Archive - Cataneo Talks Real Estate

Archive - Cataneo Talks Real Estate









At the heart of the American Dream, homeownership represents both the largest financial investment most of us will ever make and a significant lifestyle choice. Thus, whether you are selling or contemplating the purchase of a home, you have a vested interest in being well informed about the wide range of issues surrounding home ownership. Market conditions, lifestyle considerations, legal and tax issues, buying and selling strategies, financing and the various structural, mechanical and cosmetic aspects of the property are all important. Whether you are a seller, buyer, landlord or renter, dealing in single-family homes, condominiums, co-operatives, commercial real estate or apartments, this column will provide you with useful real estate information in the weeks that follow. P.S. A real estate professional can provide clients with accurate and up-to-date pricing information in order to set realistic purchase and sale limits.



There are good reasons why the vast majority of homes are sold by real estate agents. To begin with, they offer the seller the advantage of a Multiple Listing Service, which is a computerized network that provides immediate contact between most brokers and real estate agents. This service provides all relevant information about a home to every real estate agency in the area, thereby greatly enhancing the prospects for a sale. Listing agents also coordinate and host showings, help sellers negotiate inspections, and guide sellers through the closing process. Finally, and very importantly, real estate agents have access to the most recent market data, which enables them to give advice on realistic purchase and listing prices.

HINT: Real estate agents help sellers to remain objective, which is important, when setting a realistic asking price and negotiating a sale.



There are a variety of circumstances that may lead a homeowner to rent rather than sell his or her property, such as moving away for a new job. In such cases, it is best to enlist the help of a real estate agent who is experienced in leasing properties. The agent can help with important matters such as setting a realistic rental price and screening prospective tenants. Once a good candidate is found, it is important to draw up a detailed lease that clearly outlines the expenses and responsibilities that the tenant will be expected to assume. There is also the matter of who will manage the property while the owner is away. An experienced agent can suggest reliable candidates.

HINT: While fees vary in accordance with the services provided by property managers, they generally cost ten percent of the monthly rent.



There was once a prescription for retirement that said you burned the mortgage upon retiring and looked forward to debt-free golden years; that plan has largely gone out the window with company (or union) retiree health insurance plans and pensions. Today, a newly released report shows that Baby Boomers are carrying their mortgages into retirement and have much more mortgage debt than previous generations at this stage in their lives. Boomers are also defying conventional wisdom by looking for nicer and larger homes instead of downsizing during retirement. This means that there is a whole segment of buyers out there that sellers should recognize since Baby Boomers plan on retiring in the style to which they have become accustomed. 

HINT: Baby Boomers tend to retire in areas where there are a lot of services and outdoor space. 



Real estate professionals often suggest that sellers “stage” their homes to make them more appealing to house hunters. These whole-house makeovers involve repositioning or eliminating personal possessions and furniture, but it takes more than mere sprucing up for a well-staged house to create a vision of cleanliness, tranquility, and spaciousness. For instance, living room furniture can be moved away from walls and placed at angles to improve traffic flow and create intimate conversation areas. Every room can be “decluttered” to create more visual space. Closets should be emptied by two-thirds, small appliances should be removed from kitchen counters, and worn draperies should be taken down. It takes discipline to stage a home, which is why professional stagers are recommended.

HINT: Sellers might want to rent storage units to store the accumulated possessions removed from their homes while they are on the market.



While some remodeling projects are undertaken solely for the pleasure of doing them, homeowners also improve their properties with an eye toward one day selling them. When they do sell, they will likely want to get the best return on their investments. Smaller projects that are currently adding the most value to homes include wood floors, recessed lighting, kitchen appliances, and kitchen cabinets designed with storage and efficiency in mind. Generally, minor kitchen remodeling and bathroom additions have traditionally offered the best returns when it comes time to sell. Homeowners who plan to sell soon should ask the opinion of an experienced real estate agent about the home improvements that provide the biggest payoffs.

HINT: Unless you plan to live in your home for several years, it pays most to undertake those remodeling projects that elevate your home to the living standard enjoyed by similar homes in your neighborhood. 



Along with updated kitchens and age-in-place features, today’s buyers place a high priority on energy efficiency. Sellers can use this buyer preference point to their advantage by getting an “energy audit.”  This means having a professional check the home for energy leaks, which can lead to recommendations for upgrades and fixes. If the home is deemed to be energy efficient, the seller can use the fact as a selling point. On the other hand, if upgrades are needed, sellers can begin with the most cost-efficient recommendations (such as sealing foundation leaks). Pointing out the improvements to prospective buyers shows that the seller takes energy concerns seriously, which will likely increase the home’s appeal.   

HINT: If a seller’s monthly utility bills are low, the home’s fact sheet should make clear mention of the fact to prospective buyers.



The Internet has transformed home-buying to the point where half of buyers use a mobile device in their house hunts. Sellers may want to use buyers’ increased reliance on new-tech Web applications to improve their chances of making a sale. With this in mind, savvy real estate agents are posting “For Sale” signs with transmitters and barcodes that enable house hunters to scan house-related information directly to their handheld devices, without ever having to get out of their vehicles. Also available is 3D photographic technology that makes it possible to deliver a three-dimensional image of a home’s interior taken by a special camera that rotates on a tripod. The 3D images deliver impressions that trump floor plans and traditional photography.

HINT: The real estate industry is just beginning to embark on the utilization of unmanned aerial vehicles, or “drones,” to capture low-altitude overhead views of estates, waterfront homes, and large-acre properties. 



One of a real estate broker’s primary goals is to sell his or her client’s home at a price  with which the seller feels comfortable. No broker wants to run the risk of either over- or underpricing a property on the basis of less-than-solid information. To avoid either pricing mistake, brokers will take pains to shop the competition. This means learning about the asking and selling prices of similar homes (called “comparables”) and finding out how long each took to sell. Aside from locating comparables of similar age, style, size, condition, and location, brokers will want to learn all they can about the terms under which the homes were sold before they formulate a listing price for their clients’ homes.

HINT: When using “comparables” to help price a property, it is important to discover any details of the sale that may have inordinately influenced the final sale price in any way.



One thing that sellers’ agents do not want to see at an open house or showing is the seller. Therefore, sellers are usually advised to vacate the premises when prospective buyers are being shown their homes, and there is good reason for doing so. When buyers enter the serious phase of their deliberations (in particular), they tend to want to scrutinize every aspect of the house. They need to openly and candidly discuss what they like and what they do not like so that they can weigh the pros and cons and make informed decisions. Thus, it is best if the seller leaves agents and prospective buyers to do their work in private, giving sellers their best chance to succeed.

HINT: Even if an open house or showing does not result in an immediate sale, sellers’ agents seize these opportunities to elicit important feedback that could help facilitate a future sale.



While buyers are primarily focused on the layout, size, style, and location of a home, they should take the immediate neighborhood into account as well. With this in mind, buyers should spend some time taking a closer look at a home’s immediate surroundings  at different times of the day. They should try to get a good impression of the quality of life, including schools, recreational areas, shopping, commuting services, and the general quality of surrounding homes and yards. Much of this information can come from talking to locals and prospective neighbors. For more detailed information (including tax rates, zoning regulations, the state of home values, etc.), no one is more knowledgeable than a real estate agent.

HINT: There is no better time to view a house than on a rainy day, when roof and foundation leaks and flooding problems are most evident.



One way that sellers can better assure themselves of making a sale is to reduce the stress that buyers sometimes feel  when house hunting by purchasing a “home warranty.” This service contract protects homeowners against unexpected repairs and replacement of their homes’ major systems and appliances. A home warranty is a relatively inexpensive form of insurance that usually covers one year and may be renewed. It ensures that buyers have a direct means of addressing unforeseeable problems; it also creates a comfort level in the minds of buyers that facilitates a sale. When a covered item breaks, all the homeowner needs to do is call for service. The item will then either be repaired or replaced.  

HINT: Available since the 1970s, home warranties cover items such as heating and air conditioning systems, plumbing and electrical systems, and home appliances.



Some homeowners purchase a replacement home  before they sell their old one so that they can have a sense of certainty and not have to make a hurried decision on a new home. Buying a new home  before selling the old one also  locks buyers into a certain price no matter how much their old homes sell for. Any miscalculation can leave them short of funds with which to purchase their replacement home. Moreover, buying a replacement home without selling the old one can leave homeowners with owning two properties simultaneously. While “bridge loans” are available for just such circumstances, they can be expensive. Thus, many homeowners choose to sell their homes first and rent until they buy (if necessary). 

HINT: A “rent-back” agreement allows sellers to rent back their current homes from buyers for a period of time after closing, during which they can house hunt.



Sellers must rely on their agents’ recommendations to point out things that they can do to make their homes more attractive to prospective buyers. This includes removing sources of unpleasant odors that sellers may have grown so accustomed to that they are unaware that they pose a problem. People searching for homes often find themselves assaulted by the scent of cigarette smoke and cooking aromas that permeate the walls, floors, and furnishings. If sellers do not undertake deep cleanings, rug replacement, and other procedures needed to remove odors from their houses, they risk losing sales. Unpleasant odors can not only increase the time that a home spends on the market, they can reduce the sale price.

HINT: Air fresheners only mask odors. To eliminate odors, it is necessary to remove the offending source or clean it thoroughly.



Defying conventional wisdom that holds that retirees either downsize their homes or move to a more favorable climate, seniors are now tending to “age in place.” Three-quarters of the people age 45 and over surveyed by AARP indicate that they will stay in their current homes as long as they can. With this emphasis on stability in mind, buyers with young families may want to select a home that speaks to more than their immediate needs. This selective approach to home buying may include a preference for ranch-style homes that can accommodate older adults with limited mobility. It also may pay to view bedrooms with an eye toward converting them to hobby rooms and offices once the children leave home.   

HINT: Buyers with young families and long-term perspectives tend to attach just as much importance to the quality of prospective neighborhoods and their schools and services as to price.



After great swings in the real estate market over the past decade, relative calm has returned. Nationwide, the National Association of Realtors expects home prices to rise an average 4.9% this year, which is closer to the long-term average of 3.3% than we have seen lately. Since the median sales price of a home dipped to $152,000 in 2012, speculators have largely disappeared, and the number of homes that have been purchased with the sole intent of making a quick sale and profit has dropped for the second year in a row. In addition, the rate of foreclosure is half of what it was two years ago. This time of relative stability is good for both buyers and sellers.

HINT: According to a recent bank report, nearly three-quarters (74%) of Americans between ages 18 and 34 plan to purchase a new home within the next five years, and intend to spend $240,000 to do so, representing a 24% increase over last year. 



To be successful in today’s real estate market, sellers must market their homes in ways that directly appeal to tech-savvy buyers. Because they are used to getting information immediately on their mobile devices, many prospective buyers expect to view properties when it best suits them. No longer willing to wait for open houses, buyers often want to see a home  as soon as possible. This means that sellers must exercise a bit more flexibility  in terms of making their homes ready for viewing, often on a moment’s notice. On top of that, sellers should engage the services of an agent who knows how to market a home online with enticing photographs, video walk-throughs, and social media commentary.    

HINT: According to one online residential real estate company, listings of homes for sale with photographs taken by a professional receive  61 percent more views than those taken by others.



When negotiating a deal to purchase a home, it is important that buyers and sellers agree as to what stays with the home. Items that are considered to be “fixtures” are those elements that are permanent and attached to the home. In many cases, this definition does not go far enough in determining what will remain when the buyer takes possession of the property. With this in mind, it helps to clarify whether kitchen and laundry appliances, chandeliers and light fixtures, fireplace inserts, etc., will be staying in the home. Sometimes, something as seemingly inconsequential as a custom window treatment can hold up a sale  if there is a disagreement over its status as a fixture. When in doubt, ask.

HINT: Sellers can sweeten a sale by offering prospective buyers furniture, window treatments, and other items that can save them the expense of purchasing new.



Even if homeowners decide to remain in place and improve rather than move, they should make home improvements that increase their homes’ value to the next buyer. While a recent survey by a nationally known decorating and design website finds that more than half of homeowners (53 percent) say that they will remodel with value in mind, even the most popular remodeling projects provide only partial payback on initial investment upon sale. According to a 2015 Cost vs. Value report on remodeling, homeowners recoup 70 percent on the cost of a bathroom remodel and 68 percent on a minor kitchen remodel. To maximize their return, homeowners should remodel with materials and designs that prospective buyers could see themselves using.    

HINT: If a kitchen is hopelessly outdated, bringing it up to current standards and expectations can make the difference between selling a home or not.



As three-car garages become the norm in new homes, sellers of older homes should do everything they can to impress prospective buyers with the spaciousness of their garages.  This means eliminating clutter and organizing the existing space. Just as the trend toward custom closets drew homeowners’ attention nearly three decades ago, homeowners are now looking to organize their garages. Because extra car bays frequently serve as workshops and storage areas, the garage must be flexible. Homeowners want their garages to be as functional as their kitchens, so sellers should draw attention to their garages’ potential  by removing junk and adding shelves and other organizational features. A garage may not make or break a sale, but it could be a tiebreaker.

HINT: Sellers should scrub and paint garage floors that are spotted and stained with paint and oil.



Sellers shouldn’t be overly swayed when they read that home prices have gone up a declared percentage in their areas. That doesn’t necessarily mean that their homes increased in value by that stated amount. The fact is that reports of increases and decreases in home prices are typically quoted as changes in the “median home price,” which is the price that is midway between the most expensive home and the least expensive home in the area during a specified period of time. During that time, half the buyers bought homes that cost more than the median price, while another half purchased houses below the median price. When buyers purchase more expensive homes than less expensive ones, the median price rises.

HINT: Each home for sale should be realistically priced on the basis of how it uniquely compares with recently sold homes in the immediate area of similar size with similar features.



In its simplest terms, the real estate market can be seen as a process of supply and demand. While an abundance of supply favors buyers, limited inventory helps sellers. In a normal market, a five- to seven-month supply is considered to be balanced. However, in most cases, recent and current supplies have hovered between the four- and five-month mark. This means that it would take between four and five months for all available inventory to sell, which would seem to favor sellers. However, it should be noted that sellers quickly become buyers as soon as they sell their homes. The good news is that home construction is picking up and inventories are increasing, making the current conditions near perfect for sellers.    

HINT: It never hurts for those considering selling their homes to ask a real estate agent for a free market analysis that will fully detail what they might expect their home to sell for. 



The term “transparency” has certainly been used quite a bit in recent years. It largely refers to the notion that, when two or more parties agree to openly share the facts and circumstances of their dealings, trust is built. While politicians and diplomats probably most often use this term, it certainly applies to a real estate seller’s relationship with a buyer. Sellers can certainly anticipate that a buyer will enlist the services of a professional home inspector to uncover any shortcomings, problems, or needed repairs. In an effort to circumvent any possibility for disappointment, delay, and distrust, the seller should “go transparent” with his or her own presale inspection. This proactive measure puts buyer and seller on the same page.

HINT: If a seller’s inspection reveals the need for repairs, the seller should provide a copy of the inspection along with repair receipts, or otherwise indicate how he or she adjusted the price accordingly.     



According to a survey by the National Association of Realtors, 83% of respondents viewed their homes as a good financial investment. The trouble is that  when it’s time to sell a property after the average seller has lived in it for a decade, emotions often overtake reason. Generally speaking, what a seller thinks his or her home is worth and the price he or she can actually sell it for are often two very different numbers. A seller should not think that buyers really care what the seller originally paid for the home or how much money has been put into improvements. The only number that matters is what someone is willing to pay for the property under current circumstances.    

HINT: The National Association of Realtors reports that a typical seller receives 97% of his or her final asking price, with the home being on the market for about a month.



While sellers and buyers can expect a professional home inspection to reveal the condition of the home’s structure and systems, it may not provide extensive detail about the exterior landscape. This can be a significant oversight because soil grading, trees, shrubs, irrigation systems, decks, and patios can exert a great deal of influence over the condition of the rest of the property. For instance, a diseased tree or overhanging tree limb can pose the threat of damage should it fall or break. Soil that is improperly sloped around the foundation can direct water toward the basement and lead to foundation issues. These and other outdoor issues must be evaluated as part of a comprehensive home inspection  in the interests of all involved.      

HINT: Cutting down a single large tree can cost upwards of $1,500, which is an expense that should be anticipated.


The average house hunter retains only about 60 percent of the information that he or she sees and hears about a home’s features. With this in mind, sellers are urged to compile and distribute a “fact sheet” to anyone interested in their property. These informative brochures provide prospective buyers with facts about square footage, mechanical systems, taxes, schools, and other aspects of the home. Aside from anticipating and answering their questions, the fact sheet remains with the prospective buyers as a useful reminder. With photos and all the necessary information at their fingertips, they can then  leave with a concise idea of the home(s) they visited that day, as well as a record of whom to contact about their interest.

HINT: One of the most useful pieces of information for prospective buyers is a floor plan, which allows them to figure out furniture placement.


Before buyers purchase property and take possession of the deed, which transfers the title of the property to them, they should have the title insurer check previous sales and transfers of the property. Taking this important step helps make sure that no defects occurred in prior conveyances and transfers. That way, when the property is transferred, the grantor will have clear title to the property, as did previous purchasers. If any discrepancies occurred in the previous chronological chain of the title, the purchaser will not be able to obtain clear title. As soon as the purchaser does get the deed, it should be recorded with the county recorder in the county in which the property is located. 

HINT: In feudal England, real property was transferred through a ceremonial act known as “livery of seisin,” during which the person involved in transferring the land handed a twig or clod of turf from the land to the person taking delivery of the land.



Making both large and small improvements to homes not only increases homeowners’ enjoyment and comfort, but it also helps to attract future buyers. With this in mind, it pays to take a look at the National Association of Realtors’ 2015 Remodeling Impact Report, which says that kitchen upgrades, complete kitchen renovations, bathroom renovations, and new wood flooring are the interior projects that most appeal to potential buyers. As far as exterior upgrades are concerned, the projects that potential buyers deem most appealing are new roofing, new vinyl windows, new garage doors, and new vinyl siding. The report also points out that sellers can expect a complete return on investments in new wood floors and new roofs. 

HINT: According to the NAR “2015 Remodeling Impact Report” mentioned above, seller investment in insulation upgrades provides a 95% payback at time of sale, while a new garage door would recover 87%.


Sellers should realize that, in order for potential buyers to visualize themselves in the seller’s house, it must be devoid of clutter. When a home is filled with personal items such as pictures, redundant furniture, and personal collections, the items obscure the buyer’s ability to see the house as his or her own. Thus, sellers are urged to “stage” their homes in such a manner that prospective buyers are able to visualize their possibilities. To show their homes to best effect, sellers should hold garage and yard sales in which they clear objects from closets, the cellar, the garage, and interior spaces that may otherwise distract from architectural features and open spaces. Think minimalism. 

HINT: If necessary, sellers should rent space from a storage facility in which they can store all the furniture and other items that get in the way of prospective buyers seeing their homes.


According to U.S. Census Bureau estimates, every day 130,000 people move into a new home. While most people approach moving day with a mix of excitement and dread, there are some simple steps that they can take to minimize the hassle and expense. For one, it pays to get rid of as much unnecessary “stuff” before the move as possible. With this in mind, homeowners faced with moves should have yard sales and/or make charitable contributions to families in need. Next, it kills two birds with one stone to use pillows, towels, and bedding as packing material. Doing so will cut down on the amount of bubble wrap that must be purchased to wrap plates, glasses, and ceramic pieces. 

HINT: To transport clothes during moves, it may be best to leave them on hangers and pack them in wardrobe boxes.   



If homeowners hope to someday sell their homes to trade up, downsize, or make a lateral move, they should take care not to make improvements to their present homes that might not appeal to future buyers. For example, some people love the vibrancy that red paint brings to a room. However, most potential buyers are likely to find red walls to be overwhelming. It’s better to stick with neutral colors that don’t stray too far from the mainstream color palette. While some buyers are able to replace items that don’t appeal to them, others may be on limited budgets that leave little to pay for renovations. If so, anything unconventional may remove them from sellers’ available pool of buyers. 

HINT: Because most buyers love wood floors, upgrading from carpet to hardwood flooring (solid or engineered) is likely to pay big dividends  when it comes time to sell.



Real estate transactions require careful consideration of many important terms that can have long-lasting legal and financial effects. For instance, if a buyer orders one or more inspections of the home for informational purposes, the seller is not necessarily obligated to make repairs or modifications that stem from these reports. However, in practice, inspection reports are often used to negotiate repairs of major problems or noted safety or environmental hazards. The purchase contract should provide some guidance for these negotiations. Sellers should also take careful note of when the escrow is scheduled to close. Sellers must move out completely before the property changes hands. Buyers should be able to pick up the key on the day that escrow closes.

HINT: Settlement usually correlates with the length of time that is required for a title search and mortgage approval (typically 45 days to 60 days).   



A properly executed home improvement project not only increases the function and livability of a home for the current homeowners, but it also adds value and attracts future buyers. One such oft-overlooked home improvement is a master suite renovation. A project of this type that updates wall color and flooring materials serves to increase the space’s livability and sense of enjoyment. When taken a step farther to include new or revised windows that open the room to outdoor views, the master suite becomes a more inviting area. If space allows, the addition of a zero-clearance gas fireplace fairly begs for time spent snuggling up with a book or movie and simply enjoying the experience of nesting at home.  

HINT: Buyers like to know that they have the option of setting up a flat-screen TV in their master bedrooms. If there isn’t already a cable in the master bedroom, sellers should have one  installed  prior to placing their homes on the market. 



When prospective buyers are shown homes by the listing agent, they shouldn’t assume that the agent is working for them. While the agent is required to treat customers honestly, he or she has a fiduciary responsibility to the seller. The listing agent’s role is to get the highest possible price and the best possible terms for the seller, not the buyer. So, whom can the buyer put on his or her side? Buyers’ brokers work with buyers to obtain the best home and terms for the homebuyer. After carefully assessing the buyer’s needs, the buyer’s broker will conduct a search of all available properties, openly discuss their strengths and weaknesses, provide pricing advice, and negotiate on behalf of the buyer. 

HINT: Most buyer agents will have their clients sign an agency agreement, an Exclusive Buyer Agency Agreement, which outlines their services, how they are compensated, and how the two parties will work together.


It has long been a tenet of real estate professionals to encourage sellers to cultivate their landscapes to boost “curb appeal.” For many years, these efforts have revolved around getting lawns green, which has been a hallmark of the American home-owning experience. However, as the climate has become more extreme and less predictable, many people (including prospective buyers) are looking for new landscape choices that require less maintenance and water. At the very least, this new attitude begins with choosing drought-resistant grasses and plants that will not strain local resources and owners’ wallets. Some are choosing to forget lawns altogether, replacing them with ground cover, permeable patios, walkways, and other hardscapes. Deliberate low-maintenance landscaping is more appealing than ever.  

HINT: Groundcovers that replace lawns do not require mowing, which is appealing in terms of saved labor and cost of mowers and fertilizers. 



Because most people are focused on the holidays, there are usually fewer home sales between Thanksgiving and New Year’s than at other times of the year. Conversely, the months of April, May, and June are particularly strong months in the real estate market. Historically speaking, up to 35 percent of all home sales occur during these three months, as families with children time their moves to coincide with the end of the school year. However, not every buyer or seller has the luxury of timing the sale/purchase of a home. When circumstances dictate timing, seasonal trends matter little, and success largely hinges on personal circumstances, which can often be exceedingly compelling. A sale only takes one seller and one buyer. 

HINT: When life-altering circumstances force the sale of a home, they can provide homebuyers with opportunities at any time of the year.


In order to earn reputations as effective and successful brokers and agents, real estate professionals must meet the expectations of their clients. According to a recent survey by the National Association of Realtors®, the most important thing that sellers want from their brokers is help in marketing their homes to potential buyers. Second on sellers’ need lists is help from brokers in selling their homes in a specific timeframe. Of nearly equal importance to sellers is that their agents help them price their homes competitively. Help in finding a buyer for their homes and help in finding ways to fix up their homes (to sell them for more money) round out the list, which is the agent’s sole agenda.

HINT: The most common way that sellers find agents with whom they eventually work is a referral by a friend, neighbor, or relative. 


Because the purchase or sale of real estate is one of the largest financial transactions that many people will make, it is important that the sale go smoothly at the right price. For these reasons and others, buyers and sellers generally recognize that being represented by a real estate broker or agent helps ensure these and other favorable outcomes. According to the National Association of Realtors’ “2015 Profile of Home Buyers and Sellers,” 87% of buyers recently purchased their homes through a real estate agent or broker, and a similar percentage of buyers would use their agent again or recommend their agent to others. Only 8% of recent home sales were For Sale By Owner (FSBOs), the lowest since 1981.

HINT: Surveys consistently show that sellers sell their homes more quickly and for more money when they are represented by real estate agents and brokers.

Many people with Individual Retirement Accounts may wonder if they can roll their IRAs into real estate. The answer is a very qualified “yes.” In a self-directed IRA, the IRS stipulates that investment property must be rented out at all times and not used as a personal residence or rented out occasionally. This rule prevents owners from taking otherwise normal real estate deductions such as property taxes, mortgage interest, and depreciation on personal tax returns. In addition, there is a host of other “prohibited transactions,” including the fact that the property is owned by the IRA and that the IRA must be held under the custody of a fiduciary firm. Side-stepping prohibited transactions risks loss of IRA tax-deferred status.

HINT: Real estate purchased within an IRA cannot be rented to “disqualified persons” such as the IRA owner’s spouse, parents, children, and the children’s spouses.


Sellers should take note that most of today’s younger buyers prefer open floor plans with flexible living space. With this in mind, sellers may want to enlist the help of their agents in identifying rooms that could benefit from widened door openings and eliminated walls/partitions between rooms. These upgrades improve foot-traffic patterns and increase the sense of openness. One of the first places to look to make floor plans work harder is the wall between the kitchen and dining room in a traditional layout. By removing this wall (if the joist layout above permits), sellers can create a “great room” in place of a seldom-used formal dining room. Unfinished basements also provide great potential for “flex space” that buyers covet.  

HINT: Wherever possible, sellers should look to relocate laundry facilities from basements to first floors. 


If you are a homeowner looking to make improvements with an eye toward eventually selling your home, you might want to consider upgrades that buyers will value. As the population ages, people are looking for features in homes that make them easier to live in. Such amenities include walk-in showers that have no thresholds to stumble over or get in the way of a mobility aid. Buyers are also increasingly coming to see the convenience of having their master bedrooms on the first floor. Doing so eliminates steps that may otherwise prevent access to living quarters among those with reduced mobility. A design that incorporates all primary living space on the main floor also saves time and energy for everyone. 

HINT: If you are renovating bathrooms, inquire about wall-mounted vanities and comfort-height toilets for seniors, as well as widened doorways that allow wheelchair access. 



So-called “millennials,” the generation of about 75 million Americans between the ages of 18 and 34, have been slower than previous generations to buy homes. Constrained by student debt and tighter lending practices, millennials have also been suspicious of entering the real estate market after the downturn. However, now that the market has consolidated and rents are rising, millennials are showing signs of interest in homeownership. In fact, a recent survey reveals that, while only 26 percent of millennials currently own homes, 71 percent want to purchase residences of their own. Spurred by a desire for greater privacy and the wealth-building power of homeownership, this generation of young Americans is ready to stake its claim. Be ready, sellers!

HINT: Millennials generally prefer “turnkey” properties that do not require much, if any, improvement.


Just about every morning news program and general-variety talk show on television has a cooking segment, which tells you that TV producers know that food and food preparation sell. And the same goes for real estate: Agents and brokers have long known that buyers turn a keen eye on kitchens when visiting homes they are considering for purchase. First-time buyers and millennials, in particular, want to walk into updated kitchens that they can envision cooking in  on day one. This preference gives sellers every incentive to replace countertops, appliances, and fixtures  as necessary  to increase their kitchens’ appeal. An experienced agent can make suggestions as to which improvements provide the best return on investment. Kitchens are central to buyers’ decisions.

HINT: Stainless steel kitchen appliances and sinks are largely representative of “updated” kitchens in the minds of many potential buyers.   



Older homeowners are often advised to use some of the equity in their homes to finance at least part of their retirement. What makes this downsizing strategy so enticing is the fact that those over the age of 55 are entitled to a once-in-a-lifetime capital gains exclusion on the sale of a primary residence that allows them to shelter as much as $250,000 ($500,000 for couples who file a joint return) in profit. Trading down also provides the benefit of reduced real estate taxes and home maintenance costs. With all these benefits associated with trading down, the only question is: “Why wait?” Homeowners faced with an empty nest well before retirement age may want to downsize sooner rather than later.
HINT: With today’s low mortgage rates, it may make sense for downsizers to take out mortgages on their new, smaller homes  to free up additional funds for investment. 



Your home may look beautiful and exude curb appeal, but it may lack some of the features and amenities that attract buyers. If so, it shouldn’t take too much to keep your home on a par with others in your neighborhood. One of the more cost-effective upgrades involves treating a small, one-rod closet with an organizing system that introduces more shelves, rods, baskets, and other clever storage solutions. At the same time, look for additional space for more closets and added storage. While you are at it, search for a place to move the washer and dryer up from the basement to the second floor, where it is closer to bedrooms and bathrooms. Buyers love the convenience.    

HINT: Buyers have shown a preference for bathrooms outfitted with linen closets as well as open floor plans that combine traditional dining rooms and updated kitchens.


Along with a rebound in real estate prices (up 31% nationally since the bottom of the market in 2011), rents have also been rising. This latter circumstance may present opportunities for investors who would like to take advantage of low interest rates to purchase income properties. The search for an investment property begins with identifying neighborhoods that are stable and destined for long-term appreciation. Generally speaking, it’s also best to find properties in the entry-level price range, since they are likely to attract renters who cannot yet afford to purchase homes of their own. A home inspection is absolutely imperative, as it will help identify condition issues that need attending to before tenants can be expected to inhabit the property.    

HINT: When comparing investment properties, divide the purchase price by the annual rent to get the “gross rent multiplier.” The lower the result, the better the prospect for financial success. ​



Sellers’ agents know that it is in their clients’ best interests to deal primarily with potential buyers who are either “pre-qualified” or “pre-approved” for mortgages. Pre-qualified is an estimation of the potential buyer’s borrowing power from a lender and can be accomplished with a simple phone call. Pre-approval is a written commitment issued by a lender after a comprehensive analysis of the creditworthiness of the applicant. This analysis includes verification of income, resources, and other such matters as are typically done as part of a normal credit evaluation program. Because pre-approval is the more complete and formalized process of the two, sellers should look to put pre-approved buyers at the head of their lists for consideration. 

HINT: Mortgage pre-qualification indicates the maximum amount that the lender feels the buyer can afford, but not necessarily spend.


Most homeowners believe that the best time to sell their properties is in the spring, when flowering plants and green lawns show their homes to their best advantage. While this may be true, there is also a lot of competition from other sellers in the springtime, and this does not always work to the sellers’ advantage. When there is a lot of inventory from which to choose, buyers tend to be more discriminating. Conversely, when there is less to choose from, lower inventory tends to work in the sellers’ favor. While timing is always an important factor, the selling season does not matter as much as the location, attractiveness, and condition of a home. 

HINT: It is largely personal circumstance that compels buyers to purchase homes.


When parents help their children purchase homes, both sides benefit. For instance, if parents lend their money at 3.5%, they will get a return that exceeds the 2.25% that a diversified bond portfolio currently gets. Their children will get an interest rate that is lower than the national average of nearly 4%, which banks are now offering on 30-year mortgages. In order to make sure that any loan higher than $14,000 is not interpreted as a gift subject to the 40% federal gift tax, the interest rate should be set at least as high as the IRS monthly Applicable Federal Rate (AFR) for long-term loans. An attorney should also draft and properly record a detailed promissory note. 

HINT: Parents who make mortgages to their children must claim the interest portion of the mortgage payments paid to them on their tax returns. 


The Home Affordability Index provides a measure of a worker’s ability to purchase a home. The index uses median home prices, derived from publicly recorded sales deed data collected by RealtyTrac, and average wage data from the U.S. Bureau of Labor Statistics in 456 U.S. counties with a combined population of 221 million. The affordability index is based on the percentage of average wages needed to make monthly house payments on a median-priced home with a 30-year fixed rate mortgage and a 3 percent down payment. This includes property taxes, home insurance, and mortgage insurance. Buyers and sellers may refer to this index to get a general idea of how home prices and other factors are trending from a national perspective.   

HINT: When home prices were most affordable nationwide in the first quarter (Q1) of 2012, the average wage earner needed to spend 22.2% of monthly wages to buy a median-priced home. In Q2 2006, a wage earner spent 53.2% of monthly wages.



It is critically important that sellers resist the urge to overprice their homes. Overpriced homes tend to linger on the market longer, which raises doubts in buyers’ minds and discourages their interest. At that point, it is usually necessary to lower the price to where it should have been in the first place. One reason why sellers get themselves into this overpricing predicament is that they have a fixed idea of what their return on investment should be. This often occurs when sellers’ emotional attachment to their homes leads them to think that their homes are worth more than they actually are. In fact, however, homes are only worth whatever buyers are ready, willing, and able to pay for them. 
HINT: The difference in percentage between list prices and actual sale prices for the homes in your neighborhood says a lot about the current real estate climate.


When preparing their homes for sale, sellers may want to take advantage of many buyers’ preference for smart technology. A “smart home” has three or more advanced technology devices that connect lighting, appliances, and security and mechanical systems with each other and the homeowner. For instance, a smart thermostat connected to a smart phone enables homeowners to adjust the temperature of their homes at work, while a remote-controlled “app” on a smart phone or tablet allows them to turn on indoor and outdoor lighting. These features and others not only add convenience to a home, but they also save money and make people feel safer. By simply adding a smart thermostat, sellers can increase their homes’ value by 3%-5%.
HINT: Cost-effective improvements that sellers can add to their homes include motion-activated outdoor lighting and security cameras.



Many homeowners worry that if they find a new house before selling their old one, they are putting the “cart before the horse.” Generally speaking, real estate professionals recommend that trade-up buyers put their present homes on the market first. If trade-up buyers put themselves in the position of finding a replacement property before they sell their current homes, they risk losing the replacement property to more circumstantially flexible prospective buyers who are not in similar circumstances. If trade-up buyers do find the house they want, they might want to consider a short-term “bridge” loan to provide funds to make the transaction. Real estate agents, mortgage lenders, and lawyers can arrange contracts and loans so that the process moves smoothly.

HINT: When selling your current home and purchasing another, you might put in a purchase offer contingent upon selling your present house.

Over the past four decades, the size of the average American home has increased by more than 1,000 square feet, to 2,721 square feet. As buyers look over their options, sellers may search for ways to increase the square footage of their older homes as a means of increasing their appeal. One of the most cost-effective ways for sellers to add more living space to their homes is to insulate and finish basements and attics. Because finishing a basement or attic takes advantage of utilizing pre-existing space, it avoids foundation work that would otherwise be needed to increase the footprint of a house. This eliminates one of the most costly aspects of creating additional living space that boosts buyer interest.   
HINT: Finished attics and basements lend themselves to media rooms (man caves), offices, and exercise spaces that are currently in favor among buyers.


When homeowners embark upon selling their homes without an agent, they’re not likely to make out nearly as well as they might have hoped. When most prospective buyers see “For Sale By Owner” (FSBO), they assume the property will sell at a discount. Real estate agents earn their commissions by producing and paying for advertising, remaining available at all hours to prescreen prospective buyers, showing the property and running open houses, and filling out paperwork. Beyond that, real estate agents bring an extensive network of potential buyers to the table and have the negotiating skills to sell properties for more than sellers do on their own. Experience counts for a lot when dealing with the intricacies of selling a home. 

HINT: According to the National Association of Realtors, the typical FSBO home sold for $210,000 compared to $249,000 for agent-assisted home sales in 2014.



In order to ensure that the people selling you a home actually have full and legal title, the party conducting the closing will research the history of ownership at the local property records office. However, what happens if the records are wrong, or the person conducting the title search is in error? In addition, there are other issues that can “cloud” the title. To protect against these possibilities, lenders will take out a form of title insurance known as “lender’s” coverage, which is designed to protect the lender in case title problems arise. But who is protecting you, the buyer? As it turns out, “owner’s” coverage is also available to protect the buyer’s equity stake in the property.

HINT: If homebuyers choose to purchase owner’s title insurance, the total cost will usually be lower if  the same provider is used for both the lender’s policy and the owner’s policy.


Sellers can learn a number of things by checking the difference between “list” and “sales” prices in their area. This differential sheds some light on the validity of asking prices and gives some indication of how strong the market is and how long it might take to sell a home. Generally, an average difference of five percent or less is indicative of a healthy market, in which houses sell close to their asking prices in relatively short order (if they are priced well). Percentage differences between five and ten percent indicate a softer market, in which prices may have to be adjusted to sell more quickly. Percentage differences between ten and twenty percent are indicative of a weak market.
HINT: The final sale price of similar comparable properties in your neighborhood that were sold within the last six months is an indication of your home’s current value.​

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Contact Information

Cataneo & Associates
33 West Main Street
Holmdel NJ 07733

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Phone: (732) 444-6555