The American dream of tax breaks

spare change

According to the National Association of Realtors people buy houses because they get a mortgage interest tax deduction.

It is hard for me to see the American Dream of being about taxes especially when we consider that owning a home doesn’t always result in a tax break.

People that think they are getting the mortgage interest tax deduction often are not getting it.  To get the deduction a tax payer has to itemize. Those who itemize do so because their total deductions are higher than the standard deduction.

The average savings is $1,918 across all incomes, those who earn less than $75,000 per year typically save $800 or less each year by deducting their mortgage interest.

The mortgage interest tax deduction alone probably isn’t a good reason for a person of average income to buy the average priced St. Paul home.  The good news is there are plenty of other great reasons for buying a home.

Often people who buy homes do so because they want a place to live and they consider it an investment that could go up in value. It is even possible to buy a home and rent it out so that someone else pays your mortgage.

Hiring movers Vs. DIY

Some people hire movers and others move with the help of friends and family. I remember way back in my 20’s my husband and I rented a U-Haul and with the help of some friends we moved from on second floor apartment without an elevator to another second floor apartment without an elevator.

We didn’t have much in those days but what we was big and heavy. We were young and strong and so were our friends but when we moved again seven years later we hired a moving company.

Hiring movers costs money but it may also save money and a lot of grief. There isn’t anyway to make moving fun but hiring movers will make it less un-fun.

The professionals are less likely to damage furniture or the home they are moving it into. Movers are less likely to be injured. Your friends could get hurt trying to help you heft that big old sofa into the house.

For people who are both buying and selling the movers can be loading the truck during the closing on the sale of your home.

There is a solution for every moving logistics type problem. I have seen them all and so have they.  If you ask me money spent on movers is money well spent.

Two men and a truck

Twenty Percent Downpayment Mythology

An old friend and past client sent me a message the other day telling me that she will be ready to buy a house as soon as she saves up 20% to use as a down payment. I have no idea where and how the 20% down payment payment myth got started.

Most first time home buyers need at least 3.5% for a down payment and lets not forget another 3% or so for closing costs.  There are down payment assistance programs out there too.  It is a good idea to talk to a lender and then come up with a plan for saving some money.

It isn’t easy to save up for a down payment on a house but saving enough for a 3% to 5% down payment is a lot easier than putting aside enough for a 20% down payment.

Do a little research, talk to a mortgage professional. If you don’t have a savings account open one today.

Bird’s eye view of Rossmor Condo building on Robert Street

Open house open to theft

shoesOpen houses are still fairly popular. There are sellers who believe that an open house is needed to sell a house. Open houses are not needed to sell a house or to sell it more quickly.

They are wonderful  for real estate agents who are looking for “leads”, and for uncommitted buyers without financing in place.

An open house are also a great opportunity for people to steal drugs from medicine cabinets and to find other valuables and take them.

Sometimes sellers leave tax returns and check books in the top drawer of their desk. Other times there are credit card or bank statements on the kitchen counter still in the envelope. Open houses can be a great opportunity for identity thieves.

I have seen calendars on the wall when I have toured houses that tell me more about the home owners than they would want me to know. I can tell when they will be out of town and where their children go to school and even what grade they are in.

Sure your agent says he/she is going to watch everything but that isn’t the way it works. I have walked into many an open house where the agent is talking to someone near the front door and I am allowed to roam the home alone or with my clients.

If you must have open houses please make sure your valuables are locked up or removed from the home. Depersonalize your home as much as possible before it is photographed or held open.

also read: Sellers put the calendar away

A real estate team might not be what you think it is

McDonalds sign taken in August of 2015

There are teams in sports. On a baseball team everyone has a position and each player is responsible for playing his position to help the team win.

In business we use the word “team” is used to refer to a group of people who work for the same company. We like to use sports analogies in business.

A real team works together to achieve a common goal.

In real estate the point of a team is so that team members can get “leads” and so that the team leader can make more money. The leader gets some of the agents commissions. For new agents teams can be a great way to get some hands on experience and training but to be honest that is what a broker is supposed to provide.

Sometimes the clients of real estate teams get this mental picture of several people working on selling their home or finding them a new one but it almost never works that way. One agent works on selling the house while the others work with other clients or on lead capture.

If I call a team and ask about a home for sale usually no one but the actual listing agent knows anything about the home. In fact it seems like they don’t even talk to each other. They don’t actually help each other when problems arise and they do not tap into each others expertise. Homes do not sell faster because they are listed by a real estate team.

Teams are popular among agents because they are a great way for experienced agents to make more money and a way for inexperienced agents to get some experience.

Large teams operate like a company within a company. Some team leaders end up starting their own real estate company, other teams act and operate like a separate company, within a company.

It gets complicated. In the end working with a team may not be any different than working with an individual agent. Sometimes the lead agent gets the listings and the seller gets to deal with a junior agent and an assistant.

Go team!

After you buy a house change the locks

I have sold some older homes that appear to have the original door locks. There is no way to know who might have a key to the front door. Maybe the baby sitter has one and the next door neighbor too.

Right after the closing is a great time to have the locks changed. Not only will the home be more secure but lock technology has changed. In general locks are better and easier to use than they were in the 1940’s.

Also consider smart locks wth keyless and blue tooth options. Unlock doors with your phone or with a code. If you think you forgot to lock the door you can lock it from a remote location.

Locks are complicated. Do some research before you buy.

door lock