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Safety First! – When selling your home

The on-air interview

A recent case of theft from a local open house spawned discussion between myself and Mike Murrilo at WTOP News about safety when selling a home. Not only did we discuss open houses but several things to keep in mind when putting your home on the market. You can listen to the interview in it’s entirety by clicking on the WTOP logo at left.

Ideas for the blank wall

We all have that one completely empty, cold and stark wall at our home and we never know what to do with it. It is really amazing how blank walls, with a little dose of creativity can be transformed when almost anything is hung on them. Here are some ideas found on Pinterest. Enjoy!

Images via Pinterest

How will school-boundary changes affect the DC real estate market?

WASHINGTON — Homebuying just got a little more complicated in the District of Columbia.

Many buyers, whether or not they have children, want to know they’re moving into an area with good schools. For those with children, it’s an immediate concern. For those without children, it’s a question of resale value.

This week, Mayor Vincent Gray unveiled a proposal to overhaul school boundaries, including changes to the way school assignments are determined. It’s the first proposal to change the boundaries in decades, and it comes as the D.C. real estate market has heated up, including in neighborhoods east of the Anacostia River. Darrin Davis, owner of Anacostia River Realty, says, “The D.C. market is hot. I just sold five houses this week.”

So will changes to school boundaries cool that market?

Eldad Moraru, with Long and Foster, says D.C. has become a desirable place — not just for young career-minded singles, but for families too. And the proposed school-boundary changes raise questions.

“Some of them — I won’t say all of them, but some buyers are holding off on making decisions until this plays out to its completion.”

Moraru, who is licensed in D.C., Virginia and Maryland, says the uncertainty created by Gray’s proposals could send buyers elsewhere. “I’m sure there are some people who’ve opted to go ahead and purchase in other school districts like Maryland and Virginia because of this, but others are taking a wait-and-see approach.”

Davis says buyers who are looking to Anacostia, where the housing stock is plentiful and the prices are within reach for many priced out of other neighborhoods, tend to be young singles. Schools may not be a major consideration for those buyers right now, but he says, “I do see that being an issue five to ten years down the line.”

Gray is expected to announce final plans for school-boundary changes by September, but he’ll be leaving office at the end of the year, and the changes will take effect in 2015. So what will the next mayor do?

The Washington Post has reported that mayoral candidates Muriel Bowser, the Democratic nominee; and David Catania, running as an independent, have made one thing clear: Both say they will not agree to any plan that takes students out of neighborhood high schools.

Read Full Article: WTOP

How to Get Your Home Sold: Make Sure the Price is Right!

Pricing a listing competitively from the beginning is the best way to attract buyers, but sellers can also spark some interest with a strategic price reduction.

1. If you have had little buyer activity and no offers after 60 days, it may be time to lower the price in order to appeal to active buyers in your area.

2. Don’t wait too long to make an adjustment if it becomes clear that prices in your neighborhood have fallen since your home came on the market. If a competing property is reduced first, your higher price could make your property less attractive to buyers.

3. Keep in mind that the longer a home sits on the market the more likely it is to be perceived as undesirable. Buyers may start to assume there is something wrong even if it was simply overpriced next to the competition.

4. Delaying a price reduction could end up costing you-if your property takes several months longer to sell, you still have to pay the mortgage, property taxes, insurance, maintenance, etc.

Debunking the Myths of Selling a Home

The on-air interview

This past Sunday I discussed the myths of selling a home on the air at 103.5FM – WTOP News. You can listen to the interview in it’s entirety by clicking on the WTOP logo at left. If you’d like to learn about many other home selling myths or need advice on selling your home don’t hesitate to contact me.

7 Good Reasons to Own a Home

1. Homeownership Builds Wealth Over Time

We were always taught growing up that owning a home is a financially savvy move. Our parents knew it, and their parents knew it. But this past decade of real estate turbulence has shaken everyone’s confidence in homeownership. That is why it’s so important that we discuss this again now that we’re in a ‘new market.’ Homeownership can be a very savvy financial move – but only if people buy homes they can actually afford. In 2014, this idea of sticking to a home you can afford to gradually build wealth is a “rule” that just happens to be new and old at the same time.

2. You Build Equity Every Month

Your equity in your home is the amount of money you can sell it for minus what you still owe on it. Every month you make a mortgage payment, and every month a portion of what you pay reduces the amount you owe.  That reduction of your mortgage every month increases your equity. That is especially true now with the elimination of risky mortgages like negative amortized and interest-only loans – thanks to the new “Qualified Mortgage” rules. The way mortgages work is that the principal portion of your payment increases slightly every month year after year. It’s lowest on your first payment and highest on your last payment. Thus, as the months and years go by, your equity grows!

3. You Reap Mortgage Tax Deduction Benefits

  • Mortgage deduction: The tax code allows homeowners to deduct the mortgage interest from their tax obligations. For many people this is a huge deduction, since interest payments can be the largest component of your mortgage payment in the early years of owning a home.
  • Some closing cost deductions: The first year you buy your home, you are able to claim the points (also called origination fees) on your loan, no matter whether they are paid by you or the seller. And because origination fees of 1 percent or more are common, the savings are considerable.
  • Property tax is deductible: Real estate property taxes paid on your primary residence and a vacation home are fully deductible for income tax purposes.

4. Tax Deductions on Home Equity Lines

In addition to your mortgage interest, you can deduct the interest you pay on a home equity loan (or line of credit). This allows you to shift your credit card debts to your home equity loan, pay a lower interest rate than the horrendously exorbitant credit card interest rates, and get a deduction on the interest as well.

5. You Get a Capital Gains Exclusion

If you buy a home to live in as your primary residence for more than two years then you will qualify. When you sell, you can keep profits up to $250,000 if you are single, or $500,000 if you are married, and not owe any capital gains taxes. Now, it may sound ridiculous that your house could be worth more than when you purchased it after these past several years of falling house prices. However, if you purchased your home anytime prior to 2003, chances are it has appreciated in value and this tax benefit will come in very handy.

6. A Mortgage Is Like a Forced Savings Plan

Paying that mortgage every month and reducing the amount of your principal is like a forced savings plan. Each month you are building up more valuable equity in your home. In a sense, you are being forced to save—and that’s a good thing.

7. Long Term, Buying Is Cheaper than Renting

In the first few years, it may be cheaper to rent. But over time, as the interest portion of your mortgage payment decreases, the interest that you pay will eventually be lower than the rent you would have been paying. But more importantly, you are not throwing away all that money on rent. You gotta live someplace, so instead of paying off your landlord’s home or building, pay off your own!

Read Full Article: Trulia

Get the Closet of Your Dreams

Perhaps inspired by the closets seen on popular home design television shows and websites, homeowners are beginning to look at their closets in a new light. Whether your closets are the size of a small bedroom or the size of a locker, here a few tips to help you get the storage spaces you’ve always wanted.

1. Clear everything out of the closet, and organize it into three piles: keep, donate or toss. By clearing the clutter and getting rid of items that are broken or underused, you’ll have more room for items that you use and love.

2. Assess the space you have, and decide how you want to organize and store your items. Discount department stores and specialty shops have a variety of baskets, shelves, hanging rods, drawer units, etc. to store your stuff.

3. Install lighting. Great lighting will help you see everything that you have, from clothing to craft supplies. However, it’s important to have a licensed electrician install your lighting so that you can be sure that it’s up to code.

4. Don’t be afraid to experiment with bold color and patterns. Since your items will fill most of the space, pops of bright color or bold patterns will give the space some character. If your closet has a door, spruce it up with paint or change the hardware.

5. Take off the doors, and put up curtains. Closets in older homes tend to be smaller than the ones in newer homes. However, you can create the illusion of space by removing the door and putting up a curtain. Tie back the curtain when you want to see your items at once or close it when you don’t. This idea is perfect for bedrooms, hobby rooms and playrooms.

6. Install built-in custom cabinets. Cabinets aren’t just for kitchens anymore. In homes with small closets, floor-to-ceiling cabinets may give you the space you need, and they come in sizes that are perfect for the items you intend to store.

7. Turn a wall into a closet. Who says a closet has to be built into a room? Line up a dresser, hutch, cabinet, shelving, bookcase, etc. along a wall of the room. Mix and match the furniture to fit your needs. Paint it all the same color to create the look of uniformity.

8. Look for furniture with storage space, such as an ottoman or bedframe with drawers under the bed, to keep the closet clutter in check.

Walk in Closets

Images via Pinterest

Debunking the Myths of Buying a Home

The on-air interview

There are so many home buying myths out there  perpetuated by well meaning relatives and friends that it’s often hard to know who to believe and what to do. I discussed this on the air with Mike Murillo at WTOP News. We could have talked about this topic for hours but unfortunately were limited to roughly four minutes. You can listen to the interview in it’s entirety by clicking on the WTOP logo at left. If you’d like to learn about many other home buying myths or need advice on purchasing your home don’t hesitate to contact me.

Making sense of figures on a HUD-1 form

Thought I’d share this great article I read from The Washington Post

I paid $160,000 for a condominium recently. On the HUD-1 statement, the sales price was listed as $160,000 but there was also a cost of $30,000 that I had to pay.

This was a short sale. I would like to know if any of that $30,000 is deductible on my income tax return forms. Can you please direct me to somebody who can give me a breakdown of these costs and tell me if any is deductible?

We’re surprised that you seem not to know why you had to spend an extra $30,000. If you agreed to purchase the condominium for $160,000, we would assume that you’d know what you were paying for, especially when it came to a sum as large as this one.

But let’s start at the top. A HUD-1 is the statement used by closing/settlement agents and title companies for residential real estate transactions. The form was created some 40 years ago by the Department of Housing and Urban Development for residential transactions. As an aside, starting in August 2015, a new form will replace the HUD-1.

To answer your question, you will need to review the HUD-1 statement further to see if there is any additional information provided about the $30,000. You may also need to review your purchase and sale agreement to see what you agreed to pay for. In some situations, short sale lenders may refuse to pay certain charges billed to the owner/seller of the home.

While $30,000 is a very large sum, especially as a percentage of the purchase price, the condominium association may have been owed years of back assessments along with attorneys’ fees and costs associated with your seller’s failure to pay monthly assessments. If your contract made you responsible to bring those assessments current and the seller failed to make payments to the association for many years, you would expect to see a sky-high bill.

If the HUD-1 does not give you enough information to determine what the sum was for, you may want to contact the settlement agent and request that they tell you who was paid with those funds.

The disbursement statement from the settlement agent should disclose to you who was paid and for what from your closing. You shouldn’t need to see the disbursement check to figure out what you were supposed to pay for.

Many of the payments you made at the closing would not be deductible on your federal income tax return. Generally, the only deductible sum from the HUD-1 is prepaid interest on the loan. That might have been a couple of hundred dollars, or maybe as much as a thousand dollars.

Most other charges listed on the HUD-1 might affect your cost basis for the condominium but would not be deductible on your federal income tax return. In certain situations, mortgage insurance payments are deductible along with points paid to obtain the loan (a point is 1 percent of the loan amount).

However, when it comes to payments made to the seller or the title company or most third parties for fees and expenses relating to your closing, those costs would not be tax deductible. As we approach tax-filing dates, you should consult with a tax adviser or tax preparer to go over all of your expenses from the closing.

Finally, you should never close on a property unless you understand all of the charges listed on the HUD-1. It would have been entirely appropriate for you to stop the closing until the title agent or attorney provided a solid explanation of all costs and payments. It’s confusing to us why you or anyone would simply write a check for an extra 20 percent without knowing why.

Read Full Article: TheWashingtonPost