Tag Archives: buy staten island properties

5 QUESTIONS TO ASK YOUR HOME’S INSPECTOR

Most home buyers feel like they are bona fide real estate experts after all the studying up on loans and neighborhoods, online house hunting and open house visiting it takes just to get into contract on a home these days. But for all but the most handy of house hunters, getting into contract and starting the home inspection process only surfaces how little you actually know about the nuts and bolts and brick and mortar of the massive investment you’re about to make: a home!

So, you hire a home inspector, but it seems like they’re speaking an entirely different language – riddled with terms like “serviceable condition” and “conducive to deterioration” – about your dream home!  Here are 5 questions you can use to decode your home inspector’s findings into knowledge you can use to make smart decisions as a homebuyer – and homeowner.

1.  How bad is it – really?  The best home inspectors are pretty even keeled, emotionally speaking.  They’re not alarmists that blow little things up into big ones, nor do they try to play down the importance of things.  They’re all about the facts.  But sometimes, that straightforwardness makes it hard for you, the home’s buyer, to understand what’s a big deal and what isn’t so much – the information you need to know whether to move forward with the deal, whether to renegotiate and what to plan ahead for.

I’ve seen things categorized in home inspection reports under “Health and Safety Hazards” that cost less than $100 to fix, like replacing a faucet that has hot and cold reversed.  And I’ve seen one-liners in inspection reports, like “extensive earth-to-wood contact” result, after further inspection, in foundation repair bids pricier than the whole cost of the home!

If you attend the inspection (which any good Realtor will recommend) and simply ask the inspector whether or not something they say needs fixing is a big deal, nine times out of ten they will verbally give you the information you need to understand the degree to which the issue is a serious problem (or not).

2.  Who should I have fix that?  I always ask this question of home inspectors, with dual motives.  First, very often, the inspector’s response is – “What do you mean?  You don’t need to pay someone to fix that.  Go down to Home Depot, pick up a ___fill in the blank__, and here’s how you pop it in.  Should cost you $15 – tops.”  And that’s useful information to know – it eliminates the horror of a laundry list of  repairs and maintenance items at the end of an inspection report to know that a number of them are really DIY-type maintenance items.  Even buyers who are really uncomfortable doing these things themselves then feel empowered to either (a) watch a few YouTube vids that show them how it’s done, or (b) hire a handyperson to do these small fixes, knowing they shouldn’t be too terribly costly.

And even on the larger repairs, your home inspector might be able to give you a few referrals to the plumbers, electricians or roofers you’ll need to get bids from during your contingency period, which you may be able to use to negotiate with your home’s seller, and to get the work done after you own the place.  Dropping the inspector’s name might get you an appointment booked with the urgency you need it order to get your repair bids and estimates in hand before your contingency or objection period expires.

And same goes for any further inspections they recommend – if neither you nor your agent knows a specialist, ask the general home inspector for a few referrals.

3.  If this was your house, what would you fix, and when?  Your home inspector’s job is to point out everything, within the scope of the inspection, that might need repair, replacement, maintenance or further inspection – or seems like it might be on its last leg.  But they also tend to be experienced enough with homes to know that no home is perfect.  Many times, I’ve asked this question about an item the inspector described as “at the end of its serviceable lifetime” and had them say, “I wouldn’t do a thing to it. Just know that it could break in the next 5 months, or in the next 5 years.  And keep your home warranty in effect, because that should cover it when it does break.”

This question positions your home inspector to help you:

  • understand what does and doesn’t need to be repaired,
  • prioritize the work you plan to do to your home (and budget or negotiate with the seller accordingly),
  • get used to the constant maintenance that is part and parcel of homeownership, and
  • understand the importance of having a home warranty plan.

4.  Can you point that out to me? Often, when you attend the home inspection, you’ll be multi-tasking, taking pictures of the interior, measuring for drapes or furniture, even meeting the neighbors, or fielding several inspectors at a time.  Worst case scenario is to get home, open up the inspector’s report and have no clue whatsoever what he or she was referring to when they called out the wax ring that needs replacement or the temperature-pressure release valve that is improperly installed.

Your best bet is to, at the end of the inspection and while you’re all still in the property, just ask the inspector to take 10 or 15 minutes and walk you through the place, pointing out all the items they’ve noted need repair, maintenance or further inspection.  When you get the report, then, you’ll know what and where the various items belong. (One more best practice is to choose an inspector who takes digital pictures and inserts them into their reports!)

5.  Can you show me how to work that? Many home inspectors are delighted to show you how to operate various mechanical or other systems in your home, and will walk you through the steps of operating everything from your thermostat, to your water heater, to your stove and dishwasher – and especially the emergency shutoffs for your gas, water and electrical utilities.  This one single item is such a time and stress saver it alone is worth the lost income of missing a day of work to attend your inspections.

5 Tips for Homeowners Filing Taxes

Ask a roomful of homeowners what’s so great about owning versus renting, and you’ll hear them holler in unison: “the tax deductions!” And it’s true – homeowners who itemize their taxes are able to deduct 100% of their mortgage interest and property taxes from their income tax returns.

That means that if you’re in a 28% tax bracket, Uncle Sam effectively subsidizes about a third of your borrowing costs or more, making your home more affordable or allowing you to buy a larger home than you could have otherwise. Also, big chunks of your closing costs are tax deductible, and hundreds of thousands of dollars of any profit (or capital gains) that you realize when you sell your home are exempt from income taxes.

At tax time, it’s critical to know what you’re entitled to, so you can claim it. So, here are five essential need-to-knows about home-related income tax tips to help you get the most tax-reducing bang out of your home-owning buck – and to avoid hefty home ownership-related tax traps.

1. You Have to Itemize Your Return to Claim Your Deductions

During the recent debate on Capitol Hill about whether the mortgage interest deduction should be eliminated (it won’t be, not anytime soon), it came out that nearly 40% of homeowners lose out on their major tax advantages every year when they fail to itemize their income taxes. If you own a home and otherwise have a fairly simple return, it might be tempting just to take the standard deduction – and if your mortgage, property taxes and income are low enough, the standard deduction might outweigh your homeowners’ deductions. But you’ll never know if you’re losing out on the tax advantages of itemizing unless you try; before you grab a pen and start filling in that 1040-EZ grab those forms from your mortgage company and answer the questions on tax software like TurboTax, which will automatically do the math on whether itemizing or taking the standard deduction will result in the lowest tax bill – or the highest tax refund – for you.

2. Plan Ahead and Be Strategic When Taking a Home Office Deduction

According to the Small Business Administration, the average home office deduction is $3,686 – multiply that by your tax bracket – 15%, 20%, 30% or whatever it is, and that’s what you’ll save on your taxes by writing off your home office. Know, though, that the space you designate as your home office cannot be exempted from capital gains tax when you sell your home later. The $250,000 (single)/ $500,000 (married filing jointly) income tax exemption for capital gains is only good on your personal residence, after all – not including any space in your home you’ve claimed as your tax-advantaged office. If you foresee selling your home for much more than you bought it in the future, near or far, discuss this with your tax preparer to see if the few hundred bucks you save is worth the capital gains complication later.

3. Tax Relief for Loan Modifications, Short Sales and Foreclosures Is Only Around Through 2012

While the long-term housing outlook is beginning to look up, 2011 is projected to be the peak year for foreclosures during this market cycle. Distressed homeowners who are on the brink of a short sale, loan modification or foreclosure should be aware that normally, any mortgage balance that is wiped out by one of these outcomes is taxed as what the IRS calls Cancellation of Debt Income, or CODI.

Under the Mortgage Debt Forgiveness Relief Act of 2007, the IRS is currently not charging income taxes on CODI incurred through a loan mod, short sale or foreclosure on most primary residences through 2012. But right now, banks are taking many months, or even years, to work out mortgages in all of these ways; the average foreclosure in New York state right now occurs only after 22 months of missed mortgage payments. If you foresee any of these outcomes in your future, don’t put things off. Do what you can to get to closure on your distressed home and loan, ASAP, while you won’t have income taxes to add as the insult on top of your significant housing injury.

4. Project the Income Tax Consequences of a Refinance or Property Tax Appeal

Homeowners everywhere are working on applying for a lower property tax bill on the basis of the last few years’ decline in their home’s value. Those who have equity have flocked in masses to refinance their 7% home loans into the 4% to 5% rates of the last few months. These strategies offer some of the heftiest household savings out there for the corresponding investment in time and money they take. But here’s a caveat for savvy homeowners who slash these costs: remember that property taxes and mortgage interest, the very costs you’re minimizing, are also the basis for the major tax benefits of being a homeowner. So plan ahead for your income tax deductions to go down along with your taxes and interest.

5. Don’t Forget Those Closing Costs

If you bought or refinanced your home in 2010, you may be so focused on your mortgage interest and property tax deductions that you forget all about your closing costs. Any origination fees or discount points that were paid to your mortgage lender at closing are tax deductible on your 2010 return, get this – even if the seller paid your closing costs. If you can’t figure out exactly what you paid, look for your HUD-1 settlement statement, that legal sized paper full of line item credits and debits that you should have received from your escrow provider or title attorney at, or just after, closing. Can’t find it? Drop your real estate agent or mortgage broker an email; they can usually get a copy to you quickly.