Question: I'm considering selling my home because I do not want to lose money. I purchased in 2004, the value has gone up and I'm worried that it will go down. The home was not just for living in, but also an investment. Do you see the market coming back up?
Answer: I see thousands of localized markets, each with its own dynamics. The strategy that works for one may not be so good for another.
That said, if you sell where will you move? Will you become a renter? Some argue that renting is a smart strategy in given markets.
How much of a profit do you have since 2004 -- less marketing expenses and moving costs? Is it enough to make selling worthwhile?
Before going further, speak with local brokers and consider such issues as job and population growth in your area as well as new home construction.
Question: We are ready to purchase three investment properties and have a corporation into which we would like to transfer them. The loans are assumable. How can we make it so that the property does not stay in my name?
Answer: You have three investment properties each with an assumable loan? That's unusual, as most lenders will only allow assumptions with their written permission.
If you buy in your name and then transfer title you may be hit with two sets of closings and transfer taxes. Most likely, you should assign the contracts to a limited liability corporation which would then become the owner at closing. For specifics, and because state rules differ, speak with a local real estate attorney before signing anything with anyone.
Question: I have a home on the market for $3.3 million. I was wondering if I could get a market update for the area. Something that shows average days on the market and if the trend is going up or down. I also wanted to get your thoughts on "range pricing" pros and cons ... .
Answer: Your broker can check MLS statistics to get "DOM" data -- days on the market. Also, this information is often posted directly online by local MLS systems.
As to "range pricing," in general terms the idea is to say the property is available between, say, $3.2 million and $3.4 million. The thinking seems to be that buyers will be enticed by the opportunity to bargain, but I suspect would-be purchasers will rapidly become uninterested if interest at the lower end of the scale is refused. Ask yourself: If you could buy a single shirt for $30 or $35, which price would you prefer?
Question: I have a house that's going to be difficult to sell. I see companies that pay cash for houses no matter what the condition or circumstances. Are these legitimate businesses or a sector to be avoided no matter how many challenges you face selling your home?
Answer: Companies willing to pay quick cash for a property are engaged in a trade: Your home in its current condition in exchange for their money.
In other words, these companies are simply buyers. Like any buyer, they want the most property for the fewest dollars, they want to buy at discount.
Like any seller, you want the most dollars for your home.
Before selling to anyone at any price you first have to have a good understanding of your property and its value. Speak with several local brokers before making a selling decision, and then consider what various buyers may offer.
Your view that the property will be difficult to sell may or may not be correct. However, at least have brokers explain how they would market your home and how they would price it. With more information you can make a better decision, one that will likely put thousands of dollars in your pocket.
Lastly, if you do decide to sell to a buyer company, sign nothing until you have either a broker or an attorney review all paperwork. After all, professional buyers know all the tricks -- and you should too.
Question: Two years ago I moved to Texas from Europe. Not knowing anything about the U.S. real estate market, I found a lender who handled my mortgage.
Now I'm concerned about the loan I got. The points that I am concerned about are these:
- The broker charged three points on the loan which were rolled into the mortgage.
- There is a three-year pre-payment penalty. The penalty is 2 percent of the remaining principal.
- I paid 20 percent down which I thought would qualify me for a decent rate.
My loan is an ARM which started at 6.290 percent and is now at 8.150 percent. Was I taken to the cleaners?
Answer: Borrowers, like houses, are all unique. It is impossible to evaluate an individual loans without more extensive information. But, generally, here are some factors to consider.
Putting 20 percent down means you are not obligated to get private mortgage insurance. Putting 20 percent down and having something other than great credit means you are unlikely to get the best possible rate.
Did you use a stated-income loan application? That could significantly increase your rate, depending on your credit score and the loan product.
Did the lender pay a portion of your closing costs? If yes then the lender has to recoup that money from somewhere.
Did you get a "jumbo" loan, a mortgage above the conforming loan limit at the time? If so, you would pay a higher rate.
Lastly, it may be that you have several factors together which would dictate a higher rate, and not just one.
While your rate has increased, it has not increased as much as other ARMs now re-setting. The reality is that many borrowers have seen far larger rate and payment increases.
If you remain unhappy with the loan then look into refinancing after the prepayment penalty ends in a year or so. Speak with a number of lenders for specifics and be certain to avoid all penalties. You should be a good candidate for refinancing because you have equity in the property.
Question: I want to sell my condo. I was told that there was a first time seller's deal where I would not have to pay capital gains. Is this true?
Answer: Here's what's true at the federal level: If you have lived in the property for two of the past five years, if it has been your prime residence, then you can shelter as much as $250,000 from taxes if single and $500,000 if married. It does not matter if you are a first-time owner or a repeat owner, or if the property is a condo, single-family home, etc.
For details, see IRS Publication 523, Selling Your Home and speak with a tax professional.
Question: My husband owned acreage with two other equal partners. The taxes used to be low, and when my husband last spoke to one of the partners, that individual said he would take care of the taxes by himself. When property was sold, the two other partners could then reimburse him.
When my husband contacted the tax people regarding the property, they could find nothing with his name on the title, though the individual who paid the taxes and his cousin (a broker) are on a title to a property.
How should I handle this if they took my husband's name off title?
Answer: Go back to the records office and ask if your husband's name was ever on the title. If so, when was the title changed?
If his name was never on the title, what evidence of ownership does your husband have in his records?
Removing someone's name from a title without authority is a serious matter. Please see an attorney in the jurisdiction where the property is located for details.
Question: How can I change brokers even through our listing agreement is not up until October? We are reading that houses here are selling but ours is not! We have lowered our price to $179,900! It has many updates! We need to sell to avoid a foreclosure.
Answer: If you face foreclosure please contact a community housing organization, your state attorney general or a local attorney or legal clinic immediately, meaning now.
As to your broker, let's look at some realities.
The fact that homes are generally selling in a given area is not surprising. Homes are always selling.
The fact that some houses are not selling is also not surprising. This too is always true.
That you have lowered your price or that your home contains improvements may make your home more attractive in the marketplace, but such measures do not guarantee a speedy sale.
It often happens that two similar homes at the same price on a single block are for sale. One sells and one doesn't. Why does this happen? Because while the homes may be alike in terms of location, design, condition and price, that does not mean if one sells the other will also sell at the same time. There is within the marketing process an element of luck -- at least for some sellers.
Before going further, sit down with your agent and review the marketing plan. What has been done to date? Have market conditions changed? If yes, should the marketing plan be revised?
If still unhappy, then speak with the broker about an early termination to the listing agreement. In exchange you may be asked to pay the broker's cash expenses to date or to otherwise settle the matter.
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