Dear Michael: I sold my primary property as a short sale with a loss of $100,000. Will I have to pay taxes on the sale of this property?
Answer: According to the Internal Revenue Service homeowners whose mortgage debt was partly or entirely forgiven may be able to claim special tax relief by filling out newly-revised Form 982 and attaching it to their Federal income tax return. Normally, debt forgiveness results in taxable income.
But under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was $2 million or less. The limit is $1 million for a married person filing a separate return. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax-relief provision. Please check with your accountant for further evaluation.
Dear Michael: My listing agent is requesting that I not be home for the open house. I am surprised by her request. Is there a reason why I should not be home?
Answer: The purpose of holding a home open is to expose the home to an additional volume of foot traffic you would otherwise miss. By no means, are holding open houses the only avenue to driving traffic through your home, but they are one area that can provide exposure on a Sunday afternoon to buyers who are needing and wanting to find a home.
Many buyers use the open houses as a means to identify properties they can’t see in a private showing during the week because of work and other commitments. Buyers need to feel free to walk around and ask question to the listing agent and express their opinion and comment about the house without feeling pressure from a seller’s presence.
Many sellers cannot help themselves at open and will constantly interfere with the agents work making it very difficult for the agent to speak freely about the house and the neighborhood. It is best for the seller, the agent and the buyers if the seller is not home during an open house.
Dear Michael: I would like to list my home, how long should I expect before I can get an interested buyer to make an offer?
Answer: That all depends on how rational you are about the sale price of your home. If you are willing to list your house competitively to what the market is in your neighborhood, you should be ready for a wait time of approximately 30-90 days with no guarantees of selling. If you are ready to list your home at a discount price of 5-10% less then the competition, then you can expect zero to 30 days with a much better chance of getting your home sold.
I suggest hiring a professional that works the area to sell your home. Listen to their suggested list price, their experience and knowledge of the area should be sufficient for you to make the right decision regarding price. If you are still not sure, Interview 2-3 agents and choose the one that works best for you, keep in mind that the higher priced quote is not always the right one. Trust should play an important role in your choice for the right agent.
Dear Michael: When bidding on a property, can my Realtor submit an offer without the buyer’s signature?
Answer: If a Realtor submits an offer without the buyer’s signature then the contract can be null and void if the seller changes his/her mind. In order to have an enforceable binding contract the buyer’s signature is requires. The authority to enter into a contract to buy or sell by an agent for their principal must be agreed in writing by a power of attorney prior to entering into the contract. Just the act of entering into an agreement by the buyer for representation by the agent does not give the agent the authority to bind the buyer to a contract. Realtor’s need to, and should stay away from acting as attorney in fact as the pre-recautions that can occur during the transaction are just not worth.
Dear Michael: How come I’m paying more in property taxes than some of my neighbors who have similar houses?
Answer: Your taxes are not based on your neighbors’, but are based on the price you voluntarily agreed to pay for your home. Before Proposition 13 the average property tax rate in California was three percent of assessed value and there was no limit on annual increases. In those days, if a house on your block sold for much more than you paid for your house, you shuddered in fear when you received your next property tax bill. Chances are, your new taxes would be based on what your new neighbor was willing to pay for his home. Things got so bad in the late 1970s that people were actually losing their homes because of uncontrolled tax increases. The assessment rate is now only 1.25 percent for all California property and annual tax increases are limited to no more than two percent. When property is sold it is then reassessed at market value, but the rate remains at 1.25 percent and the new owner is then protected by the two percent cap on annual increases.
Dear Michael: The listing of my home is about to expire. It’s been 180 days and I think we would like to try someone new. We feel very bad about giving the listing to someone else, is there a way to make this easier on the agent? Our agent is also a friend of ours.
Answer: When an agent takes on a listing there is absolutely no guarantee that the listing will sell and therefore could expire. Agents know the risk associated with taking on a listing and need to understand and respect your decision. It seems to me that you are the one who is having the difficult time changing agent. Dealing with friends can have advantages and disadvantages. This would be considered one of the disadvantages. If the agent is your friend then he/she should understand how you feel. You need to do what is best for you and leave your emotions out of it no matter how difficult the decision is.
Michael Kayem is a Realtor with Re/max /Execs serving Culver City and the Westside since 2001. You can contact Michael with your questions at 310-390-3337 or e-mail them to him at www.homes@agentmichael.com
