3.8% real estate tax won't affect most

Beginning January 1, 2013, a new 3.8 percent tax on some investment income

will take effect. Since this new tax will affect some real estate transactions, it is

important for sellers. to clearly understand the tax and how it could impact their sale. It’s a complicated tax, passed by Congress in 2010 with the intent of generating

an estimated $210 billion to help fund President Barack Obama’s health care

and Medicare overhaul plans.

Understand that this tax WILL NOT be imposed on all real estate transactions,

a common misconception. Rather, when the legislation becomes effective in 2013,

it may impose a 3.8% tax on some (but not all) income from interest, dividends,

rents (less expenses) and capital gains (less capital losses). The tax will fall only

on individuals with an adjusted gross income (AGI) above $200,000 and couples

filing a joint return with more than $250,000 AGI. Most people are not in this category. However, the capital gain on the sale of real estate will be added to your AGI. If you have a large gain on the sale of your real estate, it could push you up into the higher category.

This new tax was never introduced, discussed or reviewed until just hours before the final debate on the massive health care legislation. That legislation was enacted on March 23, 2010, more than a year after the health care debate began. This new tax was put forward after Congress was unable to agree on changes to current law that were sufficient to pay for the proposed changes to the Medicare program and increased subsidies to individuals and businesses. The new tax raises more than $210 billion (over 10 years), representing more than half of the total new expenditures in the health care reform package. NAR expressed its strongest possible objections, but the legislation passed on a largely party line vote. The new tax is sometimes called a “Medicare tax” because the proceeds from it are to be dedicated to the Medicare Trust Fund. That Fund will run dry in only a few more years, so this tax is a means of extending its life.

A second new tax, also dedicated to Medicare funding, is imposed on the so-called “earned” income of higher income individuals. This earned income tax has a much lower rate of 0.9% (0.009). This additional or alternative tax is based on adjusted gross income thresholds of $200,000 for an individual and $250,000 on a joint return. Like the 3.8% tax, this 0.9% tax is imposed only on the excess of earned income above the threshold amounts. 

Another way of thinking about these new taxes is to think of the 3.8% tax as being imposed on a portion of the money that you make on your money — your capital (sometimes referred to as “unearned income”). The 0.9% tax is imposed on a portion of the money you make on your labor — your salary, wages, commission and similar income related to earning a livelihood.

8 steps to speedy credit score repair

Use credit cards properly and correct information reported to credit bureaus

If your credit score is 760 or above, move on, you're already getting the best interest rates. Anywhere below that, however, read on and improve your score.

1. Get a credit card if you don't have one.

Having and using a credit card or two can build your scores. Look for a card that reports to all three bureaus: Equifax, Experian and TransUnion. If you don't qualify for a regular credit card, consider a secured credit card, where the issuing bank gives you a credit line equal to your deposit. 

2. Add an installment loan.

You'll get the fastest improvement in your credit scores by also showing you're responsible with installment loans (personal, auto, mortgage, student). If you don't have any, add a small personal loan to pay back over time. Make sure it's reported to all three bureaus.

3. Pay down your credit cards.

Lenders like to see a big gap between the credit you're using and your available limits. Getting your balance below 30% of the credit limit on each card helps; getting balances below 10% is better. Pay down the cards closest to their limits 1st, rather than the highest rate cards.

4. Use your credit cards lightly.

Big balances can hurt your scores, even if you pay your bills in full each month. Spread the load around among your cards, and pay balances before the closing date to reduce the amounts reported to the credit bureaus.

5. Check your limits.

Your lenders might be showing a lower limit than you actually have, which will lower your scores. Your credit card issuers will update the information when you ask them.

6. Dust off an old card.

The older your credit history, the better. But if you don't use a card, it won't be weighted as heavily in the credit score formula. Charge a recurring bill to an old card or use it once per month.

7. Cash in some good-will.

If you've been a good customer, a lender might agree to erase that one late payment from your history. Ask for it in writing. For a more troubled account, ask that it be re-aged, which erases previous delinquencies once you've made a year of on-time payments.

8. Pick your battles.

Here's what's worth correcting:

- Late payments, charge-offs and collections that aren't yours.

- Credit limits reported as lower than they actually are.

- Accounts listed as "settled", "paid derogatory," "paid charge-off," or anything other than "current" or "paid as agreed."

- Accounts that still are listed as unpaid that were included in a bankruptcy.

- Negative items older than 7 years (10 in the case of bankruptcy) that should have automatically fallen off your credit reports.

Mortgage Rates Sink to New Lows Again

DAILY REAL ESTATE NEWS | FRIDAY, SEPTEMBER 28, 2012

Mortgage rates were back to breaking records for the second consecutive week. All mortgage products, except for the 5-year adjustable-rate mortgage, averaged a new record low, Freddie Mac reports in its weekly mortgage market survey.

For those who can qualify, the low rates are helping to keep home buyer affordability high and refinancing strong, Freddie Mac reports. 

"Fixed mortgage rates continued to decline this week, largely due to the Federal Reserve's purchases of mortgage securities, and should support an already improving housing market,” says Frank Nothaft, Freddie Mac’s chief economist.

The Fed recently announced it would purchase $40 billion in mortgage-backed securities every month until the economy shows more improvement. The move is expected to send rates lower. 

Here’s a closer look for the national average rates for the week ending Sept. 27:

• 30-year fixed-rate mortgages: averaged a new record low of 3.40 percent this week, with an average 0.6 point, dropping from last week’s previous record low of 3.49 percent. A year ago at this time, 30-year rates averaged 4.01 percent. 
• 15-year fixed-rate mortgages: averaged a new low of 2.73 percent, with an average 0.6 point, dropping from last week’s previous record low of 2.77 percent. A year ago, 15-year rates averaged 3.28 percent. 
• 5-year adjustable-rate mortgages: averaged 2.71 percent, with an average 0.6 point, dropping from last week’s 2.76 percent average. Last year at this time, 5-year ARMs averaged 3.02 percent. 
• 1-year ARMs: averaged a new low of 2.60 percent this week, with an average 0.4 point, dropping from last week’s 2.61 percent average. A year ago, 1-year ARMs averaged 2.83 percent. 

Source: Freddie Mac

7 Hard-Core Tactics for Sellers

If you’re about to put your home on the market, understand that you are about to engage in a war of sorts. Selling your home is a battle with other listings for the qualified buyers that are out there, a battle with everything else a buyer has to do for their time and attention and a battle with every other thing they could be spending their money on.  

A well-priced, impeccably-staged home is the A-number-one weapon you must wield to win this war.

That said, it’s not at all unusual to experience the tugs of emotional attachment, resentment and even resistance when it’s time to stage your home. Staging puts your home, your things and your taste under the microscope and subjects them to critique - so it’s easy to get prickly at your agent’s or stager’s suggestion that the place might need more than a good spit-and-shine to get it ready for listing.

But let’s face facts: listing your home for sale is a war with very high stakes for your finances, your life plans and your emotions: the potential jubilation of selling your home, the ecstasy of selling it at top dollar, and the agony of not being able to get it sold.

So, it’s time to buck up, put your emotional sensitivities aside and get hard core about home staging - here are 7 tactics for your battle plan.

1.  Conduct a recon mission.  The US Army Field Manual defines reconnaissance as “a mission to obtain information by visual observation or other detection methods, about the activities and resources of an enemy or potential enemy.” As a seller-to-be, your recon mission is simple: to scope out the competition. As soon as you start thinking about selling, you should be getting out to visit the other homes in your competitive bracket - the other homes that your home’s likely buyer will also likely see - during their Open Houses.  

That means you should attend the Open Houses of listings with similar beds, baths, square feet and price range to your own home, both in your neighborhood and in similar neighborhoods in your town.

If you do this for long enough, you’ll start to notice several things. If it’s been awhile since you’ve been in the market, you might be surprised at how pristine and attractively prepared the competition is, especially the non-short sale, non-foreclosure listings. You’ll start to see what homes look like that sell quickly and at (or above) the asking price, and what homes look like that lag on the market. You’ll also start to notice which listing agents and home staging companies tend to show the best-prepared properties: this is the beginning of your arsenal of information that will help you step up your home’s battle advantage.

2.  Create your plan of attack. To win this home-selling war, you must attend to the basics of home staging systematically, creating a comprehensive, written plan for everything from your home’s landscaping, the exterior and interior finish materials (paint, carpets, etc.) and every individual room of your home, including what you’ll do with your personal property and what furniture and decorative items will be used to stage the place. This plan, of course, must be created and carried out in the context of whether you plan to reside in the home while it is on the market, and in the context of your agent’s recommendations about how quickly you need to be able to have the place buyer-ready when you get a viewing request.

I strongly recommend that, at this stage, you involve some professionals in your battle preparations. Your agent should be engaged, and will be happy to have the chance to guide your property preparation decisions. Additionally, data has shown time and time again that homes prepared by professional stagers sell for more than their non-staged counterparts; consider enlisting one for your home.

That said, if you can’t afford a full-blown stager, consider reaching out to the staging companies you learned about in step 1, above, to see if any of them offer consulting services for an hourly rate. (Your agent might also be able to recommend a good, local stager.) For a couple hundred dollars, you might be able to get the most powerful benefits of a stager - their smart, creative and experienced thinking about what you can and should do to show your home in its best light - and incorporate that into your staging plan.

3.  Deploy the stealth tactic of demolition.  Turns out, some of the most powerful staging techniques are simply removing, demolishing and otherwise getting rid of unsighly features, versus adding or strategically enhancing them.  This is especially critical to keep in mind if you are staging your home on a shoestring budget - rather than trying to figure out how you’ll come up with the cash to buy a bunch of new things, focus first on whether there’s anything you can remove that will enhance a buyer’s experience of your home.

For example, I have seen the entire look and feel of a property take a dramatic turn in the right direction when a number of window coverings were removed entirely.  Studies show that the light this allows in actually makes people (i.e., your target buyers) happier than they are in the same room, darkened by drapes or shades. [Note: before you do this, take note of what a buyer will see out the window!]

I’ve seen similarly stunning effects when old, dirty carpets were pulled up. Again, though, umderstand that there might be some risk of exposing something worse, depending on the property.  That said, in many cases, buyers see imperfect original hardwood floors as far preferable to bad carpet. You might even be amazed at how relatively inexpensive it is to replace a couple of bad floorboards, compared with the costs of replacing the entire wall-to-wall carpet.
 
4.  Pre-pack.  The call to de-clutter is the rallying cry of virtually every stager. By that, they mean to clear countertops, floors, table-tops and every other surface in the home of as much of the minutae of living as humanly possible. All that should remain is the occasional decorative or functional piece - a clock here, a vase of flowers there - and even these things only to the extent that they jive with the staging plan.

While this makes sense, logically speaking, it can be difficult to wrap your head around exactly what this means when it comes time to execute. “Surely we should leave the model plane collection,” one seller might think. “Of course, we should make an exception for the classic ukelele,” another might insist.  Add to a dozen model planes even one mini Hawaiian guitar, then compound that with a few tissue boxes, candles, bottles of hand soap and inkpens, and you’ve got yourself a recipe for visual clutter, aka junk, in the eye of the beholder/buyer.

Some sellers find it easier to wrap their heads around the concept of simply pre-packing, versus decluttering. If you win this battle upon which you’re about to embark, you’ll be moving anyway, so taking the pre-packing approach harnesses the power of momentum toward the end of putting everything but the items you actually need to live your daily life in boxes and putting those boxes in storage or - neatly - in the garage, so they’re ready to go when your home sells.

5.  Wash, rinse and repeat.  The sort of cleaning you need to execute before you list your home is not like any cleaning you might ever have done before. It is not like ‘friends are coming for dinner’ cleaning, where the bedrooms don’t count. It’s it not like ‘white-gloved mother-in-law is on her way cleaning,’ where you can enlist the kids to run interference and distract her with the power of their cuteness. It even trumps ‘cleaning lady is coming’ cleaning, because you want her to feel needed, so can’t leave the place pristine before she comes - that would look like you were trying too hard!

The cleaning you give your home before showing it to buyers must be uber-thorough, covering every surface - even the nooks and crannies you’ve forgotten existed - and it must be from the outside in.  The best-staged, best-selling homes tend to have garages, basements, side yards, sheds and dog runs that are just as immaculate as their kitchens, bathrooms and master bedrooms.

Start early, give yourself ample time and  and if you have the bandwidth - consider investing a few hundred bucks to hire a cleaning crew to polish every lighting fixture and dust every baseboard and ceiling fan blade. Like your agent and stager, they can see (and clean) things you can’t, due to your familiarity with your home.

6.  Fixate on trims and details.  It’s tempting, when staging, to do the big jobs - painting the walls, polishing the floors, moving and removing furniture - and to run out of steam and cash before the little details get handled. But winning this war demands that you:

• be aware that this temptation may come,
• detect it if it does and
• resist it at all costs.

One pattern you might note on your recon mission is that the homes that show as the most pristine, the most polished, are often the ones which were prepared with the most attention to detail. On the outside of the house, this involves making sure details like mailboxes, window shutters, eaves and even shrubbery are meticulously painted, trimmed and even replaced. Adding attractive flowers, door kickplates and knockers and house numbers are some inexpensive ways to add visual detail and a polished, cared-for look to an otherwise plain property.  Inside, window trims, door casings, moldings and baseboards have the same effect, as does ensuring that drawers and doors operate smoothly and that walls are scuff mark-free.

In this way, some of the least expensive home staging projects can carry the most powerful buyer-impressing payload.

7.  Be brutally honest with yourself.  When you think you’re done preparing your home, think again. It’s not overkill to go out on a Sunday afternoon, walk through a few Open Houses, get back in the car and drive up to your house, walking through it exactly the way a buyer would.  Ask yourself: What can you edit?  What looks like clutter? What is distracting? What stops a buyer from seeing the possibilities for their own family here?  

If all else fails, take your agent with you - arm him with a packet of post-it notes and give him free rein to stick one on anything he thinks should be removed before showing the home. Then get that stuff out of there!

Tractor ride

Tractor ride through Fayette this morning. Its always a great sight to see the old tractors roll through town. After Fayette, they were headed to Wadena, Arlington and back to Oelwein. Tomorrow its Hawkeye and Summner.

Tips for Home Sellers

Interior Repair Hot Spots 

If the thought of making pre-sale home repairs all over your entire house feels overwhelming, take a step back and consider where you should really focus your attention. When you're considering the interior of your house, here are the top repair hot spots on which to focus: 

1. Electrical Panel 

Just prior to sale, you are not likely to be doing any major upgrading on your electrical system, but you will need to locate your main electrical panel and give it a good cleaning. Brush out all the cobwebs, dead spiders, and dust and wipe off any rust or mildew. 

2. Plumbing and Sewage 

Make sure each and every sink and tub in the house is draining properly and that the drain lines are clear. Flush them all, but don’t stop there. Your buyer’s inspector won’t. He will run water in several sinks and flush several toilets at the same time. This is a great test of the house’s main drain line. So, if your house doesn’t flow with the flush, get that plumber over now! 

3. Water Pressure 

Another revealing plumbing trick is to run the dishwasher and washing machine along with a sink and shower. How’s the water pressure? Do you need a bigger hot water tank? Is it big enough to handle a small family? Find out now and plan on doing some re-piping if necessary. 

4. Hot Water Heater 

Look under the water heater to check for rust or leaks. If you find any, replace it now, and save some money and negotiating. A rusty or leaking water heater will be an immediate request for replacement to your buyers from their inspector. 

5. Septic Tank 

If your house is on a septic tank system, schedule it to be emptied at least two weeks prior to sale. The last thing you want to do is empty that tank during showings. 

6. Leaks 

Most pipe and faucet leaks are an easy and inexpensive fix, but a real turn off for buyers. Inspect each and every faucet and hose bib inside and outside the house—both above and below countertops. 

7. Heating and Cooling 

Test your heating and air conditioning systems. If the systems are eight years of age or older there may be a problem about to happen, or you may have to replace something before you sell. And some buyers don’t care how small a problem is; they will often ask for a credit for a whole new system. So make sure yours works. Also, this is the time to change your filters, and make sure the units and visible ducts are spanking clean. 

8. Thermostats 

Test your thermostats. If they are broken, replace them now! 

7 Springtime Home Spruces to Boost Buyer Interest

One of the first things many homebuyers look for are the unmistakable signs of something called ‘pride of ownership.’ As a whole, it’s a relatively intangible concept: there are just homes that have it - reeking of their owners’ love and meticulous care for the property -- and homes that, well, don’t.

I’ve watched firsthand as buyers who like a cute home that is in generally good shape literally talk themselves into looking at a more homes once they start to notice one rickety gate, which snowballed into a nitpicky laundry list of little, tiny fixes the seller had left undone. The challenge is that between deciding whether and when to sell, staging, interviewing agents and determining a list price, it can be tempting for homeowners to fall into the trap of deferring maintenance on a home they might sell soon.

Whether you plan to put your home on the market next week or next year, here is a short list of  home maintenance items you should put on your Spring to-do list, stat, if you want to attract qualified buyers and let your home sweet-talk them into making a sweet offer:

1. Banish chips, scuffs and the like with a fresh coat of paint. I believe that eliminating nicks, scuffs and scratches on any painted or finished surface is one of the cheapest, easiest and most impactful spruces a seller-to-be can do.  That’s because these little tiny blemishes create a shabby appearance on a home that might otherwise be in great shape, but can be entirely banished with a good washing and some fresh paint.

This goes for interior and exterior walls, floors, and especially any sort of trims that are painted white, as is common with crown and floor moldings - scuff marks and blemishes seem to pop out from these items. Also, the edges of cupboards, doors and drawers are places where chips and nicks are so common that homeowners overlook them, but can be super visible to buyers who visit your home for the first time.

2. Brighten, polish and replace all trims.  One day, I’ll do a scientific study, and I predict the results will reveal that if you put two identical homes side-by-side and give one a set of tricked-out trims - exterior shutters, front door, eaves - even your house numbers, door knockers, kickplates and other exterior hardware - people will rate the house with the beautiful trims way higher on the ‘pride of ownership’ scale than you’d expect.

Go stand on your own curb to get the buyer’s-eye view of your home, and then drive around your own neighborhood or the nicest part of town and flip through some home improvement mags or websites for ideas.  If you can add attractive trims, freshen up the ones you have or paint them to create an unexpected but attractive color combination with the body of your house, you can skyrocket your home’s standing on my (newly invented) ‘pride of ownership’ scale.

3. Furry, drippy, noisy or broken HVAC systems. Maintaining your heating and air conditioning systems is not that expensive, but buyers think it is. In fact, your furnace  and AC are precisely the sort of major household machinery that intimidate first-time home buyers.  So, if they show up to the open house or a private showing of your home in June and the AC is making a funny knocking sound or just flat out doesn’t work well enough to keep the house cool, buyers might perceive that as a more serious red flag than it truly is.

Does your AC has that furry ‘science experiment’ look to it? Not only are you paying for the energy it’s probably wasting to push the air pass all that dust and dirt, the gross-out factor will have even the hardiest buyer wondering what else might be wrong with your home.

On the flip side, letting prospective buyers know that your home’s HVAC systems have been recently maintained or upgraded is a nice touch that makes itself obvious during showings and allows buyers to breathe a sigh of relief when it comes to concerns about short-term repair bills and the comfort level of family members who may have allergies and asthma.

Side note: if your AC does make a funny sound you might be so accustomed to you can’t hear it anymore - check in with your agent unless you know as a matter of fact that your AC is in tip-top shape. One more side note: if you live someplace where it gets cold around the holidays and you don’t plan to list your home until wintertime, right now may be the ideal time to have your heating system serviced. Off-season repairs and maintenance are often discounted.

4. Mend and tend to your fences, gates and screens. These items may not jump out at us in our own home - in fact, these are things I often see sellers skimp on or run out of time and money to tend to. And it’s easy to rationalize your way out of dealing with them, as they seem like relatively inexpensive fixes for buyers to make themselves.  But screens with holes in them and gates that don’t budge or hang off their hinges are precisely the sorts of things I’ve seen make buyers walk back through a home looking for other flaws; and anything to do with fences makes them envision neighbor disputes over bills.  You have the power to avoid sparking these concerns in the minds of house hunters by mending these items this Spring.

5. Doors, cupboards and drawers. One creaky door or squeaky cupboard does not kill a deal. But keep in mind that in some homes, other than the lights, these are the only functioning systems of your home that house hunting visitors will almost certainly use during the course of a viewing. Making sure your entry, interior closet and cupboard doors are in good cosmetic shape and that they work well and don’t stick is an easy, inexpensive way to position your home as a (literally) well-oiled machine.

One point of clarification – it’s less the case that buyers will notice, ooh and ahh over your smoothly sliding drawers than that they will notice and grow concerned if they don’t.

6. Have everything cleaned and washed. Even the most immaculate of housekeepers can realize a massive refresh to the look, feel, smell and the overall air quality of their homes by having professional cleaners come take a tour through the place. Springtime is a great time to ask your agent for referrals to the best local vendors to power wash your house, windows and driveway, as well as to have your carpets, rugs and window coverings cleaned. For those who are on a tight budget, many vendors offer Spring cleaning promotions for these services right about now (and if your budget is even tighter, there are products you can buy and machines you can rent to do these things yourself – just make sure you account for the value of your time).

7. Shred it up.  Some might say this is more like Spring cleaning than home maintenance, but I’ve noticed that the clutter of boxes and boxes of paperwork, old file cabinets and the like have a tendency to contribute to the sense that a listed property might be unkempt, the aura of  stagnation. If you have no cash to do anything else on this list, one thing you can do for free is to go through all your files and boxes, get rid of old papers and shred anything with sensitive information.

Just think – you’ll have to do it anyway when you move, so this is like giving yourself a head start and your attic, basement office or other rooms a fresh start. You can count it as a staging tactic as well, as it gives the rooms at issue some added visual white space, making them seem larger!

5 Shockingly Selfish Reasons to Go Green At Home

On Earth Day, much press is given to all the altruistic reasons we should watch our energy consumption and carbon footprints.  From those baby polar bears stranded on icecaps to visions of our grandchildren's grandchildren living on the Atlantic Coast of Montana, the unselfish reasons for going green, so to speak, abound.

Reality check: greening up your home does not have to be a pious experience, or a lifestyle downgrade. You don't need to cut back on showers or go all Birkenstock, all the time. (Although, hey - I went to Berkeley. I've got nothing against the occasional sporting of the 'stocks.)

In fact, I've realized over the last few years that there are some rather fabulous, somewhat selfish perks to making green changes to your home and your lifestyle.  Here are a handful of them, in honor of Earth Day.

1. Save Money Now.  When it comes to the economics of most home improvements, homeowners spend hours and hours trying to project the return we'll recoup on the upfront costs of our granite countertops and built-in theater equipment years down the road. And for the most part, the numbers look grim. Except for the basic upgrades that are essential to moving an older home, real estate insiders generally advise homeowners to avoid even trying to find an investment return on home improvements, and to simply execute improvements they can both afford and enjoy in the time they plan to live in the home.

However, many so-called 'green' home improvements turn this entire concept on its head. Studies show that utility bills are one of the highest monthly expenses for most households, and that green home improvements can bring those bills down by as much as 20 or 30%.  I did the math - on the average American home's energy bill of almost $2,000/year, that would represent a savings of $400-$600 - potentially much more if you live in an area with temperature extremes!  

If you install a tankless water heater, insulate your pipes and walls or even do something as simple as weather-stripping your doors and windows, you will begin to save money on your utility bills immediately. And, depending on how indulgent you really want to be, that's cold hard cash you can redirect to the college savings fund, your own retirement accounts, or a tropical adventure.

2. Sell Faster.  Green homes simply sell faster than comparable homes without energy efficient features. Today's home buyers want to save money (that's why they're buying now!) and are willing to prioritize homes that allow them to do this by way of energy efficient systems and upgrades. 

The data particularly bears this out when it comes to homes with solar energy systems. The US Department of Energy’s Office of Energy Efficiency & Renewable Energy recently released reported that solar homes sell twice as fast as a home without solar panels – even in a down market. (As an aside, don't believe the old hype that going solar requires a big investment; in some states, homeowners can sign up for something called 'solar power service' and get solar savings without ever having to pay for panels.)

If your home isn't currently on the market for sale, you might scoff at the notion of a speedy sale as a selfish aim. But if and when the day comes that your personal, career, family and financial plans are hanging in limbo, making the ability to move forward with your life and your vision contingent upon the sale of your home, you'll understand what I mean!

3.  Boost Your Net Worth.  Not only are buyers willing to bestow a preference on 'green' or energy efficient homes, they are willing to pay more for them. And remember - the value of a home at any given time is based on what a buyer would pay for it.

The Appraisal Journal recently published data to this effect: for every $1 green home improvements decreased the property's annual energy bills, the home’s value increases by $10-$25. That might not seem impressive on such a small scale, but these numbers translate to an increase of $8,000 to $25,000 to the market value of a greened-up 3,000 square foot home.
Same goes for solar homes; Lawrence Berkeley National Laboratory compared solar homes to similar homes without solar panels, and found that a solar system can add around $17,000 to a home’s value. 

If you are like the average homeowner, your home may be your largest asset - or your largest liability.  One of very few ways you can reliably bulk up the value of this asset - and your net worth in the process - is to implement any number of green home improvements.  If this is a big motivator for you to go green, talk with an experienced local agent about what green features local buyers most value.

One more thing: think very broadly about what it means to 'go green'. You could go solar or tankless, install insulation and weatherstripping, convert to low-flow toilets, and shower heads, switch out old aluminum windows for dual-paned - the options are limitless, and vary widely in cost.

4. Look better and live longer. There are green homes, and there are green households. I'm going to make the argument that if, in the process of greening your home, you take the next step and engage in the lifestyle activities that make for a green household, you can lose weight, feel better and possibly even avoid some of the chronic diseases that plague our society.

The green home element of this includes planting a kitchen garden and minimizing the water that is wasted just keeping your lawn green. Then you’ll have a back-yard (or front-yard, for that matter) harvest to reap and eat. Your household garden will attract birds, bees and, if your street is anything like mine, squirrels, deer or wild turkeys – fauna which all participate in the circle of life. (Hakuna matata.)

But maintaining a kitchen garden and implementing other green household practices like taking walks or public transporation may also increase you’re the quality of the air you personally breathe and help you shift the balance of your family’s diet from focusing on meat to the plant-based diet doctors now say minimizes the risk of heart disease and cancer, increasing lifespan. Plant-based, by the by, does not mean vegetarian or vegan; Wikipedia defines a plant-based diet as "an eating pattern dominated by fresh or minimally processed plant foods and decreased consumption of meat."

If digging and planting is more than you can take on, you can support those who do this for your community on a larger scale and still get the benefits of a plant-based diet by subscribing to a Community-Supported Agriculture (CSA) program or walking to and shopping at your neighborhood farmer’s market on the weekend.  

5. Live more comfortably.  In the fifteen years since I moved from my scorching-hot hometown to the very mild climes of the Bay Area, I have developed an issue I call my 'thermoregulation challenge.' I’m fine when I go visit my parents or vacay in Arizona, but it’s tough to stay warm at home when dressed like a normal person.  (This explains my penchant for wearing sweaters right around the calendar.)  

So, I recently undertook a campaign to stop up all the drafts in my house, and wouldn’t you know it: life got way more comfortable – and fast.Call me a weatherstripping evangelist, but I can think of very few home improvements this inexpensive that make this much of a difference in the comfort level of your life. Drafts, begone!

And this increase in comfort from green home improvements was not a one-off, in my experience. I’d already noticed a major reduction in noise from installing dual-paned windows a few years back. The next thing I have my eye on is swapping out the big old vat of water that I pay to keep warm 24 hours a day for a quake-proof, tankless water-heater.  Sure – the energy-efficiency sounds great. But so does unlimited hot water, no matter how long a shower I take or how many dog baths I give.   

I say there’s a reason why so many A-list celebs who are used to living in luxury live green lifestyles. The good deed piece of it makes for great PR, but make no mistake: the green life can also be the good life. 

6 Keys to Having a Zen Home Buying Experience

If you sat down and tried to call up a mental picture of a smart home buyer, the person in your mind’s eye might be sitting in front of the computer, calculator at hand, running numbers and weighing out pros and cons before arriving at a sensible decision. But ask any agent: even the smartest of their buyer clients looks and feels nothing like this image. Once the house hunt begins or the offer is signed, emotions start to fray, tensions run high and stress-induced gray hairs begin to multiply (and/or get pulled out).

Your home is the largest purchase you’ll ever make. So it might seem that emotional side effects like panic and fear are inevitable. But they’re not. You do have the power to manage your emotions and have a relatively blissed-out homebuying experience. And you should seize that power; doing so will not only minimize the discomfort, it will also keep panic and fear from fouling up your decision-making.

Let me hand you some keys - the keys to having a Zen home buying experience:

1.  We fear what we don’t understand. Buying a computer, a TV, even a car – these things aren’t super scary, in part, because we do them repeatedly. But we buy homes much less frequently, and the transactions are much more complex and filled with jargon that is essentially unintelligible to all but those who practice real estate for a living.  On top of all that, the mistakes we stand to make when buying a home, from buying a lemon to taking the wrong mortgage, hold the potential to devastate our lives and our finances for years to come.

No pressure.

The things that create the most fear and panic in a real estate transaction are the things that we don’t understand. Similarly, conflicts, questions and concerns that remain unspoken to your spouse, your agent or your mortgage broker also hold the potential to create deep anxiety and evolve or erupt into serious problems down the road.

Zen homebuyers are the ones who tend to start educating themselves months, even years, in advance by reading books, frequenting smart personal finance sites, visiting open houses, scouting neighborhoods, and asking questions on discussion boards frequented by experts and fellow consumers. They also educate themselves intensively throughout the process by reading their mortgage, contract, disclosure and inspection documents all the way through and systematically ask the relevant professionals to answer every single one of their questions.

This question-asking piece can be tough for both the timid, and those used to being the expert. But if you want to minimize your home buying stress, give yourself a gentle shove out of your comfort zone and decide to be willing to readily admit what you don’t know and assertive about insisting on answers.

2.  Ask - and allow - your experts to manage your expectations. I’ve found that buyers tend to experience real estate as an emotional rollercoaster when they (a) start out with unrealistic expectations or (b) resist the expectation management their brokers, bankers and agents are trying to dole out. There is a lot of education you can get from books and the web, but when it comes down to the nuts and bolts of making your offer on your home, and anticipating the details of your escrow and moving experience, you should look to your own local agent and mortgage sherpa to help you understand things like:

·    the range of outcomes that might result from your offer, 

·    how long to expect things to take, 

·    when to expect to bring cash in – and how big of a check you should expect to write, each time, and 

·    when you’ll need to take off work to come sign things in person. 

Books and news sites don’t offer the level of detail and local specificity for the nitty-gritty of what you need to know; as well, they also pose the danger of overwhelming you with a firehose of information, when what you really need as you get into a transaction is knowledge: specific answers to questions you actually have or issues you are likely to personally face.

Don’t just look to your local pros for expectation management and answers, though, listen to them.

3.  Shatter the 8 ball. In any market climate, you are at a negotiating disadvantage if you have an urgent deadline for buying and moving. But in today’s market, when deals are taking just about ever to close, having a deadline doesn’t just put your in an inferior bargaining position - it will drive you predictably crazy!

There are literally hundreds of moving pieces to a real estate transaction, any of which can cause things to fall behind. Your appraisal can come in too low, your inspector can recommend you have a specialist come do another inspection, your lender’s underwriter can take longer than expected, and so on and so forth.

When you are under the gun because you have to close by a certain date keep your interest rate locked, you don’t have enough cash to cover the differential in closing costs if you close at the beginning of next month vs. the end of this month, or because you plain old have to be out of your old place by a certain deadline, every one of those moving pieces and steps in the transaction will become loaded with a disproportionate amount of anxiety. (And you may become tempted to make unwise decisions just to get the transaction moving!)

Neutralize the drama-driving potential of all these potential timeline tripwires by getting out from behind as many timing 8 balls as possible and injecting breathing room as many places as possible.  Talk with your mortgage broker about extending your rate lock, stuff your cash cushion with as much fluff as possible, plan on some overlapping weeks – even a month – where you can be in your old place and your new one. I can vouch: minimizing your home buying time pressures will maximize your Zen.

4.  You’re exceptional, but you’re probably not the exception. Your decision to buy, your work at saving and sprucing your credit, the hard work of wading through all those homes and making the hard decisions about when and where and what to buy, your brilliant taste in real estate blogs (!) – all these things indicate that you are an exceptional person.  But don’t expect to create or to be the exception, or be immune to the predictable irritations and glitches of buying a home on today’s market.

Short sales take a long time. Underwriters sometimes request the same document what seems like a dozen different times. Sellers tend to take the highest qualified offer they get (even when that buyer is nowhere near as beautiful and brilliant as you!). 

With that said, it’s entirely possible that you will have a super smooth transaction, or the shortest short sale ever.  In fact, that is my hope for you. But if you go in expecting to be the exception to these rules of thumb, there’s a good chance you’ll be upset over and over again by things that are completely predictable and, thus, create no need for dismay. On the other hand, if you expect glitches, delays and the like, your emotional experience of the transaction will likely be smooth, even if the transaction itself contains the now-normal bumps.

5.  Cultivate clarity. One extremely common cause of emotional chaos during home buying is the sense that things have spiraled out of your control. Many buyers express feeling that what started out as a very personal vision, dream or aspiration for their lives, their finances and their families is now 100% controlled by banks who don’t care about them or professionals who don’t intimately understand your wants and needs. 

It’s true that not everything in your transaction is within your control, but many things are – and that’s where you should focus your energies. If you start preparing to buy months, even years in advance, by saving, working on your credit, getting referrals to professionals that you feel you can really trust and such, you are much more likely to end up with a home and outcome that satisfies your lifestyle and financial needs.  

You can also optimize for this by writing out a clear vision statement for your post-buying daily life and your personal finances before you ever meet with a real estate agent or mortgage broker, so that you can walk into those meetings and clearly communicate your wants, needs, and what is and isn’t important to you.  That makes it much more likely that you’ll get your needs met and minimizes the chances that your transaction will become derailed from your original intentions.

6.  Manage your own mindset. The list of freak-outs that are common in the emotional landscape of the homebuyer is quite a long one: 

·    the fear that the seller won’t take your offer, 

·    the fear that you’ll pay too much,

·    the fear of surprises, 

·    the fear of mortgage glitches, 

·    the fear that the seller’s bank won’t sign off on the short sale, 

·    the fear that the home of your dreams will turn out to have a bunch of problems,

·    the fear that the appraisal will come in low, 

·    the fear of buying into a declining market, 

·    buyer’s remorse

- and the list goes on.

Ultimately, only you have the power to be the manager of your mindset. Get educated about the full range of things that may happen and plan accordingly, but avoid mentally dwelling on or worrying about hypothetical disasters and worst case scenarios. 

Learn what things are and are not within your power to control, and decide up front that you will not fixate on or stress about the things that are not. For example, you can control what you offer or whether to house hunt for short sales; you cannot control whether another buyer offers more or whether the seller’s bank green lights the short sale. 

If you do get a curve ball thrown at you, take a deep breath, consult with your experts and make the decision that best serves your personal vision and priorities. Then, don’t look back!
 

6 Tax Breaks Every Homeowner Should Know

Regardless of the current state of our economy and thehousing market, buying a home is still a great investment. However, the resulting taxes that accompany owning a home can lead to confusion and uncertainty.

In most cases, you need to itemize your taxes in order to take advantage of all the tax breaks that accompany home ownership. This might seem overwhelming, but the benefits of completing this process make up for the inconvenience.

1. Mortgage Interest Deduction

Mortgage Interest Deduction (MID) is a top tax break forhomeowners,which can save you a significant amount of money. In the beginning, the majority of your monthly mortgage payments go toward loan interest, and you can deduct all the interest from your mortgage on your taxes. Keep Form 1098, issued by yourlender, with your important records. This form explains exactly how much you can deduct and serves as proof if you are audited by the IRS.

2. Mortgage Insurance Premiums

Homeowners with new mortgages with a loan-to-value ratiohigher than 80% must carry some form of private mortgage insurance (PMI). This insurance protects the lender against loan default. Typically, once you reach 20% equity in your home, you can avoid paying private mortgage insurance.

Until you reach that level of equity, if your adjusted gross income (AGI) is less than $100,000 (or $50,000, if married filing separately), you may be able to deduct the amount that you paid. If you surpass that income level, the deduction is either reduced or eliminated. If your AGI is $109,000 ($54,500, if married filing separately) then the deduction goes away altogether.

3. Energy Star

Installing energy-efficient windows, doors, and skylights can result in another tax deduction. In order to take advantage of this tax break, you must install the items by the end of the year. Additionally, they must be installed at your primary residence, and they need to meet Energy Star programrequirements.

If you meet the necessary criteria, you can receive a tax credit equal to 10% of the cost of the products. The credit for windows and skylights is capped at $200, the limit for doors is $500, and you cannot deduct installation costs. The IRS does not state what documentation you need to prove that you paid for these costs. However, you should hold on to all receipts and Energy Star labels for any qualified improvements you make on your home. There are quite a few green energy tax deductions for home improvement.

4. Points

Points refer to charges or fees paid by a borrower to obtain ahome mortgage. If you have your first mortgage, you can deduct these charges in the year that you paid them if the loan is for your primary residence and you didn’t pay excessive points. If you have refinanced your mortgage, you can deduct points over the life of the loan. Check the IRS rules for details.

5. Property Taxes

As long as they are based on the assessed value of the real property, you can deduct state and local property taxes. If you pay your property taxes out-of-pocket, you need to locate your bills to determine how much you paid. Most homeowners pay through an escrow account; if you do the same, the information also appears on Form 1098.

6. Construction Loan Interest

If you take out a construction loan to build a home, you may qualify to deduct the interest. You can only use this deduction for the first 24 months of the loan, even if the actual construction takes longer.

Final Thoughts

If you stay organized and focused and keep excellent records, you can take advantage of every tax break, deduction, and credit at your disposal. However, you should seriously consider consulting a tax professional when preparing your taxes for the first time after you buy your home.

You will likely encounter various technical restrictions and confusing guidelines, and you certainly don’t want any problems with the IRS. A professional can help you find more tax breaks, and you will get the best return on investment when you understand and take advantage of each and every one. Which tax breaks are you taking advantage of as a homeowners?