home seller Archives - Page 29 of 30 - Real Estate News and Commentary

May 10, 2012

Real estate pent up demand or pent up optimism

by Dan Krell © 2012
DanKrell.com

The National Association of Realtors® latest news release of April 26th stated that March’s increased pending home sales figures is an indication that the housing market is recovering. The NAR reported that March’s Pending Home Sale Index (the PHSI is a “forward looking number indicating contracts signed”) increased from February’s PHSI and is much higher than the PHSI a year ago. Lawrence Yun, NAR Chief Economist, claimed; “The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices, will be rising in more areas as the year progresses…” (realtor.org).

Regardless of the newly sparked optimism for the housing market, a news release of one week prior (April 19th) indicated although March’s existing home sales were better than the previous year, the number of home sales declined from February’s totals. Dr. Yun cautioned that, “We were expecting a seasonal increase in home listings, but a lack of inventory has suddenly become an issue in several markets with not enough homes for sale in relation to buyer interest”…“Home sales could be held back because of supply factors and not by demand…”

My local market (Montgomery County MD, which includes Bethesda, MD, Chevy Chase MD, and Rockville MD) is part of the one of the stronger housing markets in the country, and pending sales are strong. The April 2012 Montgomery County Single Family Home Housing Report released by the Greater Capital Area Association of Realtors (gcaar.com) indicated that the number of contracts increased 12.4% compared to the same time last year, as well as increasing 8.5% year-to-date compared to the same time last year.

However, when looking at closing sales, pending sales may not be converting. Although the number of settlements of single family homes in Montgomery County is reported to have increased 5.8% in April 2012 from April 2011, the number of settlements year-to-date has decreased 1.6% from the same time last year.

Additionally, housing inventory continues to pose a problem for the market. Montgomery County single family home new listings decreased 14.6% in April 2012 from April 2011; while total actives reported for year-to-date through April 2012 decreased 15.1% for the same time last year. A diminished housing inventory is not so much an issue of meeting an increased buyer demand, as Dr. Yun has stated; but rather the issue may be that the declining housing supply may be lowering to meet buyer demand.

However, if housing inventories were not meeting an increased buyer demand, then we might be experiencing something akin to what occurred 2005 through 2006 (when homes sold relatively quickly, the average time on market was less than 30 days, and home prices were increasing). But we’re not experiencing the activity of 2005-2006. Additionally, the average single family home sale price for Montgomery County as reported by GCAAR is $496,144 for the month of April 2012 (compared to $515,161 for the same time last year).

I remember (and reported) similar optimisms declared in recent years; for example, an October 2009 report indicated that the PHSI was proclaimed to be at the highest level since March 2007. Enthusiasm for a market turning point would surely be welcome; but the data is inconsistent. And in fact, maybe current reports of pent up home buyer demand may be indicative of something else- a projection of pent up optimism.

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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 May 7, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

April 5, 2012June 3, 2020

Medicare tax on real estate transactions

As pundits and commentators speculate about the Supreme Court’s opinion on the Patient Protection and Affordable Care Act of 2010 (PPACA), the National Association of Realtors® (NAR) reminds us that the 3.8% tax on unearned income imposed by PPACA is not a transfer tax. This is a tax collected on “unearned income” is to be applied to the Medicare Trust Fund (e.g. a medicare tax).

Although the new tax is not a transfer tax, it could apply to your home sale. Unlike transfer taxes, which are collected by state and local governments when real property is transferred between individuals; the “Medicare tax” is not calculated on the sale price nor is not applied to the proceeds from every real estate transaction. Rather, the tax provision kicks in when specific thresholds are met.

Incidentally, even though a real estate transaction may meet the threshold to be taxed under the new Medicare tax; it’s not the only “unearned income” that may be taxed under this provision. According to the NAR “Medicare tax faq”, “Unearned income is the income that an individual derives from investing his/her capital. It includes capital gains, rents, dividends and interest income. It also comes from some investments in active businesses if the investor is not an active participant in the business. The portion of unearned income that is subject both to income tax and the new Medicare tax is the amount of income derived from these sources, reduced by any expenses associated with earning that income. (Hence the term “net” investment income.)”

To clarify, Henry Paula explains the Medicare tax in his January 2011 article (Planning for affluent taxpayers under the 2010 healthcare reform. The CPA Journal, 81(1), 46-47); “Under the Patient Protection and Affordable Care Act (ACA) …there is a new 3.8% tax imposed on the net investment income of certain individuals, estates, and trusts considered to be high earners.”…“For tax years beginning after Dec 31, 2012, a 3.8% tax, called the Unearned Income Medicare Contribution, will be imposed on the lesser of net investment income or an individual’s modified adjusted gross income in excess of: $250,000 if married filing jointly, $125,000 if married filing separately, or $200,000 if filing single.” Mr. Paula summarizes, “The 3.8% tax will affect taxpayers with business activity income from activities that are passive for the particular taxpayer and generate net investment income that, when combined with other income, is in excess of the thresholds…”

The NAR gives this example (from the Medicare tax faq), “If AGI for a single individual is $275,000, then the excess over $200,000 would be $75,000 ($275,000 minus $200,000). Assume that this individual’s net investment income is $60,000. The new 3.8% tax applies to the smaller amount. In this example, $60,000 of net investment income is less than the $75,000 excess over the threshold. Thus, in this example, the 3.8% tax is applied to the $60,000… If this single individual had AGI [of] $275,000 and net investment income of $90,000, then the new tax would be imposed on the smaller amount: the $75,000 of excess over $200,000.”

Aside from the anticipation of the Supreme Court opinion, the new Medicare tax will begin in 2013. If you’re planning a home sale, consult your CPA, financial planner, and any other tax specialist to determine if (and how) the new Medicare tax applies to your situation.

Original located at https://dankrell.com/blog/2012/04/05/medicare-tax-on-real-estate-transactions-and-other-unearned-income/

By Dan Krell

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This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

May 20, 2011July 26, 2019

Planning to de-clutter

De-cluttering your home is not just reserved for a home sale. It’s also a bit more than just a thorough cleaning and putting away items that are not in use. You may already be overwhelmed by the thought of cleaning, but remember that if you prepare a realistic plan and stick to it, you will be finished before you know it.

When going through each room, decide which items are necessities and which items need to go. There are many items that you may decide are not necessary to keep, yet they are personal or sentimental. Professional home stagers talk about the idea of “depersonalization” when discussing de-cluttering. This means that the home should be “neutralized” so, rather than view your life and personalization, home buyers can have a vision of the home as their own. Keeping depersonalization in mind, decide which items need to go.

Remember that de-cluttering doesn’t necessarily mean that you dispose of everything you don’t need or want in your home. Many of your personal and sentimental items you wish to keep can be stored temporarily or for long periods of time. You can rent storage units of various sizes on a monthly basis, or you may decide to have a portable storage container delivered to your home. The portable storage container is a practical solution if many of the items that you’re pulling from your home will be used in your new home. Additionally, if you’re move is not immediate, the portable storage container can be transported by the company to storage until you’re ready to unload the container in your new home.

The items you decide that you no longer need or want can be donated, disposed of, or you might even decide to have a yard sale! If you have many items that need to be removed from your home, consider donating the items to a charity before throwing it all away. Since many charities vary on what is acceptable for donation, it’s a good idea to check with them before scheduling a pick up or dropping items off to their collection site.

Be careful when throwing items away; you may need to take precautions or make separate disposal plans for certain materials. Some items that cannot be picked up by the regular trash collection can be scheduled for pick up by the county or local municipality; or can be hauled to the local processing facility. If you’re unsure how to dispose of certain items, you can check with the Montgomery County Division of Solid Waste Services for facility hours and disposal/recycle procedures.

If you don’t have the time to haul your unwanted items on your own, you may decide to hire a hauling company. Charges to haul items away can vary depending on the company, as well as how they dispose of the items. Some haulers may drop everything to a county processing center, while some may sort your items either for donation or sale.

De-cluttering is the keystone to your home’s presentation. De-cluttering a home may sound laborious, but it doesn’t have to be if you have a realistic plan. If you’re unsure how to begin de-cluttering your home, you can check with your Realtor® or you can hire a Professional Organizer. The National Association of Professional Organizers (napo.net) maintains a national directory of Professional Organizers.

by Dan Krell
© 2011

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

May 5, 2011July 26, 2019

Do you want to boost your home’s curb appeal and attract home buyers?

A healthy lawn can boost your home’s curb appeal and possibly attract home buyers.

If you’re planning to list your home this spring, don’t forget to take care of your lawn. A healthy and properly groomed lawn can make your home more appealing and boost the home’s curb appeal.

Taking care of your yard doesn’t have to be overwhelming; after all it’s not rocket science. However, there is a science to fertilizing and mowing the lawn. Whether you decide to go it alone or hire a lawn care company, the Maryland Department of Agriculture (MDA) offers a guide to proper lawn maintenance and Maryland’s Nutrient Management Law to limit the impact to the environment (www.mda.state.md.us).

Great care must be taken when fertilizing your lawn. Improper use of fertilizer can not only affect the environment, it can also harm your family and pets as well. Fertilizer should be applied when the grass is growing, and be avoided when the grass is dormant. Fertilizer should not be applied when a heavy rainfall is forecasted, when the ground is frozen, or during a drought because it could cause unwanted runoff into the watershed. Because most residential lawns in Maryland are comprised of cool season grasses (which can grow throughout the year) the MDA recommends that the bulk of the fertilizer application be in the fall to help the lawn recover from “summer stresses.”

In addition to following MDA recommended fertilizing application, lawn maintenance also includes proper mowing. It is recommended that you not cut off more than one-third of the grass blade at any given time. Most experts suggest that the appropriate length for many of the cool season grasses is 2.5 to 3 inches. Following recommended mowing guidelines can reduce weed growth by 80%.

If you prefer to water your lawn, infrequent watering for long duration is recommended because frequent brief watering promotes shallow root growth as well as encouraging weeds. During hot and dry weather, however, your lawn could go dormant; lawn experts don’t recommend watering dormant grass.

Sometimes, aerating your lawn is a good idea; especially if your lawn has become compacted. Through the use of a specialized tool, air, water and nutrients are readily absorbed into the ground; which promotes grass root growth and strengthening.

If you’re concerned about dead or brown patches in your lawn, the repair may not be complicated; however the causes should be resolved prior to the repair. Some common causes of brown patches include (but not limited to) animal urine, drought, or inappropriate fertilizer/herbicide application.

If you prefer to hire a company to maintain their lawn, it’s ok. Many people are just too busy, or physically incapable of properly maintaining their yards. Before hiring a lawn care company, the MDA recommends you do your homework; ask for referrals and get at least three estimates. Make sure the companies are licensed with the MDA. Besides comparing costs, compare the services provided as well as the quality of the materials used. Once hired, make sure you point out environmentally sensitive areas and ask for advance notice of pesticide applications.

Taking proper care of your lawn can not only ensure a healthy green covering, but can also enhance your home’s curb appeal. However, following recommended guidelines as well as adhering to the Maryland Nutrient Management Law, you not only get a healthier lawn; you also minimize the environmental impact.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.

March 25, 2011July 25, 2019

Are the kids are all right; how kids cope with moving

Buying and selling a home is surely an exciting time, but it’s also a stressful time. Even the most organized person can feel the pressure. Of course, most people tend to redirect their energy into the practical aspects of buying, selling, and moving; such as ensuring their loan documents are in order, packing, and/or lining up a mover. If you have children, then additional things to worry about may be added to your already full plate of “to do” items, such as school matriculation and finding summer camps. But how are your kids coping with the move?

Like most things in life, moving to a new home is a process; the emotional process of moving involves various feelings that are expressed in no specific order and can sometimes be felt simultaneously. To complicate matters, your reasons for moving can also amplify this stress (divorce, job, etc.). Most children and their parents cope adequately during this time, but some may need additional attention and assistance.

Once you realize how hectic the pace can be while home searching/selling combined with moving, your attention to your kids may be slightly different. Although your children can experience the same feelings you may feel, their expression of those feelings can be vastly different. Some children may not be able to verbalize their feelings and their coping skills can vary.

Change can elicit both welcome and unwelcome feelings. The excitement and anticipation of a new neighborhood and school, and the sadness of leaving friends behind are just some of the feelings that children may experience while going through the process of moving to a new home. However, some kids may be more affected than others by the stress of the process and may seem more anxious, angry, and/or exhibit other behaviors.

Because children do not articulate their feelings like adults, some experts recommend that you “tune” into your children to determine how well they are coping. Of course, depending on your child’s age, indications that they may be having difficulty may vary: younger children may have increased incidents of bed wetting, incontinence and thumb sucking; while adolescents may become truant, defiant, and/or agitated.

Experts discuss the benefits of being open and honest with your children about moving, as well as informing them as soon as possible. Child experts have also recommended increasing your availability to your kids as well as acknowledging their feelings during the process. Younger children may need more comforting than usual, while older children may need to talk about the process.

Additionally, establishing continuity and allowing involvement in the process (when appropriate) can make the transition easier on children. Before the move, depending on the distance, you may be able to have your children visit the new school and possibly meet some of the kids in the new neighborhood. Have children help in packing and/or engage in other appropriate activities.

Many resources exist to assist you and your children cope with the process of moving to a new home, as this article is not intended to provide medical or psychological advice. Besides the many books written about the subject, school counselors, teachers, and pediatricians, are just a few professionals who may be able to assist you during this process. Of course, you should consult a medical, psychiatric, and/or a psychological professional if you have concerns about your child.

This article is not intended to provide nor should it be relied upon for legal and financial advice. Using this article without permission is a violation of copyright laws.