Selling Your Home

Two Options for Paying Property Taxes In Colorado

moving 3If you are responsible for paying your own property taxes and they are not being escrowed with your mortgage payment, you have two options available in Colorado.  The first option is to pay the entire amount of the prior year’s taxes in full on or before April 30th.  The second option is to pay your property taxes in two installments – the first installment is due on or before February 28th and the second installment is due on or before June 15th.

Property Taxes and Your Closing. Depending on the time of year that a property closes and which method the Lender uses to pay property taxes, the Title Company will follow one of several procedures for collecting taxes at closing.

  • If  you’re closing during the first couple weeks of the year, before the counties have certified the new mill levies, the Title Company will normally escrow from the Seller 125% of the prior year’s property tax amount.  Once the mill levies are certified and the actual tax amount is available, the prior year’s taxes will be paid from the escrow and the difference will be refunded to the Seller.

Lender’s Procedure for Handling Property Taxes.  If you are selling your home and closing early in the year, your Lender will direct the Title Company handling the closing on how to collect the property taxes. Lenders typically request the Title Company to handle the payment of the prior year’s taxes in one of two ways:

  • The first option is to collect from the Seller (by means of a debit entry on their Settlement Statement/HUD-1) the entire amount of taxes due and remit that amount to the appropriate County Treasure prior to April 30th.
  • The second option is for the Title Company to collect and pay only the first half of the prior year’s taxes. In this case, the Seller will be debited and the Buyer credited for the entire amount of the prior year’s taxes.  The Buyer will then be debited for the first half of the prior year’s tax amount and the Title Company will pay the amount to the County.  The Lender will collect a tax escrow and will pay the second installment when it comes due on or before June 15th. 

By the first part of February, parties to a real estate transaction often encounter the problem of what to do when the mortgage payoff statement indicates the prior year’s taxes have been disbursed from the escrow account by the existing Lender, but have not yet been received by the Treasure. The Title Company will have a procedures in place for this scenerio.

The bottom line, the Title Company is responsible for conveying clear title to the new owners.

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Smaller Spaces

We appear to be exiting the era of the McMansion.  Several recent reports from new home builders make it clear that, despite the increased affordability of housing, the average size of a new home is smaller than it was a few years ago. Buyers are beginning to embrace the concept of the “big-enough” home. If you have embraced this trend and have chosen to make do with reduced square footage, here are some suggestions on how to make smaller rooms look larger and function effectively:

  • Choose furniture wisely. While small furniture takes up less space and makes a room feel more open, it may not be as comfortable as larger pieces. The solution may be to make do with fewer larger pieces.
  • Let in as much natural light as possible. Natural light makes rooms seem airier, so take steps to add natural light. Adding a skylight will capture light and make a room appear larger. When choosing your window treatments, remember that curtains block light – the less you cover, the more natural light can flood into your home. Choose a sheer fabric, or chose blinds and shades that expose the entire window when drawn. If you need privacy, consider replacing a window with glass blocks, which provide privacy while allowing light in.
  • Avoid straight lines. Round tables, rugs and pillows, and sofas and chairs with curves, help small rooms feel less boxy.
  • Organize your collectibles. Removing all the knick-knacks from a small room will make it appear more spacious, but also more sterile and less homey. Instead, edit your collectibles carefully and display them in just one or two places, not scattered throughout the whole room.  A group of similar items, or different objects of the same color, creates a visual destination in a room and avoids a sense of stifling clutter.
  • Use tables made of clear materials.  Clear surfaces such as glass or Lucite give the impression of openness while delivering function.
  • Choose contrasting colors to visually expand small rooms. In the past, interior designers have suggested that painting everything white.  But today, while they still like white for cabinets and ceilings, they are suggesting that you add a warm contrasting color that will cast a glow to the room. A different approach to making a room appear larger is to paint the walls and ceiling the same shade, so the eye doesn’t stop at the ceiling line.
  • Strategic use of lighting. Lamps placed at different heights will brighten a small room and make it seem larger.
  • Use floating shelves instead of cabinets. These provide useful storage, but look airy and chic.
  • Determine your priorities. Make rooms fit your needs and lifestyle. If having a desk is more important than having a dining table, you can eat at the kitchen counter or coffee table.
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What’s Hot in Outdoor Living

It’s not quite spring yet, but it’s not too early to start thinking about your outdoor living areas. Surveys show that having an attractive outdoor living environment ranks very high with today’s buyers. Creating an “outdoor living room” for your home will pay off when you sell. Not planning to move?  Then do it for yourself and your family.  It’s a relatively inexpensive way to give yourself more space for living and entertaining.

What features are most desirable?  The American Society of Landscape Architects conducts an annual Residential Trends Survey. It’s 2011 survey, reported these features as the most popular outdoor living feature trends:

  • exterior lighting (96.2%)
  • fire pits and outdoor fireplaces (94.2%)
  • seating and dining areas (94.1%)
  • grills (93.8%)
  • installed seating, such as benches, seat walls, or ledges (89.5%)
  • weatherized outdoor furniture (83.5% )
  • counter space (74.2%)
  • utility storage (61.3%)
  • stereo systems (58.3%)
  • sinks (54.7%)
  • refrigerators (50.2%)

The survey showed increased interest in technology for the outdoors, such as stereo systems, Internet access and televisions. Low-maintenance landscaping and water-efficient irrigation systems are also growing increasingly popular.

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What Are The Tax Ramifications When Selling Your Home?

home loanWhat are the tax ramifications when selling your home?  The current law enacted in 1997, states that if you have owned and lived in your primary residence for two of the last five years, you can exclude up to $250,000 in profit if you are single, or up to $500,000 if you are married and file jointly. However, Congress did included additional legislation for three situations in which the ruling might be modified: 1)change in employment 2) health reasons or 3) unforeseen circumstances.

Change in Employment:  If your new place of employment is at least 50 miles further from the home being sold than was the former place of employment, then the homeowner can take a proportionate exclusion of gain.  For instance, if the homeowner owned the home for only one year, then the homeowner would be entitled to exclude one half of either the $250,000 or the $500,000 exclusions, depending upon the marital and tax filing of the taxpayer. Employment is defined as “the commencement of employment with a new employer, the continuation of employment with the same employer, or the commencement or continuation of self-employment.

Health Reasons:  If your Doctor recommends a change of residence for reasons of health, this is considered a safe harbor.  According to the IRS, “if the taxpayer’s primary reason for the sale is 1) to obtain, provide or facilitate the diagnosis, cure, mitigation, or treatment of disease, illness or injury or 2) to obtain or provide medical or personal care for a qualified individual suffering from a disease, illness or injury”.  A  “qualified individual” includes family members who are in need of medical assistance away from the principal residence.

Unforeseen Circumstances:  The IRS has determined the following events as “safe harbors”, with the condition that these events involve the taxpayer, his/her spouse, co-owner or a member of the taxpayer’s household.

  • death
  • being terminated from employment and eligible for unemployment compensation
  • a change in job status that results in the taxpayer being unable to pay the mortgage and reasonable basic living expenses for the taxpayer’s household
  • divorce or legal separation
  • multiple births resulting from the same pregnancy
  • involuntary conversion of the property
  • destruction of the property because of man-made disaster, an act of war or terrorism

The IRS has kept the “safe harbor” door open by allowing the IRS Commissioner the right to expand these 7 items should the need arise or in response to a particular situation involving a specific taxpayer.

Taxpayers who believe they are entitled to claim an exemption should immediately consult with their tax adviser before they sell.

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Comps – How Does my Home Compare to Others?

How does my home  compare to others? There is no better way to predict what a buyer will be willing to pay for your home than to see what other buyers have been willing to pay for similar homes.  Ask a Realtor to do a “market analysis” show you the “comps”.

But what makes a property a good comp?  A number of things must be similar in order for your Realtor to consider a closed sale a good comp for your home:houses4

  • same neighborhood
  • same school district
  • similar housing size
  • similar housing features

The ideal comp is a home that is the same model, in the same subdivision and which sold in the last 6 months.  Unfortunately, exact comps like this are rarely available.  So, the next best thing is to find sales that closely match your home, then make adjustments for the differences.  The best comps are the ones that will require the fewest adjustments.

Choosing the right comps is imperative, because not all homes are alike.  Location, upgrades, amenities, sale date, extras and unique nuances all affect how your home compares to others.  Choosing the right comps, and making proper adjustments for differences is the key to an accurate market analysis.

Most people don’t really know how to compare real estate properties, which is one of the reasons they hire an agent. Choosing a Realtor can take the guess work out of pricing a home.  But if the Realtor doesn’t choose the right comps, and compares your home to properties that aren’t truly comparable, then you may under-price or over-price your home.  If you under-price, you will leave money on the table.  If you over-price, you will delay your sale by weeks or months and may not get it sold at all.

The way to know if the Realtor you are meeting with has chosen the right comps for your home, is to ask the Realtor to explain the process that he or she used and to listen carefully to the explanation. If the Realtor can’t explain how the comps were chosen and how they are interpreted, or if the explanation makes no sense to you, find another Realtor.  Keep in mind, you aren’t looking for the Realtor who promises you the highest price.  You are looking for someone who will help you understand the market, the appraisal process, and who will offer good solid reasons for listing your home at a particular price.

How did the Realtor determine that these were the best comps?  Were all recent sales in the area included or were some rejected?  Why?  Are some of the comps outside the neighborhood?  Why?  Are they all recent sales?  Why not?  Were there any adjustments made?  Garage size? Basement finish?  Lot size?  Landscaping?  Views?  Age of kitchen and baths?  Age of windows?  Location issues?

Choosing the right Realtor is imperative, because agents are not all alike.  It is important that you find someone with enough knowledge and experience to properly advise you how to price your home.

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Coloradans Protect Yourselves During a Move

moving 1Coloradans protect yourselves during a move.  How should Coloradans protect themselves from problems during a move?  This well written article by Lisa Greim, was recently published in The Denver Post newspaper. It was part of a larger story, but I have copied this segment in its entirety because of the important information that it provided.

  • Understand that any estimate, even a “flat-rate”, “guaranteed”, or “binding” estimate, can be revised if the conditions of the move change.  If you estimate 1,000 pounds of stuff, and it actually weighs 1,200 pounds, or an hourly move took six hours instead of four, or there are two flights of stairs when you listed one,  your mover can lawfully charge your for the difference.
  • Get in-person, written estimates form three different companies.  An online inventory is a useful tool, but nothing beats having somebody walk through your house, look at your stuff and evaluate conditions that could complicate the move, such as street parking or stairs.
  • Make sure you have adequate insurance.  Required liability coverage is 60 cents per pound.  This means your 4-pound MacBook is insured for $2.40.  Check your homeowner’s or renter’s policy, or purchase full replacement coverage from your mover.
  • Some things were never meant to go in a box.  Play it safe and move that laptop, other electronics. valuables and family treasures yourself.
  • READ THE FINE PRINT, and don’t sign blank forms or documents.

 

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What Can Drive Up Your Sales Price?… Parking

2-Car GarageParking is a hot commodity. According to a recent analysis of listing ads performed by Zillow,  the properties that reference parking tend to sell for more money.

Nationwide, about 23 percent of homes for sale reference parking. In some metro areas, parking isn’t viewed as an amenity but as an expectation, even if it is not mentioned in the listing ad. Many of the metro areas with the largest increases in sales prices due to parking are those that are attracting suburbanites and “empty nesters” who are used to having a car.

Denver was one of the cities found to have a high  percentage of listing ads that mention “parking” — 44.1%. The median price when “parking” was mentioned was $277,000, while the median list price when “parking” wasn’t mentioned was $264,900 — a 4.6% premium for parking.

Of course, if the sellers are parking in the street (because their garage is filled with other stuff), it will create the appearance of a inadequate parking and the home is less likely to earn a price premium for having parking.

 

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Pre-inspect Your Home Before Putting it on the Market

No Hidden Suprises!

Pre-inspect your home before putting it on the market!  Sell your home with Robert and Jani Bielenberg, Bielenberg & Associates, and take advantage of their R & J Certified Home Marketing Program! Transform your pre-owned home into a R & J Certified Home. It’s not difficult to do. Before the sign goes in the yard, your home will undergo a comprehensive pre-inspection, which includes the physical condition of the home, a review of the preliminary title report, and a review of HOA information.  Once certified, your home’s major systems are covered by a 12-month Home Protection Plan, provided to the buyer at closing on your behalf by Robert and Jani.

Why do a pre-inspection before putting your home up for sale?  A comprehensive pre-inspection of your home will help to minimize any surprises that might come up in the buyers home inspection. Simply put, it will provide peace-of-mind for both seller and buyer during one of the largest financial transactions of their lives, which can be a very stressful time.

Nationwide, research shows that eight out of ten home buyers get a home inspection when purchasing a home.  So, wouldn’t you rather go in with your eyes open instead of with your eyes closed?  Here are a few of the benefits you will gain with a pre-listing home inspection:

  • Find out in advance what inspection items you might have to address, prior to receiving a buyer’s inspection notice.
  • Have an opportunity to repair any items before putting your home on the market.
  • Limit your financial exposure due to renegotiation during the inspection phase of the contract.
  •  Sell your home faster and for a higher price.
  • Avoid having a contract fall through when a buyer isn’t satisfied with the condition of the home for the price being paid.
  • Avoid potential issues with a  buyer’s lender over the inspection resolution.
  • Last, but not least… peace-of-mind… it’s PRICELESS!
Contact us today to turn your pre-owned home into an R & J Certified Home.
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All Home Appraisals Are Not Created Equally

Appraisals are Not All the Same

1. An appraisal isn’t an exact science

All home appraisals are not created equally. When appraisers evaluate a home’s value, they’re giving their best opinion based on how the home’s features stack up against those of similar homes recently sold nearby. One appraiser may factor in a recent sale, but another may consider that sale too long ago, or the home too different, or too far away to be a fair comparison. The result can be differences in the values two separate appraisers set for your home.

2. Appraisals have different purposes

If the appraisal is being used by a lender giving a loan on the home, the appraised value will be the lower of market value (what it would sell for on the open market today) and the price you paid for the house if you recently bought it.

An appraisal being used to figure out how much to insure your home for or to determine your property taxes may rely on other factors and arrive at different values. For example, though an appraisal for a home loan evaluates today’s market value, an appraisal for insurance purposes calculates what it would cost to rebuild your home at today’s building material and labor rates, which can result in two different numbers.

Appraisals are also different from CMAs, or competitive market analyses. In a CMA, a real estate agent relies on market expertise to estimate how much your home will sell for in a specific time period. The price your home will sell for in 30 days may be different than the price your home will sell for in 120 days. Because real estate agents don’t follow the rules appraisers do, there can be variations between CMAs and appraisals on the same home.

3. An appraisal is a snapshot

Home prices shift, and appraised values will shift with those market changes. Your home may be appraised at $150,000 today, but in two months when you refinance or list it for sale, the appraised value could be lower or higher depending on how your market has performed.

4. Appraisals don’t factor in your personal issues

You may have a reason you must sell immediately, such as a job loss or transfer, which can affect the amount of money you’ll accept to complete the transaction in your time frame. An appraisal doesn’t consider those personal factors.

5. You can ask for a second opinion

If your home appraisal comes back at a value you believe is too low, you can request that a second appraisal be performed by a different appraiser. You, or potential buyers, if they’ve requested the appraisal, will have to pay for the second appraisal. But it may be worth it to keep the sale from collapsing from a faulty appraisal. On the other hand, the appraisal may be accurate, and it may be a sign that you need to adjust your pricing or the size of the loan you’re refinancing.

 

G.M. Filisko is an attorney and award-winning writer who’s had more than 10 appraisals performed on her properties in the past 20 years. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

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9 Minute Showing Drill

When you’re selling your home, occasionally you will receive a call that a buyer wants to see your home within the next few minutes.  Don’t panic.

Use this checklist to get ready quickly.

  • SOUND. Turn off the television and tune the radio (low volume) to a classical, soft rock, or middle of the road station.
  • SIGHT. Turn on every light in the house (day or night)  and  open  every  drape and blind (daytime only).
  • KITCHEN. Wipe kitchen counters. Place dirty dishes in dishwasher.
  • BATHROOM. Wipe counters, flush and close toilet.
  • LIVING ROOM. Hide magazines, and newspapers.  Remove clutter.
  • FAMILY ROOM. Hide magazines, games and newspapers.  Remove clutter.
  • BEDROOMS. Straighten beds. Hide clutter under bed (not in closet).
  • EXTERIOR. Put away toys and clutter.  Keep walks clear.
  • PETS. They are a distraction, so send them outside.
  • GOODBYE. Sorry, but this is the single most important thing you can do to help sell your home.  Even if the agent insists that it is OK for you to stay, you must leave. Buyers must get emotionally committed to your home to buy it.  They can’t become emotional about “their new home” if the current owners are hanging around.  Please, at the very least, go into the yard or take a walk around the block.
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