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Recent Home Sellers Posts
- Capital Gains Tax on Your Home Sale
Most of our home sellers are making nice profits on the sale of their homes. Unfortunately, some sellers will need to pay the IRS on those profits. Although that is not normally the case, it does not hurt to review this potential problem before putting your home on the market.
The Great Exclusion
If a homeowner lived in his house for 24 months out of the last five years, he is entitled to exclude $250,000 of the profits from the sale – or $500,000 for married homeowners. The 24-month period does not need to be consecutive, as long as you have lived in and owned the home for at least two years.
The “2 of 5”exclusion may be used each time you sell or exchange your primary home. Generally, the exclusion may be claimed only once every two years, although exceptions do exist.
In a recent listing appointment our homeowner decided that the time was right to put a home on the market. Our seller moved out of state and rented the home for several years. Our seller realized that he was now making a profit, but was unaware of the requirement to live in the home for two of the last five years. The homeowner consulted his CPA/tax advisor before moving forward with the sale and decided the profit was big enough to pay the capital gains tax.
On another recent seller conversation, the seller had found a wonderful new home on an acre lot to purchase, but needed to sell his current home. The seller bought his current home only 18 months ago and would be making a nice profit on the sale. After consulting with a CPA, the seller decided to postpone the sale of his current home six months to avoid the capital gains tax.
As a standard part of business, Phoenix AZ Realtors are not experts on the ins and outs of capital gains taxes. For the best advice, consult a CPA or tax advisor.
Do you want to learn more about ways to control your selling costs and get the most money from the sale of your home? Contact us at (480) 776-5214 or www.ThompsonGroupAZ.com.
- Jamie Thompson Qualifies for Senior Real Estate Specialist (SRES)
A few years ago, we received an introduction to working with a senior client moving from a house to an assisted living situation. Unfortunately, our senior client had significant health issues and our client’s home suffered from a lack of maintenance. Due to the number of needed repairs, our client’s home sold for significantly less value than could have sold for if in good shape.
So, we went back to the drawing board and came up with a new process that caters to the needs of seniors and their transition to assisted living. Our sales process helps seniors downsize, clear, and prepare the home for sale and manage the contractors needed during the process. The goal is to enable our senior clients to sell their homes at the top of the market for the best value.
In May, Jamie Thompson completed all requirements for Senior Real Estate Specialist (SRES). The SRES is rigorous education focused on developing understanding of needs of the 50+ demographic. The SRES Council is known to have knowledgeable, passionate members that serve consumers in the 50 and older market.
- Contract Strategy Focused On Protecting Your Bottom Line
The day is here! You need to sell your home. The next steps are to find a real estate agent familiar with the MLS, put your home on the market and negotiate a contract. You might not have seen the latest Arizona purchase contract. Filled with 10 pages of legal jargon and multiple addendums, the management of the Arizona contract is an easy way to give away thousands of dollars through the sale of a home to a buyer. Here a few items to watch for that can affect your bottom line:
- Buyer Loan Costs. With the current distressed market, many buyers like to write offers asking for the seller to pay their loan costs. And if the overall contract sales price is right, paying the buyer loan costs might be well worth while. Generally, the request is made as 3% of sales price, which initially may not seem high. However, when considering a sales price of $150,000, 3% of sales price works out to be $4500 – not a small sum of money. Instead, consider offering a compromise: have the buyer pay only half of the loan costs.
- HOA Transfer Fees. Did you speak with your home owners association (HOA) before listing your home? The amount your HOA will charge to transfer the property to a new buyer is great information to know. In some situations, HOAs have charged $500 – $1500 to transfer the property. With HOA transfer fees being a negotiable item, a seller may be able to pass this cost on to a buyer.
- Home Warranty Costs. As a general rule, buyers of homes in the Phoenix area expect sellers to pick up the cost of a Home Warranty. The Home Warranty will cover the buyer for one year in case some of the working components in the house break. The home warranty also protects the seller from being pursued by a buyer who feels that an A/C unit, hot water heater, or other expensive item died prematurely. A typical, basic Home Warranty plan will cover most items and can be obtained for under $350. But watch out – some buyers will ask for plans that can cost up to twice this amount.
- Appraisal. Did you and your real estate agent have a conversation about what price the property is likely to be valued by an appraiser? Will your home appraise for the sales price on the contract? Over and over again, I see sellers accept contracts for sales prices that have no chance of being supported by appraisal. Many times, after about 15 days into the escrow, the appraiser may submit an appraisal for thousands less than the contracted sales price. With the seller having planned a move, packed up the house and secured a new place to live, the seller is generally between the proverbial rock and a hard place. They’re forced to wonder: “Do I accept the new sales price or cancel the move?” Keeping in mind that most sellers are moving for significant life reasons such as job transfer, bigger home or changes in lifestyle, the seller generally must accept the financial change or give up on the reason for moving.
In most cases a little upfront planning will help net more money for sellers when the contract arrives. Asking the right questions and getting the right information can be crucial. Do you have more questions? Contact us at (480) 776-5214 or www.ThompsonGroupAZ.com.
- Best Renovations for Improving Sales Price
Have you been out to see the builder model homes lately? If so, you may have noticed that builders have loaded tons of upgrades into the homes. The builders know that the look and feel of the home is super important to the buyer and if they get the buyers excited about the possibilities, then it will lead to more sales. As a homeowner and a potential seller someday down the road, getting buyers excited about your home will lead to a higher sales price! If you make a few upgrades to your home now, you will also get to enjoy the changes before you move. Now, don’t overspend on your improvements, but here are a few that can make a huge difference when you sell:
- The Kitchen – The kitchen is where improvements go a very long way. New cabinets, counter tops, and appliances will add a lot of value. Don’t feel like you need to turn you kitchen into a gourmet kitchen! There are a lot of ways you can update your kitchen to the current trends on a budget. Keep in mind that giving your kitchen a cohesive contemporary look is the best way to add value to your home.
- Landscaping – If your yard is feeling more like a jungle or desert than a place where kids would like to play, then it might be time to make a few changes! Whether you like desert landscaping or something a little greener, color and cleanliness is the key. Buyers are always looking for a yard that is well-kept, but that will also be fun to hang out in after work. Putting in a handful of plants will go a long way to dressing up your front or back yard. If a buyer can picture outdoor living and nightly barbeques, then you are on the right track.
- Flooring – Updating your flooring is a great way to get a completely new feel throughout your home. New carpet, new tile floors, or hardwood floors can make a home feel newer and will appeal to younger buyers.
- Paint – Without a doubt, a new coat of paint on the walls goes a long way to refreshing a home. Stay away from colors that are too bold and stick with colors that are more neutral. Earth tones and two-tone paint styles are the trend lately and appeal to younger buyers.
- Bathrooms – In bigger homes, the master bathroom is a great area to look at spending more of your upgrade budget. However, in smaller homes, it can be hard to get your upgrade dollars back in bathroom remodels. As you look at remodeling your bathrooms, light and water fixtures are a great way to spruce up the area without overspending.
Do you have questions about remodeling? Contact us www.ThompsonGroupAZ.com or 480-776-5214 to get started.
- Is My Home Priced For This Market?
Has your home been on the market so long that the For Sale sign out front has begun to rust? At some point you probably began to ask yourself if your home may be overpriced for the market. Here are a few thoughts to consider in making that determination before your For Sale sign completely rusts away:
- Comparables – Is your home priced right according to comparable properties? Comparable homes that have sold recently can give you a great idea of how well your home may appraise. Active, pending listings give a great indication of where the market is and what your competition is as you try to get that next buyer. Pricing considerably higher than the Active, Pending or Sold properties probably will impede a quick sale and extend your time on market.
- Showings – How many showings are you getting each week? Has it been a few weeks since you last saw a buyer’s agent in your home? If so, you are probably overpriced. A good sign that you are priced right is getting 3-4 showings a week from qualified buyers working with real estate agents.
- Market Changes and Activity – What is the market doing? Are interest rates higher or lower? What’s new on the local MLS? Are there a lot of bank owned properties or short sale properties in your area? Does your area attract lots of first-time buyers or move-up buyers? All great questions to ask when deciding on how high or low to price your home.
- Do you really want the truth? Many times sellers and real estate agents just are not ready to be honest about the situation. It’s usually far more useful to understand the realistic factors necessary to accomplish a goal than conjecture about the price you hope or wish your home will sell. Assuming that’s your position, don’t be afraid to ask your real estate agent for the honest truth: What list price does my home need to be at in order to sell in the next 30 days? Just be prepared for the answer!
Rather not figure this out on your own? Our Phoenix AZ Realtors would love to help. Contact us at www.ThompsonGroupAZ.com or 480-776-5214.
- Ways to Net More from Your House Sale
My grandfather once taught me “A Penny Saved Is a Penny Earned.” Nowhere is that more true than in the sale of a home — probably due to the number of pennies involved in the transaction. With sales price being such an important factor for a seller, few stop to think about ways to minimize the costs of selling their Phoenix Arizona Homes. Monitoring and controlling the costs during the escrow process is key to saving thousands of dollars and to receiving larger net proceeds from the transaction. Here are some costs to keep your eye on…
One of the largest costs is commissions paid to the real estate agents. Commissions vary from 5%-7% of sales price depending on the type of real estate transaction. While lower costs may seem like a winner, many times you get what you pay for in an agent. With so much riding on the selling price, a real estate agent should bring great service, a solid marketing plan and sharp negotiating skills to the table. If your agent is bringing less to the table, you will see a lower sales price.
With every home sale, home owners are required to pay the Owner’s Title Policy and to share in the escrow fee paid to the local title/escrow company. While the fees are not negotiable, the title/escrow company used to process the transaction is negotiable. All title/escrow companies publish their fees in rate books which are readily available to review and compare.
Do you live in a Home Owners Association (HOA)? If so, then your HOA may charge a transfer fee, disclosure fee, or capital improvement fee. Few homeowners understand what their HOA will charge them for the transaction but charges may run from $500-$2000. A quick phone call to the HOA should clarify what fees are charged. While these fees are non-negotiable with the HOA, there is the possibility of negotiating/sharing the cost of these fees with the buyer for your home.
In any real estate transaction, a Home Warranty is considered a must purchase for the new buyer. The cost ranges from $325-$600 and is a negotiated item payable by the buyer or the seller. Many times home sellers pick up the cost of a Home Warranty for the first year to protect the new buyer from unforeseen repairs.
Are you in an area where 1st time home buyers are known to be moving? If so, you may want to prepare yourself for requests to contribute to the buyer’s closing costs. These contributions are generally up to 3% of purchase price and could be more. The contribution covers appraisal fees, A.L.T.A. title policy, impound accounts, origination fees and other loan costs. While the contribution to buyer loan costs can be very important to getting a home sold, stronger buyers rarely need such assistance.
Do you want to learn more about ways to control your selling costs and get the most money from the sell of your home? Contact us at (602) 753-0177 or www.ThompsonGroupAZ.com.
- Quick and Easy Home Staging Strategy
Are you planning on selling your home in today’s Phoenix Real Estate market? Home values according to the Phoenix MLS are higher now than any time in the last few years. Studies show that staged homes will sell faster and for a higher price than homes that are vacant or not staged. Many sellers will turn to professional home stagers to prepare the home for sale before listing the home with a Realtor. If your bank account won’t allow for professional home staging advice, here are some great tips that will allow you to maximize your selling price.
The Staging rule of thumb to keep in mind: You are trying to help potential buyers feel that your home will become their castle. To do this, just remember that appealing to a home buyer’s five senses: sight, sound, smell, taste and touch, will be the key to successful staging.
Sight – Light, bright homes with neutral colors and a few colorful accents appeal to more buyers. Bold, vivid colors may be more “you”, but remember that you’re trying to provide more of a “blank canvas” that a potential buyer finds attractive now, but can also visualize making their own.
Sound – Ever heard the expression “the silence was deafening” or “quiet as a tomb”? Well, walking into a totally-silent home can be like that – possibly eerie or oppressive, but rarely welcoming. Leave some soft, light music playing to help provide a tranquil, inviting ambiance.
Smell – Make sure to avoid any strong aromas. Of course it makes sense to make sure noxious smells like pet odors, last night’s fish dinner or poker-game cigars are not the first thing to hit a potential buyer as they enter your home – but don’t forget that exotic incense, heavy floral accents and even cleanser smells can be offensive to many. Make sure your home is aired out well, and then provide simple, clean, subtle aromas with the restrained use of potpourri or air fresheners.
Taste – Could a plate of fresh-baked cookies entice a buyer? Maybe, maybe not – but it would certainly make your home more memorable.
Touch – Physical comfort is important. Remember that “Ahhhh!” feeling you get when you walk into a cool building, getting out of the heat of summer? Any Realtor showing your home – and any potential buyer – is going to be much more comfortable in your home if your AC is set appropriately. Be careful not to over-cool (or over-heat!) but do try to make your home feel comfortable to visitors.
Today’s market can be a great time to sell Phoenix Arizona homes, but keep in mind the competition. Do you need help with staging your home before putting it on the market? We would love to help.
- Experience Matters – Questions to Ask Your Agent Before Selling
Our clients have presented us with many unique situations when selling their Arizona Homes. Whether moving out-of-state to take a new job, hoping to buy a bigger home with a pool, needing to be in a new school district, or looking to downsize to a home that is more manageable, our clients all had something very important in common. Each had future plans – plans that depended heavily on how the logistics of the sale were handled and the financial results of the sale.
Marketing and Selling Homes is Serious Business. A well planned and executed sale of a home allows the homeowner to move forward with their next phase of life. However, mistakes may cost thousands of dollars and hours of stress when escrows are canceled. Nothing may be more important in the transaction than the knowledge and experience of the agent giving you advice. So, here are a few good questions for you to ask your agent:
What do you know about the area? At times, knowledge of the area can be the key to selling a home. Buyers that are new to the area need to know information about schools, movie theaters, shopping and more. An agent who lives in the area can help buyers identify how they will enjoy the area – and many times, the home will sell quicker.
How do you market my home? Believe it or not, some agents think that ordering a “for sale” sign and putting your home in the multiple listing service (MLS) is how to sell a home. This is only the beginning! Great agents should be able to deliver to you a written marketing plan tailored for the Phoenix Real Estate market along with success stories from using that plan.
How much are the costs of selling my home? In order to plan for the future all homeowners with Phoenix Homes for Sale need to know the amount of money they will have after the sale of the home. Great agents should be able to estimate the cost of real estate commissions, title fees, loan costs, repair costs, and property taxes.
When will the buyer’s loan be approved? Without loan approval, the sale of the home cannot close escrow. In tracking a lender’s process, a great agent should know how to use the LSU (Loan Status Update) form, what “PTD” conditions are, and what is the time needed for a lender to get loan documents to title after full loan approval. Being able to track the lender’s progress is essential for a seller to know whether they will close on time or not.
What is breach of contract and how do you handle this? In the Arizona purchase contract, the seller is unable to exit the contract while the buyer retains over five exits from the contract. However, if the buyer is in breach of contract, then the seller may exit the contract. Breach of Contract occurs when the buyer takes actions that are contrary to the written contract. This is a serious situation that experienced agents should have a plan to handle.
Do you want to learn more about how to make your home-selling process go smoothly? I would love to help with your transaction. Contact me at (480) 776-5214.
- Smooth Transition
A few years ago my team and I were introduced to a truly painful situation – a senior client who had suffered a major health issue and had to be cared for at a local skilled nursing facility. In addition to his health issues, he needed to sell his home quickly to pay for his medical expenses. Due to the logistics and quick nature of the sell, it was truly impossible to sell his home for the best value.
This past month, my team and I had the opportunity to work with another senior client as he sold his home and moved to a local retirement community. Planning for the sale took 6-12 months prior to the home being advertised for sale. These transactions tend to require more up-front work and a well thought-out plan since the client is moving from a house into a place of residence with a floor plan about the size of an apartment.
I believe the hard work paid off. Our client had a smooth escrow and did get the best value for his home.
- Phoenix Market Update – 2014 Mid-Year Review
Overall, the Phoenix Market is showing a balanced market. While there are plenty of buyers in the market, sellers are not as able to push for higher sales prices in most neighborhoods. Here are a few quick facts:
- Overall Home Supply – At the end of April, the total number of Phoenix Homes for Sale for the entire MLS was 29,769. Year over year, this is an increase in housing inventory of 9505 units or an increase of 46.9%. The number of sold listings for the entire month of April 2014 was 7,677. Based on the April sales, the inventory of active listings represents a 3.9 month supply.
- Local ZIP code of 85224 – The Chandler ZIP code of 85224 shows at the end of April there were a total number of 116 active real estate listings, with the total number of sold listings coming in at 67. In other words: there is about a 1.7 month supply for this popular Chandler ZIP code.
- City of Chandler –For the entire city of Chandler, the active inventory of homes totals 963. The number of sold homes for the month of April came in at 430 meaning that Chandler maintains a 2.2 month supply of homes.
- Phoenix Home Sales –Year-to-date, the Phoenix MLS recorded sales of 24,712 homes – or an average of 6,178 homes per month. That puts the Phoenix market on pace to sell over 70,000 homes for 2014.
Do you need to make a move in the near future? Or are you looking to maximize your selling price? Here at the Thompson Group, our goal is to show you the BEST options for your situation. Give us a call at 480-776-5214 or find us at www.ThompsonGroupAZ.com.