Prepping my townhouse for sale

Keep your original asking price or even a little higher, BUT offer $10,000 cash back to buyer at closing so they can do their own upgrades to their taste. Cash is ALWAYS attractive!

Reply to
Curmudgeon
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Well, they probably still get a year or two to qualify for the deduction, but about the taxes...

First, you only pay capital gains tax on the profit, not the sale amount. Profit is not _just_ the difference between the two sale prices. Any improvements (not maintenance, but improvements) to the house are tax deductible. Did spend a mint on fancy wallpaper 20 years ago? Sorry, not deductible, but...

  • Were the windows ever replaced? Bang, that's deductible.
  • Did you remodel the kitchen? Same thing.
  • Put a new deck in? Deductible

Considering all the years that property didn't appreciate, its possible that there's less tax involved than we realize. Now, if you make the property rental, here's what you gain:

  • Depreciation deduction
  • ANY expense on that house - any kind of maintenence at all becomes a tax deduction of off the rent.
  • Do you have heirs beside your wife? If so, at the time of inheritance they'll inherit the house at its Fair Market Value at date of death. Meaning, they can flip it the next day and pay no capital gains tax

I know you think you need the money, but, you've been living without it for this long. At the end of the year, the rental income and deductions should cover the mortgage and taxes. You might find the tenant might want to buy your home after the lease is up, and then you're saving 5-6% on realtor commissions.

Read this:

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for improvement deductions and this below for general info about how to finagle the living requirements:
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And most importantly, discuss this with a practicing CPA to get the straight scoop. People who do this generally come out pretty good in the end.

S
Reply to
mrsgator88

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
Reply to
mrsgator88

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

Reply to
hallerb

You can't be serious thinking that there isn't still a large capital gain here. They've owned this property for 24 years and in that time it would be extremely unusual for there not to be a large capital gain, even after they allow for capital improvements made over the years.

That's true, but it's a long time to wait to get out of paying capital gains, which they are already free and clear of if they sell it now.

Extremely unlikely that 6% commission or rental income is going to offset having to pay capital gains. Plus she has the headaches of being a landlord. They can do the math, but I'm betting they would have to pay tax on minimum of $75K, more likely $100K, so what's the point as opposed to being done with it now, like she wants?

Reply to
trader4

That's what I've been thinking throughout the thread. There are people that are willing to pay the premium for something in move-in condition, and people that are willing to look past imperfections for a good deal. It has to be one or the other. Given your difficulties, I'd start with minor improvements (fresh paint and a bit of landscaping, etc.), better staging, and a new agent. See where that gets you.

You say you're a two-time buyer, but not if you've ever sold a house. I haven't sold a home myself, and would take the advice of the folks that have. With that caveat, there seems to be a real balance between what you spend to prepare a house and your final price. If a couple grand of new appliances and clean new countertops gets you closer to your goal, it would be well worth considering.

You mentioned you're renting your place. There were originally tenants in the house my wife and I bought. They weren't motivated to help the house move, and it showed. Every time we went in, the place was a mess. There was so much clutter in the dining room that we never noticed how fantastic the mantle was. The carpets were trashed by multiple pets and an infant, the place didn't smell fresh, and the layout in most rooms was restrictive. We saw past all that, but I'm sure others didn't. If you still have a friend living in your house, make sure he's working with you. If you know you have people coming to look, get in there and make sure it's showing as well as it can. Good luck.

Reply to
Mark Cato

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

Reply to
Banty

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
Reply to
mrsgator88

I hope hope you're not telegraphic this much defeatism to your potential buyers.

Reply to
Goedjn

Unless her realtor works much differently than those I worked with, I doubt she is even meeting potential buyers. That usually doesn't happen until an offer is in play.

Jo Ann

Reply to
jah213

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.

Reply to
Mark Cato

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

Reply to
Banty

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.

Reply to
trader4

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.

Reply to
noname87

On Mon 08 May 2006 11:32:17a, Thus Spake Zarathustra, or was it JD?

Somewhat as I posted before, if (for whatever reason - the buyer doesn't care) either can't or won't perform the suggested/recommended changes/fixes/upgrades, then you're just belaboring the point. No one really cares why. You'd be better off to accept whatever price you can get and be done with it. Moaning won't help. I hardly even see what your point was in posting here.

Reply to
Wayne Boatwright

On Mon 08 May 2006 12:12:06p, Thus Spake Zarathustra, or was it JD?

Most people would want them to look new, too.

Ye gods, man. that redesign was 18 years ago! This is 2006. You're beating a dead horse.

Reply to
Wayne Boatwright

On Mon 08 May 2006 04:56:53p, Thus Spake Zarathustra, or was it Edwin Pawlowski?

He's deaf, Ed. But he's awfully good at moaning.

Reply to
Wayne Boatwright

Ya always end up with a dead horse with bruises.

So here's a mule joke.

Morris, a city boy moved to the country and bought a donkey from an old farmer for $100. The farmer agreed to deliver the mule the next day. The next day, the farmer drove up and said, "Sorry, but I have some bad news. The donkey died."

"Well, then, just give me my money back."

"Can't do that. I went and spent it already."

"OK, then. Just unload the donkey."

"What ya gonna do with him?"

"I'm going to raffle him off."

"You can't raffle off a dead donkey!"

"Sure I can. Watch me. I just won't tell anybody he's dead."

A month later the farmer met up with the city boy and asked, "Whatever happened with that dead donkey ?"

"I raffled him off. I sold 500 hundred tickets at two dollars apiece and made a profit of $998."

"Didn't anyone complain?"

"Just the guy who won."

"What did you do?"

"I gave him his two dollars back."

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."

Reply to
Oren
4 old carpet isnt new:( It looks old and worn to buyers...

Bottom line do what the realtors suggest or accept a MUCH lower price.

Fixing up might cost you 10 grand but net 20 grand more along with a faster sale.

if you cant afford it accept a slower sale at a dramatically lower price

Reply to
hallerb

HERE'S YOUR SIGN!

"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."

Reply to
Oren

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