home seller tips Archives - Page 8 of 11 - Real Estate News and Commentary

May 7, 2008November 23, 2021

Todays Luxury Home Trends are Tomorrow’s Home Standards

by Dan Krell
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What comes to mind when you think of a luxury home? When asked, many people first think a luxury home is a very large and expensive home. However, a luxury home does not have to be the largest or the most expensive home in the area; in fact a luxury home could be a townhome or condominium.

Although price alone does not signify a luxury home, luxury homes are more expensive than the average home. Regardless of price, luxury home ownership is on the rise. Consider the Joint Center for Housing Studies (Harvard University) report from 2004 indicating that homes costing over one million dollars are the fastest growing market segment in the country such that the United States Census Bureau had to change the top census category of home value from “$500,000 or more” in 1990 census to “$1,000,000 or more” in the 2000 census.

So what makes a home a “luxury home?” It is mostly about the home owner’s lifestyle, which is typically a combination of: personal expression, house amenities, construction quality, and physical location. A typical luxury home buyer will pay the price to create their perfect home and to make it express their lifestyle.

Lifestyles and homes have changed a lot over the years; consider that in the United States, the average home in the 1950’s was about 980 square feet while today the average home is over 2,400 square feet! As lifestyles change, trends in luxury home building will change to fit the luxury home buyers’ personality and routine. Most luxury home buyers are willing to pay more for a home in the perfect location with customized amenities.

Luxury homes usually have many state of the art amenities including the latest in appliances and recreation facilities. State of the art kitchens are usually standard in a luxury home. Current trends in high end kitchens include prep-kitchens inside the main kitchen so as to keep the main kitchen clean, as well as high tech appliances connected to the internet so you can either order groceries from your fridge or cook a turkey while at work (via phone commands). Additional luxury amenities include walk in closets (closet sizes rival the average bedroom) that are well appointed with center islands and dressing areas. Other amenities depend on the owner’s personal interests and hobbies. You might find these indoor facilities in a luxury home: theatre, basketball court, bowling alley, or swimming pool.

Luxury home construction is distinct from other construction because of the customization and materials used (such as exotic woods, imported marble, and custom fixtures). Luxury homes are now being designed for room flexibility and continuous room flow. The price of a luxury home is higher than the average home because of these design and construction features.

Do you like what you see in some of today’s “dream homes?” Today’s luxury home trends tend to become tomorrow’s norm. For example, the washer/dryer, dishwasher, air conditioning, microwave oven, granite counters, and stainless steel appliances (the list goes on) were once considered to be a luxury- but are now the norm in many homes: So, who knows? Maybe your next home will have that indoor basketball court!

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of April 21, 2008. Copyright © 2008 Dan Krell.

April 15, 2008November 23, 2021

Pre-sale Home Inspection

by Dan Krell
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Home inspections are commonplace among real estate transactions these days. Many people who bought without a home inspection during the recent sellers’ market will testify to the value of having one performed to determine the condition of the home. Generally, home inspectors vary by training and experience; however as of January 1, 2008, all home inspectors operating in Maryland are required to be licensed.

Now that the market has shifted to a buyers’ market, you might see advertisements by some real estate agents and home inspectors stating that a pre-listing home inspection will sell your home faster, eliminate home inspection negotiations, and reduce your liability.

If you do have a home inspection conducted prior to your sale, don’t expect the home buyer to forgo having a home inspection performed. Unless the home buyer has experience in home construction, most home buyers will want an opportunity to have a home inspection. Even if you are selling the home “as-is,” home buyers can still require (as part of a contract) to have an inspection performed to determine if there are serious issues to address in the home.

The pre-listing home inspection could possibly eliminate additional negotiation brought on by a buyer’s home inspection. But since home inspectors vary in experience, you can count on variances between your inspection and theirs. Additionally, there is always the chance that your home can sustain damage after the initial inspection, especially since listing periods tend to be longer these days. If there is additional damage, you can count on the home buyer’s inspector to point it out as well as the buyer asking you to fix it.

Does the pre-listing home inspection eliminate your requirement for disclosure of latent defects? No. Even if you had a pre-listing home inspection, the fact remains that you are still required to disclose any known latent defects (latent defects are defined as defects that a purchaser would not reasonably be expected to ascertain or observe by a careful visual inspection of the real property and pose a health or safety threat).

Don’t get me wrong, having a pre-listing home inspection performed should be on everyone’s pre-listing checklist. Actually, pre-listing home inspections have been performed by savvy home sellers for many years. The purpose of the pre-listing home inspection is to determine the home’s condition and reveal if there are serious issues to remedy. To improve your home’s appearance, you should consider making the recommended repairs. However if you cannot make the repairs, you can price the home based on the home inspector’s repair recommendations. Additionally, the home inspector’s critical eye may serve to provide feedback on enhancing the home’s appeal to potential home buyers.

Should you have a pre-listing home inspection? As a home seller, you should absolutely consider having a pre-listing home inspection performed. Although the pre-listing home inspection on its own doesn’t necessarily bring in home buyers or make the sale, it is a tool that acts as a guide to make your home more appealing to home buyers and to assist in facilitating a faster sale. For more information about a pre-listing home inspection, you can visit the America Society of Home Inspectors (ASHI.org) or the National Society of Home Inspectors (NSHI.us).

April 15, 2008November 23, 2021

A lot’s at stake, proceed with caution

by Dan Krell © 2008
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Separating? Divorcing? Separation and divorce can be one of the most challenging experiences anyone can endure. Even when you decide to work things out amicably, things can become contentious and difficult; disagreements seem to be at the heart of divorce, right? If you haven’t consulted an attorney yet, you should do so to get advice and assistance on the splitting of assets (including your home) and the tax liabilities you may incur.

Splitting couples often do things in haste out of anger, fear, and sometimes (mental) exhaustion. Getting to the nitty-gritty, there’s a lot at stake; making impulsive and rushed decisions can be reckless- especially when it comes to the disposition of the marital home. Before you make a move, explore the options available to you to protect your assets and your financial investment in your home.

Divorce agreements vary with the requirement to sell the marital home. Some separating couples agree to sell immediately, while others agree to sell after a number of years (allowing one spouse to stay in the home). Depending on when your agreement requires the sale of your home, you could owe additional taxes. The tax laws are complex (consult your accountant), however filing jointly would allow you to claim up to $500,000 in real estate capital gains without being taxed, while filing individually only allows you to claim up to $250,000 real estate capital gains without being taxed.

When it comes time to sell your home, finding a Realtor who has experience with divorcing couples can make the sale go smooth. Before hiring a Realtor, interviewing several can give you an idea of their communication skills and experience. It is wise to hire a Realtor who is neutral and can work with you and your spouse; hiring a Realtor because they are a relative or friend often creates or adds to the spousal discord, which deteriorates communication at a critical time.

Misunderstandings and bad feelings between you and your spouse can undermine the home sale by interrupting communication between all parties. To facilitate a smooth sale, everyone (you, your spouse and your Realtor) should agree on the communication methods to inform each about aspects of the sale, as well as the process to show the home and the preferred method of contract negotiations. By laying the groundwork prior to listing the home, everyone knows what to expect and how the sale process will be executed.

Pricing the home realistically can eliminate a lengthy time on the market. It is good practice for your Realtor to present an analysis of the local and neighborhood market to you and your spouse so as to agree in pricing the home.

Your Realtor should always be discreet about your domestic affairs during the sale. Domestic situations, such as divorce, are not material facts about the home and do not need to be communicated to home buyers. Keeping discretion about your domestic affairs can limit bargain hunters’ “low ball” offers.

Planning and counsel can lessen the overall impact of separation and divorce by exploring your options. If you have a home and are divorcing, consult with your attorney and accountant before agreeing to listing and selling the home.

March 25, 2008November 23, 2021

Creative financing can lead to creative trouble

by Dan Krell
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Several weeks ago, my client encountered The Amazing Criswell of real estate. Without knowing anything about my client’s home, this real estate agent professed to know how many homes are for sale in his neighborhood, the price the home would sell for, and time it would remain on the market. Much to my client’s dismay, the agent expressed an interest to discuss a proposal to sell his home quickly and for more than the list price. Needless to say, my client did not call him.

There is always someone pushing their angle on how to sell your home faster, make more money, or buy with no money. Some of these “real estate solutions” could even be called schemes; many schemes are not practical, some are outrageous, and some are blatantly illegal. Presently, the temptation to think outside the box tends to be more prevalent since financing guidelines are more restrictive, and for many it means needing more cash for a higher down payment, closing costs, or reserves.

Aside from creative financing options that offer seller financing, land installment contracts, or leases with the option to purchase, there are schemes that provide creative gifts of money to the home buyer so they can qualify for their loan. One of the more blatantly illegal schemes involves a “gift” from the home seller to the home buyer while increasing the sale price to exceed the listing price; the gift is not disclosed to the lender as well as exchanged outside of settlement. This scheme essentially creates a 100% financing loan from a loan that technically requires some form of down payment.

A graduate student who researched this type of transaction for his Ph.D. in finance (as reported in the New York Times “The Cash-Back Mortgage,” June 10, 2007) found that the “cash back” scheme is more prevalent than previously thought. He found that people advertised such deals through advertising and through key words in the MLS (the study revealed 150 keywords were used).

Additional findings suggested that this type of transaction would occur when homes were on the market for long periods of time, yet sold above the original list price. Furthermore, these types of transactions tend be executed by the same real estate agents (who are either the seller and/or they are the only agent in the transaction). Ironically, most of these deals were perpetrated through loans packaged in bundles and sold on Wall Street.

A subtler form of this cash back scheme occurs when the seller provides closing help to the buyer, but raises the sale price beyond the list price to make up the difference. Although the closing help is disclosed to the lender and recorded on the settlement sheet, this transaction could be illegal. Federal law (18 U.S.C. 1014) forbids providing false statements and/or willfully overvaluing land to influence a lender’s behavior in providing a loan. In fact, a New Jersey State Judiciary committee stated that an attorney knowingly participating in such a transaction is ethical misconduct.

In today’s market, it is tempting to look for creative methods to sell or buy a home. However, before you agree to any creative financing proposal, consult with an attorney to determine its validity and legality.

January 15, 2008October 5, 2019

New legislation affects home owners and home buyers

by Dan Krell

As the end of the year is a time of reflection, let’s reflect on the new legislation that directly affects home owners and home buyers. Although this is not a complete list of new laws, here are a select few that concern taxation, eminent domain, and privacy.

Buying a home in Montgomery County will cost a bit more next year as recordation tax rates will increase effective March 1, 2008. Current recordation tax rate is $3.45 per $500 (or more commonly described as $6.90 per $1,000); the first $50,000 of the purchase price is exempt from this tax if the purchaser will live in the home. The new recordation tax rate will add an additional $1.55 per $500 (a total of $5.00 per $500) for any amount over $500,000.

Confusion about property taxes and new tax assessments will hopefully be a thing of the past as the property tax disclosure requirement will go into effect April 1, 2008. The law requires any home seller to disclose present and estimated future property taxes for the property for sale. The tax amount must contain the current state, county, and municipality tax as well as any special services tax imposed. The estimated future tax must represent an accurate portrayal of any future tax increase. Estimating future property tax increases may sound tough, but don’t worry – the Montgomery County Department of Consumer Protection is required to assist home sellers and real estate agents with the tax estimations.

Additional property tax legislation includes the Homestead Tax Credit. The credit caps any property tax increase due when the home is reassessed. For homes purchased after December 31, 2007, the law requires home owners to file the one-time application within 180 days of the purchase. All other home owners have until December 31, 2012 to file the application.

Eminent domain has been a recent hot topic. Four changes to eminent domain in Maryland went into effect July 1, 2007. The first is the requirement to file for condemnation within four years of the decision to acquire the property. Subsequent changes increased the cap on mandatory payments to the displaced: the cap to displaced property owners increased to $45,000; the cap to displaced tenants of rental property increased to $10, 500; and the cap for moving and relocation expenses increased to $60,000.

Privacy protection is always a concern. However, effective January 1, 2008, all businesses including real estate brokers are required to take “reasonable steps” to ensure that personal information is protected when client records are destroyed. Additionally, businesses are required to notify their clients as well as the Maryland Attorney General’s office if there is a security breach of electronic files containing client information.

Also becoming effective January 1, 2008 is the ability for a consumer to place a security freeze on their credit report. Without the freeze, anyone with basic information can request a credit report. If the freeze is requested, the information can not be accessed without express prior authorization of the consumer.

For more information on the new legislation, you can go to the Maryland General Assembly website (http://mlis.state.md.us) or the homepage for the County Council of Montgomery County (www.montgomerycountymd.gov/csltmpl.asp?url=/content/council/index.asp).