Search

Sellers Are Moving Up, Over, Down and Out

Dear Monica:  I am planning to sell my house soon and have been seeing more inventory come on the market.  I want to understand my competition better so can you give me more information on why these sellers are selling?  Gerry W.

Dear Gerry:  There are many reasons why sellers are deciding the time is right to sell their property.  The main reasons are that some are moving to bigger homes, some to similar homes in different areas, some to smaller ones and some to other parts of the country.

Why now?  Most are moving because the time is right for them to do so and low interest rates are attractive.  Some of them have decided that the market has been strong for several years and may fluctuate soon as real estate comes to the end of a long growth cycle.  No one can predict the future but some sellers who know they are going to sell in a year or two, are deciding to do so now.

 

 

Advertisements

A Fee Appraisal vs. A Market Appraisal

Dear Monica:  I want to sell my house and wonder if I should get a standard appraisal, such as one would get if getting a loan on a property.  Would this be the best way to know how to price my home?  Kathy H.

Dear Kathy:  The best way to know where to price your home would not be to hire a fee appraiser, but rather to get one or more opinions from a good agent  or agents who are very active in your area.  You need to know current market information, as well as recent sales of comparable properties.  More than that, a good agent can tell you how the market is doing that week, such as how many offers a particular property received, what buyers are thinking, and what is coming on the market that might compete with your property.

A fee appraisal will only give you information about closed sales, which is helpful but doesn’t help you predict what the current market response to your property will be.  There are also online resources that attempt to tell you what your home is worth based on data of closed sales.  These estimates are very general and are influenced by algorithms rather than experience.  Thus they are less reliable than other valuations.

Spring Arrives, IPOs, Etc.

Dear Monica: I am trying to buy a home and am not sure whether I should wait until after spring when there aren’t so many buyers trying to do the same thing.  But then with the IPOs happening, prices may be affected.  What would you advise? Karen G.

Dear Karen:  My advice to you would be to continue to look for a good property and when you find it, don’t hesitate to make an offer if it meets your housing and financial needs.  There are a few Initial Public Offerings (IPOs) on the calendar this year and while you should keep apprised of market forces, you needn’t let this dissuade you from buying a home.   Real estate in this area is strong and interest rates are currently very attractive.

 

Pricing Is Key To Selling Well

Dear Monica:  I am about to put my home on the market and must decide on a price.  I want to get a good price but don’t know how best to achieve this.  What is your advice?  James D.

Dear James:  Pricing a property is very important in this market.  Prices have already risen so much in the past few years that buyers are not bidding as high as they once did.  They are wary of paying too much.  If you price your property too low expecting to generate lots of high bids, you may be disappointed and only get one or two offers at less than what you were expecting.

 

The best strategy is to compare your property to the homes that have recently sold in your neighborhood and price it within the range you think it will sell.  If you do this, you may get more than one offer or you may not, but you should be able to sell it at the market price within a reasonable time.

Initiative To Change Some Property Tax Rules Coming

Dear Monica:  I have heard that there may be a ballot initiative coming soon in California that would change the way commercial and industrial properties are taxed.  Do you know about this?  Carole V.

Dear Carole: Yes.  There is a measure that has qualified for the ballot in 2020 that would require commercial and industrial properties to be taxed at fair market value.  Proposition 13 passed in 1978, stipulated that all properties would be taxed at a certain percentage of purchase price, with a 2% annual cap on any tax increases.   When a property is sold, it is assessed under at the purchase price.

Many commercial buildings are owned by corporations and although they have not sold, in many cases the shareholders and corporations themselves have sold.  There has been an enormous rise in property values and yet the property taxes stay the same.  Funding for schools and local services has declined as a result.  The ballot initiative to change needs a 60% approval to pass.  Small family-owned business would be exempt from these changes until they are sold. For more information go to Schools and Communities First.org.

Capital Gains Taxes Can Keep Owners from Selling

Dear Monica:  My husband and I are ready to move on from the home where we have lived for 30 years.  The house is too large for us and we would like to find a smaller, newer property close to things we like to do.  But the idea of paying capital gains taxes has us unable to make the move.  What would you advise?  Annemarie G.

Dear Annemarie:  You are like many who have lived in the Bay Area a long time and have enjoyed substantial appreciation in the value of their home.  We who live here are more fortunate than those in other parts of the country where there has been  only modest appreciation.  The rise in your home value has made you feel rich, but now that you want to sell, you feel less rich when you contemplate paying capital gains tax.

This is a decision you will have to make on your own.  You have always known that when you sold,  there would be tax to pay.  Of course if one of you dies, the surviving spouse will have a step-up in the base value of the home as of the date of the death, and there won’t be any capital gain.  But you may not want to wait for such a sad event just to avoid a tax.  You should make the decision based on how and where you want your life to be.  Paying capital gains tax is an unfortunate by-product of selling but it is worth doing if you can afford it and you want to enjoy your future life in a new place.  Think about how you want to live, not about the tax you will pay.

 

Wood Burning Fireplaces

Dear Monica:  Whenever I am outside and I smell woodsmoke from someone’s fireplace, I immediately think of the terrible fires we have had in California and wonder why someone is polluting the air when we just got rid of all the smoke. What are the rules about burning wood in your fireplace?  Virginia C.

 

Dear Virginia:  The horrendous fires of the past few years in California have changed people’s minds about smoke.  The romantic allure of wood fire in the fireplace used to seem cozy and attractive but this attitude has changed considerably.   This year, when the Paradise fire brought days of unhealthy air to the region, many people began to rethink the recreational value of a wood fire.

 

Many cities in California have disallowed wood burning fireplaces in new construction for several years.  Older buildings that have them have been allowed to use them, but often if a major repair is needed to the flue or firebox, the city won’t issue a permit to fix it.  In addition we have more Spare the Air days when no burning of particulate matter is allowed unless the fire is the only source of heat for a building.  Gas fires, however, are allowed and these have little or no effect on air quality.

 

Real Estate As An Investment 

Dear Monica:    The stock market has fluctuated so much lately that I no longer feel as committed to it as I once was.  Do you think real estate would be a better investment going forward?  Ellen G.

Dear Ellen:  I can’t comment on what the financial market will do now or in the future.  No one knows for sure although judging by history, the markets are due for some kind of “correction” in the foreseeable future.

But considering the way Bay Area companies have been growing and expanding, it’s reasonable to predict that that good residential real estate will be in demand for a long time, making it a good investment.   Real estate prices are down from the highs of last spring and buyers have more leverage now than a year ago.  It’s true that interest rates are rising making housing more expensive, but it is a good time to buy and hold for the long term.

Consult your financial advisor to know if real estate makes sense for you but you can be confident that the future for real estate in our area is bright.

What To Do If Seller Didn’t Obtain Permits For Work Done

Dear Monica: I am searching for a home and am seeing properties that have been nicely updated.  However in some cases sellers did not get permits for the work.  What is the risk to me if I buy a house with un-permitted work?  Kevin K.

Dear Kevin:  If a homeowner does significant work without obtaining permits, the risks to a buyer are several.  First, you may not be able to get insurance enough to cover the cost of replacing the improvements done without permits.  For example, if a garage is converted without permits, and the property has a fire, the insurer may only pay to rebuild the space as it was, and not as the family room it was converted to.

Also if a new owner wants to do work to the home, the building department may require that the un-permitted work be removed.  This is not too common but it can happen.  Not obtaining permits can affect the value of your property because buyers may discount the price to cover the risk they are taking.  The best practice is to always get a permit for any work that requires one.

Create a free website or blog at WordPress.com.

Up ↑