The Gary Segal Team - Blog

Seven Steps Every New Homeowner Should Take

Nanette Germain — Sun, 30 May 2010 22:06:37 GMT

7 Smart Steps Every New Homeowner Should Take

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By Amy Fontinelle

Investopedia.com

Turning the key in a lock that no landlord has access to, reading in a hammock in your own backyard and painting your dining room bright red - what could be more exciting than making the leap from renter to first-time homeowner? Getting swept up in all the excitement is a wonderful feeling, but some first-time homeowners lose their heads and make mistakes that can jeopardize everything they've worked so hard to earn.

Don't be one of those people: take a few moments to ponder these seven practical concerns that will help ensure that your first home becomes the place of luxury and financial freedom you've anticipated.

1. Don't Overspend on Furniture and Remodeling
You've just handed over a large portion of your life savings for a down payment, closing costs and moving expenses. Money is tight for most first-time homeowners - not only are their savings depleted, their monthly expenses are often higher as well, thanks to the many new expenses that come with home ownership, such as water and trash bills, and extra insurance.

Everyone wants to personalize a new home and upgrade what may have been temporary apartment furniture for something nicer, but don't go on a massive spending spree to improve everything all at once. Just as important as getting your first home is staying in it, and as nice as solid maple kitchen cabinets might be, they aren't worth jeopardizing your new status as a homeowner over. Give yourself time to adjust to the expenses of home ownership and rebuild your savings - the cabinets will still be waiting for you when you can more comfortably afford them.

2. Don't Ignore Important Maintenance Items
One of the new expenses that accompanies home ownership is making repairs. There is no landlord to call if your roof is leaking or your toilet is clogged (on the plus side, there is also no rent increase notice taped to your door on a random Friday afternoon when you were looking forward to a nice weekend). While you should exercise restraint in purchasing the nonessentials, you shouldn't neglect any problem that puts you in danger or could get worse over time, turning relatively small problem into a much larger and costlier one.

3. Hire Qualified Contractors
Don't try to save money by making improvements and repairs yourself that you aren't qualified to make. This may seem to contradict the first point slightly, but it really doesn't. Your home is both the place where you live and an investment, and it deserves the same level of care and attention you would give to anything you value highly. There's nothing wrong with painting the walls yourself, but if there's no wiring for an electric opener in your garage, don't cut a hole in the wall and start playing with copper. Hiring professionals to do work you don't know how to do is the best way to keep your home in top condition and avoid injuring - or even killing - yourself.

4. Get Help With Your Tax Return
Even if you hate the thought of spending money on an accountant when you normally do your returns yourself, and even if you're already feeling broke from buying that house, hiring an accountant to make sure you complete your return correctly and maximize your refund is a good idea. Home ownership significantly changes most people's tax situations and the deductions they are eligible to claim. Just getting your taxes professionally done for one year can give you a template to use in future years if you want to continue doing your taxes yourself. And remember, tax preparation expenses are tax deductible, so whatever your marginal tax rate is, think of that as a discount on the cost of the service.

5. Keep Receipts for Home Improvements
When you sell your home, you can use these costs to increase your home's basis, which can help you to maximize your tax-free earnings on the sale of your home. In 2008, you could have earned up to $250,000 tax free from the sale of your home if it was your primary residence and you had lived there for at least two of five years before you sold it. This assumes that you owned the home alone - if you owned it jointly with a spouse, you could each have gotten the $250,000 exemption.

Let's say you purchased your home for $150,000 and were able to sell it for $450,000. You've also made $20,000 in home improvements over the years you've lived in the home. If you haven't saved your receipts, your basis in the home, or the amount you originally paid for your investment, is $150,000. You take your $250,000 exemption on the proceeds and are left with $50,000 of taxable income on the sale of your home. However, if you saved all $20,000 of your receipts, your basis would be $170,000 and you would only pay taxes on $30,000. That's a huge savings: in this case, it would be $5,000 if your marginal tax rate is 25%.

6. Don't Confuse a Repair With an Improvement
Unfortunately, not all home expenses are treated equally for the purpose of determining your home's basis. The IRS considers repairs to be part and parcel of home ownership -something that preserves the home's original value, but does not enhance its value. This may not always seem true. For example, if you bought a foreclosure and had to fix a lot of broken stuff, the home is obviously worth more after you fix those items, but the IRS doesn't care - you did get a discount on the purchase price because of those unmade repairs, after all. It's only improvements, like replacing the roof or adding central air conditioning, which will help decrease your future tax bill when you sell your home.

For gray areas (like remodeling your bathroom because you had to bust open the wall to repair some old, failed plumbing), consult IRS Publication 530 and/or your accountant. And on a non-tax-related note, don't trick yourself into thinking it's OK to spend money on something because it's a necessary "repair" when in truth it's really a fun improvement. That isn't good for your finances.

7. Get Properly Insured
Your mortgage lender requires you not only to purchase homeowners insurance, but also to purchase enough to fully replace the property in the event of a total loss. But that's not the only insurance coverage you need as a homeowner. If you share your home with anyone who relies on your income to help pay the mortgage, whether it's a girlfriend or a child, you'll need life insurance with that person named as a beneficiary so he or she won't lose the house if you die unexpectedly. Similarly, you'll want to have disability-income insurance to replace your income if you become so disabled that you can't work.

Also, once you own a home, you have more to lose in the event of a lawsuit, so you'll want to make sure you have excellent car insurance coverage. If you are self-employed as a sole proprietor, you may want to consider forming a corporation for greater legal protection of your assets. You may also want to purchase an umbrella policy that picks up where your other policies leave off. If you are found at fault in a car accident with a judgment of $1 million against you and your car insurance only covers the first $250,000, an umbrella policy can pick up the rest of the slack. These policies are usually issued in the millions.

With the great freedom of owning your own home comes great responsibilities. You must manage your finances well enough to keep the home and maintain the home's condition well enough to protect your investment and keep your family safe. Don't let the excitement of being a new homeowner lead you to bad decisions or oversights that jeopardize your financial or physical security.

Great Photo Tips to Help Market Your Home

Nanette Germain — Thu, 27 May 2010 22:42:31 GMT

Photo Tricks to Sell Your Home

By Alison Rogers |

One of the great things about selling real estate is that the landscape changes. As an agent, you’re always adapting and learning new tips and tricks.

That’s why I was surprised and pleased to see a blog post from Larry Lohrman, who is a real estate photography guru, talking about photography in the context of the new Realtor.com iPhone app.

Well, of course it makes sense that our photography of properties should change as the way potential buyers view those photos changes, but I hadn’t really thought about it.

So I caught up with Larry, the author of the Learn Real Estate Photography and Real Estate Photographer Stimulus Package e-books, via phone to his home base in Oregon. He noted that in this slower market, good photography can give a seller an edge. “Market times are very long, and in any given submarket, the inventory is huge,” Lohrman said. “So I think the real issue is how you stand out among the competition. To me, one of the best ways to stand out is photography.”

Here are five of his top current photography tips:

Consider where your photos are going. “In almost every real estate site, when a buyer searches, they get about 25 thumbnails, and that thumbnail is the primary exterior. So I recommend that you spend ten times as much time in choosing that exterior photo than you do the rest of the shots, because that’s the hook that will get buyers to look at the rest of the photos.On Realtor.com, with the four-photo layout, you have to have front exterior photos in the top left because that’s where people look first, then you have to think about the three other strongest photos of the home,” Lohrman said. (Bonus tip: On Realtor.com, he thinks landscape shots — short wide rectangles look stronger than portrait shots– tall skinny ones. )
Think about the strongest points of the home. If you’re a photographer, make sure that you talk to the listing Realtor about this. “The Realtor may know what the buyers are really psyched about,” Lohrman notes. Secondary exterior shots, especially, should be of a home’s very strongest point. “Usually it’s a deck or a patio, or a wonderful backyard,” Lohrman says.
Time of day matters. “Early in the morning or at twilight are the best for exterior shots,” Lohrman says. “However, when you’re shooting, you rarely have the latitude to choose. If I had the latitude, the sweet spot is half an hour before sunset to half an hour after; you do the exterior shot with all the interior lights turned on. That can look really nice.” He adds that since it’s such a specific demand on a real estate photographer’s time, you might pay extra for it: “Many real estate photographers have a package where they come back and do a twilight shot.”
Get your shots straight. “The number one mistake that Realtors and real estate photographers make is that their verticals are not completely vertical, so it looks like the room is going to fall in,” Lohrman says. “If you use a wide-angle lens and shoot up or down, it can look like the walls are converging instead of parallel.”
Remember that great photography is no substitute for a great price. “Everyone thinks that their home is worth what it was in 2006 at the peak of the market,” Lohrman says. “So the first step is price. If you’re overpriced by one hundred thousand dollars, it doesn’t matter what kind of photography you have.”

Making Your Yard Safe

Nanette Germain — Mon, 24 May 2010 22:36:18 GMT

Although your yard or garden is a great place for kids and pets to enjoy, it can also be extremely dangerous.
Common outdoor items can be toxic to humans and animals. Being safe, however, is easy when you know how to go about it. Being outside in the spring or summer is a joy to humans and pets. Outdoor enjoyment must, however, be accompanied by a measure of caution to keep those dear to you safe. Common yard and garden items such as plant food, fertilizer, petals and leaves can be toxic, if not fatal, to animals and humans, especially children. A recent USA Weekend article offers the following tips to be safe outdoors
Be a Label Reader. As with all products, reading labels can be important for your health and safety. Not only will reading labels on lawn and garden products inform you about how to use the product correctly, you will also learn whether the product is toxic. Newer pesticides have toxicity warnings, but if you want to be completely safe, you can avoid chemicals by using organic or chemical-free products, such as Organic-Gro or Serenade Garden Disease Control. If you do have to use toxic lawn and garden products, be sure to use child- and pet-resistant packaging and lock the products up. Know Toxic Plants. Many beautiful plants can be toxic to humans and animals if ingested. Some non-toxic plants can also cause irritation or allergic reactions if touched. Also, keep in mind that some plants are safe for humans but toxic to animals. For instance, aloe, English ivy, Easter lilies, daffodils and tulips are all poisonous to animals. For a list of toxic and non-toxic plants, visit the ASPCA Animal Poison Control Center through the ASPCA’s Web site at www.aspca.org. You can also access a list of toxic regional plants by calling your local poison control center (via 1-800-222-1222). Use Natural Repellants. You can keep dogs and cats out of your flower and vegetable gardens by planting natural repellants. According to Cheryl Smith, author of Dog Friendly Gardens, Garden Friendly Dogs, dogs and cats find the scent of Coleus canina distasteful. You can plant this annual with lavender flowers around your gardens to keep pets out. You can keep your children out of certain areas in the yard or garden by teaching them where they can and cannot go and by putting up attractive borders or fencing. Give Everyone Their Place. If animals and kids have appealing areas outside to explore and enjoy, they are less likely to go where you don’t want them. For example, you can give your dog his or her own digging pit. A pit should be twice as long as the animal and filled with dirt or sand. Cat owners can try planting catnip or catmint in an outdoor plot, large planter or window box. Kids should also have their own area, filled with plenty of things to do. Although not always attractive, swing sets are always good for hours of entertainment and exercise. You can also choose to set up a soccer net or basketball net.

Home-improvement costs for 5 problems

Nanette Germain — Sat, 22 May 2010 22:56:28 GMT

Home-improvement costs for 5 problems

Here's how to determine what's causing the problem and how much it will cost to fix it.

By Margarette Burnette of Bankrate.com

Many homeowners are perplexed when they see defects in their homes. If there is a water spot on the ceiling, does it mean a few shingles on the roof need to be replaced? Or does an entirely new roof need to be purchased?

Reggie Marston, president of Residential Equity Management Home Inspections in Springfield, Va., says it is important to thoroughly assess any defects in a home. Call in experts as necessary to help decide whether the repair is a major or minor expense, he says.

"Homeowners should have some method of determining the extent of the problem and how to have it corrected," Marston says.

Relatively common defects — such as cracks in concrete or worn wooden decks — may offer clues as to whether they can be solved with a quick, cheap fix, or whether they require a long, costly remodel, Marston says.

Homeowners need to use these clues to spend their repair dollars wisely.

1. Cracked concrete
Thin cracks along a concrete foundation could be the result of settling in the concrete and are not necessarily be a cause for concern, says Kathleen Kuhn, president of HouseMaster Home Inspections in Bound Brook, N.J.

However, homeowners need to pay attention to the shape and direction of the divide. Long, horizontal splits in the concrete could indicate pressure from the outside — possibly from saturated soil — that needs to be repaired. "Normal settlement doesn't generally cause horizontal cracks," Kuhn says.

Regardless of shape, any cracks that leak water or are wider than one-fourth of an inch (some experts put the limit at one-sixteenth of an inch) should be inspected by a structural engineer immediately, Kuhn says.

Even if a crack appears to be minor, it should be repaired, Marston says. "If moisture gets inside a small crack, it can cause the steel inside to rust, which could cause further deterioration," he says.

Cost: The cost for a structural engineer to assess a property is about $300, Marston says. If the expert finds major structural damage, the repair would be costly.

"Typical bills range from $10,000 to $30,000," he says.

2. Worn-out decks
One low-tech way to test the firmness of a wooden backyard deck — assuming it's safe to stand on — is to hit it hard with your foot and listen to the sound it makes, says Dean Bennett, president of Dean Bennett Design and Construction in Castle Rock, Colo.

"If you hear the board beneath your foot vibrate, the deck is still probably solid," Bennett says.

Marston says that if the deck is fairly new, it's probably structurally sound. "When the wood is under five years old, then even if the lumber is discolored and there's a little cracking, it's generally not a cause for concern," he says. "The solution could be as simple as cleaning it, resecuring the nails and adding a sealant."

Cost: Marston says the cost of a cosmetic repair could range from $200 up to about $1,000, depending on whether the owner makes it a do-it-yourself project or hires a contractor.

If the deck is older than about 15 years, however, it is probably past its life expectancy and should be inspected by an experienced, licensed landscape contractor, Marston says. Replacement costs range from $5,000 to about $20,000, he says.

3. Ceiling water stain
After spotting a water stain, homeowners should consider where the possible source of the stain is, Kuhn says. If there's a bathroom above the water spot, the leak may be a plumbing issue. That could be a costly repair, she says, because a plumber may need access to an interior wall to repair the leaking pipe.

If the water spot appears to be rainwater coming through the roof, it's not necessarily a major expense, especially if the roof is fairly new, Marston says. It could simply be a nail that popped through a shingle on the roof, or flashing (which secures pipes to a roof) that hasn't been caulked properly, he says.

"Those problems are relatively simple to fix," Marston says. "They usually cost a couple hundred dollars for a roofer to repair."

Other problems could be more expensive to fix. For example, if the roof is 15 years old and several shingles have blown off, the roof is probably in poor condition and may require a complete replacement, Marston says.

"Most builder-grade asphalt roofs have a life expectancy of 15 to 20 years," he says.

Cost: New roofs cost from $5,000 to $12,000, depending on their size, Marston says.

4. Inefficient heating and cooling
If a home's heat source or air conditioning unit isn't working well, homeowners need to have it inspected by a heating, ventilating and air conditioning (HVAC) professional, Bennett says.

The technician will look for problems and probably will perform general maintenance on the system, which may include cleaning the burners, tightening connections and checking the system controls, Bennett says.

After the heating and cooling unit is repaired, homeowners still need to budget for regular maintenance on their systems to keep them in good condition, Marston says. "If the system isn't efficient in the first place, it's probably because the owners didn't keep it properly maintained."

Cost: Common problems that HVAC technicians discover, such as defective igniters and fuses, are relatively cheap to fix, Bennett says.

"Homeowners can expect to pay a few hundred dollars for these types of repairs," he says.

However, Marston says that if the unit is older than 10 years and isn't working properly, it's probably best to buy a new one. Otherwise, even after it's been repaired, it probably won't have the energy efficiency that newer models will have.

New HVAC units cost about $5,000, with high-efficiency models starting at about $10,000, Marston says.

5. Basement wall spots
If a basement wall spot appears to be mold, there's probably a moisture problem, Marston says.

"Call a soil engineer or home inspector to help determine where the moisture's coming from," he says. If water is coming from leaks in the interior water pipes, the repair could cost thousands. However, if the problem is poor water flow around the house, the exterior of the house may just need simple regrading, Marston says.

"The owner could hire a landscaper for a couple hundred dollars to add more shrubs and to make sure the dirt that's beside the house is 6 inches higher than the level of dirt that's 10 feet away," Marston says. This allows water to drain away from the house.

If you live in an arid climate, a wall spot may not be moisture at all.

Bennett, who lives in Colorado, says: "Out west, in our part of country, it's very dry. We don't see a lot of water filtration, so we don't run into mold issues often. So a spot could just be dirt."

The solution? Soap and water.

Cost: Anywhere from a few dollars to several thousand dollars.