I have always enjoyed the writing of real estate writer Robert Bruss (in the Chicago Tribune). He writes succinctly and lets you know his opinion.
He recently covered some changes in the $250,000 exclusion from income tax on home sales. Nothing startling here, but the changes may apply to some sellers (divorced or in the event of the death of a spouse.)
Every three years the Cook County assessor increases the assessments for real estate. The schedule for the so-called triennial reassessments goes by township– Palatine and Barrington townships will be reassessed in the 2004 tax bill issued in 2005.
Notices were mailed to Barrington homeowners a few days ago. They will be mailed to Palatine homeowners the first week of August. Why is this important? You only have 30 days from the mailing of the assessment to protest the increase.
The 7% assessment cap that was just passed should help keep large increases under control. It is very important to check your new assessment and to file a protest if it looks too high. If you miss the 30 day window you are out of luck for more three more years.
A new contingency is showing up in home purchase contracts: We already have attorneys’ approval, mortgage, home inspection, lead paint, mold and radon. And now, introducing, the clue report contingency!
I have a closing in process where the buyer requested that my seller furnish a clue report. I expect that this will show up as a buyer’s contingency more and more.
A clue report can be easily obtained online for $9 and it shows the last 5 years claims history of your house on homeowner’s insurance. So if your basement has flooded 15 times in the last two years and you filed claims on your homeowner’s insurance it will show up on the clue report. If you failed to disclose that flooding the buyer will probably bail out on the contract when he or she see the clue report.
The problem with clue reports is that some insurance agents report phone calls to the agent concerning coverage issues as claims. Car and umbrella policy claims are included too.
When you list your home for sale with a real estate agent, the agent inputs data on your house in a multiple listing service web site available solely by other real estate agents (not the general public).
There are two multiple listing services in the Chicago area: MLSNI (the big one) and MAP (the small one– is an acronym for Mt. Prospect, Arlington Heights and Palatine). Some real estate companies have recently dropped MLSNI in favor of the smaller MAP. Several Coldwell Banker offices on the north shore have pulled out of MLSNI and now use MAP exclusively. The reasons for this are cloudy at best (and you probably don’t care anyway). MLSNI does have a public web site that is very good and shows most of what’s on the market. MAP does not have a public site, but relays listings through to the Tribune and realtor.com.
What does this mean to you? If you list your home for sale, make sure your real estate agent puts the listing in BOTH MLSNI and MAP. You pay a lot to list your home and you should get maximum exposure.
Cook County (unlike every other county) insists on requiring homeowners to apply every year for the homeowner’s exemption on their real estate taxes. This reduces the real estate taxes by about $450.00. For years, the assessor mailed a postcard around February and had to be signed and returned. Then, just to further confuse everyone, they switched to a large 8.5 x 11 packet a few years ago.
The exemption packets have NOT been mailed yet (for the 2003 tax year) as of 4/16/04. According to the Palatine Township Assessor they should be mailed by May 1, 2004. The assessor’s website has a helpful apply online feature, but it doesn’t work until the packets are mailed.
So hang in there a few more weeks and then either download the form from the assessor’s website or fill out the form online. You have not missed the almighty exemption (yet).
Real Estate exchanges help you sell “investment” real estate without paying capital gains tax. (Actually, the taxes are deferred, not eliminated.)
Seller can rid themselves of investment houses, land or apartment buildings and they get 45 days to identify 3 replacement properties and 180 days to close on the new property. The seller must put the sale proceeds in an exchange escrow. I set up quite a few of these for clients.
There are also “reverse exchanges.” In a reverse exchange, you buy your replacement property first, then sell your current investment property. The problem is that an exchange accommodator must buy the property (you can’t) and then you buy it from the accommodator once you sell your current property. A reverse exchange is more complicated than a straight exchange and the fees are about 4 times that of a regular exchange. There are two sets of transfer taxes and it is difficult to obtain financing on the property that is acquired first (because you don’t have the equity from your sale yet).
All things being the sale you are better off doing a regular exchange rather than a reverse, if at all possible.
The number of “discount” limited service listings has increased greatly. A seller lists his or property with a real estate agent who does one thing only: enters the data in the multiple listing service. This gets more exposure for the property and the owner deals directlyu with other agents wanting to show the house. Most also offer a sign and a lock-box for an extra fee. The charge is about $500 to the listing real estate agent up front (but 2.5% is charged by the selling real estate agent at closing). No open houses are conducted and there is no assistance in negotiating the sale contract.
In the last month I have had several clients do this. It seems to be internet-savvy clients under age 35 or so who really like this way of selling.
The only problems are:
1. The listing agents do not take calls and that seems to frustrate other agents trying to show the property;
2. There is no “buffer” when an offer comes in (because the agent doesn’t help with the offer) and negotiating the contract is harder;
3. I had one client who signed up with a southside discount broker who did not list the home in the listing services (MAP and MLSNI) that everyone uses here and no one saw the house. He cancelled the listing when he found out.
This is part of the “unbundling” of real estate services that will continue to unfold.
Mold cases are increasing. More and more, home inspectors find mold in attics during the inspection.
In the last year, I have had about 10 mold cases: In onecase, the Buyer backed out of the contract. A few days later the Buyer reconsidered and signed a new contract, for $5,000 less than the last one, but accepting the property “as is.” In another case, a mold remediator was called in, the seller cleaned up the mold for about $2500 and the Buyer closed. The cost of remediating the mold is between $1500 and $8000, I have found.
If the inspector finds mold, a mold remediation company is called in to examine it, clean it up and stop the leakage that caused it in the first place. Generally, home inspectors will not do mold remediation; they just indentify a mold problem.
If you are thinking of selling a home it may be wise to inspect your attic for mold before it goes on the market. Click here for a good mold primer.