Looking for a Way to Test a Property’s Condition

Although putting a professional inspection contingency in the contract will help protect you from surprises, doing your own inspection before making an offer could save you considerable time and money.

How can you tell if a property is worth buying? Here’s how to look at the big picture—for structural concerns, major repairs that are needed, appliances that have to be replaced.

Crawl the Walls

Start out by going to the right when you enter the house, and keep following the wall. You will check each wall that way. Do the same on every floor. Look for settlement cracks, separating joints, defective plaster or other signs of stress or damage. Check wallpapered areas for crinkling or gathering, which may mean walls are settling or shifting.

Look for Leaks

Loose or wrinkled wallpaper could indicate a water leak somewhere. Look for water stains on the ceiling and walls. You may have to look closely—bring a flashlight—in case they have been painted over or repaired.

Spend time in the bathrooms and in every area with pipes, checking for leaks and drips. Also, run the shower and basin, then flush the toilet to check water pressure. Look for cracked or loose tiles and missing grout or mildew stains on the walls or floor, which could indicate a behind-the-wall leak.

Plug Into the Electrical System

Check every electric socket or outlet. Use a plug-in night light and turn every switch on and off. Look for extension cords and multiple plugs in sockets, which could mean insufficient or poorly placed sockets. Also, check every appliance to be sure it works well.

Focus on Condition

Open and close every door and window. Look and listen for squeaking, sticking, or a tendency to close on their own. Check for evidence of shifting or settling around the front stoop, chimney and walks, and places where the driveway and the fence meet the house. Also, check the deck for sturdiness and look for rotted wood. Go into the garage and check the walls, floors and doors—inside and out.

Pay Attention to Pests

Look for termites and ants. Especially look along the foundation, around doors and entry points of wiring and pipes. Check the grading of the yard to be sure water runs away from the house.

You can and should insist on a written report detailing what the problems are with the house, how important each one is. You may have to consult a contractor to estimate repair costs on any problems found.

If everything looks good and you decide to purchase the house, be sure to require a home inspection by a professional inspector before settlement. You will want a professional who will get into the crawl space, climb onto the roof and poke around with a flashlight in the attic. Your professional should also carefully inspect the major systems—electrical, gas, plumbing and heating/air conditioning.

To make sure a home is in tip-top shape before making an offer, give us a call today for more information about how you can spot red flags.


source:  Houlihan Lawrence newsletter

4 Ways to Save on Utility Bills in the Hot Summer Months

Although the summer months are a favorite for so many of us, homeowners can get stressed by the skyrocketing energy bills as your struggle to keep things cool inside the house. If you want to cut back on how much you’re spending on utility bills, a few behavioral strategies can make a huge difference.

Consider the following popular strategies to keep utility bills manageable during the hottest months of the year.

Use Your Ceiling Fans

Instead of switching on your air conditioner, consider turning on the ceiling fans instead. When we feel hot in the summer, most of the time it’s because of a lack of air circulation around the house.

There’s no better way to increase the cool airflow around your home than by using the ceiling fans. When the fans are on, you can even switch off the air-conditioning unit so it’s not running your electricity while inactive.

Keep the Drapes Closed

Sunlight is a major contributor to a hot household. If you have sunlight streaming in through the glass surfaces in your home, you’ll definitely be feeling the heat. Fix this problem by blocking out the heat and the light.

When it hits high noon and the sun is at its most intense point of the day, make sure that you close the curtains. This will prevent your rooms from climbing to temperature extremes that take a lot of energy power to cool down again so your air conditioning doesn’t have to work as hard.

Ventilate the House

Nothing beats that summer breeze — and letting it in will help regulate the temperature in and around your home. Opening the doors and windows periodically will help move the hot stagnant air that’s built up during the day out while letting in the fresh air.

Install a mesh screen over doors and windows to prevent any unwanted pests and insects from sneaking in while you’re airing out the home.

Clean Your Air-Conditioning Unit

A dirty air conditioning unit isn’t able to work it’s best. If your air conditioning isn’t regulating the temperature as efficiently as it should be, it may just need to be cleaned out. Air conditioners that are working through built-up dirt and grime require much more energy to cool down your home than does a clean unit.

You’ll want to clean the vents, too. Keeping a clean air-conditioning unit and air pathways will purify your interior environment — resulting in a healthier and cleaner home.

Now you can enjoy the summer season without a spike in utility costs. If you want more ideas to help you invest in memorable moments rather than household expenses, call us today.


source:  Houlihan Lawrence newsletter

Capital Gains and Home Sales

There’s a good chance that the profit from your home sale will not be taxable. Unmarried individuals can exclude up to $250,000 in profits from capital gains tax when they sell their primary personal residences, thanks to a home sales exclusion provided for by the Internal Revenue Code. Married taxpayers can exclude up to $500,000 in gains.

The tax break is the Section 121 Exclusion, which is commonly referred to as the home sale exclusion. This rule makes your capital gain or loss the difference between the sales price and your basis in property — what you paid — plus certain qualifying costs.

To calculate your gain, subtract your cost basis from your sales price. Find your cost basis by starting with what you paid for the home, then add the costs you incurred in the purchase, such as title fees, escrow fees and real estate agent commissions. Add the costs of any major improvements you made, such as replacing the roof or the furnace. Minor renovations such as painting a room don’t count. Subtract any accumulated depreciation you may have taken over the years — if you’ve ever taken a home office deduction, that would factor into the depreciation. The resulting number is your cost basis.

Your capital gain is the sales price of your home minus your cost basis. You’ve got a loss if the number is negative. You can’t claim a deduction for a loss from the sale of your main home or for any other personal property.

You’ve made a profit if the capital gain is positive. If the property is your primary residence, you can subtract the home sales exclusion to find your taxable gain. To be eligible for that break, you must have lived in the home for a minimum of two of the five years immediately preceding the date of sale. The two years don’t have to be consecutive, and you don’t have to live there on the date of the sale.

You can use this two-out-of-five-years rule to exclude your profits each time you sell your main home. However, you can claim the exclusion only once every two years because you must spend at least that much time in residence. You can’t have excluded the gain on another home in the last two-year period.

You also want to document any unforeseen circumstances that might force you to sell your home before you’ve lived there the required period of time. The IRS defines an unforeseen circumstance as an event that you couldn’t reasonably have anticipated before buying and occupying your main home. Natural disasters, a change in employment that left you unable to meet basic living expenses, death, divorce and multiple births from the same pregnancy qualify as unforeseen circumstances under IRS rules. Any unforeseen circumstances may get you a partial exclusion.

Active-duty service members aren’t subject to the residency rule. They can waive the rule for up to 10 years if they’re on qualified official extended duty.

Any profit from the sale of your home is reported on Schedule D as a capital gain if you realize a profit in excess of the exclusion amounts or if you don’t qualify for the exclusion.

This is just a summary — there may be other provisions and exceptions applicable to you. Be sure to consult a tax professional before filing.


source:  Houlihan Lawrence newsletter

Why buying and selling a house could soon be as simple as trading stocks – MarketWatch

On a recent weeknight, Dahlia and Adam Brown came home to their spacious Colonial on a quiet cul-de-sac in Marietta, Ga. The Browns both work demanding jobs and have two young sons. They bought the house in June using Knock, a company that’s trying to revolutionize the real-estate industry with a “home trade-in platform” making it easier to buy and sell at once. That solution was ideal for the Browns, who are just as busy as most couples but more introverted, making the idea of prospective buyers tramping through their private space seem excruciating.  more…

read full article here: Why buying and selling a house could soon be as simple as trading stocks – MarketWatch

Understanding the home appraisal process (LoanDepot article)

Whether you’re selling your home or refinancing, one of the next essential steps will be to get a home appraisal. Initiated by the lender and usually paid for by the buyer, a home appraisal is essentially an expert’s opinion of what your home is worth. The appraisal assures the lender that the buyer, or borrower, is not overpaying for the home.

Source: Understanding the home appraisal process

Tax Treatment of Canceled Mortgage Debt (thebalance.com)

Mortgage debt may qualify to be excluded from income under the Mortgage Forgiveness Debt Relief Act. This law provides that certain types of canceled mortgage debt can be excluded from taxes. This exclusion is important for people whose homes have been foreclosed, or who sold their house short, or who restructured their mortgage.

Read the rest of the article here: Tax Treatment of Canceled Mortgage Debt

NYC The dreaded tenant blacklist: What you need to know (BrickUnderground)

To see if your name appears in a database, you can request a report from a company that provides tenant-screening data, such as CoreLogic, TransUnion or On-Site. Just give them a call. It generally costs $15-$20, but can run up to $50, a fee that many landlords pass on as part of the lease application fee.

Source: The dreaded tenant blacklist: What you need to know

HGAR LEGAL CORNER: I am Buying a Home and I Lost My Job, Now What? – Real Estate in Depth

The loss of employment can be one of the most stressful events in a person’s life. Purchasing a home, while it is a very exciting time, can also be an extremely stressful event. If one loses his or her job, however, while in contract to purchase a home it can certainly be devastating. A purchaser spends many years to save up enough of a downpayment to purchase a home and, in the end, could potentially forfeit his or her life savings upon the loss of his or her job after a mortgage commitment has been issued by a lender. Recent court decisions highlight the various issues and consequences that could exist when a purchaser loses his or her job, particularly after the lender has issued a mortgage commitment and the mortgage contingency under the contract of sale has been met.

Source: LEGAL CORNER: I am Buying a Home and I Lost My Job, Now What? – Real Estate in Depth

Home Prices Are Falling in One of America’s Richest Suburbs – Bloomberg

This has become a summer of discontent for those trying to sell their homes in New York City’s leafy suburbs — in no small part because of the Trump administration. In affluent enclaves in Westchester County, New Jersey and Connecticut, a federal cap on state and local property tax deductions has begun to bite hard. Longtime homeowners who dreamed of offloading their empty nests are finding their plans complicated by the tax bill, as would-be buyers hold back, expecting sellers to cut their prices. The i

Source: Home Prices Are Falling in One of America’s Richest Suburbs – Bloomberg

Nate Smithson Provides an Update on Tax Reform | Jackson Walker – JDSupra

Jackson Walker partner Nate Smithson has prepared an updated guide to tax reform which reflects the senate’s newly-proposed tax bill. The guide covers tax brackets, deductions, capital gains, and other relevant topics in tax law.

READ MORE: Nate Smithson Provides an Update on Tax Reform | Jackson Walker – JDSupra