Does a Home Inspection Need to be Stressful?

September 15th, 2019
Home inspections

A home inspection is beneficial to the seller as well as the buyer. No need to stress about home inspections.

Your home is on the market. And things are progressing well. You’ve got a buyer! The offer, the terms, and the price are all agreed upon. What comes next? The home inspection. And most homeowners find a home inspection to be stressful. Why?

What is a Home Inspection?

Before you and the buyers actually go to contract (aka escrow), the buyers will pay for a home inspection. Home inspections afford them the peace of mind that the condition of your house is in good order.

A home inspection is a report on the overall condition of a home. They are done by home inspectors who are trained and certified to do so.

The home inspector prepares and delivers a written report of their findings to the buyers. The buyers then use this information to help them make more educated decisions concerning their pending real estate purchase.

What to Expect on Home Inspection Day

No home is perfect. But a home inspection alleviates stress for you as the seller. Because knowing what an inspector looks for, allows you to sort out minor issues in advance.

The home inspector looks at and provides a written report on:

  • HVAC system
  • interior plumbing
  • electrical systems
  • roof
  • attic
  • floors
  • windows
  • doors
  • basement
  • foundation

Home inspections usually take two to four hours, sometimes longer, depending on the size of the house.

While the inspection is underway, you may feel helpless or that at the mercy of the buyer and his home inspector. But just let the process run its course.

What to Expect Following the Home Inspection

Most inspectors are fair and realize that whatever is in disrepair can be fixed. And most buyers understand a house is always in need of some repair. They expect that some things will need their attention after they move in.

Upon completion of the home inspection, it may take a couple of days for the buyer to receive a copy of the report. Exercise patience. Now is not the time to negotiate or fly off the handle. Just wait for the results of the report. If the buyer comes back with a list of repairs, expect to negotiate a compromise that works for both parties.

But remember, the ultimate goal is closing on the house.

Ask for a copy of the report and schedule time with your Realtor to review the following:

  • Small repairs listed that are not necessarily urgent
  • Repairs that were known by both parties in the original negotiations

When it comes to making the repairs listed in the report, what are your options?

  • Agree to do some repairs
  • Give the  buyer a credit
  • Reduce the price of your home
  • Do nothing at all

Remember though when you choose not to fix what needs fixing, you choose to sell your home as is and for a lower price. But this isn’t always the best choice since your ultimate goal is closing on the house.

And if there are major repairs listed, be sure to shop for the lowest cost of repair before you make a decision.

Home Inspections Don’t Have to be Stressful

Remember, home inspections are a normal part of the process. So stay cool.

Michael Reinhardt, a local attorney and Brooklyn real estate lawyer for over 20 years, wrote ‘Selling A Home Doesn’t Have To Be Stressful.’ Ask for your free copy today. There is no obligation, and the book’s information helps alleviate stress you may be feeling about the home selling process.

If you need to sell your home or have specific questions about home inspections, contact Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext. 206 or email [email protected] 


 

Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]


The Best Advice for First-Time Homebuyers

August 30th, 2019
Advice for first-time homebuyers
First-time homebuyer? Here’s some of the best advice for first-time homebuyers!

If you’ve entered the real estate market as a first-time homebuyer, you may be feeling a little overwhelmed. And that’s totally understandable. It is the biggest purchase you’ll ever make after all! But where do you start? What should you know before investing in homeownership? Here’s the best advice for first-time homebuyers. Read on and put your mind at ease.

Advice for First-Time Homebuyers

In a seller’s market, inventory is low. That means bidding wars are going to happen. And the seller ends up selling for a higher price than what the house was initially listed for. That’s great for the seller! But this means you as a buyer need to be prepared and available to act quickly. You should also be prepared to lose out on a few homes before purchasing the home you really want.

1. Find Out How Much Home You Can Afford

Speak with a mortgage broker (preferably several) and find out how much you can afford to pay for a home. And don’t forget to allow for the monthly costs of homeownership. There’s more to owning a home than paying the monthly mortgage. Owning a home means electricity, water, gas, sewer, and maintenance.

2. Know Your Credit Score

First-time homebuyers need to know their credit score before doing anything. Lenders set their own credit score requirements and may require a minimum score higher than 580.

3. Get Pre-Approved for a Mortgage Loan

While knowing how much you can afford is your very important first step, sellers will be much more receptive to potential buyers who have been pre-approved. You’ll also avoid being disappointed when going after homes that are out of your price range.

With pre-approval, the buyer actually applies for a mortgage and receives a commitment in writing from a lender. This way the seller knows immediately that you are a serious buyer for that property.

Costs for pre-approval are generally nominal and lenders will usually permit you to pay them when you close on your loan.

4. Hire a Buyer’s Agent

Reach out to and hire a buyer’s estate agent, someone who is looking out for your interests, not the seller’s. It’s free.

5. Communicate Clearly Your Lists of Needs and Wants

Make two lists. And be as specific as you can be. The more specific you are, the more your real estate agent can help you in finding the home that’s perfect for you.

The first list should include items you must have (the number of bedrooms you need for the size of your family, a one-story house if accessibility is a factor, etc.).

The second list is your wish list, things you would like to have (pool, den, etc.) but aren’t absolutely necessary. Realistically, you probably won’t get everything on your wish list as a first-time homebuyer. But the lists will keep you on track for what you are looking for.

6. Stay Focused and Be Organized

Keep the following items handy. They’ll help you maximize your home search efforts.

  • Maps – One or more detailed maps with the areas you’re interested in highlighted
  • File – A file of the properties your agent has shown to you and ads you have collected
  • Notebook and Pen – Take notes on each home you walk through
  • Camera – A camera or video camera will help refresh your memory on individual properties, especially if you’re visiting more than five homes

7. Look at a Property with the Eyes of a Seller

Look at a potential property as if you are the seller. Would a prospective buyer find it attractive based on school district, crime rate, proximity to positive and negative features of the area? Think access to shopping, parks, freeways or abandoned properties, garbage dumps, noise, heavy traffic.

8. Visualize the House Empty and with Your Décor

Will the home meet your needs now as well as three to five years from now? Are the rooms laid out in a way that the home will accommodate your family? Is there enough light? What about outlets and storage space?

9. Be Objective

Instead of thinking with your heart when you find a home, think with your head. Too often, first-time homebuyers succumb to their emotions and allow themselves to become attached to a less than desirable property.

Spend time researching the local market trends and make sure your finances are suitable for a home purchase.

Purchasing a property should never be a rushed process. There are many houses on the market. Don’t make a hurried decision that you may regret later.

10. Be Thorough

A few extra dollars well spent now will save you big expenses in the long run.

  • Include inspection and mortgage contingencies in your written offer
  • Have the property inspected by a professional inspector
  • Request a second walk-through to take place within 24 hours of closing (Check to see that no changes have been made that were not previously agreed upon. For example, a nice chandelier that you assumed came with the sale has been replaced with a cheap ceiling light).

11. Know the Home-Buying Process

 Review the home-buying process with your real estate agent

  • timing of a purchase
  • costs you need to be prepared for beyond closing costs
  • whether the market is a seller’s market or buyer’s market

The Most Important Advice for First-Time Homebuyers

Above all, the best piece of advice for first-time homebuyers is to choose a real estate agent with these three qualities:

  • Trustworthiness
  • Excellent communication
  • Quick responsiveness

Charles D’Alessandro is a real estate agent you will connect with personally and professionally. You feel comfortable confiding in and trusting him with the most expensive purchase of your life.

Need advice for first-time homebuyers? Contact Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext. 206 or email [email protected] and get your questions answered. He is the Brooklyn Expert connecting clients with Brooklyn homes for over 30 years. He knows the Brooklyn area inside and out.


Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]


What is the Role of a Seller’s Agent in the Real Estate Process?

August 15th, 2019
Seller's Agent
If you’re selling, you don’t want to be without a seller’s agent.

In a previous blog post, I explained what the benefits of hiring a buyer’s agent are. So let’s talk about what a seller’s agent is and what they do for their clients in this blog post.

What is a Seller’s Agent?

Bankrate.com defines a seller’s agent, or seller’s real estate agent, as “a professional who helps list property for sale. The seller’s agent represents the person selling the property and holds allegiance to that party.” They are also known as the listing agent.

“Holds allegiance to” means they act solely on your behalf. And they represent your best interest as the seller in the real estate transaction.

Their loyalties lie with you. It is their duty to share all information about potential buyers with you to help you make decisions regarding the transaction.

They are legally obligated to represent you and your financial interests as the seller.

So, if you’re selling, you really want a seller’s agent in your corner!

What Do Seller’s Agents Do?

From the moment you sign a listing contract, your seller’s agent:

  • Advises you on the best ways to present and prepare your home to sell it and may even help arrange a home inspection. They know how to highlight your home’s amenities from its curb appeal to its emptied closets, and what buyers want
  • Researches the market for recent sales of comparable homes to determine the best asking price
  • Prepares a marketing plan: schedule for listing, showing and advertising your property
  • Provides you with a real property condition disclosure and other necessary forms
  • Places a “For Sale” sign with information flyers describing your home on-site. They market your home to buyers on the internet, in classified ads, in real estate magazines, pamphlets, direct-mail flyers and newspaper ads
  • Lists your property for sale to the public on the Multiple Listing Service (the MLS, a searchable list of homes for sale)

And More Your Seller’s Agent Does for You

  • Takes other real estate agents on a walkthrough of your home, so they know what to tell their clients about your home
  • Serves as a contact to answer any questions about your home and schedule showings
  • Holds an open house to show your property
  • Makes sure buyers are pre-screened and that they are financially suitable to buy your home
  • Acts as a trustee for you. This could include preparing a standard real estate purchase contract for you
  • Finds a buyer for your property for the highest possible price on the best terms for you as the seller
  • Presents buyers’ offers to you
  • Shares all information about potential buyers that will help you make decisions regarding the sale
  • Negotiates the price of your home on your behalf as the sellers as well as the terms of the sale. They are your representative in all negotiations
  • Is your messenger, manager, counteroffer and contingency issues handler once an offer is made. They follow the paper trail from the initial offer from the buyer through to the final closing. And they process all the paperwork necessary to complete the transaction

How Much Do Seller’s Agents Cost?

You pay for your seller’s agent’s services with a percentage commission of 4 to 6 percent or a flat fee. This is stated in your listing contract. The buyer’s agent can be paid from that fee.

Selling? Hire a Seller’s Agent

Again, if you’re selling, you really want to hire a seller’s agent!

Do you have questions? Contact Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext. 206 or email [email protected] and get your questions answered. He is the Brooklyn Expert connecting clients with Brooklyn homes for over 30 years. So he knows the Brooklyn area inside and out.


Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]EstateSales.com


What are the Benefits of Hiring the Best Buyer’s Agent?

July 30th, 2019
Buyer's agent
A buyer’s agent works on behalf of the buyer in the transaction process.

Buyer’s Agent. Seller’s Agent. Listing Agent. If you’ve listed your home or been shopping for a new one, you’ve heard these terms. But what are the differences? And does it really matter?

The home buying process can be complex and stressful. So why would you buy a home without the best buyer’s agent to help you? The best buyer’s agents make a positive difference in the transaction process from beginning to end.

What is a Buyer’s Agent?

A buyer’s agent represents the buyer. It is their responsibility or fiduciary obligation to get the best price and terms for the buyer.

Buyer’s agents assist you every step of the way in finding and then buying the perfect place. And the best ones:

  • Get you the best deals
  • Value relationships over money
  • Know your home’s role in your budget
  • Share your values
  • Desire to inspire and serve you as their client

What Do Buyer’s Agents Do?

What a great buyer’s agent does for you as a homebuyer is what makes them so valuable to work with.

  • First, they determine what you are looking for and what you can afford. They schedule appointments for you to tour available homes that fit these two criteria. They’ll also point out the pros and cons of properties and neighborhoods to help you decide on a home.
  • Buyer’s agents advise you on an appropriate price to offer for a home you’re seriously interested in. And they present the price you decide on to the seller’s agent. Then they negotiate on your behalf and write the contracts for you. All agents are trained to negotiate. But the best buyer’s agents are experienced negotiators who save you money and help you avoid getting into a home that requires more repairs than it’s worth.
  • Knowing who to refer you to expedites each step of the home buying process and moves you into a quicker and successful sale. A buyer’s agent, a good one, should be able to refer you to other reliable professionals such as mortgage brokers, real estate attorneys, home inspectors, movers, and more.
  • Setbacks happen. For example, sometimes a home inspector’s report or appraisal brings new issues to light. But your buyer’s agent will advise you on how to proceed, and then act as a buffer between you and the seller’s or their agent. And if negotiations become heated or hostile, and they sometimes do, experienced buyer’s agents keep thing calm and offer productive solutions. This alone makes a buyer’s agent worth every dollar they earn!

What to Ask a Buyer’s Agent

Charles D’Alessandro is a great buyer’s agent. But don’t take our word for it. Ask him these questions before deciding.

  • “What Brooklyn neighborhoods do you specialize in?” Real estate requires local expertise. Charles is extremely familiar with the Brooklyn neighborhoods you’re interested in.
  • “Are you readily available and reachable?” Charles is readily available and reachable. If your dream home is suddenly available or a last-minute issue with closing happens suddenly, Charles is on it.
  • “How long have you been a Brooklyn real estate agent?” Charles has over 35 years of experience and a proven track record for selling Brooklyn homes.

How Much Do Buyer’s Agents Cost?

Since the seller pays the commission for both the seller’s agent and the buyer’s agent, you don’t need to pay to hire a buyer’s agent. A buyer’s agent’s commission equals about 6% of the home’s sales price. The commission is split evenly between both the buyer’s and seller’s agents. For example, commission on a $200,000 home would be $6,000 for each agent.

Homeowner, Hire a Buyer’s Agent

If you’re in the market to buy, hire a buyer’s agent. You’ll be happy you did. Choosing the best real estate agent is a lot like choosing a doctor or lawyer. And choosing the best real estate agent can make all the difference in the world when buying or selling a home.

Charles D’Alessandro looks out for your best interest. Contact Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext. 206 or email [email protected] today. With over 30 years of real estate experience in Brooklyn and a heart for his clients, he’s the best in Brooklyn!


Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]


The Most Important Things to Do Before You Sell Your Home

July 15th, 2019
Before you sell
Before you sell your home, there are a few important things to do before you list it.

If selling your home is in your future, you’ve got some important work to do ahead of you. There’s so much more to selling your home than just planting a for sale sign in your front yard. It means more than taking a few pictures of the place to post online, too. Here’s a checklist of nine important things to do before you sell your home.

Before You Sell Your Home

Invest in some curb appeal

The first thing prospective buyers see of your home should entice them to want to see more.

Stand on the front walk and examine your home closely. Look at it through a prospective buyer’s eyes. How does it look? Does it need paint? Are the gutters rusting? If you have a garden, is it overgrown with weeds and grass? These are relatively easy fixes.

Do a clean sweep

You know the saying, “Less is more”? This is so true when it comes to getting your house ready to show.

Declutter all visible areas first. Then move to behind closed doors: closets, drawers, and cupboards. Yes, even behind closed doors. No space is off-limits to curious buyers. Note: Hide or lock up your valuables before your home is shown.

Donate, pack up, give, or throw away excess belongings and stuff. Potential buyers may worry the house won’t have enough space for their belongings and stuff.

Plus, you’ll have less to deal with when it’s actually time to move.

Remove potential buyer distractions

This step goes hand-in-hand with the clean sweep. Buyers need to be able to visualize themselves and their family living in your house. So pack up your personal items, family photos, artwork, and furniture. Anything that could distract potential buyers from visualizing themselves living this space needs to go.

Paint walls with a neutral color

It’s rare that anyone will hate a neutral color. Light, neutral colors allow potential buyers to envision what the walls will look like with the paint color they like.

And while you’re at it, pay attention to the baseboards. Scuff marks and chipping make a home look neglected.

Fix what’s broke

Well, fix loose handles, missing lightbulbs, dripping faucets, and so forth. Buyers tend to wonder what else may be broken if these small things aren’t taken care of.

Clean, clean, clean

And then clean some more. Bathrooms, tile, counters, showers, tubs, windows, and floors should shine.

Invigorate your home with staging

Home stagers evaluate your home’s condition and the belongings inside. Their goal is to make your home appealing to the highest number of potential buyers and selling your home quickly and for more money.

Scope out our neighborhood

Look for houses for sale in your area and search the internet. Visit open houses that are comparable to your home, also. This will help you choose the best selling price for your home.

Choose a great real estate agent

A great real estate agent makes all the difference in the selling process.

Many people think they can sell their home themselves versus paying an agent. But resist the urge to save money and pocket the cash. For Sale by Owners (FSBO’s) almost always turn into disasters, sacrificing both your time and money.

A great real estate agent knows the current market and can suggest the price to list your home for. They have a great marketing plan for the sale of your home.

Charles D’Alessandro, your great Brooklyn real estate agent

Before you sell your home, contact Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext. 206 or email me at [email protected] today. With over 30 years of real estate experience in Brooklyn, I can guide you through each step of the selling process, from listing to closing.


Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]


Want to Celebrate the American Dream This Year?

June 30th, 2019
American dream
Owning a home is part of the American dream. Start living your American dream this year!

What does the American Dream mean to you? How would you define it? Investopedia defines it as “the belief that anyone, regardless of where they were born or what class they were born into, can attain their own version of success in a society where upward mobility is possible for everyone.” James Truslow Adams described it as “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”

The American Dream, A Home to Call Their Own

When my dad, Charles D’Alessandro Sr. and my mom, Rose, looked for a house in 1954, they were looking for a home. Above all, they were looking for a home to raise their family in an area they could afford to live in. They were looking for a home in an area that was close to friends and family too, The Neighborhood. In their minds, it was not an investment. It was a home they could call their own, their American Dream, their version of success.

They lived through the ups and downs of the real estate and financial markets paying the mortgage, raising their three children. They did as best they could, made sacrifices, and in the end paid that mortgage off.

The Opportunity to Achieve the American Dream

Again, Investopedia states, “The American Dream promises freedom and equality. It offers the freedom to make both the large and small decisions that affect one’s life, the freedom to aspire to bigger and better things and the possibility of achieving them, the freedom to accumulate wealth, the opportunity to lead a dignified life, and the freedom to live in accordance with one’s values – even if those values are not widely held or accepted.”

Ask anybody to define it in their own terms and somewhere in their answer the words “home ownership” will probably pop up. This is because for many of us, owning a home is an essential part of the American Dream.

Benefits of Achieving It

Homeownership conveys a number of economic benefits:

  • the ability to accumulate wealth
  • access credit by building home equity
  • reduce housing costs through the mortgage interest deduction
  • gain long-term savings over the cost of renting

Achieving Your Version of Success

Today interest rates are as low as 3.25 (4.856 APR). View the 10 Best Mortgage Rates of 2019 here. With a good credit score, you can achieve your version of success as a homeowner.

Celebrate the American Dream!

June is National Homeownership Month. And with the 4th of July “popping” up next week, I want to encourage everyone to pursue your version of success, your version of the American Dream.

Is homeownership is part of the American Dream for you? Contact me, Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext. 206 or email [email protected] today. There is a ton of information out there. But don’t get frustrated or confused by it all. I can help you sort through any confusion you may have. Let me guide you to make an informed and confident decision about your American Dream.


Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]


Do You Know How to Qualify for a Mortgage?

June 15th, 2019
Qualify for a mortgage
Home ownership is more of a possibility than most people realize. Find out how you can qualify for a mortgage and start shopping.

If you don’t know what it takes to qualify for a mortgage, you’re not alone. This lack of knowledge prevents people from even trying to purchase their first home. Is this you? If so, understanding the whole process better will clear up a lot of confusion. Read on to find out how to qualify for a mortgage and which type of loan is best for you.

Down Payment Requirements

Are you wondering how much of a down payment you need to qualify for a mortgage? Most people are. In spite of all the mortgage information available online, a lot of it is insufficient. So many still overestimate the down payment needed to qualify for a mortgage. The answer used to be 20 percent. But nowadays you can qualify for a home loan with a low down payment. Some types of mortgages even require no down payment! And no, this isn’t some special offer for first-time home buyers only.

Here are some down payment guidelines for different types of home loans:

  • VA loans and USDA loans require no down payment
  • FHA loans are one of the most popular types of home loans. They require 3.5 percent down with a 580 credit score. If your credit score ranks 500-579, your FHA loan will require 10 percent down
  • 203k loans also require 3.5 percent down
  • A Conventional 97 loan requires only 3 percent down
  • Conventional loans require anywhere between 5 percent and 20 percent down.

Credit Score Requirements

How’s your credit score? Do you know the credit score you need to qualify for a mortgage? Again, most people don’t. And many can’t recall what their current credit score is even after checking it recently. Your credit score is one of the biggest factors in determining whether or not you qualify for a mortgage. And of course, an excellent credit score gives you lots of worry-free wiggle room in qualifying for a home loan.

A credit score of 680 or higher is ideal when you’re in need of getting approved for a home loan. Some lenders require a credit score of 640 while others will accept lower credit scores.

Each of the loan programs listed above have a set minimum qualifying credit score requirements.

  • VA loans and USDA loans require a credit score of 620. For VA loans, some lenders may  be able to approve a credit score of 580+
  • FHA loans require a 580 credit score
  • 203k and Conventional loans require a credit score of 640
  • Conventional 97 loans require a 620 credit score

But what if you have bad credit? If you need to improve your credit score to qualify for a mortgage, click here. Learn how to improve your credit score by 100 points in 30 days.

Mortgage Document Requirements

In order for your lender to process your loan, you must produce several documents. So be prepared ahead of time and get the following ready now:

  • W2’s from the past 2 years. You should have at least 2 years of income from the same company or industry documented
  • Pay-stubs for the last 3 months
  • Bank statements for the past 3 months
  • Tax returns for the previous 2 years
  • A list of your debts and assets
  • Divorce decree if you have gone through a divorce
  • Additional income documentation

Basic Guidelines for How to Qualify for a Mortgage

If you want to qualify for a home loan, follow these basic guidelines:

  • Prove your income is sufficient and consistent
  • Have at least 2 years of documented income from the same company or in the same industry
  • If you earn commissions, average your income from the last 2 years of tax returns

What income is considered “qualifying income”?

  • W-2 income/salary income from part-time jobs
  • Income from a second job
  • Overtime and bonuses
  • Seasonal jobs
  • Self-employed income
  • Alimony and child support (Documentation for this is required)
  • Non-qualifying VA income
  • Income from the lottery gambling
  • Unemployment pay
  • Single bonuses non-occupying co-signer income
  • Unverifiable income
  • Income from Rental Properties

Homeownership is a Possibility!

So if you are one of the 20 percent of consumers who believe a down payment of 10 percent or less is not enough to purchase a home, think again! There are mortgage financing options available that don’t require a 20 percent down payment. Providing you are a creditworthy prospective buyer, lenders now offer safe, sustainable loans with as little as 3 percent down. Obtaining a mortgage isn’t as difficult as it used to be. Homeownership is truly a possibility!

Contact Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext.206 or email [email protected] With 30-plus years of real estate experience in Brooklyn, he can answer your questions about how to qualify for a mortgage.


Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]


Taxes You Need to Pay When Selling Your Rental

May 30th, 2019

Taxes – UGH! Unless you’re an accountant with a love for numbers, the word probably brings with it a feeling of dread when you hear it. Some folks pay them annually to the IRS. Others must pay them quarterly. And we all get to pay them daily when we purchase stuff. Like death, they cannot be avoided! And if you’re selling your rental, there are a couple tax basics you should know. First, your rental is a business asset. So the taxes you need to pay on it are due only when it sells at a profit. But if your rental sells at a loss, you can write off the loss to offset taxable income. The key to knowing the taxes you need to pay is found in correctly calculating the amount of gain or loss on the rental you sold.

How a Profit or Loss is Determined

Your profit or loss is determined by subtracting your property’s adjusted basis on the date of sale from the sales price you receive (plus expenses, such as real estate commissions).

To understand your property’s adjusted basis, you must first know what “basis in property” and “adjusted basis” mean. Basis in property is the amount of your total investment in a property. And it is not fixed. It changes over time to reflect the true amount of your investment. Each change or new basis is called the adjusted basis.

Taxes You Need to Pay When Selling Your Rental Property at a Profit

When you sell a rental property at a profit, you pay taxes on the gain (profit) you realize (earn). These taxes are called Capital Gains Tax.

Reductions in basis increase the gain or profit you realize and therefore increase your tax liability when you sell your rental.

Taxes You Need to Pay When Selling Your Rental Property at a Loss

If you sell at a loss or lose money, you’ll be able to deduct the loss, but not without being subject to important limitations.

Increases in basis are lower your tax liability because they lower your profits.

Here’s an example from Nolo.com:

Viola bought a small apartment building and sold it six years later for $300,000. Her starting basis was $200,000. During the time she owned the property she took $43,000 in depreciation deductions and paid $13,000 for a new roof (an improvement). Her depreciation deductions reduced the property’s basis, but the roof improvement increased it. Her basis at the time of the sale is $170,000. Viola calculates her taxable gain on the property by subtracting her adjusted basis from the sales price: $300,000 – $170,000 = $130,000.

As you can see, when you sell your property, you effectively give back the depreciation deductions you took on it. Since they reduce your adjusted basis, they increase your taxable gain. Thus, Viola’s taxable gain was increased by the $43,000 in depreciation deductions she took. The amount of your gain attributable to the depreciation deductions you took in prior years is taxed at a single 25% rate. Viola, for example, would have to pay a 25% tax on the $43,000 in depreciation deductions she received. The remaining gain on the sale is taxed at capital gains rates (usually 15%, 20% for taxpayers in the top tax bracket).

How to Avoid Taxes You Need to Pay When Selling a Rental Property

Rental properties generate a respectable profit each month, provided you choose the right rental properties. But they can cost you when you sell. Here are three strategies that help ease the burden of a significant tax bite when you sell a profitable rental.

  1. Offset gains with losses
  2. Take advantage of Section 1031 of the Tax Code
  3. Turn your rental property into your primary residence

Offsetting gains with losses through tax-loss harvesting is for those with capital losses in a given tax year. This strategy allows a landlord to subtract those losses from the capital gains from the sale of their rental.

Taking advantage of the IRS Section 1031 “Like-kind” exchange is for those who are able to reinvest the proceeds of selling their rental property in new real estate. This strategy allows them the ability to defer some or all of the taxes on the capital gain.

Converting your rental property into your primary residence is for people who want to do so for better tax treatment when they sell. Landlords who convert a rental into their home to live in are able to exclude as much as $500,000 in capital gains from taxes.

Hire the Right Financial Advisor

When it comes to investments and knowing what taxes you need to pay on the sale of a rental, it’s always best to find and hire the right financial advisor. And it doesn’t have to be hard to find one who fits your needs. SmartAsset offers a free tool to match you with fiduciary financial advisors in your area in five minutes.

Hire the Right Real Estate Agent

If you’re selling a rental property, contact Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. Call (718) 253-9600 ext.206 or email [email protected] With 30-plus years of real estate experience in Brooklyn, he can help you with all your real estate needs.


Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]

What Do You Need to Know About Rent Back Agreements?

May 15th, 2019
Rent Back Agreements can be advantageous to both buyers and sellers providing they are utilized judiciously.

Ever hear of rent back agreements? So what are they, and what are the advantages and disadvantages associated with this kind of real estate transaction?

Rent Back Agreements Defined

Wikpedia defines rent back agreements as “a form of property transaction involving the expeditious sale of an owner occupier’s residence to a landlord or property company and renting it back from the new owner.” They are also known as post-settlement occupancy agreements.

This kind of transaction allows a home seller to buy himself extra time to stay in the home after closing.

And why would a home seller need extra time beyond the closing date to stay in the home?

Rent Back Agreements Explained

Here are a couple of home sale stories to help explain what rent back agreements are.

The Story of the Brownstone

My wife and I paid a builder to build a getaway home outside of New York City limits. And now our builder is nearing completion.

We put our brownstone up for sale as soon as the builder broke ground, assuming that it could be on the market for a little while. But guess what? Our custom home isn’t quite finished, and we already have a buyer for our brownstone.

The buyer has come to an agreement on a reasonable closing date with us since our new home is almost built. But again, guess what? As our closing date approaches, the builder has informed us of a major delay. This snag is going to keep us out of our new home for another 30 days past the closing date.

So what can we do? We know the buyer wants to move into their brownstone on closing day. Wouldn’t you? Of course you would!

The Story of the Offer Too Good to Refuse

My friend was selling her condo. And it wasn’t long before she received a very attractive cash offer that was just too good to refuse. The cash offer, however, came with a very short time until closing. She expected and planned on having more time to find a new place to live. But she knew she couldn’t turn down the buyer’s cash offer.

So there she was, cash in hand and no home to move into at closing time. What could she do?

Benefits of Rent Back Agreements

In both of the stories, the sellers ended up with no place to go on closing day. And in both cases, their real estate agents proposed rent back agreements.

In the case of the condo seller, her buyer was an investor who was planning to rent the condo out anyway. And he readily accepted. For 40 days past the closing date, she paid a daily rate that was equivalent to her mortgage payment plus the condo fee.

Benefits for the Seller

  • Allowed to stay in the home until a specified date past closing
  • Able to put things together to close the deal (if used properly with the appropriate language inserted in the addendum to the contract)

Benefits for the Buyer

  • Extra income can offset mortgage payments and some closing costs, such as broker commissions, appraisal fees, and attorney fees
  • Agreeing to a rent back gets your offer accepted in multiple offer situations in most cases

Benefits for Both the Buyer and the Seller

  • Minimizes stress for everybody involved by wrapping the rent into the closing and delivering it as a single payment
  • Used judiciously, it’s a win-win for all parties

Before Agreeing to Rent Back Agreements

Before agreeing to rent-back agreements, think carefully about the terms. Spell out the details for the record to avoid misunderstandings.

  • Understand why the seller wants a rent-back agreement
  • Charge a fair price
  • Don’t sign a lease that lasts longer than 60 days
  • Charge a holdover fee if the seller stays longer than agreed
  • Collect a security deposit
  • Require renters insurance

Most people do their best to plan ahead. But life happens. When a seller gets an offer with a proposed settlement date, they might ask, “Now, how am I going to coordinate getting out of this house and into another without having movers lined up in the driveway?”

Take note: Rent back agreements should be treated the same as you would treat any other business relationship. Buyers, never let the sellers retain possession of the home without drawing up a formal occupancy agreement, never. Because with terms and conditions of the seller’s stay in the buyer’s new home, both parties are protected.

Have you ever needed rent back agreements? Did a real estate agent you were working with suggest using a rent back agreement? There’s a lot that goes into a good rent back agreement. And in order for it to do its best work for both parties, it must be used properly. I recommend consulting with a real estate lawyer for more information.


 Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]

Should You Sell Your Home First?

April 30th, 2019
Sell your home

Should you sell your home first or wait until it sells to buy a new one?

If you’re moving soon, you might be questioning whether or not you should sell your home before buying a new one. There are a lot of factors involved in answering this question and making a decision. But hashed out below are the pros and cons of each. Now you can decide whether or not you should sell your home first before buying a one. And you can decide with confidence.

 

Yes, Sell Your Home First If You …

Want to get the most money for your home

If you’re not in any hurry, you won’t be tempted to take a low offer. It’s hard for you as a seller to hold firm on a price when you’re carrying two mortgages. And if you’re not in any hurry, you’ll also have negotiating power.

Can include a contingency clause in your contract of sale

You certainly don’t want to lose a buyer just to be able to stay in your home longer. But you can add a contingency clause to your contract that allows you to remain in your house for a short time after closing. A contingency of 30 to 60 days will give you enough time to close on a new property. It may be difficult to get the buyer to agree to this. But if they do, you’ll have plenty of time to find the perfect new house.

Can handle moving twice

If you sell your home first, you can always live in a short-term rental until you find a new place. This means moving twice, yes. But if you can handle it and are okay with that, it gives you an option.

Don’t want to be stressed about selling

No doubt about it. Selling a home is stressful, no matter how organized, prepared, or easy-going you may be. And carrying a second mortgage is stressful enough to elevate your blood pressure.

 

Yes, Buy a New Home First If …

It’s the Brooklyn home you’ve always wanted

 If you’re absolutely sure you’ve found your dream house, you should buy it now, even if your current house hasn’t sold. You might be full of regret later if you let your dream house pass you by.  Just make sure the house is truly worth it.

You’ve found a deal that’s too good to pass up

If you’ve researched the comps and you know the home you’ve found is too good a deal to pass up,  buy it. Waiting to sell your home might cost you more in the long run if you lose out on a good bargain.

The real estate market is a seller’s market

If it’s seller’s market, there are more buyers than there are houses selling, you won’t have any difficulty selling your Brooklyn property.

You have the money

Talk with Charles D’Alessandro, your Brooklyn Real Estate Agent. Find out how long homes that are comparable to yours are taking to sell these days. Then, do the math. Determine whether or not you have enough in savings to make the down payment and both monthly mortgage payments while you’re waiting to sell.

Do you need to sell your home? Should you buy a new home now or wait until the home you’re selling sells? Call Charles D’Alessandro, your Brooklyn Real Estate Agent with Fillmore Real Estate and ask him. Call (718) 253-9600 ext.206 email [email protected] With 30-plus years of real estate experience in Brooklyn, he’s got the answers.

 


 

Brooklyn Real Estate Agent

 Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 206
[email protected]