Buyers and Sellers More Articles

Choose a Real Estate Professional
	The Real Estate transaction is a very complicated procedure involving many different parties with requirements and critical timing. A Real Estate Professional provides the marketing, forms, advice and experience to help achieve your goals.
Your Wants and Needs
	Getting the highest price for the value your property offers is always a seller?s goal. The time required to find a willing buyer depends on the status of the market, competition, price, interest rates and other variables. Balancing your future plans with selling your home is the challenge.
Maximize the Value of Your Property
	Listen to professional advice. Repair electrical and plumbing problems. Replace worn out maintenance items such as the furnace, water heater, carpet and roof. Clean the interior walls, woodwork, sinks, bathroom fixtures, closets, appliances, drapes and blinds. Brighten with new paint, light bulbs or fixtures. De-personalize by removing family pictures and personal items. Remove excessive or worn furniture. Increase the street appeal by painting or replacing the front door and painting, cleaning, weeding mowing and planting.
Welcoming the Buyers;
Buyers are often on a short time frame. The easier it is to show your property, the better chance of a sale. If you can?t show it, you can?t sell it. Stay out of the buyer?s area or leave during showings. Buyers are leery of anything sellers may say. Their own Real Estate Professional will answer their questions.


Debra Anderson Realtor	Executive Realty Group 140 W. Lake Street Bloomingdale, IL 60108 Direct: 630-235-0139 Fax: 630-372-2017 anderson623@comcast.net www.DebiAnderson.com

Seven Tips for Pricing Your Home

Consider comparables. What have other homes in your neighborhood sold for recently? How do they compare to yours in terms of size, upkeep, and amenities?

Consider competition. How many other houses are for sale in your area? Are you competing against new homes?

Consider your contingencies. Do you have special concerns that would affect the price you?ll receive? For example, do you want to be able to move in four months?

Get an appraisal. For a few hundred dollars, a qualified appraiser can give you an estimate of your home?s value. Be sure to ask for a market-value appraisal. To locate appraisers in your area, contact The Appraisal Institute (www.appraisalinstitute.org) or ask your REALTOR® for some recommendations.

Ask a lender. Since most buyers will need a mortgage, it?s important that a home?s sale price be in line with a lender?s estimate of its value.

Be accurate. Studies show that homes priced more than 3 percent over the correct price take longer to sell.

Know what you?ll take. It?s critical to know what price you?ll accept before beginning a negotiation with a buyer.

Tax Benefits of Home Ownership

The tax deductions you can take for mortgage interest and property taxes greatly increase the financial benefits of home ownership. Here?s how it works. Assume:
$9,877 = Mortgage interest paid (a loan of $150,000 for 30 years, at 7 percent, using year-five interest)
$2,700 = Property taxes (at 1.5 percent on $180,000 assessed value
______
$12,577 = Total deduction

$3,521.56 = Amount you have lowered your federal income tax (at 28 percent tax rate)
(12,577 X .28 = $3,521.56)

Note that mortgage interest may not be deductible on loans over $1.1 million. In addition, deductions are decreased when total income reaches a certain level.

What Is Appraised Value?
It?s an objective opinion of value, but it?s not an exact science so appraisals may differ.
For buying and selling purposes, appraisals are usually based on market value?what the property could probably be sold for. Other types of value include insurance value, replacement value, and assessed value for property tax purposes.
Appraised value is not a constant number. Changes in market conditions can dramatically alter appraised value.
Appraised value doesn?t consider special considerations, like the need to sell rapidly.
Lenders usually use either the appraised value or the sale price, whichever is less, to determine the amount of the mortgage they will offer.

What to Keep From Your Closing

The Real Estate Settlement Procedures Act (RESPA) statement. This form, sometimes called a HUD 1 statement, itemizes all the costs associated with the closing. You?ll need for income tax purposes and when you sell the home.
The Truth in Lending Statement summarizes the terms of your mortgage loan.
The mortgage and the note (two pieces of paper) spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.
The deed transfers ownership of the property to you.
Affidavits swearing to various statements by either party. For example, the sellers will often sign an affidavit stating that they have not incurred any liens on the property.
Riders are amendments to the sales contract that affect your rights. For example, if you buy a condominium, you may have a rider outline the condo association?s rules and restrictions.
Insurance policies provide a record and proof of your coverage.

7 Reasons to Own Your Own Home

Tax breaks. The U.S. Tax Code lets you deduct the interest you pay on your mortgage, property taxes you pay, as well as some of the costs involved in buying your home.
Gains. Over last five years (1998-2002) national home prices have increased at an average of 5.4 percent annually. And while there?s no guarantee of appreciation, a 2001 study by the National Association of REALTORS® found that the typical homeowner has approximately $50,000 of unrealized gain in a home.
Equity. Money paid for rent is money that you?ll never see again, but mortgage payments let you build equity ownership interest in your home.
Savings. Building equity in your home is a ready-made savings plan. And when you sell, you can generally take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.
Predictability. Unlike rent, your mortgage payments don?t go up over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will rise.
Freedom. The home is yours. You can decorate any way you want and be able to benefit from your investment for as long as you own the home.
Stability. Remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

More Tips: 7 Steps to Preparing for an Open House

Hire a cleaning service. A spotlessly clean home is essential; dirt will turn off a prospect faster than anything.

Pay attention to the outdoors. Mow your lawn, and be sure toys and yard equipment are put away.

Serve cookies, coffee, and soft drinks. It creates a welcoming touch. But be sure the kitchen has been cleaned up; use disposable cups so the sink doesn?t fill up.

Lock up your valuables, jewelry, and money. Although the real estate salesperson will be on site during the open house, it?s impossible to watch everyone all the time.

Turn on all the lights. Even in the daytime, incandescent lights add sparkle.

Send your pets to a neighbor or take them outside. If that?s not possible, crate them or confine them to one room (a basemnt or bath), and let the salesperson know where to find them.

Leave. It?s awkward for prospective buyers to look in your closets and express their opinions of your home with you there.

10 Ways to Lower Your Homeowners Insurance Costs

Raise your deductible. If you can afford to pay more toward a loss that occurs, your premiums will be lower.
Buy your homeowners and auto policies from the same company and you?ll usually qualify for a discount. But make sure that the savings really yields the lowest price.
Make your home less susceptible to damage. Keep roofs and drains in good repair. Retrofit your house to protect against natural disasters common to your area.
Keep your home safer. Install smoke detectors, burglar alarms, and dead-bolt locks. All of these will usually qualify for a discount.
Be sure you insure your house for the correct amount. Remember, you?re covering replacement cost, not market value.
Ask about other discounts. For example, retirees who are home more than working people may qualify for a discount on theft insurance.
Stay with the same insurer. Especially in today?s tight insurance market, your current vendor is more likely to give you a good price.
See if you belong to any groups?associations, alumni groups?that offer lower insurance rates.
Review your policy limits and the value of your home and possessions annually. Some items depreciate and may not need as much coverage.
See if there?s a government-backed insurance plan. In some high-risk areas, such as coasts, federal or state government may back plans to lower rates. Ask your agent.

5 Things to Understand about Homeowners Insurance

Look for exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These coverages must be bought separately.
Look for dollar limitations on claims. Even if you are covered for a risk, there may a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.
Understand replacement cost. If your home is destroyed you?ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you?ll only receive $150,000.
Understand actual cash value. If you chose not to replace your home when it?s destroyed, you?ll receive replacement cost, less depreciation. This is called actual cash value.
Understand liability. Generally your homeowners insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it?s sufficient if you have significant assets.

Make Your Home Irresistible: 10 Open House Tips

Add a touch of color. Use fresh or silk flowers to breathe life and color into the main rooms. A colored afghan or throw on the couch will jazz up a dull room.
Make the bathrooms feel luxurious. Put away those old towels and toothbrushes. When buyers enter your bathroom, they should feel pampered. Add a new shower curtain, fresh towels, and fancy guest soaps.
Does it smell good? Set out potpourri or fresh baked goods for a homey smell. Make sure that there are no lingering scents from cigarettes or pets.
Help them envision living there. Set the table with pretty dishes and candles, and create other vignettes throughout the home to help buyers picture themselves there. For example, in the basement lay out a chess game.
Beautify the entrance. Buy a fresh doormat with a pretty pattern or a clever saying.
Make the rooms feel bigger. Take one or two major pieces of furniture out of every room to create a sense of spaciousness.
Accentuate counter space. Put away kitchen appliances and personal bathroom items to give the illusion of more counter space.
Lay logs in the fireplace. Or put a basket of flowers there if it?s not in use.
Depersonalize the rooms. Put away family photos, mementos, and distinctive artwork.
The lawn should sparkle. Turn on the water for approximately 30 minutes to make your lawn sparkle.

10 Things to Take the Trauma Out of Homebuying

Find a real estate agent that?s simpatico. Homebuying is not only a big financial commitment, but also an emotional one. It?s critical that the agent you chose is both skilled and a good fit with your personality.
Remember, there?s no ?right? time to buy, any more than there?s a right time to sell. If you find a home now, don?t try to second-guess the interest rates or the housing market by waiting. Changes don?t usually occur fast enough to make that much difference in price, and a good home won?t stay on the market long.
Don?t ask for too many opinions. It?s natural to want reassurance for such a big decision, but too many ideas will make it much harder to make a decision.
Accept that no house is ever perfect. Focus in on the things that are most important to you and let the minor ones go.
Don?t try to be a killer negotiator. Negotiation is definitely a part of the real estate process, but trying to ?win? by getting an extra-low price may lose you the home you love.
Remember your home doesn?t exist in a vacuum. Don?t get so caught up in the physical aspects of the house itself?room size, kitchen?that you forget such issues as amenities, noise level, etc., that have a big impact on what it?s like to live in your new home.
Don?t wait until you?ve found a home and made an offer to get approved for a mortgage, investigate insurance availability, and consider a schedule for moving. Presenting an offer contingent on a lot of unresolved issues will make your bid much less attractive to sellers.
Factor in maintenance and repair costs in your post-home buying budget. Even if you buy a new home, there will be some costs. Don?t leave yourself short and let your home deteriorate.
Accept that a little buyer?s remorse is inevitable and will probably pass. Buying a home, especially for the first time, is a big commitment, but it also yields big benefits.
Choose a home first because you love it; then think about appreciation. While U.S. homes have appreciated an average of 5.4 percent annually over from 1998 to 2002, a home?s most important role is as a comfortable, safe place to live.

Choices That Will Affect Your Loan:

Mortgage term. Mortgages are generally available at 15-, 20-, or 30-year terms. The longer the term, the lower the monthly payment if the same amount is borrowed. However, you pay more interest overall if you borrow for a longer term.
Fixed or adjustable interest rates. A fixed rate allows you to lock in a low rate for as long as you hold the mortgage and is usually a good choice if interest rates are low. An adjustable-rate mortgage is designed so that interest rates will rise as interest rates increase; however they usually offer a lower rate in the first years of the mortgage. ARMs also usually have a limit as to how much the interest rate can be increased and how frequently they can be raised. ARMs are a good choice when interest rates are high or when you expect your income to grow significantly in the coming years.
Balloon mortgages offer very low interest rates for a short period of time?often three to seven years. Payments usually cover only the interest, so the principal owed is not reduced. However, this type of loan may be a good choice if you think you will sell your home in a few years.
Government-acked loans, sponsored by agencies such as the Federal Housing Administration (www.fha.gov) or the Department of Veterans Affairs (www.va.gov), offer special terms, including lower downpayments or reduced interest rates?to qualified buyers.

How to Calculate Capital Gains
In real estate, capital gains are based not on what you paid for the home, but on its adjusted cost basis. To calculate this:
1. Take the purchase price of the home: This is the sale price, not the amount of money you actually contributed at closing.
2. Add Adjustments:

Cost of the purchase?including transfer fees, attorney fees, inspections, but not points you paid on your mortgage.
Cost of sale?including inspections, attorney?s fee, real estate commission, and money you spent to fix up your home just prior to sale.
Cost of improvements?including room additions, deck, etc. Note here that improvements do not include repairing or replacing something already there, such as putting on a new roof or buying a new furnace.

3. The total of this is the adjusted cost basis of your home.
4. Subtract this adjusted cost basis from the amount you sell your home for. This is your capital gain.
A Special Real Estate Exemption for Capital Gains

Since 1997, up to $250,000 in capital gains ($500,000 for a married couple) on the sale of a home is exempt from taxation if you meet the following criteria

You have lived in the home as your principal residence for two out of the last five years.

You have not sold or exchanged another home during the two years preceding the sale.

Also note that as of 2003, you may also qualify for this exemption if you meet what the IRS calls ?unforeseen circumstances? such as job loss, divorce, or family medical emergency.

5 Property Tax Questions You Need to Ask

What is the assessed value of the property? Note that assessed value is generally less than market value. Ask to see a recent copy of the seller?s tax bill to help you determine this information.
How often are properties reassessed, and when was the last reassessment done? In general, taxes jump most significantly when a property is reassessed.
Will the sale of the property trigger a tax increase? The assessed value of the property may increase based on the amount you pay for the property. And in some areas, such as California, taxes may be frozen until resale.
Is the amount of taxes paid comparable to other properties in the area? If not, it might be possible to appeal the tax assessment and lower the rate.
Does the current tax bill reflect any special exemptions that I might not qualify for? For example, many tax districts offer reductions to those 65 or over.