Michelle Millikin

Wausau Real Estate: “AS IS” real estate transactions

Michelle Millikin — Sat, 11 Feb 2012 10:34:37 +0000

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.

Controversial E-mail: 3.8 Percent “Sales Tax” on Real Estate Transactions

Michelle Millikin — Mon, 06 Feb 2012 17:06:07 +0000

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.

The “Alphabet Soup” of Real Estate Designations

Michelle Millikin — Sun, 15 Jan 2012 10:24:29 +0000

In most professions, experts are identified by the myriad of letters behind their names or titles. Realtors are no different yet most consumers of our services have no idea what these credentials or designations mean, therefore not acknowledging the professionalism of some. These designations increase skills, proficiency and knowledge as well as boosting productivity and marketability.

CRS (Certified Residential Specialist): Only 4 percent of all Realtors nationswide hold this designation. There are professional requirements in both experience and education. These agents earn three times the median Realtor income.

GRI (Graduate, Realtor Institute): This is the most widely recognized of national designations. It is earned by a Realtor completing 90 hours of classroom instruction, covering subjects in contract law, professional standards, sales and marketing, finance and risk reduction.

ABR (Accredited Buyer Representation): This is considered the standard of quality and excellence in buyer representation, awarded by Real Estate Buyer’s Agent Council (REBAC)

CRB (Certified Real Estate Brokerage Manager): Those holding this designation are among the most efficient, effective and profitable maangers in the country, able to integrate new technologies, business strategies and streamlije operations of their businesses.

BPOR (Broker’s Price Opinion Resource): Newest certification helping to sharpen an agent’s skills with evaluating properties, applying alternative valuation techniques and efficiently generating accurate and professional reports. The mortgage lender is the client with their perspective in mind. Understanding the process and that perspective on a higher level is of a great benefit to a lender.

SFR (Short Sales and Foreclosure Resource): This designation validates the new norm within our industry of distressed sales with its many complexities assocaited with these types of transactions. Knowing how to help clients deal with the complications of short sales and foreclosures is essential in today’s market.

SRES (Seniors Real Estate Specialist): This designation is the only one dealing with the fastest growing market in real estate, working with clients aged 50-plus in the process of buying, selling or relocating due to retirement, health concerns or grandchildren, etc.

GREEN: This is the only designation for professionals willing to become experts in energy efficiency and sustainability in various areas of real estate.

Why Purchase vs Renting a Home

Michelle Millikin — Sun, 08 Jan 2012 10:22:02 +0000

The United States homeownership rate declined in 2010. Whether renting is better than buying depends on many factors such as how fast prices and rents rise and how long someone plans to remain in the home. However, if a buyer intends to reamin in the home for more than several years, there may be homeownership advantages to be considered:

Homeowners are happier and healthier and have a greater feeling of control over their lives.

Homeowners pay 80-90 percent of federal income taxes, contributing to federal programs that benefit many.

Every home pumps $60,000 in tot he economy in relation to furniture sales, home improvement, etc.

Housing accounts for more than 15 percent of the national Gross Domestic Product the key driver of the nation’s economy.

Owning a home is one of the best ways to build long term wealth. Historically, a homeowner’s net worth has ranges from 31 – 46 times that of a renter.

There are even Home Ownership Matters buttons available for purchase along with a new free app called MID Calc, available at the iTunes store, for homeowners to estimate the tax-savings value of their mortgage interest deduction. This app is compatible with iPhione, iPod Touch and iPad.

As rents continue to rise, the cost of buying a home becomes increasingly attractive. Our housing market values are at all-time lows and interest rates are as well. There are a number of programs to help offset our huge inventory. All buyers should get pre-qualified to determine if they can jump into this great opportunistic time. If not, credit counseling may be in order.

If you would like to discuss Wausau area home ownership possibilities, please do not hesitate to call me.

The Healthy Home Campaign

Michelle Millikin — Mon, 02 Jan 2012 17:21:34 +0000

There are many environmental dangers and contaminants found within a home. Buyers want to be assured that they are not purchasing a property at risk. Below are some of the potential dangers and what a buyer can do to protect their risk:

Mold: Mold is literally everywhere and there is no practical way to keep it out of a home. Mold typically grows in warm, damp, humid conditions where there is little air movement. Some molds can be harmful and sometimes make allergies and asthma worse. Flooding, water leaks, overflowing bathtubs, condensation and humidity can increase the probability of mold within a home. If a buyer suspects mold within a home, their first inclination is to have it tested to find out concentration and type of mold spore present. This is thought to be unnecessary because there is no Environmental Protection Agency (EPA) standard regarding what is considered an unsafe level of mold and data is interpreted differently amongst “experts.” It is more imperative to discover the source of the mold and clean it appropriately. There may be visible mold but also a musty odor may be the off-gassing of mold colonies. Elimination of the moisture source and a thorough cleaning. More than likely, if there was a severe water damage at the property, there will have been an insurance claim which can be found in the seller’s CLUE report.

Lead: Lead in a home is found in the paint or water pipes. Consumption of lead or inhalation of its dust can poison children, cause lifelong disabilities or behavioral problems. Many homes built before 1978 have lead paint on the walls, woodwork, windows and floors. A buyer must receive a LBP Disclosure and give the buyer the right to conduct an assessment or investigation

Radon: Radon is found throughout the United States and is the second leading cause of lung cancer. Radon comes from the natural radioactive breakdown of uranium in soil, rock and water, which gets into the air. The EPA issued a recommended threshold of radon action level of 4 picoCuries (pCi/L) per liter of air. The EPA estimates that one in 15 homes nationwide has a radon level at or above this level. Testing is the only way to determine a home’s radon level and is typically done at the time of a buyer’s home inspection. The testing should be done in the lowest level of the home being used as living space, whether finished or not.

Carbon Monoxide: Carbon Monoxide is a deadly gas that comes from appliances that are not working appropriately, are poorly vented or being used incorrectly. The appliances are typically furnaces, water heaters, gas stoves or other fuel-burning appliances. The new Wisconsin Statute requires all homes have CO detectors beginning on February 1, 2011.

Asking for a home inspection is not enough to protect a buyer and allow for them to test for these concerns. A testing contingency must be included within the offer to purchase to allow for such testing. The contingency should also include what the buyer would like the seller to do if the testing comes out positive within the offer and not expect cooperation form the seller after the results are disclosed.