Question: I have a buyer and they offered a very good price, perhaps a bit higher than a house of this size and neighborhood has ever fetched. Maybe the low age and excellent condition and extras justify this. Just before the offer, mortgage rates were lower than ever in recent memory, but now they have jumped .75 - 1.5%, which I suppose may erode the value. If I get a lower number from an assessor than our agreed price, and the lender insists on 100% assessed valuation, what are my options as a seller?
Answer: An "assessor" values property for the local government. Your concern -- and the lender's -- is with appraisers and an appraisal.
Lenders will provide money based on the sale price or appraised value, whichever is less. Let's say the sale price is $300,000 and the appraised value is $290,000. The lender will finance a purchase based on the lower amount. Can you still get the $300,000? Yes -- if the buyer is willing or obligated to put additional cash into the transaction.
What are the terms of the purchase offer? Does it require a minimum appraised amount? Does it cap the interest rate that the buyer is obligated to pay? Is the buyer's cash requirement limited? For details, review the purchase agreement.
Question: I am a real estate investor. I often visit developer subdivisions with model homes and inquire about purchasing homes for rentals. I am often told that "we don't sell to investors". Can they do that?"
Answer: There are several ways to see your question:
First, it may not be especially artful, but perhaps what is being said is that the builder does not have investor financing. However, if you can get such financing then perhaps the builder would consider a purchase proposal.
Second, the property covenants may prohibit anything other than use by owner-occupants. With condominiums, for example, if a given percentage of units are rented then all units may be regarded as investment properties and thus will be harder to finance or refinance.
Third, if the properties don't sell you may want to speak with the builder again....
Question: We are selling a house that we haven't lived in for over five years. It had a VA loan and at the time we left the area the house was worth less than we paid for it. So VA made us keep it or walk. We kept it and rented it, now we are selling and will have to pay a capital gains tax for all this trouble. We don't want to do an exchange or be a landlord. Any options to avoiding capital gains tax in our situation?
Answer: The VA did you a huge favor. Had you walked away from the property your credit would have been demolished. Now you're selling at a profit (there must be a profit otherwise there would be nothing to tax), you have good credit, what would have been a credit blemish will be cash in your pocket and the capital gains tax has dropped from 20 percent to 15 percent.
As to the VA, instead of having a foreclosure on the books it now has another loan paid-in-full.
All in all, a good outcome from tough circumstances.
Question: I have owned my home for just over 2 years and have resided in it the whole time. If I choose to sell within the next 6 month to a year and not invest in real estate with my equity, will I be taxed on the capital gain?
Answer: Under the current federal tax rules, if you sell a personal residence in which you have lived for two of the past five years, then as much as $250,000 in profit is tax exempt, $500,000 if married and filing jointly. You are not required to reinvest or roll-over the money into another residence. For general information, see IRS Publications 521 and 523, "Moving Expenses" and "Selling Your Home." For details, including any state tax issues, speak with a CPA, enrolled agent or tax attorney.
Question: I plan to purchase a modular home if I can find the particular model that is priced right. If I decide to sell my modular, do I have to disclose that my home is a modular (manufactured) home or can I sell it as a traditional stick built home?
Answer: You can't sell it as a "stick-built" home because that isn't the case. Alternatively, what is a modular home? Is it a home that came entirely from a factory or is it merely a home with modular elements, say a roofing system? Given the huge number of modular homes produced each year, at this point it's a common and acceptable construction technique, one preferred by some buyers.
Has the module been re-called? If not, why not describe the house as what it is: a house.
The buyers should obtain a structural inspection and the inspector will point out if the improvement is modular and if there are material construction defects.