As a seller, you’ll obviously want to prep your home accordingly in order to attract the masses of buyers out there. That’s precisely why many sellers employ professional home stagers. But in many cases, taking on certain home improvement or upgrading projects might be warranted to bring your home up to par.
That said, you’ll need to be very careful about the type of projects that you undertake. More specifically, the following projects might not add as much value as you’d like and probably won’t allow you to fully recoup what you spend on them.
When it comes to adding perceived value to a home, features that buyers can actually see are what really matters. While things like the electrical panel and wiring or new plumbing pipes are certainly nice to have, buyers might not always associate the importance of such upgrades with offering more money.
Even though you may have spent thousands of dollars upgrading the wiring and pipes, you may not see all that money recouped in the offers that buyers submit.
Of course, making the necessary improvements in these areas isn’t necessarily a bad idea, and it may sometimes be needed in order to actually sell your home. That said, don’t assume that such upgrades will allow you to hike up your asking price.
Like the utilities in your home, the HVAC system isn’t something that buyers will notice. Of course, if the A/C is completely dead and the inside of the home is boiling hot, buyers will notice. In this case, you’ll have little choice but to repair or replace the unit before you sell.
But simply upgrading your entire HVAC system isn’t necessarily going to allow you to recoup all the money you may spend on it when it comes time to sell. Buyers are not likely to pay more for it.
Many buyers in California expect a home to have a pool when they buy. But if your home doesn’t already have one, adding one now isn’t exactly going to bring you a high ROI. In fact, you could lose money by taking on such a huge project.
Installing a pool is a very expensive job. You’ll likely spend no less than $30,000 on a pool installation, but you probably won’t be able to tack on that extra $30,000 to the asking price.
Buyers who really want a pool can always install one themselves and design it in the way they like. If other homes on the block have a pool, you’ll need to make the appropriate price adjustment to your asking price, which might be the better way to go than installing (and paying) for a pool installation that will likely cost much more than you’ll get back for it.
An increasing number of buyers – especially those in the millennial demographic – appreciate “green” homes that are easy on the environment – and their pocketbooks. And solar paneling is certainly a great feature for a home to have that can save energy and money.
But the installation cost is extremely high. People who install solar panels usually do so if they are planning to remain in their homes for the long haul, as they won’t see any recouping for years to come. Installing them today will definitely not add the kind of value that you’ll be able to get back when you sell.
Bathrooms might be small in size, but they play a key role in the value of a home. A home with three updated bathrooms is obviously better than a home with one old and outdated bathroom, for example. But while you might want to spruce up a tired-looking space, installing a brand new bathroom might not bring you back what you spend on such a project.
In fact, you can expect to get back no more than half of what you spend on a new bathroom installation. If anything, consider updating the one(s) you already have, within reason.
Your home’s landscaping plays a key role in curb appeal, which is crucial when selling your home. Your lawn should be mowed and free of weeds, your flowers should be healthy, and your bushes should be trimmed. But going overboard with your landscaping will risk losing money when you finally sell.
Not only will you probably spend a lot more on your landscaping that you’ll get back, but you might even turn some buyers off who prefer to personalize their landscaping without so many extensive intricacies.
When prepping your home for the market, it’s important that you stay in line with what the majority of homes in the area offer. A home that’s been overloaded with high-end upgrades on a block that has more modest homes might not make sense. You’ll probably do nothing more than make your home stand out like a sore thumb.
You may have spent some good money on ornate lighting, extensive crown molding, decorative wainscoting, innovative kitchen appliances, or Italian marble countertops, but are buyers in the area willing to spend the big bucks to have all that? These types of features are super expensive, and it’s unlikely that you’ll find a buyer who would be willing to pay as much for your home as what you spent on it.
Upgrading your home is certainly a good thing when prepping your home for the market. But the types of projects you take on and the amount of money you spend on them should be carefully considered. While you want your home to impress buyers, you also want to make sure the ROI is worth it. Speak with your real estate agent to find out which projects make more financial sense, and which ones you should steer clear of.
These “Generation Yers” have plenty of expectations that the generations before them may not have had when it comes to buying real estate. Knowing this, sellers should take the time to understand exactly what the specific needs and desires of this group are when they’re searching for a home. That way, sellers can be more competitive.
Appraisals are an important part of the real estate transaction, especially when a mortgage is involved. Lenders will typically want to verify the current market value of a home before they agree to extend a specific loan amount, and they do this by having the home appraised by a professional appraiser.
But not all appraisals necessarily come out the way buyers and sellers expect them to. Sometimes they can come in short, leaving buyers scrambling to secure a mortgage and sellers wondering if the deal will go through.
So why do appraisals fall through? Here are a few reasons why.
Real estate markets never stay in the same place forever. They’re always changing, and sometimes they can fluctuate rather quickly. It’s possible that the market has changed from the time the home was sold to the time the appraisal was conducted.
Usually, this can happen when homes are selling quickly and prices are spiking rapidly. In a case like this, it can be tough for the appraiser to keep up with such rapid changes.
For instance, in areas where inventory is tight and demand is still hot, prices can skyrocket in a very short period of time. But if things start to fizzle and plateau just before an appraisal is done, it could affect whether or not the appraisal comes in lower than the price that was paid for the home.
If there are characteristics of a home that are not exactly convenient or desirable, these can impact market value. For instance, a home that’s comparable to the size of others in the area but only has two bedrooms compared to the average of four would be considered an impractical or undesirable trait. Likewise, a home that requires people to have to walk through a bedroom to reach the living room would be impractical as well.
In cases like these, an appraiser would have a tougher time appraising the property and would likely value it under what it could have been valued at if such nuances didn’t exist.
One of the most important things that appraisers have to go on when they appraise homes are comparables. Also known as “comps,” comparables are extremely helpful tools that appraisers use to establish a value for the subject property. Ideally, appraisers will be able to gather a few comps that are similar to the subject property and have sold in the recent past.
But what if there’s nothing to compare the subject property to? What if the home is so unique that there’s nothing in the nearby area to compare to? Issues like these can and do arise, which can make the job of an appraiser more difficult.
The comps that the appraiser ends up having to use might also not be as desirable as where the subject home is, which can have a negative effect on the appraisal value.
This situation is rather common as a result of a bidding war. Usually, buyers who are competing with one another will try to outbid each other in an effort to come out the winner. In the meantime, such activity drives up the price of the home, and the winning bidder often ends up paying more than what the home is actually worth according to current market conditions.
In this case, the value that the appraiser comes up with may be lower than the price that the buyer agreed to pay for the home. If that happens, the lender will likely not approve the loan amount, and the buyer will be left having to come up with more money to accommodate the lower loan amount.
Most appraisals are accurate, but that doesn’t mean that mistakes are never made. It’s possible that the appraiser used bad comps or didn’t calculate the square footage correctly. Maybe the appraiser didn’t take certain traits into consideration, or perhaps the appraiser is simply inexperienced or just not good at their job.
There are literally dozens of reasons why an appraiser’s results may not be accurate. Regardless, appraiser error could be a reason why an appraisal comes out flawed.
It’s never fun for either buyers or sellers to find out that the appraisal has come in lower than anticipated. Should that happen to you, find out why. Discuss your options with your real estate agent and come up with a plan to handle the situation as best as possible.
The vast majority of homebuyers search online during the house-hunting process, which means your listing better be in tip-top shape before buyers set their sights on your property. More specifically, the photos you’ve got posted along with your listing must absolutely be as high-quality as possible in order to pique the interests of buyers.
Photos can be the deciding factor of whether or not a buyer decides to make an appointment to see your home in person. Just think about when you’re shopping online for just about any product: if the photo doesn’t do the product justice, you’d be more likely to look elsewhere than to make a purchase. The same concept applies with listings for homes.
Unfortunately, many sellers make a few mistakes with their online photos, which can totally sabotage their listings. Here are some blunders you should try your best to avoid making when it comes to your home’s photos.
First of all, photos should always be taken during the daytime when natural daylight is at its maximum. This will help to create bright, clear photos without having to depend too much on artificial lighting.
But sometimes there are certain rooms in a house that may be void of windows, but you still want to capture a photo of them anyway. In this case, a flash may be required. The problem is that most built-in flashes on regular cameras or even smartphones can leave bright spots that can cover up details that you want to be depicted in your photos.
You’d be better off illuminating the space appropriately with lighting placed in strategic places to avoid flash spots on your images. Or better yet, hire a pro to do it instead.
If you’re taking your own photos, make sure the image is in clear focus. Blurry photos will do absolutely nothing for your home. All they will do is tell buyers that you’re not really serious about your listing or don’t even have much pride in your home. Blurry images might also tell buyers that you’re trying to hide certain flaws by keeping them out of focus.
When taking photos of the rooms in your home, you shouldn’t just pay attention to the actual components that you want in the shot. You should also be paying attention to things that shouldn’t be in the picture that can compromise their quality.
For instance, you might inadvertently catch your own reflection or shadow in the picture, especially if there are mirrors or windows in the room. It’s also possible to catch another person in the next room who may accidentally photobomb your shot.
Whatever the case may be, forgetting to check the background of your photos could compromise them.
Not only should your photos be void of any strange items in the background, but they should also not focus on the wrong components. Cameras with autofocus have a tendency to highlight specific items in a shot while leaving other items slightly out of focus.
For instance, it would be strange to have the vase in the living room be the center of a shot when you’re trying to convey the look of an open concept. If you’re taking your own photos with a DSLR camera, be sure to manually focus on what you want rather than leaving it up to the autofocus to decide what should be the center of attention.
Buyers typically want to see all rooms of a home online before they make the decision to make an appointment for a showing. Not posting enough images can be a downfall for your listing. But the opposite might also be true. Too many images can just be overkill and can be overwhelming for buyers.
There’s actually a specific sweet spot for the number of images that should be posted online with listings, and that number is around the 15 mark. In fact, having around this number of photos on your listing can increase the number of clicks your listing can get!
What you want to do is sell a lifestyle to buyers so they can visualize themselves living in your house and calling it home. But if you’ve got too many things in your images – including personal items and photos – you could unknowingly be distracting buyers. When it comes to details in your listing photos, less is often more.
Many listings include amazing interior images, but they fail to show buyers what the outside of the home looks like. Failure to include exterior shots will likely tell buyers that while the inside of the home may look nice, there’s probably something wrong with the outside. Or else, why leave such important details out?
Certain expensive items can capture the attention of would-be thieves who may actually peruse online listings to choose their next target. If you leave any valuable items in your online photos, you could be leaving your home vulnerable to theft.
Also, you don’t want to include any details in your online photos that will indicate where you live. Ideally, the street name and house numbers should either be out of the shot completely or blurred out. You’ll also want to blur out the license plate of your car if it’s in the driveway. But ideally, your car shouldn’t be in the shot at all.
There are so many little mistakes that you can make with your photos that can actually weaken your listing. It would be in your best interests to learn exactly how to take the right types of photos and use the appropriate equipment to take high-quality shots. Better yet, hire a professional photographer to take photos of your home so you can be certain that you’ll end up with quality photos that will draw buyers in.
Generally speaking, any profits that are made from the sale of real estate may be subject to capital gains taxes. The actual profit itself is considered “capital gains,” and the IRS may want a cut of those profits when it comes time to file your taxes in the spring.
But are capital gains taxes applicable to primary residences? Sure, real estate investors may have to pay a cut of the profits they make as part of their overall business. But are homeowners who are selling the properties they live in also subject to capital gains taxes?
This may come as a surprise to many, but the sale of primary residences may be subject to capital gains taxes, depending on the situation.
However, you may be eligible for a capital gains tax cut thanks to the Primary Residence Exclusion in Section 121 of the Internal Revenue Code. Thanks to this exclusion, homeowners who are selling their primary residence can exclude $250,000 of any profits from the sale of their property if they’re single, or up to $500,000 if the taxes are being filed jointly as a married couple.
The caveat is that you must have owned and used the home as your primary residence for a minimum of two consecutive years out of the five years before it is sold.
But that doesn’t necessarily mean that you have to have lived in the home first two straight years without a break. For example, it’s possible to live in and out of the home sporadically, as long as the total combined amount of time totals two years out of the previous five-year time frame.
If you were away for work or were on an extended vacation for a few months, for instance, any time that you actually lived in the home is included in the two-year requirement.
Further, even though you are allowed to use this exclusion more than once, you cannot have claimed it at any point in the previous two years.
Let’s say you purchased your home with your spouse in 2013 for $350,000 and owned and lived in it until you decided to sell in 2018 for $550,000. That’s a $200,000 profit, or “gain.” If you owned the house for at least two years and lived in it for at least two out of the last five years, you may not necessarily be subject to any tax implications.
A recent change to the capital gains tax exemption rule now also allows exemptions for special situations. For instance, you may still be eligible to exempt $500,000 even if your spouse has passed away, but you’d have to sell the property in two years after your spouse’s passing. The previous rule stipulated that the home would have to be sold within the same tax year that the spouse passed away.
What if You Don’t Meet the Requirements For Exclusion?
Short-term capital gains tax rates. If you owned your primary residence for less than one year, you would be subject to a short-term capital gains tax rate. This is equal to your ordinary income tax bracket.
Long-term capital gains tax rates. If you’ve held onto your home for more than one year before selling it, you could be taxed at the long-term capital gains rate. That said, the exact rate that you will be charged will depend on your income tax bracket. Basically, the higher your income, the higher your tax rate. Many people may qualify for a 0% tax rate; it all depends on your income and filing status.
If you’re subject to capital gains taxes when you sell your home, you could be forking over hundreds of thousands of dollars to Uncle Sam come tax time. If you can swing it, taking advantage of the tax exemption makes a lot of financial sense.
Be sure to position yourself appropriately before you consider selling so you can take advantage of this tax exemption and save yourself a ton of money. Of course, speaking with a tax specialist will help you determine what you need to do to help avoid paying capital gains taxes if possible.
http://www.ohlmeyerteam.com/wp-content/uploads/sites/52/2018/10/howdoesyour-featimage.jpg 720 1280 admin http://jasoncaskie.wingwire.com/wp-content/uploads/sites/52/2015/07/caskie-logo-final.png admin2018-10-01 22:22:062018-10-01 22:22:06How Does Your Primary Residence Impact Capital Gains Taxes When You Sell?