Prepping my townhouse for sale

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"Creative Finances" a serious imagination can come up with ways to get what you need.
What was the cartoon? "I'll gladly give you money tomorrow for a hamburger today."
You have equity in the house, use some of it. Ask a family member, ask your banker. Ask a close friend. You're looking for short term money to accomplish the repairs, so the house will sell and not stagnate.
"Can't never could and won't never will."
Oren "My doctor says I have a malformed public-duty gland and a natural deficiency in moral fiber, and that I am therefore excused from saving Universes."
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I disagree. You are not being realistic and you're not dealing with it either. You are keeping your price too high. You didn't have money to do upgrades, but did have money to pay two years of insurance and property taxes. Most people couldn't pull that off so your money situation may be able to support some work in the home. Think of it as an investment.
And don't look for too much in the marketing department. You're talking about a $200,000 townhome, not some grand villa. The realtor's cut will probably be 1.25% less expenses. Thats going to be about $2000. That may seem like a lot to you, but you're not in their shoes. They even have to pay rent on the desk they sit at. And how many houses does an agent sell in a year? You'll be lucky to get 3 lines in the Sunday paper real esate ads.
Marketing is about pricing and writing a description that entices people instead of scaring them off. Waiting another month to make changes is a mistake, you should do something NOW. When buyers go looking at properties, they know how long they've been on the market, and the longer the worse.
Do you know what comparable properties have sold for? What they listed for? Either your current or future agent can review this with you. Get on top of what the right price is, immediately, and make sure you're priced there. And take a good hard look at the description in the MLS. Buyers do look at this before deciding which properties to actually visit. If you're overpriced and not considering reasonable offers, your property will develop a "difficult" reputation, and realtors won't even bother showing it to potential buyers if they believe its a waste of time.
S
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On 8 May 2006 13:32:29 -0700, snipped-for-privacy@optonline.net wrote:

Wasn't many months ago (locally) that taxes increased with the increase in property values.
Our market is moving sideways, no loss but modest gains.
Oren "My doctor says I have a malformed public-duty gland and a natural deficiency in moral fiber, and that I am therefore excused from saving Universes."
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JD wrote:

What is the market like in general? Community in good shape? Lots of for sale signs? May be rebound of hot market cooling, which is happening a little bit here in FL - property on water still selling for just about any price asked :o)
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I rented a home for 7 years and kinda enjoyed it. Blessed with a great lady and her family. We became close friends.
If she hadnt of died no doubt I would still be renting it.
Renting has tons of advantages, but if it still qualifies as your primary residence sell.... to save taxes.
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Not exactly. Capital gains aren't the only taxes, just the least costly.
There are estate planning issues that will probably outweigh those captial gains tax savings. And all kinds of deductions that can offset the future capital gains if the property is sold in several years. Talk to a CPA who can run some numbers for you for sale, short term rental, long term rental, and very long term rental (renting the property until you and your spouse die).
S
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mrsgator88 wrote:

There is no federal estate tax unless the estate is like $1Mil. I don;t think these folks are in that range. States have relatively modest estate taxes, with most having no tax if it's a modest estate and one spouse dies. Even if it's passed on to a child, the state taxes are very modest.
And all kinds of deductions that can offset the future

The only deduction I see that they get from a rental without incurring costs is depreciation. And that is over 27.5 years, on the building portion only, not land. So they could get a max of around $5k a year deduction from that, which if they are paying 20% bracket rate, amounts to $1K a year. And that reduces their cost basis when they sell. All the other deductions, repairs, maintenance fees, etc are deductions, but they are also actual expenses they have to pay for. And of course, the rental amount is income. The main benefit to renting it out would be the future capital appreciation in the value of the condo. But that is long term. If they rent it for several years, then sell, as you suggest, they are gonna get hit with capital gains that are gonna be a lot more than any short term tax strategy.
Plus, you have to factor in that not everyone wants to be a landlord or deal with the headaches. Given that they can sell this thing and pay zippo tax right now and don't want to be landlords, I don't see the compelling financial case for them to rent it out.
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Its not about the estate tax. Suppose they bought the house for $100,000, and kept it until they died. If the house is worth $300,00 at that time, the heirs can sell it immediately for $300,000, and pay NO capital gains tax on that amount. Its a great tax savings vehicle, and most people don't even realize it. Maybe not for everyone, but we don't know all the facts about these people either.

Yes, that's all true. However, its not this place has been vacant for a few months. Its been 2 years already, and may be vacant for some time to come. At some point its worthwhile to consider having some income to offset the expenses. Just my opinion.
S
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mrsgator88 wrote:

They can sell it right now and pay Zero capital gains, so they don't need to do estate planning and wait till they die to avoid capital gains on this property, which clearly they prefer to sell now. The main advantage to holding on to it as a rental would be as an investment for future capital appreciation. And then, you are right, under current tax law, their heirs would inherit it at current market value, again avoiding the capital gains tax decades from now. But you claimed that there were estate planning "isuues" that would outweigh the capital gains exemption they could have now, implying there was some other tax coming into play here, which just creates confusion.
I'd also point out that passing on a property to your heirs isn't a great tax savings vehicle for most people. A married couple is already exempt from $500K in federal capital gains on their primary residence. So the vast majority of people can sell it any time they want and already pay zero tax. They can even sell it and move up to the next house and start the $500K process all over. It can be a good strategy for people with a low basis on a property that is not their primary residence, provided they really want to hold the property for their lifetime.
And I'd also point out that right now we know they can sell it and pay zero capital gains. No one knows what the tax code will be 20 or 30 years from now, or even 3 years from now. It could very well change so that the heirs will assume the cost basis, rather than market value for tax purposes. With the need to do something to close the ever growing deficit, it's likely politicians will be looking at additional sources of revenue. If I were a politician, this one would look like a particularly inviting target to me.

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JD wrote:

$10,000 cash back to buyer at closing so they can do their own upgrades to their taste. Cash is ALWAYS attractive!
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Sadly TODAY 90% of buyers want move in condition, and dont even consider homes needing repairs.Later they will redo what they dont like... at their time.
reasons why buyers avoid homes needing improvements, costs, finding contractors, managing job, and all the hassles that go with remodeling. nearly all buyers buy the most expensive home they can afford, leaving little money for repairs. plus truthfully as this seller notes its hard to afford 2 homes, and living in a constuction site sucks.
so selling a fixer upper is tough. with only 10% of buyers even considering it your target customer base is really small.:(
This requires creative selling and often bargain basement pricing.
If this seller could afford a new kitchen and baths they would likely sell fast and get more than their current asking price.
all homes sell, its just a matter of price...
low enough and it will move fast............
seller might consider one of those discount realty companies. around here blue edge get the home on the multi list
the buyer is responsible for promoting and showing the home. fee2% if seller finds buyer. once you have a caandidate blue edge handles all the paperwork.
saving realty fee can allow lower price so home moves faster
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snipped-for-privacy@aol.com says...

I think it's a fair question, though, if this is really a fixer.
1988 kitchen being a "fixer"? Really? Do folks really remodel their kitchen every 18 years? Naw - not in most cases. Unless there are problems, it's perfectly livable. Maybe a new Formica countertop (or something like that) and some new hardware (as the OP indicates) and a homeowner's warranty for the appliances, *at most* is indicated. I'd do as little as possible unless it's been subject to a *lot* of wear.

Adding in the remods, though? (Remember, "Design to Sell" kinda leaves out this little matter of *labor*, vetting contractors, etc. etc.)

I think minor cosmetics + lowering price + getting a realtor willing to work with the seller is in order. The original poster is done fooling around with this - I dont' see him as an FSBO or discount guy.
Banty
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It seems that two areas really date a house, the kitchen and bathroom. In both, 18 years without any improvements is a long time. It's not so much a matter of what's livable; it's about appealing to buyers. If the layout is good in both, updating hardware, painting walls and cabinets, and installing new countertops and/or flooring could really help. I don't think anyone is suggesting a complete tear-out.
I don't think the age of the appliances has been mentioned. If they're older, mismatched, or an unusual color, it may be worth updating. Prospective buyers will take note of new, coordinated, energy-efficient appliances. If the seller has appliance warehouses, she can get a lot of bang for her buck. It's tough to know if investing in certain items will net more in the end than dropping the price, but it's time to give it serious thought.
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That would be me and my wife as buyers. Its not that we didn't want to do any work, because you end up doing that anyway, but really, people selling solid but outdated houses usually have unrealistic expectations of what they should sell for. I'm not going to pay the same or almost the same price for a house that needs $20,000 or more of carpet, cabinets, paint, etc. That was our experience anyways, and those houses would just sit on the market forever until the owner grudgingly gave in as they reached their financial break-point. I also sell furniture, so I see it from our customers sometimes too.

Very true

A lesson to be learned here. You're going to pay to have it fixed up at some time no matter what. Better to do it early on and get the enjoyment from it, than at the very end as a discount off of your selling price.

Very true. Any Realtor will tell you, there's only one reason, and only one, that a house sells (or doesn't). Price.

My friends did that and saved a mint (and the wife works for a RE agency!)
S
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says...

I completely agree if it's been priced with comps that are remodelled.
But I'm not so sure the market is so bereft of folks who are happy with livable, though not spanking-new, features in the home. When I bought, I was looking for location, layout, price, livability. If I want to eventually have a kitchen with a craftsman or southwestern feel (as I did), why the heck do I want to pay $$$ for cherry cabinets, big honking brushed-nickel hardware and black starry granite, and frickin' misplaced wooden floors (eveyone by know should know how I feel about wooden kitchen floors... ;) just to rip it all out?? Sure, there will be buyers who fall into the current styles hook, line, and sinker. But if it takes too much to get there, I really find it hard to believe there aren't buyers happy with an 18 year old kitchen for starters while they pull resources to get what they *really* want a little down the line. Maybe the condo market is a little different - but can folks here tell me in what ways it's different??

Absolutely. So many people make that mistake.

Of course. But the O.P needs a realtor willing to work with him. If the ones he's meeting only want stuff that shows itself, well, he's run into some cherry-pickers.
I'll be remotely selling a co-op soon (my elderly mother's). It'll be a new low-pile neutral flecked carpet, neutral color on the walls, off-white trim, an added recessed can over the kitchen sink, *possibly* new Formica, and a fix up of the porch. That's it. And push it out on the market and let it get what it gets. Anything more will be way more agita and possible wasted travel $$$ than would make it worthwhile to me.
Banty
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As I read the replies, I am surprise that a basic reality check isn't discussed.
What is this costing you per month to own including the cost of money (the lost interest that you would earn if you sold it today and put the proceeds in the bank). The next question is it worth waiting for the desired price or should you drop the price now and get rid of it.
With bank interest rates over 4.5 percent, you are losing a fair chunk of change by trying to get top dollar. Add in insurance, maintenance fees, electrical cost, water, sewer, etc. It might be better to drop the price to the point where someone will overlook the little things.
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