How HIGH do I go?
I was talking to a colleague today. She said she had a disappointing day yesterday. I asked her what had happened. She explained that her client made an offer on a property. Of course there were multiple offers and their offer was already, what my friend believes, over the market value. The seller which is a bank, or perhaps the listing agent counters the top 2 offers for their highest and best offer. My friend doesn’t want her client to buy this property for more than what it’s worth. But, on the other hand she doesn’t want her client to loose another house to multiple offers, either. She said that she would feel guilty no matter what the outcome. “I know the house will not appraise,” she said. My advice was that she explains everything to her clients and let them make a decision.
It seems like the inventory is low and some listing agents take advantage of the situation and list the properties below market value. This becomes very difficult for the buyers. How high should they offer? How can a regular buyer who is using a conventional loan compete with an investor who is buying properties all cash and waiving all inspections and financing contingencies? Read more
Converting your Primary Residence into Rental Property
The tax code allows you to keep some or all of the gain on the sale of a primary residence if you meet certain conditions. IRC §121 permits the exclusion of realized capital gain of $250,000 for a single person and $500,000 for a married couple upon the sale of a home that was their primary residence for any two years during the five years preceding the sale. If your gain is in excess of this exclusion, you may have to pay capital gain tax on the amount over the exemption. This exemption cannot be used more than once every two years.
Let’s assume you have lived in your home as a primary residence more than two years, but decide to move out and turn the property into rental housing. If you sell the property less than three years after you move out, you still qualify for that primary residence exemption of $250,000 or $500,000. So if your gain (profit) is less than those thresholds, you will have no tax to pay on your gain, though you will have to pay depreciation recapture tax on the amount that you depreciated the property while it was a rental. Read more
Environmental Issues When Buying Real Estate – Part II
In a recent article, I covered many of the important facts that homeowners should know about asbestos. Today, I will be talking about a little known environmental concern called “Radon.”
Radon is an odorless gas that you can’t smell and/or taste. And, unfortunately, it is the second leading cause of of lung cancer. According to the Environmental Protection Agency (EPA), if you smoke and your home has high radon levels, your risk of lung cancer is especially high.
Basically, radon is a radioactive gas. It is caused by the natural decay of uranium that is found in nearly all soil. It moves into your home through cracks and other holes in the foundation. It can, also, enter your home through well water.
In some cases, certainly not all, granite counter tops are known to contain dangerous levels of radon. There is no need to panic if you have granite counters, but it is a good idea to test their radon levels.
It is very easy to test for radon. There are several short term tests that can be purchased at your local hardware store. They are easy to use and can let you know if you have a problem within a very short period of time. The EPA recommends that everyone test for radon, whether they are in an old or new home.
If you take the short term test and your result is 4 pCi/L or higher, you should take a follow up test just to be sure. And, if it comes back high a second time, then you should contact the EPA and do the long term test.
If you are doing renovation of your home, such as converting an unfinished basement to living space, it is especially important to test the radon levels since major renovations can change the radon levels of any home.
There are ways to lower the radon levels of your home. One such method is to use a vent pipe system and a fan. These pull the radon from beneath the house and vents it to the outside. It is called a soil suction radon reduction system. Before beginning any repairs, it is wise to consult the state radon office for advice and recommendations.
Home sellers would be well advised to check out their radon levels before putting the house on the market, since more and more buyers are asking about it. In addition, every person who purchases new construction should definitely check their radon level prior to occupying the home.
For more details on the information contained in this article, please check out the EPA’s website at: www.epa.gov/radon/.
Kathy Wall
(415) 608-4168
How Many Offers before I’m a Home Owner?
Recently, it seems like buyers are writing several offers on multiple properties simultaneously before they can ratify one. One of my clients has 3 offers on short sale properties. He asked me yesterday to show him two more properties. There is no certainty that he ratifies any of the offers. Good thing is that he is not giving up and in fact, he is certain that one of these days he will own a house. Is this a numbers game? How many offers do you have to write before you actually ratify one and become a home owner? What has been your experience lately?
Here’s the story of how I became a home owner … I bought my house about 9 years ago. I looked at properties for about a month, found a house and made an offer. I got countered to give my best and highest offer because there were 2 other offers. I came back with my best offer which was $25,000 over asking. Luckily, I wrote the winning offer. The point is that I only wrote ONE offer and I became a home owner.
Shokoofeh Nowbakht http://www.shokoo.com/
Is history repeating itself?
In recent months the entry level Real Estate market has shifted and become for some people, a competitive sport. If priced correctly homes aren’t lasting past the first week’s open house as buyers are frantically racing to submit offers. Supply is low and demand is high and we all know with that combination multiple offers arise. What’s good for the goose isn’t necassarily good for the gander.. is history repeating itself? Is what is occuring now exactly what we saw a few years ago when home prices soared and multiple offers were just expected? There are many factors that come into play, some may argue this market is nothing like the one we saw a few years ago. We can say for sure banks have tightened up their guidelines to put it gently. Unless you can prove you qualify, you don’t get approved. Interest rates are lower and home prices have dropped so buyers in today’s market essentially have more buying power. Appraisals have been tightened and often times more then one is necessary to get approved by the lender. With that said, is it really all that different? Are consumers so eager to purchase a home for fear they will “miss the boat” that they are over extending themselves to make it happen. Hopefully with the tightened lender guidelines, history won’t repeat itself. What are your thoughts as I would love to hear them…
Nicole Machado www.mve2day.com
How much higher do I offer?
About one & a half year ago, often I was asked “How much lower can I offer?” It seems like those days are gone. Last week I wrote 3 offers for 3 of my clients. And yes, you guessed right, I was asked every single time, “how much higher do I offer?” Real Estate market has clearly changed, I’d say, since 2 months ago. Many properties receive multiple offers after only a short number of days on the market. Most offers are over the asking price. One of my clients offered $530,000 on property listed for $499,000, and his turned out to be one of the 14 rejected offers. From my experience and what I hear from my colleagues, offers may need to be over 10% of the list price to be considered a strong offer. What has been your experience recently?
5 Tips To Improve Your Odds in a Multiple Offer Situation
“Multiple offers? I thought we were in a Buyer’s Market?” Well, it certainly IS a great time to buy in that we are seeing interest rates that are still at historical lows coupled with housing prices that are more affordable. But on the other hand, here in the San Francisco & Peninsula area, we are seeing an increasing number of multiple offer situations. For example, on the last home my clients submitted an offer for, there were 26 (yes TWENTY-SIX!) offers, all of which were put in within the home’s first two weeks on the market! Whatever the reasons for this, it’s become clear that if a home is well priced or below market value, there’s a good possibility that prospective home buyers will find themselves in a multiple offer situation. Here are five tips to help make your offer stronger:
Homes Are Moving Quickly!
I recently started working with some first time home buyers. We made an appointment to view four homes in Daly City and South San Francisco. They have not had much experience viewing homes and wanted to get their feet wet to see what was offered in the current market.
As always, I do my best to preview the homes I show, as to gain as much knowledge as possible about the homes we are going to view.
What we were surprised to find out is that, out of the four homes we planned on viewing, 3 of them were marked pending or were going to be marked pending soon. All of the homes were vacant and have been on the market less than a month. Read more
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