Negotiating Your Way Into Homeownership

When you go to buy a house, you’re certainly hoping to get the best price and terms. In order to do that, it’s important to know when to start negotiating and when to stop. That begins with being familiar with the market, down to the neighborhood and possibly even the street. Of course, when there are a limited number of homes for sale as is the case in our marketplace today, it is highly unlikely that a laundry list of demands can be successfully negotiated. The more operative word today would be flexibility. Here are some tactics every buyer should know before negotiations begin.

Be Prepared to Move Fast

When properties go on the market, they go very quickly, so if you’re in a competitive market, make your first offer your best offer. And if you take too many chances, you might strike out. Remember, there will always be people who want to make a lower offer, however, when they miss out on the first or second or third property, they learn their lessons.

Don’t Use Inspections for Renegotiation

If the inspection reveals major problems, it’s completely acceptable to ask for a credit. However, know you may not get it if the market is tight. These days, it’s unlikely that a seller will make significant repairs, and so it’s better to ask for a credit at closing in order to hire your own contractors. In some hot markets, in order to submit an offer with fewer contingencies, prospective buyers have an inspection done before making their offer.

Be Flexible with the Possession Date

As a homebuyer, a great tool for negotiation is to accommodate a seller's particular closing date. By catering to their needs, you're making them feel like they're in the driver's seat. You could have a “rent-back” agreement drawn up, where you rent the property back to the seller for a short period of time. This takes pressure off their move and may make your offer stand out against the competition. If possible, also make it clear that you can also be flexible with the dates of the Purchase and Sale signing.

In every real estate negotiation, buyers ask and sellers push back - because if you're the buyer and you don’t ask, you won’t get. While buyers want the best deal and sellers want the highest price, eventually the two will have to meet somewhere in the middle for the deal to close. Since a home is the largest asset most people will ever own and there’s usually a lot of cash at stake, negotiating is extremely important.

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. 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://www.houselogic.com/buy/how-to-buy-step-by-step/how-to-negotiate-an-offer/?sf187586507=1

https://www.realtor.com/advice/buy/buyer-negotiation-tactics-that-backfire/

Having a financial game plan for your home will give you peace of mind

Creating a financial plan for your home can help you feel more secure in budgeting for the future. A financial plan will spell out how much you need to pay and when, so you know exactly how much money is going toward your home. Without a plan, you could find yourself overwhelmed by unforeseen expenses like emergency repairs that you didn’t budget for, or unable to make updates to your home because of a lack of savings.

Luckily, you can create your own financial planning checklist to get a better look at your expenses and savings in the years ahead.  

Where to start

First, write down recurring expenses like your mortgage payment, taxes, and homeowner’s insurance. Note when each of these payments is due, and how much it is.

• Follow that list up with more occasional expenses like seasonal lawn care and maintenance or replacement dates for major appliances, plumbing fixtures, and the roof. Note that these dates don’t need to be exact, but searching for the average lifespan of a water heater, for example, will help you identify future expenses you’ll need to save for.
• Lastly, write down any voluntary expenses like adding a pool or finishing the basement. By listing the things you want to add to your home and estimating their cost, you’ll be able to see what is financially possible and when. 

Ways to save

With an idea of how much you need to spend in the short and long-term of your home, you’ll be able to turn your attention to places you might save money in order to be prepared for the future.

If you’re planning on staying in your current home forever, pay more than the minimum monthly mortgage payment. Paying more upfront means saving thousands in interest later down the line. Plus, it just feels better to pay down your home sooner.

Another oftentimes overlooked area to save is by checking with your insurance agent to make sure you are covered enough, but not too much. Over-insuring your home means you’re paying more than you need to on a policy that you’ll never see the full benefit from. Likewise, under-insuring your home will leave you paying out-of-pocket should you need to make a claim. Everyone has to pay property taxes.  However, you may be able to reduce your tax burden by getting a reassessment. Do your homework first: Are comparable homes taxed less than yours? If so, you can contact the local assessor, challenge the assessed value of your home and possibly reduce your taxes..

With a little planning, you’ll have peace-of-mind knowing that you’re in good financial shape, and the fear of surprise expenses will be greatly reduced.  If you’re looking for a new home, contact the Three Rivers Association of Realtors at 815-744-4520 to start your search today.

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.

Why Should I work with a REALTOR®?

In the world of real estate, the words “REALTOR®” and “agent” are often used interchangeably. To some it might seem as though they are one in the same. However, choosing to work with an agent as opposed to a REALTOR® has several shortcomings that should not be overlooked in making this decision.

What is the difference?

Often these terms are used synonymously simply because people shorten phrase “real estate agent” and use REALTOR®, which they assume is a generic term. While both of these titles require the individual to be licensed with the Department of Professional Regulation, this is where the similarities end.

Real estate agent

A real estate agent is anyone who has a license to assist clients in the buying or selling of either commercial or residential property. This individual may perform this job as a sales representative, an associate real estate broker or a broker. To obtain a license, the agent must complete the required classroom training (typically between 30 and 90 hours) from an accredited real estate school and pass a state real estate examination that covers national, state and local real estate laws, standards and practices. In addition, an agent (as well as a REALTOR®) must pay a licensing fee as well as complete the required continuing education courses in order to renew his or her license every other year.

REALTOR®

REALTORS® aren’t just agents. They are professional members of the National Association of REALTORS® (NAR). In addition to completing all of the necessary requirements in order to sell real estate, a REALTOR® subscribes to a strict code of ethics which spells out specific practices and duties they must adhere to for the protection of their clients, customers and fellow REALTORS®. Real estate agents are not required to follow NAR’s Code of Ethics.

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®.

The Spring Selling Season May Be “NOW”!

If selling your home is in the plans for 2017, it may be in your best interest to start now. Normally, sellers tend to wait until spring to put their home on the market when it is believed that most buyers start looking for a home to purchase. With the current low inventory of homes available for sale, this housing market is anything but normal. It may be to your advantage to list your home right now. There are many unpredictable factors which can affect the real estate market whether it is interest rates, the general economic climate…even the weather. The one factor that is affecting it right now is inventory. Supply and demand is what drives the price of homes. With a good supply of homes for sale and steady demand, prices stabilize. When the supply is low and demand is high, as is the circumstance we face today, prices tend to rise. If you list your home now, chances are that there will be much less competition with similar homes for sale in the area than there will be in a couple of months. This also may mean getting top dollar for your home. Of course, as always condition and location will directly affect what the home eventually sells for.  Another factor in your favor is that more Americans are showing optimism toward their personal finances and the housing market, a reversal to a five-month decline. The National Association of REALTORS® web site reported that according to Fannie Mae’s Home Purchase Sentiment Index, a survey of 1,000 Americans in January about their attitudes toward housing, Americans are more upbeat about home prices, home selling, their rising household incomes and they are less scared about losing their jobs.

When considering the sale of your home, members of the Three Rivers Association of REALTORS® are here to help. Meet with your agent TODAY to discuss listing your home for sale. You can also find a REALTOR® by visiting the Three Rivers Association of Realtors web site…www.trarealtors.net.

Quick, Easy and Inexpensive Renovations Before Selling a Home

Selling a home can be one of the most stressful times in a homeowner’s life. Your schedule becomes packed with appraisals, home inspections, radon testing and packing away unsightly clutter. While juggling these time-consuming tasks, the thought of adding home renovations to your lengthy to-do list seems out of the question. Fear not, there are renovations that won’t require long timelines, stinky dumpsters, or large price tags. Here are a few simple renovations that can be completed to ensure that your home not only sells, but that your home sells quickly.

Quick & Easy Renovations:

·   Remove family photos or outdated wall art. Spackle nail holes and give rooms a fresh, neutral coat of paint. Bold colors can sometimes be a turnoff for potential homebuyers.

·   Purchase new interior and exterior entryway light fixtures. This is the first area potential homebuyers will see upon entering the home.

·   A beautiful new door or fresh coat of paint will create a stunning entryway for guests.

·   Full bathroom renovations don’t often make a large impact. Save your money, and simply put in new light fixtures, new mirrors, and new vanities.

If you have an outdated home but no time for renovations, consider offering a renovation budget to potential homebuyers. The budget will be a small chunk of the list price and allows buyers to give their new home a personal touch.

In addition to renovations, there are many small changes that can be made to a home that will increase buyer appeal. Make sure that the home is as clean as possible. This may require putting some belongings in a storage unit until the home sells. Landscaping and curb appeal can attract buyers who are simply passing by the home. Consider keeping your lawn cut, watered, and edged. If you don’t have time for gardening, purchasing and hanging flower baskets can do the trick.

When searching for more information on ensuring a successful sale, turn to the professionals at Three Rivers Association of REALTORS®. Three Rivers Association of REALTORS® is a local non-profit real estate service that assists and educates REALTORS® with programs and services. On our website, homebuyers and sellers can find Three Rivers Association of REALTORS® related service affiliates like home appraisers, attorneys, inspectors, and more. For additional information, give us a call at 815-733-4520 or visit our website at www.trarealtors.net.