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Front Porch is a real estate company that wants you to know stuff. Really.

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I’m selling my home. My boss told me that if my profit is less than $250,000 I don’t have to pay taxes, is that true?

In order to encourage homeownership, the IRS has set up a capital gains exemption on primary residences.

This exemption is up to $250K per taxpayer, so it works out to $500K per married couple.

And unlike the old system, which you may remember from decades ago, you don’t have to buy a new property to get the tax exemption.

You do, however, need to have had the property as your principal residence for two out of the last five years.

It’s complicated enough (and there’s enough money involved) that you really should check with an accountant. For a little more information though, check out IRS publication 523, a pdf file which you can get by clicking here

Posted 12 years, 6 months ago at 3:58 pm.

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I’m a Canadian, thinking about selling my NYC condo. I heard there’s some kind of hold-back tax on foreign sellers, what is it?

You’re thinking about FIRPTA, which is actually a federal regulation, not a city one.

Basically, the Foreign Investors Real Property Tax Act of 1980 is a way for the U.S. government to make sure that foreign sellers don’t take their money and run — it allows for withholding some of the proceeds of the sale into government hands until income taxes are filed.

The way it works is that your buyer is actually the agent of the withholding, which should be about 10% of proceeds.

Read more about it on the IRS Sheet Here

Posted 12 years, 7 months ago at 9:03 am.

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We’re selling our home and buying a new one — but it looks like we might have to close on the purchase first. Help!!

In a slow market, when you buy, you put a sales contingency into your offer — you basically predicate your purchase on your the sale of your last home.

In a faster market, however, you won’t be able to do that — the seller of your new home won’t accept the risk.

Sometimes mortgage brokers would offer bridge loans, but in the current mortgage climate, they’re tough to swing.

So what you need to do is sit down with your mortgage broker or bank and tap the equity in your first home, either by using a Home Equity Loan or a Home Equity Line of Credit.

That will give you the cash you need to purchase the new home, and the loan or HELOC will get paid off with the proceeds of the old home.

The paperwork on these is pretty easy, but because of the potential for fraud that comes with tapping your home equity, I think it’s worth it to pay an attorney to review these papers.

Posted 12 years, 10 months ago at 9:00 am.

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I want to sell my home (house/apartment) myself, what are the eight things I need to know?

Homes do not sell themselves. This doesn’t mean you need a professional to sell one, any more than you need a professional to cook dinner, but it does mean that if you choose to do it yourself, there will be work involved:

1) You need to have high-quality professional photos taken. This doesn’t mean you can take them with a good camera. You need a real estate photographer who carries accessory lights, and knows how to make shallow rooms look like they have depth. It’s a few hundred bucks. Spend it. P.S. draw floorplans too.

2) You need to make sure those photos reach your intended customers. If you’re using a cheapie listing service to get into the local MLS, double-check on them once the listing goes up to make sure you get what you’re promised. And be prepared to buy advertising in the local paper.

3) You need to make sure the customers who like those photos can get into your home. That means you need to be able to show it, a lot. Depending on your market, you should expect an offer to come from every ten showings.

4) You need to be realistic about price. If you aren’t getting offers, your vision of what your home is worth, and the market’s vision, may be different. You can give it more time, if you’ve got time to burn, but eventually those two things have to align. Wishes aren’t contracts.

5) You need to make sure that those customers who make offers for your home can actually pay for it. It’s not unusual, in New York City, for a buyer’s agent to send over evidence of down payment availability and mortgage pre-approval when submitting an offer. You’re within your rights to request the same things.

6) You need to make sure that when an offer is accepted, a deal is facilitated. This means someone needs to shove the paperwork around, and be nice to the other side, and pay attention to the details. Do discount brokers do this? Heck, many full-service brokers don’t do this. Other people’s failure to be good at this = why I have a job.

But I digress, you’ll certainly need to do it. This is one of the keys to a sale so if you don’t have time for it, hire a broker.

7) You need to make sure your interests are protected, so you need to hire a capable attorney. Note that many lawyers who will do a perfectly good job of looking out for your interests while reading contracts don’t believe that their job involves facilitation. If you try to dump it on them, you may be disappointed.

8) You need to get all this done within a reasonable timeframe. Your local board of realtors should be able to tell you what the average days on market — from listing to close — are in your area. If you need to beat the average, trim your price a little.

There we go, that’s your free course on selling your home yourself, or FSBO. If you want more advanced tips, you can buy my new book here.

Posted 12 years, 11 months ago at 8:17 am.

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A $3 Million “real house” just went on sale in Second Life. How can I use the info to learn to stage my real house?

It’s a Coldwell Banker publicity stunt, but a good one — they’re marketing a $3MM home in the virtual world of Second Life.

Ok, hah, hah. But actually, this is a very cool thing for home sellers. By noting how one of the country’s top real estate agencies changes the way a house looks, we can learn all sorts of great tips about staging.

You can go to this ABC news link to take a look at both sets of pictures.

Notable changes between the “real” home and the virtual representation include:

Picture 1:

* a stricter sense of entry (in reality, the entryway has an open space between two columns, while on SL there’s a solid wall).

* less landscaping — in SL the front shrubbery is much shorter, in order to show off the house; one shrub has been moved to the edge of the home, and one tree has been eliminated entirely. If you are selling your real home, consider pruning back trees that obscure the house’s features, especially the front windows. Also, even if you don’t want to spend a lot of money right before you sell your home, realize that every $1 you spend on landscaping will net you $3 back when you sell.

Picture 2:

* there is a fire in the fireplace in the SL house. This makes the home seem warm and inviting. If you’re selling your home in the winter, you might want to light a Duraflame log to create the same effect. If you’re selling your home in the summer, use a mass of candleholders and candles of different heights to give that same sense of potential light, even if they’re not aflame.

* in the SL house, the fireplace surround and the columns are a darker grey. You could do this in RL using paint colors to create a greater sense of depth and drama in the room. Note that the current trend is not to use crazy contrast-y colors, such as red accents in a white room, but to use slightly darker tints in one neutral family. I love grays, but I should note that in New York City on the high-end, different shades of cream and beige are much more popular.

Picture 3 is the Realtor avatar, which I’ll comment on in a minute.

Pictures 4 and 5 are the kitchen. First, let’s just note that it’s important that the kitchen takes up two whole photos in the ABC News Story. It’s proof of the Realtor maxim, “Kitchens sell houses” — when you’re staging, if you can concentrate on only two things, the exterior and the kitchen are the places to start.

Second, notice how warm the cabinetry in the SL house is. First, the cabinetry in the real house is inexplicably three colors — pine, white, and some sort of dark mahogany. In SL, that’s been streamlined into one color, a cherry, which balances out the shiny cool of the stainless steel refrigerator. Finally, the countertop in the SL house is quite prominent, one giant slab of grey stone.

You might not want to spend $100K renovating your kitchen — and yes, it could cost that — but you can get a real bang for your buck by updating your countertop. The best approximation of what’s in the SL pictures is a grey quartz composite or, on the high end, a pietra del Cardoso stone.

Pictures 6 and 7:

This is every Realtor’s dream — an ability to focus on an open door, inviting the buyer in. Obviously, you can’t change the buyer’s focus in real life, but if you are taking photos of your house for a listing you might want to try a shot lot like this just as you’re walking in.Also, do you notice how much brighter the SL pictures are than the Realtor’s photos of the home? It’s an argument for sellers getting a professional photographer, who will use expensive lights when he or she does the shoot; also, as you get your home ready to sell, think about places where spending a few hundred dollars to put in a light fixture can really brighten a room.

For more tips on selling your house — and some wacky stories of my first year in real estate, check out my new book, “Diary of a Real Estate Rookie”– the pick of the week from Newsweek earlier this summer!


Alison Rogers

author, Diary of a Real Estate Rookie


Posted 13 years ago at 6:27 am.

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My house is not selling. Should I pull it from the market and re-list in 8 weeks?

There are really two steps to selling: getting traffic, and getting bids.

If you’re not getting traffic, your price is probably too high and it’s scaring shoppers off. So consider staying on the market and lowering your price. You might also want to consider getting new, professional photos of your house taken, particularly if you’re using photos that you or your realtor took. Buyers spend so much time on the Web now, it makes a big difference to have great photos.

If you’re not getting bids, your staging is wrong, and clutter and/or some house defect is scaring potential buyers away. Have your agent talk to the agents of a couple of the tire-kickers to suss out what the problem is. Then pull the house, solve the problem and stage it, and re-market.

Posted 13 years ago at 7:33 pm.

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I just read The New York Times article on fair housing, can my broker really not tell me whether a listing is in P.S. 234?

Because I was a child in metropolitan Little Rock when that city underwent tumultous integration (more stories on that later) fair housing is one of my very favorite subjects in the whole world.

Unfortunately, Sunday’s New York Times article by Vivian S. Toy put across the idea that agents — in pursuit of fair housing — can say very little.

And it’s true that you can’t ask your agent to speak in code. It is widely accepted, for instance, that a seller doesn’t put “walk to church” in an ad, because that could be seen as discriminating against non-Christians.

I don’t know whether I believe the same logic translates to school districts, however. In the Times article, Neil Garfinkel, who is counsel to the Real Estate Board of New York, stated that agents shouldn’t mention school districts because they’re a coded way of mentioning race.

Well, my first thought is that it would actually be a giant leap ahead in the fight against racism if racial references actually had to be coded. The current racial discrimination suit against an agent of the Corcoran Group alleges that the agent handed potential homebuyers maps with areas red-lined and said, this is where the white areas are.

For the record, Pam Liebman, CEO of Corcoran, has expressed hope the company would be vindicated and has expressed “zero tolerance” for this sort of thing.

But honestly, it’s a long, long way from discrimination through steering with maps (or what I grew up with, discrimination through violence) to discrimination by telling homebuyers or sellers that a home is in P.S. 234, widely considered to be one of the top school districts in Manhattan.

Also, the makeup of 234 is public information (remember the whole your tax dollars thing?)

It’s available from the New York City Department of Education here . The stats show that 234 is 70.75% white, 16.57% Asian/Pacific Islander, 6.34% Black, 6.20% Hispanic.

If that is not an acceptable level of diversity, we as an entire community — agents and homebuyers and people not in the market, people with kids and people without kids — need to do something about it.

Also, in case you were wondering, the cachement area for 234 is roughly south of Canal Street to Liberty (in other words, Tribeca with the southern edge expanded) running roughly from Broadway to West. (There is a decent map on www.insideschools.org) It’s possible to catch some parts of the Financial District, too, so no matter what your broker says, call the city to check on your zoning.

You can call them about discrimination, too, for that matter: 311.

Posted 13 years, 1 month ago at 12:16 pm.

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I received a letter offering me a certified copy of my deed for $120, should I buy it?

Umm, no.

Last month I got two copies of this letter, one telling me that I could buy a copy of “this important document” for $120, one offering me the relatively low price of $65. (I liked the idea that I could “save” $55″ by answering the second letter; great scam technique, huh?)

But keep your wallet in your pocket; this letter is half right and half wrong.

A deed is an important document; it proves that you own your house or condo.

However, once a deed exists, it is recorded — essentially, put into the County Clerk’s records. By the time the County Clerk has your deed, you

a) probably also have a copy, because after your attorney recorded it, he or she put your copy into that giant package of paperwork you got sent after closing;

and b) can get another copy, if you need it, by dealing with the County Clerk. In Westchester, deeds cost $5; in Nassau, 65 cents (not 65 dollars) per page; in New York City, according to assemblywoman Audrey Pheffer , $4 per page.

Posted 13 years, 2 months ago at 8:10 am.

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I’m selling my apartment, what goes into my storage unit?

Congratulations on your upcoming move!

Even if you’re not doing full-blown home staging — where you get a decorator to come in and make your house look like a movie set — you should at least consider storing your extra things.

{Book plug: I have a very funny chapter called “Staging the Bohemian Apartment,” in my new book, available here.}

The point of storing is to make your home look capacious. I have been at open houses for $1.3 million apartments where, I’m not kidding, the mixer was left in the dining room and the broom was out in the second bedroom.

That turns off a buyer. The buyer thinks, “if the seller can’t fit all her stuff into this place, where am I going to put all my stuff?”

So go ahead and get a mini-storage locker, just for the next few months. If you think you’re going to need to visit it twice a month, snag one nearby.

Here’s what to put in it:

* Suitcases;

* Kitchen appliances you do not use every single week (e.g., the breadmaker);

* Off-season clothes;

* Collectibles such as baseball cards (yes, I have been to an open house where it looked like there was no closet space because the Yankees had taken it all);

* Holiday china and extra dishes;

* Half your entertainment media such as books, CDs, videotapes, records, etc. (Really, you can live without all your movies for a few months).

Getting rid of this layer of stuff will allow you to organize your closets, or at least put the stuff lying around in corners and on tabletops into your closets. It is especially important to do this if you have kids, because obviously you can’t store the stroller and the bouncy seat, so you want to create room in the closets to stow those away before a showing.

Posted 13 years, 2 months ago at 10:40 am.

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What’s a “gift letter” and do I need to worry if my buyers want to use one?

It depends, really, on whether you are selling a condo or a co-op.

A “gift letter” is a letter from a relative of a buyer to a buyer. It states that a set amount of money — and the amount is stated — is being transferred to the buyer for purchase of property at a specific address — and the address is stated.

The letter goes on to say that the money referred to is a gift, not a loan, and that the gift never expects to see it back.

If you’re a buyer, your mortgage broker will give you a copy of a gift letter form that you can have your source of funds — usually parents — fill out.

But back to the seller. If you’re selling a condo, most likely the condo board is only trying to make sure that your buyer has their down payment in hand, and they don’t care where it came from. If you’re selling a co-op, the board will ask for several months’ worth of financial statements, and if the buyer’s assets suddenly increase by $20K the board will want to know where that money came from. A looser co-op board will simply ask to see the gift letter; a tighter condo board will decide that the buyer probably isn’t independent enough, and your sale may not got through.

One of the things your realtor is supposed to be doing for you, while you’re selling, is sniffing your buyers to figure out what their financial status is and whether gift letters are going to be part of the package.

Posted 13 years, 4 months ago at 4:00 pm.

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