Selling a home that is close to a new development can be challenging

There is a newly built home down the street - in a newly built subdivision and, you’ll admit, it is divine. It’s a house with everything… brand-new appliances, white marble countertops, wide plank flooring, pendant fixtures, and energy efficient heating, cooling, and electrical systems. Looking around, you find yourself entranced. The problem is…you’re not in the market to buy a home...you're trying to sell your not-so-new home.  

How do you market an older home? The good news is that older homes have buyers! Oftentimes, the buyers are looking for an older home because of its character, mature landscaping, and lower property taxes. If your potential buyer is looking for a newer home, you’ll have to make changes so that buyers are attracted to your older home.  

While there is nothing you can do about the fact that your house was built in 1985 (or thereabouts), you can research the trends in new homes, analyzing what to do to make your home appeal to buyers.

Investigate trends and review competition. Get ideas of the latest decorating trends in model homes as wells as ways to maximize the best features of your home, minimizing the least appealing features.

Small upgrades go a long way.  Adding a fresh coat of paint in new neutral tones of pale grey or beige rather than pure white can give your house a new look. Other upgrades, like switching out the old kitchen and door hardware are small aesthetic details that can give your listing new life.  

Big ticket items go even longer.  Big ticket items like energy-efficient appliances, new countertops, and bathroom remodels, may be the most important upgrades sellers can make because most buyers can’t afford them on top of a home purchase.

Be Realistic. Lower Your Price.  A house that has seen little movement for months is frustrating. Not an easy decision, but lowering your house by $20,000 (or more) will take months off the time it can potentially be on the market.

Three Rivers Association of REALTORS® is a professional trade association with over 1,000 REALTOR® and affiliate members in Will and Grundy counties and the surrounding areas who provide professional and ethical real estate and real estate related services.

Call us: 815-744-4520!

Sources:

https://www.realtor.com/advice/sell/sellers-game-compete-newly-built-homes/

https://magazine.realtor/home-and-design/feature/article/2018/05/how-older-homes-can-gain-an-edge

https://www.realtor.com/advice/buy/why-buy-old-home-instead-of-new-one/

https://www.washingtonpost.com/lifestyle/home/ten-home-design-trends-to-watch-out-for-in-2018-according-to-houzz/2017/12/15/b64a9b58-df6a-11e7-89e8-edec16379010_story.html?utm_term=.cadca86ae282

Think about getting a home inspection before putting your home on the market

In a typical real estate transaction, it is the buyer who arranges and pays for the home inspection. However, it can be to a seller’s advantage to pay to have an inspection done prior to placing their home on the market. A pre-listing inspection can provide them with valuable information about the condition of their property and an idea of repairs that they may (or may not) wish to have done. This information can help in negotiating the sales price of the home as well as avoid having these repair issues surface down the road at a less opportune time.  

Is there any difference between a pre-listing inspection and a buyer’s inspection?

The only difference is who (seller or buyer) is having the inspection done and the point in time when the inspection occurs. The scope of the inspection, whether done pre-listing or after the sales price and terms have been agreed upon, will essentially be the same focusing primarily on proper functionality of all major systems and components of the house: heating and cooling, electrical, plumbing, roof and structure, siding, doors, and windows.

Typically, how much does it cost for a pre-listing inspection?

The fee is usually the same as the buyer’s inspection, generally ranging from $350 to $500 for a qualified inspector who carries errors and omissions insurance. The price can vary based on location, square footage, age of the home, and any special conditions.

Why should a seller consider doing pre-listing inspection?

Keep in mind that whether a seller has a pre-listing inspection or not, the buyer may still choose to have their own inspection done. What a pre-listing inspection does is give the seller a chance to resolve any repair issues up front that are likely to surface in the buyer’s inspection or have them accounted for in the asking price. This not only places the seller in a better negotiating position but helps minimize the chance of having to deal with circumstances that may come up in the buyer’s inspection that is done after the sales price and terms have been negotiated.

What should the seller do if a pre-listing inspection uncovers major problems?

Generally, it is better to know about inspection issues early rather than to be blindsided at a later date. Once identified, they can be assessed for proper resolution. A seller shouldn’t automatically assume that everything needs to be fixed prior to placing the home on the market. A REALTOR® can advise them as to which repairs are likely to negatively affect the sale of their home.

If you’re looking for more information about buying or selling your home, Three Rivers Association of REALTORS® can help. Visit our website today to learn more and to find one of our members who can help you!

How a Credit Freeze Affects Home Loans

For very little money, you can prevent identity thieves from opening accounts in your name by freezing your credit report. It’s understandable if you have questions and concerns regarding a security freeze. So let’s take a look at how you may be affected.

What Is a Credit Freeze?

A credit freeze limits who can see your credit report information. The goal is to prevent anyone from opening any new accounts. It doesn't damage your credit or stop your credit report from evolving by your own actions.

Your credit information will still be released to your existing creditors and any debt collectors who may come calling.

But, if you want to open new lines of credit, you'll need to lift the freeze first. This can be done temporarily, either for a set time or for a particular party, like a landlord or lender.

The costs to freeze and lift the freeze on your credit vary based on where you live and for each credit reporting agency, but commonly run about $10 per agency.

How Can It Affect Home Loans?

A credit freeze aims to block anyone from opening new accounts in your name. The catch is that the block applies to legit inquires, too. So it's not a great idea if you're shopping for a home or an auto loan. But when you're not looking to take out any loans or open any lines of credit, it can be a financial lifesaver.

One of the biggest problems with a credit freeze is it takes a lot longer to thaw credit than it does to freeze it. That could be a problem if you need credit in a hurry, such as a store credit card for an unexpected appliance purchase. 

Working with a REALTOR® provides clients with peace-of-mind that they will be receiving both professional and ethical service during the home buying or selling process. All of the members of Three Rivers Association of REALTORS® are REALTORS® as well as members of the Illinois REALTORS®and National Association of REALTORS®. Learn more about purchasing a home and find a REALTOR® to help by visiting Three Rivers Association of REALTORS® website, or calling 815-744-4520. 

Sources:

http://www.trarealtors.net/

https://business.facebook.com/ThreeRiversAssociationofREALTORS/?business_id=799349030146064

http://realtormag.realtor.org/sales-and-marketing/feature/article/2017/11/keep-frozen-credit-from-putting-transactions-thin-ice#!#sf175632085%23sf175638474

https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs

https://www.creditcards.com/credit-card-news/credit-report-freeze-1282.php

https://pixabay.com/en/credit-card-bank-card-theft-1591492/

Tax Records: What to Save and for How Long

Curious about how long you should hold on to your tax records after filing? A Dona Dizube over at House Logic details why holding on to those pesky documents can save you from future headaches in her article below.

How Long to Keep Tax Records
By Dona Dizube

The federal tax law signed by President Donald Trump Dec. 22, 2017, may affect home ownership tax benefits described in this article. The new law goes into effect for the 2018 tax year and generally doesn’t affect tax filings for the 2017 tax year. In 2018, HouseLogic will be providing information on the tax provisions affecting home ownership. In the meantime, here’s a detailed summary of the changes.

Unless you’re living in the 123-room Spelling Manor, you probably don’t have space to store massive amounts of tax and insurance paperwork, warranties, and repair receipts related to your home.

But you’ll definitely want your paperwork at hand if you have to prove you deserved a tax deduction, file an insurance claim, or figure out if your busted oven is still under warranty.

To help you prioritize your paperwork, we’ve created a hand “How Long to Keep It” home records checklist.

First, a little background on IRS rules, which informed some of our charts:

• The IRS says you should keep tax returns and the paperwork supporting them for at least three years after you file the return — the amount of time the IRS has to audit you. So that’s how long we advise in our charts.
• Check with your state about state income tax, though. Some make you keep tax records a really long time: In Ohio, it’s 10 years.
• The IRS can also ask for records up to six years after a filing if they suspect someone failed to report 25% or more of his gross income. And the agency never closes the door on an audit if it suspects fraud. Just sayin’.

HOME SALE RECORDS
Document	How Long to Keep It
Home sale closing documents, including closing statement	As long as you own the property + 3 years
Deed to the house	As long as you own the property
Builder’s warranty or service contract for new home	Until the warranty period ends
Community/condo association covenants, codes, restrictions (CC&Rs)	As long as you own the property
Receipts for capital improvements	As long as you own the property + 3 years
Section 1031 (like-kind exchange) sale records for both your old and new properties, including HUD-1 settlement sheet	As long as you own the property + 3 years
Mortgage payoff statements (certificate of satisfaction or lien release)	Forever, just in case a lender says, “Hey, you still owe us money.”

Why you need these docs: You use home sale closing documents, receipts for capital improvements, and like-kind exchange records to calculate and document your profit (gain) when you sell your home. Your deed and mortgage payoff statements prove you own your home and have paid off your mortgage, respectively. Your builder’s warranty or contract is important if you file a claim. And sooner or later you’ll need to check the CC&R rules in your condo or community association.

ANNUAL TAX DEDUCTIONS
Document	How Long to Keep It
Property tax payment (tax bill + canceled check or bank statement showing check was cashed)	3 years after the due date of the return showing the deduction
Year-end mortgage statements	3 years after the due date of the return showing the deduction
PMI payment (monthly bills + canceled check or bank statements showing check was cashed)	3 years after the due date of the return showing the deduction
Residential energy tax credit* receipts	3 years after the due date of the return on which the credit is claimed (including carryforwards**)

Why you need these docs: To document you’re eligible for a deduction or tax credit.

*Energy tax credits ($500 lifetime cap) for such things as energy-efficient windows, doors, heating and cooling systems, insulation, and more.

**Tax credits that you carry forward from one year to a future year, such as when you don’t have enough tax liability to offset the entire amount of the credit. (You can’t deduct more than you earn.) Only certain tax credits can be carried forward. Check with your tax pro about your particular circumstances.

INSURANCE AND WARRANTIES
Document	How Long to Keep It
Home repair receipts	Until warranty expires
Inventory of household possessions	Forever (Remember to make updates.)
Homeowners insurance policies	Until you receive the next year’s policy
Service contracts and warranties	As long as you have the item being warrantied

Why you need these docs: To file a claim or see what your policy or warranty covers.

INVESTMENT (LANDLORD) REAL ESTATE DEDUCTIONS
Document	How Long to Keep It
Appraisal or valuation used to calculate depreciation	As long as you own the property + 3 years
Receipts for capital expenses, such as an addition or improvements	As long as you own the property + 3 years
Receipts for repairs and other expenses	3 years after the due date of the return showing the deduction
Landlord’s insurance payment receipt (canceled check or bank statement showing check was cashed)	3 years after the due date showing the deduction
Landlord’s insurance policy	Until you receive the next year’s policy
Partnership or LLC agreements for real estate investments	As long as the partnership or LLC exists
Landlord insurance receipts (canceled check or bank statement showing check was cashed)	3 years after you deduct the expense

Why you need these docs: For the most part, to prove your eligibility to deduct the expense. You’ll also need receipts for capital expenditures to calculate your gain or loss when you sell the property. Landlord’s insurance and partnership agreements are important references.

MISCELLANEOUS RECORDS
Document	How Long to Keep It
Wills and property trusts	Until updated
Date-of-death home value record for inherited home, and any rules for heirs’ use of home	As long as you or spouse owns the home + 3 years
Original owners’ purchase documents (sales contract, deed) for home given to you as a gift	As long as you or spouse owns the home + 3 years
Divorce decree with home sale clause	As long as you or spouse owns the home + 3 years
Employment records for live-in help (W-2s, W-4s, pay and benefits statements)	4 years after you make (or owe) payroll tax payments

Why you need these docs: Most are needed to calculate capital gains when you sell. Employment records help prove deductions.

Organizing Your Home Records

Because paper, such as receipts, fades with time and takes up space, consider scanning and storing your documents on a flash drive, an external hard drive, or a cloud-based remote server. Even better, save your documents to at least two of these places.

Digital copies are OK with the IRS as long as they’re identical to the originals and contain all the accurate information that was in the original receipts. You must be able to produce a hard copy if the IRS asks for one.

Tip: Tax season and year’s end are good times to purge files and toss what you no longer need; that’s often when the spirit of organization moves us.

When you do finally toss out your home-related paperwork, use a shredder. Throwing away intact documents with personal financial information puts you at risk for identity theft.

This article was written by Dona Dizube on behalf of House Logic. The article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. 

If you're looking for further advice or information when it comes to tax documentation as a home owner, Three Rivers Association of Realtors is here to help. Contact us today!

Helping Sellers Choose Between Multiple Offers

The housing market is hot and with limited inventory multiple offers is a common occurrence. It's a good problem to have if you're a seller. But how do you choose the best offer?

Start with Price and Terms

The offer with the highest price is going to get your attention, especially if it’s close to or above your asking price.  But, you will want to make sure that the buyer is qualified.  Those offering the most money might be stretching their finances and run into trouble before closing.  Also, asking for a sizeable earnest money deposit can help discern the seriousness of the buyer.  Pay attention to the amount that the buyer is planning as a down payment in the transaction.  A larger down payment means a lower home loan and may ease a closing. Your REALTOR® can help you look at all the details.

Contingencies

When buyers make an offer, they’ll often include a few conditions or contingencies that may allow them to cancel the deal or reduce the price. As a result, sellers may consider taking a lesser offer with fewer strings attached.  With so many issues today surrounding appraisals, waiving the appraisal contingency is a definite plus for sellers.  Normally, the house must appraise at the offer price.  If not, either the buyer would have to make up the difference or the sale price be reduced by the seller to match the appraisal.  When the appraisal contingency is waived, a low appraisal is not a deal breaker.  In any event, Looking for fewer contingencies in an offer may reduce the chances for difficulties toward closing the contract.

Mortgage Pre-Approval

Make sure that the buyer is preapproved for the home loan. An offer from a preapproved buyer usually is stronger than an offer from a buyer who hasn’t made any financing arrangements.

Closing Date 

If you’re reviewing similar offers and want to move soon, a quicker close can be a deciding factor. But if you’re not ready to move, you may be better off with a buyer who’s willing to wait for you to find another home.

Buyer ‘Extras’

Many times a buyer will send a personal letter to tug on your heartstrings and, if this is an emotional sale for you, it may pull your decision one way or another. If you’re considering several offers that have similar price and contingency terms, these kinds of sweeteners can tip the balance.

The Bottom Line

Getting multiple offers when you sell your home seems to be a great situation to be in, but it can be tricky.  Evaluate each offer fairly and consider advice from your REALTOR® to choose the best one. Ready to sell your house? Contact Three Rivers Association of REALTORS® for help finding a REALTOR® that can help meet your needs. 

Three Rivers Association of REALTORS® is a non-profit organization that services more than 1,000 REALTOR® and Affiliate members. Three Rivers Association of REALTORS® is affiliated with the Illinois REALTORS® and the National Association of REALTORS®, and works to provide our members with the tools and information they need to remain successful.  We also strive to keep our membership informed as to the latest developments that affect housing and the real estate industry in general. The Multiple Listing Service, education programs and an extensive political action program are just a few of the services that Three Rivers Association of REALTORS® provides for its members.

Understanding Your Homeowners’ Insurance



 

A homeowners insurance policy will protect you against certain losses and damage to your new home and is generally required by lenders prior to closing.  It is important to know what is covered and what is not.  All too often, it is only at the time a claim is filed that you discover that something you thought was covered is not.  

Typical Homeowners’ Coverage

 

• Your policy generally provides coverage for a sudden or accidental occurrence to your dwelling as well as attached and detached structures on your property. This includes damage to fixtures such as plumbing, electrical wiring, heating and permanently installed air-conditioning systems.
• Pays for damage to fences, tool sheds, freestanding garages, guest cottages and other structures not attached to your house.
• Reimburses you for the value of your possessions including furniture, electronics, appliances and clothing damaged or stolen even when they are not on your property.
• Pays for some of your additional living expenses while your home is being repaired and covers your financial loss if you are sued and found legally responsible for injuries or damages to someone else.
• Pays medical bills for people hurt on your property or possibly hurt by your pets.

What is typically NOT covered?

 

Claims related to dog bites, swimming pools or trampolines and operating a business from your home MAY NOT be covered. Common events you may be unaware of that your policy does not cover are identity theft, normal wear and tear, flooding, earthquakes, mudslides and sewer backups.

 

America’s sewer lines are aging and as more homes have been connected to these out-of-date lines, sewage backups have followed. Also, pipelines that handle both stormwater and raw sewage become overwhelmed in rainstorms or blockages from tree roots that work their way into sewer-line cracks can cause backups. Damage to floors, walls, furniture and electrical systems due to sewer backup are not covered. The Insurance Information Institute says sewer-backup damage often can be covered for an additional premium of just $40 to $50 per year.

 

According to The National Association of REALTORS®, policymakers in more than 22,000 communities nationwide rely on the National Flood Insurance Program (NFIP) to protect them from flood risks caused by torrential rain, swollen rivers and lakes, snow melt, failing infrastructure, storm surges and hurricanes. The NFIP expires on Sept 30th which could leave buyers unable to get a mortgage or protection from flooding as flood insurance is required for a mortgage in the 100-year floodplain. The National Association of REALTORS® is working with lawmakers to strengthen the program and also create a path for a private market to take hold ahead of the September 30 expiration date.

 

Limited Coverage Items

 

According to the Insurance Information Institute, jewelry, guns, electronics, collectibles, antiques and the costs of meeting updated electrical, fire, plumbing, building codes and mold may be limited. A breakout of mold on walls not only looks disgusting but also is a health risk that the Centers for Disease Control says can bring about symptoms similar to allergies or even breathing difficulties. A standard homeowners insurance policy generally either limits coverage for mold damage or outright excludes it.

Some insurers offer an endorsement to expand coverage limits for mold claims but only if you are willing to pay more for your insurance. The best cure for mold is to prevent it from growing in the first place, so eliminate the moisture promptly. The U.S. Environmental Protection Agency says homeowners generally can clean up mold themselves if the affected area is less than about 10 square feet. Otherwise, it is best to call in an expert.

Contact Three Rivers Association of REALTORS® for help finding an insurance agent in their affiliate directory that can help you with your insurance needs. Talk to your insurance agent about the property you want to protect and the hazards from which you would like to be insured. Your agent can review the coverage provided by your policy and discuss options specific to your situation. They will answer any important questions you may have.

 

Three Rivers Association of REALTORS® is a non-profit organization that services more than 1,000 REALTOR® and Affiliate members. Three Rivers Association of REALTORS® is affiliated with the Illinois REALTORS® and the National Association of REALTORS®, and works to provide our members with the tools and information they need to remain successful.  We also strive to keep our membership informed as to the latest developments that affect housing and the real estate industry in general. The Multiple Listing Service, education programs and an extensive political action program are just a few of the services that Three Rivers Association of REALTORS® provides for its members.