerage represents both the buyer and the seller in the same real estate transaction. Dual agency relationships don’t carry with them all of the traditional fiduciary duties to the clients; instead, dual agents owe limited fiduciary duties. The fiduciary duty of loyalty to the client is limited. This focuses on confidentially and the negotiation process. Because of the potential for conflicts of interest in a dual agency relationship, it’s vital that all parties to the dual agency relationship give their informed consent. In many states, this must be in writing. Disclosed dual agency is legal in most states.

Designated agent

Also called, among other things “appointed agency,” this is a brokerage practice that allows the managing broker to designate which licensees in the brokerage will act as agents of the seller, and which will act as agents of the buyer, without the individual licensees being dual agents. The designated agents give their clients full representation, with all of the attendant fiduciary duties. To use designated agency, it specifically must be permitted by state law. State laws vary, and in some states permitting this practice, the managing broker also is not a dual agent.

Nonagency relationship

This relationship is called, among other things, a transaction broker, or facilitator. Some states permit a type of nonagency relationship with a consumer. These relationships vary considerably from state to state, both as far as the duties owed to the consumer and the terminology used to describe the relationship. Very generally, in these relationships, the duties owed to the consumer are less than the complete, traditional fiduciary duties, but in most states which allow for this type of relationship, the licensee still owes fiduciary duties to the consumer.

What are Contingency Provisions? Do I need them?


Contingency provisions
describe an event, activity or condition which needs to occur before the purchase agreement transaction can proceed toward closing. On the occurrence of the event or approval of information described in a contingency provision, the contingency has been satisfied and is no longer an obstacle to further performance and closing.

Contingency provisions authorize the buyer or seller to cancel the transaction when:

  • The described event fails to occur; or
  • The information received is disapproved.

Contingency provisions stating conditions allowing for the termination of an agreement are separated into two categories:

  • Event-occurrence contingency provisions — those provisions satisfied by the existence, completion or outcome of an activity or event which eliminates the contingency; and
  • Further-approval or personal-satisfaction contingency provisions — those provisions satisfied by the receipt, review and approval of data, documents and reports which eliminate the contingency.

Event-occurrence contingency provisions address the occurrence of specific activities and events, such as:

  • The sale or acquisition of other property by the buyer or the seller;
  • Obtaining purchase-assist financing;
  • The approval of building permits; and
  • The elimination of title conditions, or the release of encumbrances, such as liens or leases.

Further-approval contingency provisions address the right of the buyer or seller to cancel the transaction on their disapproval due to unacceptable property conditions and material facts, such as:

  • Disclosures and inspection reports concerning the physical integrity and natural and environmental hazards of the property;
  • Appraisals;
  • Title reports; and
  • Rental income and expenses.

To terminate a purchase agreement under a contingency provision, the buyer or seller needs to have a reasonable cause to cancel for the cancellation to be enforceable. When a reasonable basis exists, they may avoid enforcement of the purchase agreement by the other person by notice of cancellation.

Contingency provisions contained in purchase agreements are eliminated by either:

  • Satisfaction of the contingency provision by the occurrence of an event or by someone’s approval of the conditions contained in information, data, documents or a report; or
  • Waiver or expiration of the contingency provision.

Contingency provisions are unique as they deal with uncertainties at the time an agreement is entered into. As a matter of good practice, contingency provisions are included in purchase agreements to eliminate any uncertainty about aspects the property’s title, income/expenses or physical condition. Before escrow is able to close, contingency provisions need to be eliminated.

How to Stage a House for Free: 7 Ideas That Don’t Cost a Dime

One of the most common mistakes sellers make is assuming they need to sink a bunch of money into home staging. Some choose the expensive route—swapping out their furniture and art at the behest of a hired professional home stager—but that’s not the only way to impress potential buyers.

“Everyone needs to stage their home to sell it efficiently,” says Laura McHolm, co-founder of NorthStar Moving. “But you do not need to spend a lot of money to stage your home.”

Want to get your house in tiptop shape without spending a dime? Follow these home staging ideas that are 100% free.

1. Depersonalize

The first step to staging your home is getting rid of personal items such as photos, albums, handmade items, trophies, and mementos—even the kids’ artwork on the fridge.

“No family pictures,” says McHolm. “A buyer wants to be able to envision living in that house. It’s not your house anymore. It’s a house that will soon be their house. So get the ‘you’ out of your house.”

Removing your personal items isn’t easy—they’re the things that make your house feel like your home, but keep in mind that it’s only temporary. Pack them up and store them safely until you can find them all spots of honor in your new place.

2. Declutter

All that stuff littering the surfaces of your home has to go.

“Most surfaces should have between three to five items on them, because clutter is distracting both in photos and in person,” says property stylist Julie Chrissis, of Chrissis & Company Interiors. “You want buyers looking at the home, not the stuff.”

This means eliminating piles of mail and magazines, collections you have on display, knickknacks, and most other items that can easily be packed away.

3. Nix the extra storage

If you’ve been living in your current home for a while, you’ve probably come up with a lot of creative ways to store all of the items you’ve accumulated. But now that you’re hoping to sell, it’s time to get rid of them. Purge!

“Eliminate any plastic storage bins, over-door storage, above-cabinet storage, and extra racks in rooms,” says Chrissis. “This is important because buyers never want to think they will outgrow a home. A seller’s job is to show them there is plenty of storage space for them to grow into.”

Since all those stored items are already packed into bins and baskets, it should be simple enough to move them to a storage facility until you’ve moved.

4. Deep clean

Even if you consider yourself a neatnik, you’re probably going to need to do a little extra work to get your house ready for buyers.

“Take a critical eye to your home. Living somewhere daily reduces the things you notice that might be a problem, like dirty walls, scuffs and scrapes, leaks, or even odors you have become accustomed to,” says Marty Basher, home organization expert at ModularClosets.com. “Also, deep clean the kitchen and bathrooms. These areas of the home are generally the most cluttered and dirty. Both of those things will turn off willing buyers.”

It might help to ask a friend or family member to come by and help you find areas that need attention. Someone who doesn’t live in your house will be better able to look at your space through the eyes of a buyer.

5. Change the furniture layout

Maybe you’ve placed your couch at an odd angle to keep the sun out of your eyes during your midday nap, or your armchair is in the middle of the room so you can better see the TV. Those things are all fine for you—but not for buyers. Now it’s time to stage the room for optimal space and flow.

“Room layouts should be set up for photos first. It’s important that the photo not be of the back of a sofa, large chair, or other piece of furniture, as this makes the room look smaller because it blocks the view of part of the room,” says Chrissis. “The same goes for open houses and showings. If buyers see a room with furniture barriers, it makes the room seem smaller.”

6. Let there be light

Now that your home is clean and uncluttered, it’s time to brighten things up so buyers can actually see it.

“You want natural light and lamps with warm light—no swirly bulbs that look like office light,” says Chrissis. “We tell most of our clients to remove valances as they typically make a room darker and, in most markets, are a little out of fashion. Lamps are important, especially in winter months when there is less sun and sunset is earlier.”

7. Reduce your furniture

If your house is filled to the brim with furniture, it’s time to move some of it out.

“After the home is thoroughly cleaned out, keep only up-to-date furniture in excellent condition, and just a couple of accent pieces in each room,” suggests broker and interior designer Tory Keith of Natick, MA.

Not only does this go hand in hand with making things look less cluttered, but less furniture will also make the rooms look bigger.

Move unneeded pieces to the basement, garage, or a storage facility until you’re ready to move.

Original Article

How do I Use a Pest Control Report?


A
Structural Pest Control (SPC) report is not a legislatively mandated seller disclosure in a California real estate transaction, unlike a Transfer Disclosure Statement (TDS) or a Natural Hazard Disclosure (NHD). Most conventional lenders do not require a NSPC report or termite clearance.

However, the existence of pests such as termites adversely affects the value of property. Since this fact relates to value, the seller is compelled to disclose their presence before the buyer makes a decision setting the price and closing conditions in an offer submitted to the seller. 

To best disclose a pest infestation, the seller orders an SPC report. The report is included as part of the marketing package for delivery to prospective buyers or their agents when they inquire about the property — before the seller enters into a purchase agreement with the buyer. 

A Pest Control Certification — a certificate of clearance — is issued by the SPC company to indicate the property is free of infestation or infection in the visible and accessible areas. This certification is commonly called a termite clearance. If any infestation or infection is not corrected, it will be noted in the certification. The SPC report separates the findings and recommendations into two categories: 

1. Section I items, listing items with visible evidence of active infestations, infections or conditions that have resulted in or from infestation or infection; and 

2. Section II items, listing conditions deemed likely to lead to infestation or infection but where no visible evidence of infestation or infection was found. 

If a seller has obtained an SPC report which discloses the existence of conditions that have an adverse effect on value and does not inform the buyer of the contents of the report, the seller is defrauding the buyer. Therefore, the buyer may pursue the seller and the seller’s broker/agent to recover the cost of repairs, either prior to or after the close of escrow. Provisions in the purchase agreement allowing the seller to entirely avoid the cost of termite clearance and repairs are not enforceable when known defects go undisclosed at the time the buyer and seller enter into a purchase agreement.  

Further, when the seller does not provide an SPC report, the buyer needs to consider ordering their own SPC report.

9 Tips for Home Sellers: What You Should Know to Land a Buyer’s Offer


“What do I do when I get an Offer?”
– That is a common question from sellers.

If the offer is at or above asking price the answer may be easy. But remember money is not the only consideration. You may prefer a lower offer with better financing or a stronger buyer or a more convenient settlement date. When all factors are favorable, and the price is right—set the contract and reel your buyer in quickly. 

Typically with my assistance, you will negotiate. It is an art (somewhat like fishing), where you may give and take over price, terms special conditions, or closing costs. Even carry back financing, dates of possession, or included personal property may come into play. 

Here are some tips to help you throughout the process: 

Aim for a Sale

Remember, while your aim is to get as much as you can for your home, the buyer’s aim is to find your lowest acceptable price. In the end, however, you’re both angling for the same catch: a sale on the best possible terms for both of you. 

Evaluate the Buyer

Find out as much as you can about whether the buyer can afford to purchase your house. You’ll gain peace of mind knowing your buyer is qualified to pay the price you agree upon. Buyers who are ‘prequalified’ have been told by a lender how large a mortgage they are likely to qualify for, while buyers who are ‘preapproved’ have a tentative loan commitment from a lender. 

Stay Cool

Keep communications on an agreeable level. At all stages of negotiation, be as flexible as possible. Don’t lose your cool—even if the buyer gets tense—or you might lose your sale.

Ask Questions

When offers come in they may contain complicated terminology, sometimes even 2 or 3 addenda. They should be carefully considered in person either at my real estate office or in the quiet of your own home. I will help you to understand all of the ramifications.

Consider all Offers

Remember, you have 3 basic choices: you can accept the offer, reject it, or counter offer with an alternative that suits you. Give consideration to every offer, even if it’s lower then your asking price. Outright rejection is seldom wise unless it is so ridiculous you know the buyer is simply fishing. With my counsel, you might make a counter offer close to your asking price. That seems fair for your buyers and lets then know, while you are not inflexible, neither are you so anxious to sell you’ll take anything. 

Respond Quickly

When buyers make an offer, they are in the mood to buy. But moods change. Be sure to respond as soon as possible, even with a counter offer. Buyers are known to get ‘buyers remorse’ in the middle of the night. Don’t delay responding if you really want that sale now. Keep mum, of course, about the minimum price you’d accept, but keep the dialogue going. It is not unusual to exchange 2 or 3 counter offers. Remember, I am professionally trained to find a meeting of the minds where everyone wins.

Rely on your Agent

Rely on me to keep negotiations moving forward. Realize agents are required by law to bring you any offer – no matter how low. Knowing what you want from the sale, I am in a unique position to help negotiations along. By relaying your counter offers, I can depersonalize the delicate money discussions and keep negotiations flowing toward eventual agreement. And remember it is to our financial benefit to see you get the highest price the buyer is able to pay. 

Be Patient

Exercise confidence and patience as the buyer weights the counter offers. Be forthcoming with all information requested and call attention to all the areas of agreement. Be positive. When disagreements occur, iron out all the small negotiating areas before getting down to any real stumbling block later when most items are agreed.

Consider Sweeteners

As the bidding gets close to your acceptable price, you might offer some extras – ‘sweeteners’ – to make a higher price acceptable to the buyer: the inclusion in the sale of draperies, lawn furniture, bbq grill – whatever you don’t mind giving up. If you are in a position to offer financial support, now is the time to offer to negotiate points or hold a second mortgage to help sell your home.

Take Care with Contingencies

In drawing up your contract, consider requests for contingencies carefully. Contingencies – stipulations such as obtaining financing or home inspections – are typically used to smooth acceptance of a contract without delaying the buying decision. Each contingency must be satisfied before the sale is final and should include a time limit for work to be completed.               

When you’ve landed your buyer, your signed acceptance of a written offer becomes your sales contract. Except for removing any contingencies, this document is the binding basis for the sale.

Ready to sell your home? Call Steve today to get the process started: 760.476.9560