Dear Edith: You have advised that a house priced right will sell, and if it is not selling, it could be priced too high for the market.
Obviously, all situations are unique, but is there a good rule of thumb about how long should you let a house be on the market before reducing the price? Does a month suffice? Supposedly, the real estate market is low on inventory where I live, so homes are selling faster. -- T. M.
Answer: Sorry, but there's no rule. Every property is unique, and more factors are involved than just the state of the local market. We'd need to know, for example, how widely the property has been exposed on that market and what similar properties happen to be offered for sale at the moment.
Additionally, the sellers' situation can make a difference. Sometimes older homeowners are really reluctant to leave their longtime home and have the mindset "If it doesn't sell now, there's always next year." On the other hand, sometimes sellers are under pressure: They've already moved, and expenses are being paid on two houses.
All I can tell you is it's best to follow the advice of an experienced real estate broker.
Edith: Besides price and construction, what questions or concerns should be addressed when purchasing a brand-new home? -- D. O.
Answer: First, let's talk about price for a bit. Builders and developers pretty much know their costs, and price is usually not flexible except in situations of hardship. However, it may be possible to dicker about extras that involve add-on prices.
In some areas, you may not know how much property taxes on new construction will cost, so a talk with the local assessor's office could be in order.
Get all promises in writing. If possible, you -- or your attorney -- should arrange for part of the purchase price to be held in escrow pending the builder's attention to small matters that may come up during your first few months of occupancy.
Be prepared for the following:
--Everything will take longer than expected.
--Everything will cost more than expected.
--The weather will turn uncooperative.
--Changing your mind about anything will be surprisingly expensive.
--You're going to love your new home.
Getting an Appraisal
Dear Edith: Regarding the question of selling a home to a family member and "the best way to set a fair market value," I was shocked that you did not advise getting an appraisal! Yes, a Realtor can complete a market analysis, but the best way is to get an appraisal from a certified real estate appraiser. As a residential appraiser of over 30 years, I have done many market-value appraisals for selling purposes. The Realtor opinion may or may not be free, but it would be well worth the money to get a professional appraisal. It protects both the buyer and the seller, especially when they are family members. -- R. L.
Answer: Thanks for your opinion. I realize you are a certified professional, and I do remember the old saying "If it's free, it's not an appraisal."
I still feel that experienced neighborhood brokers are probably qualified to furnish useful opinions of market value. I did suggest consulting more than one and averaging the estimates. Or, if the homeowner were to hire a licensed appraiser like yourself, an inexpensive one-page appraisal would also be sufficient, rather than an elaborate study.
Assessment Vs. Appraisal
Dear Edith: I am responding to the person who asked whether it's possible to use a home assessment to value a home. I have owned my home for 32 years. I have made many improvements, and the area I live in is very sought after. To use my assessment, which they do raise now and then, would still result in a selling price that's way too low. Tell the reader to get an appraiser to look at the home. -- D. A.
Interest on Escrow Account
Ms. Lank: As a tax professional, I'd just like to add one tidbit to the discussion of interest on an escrow account. If your escrow earns interest, the interest is considered taxable income. Your bank should furnish a Form 1099-INT. If it doesn't, the IRS expects you to ask for it, or at least find out what the amount was for the tax year and include it as taxable interest. (You don't have to send the 1099-INT form itself to the IRS).
I don't know if you consider this bit of info a bit far afield -- it's only tangentially real estate-related, but I'm sending it just in case. -- R. E.
Answer: Thanks for the reminder. It does apply in states where interest is paid on escrow accounts.
Contact Edith Lank at www.askedith.com, at firstname.lastname@example.org or at 240 Hemingway Drive, Rochester NY 14620.
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