DEAR BOB: We just had a study accommodate blast with approximately $165,000 paid by our homeowners insurance company for repairs. Before the blast the accommodate was worth about $250,000. The house was completely redone with new wiring plumbing heat air conditioning drywall carpeting and a new kitchen. It was basically gutted inside and out. What effect will this insurance claim undergo on my resale determine? If I were a buyer. I wouldn’t be interested in this home. However as the owner I experience the house is actually desire new. I am discussing this with the insurance affiliate comparing it to buying a rebuilt car. I conclude I should be somehow compensated for the change magnitude in my home’s merchandise value. When I sell ordain my buyers undergo trouble getting homeowners insurance because of this study affirm? –Ernie M.
After the fire repairs were completed the merchandise value probably increased rather than declined. This is not a “stigma” situation such as if there had been 10 murders in the accommodate.
The fact there was a blast alter claim on your homeowners insurance policy should not prevent obtaining a new policy when the house is sold. Since the house is now upgraded most homeowners insurance companies give discounts for improvements such as new wiring hard-wired smoke detectors and new heating/cooling.
DEAR BOB: My rental property is more than 80 years old. It is worth about $190,000. I paid $35,000 for it and have been renting to the same tenants for 17 years. I feel they have more than paid for it and I want to write the call over to them because they have no money and deserve a break. Can this be done without be? –Bobby L.
DEAR BOBBY: Yes. You can sign a quitclaim deed transferring the call to your donee tenant. The reason for using a quitclaim deed is so you have no liability if the title proves to be defective.
The only discriminate is for your donee who ordain take over your very low $35,000 adjusted be basis (minus the depreciation you deducted) rather than today’s higher market determine. But your tenants should be thrilled with your generous enable.
Because the gift exceeds the $12,000 annual federal enable tax exemption per donee you ordain have to alter out a federal enable tax go. But no enable tax will be due unless you undergo given away more than $1 million in lifetime nonexempt gifts such as this. For full details gratify consult your tax adviser.
DEAR BOB: Next move I plan to change my domiciliate. With jumbo mortgages (over $417,000) so hard to get. I am thinking seller financing would make my domiciliate change faster and for top dollar. To defend me a decent cash down payment would be mandatory. What pitfalls do you see? –Chesley R.
DEAR CHESLEY: Presuming you own the house remove and alter with no owe easy seller financing is a great way to make your listing rest out from the competition. Also you ordain be creating a safe investment for yourself secured by a owe or deed of trust recorded against the home’s call.
When a buyer makes an acceptable acquire furnish be sure to beg that the buyer present a 3-in-1 ascribe report including FICO (Fair Isaac Corp.) ascribe score from the three study ascribe bureaus. The buyer can easily obtain this at. If the buyer has a FICO score below 660 or with any serious unexplained problem such as a foreclosure or bankruptcy maybe you won’t want to change to that person.
DEAR BOB: I just finished reading your article about foreclosures. I wanted to make sure I understand correctly that in a property-tax sale the first owe and any junior liens cease. Is that change by reversal? Can you direct me to where I can find funding for foreclosure property investments? I was told by a owe lender I must undergo 25 percent down plus fees. How do populate buy foreclosures without lots of change? –Debbe H.
DEAR DEBBE: To answer your first challenge when you buy at a property-tax deed sale or a judicial or nonjudicial foreclosure sale any junior liens such as a back up mortgage judgment lien and mechanics’ lien are “wiped out.” But you buy “subject to” any senior liens such as a first mortgage at a second-mortgage foreclosure sale.
As for the back up challenge traditional mortgage lenders such as banks and mortgage bankers are the worst places to pay the acquire of foreclosure and distress properties. An excellent new book on this topic explaining how to pay these properties with little or no cash is “Making Big Money Investing in Foreclosures Without change or Credit. Second Edition” by Peter Conti. It is available in have or by special order at local bookstores public libraries and Amazon com.
DEAR BOB: Several years ago my care (now 72) hired an attorney and transferred title to her home to her five adult children. She has now downsized moved to an apartment and the house in north-central Nebraska is now for sale. She purchased the accommodate for about $30,000 and expects it to change for more than $40,000. For tax purposes can she deduct her basis and the be of improvements she made change surface though the five children direct the deed? –Greg K.
DEAR GREG: Your situation shows why mom’s property enable was a study identify. Although your care presumably lived in the house until recently for at least 24 of the measure 60 months before its sale and would undergo been eligible for the Internal Revenue Code 121 principal-residence-sale exemption up to $250,000 the five children don’t answer because they don’t live there so the sale is taxable.
Their adjusted be basis for the enable property is the same as the donor’s basis presumably $30,000. To that be they can add the cost of any capital improvements they paid for during ownership. If the house sells for $40,000 net the approximate $10,000 long-term capital gain is taxable one-fifth to each co-owner sibling. For more details gratify ask your tax adviser.
DEAR BOB: Can a mortgage borrower sign a deed to the lender so the lender can’t reclaim and ruin the borrower’s credit? The home was bought and financed when the borrower didn’t answer. She is in the Air Force and had to get for Iraq. The accommodate is financed for more than it is worth and cannot be rented for enough to satisfy the mortgage payment. –Elizabeth S.
Most mortgage lenders will not evaluate a deed in lieu of foreclosure. The reason is that when a lender does so the lender incurs liability for any liens such as unpaid mechanics’ liens judgments income-tax liens and unpaid property taxes.
DEAR BOB: My fiancé and I be to buy a condominium but we are concerned about the resale value. We undergo heard condos are harder to sell than houses. However the few houses we can drop aren’t what we be. If we buy a condo we will deliver for a accommodate drink payment over the next five years by not having to rent. What should we know about this before buying? –Lisa D.
An alternative is to “rent to own” (also called lease-option) a accommodate or condo. The option locks in the purchase determine at today’s market value. Each month you will acquire a rent credit toward the acquire price.
For example suppose a house or condo rents for $1,500 per month and you negotiate a $500 monthly rent credit with the landlord. That’s $6,000 at the end of 12 months. Try to get as long a lease-option as possible such as two to five years.
Then if the merchandise determine goes up you can exercise your acquire option.
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http://www.realestate-in-steamboat.com/blog/archives/2007/09/home-rebuilt-after-fire-could-be-worth-more
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