Category Archives: Real Estate

Selling a House in 2017? What to Consider

If you’ve already decided that this is your year to sell, you’ve probably been monitoring the housing market and enjoying the steady price appreciation that the last few years have brought to most parts of the United States.

That appreciation is projected to continue through 2017—albeit not as dramatically. The National Association of Realtors’ Senior Economist Joe Kirchner says that, “Nationally, home prices are forecast to slow to 3.9 percent growth year over year, from an estimated 4.9 percent in 2016.”

Part of the issue, according to Kirchner, is that interest rates will likely go up to 4.5 percent, driven by inflation.

The rising interest rates reduce the buyer pool somewhat, which isn’t good for sellers like you. On the other hand, with some homeowners changing their mind about selling (as they wait for prices to move up again), inventory may go down, and your house may become the plum that the remaining buyers are seeking.

As always, remember that in the final analysis, it’s your local market that determines how quickly and profitably your home sells—and there’s nearly always something new happening there, with or without a new calendar year.

As Las Vegas-based Realtor Rob Jensen (who contributed to the recently issued second edition of Nolo’s book Selling Your House) explains, “You’ll want to look carefully at your nearby competition including new builds.  Some people would rather buy a new home than a resale, so you are competing with new construction as well as resale homes. Comps tell the past of what has sold, but what’s for sale now? Regardless of how special or amazing your home is, buyers have choices, so do your best to look objectively at all the competition.”

Losing the Home Office Space Means Losing the Tax Deduction, Too

Overtime2A recent article in Bloomberg reported that dedicated space for a home office is “less of a selling point” than it once was for home sellers. It’s appearing less often in real estate ads and marketing, and new-home developers are shifting toward open-floor plans containing flexible spaces, workspace nooks, and lots of handy electrical outlets.

That’s all very well as a reflection of how modern connectivity allows many people to work from their sofa, in their pajamas, or at just about any time and place in their home. But if you’re operating some sort of business principally from your home, it’s worth also considering what you might lose out on when tax time rolls around if you don’t have a dedicated home office space.

The home office tax deduction lets people who meet various legal requirements deduct a percentage of their home-related costs, such as utilities, rent, insurance, depreciation, mortgage interest, real estate taxes, and certain casualty losses, repairs, and improvements.

But here’s the key thing to remember: the deduction applies only if you regularly use part of your home exclusively for your trade or business. The IRS can be a stickler on this point–if, for instance, your office is also the family TV room, an auditor who notices that might not allow the deduction.

Any shared use of a room or equipment can be problematic. So if it gets to the point where you can’t point to ANY part of your home that’s solely used to run your business, say bye bye to the deduction.

Check out Nolo’s articles on Home Deductions for more on the exact rules and benefits of the home office tax deduction.

 

Holiday Season Great for Home Deals—If You Can Cope With the Downsides

holiday lightsA recent, informal survey by the National Association of Exclusive Buyer Agents (NAEBA) asked its members—real estate brokerages that only represent home buyers—to report in on the challenges of shopping for a home during the holiday season.

The responses are in most cases either entertaining—“Aftermath of a New Year’s Eve party including passed out guests complete with open and spilled adult beverages”—or daunting—“Sellers reluctant to show because house is a wreck or too much company in house” and “difficulties in meeting deadlines when financial institutions or other offices are closed or industry personnel (loan officer, inspector, etc.) take time off.”

Difficulties aside, however, the NAEBA agents noted a silver lining to home shopping while everyone else is gift shopping: “Since we know anyone whose home is on the market during the holidays is highly motivated, we can be more aggressive in offering price and terms of the contract.”

Translated, that means that no seller in their right mind would put a home on the market during this cold, dreary, and distracted time of year—and therefore anyone who does so probably has a pressing reason.

Divorce, job change, or other change in life circumstances might be among the reasons. The seller basically needs to move, and move now.

That puts the prospective home buyer in a strong negotiating position. For help, see Nolo’s articles on Buying a House or Property.  Just step carefully on those frozen front steps, and don’t close the purchase until you have a chance to persuade a home inspector to put down the eggnog and come check the roof for leaks.

Fewer First-Time Buyers Than Ever Entering U.S. Housing Market

htbh5_1_1The latest Profile of Home Buyers and Sellers (2015) from the National Association of Realtors® (NAR) contains a stark statistical representation of how difficult it is for young (and possibly not so young) people to buy their first home: only 32% of buyers were first-timers last year. That’s the lowest share since 1987, when it came in at 30%.

The reasons are widely known and discussed: high home prices (and therefore needed down payments), low inventory of homes for sale, underemployment, and high (in many cases crushing) student debt loads.

Is it really so impossible to enter the U.S. real estate market? True, with median home prices across the United States at over $200,000—with some areas of the U.S. far, far above that (such as California, where the median is over $400,000)—we’re talking some serious dollars no matter who you are.

But it may also be that some people have simply been scared out of the market.

For example, Lisa Shaffer, Loan Advisor at RPM Mortgage in Alamo, California, told Nolo that one of the most satisfying things about her work is “when I can help get someone get into a home who doubted they could afford one at all. Some clients of ours have had a good income but not much saved up for a down payment, and we’ve been able to find them first-time buyer programs (either through the government or through niche programs offered by banks) to help them buy a home sooner than they’d thought possible.”

Another hopeful thing about the current housing market is that, while a 20% down payment is widely referred to as the norm, most first-time buyers don’t actually pay that much. The same NAR survey found that first-time buyers are putting an average of 6% down.

For help with the challenges of breaking into the real estate market, see Nolo’s Essential Guide to Buying Your First Home.

Halloween Décor Spending at Odds With Tiny House Trend!

hallwThe pumpkins, plastic gravestones, oddly placed fake spiderwebbing, and other home and yard decorations are making their yearly appearance.

In fact, according to the National Retail Federation’s annual study, 70% of Americans plan to decorate their home for Halloween in 2016, spending a collective $2.4 billion to do so.

For anyone with a practical bent, the truly scary thing is having to store all those items after Halloween is over. (With the exception of the carved pumpkins, of course, which will rot nicely in one’s compost bin.) Their closets might already be full of Halloween costumes, which 67% of Americans plan to buy this year, spending a collective $3.1 billion.

Meanwhile, fascination with tiny homes is big in the real estate world, particularly among millennials. The topic has given rise to blogs, books, websites, and even television programs.

What’s “tiny,” exactly? It’s a home that’s smaller than some people’s living room, at around 400 square feet.

Tiny homes are a good way to remain debt-free—but the closets don’t offer much space for, say, plastic gravestones. Perhaps that’s why the actual number of people purchasing tiny homes to live in remains in the thousands, according to a USA TODAY report.

If you can limit your Halloween décor to compostables, and are intrigued by tiny homes, be sure to check out attorney Will Van Vactor’s series of articles on laws concerning tiny homes in various U.S. states.