When it comes to a real estate transaction, there are two major types of taxes you need to know about: the capital gains tax and property taxes. A capital gains tax is levied on the profit you receive from selling a property, while property taxes are based on the value of the property itself. 

People often assume if they’re selling their house and that house is their primary residence that they’ll have to buy a new house to avoid getting taxed, so here’s how each tax applies to a real estate transaction and how you can take advantage of them.

Regarding the capital gains tax, if you have lived in a house you’re selling for two out of the last five years, the IRS considers that house your primary residence. If you’re a single person and have a gain of up to $250,000 on your sale, that $250,000 sum is tax-free. Anything above that and you will have to pay whatever your capital gains tax rate is. If you’re married, you can keep up to $500,000 of your capital gain on the sale.

If you’re afraid of moving because of how taxes will impact you, don’t be.

When it comes to property taxes, we have many people living in our area who’ve lived in their house for a long time who don’t want to move because they don’t want to lose their low tax base.

For example, let’s say you paid $200,000 for your house and the property tax was 1% per year, which means you paid roughly $2,000 a year. If you want to sell the house now for $1.5 million and buy your next house for $1.6 million, your new property tax will be based on that $1.6 million price tag. That means you’d go from paying $2,000 a year to paying $16,000 a year.

There is a solution for this dilemma, and it’s called Proposition 60. This proposition allows you to move your tax base to another property. If you sell for $1.5 million and you buy another house of equal or less value, you can simply transfer that tax base and continue paying $2,000 a year.

The primary purpose of this proposition is to allow couples who’ve lived in their house for a long time and don’t have kids around anymore to sell that house and buy a smaller one without getting burdened with a higher property tax.

If you have any questions about these two types of taxes or are looking to buy or sell a house, don’t hesitate to reach out to me. I’d be happy to help you!

How do you determine value in real estate?

The first thing we do to determine the value of your home is compare the features and benefits of your property with the features and benefits of similar homes that are currently on the market or have recently sold.

For example, does your home feature a popular floor plan? Does it have easy access to a backyard? Does it have a view? Is it a one-story or a two-story home? All of those things affect the value of your home.

The value of your home will also depend on who you are competing with in the market. If there are 20 buyers that are looking and there is only one property available, that home’s price will increase. If there are more homes on the market than there are buyers, you might not get top dollar for your home.

There are a lot of factors that determine the value of a home.

Before I meet with homeowners, I pull a list of homes that are in escrow to find out if they got a good price, multiple offers, or if they had any challenges. This helps me prepare to sell your home.

If you have any other questions about determining value, or if you have any other real estate questions, please feel free to give me a call or send me an email. I look forward to hearing from you!

Sometimes, real estate transactions can fall apart. It’s unfortunate, but it happens.

One of the biggest things you have to understand is that your agent’s job is to make the process as seamless as possible. When nothing goes wrong, that is when the agent has done their job for you. After all, the best way to prevent any obstacle is to get in front of it.

That said, there are three common reasons why real estate deals fail:

1. The home inspection. Sometimes, buyers look at the inspection and ask the seller to make thousands of repairs, which is not a good strategy. Instead, make sure that major items like the roof or HVAC system get taken care of. Smaller, cosmetic issues don’t need to be fixed by the seller.

Don’t get emotionally involved in the negotiation process.

2. Real estate agents. Too often, I see real estate agents become emotionally involved and get in the way of their clients' best interest. It’s important to hire the right agent to take care of your needs.

3. Negotiations. I have seen buyers send in lowball offers many times. If you are selling a home for $1 million and the buyer sends in an offer that’s $60,000 below market value, it’s easy to get upset. As your fiduciary, I recommend that you make a counteroffer. It’s easy to get offended and dismiss an offer, but you never know what will happen. I want to get you the highest profit so that you can get the greatest return from the value of your house. Let me be your third-party negotiator; whether you are buying or selling, don’t get emotionally involved during negotiations.

If you want to have a successful real estate transaction, it’s important to be aware of these mistakes so that you can avoid them. If you have any other questions about buying or selling a home, just give me a call or send me an email. I would be happy to help you!

How can you sell your home faster and for more money than any other homes in your neighborhood? I’ve got four tips to share with you today that will help you do just that:

1. Landscaping and curb appeal. It’s important to update your landscaping, and curb appeal is huge. If buyers don’t like the outside of the home, they may never come in and see the inside. Trim your shrubs, get rid of weeds, and put a fresh layer of mulch down to make the landscaping look new again.

2. Consider new paint. Nothing will make a home feel brand new like new paint on the walls. In the grand scheme of things, it’s relatively inexpensive but can pay huge dividends when it’s time for buyers to make an offer. We have some great painters that our team works with and we can set you up with one that is fair and reasonably priced.

New paint makes a home feel brand new.

3. “Move out” and clear the home of clutter. If you are able to move out of your home to get it ready, you should. If you can’t, you should do all you can to make it look like you are moved out. This means getting rid of all the clutter in every single one of your rooms. The more things you have, the more clutter buyers feel. The more clutter there is, the smaller the home feels. If you can declutter well, the home will show well. Those type of homes get higher offers than most.

4. Price it right. To help price homes, we use a software that I don’t know any other company in the Bay Area is using. We are able to look at a ton of information, including data about whether homes that had a price change or multiple price changes sold for a higher amount than homes that sold at their list price. We found that a home that's priced correctly from the beginning sells quicker and for more money than the homes that reduce their price. A home that is priced correctly will net you more money on that bottom line.

If you have any questions or want any more tips, don’t hesitate to reach out and give me a call or send me an email. I would love to hear from you.

Before you buy a home, there are a number of questions you should answer about the type of home you want to buy and where you want to buy it. Here are the riddles we recommend you solve first:

1. The neighborhood and surrounding area. What kind of place do you want to live in? Do you want to be within walking distance of amenities like restaurants or stores, or more spread out in a quiet area?

2. Is there new construction going on? If you’re buying a new home, that’s great. However, if it’s a newer neighborhood, you should know if there is any new construction ongoing in your neighborhood and how long it will be that way.

3. Do you want to live in a certain school district? If you’d like to live in an area with good schools for your children to attend, we’d be happy to provide you with a list of the best schools in the area. Even if you don’t have children, living in an area like this can have a significant impact on your home’s resale value.

It’s not always about just the house itself.

4. Meet with your lender and talk about payments. You should also discuss your utility bills and how much those are. There are a lot of different factors to look at when determining the affordability of the home.

5. What is the condition of the major systems in the home? There will be a lot of maintenance tests going on during the buying process. You want to set aside some money for repairs, or better yet, ask the seller to include a home warranty with the sale.

6. Look at the comparable homes. If a lot of homes in the area are selling quickly, it’s a good indication of positive resale value.

Sometimes it’s not just about the house itself, it's about the lifestyle you want to live and how the neighborhood affects those things. Regardless of when you plan on buying, make sure you pair up with the right Realtor so you can have a professional on your side to help you along.

If you have any questions for us, don’t hesitate to give us a call or send us an email. We look forward to hearing from you.

If you're selling your home, there are a number of ways you can save money before the sale.

One trend we see a lot now is buyers really scrutinizing homes during the inspection period. Sellers can save time and money by hiring an inspector of their own before selling. We call this a pre-inspection. This will help sellers find issues before buyers or their inspectors have the chance to find them and mitigate any surprises before buyers see them. With a pre-inspection, sellers can save money by making repairs on their own terms.

Get a pre-inspection so you can make repairs on your own terms, not the buyer's.

You can also save up to 50% of the cost by telling the inspector that you don't need a report, which can be time-consuming. Instead, just ask to walk through the property with the inspector so they can point out where issues might arise. No two inspectors are the same, but it's worth the investment.

If you have any more questions about saving money before selling your home, you can always call us or shoot me a text or email. We'd be happy to help!

The Bay Area market is extremely hot for sellers right now, and as a home buyer, you may face more competition for a home now than you may have in the past. What can you do to make your offer stand out and win the home you want?

Many Realtors would suggest writing a personal letter to the seller. Writing a “love letter” to the seller about their home will inform them about who you are, what you love about the home, and why they should choose your offer over others.

Let the seller see who you are and why you’re passionate about the home.

Though we think that this is a great idea, as a cutting-edge brokerage, we’d like to take another step up from this concept.

What we’re doing instead is encouraging home buyers to create a short video to send to the seller to let them see who you are and how passionate you are about their home. This will really help you stand out from all of the offers on the table.

This kind of emotional appeal to the seller will go a long way in getting your offer accepted. If you have any other questions about the best ways to get your offer accepted in a hot market like this one, give me a call or send me an email. I’d be happy to help you!

If you're purchasing a home, there are three main things you should look for:

1. Foundation issues. If you're walking around the house and you see large cracks in the wall, the foundation may have issues that you need to repair. Common signs of foundation issues include cracks or crumbling, water damage, shifting soil, sagging floors, buckling walls, or doors and windows that don't fit properly. Cracks in concrete floor slabs like the garage floor are rarely a structural defect. Shrinkage of concrete as it cures or the settling of the ground beneath the slab contribute to cracks opening up in the slab. The cracks, however, are not defined as a structural issue unless they have an opening of 1/8th inch or more across or it has differential, which is where one side of the crack is raised above the other.

2. Systems of the house like the water heater, furnace, air conditioning, etc. They may all look old, but you should know that they only represent a marginal percentage of the overall cost of the house. Replacing a water heater, for example, will only cost about $800 to $1,200, which is by no means a reason not to buy a house.

3. Permitting. Remodels, major repairs, or major upgrades will all require some sort of permit from the local municipality. Most of these permits are readily available through an online search, or you can call the building department.

Most permits are readily available online.

If you'd like any more information about things to look out for when buying a home, feel free to reach out to us. I'd love to help you in any way that I can!

There are many small improvements you can make to your home that will improve its resale value.

Large-scale fixes and upgrades are unlikely to return their full cost to you when you sell your home. If you're anticipating selling your home, these small changes can provide up to a 100% return on investment. Not all will give you a 100% return, but they will help improve the market position of the property in relation to the competition.

For example, the national average cost to replace a steel front door is $1,230, which is the least-expensive project on the list and ranks highest on the payback scale with a 108% return on investment on average. In 43 of the 102 markets surveyed, Realtors say that a new front door will recoup more than 100% of its cost.

Small changes can provide more than 100% return on your investment.

Mid-range and high-end garage door replacement is another improvement expected to top 100% payback in multiple markets. The same goes for replacing windows and minor kitchen remodels.

Notice a pattern? With the exception of the kitchen remodel, these are all replacement jobs. Replacement jobs provide a much better payback than remodels or new additions to a home. First impressions are important, so the improvements that offer the greatest payback are the ones that are obvious to buyers when they see your house online or in person. This includes your front door and garage door, and possibly siding, too. This year, manufactured stone veneers are expected to recoup 92% of their cost on average across the nation.

Inside the home, kitchen remodeling still offers the most bang for your buck. The only remodeling job that breaks the top 10 in payback is a minor kitchen remodel, with a national average cost of about $19,000 and a national average return of 79.3%.

If you’d like any more information about home improvements or how to improve the value of your home, give us a call or send us an email today.

A lot of homeowners have been making the decision to refinance. We wanted to explain the process in a little more detail today so you can determine if it’s the right move for you.

First of all, there are three important factors to consider that may affect your interest rate. They are your income, assets, and credit. If any of these factors change over time, you may be able to get a better rate.

For example, let’s say a borrower has a score of 680 when applying, but a couple of years later their credit has improved to 740. With a score of 740 or above, the borrower can get the best interest rates, which will significantly lower their payment.

Here are a few terms you should be familiar with. The first is your loan-to-value ratio, or LTV. The lower the LTV, the lower your interest rate will be. The second is your debt-to-income ratio, or DTI. It’s your monthly debt divided by your monthly income. Generally speaking, this ratio should be no greater than 43%.

A better credit score equals a better rate.

The conclusion here is that if your loan scenario has improved in any way since you got your mortgage originally, it makes a lot of sense to refinance.

What if your scenario has not changed? Well, with interest rates as low as they are right now, it still makes sense to refinance. See how much you can save on your payment; we have tools that can help you with that.

There are rumors that rates are going to go up this year, so take advantage of them while you can.

If you have any questions for us about refinancing or real estate in general, give us a call or send us an email. We would love to hear from you.