Until March of this year vacation homes had a weird non-status … they weren’t investment property and they weren’t personal use property in the eyes of the IRS. To achieve a 1031 Exchange the property must be held for investment or used in a trade or business. After a U.S. Tax Court disallowed a taxpayer’s exchange from one vacation home to another the IRS recognized that some guidelines were needed to establish what could be done to qualify a vacation home for a 1031 Exchange.
The result is a Revenue Procedure ruling that was effective March 10, 2008, the first IRS guidance on the matter since a 1981 letter. The Procedure ruling provides guidelines that the IRS says, if followed, they promise not to challenge the investment nature of your vacation home.
The ruling requires that you hold the relinquished property at least 24 months if it is your vacation home or the acquisition property for 24 months if you intend to buy a vacation home, or for both if you are moving from one vacation home to another. Note that this is more stringent than the one year holding period required for a safe long term capital gain status.
Additionally, for each twelve month block of the holding period you must rent the vacation home at least 14 days at a fair market rent. During that same period, you the owner, can only use the property for the greater of 14 days or 10 percent of the days rented. For instance, if you rented it for 30 days in a year your use is limited to 14 days, but if you rented it for 200 you could use it for 20 days. Days that relatives use the unit for free count against you. Not discussed, but generally understood, is your allowance for maintenance days. You are allowed a reasonable number of “maintenance days” to care for your unit, but don’t try to take a week shampooing the carpets.Our Advice: You now have specific qualifying criteria to meet that will allow you to rest easy knowing that your vacation home exchange will not be challenged. Understand that this is what is known as a “safe harbor”, guidelines that you and your accountant can use with confidence. If you don’t quite qualify it doesn’t mean the end of the world, but you might get looked at closer by the IRS. The best thing you can do is maintain excellent records, be serious in your rental attempts, charge family members market rate for their use, keep detailed records of the dates you use it and what you did, i.e. - maintenance days. Your records are very important for the ultimate success of your exchange.
Tax ramifications are an important component of the buy/sell decision in real estate. The 1031 tax-deferred exchange is designed to encourage the investor to keep his money invested. The ability to defer the tax obligation rather than paying for the taxes on the profit of each transaction along the way can have a significant beneficial impact on your portfolio as you create wealth via real estate. Work with your accountant and real estate agent to maximize your return and minimize your liability as you buy and sell real property.
Experience is Priceless Lisa Wetzel & Jim Valentine; RE/MAX Realty Affiliates, 775-781-5472 or toll free at 800-814-8799 ext. 254, email us at carsonvalleyland@hotmail.com, or visit our website at www.carsonvalleyland.com .
Thursday, July 31, 2008
Thursday, July 24, 2008
Follow Up Comments ... Should the Seller Leave or Stay?
Interesting Follow Up to our previous Blog ... Following are some interesting comments we received on our post regarding whether or not a seller should stay home during a showing. Thanks to those who shared their opinions!
Should the Seller Leave or Stay When Their Home Is Being Shown?
10 Comments on Should the Seller Leave or Stay When Their Home Is Being Shown?
I think most buyers are a little uncomfortable when the sellers are home. The buyers feel like they are invading their home.
07/16/2008 01:31 PM
by Steve Dawson (Prudential California Realty)
Jim, I had a Seller who insisted on attending "ALL" showings after a while and several showings the seller got frustrated with arranging his schedule around our showings. So eventually he prepared a hand-out with the features he believed were important, in case a showing was unassisted by the listing agent. That seemed to work out for all parties concerned. Steve
07/16/2008 01:35 PM
by Steve Loynd, Alpine Lakes Real Estate Inc., Loon Mt, NH.
Great question and off the cuff I would say get them outta of the home as it makes potential buyers uneasy and unrelaxed to speak freely...
With that said, I have shown some homes where the seller was on site but NOT directly in the home and was available for questions that the buyer and myself had and got straight forward honest answers that helped the buyer make a decision.
but in general I would say get your sellers off site. Any questions can be answered after the showing and thru the listing agent. All it takes is the seller to say one wrong thing to off set the potential buyer and teh sale is blown...
07/16/2008 01:38 PM
by Ryan Servatius (ERA Network Real Estate)
If they want to be there for the showings they are control mongers. Better gone than scaring off potential offers.
07/16/2008 01:46 PM
by Heath Coker, Broker Owner (Cape Group Real Estate & REindex.com)
Certainly buyers are more comfortable viewing a home without the seller present. I have a few listings that are Ranches. Since I didn't grow up in the country and much of the lingo and even important features that a ranch buyer seeks still elude me, I appreciate the help of an experienced rancher in showing the property. Where it is imporant to draw the line, is making statements or promises that may not be accurate. Sellers have a vested interest in selling at the highest possible price -- so I need to make sure that they don't oversell something about the property. I try to have a discussion with the seller ahead of time and advise that the seller avoid overexaggeration and I have a similar discussion with the buyer indicating that any statements made by the seller need to be verified for accuracy -- not that they are attempting to deceive, but we want to make sure that you (buyer) get what you expect -- we don't like negative surprises.
07/16/2008 01:52 PM
by Property Connections Realty Inc.
Heath, you make an excellent point and that reminds me of the sellers who want their agents at the shows...
Not good and turns off buyers agents as I have seen listing agents ask the potential buyer directly what they are looking for and then say they have some other listings that might meet their needs...
07/16/2008 01:56 PM
by Ryan Servatius (ERA Network Real Estate)
Sellers must leave for all showings. I've never sold a house where the sellers were present when I showed it. The house then becomes "the one with the people at home" instead of "the one with that great master suite."
07/16/2008 02:45 PM
by Don Fabrizio-Garcia - Connecticut Real Estate & Appraisals (Keller Williams CT Realty)
Pretty Interesting - the comments all seem to be running in the same direction. Heath, you are exactly right, these people are control mongers. They bragged to us that when they sold their last home they hid a tape recorder to spy on the Agents and see what they were saying. The wife would vacuum the carpet all one direction to make sure she could tell where the footprints lead and which rooms the people really walked into.
Ryan, you are right too! We got many many negative comments in our feed back from the showing agents and their customers. As I said, one agent refussed to show it after a preview session where the seller drove her nuts!
We agree with Steve's comment. If the Seller has "items of interest", let them write a list to be available to potential purchasers.
Thanks all for the interest and for letting me vent a smidge!
07/16/2008 05:24 PM
by Jim Valentine (RE/MAX Realty Affiliates)
Jim, I prefer them out of the house. I think that everyone feels uncomfortable having them there. It also leaves them open to giving out information that we as agents can't give, ie why they are moving, how desperate they are to move, how quickly they would or have to be out of the house. This is why they have hired a listing agent, let them be present if they feel that someone has to be!
07/16/2008 05:46 PM
by Tony & Darcy Cannon - The C Team (ERA Realty Center)
It is usually better for the seller to be gone but there are always exceptions to every rule. It makes it difficult for buyers and agents to talk about the house with the seller standing there.
07/16/2008 06:57 PM
by Gene Allen Realtor Hampton Roads Real Estate (Resh Realty Group)
Should the Seller Leave or Stay When Their Home Is Being Shown?
There is no set rule in the industry. In the Carson Valley where we live and work, some agents are so adamant that a Seller must leave the house that they will turn down showings if the Sellers can't leave. We believe that any showing is better than no showing, but there are ways to maximize the results of your showing and your presence, or absence, can be an integral part of that. Most of the time we recommend that Sellers open the blinds, turn on the lights, put on some soft music and take off. The home will show itself with the showing agent illuminating the highlights.
Buyers know what they are looking for and will seek it out as they look. Without the Seller to interact with they can be fully immersed in the experience of your home ... a good showing.
If a home has complex features that are key selling points, i.e.- supplemental solar hot water heating system, surface water irrigation, etc., the Seller will likely need to be consulted for an explanation so they can finalize a buying decision. It can then be to their advantage to be available at a showing. A seller can show them how easy it is to operate the special feature and how it benefits the property ... ostensibly how it will benefit them. In this scenario the seller should be sure to be scarce - hang out in the garden or garage, out of the way, waiting to be of help if you are asked.
Let the agents do their work. Different agents have different styles, and the really good ones will adapt their style according to how the Buyer processes information. If they have an analytical personality, i.e.- an engineer, they might point out the detail of the new hinges in the doggy door. With a kinesthetic personality they will let them flow through the house and get a "feel" for it ... without intrusion. People will absorb information and buy according to their own personality ... don't intrude on the process with your buying style.
We recently had a Seller that would follow the Buyers and agents around the house showing and talking and negotiating on the spot. They weren't wanted or welcome and lost sales because of it. In fact, one agent that was previewing it for a Buyer had such a negative experience with the Seller that she didn't even show the home to her client ... exactly the opposite affect the Seller was seeking.
Our Advice: As a seller, when you have the opportunity to have a showing take it ... whether you are home, or not. Buyers want to explore your home to see if it will work for them. When they start opening doors and drawers they are showing interest in how your home fits them and their lifestyle. Some Buyers are hesitant to look closely when the Seller is in the home. Take a walk, or a spin around the block. If they have specific questions about your property the agent will ask you or your agent, often via cell phone during the actual showing. If you want to make sure they see or learn something make a sign and put it where they can see it. If you place signs around your house pointing out key things that aren't readily apparent it can really help a showing agent. Pictures on the dining table can help show how pretty your flowers or other seasonal features are. You are helping to show/sell your home in a subtle manner. Nobody knows your home better than you ... be judicious on how much information you give and when you give it. Don't exasperate a Buyer by overwhelming them. Let them enjoy the experience of "trying on" your home to see if it fits ... then enhance that experience and close the sale with your additional details when asked.
Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472 , carsonvalleyland@hotmail.com, www.carsonvalleyland.com
Should the Seller Leave or Stay When Their Home Is Being Shown?
10 Comments on Should the Seller Leave or Stay When Their Home Is Being Shown?
I think most buyers are a little uncomfortable when the sellers are home. The buyers feel like they are invading their home.
07/16/2008 01:31 PM
by Steve Dawson (Prudential California Realty)
Jim, I had a Seller who insisted on attending "ALL" showings after a while and several showings the seller got frustrated with arranging his schedule around our showings. So eventually he prepared a hand-out with the features he believed were important, in case a showing was unassisted by the listing agent. That seemed to work out for all parties concerned. Steve
07/16/2008 01:35 PM
by Steve Loynd, Alpine Lakes Real Estate Inc., Loon Mt, NH.
Great question and off the cuff I would say get them outta of the home as it makes potential buyers uneasy and unrelaxed to speak freely...
With that said, I have shown some homes where the seller was on site but NOT directly in the home and was available for questions that the buyer and myself had and got straight forward honest answers that helped the buyer make a decision.
but in general I would say get your sellers off site. Any questions can be answered after the showing and thru the listing agent. All it takes is the seller to say one wrong thing to off set the potential buyer and teh sale is blown...
07/16/2008 01:38 PM
by Ryan Servatius (ERA Network Real Estate)
If they want to be there for the showings they are control mongers. Better gone than scaring off potential offers.
07/16/2008 01:46 PM
by Heath Coker, Broker Owner (Cape Group Real Estate & REindex.com)
Certainly buyers are more comfortable viewing a home without the seller present. I have a few listings that are Ranches. Since I didn't grow up in the country and much of the lingo and even important features that a ranch buyer seeks still elude me, I appreciate the help of an experienced rancher in showing the property. Where it is imporant to draw the line, is making statements or promises that may not be accurate. Sellers have a vested interest in selling at the highest possible price -- so I need to make sure that they don't oversell something about the property. I try to have a discussion with the seller ahead of time and advise that the seller avoid overexaggeration and I have a similar discussion with the buyer indicating that any statements made by the seller need to be verified for accuracy -- not that they are attempting to deceive, but we want to make sure that you (buyer) get what you expect -- we don't like negative surprises.
07/16/2008 01:52 PM
by Property Connections Realty Inc.
Heath, you make an excellent point and that reminds me of the sellers who want their agents at the shows...
Not good and turns off buyers agents as I have seen listing agents ask the potential buyer directly what they are looking for and then say they have some other listings that might meet their needs...
07/16/2008 01:56 PM
by Ryan Servatius (ERA Network Real Estate)
Sellers must leave for all showings. I've never sold a house where the sellers were present when I showed it. The house then becomes "the one with the people at home" instead of "the one with that great master suite."
07/16/2008 02:45 PM
by Don Fabrizio-Garcia - Connecticut Real Estate & Appraisals (Keller Williams CT Realty)
Pretty Interesting - the comments all seem to be running in the same direction. Heath, you are exactly right, these people are control mongers. They bragged to us that when they sold their last home they hid a tape recorder to spy on the Agents and see what they were saying. The wife would vacuum the carpet all one direction to make sure she could tell where the footprints lead and which rooms the people really walked into.
Ryan, you are right too! We got many many negative comments in our feed back from the showing agents and their customers. As I said, one agent refussed to show it after a preview session where the seller drove her nuts!
We agree with Steve's comment. If the Seller has "items of interest", let them write a list to be available to potential purchasers.
Thanks all for the interest and for letting me vent a smidge!
07/16/2008 05:24 PM
by Jim Valentine (RE/MAX Realty Affiliates)
Jim, I prefer them out of the house. I think that everyone feels uncomfortable having them there. It also leaves them open to giving out information that we as agents can't give, ie why they are moving, how desperate they are to move, how quickly they would or have to be out of the house. This is why they have hired a listing agent, let them be present if they feel that someone has to be!
07/16/2008 05:46 PM
by Tony & Darcy Cannon - The C Team (ERA Realty Center)
It is usually better for the seller to be gone but there are always exceptions to every rule. It makes it difficult for buyers and agents to talk about the house with the seller standing there.
07/16/2008 06:57 PM
by Gene Allen Realtor Hampton Roads Real Estate (Resh Realty Group)
Should the Seller Leave or Stay When Their Home Is Being Shown?
There is no set rule in the industry. In the Carson Valley where we live and work, some agents are so adamant that a Seller must leave the house that they will turn down showings if the Sellers can't leave. We believe that any showing is better than no showing, but there are ways to maximize the results of your showing and your presence, or absence, can be an integral part of that. Most of the time we recommend that Sellers open the blinds, turn on the lights, put on some soft music and take off. The home will show itself with the showing agent illuminating the highlights.
Buyers know what they are looking for and will seek it out as they look. Without the Seller to interact with they can be fully immersed in the experience of your home ... a good showing.
If a home has complex features that are key selling points, i.e.- supplemental solar hot water heating system, surface water irrigation, etc., the Seller will likely need to be consulted for an explanation so they can finalize a buying decision. It can then be to their advantage to be available at a showing. A seller can show them how easy it is to operate the special feature and how it benefits the property ... ostensibly how it will benefit them. In this scenario the seller should be sure to be scarce - hang out in the garden or garage, out of the way, waiting to be of help if you are asked.
Let the agents do their work. Different agents have different styles, and the really good ones will adapt their style according to how the Buyer processes information. If they have an analytical personality, i.e.- an engineer, they might point out the detail of the new hinges in the doggy door. With a kinesthetic personality they will let them flow through the house and get a "feel" for it ... without intrusion. People will absorb information and buy according to their own personality ... don't intrude on the process with your buying style.
We recently had a Seller that would follow the Buyers and agents around the house showing and talking and negotiating on the spot. They weren't wanted or welcome and lost sales because of it. In fact, one agent that was previewing it for a Buyer had such a negative experience with the Seller that she didn't even show the home to her client ... exactly the opposite affect the Seller was seeking.
Our Advice: As a seller, when you have the opportunity to have a showing take it ... whether you are home, or not. Buyers want to explore your home to see if it will work for them. When they start opening doors and drawers they are showing interest in how your home fits them and their lifestyle. Some Buyers are hesitant to look closely when the Seller is in the home. Take a walk, or a spin around the block. If they have specific questions about your property the agent will ask you or your agent, often via cell phone during the actual showing. If you want to make sure they see or learn something make a sign and put it where they can see it. If you place signs around your house pointing out key things that aren't readily apparent it can really help a showing agent. Pictures on the dining table can help show how pretty your flowers or other seasonal features are. You are helping to show/sell your home in a subtle manner. Nobody knows your home better than you ... be judicious on how much information you give and when you give it. Don't exasperate a Buyer by overwhelming them. Let them enjoy the experience of "trying on" your home to see if it fits ... then enhance that experience and close the sale with your additional details when asked.
Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472 , carsonvalleyland@hotmail.com, www.carsonvalleyland.com
Are Lenders Still Impacting the Market?
Yes, lenders are still having an impact on real estate values and sales. The numerous bank-owned properties throughout Carson Valley are continually driving down the neighborhood values because of the banks’ lack of maintenance on their properties. The dry lawns, weed forests, and other value-sapping deficiencies resulting from lack of care and a vacant property are driving down the values of entire neighborhoods.
There are other, less obvious lender impacts in our market that are also having a major impact in sales as they affect a borrower’s ability to qualify. These involve major changes that are new policies or procedures. They can range from allowable debt/income ratios being lowered, to a higher FICO score requirement. Those are usually known to a borrower at the beginning, but we have seen changes in the middle of a loan process. The more subtle, less publicized ones are the ones that will trip you up.
Consider the new Fannie Mae and Freddie Mac rules that apply when buying another home before selling your old one. Historically, the Buyer generated a lease agreement for the existing home and was allowed to use 75% of the lease income to offset payments on that home. Two months of cash reserves were typically required. The New Rules require a borrower with a home in escrow, but not sold, to qualify on their ability to carry the payments on both homes, no lease income or rental survey income is allowed.
If the new home is a second home, the borrower has to show the ability to carry both payments and have six months PITI on both properties in documented reserves. If you are buying a rental property you can use 75% of the rental amount, but now you must provide documented evidence that you have at least 30% equity in the property. Additionally, there are detail requirements that must be complied with, i.e.- you have to provide the receipts of the security deposit from the tenant, and the deposit into your account. If you have less than 30% equity the rental income won’t count to offset your payment, you must now have six months reserves for both properties.Our Advice: Don’t let the details stop you if you want to buy a new home. We recommend, however, that you don’t experiment with lenders. We have many good, seasoned, honest lenders in our Carson Valley that will work with you, protect you, and perform for you allowing you to achieve your objective. A new lender doesn’t know where the roadblocks in the process are. Your process will be one continual surprise resulting in an exceptionally frustrating experience if your lender isn’t seasoned. The seasoned lender will take you through the process addressing each hurdle like a hurdler. Lenders today are working to minimize the risk to the investor. That has resulted in a new industry which is much like the old industry … you have to truly qualify to borrow. If you qualify … proceed with confidence and don’t let the hurdles bother you along the way.
Professionals in our industry have rarely been as important as they are now. The major wealth in the world has been largely accumulated via real estate. These are good investment times, don’t let the hurdles keep you from your goal. Get with a good hurdler and have confidence in achieving your goals. Your lender, escrow officer and real estate agent are more important to you than ever before in these exhilarating times. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, visit our websites at carsonvalleyland.com or carsonvalleyland.net .
There are other, less obvious lender impacts in our market that are also having a major impact in sales as they affect a borrower’s ability to qualify. These involve major changes that are new policies or procedures. They can range from allowable debt/income ratios being lowered, to a higher FICO score requirement. Those are usually known to a borrower at the beginning, but we have seen changes in the middle of a loan process. The more subtle, less publicized ones are the ones that will trip you up.
Consider the new Fannie Mae and Freddie Mac rules that apply when buying another home before selling your old one. Historically, the Buyer generated a lease agreement for the existing home and was allowed to use 75% of the lease income to offset payments on that home. Two months of cash reserves were typically required. The New Rules require a borrower with a home in escrow, but not sold, to qualify on their ability to carry the payments on both homes, no lease income or rental survey income is allowed.
If the new home is a second home, the borrower has to show the ability to carry both payments and have six months PITI on both properties in documented reserves. If you are buying a rental property you can use 75% of the rental amount, but now you must provide documented evidence that you have at least 30% equity in the property. Additionally, there are detail requirements that must be complied with, i.e.- you have to provide the receipts of the security deposit from the tenant, and the deposit into your account. If you have less than 30% equity the rental income won’t count to offset your payment, you must now have six months reserves for both properties.Our Advice: Don’t let the details stop you if you want to buy a new home. We recommend, however, that you don’t experiment with lenders. We have many good, seasoned, honest lenders in our Carson Valley that will work with you, protect you, and perform for you allowing you to achieve your objective. A new lender doesn’t know where the roadblocks in the process are. Your process will be one continual surprise resulting in an exceptionally frustrating experience if your lender isn’t seasoned. The seasoned lender will take you through the process addressing each hurdle like a hurdler. Lenders today are working to minimize the risk to the investor. That has resulted in a new industry which is much like the old industry … you have to truly qualify to borrow. If you qualify … proceed with confidence and don’t let the hurdles bother you along the way.
Professionals in our industry have rarely been as important as they are now. The major wealth in the world has been largely accumulated via real estate. These are good investment times, don’t let the hurdles keep you from your goal. Get with a good hurdler and have confidence in achieving your goals. Your lender, escrow officer and real estate agent are more important to you than ever before in these exhilarating times. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, visit our websites at carsonvalleyland.com or carsonvalleyland.net .
Wednesday, July 16, 2008
Should I Leave or Stay When My Home Is Being Shown?
There is no set rule in the industry. In the Carson Valley where we live and work, some agents are so adamant that a Seller must leave the house that they will turn down showings if the Sellers can’t leave. We believe that any showing is better than no showing, but there are ways to maximize the results of your showing and your presence, or absence, can be an integral part of that.
Most of the time we recommend that you open the blinds, turn on the lights, put on some soft music and take off. The home will show itself with the showing agent illuminating the highlights. Buyers know what they are looking for and will seek it out as they look. Without you to interact with they can be fully immersed in the experience of your home … a good showing.
If your home has complex features that are key selling points, i.e.- supplemental solar hot water heating system, surface water irrigation, etc., you will likely need to be consulted for an explanation so they can finalize a buying decision. It can then be to your advantage to be available at a showing. You can show them how easy it is to operate the special feature and how it benefits the property … ostensibly how it will benefit them. In this scenario be sure to be scarce – hang out in the garden or garage, out of the way, waiting to be of help if you are asked.
Let the agents do their work. Different agents have different styles, and the really good ones will adapt their style according to how the Buyer processes information. If they have an analytical personality, i.e.- an engineer, they might point out the detail of the new hinges in the doggy door. With a kinesthetic personality they will let them flow through the house and get a “feel” for it … without intrusion. People will absorb information and buy according to their own personality … don’t intrude on the process with your buying style. We recently had a Seller that would follow the Buyers and agents around the house showing and talking and negotiating on the spot. They weren’t wanted or welcome and lost sales because of it. In fact, one agent that was previewing it for a Buyer had such a negative experience with the Seller that she didn’t even show the home to her client … exactly the opposite affect the Seller was seeking.Our Advice: When you have the opportunity to have a showing take it … whether you are home, or not. Buyers want to explore your home to see if it will work for them. When they start opening doors and drawers they are showing interest in how your home fits them and their lifestyle. Some Buyers are hesitant to look closely when the Seller is in the home. Take a walk, or a spin around the block. If they have specific questions about your property the agent will ask you or your agent, often via cell phone during the actual showing. If you want to make sure they see or learn something make a sign and put it where they can see it. If you place signs around your house pointing out key things that aren’t readily apparent it can really help a showing agent. Pictures on the dining table can help show how pretty your flowers or other seasonal features are. You are helping to show/sell your home in a subtle manner.
Nobody knows your home better than you … be judicious on how much information you give and when you give it. Don’t exasperate a Buyer by overwhelming them. Let them enjoy the experience of “trying on” your home to see if it fits… then enhance that experience and close the sale with your additional details when asked. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com
Most of the time we recommend that you open the blinds, turn on the lights, put on some soft music and take off. The home will show itself with the showing agent illuminating the highlights. Buyers know what they are looking for and will seek it out as they look. Without you to interact with they can be fully immersed in the experience of your home … a good showing.
If your home has complex features that are key selling points, i.e.- supplemental solar hot water heating system, surface water irrigation, etc., you will likely need to be consulted for an explanation so they can finalize a buying decision. It can then be to your advantage to be available at a showing. You can show them how easy it is to operate the special feature and how it benefits the property … ostensibly how it will benefit them. In this scenario be sure to be scarce – hang out in the garden or garage, out of the way, waiting to be of help if you are asked.
Let the agents do their work. Different agents have different styles, and the really good ones will adapt their style according to how the Buyer processes information. If they have an analytical personality, i.e.- an engineer, they might point out the detail of the new hinges in the doggy door. With a kinesthetic personality they will let them flow through the house and get a “feel” for it … without intrusion. People will absorb information and buy according to their own personality … don’t intrude on the process with your buying style. We recently had a Seller that would follow the Buyers and agents around the house showing and talking and negotiating on the spot. They weren’t wanted or welcome and lost sales because of it. In fact, one agent that was previewing it for a Buyer had such a negative experience with the Seller that she didn’t even show the home to her client … exactly the opposite affect the Seller was seeking.Our Advice: When you have the opportunity to have a showing take it … whether you are home, or not. Buyers want to explore your home to see if it will work for them. When they start opening doors and drawers they are showing interest in how your home fits them and their lifestyle. Some Buyers are hesitant to look closely when the Seller is in the home. Take a walk, or a spin around the block. If they have specific questions about your property the agent will ask you or your agent, often via cell phone during the actual showing. If you want to make sure they see or learn something make a sign and put it where they can see it. If you place signs around your house pointing out key things that aren’t readily apparent it can really help a showing agent. Pictures on the dining table can help show how pretty your flowers or other seasonal features are. You are helping to show/sell your home in a subtle manner.
Nobody knows your home better than you … be judicious on how much information you give and when you give it. Don’t exasperate a Buyer by overwhelming them. Let them enjoy the experience of “trying on” your home to see if it fits… then enhance that experience and close the sale with your additional details when asked. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-5472, carsonvalleyland@hotmail.com, www.carsonvalleyland.com
Thursday, July 10, 2008
The beautiful open field behind my house is going to be subdivided … what can I do?
It may be a bit late to do anything about the new development, but our concern is what you could have done when you bought your property. Most of the Valley’s developable land is a matter of public knowledge, or readily apparent for its potentiality by a bit of investigation. If an open field behind your property that served as an inducement for your purchase can be subdivided, your agent should have made you aware of that fact when you were buying.
The Carson Valley certainly has world class views and, contrary to conventional real estate theory, people often do buy for the view when they buy a home here. Some subdivisions have view protection restrictions in their C.C.&R.’s, but most don’t. In fact, many of the older homes were designed and aligned without consideration for the view – almost like it was taken for granted in those days. As the Valley population increases, and the resulting new homes are constructed, views are being compromised. You have the right to do as you please on your property as long as it complies with County Code and the C.C.&R’s. If you are building a new home the neighborly thing to do is to consider the view of your neighbor … if you can build accordingly. Sometimes an owner just can’t help building in a view corridor and it is within their private property rights to do so.
It isn’t always a new subdivision that interrupts a view. Your neighbor can plant a tree that will grow and wipe out a view. A shop building, or two story residence can be constructed in your view corridor. Some of the best protected view corridors are available by simply looking down the street – it won’t be built on so you have a view you can count on.
Even BLM land can change ownership status. If Federal land abuts a populated area, i.e.- your subdivision, it is possible that you can see a change from public to private ownership. Though it hasn’t happened in our area recently, it is possible – especially with sustained demand for developable property located out of the flood plane. If your agent says such public land will be open forever, remember, “forever” is a very long time. Things change – that is the only constant.
Our advice: When you are considering a purchase, evaluate the potential for a change in land use of the adjacent property and how it could affect you. We’ve seen several instances over the years where individuals thought the neighboring private property was BLM, public land, until it was developed. Whether those folks were improperly informed by their agent, or simply made a wrong assumption, one of the critical factors in their buying decision was clearly erroneous. Nothing is forever – if you are buying property next to vacant land explore the ownership, zoning, master plan, and flood plane status of the property to determine potential future use changes that could occur on that property.
Buying a view? Tranquility? Easy access to the public domain? Privacy? Investigate thoroughly since all is not always what it appears to be … or could change with time. Your seasoned agent can help you. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704, carsonvalleyland@hotmail.com , www.carsonvalleyland.com .
The Carson Valley certainly has world class views and, contrary to conventional real estate theory, people often do buy for the view when they buy a home here. Some subdivisions have view protection restrictions in their C.C.&R.’s, but most don’t. In fact, many of the older homes were designed and aligned without consideration for the view – almost like it was taken for granted in those days. As the Valley population increases, and the resulting new homes are constructed, views are being compromised. You have the right to do as you please on your property as long as it complies with County Code and the C.C.&R’s. If you are building a new home the neighborly thing to do is to consider the view of your neighbor … if you can build accordingly. Sometimes an owner just can’t help building in a view corridor and it is within their private property rights to do so.
It isn’t always a new subdivision that interrupts a view. Your neighbor can plant a tree that will grow and wipe out a view. A shop building, or two story residence can be constructed in your view corridor. Some of the best protected view corridors are available by simply looking down the street – it won’t be built on so you have a view you can count on.
Even BLM land can change ownership status. If Federal land abuts a populated area, i.e.- your subdivision, it is possible that you can see a change from public to private ownership. Though it hasn’t happened in our area recently, it is possible – especially with sustained demand for developable property located out of the flood plane. If your agent says such public land will be open forever, remember, “forever” is a very long time. Things change – that is the only constant.
Our advice: When you are considering a purchase, evaluate the potential for a change in land use of the adjacent property and how it could affect you. We’ve seen several instances over the years where individuals thought the neighboring private property was BLM, public land, until it was developed. Whether those folks were improperly informed by their agent, or simply made a wrong assumption, one of the critical factors in their buying decision was clearly erroneous. Nothing is forever – if you are buying property next to vacant land explore the ownership, zoning, master plan, and flood plane status of the property to determine potential future use changes that could occur on that property.
Buying a view? Tranquility? Easy access to the public domain? Privacy? Investigate thoroughly since all is not always what it appears to be … or could change with time. Your seasoned agent can help you. Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704, carsonvalleyland@hotmail.com , www.carsonvalleyland.com .
Wednesday, July 2, 2008
A Lease/Option … Should We Take It?
As markets change so does the nature of real estate transactions. One type of transaction that comes and goes with market changes is the lease/option, a lease tied to an option to purchase. The lease/option tool can be a good one for Buyers and Sellers if their circumstances warrant it.
Optionor (Seller) and Optionee (Buyer) can both benefit if the agreement is structured correctly for their respective objectives. A Seller with a vacant property that wants to generate cash or a cash flow with the rent monies and option consideration might consider a lease/option. A Buyer that hasn’t sold his property but wants to move once and in to a home he is buying so he can establish it as his own until his property closes escrow might consider a lease/option. These, and many other scenarios, are bona fide lease/option situations that could result in a mutually beneficial lease/option arrangement.
Beware, however, that we are seeing more lease/option agreements being written for speculation these days. We caution you to have your agent clearly help you with perspective in evaluating such a proposed contract and its effect on you. If someone proposes to give you $5,000 and tie your property up for three years, the warning bells should go off as their respective flags raise. No matter how frustrated you might be in today’s market facing your continuing payments, in this situation you must project forward three years and consider what the market might be. Also be advised, these offers are coming in way below today’s market value.
The option agreement gives the Buyer the option of buying tomorrow at a price agreed on today. Let’s say your property is worth $300,000 today. It has probably gone down 30% in the past year. If it comes back 20% in three years, the appreciation would be $60,000. In this case, the Buyer/Optionee would make $60,000 on an investment of $5,000 over three years. That is the speculator’s motivation. The speculator’s motivation is further enhanced if he can contract to buy your home for $250,000 in 3 years.
To minimize your risk exposure to such a speculative investor’s offer, in addition to adjusting the price, consider shortening the time, i.e.- one year instead of three. Try increasing the option consideration. If you go beyond a one year time frame consider annual option consideration payments for extending the option incrementally. Higher monthly payments can give you a cash flow and bind the Optionee tighter. If the person has a bona fide reason to stay in the transaction you will likely put it together with some massaging of the transaction components as discussed above. If not, you will flush out the unscrupulous predator investor that is trying to capitalize on your situation and thereby save yourself extreme future frustration.
Our Advice: Be sure to understand the objectives of the other party if you are considering a lease/option agreement. If you are a Seller and you sense a lease/option offer is speculation driven, make sure you have sufficient cash induced into the transaction to make it worth your while. If a speculating Buyer, make sure you find the right Seller or you are wasting your time. The right agreement between reasonable Optionors and Optionees can be a win/win transaction for both parties, and it will be readily apparent that it is a logical way to put them together.
The keys to a healthy lease/option agreement are the right circumstances of the principals, Optionee and Optionor, and savvy real estate agents that can properly construct the transaction and successfully negotiate it for the benefit of all. This is a powerful tool – use it right and righteously and you will be rewarded and happy.
Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com , 775-781-5472.
Optionor (Seller) and Optionee (Buyer) can both benefit if the agreement is structured correctly for their respective objectives. A Seller with a vacant property that wants to generate cash or a cash flow with the rent monies and option consideration might consider a lease/option. A Buyer that hasn’t sold his property but wants to move once and in to a home he is buying so he can establish it as his own until his property closes escrow might consider a lease/option. These, and many other scenarios, are bona fide lease/option situations that could result in a mutually beneficial lease/option arrangement.
Beware, however, that we are seeing more lease/option agreements being written for speculation these days. We caution you to have your agent clearly help you with perspective in evaluating such a proposed contract and its effect on you. If someone proposes to give you $5,000 and tie your property up for three years, the warning bells should go off as their respective flags raise. No matter how frustrated you might be in today’s market facing your continuing payments, in this situation you must project forward three years and consider what the market might be. Also be advised, these offers are coming in way below today’s market value.
The option agreement gives the Buyer the option of buying tomorrow at a price agreed on today. Let’s say your property is worth $300,000 today. It has probably gone down 30% in the past year. If it comes back 20% in three years, the appreciation would be $60,000. In this case, the Buyer/Optionee would make $60,000 on an investment of $5,000 over three years. That is the speculator’s motivation. The speculator’s motivation is further enhanced if he can contract to buy your home for $250,000 in 3 years.
To minimize your risk exposure to such a speculative investor’s offer, in addition to adjusting the price, consider shortening the time, i.e.- one year instead of three. Try increasing the option consideration. If you go beyond a one year time frame consider annual option consideration payments for extending the option incrementally. Higher monthly payments can give you a cash flow and bind the Optionee tighter. If the person has a bona fide reason to stay in the transaction you will likely put it together with some massaging of the transaction components as discussed above. If not, you will flush out the unscrupulous predator investor that is trying to capitalize on your situation and thereby save yourself extreme future frustration.
Our Advice: Be sure to understand the objectives of the other party if you are considering a lease/option agreement. If you are a Seller and you sense a lease/option offer is speculation driven, make sure you have sufficient cash induced into the transaction to make it worth your while. If a speculating Buyer, make sure you find the right Seller or you are wasting your time. The right agreement between reasonable Optionors and Optionees can be a win/win transaction for both parties, and it will be readily apparent that it is a logical way to put them together.
The keys to a healthy lease/option agreement are the right circumstances of the principals, Optionee and Optionor, and savvy real estate agents that can properly construct the transaction and successfully negotiate it for the benefit of all. This is a powerful tool – use it right and righteously and you will be rewarded and happy.
Experience is Priceless! Lisa Wetzel & Jim Valentine, RE/MAX Realty Affiliates, www.carsonvalleyland.com , 775-781-5472.
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