The Place
To Make A Connection
With Your Community

RSS

Second Homes – Now is the Time to Buy

Hi! Tax Day – it’s a great time for a blog post about more tax deductions!

Have you ever considered buying a second home? A retreat from the busier lifestyle of the DC area? An investment? Well, now is a great time to buy. As a second home and Virginia countryside expert, I talk with people all the time about what will work for them.

Virginia Horse Farm

First, let’s talk about why to buy at all. You have probably seen your current or past primary home increase in market value. This added to your wealth, right?
Buying a second home gives you another way to invest in your future while enjoying the home (if it is a getaway for you) and benefitting from the tax breaks.

Why buy now? Mortgage rates are hovering around 4%. At one time not terribly long ago, they were double, and not too long before that double that double – in the teens!
Secondly, more baby boomers and others who have the desire and financial ability are expected to continue entering the second home market. This drives prices up. Avoid paying more money! Buy now before homes increase in price and you cannot afford as much house or perhaps cannot afford one at all. And before the availability of existing homes decreases and you have less to choose from. For instance, there is a shortage of older farmhouses in the Virginia countryside already.

There are so many options to choose from across the US and the world. And right in your own back yard where there is the ocean, some lakes, rivers, mountains and stunning countryside.
Whatever your preference, one recommendation is to consider how often you will use it and whether or not you will rent it out. You wil also want to consider:
1. How do I spend my free time now?
2. How much travel time would be the maximum I would want to spend to get to and from the home?
3. How often would I use the home?
4. How much maintenance is required or would I be willing to do?
5. What cost of owning the home is agreeable to me?
6. Do I want to enjoy the home seasonally, in more than one or in all seasons?
7. Does the area I am considering buying in have a growth history and /or a stable price sales history?

So, why is buying a second home a great financial investment? Often, when you or anyone buys a home, you borrow money to do so. It is referred to as “leverage.” For example, say you buy a $300,000 second home with a 20% down payment. And then suppose that the property increases in value a modest 5% per year. At the end of the first year of your ownership, the home will be worth $315,000. You have earned $15k on your investment of $60K, an increase of 25%! Isn’t that an impressive return on your money?

Do keep in mind that second homes are considered a luxury and can sometimes be a volatile market to buy in. So, get Realtor who helps you to buy wisely. Not every second home is a wise or good buy. Always invest with the current market in mind and also think of resale. Determine or project how long you will or might own it and whether or not you will make any improvements or corrections to it while you own that may increase its value.

Next – Tax Breaks – yes!

Here is a list:
1. Mortgage interest may be tax deductible depending on your use of the home, just as interest payments are on the mortgage of your primary home.
2. Property taxes – ditto on no.1.
3. Used an equity line to buy? This may be tax deductible also.
4. Renting at all: If you have used it to rent out, you may be able to deduct some expenses including depreciation, if the government considers your home to be a “vacation home.”
Ask your accountant about the distinct government regulations of claiming a home as a second home or vacation home. She can advise you on the government’s definition which has to do with the number of days you use the home for a rental vs the number that you enjoy it yourself as a vacation home. Possible other specifications. Find out the distinct guidelines. Make the numbers work well for you, if you can by adjusting the days you rent it vs. spend there yourself.

Again, as a second home and Virginia countryside expert – and a land and homeowner in Rappahannock County – I talk with people all the time about what will work for them and what they will enjoy. Reach out to me for a free consultation. Let us show around and show you some homes in the Virginia countryside or elsewhere. It will be our pleasure.

Have a great day and a wonderful summer!

Cheers,
Ken

Tags: , , , , ,

What to do when a buyer voids a contract?

What to do when a buyer voids a contract?

Hi!

It’s not an exciting day when the buyer changes his or her mind. It’s definitely part of the risk of selling a home and getting under contract that a buyer may decide for any reason to want out of a contract. As a seller working with a skilled listing agent, one can do a lot prior to going on the market, while accepting contracts and during the contract to close phase to help avoid a buyer backing out of a contract.

Save money. Have a strategy.

Save money. Have a strategy.

Even so, sometimes buyers do. This could be for a reason they find in a home inspection, for an unexpected health or family reason, loss of a job or any number of reasons. They might state their reason and ask out or they might void the contract during the home contingency phase, for example (As a side note, this is one reason to have a strategy to eliminate contingencies being in the contract in the first place. Like doing your own pre-listing inspection and making corrections, and then advising the buyer that this has been done.).

When the buyer wants out, and can do so contracturally, or you as a seller simply agree to let them out of the contract, what then?
Some options:
1) Put your home back on the market immediately with no changes whatsoever to the home or listing information available to the agents and the public.
2) Put your home back on the market after strategizing, having learned from one buyer / one part of a possible sale, making adjustments to the information.
3) Put back on the market after strategizing, having learned from one buyer / one part of a possible sale, making adjustments to the home itself and the information.

My experience is the 3rd option is usually the best approach.

First, without exception, it is always important to assess where the market has changed since the home went on the market and since the contract was ratified. Markets are always moving in one direction or the other, and can be very local (I refer to it as hyper-local.), very specific to the neighborhood, even. Take a strong look at “What is the market of the moment?” In order to be in sync, timely, with decision makings in formulating a strategy.

Selling Your Home Without Having It Returned to You

Selling Your Home Without Having It Returned to You

Then, if due to a home inspection, what was the reason for the back out? Did the buyers say they were anxious or unhappy about any items on it? If so, it would it behoove you as a seller to listen to what the buyers found and said about it, make corrections if it makes sense, and note any big ticket items as “replaced, new or improved” to buyers?

Another reason the buyer might back out is for a more desirable home down the street that has come on the market since the buyer went under contract with you. If so, would it be a great idea to take a very strong look at that home and how it compares to yours? What about it is more likable to buyers – price, condition, exact location? You may want to or need to adjust your pricing strategy if that home or any others help you to see the market of the moment in a clearer sense.

I hope this was helpful. With a great strategy going into selling a home – choosing an experienced, skilled listing agent, completely preparing your home for sale, having a smart pricing strategy, and creatively and strongly marketing your property, you will be a long way to a hedge against a buyer wanting to void a contract. An once of prevention…. “an investment of $100 could save you $1,000.”

Cheers,
Ken

Tags: , , , , , , , ,

RED DAY AT KELLER WILLIAMS: MAY 9th, 2013 – We ROCK Arlington!

Thursday, May 9th,  is RED DAY at Keller Williams. This is our annual day of service. It’s an international effort and it’s lots of fun! On this one day each year, agents in every Keller Williams office fan out across our communities to volunteer their services. Our office has four activities planned.

Here’s what we’ll be doing:

1. Cleaning the shelter run by A-SPAN (Arlington Street People’s Assistance Network)  The shelter is closed for the season, but needs a deep cleaning. We also will be helping the staff prepare for their gala fund-raiser by stuffing goodie bags and anything else they need to be ready for their event.

2. Supply drive at Whole Foods. We will be collecting items for  A-SPAN. Whole Foods is a wonderful partner in this effort. We will have shopping lists to hand to shoppers as they arrive. We’ll have baskets at the exit for them to drop the goods when they leave. Be sure to stop by Whole Foods at Clarendon to say hello and to help support us in our efforts! That is where I will be, as I have been in the past years. This time, come see me 12-2pm!

3. Painting at the Animal Welfare League of Arlington.

4.  Underwear and sock drive. We will have a box in our office for donations of new men’s underwear and socks for A-SPAN.

Contact me if you would like more information or help with giving a donation. Here’s to Arlington, as well as all of VA, DC, & MD, and all of our wonderful communities across America and the world.


Cheers!
Ken & The Yes I Ken! Team












Tags: , , , , , , , , ,

facebook twitter linked in youtube