Michelle Millikin

Archive for February, 2012

The Code of Ethics specifically states “Realtors in attempting to secure a listing shall not deliberately mislead the owner as to the market value.”  This is in reference to over or under pricing listings.  When an agent under prices the home may sell very quickly and the seller may have not acheived the optimal value for their property.  However, and much more common, is that a listing is over priced, resulting in the property remaining on the market for a longer period of time. This may cost the seller money in the long run in terms of holding costs and diminished value as a stigmatized property.

Of course the marketing plan for exposing your property to potential buyers is important, however, if the price is not reflective of the home’s current market value, the marketing will be ineffective.  Buyers are more market-savvy than ever before with access to county public records, tax assessments and purchase prices.  They can easily compare and contrast homes for sale online.  Most realize when a property’s asking price is missing its mark.  And what is the “mark?”  Not what a Seller would like to get for the home to fulfill their financial wants or needs.  Not what the Seller financially needs to clear out their current mortgage or debt on the home.  Quite frankly, a Buyer doesn’t care.  They want a value and will refuse to overpay for a home.  The market value of a home is what a willing and able buyer is willing to pay.  How do we accurately determine a property’s value?

I use a three-part method, based upon statistics and market data.  I am able to remove the emotion and stress out of the selling process and keep it to measurable guidelines to help determine the value.  First, I use an Appraisal Method based upon what similar properties in a similar neighborhood sold for in the last 6 months.  This is what the buyer’s lender will use to determine their willingness to finance the purchase.  Second, I use an Absorption Rate Calculation.  This will demonstrate how many homes have recently sold against how many similar properties are currently on the market competing against the Seller’s home for the valuable buyer.  Essentially, it is the rate at which the market is “absorbing” its current inventory.  A stable market is a 6 month supply.  As you can imagine, our current market has a several years supply in many price ranges and neighborhoods.  Lastly, I compare the Seller’s home with its current competition to see how it measures up.  If the Absorption Rate tells me that 5 homes will be absorbed in the next year and there are 15 actively competing (3 year supply) I need to place the home appropriately within the market to enhance its chances of being sold.  The price needs to reflect the home in a way that it is within the top 3-4 homes within its price range so it will be chosen.

Price will be the most important criteria in predicting the home’s sale.  The best way in which to get the most money for your home is to price it correctly from the very beginning, based upon the data that I can provide for mutual analysis.  It is amazing that when Sellers have the necessary information and understand it, they can readily see where their home is valued within the current market.

If you or someone you know would like me to provide an accurate Market Analysis on a home or property, please give me a call.

With the abundance of Wausau area foreclosures, estate sales and bank-owned properties within our Wausau area housing market, there is a common tendency for Seller’s to sell a property “as is.” Yet both Buyers and Sellers do not seem to have a firm grasp on what that really means and how it can affect a transaction.

A Seller may choose to use this clause (which can be used on any type of property) because they cannot afford to put any more money into repairing a property, because there may be a potential of environmental concerns they do not wish to confront or because they are incapable of dealing with such remedies due to physical or mental constraints.

The “as is” clause can mean one or both of the following: The Seller wishes to make no representations to the condition of the property and is holding the Buyer responsible for its determination and/or the Seller is unwilling to cure any defects if found.
Sellers need to realize that even if they have this clause disclosed they are not free and clear from some liability and duties in relationship to their property. For instance they cannot put a Buyer in a condition of “foreseeable” or “unreasonable risk or harm. They cannot conceal a defect or make it difficult for the Buyer to discover the defect or make false statements.

As a licensed agent, we still have to inspect the property, consisting of a visual walk thru of the property and ask the Seller questions of suspect conditions they may discover.

Lead-based paint disclosure requirements are not waived in an “as is” sale.

My recommendation is for a Buyer to write an offer contingent upon an Inspection. The Seller has already made it clear that they are making no representations and will more than likely not cure any defects or offer a financial allowance to the Buyers for what they find, however, it will give the Buyer the justifiable right to determine the property’s condition before full blown commitment. An inspection contingency gives the Buyer a right to back out if the defects are beyond acceptable and the Buyer no longer wants the property. If there is no inspection contingency, the Buyer is REALLY accepting the property “as is.” If the Buyer closes on the property and discovers a defect afterward, they cannot go after the Seller for compensation – they agreed to purchase the property based upon the condition THEY determined.

There has been a chain mail e-mail distributed alerting Americans of a 3.8% sales tax when selling a property secretly embedded within Obama’s Heath Care Reform.  The email has been circulated several times within the past year and although there have been attempts to explain the notion, the idea remains and actually seems to be gaining some credence.  I researched this allegation and found the truth to be easily obtained and quite simplistic to understand.

The email typically has the following text:

“Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?  That’s $3800 on a $100,000 home etc.  When did this happen?  It’s in the health care bill.  Just thought you should know…”

Both the e-mail and the blog post attached to it are deemed to be deceptive and here is what I found:

It is not a sales tax, it is a tax on investment income for the wealthy.  According to Section 1402 of the Health Care and Education Reconciliation Act of 2010, titled “Unearned income Medicare contribution, it applies only to the investment income of single taxpayers who make more than $200,000 or couples who make more than $250,000.

To be hit with the tax you would have to CLEAR $250,000 in PROFIT off of your home sale, which means $250,000 more than what you originally  paid for it.  And the ceiling is even higher for a married couple.  Married couples are not taxed on the first $500,000 of profit from their home sale.

Most tax payers will never have to concern themselves with this tax and there is a long-standing tax exemption on the profits from home sales.

Bottom-line:  The email is not explaining the facts. If you are a high-earning homeowner concerned about the tax implications of a future sale, please contact your accountant or tax attorney.  It is created to only hit a very select few.